LM Funding America Q1 2025 Earnings Call Transcript

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May 15, 2025

There are 7 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to the LM Funding First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the presentation, there will be a question and answer session.

Operator

You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Cody Fletcher of Investor Relations. Please go ahead.

Speaker 1

Thank you, operator, and thank you all for joining LM Funding America's first quarter twenty twenty five earnings conference call. Joining us today are Chairman and CEO, Bruce Rogers President of US Digital Mining, Ryan Duran and CFO, Richard Russell. For today's call, have uploaded an accompanying supplemental investor presentation, which can be found under the Events section of LM Funding's Investor Relations website. Before we get started, please note that our remarks today may include forward looking statements. These statements are subject to risks and uncertainties and actual results may differ materially.

Speaker 1

We will also reference certain non GAAP financial measures today. Please refer to our 10 Q filing and our website for a full reconciliation of these non GAAP performance measures to the most comparable GAAP measures. For a comprehensive discussion of these and other risks, please refer to our filings with the SEC available on sec.gov and in the investor section of our website at www.lmfunding.com/investors. I will now turn the call over to our CEO, Bruce Rogers. Bruce?

Speaker 2

Thanks, Cody. Good morning and thank you for joining us today. First quarter of twenty twenty five marked another period of strong execution and strategic progress for LM Funding. Since entering the Bitcoin mining business in 2021, we have transitioned from an asset light model to a vertically integrated operator, gaining full control of our fleet, improving margins and reducing operational risks. We mined 24.3 Bitcoin for the quarter, continuing to scale our production capabilities while improving our operational efficiency.

Speaker 1

In

Speaker 2

parallel, we've begun monetizing our curtailment energy sales by selling energy back to the grid during periods of peak demand, creating a natural hedge against Bitcoin price volatility and further reducing our cost of operations. Our disciplined approach to cost management also drove a meaningful reduction in operating expenses as we continue to build a leaner, more agile, vertically integrated business without compromising performance. Rick will cover this in more detail shortly. We're seeing progress in margin improvements and cost control, furthering our disciplined growth strategy. Finally, we again call attention to the disparity between the value of our Bitcoin held versus our market cap.

Speaker 2

On April 30, we held 148.7 Bitcoin. Given a market price of $104,000 per Bitcoin, our Bitcoin holdings would be worth $15,500,000 or approximately $3.1 per share when our stock is trading at $1.87 as of May 13 close. I'll now turn the call over to Ryan Duran, our President of U. S. Digital Mining, to review our operational highlights in more detail.

Speaker 2

Ryan?

Speaker 3

Thank you, Bruce. In the first quarter, we focused on maximizing the operational efficiency of our existing infrastructure while targeting strategic growth opportunities. We achieved five sixty petahash at the March, deployed LUXOS upgrades across our Oklahoma fleet, and executed our first power sales stack to the grid. In May, we ordered two one megawatt immersion mining containers for our previously announced two megawatt expansion of our Oklahoma site. We expect to complete construction and energization by the end of third quarter, pending international shipping timelines.

Speaker 3

We believe the shift to immersion cooling marks a meaningful advancement in our operational strategy. This technology will allow us to operate in crowded and harsh environments that offer access to lower cost power. Immersion technology reduces dust, heat, and humidity, leading to more consistent performance with longer equipment lifespan and improved reliability. We expect Immersion Technology to expand our operational horizons and add shareholder value. Our shift to Immersion cooling led to the strategic decision to sell the two fifty six Bitmain S21 plus machines ordered last December and delivered this April.

Speaker 3

Machine prices have been relatively stable throughout this period, so we anticipate this transaction to be cash neutral. Lastly, as mentioned in our April production update, we began relocating our 800 machines from our hosting partner site to our wholly owned Oklahoma site. Once installed, these machines will operate with lower power costs, enabling us to mine bitcoin more cost effectively. Our CFO, Rick Russell, will now provide a review of the financial highlights for the first quarter of twenty twenty five. Rick?

Speaker 4

Thank you, Ryan. In the first quarter of twenty twenty five, we mined 24.3 Bitcoins at an average price of $93,500 which was 12% more Bitcoin mined sequentially. Bitcoin mining revenue for the quarter was approximately $2,300,000, up 25% sequentially, reflecting the success of our infrastructure investments and improved machine efficiency from the Luxe OS upgrades. Year over year revenue declined 50.5% largely due to the impact of the April 2024 having. Additionally, we have made significant strides in our operational strategy.

Speaker 4

As Bruce mentioned, during the first quarter we generated approximately $150,000 from power cells back to the grid, offsetting our mining cost of revenue. This contributed to an improvement in mining margins from 31.2 in Q4 twenty twenty four to 38.5% in q one twenty twenty five. In April, we generated approximately $120,000 in power sales, demonstrating early momentum in this initiative. By incorporating curtailment into our operational models, we aim to stabilize operating costs by establishing a partial hedge against Bitcoin price volatility. As Bruce also mentioned, another highlight for the quarter was reduction in our staff costs, professional fees, SG and A, and other costs by 7.7% year over year.

