Q2 2026 WhiteFiber Inc Earnings Call
Speaker #1: We'll begin with prepared remarks from management, followed by a question-and-answer session. During the Q&A, if you would like to ask a question, please press star 1 on your telephone keypad, as a reminder today's conference is being recorded.
Speaker #1: I would now like to turn the call over to your host, Kim Incheneer, Senior Vice President of Capital Markets and Corporate Strategy at WhiteFiber.
Speaker #1: Kim, please go ahead.
Speaker #2: Thank you, and welcome to the WhiteFiber second quarter 2026 earnings call. Joining me today are Sam Tabar, our Chief Executive Officer, and Justin Hsu, our Chief Financial Officer.
Speaker #2: Before we begin, I'd like to remind everyone that some of the statements we make on this call are forward-looking in nature and subject to risks and uncertainties that could cause actual results to differ materially.
Speaker #2: Such risks and uncertainties include, but are not limited to, those factors described in today's earnings press release. Our Form 10-Q for the quarter ended June 30, 2026, filed today, as well as other filings we may make with the SEC from time to time.
Speaker #2: Our remarks today may also include non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in our Form 10-Q and in the earnings press release posted on our website.
Speaker #2: Following our prepared remarks, we will open the line for questions. With that, I'll turn the call over to Sam to discuss our performance. Sam?
Speaker #3: Thank you, Kim, and thank you everyone for joining us. Last week, marked with the first anniversary of WhiteFiber's initial public offering. Over the past year, we've made substantial progress toward the company we set out to build.
Speaker #3: Most notably, we signed a transformational 10-year agreement representing approximately $865 million of contracted revenue for 40 megawatts of—excuse me—of IT workload at NC1. We've since advanced the project through construction, and now into active customer deployment.
Speaker #1: International Unibar Infrastructure, and the installation and testing of customer equipment. We've worked closely with Enscale on a phased turnover schedule that sequences the work being completed by both parties.
Speaker #3: We've also started operations and turned on revenue at our Montreal-3 location under our Cerebras agreement, expanded our development pipeline, strengthened our capital base, and repositioned our cloud services business around larger, longer-duration opportunities.
Speaker #1: Hello and welcome to the Hello. WhiteFiber Q4 WhiteFiber, second quarter 2026 earnings conference call. 2026, earnings conference call. Good Good morning, and thank you for joining morning, and thank you for joining us.
Speaker #3: We are proud of what we've accomplished in our first year. But we aren't satisfied. We remain in the early stages of what—excuse me, I've got a bit of a cough—we remain in the early stages of what WhiteFiber can become.
Speaker #1: We will begin with prepared remarks from management, followed by a question-and-answer session. Management will address questions during the Q&A session.
Speaker #1: In the Q&A, if you would like to session. During the Q&A, if you would like to ask a ask a question, question, please press star press star 1 on your telephone 1 on your telephone keypad.
Speaker #1: keypad. As a reminder, today's conference As a reminder, today's conference is being is recorded. I will now recorded. I would now like to turn the call turn the call over to our host for over to your host, Kim Engineer.
Speaker #3: Our first—our most significant accomplishments remain ahead of us. As we enter this next phase, I'd also like to welcome Justin Hsu as WhiteFiber's Chief Financial Officer, Justin previously served as Senior Vice President of Finance and Chief Accounting Officer, he's been with WhiteFiber since its formation.
Speaker #1: mentioning, Senior Vice President of Capital Markets Senior Vice President of Capital Markets and Corporate and Strategy at WhiteFiber. Strategy at WhiteFiber. Cameron, please go Cameron, please go ahead.
Speaker #1: ahead.
Speaker #2: Thank you, and welcome to the WhiteFiber WhiteFiber second quarter 2026 earnings Q4. Joining me today are call. Joining me today are Sam Sam Kabar, our Chief Executive Officer, and Justin Chu, our Chief Financial Tavar, before we begin, I'd like to Officer.
Speaker #2: Thank you, and welcome to the
Speaker #2: Before we begin, I'd like to remind remind everyone everyone that some of the statements we make on this call this call is open by nature and are for market nature and subject to risks and uncertainties that cause actual results to differ subject.
Speaker #3: He has a deep understanding of our business, financial operations, and growth strategy. Eric is stepping away from his executive role at WhiteFiber to focus fully on Bit Digital.
Speaker #2: Risks and certainty materially. Such risks and uncertainties include include limited the turnout limited to those factors described in today's earnings press release. Our call tends to be quarter-ended June 30, 2026, while today as well as other filings may make with the SEC from time to to our remarks time.
Speaker #3: We thank Eric for his important contributions to WhiteFiber's development. Eric will continue to support WhiteFiber as a Senior Advisor and non-voting observer to our board.
Speaker #2: Our remarks today may today may include also include non-cap financial financial measures for reconciliations, most directly comparable gap measures can be found in our Form 10-Q and in the earnings press release posted on our numbers, website.
Speaker #3: He'll provide additional continuity through the transition. We believe this structure provides each company with increasingly dedicated financial leadership as both businesses continue to grow.
Speaker #2: Following following our prepared our prepared remarks, we will open the line for remarks. With that, I'll turn the questions. With that, I'll turn the call over to call over to Sam to discuss our performance.
Speaker #2: Sam?
Speaker #2: Sam.
Speaker #3: Thank you, Cam, and thank you you everyone for joining everyone for joining us. Last week, us. Last week, marked with Mark's first anniversary of the first anniversary of WhiteFiber's WhiteFiber's initial public initial over the past offering.
Speaker #3: Turning to our operating update, I'll begin with NC1. Which remains our most important near-term operating and financial priority. NC1 has moved into active customer deployment.
Speaker #3: Thank you, Cam, and thank
Speaker #3: Over the past year, year, we made substantial we've made substantial progress toward progress toward the company we put out the company we set out to goals.
Speaker #3: As of today, approximately 20 megawatts of IT capacity is available to support the installation and testing activities of NSCALE and its investment-grade offtaker. Initial billing to our customer has now commenced, with the initial tranches of capacity.
Speaker #3: Most build. Most notably, we signed a notably, we signed a transformational transformational 10-year agreement 10-year agreement representing representing approximately approximately $865 million 865 of contracted revenue for 40 megawatts million IT of—excuse me—of IT workload at workload we've NC1.
Speaker #3: We've since advanced the since advanced the project through project to construction, and construction, and now into now access for active customer deployment. We've also started deployment.
Speaker #3: Remaining equipment startups and testing are progressing very well. We expect the remaining capacity to be turned over progressively through August. By the end of this month, the full 40 megawatts of contracted IT load will reach a full run-rate billing.
Speaker #3: We've also started operations and turned on revenue at our Montreal-3 operations under a grievance location under our Cerebras agreement, expanded our development agreement, expanded our development pipeline, strengthened our capital pipeline, strengthened our capital base, and repositioned our base, and repositioned our cloud cloud services around services business around larger, longer-duration larger we are proud opportunities.
Speaker #3: As we discussed last quarter, the pace of the ramp was affected by delivering and commissioning issues involving certain switchgear equipment. Those issues have since been resolved.
Speaker #3: We are proud of of what we've accomplished in our first what we've accomplished in our first year. But we aren't year. But we aren't satisfied.
Speaker #3: We remain in the satisfied. We remain in the early early stages stages of what—excuse me, I've got a bit of a cough—we remain in the early stages of of what WhiteFiber can what WhiteFiber can become.
Speaker #3: Final deployment also requires tight coordination between the commissioning of our infrastructure, and the installation and testing of customer equipment. We've worked closely with NSCALE on a phased turnover schedule that sequences the work being completed by both parties.
Speaker #3: Our first our become. Our first—our most most significant accomplishments remain significant accomplishments remain ahead of to handle. As we enter this next us. As we enter this next phase, I'd also like to phase, I'd also like to welcome welcome Justin Chu as WhiteFiber's Chief WhiteFiber's Chief Financial Financial Officer, Justin previously served Officer, Justin previously served as as Senior Vice President of Finance Senior Vice President of Finance and Chief and Chief Economic Accounting Officer.
Speaker #3: While the ramp has taken a touch longer than we originally anticipated, the contracted economics of the agreement remain unchanged. The results, speak for themselves.
Speaker #3: He has been with Officer. He has been with WhiteFiber since its WhiteFiber since he has formation. He has a deep a deep understanding of our understanding of our business, financial business, financial operations, and growth operations, and growth strategy.
Speaker #3: It took disciplined coordination across our team, our customer, the utility, our equipment vendors, and our construction partners, all amid persistent supply chain constraints. We believe NC1 shows what WhiteFiber can do.
Speaker #3: strategy. Eric is stepping away from the Eric is stepping away from his executive role at executive role at WhiteFiber to fully WhiteFiber to focus fully on Bit audit Digital.
Speaker #3: We digital. We thank Eric for his thank Eric for his important contributions important contributions to WhiteFiber's to WhiteFiber's development. Eric will continue to development.
Speaker #3: It demonstrates our ability to execute complex, large-scale AI projects. Just as importantly, we have expanded and experienced operating team on the ground. The team spans facility operations, engineering, and customer support.
Speaker #3: Eric will continue to support WhiteFiber as a senior support WhiteFiber as a senior advisor advisor and and non-voting observer to our board. non-he'll provide additional He'll provide additional continuity through the contributions through the transition.
Speaker #3: We transition. We believe this structure provides the believe this structure provides each company with company with increasingly dedicated increasingly dedicated financial financial leadership as both leadership as both businesses continue to businesses continue to grow.
Speaker #3: This is not simply a development project or a piece of powered real estate to us. It is a mission-critical facility built to operate continuously and support customers over long-term contracts.
Speaker #3: Turning to our operating grow. Turning to our operating update, I'll begin with update, it remains our most NC1. Which remains our most important important near-term operating and near-term operating and financial financial priority.
Speaker #3: NC1 has priority. NC1 has moved moved into an active customer into active customer deployment. As of deployment. As of today, today, approximately 20 megawatts approximately 20 megawatts of IT of IT capacity is available to capacity is available to support the support integration and testing installation and testing activities activities of NPO and investment of NSCALE and integrated grade off-taker.
Speaker #3: The people, systems, and operating capabilities now in place reduce execution risk as NC1 moves toward full contracted operations. We established a foundation for continued expansion of the campus.
Speaker #3: off.
Speaker #3: Initial billing to our customer has now commenced for the initial tranches of capacity. Remaining equipment startups and testing are progressing very well. We expect the remaining capacity to be turned over progressively through August.
Speaker #3: We also established a long-term and positive presence with the local community. Ultimately, we're building a durable operating business in North Carolina. The initial 40 megawatt deployment is only the first stage at NC1.
Speaker #3: By the end of this month, the full 40 megawatts of contracted IT load will reach a full run-rate billing. As we discussed last quarter, the pace of the ramp was affected.
Speaker #3: We expect Duke Energy to provide a delivery schedule for the next 45 megawatts of gross capacity in the near term. At that point, NSCALE will receive priority notification of the available capacity in accordance with our existing agreement.
Speaker #3: We also received extremely strong inbound interest for this new upcoming tranche. We'll evaluate the path forward based on what we believe will deliver the best outcome for WhiteFiber.
Speaker #3: Beyond this, we are working with Duke Energy in further evaluating the potential delivery of an additional 200 megawatts of incremental power to the site.
Speaker #3: Together with the initial phases, that would bring NC1 to approximately 300 gross megawatts. This is a longer-term opportunity and remains subject to the utility process.
Speaker #3: We believe it shows how NC1 could scale over time. It also shows why securing the site early was strategically important. NC1 is our flagship facility.
