Ionic Digital Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 19, 2026

Key Takeaways

  • Positive Sentiment: Ionic energized its first data center and began receiving cash rent under the Nscale lease in August, marking the transition from primarily Bitcoin mining to digital infrastructure leasing.
  • Positive Sentiment: The company reaffirmed its 2026 outlook of $190 million–$195 million in revenue and $137.5 million–$142.5 million in adjusted EBITDA, while reporting a 93% adjusted gross margin in the second quarter.
  • Negative Sentiment: ERCOT paused its Batch Zero process to verify large-load projects, leaving the timing of approval for Ionic’s planned 466-megawatt Ward County expansion uncertain, although management believes its operating history and existing agreements strengthen its position.
  • Positive Sentiment: Ionic reported more than $400 million in cash, approximately $169 million in Bitcoin, no debt, and nearly $600 million of liquidity, which management expects to use for Ward County development and converting its Midland sites to HPC and AI data centers.
  • Neutral Sentiment: Management is pursuing a differentiated strategy focused on smaller, latency-sensitive inference and agentic AI facilities near major metropolitan areas, with potential customers spanning hyperscalers, neoclouds, and enterprise technology firms.
AI Generated. May Contain Errors.
Earnings Conference Call
Ionic Digital Q2 2026
00:00 / 00:00

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Operator

Thank you for standing by, and welcome to the Ionic Digital's second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 1 on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press star 1 1 again. As a reminder, today's program is being recorded. Now I would like to introduce your host for today's program, Anna Stooke, Director of Investor Relations. Please go ahead.

Anna Stooke
Director of Investor Relations at Ionic Digital

Good afternoon, and welcome to Ionic Digital's second quarter 2026 earnings call. With me today, we have Chief Executive Officer, Andy Stewart, and Chief Financial Officer, Chris Hickman. Before we begin, a brief reminder. Statements made on today's call, in our presentation, and in our press release contain forward-looking statements, including statements about our contracted revenue, growth pipeline, and capital plans. Actual results may differ materially. These statements are subject to the risks described in the Risk Factors section of our prospectus, which you should read in full. We undertake no obligation to update these forward-looking statements except as required by law. For additional information on non-GAAP financial measures discussed on today's call, please refer to the reconciliations to the most directly comparable GAAP measures. These reconciliations are available in today's earnings release and investor presentation, both of which can be found on the Investor Relations section of our website.

Anna Stooke
Director of Investor Relations at Ionic Digital

With that, I will turn the call over to Andy.

Andy Stewart
CEO at Ionic Digital

Thanks, Anna, and good afternoon, everyone. We are excited to be here on our first earnings call after completing our direct listing last month. We have also recently achieved two important milestones. We energized the first data center and cash rent has commenced on the Ward County lease. Most of what you will hear from me this afternoon was also discussed at our Investor Day in July. That webcast and presentation are both on our website. If this is your first time listening to us, that is a great place to start. Chris will take you through the quarter in a few minutes, so I will start with the recent developments at ERCOT and their Batch Zero process, then come back to a few of the highlights from our Investor Day. Ward County is our flagship site, located on 136 acres that we own in West Texas.

Andy Stewart
CEO at Ionic Digital

Our facility extension agreement with our interconnecting utility, Texas New Mexico Power, or TNMP, was executed in 2021 for 700 megawatts. The initial 234-megawatt phase was energized in 2023. The 466-megawatt expansion has been planned around two transmission and substation upgrades, a 138 kV system with TNMP and a 345 kV system with Oncor, with energization expected by the end of 2027. Notably, these are separate from the 765 kV system being planned elsewhere in the state. Our path to the incremental 466 megawatts is not a new project and we are not seeking a new interconnection. Rather, it advances an agreement that has been in place for five years. Additionally, the site has already achieved initial energization, and it has an existing operating load at the point of interconnection. These facts allowed TNMP to file the site as base load with ERCOT in July.

