HUT Q3 2026 earnings call transcript, November 4, 2026

It's the premise behind all three measures because it explains why we sequence them in that order. AI is deliberate as software, but it is produced by physical infrastructure, power, land, transmission, buildings, cooling, equipment, and the people who operate them. The next generation of compute will be constrained not only by chips, but also by that infrastructure. And of everything that infrastructure requires... Power is a scarce input. That is why we are a power-first company. The input that is hardest to secure is the one we secure first. We developed the discipline of building within that constraint in Bitcoin mining, which required us to operate power-dense compute, to manage cooling and uptime, and to procure and build quickly. AI is the largest opportunity we have yet encountered to apply that same discipline. Securing power... ...however, only earns the right to build. Converting it into contracted revenue depends on how efficiently we build, and that is the second part of what defines HUT-8. I am convinced that the infrastructure behind AI can be built better than it is being built today, faster, at a lower cost, and without compromising on quality. Many of today's data centers resemble NASA rocket programs, remarkable engineering, a complex, expensive, and slow... ...to deliver. And frankly, this is the mold that Rubberbed and Beacon Point Phase 1 follow. This approach makes sense when the build-out is small, but it will not work at the multi-gigawatt scale at which I expect HUD-8 to build.

Our future builds, therefore, start with a different question. What each system must do and how it should be designed and delivered. We are rethinking builds from there with the aim of improving speed and cost efficiency with quality... held as a constant, not the variable. We have done this before. Vega, a Bitcoin mining facility we designed in-house with direct liquid-to-chip cooling, was built in under six months. We believe we can apply the same approach to our future builds, and we believe that our ability to rethink builds to be more cost-efficient and shorten delivery times while maintaining quality through innovation will differentiate HUD-8 with customers. With that as context, I will turn to the quarter beginning with origination, which is where the power is secured. For investors, origination is a measure of whether we control sufficient power on terms that support attractive commercialization opportunities to continue converting our pipeline into leases comparable to those at Riverbend and Beacon Point. We originate through three channels, and we advanced each throughout the quarter. The first is front-of-the-meter greenfield development. Our pipeline now includes more than 6.4 gigawatts under diligence and under exclusivity. Capacity under exclusivity, the stage at which we have secured a defined path to ownership, increased by approximately 1.3 gigawatts during the quarter as existing projects advanced and new projects were originated.

Scale alone does not answer the question investors ask most often about that pipeline, which is how geographically diversified is it? This quarter we are providing a breakdown of our front-of-the-meter greenfield pipeline by geography. The largest shares are in Mysto, PJM, and Cirque. Less than 5% is in ERCOT. That distribution reduces our regulatory and price exposure in any single market. It does not, however, diminish the value of our existing Texas Interconnects, which we believe has become more valuable as ERCOT's revived interconnection process has lengthened the time required to secure approvals for few interconnections. The second channel is behind-the-meter development, which allows us to unlock power and accelerate delivery where traditional grid timelines are constrained, and which builds on years of experience developing and operating such projects. We are actively evaluating opportunities across our campuses. Consistent with our disciplined approach, however, we do not include that capacity in our reported development pipeline until a contract is executed. Riverbend illustrates that point. Beyond the current phase under construction, we continue to develop the site. We have cleared 184 acres for campus expansion and are advancing site preparation now so that construction can begin promptly once the next phase is commercialized and approvals are secured. The third channel is corporate development in which we acquire powered assets. Our approach here is the one that produced BeaconPoint where we secured the power, underwrote the

