IREN Limited

Good day and thank you for standing by. Welcome to the IRN Q3 FY25 results conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, Mike Power, Director, Investor Relations.

Thank you, Josh. Good afternoon, and welcome to IRON's third quarter FY25 results presentation. My name is Mike Power, Director of Investor Relations, and with me on the call today are Daniel Roberts, co-founder and co-CEO, Belinda Nusifora, CFO, and Kent Draper, Chief Commercial Officer. Before we begin, please note this call is being webcast live with an accompanying presentation. For those that have dialed in via phone, you can elect to ask a question via the moderator after our presentation. I would like to remind you that certain statements that we make during the conference call may constitute forward-looking statements, and IRN cautions listeners that forward-looking information and statements are based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of the company. Listeners should not place undue reliance on forward-looking information or statements. Please refer to the disclaimer on slide two of the accompanying presentation for more information. Thank you, and I will turn the call over to Dan Roberts.

Thanks, Mike. Good afternoon, everyone, and thank you for joining IRON's third quarter FY25 earnings call. I'm Daniel Roberts, co-founder, co-CEO, of Iron and today we will provide an update on our financial results for the quarter ended 31 March 2025 along with some operational highlights and some strategic updates from both our Bitcoin mining business and our AI infrastructure vertical. We'll then end the call with Q&A. So starting with the highlights. Q3 was another strong quarter, operationally and financially. We delivered our second consecutive quarter of profit after tax, where we posted 24 million in net profit. This reflects a 28% growth quarter on quarter. Revenue then hit a record $148 million for the quarter, driven by growth in both our Bitcoin mining and our AI cloud segments. EBITDA came in at just under $83 million, also a record for us. Operationally, we continued our cadence of delivering 50 megawatts every month of data centers with the energization of Childress Phase 4. And during the quarter, we averaged 29.4 exahash of operating mining capacity, which represents a nearly 5x uplift year on year. So these results reinforce both the earnings power of our growing data center platform, along with the strength of our procurement engineering, construction, mining, and AI teams who simply continue to execute. We anticipate this earnings momentum to continue into fiscal Q4 as we further progress on our key growth initiatives, which I'll now come on to. So looking forward, our strategy is anchored across value accretive investments in both Bitcoin mining and AI infrastructure. On Bitcoin mining, we're on track to reach 50x a hash of installed capacity by June 30. That milestone represents a 4x increase from only 10x a hash in June last year and cements us as one of the world's largest and importantly, lowest cost Bitcoin producers globally. But we're pausing further mining expansion At that point, that decision is deliberate. While mining remains highly profitable, we see more compelling shareholder value creation in AI infrastructure, and we want to be disciplined in capital allocation. In AI cloud, momentum continues. Revenues are increasing, underpinned by new contracts and customer attention. Our GPU fleet has been running at or near full utilization with hardware level margins north of 95%. Kent will speak to this more shortly. In our AI data centers vertical, we're advancing two significant build outs. Horizon One, a 50 megawatt liquid cooled data center targeting Q4 2025 delivery. It's been designed and built for next generation AI workloads, supporting 200 kilowatt racks. which is around 20 times the rack density of traditional data centers. Again, we'll talk a little bit more to rack density later in the presentation. The second significant build out is Sweetwater, our two gigawatt flagship data center hub in West Texas. 1400 megawatts at Sweetwater One is on track for energization in less than a year now, April, 2026. The power is contracted, long lead equipment is secured and site preparation and construction is underway. Finally, a few notes on funding and structure. So first, we continue to practice disciplined capital allocation, particularly in the face of broader market volatility like we've seen over the past few months. Our decision to pause on further mining capex is a good example of this discipline in action. We've also engaged advisors across multiple debt financing work streams. Discussions are active and we expect execution in the coming months as markets continue to stabilise. And finally, as previously noted, we will be transitioning to a US domestic issuer status from the 1st of July this year. That will align our reporting with US GAAP and reflect our increased US asset footprint, along with the increased US investor base. So in summary, record performance this quarter, consecutive profitability, near-term milestones all on track, and clearly a capital discipline lens as we focus on high return infrastructure growth and value creation for shareholders in the AI space going forward. So to talk a little bit about Bitcoin mining. This slide speaks to the performance both in absolute financial terms and in efficiency, especially in our mining segment. What we're showing here is not just growth, but how we're executing well across many multiple key operating and financial metrics. Despite macro headwinds, we're maintaining margins, we're scaling, and we're using operating cash flow to help fund our growth in the AI vertical. So let's start with the headline figures. We averaged 29.4 exahash in operating hash rate this quarter. That's up 30% from second quarter and is driven by the continued build out at our Childress site and the deployment of new generation hardware. What we've also seen is 326% year on year hash rate growth against only a 40% increase in network difficulty. reinforcing that we're not just growing, we're outpacing the industry and we're growing our market share. All of this feeds directly into revenue and earnings growth. We continue to lead the sector on efficiency. Our fleet level efficiency remains best in class at 15 joules per terahash. Our power costs average 3.3 cents per kilowatt hour at Childress last quarter and are among the lowest of any scaled miner globally. They're assisted by our energy market intelligence and software driven optimisation