HIVE Digital Technologies Q1 2027 Earnings Call Transcript

HIVE Digital Technologies (NASDAQ: HIVE ) held its first-quarter earnings conference call on Monday. Below is the complete transcript from the call. This content is powered APIs. 1 million, driven by its Bitcoin mining operations and expanding HPC and AI business.

The company announced $180 million in contracted revenue for its HPC business, with a significant five-year $350 million contract recently secured, indicating strong growth potential. HIVE continues to focus on expanding its AI infrastructure, leveraging partnerships with Bell Canada for GPU clusters and exploring additional financing strategies to support further growth. The company faced a $143 million net loss due to non-cash items, including a $85 million provision for a disputed Swedish tax liability, which HIVE plans to contest. 4 million for the quarter.

Full Transcript Nathan Fast, Director of Marketing and Branding Hello and welcome to today's webcast covering HIVE Digital Technologies' financial results for fiscal Q1 2027. My name is Nathan Fast, Director of Marketing and Branding at HIVE, and I'll be your moderator for today's call. Before we get started on slide two, I'd like to briefly note the disclosures for today's presentation. S.

Private Securities Litigation Reform Act of 1995. Words such as "expects," "believes," and similar expressions identify these statements. Actual results could differ materially and we disclaim any obligation to update them except as required by law. gov.

In addition to discussing results that are calculated in accordance with GAAP, we will also reference certain non-GAAP financial measures including Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow. Management uses these metrics to evaluate operating performance and believes they provide investors with additional insight, and they're presented for supplemental purposes only and should not be considered in isolation from GAAP results. Reconciliations to the nearest GAAP measures are included in the appendix to this presentation and in the press release and Form 8—K furnished to the SEC.

On the next slide, I'm pleased to introduce today's presenters: Frank Holmes, Executive Chairman; Aydin Kilic, President and CEO; and Darcy Daubaras, Chief Financial Officer. I'd now like to hand the presentation over to Mr. Frank Holmes for a macro recap of the quarter. Frank Holmes, Executive Chairman Thank you.

And so let's go a quick macro recap of what's been affecting stock markets and HIVE's stock price and valuations over this past recent quarter. Next please. So before we jump into those granular details, it's always important to understand the DNA volatility, and every asset class has its own DNA volatility. And this is to highlight that—especially we find so many people like to trade HIVE—it's because of that volatility.

It is a non—event over one day to go up or down 6%, and over 10 days 23%. You can see that's a little more than CoreWeave. It's substantially three times more than what Bitcoin is, and four times more what Nvidia is when we look over six trading days. So it is just a factor of these macro forces pulling, with these announcements from what Bitcoin is doing on a daily basis to the announcements of our AI build—out.

So when we have a strong Bitcoin day and good AI sentiment, the stock has these big surges; vice versa, a negative day in the world of AI and Bitcoin down, and you get these downdrafts. These appear to be the factors driving a lot of the sentiment. The leadership team has been up here before. Aydin, CEO, the best operator—and I'll walk you through why—in the data center business.

And Craig Devar is our superstar builder—an incredible builder of data centers—to build out our vision in Canada in particular, which is the fastest track that we have, and the government's committed to it with having a minister for AI. Darcy Daubaras, our CFO, Gabriel Ibghy is in Europe, and Gabriel Lamas who's in Paraguay, and Johanna Thornblad is also in Europe. HIVE operates over nine time zones in five languages, and we're able to manage that complexity and still be one of the most efficient Bitcoin miners.

And our HPC AI data centers that we have functioning today in downtown Montreal, Stockholm, in Manitoba and British Columbia—our efficiency is always ranked by third party—it's the top of the stock. HIVE has always used green energy—Canada, Sweden—powered by low electricity cost, low temperature, fast internet connection, and what we've been doing to accelerate the AI build—out is largely dark fiber. Dark fiber in British Columbia—no, sorry—dark fiber in New Brunswick in Canada. And dark fiber is next to be laid in Paraguay.

But we've been able to demonstrate on this ability to convert electrons and export to what they call compute power 5,000 miles away. So that's pretty impressive. And so we're pretty excited about what the opportunities down the road is from Paraguay. I want to thank all the shareholders.

You can see Invesco, Citadel Advisors, Millennium Management, Two Sigma Investments, Charles Schwab. Charles Schwab is probably the biggest in the retail component from registered investment advisors and the retail public. So thank you all for listening to the call. For being shareholders for the quarter ended June 30th, you can see that HIVE outperformed its 50—day moving average.

