LM Funding America, Inc.

Good day and thank you for standing by. Welcome to the LM Funding America, Inc.' 's third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message, advise your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Cody Fletcher. Please go ahead, sir.

Thank you, Operator, and thank you all for joining LM Funding America's third quarter 2025 earnings conference call. Joining us today are Chairman and CEO Bruce Rogers, President of U.S. Digital Mining Ryan Duran, and CFO Richard Russell. For today's call, we have uploaded an accompanying supplemental investor presentation, which can be found under the events section of LM Funding's investor relations website. Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. We will also reference certain non-GAAP financial measures today. Please refer to our 10-Q filing and our website for a full reconciliation of these non-GAAP performance measures for the most comparable gap measures. For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC, available on sec.gov and in the investor section of our website at lmfunding.com backslash investors. I'll now turn the call over to our CEO, Bruce Rogers.

Thanks, Cody. Good morning, everyone, and thank you for joining us. The third quarter was one of execution, integration, and disciplined capital allocation as we continued building LN funding into a vertically integrated Bitcoin miner with a simple ambition, increase Bitcoin per share and grow intrinsic value over time. We entered the quarter with momentum from our Oklahoma site and a growing Bitcoin treasury. As summer progressed, we added meaningful scale and strengthened our foundations. In August, we bolstered our balance sheet with $21 million of capital designated primarily for Bitcoin accumulation and quickly deployed a large portion of those proceeds to purchase 164 Bitcoin, accelerating our treasury growth. Just weeks later, we closed on the acquisition of an 11-megawatt facility in Columbus, Mississippi, bringing our total capacity to 26 megawatts across two wholly controlled sites. This move expanded our operational base, diversified our power and climate exposure, and gave us full control of energy and uptime across a second location. By the end of September, we had integrated Mississippi, energized additional capacity, and exited the month with approximately 304.5 Bitcoin in Treasury, valued then at nearly $35 million versus a market capitalization of roughly half that amount. That disconnect between our treasury value alone and our equity valuation underscores the opportunity we are working toward. Then in October, we advanced two core priorities simultaneously. We enhanced our per share economics and positioned our mining fleet to improve productivity. In a private securities repurchase, we retired more than 3.3 million shares and over 7.3 million warrants in a single transaction, reducing dilution, simplifying our capital structure, and increasing our Bitcoin per share. Subsequently, in early November, we announced a $1.5 million stock buyback, further committing our resources to increasing Bitcoin per share. During the same quarter, we secured Bitmain's S21 immersion-cooled machines to grow our immersion systems at our Oklahoma site. We expect these machines to come online in December. Importantly, October is also our first full month with Mississippi operating at steady state. and the results validated our strategy. Bitcoin production increased 28% sequentially, rising from 5.9 Bitcoin in September to 7.6 Bitcoin in October. Taken together, Q3 and October were about strengthening control of our energy, expanding our mining footprint, growing our treasury, and reducing our share count, all in service of improving Bitcoin ownership on a per share basis. We strongly believe in Bitcoin as a growth asset We built our company to take advantage of Bitcoin's growth and long-term value proposition. We find inexpensive power machines to add to our Bitcoin holdings, and we are active in the capital markets trying to increase our total Bitcoins held and our Bitcoins per share. It's a long game, and it starts with sound mining operations. With that, let me turn it over to Ryan for an operational update.

