Soluna Holdings Reports Strong Adjusted EBITDA and Q2’24 Results

Rhea-AI Summary

Soluna Holdings (NASDAQ: SLNH) reported a 362% year-over-year increase in revenue for Q2 2024, reaching $9.7 million compared to $2.1 million in Q2 2023.

Operating loss improved to $3.7 million, a 48% reduction from the $7.1 million loss in Q2 2023. Adjusted EBITDA rose to $1.8 million from a loss of $2.0 million in the prior year, driven by strong revenue growth and cost discipline.

Unrestricted cash increased by 50% from the end of 2023 to $9.6 million. Key projects include the ongoing construction of Dorothy 2, the development of Project Kati, and a 2 GW pipeline.

Partnership with Hewlett Packard Enterprise launched Soluna Cloud, allowing for scalable AI workloads using renewable energy.

Project Kati signed a Definitive Power Purchase Agreement with EDF Renewables and Masdar. Convertible debt decreased from $7.7 million to $5.3 million due to strong share price momentum and trading volume.

Positive

• Revenue increased by 362% year-over-year to $9.7 million.
• Operating loss reduced by 48% to $3.7 million.
• Adjusted EBITDA increased to $1.8 million from a loss of $2.0 million.
• Unrestricted cash grew by 50% to $9.6 million.
• Convertible debt reduced from $7.7 million to $5.3 million.

Negative

• General and administrative expenses increased by 32% to $5.4 million.

Financial Analyst

Soluna Holdings' Q2 2024 results show significant improvement, with revenue increasing 362% year-over-year to $9.7 million. The company's diversification strategy is paying off, as evidenced by strong growth in both cryptocurrency mining and data hosting revenues. The adjusted EBITDA of $1.8 million marks a substantial turnaround from the $2.0 million loss in Q2 2023.

However, investors should note that revenue decreased 22% quarter-over-quarter due to the Bitcoin halving in April. Despite this, Soluna's ability to maintain positive adjusted EBITDA demonstrates resilience. The 50% increase in unrestricted cash to $9.6 million since the end of 2023 is a positive sign for the company's liquidity position.

The partnership with HP Enterprise and the power purchase agreement with EDF Renewables for Project Kati indicate potential for future growth. The reduction in convertible debt from $7.7 million to $5.3 million is also favorable for the company's capital structure.

Tech Expert

Soluna's strategic pivot towards AI and high-performance computing is a smart move in the evolving tech landscape. The partnership with Hewlett Packard Enterprise to launch Soluna Cloud positions the company to capitalize on the growing demand for AI infrastructure. By offering a platform that combines renewable energy, direct liquid cooling and waste-heat recovery, Soluna is addressing both performance and sustainability concerns in the AI industry.

The development of Project Kati, with its planned 166 MW capacity for Bitcoin hosting and AI applications, demonstrates Soluna's commitment to scaling its operations. This project, along with the existing 2 GW pipeline, suggests significant potential for future expansion in the high-performance computing space.

However, investors should be aware that the AI market is highly competitive, with established players like NVIDIA and AMD dominating the hardware space. Soluna will need to differentiate itself through its renewable energy focus and potentially lower operating costs to carve out a significant market share.

362% Increase in Revenue year-over-year

ALBANY, N.Y.--(BUSINESS WIRE)-- Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), a developer of green data centers for intensive computing applications including Bitcoin mining and AI, announced financial results for the second quarter ended June 30, 2024.

(Graphic: Business Wire)

John Belizaire, CEO of Soluna, said, “I am honored to lead such a resilient team. This year's quarterly results show a markedly different company with many opportunities ahead. We have now successfully implemented all of our revenue diversification strategies and I am proud that the results are beginning to show and that we have achieved significant project milestones this quarter.”

Belizaire said, “Our venture into AI, the construction phase of Dorothy 2, the development of Project Kati, and the continued development of our 2 GW pipeline represents the next frontier of growth for our enterprise.”

