Core Scientific, Inc. (NASDAQ: CORZ), a leader in
high-performance blockchain data centers and software solutions,
reported its financial results for the second quarter ended June
30, 2022.
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the full release here:
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Core Scientific's Marble, NC Data Center
(Graphic: Business Wire)
Second Quarter 2022 Financial Highlights (Compared to Second
Quarter 2021)1
- Self-mining bitcoin production increased 1,769% to 3,365
bitcoins
- 1,959 bitcoins held as of June 30, 2022
- Total hashrate of 17.9 EH/s consisting of 10.3 EH/s self-mining
and 7.6 EH/s hosting
YTD 2022 Financial Highlights (Compared to YTD 2021)1
- Self-mining bitcoin production increased 1,601% to 6,567
bitcoins
“Our team remained focused on our business objectives,
delivering second quarter revenue of $164.0 million, an increase of
more than 115 percent over the prior year,” said Mike Levitt, Core
Scientific Chief Executive Officer. “We are now managing over
200,000 servers generating over 20 EH/s in approximately 800,000
square feet of our own custom-developed data centers across five
states. We deployed 14,000 servers in July and have already
deployed over 17,000 in August. This month we are averaging over 40
self-mined bitcoins per day, including producing a company record
45.7 bitcoin in a single day on August 10. With enhanced liquidity
from bitcoin sales and our committed equity facility, line of sight
to improved hosting margins and manageable principal and interest
payments on our liabilities, we remain well positioned to navigate
current market conditions and emerge from these markets a larger,
stronger and more profitable company.”
Second Quarter 2022 Financial Results (Compared to Second
Quarter 2021)1
Total revenue of $164.0 million increased by $88.7 million, or
118%, from $75.3 million. The increase in total revenue was driven
primarily by increases in digital asset mining revenue and hosting
revenue, partially offset by a decrease in equipment sales.
Total hosting revenue of $38.9 million increased by $20.4
million, or 110%, from $18.6 million. The increase in hosting
revenue from customers was driven primarily by the onboarding of
new clients and the execution of new related party hosting
contracts for miners deployed.
Total equipment sales of $15.2 million decreased by $30.8
million, or 67%, from $46.0 million. The decrease in equipment
sales to customers was primarily driven by fewer miners being
deployed, partially offset by higher equipment sales to related
parties driven by higher demand for new generation mining
equipment.
Digital asset mining revenue of $109.8 million increased by
$99.1 million, or 920%, from $10.8 million. The increase in mining
revenue was driven primarily by an increase in our self-mining hash
rate to 10.3 EH/s from 0.45 EH/s. The total number of bitcoins
awarded was 3,365 compared to 180. The average price of bitcoin was
$32,502 as compared to $46,498, a decrease of 30%.
Cost of revenue of $151.3 million increased by $100.5 million,
or 198%, from $50.8 million. The increase in cost of revenue was
primarily attributable to higher power consumption costs of $45.9
million driven by an increase in the number of self-mining and
hosted miners operating in our fleet. Depreciation expense
increased $46.3 million driven by an increase in the number of
self-mining units deployed, higher personnel and facilities
operating costs driven by the opening and expansion of our data
centers of $25.8 million, which includes increased stock-based
compensation of $16.9 million, increased payroll and benefit costs
for personnel of $3.6 million. The increase in cost of revenue was
partially offset by lower equipment sales costs of $17.6 million.
As a percentage of total revenue, cost of revenue totaled 92% and
67% for the three months ended June 30, 2022 and 2021,
respectively.
Gross profit of $12.7 million decreased by $11.8 million, or
48%, from $24.5 million. The decrease in gross profit was driven
primarily by a $18.9 million decrease in gross profit in the
hosting and equipment segment, partially offset by an $7.1 million
increase in gross profit for the mining segment, driven by an
increase in mining revenue. The decrease in gross margin for the
mining segment was driven by higher miner depreciation as well as
higher power costs and lower average price per bitcoin mined.
