Core Scientific, Inc. (CORZ) Earnings Call Transcript

Greetings, and welcome to the Core Scientific Fiscal Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Jonathan Charbonneau, SVP of Investor Relations. Please go ahead.

Good morning, and welcome to Core Scientific's Second Quarter 2026 Earnings Call. Before we begin, I need to remind you that statements made on this call, other than historical facts, are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995 and are based on our current expectations. Words such as anticipates, expects, intends, believes and similar words and expressions are intended to identify forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ substantially. For further information on these risks and uncertainties we encourage you to review the risk factors discussed in the company's reports on Form 10-Q and 8-K filed today with the Securities and Exchange Commission and the press release and slide presentation contained therein. The forward-looking statements we make today speak as of today, and we do not undertake any obligation to update any such statement to reflect events or circumstances occurring after today. Today's presentation is available on our website at investors.corescientific.com. The content of this conference call contains information that is accurate only as of today, July 28, 2026. Joining me today from Core Scientific are our CEO, Adam Sullivan, our Chief Financial Officer, Jim Nygaard, and our Chief Operating Officer, Matt Brown. We will conduct a question-and-answer session after management's remarks. We will now begin with remarks from Adam.

Good morning, everyone, and thank you for joining us. This morning, we announced a commercial partnership with AMD for up to 2.5 gigawatts of data center capacity, a clear validation of our deliberate strategy to begin development and construction across multiple locations before customer contracts were in place. Beyond their scale, contracted value and long-term growth potential. The agreements underlying this relationship reflect the strength of the company we've built, discipline and conviction behind our approach and the significant opportunity still out of us. Throughout this process, our priority has been to form the right relationships that recognize the value of our portfolio. The most valuable arrangements in this market are not one-off transactions. They are the ones with the potential for significant expansion over time. In our agreement with Core began at a 16-megawatt lease at our Austin campus in 2024 and has since expanded to 590 megawatts of total contracted capacity. That progression is important, and our partnership announcement today with AMD reflects this potential. The initial agreement represents more than $14 billion of base contracted revenue across the 15-year agreements with 2.5% annual escalators. Core Scientific will deliver 530 megawatts across 5 sites, which is 1 of the largest single deals announced among our peers. With this announcement, we will have 2 customers that have each committed to over 500 megawatts each across 5 campuses. Approximately 380 megawatts will be delivered directly to AMD under a triple-net lease across Pecos, Hunt and Muskogee. The remaining approximately 150 megawatts across Auburn, Dalton will support [indiscernible] through a modified gross lease for which AMD will provide full credit support throughout the full 15-year lease term. Through this initial agreement, Dalton and Auburn will be fully leased. Importantly, the long-term opportunity at the remaining campuses extend well beyond the capacity included in these agreements. As we previously disclosed, both Pecos and Muskogee have the potential to support up to 1 gigawatt of leasable capacity through a combination of additional trade connected power and behind-the-meter solutions. Notably, the credit support agreements do not include any equity step in rights like those include in certain other transactions announced in the market, protecting our equity investment in these projects. As a sign of this partnership, we have issued a warrant to AMD with a strike price reflecting current market levels, investing subject to certain commercial conditions. The structure with AMD provides meaningful potential long-term revenue, durable contracted cash flows, greater customer diversification and substantial utilization of our leasable campus portfolio. The initial 530 megawatts of contracted capacity represents only the first phase of what we believe can become a much larger strategic relationship. AMD at specific times and under specific conditions has the exclusive reservation right to lease as much as 2 additional gigawatts. We believe we can make this power available to AMD through a combination of incremental connected power capacity progressing through load studies in behind-the-meter solutions across Pecos, Hunt and Muskogee. This structure positions us to grow alongside AMD as its infrastructure requirements continue to expand over time. Our vision to provide AMD with expansion options across our portfolio reflects both our confidence in its position within the AI ecosystem and our belief in the long-term growth potential of the relationship. AMD is building significant momentum in a rapidly expanding market as