Andy Stewart
CEO at Ionic Digital

Now, turning to the recent pause in ERCOT's Batch Zero announcement. On August 3rd, Governor Abbott directed ERCOT to verify the large load projects in its interconnection queue. ERCOT then paused the Batch Zero process. We expect ERCOT to provide additional details on their next steps at the commission's open meeting on August 20th. ERCOT has said the verification will focus on roughly 250 to 300 projects, totaling approximately 200 gigawatts out of a large load queue of approximately 474 gigawatts. This exercise is to substantiate what was already filed. ERCOT will send us requests for information through the utilities, which means ours will come through TNMP, and we will respond promptly and completely. The substance of our filing does not change with the calendar. If anything, we believe a longer and more rigorous review favors sites that can document real operating history, such as ours.

Andy Stewart
CEO at Ionic Digital

What we do not have is a date, and we are not going to speculate on one. Let me say a word about the broader environment in Texas. Ionic supports Governor Abbott's efforts to promote responsible data center development in the state, and we have committed to comply with the applicable state requirements and to participate fully in the PUCT and ERCOT verification and audit process. We believe a transparent, rules-based process works in our favor, and we intend to be a constructive participant in it. There are three reasons why we believe our request is well-positioned. First, the facility extension agreement covering all 700 megawatts was executed in 2021. TNMP filed the interconnection studies with ERCOT in 2022, and ERCOT approved the first phase that same year. The full 700 megawatts has been carried in TNMP's transmission planning since 2023. Second, our request is not speculative.

Andy Stewart
CEO at Ionic Digital

We've been drawing power at this point of interconnection since 2023 with a contracted tenant behind it. Third, the work on our side is funded and moving. We've executed our EPC contract, and we've ordered the long lead time transformers required for the substation upgrade, with delivery expected in early 2027. That positions us to begin development late this year. As a result, we continue to believe we are well-positioned to receive approval from ERCOT and energization by the end of 2027 following completion of the two utility infrastructure projects that are under construction. The regulatory time isn't ours to set. Being ready for it is. Starting with page 3, our total pipeline includes utility capacity totaling 822 megawatts concentrated in the high-demand West Texas market.

Andy Stewart
CEO at Ionic Digital

Our anchor contract is the Nscale lease, initially contracted at 234 megawatts, totaling $1.9 billion of contracted revenue, amended earlier this year for an additional 89 megawatts, bringing the total to 323 megawatts and $2.6 billion of contracted revenue. NVIDIA guarantees the first five years of rent on the initial contracted capacity. Nscale has granted Microsoft an option on additional power that they secure at the site. We are also operating from a position of real financial strength, with a debt-free balance sheet and nearly $600 million of liquidity. Put it together, contracted revenue, embedded growth from an existing footprint, an experienced management team, a strong balance sheet, and a clear forward strategy. Page six shows you our executive team.

Andy Stewart
CEO at Ionic Digital

The five of us, brought together over the past year to complete Ionic Digital's transition into a data center-first company, each of us with decades of experience building and operating infrastructure at scale. Page seven shows you our existing footprint. In addition to our Ward County asset, we control 112 megawatts of grid power across four sites in Midland. These sites are mining Bitcoin today while we complete the pre-development work required to convert them into HPC and AI data centers. Pre-development across all four sites is underway. We are already fielding inbound interest from prospective tenants. Turning to page eight, this shows you how our existing footprint gets to 822 megawatts of grid power. Start on the left with where we are today, 234 megawatts energized and under contract at Ward County.

Andy Stewart
CEO at Ionic Digital

From there, the incremental 89 megawatts, then the remaining 377 that takes Ward County to its full 700 megawatts. 112 megawatts across our four Midland sites, expanding to 122 next year. When combined, you arrive at 822 megawatts of total utility power. This comprises two of our three growth pillars. The first is our contracted base, the second is our embedded growth, and grid capacity inside a footprint we already control. The third, on page 10, is what we believe will be the next wave of AI demand, inference and agentic workloads. An inference site is not a training campus in a smaller size. It is a different product, always on, sub 100 megawatt, and latency sensitive, so it has to sit close to the enterprise rather than in a remote area.