Operating loss of $1.09 billion decreased by $1.11 billion from
an operating income of $15.5 million. The decrease was
predominantly due to a $840.0 million impairment of goodwill, a
$150.2 million impairment of digital assets, higher total operating
expenses of $106.9 million and a $13.1 million loss on exchange or
disposal of property, plant and equipment. The increase in total
operating expenses was driven primarily by a $92.0 million increase
in stock-based compensation, primarily reflecting an amendment to
our restricted stock unit awards made in June 2022 that resulted in
the elimination of the performance condition that had previously
required a change in control or public offering before the awards
could vest. The increase in operating expenses was further driven
by a $4.6 million of higher professional fees, primarily related to
investments made to support public company readiness, and $3.4
million of higher payroll and benefit costs for personnel.
Net loss of $861.7 million increased by $858.3 million from a
net loss of $3.4 million. The increase in net loss was due to a
$840.0 million impairment of goodwill, a $150.2 million impairment
of digital assets and higher total operating expenses of $106.9
million, partially offset by a decrease in the fair value of the
convertible notes (excluding interest expense and changes in
instrument-specific credit risk) and corresponding gain of $195.1
million, a decrease in the fair value of the derivative warrant
liabilities and corresponding gain of $22.2 million and an increase
in the income tax benefit of $46.8 million.
Adjusted EBITDA increased $38.3 million to $59.1 million from
$20.8 million. The increase was due to higher gross profit,
excluding depreciation and amortization and share-based
compensation, partially offset by higher operating expenses,
excluding stock-based compensation and depreciation and
amortization.
YTD 2022 Financial Results (Compared to YTD 2021)1
Total revenue of $356.5 million increased by $226.9 million, or
175%, from $129.5 million. The increase in total revenue was driven
primarily by increases in digital asset mining revenue and hosting
revenue, partially offset by a decrease in equipment sales.
Total hosting revenue of $72.2 million increased by $40.9
million, or 131%, from $31.3 million. The increase in hosting
revenue from customers was driven primarily by the onboarding of
new clients and the execution of new related party hosting
contracts for miners deployed.
Total equipment sales of $41.5 million decreased by $36.4
million, or 47%, from $77.9 million. The decrease in equipment
sales to customers was primarily driven by fewer miners being
deployed, partially offset by higher equipment sales to related
parties driven by higher demand for new generation mining
equipment.
Digital asset mining revenue of $242.8 million increased by
$222.4 million, from $20.4 million. The year over year increase in
mining revenue was driven primarily by an increase in our
self-mining hash rate. The total number of bitcoins awarded was
6,567 compared to 386. The average price of bitcoin was $36,876 as
compared to $45,914, a decrease of 20%.
Cost of revenue of $273.8 million increased by $183.3 million,
or 203%, from $90.5 million. The increase in cost of revenue was
primarily attributable to higher power consumption costs of $83.5
million driven by an increase in the number of self-mining and
hosted miners operating in our fleet . Depreciation expense
increased $85.3 million driven by an increase in the number of
self-mining units deployed, higher personnel and facilities
operating costs driven by the opening and expansion of our data
centers of $35.7 million, which includes increased stock-based
compensation of $18.9 million, increased payroll and benefit costs
for personnel of $6.7 million. The increase in cost of revenue was
partially offset by lower equipment sales costs of $21.3 million.
As a percentage of total revenue, cost of revenue totaled 77% and
70% for the six months ended June 30, 2022 and 2021,
respectively.
Gross profit of $82.7 million increased by $43.6 million, or
112%, from $39.1 million. The increase in gross profit was driven
primarily by a $63.4 million increase in gross profit for the
mining segment, driven by higher mining revenue as described above,
partially offset by a $19.7 million decrease in the hosting and
equipment segment. The decrease in gross margin for the mining
segment was driven by higher miner depreciation as well as higher
power costs and lower average price per bitcoin mined.
Operating loss of $1.12 billion decreased by $1.15 billion from
an operating income of $24.6 million. The decrease was
predominantly due to a $840.0 million impairment of goodwill, a
$204.2 million impairment of digital assets, higher total operating
expenses of $146.3 million and a $13.1 million loss on exchange or
disposal of property, plant and equipment. The increase in total
operating expenses was driven primarily by a $115.2 million
increase in stock-based compensation, primarily reflecting an
amendment to our restricted stock unit awards made in June 2022
that resulted in the elimination of the performance condition that
had previously required a change in control or public offering
before the awards could vest. The increase in operating expenses
was further driven by a $12.4 million of higher professional fees,
primarily related to investments made to support public company
readiness, and $5.6 million of higher payroll and benefit costs for
personnel. These decreases in operating income were partially
offset by an increase in gross profit of $43.6 million and an
increase on gain from sales of digital assets of $14.0 million.