The results speak for themselves, it took disciplined coordination across our team, our customer the utility our equipment vendors, and our construction Partners all amid persistent supply, chain constraints.
We Believe nc1 shows what White Fiber can do.
Speaker #3: It validates WhiteFiber's ability to acquire, develop, and operate large-scale AI infrastructure. We intend to repeat that capability across our pipeline. Turning to our Canadian portfolio, the most significant update is at MTL2.
It demonstrates our ability to execute complex, large-scale AI projects.
just as importantly,
we have expanded and and experienced operating team on the ground.
The team spans facility operations, engineering and customer support.
This is not simply a development project or a piece of powered real estate to us.
Speaker #3: We had paused development while we evaluated the best use of that site. We've now decided to move forward. We plan to develop approximately 5 megawatts of gross capacity targeting completion around year-end.
It is a mission. Critical facility built to operate continuously and support customers over long term contracts,
Speaker #3: This decision is supported by active discussions with certain prospective customers. We're evaluating two deployment paths: the first is traditional co-location, the second is a vertically integrated deployment combining our data center infrastructure and our cloud services capabilities.
The people systems and operating capabilities. Now in place reduce execution risk, as nc1 moves towards full contracted operations.
We established a foundation for continued expansion of the campus.
We also established a long-term and positive presence with the local community.
Ultimately, we're building a durable operating business in North Carolina.
Speaker #3: We'll provide more discussions and the commercial structure progress. Moving on to our other sites, MTL1 continues to perform steadily. Recent customer renewal supports a stable outlook, and we're evaluating a modest expansion of that particular facility.
The initial 40 megawatt deployment is only the first stage at nc1.
We expect Duke Energy to provide a delivery schedule for the next. 45 megawatts of gross capacity in the near term.
At that point and skill will receive priority notification of the available capacity in accordance with our existing agreements.
Speaker #3: At MTL3, the Cerebras deployment continues to perform well. We're also pursuing additional utility capacity for that site that could support a meaningful expansion over time.
We also received extremely strong inbound interest for this new upcoming tranche.
We'll evaluate the path forward based on what we believe, will deliver the best outcome for a White Fiber.
Speaker #3: The approval process remains ongoing. Beyond our existing portfolio, demand for power-ready, high-density AI infrastructure remains very strong. Demand is particularly acute for 2027 deployments.
Beyond this.
We are working with Duke Energy in further evaluating the potential delivery of an additional 200 megawatts of incremental power to the site.
Together with the initial phases.
That would bring NC1 to approximately 300 gross megawatts.
Speaker #3: This reinforces our view that capacity able to reach the market within the next 12 to 18 months will remain extremely scarce. This is where our retrofit-first approach has a clear advantage.
This is a longer-term opportunity and remain subject to the utility process.
We believe it shows how nc1 could scale over time.
Speaker #3: We prioritize sites with existing infrastructure and a credible path to power. That allows us to bring capacity to market faster than traditional greenfield development.
It also shows why Security Site early was strategically important.
Nc1 is our Flagship facility.
Speaker #3: Speed to market is a key competitive advantage for WhiteFiber. We've built a substantial development pipeline. We're concentrating on the opportunities we can advance toward definitive commitments.
It validates Wi-Fi fibers ability to acquire, develop and operate large scale. AI infrastructure.
We intend to repeat that capability of our pipeline.
Turning to our Canadian portfolio. The most significant update is that MTL 2?
Speaker #3: We remain disciplined with capital. We prioritize sites with clear current and future power visibility strong customer alignment, attractive return potential, and a path toward project-level financing.
We had paused development while we evaluated the best use of that site.
We've now decided to move forward.
We plan to develop approximately 5 megawatts of gross capacity, targeting completion around year-end.
Speaker #3: We're also deliberate about sequencing our investments. As permanent financing for NC1 progresses, we expect greater flexibility to advance the next opportunities in our pipeline.
This decision is supported by active discussions with certain perspective, customers.
We evaluating 2 deployment paths. The first is traditional collocation.
Speaker #3: We remain focused on moving forward on the right terms and in a way that supports disciplined, repeatable growth. Turning to cloud services, we made substantial progress in transforming the business around larger longer-duration customer engagements and a more capital-efficient operating model.
The second is a vertically, integrated deploy deployment combining our data center infrastructure, and our cloud services capabilities.
We'll provide more details soon as customer discussions and the commercial and the commercial structure progress.
Moving on to our other sites.
Ml1 continues to perform steadily recent customer renewals support a stable Outlook and we're evaluating a modest expansion of that particular facility.
Speaker #3: We streamlined the organization and concentrated our resources on the areas where WhiteFiber provides the greatest value. That being sourcing next-generation hardware, deploying complex clusters, and operating infrastructure over the life of a customer engagement.
At mtl3.
The cerebras deployment, continues to perform well.
We're also pursuing additional utility capacity for that site that could support a meaningful expansion over time.
The approval process remains ongoing.
Speaker #3: We're encouraged by early results. Our commercial pipeline has expanded considerably. We are increasing converting that pipeline into larger-scale multi-year contracts. These agreements are supported by firm customer commitments.
Beyond our existing portfolio.
High density. Our infrastructure remains very strong.
Demand is particularly acute for 2027 deployments.
Speaker #3: Customer prepayments and third-party equipment financing significantly reduce the equity capital required from WhiteFiber's balance sheet. We're also seeing an important shift in how customers select infrastructure partners.
This reinforces our view that capacity able to reach the Market within the next 12 to 18 months will remain extremely scarce.
This is where our retrofit first approach, has a clear advantage.
Speaker #3: Larger buyers are consolidating their deployments among a smaller group of providers capable of supporting them at scale. While pricing remains important, customers are increasingly prioritizing engineering credibility, deployment execution, and reliable ongoing operations.
We prioritize sites with existing infrastructure and a credible path to power.
That allows us to break capacity to Market faster than traditional Greenfield development.
Speed to market is a key competitive advantage for WhiteFiber.
We've built a substantial development pipeline.
Speaker #3: We believe these are the areas WhiteFiber is particularly well-positioned. Since our last earnings call, we've entered into new multi-year cloud services agreements representing more than 540 million dollars in aggregate contract value over their initial terms.
We're concentrating on the opportunities, we can advance towards definitive commitments.
We remain disciplined with capital.
We prioritize sites with clear current at with clear current and future power visibility, strong customer, alignment attractive, return potential, and a path towards project level financing.
Speaker #3: Based on contract signed to date, our cloud services portfolio is expected to generate more than 200 million dollars of annualized revenue once fully deployed.
We're also deliberate about sequencing our investments.
As permanent financing for NC1 progresses, we expect greater flexibility to advance the next opportunities in our pipeline.
Speaker #3: One of the new agreements is with Base10, an AI infrastructure platform focused on production inference workloads. Under the three-year agreement, we will deploy 1,392 NVIDIA B300 GPUs at a third-party data center in Ontario.
We remain focused on moving forward on the right terms and in a way that supports disciplined, repeatable growth.
Turning to cloud services.
Speaker #3: The agreement represents approximately 165 million dollars of contract value over its initial term, with service targeted to commence in November of this year. Base10 also has the option to extend the deployment for up to a two additional years creating potential upside beyond this committed initial term.
We made substantial progress in transforming the business around larger, longer duration customer engagements and a more capital-efficient operating model.
We streamlined the organization and concentrated our resources on the areas where WhiteFiber provides the greatest value.
That being sourcing Next Generation. Hardware deploying complex clusters and operating infrastructure over the life of a customer engagement.
Speaker #3: Separately, we entered into a three-year agreement with Prime Intellect, an AI-focused platform on large-scale focused on large-scale model training and distributed compute. Under the agreement, we'll deploy 576 NVIDIA Vera Rubin 200 GPUs in Canada marking WhiteFiber's first Vera Rubin deployment.
We're encouraged by early results.
Our commercial pipeline has expanded considerably.
We are increasing converting that pipeline into larger scale, multi-year, contracts.
These Agreements are supported by firm customer commitments.
Speaker #3: The agreement represents approximately 108 million dollars of contract value with service targeted to commence in the second quarter of 2027. This Vera Rubin deployment demonstrates the technical depth and expertise of our engineering team.
Customer prepayments and third-party equipment. Financing significantly reduce the equity Capital, required from White, fibrous balance sheets.
We're also seeing an important shift and how customers select infrastructure partners.
Larger buyers are consolidating their deployments among a smaller group of providers capable of supporting them at scale.
Speaker #3: It also aligns to our strategy of focusing on current and next-generation GPUs. Both of these deals expand existing customer relationships, and that illustrates our customers' confidence in WhiteFiber's engineering and operational capabilities.
While pricing remains important.
Customers are increasingly prioritizing engineering credibility, deployment, execution, and reliable ongoing operations.
We believe these are the areas where WhiteFiber is particularly well positioned.
Speaker #3: We also continue to advance our previously announced five-year deployment in the Paris region, which represents over 160 million dollars of contract value. Following the completion and procurement and site-level arrangements, we're targeting an end of September ready for service date.
Since our last earnings call.
We've entered into new multi-year cloud services agreements representing more than 540 million dollars in aggregate contract value over their initial terms.
Speaker #3: Additionally, we entered into a five-year agreement with an existing customer supporting the deployment of 576 NVIDIA B300 GPUs in Iceland. The agreement represents approximately 87.5 million dollars of contract value over its initial term, with additional potential upside through revenue sharing.
Based on contract signed to date. Our cloud services portfolio is expected to generate more than $200 million of annualized Revenue. Once fully deployed
One of the new agreements is with Base10, an AI infrastructure platform focused on production inference workloads.
Under the 3 year agreement.
Speaker #3: We expect deployment to commence later this year. Beyond these dedicated infrastructure deployments, we're seeing meaningful demand for our managed services offering. Under this model, customers fund the underlying hardware and data center capacity while WhiteFiber applies its technical and operating capabilities to deploy and operate the infrastructure on their behalf.
We will deploy 1,392. Nvidia B300 gpus at a third-party data center in Ontario.
the agreement represents approximately 165 million of contract value over its initial term with service, targeted to commence in November of this year,
Base 10 also has the option to extend the deployment for up to two additional years, creating the potential for upside beyond this committed initial term.
Separately.
Speaker #3: Managed services would allow us to generate revenue without funding the underlying equipment, creating a hyper-capital-efficient path to growth. This model will also leverage systems and personnel and expertise that are pretty much already in place.
We entered into a 3 year agreement with prime intellect and AI focused platform on large-scale focused on large-scale model training and distributed compute.
Under the agreement, we'll deploy 576 Nvidia Vera Rubin 200 gpus in Canada.
Speaker #3: This creates the potential for attractive incremental margins with limited additional direct operating expense. We're an active discussions regarding several potential managed services engagements, including larger-scale opportunities.
Employment.
The agreement represents approximately 108 million of contract value with start with service. Targeted to commence in the second quarter of 2027.
Speaker #3: We believe managed services can become an increasingly important capital-light extension of our business. To support cloud growth in 2027 and beyond, we've entered into an agreement with data center and excuse me, with data center developer and operator Cranbu.
This very Reuben, deployment demonstrates, the technical depth and expertise of our engineering team.
It also aligns with our strategy of focusing on current and next-generation GPUs.
Both of these deals, expand existing customer relationships.
Speaker #3: The agreement provides WhiteFiber with exclusive access to 100 megawatts of liquid-cooled co-location capacity beginning in 2027, with the potential to expand over time. Access to deployable power remains a key constraint across the industry, this agreement provides an important pathway to additional capacity for our cloud services business.