Andy Stewart
CEO at Ionic Digital

The demand we are targeting in and around major metros is a natural extension of what this team has done for decades. We are certainly excited for where we are today, but even more excited for what is ahead. With that, I will turn the call over to Chris.

Chris Hickman
CFO at Ionic Digital

Thanks, Andy. Good afternoon, everyone. Starting with our second quarter results back on page 4, total revenue was $48.6 million, of which 90% came from digital infrastructure leasing, compared to $37.2 million in the second quarter of 2025, which was comprised entirely of Bitcoin mining. The change in mix is most pronounced in the margins. Adjusted gross margin was 93% in the second quarter 2026, compared to 40% in the same period last year. Mining generated adjusted gross margin of 36% in the second quarter, while our digital infrastructure segment achieved 99%. As we have discussed, that difference is a function of the lease structure. The Nscale lease is triple net, meaning the tenant is responsible for the operating costs, taxes, insurance, and maintenance. One point on the timing of our revenue. The $43.8 million of digital infrastructure revenue in the second quarter was entirely straight-line non-cash revenue.

Chris Hickman
CFO at Ionic Digital

As Andy mentioned earlier, cash rent under the lease commenced this month for approximately $3.3 million in August. From here, we expect roughly $23 million of cash rent in the fourth quarter, approximately $29 million for the full year 2026, $135 million for the full year 2027, and a fully ramped run rate of approximately $183 million by the end of 2028. We continue to expect the 89-megawatt additional capacity to energize in the second half of 2027, which increases the run rate revenue to $251 million at the full 323 megawatts. I would note that this is the timing for cash revenue. GAAP recognition is already accruing at the run rate of roughly $175 million annualized. What changes from here is cash, not the income statement. As that ramp comes through, more of our cash revenue converts to cash at triple net margins.

Chris Hickman
CFO at Ionic Digital

Because it is contracted rent rather than mining output, the earnings profile becomes considerably more predictable. Turning to expenses, G&A was $19.5 million in the second quarter, including $9 million of non-cash stock-based compensation expense and approximately $2.9 million of costs associated with the direct listing and the private placement, which we do not expect to recur. Excluding those two items, G&A was approximately $7.6 million in the quarter. We will remain disciplined on overhead while ensuring we have the appropriate capabilities to execute against our contracted revenue base and growth pipeline. On a GAAP basis, we reported a net loss of $35.3 million in the quarter. Two items account for the majority of the loss. First, a $28.2 million non-cash loss on the fair value of our Bitcoin. Second, a $27.2 million provision for income taxes. Adjusted EBITDA in the second quarter was $37.6 million.

Chris Hickman
CFO at Ionic Digital

For the full year, we are reaffirming our 2026 outlook, shown on page 11, and continue to expect total revenue of $190 million-$195 million, with 90%-92% of that coming from digital infrastructure leasing, adjusted EBITDA of $137.5 million-$142.5 million, and capital expenditures of $45 million-$60 million, which excludes any spending on new site acquisitions. We ended the quarter with more than $400 million of cash, 2,882 Bitcoin valued at approximately $169 million, and a debt-free balance sheet. We believe this liquidity gives us clear visibility to funding the near-term Ward County expansion and the conversion of our Midland sites into HPC and AI data centers. Lastly, I want to touch on the progress we've seen with share transfers among our legacy shareholders. To date, more than 16 million shares have moved from the transfer agent into individual brokerage accounts.

