Bit Digital, Inc. Third Quarter 2026 Earnings Call - VITRIA TECHNOLOGY INC

Financial Performance:

• Consolidated revenue for Q3 2026 was $27.1 million (down from $32.1 million in Q2), with YTD revenue of $87.1 million (up 7% YoY).
• Operating cash flow for the first nine months was $163 million, significantly supported by customer advanced payments.
• Consolidated net income was $0.6 million; net income attributable to BitDigital shareholders was $28.5 million ($0.08 diluted per share).
• Non-controlling interests absorbed $27.9 million in losses.
• Cost of revenue was $11.9 million, excluding $11.1 million in depreciation and amortization.
• Significant non-operating gains included $84 million from digital asset appreciation and $17.1 million in unrealized gains from a third-party fund.
• Consolidated interest expense totaled $10.4 million.
• Remaining performance obligations under ASC 606 reached $729 million at quarter-end.

Guidance and Future Outlook:

• Management expects to recognize $13.5 million from remaining performance obligations in late 2026, approximately $235 million in 2027, and $207 million in 2028.
• Revenue growth is driven by the ramp-up of WhiteFiber's NC1 facility (full 40MW operational) and new site acquisitions in Yadkin County (NC2 and NC3).
• Strategic focus on transitioning capital into operating assets and contracted revenue rather than passive asset holding.
• Potential sale of WhiteFiber shares in 2027 to fund BitDigital share repurchases, subject to market valuation and execution.
• Development of an in-house, alpha-oriented business expected to provide further color in Q1 2027.
• Management views current NAV discount (approx. 39%) as a long-term opportunity but requires shareholder approval for repurchase programs.

Business Segments and Product Lines:

• Cloud Services: Revenue was $18.1 million (down from $23.8 million in Q2), including a $3.4 million non-recurring termination fee from a previous customer, partially offset by new deployments.
• Co-location: Revenue rose to $5.4 million (from $4.7 million in Q2, $1.7 million YoY), driven by MTL3 and $1.1 million NOI contribution from NC1.
• Native Staking: Revenue reached $1.0 million (up from $0.9 million in Q2); generated 474 ETH in rewards at ~3.4% annualized yield.
• Digital Asset Mining: Revenue was $2.0 million from 28.4 BTC mined (down from $2.4 million and 32.3 BTC in Q2).
• Portfolio Mix: Cloud, co-location, and staking now constitute ~91% of consolidated revenue, up from 74% the prior year.
• WhiteFiber Operations: Fully operational 40MW contracted capacity at NC1; secured $300 million credit facility (funding later this month) to repay bridge loans.
• Ethereum Holdings: End-of-quarter treasury includes 74,660 ETH (<del>$200M) and 47,192 liquid staking tokens (</del>$98M); total exposure via third-party funds also present.

Market and Competitive Landscape:

• Ethereum is positioned as foundational infrastructure for programmable finance, with specific interest in AI integration via technologies like ZKAPI for verifiable payments.
• BitDigital distinguishes itself from peers by owning a controlling majority stake in WhiteFiber, a revenue-generating AI infrastructure business.
• Market competition for network activity exists, but BitDigital leverages Ethereum's security and developer ecosystem.
• Current share trading value sits at a ~39% discount to Net Asset Value (NAV).
• WhiteFiber is aggressively expanding its portfolio with acquisitions in Yadkin County to support further growth.

Risks and Challenges:

• Digital Asset Volatility: ETH price volatility and fluctuating staking rewards remain key risks.
• Liquidity and Collateral: Borrowing against liquid staked tokens creates collateral and liquidity obligations; BitDigital manages these alongside investment conviction.
• Regulatory and Accounting: Use of non-GAAP measures and complex accounting for digital assets (impairments, re-measurements) adds complexity.
• Execution Risk: Risks associated with ramping new data centers (e.g., switchgear delays) and integrating acquired sites.
• Capital Allocation Trade-offs: Selling ETH to fund buybacks reduces staking yield and exposure to future ETH appreciation.

Management Commentary and Tone:

• Tone: Confident and strategic, emphasizing active management of assets to compound value per share rather than passive holding.
• Strategic Pivot: Explicitly shifting away from Bitcoin mining toward a diversified model of cloud, co-location, and staking.
• Shareholder Value: Acknowledged frustration regarding the NAV discount; outlined four specific levers to close the gap: WhiteFiber execution, ETH price appreciation, potential WhiteFiber share sale, and new alpha-generating business.
• Capital Discipline: Refrained from committing to buybacks without shareholder approval, emphasizing the need to balance share count reduction with liquidity and financing obligations.
• Ownership: CEO Sam Tabar noted significant personal ownership in BitDigital shares.

Analyst Questions and Answers:

• Levers for Value: Management confirmed four levers: WhiteFiber execution, ETH price rise, potential WhiteFiber share sale, and internal alpha business development.
• Share Sale Target: No specific target percentage for selling WhiteFiber shares; any exit would be measured to avoid market pressure.
• Bridge Loan Mechanics: Explained the flow of funds where BitDigital converts native ETH to liquid staking ETH, borrows USD from Galaxy (5.5% interest), and lends to WhiteFiber at 9.5% + 1.1% MOIC; repayment expected in Q2 2027.
• ETH Treasury Strategy: Majority of ETH (100% native staking unless strategic exceptions like the WhiteFiber bridge) or 2.2% native yield vs. 3-5% via third-party funds.
• Buyback Conditions: No formulaic threshold for selling ETH to fund buybacks; decisions depend on NAV discount depth and liquidity needs.
• Staking Provider: Confirmed usage of Figment (not Bloom or Damion) with fees based on a percentage of rewards (approx. 2.5%) plus node costs; currently satisfied with provider.

Other Key Points:

• WhiteFiber's NC1 facility faced minor switchgear delays but is now fully operational at 40MW connected to an $865 million, 10-year contract.
• BitDigital repaid $30 million of the Galaxy borrowing in September; total outstanding debt under the facility is $100 million post-Q3 drawdowns.
• In July, BitDigital raised $11.6 million net via at-the-market sales (6.9 million shares at $1.71 average price) for working capital.
• Management highlighted the emerging use case of AI agents paying for services directly on the Ethereum network.
• The company remains committed to preserving liquidity to meet financing obligations while exploring capital allocation strategies.