hyperscalers, AI labs, cloud providers and enterprise customers increasingly adopt its advanced computing platforms making it a highly attractive and strategic count party for Core Scientific. The scale and structure of the relationship are important, but AMD's decision to work with Core Scientific also reflects confidence in our ability to deliver. Discipline explains why we continue to seek only the right commercial agreement, execution explains why we want it. AMD had the opportunity to evaluate not only the quality of our power and real estate portfolio, but also our demonstrated ability to develop and operate highly complex AI infrastructure across multiple campuses. Over the last year, we have shown that we can move from contract execution to construction, energization and revenue generation at significant scale. That experience is also enabling us to collaborate closely with AMD on codesign initiatives, creating the future of our campuses to drive greater efficiency and speed across their GPU and CPU products. Our execution capability is not theoretical. A, we are pleased to announce we are ahead of schedule and currently billing for 437 megawatts of capacity. Tangible evidence of our ability to move from agreements to deliver operational infrastructure. We believe this distinction will become increasingly important as the market shifts from evaluating companies, primarily on the deals they announced to also assessing their ability to execute. Value is not announced it is delivered, delivering hundreds of megawatts of high-density infrastructure requires far more than access to power. It requires an integrated development and operating platform capable of designing, building and operating comp line for structure reliably and consistently at scale. We've built those capabilities, and they position us to deliver against our existing commitments while continuing to establish and expand our capacity agreements with leading companies across the AI ecosystem. The agreements announced today materially increased the scale and diversification of our contracted portfolio. Core Scientific now has approximately 1.1 gigawatts of total contracted billable capacity, representing more than $24 billion of base contracted revenue. Just as important, we achieved this growth without compromising the principles that have guided our strategy. We have remained disciplined in how we value our power, allocate our campuses assess customer credit and evaluate the risk-adjusted returns of each opportunity. The result is a stronger, more diversified platform with greater revenue visibility, substantial embedded growth opportunities and contracts with some of the most important companies in the AI ecosystem. Our focus now is clear: finished the 150 megawatts remaining in the core we build out. successfully built and deliver the capacity leased today, position ourselves to expand our existing customers over time and continue growing our site portfolio for additional new customers. Over the past year, our priority has been converting existing power capacity from Bitcoin mining to high-density colocation. As we enter the next phase of our growth, we will complement that strategy by expanding our power portfolio through the selective acquisition of Powered land and the development of new sites. Our acquisition in Hunt County, Texas earlier this year is an example of how we are beginning to build this next generation of capacity. We have now identified a new site pipeline of more than 2 gigawatts of potential incremental power with initial capacity potentially available from late 2028 through 2030. This pipeline meaningfully expands our opportunity set, and we will apply the same disciplined approach to advancing these projects that has guided the development of our existing platforms. We believe the late 2028 to 2030 time lines are well aligned with our construction schedules. Over the next several years, our primary focus will remain on executing against our contracted commitments in advancing the broader pathway towards 2.5 gigawatts with AMD. This longer-dated pipeline provides additional runway for growth beyond that opportunity. Our position is unique and we continue to have the balance sheet and operating experience to invest ahead of customer demand when the economics are compelling. The strategy we have outlined is a repeatable model that will guide our growth. secure power early investment discipline, deliver capacity at scale and expand successful customer relationships. Today's AMD announcement is an important validation of the strategy we have pursued but it is also a foundation for what comes next. We remain confident in the opportunity ahead and in our ability to continue building 1 of the most valuable infrastructure platforms serving the growth of AI. Before turning the call over to Matt, I would like to thank the entire Core Scientific team. Their expertise, commitment and collective effort have brought us to this important inflection point and positioned us to continue delivering for our customers and shareholders. I cannot be more excited about the next phase of Core Scientific and the opportunity that is ahead of us. With that, I will turn the call over to our Chief Operating Officer, Matt Brown to discuss operations. Matt?