Chris Hickman
CFO at Ionic Digital

That represents more than 40% of our outstanding shares, excluding shares issued in connection with the private placement. If you also exclude the shares still held by the Celsius estate, nearly 50% of the legacy shares have now moved into brokerage accounts. As a reminder to our legacy shareholders whose shares remain with the transfer agent, you will first need to register your shares with Odyssey Trust Company. You can do that online through the portal available in the legacy shareholder section of the ionicdigital.com website. After registering, shareholders can contact their broker to move their shares from Odyssey Trust Company into a brokerage account that supports DRS transfers. Once transferred, those shares can then be traded. Shares that remain with the transfer agent cannot be sold. We have a dedicated legacy shareholder section on our website at ionicdigital.com with additional information and step-by-step instructions on the transfer process.

Chris Hickman
CFO at Ionic Digital

With that, Jonathan, we can open the line for questions.

Operator

Certainly. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 1 1 on your telephone. Our first question for today comes from the line of Joseph Vafi from Canaccord Genuity. Your question, please.

Joseph Vafi
Joseph Vafi
Analyst at Canaccord Genuity

Hey, guys. Good afternoon, and once again, congrats on your direct listing. I was wondering maybe at a high level, if you could, Andy Stewart, maybe just walk us through again your differentiated strategy on focusing on the metro market and more medium-sized potential sites versus the kind of large mega site that we've seen a lot of recently. From there, how that strategy kind of unfolds relative to the types of customers you may be focused on, and how there may be some differentiation or differences there on the financing side for those types of sites. Thank you.

Andy Stewart
CEO at Ionic Digital

Hey, Jonathan, thank you for the question. I think our major metro strategy is informed from decades of experience in this space, and it's a few things. One is historical macro trends within IT and technology in general. We've seen these waves of centralization and decentralization, and right now we're in a wave of centralization where these larger gigawatt scale campuses are a real focus. What we believe is that the real opportunity for AI will be much more around inference and agentic, and that will require processing and compute closer to where the data is being consumed and where the data is being created. That means data centers in and around the major metros.

Andy Stewart
CEO at Ionic Digital

That's kind of one big factor, and you're already starting to see some of that as well as some of the announcements coming from Claude and OpenAI and even Anthropic in terms of some of the agentic successes that they're having. Second, I'd say is that the data centers in these markets, by and large, one, they're highly utilized, and you'll see that in announcements from Digital Realty and CyrusOne and Equinix, but they are also importantly built for CPU workloads. What I mean by that is that the power density per rack is often in the 5-10 kW range compared to 150 to even 500 kW for new NVIDIA chips. Secondly, the little things like the floor loading. A lot of those data centers are on 3-foot raised floor. They don't have the capacity even to support a new rack.

Andy Stewart
CEO at Ionic Digital

We really think that there is just a need for this new digital infrastructure closer to where the people are. Also I'd say we obviously have huge aspirations, but we're still a bit of a small company. When we see the macro trends aligning, our history aligning, and the fact that we've got to pick an area where we think we could be successful, the major metro strategy, a little less competitive, and it's something that we've done before as individuals and now we'll be doing as a team.

Joseph Vafi
Joseph Vafi
Analyst at Canaccord Genuity

Great. Thanks for that color, Andy. Congrats again on the listing.

Andy Stewart
CEO at Ionic Digital

Thank you.

Operator

Thank you. Our next question comes from the line of Jonathan Petersen from Jefferies. Your question, please.

Jon Petersen
Jon Petersen
Analyst at Jefferies

Oh, great. Thank you. Congrats on the direct listing. Great to talk to you guys. Appreciate your time. On the 466 megawatt expansion and the ERCOT holdup that everybody's dealing with right now, is there an outcome here where this could be approved in multiple phases, instead of the 466 at once, or do you expect it to be all or nothing?

Andy Stewart
CEO at Ionic Digital

Yeah. We really don't know. I think what ERCOT is trying to do is be as objective as possible, reduce any kind of subjectivity. We think that they will focus on narrowing down the list of batch Zero applicants. That's really what Governor Abbott's directive does, is helps kind of give them support to be more aggressive on kind of whittling that list down, where we think we have a great position and stand well. As it relates to them trying to kind of allocate load differently, there's really no basis for them to do that, and we don't have a good view on why anything like that might happen.

