Core Scientific, Inc. (CORZ) Bundle
Understanding Core Scientific, Inc. (CORZ) Revenue Streams
Understanding Core Scientific, Inc.’s Revenue Streams
Core Scientific, Inc. generates revenue through various streams primarily associated with digital asset self-mining, hosted mining services, and high-performance computing (HPC) hosting. Below is a detailed analysis of the company's revenue sources for 2024.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Digital Asset Self-Mining Revenue | 68,138 | 83,056 | (14,918) | (18%) |
| Digital Asset Hosted Mining Revenue from Customers | 16,878 | 27,020 | (10,142) | (38%) |
| Digital Asset Hosted Mining Revenue from Related Parties | 0 | 2,828 | (2,828) | NM |
| HPC Hosting Revenue | 10,338 | 0 | 10,338 | NM |
| Total Revenue | 95,354 | 112,904 | (17,550) | (16%) |
For the nine months ended September 30, 2024, total revenue reached $415.7 million, up from $360.5 million in the same period of 2023, marking a year-over-year increase of $55.3 million or 15%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects the company's ability to adapt to changing market conditions. The following data showcases the revenue changes over the past year:
| Metric | 2024 (Nine Months) | 2023 (Nine Months) | Change | Percentage Change |
|---|---|---|---|---|
| Total Revenue | 415,747 | 360,471 | 55,276 | 15% |
| Digital Asset Self-Mining Revenue | 328,840 | 278,164 | 50,676 | 18% |
| Digital Asset Hosted Mining Revenue from Customers | 71,050 | 72,245 | (1,195) | (2%) |
| Digital Asset Hosted Mining Revenue from Related Parties | 0 | 10,062 | (10,062) | NM |
| HPC Hosting Revenue | 15,857 | 0 | 15,857 | NM |
Contribution of Different Business Segments to Overall Revenue
As of September 30, 2024, the contribution of different business segments to overall revenue is as follows:
| Revenue Segment | Revenue (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Digital Asset Self-Mining | 328,840 | 79% |
| Digital Asset Hosted Mining from Customers | 71,050 | 17% |
| HPC Hosting | 15,857 | 4% |
Analysis of Significant Changes in Revenue Streams
In Q3 2024, the company experienced a notable decrease in digital asset self-mining revenue, which fell by 18% compared to Q3 2023, primarily due to a 62% decrease in bitcoin mined. Conversely, the introduction of HPC hosting has started to contribute positively, generating $10.3 million in revenue during Q3 2024. The termination of several customer contracts also impacted hosted mining revenue, which fell by 38%.
For the nine months ended September 30, 2024, while self-mining revenue grew by 18%, hosted mining revenue from customers decreased marginally by 2%, reflecting ongoing adjustments in the business model.
A Deep Dive into Core Scientific, Inc. (CORZ) Profitability
A Deep Dive into Core Scientific, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $116.3 million with a gross margin of 28%. This represents an increase from a gross profit of $84.2 million and a gross margin of 23% for the same period in 2023.
Operating Profit: The operating income for the nine months ended September 30, 2024, was $20.6 million, compared to $5.0 million in 2023. The total operating expenses were $88.7 million, up from $78.1 million in the previous year.
Net Profit Margin: The net loss for the nine months ended September 30, 2024, was $1.05 billion, compared to a net loss of $50.8 million for the same period in 2023. The net loss per share was $(3.71), significantly higher than $(0.13) in the prior year.
Trends in Profitability Over Time
Revenue Growth: Total revenue for the nine months ended September 30, 2024, was $415.7 million, a 15% increase from $360.5 million in 2023. Digital asset self-mining revenue increased by 18% to $328.8 million.
Cost of Revenue: The cost of revenue rose to $299.4 million in 2024, compared to $276.3 million in 2023, reflecting an 8% increase.
Comparison of Profitability Ratios with Industry Averages
Industry Benchmarking: The average gross margin in the digital asset mining industry stands around 30%, which indicates that the company's gross margin of 28% is slightly below the industry average.
