CORRECTING and REPLACING Core Scientific Announces Second Quarter 2022 Results

August 22, 2022

Please replace the release dated August 11, 2022, with the following corrected version due to multiple revisions.

Core Scientific's Marble, NC Data Center (Graphic: Business Wire)

Core Scientific's Marble, NC Data Center (Graphic: Business Wire)

The updated release reads:

CORE SCIENTIFIC ANNOUNCES SECOND QUARTER 2022 RESULTS

Core Scientific, Inc. (NASDAQ: CORZ), a leader in high-performance blockchain data centers and software solutions, reported its financial results for the second quarter ended June 30, 2022.

Second Quarter 2022 Financial Highlights (Compared to Second Quarter 2021)

  • Self-mining bitcoin production increased 1,769% to 3,365 bitcoins
  • 1,959 bitcoins held as of June 30, 2022
  • Total hashrate of 17.9 EH/s consisting of 10.3 EH/s self-mining and 7.6 EH/s hosting

YTD 2022 Financial Highlights (Compared to YTD 2021)

  • Self-mining bitcoin production increased 1,601% to 6,567 bitcoins

“Our team remained focused on our business objectives, delivering second quarter revenue of $164.0 million, an increase of more than 115 percent over the prior year,” said Mike Levitt, Core Scientific Chief Executive Officer. “We are now managing over 200,000 servers generating over 20 EH/s in approximately 800,000 square feet of our own custom-developed data centers across five states. We deployed 14,000 servers in July and have already deployed over 17,000 in August. This month we are averaging over 40 self-mined bitcoins per day, including producing a company record 45.7 bitcoin in a single day on August 10. With enhanced liquidity from bitcoin sales and our committed equity facility, line of sight to improved hosting margins and manageable principal and interest payments on our liabilities, we remain well positioned to navigate current market conditions and emerge from these markets a larger, stronger and more profitable company.”

Second Quarter 2022 Financial Results (Compared to Second Quarter 2021)

Total revenue of $164.0 million increased by $88.7 million, or 118%, from $75.3 million. The increase in total revenue was driven primarily by increases in digital asset mining revenue and hosting revenue, partially offset by a decrease in equipment sales.

Total hosting revenue of $38.9 million increased by $20.4 million, or 110%, from $18.6 million. The increase in hosting revenue from customers was driven primarily by the onboarding of new clients and the execution of new related party hosting contracts for miners deployed.

Total equipment sales of $15.2 million decreased by $30.8 million, or 67%, from $46.0 million. The decrease in equipment sales to customers was primarily driven by fewer miners being deployed, partially offset by higher equipment sales to related parties driven by higher demand for new generation mining equipment.

Digital asset mining revenue of $109.8 million increased by $99.1 million, or 920%, from $10.8 million. The increase in mining revenue was driven primarily by an increase in our self-mining hash rate to 10.3 EH/s from 0.45 EH/s. The total number of bitcoins awarded was 3,365 compared to 180. The average price of bitcoin was $32,502 as compared to $46,498, a decrease of 30%.

Cost of revenue of $151.3 million increased by $100.5 million, or 198%, from $50.8 million. The increase in cost of revenue was primarily attributable to higher power consumption costs of $45.9 million driven by an increase in the number of self-mining and hosted miners operating in our fleet. Depreciation expense increased $46.3 million driven by an increase in the number of self-mining units deployed, higher personnel and facilities operating costs driven by the opening and expansion of our data centers of $25.8 million, which includes increased stock-based compensation of $16.9 million, increased payroll and benefit costs for personnel of $3.6 million. The increase in cost of revenue was partially offset by lower equipment sales costs of $17.6 million. As a percentage of total revenue, cost of revenue totaled 92% and 67% for the three months ended June 30, 2022 and 2021, respectively.

Gross profit of $12.7 million decreased by $11.8 million, or 48%, from $24.5 million. The decrease in gross profit was driven primarily by a $18.9 million decrease in gross profit in the hosting and equipment segment, partially offset by an $7.1 million increase in gross profit for the mining segment, driven by an increase in mining revenue. The decrease in gross margin for the mining segment was driven by higher miner depreciation as well as higher power costs and lower average price per bitcoin mined.