Finance and Operational Highlights:

• Strong Revenue – Revenue increased by 362% to $9.7 million in the three months ended of second quarter of 2024 compared to $2.1 million in the three months ended of second quarter of 2023.
• Operating loss – Operating loss significantly improved to $3.7 million in the three months ended second quarter of 2024, a substantial 48% reduction from the $7.1 million operating loss in the second quarter of 2023.
• Strong Adjusted EBITDA – Adjusted EBITDA (non-GAAP) ramped to $1.8 million compared to the second quarter of 2023 of ($2.0 million), an increase of $3.8 million driven by strong revenue growth and cost discipline through the Bitcoin halving.
• Strong Cash Growth – Unrestricted cash increased 50% from the end of 2023, reaching $9.6 million.
• HP Enterprise Partnership – Soluna has partnered with Hewlett Packard Enterprise to launch Soluna Cloud. By utilizing Soluna Cloud, enterprise customers can rapidly deploy AI workloads on a more sustainable and scalable platform, made possible by renewable energy, direct liquid cooling (DLC), and waste-heat recovery.
• Signed Definitive Power Purchase Agreement with EDF Renewables – Project Kati is Soluna’s second Renewable Computing data center project in Texas. It will be co-located at a wind facility owned by EDF Renewables and Masdar. Project Kati will be executed in two phases, with each phase delivering 83 MW of renewable energy capacity to power high-performance computing applications, including Bitcoin Hosting and AI.
• Completed Spring Demand Response Period and Began Summer Period – As part of its Demand Response Plan, Soluna has earned $1.2 million for the six months ended June 2024 at Project Dorothy.
• Reduced Convertible Debt – Driven by strong share price momentum and trading volume, Convertible Note Holders reduced their principal balance through conversions from $7.7 million at the end of the first quarter of 2024 to $5.3 million at the end of the second quarter of 2024.

Financial Summary:

Key financial results for the second quarter include:

• The strong second-quarter revenue of $9.7 million and the 4th consecutive quarter of positive Adjusted EBITDA showcased our resilience, reflecting only a 22% revenue decrease compared to the first quarter of 2024, despite the challenges posed by the Bitcoin halving in April, which drove the lower Adjusted EBITDA, as expected. The second quarter resulted in a revenue increase of 362% compared to the second quarter of 2023.
• Cryptocurrency Mining Revenue increased by $3.6 million compared to the second quarter of 2023 when Project Sophie switched to Data Hosting, and Project Dorothy 1B was energized in the third quarter of 2023.
• Data Hosting Revenue increased by approximately $3.7 million – compared to the second quarter of 2023, primarily related to the energization and deployment of hosting customers at Project Dorothy 1A and Project Sophie in 2023.
• Adjusted EBITDA of $1.8 million – Adjusted EBITDA (non-GAAP) ramped from ($2.0 million) in the second quarter of 2023 to $1.8 million in the second quarter of 2024, an increase of $3.8 million driven by strong revenue growth and cost discipline.

Revenue & Cost of Revenue by Project Site
Second Quarter 2024
(Dollars in thousands)
		Project Dorothy 1B			Project Dorothy 1A			Project Sophie			Project Marie			Other			Total
Cryptocurrency mining revenue		$	4,484		$	-		$	-		$	-		$	-		$	4,484
Data hosting revenue			-			3,567			1,331			-			-			4,898
Demand response services			-			-			-			-			293			293
Total revenue		$	4,484		$	3,567		$	1,331		$	-		$	293		$	9,675
Cost of cryptocurrency mining, exclusive of depreciation		$	1,883		$	-			-			-			-			1,883
Cost of data hosting revenue, exclusive of depreciation			-			1,758			418			-			-			2,176
Cost of revenue- depreciation			1,073			282			151			-			-			1,506
Total cost of revenue		$	2,956		$	2,040		$	569		$	-		$	-		$	5,565