And that illustrates our customers' confidence in WhiteFiber's engineering and operational capabilities.
We also continue to advance our previously announced five-year deployment in the Paris region, which represents over $160 million of contract value.
Following the completion and procurement and site level arrangements or targeting and end of September ready for service dates.
Speaker #3: Taken together, these developments demonstrate the progress we're making toward a scalable cloud services model. We can secure access to deployable capacity, we can provide dedicated infrastructure through long-term customer commitments, we can access third-party equipment financing, and we can apply our technical expertise to customer-funded infrastructure through managed services engagements.
Additionally, we entered into a 5-year agreement with an existing customer supporting the deployment of 576 Nvidia, B300 gpus in Iceland
the agreement represents approximately 87.5 million of contract value over its initial term with additional potential upside, true Revenue sharing,
We expect deployment to compare to commence later this year.
Speaker #3: These models allow us to pursue longer-duration revenue while maintaining discipline around WhiteFiber's capital investment. Finally, we continue to advance our cross-data center networking initiatives.
Beyond these dedicated infrastructure deployments.
We're seeing meaningful demand for our managed Services offering.
Speaker #3: During the quarter, we successfully demonstrated 111.2 terabits per second of bandwidth with guaranteed sub-millisecond latency across 83 kilometers, we believe our patent we believe our patent pending technology has the potential to create significant platform value for WhiteFiber.
Under this model, customers fund the underlying hardware and Data Center capacity while White Fiber applies. Its Technical and operating capabilities to deploy and operate the infrastructure on their behalf.
Managed Services would allow us to generate revenue without funding the underlying equipment, creating a hyper-capital-efficient path to growth.
The model will also leverage systems and personnel and expertise that are pretty much at already in place.
Speaker #3: By enabling certain AI workloads to operate across geographically separated facilities, it could allow us to it could allow us to aggregate smaller blocks of power and compute into a single integrated environment, thereby creating a virtual supercluster under one logical system.
This creates the potential for attractive incremental, margins with limited additional direct operating expense.
For an active discussion regarding several potential managed services and engagements, including larger-scale opportunities.
We believe managed services can become an increasingly important, capital-light extension of our business.
Speaker #3: This could expand the commercial utility of capacity that might otherwise be difficult to monetize independently. This would also increase the value of WhiteFiber's broader site portfolio.
To support cloud growth in 2027 and beyond.
We've entered into an agreement with Data Center and develop, excuse me with data center, developer and operator creme. Boo,
Speaker #3: We're now validating specific customer cases for this technology. We're targeting an initial commercial launch of this new technology by this September. Given the proprietary nature and of the architecture and the early stage of commercialization, we're not disclosing all aspects of the technology and commercial mode for now.
The agreement provides White Fiber with exclusive access to 100 megawatts of liquid cooling capacity beginning in 2027, with the potential to expand over time.
Deployable power remains a key. Constraint across the industry.
Speaker #3: Over time, we believe this opportunity could extend beyond WhiteFiber's own infrastructure through licensing and other commercial structures involving third-party facilities. Across both co-location and cloud services, the demand backdrop remains extraordinary.
This agreement provides an important Pathway to additional capacity for our cloud services business.
Taken together, these developments demonstrate the progress we're making toward a scalable cloud services model.
Speaker #3: We're being deliberate about how we grow. Our priority is to pursue the right sites, customers, and deployments. We will scale at a pace that allows us to execute consistently, maintain a high standard of service, and continue building WhiteFiber's reputation as a trusted infrastructure partner.
We can secure access to deployable capacity, and we can provide dedicated infrastructure through long-term customer commitments.
We can access third-party equipment financing, and we can apply our technical expertise to customer funds and infrastructure through managed services engagements.
Speaker #3: I'll now turn the call over to our chief financial officer, Justin, to discuss our financial results. Go ahead, Justin. Thanks, Sam. Second quarter of revenue was 28.8 million, an increase of 54% from 18.7 million in the second quarter of 2025.
These models allow us to pursue longer-duration revenue, while maintaining discipline around WhiteFiber's capital investment.
Finally, we continue to advance our cross-data center networking initiatives.
Speaker #3: Cloud services revenue was 23.8 million, compared with 16.6 million in the prior year period. Revenue for the quarter included approximately 12.3 million associates, with the previous disclosed customer termination, the termination also result in approximately 4 million of related expense payable to the GPU lease provider, which was recorded in cost of revenue.
During the quarter, we successfully demonstrated 111.2 terabits per second of bandwidth with guaranteed sub-millisecond latency across 83 kilometers.
We believe our patent, we believe our patent. Pending technology, has the potential to create significant platform value, for White Fiber.
By enabling certain AI workloads to to operate across geographically, separated facilities.
Speaker #3: Underlying cloud services results also reflected temporary downtime between the termination of prior contracts and the commencement of the newly signed replacement contract. Co-location revenue was 4.7 million, compared with 1.7 million in the prior year period, the increase primarily reflect the contribution from MTL3, which commenced operation under our agreement with Cerebras in fourth quarter 2025.
Upgraded environment, thereby creating a virtual supercluster under 1 logical system.
This could expand the commercial utility of capacity that might otherwise be difficult to monetize independently.
This would also increase the value of WhiteFiber's broader site portfolio.
We're now validating specific customer cases for this technology.
Speaker #3: Gross profit excluding depreciation and amortization was 17.1 million, representing a gross margin of approximately 59%, and this compared with gross profit 11.5 million, and gross margin of approximately 61% in the prior year period.
We're targeting an initial commercial launch of this new technology by this September.
Given the proprietary nature of the of the architecture, and the early stage of commercialization or not. Disclosing all aspects of the technology and Commercial mode for now.
Speaker #3: GNA expense was about 14.8 million, down from the 17.8 million in the first quarter. The sequential decline primarily reflected lower professional and consulting expenses and lower share-based compensation expense.
Over time, we believe this opportunity could extend beyond WhiteFiber's own infrastructure, through licensing and other commercial structures involving third-party facilities.
Across both collocation and cloud services.
The demand backdrop remains extraordinary.
Speaker #3: GNA for the quarter also included approximately 2.2 million of backday expense, associated with the previous disclosed customer termination, adjusted EBITDA was about 5.5 million, compared with 3.3 million in the prior period, a reconciliation of adjusted EBITDA to net loss is including our earnings release and Form 10-Q.
We're being deliberate about how we grow.
Our priority is to pursue the right sites, customers and deployments.
We will scale at a pace that allows us to execute consistently, maintain a high standard of service, and continue building WhiteFiber's reputation as a trusted infrastructure partner.
Speaker #3: Net loss was 15 million, or 39 cents loss per diluted share. The net loss reflect a higher depreciation and interest expense associated with the expansion of our infrastructure in the related financing activities.
I'll now turn the call over to our Chief Financial Officer, Justin, to discuss our financial results. Go ahead, Justin.
Thanks Sam second. Quarter of Revenue was 28.8 million and increase of 54% from 18.7 million in the second quarter, 2025
Speaker #3: We ended the quarter with 56.1 million of cash and cash equivalents, deferred revenue was approximately 143 million, and primarily reflecting customer prepayment associated with our NC1 site and cloud services deployments.
Cloud services Revenue was 23.8 Million compared with 15.6 million in the prior year period.
Revenue for the quarter included the approximately $12.3 million associated with the previously disclosed customer termination.
Speaker #3: During the quarter, we added approximately 83.2 million of project-level equipment and bridge financing to support the continued development of our co-location and cloud services infrastructure.
The termination also result in approximately 4 million of related expenses payable to the GPU leads provider, which was recorded in cost of Revenue.
Speaker #3: As Sam mentioned, discussed earlier, completing the permanent financing for NC1 will further strengthen our financial capacity and allow us to recycle capital into future development.
Underlying cloud services results. Also reflected temporary downtime between the termination of Prior contract, and the commencement of the new design replacement contract.
Collocation Revenue was 4.7 million.
Compared with 1.7 million in the prior year, period.
Speaker #3: Overall, the quarter reflected continued positive adjusted EBITDA and substantial investment in the infrastructure supporting our contracted growth, with remaining focus on converting the investment into recurring revenue and cash flow while maintaining discipline around capital deployments.
The increase primarily reflects the contribution from MTL3, which commenced operation under our agreement with Cerebras in the first quarter of 2025.
Speaker #3: I will now turn the call back to Sam.
Speaker #2: Thank you, Justin. Before we open the call for questions, I want to leave you with a few thoughts. Last quarter, we said the pieces of our development model were beginning to come together.
Gross profit excluding depreciation and amortization was 17.1 Million representing, a gross margin of approximately 59% and this compare with gross profit. 11.5 million and gross margin of approximately 601% in the prior year period.
Speaker #2: They are. Since then, NC1 has moved into active customer deployment and toward full contracted operations. We've also focused our pipeline on the opportunities best positioned to move forward.
G&A expense was about $14.8 million, down from the $17.8 million in the first quarter.
Speaker #2: Importantly, we have recently entered into exclusivity with a consortium of well-known lenders for the proposed secured financing for NC1. The parties have commenced diligence, are negotiating definitive documentation, and are working toward closing subject to customary approvals and conditions.
The second, the sequential decline primarily the reflected lower professional and Consulting expenses and lower share based compensation expense. Gni for the quarter. Also included approximately 2.2 million of back that expense, uh, associated with the previous disclosed, customer termination
Speaker #2: This financing process has taken longer than we initially anticipated. But finally reaching exclusivity and negotiating definitive documentation represent meaningful progress. If completed, the financing would return a significant portion of the capital invested in NC1.
Adjusted EBITDA was about 4 to 5.5% compared with $3.3 million in the prior period. A reconciliation of adjusted EBITDA to net loss is included in our earnings release and Form 10-Q.
Net loss was 15 million or um, 39 cents loss per diluted share the net loss, reflect a higher depreciation, and interest expense associated. With the expansions, our infrastructure in everyday financing activities,
Speaker #2: It would also allow us to advance the next site in our pipeline, but, as my lawyers have advised me to say, there could be no assurance that the financing will be completed on favorable terms or at all.
We ended the quarter with $56.1 million of cash and cash equivalents.
Defer Revenue was approximately 100% 143 million.
Speaker #2: This financing would also complete the first turn of the development flywheel we've described. We acquire power advantage infrastructure, we secure long-term customer commitments, we develop and stabilize the asset, we then access institutional capital and recycle our equity into the next project.
And primarily reflecting customer prepayment associated with our NC1 side and cloud services deployments.
Speaker #2: Completing that first turn, would represent an important inflection point for our co-location business. We believe our next opportunity is also becoming increasingly tangible. Several sites have advanced significantly through our diligence process.
To recycle Capital into future development.
Overall, the quarter reflected continued positive adjusted EBITDA and substantial investment in the infrastructure supporting our contracted growth.
Speaker #2: Among the most actionable is a site that could support approximately 60 megawatts in 2027 and scale to more than 250 megawatts over time. The site has passed substantial diligence.
We remain focused on converting the investment into recurring revenue and cash flow while maintaining discipline around Capital deployment.
I will now turn the call back to Fan.
Speaker #2: We are now actively negotiating a purchase agreement as we complete the final stages of our evaluation. Power available at this scale in 2027 is scarce.
Thank you, Justin. Before we open the call for questions, I want to leave you with a few thoughts.
Last quarter, we said the pieces of our development model were beginning to come together.
They are.
Speaker #2: Our retrofit-first approach can bring capacity to market faster than traditional greenfield development, creating a meaningful speed-to-market advantage in a supply-constrained environment. We believe this combination of scarcity and speed to market should support premium economics.