Operating loss of $1.05 billion decreased by $1.06 billion from an operating income of $15.5 million. The decrease was predominantly due to a $790.8 million impairment of goodwill and other intangibles, a $150.2 million impairment of digital assets, higher total operating expenses of $106.9 million and a $13.1 million loss on exchange or disposal of property, plant and equipment. The increase in total operating expenses was driven primarily by a $92.0 million increase in stock-based compensation, primarily reflecting an amendment to our restricted stock unit awards made in June 2022 that resulted in the elimination of the performance condition that had previously required a change in control or public offering before the awards could vest. The increase in operating expenses was further driven by a $4.6 million of higher professional fees, primarily related to investments made to support public company readiness, and $3.4 million of higher payroll and benefit costs for personnel.

Net loss of $810.5 million increased by $807.1 million from a net loss of $3.4 million. The increase in net loss was due to a $790.8 million impairment of goodwill and other intangibles, a $150.2 million impairment of digital assets and higher total operating expenses of $106.9 million, partially offset by a decrease in the fair value of the convertible notes (excluding interest expense and changes in instrument-specific credit risk) and corresponding gain of $195.1 million, a decrease in the fair value of the derivative warrant liabilities and corresponding gain of $22.2 million and an increase in the income tax benefit of $48.8 million.

Adjusted EBITDA increased $38.3 million to $59.1 million from $20.8 million. The increase was due to higher gross profit, excluding depreciation and amortization and share-based compensation, partially offset by higher operating expenses, excluding stock-based compensation and depreciation and amortization.

YTD 2022 Financial Results (Compared to YTD 2021)

Total revenue of $356.5 million increased by $226.9 million, or 175%, from $129.5 million. The increase in total revenue was driven primarily by increases in digital asset mining revenue and hosting revenue, partially offset by a decrease in equipment sales.

Total hosting revenue of $72.2 million increased by $40.9 million, or 131%, from $31.3 million. The increase in hosting revenue from customers was driven primarily by the onboarding of new clients and the execution of new related party hosting contracts for miners deployed.

Total equipment sales of $41.5 million decreased by $36.4 million, or 47%, from $77.9 million. The decrease in equipment sales to customers was primarily driven by fewer miners being deployed, partially offset by higher equipment sales to related parties driven by higher demand for new generation mining equipment.

Digital asset mining revenue of $242.8 million increased by $222.4 million, from $20.4 million. The year over year increase in mining revenue was driven primarily by an increase in our self-mining hash rate. The total number of bitcoins awarded was 6,567 compared to 386. The average price of bitcoin was $36,876 as compared to $45,914, a decrease of 20%.

Cost of revenue of $273.8 million increased by $183.3 million, or 203%, from $90.5 million. The increase in cost of revenue was primarily attributable to higher power consumption costs of $83.5 million driven by an increase in the number of self-mining and hosted miners operating in our fleet . Depreciation expense increased $85.3 million driven by an increase in the number of self-mining units deployed, higher personnel and facilities operating costs driven by the opening and expansion of our data centers of $35.7 million, which includes increased stock-based compensation of $18.9 million, increased payroll and benefit costs for personnel of $6.7 million. The increase in cost of revenue was partially offset by lower equipment sales costs of $21.3 million. As a percentage of total revenue, cost of revenue totaled 77% and 70% for the six months ended June 30, 2022 and 2021, respectively.

Gross profit of $82.7 million increased by $43.6 million, or 112%, from $39.1 million. The increase in gross profit was driven primarily by a $63.4 million increase in gross profit for the mining segment, driven by higher mining revenue as described above, partially offset by a $19.7 million decrease in the hosting and equipment segment. The decrease in gross margin for the mining segment was driven by higher miner depreciation as well as higher power costs and lower average price per bitcoin mined.

Operating loss of $1.07 billion decreased by $1.10 billion from an operating income of $24.6 million. The decrease was predominantly due to a $790.8 million impairment of goodwill and other intangibles, a $204.2 million impairment of digital assets, higher total operating expenses of $146.3 million and a $13.1 million loss on exchange or disposal of property, plant and equipment. The increase in total operating expenses was driven primarily by a $115.2 million increase in stock-based compensation, primarily reflecting an amendment to our restricted stock unit awards made in June 2022 that resulted in the elimination of the performance condition that had previously required a change in control or public offering before the awards could vest. The increase in operating expenses was further driven by a $12.4 million of higher professional fees, primarily related to investments made to support public company readiness, and $5.6 million of higher payroll and benefit costs for personnel. These decreases in operating income were partially offset by an increase in gross profit of $43.6 million and an increase on gain from sales of digital assets of $14.0 million.