Analysis of Operational Efficiency
Cost Management: The company recorded a significant reduction in power costs, which decreased by $14.3 million year-over-year. The total operating expenses increased by 13% to $88.7 million.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change ($) | Change (%) |
|---|---|---|---|---|
| Total Revenue | $415.7 million | $360.5 million | $55.2 million | 15% |
| Cost of Revenue | $299.4 million | $276.3 million | $23.1 million | 8% |
| Gross Profit | $116.3 million | $84.2 million | $32.1 million | 38% |
| Operating Income | $20.6 million | $5.0 million | $15.6 million | 312% |
| Net Loss | $(1.05 billion) | $(50.8 million) | $(998.7 million) | 1960% |
Operational Efficiency: The self-mining hash rate increased by 36% to 20.4 EH/s. The cost to self-mine one bitcoin was $42,351, a substantial increase from $18,037 in the previous year.
Debt vs. Equity: How Core Scientific, Inc. (CORZ) Finances Its Growth
Debt vs. Equity: How Core Scientific, Inc. Finances Its Growth
Core Scientific, Inc. has undergone significant changes in its debt levels as part of its financial restructuring. As of September 30, 2024, the company reported total long-term debt of $474.6 million and short-term debt of $17.9 million, resulting in a total debt of $492.5 million.
The debt-to-equity ratio stands at 0.65 as of September 30, 2024, calculated from total liabilities of $1.65 billion and stockholders' deficit of $729.4 million. This ratio indicates a moderate level of leverage compared to industry standards, where a typical ratio for companies in the technology sector averages around 0.5 to 1.0.
Recent debt issuances include the completion of a private offering of $460 million in 3% Convertible Senior Notes due 2029 on August 19, 2024. This issuance was part of a broader strategy to refinance existing debt and improve liquidity. Following the emergence from bankruptcy, the company has eliminated substantial debt, establishing new secured credit agreements and convertible notes. The company’s credit rating has improved post-restructuring, reflecting enhanced financial stability.
Core Scientific has balanced its growth financing between debt and equity effectively. For the nine months ending September 30, 2024, net cash provided by financing activities was $221.4 million, primarily from the issuance of convertible notes and common stock, offset by $268.9 million in principal payments on debt. This demonstrates the company's reliance on equity funding to bolster its capital structure while managing debt obligations.
| Type of Debt | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Convertible Senior Notes | 460.0 | 3.00% | 2029 |
| Secured Notes | 150.0 | 12.5% | 2028 |
| Exit Facility | 20.0 | 9.00% | 2026 |
| Short-term Debt | 17.9 | Variable | 2025 |
In conclusion, Core Scientific's strategic approach to managing its debt and equity has positioned it to navigate financial challenges while pursuing growth opportunities. The balance of $221.4 million in financing activities in 2024 indicates a proactive stance on capital management.
Assessing Core Scientific, Inc. (CORZ) Liquidity
Assessing Core Scientific, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
Current Assets: $253,802,000 (cash and cash equivalents + restricted cash)
Current Liabilities: $52,500,000 (short-term liabilities)
Current Ratio = Current Assets / Current Liabilities = $253,802,000 / $52,500,000 = 4.83
Quick Ratio: The quick ratio excludes inventory from current assets, relevant for assessing liquidity:
Quick Assets: $253,802,000 (assuming no inventory)
Quick Ratio = Quick Assets / Current Liabilities = $253,802,000 / $52,500,000 = 4.83
Analysis of Working Capital Trends
As of September 30, 2024, the net working capital stands at $201,300,000. This is a significant increase from December 31, 2023, where it was negative due to high liabilities.
| Period | Net Working Capital | Current Assets | Current Liabilities |
|---|---|---|---|
| September 30, 2024 | $201,300,000 | $253,802,000 | $52,500,000 |
| December 31, 2023 | Negative | $50,409,000 | $100,000,000 |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from various activities is as follows:
- Operating Activities: Net cash provided was $29,091,000.
- Investing Activities: Net cash used was $66,394,000.
- Financing Activities: Net cash provided was $221,396,000.
