Riot Platforms (NASDAQ:RIOT) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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Summary
Riot Platforms reported an EBITDA loss of $311 million, driven by non-cash accounting adjustments and depreciation expenses.
The company produced 1,473 bitcoin, reducing its direct cost to mine by 26% compared to Q4 2025.
The newly added data center segment generated $33.2 million in revenue, mainly from tenant fit-out services, with a 91% gross margin from operating lease income.
Riot Platforms holds 15,679 Bitcoin valued at approximately $1.1 billion, which will be leveraged for data center development.
Strategic initiatives include expanding data center operations, securing power access, and vertically integrating engineering capabilities.
The company is focused on securing leases with high-quality tenants like AMD and expanding its power portfolio through various avenues.
Management highlighted the importance of their experienced team and strategic execution to capitalize on the growing demand for data center capacity.
Full Transcript
OPERATOR
EBITDA loss of $311 million. This loss was driven by non cash mark to market accounting adjustments on our bitcoin holdings of $326.7 million and non cash depreciation and amortization expense of $97.7 million which do not reflect the underlying strong fundamental economics of our operations. Diving into these operations, our Bitcoin mining segment performance remained robust. Riot Platforms produced 1,473 bitcoin in the first quarter and ended the quarter with a deployed hashrate of 42.5 exahash. We generated $21 million in power curtailment credits, driving our net cost of power down to $0.03 per kilowatt hour, thereby lowering our direct cost to mine Bitcoin to $44,629 per Bitcoin, a 26% reduction compared to the fourth quarter of 2025. In our newly added data center segment, we successfully exited the quarter with 5 megawatts of critical IT capacity fully online and generated $33.2 million in total revenue consisting of $900,000 in operating lease revenue and $32.2 million in tenant fit out services revenue. Finally, we ended the quarter holding 15,679 Bitcoin on our balance sheet valued at approximately $1.1 billion which we will continue to leverage in order to finance the ongoing development of our data center business. Turning to slide 15, I’m proud to present the inaugural financial results of our data center segment. In the first quarter, this segment generated $33.2 million in total revenue. As we introduce this new reporting line, it is important to understand the composition of this revenue and how it will evolve as our footprint scales. The majority of our first quarter revenue $32.2 million was driven by tenant Fit out services. This represents the procurement and installation of customer specific equipment which is reimbursed by tenants on a cost plus basis. While this revenue naturally carries a lower margin, it requires no capital risk from Riot Platforms and accelerates our tenant’s ultimate speed to market. The fundamental value of this segment, however, is reflected in the operating lease income. We recognize roughly $900,000 in recurring lease revenue driven by the initial 5 megawatt delivery to AMD in January which generated a 91% gross margin this quarter. As AMD scales its operations, we expect associated operations and maintenance costs to naturally increase which will normalize this margin towards our previously stated run rate target of 80% plus. As we look ahead, you will see a natural evolution in this revenue mix. While tenant fit out revenue is elevated today during the development phase. As the remaining megawatts for AMD come fully online, our high margin operating lease revenue will scale dramatically. This will layer highly predictable infrastructure grade cash flows into our consolidated P&L driving significant margin expansion over time. Turning to Slide 16, our engineering segment comprised of ESS Metron and E4A Solutions serves as a key pillar of our execution strategy. The financial metrics for engineering remain exceptionally strong. Engineering backlog stood at $193.4 million during the quarter, with approximately 90% of backlog continuing to be driven by data center sector demand. Most importantly, the apparent decline in backlog for this quarter was entirely driven by our decision to strategically hold back manufacturing capacity for deployment towards our own data center business. Since acquiring ESS Metron in December 2021, Riot Platforms has realized approximately $24 million in cumulative CapEx savings from across our development footprint and these savings will continue to compound as we further scale up. While this compounding cost advantage is accretive, the true strategic value of our engineering business is control over procurement. Low and medium voltage switchgear transformers and power distribution centers are among the most severely constrained components in the data center supply chain. For developers. Relying on third party manufacturers, lead times are lengthening and these lead times have become a binding constraint on delivery schedules across the industry. Because Riot owns a dedicated switchgear and power distribution manufacturer, we can sequence, prioritize and de risk the schedule critical equipment required to bring a data center online. This vertical integration was a key factor supporting our ability to deliver Phase one of the AMD lease on an accelerated timeline. Looking ahead, we’ll continue to invest in this strategically important business. In 2026, we expect to increase ESS Metron’s total engineering capacity by approximately 25% and we will be strategically allocating that incremental capacity to support Riot’s own data center growth. Further, because we manufacture these components in house, we design them in parallel with our data center engineering team, allowing us to move faster and reducing redesign risk. Just as importantly, the same teams that manufacture this equipment also provide maintenance in the field which will drive long term operational efficiencies as our data centers are energized and stabilized. Taken together, our engineering business is a core engine of our competitive moat in a market where time to power is the single most valuable commodity. Now I’d like to turn it back over to Jason Les thank you Jason.