Jon Petersen
Jon Petersen
Analyst at Jefferies

Okay. All right. Maybe some more color. You said you could be energized on that power by the end of 2027. I guess, assuming Microsoft exercises their option, when should we think about revenue, like a data center being completed and revenue starting to flow there?

Andy Stewart
CEO at Ionic Digital

Yeah. We are starting the pre-development work right now. We are doing test fit work. Mark Lambourne, our Chief Development Officer, is pulling together all the right vendors and partners. As we mentioned, we have our long lead equipment transformers ordered. We are still on a path towards breaking ground in early 2027 and having the first data center up late next year. If energization happens at the end of next year, then revenue would follow soon after.

Chris Hickman
CFO at Ionic Digital

John, this is Chris. Also, I just want to remind you that incremental power has a ROFR with Nscale and Microsoft. We will take the incremental 466 once it has been awarded to us. Assuming that process continues as we hope, then we would take that to market broadly, as well. This is not dependent on Nscale or Microsoft. With our capabilities now, and our team, we certainly would expect to take that incremental power to market broadly.

Jon Petersen
Jon Petersen
Analyst at Jefferies

Thank you. Yeah. Good to know. Thank you so much, guys. Congrats again.

Andy Stewart
CEO at Ionic Digital

Thanks, John.

Operator

Thank you. Our next question comes from the line of Brandon Nispel from KeyBanc Capital Markets. Your question, please.

Kyle Richard
Kyle Richard
Analyst at KeyBanc Capital Markets

Hi, this is Kyle Richard on for Brandon. Congrats on the direct listing, and thanks for taking the questions. If you had to frame the different customers who you guys are having conversations with, where would you say that demand is strongest? Would it be hyperscalers, neoclouds, LLM providers? Can you provide a little more color on that, please?

Andy Stewart
CEO at Ionic Digital

Yeah, absolutely. For the properties that we have today, Ward County, given its size, is really hyperscale and neocloud. Beyond Nscale taking the 89-megawatt amendment, having 377 megawatts in this market is really attractive to both hyperscalers and neoclouds. It's funny, three years ago, we would've probably said that it wasn't an area where hyperscalers have gone, but we've seen Microsoft and Google and Amazon Web Services and Meta all go after these kinds of sites. For our properties in Midland, those are more, I'd say, neocloud oriented. We've also had two large technology firms that don't fit in the neocloud or the hyperscaler bucket express interest. They've had interest because, one, it's grid power. Two, it's very cost-effective power. And three, it gives them a way to scale up for different use cases.

Andy Stewart
CEO at Ionic Digital

Those use cases can be lab environments. Those use cases can also be sovereign cloud solutions. I think the properties themselves, because of their different characteristics, have slightly different target profiles to the end user.

Kyle Richard
Kyle Richard
Analyst at KeyBanc Capital Markets

Okay, great. Thanks. Then just in terms of Texas, we have heard some of your peers talk about potential acquisition opportunities coming as a result of Governor Abbott's recent order. What are you guys kind of hearing around this, and do you see this creating any opportunities for you guys?

Andy Stewart
CEO at Ionic Digital

I think we will be opportunistic, not just in Texas, but around the country. Because our strategy going forward is focused more on major metros, if we were to find something really interesting or exciting outside of Houston or Austin or San Antonio or Dallas, all four of those would be interesting. If some of the groups out there that are a little bit more kind of speculative in nature, and I think a lot of what Governor Abbott is doing was really directed at kind of pushing some of the speculators out. Certainly, there could be some opportunities that come up as that. If we see something that we think is really exciting, we will certainly be quick to move.

Kyle Richard
Kyle Richard
Analyst at KeyBanc Capital Markets

Great. Thank you for taking the questions.

Operator

Thank you. Our next question comes from the line of Ben Summers from U.S. Bancorp. Your question, please.