Overall cash position at the end of the period:
Cash, Cash Equivalents and Restricted Cash - End of Period: $253,802,000
| Activity | 2024 | 2023 |
|---|---|---|
| Net Cash from Operating Activities | $29,091,000 | $43,411,000 |
| Net Cash used in Investing Activities | $(66,394,000) | $(5,356,000) |
| Net Cash from Financing Activities | $221,396,000 | $(26,352,000) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company faced a net loss of $1,049,464,000. However, the unrestricted cash and cash equivalents at this date stood at $253,019,000, indicating a strong liquidity position despite the recent losses.
The total liabilities were reported at $1,651,246,000, while the total stockholders’ deficit was ($729,395,000). Management believes that capital, cash flow from operations, and other sources of liquidity are sufficient to fund operations and debt service obligations for at least the next twelve months, highlighting a potential strength in liquidity management.
Is Core Scientific, Inc. (CORZ) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, we will analyze its valuation metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends, dividend yield, and analyst consensus.
Valuation Ratios
As of September 30, 2024, the key valuation ratios are as follows:
- Price-to-Earnings (P/E) Ratio: The company reported a net loss of $1.05 billion for the nine months ended September 30, 2024, resulting in a P/E ratio that is not applicable due to negative earnings.
- Price-to-Book (P/B) Ratio: The book value per share is calculated based on total stockholders' equity of $(729.4 million) as of September 30, 2024.
- Enterprise Value-to-EBITDA (EV/EBITDA): The enterprise value is derived from the market capitalization plus debt minus cash. The EBITDA for the nine months ended September 30, 2024, was $144.2 million.
Stock Price Trends
The stock price has exhibited significant volatility over the past year:
- As of September 30, 2024, the stock price was $11.86, up from $3.44 as of the effective date of the reorganization.
- The stock price increased by approximately 344% over the last 12 months.
Dividend Yield and Payout Ratios
Currently, the company does not pay a dividend, resulting in a dividend yield of 0%. The payout ratio is also not applicable due to the net loss.
Analyst Consensus
Analyst ratings for the stock are as follows:
- Consensus Rating: Hold
- Target Price: Analysts have set a target price range between $10.00 and $15.00.
| Metric | Value |
|---|---|
| P/E Ratio | Not Applicable (Negative Earnings) |
| P/B Ratio | Negative (Total Stockholders' Equity: $(729.4 million)) |
| EV/EBITDA | Calculated based on market cap and EBITDA of $144.2 million |
| Stock Price (as of Sep 30, 2024) | $11.86 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Target Price Range | $10.00 - $15.00 |
Key Risks Facing Core Scientific, Inc. (CORZ)
Key Risks Facing Core Scientific, Inc. (CORZ)
The financial health of Core Scientific, Inc. is impacted by various internal and external risks that investors must consider. Below are some of the key risk factors affecting the company as of 2024.
Industry Competition
The digital asset mining industry is characterized by intense competition. As of September 30, 2024, the company faced a 62% decrease in bitcoins mined, largely due to increased competition and network difficulty following the April 2024 halving event. This reduction in mined bitcoins directly impacts revenue, which fell to $68.1 million for the three months ended September 30, 2024, down from $83.1 million a year prior.
Regulatory Changes
Regulatory risks are significant in the cryptocurrency sector. The company has had to adapt to changing regulations that affect mining operations and digital asset transactions. As of September 30, 2024, there were ongoing concerns about regulatory scrutiny which could impact future operational capabilities and costs.
Market Conditions
Fluctuations in bitcoin prices are a major risk. The average price of bitcoin surged by 117% year-over-year to $61,002 for the three months ended September 30, 2024, but volatility remains a concern. Market conditions can affect both self-mining revenues and the demand for hosting services, which totaled $95.4 million in total revenue for the same period, a 16% decrease from $112.9 million.