Net loss of $1.28 billion decreased by $1.28 billion from net income of $3.4 million. The decrease in net income was due to a $790.8 million impairment of goodwill and other intangibles, a $204.2 million increase in impairment of digital assets, an increase in the fair value of the convertible notes (excluding interest expense and changes in instrument-specific credit risk) and corresponding loss of $191.0 million, higher total operating expenses of $146.3 million and an increase in interest expense, net of $35.8 million. These decreases in net income were partially offset by an increase in gross profit of $43.6 million, a decrease in the fair value of the derivative warrant liabilities and corresponding gain of $32.5 million, an increase on gain from sales of digital assets of $14.0 million and an increase in the income tax benefit of $6.4 million.

Adjusted EBITDA increased $118.9 million to $152.2 million from $33.3 million. The increase was due to higher gross profit, excluding depreciation and amortization and share-based compensation, partially offset by higher operating expenses, excluding stock-based compensation and depreciation and amortization.

LIQUIDITY

As of June 30, 2022, cash and cash equivalents totaled $128.5 million and restricted cash totaled $11.9 million.

As of June 30, 2022, the Company’s Bitcoin balance totaled 1,959. The carrying value of our digital assets was $40.7 million, which reflects accumulated impairment losses of $20.1 million year-to-date.

B. Riley Equity Line of Credit

Under the agreement with B. Riley Principal Capital II, LLC (“B. Riley”), Core Scientific has the right, without obligation, to sell and issue up to $100.0 million of shares of its common stock to B. Riley, subject to certain limitations and satisfaction of certain conditions. Purchase notices may be issued to B. Riley over a 24-month period. Core Scientific issued B. Riley 573,381 shares of common stock as consideration for B. Riley’s commitment to purchase Core Scientific common stock under the purchase agreement. Further details are contained in a Current Report on Form 8-K Core Scientific was filed with the Securities and Exchange Commission.

OUTLOOK

For 2022, the Company continues to expect to achieve total hashrate of between 30 EH/s and 32 EH/s, with total power of approximately 1 GW.

The foregoing estimates are forward-looking and reflect management's view of current and future market conditions, subject to certain risks and uncertainties and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates.

ABOUT CORE SCIENTIFIC

Core Scientific is one of the largest publicly traded blockchain data center providers and miners of digital assets in North America. Core Scientific has operated blockchain data centers in North America since 2017, using its facilities and intellectual property portfolio for colocated digital asset mining and self-mining. Core Scientific operates data centers in Georgia, Kentucky, North Carolina, North Dakota and Texas, and expects to commence operations in Oklahoma in the second half of 2022. Core Scientific’s proprietary Minder® fleet management software combines the Company’s colocation expertise with data analytics to deliver maximum uptime, alerting, monitoring and management of all miners in the Company’s network. To learn more, visit http://www.corescientific.com. Information on our website and social media platforms is not incorporated by reference in this release or in any of our filings with the U.S. Securities and Exchange Commission.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our and our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release may include, for example, statements about:

  • meet future liquidity requirements and comply with restrictive covenants related to indebtedness;
  • effectively respond to general economic and business conditions, including the price of bitcoin;
  • maintain the listing on, or to prevent the delisting of our securities from, Nasdaq or another national securities exchange;
  • obtain additional capital, whether equity or debt;
  • enhance future operating and financial results;
  • successfully execute expansion plans;
  • attract and retain employees, officers or directors;
  • anticipate rapid changes in laws, regulations and technology;
  • execute its business strategy, including enhancement of the profitability of services provided;
  • realize the benefits expected from the acquisition of Blockcap, including any related synergies;
  • anticipate the uncertainties inherent in the development of new business strategies;
  • anticipate the impact of the COVID-19 pandemic, including variant strains of COVID-19, and its effect on business and financial conditions;
  • manage risks associated with operational changes in response to the COVID-19 pandemic, including the emergence of variant strains of COVID-19;
  • increase brand awareness;
  • upgrade and maintain effective business controls and information technology systems;
  • acquire and protect intellectual property;
  • comply with laws and regulations applicable to its business, including tax laws and laws and regulations related to data privacy and the protection of the environment;
  • stay abreast of modified or new laws and regulations applicable to its business or withstand the impact of any new laws and regulations related to its industry;
  • anticipate the impact of, and response to, new accounting standards;
  • anticipate the significance and timing of contractual obligations;
  • maintain key strategic relationships with partners and distributors;
  • respond to uncertainties associated with product and service development and market acceptance;
  • anticipate the impact of changes in U.S. federal income tax laws, including the impact on deferred tax assets; and
  • successfully defend litigation.

