CIFR Stock Drops After Q3 Revenue Miss: CEO Says Company Is Not A ‘Neocloud’

Total revenue of $26.7 million fell short of the $37.5 million analysts estimated, according to Koyfin.

• Cipher Digital's Bitcoin mining accounted for $20.8 million in the third quarter, or almost 78% of total revenue.
• The loss of $0.22 per share, excluding certain items, was better than the expected $0.26 loss.
• Cipher has $16.6 billion in contracted revenue over three sites, including roughly $9.1 billion at Barber Lake.

Shares of Cipher Digital (CIFR) fell on Monday morning after the firm reported third-quarter results with revenue falling short of estimates. 

According to the results, Bitcoin (BTC) mining still accounted for the majority of its revenue, even as CEO Tyler Page stressed that the company is "not a neo-cloud."

The company's earnings report showed Bitcoin mining income was $20.8 million, or nearly 78% of Cipher's overall revenue. That was down from $71.7 million the previous year. The company's first $5.9 million in high-performance computing lease revenue was recorded after the commencement of rent at its Black Pearl location.

CIFR stock was down over 0.4% in morning trade. On Stocktwits, CIFR was one of the top trending tickers among equities at the time of writing. Retail sentiment around CIFR remained in the ‘bullish’ zone, accompanied by ‘normal’ chatter levels over the past day

Revenue Falls Short Of Estimates

Revenue fell to $26.7 million, down from an estimated $37.5 million, according to Koyfin data. The company earned $0.08 per basic share, supported by a $127.2 million gain on the fair value of its warrant liability. 

The company posted a diluted loss of $0.22 a share, below the analyst estimate of $0.26, according to Koyfin. 

CEO Says Cipher Is Not A Neocloud

Page separated Cipher's business from "neoclouds," which provide clients direct access to chips. He said, “that model can generate a larger headline revenue opportunity, but comes with meaningful increase in risk and financing obligations.” 

“Revenue visibility is lower, risk exposure is higher, and margins are highly sensitive to changes in the cost of capital and spot pricing for compute," added Page.

Rather, Cipher has a long-term colocation model, providing turn-key data center capacity that its tenants build out themselves, he said. Cipher has now changed how it prices new leases, Page said. 

Now the firm measures each project by its yield on cost, or the stable annual income a site generates compared with what it costs to create. “In return, we sign long-term contracts with creditworthy counterparties that give us strong revenue visibility and a more limited risk profile.”  

As borrowing costs increase across the industry, Cipher wants to preserve competitive yields on new leases, Page said. 

What Has Evolved?

Page added that Cipher is also pouring more money into projects earlier. When it first launched into HPC data centers, Cipher and its tenants signed leases before plans were complete, so they could move faster. Now the company works with tenants to agree on design specifications before signing, to minimize costly change orders and construction delays.

For its near-term pipeline, Page said Cipher is getting designs 30% to 60% complete before it signs leases.

The company now has $16.6 billion in contracted revenue over three campuses. That included around $9.1 billion at Barber Lake, where a revised agreement with a top AI lab extended the period to 20 years from 10. The first capacity is projected to be ready in the fourth quarter of this year.

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