Thank you, Adam. Today's announcement marks an exciting next phase of growth for Core Scientific and reflects the strong execution of our team. I'll begin with a major milestone achieved during the second quarter, then provide an overview of the AMD build-out and delivery plan. As we stated in our last earnings call, we expected to substantially complete 4 of the 5 4-week campuses before the end of the summer. We achieved that milestone ahead of schedule, reaching 437 billable megawatts and demonstrating our ability to deliver complex infrastructure safely, efficiently and at scale. Dalton Phase II, the fifth and final campus remains on track for full completion in early 2027. With the majority of the core we program now delivered, our focus is shifting to the next phase of development, led by our approximately 530-megawatt AMD commitment across 5 campuses. Importantly, this program represents more than a collection of individual data center projects. It is an integrated colocation platform engineered to support AMD Helios rack-scale systems optimized for the most demanding AI workloads. Our close couple AMD design framework aligns Core Scientific infrastructure AMD's technology road map through a repeatable, scalable design that accelerates speed to compute, optimizes capital deployment and reduces execution risk as contracted capacity scales. Pecos remains our lead AMD site and is on track for initial megawatt delivery in the first half of 2027. Vertical construction is underway major infrastructure equipment beginning to arrive on site, and the project continues to advance in line with delivery schedule. The remaining AMD campuses, Hunt, Auburn, Muskogee and Dalton Phase III we're also progressing through design, procurement, site preparation and construction with deliveries beginning in 2027 and ramping through the end of 2028. As we move from 1 major customer program to the next, our operating priorities remain clear: deliver capacity efficiently, maintain schedule discipline and deploy capital responsibly. We also want to give investors clear visibility in the true all-in fault of delivering high-density AI infrastructure. The cost per megawatt goes well beyond acquiring land and putting up the building. It reflects the capital required to take a sight from development planning through construction, utility energization, integrated systems testing, commissioning, customer acceptance and ultimately rent commencement. We organized that estimate into 3 categories. The first is construction labor and one-side execution, skilled electrical and mechanical technicians, pipe fitters, equipment operators project supervisors and safety personnel required to integrate and commission the facility. Second is the critical infrastructure equipment, commonly referred to as OFE, owner furnished equipment, including transformers, switchgears, generators, chillers, pumps, liquid cooling systems, power distribution systems, control systems and the other major components that identity computing requires. The third is self cost and general conditions. Design engineering, permitting, utility interconnect, insurance, on-site construction offices, warehouses, temporary power, fuel, widening, program management testing and contingency. Together, these categories capture the full cost of delivering a commissioned customer-ready billable megawatt. Based on current market conditions and site-specific factors, we expect build cost range from approximately $11 million to $12 million per megawatt. The key takeaway is simple. We have demonstrated that we can deliver AI infrastructure at scale, and are now applying that experience to a standardized multisite deployment platform for AMD with determined focus on schedule, capital delisting and repeatable execution. With that, I'll turn the call over to Chief Financial Officer, Jim Nygaard to discuss Q2 financials.

Thanks, Matt. I'll begin with our second quarter results, which reflect continued momentum in scaling our high-density colocation business. We began billing for 437 megawatts in mid-July nearly 200 megawatts more than at the end of the first quarter and ahead of expectations. This drove a significant sequential increase in GAAP colocation revenue to $137 million and we expect another meaningful step-up in the third quarter. For context, under GAAP, revenue from the core weave contracts is recognized on a straight-line basis over the 12-year lease terms. Effectively pulling future contractual escalators forward. Within Bitcoin Mining, our strategy remains unchanged. We continue to optimize the business and operate primarily to offset contractual power costs during the wind down. We ended June with nearly 30% fewer miners online than at the end of the first quarter and are now self-mining at only 2 sites. We expect the coin mining activity to continue winding down over the remainder of the year. On the expense side, second quarter cash SG&A was approximately $36 million. The $4 million sequential increase was primarily driven by onetime professional fees associated with our recent debt financing. While we are not providing explicit SG&A guidance, we continue to view the low $30 million range as a reasonable quarterly baseline with the potential for some variability as we make targeted investments to support growth. With that overview of the quarter, let me turn to capital formation and our plans to fund the next phase of growth. The AMD announcement is a significant commercial achievement and an important validation of the investment and financing strategy we have pursued. We ended the second quarter with approximately $1.8 billion of liquidity, giving us a strong foundation as we prepare to fund the AMD build-out. At our current cost estimate of $11 million to $12 million per megawatt in CapEx, the initial 530 megawatts will require approximately $6 billion of capital, which we expect to finance through project-level bonds. Beyond our contracted commitments, we intend to continue to selectively advance capacity ahead of customer contracts, following the same playbook that helped us position for the AMD opportunity. At a high level, we are prepared to invest up to approximately $1 billion to advance roughly 500 megawatts of initial build-outs for future capacity. This capital would be deployed to advance development secure long lead equipment and provide greater certainty around ready-for-service dates. The AMD announcement demonstrates the value of this approach and reinforces our ability to convert customer demand into additional contracted capacity. We believe our balance sheet and financing strategy give us flexibility to execute our contracted commitments while continuing to invest in the next phase of Core Scientific's growth. With that, I'll hand the call back to the operator for Q&A.