These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should read this press release with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this press release and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

Core Scientific, Inc.

Consolidated Balance Sheets

(in thousands, except par value)

(Unaudited)

 

 

June 30, 2022

 

December 31, 2021

Assets

(Unaudited)

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

128,542

 

 

$

117,871

 

Restricted cash

 

11,938

 

 

 

13,807

 

Accounts receivable, net

 

2,840

 

 

 

1,382

 

Accounts receivable from related parties

 

677

 

 

 

300

 

Deposits for equipment

 

165,662

 

 

 

358,791

 

Digital assets

 

40,664

 

 

 

234,298

 

Prepaid expenses and other current assets

 

161,234

 

 

 

30,111

 

Total Current Assets

 

511,557

 

 

 

756,560

 

Property, plant and equipment, net

 

1,049,070

 

 

 

597,304

 

Goodwill

 

266,038

 

 

 

1,055,760

 

Intangible assets, net

 

3,590

 

 

 

8,195

 

Other noncurrent assets

 

14,903

 

 

 

21,045

 

Total Assets

$

1,845,158

 

 

$

2,438,864

 

Liabilities, Redeemable Preferred Stock and Stockholders’ Equity

 

 

 

Current Liabilities:

 

 

 

Accounts payable

$

31,252

 

 

$

11,617

 

Accrued expenses and other

 

124,488

 

 

 

67,862

 

Deferred revenue

 

71,837

 

 

 

63,417

 

Deferred revenue from related parties

 

36,923

 

 

 

72,945

 

Derivative warrant liabilities

 

5,808

 

 

 

 

Finance lease liabilities, current portion

 

28,570

 

 

 

28,452

 

Notes payable, current portion

 

217,674

 

 

 

75,996

 

Total Current Liabilities

 

516,552

 

 

 

320,289

 

Finance lease liabilities, net of current portion

 

48,701

 

 

 

62,145

 

Notes payable, net of current portion (includes $726,554 and $557,007 at fair value)

 

852,323

 

 

 

652,213

 

Other noncurrent liabilities

 

11,130

 

 

 

18,531

 

Total Liabilities

 

1,428,706

 

 

 

1,053,178

 

Contingently redeemable convertible preferred stock; $0.0001 par value; 2,000,000 shares authorized; — and 10,826 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively; $— and $45,164 total liquidation preference at June 30, 2022 and December 31, 2021, respectively

 

 

 

 

44,476

 

Commitments and contingencies

 

 

 

Stockholders’ Equity:

 

 

 

Common stock; $0.0001 par value; 10,000,000 shares authorized at both June 30, 2022 and December 31, 2021; 353,481 and 271,576 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

35

 

 

 

27

 

Additional paid-in capital

 

1,695,748

 

 

 

1,379,581

 

Accumulated deficit

 

(1,304,111

)

 

 

(27,432

)

Accumulated other comprehensive income (loss)

 

24,780

 

 

 

(10,966

)

Total Stockholders’ Equity

 

416,452

 

 

 

1,341,210

 

Total Liabilities, Redeemable Preferred Stock and Stockholders’ Equity

$

1,845,158

 

 

$

2,438,864

 

Core Scientific, Inc.

Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

 

 

 

 

Hosting revenue from customers

$

31,338

 

 

$

11,895

 

 

$

58,676

 

 

$

20,251

 

Hosting revenue from related parties

 

7,598

 

 

 

6,667

 

 

 

13,474

 

 

 

11,003

 

Equipment sales to customers

 

3,507

 

 

 

36,457

 

 

 

3,923

 

 

 

60,499

 

Equipment sales to related parties

 

11,687

 

 

 

9,519

 

 

 

37,576

 

 

 

17,403

 

Digital asset mining revenue

 

109,842

 

 

 

10,765

 

 

 

242,842

 

 

 

20,393

 

Total revenue

 

163,972

 

 

 

75,303

 

 

 

356,491

 

 

 

129,549

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of hosting services

 

43,644

 

 

 

17,550

 

 

 

74,875

 

 

 

29,379

 

Cost of equipment sales

 

13,541

 

 

 

31,100

 

 

 

36,076

 

 

 

57,331

 

Cost of digital asset mining

 

94,070

 