Net loss of $1.33 billion decreased by $1.33 billion from net
income of $3.4 million. The decrease in net income was due to a
$840.0 million impairment of goodwill, a $204.2 million increase in
impairment of digital assets, an increase in the fair value of the
convertible notes (excluding interest expense and changes in
instrument-specific credit risk) and corresponding loss of $191.0
million, higher total operating expenses of $146.3 million and an
increase in interest expense, net of $35.8 million. These decreases
in net income were partially offset by an increase in gross profit
of $43.6 million, a decrease in the fair value of the derivative
warrant liabilities and corresponding gain of $32.5 million, an
increase on gain from sales of digital assets of $14.0 million and
an increase in the income tax benefit of $4.4 million.
Adjusted EBITDA increased $118.9 million to $152.2 million from
$33.3 million. The increase was due to higher gross profit,
excluding depreciation and amortization and share-based
compensation, partially offset by higher operating expenses,
excluding stock-based compensation and depreciation and
amortization.
LIQUIDITY
As of June 30, 2022, cash and cash equivalents totaled $128.5
million and restricted cash totaled $11.9 million.
As of June 30, 2022, the Company’s Bitcoin balance totaled
1,959. The carrying value of our digital assets was $40.7 million,
which reflects accumulated impairment losses of $20.1 million
year-to-date.
B. Riley Equity Line of Credit
Under the agreement with B. Riley Principal Capital II, LLC (“B.
Riley”), Core Scientific has the right, without obligation, to sell
and issue up to $100.0 million of shares of its common stock to B.
Riley, subject to certain limitations and satisfaction of certain
conditions. Purchase notices may be issued to B. Riley over a
24-month period. Core Scientific issued B. Riley 573,381 shares of
common stock as consideration for B. Riley’s commitment to purchase
Core Scientific common stock under the purchase agreement. Further
details are contained in a Current Report on Form 8-K Core
Scientific was filed with the Securities and Exchange
Commission.
OUTLOOK
For 2022, the Company continues to expect to achieve total
hashrate of between 30 EH/s and 32 EH/s, with total power of
approximately 1 GW.
The foregoing estimates are forward-looking and reflect
management's view of current and future market conditions, subject
to certain risks and uncertainties and general economic and
business conditions in the United States and elsewhere in the
world. Investors are reminded that actual results may differ
materially from these estimates.
CONFERENCE CALL AND WEBCAST
In conjunction with this release, Core Scientific, Inc. will
host a conference call today, Thursday, August 11, 2022, at 4:30 pm
Eastern Time that will be webcast live. Mike Levitt, Chief
Executive Officer, Denise Sterling, Chief Financial Officer and
Steven A. Gitlin, Senior Vice President Investor Relations, will
host the call.
Investors may dial into the call by using the following
telephone numbers, 1 (844) 200-6205 (U.S. toll-free), 1 (646)
904-5544 (U.S. local) or 1 (929) 526-1599 (international) and
providing the access code 481493 five to ten minutes prior to the
start time to allow for registration.
Investors with Internet access may listen to the live audio
webcast via the Investor Relations page of the Core Scientific,
Inc. website, http://investors.corescientific.com. Please allow 15
minutes prior to the call to download and install any necessary
audio software. A replay of the audio webcast will be available for
one year.
A supplementary investor presentation for the full fiscal year
2021 can be accessed at
https://investors.corescientific.com/investors/events-and-presentations/default.aspx.
AUDIO REPLAY
An audio replay of the event will be archived on the Investor
Relations section of the Company's website at
http://investors.corescientific.com and via telephone by dialing 1
(866) 813-9403 (U.S. toll free), 1 (929) 458-6194 (U.S. local) or
44 (204) 525-0658 (all other locations) and entering Access Code
168925.