site on Bitcoin mining as its initial use and applied our Greenfield development capabilities to advance the site and convert it into an AI data center campus. This quarter, corporate development yielded another opportunity as we entered into a definitive agreement to acquire from affiliates of Poland two energized data center sites in West Texas with up to 230 megawatts of utility capacity upon full energization, subject to final power approvals and infrastructure development. Second, delivery. Each lease we sign obligates us to deliver capacity by a contracted date and the lease revenue begins only on delivery. For investors, delivery is therefore the measure of whether the capacity we have contracted begins generating rent on the dates to which we committed and it is our central operating priority. Construction at Riverbed and Beacon Point Phase 1 remains on track to meet our delivery target. And both projects are funded entirely at the project level. At Riverbed, more than 1,200 people are on site. Structural steel, roof decking, and building foundations are complete on all four data halls. The slab at Data Hall 1 is also complete, and the remaining three data halls will follow through year-end. Roofing and precast wall panels have also been installed at Data Hall 1, with the remaining halls expected to follow through by mid-December, reducing the exposure of inferior... electrical and mechanical work to weather-related disruption. We expect to energize the substation in phases, and equipment installation has begun in Data Hall 1, starting with Vertiv IT power skids and smart-run overhead modulars.

At Deakin Point Phase 1, ground improvements are approximately 95% complete. Building foundation work and underground utilities installation are underway. The steel erection is scheduled to begin this month. We have all... We have also begun foundation work for the substation. For Deakin Point Phase 2, civil design and surveying are underway. We also amended the Deakin Point Phase 2 lease with our customer, extending its term from 15 to 17 years. The extension serves both parties. For our customer, it secures capacity over a longer horizon, which reflects the durability of demand for power. For HUT 8, it adds two years of contracted revenue for lenders. to underwrite, which should help offset potentially higher financing costs as we look to finance phase two. The amendment applies to phase two only. Phase one remains on its existing terms and the construction and financing framework for the campus is unchanged. Delivery also depends on the support of the communities in which we build, which we treat as a precondition of development rather than as an obstacle to be managed. Riverbend demonstrates what is required to convert power. Our first approach into a real project, power, transmission, land, construction, partners, and community alignment must come together in the right order. That is what more than 300 investors, analysts, media, government stakeholders, and community members saw when they visited Riverbend last month.

I joined Governor Jeff Landry of Louisiana and leaders from Anthropik, Energy, Louisiana, Broadcom, Birdman, Jacobs to discuss the future of American AI. And those discussions reach one conclusion. Demand, supply, delivery, and policy are inseparable. Sound technical plans matter, but durable projects are built transparently in partnerships with the people who live and work nearby. In Louisiana, that partnership has taken specific form. We are investing approximately $16 million in a new water well and nearly eight miles of water infrastructure. which will be used to cool the data center and which will be transferred to the parish at no cost to local taxpayers and can serve more than 4,000 households and 200 local employers. We also made a $10 million payment in lieu of taxes, bringing tax revenue to West Feliciana Parish one year earlier than it otherwise would have arrived, supporting local government, schools, and law enforcement, including $7,000 Skype-ins for school employees in each of the in the U.S. next two school years, and payments of up to $8,000 for eligible sheriff office personnel. At Deacon Point in Texas, the commitments differ in form, but not in principle. We are funding the electrical upgrades that our campus requires so that those costs are not shifted to residential rate payers, and the campus uses closed-loop cooling design to minimize local water demand. Across both phases, we anticipate approximately $1,900.

construction jobs and more than 200 permanent positions supported by partnerships with local educators and workforce organizations. We make these commitments because we believe a successful project must create lasting value not only for our customers and shareholders, but also for the communities that host it. We uphold this velocity by investing in the infrastructure, workforce, and partnerships that allow our projects and the communities around them to grow together. Third, financing. For investors, how we finance our projects is a measure of our ability to limit risk to the parent balance sheet and avoid dilution for existing shareholders. Two of the main questions we've been asked this quarter is directly to that point. How are our current builds progressing and might we need to issue additional equity to support them?

