Digi Power X Inc. (DGX:CA) Q3 2025 Earnings Call Transcript

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Overview

The earnings call summary indicates strong liquidity, no debt, and improved working capital, which are positive financial indicators. The strategic partnership with Super Micro and the development of the NeoCloud platform are promising for future growth. Despite a decline in net income, the company has a positive EBITDA and increased digital asset holdings. The Q&A section reveals confidence in future AI revenues and detailed responses from management, enhancing positive sentiment. Considering these factors, the overall sentiment is positive, with potential for a 2% to 8% stock price increase over the next two weeks.

Key Financial Performance

Working Capital $15 million in Q3 2025, up from $0.5 million in Q3 2024, indicating a significant improvement in liquidity.

Net Income Positive $300,000 in Q3 2025, compared to $6.4 million in Q3 2024, showing a decline due to unspecified factors.

EBITDA $1.9 million positive in Q3 2025, with adjusted EBITDA at $0.8 million positive, reflecting operational profitability.

Digital Assets BTC holdings increased by 143% to 97 Bitcoin, and Ethereum holdings reached 1,000 tokens. Total digital currency value rose to $15.4 million, up 213% year-over-year, driven by increased cryptocurrency holdings.

Debt No long-term debt, indicating a strong financial position.

Capital Expenditures (CapEx) $3.1 million in Q3 2025 and $9.5 million year-to-date, primarily for Tier 3 AI data center conversion.

Energy Revenue Grew 112% year-over-year to $8.7 million, driven by increased energy-related operations.

Cost of Revenue and Depreciation Reduced by $9.3 million year-to-date, contributing to improved profitability.

Liquidity Over $90 million in cash, BTC, ETH, and equivalents, marking the strongest liquidity in company history.

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Operating Highlights

ARMS 200 Tier 3 AI-powered assembly: First assembly began in Q4 2025 and will be online in Q1 2026. ARMS 200 modules will be deployed across all Tier 3 sites starting January 2026.

NeoCloudz platform: GPU-as-a-Service platform launching January 2026.

AI infrastructure expansion: Approved 60-megawatt load study in New York for future AI expansions. Advancing long-term co-location and AI compute agreements with multiple potential customers.

Energy revenue: Grew 112% year-over-year to $8.7 million.

Cost efficiencies: Cost of revenue and depreciation reduced by $9.3 million year-to-date.

AI infrastructure transition: Phase 1 deployment of 5 megawatts in Q1 2026, Phase 2 with 15 megawatts in Q2 2026, and Phase 3 with 30 megawatts in Q3 2026, totaling 55 megawatts by Q4 2026.

Power availability: Alabama has 55 megawatts, New York has 141.7 megawatts, totaling close to 200 megawatts for 2026. North Carolina anticipates an additional 200 megawatts by 2028.

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Risk or Challenges

Market Conditions: Potential risks from economic uncertainties or fluctuations in digital asset values (e.g., Bitcoin and Ethereum) which could impact financial stability.

Regulatory Hurdles: Possible challenges related to compliance with U.S. and Canadian securities laws and other regulatory requirements for AI infrastructure and digital assets.

Strategic Execution Risks: Dependence on successful deployment of ARMS 200 modules and NeoCloudz platform by Q1 2026, which could face delays or technical issues.

Supply Chain Disruptions: Potential risks in sourcing and deploying NVIDIA B200 clusters and other critical AI infrastructure components.

Competitive Pressures: Emerging competition in the AI infrastructure and GPU-as-a-Service markets could impact market share and profitability.

Operational Risks: Challenges in managing and scaling power availability across multiple sites (e.g., Alabama, New York, North Carolina) to meet deployment timelines.

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Guidance & Outlook

ARMS 200 Tier 3 AI-powered assembly: First ARMS 200 Tier 3 AI-powered assembly began in Q4 2025 and will be online in Q1 2026. Beginning January 2026, ARMS 200 modules will be deployed across all Tier 3 sites.

NVIDIA B200 cluster: First NVIDIA B200 cluster built with Super Micro on track for Q1 2026 activation.

NeoCloudz platform: NeoCloudz or GPU-as-a-Service platform launching January 2026.

AI infrastructure build-out: Capital fully supports the 2026 AI infrastructure build-out. AI transition across power assets Phase 1 deployment in Q1 2026 (5 megawatts), Phase 2 in Q2 2026 (15 megawatts), and Phase 3 in Q3 2026 (30 megawatts). By Q4 2026, 55 megawatts will be deployed, including 40-megawatt critical IT load.

Power availability: Current power availability includes Alabama (55 megawatts) and New York (141.7 megawatts), totaling close to 200 megawatts for 2026. North Carolina anticipates an additional 200 megawatts by 2028.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What are your expectations in AI revenues in 2026 and 2027?

A:The company expects to generate approximately $65 million in AI-related revenues in 2026. This includes $50 million from co-location services and $15 million from GPU-as-a-Service through the NeoCloudz platform. Additionally, they anticipate revenue from Bitcoin mining and energy sales to the grid, which contributed $8.9 million year-to-date in 2023.

Q:What are the current debts?

A:The company has no long-term debt and is completely debt-free, with no obligations or triggers that could harm the company.

Q:How is your current cash holdings?

A:The company holds over $90 million, mostly in cash, along with 115-116 Bitcoins and 1,000 Ethereum. They have already spent close to $10 million year-to-date on the development of the ARMS 200 system, which is expected to be operational by early January.

Q:Can you please describe the ARMS AI-ready Modular Solutions platform?

A:The ARMS platform is a proprietary AI-ready modular system developed by Digi Power X, a subsidiary of U.S. Data Centers, Inc. It supports various chips, including NVIDIA B200 and B300, and comes in 1 MW, 5 MW, and 10 MW configurations. The system can be deployed within 180 days and is designed for rapid scalability, leveraging existing high-voltage substations and grid connections.

Q:Can you please go into some detail on your relationship with Super Micro Computer, Inc.?

A:The company has a strong partnership with Super Micro, leveraging their resources and expertise. Super Micro supplies optimized service racks and assists with software integration. They will also help set up the modular systems at the company's sites in Alabama and upstate.

Q:Can you please describe the retail compute platform, NeoCloud, and who the potential customers or end users will be?

A:NeoCloud is a retail compute platform developed for smaller players like AI developers, ML engineers, startups, research institutions, and universities. It offers GPU-as-a-Service and is designed to serve customers priced out of AWS, Azure, or NVIDIA cloud capacity. The platform is expected to contribute 20%-25% of total revenue, with higher margins compared to co-location services.

Q:Review of Unclear Management Responses

A:None of the questions were avoided or lacked clarity. All responses were detailed and addressed the questions directly.

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Earnings Word Cloud

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DGXX Transcript

Digi Power X Inc. (DGX:CA) Q3 2025 Earnings Call Transcript

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