Since then, NC1 has moved into active customer deployment and toward full contracted operations.
We've also focused our pipeline on the opportunities best positioned to move forward.
Importantly.
We have recently entered into exclusivity with the Consortium of well-known lenders, for the proposed. Secured financing for nc1.
Speaker #2: Across our pipeline, we're increasingly prioritizing opportunities with investment-grade credit support. We believe this will enhance project finance ability and execution certainty. This reflects the same discipline sourcing approach that produced attractive economics at NC1, advantage power, speed-to-market, and strong customer demand.
The parties have commenced diligence.
Our negotiating definitive documentation and are working toward closing subject to customary, approvals and conditions.
This financing process has taken longer than we initially anticipated.
But finally, reaching exclusivity and negotiating definitive documentation represent meaningful progress.
Speaker #2: We're not pursuing growth for its own sake. We're focused on opportunities that combine advantage power, credible customer demand, and financeable contract structure. Completing the NC1 financing would strengthen our ability to act on opportunities that meet those standards.
If completed the financing would return a significant portion of the capital invested in NC.
It would also allow us to advance the next site in our pipeline.
But as my lawyers have advised me to say, there could be no assurance that the financing will be completed on favorable terms or at all.
Speaker #2: In cloud services, we're also converting strategy into signed contracts. The multi-year agreements we've signed since our last earnings call meaningfully expand our contracted revenue base and improve revenue visibility.
This financing would also complete the first turn of the development flywheel we've described.
We acquire power, advantage, and structure. We secure longer, long-term customer commitments.
Speaker #2: These deployments are structured around firm customer commitments and are designed to be funded through customer prepayments and third-party equipment financing. This limits the capital required from WhiteFiber while allowing us to retain attractive economics.
We develop and stabilize the asset, we then assess institutional capital and recycle our Equity into the next project.
Completing that first turn.
This would represent an important inflection point for our colocation business.
We believe our next opportunity is also becoming increasingly tangible.
Speaker #2: For the most part, for the most part, Pat, excuse me, for most of the past year, we've been building the individual pieces of this strategy.
Several sites have advanced significantly through our diligence process.
Speaker #2: We're now beginning to demonstrate how they all work together. In co-location, we're moving towards a repeatable model for developing and financing long-term contracted infrastructure.
Among the most actionable is a site that could support approximately 60 megawatts in 2027, and scale to more than 250 megawatts over time.
Speaker #2: In cloud services, we're pursuing longer-duration customer engagements designed to generate attractive returns with limited WhiteFiber capital. This is still there is still important execution to be done ahead of NC1 and on the financing.
The site has passed substantial diligence. We are now actively negotiating a purchase agreement as we complete the final stages of our evaluation
Power available at this scale in 2027 is scarce.
Speaker #2: But completing this first turn of the flywheel would position us to enter 2027 with greater financial capacity, a larger contracted revenue base, and a more actionable development pipeline.
Our retrofit first approach can bring capacity to Market faster than traditional Greenfield development.
Creating a meaningful speed to Market advantage in a supply constrained environment.
Speaker #2: We remain focused on execution, capital discipline, and building durable value for our shareholders. With that, we're ready to take your questions. Joining us today for Q&A are WhiteFiber President Billy Kruskopoulos, Chief Financial Officer Justin Hsu, Eric Wang, and Advisor to WhiteFiber, and our former and, of course, our former Chief Financial Officer, and Michael Francisco Vice President of Cloud Services.
We believe this combination of scarcity and speed to market should support premium economics.
Across our pipeline.
We're increasingly prioritizing opportunities with investment-grade credit support.
We believe this will enhance project Finance ability and execution certainty.
This reflects the same disciplined sourcing approach that produced attractive economics at NC1—advantage, power, speed to market, and strong customer demand.
Speaker #2: Operator, please open the line.
Speaker #3: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure you mute function is turned off to allow your signal to reach our equipment.
We're not pursuing growth for its own sake.
We're focused on opportunities that combine advantage, power credibility, customer demand, and a financeable contract structure.
Speaker #3: And again, that is star 1. We'll pause for just a moment to allow everyone an opportunity to signal for questions. While we wait, we'll take our first question from Nick Giles with B.
Completing the NC1 financing will strengthen our ability to act on opportunities that meet those standards.
Speaker #3: Reilly Securities. Please go ahead.
Speaker #2: Hi, Nick.
In cloud services, we're also converting strategy into signed contracts.
Speaker #4: Yeah, hi, guys. Good morning. Thanks for the update here. It sounds like demand is really strong for the remaining available capacity at NC1. I was just hoping you could speak to that commercial process and kind of when you would ultimately cut it off or if you would be willing to kind of entertain other potential counterparties at this point.
The multi-year agreements we've signed since our last earnings call meaningfully expand our contracted revenue base and improve revenue visibility.
These deployments are structured around firm customer commitments and are designed to be funded through customer prepayments and third-party equipment financing.
Speaker #4: Thanks.
Speaker #2: Billy, would you like to take that?
This limits, the capital required from White Fiber, while allowing us to to retain attractive economics.
Speaker #5: Sure. Thanks, Sam. Hi, Nick. We're still in the early phases of that. Still a little early to comment on timing. Of when we would be able to set that up for any client right now.
Building the individual pieces of the strategy.
Speaker #4: Oh, fair enough, Billy.
Speaker #2: But it is oh, I was going to add to that, but go ahead, Billy.
Speaker #5: It is an imminent. I mean, we're fully focused on, like Sam said, completing that first turn of the flywheel and phase 1 of North Carolina.
We're now beginning to demonstrate how they all work together in colocation. We're moving towards a repeatable model for developing and financing long-term, contracted infrastructure in cloud services. We're pursuing longer-duration customer engagements designed to generate attractive returns with limited WhiteFiber capital.
Speaker #5: But the next step is marketing and putting together a full project plan for phase 2.
Speaker #2: Yeah, it's just worth mentioning and reiterating to Billy's point that these are we have wonderful champagne problems for trench 2. We have overwhelming demand.
This is still important. There is still important execution to be done ahead of nc1, and on the financing. But completing this first turn of the flywheel would position us to enter 2027 with greater Financial capacity. A larger, contracted Revenue base and a more actionable development pipeline.
Speaker #2: For that, we do have a notification we have in our we have a legal obligation towards NScale to have to just notify them on the second tranche.
We remain focused on execution, capital discipline, and building durable value for our shareholders.
Speaker #2: But every counterparty is certainly looking at that second tranche, and they've seen what we've been able to do already with the first tranche, and we've proven ourselves over and over again on how to get things done on time and within budget.
Speaker #2: So we'll be playing catch on the demand, and we'll make sure that the economics are as premium as they can be for WhiteFiber.
With that, we're ready to take your questions. Join joining us today for a Q&A, our White Fiber president. Billy cross kopulos, Chief Financial Officer, Justin Shu Eric Wong and adviser to White Fiber and our former. And so of course our former Chief Financial Officer and Michael Francisco, vice president of cloud services.
Operator, please open the line.
Speaker #4: Great. No, I appreciate that. And then maybe just on the new site side, was curious, when you eventually acquire the site, kind of where it stands today, what type of development work you would be willing to complete before any commercial signing, just to ensure that 2027 delivery?
Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad, if you're using a speaker-phone, please make sure you mute function is turned on to allow your signal to reach our equipment. And again, that is star 1. We'll pause for just a moment to allow everyone an opportunity to signal for questions.
While we wait, we'll take our first question from Nick, Giles, with B Riley Securities. Please go ahead.
Hi Nick.
Speaker #4: Thanks.
Speaker #2: Billy, you want to take that again?
Speaker #5: Sure. We're looking at similar situations to North Carolina one. Buildings that we can go into quickly retrofit them, and I mean, our key advantage here is speed.
Yeah, hi guys. Good morning. Um, thanks for the update here. It sounds like demand is really strong for the remaining available capacity at nc1. I was just hoping you could speak to that commercial processing. Kind of when you would ultimately cut it off or if you would be willing to kind of entertain, um, other potential counterparties at this point, thanks.
Speaker #5: For ourselves and for our clients as well. The quickly we develop the more quickly we develop these properties, the more quickly we get clients in them, it serves both purposes.
Go ahead. Would you like to take that?
Speaker #5: But the overall strategy that we're looking at is very similar to what we've accomplished at our North Carolina 1 facility.
Sure, thanks, Sam. Hi, Nick. Uh, we're still in the early phase phases of that still a little early to comment uh on timing uh of when we would
be able to, um,
Set that up for any clients right now.
Speaker #4: Great. Okay. Well, that's good to hear. Guys, I'll turn it over for now, but appreciate the update.
No, fair enough. Delay—um, it is, it is...
Oh, I was going to add to that, but go ahead, Billy.
Speaker #3: Thank you. And we'll go to our next question from Greg Lewis with BTEG. Please go ahead.
Speaker #2: Hi, Greg.
Speaker #5: Yeah, hi. Thank you. Hi, good morning, and thanks for taking my question. I was hoping we could talk a little bit about the cloud service business.
It is— it is an imminent— I mean, we're fully focused on, like Sam said, completing that first turn of the flywheel and Phase 1 of North Carolina.
Speaker #5: Congratulations on bringing on a couple more customers. One of the things we've been hearing is that there's ample opportunities to bring on prepayments. How do you balance those upfront prepayments as you're thinking about your structures versus the overall return on, say, a multi-year cloud service business?
But the next step is marketing, uh, and putting together a full project plan for Phase 2.
Yeah, it's worth—it’s just worth mentioning and reiterating, uh, to Billy's point that, um,
Yeah, the these are we have wonderful champagne problems for trench 2. We have overwhelming demand uh for that. Uh, we do have a notification, um we have in our we have a legal obligation towards and scale to have to just notify them on the second tranche.
uh, that, um
Speaker #5: Just trying to understand, I guess, what a bird of hands worth killing the bush, but just kind of curious how you're thinking about that as we continue to build out the cloud business.
You know, every counterparty is, um, certainly looking at that.
Speaker #2: Glad you asked that question. We have Michael Francisco who is in the weeds of all that on the cloud side. Go ahead, Michael.
Second tranche, and they've seen what we've been able to do already with the first tranche and we've proven ourselves over and over again on how to get things done on time and within budget. So, um, we're um, we'll be playing catch on the, on the demand. We'll make sure that the economics are as premium as they can be for, uh, for White Fiber.
Speaker #6: Thanks, Sam. And hi, Greg. So the way we think about this is we evaluate all of our deals at the project level and look for healthy terms across the life cycle of that deal.
Speaker #6: When we started kind of restructuring the cloud business earlier this year, we set some we set a framework around that that really forced us to think about how we run this business in a way that might be a little bit different from the rest of the market and really focusing on high-quality customers as well as deals that have a positive cash flow throughout as well as deals that limit the amount of capital that we have to take out of our own funds in order to make those deals happen.
Great know, appreciate that. And then, you know, maybe just on the new site side, um, was curious, you know, when you eventually acquire the site kind of uh, where it stands today, what type of development work, you would be willing to uh complete before any commercial signing, just to ensure that 27 delivery. Thanks.
But you want to take that again?
Speaker #6: So when we think about the prepayments, that is a mechanism that we can leverage in order to help reduce the amount of capital that we deploy in support of these deals.
Speaker #6: And then we look at the structure of the deal across its life cycle to ensure that it is cash flow positive and get creative around the last couple of years on those deals.
Speaker #6: So you notice as an example, base 10 has a two-year option for the customer to extend that deal. We can be creative with how we structure that to both benefit the customer over the term of that deal, but also allow us to adhere to the parameters we set out upfront.