We remain on schedule and we do not expect to issue additional equity to support Riverbend or Beacon Point. Riverbend and Beacon Point Phase 1 are funded through completion with investment-grade project bonds of $3.25 billion for Riverbend and $4.25 billion for Beacon Point Phase 1, each non-recourse to HUT 8. We were able to raise investment-grade financing for both projects through a comprehensive approach to risk mitigation. Operating in Bitcoin mining taught us how quickly markets can change, and inflation and interest rate expansion are present realities. We cannot control the market, but we can control what we secure in advance and how we contract. We work from first principles to understand what every component must do and what it should cost. At Riverbend and Beacon Point Phase 1, all long-lead equipment has been ordered and all major contracts have been signed. locking in the largest components of costs ahead of further market movement. Risk mitigation extends beyond procurement. Our principal equipment and construction partners, Berdov and Jacobs, are investment-grade counterparties. Comprehensive insurance coverage is in place at both sites, providing an additional layer of protection against covered losses that could affect the projects and in turn bondholders. And the triple net lease structure makes tenants responsible for operating expenses, taxes, and expenses. Insurance, which further supports this framework. A measure of the strength of our financings is that both bonds have traded well in the secondary market.

That matters because capital has become scarcer across today's markets, and we believe scarcity produces a flight to quality. Investor interest in future issuance remains strong. In a tighter market, we believe contract quality and the flexibility to access multiple debt capital markets market without net money. Let's do it. Give us a competitive advantage. And as we evaluate financing for future projects, we will start from first principles with a clean slate, seeking the lowest cost of capital and the highest free cash flow yield on a risk-adjusted basis. How we originate, how we deliver, and how we finance also answers the most direct question investors ask. What will drive the stock? We believe execution is how we create long-term shareholder value. The daily share price, we manage the delivery of Riverbend and Beacon Point into the conversion of our pipeline into contractive projects because those are the outcomes within our control. The same long-term focus governs how we allocate capital. Every decision is evaluated against a single criteria, whether it creates long-term shareholder value. Alongside investing in growth, that criteria allows us to opportunistically create shareholder value by repurchasing our shares. When we believe the stock trade at a discount to intrinsic value. We have acted on that conviction since last quarter by repurchasing approximately 3.3 million shares for approximately $250 million, funded with about 3,100 Bitcoin from our balance sheet.

The repurchase met our criterion because we believe our shares do not fully reflect the value of the revenue we have contracted and the power capacity that we control. Funding it with... Rather than with cash, preserve liquidity and continue the reduction in parent-level Bitcoin exposure that we described in February. Underneath those measures is a simple proposition. We are builders and we believe the AI era will reward the companies that bring power and compute online faster, more cost-efficiently, and without compromising on quality. That is the company we are building. The revenue we have contracted will be realized the way it was secured. Starting with power, underwriting carefully, preserving flexibility, and delivering. Those principles govern the three measures I have described, and those measures are how we expect to be judged in the quarters of the end. We believe they are the foundation of an enduring generational business at the intersection of energy and technology. With that, I will turn the call over to Sean.

The financial story this quarter has four main components. First, the operating platform remains resilient. Revenue was $71.1 million for the third quarter, compared with $83.5 million in the prior year period, while adjusted EBITDA increased to $33 million from $30.5 million. That result reflects the contribution from additional operating capacity and a disciplined approach to cost. Despite the sale of the Far North portfolio in February, a decline in average revenue per Bitcoin mind, and the planned runoff of businesses that are no longer central to our strategy. Second, the gap result was heavily affected by the fair value remeasurement of digital assets. The reported net income of $189.5 million, of which $131.1 million was attributable to HUTE. That result included a $413.8 million gain on digital assets, reflecting the increase in the price of Bitcoin during the quarter.

