Cipher Digital Inc. Common Stock 2026 Q2 Earnings Call

Thank you for joining us on this conference call to address Cipher Digital's business update for the second quarter of 2026. Joining me on the call today are Tyler Page, Chief Executive Officer, and Greg Mumford, Chief Financial Officer. Please note that our press release and presentation can be found on the investor relations section of the company's website, where this conference call will also be simultaneously webcast. Please also note that this conference call is the property of Cipher Digital. Any taping or other reproduction is expressly prohibited without prior consent. Before we start, I'd like to remind you that the following discussion, as well as our press release and presentation, contain forward-looking statements.

These statements include, but are not limited to, Cipher's financial outlook, business plans and objectives, other future events and developments, including statements about the market potential of our business operations, potential competition, and our goals and strategies. Forward-looking statements and risks in this conference call, including responses to your questions, are based on current expectations as of today. Cipher assumes no obligation to update or revise them, whether as a result of new developments or otherwise, except as required by law. Additionally, the following discussion may contain non-GAAP financial measures. We may use non-GAAP measures to describe the way in which we manage and operate our business. We reconcile non-GAAP measures to the most directly comparable GAAP measures. You are encouraged to examine those reconciliations, which are filed at the end of our earnings release issued earlier this morning.

I will now turn the call over to our CEO, Tyler Page.

Tyler? Thanks, Courtney. Good morning, everyone, and thank you for joining us today.

I'm Tyler Page, CEO of Cipher Digital, and I'm pleased to welcome you to our second quarter 2026 business update call. Execution has been exceptional across the business this quarter, and we continue to build in line with our transformational strategy. What has become increasingly clear over the past few months is how each step forward in the progress of our flywheel is now reinforcing the next. The leases we've signed are giving prospective tenants more confidence to come to the table. The financings we've completed are strengthening our standing with capital markets and validating the co-location strategy we've laid out. The construction milestones we continue to hit on schedule or ahead of schedule are reinforcing the trust hyperscalers place in us as a partner for their next data center campuses.

Put simply, this business is building on itself in a way that compounds, and the results are starting to show up, giving us an even clearer path to scale much larger. For those newer to our story, let me frame quickly what Cipher Digital is today. We control the full value chain of developing and delivering turnkey data centers to hyperscalers, from land and power origination to engineering, construction, and operations, which is what allows us to move at the speed and precision hyperscalers require. Those capabilities have translated into a stable and reliable business with longevity. Three data center campuses leased to some of the most sophisticated technology companies in the world, representing $billions of contracted revenue locked in over the next decade+.

Beyond those initial campuses, our pipeline keeps expanding with approximately 4.4 gigawatts of expected future developments, giving us years of visibility into growth well beyond what's already under contract. Let's zoom out and look at the full scope of what we've built. Across our operating, contracted, and future pipeline developments, the portfolio now totals approximately 5.3 gigawatts of capacity spread across 11 sites. The overwhelming majority of that sits in our pipeline, representing substantial growth beyond existing contracts. The remainder reflects our already contracted HPC capacity as well as our legacy Bitcoin mining capacity at Odessa. Texas remains the center of gravity for this portfolio, and that is deliberate. Early on, we made the call that Texas would become one of the most sought-after regions in the country for large-scale AI infrastructure, and that conviction has been proven out.

This quarter, we added up to 1.1 gigawatts of potential new future capacity in Texas with a new 900-megawatt site called Apollo and a planned 200-megawatt expansion at our current Stingray site. We are positioned exceptionally well for multiple levers of future growth via continued site acquisition and existing site expansion, as well as the addition of behind-the-meter generation, which is particularly well suited to our sites and not yet included in this pipeline. Let's turn to the cash flow profile behind the contracted leases on slide five. Our three executed data center campus leases are expected to generate approximately $793 million of average annualized net operating income from October 2026 through September 2036. This slide shows the future of our revenue model. Stable, visible, and contracted net operating income from long-term agreements with investment-grade counterparties.

As we move into the second half of 2026, we are turning these projected cash flows into reality as our first rental payments begin at Barber Lake and Black Pearl. I'm pleased to say that reality is arriving even sooner than we'd planned at our Black Pearl site. Slide six highlights the key developments from the second quarter, which have built momentum and position Cipher well for the second half of 2026 and beyond. First, and most significantly, I'm proud to announce the early delivery of data center capacity at Black Pearl, two months ahead of schedule. At the request of our tenant, we executed an amendment to the lease that accelerated the development timeline of initial capacity. I'm pleased to report that we delivered that capacity and rent has commenced at the site. I want to spend a moment on why this matters beyond the headline.

Any developer can sign a lease. Far fewer can deliver ahead of schedule when a tenant asks for a faster timeline without cutting corners or sacrificing quality. What we have now proven is that Cipher has the operational depth across all of our teams to compress a delivery timeline on demand and without compromise. We believe this early delivery will pay dividends in two ways. First, this strengthens our credibility with existing and prospective tenants, giving them even more confidence to work with us at other sites in our 4.4 gigawatt pipeline. Second, it's an early proof point on construction execution that will serve us well in future financings, since we can now point to a demonstrated track record of timely delivery.

We will continue to prove our differentiation in construction and execution as we deliver on the rest of our current projects and sign new leases in the future, each step forward reinforcing the next. The second highlight is our landmark financing of the Stingray data center. We priced an $810 million bond offering at a 6% coupon, fully funding Stingray through substantial completion. Greg will provide more information on the financing in his remarks, but it is notable that this third project-level bond issuance priced tighter than our previous bonds, despite spreads widening in the credit markets, reflecting continued confidence in our story. Next, I'm pleased to announce that we've acquired an option on a new site we're calling Apollo. As our 11th site, the name is a fitting nod to Apollo 11 and to the same reach for the impossible spirit that put footprints on the moon.

This site provides up to 900 megawatts by 2031 and is located within 25 miles of San Antonio, Texas. The site has been submitted as a studied load in Batch Zero under ERCOT's updated interconnection process, and its flat, buildable terrain and proximity to San Antonio make it well-suited for large-scale data center development. Finally, we continue to invest in our team. This quarter, we welcomed Bill Blevins as our Head of Grid Strategies, who previously served as director of grid coordination at ERCOT, overseeing large load interconnections, experience directly relevant to how we navigate interconnection across our pipeline. We also welcomed Mohammed Aboulela, who joins us from Google, where he was responsible for technical due diligence, design, and delivery across more than five gigawatts of data center capacity globally.

He spent 11 years designing Google's build-to-suit and colocation data center campuses, and we're thrilled to have his expertise as we continue to build and sign new leases. These are just 2 of many additions we've made to the team this quarter, and they reflect how we are building the organization needed to execute on gigawatts of HPC development in the years ahead. These milestones, an accelerated delivery, a tightly priced financing, a new site secured on attractive terms, and a strengthening team, is what compounding momentum looks like in practice. Let's take a closer look at our current development portfolio. Starting with Black Pearl, as mentioned, we executed an amendment to our lease with the tenant to accelerate the development timeline of initial capacity at the tenant's request. I'm proud to say our team delivered on that commitment.