 

 

2,115

 

 

 

162,820

 

 

 

3,768

 

Total cost of revenue

 

151,255

 

 

 

50,765

 

 

 

273,771

 

 

 

90,478

 

Gross profit

 

12,717

 

 

 

24,538

 

 

 

82,720

 

 

 

39,071

 

Gain (loss) from sales of digital assets

 

11,808

 

 

 

(16

)

 

 

13,971

 

 

 

14

 

Impairment of digital assets

 

(150,213

)

 

 

 

 

 

(204,198

)

 

 

 

Impairment of goodwill and other intangibles

 

(790,753

)

 

 

 

 

 

(790,753

)

 

 

 

Losses on exchange or disposal of property, plant and equipment

 

(13,057

)

 

 

(17

)

 

 

(13,057

)

 

 

(17

)

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

14,773

 

 

 

1,437

 

 

 

18,113

 

 

 

2,645

 

Sales and marketing

 

10,238

 

 

 

720

 

 

 

11,636

 

 

 

1,254

 

General and administrative

 

90,874

 

 

 

6,822

 

 

 

131,034

 

 

 

10,617

 

Total operating expenses

 

115,885

 

 

 

8,979

 

 

 

160,783

 

 

 

14,516

 

Operating (loss) income

 

(1,045,383

)

 

 

15,526

 

 

 

(1,072,100

)

 

 

24,552

 

Non-operating (income) expenses, net:

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

 

 

7,974

 

 

 

 

 

 

8,016

 

Interest expense, net

 

27,116

 

 

 

10,846

 

 

 

48,792

 

 

 

12,981

 

Fair value adjustments on convertible notes

 

(195,061

)

 

 

 

 

 

190,976

 

 

 

 

Fair value adjustments on derivative warrant liabilities

 

(22,189

)

 

 

 

 

 

(32,464

)

 

 

 

Other non-operating expenses, net

 

3,876

 

 

 

2

 

 

 

3,519

 

 

 

2

 

Total non-operating (income) expenses, net

 

(186,258

)

 

 

18,822

 

 

 

210,823

 

 

 

20,999

 

(Loss) income before income taxes

 

(859,125

)

 

 

(3,296

)

 

 

(1,282,923

)

 

 

3,553

 

Income tax (benefit) expense

 

(48,650

)

 

 

118

 

 

 

(6,244

)

 

 

118

 

Net (loss) income

$

(810,475

)

 

$

(3,414

)

 

$

(1,276,679

)

 

$

3,435

 

Net (loss) income per share

 

 

 

 

 

 

 

Basic

$

(2.49

)

 

$

(0.02

)

 

$

(4.04

)

 

$

0.02

 

Diluted

$

(2.49

)

 

$

(0.02

)

 

$

(4.04

)

 

$

0.02

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

324,967

 

 

 

158,890

 

 

 

316,269

 

 

 

158,338

 

Diluted

 

324,967

 

 

 

158,890

 

 

 

316,269

 

 

 

177,342

 

Core Scientific, Inc.

Segment Results

(in thousands, except percentages)

(Unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Equipment Sales and Hosting Segment

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Hosting revenue

$

38,936

 

 

$

18,562

 

 

$

72,150

 

 

$

31,254

 

Equipment sales

 

15,194

 

 

 

45,976

 

 

 

41,499

 

 

 

77,902

 

Total revenue

 

54,130

 

 

 

64,538

 

 

 

113,649

 

 

 

109,156

 

Cost of revenue:

 

 

 

 

 

 

 

Cost of hosting services

 

43,644

 

 

 

17,550

 

 

$

74,875

 

 

$

29,379

 

Cost of equipment sales

 

13,541

 

 

 

31,100

 

 

 

36,076

 

 

 

57,331

 

Total cost of revenue

$

57,185

 

 

$

48,650

 

 

$

110,951

 

 

$

86,710

 

Gross (loss) profit

$

(3,055

)

 

$

15,888

 

 

$

2,698

 

 

$

22,446

 

Gross margin1

 

(6

) %

 

 

25

%

 

 

2

%

 

 

21

%

Mining Segment

Digital asset mining revenue

$

109,842

 

 

$

10,765

 

 

$

242,842

 

 

$

20,393

 

Total revenue

 

109,842

 

 

 

10,765

 

 

 

242,842

 

 

 

20,393

 

Cost of revenue

 

94,070

 

 

 

2,115

 

 

 