Operational Risks
Operational risks stem from the company's reliance on a large number of mining units. The increase in self-mining hash rate to 20.4 EH/s from 15.0 EH/s has not fully mitigated the impact of decreased bitcoin production. Additionally, the termination of contracts with several customers, leading to a 38% decline in hosted mining revenue from customers to $16.9 million, represents a significant operational challenge.
Financial Risks
Financial risks include significant losses reported in recent earnings. For the nine months ended September 30, 2024, the company reported a net loss of $1.05 billion, driven in part by a $1.22 billion change in the fair value of warrants. Interest expenses also surged to $35.9 million for the same period, up from $2.3 million.
Mitigation Strategies
The company is working on mitigating risks through diversification of its service offerings, particularly by expanding into high-performance computing (HPC) hosting. As of September 30, 2024, HPC hosting revenue reached $10.3 million, a new revenue stream that aims to reduce reliance on traditional mining.
| Risk Factor | Description | Impact (2024) |
|---|---|---|
| Industry Competition | Intense competition leading to decreased bitcoin mined | 62% decrease in bitcoins mined |
| Regulatory Changes | Adapting to new regulations in the cryptocurrency sector | Potential impact on operations and costs |
| Market Conditions | Volatility in bitcoin prices affecting revenue | Average bitcoin price increased 117% |
| Operational Risks | Reliance on mining units and customer contracts | 38% decline in hosted mining revenue |
| Financial Risks | Significant losses and rising interest expenses | Net loss of $1.05 billion |
| Mitigation Strategies | Diversifying into HPC hosting | HPC hosting revenue of $10.3 million |
Investors should carefully consider these risks as they evaluate the financial health and future prospects of the company.
Future Growth Prospects for Core Scientific, Inc. (CORZ)
Future Growth Prospects for Core Scientific, Inc.
Analysis of Key Growth Drivers
Core Scientific has several key growth drivers that position it for future success:
- Product Innovations: The company has shifted focus towards High-Performance Computing (HPC) hosting solutions, which began operations in June 2024. HPC hosting revenue for the nine months ended September 30, 2024, was $15.9 million, compared to $0 for the same period in 2023.
- Market Expansions: The company entered into long-term contracts with CoreWeave to deliver up to 200 MW of infrastructure for HPC operations, with plans for additional capacity expected in 2025.
- Acquisitions: While no specific acquisitions have been disclosed recently, strategic partnerships such as that with CoreWeave enhance operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
The total revenue for Core Scientific for the nine months ended September 30, 2024, was $415.7 million, representing a 15% increase from $360.5 million for the same period in 2023. The breakdown is as follows:
| Revenue Source | 2024 Revenue ($ thousands) | 2023 Revenue ($ thousands) | Percentage Change |
|---|---|---|---|
| Digital Asset Self-Mining | 328,840 | 278,164 | 18% |
| Digital Asset Hosted Mining | 71,050 | 72,245 | -2% |
| HPC Hosting | 15,857 | 0 | NM |
Looking ahead, analysts project continued revenue growth driven by increased demand for HPC services and digital asset mining, with earnings estimates improving as operational efficiencies are realized.
Strategic Initiatives or Partnerships that May Drive Future Growth
The strategic partnership with CoreWeave is pivotal, as it allows Core Scientific to leverage its existing infrastructure for new revenue streams in HPC hosting. This initiative is expected to provide consistent dollar-based revenue with lower risk compared to traditional bitcoin mining.
Competitive Advantages that Position the Company for Growth
Core Scientific's competitive advantages include:
- Scale of Operations: The company operates a significant self-mining hash rate of 20.4 EH/s, a 36% increase from the previous year.
- Technological Expertise: With advancements in energy efficiency, the average self-mining fleet energy efficiency improved to 24.5 joules per terahash.
- Market Position: The company is positioned as a leading provider of digital asset mining, hosting services, and HPC solutions in the U.S. market.
As of September 30, 2024, the company reported unrestricted cash and cash equivalents of $253.0 million, indicating strong liquidity to support growth initiatives going forward.
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Resources:
- Core Scientific, Inc. (CORZ) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Core Scientific, Inc. (CORZ)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Core Scientific, Inc. (CORZ)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.