Sure. Um, we're looking at similar situations to North Carolina 1, um, buildings that we can, that we can go into quickly, retrofit them. Uh, and I mean, our key Advantage here is speed, uh, for for ourselves and for our clients as well. Uh, the quickly, we developed the more quickly we developed these properties and more quickly, we get clients in them. It serves both purposes. Um, but the the the overall strategy that we're looking at is very similar to what we've accomplished at uh, our North Carolina 1.
Great. Okay, well, that's good to hear. Um, guys, I'll turn over for now, but appreciate the update.
Next question, from Greg Lewis with BTech. Please go ahead.
Speaker #5: Okay. So super helpful. And then my other question was around the pipeline. I guess the way how do we think about with the growth pipeline, some of these projects where from a co-location standpoint, I'm assuming that those megawatts are just going to be bigger when versus, say, sites where we're going to use cloud services?
Hi, Greg. Yeah, hi, thank you. Hi. Good morning, and thanks for taking my question. Um, I was hoping we could talk a little bit about the cloud service business. Um, you know, congratulations on, you know, bringing on a couple more customers.
Um, you know, one of the things we've been hearing is
Speaker #5: But really, what I'm wondering is, could we see opportunities over the next couple of years where we're using a co-location customer, but also at the same location, maybe not in the same buildings, running GPU as a service?
Speaker #5: Is that something how we're thinking about maybe scaling that business also?
that there's, you know, ample opportunities to to bring on prepayments. Um, you know, how do you balance? Um, you know, those upfront, prepayments? As you're thinking about your structures versus, you know, the the overall return on say a, a multi-year cloud service business just just trying to understand, um, you know, I guess what, the bird to hand is worth doing the bush, but just kind of curious how you're how you're thinking about that as we continue to build out the cloud business.
Speaker #2: Yes, in fact. Michael, you should take this take that answer, but we'll be doing that, I think, sooner rather than later. Go ahead, Michael.
Glad you asked that question. We have Michael Francisco, who is in the weeds of all that, uh, on the cloud side. Go ahead, Michael.
Speaker #6: Yes. Getting to the vertically integrated model has always been the goal. And so to make that happen, we have to have our development pipeline on the data center side align with our customer pipeline on the cloud services side, and have customers of the right quality that will allow us to get the right cost of capital to make that an interesting arrangement for us.
Thanks, Sam. And hi. Greg. So the the way we think about this is we evaluate all of our deals at at the project level and look for healthy terms across, uh, the like the life cycle of that, that deal when we started kind of restructuring the cloud business earlier this year, we set some, you set a framework around that that really forced us to think about how we run.
Speaker #6: We Billy and I have been talking about how we go get this done, and I think the timeline on this has gotten shorter versus longer.
Speaker #6: And so ultimately, I think we will see a move to that. I don't think we will see all cloud services roll into the data center business, and I don't think that all customers at the data center level will come from the cloud business, but we'll be opportunistic about how we do that and look for other opportunities such as the arrangement with Brembo to identify and build capacity for our customers that we don't place in those data centers.
Speaker #6: It is something we want to get to, and we're getting there more quickly than we thought.
This business in a way that might be a little bit different from the rest of the market and really focusing on high-quality customers as well as deals that have a positive cash flow throughout uh, as well as deals that, uh, limit the amount of, uh, Capital that we have to take, uh, out of out of our own funds in order to make those deals happen. So, when we think about the prepayments, that is a mechanism that we can leverage in order to help reduce the amount of capital that we deploy in support of these deals. And then we look at the structure of the deal of its life cycle to ensure that it is cash flow positive and get creative around the
Speaker #5: That's super helpful. And congrats on getting in, see one stood up and running.
Speaker #2: Glad I belong to Billy and his team.
Speaker #3: Thank you. We'll next go to Primo Lincho with Barclays. Please go ahead.
Last couple of years on those deals. So, you notice, as an example, Base 10 has a two-year option for the customer to extend that deal. We can be creative with how we structure that to both benefit the customer over the term of that deal, but also allow us to adhere to the parameters we set out up front.
Speaker #7: Thank you. Congrats from me as well. That's an amazing progress across the board, actually. I have two quick questions. One is, if you think, Sam, it's for you now, as you think about the business, how do you think about the mix we should think about in the long run between cloud services, co-location, talked about managed services.
Speaker #7: Well, on the last answer, it sounds like the first two are related, but how do you think about the evolution of the mix during the pros and cons?
Speaker #7: And I had one follow-up.
Okay, so super helpful and then my other question was around the the pipeline. Um, you know I I guess the way you know like how do we think about um you know, with the growth pipeline. So some of these projects where, you know, from a co-location standpoint I'm assuming there that those megawatts are are just going to be bigger when versus says sites where we're going to use cloud services. Um but but really what I'm wondering is
Speaker #2: Is the question, what do I how do we think of the co-location business and the cloud business? And the pros and cons of mixing the two, rather than keeping them separate?
Speaker #2: Is that the question?
Speaker #7: And pursuing one more than the other, just obviously two slightly separate ways of doing the work.
Could we see opportunities over the next couple years? Where, you know, we're using a, a collocation customer, but also, you know, at the same location, maybe not in the same buildings, um, running GPU as service. Is that something? How we're thinking about maybe scaling that business also?
Speaker #2: Well, aside from I love Michael to add to this, but aside from the market assigns different multiples. To co-location, versus cloud. And they both require different types of expertise and skill set.
Speaker #2: We have two very separate teams working on those businesses, our co-location team is very separate from the cloud team, and vice versa. And that's by design because, again, it's a very different skill set.
Speaker #2: And integrating the two I sometimes wonder if that will affect multiples. But there's also a big reason to integrate the two because in a way, we can sort of double dip into the margin, into the profits of the revenue.
Speaker #2: So maybe, Michael, if you want to add to that. But I know it's an ongoing debate that we have internally, and there is a path towards integrating the two, which is what we're thinking about doing soon.
Speaker #2: Would love to hear from Michael if he has additional thoughts about that.
Speaker #6: Yeah. I think that there are benefits to both models there, but the way that we have it structured today, I actually think creates a good tension a healthy tension within the business.
Yes. In fact, uh, Michael you said, you just take this, uh, take that answer. But, uh, we'll be doing that. I think sooner rather than later. Go ahead Michael. Yes, getting to the vertically, integrated model model, has always been the goal. And so to make that happen, we have to have our development uh, Pipeline on the data center side. Aligned with our customer Pipeline on the cloud services side and have customers of the right quality that will allow us to get the right cost of capital to make that. Um, and and interesting, uh, arrangement for us. Uh, we, you know, Billy and I have been talking about how we go get this done, and I think the timeline on this has gotten shorter versus longer. And so, ultimately, I think we will see a move to that. I don't think we will see all cloud services roll into the data center business, and I don't think that all customers at the data center level will come from the cloud business, but we'll be opportunistic about how we do that and look for other opportunities such as the arrangement with creamoue to identify and and build capacity.
...for our customers that we don't place in those data centers. It is something we want to get to, and we're getting there more quickly than we thought.
Speaker #6: In order for the cloud business to be able to become a customer of the data center business and partner on those vertically integrated projects, we almost have to earn that opportunity.
This is super helpful, and congrats on getting NC up and running.
Next team.
Speaker #6: We are not the data center team is not beholden to the cloud organization to put our customers in those locations. Instead, we need to have a compelling customer and a compelling economic case in order to display some of the demand that they already have.
Thank you, and we'll next go to Primo Winslow with Barclays. Please go ahead.
Speaker #6: And I think that tension is very healthy because it allows the cloud team to have some goals and some parameters around how they're going to actually be able to do that vertical integration.
Around the business, how do you think about the mix that we should consider in the long run between cloud services, colocation—you know, you talked about managed services. Well, um,
Speaker #6: So again, I could see benefits to both sides, but I think the healthy tension inside the organization and the desire for the cloud team to partner more closely with the data center team on specific projects is good for all of us.
You know, in the last answer, it sounds like the first two are related. But how do you think about the evolution of the mix there and the pros and cons? And I had one follow-up.
Speaker #7: Okay. Perfect. Thank you. And then can you talk to the managed service approach? I mean, obviously, it helps you a lot on not having to deploy capital etc., but what sort of a margin profile that you that we should think about there?
Speaker #7: Thank you.
Is the question. What do I, how do we think of, uh, the collocation business and the cloud business and the pros and cons of mixing, the 2, where rather than keeping them separate is that the question and, and, and, and pursuing 1 more than the other. Like, just, you know, something to slightly separate them ways of doing doing the work.
Speaker #6: The managed services model is pretty interesting. It was actually something that we put together in anticipation of internal enterprise adoption of AI for R&D and kind of internal development projects.
Speaker #6: What we found as we put that together is that the demand for it is much greater than enterprise customers who traditionally want to actually own the CapEx expense for a number of different reasons.
Speaker #6: We're actually seeing a lot of demand both from other neo clouds, interesting financial partners, as well as some of the frontier and AI labs that are have grown to a point where they're actually considering taking on some of the CapEx.
Well aside from I I love Michael to add to this, but aside from um you know, the the market assigns different multiples to co-location uh versus cloud and they both require different types of expertise and skill set. We have 2 very separate teams working on those businesses. Our co-location team is very separate from the cloud team and and vice versa. And that that's by Design. Because again, it's a very different skill set.
Speaker #6: From a margin perspective, we see a very healthy margin on those, and I'm going to I'm going to pause for now on talking about margin until we have some other things to talk about around this.
Speaker #6: But the one of the key benefits along with the capital light kind of deployment opportunity is that we start deriving a meaningful margin from day one.
And integrating the 2, I sometimes wonder if that will affect multiples but there's also a big reason to integrate the 2 because in a way we can sort of double dip into the into the margin into the into the profits of the revenue. So maybe Michael if you want to add to that but I know it's a it's an ongoing debate that we have internally and there is a path towards integrating the 2 which is what we're thinking about doing soon. Um would love to hear from Michael if he has additional thoughts about that.
Speaker #6: So because we are not working on having to pay off finance debt or data center costs, all of the revenue that we produce as part of those deals starts evenly creating revenue for the company from day one throughout the lifecycle of the deal.
Yeah, I think that there are benefits to both models there, but the way that we have it structured today, I actually think creates a good tension a healthy tension within the business, uh, in order for the cloud business, to be able to become a customer of the data center business and partner on those vertically integrated projects.
Speaker #6: And then on top of just standard development and operations, we have adjusted the way we think about software development, focusing our internal software development primarily on projects that help us drive revenue and balance sheet growth.
We almost have to earn that opportunity. We are not
Speaker #6: So we have a roadmap focused on how do we drive better efficiency to reduce costs, and we have a roadmap to think about how we drive incremental value for customers and revenue on inside of those inside of those deals and deployments.
Speaker #6: On top of that, then we layer on third-party services to provide an appropriate toolbox of APIs for developers that are leveraging our bare metal solutions.
Speaker #6: So it allows us to have layers of sales opportunities on top of each of these managed services deal that create incremental revenue and incremental margin in significant value for our customers.
Uh, the data center team is not beholden to the cloud organization to put our customers. In those, in those locations. Instead, we need to have a compelling customer and a compelling, uh, economic case in order to displace some of the demand that they already have. And I think that tension is very healthy because it allows the cloud team to have some have some goals and some parameters around how they're going to actually be able to do that vertical integration. So, again, I could see benefits to both sides, but I think the healthy tension inside the organization and the desire for the cloud team to partner more closely with the data center team on specific.
Projects are good for all of us.
Speaker #2: In general right now, the margin profile would look more like a software offering than a hardware offering.