ABOUT CORE SCIENTIFIC
Core Scientific is one of the largest publicly traded blockchain
data center providers and miners of digital assets in North
America. Core Scientific has operated blockchain data centers in
North America since 2017, using its facilities and intellectual
property portfolio for colocated digital asset mining and
self-mining. Core Scientific operates data centers in Georgia,
Kentucky, North Carolina, North Dakota and Texas, and expects to
commence operations in Oklahoma in the second half of 2022. Core
Scientific’s proprietary Minder® fleet management software combines
the Company’s colocation expertise with data analytics to deliver
maximum uptime, alerting, monitoring and management of all miners
in the Company’s network. To learn more, visit
http://www.corescientific.com. Information on our website and
social media platforms is not incorporated by reference in this
release or in any of our filings with the U.S. Securities and
Exchange Commission.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute
“forward-looking statements” for purposes of the federal securities
laws. Our forward-looking statements include, but are not limited
to, statements regarding our and our management team’s
expectations, hopes, beliefs, intentions or strategies regarding
the future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “will,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements in this press release may include, for example,
statements about:
- meet future liquidity requirements and comply with restrictive
covenants related to indebtedness;
- effectively respond to general economic and business
conditions, including the price of bitcoin;
- maintain the listing on, or to prevent the delisting of our
securities from, Nasdaq or another national securities
exchange;
- obtain additional capital, whether equity or debt;
- enhance future operating and financial results;
- successfully execute expansion plans;
- attract and retain employees, officers or directors;
- anticipate rapid changes in laws, regulations and
technology;
- execute its business strategy, including enhancement of the
profitability of services provided;
- realize the benefits expected from the acquisition of Blockcap,
including any related synergies;
- anticipate the uncertainties inherent in the development of new
business strategies;
- anticipate the impact of the COVID-19 pandemic, including
variant strains of COVID-19, and its effect on business and
financial conditions;
- manage risks associated with operational changes in response to
the COVID-19 pandemic, including the emergence of variant strains
of COVID-19;
- increase brand awareness;
- upgrade and maintain effective business controls and
information technology systems;
- acquire and protect intellectual property;
- comply with laws and regulations applicable to its business,
including tax laws and laws and regulations related to data privacy
and the protection of the environment;
- stay abreast of modified or new laws and regulations applicable
to its business or withstand the impact of any new laws and
regulations related to its industry;
- anticipate the impact of, and response to, new accounting
standards;
- anticipate the significance and timing of contractual
obligations;
- maintain key strategic relationships with partners and
distributors;
- respond to uncertainties associated with product and service
development and market acceptance;
- anticipate the impact of changes in U.S. federal income tax
laws, including the impact on deferred tax assets; and
- successfully defend litigation.
These forward-looking statements are based on information
available as of the date of this press release, and current
expectations, forecasts and assumptions, and involve a number of
judgments, risks and uncertainties. Accordingly, forward-looking
statements should not be relied upon as representing our views as
of any subsequent date, and we do not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws.
You should read this press release with the understanding that
our actual future results may be materially different from what we
expect. We qualify all of our forward-looking statements by these
cautionary statements.
In addition, statements that “we believe” and similar statements
reflect our beliefs and opinions on the relevant subject. These
statements are based upon information available to us as of the
date of this press release and while we believe such information
forms a reasonable basis for such statements, such information may
be limited or incomplete, and such statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These
statements are inherently uncertain, and investors are cautioned
not to unduly rely upon these statements.
Core Scientific, Inc.