Jason Less
I want to frame one of our key competitive advantages in the broader data center development market. Secured Power Today, access to power is a key bottleneck to data center development globally. This makes our large portfolio of 2 GW of fully approved power a strong competitive advantage, giving us one of the most significant development pipelines in our industry. However, we are not stopping here. We recognize that the market demand for power is strong and we are aggressively pursuing growth in our power portfolio across four distinct avenues. First, through Greenfield and brownfield development, securing and developing new land assets that offer immediate or near term power capacity. Second, through behind the meter self generation, allowing us to strategically co locate our own power production directly with our critical load. Third, through Inorganic M and A actively targeting and acquiring portfolios or organizations that already possess established access to power and fourth, through strategic partnerships forming joint ventures to expand our geographic footprint, rapidly grow our pipeline and explore next generation technologies. To put the scale and rigor of this effort into perspective, our corporate development team has already evaluated over 100 distinct opportunities across these four avenues. We have the team, the capital and the strategy to continuously source the highest quality power assets required to fuel our development pipeline. However, let me be clear. While we are aggressively pursuing these opportunities, we maintain rigorous capital discipline. We will only execute on transactions that are highly accretive, financially responsible and strictly aligned with our target return thresholds. Now I want to walk through the path we have taken to get to where we are today and provide investors with a clear picture of some of the obstacles Riot Platforms has navigated in order to best position our power portfolio for maximum value creation. At the start of 2025, we engaged Altman Solon to conduct a formal feasibility study on both Corsicana and Rockdale and the conclusion was unambiguous. We had two of the most attractive data center sites in the country. But the same study also identified two very specific constraints that left unresolved, would have prevented us from leasing that power to high quality tenants at any meaningful scale. The first was land at Corsicana, where our original footprint was insufficient to ACCommodate the full 1 GW campus development we wanted to deliver. The second was our ground lease at Rockdale. Until we solved both of these constraints, we were not in a position to meaningfully advance design, development or leasing at either site. Solving these two constraints required patient, disciplined execution, and that is what we did. Over the course of 2025, we successfully navigated a series of obstacles to acquire land adjacent to our original Corsicana site, unlocking the ability to develop the full 1 GW of approved power on Riot Platforms owned land in a connected campus layout at Rockdale. We converted our interest from a long term ground lease into a fee simple acquisition of the 200 acres underlying the site. With those two transactions closed, we own the land. We took control over our own destiny at both sites and we removed the most significant barriers between our power portfolio and high quality contracted leases. Critically, we did not wait for one work stream to finish before beginning the next. In parallel with the land work, we systematically built out the organization starting in the second quarter of 2025 with veteran product design and engineering talent. With the Corsicana land situation on track, we completed the initial basis of design for our standard data center product and initial campus design for the full Corsicana build out through the end of 2025. We took those designs to market for direct technical and commercial feedback from prospective tenants, initiated core and shell development at Corsicana, and brought on senior commercial leadership to drive leasing execution. That disciplined, sequenced groundwork is exactly what allowed us to move decisively when the opportunity arrived. In January of this year, we signed our first data center lease with AMD and delivered the initial phase of capacity within the same month. Since that initial lease, we have expanded the AMD relationship to 50 megawatts, enhance our standard design to increase density and flexibility, and are now actively engaged in commercial discussions at both of our sites. Every one of the steps on this timeline was necessary in order to maximize our value creation opportunity. Every one of them has been completed on an accelerated schedule and the result is that we now have an active commercial pipeline underpinned by secured land, a proven design, committed capital and a tenant relationship that is already generating revenue today. This is an excellent position to be in and we are confident in our ability to continue to execute from here. Now I want to zoom in on part of that timeline and take a moment to elaborate on the team we have built to execute on this opportunity. Over the past year, building out a world class data center organization has been one of our highest priorities because we knew from the start that the quality of our team would be every bit as important as the quality of our assets. What you see on this slide is the depth and breadth the capabilities. We have now assembled across four pillars. Commercial sales, critical operations, project execution and design and construction. Each of these functions is led by experienced credentialed leadership with direct track records of delivering mission critical infrastructure at hyperscale grade platforms. On the commercial side, our sales organization is led by Rhea Williams Williams, our Senior Vice President of AI and Hyperscale Sales. Rhea Williams joined us following previous sales roles at Oracle, Compass Data Centers and Digital Realty and she brings both the relationships and the credibility necessary to to engage hyperscalers and other top tier tenants at the highest level, RIA directly reports to me that reporting structure is deliberate. Our leasing strategy is the single most important driver of long term shareholder value at Riot Platforms and having sales report directly to the CEO ensures that I am directly engaged in every major commercial discussion. I am also very pleased to announce today a significant addition to our leadership team. Adam is a proven infrastructure executive with more than 15 years of experience leading hyperscale and AI data center development at multi gigawatt scale. He comes to us most recently from TA Digital Group, where he served as Senior Vice President of Design and Construction …
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