Speaker #7: Okay. Okay. That's helpful. Thank you.
Okay. Perfect, thank you. And then, can you talk to the managed Service uh approach? Like how I mean? Uh obviously it helps you a lot on on not having to deploy Capital Etc but like what sort of a margin profile that you that we should think about their? Thank you.
Speaker #5: Thank you. And we'll take our next question from Brian Dodson with ClearStreet. Please go ahead.
Speaker #2: Hey, Brian.
Speaker #8: Hey. Hey. Thanks very much. So you've been signing a significant number of contracts and agreements over the past quarter. I guess as you're in discussions with those clients, do you find that there are leaning more toward longer duration contracts?
Speaker #8: And I guess how is the execution that you've done at NC1 impacting those conversations? It must be a net benefit.
Speaker #2: I don't think the execution at NC1 is related to the cloud contracts that we've been signing up. They're two separate businesses. But maybe Michael, do you want to just speak about the longer duration contracts on the cloud side?
The managed Services model is is pretty interesting. It was actually something that we put together in anticipation of internal Enterprise adoption. Um uh, AI for R&D and kind of internal development projects. What we found, uh, as we put that together, is that the demand for it is much greater than Enterprise customers who traditionally want to actually own the capex expense for a number of different reasons. We're actually seeing a lot of demand, both from other Neo clouds. Uh, it's kind of interesting Financial Partners, as well as, uh, some of the frontier in AI Labs that are or have grown to a point where they're actually considering taking on some of the capex, from a margin perspective, we see a very healthy margin on those and I'm going to, um,
Speaker #2: And I'm happy to double-click on if there's any if there's anything unanswered, Brian, feel free to ask away. I just want to make sure your questions are answered.
Speaker #2: Go ahead, Michael.
Speaker #6: On the cloud side of the business, we're seeing an interesting dynamic with regard to term of contract. Last year, in kind of coming into this year, customers were often looking for shorter-term arrangements.
I'm going to pause for now on talking about margin, until we have some other things to talk about around this. But the, the 1 of the key benefits along with the, uh, Capital light kind of deployment opportunity is that we start driving a meaningful margin from day 1. So because we are not working on having to pay off Finance, debt or data center.
Cost.
Speaker #6: But with the dynamics of the pricing that we're seeing inside the cloud GPU model, I think customers are starting to reevaluate how they procure these and on what duration.
Speaker #6: If we look at H100s are probably the best example given they've been in the market the longest. The actual cost per GPU hour for those is actually higher today than they were when they released into the market.
All of the revenue that we produce as part of those deals starts evenly, creating revenue for the company from day 1, throughout the life, cycle of the deal. And then on top of just standard development and operations. We have adjusted the way we think about software, development focusing. Our internal software development primarily on uh,
Speaker #6: And so customers are looking at some of those dynamics and then considering what is their total cost of ownership or total lease cost across the lifecycle of those deals and looking to both, A, preserve their access to those GPUs so they're not having to go out and fight a tough market three years from now to go find new capacity, but also looking for ways to bring that cost down and ensure that they have access to those GPUs for as long as makes sense for them.
Speaker #6: And so those longer duration contracts also allow us to adjust the economics within those deals in a way that's favorable to the customer and actually helps improve our margin throughout the lifecycle.
Inappropriate toolbox of apis for developers that are leveraging, our Bare Metal Solutions. So it allows us to have layers of, uh, sales opportunities on top of each of these managed Services deal. That create incremental revenue and incremental, margin and significant value for our customers.
In general, the soft the margin profile would look more like a software offering than a hardware offering.
Okay, okay. That's helpful. Thank you.
Speaker #6: So there's a couple of dynamics that are both in terms of in the market and kind of how customers are thinking about these things that are influencing these longer-term deals.
Thank you. And we'll take our next question from Brian Dodson with Clear Street. Please go ahead.
Speaker #8: Yeah. Great. Thanks very much. And then you mentioned that your next opportunity is now in late-stage diligence, I guess. Can you give us a little bit more color on what that might look like?
Speaker #8: And at this point, given your experience, would you favor a single campus opportunity or a multi-campus portfolio type of development?
Hey Brian. Hey hey, thanks very much. Um, so you've been uh you've been signing, you know, significant number of uh of contracts and agreements over the past quarter, I guess, as you're as you're, in discussions with those clients. Do you find that there are leaning more toward longer duration contracts?
Speaker #2: Yeah. Those are great questions. Billy, do you want to take that?
And um and and I guess how is the the execution that you've that you've done at MC1 impact in those conversations, it must be a net benefit.
Speaker #4: Sure. So it's leaning towards a single tenant opportunity. And again, think of the process that we went through for North Carolina 1, kind of the same deal here.
Speaker #4: Final stages of due diligence will be marrying the opportunity to a client shortly. If everything goes well, with the technical due diligence, and executing the same game plan that we've done in our 1.
I don't think the execution at NC1 is related to the cloud contracts that we've been signing up. Uh, they are two separate businesses. Um, but maybe, Michael, do you want to just speak about the longer-duration contracts on the cloud side? And I'm happy to double-click on it if there's any—
If there's anything unanswered, Brian, feel free to ask away. I just want to make sure your questions are answered. Go ahead, Michael.
Speaker #8: Great. Thanks very much.
Speaker #5: We'll take our next question from George Sutton with Craig Hallum. Please go ahead.
Speaker #2: Hey, George.
Speaker #3: Hey, Sam. And welcome to Justin. So a lot of great updates. Wanted to take the higher-level view on one of the challenges in the market recently have been the not-my-backyard theme.
Speaker #3: And it would seem to me that retrofits along with your cross-DC initiatives would be great answers to that challenge. Can you just talk through that in terms of the things you're looking at?
Speaker #2: Yeah, certainly. Billy, we'll talk to that just before you start. I do want to embrace how important it is to engage with the community.
Speaker #2: We had a community day at North Carolina 1, and we discussed how we're taking 85% less water than the previous tenant, that there'll be less noise in the previous tenant.
On the cloud side of the business, we're seeing an interesting Dynamic with regard to term of contract, uh, last year and kind of coming into this year. Customers were often looking for shorter term Arrangements, but with the Dynamics of the, the pricing that we're seeing inside the cloud GPU model, I think customers are starting to re-evaluate how, they, how they procure these and on what duration if we look at, you know, h100s are probably the best example. Given they've been in the market, the longest, the actual cost per GPU hour for those is actually higher today than they were when they released into the market. And so, customers are looking at some of those Dynamics. And then considering, what is their total cost of ownership or total lease cost across the life cycle of those deals and looking to both a uh, preserve their access to those gpus. So they're not having to uh go out and fight a tough Market. You know 3 years from now to go find new capacity but also looking for ways to bring that cost down and ensure that they have
Speaker #2: The retrofit format really does solve a lot of the pushback related to data center build-up, particularly against greenfields. And so we think engaging with the community getting support from local community leaders using retrofit as opposed to greenfield really does help solve a lot of the problems that are being discussed right now nationally.
Access to those GPUs, uh, for as long as makes sense for them. And so those longer duration contracts also allow us to, uh,
Adjust the economics within those deals in a way that's favorable to the customer and actually helps improve our margin throughout the life cycle. So, there's a couple dynamics, both in terms of what's happening in the market and how customers are thinking about these things, that are influencing these longer-term deals.
Speaker #2: In fact, CNN just published a pretty long interview about why fibers approach and how it's uniquely designed to help mitigate all the pushback I would encourage all the listeners to listen in on that.
Speaker #2: Billy, do you want to add a few more points on that question?
Yeah great. Thanks very much. And then you know, you mentioned that your next opportunity is now in late stage diligence, I guess, you know can can you give us a a little bit more color on what that might look like? And at this point, given your experience. Would you favor like a single campus opportunity or a multi campus portfolio type of development?
Speaker #4: Yeah, for sure. I mean, like Michael said, the GPU division and the data center division work hand in hand. And the cross-data center platform is going to enable us to deploy that technology in our sites and all the projects, all the stuff in our pipeline that we've been presenting have always been deemed on the smaller side, 30 megawatts, 60 megawatts, 99 megawatts.
Yeah, those are great questions. Billy, do you want to take that?
Speaker #4: There's a reason for that. It's done on purpose. We're able to execute these sites much quicker and bring that capacity online much quicker than competitors can like we've proved with North Carolina 1.
Sure. Um, so it's it's linked towards a single tenant, uh, opportunity, um, and, and again think think of the process that we went through for North Carolina 1 uh kind of the same deal here. Uh, final stages of due diligence will be marrying the opportunity to a client shortly. Uh, if everything goes well with the technical due diligence, uh, and uh, executing the same game plan that we, that we've done in our completing right now in North Carolina 1.
Great. Thanks very much.
We'll take our next question from George Sutton with Craig-Hallum. Please go ahead.
Speaker #4: And with the cross-data center platform, we can bundle these sites into larger clusters. So all this stuff is work in progress, stuff that we're cooperating together with the GPU division and the data center division.
Hey, George.
Speaker #4: And it's all strategic.
Speaker #2: Yeah, I want to highlight that point, that Billy made. This technology that we patented was patent pending. It is very unique and the reason for it, the impetus for it is if we have these smaller modular sites and if we can create a super virtual super cluster on these modular sites, we can basically solve for disparate smaller sites.
Hey, Sam. And welcome to Justin. So, uh, a lot of great updates wanted to, uh, take the higher level view on, you know, 1 of the challenges in the market, uh, recently have been, uh, not in my backyard theme, and it would seem to me that retrofits along with your cross, DC initiatives would be great answers to that challenge. Can you just talk through that in terms of the things you're looking at?
Speaker #2: And just create them into these virtual larger ones under one logical system. And so this technology helps basically solves for that issue. And if we have smaller sites, we could just connect them through this technology, which we think is transformational for the industry, let alone white fiber.
Speaker #3: Makes great sense. One other question on Crembu. So if I understand it, you have worked out access to 100 megawatts in 2027 with power access.
Speaker #3: Can you just walk through how that's influencing what's in your pipeline and how you're just a little bit more on that deal?
Speaker #2: Yeah. So the genesis for this,
Speaker #6: we have been working with Crembu for quite a while, and we have some couple of deals in late stage that we hope to be able to talk about where we're leveraging their facilities.
Uh related to um to uh data center, build up, particularly against greenfields. And so we think we think engaging with the community uh getting support uh from local community leaders uh using retrofit as opposed to Greenfield, really does help solve a lot of problems that are being discussed right now. Nationally in fact, CNN, just published um, uh, pretty long interview, uh, about white fibers approach and how it's uniquely designed to to help mitigate, uh, all the push back. I would encourage, um, all the listeners to, to listen in on that Billy. Do you want to add a few more points on that? On that question?
Speaker #6: Both Crembu and ourselves see the market today as trying to solve GPU and power access as two separate problems. And it's really hard to get those timelines to match with customer demand and their own timelines and goals and priorities around deploying the infrastructure.
Yeah, for sure. I mean, like, like Michael said that the GPU Division and the data center division, uh, work hand in hand, and the, the cross data center platform is going to enable us to
deploy that technology in our sites and
Speaker #6: By partnering together, we create a single face and we can align our both of our sales pipelines as well as our supply chain pipelines together in order to provide very clear views into what's available and when.