It had a big sell—off along with the whole industry in July, and it was one of the biggest outpouring in the month of July by hedge funds. And a lot has to do—which I'll mention later on—about the carry trade out of Japan and the significance of this sort of domino effect, a contagion. Japan wanted their money back because rates are going up, and it impacted first the Korean stock market, which was one of the best performers last year—up about 100%. It had a huge correction as particular technology and AI—related stocks sold off out of South Korea.

And we saw that dominant impact in America, and we saw a lot of AI—anything related—also being deleveraged. And I think that that sort of worst is behind us. And these sentiment factors, they swing back and forth. What investors have to realize is, this carry trade of Japan is quite significant.

In my years as a money manager, I've seen the swings back and forth globally of what it's done. And so it appears that the worst is behind us right now out of the Japanese economy. We're happy to see that HIVE outperformed Bitcoin at the end of June when you look over that time period this year, and I think a big part is much of our AI strategy and announcing the growth in the revenue from a million a month to $3 million a month, and now expanding that. It'll be going to five to six to $10 million a month with these contracts that we're building.

And we have machines that are increasing this year—to—date substantially over the year. The daily cash flow coming from our GPU chips, in particular the suite of Nvidia chips we have. I mentioned earlier that Japan carry trade unwind is a macro risk. I think the worst is behind us, but any rising rates in Japan will have a big impact.

We've seen the administration come in to support Japan's currency even though rates were rising, and it appears to be sort of an aftermath of COVID—19. After three decades, inflation started showing up in Japan and rates started rising. They went for three decades of basically, a majority of the time, issuing zero cost of capital—or 10 basis points. S.

rates from 4% up to dividend—paying stocks and in speculative stocks. That was starting to unwind as Japan started seeing the rates rise and they want their money back. This is a real important phenomena for investors just to be able to follow the Japan carry trade because it can impact you. You don't realize why the stocks are off or up or down during the day—there's no news—and it could be an unwind or reloading around the world.

Well, it's been exciting to respect that. Last year we substantially increased our hashing power. In Paraguay in particular, taking overall complex from 6 hexahash to 25. That gave us economies of scale and that gave us the ability to deal with the drop in bitcoin pricing and the difficulty rising.

And those are two real significant headwinds, especially in February of this year. We've been able to make money every month, even though, and I could share with you, had we not strapped on that additional power, we would be very difficult to be operating a bitcoin operation today. But we have this key scalability at 2%. And then we've been deploying our bitcoin into expanding our AI Gigafactory vision.

So Aydin's going to give you—and Darcy, our CFO—and Aydin Kilic, our CEO, is going to give you more granularity on these numbers. But underneath the hood, underneath all these non-cash charges, such as the depreciation that we have to take for our chips, and in particular the non-cash charges out of Sweden—which we'll have more discussion on as we go on—this ongoing battle with the Swedish tax agency which changed the rules from when we initially went there. The interpretation, the laws haven't changed. It is their interpretation because they're very anti-crypto industry.

And even though we try to explain that we're exporters of electrons: we take hydroelectricity, run them through an ASIC chip and we export that hashing power, compute power, to Foundry, which is a pool in the US which is SOC 1 and 2 compliant, and they pay us in bitcoin. In Bermuda, it's an export industry. And what's really exciting is that Paraguay's Central Bank gets that. And it's important now for them in calculating what the GDP is and the contribution to their GDP of how we use a chip.

And the AI business is very similar. That is, you take the electrons you run from the hydroelectricity of hydro, they go through your GPU chips and you can transmit that GPU power, compute power, to New York City. And we demonstrated that in a test—5,000 miles. Now, you cannot send electricity on transmission lines 5,000 miles, but you can convert them into compute power and send along fiber-optic cables along the bottom of the ocean 5,000 miles.

And someone can create models in New York City, at Columbia University, which has basically validated that exercise. So when you look at a bitcoin mining industry or you're looking at an AI Gigafactory, what investors have to realize is that you don't have an ATM, you don't have a bitcoin machine that spits out bitcoin. No, you really export out to a pool—that's bitcoin mining—or to an end user who wants your compute power and you can transmit that. So this is phenomenal because you can take all this abundance of electricity in Paraguay and you can turn around and export by converting those electrons into compute power and they can be used all over the world.

So it's very exciting what we are doing on that. But it doesn't stop this ongoing saga in battling with Sweden. And we believe that, based on law and our expert witnesses, we will go through this process and we believe that justice will prevail. But what's important for you is to recognize underneath the hood is that the revenue quarter grew 10%.

Net operating income grew by 86% because the beginning of this year, February, was a very big challenging month. So the year-over-year goes to show the significance of the scaling I mentioned at the very beginning. Taking revenue as year-over-year grew by 73% even though bitcoin fell by 40% and operating net income grew by 50%. So we're really thrilled of our positioning of having 2% of that global network and continuing to build out that dual engine.