162,820

 

 

 

3,768

 

Gross profit

$

15,772

 

 

$

8,650

 

 

$

80,022

 

 

$

16,625

 

Gross margin1

 

14

%

 

 

80

%

 

 

33

%

 

 

82

%

Consolidated

 

 

 

 

 

 

 

Consolidated total revenue

$

163,972

 

 

$

75,303

 

 

$

356,491

 

 

$

129,549

 

Consolidated cost of revenue

$

151,255

 

 

$

50,765

 

 

$

273,771

 

 

$

90,478

 

Consolidated gross profit

$

12,717

 

 

$

24,538

 

 

$

82,720

 

 

$

39,071

 

Consolidated gross margin1

 

8

%

 

 

33

%

 

 

23

%

 

 

30

%

Core Scientific, Inc.

Total notes payable and finance lease liabilities

(in thousands)

(Unaudited)

 

The following table summarizes the Company’s debt consisting of notes payable and finance lease liabilities: (in thousands):

 

Notes payable:

Current
(next twelve months)

 

Noncurrent
(greater than 12 months)

 

Total

Equipment financing

$

145,766

 

 

$

125,833

 

 

$

271,599

 

Convertible notes

 

 

 

 

536,281

 

 

 

536,281

 

Bridge loan

 

75,000

 

 

 

 

 

 

75,000

 

Other

 

734

 

 

 

324

 

 

 

1,058

 

Total

 

221,500

 

 

 

662,438

 

 

 

883,938

 

Unamortized discount and debt issuance costs

 

(3,826

)

 

 

(388

)

 

 

(4,214

)

Fair value adjustment on convertible notes

 

 

 

 

190,273

 

 

 

190,273

 

Total notes payable

$

217,674

 

 

$

852,323

 

 

$

1,069,997

 

Leases:

 

 

 

 

 

Equipment financing lease liabilities

$

28,570

 

 

$

48,701

 

 

$

77,271

 

 

 

 

 

 

 

Total notes payable and finance lease liabilities

$

246,244

 

 

$

901,024

 

 

$

1,147,268

 

Core Scientific, Inc. and Subsidiaries
Non-GAAP Financial Measures
(Unaudited)

Adjusted EBITDA is a non-GAAP financial measure defined as our net income or (loss), adjusted to eliminate the effect of (i) interest income, interest expense, and other income (expense), net; (ii) provision for income taxes; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) gain on sale of intangible assets; (vi) restructuring charges; and (vii) certain additional non-cash or non-recurring items, that do not reflect our ongoing business operations. Adjusted earnings per share (“Adjusted EPS”) is defined as our net income or (loss) divided by our weighted-average diluted shares outstanding, adjusted to eliminate the effect of (i) interest income, interest expense, and other income (expense), net; (ii) provision for income taxes; (iii) depreciation and amortization; (iv) stock-based compensation expense; (v) gain on sale of intangible assets; (vi) restructuring charges; and (vii) certain additional non-cash or non-recurring items, that do not reflect our ongoing business operations. For additional information, including the reconciliation of net income (loss) to Adjusted EBITDA and the reconciliation of net income (loss) per diluted share to Adjusted EPS, please refer to the tables below. We believe Adjusted EBITDA and Adjusted EPS are important measures because they allow management, investors, and our board of directors to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making the adjustments described above. In addition, it provides useful information to investors and others in understanding and evaluating our results of operations, as well as provides a useful measure for period-to-period comparisons of our business, as it removes the effect of net interest expense, taxes, certain non-cash items, variable charges, and timing differences. Moreover, we have included Adjusted EBITDA in this press release because it is a key measurement used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic and financial planning.

The above items are excluded from our Adjusted EBITDA and Adjusted EPS measures because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful. However, you should be aware that when evaluating Adjusted EBITDA and Adjusted EPS, we may incur future expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that its future results will be unaffected by unusual or non-recurring items. Further, these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). We compensate for these limitations by relying primarily on GAAP results and using Adjusted EBITDA and Adjusted EPS on a supplemental basis. Our computation of Adjusted EBITDA and Adjusted EPS may not be comparable to other similarly titled measures computed by other companies because not all companies calculate these measures in the same fashion. You should review the reconciliation of net (loss) income to Adjusted EBITDA and net (loss) income per diluted share to Adjusted EPS below and not rely on any single financial measure to evaluate our business.