Consolidated Balance Sheets (in thousands, except par value)
(Unaudited)
June 30, 20221
December 31,
2021
Assets
Unaudited
Current Assets:
Cash and cash equivalents
$
128,542
$
117,871
Restricted cash
11,938
13,807
Accounts receivable, net
2,840
1,382
Accounts receivable from
related parties
677
300
Deposits for equipment
165,662
358,791
Digital assets
40,664
234,298
Prepaid expenses and other
current assets
161,234
30,111
Total Current Assets
511,557
756,560
Property, plant and equipment,
net
1,049,070
597,304
Goodwill
214,759
1,055,760
Intangible assets, net
5,622
8,195
Other noncurrent assets
14,903
21,045
Total Assets
$
1,795,911
$
2,438,864
Liabilities, Redeemable
Preferred Stock and Stockholders’ Equity
Current Liabilities:
Accounts payable
$
31,252
$
11,617
Accrued expenses and other
124,173
67,862
Deferred revenue
71,837
63,417
Deferred revenue from related
parties
36,923
72,945
Derivative warrant
liabilities
5,808
—
Finance lease liabilities,
current portion
28,570
28,452
Notes payable, current
portion
217,674
75,996
Total Current Liabilities
516,237
320,289
Finance lease liabilities, net
of current portion
48,701
62,145
Notes payable, net of current
portion (includes $726,555 and $557,007 at fair value)
852,323
652,213
Other noncurrent
liabilities
13,393
18,531
Total Liabilities
1,430,654
1,053,178
Contingently redeemable convertible
preferred stock; $0.0001 par value; 2,000,000 shares authorized; —
and 10,826 shares issued and outstanding at June 30, 2022 and
December 31, 2021, respectively; $— and $45,164 total liquidation
preference at June 30, 2022 and December 31, 2021, respectively
—
44,476
Commitments and contingencies
Stockholders’ Equity:
Common stock; $0.0001 par
value; 10,000,000 shares authorized at both June 30, 2022 and
December 31, 2021; 353,481 and 271,576 shares issued and
outstanding at June 30, 2022 and December 31, 2021,
respectively
35
27
Additional paid-in capital
1,695,748
1,379,581
Accumulated deficit
(1,355,306
)
(27,432
)
Accumulated other comprehensive
income (loss)
24,780
(10,966
)
Total Stockholders’ Equity
365,257
1,341,210
Total Liabilities,
Redeemable Preferred Stock and Stockholders’ Equity
$
1,795,911
$
2,438,864
Core Scientific, Inc.
Consolidated Statements of Operations (in thousands, except per
share amounts) (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
20221
2021
20221
2021
Revenue:
Hosting revenue from
customers
$
31,338
$
11,895
$
58,676
$
20,251
Hosting revenue from related
parties
7,598
6,667
13,474
11,003
Equipment sales to
customers
3,507
36,457
3,923
60,499
Equipment sales to related
parties
11,687
9,519
37,576
17,403
Digital asset mining
revenue
109,842
10,765
242,842
20,393
Total revenue
163,972
75,303
356,491
129,549
Cost of revenue:
Cost of hosting services
43,644
17,550
74,875
29,379
Cost of equipment sales
13,541
31,100
36,076
57,331
Cost of digital asset
mining
94,070
2,115
162,820
3,768
Total cost of revenue
151,255
50,765
273,771
90,478
Gross profit
12,717
24,538
82,720
39,071
Gain (loss) from sales of digital
assets
11,808
(16
)
13,971
14
Impairment of digital assets
(150,213
)
—
(204,198
)
—
Impairment of goodwill
(840,000
)
—
(840,000
)
—
Losses on exchange or disposal of
property, plant and equipment
(13,057
)
(17
)
(13,057
)
(17
)
Operating expenses:
Research and development
14,773
1,437
18,113
2,645
Sales and marketing
10,238
720
11,636
1,254
General and administrative
90,874
6,822
131,034
10,617
Total operating expenses
115,885
8,979
160,783
14,516
Operating (loss) income
(1,094,630
)
15,526
(1,121,347
)
24,552
Non-operating (income) expenses, net:
Loss on debt extinguishment
—
7,974
—
8,016
Interest expense, net
27,116
10,846
48,792
12,981
Fair value adjustments on
convertible notes
(195,061
)
—
190,976
—
Fair value adjustments on
derivative warrant liabilities
(22,189
)
—
(32,464
)
—
Other non-operating expenses,
net
3,876
2
3,519
2
Total non-operating (income) expenses,
net
(186,258
)
18,822
210,823
20,999
(Loss) income before income
taxes
(908,372
)
(3,296
)
(1,332,170
)
3,553
Income tax (benefit) expense
(46,702
)
118
(4,296
)
118
Net (loss) income
$
(861,670
)
$
(3,414
)
$
(1,327,874
)
$
3,435
Net (loss) income per share
Basic
$
(2.65
)
$
(0.02
)
$
(4.20
)
$
0.02
Diluted
$
(2.65
)
$
(0.02
)
$
(4.20
)