In particular this year is our HPC, high-performance compute, strategy to build AI Gigafactories. And Craig Tavares will give you more granularity as we go on. But who's really going to carry that ball for you today is going to be Aydin Kilic. The team is very, very proud of closing another 130 million of exchangeable notes, zero cost of capital for interest payments.

That money is not earmarked for Sweden. That money is earmarked for the fastest path to cash flow and revenue, in particular in our partnership with Bell Canada. The countries that win the AI race won't just produce the smartest engineers; they’ll build the infrastructure to support them. And data centers are becoming as essential to economic growth as railroads were a century ago.

And a quote I've been saying in speeches, and one of the things that in our Gigafactory being the biggest in Canada, I think what's really interesting is that it's really not taught in school in Canada to the degree. But I grew up there as a child, and Toronto was very proud of their medical breakthroughs and research. It inspired me, and part of my journey of education was going into medical school before I pivoted to go into business and economics because I was just so in love with what was taking place in Toronto and Waterloo and then University of Western Ontario where the founding school is called Huron University. I sit on the board.

I was always thrilled to know in 1921 insulin was discovered in Toronto. Pablum was developed in Toronto. The pacemaker, pioneered. Polio vaccine in scaling—it was in 1955 when I was born—was done in Toronto.

The first successful double-lung transplant, cystic fibrosis gene—I can go on. But it is rich with intellectual capital with two major schools, the University of Toronto and Waterloo University, which is like Canada's MIT. There are many other schools all around like the Schulich School is famous for business in Toronto, but there are many scientific research laboratories in that area, and Toronto is the financial capital of the country. —it is the political capital of the federal government.

But the universities are really in that Greater Toronto Area. So we did a campaign to try to educate investors in Canada as well as in the US about the University Health Network, SickKids Hospital. One of my friends is a doctor, a pediatrician, and his internship was in Toronto at SickKids; the Princess Margaret Cancer Centre; the Vector Institute where the Nobel Prize winner two years ago, Geoffrey Hinton, was at the University of Toronto. This use of artificial intelligence to improve cancer diagnosis, drug discovery, medical imaging—it's very, very big.

But what they do not have are these big Gigafactories, AI Gigafactories. And that is where HIVE is buzzing with activity to build out. So other things is to understand and appreciate Toronto more. Outside of the Maple Leafs or the Raptors basketball and the Blue Jays baseball.

The telephone innovation was not too far from the city of Toronto. The electron microscope in 1938. Deep learning 2006. Ethereum—next, please—was discovered by a student out of Waterloo University.

What's also important in this visual is to show you the triangle of concentration of internet nodes and, in particular for AI and transferring of data. The big concentration is from the Toronto region up to Boston and down to Virginia. This is a visual to show you where Lake Ontario is and Finger Lakes. As you see is New York, and University of Toronto, and the HIVE Gigafactories right in between Waterloo University and University of Toronto.

The University of Toronto is much closer to where Toronto is in this map. But it gives you an idea that this is an important intellectual capital. Just like I mentioned before that you look at bio research—50% of bio research is done in Boston, San Diego. If you look at other types of gaming, there's clusters of software coders that show up.

And when you look at cybersecurity, one of the biggest clusters is right here in San Antonio, Texas, with UT University which has the biggest cyber school, cybersecurity school, in the country with 10,000 students. So Vitalik Buterin, the creator of Ethereum, went to Waterloo, AKA as I call it, the MIT of Toronto because of the software number of geniuses that come out of that school. So this is to give you an idea from a macro point of view which has happened this year. Semiconductors have had a big run and they started coming off with the correction as you can see here in July.

And a lot of this had to do with the contagion from Japan to Korea to North America to Europe. And it looks like that worst is behind us now. What's important when I look at—I hear, oh, it's a bubble. It's already...

it's the worst ever. It's a bubble, bubble, bubble, bubble. And all these people are coming in with PhDs in bubblology. I share with you that it's far from that.

And the amount of these collateral minerals you need—lithium batteries, not just for cars, but you need them for all these data centers. And you can see the drive for lithium and graphite and nickel and zinc and copper. Copper is making an all-time high because a gigawatt electricity converting that to an AI factory like Texas is going to consume 50,000 tons—not pounds—tons of copper. Most people think of pounds of copper—no, 50,000 tons, and that's 2,000 pounds per ton.

That's a significant amount. And when we look around the world it means that the supply is limited and it continues to have big demand globally. That's another sort of demand that I see that's going to continue with building out of AI centers. And there's lots of political headwinds as election year, so it becomes on the agenda.

But it's not going to stop this buildout.