Thanks, Bruce. Operationally, the last four months were about turning owned infrastructure into accelerating hash power and building an asset base that compounds efficiency over time. We moved from a single site facility at roughly 0.48 exahash in June to exiting October with roughly 0.71 exahash energized, plus additional growth coming online in December, representing roughly 50% hash rate expansion in one build cycle. That growth came from owning and controlling our power, upgrading fleet mix, and integrating our second site in Mississippi. The acquisition added roughly 7.5 megawatts of energized capacity and approximately 230 petahash of installed hash rate at an attractive 3.6 cents per kilowatt hour power cost, giving us a second low-cost, self-managed facility and a diversified operating base. Equally important, we quickly integrated Mississippi and the site immediately started contributing to our mining operations. And when we reached our first full month of steady state operation in October, total production of the company increased. As Bruce mentioned, 27% month over month from 5.9 Bitcoin to 7.6 Bitcoin. This gain reflects not only expanded capacity, but also the compounding benefits of tighter operational control optimized firmware, refined curtailment and power sales scheduling, and more efficient fleet deployment in warmer months. We now operate approximately 6,700 machines across the fleet and additional units staged for deployment behind immersion. Our energized hash rate helps stable through high heat periods supported by curtailment and energy sales that directly improve our margins. And we position the fleet for stronger winter uptime when performance conditions naturally improve. Looking forward, we are entering our next efficiency phase. We secured Bitmain S21 immersion cooled units that will add roughly 70 petahash of compute power to our Oklahoma site and are scheduled to energize in December. This upgrade is meaningful. Immersion cooling improves heat transfer, reduces thermal strain, tightens fan load overhead, and increases uptime, especially during seasonal peaks. Combined with the S21's efficiency profile, this gives us a step change in efficiency and should meaningfully increase Bitcoin per megawatt at the site. This is the same philosophy that guided our site acquisition. Combine own power with modern generation hardware and operate it with discipline. We now operate a cleaner, more efficient, and fully controlled mining platform, improving uptime and next-gen hardware and immersion coming online. The foundation is built. From here, the focus is simple. Increased production, efficiency, and Bitcoin per share. With that, I'll turn it over to Rick to walk through the financials. Rick?

Thanks, Ryan. For the third quarter, revenue was $2.2 million, up approximately 13% sequentially and 74% year-over-year. The sequential increase reflects stronger average Bitcoin pricing up $114,000 and contributions from the newly operational Mississippi facility for the second half of September. Mining margins improved to 49% driven by a shift from hosting fees to self-mining utilizing our curtailment and energy sales to offset mining expenses and higher fleet efficiency. Curtailment and energy sales totaled 152,000 down from 223,000 in Q2 due to cooler seasonal temperatures. We reported a net loss of $3.7 million and a core EBITDA loss of $1.4 million, both driven by increased staff costs and payroll expenses. Following quarter end, we executed a substantial balance sheet and equity enhancement initiative, completing an $8 million private repurchase of around 3.3 million shares and 7.3 million warrants, finance our 11 million Galaxy facilities secured by Bitcoin. This transaction removed a large warrant overhang and materially reduced the share account, improving per share economics and shareholder alignment. We paired that with a newly authorized 1.5 million public share repurchase program, which gives us flexibility to act opportunistically when our market value trades meanfully below our Bitcoin holdings and infrastructure value. In terms of our balance sheet, at quarter end, Ellen Funding held cash and cash equivalents of $300,000 and $304 Bitcoin valued at $34.7 million, nearly double our market cap, while our equity was $50 million, nearly three times our market cap. As of October 31st, our Bitcoin Treasuries stood at approximately $295 Bitcoin, valued at roughly $31.9 million, or $2.60 per share of compared to a stock price near $1.7 on 12.2 million shares. Our liquidity, treasury, and credit capacity give us flexibility to support operations, growth, and continue share repurchases while eliminating dilution and preserving long-term upside for shareholders. The numbers tell a clear story, expanding hash rate, improving operating leverage, disciplined cost control, and balance sheet and cap table built to improve per share value over time.

Thanks, Rick. Our focus remains clear. Increase Bitcoin per share, expand owned infrastructure, and close the gap between intrinsic value and market value. We've built a vertically integrated platform that gives us operational control, cost efficiency, and treasury leverage. With Mississippi fully online, Oklahoma adding immersion, and Bitmain S21 machines coming online in December, we are entering a phase where scale, efficiency, and productivity converge. From a capital strategy standpoint, we will continue to balance Bitcoin accumulation, strategic investment, and opportunistic share repurchases that we'll use only when it strengthens the balance sheet without sacrificing per share value. We have no interest in growing for growth's sake. We're interested in growing per share of Bitcoin and per share intrinsic value. We believe deeply in the long-term value of Bitcoin, and we believe just as deeply in the long-term value of LM Funding. Every action we take, every machine deployment, every site decision, every capital move is designed to improve per share ownership, per share cash flow, and per share Bitcoin. We like the path we're on, and we like the structure we've built. Ellen Funding is one of the few micro-cap miners with active investment management. We've built this business to endure volatility and to scale into the next cycle. Our focus is to keep executing methodically, patiently, and with conviction. Thank you for your continued support. We'll now open the line for questions.

