Sphere 3D Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Sphere 3D Corp. (NASDAQ: ANY), a Bitcoin mining company, reported its Q2 2024 financial results. Key highlights include:

- $7.3 million unrealized gain on investment in equity securities
- 70.7 Bitcoin mined during the quarter
- 1.2 EH/s hashrate at quarter-end
- Revenue of $4.7 million, down from $5.5 million in Q2 2023
- Net income of $2.1 million, or $0.11 basic EPS
- Bitcoin holdings of 7.2, valued at $0.5 million

The company faced challenges including a 50% reduction in block rewards and temporary hosting interruptions. However, they began energizing S21 miners in July, marking progress in their fleet upgrade strategy.

Positive

• $7.3 million unrealized gain on investment in equity securities
• Net income of $2.1 million, compared to a net loss of $4.8 million in Q2 2023
• Initiation of S21 miner deployment in July, advancing fleet upgrade strategy

Negative

• Bitcoin production decreased to 70.7 Bitcoin from 178.4 Bitcoin in Q2 2023
• Revenue declined to $4.7 million from $5.5 million in Q2 2023
• Operating costs increased slightly to $10.4 million from $10.2 million in Q2 2023
• 50% reduction in block rewards and temporary hosting interruptions impacted performance

Insights

Financial Analyst

Sphere 3D's Q2 2024 results present a mixed financial picture. The company reported a net income of $2.1 million, a significant improvement from the $4.8 million loss in Q2 2023. However, this profit was largely driven by a $7.3 million unrealized gain on equity securities, masking underlying operational challenges.

Revenue declined 14.5% year-over-year to $4.7 million, primarily due to a 60.4% decrease in Bitcoin production (70.7 BTC vs 178.4 BTC). This substantial drop in mining output, coupled with the halving event, raises concerns about the company's operational efficiency and ability to maintain profitability in a competitive mining landscape.

The company's strategic shift towards upgrading its mining fleet with S21 miners is a positive step, but the impact on future performance remains to be seen. Investors should closely monitor the company's ability to improve its hashrate and mining efficiency in the coming quarters.

Cryptocurrency Expert

Sphere 3D's performance in Q2 2024 reflects the harsh realities of the current Bitcoin mining environment. The 50% reduction in block rewards due to the halving event, combined with operational interruptions, has significantly impacted the company's mining output. The drop from 178.4 to 70.7 Bitcoin mined quarter-over-quarter is concerning and highlights the challenges faced by smaller mining operations.

The company's move to deploy S21 miners is important for maintaining competitiveness. However, with only 1.2 EH/s of hashrate and 7.2 Bitcoin holdings, Sphere 3D remains a relatively small player in the industry. The focus on potential mergers suggests that management recognizes the need for scale to survive in this capital-intensive sector.

Investors should be cautious about the company's ability to maintain profitability post-halving, especially given the thin margins evident in the financial results when excluding the unrealized gain on investments.

Stamford, Connecticut--(Newsfile Corp. - August 13, 2024) - Sphere 3D Corp. (NASDAQ: ANY) ("Sphere 3D"), a Bitcoin mining company operating at an industrial scale, today reported financial results for the quarter ended June 30, 2024.

2024 Second Quarter Highlights

• Sphere 3D recognized a $7.3 million unrealized gain on investment in equity securities acquired through the Core settlement.

• Sphere 3D mined 70.7 Bitcoin during the quarter.

• Sphere 3D ended the quarter with 1.2 EH/s.

CFO Comments

“Despite some challenges in the second quarter, including a 50% reduction in block rewards and temporary interruptions from certain hosting partners, we are excited to share that our first shipment of S21s were energized in July," said Kurt Kalbfleisch, Chief Financial Officer of Sphere 3D. "This marks an important milestone in our long-term strategy to refresh and enhance our fleet. As we continue to upgrade our equipment, we remain committed to pursuing strategic opportunities, including potential mergers, that will position us for sustained growth and success in the future."

Hashrate Update

Sphere 3D had approximately 1.2 EH/s hosted at June 30, 2024.

Bitcoin Asset and Value

As of June 30, 2024, the Company had Bitcoin holdings of 7.2, with a market value of $0.5 million.

Second Quarter FY 2024 Financial Results

• Bitcoin production during the second quarter of 2024 was 70.7 Bitcoin, compared to 178.4 Bitcoin for the second quarter of 2023.

• Revenue for the second quarter was $4.7 million, compared to $5.5 million for the second quarter of 2023. Bitcoin mining revenue for the second quarter of 2024 was $4.7 million, compared to $5.0 million for the second quarter of 2023.

• Operating costs and expenses for the quarter were $10.4 million, compared to $10.2 million for the second quarter of 2023.

• Depreciation and amortization was $1.8 million, compared to $1.4 million for the second quarter of 2023.

• Net income was $2.1 million, or $0.11 basic earnings per share and $0.10 diluted earnings per share, compared to a net loss of $4.8 million, or a net loss of $0.44 per share, for the second quarter of 2023.

