Applied Digital Corporation

Good afternoon and welcome to Applied Blockchain's fiscal fourth quarter and full year ended May 31, 2022 conference call. My name is Andrea and I will be your operator today. Before this call, Applied Blockchain issued its financial results for the fiscal fourth quarter and full year ended May 31, 2022 in a press release, a copy of which will be furnished in a report on Form 8-K filed with the SEC and will be available in the investor relations section of the company's website. Joining us on today's call are Applied Blockchain's Chairman and CEO, Wes Cummins, and CFO, David Wrench. Following their remarks, we will open the call for questions. Before we begin, Jeff Gramp from Gateway Group will make a brief introductory statement. Mr. Gramp, please proceed.

Thank you. Good afternoon, everyone, and welcome. Before management begins their formal remarks, we need to remind everyone that some statements we're making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, Please see the disclosures in our earnings release and a public filing made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures in the reconciliation tables to applicable GAAP measures in our earnings release carefully as you consider these metrics. We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors in our IPO Perspectives. You may get Applied Blockchain Securities and Exchange Commission filings for free by visiting the SEC website at sec.gov. I would like to remind everyone that this call is being recorded and will be made available via a link in the Investor Relations section of Applied Blockchain's website. Now, I would like to turn the call over to Applied Blockchain's Chairman and CEO, Wes Cummins. Sir, please proceed.

Thanks, Jeff, and good afternoon, everyone. Thank you for joining us for our fiscal fourth quarter and full year 2022 conference call. While we are a young company, we've been busy, and I'm pleased to share our progress with you today. First, I want to highlight our fiscal fourth quarter results as we reported revenue of $7.5 million above our guidance of $7 to $7.4 million, which was already increased from our initial range of $5.7 to $6.2 million. Our first data center located in Jamestown, North Dakota, has overall performed quite well for things under our control. The facility energized in late January and had over 90 megawatts of the 100 megawatt main plate capacity online in June. However, as we reported in mid-July, there was an unexpected equipment failure at the substation powering the facility, resulting in a partial outage of about 50%. We expected the power provider to restore full capacity by early September, and they have been a great partner for us by responding diligently and getting full capacity back online in mid-August. As a reminder, the Jamestown facility was not damaged and remains fully operational and capable of hosting the entire 100 megawatts of capacity. Anecdotally, we heard from employees at our power provider that have decades of experience that they have seen this issue only a handful of times in their career, so this is truly a rare force majeure type event. also continue to make progress expanding our co-hosting capabilities through the build out and expected energy energization of additional facilities our second facility is co-located with a wind farm in garden city texas with planned capacity of 200 megawatts construction began in late april and the first buildings have been constructed with the majority of the electrical equipment required already on site our base case expectation is we will begin energizing garden city in the fourth calendar quarter of 2022, but we are currently ahead of schedule, so there may be some upside to the start date. Our third facility, which is located in North Dakota at a different site than our existing Jamestown facility, is also continuing to move ahead. We have executed a letter of intent with the utility and are in the late stages of design and pre-construction. Also on August 15th, we entered into a purchase agreement for the raw land to house the site. We expect groundbreaking to occur in the third calendar quarter of 2022, and energization to begin early in the first half of calendar 23. For reference, we're a few weeks ahead of where we were with our Jamestown facility this time last year. With a slightly earlier start and significantly more experience, I would expect us to be able to bring this facility online a little earlier than we did with Jamestown. Now, this growth would not be possible without strong demand from a quality customer base, so I want to take a moment to remind everyone of this component of our strategy. We aim to partner with some of the best and most recognized names in the cryptocurrency industry from the get-go, which provided expertise and resources from an early stage as we initiated our co-hosting business. These groups have not only invested in our company, but have contracted for material power with us on a multi-year basis. In fact, our partners have contracted out the entire 100 megawatts of our Jamestown site and have committed to 85 megawatts at our second facility, thereby providing us with a low-risk revenue stream looking forward. Our strategy is to have capacity committed by customers before breaking ground on facilities, which substantially reduces the risk profile and avoids us needing to build data centers on a speculative basis that demand will materialize. Currently, all planned hosting capacity is fully committed either through contract or option. In addition to these strong names, we also definitively jumped into working with public Bitcoin miners for our significant agreement with Marathon Digital Holdings that we announced in July. In the past, we have talked with many of you about our thesis that publicly traded Bitcoin miners will have a need for our co-hosting services, so we are proud that a leading Bitcoin miner in Marathon selected us for their hosting needs. Specific to our Marathon contract, they have signed a five-year deal with us for 200 megawatts of hosting capacity with an option to expand the contract to 270 megawatts. We expect to host a portion of their contract at our Garden City facility I previously discussed, and the remainder will be hosted in the third facility currently under development in North Dakota. We expect to begin energizing Marathon's miners in the fourth calendar quarter of 2022, and for all miners associated with the 200 megawatt contract to be energized by the middle of calendar 2023. I'll now turn the call over to our CFO, David Wrench, to walk you through our financials before providing closing remarks. David?