$
0.02
Weighted average shares outstanding:
Basic
324,967
158,890
316,269
158,338
Diluted
324,967
158,890
316,269
177,342
Core Scientific, Inc. Segment
Results (in thousands, except percentages) (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Equipment Sales and Hosting
Segment
Revenue:
Hosting revenue
$
38,936
$
18,562
$
72,150
$
31,254
Equipment sales
15,194
45,976
41,499
77,902
Total revenue
54,130
64,538
113,649
109,156
Cost of revenue:
Cost of hosting services
43,644
17,550
$
74,875
$
29,379
Cost of equipment sales
13,541
31,100
36,076
57,331
Total cost of revenue
$
57,185
$
48,650
$
110,951
$
86,710
Gross (loss) profit
$
(3,055
)
$
15,888
$
2,698
$
22,446
Gross margin2
(6
) %
25
%
2
%
21
%
Mining Segment
Digital asset mining
revenue
$
109,842
$
10,765
$
242,842
$
20,393
Total revenue
109,842
10,765
242,842
20,393
Cost of revenue
94,070
2,115
162,820
3,768
Gross profit
$
15,772
$
8,650
$
80,022
$
16,625
Gross margin2
14
%
80
%
33
%
82
%
Consolidated
Consolidated total revenue
$
163,972
$
75,303
$
356,491
$
129,549
Consolidated cost of revenue
$
151,255
$
50,765
$
273,771
$
90,478
Consolidated gross profit
$
12,717
$
24,538
$
82,720
$
39,071
Consolidated gross margin2
8
%
33
%
23
%
30
%
Core Scientific, Inc. Total
notes payable and finance lease liabilities |(in thousands)
(Unaudited)
The following table summarizes the Company’s debt consisting
of notes payable and finance lease liabilities: (in thousands):
Notes payable:
Current (next twelve
months)
Noncurrent (greater than 12
months)
Total
Equipment financing
$
145,766
$
125,832
$
271,598
Convertible notes
—
536,278
536,278
Bridge loan
75,000
—
75,000
Other
734
324
1,058
Total
221,500
662,434
883,934
Unamortized discount and debt
issuance costs
(3,826
)
(388
)
(4,214
)
Fair value adjustment on
convertible notes
—
190,277
190,277
Total notes payable
$
217,674
$
852,323
$
1,069,997
Leases:
Equipment financing lease
liabilities
$
28,570
$
48,701
$
77,271
Total notes payable and
finance lease liabilities
$
246,244
$
901,024
$
1,147,268
Core Scientific, Inc. and Subsidiaries
Non-GAAP Financial Measures (Unaudited)
Adjusted EBITDA is a non-GAAP financial measure defined as our
net income or (loss), adjusted to eliminate the effect of (i)
interest income, interest expense, and other income (expense), net;
(ii) provision for income taxes; (iii) depreciation and
amortization; (iv) stock-based compensation expense; (v) gain on
sale of intangible assets; (vi) restructuring charges; and (vii)
certain additional non-cash or non-recurring items, that do not
reflect our ongoing business operations. Adjusted earnings per
share (“Adjusted EPS”) is defined as our net income or (loss)
divided by our weighted-average diluted shares outstanding,
adjusted to eliminate the effect of (i) interest income, interest
expense, and other income (expense), net; (ii) provision for income
taxes; (iii) depreciation and amortization; (iv) stock-based
compensation expense; (v) gain on sale of intangible assets; (vi)
restructuring charges; and (vii) certain additional non-cash or
non-recurring items, that do not reflect our ongoing business
operations. For additional information, including the
reconciliation of net income (loss) to Adjusted EBITDA and the
reconciliation of net income (loss) per diluted share to Adjusted
EPS, please refer to the tables below. We believe Adjusted EBITDA
and Adjusted EPS are important measures because they allow
management, investors, and our board of directors to evaluate and
compare our operating results, including our return on capital and
operating efficiencies, from period-to-period by making the
adjustments described above. In addition, it provides useful
information to investors and others in understanding and evaluating
our results of operations, as well as provides a useful measure for
period-to-period comparisons of our business, as it removes the
effect of net interest expense, taxes, certain non-cash items,
variable charges, and timing differences. Moreover, we have
included Adjusted EBITDA in this press release because it is a key
measurement used by our management internally to make operating
decisions, including those related to operating expenses, evaluate
performance, and perform strategic and financial planning.