Ben Summers
Ben Summers
Analyst at U.S. Bancorp

Hey. Good afternoon, and congrats on the direct listing. Kind of building off that last point. You talked about speculative loads and Texas trying to weed those out. Curious how big of an impact you think it has that you guys have ROFRs in place for your expansion capacity to kind of help prove that is not speculative load?

Andy Stewart
CEO at Ionic Digital

Yeah. I'd say it's helpful for sure. The biggest factor, we think, is that we've been energized for so long, and that our original request goes all the way back to 2021 with our FEA. Having the ROFR and potential offtake is a factor, but we think the bigger factors are those two that I mentioned.

Ben Summers
Ben Summers
Analyst at U.S. Bancorp

Got it. Super helpful. Can you just talk a little bit about moving forward with the pipeline, how you think about whether it's exploring powered shell builds or turnkey leases, just kind of what are you hearing from customers, and is there a preferred route that you guys want to go down?

Andy Stewart
CEO at Ionic Digital

Yeah. So, both. I think that is one of the great things about Ionic is that we have flexibility to do both powered shell and full turnkey builds. The customers that we are looking at for those markets, for metro and inference, are the hyperscalers, neocloud, and enterprise. We will start seeing more enterprise purpose-built data centers over the coming years. Each of those three different customers has different requirements. The hyperscalers, Amazon Web Services, Microsoft, and Google in particular, I think their preference is to do a powered shell that tends to lead to a slightly lower yield on cost, but from a risk-adjusted standpoint, it is very attractive. The neoclouds, most of them, with the exception of probably Nscale, do not really have the ability to do a full fit out of a data center, so you would more likely see those being turnkey.

Andy Stewart
CEO at Ionic Digital

In the end, if you hear it once, you will hear it a million times from us, we will focus on the best kind of risk-adjusted returns that we can get for any individual site.

Analyst at US Bancorp

Super helpful. Thank you for taking my questions.

Operator

Thank you. Our next question comes from the line of John Todaro from Needham. Your question, please.

John Todaro
John Todaro
Analyst at Needham

Hey, guys. Thanks for taking my question, and, yeah, congrats on the listing there.

Andy Stewart
CEO at Ionic Digital

Thanks, John.

John Todaro
John Todaro
Analyst at Needham

If you could dig a little bit more into the conversations with potential tenants, as all these moratoriums are kind of popping up. I'm just kind of curious how those conversations are going. Do they kind of just due diligence as business as usual? Do talks slow down a bit? I guess, how in those conversations has it shifted, if at all?

Andy Stewart
CEO at Ionic Digital

I'd say, like all of us on this call, we've all gotten a lot smarter about ERCOT and Governor Abbott and the whole process. When I joined last year, it was a lot more kind of opaque, and people didn't have the same amount of information. Whereas now, if we're sitting down in front of a customer explaining what's going on with ERCOT, they've already done their research. They know. It's kind of worked its way through the system, so it's a much easier conversation to have. For us, it is really kind of going through the whole fact pattern of where we sit and why we are so confident in our position.

Andy Stewart
CEO at Ionic Digital

But that said, that gives them the confidence to start the discussions, but there's still a lot of work to be done with any customer on the design, on the kind of parameters that they want. We're starting those conversations now because to do it the right way, it takes time and it takes a process. But I'd say just the customers are by and large, more informed and capable of moving forward now that they've been kind of through this for a few months now.

John Todaro
John Todaro
Analyst at Needham

Understood. That's helpful. Then, another one just kind of in the same NIMBY vein. With the sites being a little bit more metro area, likely get a little bit more pushback, but at the same time, I would think, to some extent, a bit smaller sites than these mega campuses you're seeing that are more set up for training. I guess, just could you talk through maybe the community view on that and, yeah, maybe by being a bit smaller than those mega campuses, if it actually looks a little bit better from a NIMBY perspective?

