What Drove Hut 8 Earnings Beat? 4 Analysts Provide Their Q1 Takeaways

Hut 8 Corp HUT reported financial results Wednesday after merging with U.S. Bitcoin Corporation (USBTC) in November 2023.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

• Needham analyst John Todaro maintained a Buy rating, while raising the price target from $12 to $13.
• H.C. Wainwright analyst Mike Colonnese reiterated a Sell rating, while cutting the price target from $9.00 to $7.50.
• Canaccord Genuity analyst Joseph Vafi reaffirmed a Buy rating and price target of $14.
• Benchmark analyst Mark Palmer maintained a Buy rating and price target of $12.

Check out other analyst stock ratings.

Needham: Hut 8 reported first-quarter revenue of $52 million, in-line with Needham estimates, while EBITDA came in at $22 million, beating expectations of $19 million. "Power costs also came lower than we forecast," and management expects this to fall to below 4c/kwh in self-mining for the remainder of 2024, Todaro added.

Lower power costs and AI are expected to contribute to the company's performance in the back half of the year, the analyst stated. "HUT expects $20m in revenue from its third-party HPC co-location recognized beginning in the second half of ’24," he further wrote.

H.C. Wainwright: Both total revenues and adjusted EBITDA were "ahead of our estimates, as better Managed Services (highest margin business) and Other revenues offset weaker self-mining revenues in the quarter," Colonnese wrote.

Management executed well against the restructuring program in the first quarter, "as HUT shuttered its underperforming Drumheller site, retired older and inefficient miners, relocated its fleet of hosted miners to owned facilities, and began implementing USBTC's proprietary energy curtailment software across the company's mining facilities," the analyst stated. While the results were encouraging, "we await a clear growth strategy, improved fleet efficiency, and more favorable mining economics at a macro level before becoming more constructive on the name," he further said.

Canaccord Genuity: Following its merger with USBTC, Hut 8 has "an infrastructure-first mindset" and is streamlining its merged operations, "removing costs where there is opportunity while at the same time shuttering operations where bottom-line economics are less attractive," Vafi said.

Management is focusing on both growth and improving the operational performance of the existing business, the analyst stated. The company is set to launch its GPU-as-a-Service business, following the recent purchase of $40 million worth of NVIDIA Corp's NVDA H100s, he added.

Benchmark: The steep jump in adjusted EBITDA, from $11.1 million in the year-ago quarter to $297 million, was the "most prominent figure" in the first-quarter results, Palmer said in a note. This was driven by the company's early adoption of "a Financial Accounting Standards Board (FASB) rule requiring firms that hold bitcoin on their balance sheets to account for those holdings at fair value rather than historical cost less impairment," he added.

The management's efforts to reposition the business "will have far more bearing on the trajectory of the company's operating performance and its share price than the sizeable one-time mark-up," the analyst further stated.

HUT Price Action: Shares of Hut 8 had risen by 0.45% to $8.87 at the time of publication on Thursday.

Now Read: Andrew Left Is Back — The Man Who Bet Against GameStop Returns To Benzinga Live