The above items are excluded from our Adjusted EBITDA and
Adjusted EPS measures because these items are non-cash in nature,
or because the amount and timing of these items is unpredictable,
not driven by core results of operations and renders comparisons
with prior periods and competitors less meaningful. However, you
should be aware that when evaluating Adjusted EBITDA and Adjusted
EPS, we may incur future expenses similar to those excluded when
calculating these measures. Our presentation of these measures
should not be construed as an inference that its future results
will be unaffected by unusual or non-recurring items. Further,
these non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”). We compensate for these
limitations by relying primarily on GAAP results and using Adjusted
EBITDA and Adjusted EPS on a supplemental basis. Our computation of
Adjusted EBITDA and Adjusted EPS may not be comparable to other
similarly titled measures computed by other companies because not
all companies calculate these measures in the same fashion. You
should review the reconciliation of net (loss) income to Adjusted
EBITDA and net (loss) income per diluted share to Adjusted EPS
below and not rely on any single financial measure to evaluate our
business.
The following tables reconcile the non-GAAP financial measures
to the most directly comparable U.S. GAAP financial performance
measure, which is net (loss) income, for the periods presented (in
thousands, except per share amounts):
Three Months Ended June
30,
Six Months Ended June
30,
20221
2021
20221
2021
Adjusted EBITDA
Net (loss) income
$
(861,670
)
$
(3,414
)
$
(1,327,874
)
$
3,435
Adjustments:
Interest expense, net
27,116
10,846
48,792
12,981
Income tax (benefit)
expense
(46,702
)
118
(4,296
)
118
Depreciation and
amortization
49,835
3,075
91,974
5,991
Loss on debt extinguishment
—
7,974
—
8,016
Stock-based compensation
expense
110,998
2,136
136,795
2,724
Fair value adjustment on
derivative warrant liabilities
(22,189
)
—
(32,464
)
—
Fair value adjustment on
convertible notes
(195,061
)
—
190,976
—
(Gain) loss from sales of
digital assets
(11,808
)
16
(13,971
)
(14
)
Impairment of digital
assets
150,213
—
204,198
—
Impairment of goodwill
840,000
—
840,000
—
Losses on exchange or disposal
of property, plant and equipment
13,057
17
13,057
17
Gain on sale of intangible
assets
(5,904
)
—
(5,904
)
—
Restructuring charges
1,445
—
1,445
—
Other non-cash or non-recurring
items
9,781
—
9,424
—
Adjusted EBITDA
$
59,111
$
20,768
$
152,152
$
33,268
Three Months Ended June
30,
Six Months Ended June
30,
20221
2021
20221
2021
Adjusted earnings per share (“Adjusted
EPS”)
Net (loss) income
$
(2.65
)
$
(0.02
)
$
(4.20
)
$
0.02
Adjustments:
Interest expense, net
0.08
0.07
0.15
0.07
Income tax (benefit)
expense
(0.14
)
—
(0.01
)
—
Depreciation and
amortization
0.15
0.02
0.29
0.03
Loss on debt extinguishment
—
0.05
—
0.05
Stock-based compensation
expense
0.34
0.01
0.43
0.02
Fair value adjustment on
derivative warrant liabilities
(0.07
)
—
(0.10
)
—
Fair value adjustment on
convertible notes
(0.60
)
—
0.60
—
(Gain) loss from sales of
digital assets
(0.04
)
—
(0.04
)
—
Impairment of digital
assets
0.46
—
0.65
—
Impairment of goodwill
2.59
—
2.66
—
Losses on exchange or disposal
of property, plant and equipment
0.04
—
0.04
—
Gain on sale of intangible
assets
(0.02
)
—
(0.02
)
—
Restructuring charges
—
—
—
—
Other non-cash or non-recurring
items
0.04
—
0.03
—
Adjusted EPS
$
0.18
$
0.13
$
0.48
$
0.19
Weighted average shares outstanding -
diluted
324,967
158,890
316,269
177,342
1
Results are preliminary. The Company
expects to file its Quarterly Report on Form 10-Q on August 15,
2022 and actual results may vary.
2
Gross margin is calculated as gross profit
(loss) as a percentage of total revenue.
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version on businesswire.com: https://www.businesswire.com/news/home/20220811005705/en/
Investors: Steven Gitlin ir@corescientific.com
Media: press@corescientific.com
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