CORZZ — Core Scientific, Inc. Tranche 2 Warrants

Core Scientific, Inc. (CORZZ) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Colocation Revenue: Achieved a billable capacity of 243 megawatts, translating to over $350 million in annualized GAAP revenue.
• SG&A Expenses: First quarter SG&A on a cash basis was just over $30 million, expected to remain stable with potential for opportunistic growth investments.
• CoreWeave Contract Margin: Increased target cash gross profit margin from 75%-80% to 80%-85% based on improved visibility into cost structures.
• Capital Raise: Closed a $3.3 billion project bond financing at a 7.75% interest rate, netting approximately $2.9 billion for future growth initiatives.

2. Strategic Updates and Business Highlights

• Infrastructure Development: Core Scientific is advancing its infrastructure with five operational sites and plans to scale capacity significantly, including a pathway to 1.5 gigawatts at Muskogee and a similar expansion at Pecos.
• Customer Engagement: Engaged with multiple hyperscalers and emerging customer segments, including chip makers and AI labs, with increased conversations since the beginning of the year.
• Operational Milestones: Successfully transitioned Marble, NC, and Dalton, GA, facilities into operations, adding significant billable capacity.
• Power Strategy: Focus on behind-the-meter solutions to enhance resilience and reduce supply chain risks, with construction underway for natural gas infrastructure.

3. Forward Guidance and Outlook

• Capacity Expansion: Expect to deliver over 450 megawatts billable by summer 2026 and a total of 590 megawatts by early 2027.
• Capital Expenditures: Projecting approximately $2 billion in capital expenditures for 2026, including investments in new project developments and acquisitions.
• Customer Contracts: Confident in the ability to secure new customer contracts, with readiness timelines for capacity delivery expected to be attractive to potential clients.

4. Bad News, Challenges, or Points of Concern

• Bitcoin Mining Transition: The company is winding down its Bitcoin mining operations, which may impact revenue as it transitions to high-density colocation.
• Exclusivity Expiration: The expiration of exclusivity agreements with hyperscalers raised questions about deal timing and customer selection, although immediate re-engagement with other hyperscalers occurred.
• Labor Market Constraints: Labor availability remains a challenge in the construction market, potentially impacting development timelines.

5. Notable Q&A Insights

• Hyperscaler Engagement: The expired exclusivity did not deter interest; multiple hyperscalers are now engaged with the Pecos and Muskogee sites.
• Pricing Trends: Pricing for new contracts is expected to firm up due to rising labor and equipment costs.
• Behind-the-Meter Solutions: Deployment timelines for behind-the-meter power solutions are projected at 12-14 months, with costs comparable to grid power.
• Competitive Advantage: Core Scientific's experience and proactive development strategy position it favorably against competitors, particularly in securing contracts with hyperscalers and other large clients.

Overall, Core Scientific is executing a robust growth strategy in the high-density colocation market, with strong customer demand and significant operational advancements, despite facing challenges related to transitioning from Bitcoin mining and labor market constraints.