Alongside these price movements, we supplement our GAAP results with adjusted EBITDA, a non-GAAP measure, and our segment results. Adjusted EBITDA should be considered together with, and not a substitute for, GAAP net income. Third, we continue to maintain cost discipline even as we scale the company. While we are making major investments to scale them to the company we want to become, we are doing so judiciously. The rigor around spend decisions has not changed since I started two years ago. When the company was in more of a startup. Compared with the prior year period, G&A, excluding stock-based compensation, her megawatt of development pipeline has declined, even as her development pipeline has nearly doubled. And last, but arguably most important, the balance sheet and capital position of the company remains strong. We have fully funded two construction-stage projects. We have ample liquidity to meet our obligations until our data centers begin generating cash flow. And that liquidity is now further supported by the $1.07 billion revolving. Credit facility that we closed in September, which provides low-cost, flexible, non-dilutive capital. And we have confidence in the availability of capital for strong projects underpinned by robust contracts and thoughtful risk mitigation. Let me walk through the operating business. Compute. Compute revenue was $68.4 million in the third quarter compared with $70 million in the prior year period. Headline revenue was broadly stable because...

...the decline in average revenue per Bitcoin mined was largely offset by an increase in Bitcoin mined, reflecting additional operating capacity at Vega and the re-energization of Drumheller. That result demonstrates the enterprise's ability to scale revenue across a range of external environments. Compute cost of revenue increased to $28 million from $22 million, primarily because we were operating more capacity and incurring the associated electricity costs. To increase track to increase in production. Not a deterioration in operating efficiency. The important point is that we are producing more Bitcoin from a larger operating footprint. Again, demonstrating the ability to scale in a cost-conscious manner. AI cloud revenue also increased during the quarter as new customer contracts came online. That growth was partially offset by the sale of the traditional cloud business in August. Power. Power revenue is $1.3 million in the third quarter, compared with $8.4 million in the prior year. period. The decline was primarily the result of the sale of the Far North portfolio in February. It is therefore a portfolio composition effect, not a deterioration in the remaining hour business, which generates revenue primarily from managed services contracts. Digital infrastructure. Digital infrastructure revenue was $1.4 million in the third quarter, compared with $5.1 million in the prior year period.

The decline primarily reflects the termination. of the bigger co-location agreement after American Bitcoin exercised its purchase option for the miners at that site, together with the custom return in the legacy CPU infrastructure business. The current digital infrastructure results do not yet reflect the contracted lease revenue from Riverbend and Beacon Point. That revenue begins when the relevant capacity is delivered. The financial model is therefore moving through an intentional transition.

Larger contracted infrastructure revenues remain tied to delivery milestones. Adjusted EBITDA was $33 million, compared with $30.5 million in the prior year period. We use this measure to evaluate operating performance after excluding the effect of fair value re-measurement of digital assets and other one-time or non-cash items. As always, adjusted EBITDA should be considered alongside GAAP results, not in place of them. Reported general and admin administrative expense was $99.6 million, compared with $25.9 million in the prior year period. Approximately $64.7 million of this quarter's G&A was stock-based compensation, including the effect of one-time long-term incentive awards. The quarter also included professional fees and approximately $6.2 million of incremental salaries and benefits as we added people to support energy origination, corporate development, and other growth functions. Excluding non-cash costs, the cash DNA was $34.8 million, which compares with $24.8 million last quarter and $19.5 million from a year ago. We do not view all of that spending as recurring corporate overhead. A meaningful portion reflects the cost of building the organization required to originate, finance, construct, and operate multiple large campuses in parallel. At the same time, the cash component is real. And we are holding those investments to a clear standard. They must support one or more of the following outcomes over time.

More high-quality power origination, faster project conversion, a lower cost of capital, better execution, or stronger operating leverage. The balance sheet requires an important distinction between corporate liquidity and project-restricted capital. On September 30, 2026, we had approximately $156.9 million of cash. $3.6 billion of restricted cash and cash equivalents, and $2.8 billion of restricted short-term investments. The restricted balances are principally crocheted from the Riverbend and Beacon Point financings held in project accounts for construction, debt service reserves, and other specified project purposes. They are not excess corporate cash. HUT8 also has about 1,361 unencumbered Bitcoin on the balance sheet as of November 1. The company had approximately $7.1 million. $6 billion of consolidated loans, notes payable, and other financial liabilities. Approximately $7.5 billion of that amount relates to the Riverbend and Beacon Point project financing. Those obligations sit at project subsidiaries, are secured by the applicable project assets and accounts, and are non-recourse to HUT8's parent company. Each project is designed to serve as its own debt from its own contracted lease cash flows. The quarter also included $105.5 million. of interest expense and $61.8 million of interest income. The interest expense reflects the construction period carry on the Riverbend and Deacon Point financings. The interest income was generated by investing unused project proceeds and restricted short-term investments to partially offset that carry. We accepted that construction period interest cost because the projects are fully funded up front.