[Operator Instructions] And our first question will come from John Todaro with Needham & Company.

Congrats on all the progress and the lease here. Two, if I may. First one, just on the potential expansion with A&D looks like 1.5 gigawatts of that is as stated behind the meter and in the load study. I guess just wondering if we can give a little bit more color on kind of time line there. And if it is a little bit more lengthy, does AMD then have an exclusivity period for a significant chunk of time or just maybe frame that up a little bit more for us?

Yes. Happy to John, and thanks for the question. I think to start off, I mean, this is obviously a transformational deal for Core Scientific, and we could not be more excited about our partnership with AMD on this. I think it's not appropriate for us to speculate and certainly on what AMD will do as it relates to the additional megawatts. And as you mentioned, it is up to nearly 2 gigawatts of additional capacity under the agreement. And that is an exclusive reservation agreement that we have with AMD I think the important part here is as you look at and as you mentioned behind the meter -- behind the meter is becoming much more common in the marketplace amongst hyperscalers and labs. That's continued to be a growing segment of this market. . And I believe the comfort level amongst all of the peers are continuing to increase as it relates to the meter deployments. We have great solutions as it relates to our Pecos and Muskogee campuses. We're looking forward to growing those campuses alongside AMD. And I think the important part here is the market demand for GPUs only continues to expand, obviously, highlighted by the most recent AMD announcements. But data center capacity is still in very short supply. So we feel like we're very well positioned for the continued growth here, and we're going to be able to deliver a site amount of capacity for AMD.

Great. That's very helpful. And then just a quick 1 on the [ Neal cloud ] lease as well, is there going to be a backstop or guarantee for them is AMD associated with that 1 as well or completely separate?

Yes, I know that's correct. They are providing a full credit support for the full 15-year lease term. And as we noted in prepared remarks, that full credit support does not include any equity step-in rights, as you've seen included in some other deals, which just per tax our equity investments in these projects. .

Our next question will come from Brett Knoblauch with Cantor Fitzgerald.

Congrats on the deal. Curious about the economics between maybe like the 2 deals within the larger deal. Should we view that maybe the Neo Cloud plus backstop economic similar as maybe the straight AMD economics?

Yes. I mean I think that's right. I think what you could assume given the modified lease kind of modified growth structure with the Neo cloud that those economics are in line with market. And I would say similar for the direct leases with AMD, those are also in line with market. .

Awesome. And then maybe just on the CapEx front. I know you guys have kind of been pre-spending already across multiple sites. Could you maybe ballpark maybe how much of the $11 million to $12 million you guys have already spent repairing some of these sites? .

Yes. Yes. I mean similar to what we had mentioned in previous earnings call, we were looking at deploying about $2 million per megawatt across the portfolio. And so we had a bit just about $1 billion in commitments across these projects. So we're very far into our capital commitment as it relates to what the equity investment will be required for these projects. .

And moving next to [ Darren Aftahi ] with Lucid Capital.

Congrats, guys. Two, if I may. Can you just talk to the thought process of if the deal is exclusive with AMD just committing sort of 1 customer that amount of capacity, just kind of the thought process that went through that. And then the time frame you laid out in the presentation, just your level of confidence in delivering that capacity on time?

