Episode Details

WhiteFiber (WYFI) Q2 2026 — Revenue $28.8M, up 54.5%, and GAAP EPS of -$0.39 against a -$0.45 bar. But $12.3M of that revenue is a contract-termination fee from the departing anchor customer. The 10-Q was accepted 7:00am ET on Aug 12, BEFORE the open, so Wednesday Aug 12 IS the reaction: $24.22 to $28.58, up 18.00%. WhiteFiber reported revenue of $28.8M, up 54.5%, and the stock rose 18%. But $12.3 million of that revenue is a contract-termination fee paid by the anchor customer to exit its agreement. Strip it out and revenue was $16.5M, down 11.4% year on year and down 24.6% on the March quarter. The company says so itself in the MD&A. And as of the filing date, eight weeks after quarter end, the fee had still not been collected. THE CALL: AVOID (3/5, A VALUATION AND REVENUE-QUALITY CALL, NOT A DEMAND CALL) — base-case value ~$16.5 vs ~$28.58 today. KEY METRICS: - CALL: AVOID 3/5, fair value $16.50 vs the $28.58 close - 42% BELOW the price and 49% below the Street's $32.33 average. Bear $2.50, base $16.50, bull $29.15. - THE ANGLE: $12.3M of the $28.8M revenue line is a contract-termination fee from the anchor customer that walked. That is 42.7% of the quarter's revenue. - EX-FEE REVENUE: $16.5M, down 11.4% year on year and down 24.6% on Q1's $21.9M. Cloud services ex-fee were $11.5M vs $16.6M - a 30.7% decline, not a 43.5% rise. - THE MD&A SAYS IT: lost monthly GPU revenue was 'substantially offset by $12.3 million of termination fee revenue recorded'. The company discloses this itself. - AND IT IS UNPAID: after quarter end the fee was amended UP to $15.7M, and the 10-Q states that amount remains outstanding as of its own filing date. - THE EPS BEAT IS THE FEE: $12.3M over 38,662,914 shares is 31.8 cents. Filed EPS was $(0.39) basic and diluted; without the fee the quarter is nearer $(0.71). - OPERATING LOSS WAS FLAT: $9.3M vs $9.2M a year earlier, on 54.5% headline growth. Interest went from zero to $6.0M - $4.6M third-party, $1.4M to parent Bit Digital. - THE BULL CASE IS REAL: remaining performance obligation $1,008.0M, colocation $932.9M. Nscale NC-1 is ~$865M over 10 years, 40 MW, and bills from Q3 2026. - FUNDED BY CUSTOMERS: contract liabilities $143.1M vs $79.6M, on $72.6M of prepayments - 2.5x the $56.1M cash balance, and $63.6M of the $89.1M operating cash flow. - CASH: capex $344.7M in the half against $89.1M operating cash - free cash flow -$255.6M. Cash fell $114.4M to $56.1M; working capital swung to a $28.6M deficit. - THE $120M NOBODY MENTIONS: 54% of January's $222.1M convertible raise bought a zero-strike call on 5,905,511 of its own shares. Equity fell $145.1M on a $27.0M loss. - CONCENTRATION AND CONTROL: seven customers, largest at 63% of H1 revenue, three orders discontinued. Bit Digital owns 69.6% and is also a lender. Float is 24.4%. - VALUATION: EV $1.36B = 14.4x trailing sales, or 16.6x excluding the fee. Our base takes $380M of 2029 revenue at a 42% cash margin on 12x, less $760M of net debt. What to watch: UP: remaining performance obligation of $1,008.0M, of which $932.9M is colocation; the Nscale NC-1 order is roughly $865M over ten years across 40 MW and starts billing in Q3; colocation revenue tripled to $4.7M at a 63% cash gross margin; capacity targeted at 70 MW gross by year end. DOWN: revenue excluding the breakup fee fell 11.4%; cloud ex-fee fell 30.7%; operating loss was flat at $9.3M on 54.5% headline growth; H1 free cash flow was -$255.6M; seven customers with one at 63% of revenue; and a working capital deficit of $28.6M. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.