The parent level financing architecture is separate and quite simple. In September, we added a $1.07 billion senior secured revolving credit facility to support corporate liquidity, development need, and letters of credit. No borrowings were outstanding under that facility as of September 30, 2026. The facility gives us committed capacity without requiring us to draw debt before we need it. We also simplified the parent capital structure during the year. The CO2 note converted into equity. The Coinbase facility was refinanced, but the Bitcoin collateralized Falcon X term loan at a lower coupon, and the remaining TGRC-secured promissory note was repaid in October. We are also planning to retire the Falcon X term loan ahead of its maturity in April 2027. The objective is straightforward. Maintain parent-level flexibility, match financing to the asset that generates the cash flow, and avoid using corporate equity where project-level capital is available on better terms. During the quarter, we sold approximately 954... Bitcoin for $74.8 million and used those proceeds to repurchase 953,802 shares for $74.7 million. Subsequent to quarter-end, we've repurchased additional shares under the $250 million program. In total, we repurchased approximately 3.3 million shares for approximately $250 million, funded with approximately 3,100 Bitcoin. Those repurchases converted a portion of the Strategic Bitcoin Reserve...

...into equity at a price we believe did not reflect the contracted revenue and power capacity controlled by the company. They also continued the reduction of parent-level Bitcoin exposure that we had described previously. Our board has also authorized an increase in our share repurchasing program from $250 million to $1 billion. We view this as a long-term program that gives us the flexibility to act when opportunities arise over the coming years. We will be patient and judicious. and how we deploy it, so that we maintain liquidity to run our business and pursue opportunistic growth. Stepping back, investors should evaluate HUT8 through three layers. The first is the solid footing of the current operating platform, where the quarter demonstrated increased Bitcoin production, a growing AI cloud contribution, and adjusted EBITDA above the prior year period despite lower revenue. The second is the contracted infrastructure platform, where Herbal Bend and Beacon Point are... being funded and delivered through project-level structures tied to long-duration customer commitments. The third is the development platform, where we are advancing power opportunities while preserving flexibility on the application, the customer, and the financing structure. Our financial objective is not to maximize headline growth at any cost. It is to convert scarce power into financeable, contracted infrastructure while protecting parent-level liquidity and limiting unnecessary dilution.

If we execute against that standard... Financial profiles should evolve from a business with Bitcoin-driven volatility and construction period carry toward one with a larger base of contracted infrastructure cash flows.

Before we transition to Q&A, let me address what is likely to be the first question. The outcome of the governor's race in Texas and its implications for Beacon Point. We respect the election outcome and support the governor-elect in a hostess call for... legislative guardrails. We also expect Texas to remain a business-friendly state and recognize the benefits that data centers bring to local communities through tax revenue and jobs. As we discussed earlier in the context of Beacon Point and Riverbend, our focus is on building responsibly with local communities in mind, a commitment that we believe aligns with Governor Hinojosa's objectives. We do not believe the results change the outlook for Beacon Point, which as a late-stage project is well positioned. For Beacon Point Phase 1, our baseload designation remains subject to Governor Abbott's audits. We believe we are well placed in that process and anticipate an unconditional classification on December 17th, which will provide a clear path to energizing the full gigawatt at Beacon Point with 700 megawatts expected in the first quarter of 2027. With that, happy to take questions. At this time, in order to ask a question, press star, then the number one. One on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.

And of Richard Cho with J.P. Morgan. Please go ahead.

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