The following tables reconcile the non-GAAP financial measures to the most directly comparable U.S. GAAP financial performance measure, which is net (loss) income, for the periods presented (in thousands, except per share amounts):

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Adjusted EBITDA

 

 

 

Net (loss) income

$

(810,475

)

 

$

(3,414

)

 

$

(1,276,679

)

 

$

3,435

 

Adjustments:

 

 

 

 

 

 

 

Interest expense, net

 

27,116

 

 

 

10,846

 

 

 

48,792

 

 

 

12,981

 

Income tax (benefit) expense

 

(48,650

)

 

 

118

 

 

 

(6,244

)

 

 

118

 

Depreciation and amortization

 

49,835

 

 

 

3,075

 

 

 

91,974

 

 

 

5,991

 

Loss on debt extinguishment

 

 

 

 

7,974

 

 

 

 

 

 

8,016

 

Stock-based compensation expense

 

110,998

 

 

 

2,136

 

 

 

136,795

 

 

 

2,724

 

Fair value adjustment on derivative warrant liabilities

 

(22,189

)

 

 

 

 

 

(32,464

)

 

 

 

Fair value adjustment on convertible notes

 

(195,061

)

 

 

 

 

 

190,976

 

 

 

 

(Gain) loss from sales of digital assets

 

(11,808

)

 

 

16

 

 

 

(13,971

)

 

 

(14

)

Impairment of digital assets

 

150,213

 

 

 

 

 

 

204,198

 

 

 

 

Impairment of goodwill and other intangibles

 

790,753

 

 

 

 

 

 

790,753

 

 

 

 

Losses on exchange or disposal of property, plant and equipment

 

13,057

 

 

 

17

 

 

 

13,057

 

 

 

17

 

Gain on sale of intangible assets

 

(5,904

)

 

 

 

 

 

(5,904

)

 

 

 

Restructuring charges

 

1,445

 

 

 

 

 

 

1,445

 

 

 

 

Fair value adjustment on acquired vendor liability

 

9,789

 

 

 

 

 

 

9,430

 

 

 

 

Other non-cash or non-recurring items

 

(8

)

 

 

 

 

 

(6

)

 

 

 

Adjusted EBITDA

$

59,111

 

 

$

20,768

 

 

$

152,152

 

 

$

33,268

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

Adjusted earnings per share (“Adjusted EPS”)

 

Net (loss) income

$

(2.49

)

 

$

(0.02

)

 

$

(4.04

)

 

$

0.02

Adjustments:

 

 

 

 

 

 

 

Interest expense, net

 

0.08

 

 

 

0.07

 

 

 

0.15

 

 

 

0.07

Income tax (benefit) expense

 

(0.15

)

 

 

 

 

 

(0.02

)

 

 

Depreciation and amortization

 

0.15

 

 

 

0.02

 

 

 

0.29

 

 

 

0.03

Loss on debt extinguishment

 

 

 

 

0.05

 

 

 

 

 

 

0.05

Stock-based compensation expense

 

0.34

 

 

 

0.01

 

 

 

0.43

 

 

 

0.02

Fair value adjustment on derivative warrant liabilities

 

(0.07

)

 

 

 

 

 

(0.10

)

 

 

Fair value adjustment on convertible notes

 

(0.60

)

 

 

 

 

 

0.60

 

 

 

(Gain) loss from sales of digital assets

 

(0.04

)

 

 

 

 

 

(0.04

)

 

 

Impairment of digital assets

 

0.46

 

 

 

 

 

 

0.65

 

 

 

Impairment of goodwill and other intangibles

 

2.44

 

 

 

 

 

 

2.50

 

 

 

Losses on exchange or disposal of property, plant and equipment

 

0.04

 

 

 

 

 

 

0.04

 

 

 

Gain on sale of intangible assets

 

(0.02

)

 

 

 

 

 

(0.02

)

 

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

Fair value adjustment on acquired vendor liability

 

0.04

 

 

 

 

 

 

0.04

 

 

 

Other non-cash or non-recurring items

 

 

 

 

 

 

 

 

 

 

Adjusted EPS

$

0.18

 

 

$

0.13

 

 

$

0.48

 

 

$

0.19

Weighted average shares outstanding - diluted

324,967

 

 

158,890

316,269

177,342

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1 Gross margin is calculated as gross profit (loss) as a percentage of total revenue.

Investors:
Steven Gitlin
ir@corescientific.com

Media:
press@corescientific.com

Source: Core Scientific, Inc.