Speaker #6: For our customers, the genesis of this actually started as a technical collaboration because as we've shifted our focus to the physical layer of GPU infrastructure, we have been working with them around how do we think about driving the most value out of these highly dense GPU clusters.
all the projects, all, all all, all, all the pipe stuff in our pipeline that, that we've been presenting have always been deemed on the smaller side. 30 megawatts, 60 megawatts 99 megawatts. Um, there's a reason for that. It's done on purpose. Like we're able to execute these sites much quicker and bring that capacity online much quicker than competitors can. Like, we proved with North Carolina 1st data center platform. We can
Bundle these sites into larger clusters. So,
Speaker #6: And so for us and them being able to bring the skill sets of our engineering teams together as well as align on the availability timelines we have a very compelling kind of offering and workflow for customers.
All this stuff is a work in progress—stuff that we're, we're cooperating together with the GPU Division and the Data Center Division, and it's all strategic.
Speaker #6: We're looking to planning going forward, particularly those customers who have I would say defined scaling plans where we can align their needs with what we have upcoming.
Speaker #6: From a how it has affected our pipeline, it's actually what it has done today because we're just announcing this. So we'll see what it does relative to growing the pipeline.
Speaker #6: But what it does is it makes some of our pipeline more realistic in terms of being able to fulfill those customer demands both more near-term but also long-term.
Speaker #6: We had the good fortune of expanding a couple of customers this quarter, and we have others that we're talking to about working with them to partner across the next 12 months around their deployments and what they need and an arrangement like Crembu allows us to give them a very clear timeline and be able to fulfill and act as a good partner for them to help fulfill those needs.
Yeah, I want to highlight that that point, that, that Billy made this technology that we, uh, patented was patented patent pending. It is very unique and the reason for it, the, the impetus for it is if we have these smaller modular sites and if we can create a super virtual, uh, supercluster on these modular sites, uh, we can basically solve for uh desperate uh, smaller sites and just create them into these virtual larger ones, under 1 logical system. And so, this technology helps basically solves for that issue. And if we have smaller sites, we could just connect them through this technology, which we think is transformational for the industry, let alone White Fiber.
Speaker #3: All right. Great stuff. Thanks, guys.
Speaker #1: We'll take our next question from Paul Golding with MAGRI Capital. Please go ahead.
Makes great sense. So, one of the questions that—cream, boo. Um, so if I understand it, you have worked out access to 100 megawatts in 2027, with power access. Can you just walk through how that's influencing what's in your pipeline, and maybe just a little bit more on that deal?
Speaker #2: Hey, Paul.
Speaker #5: Hey, Sam. Thanks so much for taking the question and congrats on all the progress. Just wanted to ask initially on the 200 megawatt incremental opportunity.
Speaker #5: NC1 that Duke is evaluating, how would you expect to see that capacity potentially come on? Would it be phased once again as with the first around 100 gross, or would you expect to see this load study potentially lead to the full 200 coming on all at once and then how might you market that?
Yeah, so the genesis for this—we have been working with Kranu for quite a while, and we have a couple of deals in late stage that we hope to be able to talk about, where we’re leveraging their facilities.
Speaker #5: And then I have a follow-up. Thanks.
Speaker #2: Billy, you should definitely take that one.
Speaker #4: Hi, Paul. A little difficult to say right now. It's still too soon in the game for that. There will more than likely be one or even multiple sites that we're enacting on before that 200 megawatts is approved or any schedule for deployment on that.
Speaker #4: It is to be released.
Speaker #5: Understood. And then maybe from a cloud perspective, just turning to the comments on the prior question, I just wanted to double-click on the GPU availability itself.
Both kranu and ourselves. See the market today is trying to solve GPU and power access is 2 separate problems and it's really hard to get those timelines to match with customer demand, and their own timelines and goals, and priorities around deploying the infrastructure by partnering together. We create a single face and we can align our both of our sales pipelines, as well as our, uh, supply chain pipelines together. In order to provide very clear views into what's available. And when, uh, for our customers, the Genesis of this actually started as a technical collaboration, uh, because as we've shifted our Focus to the physical layer of GPU infrastructure. We have been working with them around. How do we think about, uh, driving the most value out of these highly dense, uh, GPU clusters. And so, for us and them being able to bring the skill set of our engineering teams together, as well, as a line on the availability time.
Speaker #5: We've been seeing in the marketplace, of course, how constrained GPU capacity is. Through this partnership that you have, just in terms of access to the compute, how I guess, how confident are you into sort of the forward-looking availability of that supply?
Speaker #5: In particular, as you noted that you have a new cloud services agreement around Vera Rubin and B300 infrastructure, maybe in particular around Vera Rubin, given the memory considerations there.
Speaker #5: And presumably the opportunity to sell through it at a higher price to your customers. Just how is the absolute quantum of availability of compute looking based on the relationships that you have?
Speaker #5: Thank you.
Speaker #6: So I'll address this in two parts. So the first part is relative to our relationship with Crembu. It actually helps us with availability. Being able to leverage both our connections kind of across the industry from OEMs and NVIDIA as well as their own, allows us a little bit better access and I think some of the work they've done around cluster density and kind of the footprint and how their data centers are designed have helped them obtain some allocations that we can then take advantage of.
Their deployments and what they need, and an arrangement like Kranu, allows us to give them a very clear timeline and be able to fulfill and act as a good partner for them to help fulfill those needs.
All right. Great stuff. Thanks, guys.
We'll take our next question from Paul Golding with MRI Capital. Please go ahead.
Paul.
Speaker #6: So on the whole, it is a net benefit to us to be able to have this partnership and relative to allocations. A second piece, I think I would like to address on this is that one of the things that we did when we went to restructure this business is to put a strategy in place that prevents us from chasing our tails around near-term GPU demand.
Hey Sam. Thanks so much for taking the question and congrats on all the progress. Uh, just wanted to ask initially on the 200 megawatt, incremental opportunity at uh, uh, and c 1. That Duke is evaluating. How would you expect to see that capacity potentially? Come on, would it be phased? Uh once again as with the the first uh around 100 uh gross or would you expect to see uh this load study potentially lead to the full 200 coming on all at once and then uh how might you Market that and then I have a follow-up. Thanks.
Billy, you should definitely take that one.
Speaker #6: It's funny, one of the things that our customers love about us is that we're very willing to say no. And the reason we say no is because we do not want to be able we do not want to put ourselves or our customers in a position where we are making commitments around delivery timelines that we are not absolutely certain that we can meet.
Speaker #6: And so a lot of the discussions we're having are for deployments that are far enough out that we can be very certain that we can get the GPU allocations in place in order to serve those customers and particularly for those customers that are partnering with us to scale, we are looking out at a timeline of about 12 months.
Hi Paul. Um, a little difficult to say right now, it's it's still too soon in the game for that. Um, there's will more than likely be 1 or even multiple sites uh, that that were enacting on before that 200 megawatts uh, is approved or any schedule for deployment on that. Uh, is to be released
Speaker #6: And so it's a little bit easier for us to make sure that we can source the right infrastructure in order to support those customers because of the way that we've set the business up.
Speaker #5: Thanks so much. Maybe just to sneak one in on the back of that response, do you might we expect to see white fiber buying GPU compute speculatively in the marketplace based on your visibility to this sort of demand curve and how it's coming to you and realizing committed contracts?
Speaker #5: Thank you.
Speaker #6: Perhaps, but I don't see that happening in the near term. It would have to be really the right opportunity for us. If I go back to the initial parameters that we put in place as we started restructuring the business, that speculative purchasing doesn't really fall into that.
Understood and then, uh, maybe from a, uh, uh, from a, a cloud perspective, just turning to the comments, uh, on the prior question. I just wanted to double click on the GPU availability itself. We've been seeing in the marketplace. Of course, how constrained GPU capacity is, um, through this partnership, that you have just in terms of access to the compute. Um, how, uh, I guess how confident are you in, to sort of the, the forward-looking, uh, availability of that Supply in particular, as you noted that, uh, you, you have a new, uh, cloud services agreement around your Ruben, uh, and be 300 infrastructure, maybe in particular around Euro Ruben given, uh, the, the memory, uh, considerations there. Um, and and presumably the opportunity to sell through at a at a higher, uh, price to your customers. Just, how is the absolute Quantum of availability of compute looking based.
On the relationships that you have, thank you.
Speaker #6: Now, there are some things that we're working on where it might make sense for us to do that in the future, but I'm not ready to comment on kind of what those developments are but I will say that today we are really focused on fulfilling real customer need based on real contracts.
Speaker #6: With high-quality customers. And so the speculative purchasing is not a thing that's on the table for us at the moment.
Speaker #5: Got it. Thank you so much.
So I I'll address this in in 2 parts. So, the first part is relative to our relationship with kranu. It actually helps, uh, helps us with availability. Uh, being able to leverage both our connections, uh kind of across the industry from oems and Nvidia, as well as their own uh allows us uh a little bit better access. And I think some of the work they've done around cluster density uh in kind of the footprint and how their data centers is
Speaker #2: I guess in priority given our available capital today.
Speaker #5: Great. Thanks.
Speaker #1: We'll take our next question from John Totoro with Needham and Company. Please go ahead.
Speaker #7: Hey, guys. Thanks for taking my question. I was hoping to just get a little bit more commentary on the financing market, whether for NC1 or some of the future sites.
Designed has, uh, helped them, obtain, some allocations that, um, we can then take advantage of. So, as as on the whole it is a, it is a net benefit to us, uh, to be able to have this partnership and relative to allocations.
Speaker #7: Is the most likely guarantors here? We're talking about chip manufacturers. Are the banks starting to step in more in the future? Do you target more hyperscaler leases?
Speaker #7: Just any commentary there. Thanks.
Speaker #5: Can you go ahead.
Speaker #6: I mean, overall, I mean, we're really just trying to solve for the lowest cost of capital. And I think we've had certain things that we've learned along the way on this NC1 financing process that, as noted, has taken longer than expected and there would have been certain contractual features, certainly that would have made it easier to finance.
A second piece, I think, I would like to address on this is that, um, 1 of the things that we did when we went to restructure, this business is to put a strategy in place that, uh, prevents us from chasing our tails around near-term, uh, near-term GPU demand. Uh, it's funny 1 of the things that our customers love about us is that we're very willing to say. No. And the reason we say no, is because we do not want to be able, we do not want to put ourselves or our customers in a position where we are making commitments around delivery timelines, that we are not absolutely certain that we can meet. And so a lot of the discussions were, having are, uh, 4 deployments that are far enough out that we can,
Speaker #6: So we know what we need to solve. We know that we want to establish a structure with counterparty that's financeable from day one and have that firmly underwritten.
Speaker #6: So whether that be directly with a hyperscaler backed by a chip manufacturer or whatever structure is really advantageous from a cost of capital perspective, that's kind of our priority.
Be very certain that we can get the GPU allocations in place in order to serve those customers. And particularly for those customers that are partnering with us to scale, we are looking out at a timeline of about 12 months, and so it's a little bit easier for us to make sure that we can source the right infrastructure in order to support those customers, because of the way that we've set the business up.
Speaker #6: So there's not one above the other. It's really just solving for the lowest cost of capital and the best financing structure.
Speaker #7: Okay. Understood. Makes sense. And then one on the cloud segment, seems like pretty good pricing on all of them. The GPU per hour pricing I was backing into was ranging from $3.47 up to above $7.
Thanks so much, maybe just to sneak 1 in on the back of that response. Do you? Uh, might we expect to see White Fiber buying, uh, GPU compute speculatively in the marketplace based on your visibility to this um, sort of demand curve and and how it's coming to you and and um, realizing committed contracts. Thank you.
Speaker #7: And I think that lower one includes a revenue share. So likely comes even better. Just wondering if margin starts to expand maybe sooner than folks were initially thinking would love to just get your thoughts there on that margin expansion opportunity.