Andy Stewart
CEO at Ionic Digital

Yeah. Great question. I think that, we believe, and just given our experience at prior companies, that we'll be a little bit more resistant to some of the NIMBYism, for a few reasons. One, you mentioned it's a little bit smaller, it's a little bit kind of under the radar. That certainly helps. Two, we're not looking at developing and kind of taking over somebody's pristine farmland and turning that into an unattractive data center. By and large, we're focusing on sites that are already zoned. There's something in place right now. It could be manufacturing, it could be industrial, it could be commercial. Redeveloping those sites tends to lead to less resistance, and you can also point to a boost in kind of property taxes. So it's not greenfield. That helps. It's below the radar. That helps.

Andy Stewart
CEO at Ionic Digital

The fact that you are kind of redeveloping in an existing part of town is also another benefit to our strategy.

John Todaro
John Todaro
Analyst at Needham

Understood. That's very helpful. Thank you for taking my question.

Operator

Thank you. Our next question comes from the line of Brian Dobson from Clear Street. Your question, please.

Jonah Henschel
Analyst at Clear Street

Hi. Congrats on your first earnings call as a public company. This is Jonah Henschel speaking on behalf of Brian Dobson here at Clear Street. As you think about funding future site acquisitions and development, how should we think about the role of the Bitcoin treasury in your overall capital allocation framework?

Chris Hickman
CFO at Ionic Digital

Yeah. Thanks for the question, and thanks for joining the call. We see our Bitcoin and treat our Bitcoin really no different than our cash, and that we expect to be using it for near-term development and near-term site acquisitions. As development at Ward County and Midland ramp up Through the back half of this year and into early 2027, we would certainly expect to be selling Bitcoin and deploying it for development, and have no objection to selling that Bitcoin for site acquisitions. In fact, I will be excited to make that announcement when we can do so.

Jonah Henschel
Analyst at Clear Street

Understood. Thank you for the clarity.

Chris Hickman
CFO at Ionic Digital

Sure. Thank you.

Operator

Thank you. Our next question comes from the line of Nick Armato from Texas Capital. Your question, please.

Nick Armato
Nick Armato
Analyst at Texas Capital

Good afternoon, all, and congrats on the release and the progress to date.

Chris Hickman
CFO at Ionic Digital

Thanks, Nick.

Nick Armato
Nick Armato
Analyst at Texas Capital

Yep. Maybe just one quick one for me. There has been some discussion today around a potential Fed rate hike in the future. Could you provide some color on how maybe a higher rate environment could impact your business? Our understanding is that many of these projects are underwriting to generate a guaranteed return, regardless of financing costs. But any additional color on how you think about rate sensitivity for your business would be really helpful.

Chris Hickman
CFO at Ionic Digital

Sure. We provided some kind of general framework outlook on yield on cost that we are targeting at both turnkey and powered shell structures going forward. Those are unlevered yields that we are targeting. We take a long-term view on rates, and plan to have a pretty balanced capital structure. If we see sustained rate environments, we would certainly look to make sure that the cash yield is kind of levered cash yield is appropriate for the risk that is being taken. I know Andy Stewart already mentioned it once, and you will get tired of hearing it, but it is a full risk-adjusted return that we are looking for. That is both risk kind of applies both to development risk, but also financing risk.

Nick Armato
Nick Armato
Analyst at Texas Capital

Perfect. I appreciate it. I'll turn it back.

Chris Hickman
CFO at Ionic Digital

Yeah, thanks for the question and thanks for joining.

Operator

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Andy Stewart for any further remarks.

Andy Stewart
CEO at Ionic Digital

Thank you, Jonathan, and thanks to everyone for joining the call today. It was a really important quarter for Ionic, and we've had some really great key recent successes and milestones. We completed our direct listing in July. We energized the first data center under the Nscale lease, and we continue to advance the next phases of growth across a platform with significant contracted revenue and secured power. We appreciate your continued support of our shareholders, our customers, and our partners, and we look forward to updating you on our progress in the quarters ahead. Thank you.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Executives
    • Anna Stooke
      Director of Investor Relations
    • Andy Stewart
      CEO
    • Chris Hickman
      CFO
Analysts
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