Record 2Q21 Results: Revenues +122% Y/Y Fueled by Bitcoin Mining Success; Improved FY21 Outlook



KEY POINTS
  • CleanSpark reported a record 2Q21, with revenues doubling for the second consecutive quarter along with achieving profitability for the first time ever largely driven by the company’s bitcoin mining operation.
  • Revenues surged +122% y/y and +260% q/q to $8.1 million with $6.7 million or 82% of revenues from bitcoin mining. The energy segment continued to be challenged from the pandemic, but management expects the business to rebound as it executes $24.5 million worth ($14-18 million in the next two quarters) of its contract backlog.
  • Gross margins improved to 81% or $6.6 million from 20% or $0.7 million in 2Q20 and from 41% or $0.9 million in the preceding quarter, primarily attributable to a higher proportion (82% of revenues) of high-margin (~85% gross margins) bitcoin mining revenues as well as lower manufacturing and hardware expenses.
  • The company earned positive net income for the first time ever in 2Q21. Net income was $7.4 million or $0.22 per diluted share compared to a loss of $5.8 million or $1.13 per diluted share for the same prior year period.
  • CleanSpark has produced an aggregate of 241 bitcoins since the ATL acquisition, and in 2Q21 alone, the company produced more than 144 bitcoins. The company is expecting significant growth in hashrate capacity over the coming quarters as new rigs arrive.
  • The company has a sizable cash position of $157 million, which it can invest behind its bitcoin expansion and potential acquisitions in both the energy and bitcoin space. The company carries very little debt.
  • Following strong 2Q21 results, management raised its revenue guidance for FY21. The company now expects revenues of $47-67 million with $16-20 million from the energy business, $1.0 million from digital agency, and $30-40 million from bitcoin mining.
COMPANY OVERVIEW

CleanSpark is a software and services company providing advanced energy software and control technology that enables a plug-and-play and end-to-end enterprise energy solution in microgrid and distributed energy resource (DER) settings as well as hardware systems, specifically switch gear and energy storage solutions. The company also owns and operates a fleet of bitcoin miners.

Central to the energy software and control technology business is an integrated software suite comprised of mPulse and mVSO, with the core function of enabling a user to accurately model and intelligently manage a complex microgrid. CleanSpark’s software solutions can be widely implemented across commercial, industrial, military, and municipal organizations.

In terms of revenue mix, as of 2Q21, the high-margin (~85%) bitcoin mining and software solutions businesses represented 89% of the company’s revenues, while the low-margin (~15%) hardware business accounted for only 11%. The company intends to shift its mix of business toward its high-margin product offerings.

For additional information, please visit cleanspark.com.

CleanSpark reported a record 2Q21, with revenues doubling for the second consecutive quarter along with achieving profitability for the first time ever largely driven by the company’s bitcoin mining operation.

DISCLOSURES

Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.

WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information p...