Revenue & Cost of Revenue by Project Site
Second Quarter 2023
(Dollars in thousands)
		Project Dorothy 1B			Project Dorothy 1A			Project Sophie			Project Marie			Other			Total
Cryptocurrency mining revenue		$	-		$	-		$	915		$	-		$	-		$	915
Data hosting revenue			-			456			692			-			5			1,153
Demand response services			-			-			-			-			-			-
Total revenue		$	-		$	456		$	1,607		$	-		$	5		$	2,068
Cost of cryptocurrency mining, exclusive of depreciation		$	224		$	-			936			-			-			1,160
Cost of data hosting revenue, exclusive of depreciation			-			508			251			-			-			759
Cost of revenue- depreciation			14			185			332			8			-			539
Total cost of revenue		$	238		$	693		$	1,519		$	8		$	-		$	2,458

• Gross Profit improved by $4.5 million - as Project Sophie pivoted to Data Hosting and Project Dorothy reached full energization, costs of revenue either met or exceeded expectations, enabling strong Gross Profit (Loss) growth from ($390 thousand) for the second quarter of 2023 to $4.1 million for the second quarter of 2024.

• Gross profit for the second quarter of 2024 compared to the first quarter of 2024 decreased by $2.8 million, while revenue declined by $2.9 million. This highlights the company's cost management practices and discipline.

• General and administrative expenses, excluding depreciation and amortization for the second quarter of 2024 increased by approximately $1.3 million in the second quarter of 2024 or 32% over the second quarter of 2023 - to $5.4 million from $4.1 million. The increase in general and administrative expenses was mainly due to employee-related expenses, legal fees, investor relations, and professional fees which are partially offset by a decrease in stock compensation expenses.

The unaudited financial statements are available online, here. A presentation of this Second Quarter Update can also be found online, here.

___

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

In addition to figures prepared in accordance with GAAP, Soluna from time to time presents alternative non-GAAP performance measures, e.g., EBITDA, adjusted EBITDA, adjusted net profit/loss, adjusted earnings per share, free cash flow. These measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Alternative performance measures are not subject to GAAP or any other generally accepted accounting principle. Other companies may define these terms in different ways.

About Soluna Holdings, Inc (SLNH)

Soluna is on a mission to make renewable energy a global superpower using computing as a catalyst. The company designs, develops and operates digital infrastructure that transforms surplus renewable energy into global computing resources. Soluna’s pioneering data centers are strategically co-located with wind, solar, or hydroelectric power plants to support high-performance computing applications including Bitcoin Mining, Generative AI, and other compute intensive applications. Soluna’s proprietary software MaestroOS(™) helps energize a greener grid while delivering cost-effective and sustainable computing solutions, and superior returns. To learn more visit solunacomputing.com. Follow us on X (formerly Twitter) at @SolunaHoldings.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815547957/en/

John Tunison

Chief Financial Officer

Soluna Holdings, Inc.

jtunison@soluna.io

Source: Soluna Holdings, Inc.

FAQ

What was Soluna Holdings' revenue in Q2 2024?

Soluna Holdings reported revenue of $9.7 million in Q2 2024, a 362% increase year-over-year.

How much did Soluna Holdings reduce its operating loss by in Q2 2024?

Soluna Holdings reduced its operating loss by 48%, down to $3.7 million in Q2 2024.

What was Soluna Holdings' Adjusted EBITDA for Q2 2024?

Soluna Holdings' Adjusted EBITDA was $1.8 million in Q2 2024, up from a loss of $2.0 million in Q2 2023.

What are the recent partnerships of Soluna Holdings?

Soluna Holdings partnered with Hewlett Packard Enterprise to launch Soluna Cloud, a platform for AI workloads using renewable energy.

How much did Soluna Holdings increase its unrestricted cash by at the end of Q2 2024?

Soluna Holdings increased its unrestricted cash by 50% to $9.6 million at the end of Q2 2024.

What is Soluna Holdings' convertible debt status in Q2 2024?

Soluna Holdings reduced its convertible debt from $7.7 million to $5.3 million due to strong share price momentum and trading volume.

What was the increase in Soluna Holdings' general and administrative expenses in Q2 2024?

General and administrative expenses increased by 32% to $5.4 million in Q2 2024.