• Unrealized gain of $7.3 million recognized during the second quarter of 2024 on investment in equity securities acquired through the Core settlement.

About Sphere 3D

Sphere 3D Corp. (NASDAQ: ANY) is a cryptocurrency miner growing its industrial-scale Bitcoin mining operation through the capital-efficient procurement of next-generation mining equipment and partnering with best-in-class data center operators. Sphere 3D is dedicated to growing shareholder value while honoring its commitment to strict environmental, social, and governance standards. For more information about Sphere 3D, please visit Sphere3D.com.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events, including the timing of the proposed transaction and other information related to the proposed transaction. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions. Expectations and beliefs regarding matters discussed herein may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The forward-looking statements contained in this communication are also subject to other risks and uncertainties, including those more fully described in filings with the SEC, including Sphere 3D's reports filed on Form 10-K and Form 8-K and in other filings made by Sphere 3D with the SEC from time to time and available at www.sec.gov. These forward-looking statements are based on current expectations, which are subject to change.

Sphere 3D Contact

Kurt Kalbfleisch, CFO, Sphere 3D
Investor.relations@sphere3d.com

SPHERE 3D CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share amounts)

		Three Months Ended						Six Months Ended
		June 30, 2024						June 30, 2024
		2024			2023			2024			2023
Revenues:		(Unaudited)						(Unaudited)
Bitcoin mining revenue	$	4,666		$	4,966		$	11,612		$	7,490
Service and product revenue		-			500			-			1,002
Total revenues		4,666			5,466			11,612			8,492
Operating costs and expenses:
Cost of Bitcoin mining revenue (exclusive of depreciation and amortization shown below)		3,959			4,074			8,266			6,039
Cost of service and product revenue		-			209			-			507
Sales and marketing		-			277			-			551
Research and development		-			227			-			497
General and administrative		2,986			3,634			6,438			7,105
Depreciation and amortization		1,816			1,375			3,637			2,400
Impairmant of property and equipment		860			-			860			-
Loss on disposal of property and equipment		691			251			691			251
Change in fair value of Bitcoin		65			-			(703	)		-
Realized gain on sale of Bitcoin		-			(139	)		-			(772	)
Impairment of Bitcoin		-			254			-			350
Total operating costs and expenses		10,377			10,162			19,189			16,928
Loss from operations		(5,711)			(4,696	)		(7,577	)		(8,436	)
Other income (expense):
Unrealized gain on investment in equity securities		7,279			-			4,539			-
Interest income and other income, net		558			1,113			687			1,364
Interest expense		-			(1,173	)		-			(1,173	)
Income (loss) before income taxes		2,126			(4,756	)		(2,351	)		(8,245	)
Provision for income taxes		2			4			2			4
Net income (loss)		2,124			(4,760	)		(2,353	)		(8,249	)
Less: Non-controlling interest - income		-			67			-			83
Net income (loss) available to common shareholders	$	2,124		$	(4,827	)	$	(2,353	)	$	(8,332	)
Net income (loss) per share:
Basic	$	0.11		$	(0.44	)	$	(0.13	)	$	(0.78	)
Diluted	$	0.10		$	(0.44	)	$	(0.13	)	$	(0.78	)
Shares used in computing net income (loss) per share:
Basic		18,711,718			11,051,588			17,644,315			10,673,876
Diluted		20,884,287			11,051,588			17,644,315			10,673,876

 

SPHERE 3D CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)

				June 30,			December 31,
				2024			2023
				(Unaudited)			(Unaudited)
ASSETS
Cash and cash equivalents			$	4,263		$	586
Digital assets, net				450			986
Investment in equity securities				9,542			-
Other current assets				3,018			11,938
	Total current assets			17,273			13,510
Property and equipment, net				19,535			24,166
Intangible assets, net				3,838			4,581
Other non-current assets				3,380			3,406
	Total assets		$	44,026		$	45,663
LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities			$	3,935		$	5,346
Total temporary equity				6,656			13,794
Total shareholders' equity				33,435			26,523
	Total liabilities, temporary equity, and shareholders' equity		$	44,026		$	45,663

 

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/219798

FAQ

What was Sphere 3D's (ANY) revenue in Q2 2024?

Sphere 3D's revenue for Q2 2024 was $4.7 million, compared to $5.5 million in Q2 2023.

How many Bitcoin did Sphere 3D (ANY) mine in Q2 2024?

Sphere 3D mined 70.7 Bitcoin during Q2 2024, down from 178.4 Bitcoin in Q2 2023.

What was Sphere 3D's (ANY) net income for Q2 2024?

Sphere 3D reported a net income of $2.1 million, or $0.11 basic earnings per share, for Q2 2024.

What challenges did Sphere 3D (ANY) face in Q2 2024?

Sphere 3D faced challenges including a 50% reduction in block rewards and temporary interruptions from certain hosting partners.