Speaker 4

This improvement was driven by our transition to a leaner operational model while maintaining output and efficiency. Net loss for the quarter was 5,400,000.0 with a core EBITDA loss of 2,800,000.0, both driven by a 1,800,000.0 Bitcoin noncash write down for fair market value of our Bitcoin held as of 03/31/2025. However, as of the date of this call, the 1,800,000 write down has nearly reversed given Bitcoin's price recovery to approximately $104,000 as of 05/13/2025. We finished the quarter with $1,000,000 in cash and our Bitcoin holdings increased 160.2 Bitcoin valued at 13,200,000.0 as of 03/31/2025 or approximately $2.58 per share. Using our April month end holdings of 148.7 and a Bitcoin price of 104,000 as of 05/13/2025, the calculated value of our holdings would be approximately $15,500,000 or about $3 per share compared to our May 13 stock price of $1.87 on the same date.

Speaker 4

Bruce will now provide some thoughts on our outlook and strategy heading into the remainder of 2025.

Speaker 2

Thanks Rick. Looking ahead, as Ryan mentioned, we're excited to begin immersion mining with expansion of our Oklahoma site. We believe immersion mining will produce immediate returns in Oklahoma and open up unique mining site selection opportunities to us. We're seeking to deploy immersion technology at greenfield and brownfield sites offering five to 20 megawatts, facilities that typically fall below the acquisition thresholds of larger operators or offer environments best suited for immersion mining. In Oklahoma, curtailment and energy sales complement our mining revenue and provide a natural hedge against Bitcoin price volatility.

Speaker 2

By treating Bitcoin mining sites like ours as power producers, our energy agreement in Oklahoma allows us to sell curtailed energy back to the grid at market prices. We hope to build a sustainable business model around similar sites that can thrive in various market conditions, mining Bitcoin with greater flexibility and at lower costs. We remain bullish on Bitcoin and committed to our long term Bitcoin accumulation strategy. We hodl. We began our treasury strategy in 2021.

Speaker 2

Holding and mining Bitcoin remains a logical continuation of this strategy. Recent news reports indicate we're not alone in our thinking. In 2024, we borrowed $5,000,000 secured by our Bitcoin holdings. So like others in the news, we may want to add Bitcoin to our balance sheet with debt and or equity. In closing, we believe this approach to Bitcoin treasury management will create substantial long term value for our shareholders, particularly given that our Bitcoin holdings are currently valued at more than one and a half times our market capitalization.

Speaker 2

Thank you for your time this morning and your continued support. Thank

Operator

you, Bruce. Our first question coming from the line of Michael Donovan with H. C. Wainwright. Your line is open.

Speaker 5

Hi, Bruce, Rick, Ryan. Thank you for taking my question. This is Michael Donovan calling in for Kevin Dede. Can you guys talk a little

Speaker 2

bit more about the Oklahoma site build out and what you're thinking about currently in Texas? Sure. Texas has got a counterparty issue, so I don't think that there's anything in the short horizon force at this point. Oklahoma, we are up and running and we're will continue to convert containers to expand and that is on the timetable that we've discussed earlier and update you as the quarter progresses.

Speaker 4

Now the two megawatts we expect I think Brian, the machine to be ready

Speaker 6

to ship to us from China. We're gonna head over.

Speaker 2

Okay.

Speaker 5

I appreciate that. Now after that April sales of the s 21, so does that take care of all the machines that were in inventory and not plugged in?

Speaker 2

By taking care of, I don't know what that means. So we did test 21s and Pluses. Yes from the

Speaker 6

A plus.

Speaker 2

Pluses rather.

Speaker 6

Okay. Into the hosting file and pull up on the older SIT that

Speaker 4

the net revenue

Speaker 6

will be about the same at the cost.

Speaker 5

Okay. Now then for, I guess, just a 20,000 foot perspective question with the new sites. Do you have any geographies in mind targeting the five to 20 megawatt green, greenfield, brownfield build outs? Are you

Speaker 6

exploring? Exploring?

Speaker 2

Actually, the geography of our energy provider to have an insight that would like to be found. That's taking us right now a lot. This is in Oklahoma, Pennsylvania. I'll be calling you from Texas.

Speaker 6

We think

Speaker 2

we'll have an offering in Texas that has this kind of power arrangement.

Speaker 5

Okay, great. Well thanks guys and best of luck.

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Key Takeaways

  • LM Funding has transitioned to a vertically integrated Bitcoin mining operator, gaining full control of its fleet, improving margins and reducing operational risk since entering the business in 2021.
  • In Q1 2025, the company mined 24.3 Bitcoin, generated $2.3 million in mining revenue (up 25% sequentially) and improved mining margins to 38.5% from 31.2% in Q4 2024.
  • LM Funding began monetizing curtailment energy sales, earning $150,000 in Q1 (and $120,000 in April) by selling excess power back to the grid, creating a natural hedge against Bitcoin price volatility.
  • The company is deploying immersion cooling technology, including two 1 MW immersion mining containers at its Oklahoma site by Q3 2025, to access lower-cost power and expand into new 5–20 MW greenfield and brownfield opportunities.
  • As of May 13, LM Funding’s holdings of ~148.7 Bitcoin are valued at $15.5 million (~$3.10 per share) versus its stock trading at $1.87, highlighting a perceived undervaluation and underpinning its long-term Bitcoin accumulation strategy.
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Earnings Conference Call
LM Funding America Q1 2025
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