Thank you. As you're invited 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. One moment. Our first question is going to come from the line of Matthew Galenko with Maxim Group. Your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking my question. Congrats on all the progress over the last few months. With your mining infrastructure pretty radically different from where it was entering 25, I'm curious if you could maybe give us some thoughts on how you think about you know, that your path in 26, as far as the, the mine, you know, the Bitcoin mining infrastructure and, um, equipment go.

Sure. Um, the Mississippi acquisition has worked really, really well. First off, it's doing what it was supposed to. And then secondly, green is left behind some, some low hanging fruit. And they did some things to, you know, uh, grow there that they didn't take advantage of that. We're now kind of slipping into. And, uh, So we've got a nice runway there that we didn't anticipate. So I look for more growth there and the magnitude of what we've achieved this year seems foreseeable. So that's there. Oklahoma, we're adding the two immersion machines in there. We'll have that thing built out pretty soon. And then it just starts paying for itself and making money after that. It's going to be a long-term Bitcoin mining site given the energy pricing there.

And this is Rick.

We also have the ability to expand in Mississippi by additional four megawatts, so. Got it.

Okay, so if I can read between the lines there, it sounds like you're not necessarily, you know, pursuing or close on any additional site acquisitions, or is that something you're still, you know, exploring, but just nothing appealing at this point.

We always have people exploring side acquisitions when we do it based on where the energy tariffs and then we look for a property that goes with those energy tariffs.

Got it. And last question for me, and I'll jump back in the queue. Just, you know, with the, I guess, with the perspective that you have the, I guess, mandate now to maximize your Bitcoin per share, how do you, you know, I guess, think about allocating between mining business and directly acquiring additional Bitcoin?

We always say you have to take a dollar and decide whether the price of Bitcoin, the price of the infrastructure, et cetera. And then it's a target of where in the future you want that to pay off. And so we kind of play a long game, five years on that, looking at what do we think the price of Bitcoin is. And that's, That means you don't necessarily make a dollar decision based on the current circumstances. You have to make it on a pro forma basis, which kind of makes it a little more black magic. I get it. But it's a long game. So growing the mining helps pay the bills and it has the potential to be accretive to the overall treasury strategy. And then the treasury strategy is a balance between your equities market and the Bitcoin market.

Thank you, and we'll move on to our next question. Our next question comes from the line of Kev DeeDee with HCW. Your line is open. Please go ahead.

Hello, I'm . This is Sky Moore calling for Kev and DeeDee. Thanks for taking my call. I've got two questions for you all. The first is going to be, with about 15% of your old machines in storage, as reported in the company's October update, how are you guys managing your fleet of these machines going forward?

Ryan, do you want to, this is kind of granular, do you want to handle that? Yeah, sorry. Hey, Sky. It took a second to get off of me there.

So, yeah, those machines are kind of sitting in the wings. As we've hit on, we do have build-out capacity available already immediately at Mississippi. And as Bruce already alluded to as well, we're exploring other opportunities. And we feel strongly that having those machines in the wings is a great way to quickly deploy once that power becomes available. And then as we're doing in Oklahoma, we kind of set our roots in and then upgrade the fleet from there. So that's generally our strategy.

Awesome. Thanks for that. My final question is, you mentioned more efficient machines being placed at your current sites. Could you guys provide a current cost of mining one Bitcoin or perhaps a range of mining one Bitcoin?

Yeah, this is Rick. Our current mining cost right now for Bitcoin for this most recent quarter was $66,000. Last quarter, it was like $70,000. So we've been able to reduce it by direct mine cost quarter over quarter.

Awesome. Thank you so much for taking my questions, and I look forward to speaking with you guys next earnings. Thank you.

Thank you. This will conclude today's question and answer session. Ladies and gentlemen, this will also conclude today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.