Yes. Thanks, Darren. I appreciate it. I think as we look at the commitment that we made with AMD today, this is truly a one-of-one type partnership in this market. we feel very strongly that our execution capabilities over the course of the core contracts, it was 1 of the main reasons why we are able to get such a unique partnership agreement with AMD. As we look at the product road map and the growth, the reservation rights that AMD has on additional capacity at sites where they have direct leases that's Pecos, Muskogee, Hunt. . In terms of the delivery time lines and their reservation rights time lines, they pair up very well. And so we feel very strongly that we're going to be able to continue to grow alongside of AMD at those 3 sites in particular. -- just given the fact that there's significant demand in the market. As I mentioned earlier, market drivers are all in our favor as it relates to both supply and demand here in this industry. And we believe AMD is going to continue to expand into the future. And Darren, to your other question, talking about our confidence in our ability to deliver we have the equipment secured, we have contractors on site across these 5 campuses. This is a unique situation compared to others who are announcing deals with Greenland. We have bodies moving on-site walls going up at Pecos as we mentioned, we have the building fully complete at this point. And so we feel like we're in a very strong position and that confidence in our ability to deliver and the progress that we've made, we believe is really why AMD chose Core Scientific to partner with.

And we'll go next to Jon Petersen with Jefferies.

Great. Congratulations on the AMD deal. That's really exciting. On the -- looking at your slide on load study, additional power, Pecos, Texas. So I think on August 7, we're going to get an update from ERCOT, I guess this 815 megawatts. Is there a potential that, that's unlocked for you guys or you have a time line on it within the next few weeks?

It's really hard for us to judge. Part of that is the -- sorry, about 300 megawatts of that is the load study for pecos this is behind the meter. I think in terms of our execution on the next megawatts at Pecos in particular, is going to be driven by the behind-the-meter strategy. just given the uncertainty related to timing of that next 300 megawatts from on grid power. .

Okay. All right. That's helpful. And then on the development -- maybe can you talk about the buildup to the lease, like the different pieces that you've already put in place like deposits down on the various supply chain stuff that you need for the development, lining up general contractors and subcontractors. I'd just be curious to hear just a little more about what you guys have been up to in the past few months and just the pieces that you had to put together to get to the point of lease signing this morning?

Yes, I can answer -- I can take that question. I think as we stated in our previous earnings, we outlined a strategy of sort of leaning into development ahead of demand. So over the past year, we had been we started developing Pecos. We started precon in Hunt and the second building in Muskogee. So we were already getting through precon through engineering. We had secured -- actually placed orders for equipment for the initial delivery phases of each of those projects. So what does that mean? Does that mean that we'd already secured long-lead equipment for a large quantum of those megawatts. And then we had already secured the labor and the GCs on site and sort of progressing through GMPs. And now we're at a stage where -- we've already completed in Pecos, like the precast and the building is almost complete here in the number of weeks. The full shelf for the first 10085 megawatts done and we're a pad-ready utility reiteration across the other sites. We released capital for substation construction earlier this year across multiple sites. And so all of that work that we've been going through over the course of 2026 has put us in a position to deal with AMD, and we're really excited about our ability to execute through 2028.

Moving on to Nick Giles with B. Riley Securities.

Congrats guys. You mentioned, I think, 2 gigawatts of new sites. Can you just break that down across how many sites, how advanced is due diligence? And then would you expect to spend capital at those sites ahead of any lease similar to your current footprint?

Yes, I appreciate the question, Nick. Yes, across the 2 gigawatts, we're not giving a slight break down number of sites. But I would say the Hunt acquisition that we made earlier this year is extraordinarily representative of the opportunities that we're pursuing today. I'd say that's a great strike zone in terms of total amount of power that's available at the site. And to your last part of your question, absolutely. As we look at new sites and we look at acquisition costs, what we include in those calculations is being able to bring that site to really a pad-ready status the very lease. That includes putting the substation in place and releasing that capital and so as we evaluate these sites, we think about what -- how does this fit in terms of when the power is available versus our construction schedules, and so there are a number of sites in that pipeline at varying stages of due diligence that we have confidence that we'll be able to bring a new site to market, hopefully, by year-end here.