during price spikes or curtailment events. So all of this translates to strong operational leverage. And as you can see, as we continue to add scale, our unit economics hold up and even improve in some cases. But perhaps just as important as this margin is how we fund growth from this point. So as many of you will know on this call, we've made a deliberate choice to support our growth, including the growth in AI, using cash flows from daily Bitcoin liquidation, rather than raising dilutive equity unnecessarily. On the top right, you can see what all of this efficiency, all of this profitability looks like in different metrics. So our all-in hash cost was $23 per petahash per day, versus an average hash price or a revenue of 54%, representing over a 50% gross margin, even on a fully loaded cost basis, which includes all indirect, direct OPEX, all in. To look at it a different way on a per Bitcoin basis, our all in cash costs, direct indirect costs, all in was $41,000. As compared to $93,000 in realized, revenue per Bitcoin mined this quarter. And again, realized we liquidated, we achieved an actual price of 93,000 against an actual all-in cost of 41,000. So that's gross profit per Bitcoin of roughly $52,000 for the quarter locked in cash. These margins are top tier clearly in the industry and also include all the cash costs for our AI business vertical. So they give us a strong buffer in the face of network or price volatility, and give us a great platform to scale further from this point onwards, particularly noting that we had an average of 29.4 exahash last quarter, and we are within weeks of hitting 50 exahash. So exciting times. So if we turn our mind to the financials along the bottom, revenue grew from roughly $120 million in Q2 to $148 million in Q3, up 24%. Adjusted EBITDA from 62 million to 83 million. And on a statutory basis, EBITDA also rose 32% to $82.7 million. Finally, profit after tax, we saw an increase of 28% from a profit after tax last quarter. of $18.9 million to a profit after tax this quarter of $24.2 million. So these results, they're not just about growth, they're about quality of earnings. We're expanding while keeping costs maintained and margins pretty resilient. So we're excited about the expansion ahead as we round out from what you've seen here as an average of 29.4x hash to hitting 50x hash in the next few weeks. So in summary, we're operating efficiently, profitably, we're utilising operating cash flows to support funding our next phase of growth as we scale AI infrastructure. On to 50 exahash. So now to talk about our progress towards that key near-term milestone, which I've mentioned a couple of times, achieving 50 exahash of installed Bitcoin mining capacity, by the end of June. It also highlights how this sets us up. Again, as I mentioned earlier, it's one of the largest and lowest cost miners globally with substantial free cash flow available to support our AI strategy going forward. So as of April 16th, 2025, we reached 40 exahash of installed capacity. What's really interesting is that's up from just one, one exahash in December 2022. representing a 40x growth in less than two and a half years. So the right hand chart shows this visually with our installed hash rate tracking a 361% cumulative average growth rate since December 2022. Simply a testament to our team's execution capabilities. So we're now on the final leg towards this 50x a hash target. The data centres phase five of our Childress campus an additional 150 megawatts of capacity is nearing completion. The primary substation is already on site and nearing energisation, so that's the 138 to 34.5 kV transformation. And then the bulk substation, we've completed the key upgrades and a second 345 kV to 138 kV, so this is the high voltage substation, is scheduled for delivery imminently. So this is important because not only does it support the full 750 megawatt deployment, but it also creates and provides some additional redundancy as we head into alternate applications for this site, which we'll come on to later in the presentation. In terms of miners, all the hardware is procured. It's been secured for a little while. It's now scheduled for shipping from Southeast Asia. and is scheduled to land well within the 90-day tariff pause for reciprocal duties so that's a bit of a win um a full 50 exahash deployment the current market conditions as you can see in that table uh based on a 95 000 bitcoin price at least supports 588 million dollars in illustrative adjusted ebitda The table at the bottom right walks through this. So at 40x a hash where we are today, we estimate adjusted EBITDA of around $450 million, already delivering a 60% margin. At 50x a hash, given the unit economics, driven by scale efficiencies, that fixed cost leverage, that rises to $588 million and a 62% margin. So these aren't projections. Clearly, we don't know where Bitcoin price will be, but they do illustrate the underlying profitability of our mining business and some of the resilience going forward. So at this point, yes, we have made a deliberate decision, despite all this, to pause expansion beyond 50x hash, even though we had originally contemplated the 52x hash. The reason for this decision, firstly, it saves us around $43 million of near-term hardware capex. Secondly, it allows us to reallocate capital and internal resources, importantly, towards liquid cool AI data centers. And finally, we still preserve that strategic flexibility depending on the Bitcoin price, depending on network difficulty, depending on unit economics to resume this growth in the future. But for right now, we've built out scale and we're now switching our focus to maximizing return on invested capital. And we see the best opportunity to do that in the AI vertical in the near term. So we're now one of the largest and lowest cost Bitcoin miners globally that positions us with meaningful and consistent cash flows, which is particularly valuable in capital intensive sectors like AI infrastructure. So our ability to generate that cash allows us to self fund some of the high-margin, high-growth verticals, such as AI Cloud, such as AI liquid-cooled data centers, and allow us to minimize dilution for shareholders going forward. So we're delivering scale, we're controlling costs, and we're using this platform to drive the next phase of our growth in AI infrastructure. So this is what makes 50xHash clearly not a stopping point or an endpoint, but a great place for us to pause and really drive growth in a new vertical. Now over to Kent to talk about one of those verticals.