Applied Digital Corporation

Good afternoon and welcome to Applied Blockchain's first fiscal quarter 2023 conference call. My name is Paul and I will be your operator today. Before this call, Applied Blockchain issued its financial results for the first quarter of fiscal 2023 and did August 31st, 2022 in a press release, a copy of which will be furnished in a report on Form 10Q 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, Operator. Good afternoon, everyone, and welcome to Applied Blockchain's Fiscal First Quarter 2023 Conference Call. Before management begins their formal remarks, we would like 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 public filings 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 and 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 prospectus. You may get applied blockchain securities and exchange commissions filings for free by visiting the SEC website at sec.gov. I would also like to remind everyone that this call is being recorded and will be made available for replay via a link available in the investor relations section of Applied Blockchain's website. Now I will turn the call over to Applied Blockchain's chairman and CEO, Wes Cummins. Wes?

Thanks, Jeff, and good afternoon, everyone. Thank you for joining us for our first quarter fiscal 2023 conference call. Our results for the quarter were solid, with revenue of $6.9 million coming in at the high end of our guidance range of $6.5 to $6.9 million, and adjusted EBITDA coming in at a loss of $1.9 million, which compares favorably with our guidance of adjusted EBITDA of $1.8 to $2.2 million loss. Our financial performance relative to our guidance reflects our steady execution and the consistency and predictability of our hosting-only business model, which provides shareholders with revenue that is contracted out on a multi-year basis. We expect these dynamics to drive long-term, high-margin, sustainable cash flow generation for our company. Also, I want to remind everyone that when evaluating our first fiscal quarter results, it is important to keep in mind that our 100-megawatt Jamestown, North Dakota data center operated at only 50% capacity during most of July and August due to the previously disclosed unexpected equipment failure at the substation powering the facility. Therefore, our first fiscal quarter results ended August 31st, 2022, do not reflect a full quarter of contribution for our Jamestown facility. Since repairs were made in August, the facility has been operating as expected. Outside of our currently operating Jamestown site, we remain laser focused on executing the build out of our next generation data center sites. a 200-megawatt facility in Garden City, Texas, and a 180-megawatt facility in Ellendale, North Dakota. These two facilities are expected to energize between now and mid-2023, which will bring our total hosting capacity to almost 500 megawatts. All this capacity is already contracted out on multi-year agreements, and once fully online, we expect to be at a run rate, annualized adjusted EBITDA of about $100 million, which we think is quite compelling in the context of our current enterprise value. I would like to highlight what I believe to be the largest risk factors to the timing of energization, which is regulatory approvals and weather. We're working through the regulatory approval process in Texas and North Dakota. Weather in North Dakota has been good to date, but we need to pour all concrete prior to extremely cold weather arriving. Our crews are working diligently to make this happen. I want to commend the entire applied team and especially the operations personnel for executing so well amidst an overall difficult operating environment with supply chain challenges and persistent inflation. Our team has stayed ahead of the curve by ordering certain long lead time items well in advance to avoid any meaningful delays related to construction. Since our entry into the high-performance computing hosting industry, we have prided ourselves on the capabilities and experience of our team, so I'm pleased that we've been able to execute so well in an industry that has unfortunately been challenged to meet timelines. I will now turn the call over to our CFO, David Rentsch, to walk you through our financials before providing my closing remarks. David.