And maybe a question for Jim. Should we expect to see you raise project debt at the site level? Or how do these AMD direct sites versus the Neo clouds with the wrapper influence the overall financing strategy? .

Our primary financing strategy is going to be utilizing the project bond structure that is, I would say, fairly consistent in the market today, very similar to what we did with Core Weave Functionally speaking, the SPVs are very similar in the direct case, the tenant has direct responsibility for fulfilling the lease payment. So that's what effectively fuels that vehicle. On the credit support dynamic, the debt is fully supported. That dynamic still exists in a similar structure. So they function and operate very -- in a very similar fashion, but they do have distinctions of having the direct relationship in 1 and having a credit support figure in the other. But they are project bond structures in the SPVs that we've now used in the core weave example. .

Our next question comes from Ben Sommers with BTIG. .

So as we think about the behind-the-meter opportunities -- just kind of curious, what is the current kind of status of securing potentially long lead time items for this? And I guess just -- I know you can't give a direct time line estimate, but just kind of curious how that development is progressing as we think about expanding with AMD or beyond? .

Yes. Thanks for the question. What I can say, our visibility into the behind a meter of development across Pecos and Muskogee we've already been in conversations -- advanced conversations with natural gas suppliers. We've done preliminary planning around lateral development to those sites. And we've had some really integrated conversations with equipment providers that would provide the generation 1 site for that. So I would say where we stand today is that we have really clear visibility into the execution time lines cost and all the delivery partners are required to pull that together. .

Awesome. And then 1 more quick 1 for me. So for the expansion of capacity, does AMD have the ability to potentially grant that to, let's say, like another neo cloud, similar tower doing here and then backstop that contract? Or does this all have to be direct with AMD? .

On the direct leases, it has to be direct with AMD.

Our next question comes from Joseph Vafi with Canaccord. .

Adding my congratulations here as well. Great to see the AMD news. Just -- if we rewind about a quarter, I know you were winding down some exclusive negotiations for, I believe, some of these sites with an investment-grade tenant, and now we have the AMD announcement. Just be interesting if you could provide any color on if AMD was the exclusive negotiating partner there or if they arose after those exclusives ended just would be -- I think it would be valuable and insightful relative to the cadence of negotiations out there broadly in the marketplace?

Yes, I appreciate the question, Joe. I'm not going to comment on who the customer was in previous discussions. I think the key here is this is a long-term relationship that was formed over a long period of time with AMD. They were evaluating our execution capabilities across the existing contracts that we have in place today. they were evaluating what we had on order in terms of long-lead equipment. And we're evaluating the sites over a period of time as construction continued across the 5 campuses that they've signed up for today. So these conversations are long, and I think that's expected across the market. But what we sign today is truly unique, and we could be more excited about partnering with AMD on a project of this scale.

Sure. Great. That's helpful, Adam. And then Jim, you're kind of ahead of the pack here on generating revenue and operating cash flow, I think at this point, how does the revenue and more of a maturing P&L kind of shape strategy here versus where you were maybe 6 or 9 months ago?

Yes, I appreciate the question. It is quite a transformation from our history of Bitcoin mining, which is certainly characteristic of a lot of volatility and lack of transparency to essentially a financial profile that is essentially an opposite of that. That's what makes this business in terms of its financing capability its visibility and it's ultimately stability allows us to really make investments with a lot of confidence. So we're excited about that transformation. We've had a lot of noise in our historical financials. And what's exciting about next year is we're going to be starting with a clean sheet of paper and you're going to start to see a much more mature financial profile emerge. That is much more consistent with the new business model. . So that's an exciting transformation for us and 1 that we think is going to serve us well, and I appreciate your comments about us being ahead of the pack. That's an important observation for our differentiation in the market that often, I don't think we get a lot of credit for. So thank you for calling that out.