Speaker #6: So from a margin expansion standpoint, we look across the deal types. I think we will see an improvement in margin kind of across our deals as we look at the mix that we're looking to deploy.
Developments are. Um, but I I will say that today we are really focused on fulfilling real. Customer need based on real contracts uh with high-quality customers. And so the speculative perching is purchasing is not a thing that's uh, on the table for us at the moment.
Speaker #6: Over the coming years, customers that we talk to are especially these folks that are more mature in the AI lab space or in other areas or particularly in the enterprise they understand the balance between cost and quality and overall ROI on those clusters.
Got it. Thank you so much, and priority will be given to our available capital today.
Great, thanks.
We'll take our next question from Don, John Totoro with Neum and Company. Please go ahead.
Hey guys, thanks for taking my question. I was hoping to get a little bit more commentary on the financing market.
Speaker #6: And so many folks have been burned kind of going for the cheaper pricing and winning in doing so they actually get less value out of that because they suffer from more downtime in this SLAs and those sorts of things.
Speaker #6: So because of the quality of our engineering team, we are able to deliver really high-quality deployments and as a result of that, that's a thing that customers are willing to pay a bit more for.
Uh, whether for nc1 or some of the future sites, the most likely guarantors here. Um, you know, we're talking about chip manufacturers are the banks starting this step in more uh in the future. Do you target more hyperscaler? Leases um, just any commentary there? Thanks.
You go ahead. I am—overall, I mean, we're...
Speaker #6: So I think we will see improvement for a couple of reasons over time, but it's going to take some time for that to develop.
Really just trying to solve for the lowest cost of capital, and I think we've had certain—
Speaker #7: Okay. That's great. Love to see it. And congrats on all the progress.
Speaker #2: Thank you.
Speaker #1: Well, next go to Michael Donovan with Compass Point. Please go ahead.
Things that we've learned along the way and this nc1 Finance team process that has noted. It's taken longer than expected, and there would have been certain contractual features. Certainly, that would have
Speaker #7: Thank you for taking my question. Congrats for the progress, guys. So you now have operations across the US, Canada, Iceland, France. How do you think about geographic expansion from here?
Speaker #7: What other markets look most attractive and what factors are driving where you've may potentially expand?
Speaker #6: Those are probably different answers depending on the business unit. Billy, do you want to talk about it from a co-location perspective? And then Michael, can discuss it from a yeah.
It made it easier, um, to finance, so we know what we need to solve. We know that we want to, um, establish a structure with a counterparty that's financial from day one and have that firmly underwritten. So whether that be directly with the hyperscaler, um, backed by a chip manufacturer—whatever structure is really advantageous from a cost of capital perspective. Um,
that's kind of our priority, so there's not
Speaker #7: Sure. On the data center co-location side, it's quite simple. It's a mix of client opportunity and where we can marry that and match that with available power in the timeline required.
One above the other, it's really just solving for the lowest cost of capital and the best financing structure.
Speaker #7: So everything that we're looking at right now is mostly in the United States, a little bit in Canada. For the data center co-location side.
Speaker #6: On the cloud services side, it's really pardon me. Sorry. Continuing to talk over you there. On the cloud side, it's really driven by customer demand and customers have different requirements for where they want their GPUs to be placed, whether it be for compliance reasons or other things, performance due to low latency, things like that.
Okay. Understood makes sense. And then 1 on the cloud segment seems like pretty good, uh, pricing on all of them, you know, the GPU per hour, uh, pricing hours back into was you know, ranging from 3 to 47 cents up to about 7 Bucks and I think that lower 1 includes a revenue share, so likely comes even better. Um, just wondering if if margin starts to expand, maybe sooner than folks were initially thinking, uh, would love to just get your thoughts there, uh, on that margin expansion opportunity.
Speaker #6: So it's really driven by our customers. And so most of our deals that we're seeing today are in North America. But we are seeing some interest in European deployments, particularly for folks that have GDPR concerns, things like that.
So from a margin expansion standpoint was we look across the deal types. I think we will see an improvement in margin in kind of a cross our deals. As we look at the mix that we're looking to deploy uh over the coming years. Um customers that we talk to are especially these uh folks that are uh more mature in the AI lab space or in other.
Speaker #6: So we'll see how that goes over time. But right now, the economics of where we place those GPUs also has an impact and right now the US is the most attractive market relative to what we're seeing from our customers.
Speaker #7: Thank you. That's helpful. And I understand you want to keep discussions on a high level, but on project Redwood and Cross Data. Center networking.
Speaker #7: Is this primarily suited for inference or could it support training as well? And theoretically, how many geographically separate sites could you aggregate?
Speaker #6: Today, the way that we're building it is to support multiple use cases. One of the reasons why we selected Modal as the customer for our R&D cluster is because they were doing some intense training workloads.
Other areas or particularly in the Enterprise, they understand the balance between cost and quality and overall Roi on those clusters. And so many folks have been burned kind of going for the the cheaper pricing, uh, and winning in doing. So they actually get less value out of that because they suffer from more downtime, and this slas and those sorts of things. So, because of the quality of our engineering team, uh, we are able to deliver really high quality, um, deployments and as a result of that, that's a thing that customers are willing to pay a bit more for. So I think we will see Improvement for a couple of reasons over time, but it's going to take some time for that to develop.
Okay, that's great. Love to see it, and uh, congrats on all the progress.
Thank you, call, next. We'll next go to
Point. Please go ahead.
Speaker #6: And those workloads being able to put those clusters and run them as a single virtual cluster, training was the most demanding workload that we could put on there.
Speaker #6: So I think we can support kind of both ends of the spectrum from training to inference. And it'll be interesting to see what kind of use cases our customers want to use that for because while we talk about it as a single virtual cluster is kind of the primary way people are talking about that today, there's lots of other potential use cases we can look at from telecommunications to edge computing and others.
Thank you for taking my question. Congrats on the progress, guys. So, you now have operations across the US, Canada, and, I assume, France. Are you thinking about geographic expansion from here? What other markets look most attractive, and what factors are driving where you may potentially expand?
Those are probably different answers depending on the business unit. Uh, Billy, do you want to talk about it from a co-location perspective within Michael?
Speaker #6: So we'll be really interested to see what our customers want to do with that once we bring that to market and finalize the testing across the full fiber span.
Can discuss it, sure, on the data center - cool location side. It's quite simple. It's a mix of, uh, client opportunity and where we can...
Speaker #7: Appreciate it.
Speaker #1: And our last question comes from Nathan Frankowitz with Canterfoot's Gerald. Please go ahead.
Speaker #8: Hey, guys. Thanks for taking my question. Just on the cross data center product, I guess, how do you think about the long-term opportunity and what's the pathway to monetization?
Marry that and match that with available power in the timeline required. So, uh, everything that we're looking at right now is mostly, uh, in the United States; a little bit in Canada, uh, for the data center colocation site.
on the cloud services side, it's really
Speaker #8: Is it more of an internal capability or can you talk through the potential scalability for commercialization? Thank you.
Speaker #7: Could be both internal and we're even thinking about licensing it. But Michael, is leading that workstream. So go ahead, Michael.
Speaker #6: Thanks, Sam. Yeah. Sam is correct. I think there is and as Billy mentioned earlier as well, we think there's some really compelling use cases for our own internal utilization of this, whether it be connecting two large sites with lots of megawatts.
Speaker #6: There's clearly some economic value in being able to connect as an example to 50-megawatt sites and go market that as 100. There's some value in that.
Speaker #6: There's also value in being able to leverage fragmented power resources.
So it's really driven by our customers, and um, so most of our deals that we're seeing today are in North America. Uh, but we are seeing some interest in European deployments particularly for folks that have gdpr concerns, things like that. So we'll see how that goes over time. Uh, but right now the economics of where we place those gpus also has an impact. And, and right now, the US is the most attractive Market relative to what we're seeing from our customers.
Speaker #7: That's understatement. There is massive value in that.
Speaker #6: So I think as power continues to become a challenge for folks, being able to aggregate multiple sites, into a single cluster is going to be a value proposition.
Thank you, that's helpful. And I understand you want to keep this discussion at a high level, but, uh, Project Redwood and cross data.
Speaker #6: And we don't know yet what's going to happen from a legislative standpoint, but say we get to a world where there are taxes applied to clusters or, excuse me, data centers over certain megawatts, this technology allows us to really think strategically around how we deployed in order to preserve kind of the economic value of the sites by kind of bringing them together.
Center networking—is this primarily suited for inference, or could it support training as well? And, theoretically, how many geographically separate sites could you aggregate?
Speaker #6: In terms of the number of sites, we will see. The next phase of testing around this will be to test and demonstrate the efficacy of the hub and spoke model.
Speaker #6: And so we believe that it can expand significantly, but we will wait to see when we have some real data that we can present to the market.
Speaker #7: Awesome. Thank you, guys.
Today, uh, the way that we're building it is to support multiple use cases. Uh, one of the reasons why we've selected Modal as the customer for our R&D cluster is because they were doing some intense training workloads. And those workloads, being able to, uh, push those clusters and run them as a single virtual cluster—training is the most demanding workload that we could put on there. So I think we can support kind of both ends of the spectrum, from training to inference. And it'll be interesting to see what kind of use cases our customers want to use that for, because while we talk about it as a single virtual cluster, which is kind of the primary way people are talking about that today, there's lots of other potential use cases we can look at, from telecommunications.
Speaker #1: And now I'd like to turn it back to our speakers for any final or closing remarks.
Speaker #7: Sorry, I was on mute. Thank you, everyone, for joining us today. We look forward to the next quarterly call. Until then, we'll be working very hard and delivering results.
Edge, computing, and others. So, we'll be really interested to see what our customers want to do with that once we bring that to market and finalize the testing across the full fiber span.
I appreciate it.
Speaker #7: Thank you.
And our last question comes from Nathan Franco Vitz with Cantor Fitzgerald, please go ahead.
And, um, just on the cross data center product. Um, I guess, how do you think about the long-term opportunity and what's the pathway to monetization? Is it more of an internal capability or um, can you talk to me like the potential scalability for commercialization? Thank you.
Could you both internal and we're even thinking about licensing it. But my goal um, is leading that work stream. So go go ahead, Michael.
Thanks Sam. Yeah, Sam is correct. I think there is, and is Billy mentioned earlier as well. We think there's some really compelling use cases for our own, internal utilization of this, whether it be connecting to large, uh, sites with lots of megawatts. There's clearly some economic value in being able to connect as an example, to 50 megawatt sites and go market that as a 100. There's some value in that there's also value in being able to leverage fragmented power resources. That's, that's, that's a understatement. There is massive value in that. Okay, so yeah, I think, you know, as power continues to, uh, become a challenge for folks, being able to aggregate multiple sites,
Into a single cluster is going to be a value proposition and and we don't know yet, what's going to happen from a legislative uh, standpoint. But say we get to a world where there are taxes applied to clusters or excuse me, uh, data centers over certain megawatts. This technology allows us to really think strategically around how we deployed in order to, uh, preserve kind of the, the economic value of the sites by kind of bringing them together in terms of the number of sites. Uh, we will, uh, we will see, uh, the next phase of testing around this will be to test and, and demonstrate the efficacy of the Hub and spoke model. Uh, and so, we believe that it can expand, uh, significantly. But we will wait to see, uh, when we have some real data that we can present to the market.
Awesome. Thank you guys.
And I'd like to turn it back to our speakers for any final or closing remarks.
All right, I was on mute. Uh, thank you everyone for joining us today. We look forward to the next quarterly call until then we'll be working very hard and, uh, delivering results. Thank you.
Thank you. And this does conclude today's call. We thank you for your participation and you may now disconnect