Earnings Call: Q2 2025

Aug 27, 2025

Thank you everyone for being here with us today. We are going to present the Q2 2025 financial results with Kyle Appleby, our CFO, who is with me today. I will start by giving you a company overview about what we've been working for the past months. First slide, obviously, disclaimer and forward-looking information. What we are going to discuss today are forward-looking information. Please, if you want to invest in the company, read this disclaimer. You can also find it online on our website on www.bysato.com, and you will be able to find this presentation. For those of you who does not know us, we are SATO Technologies Corp. We started in 2017 as a Bitcoin miner. We signed a contract of 20 MW of energy in Joliette in Quebec, one of the best energy in the world. Not only it's an energy that is stable and green because hydro-powered, but it's also very well priced, with a full price all-in of CAD 0.043 a kWh. For mining and for AI and data centers, this is one of the best energy you can find, and very much in demand. We have been also a publicly listed company since 2021 on the TSXV. Our ticker obviously is SATO, and also available on the OTCQB, with the ticker CCPUF. Since the beginning of the company, we've been striving and making sure that we are very efficient because the business of data center, Bitcoin mining, AI factory is about efficiency. The efficiency not only for the energy, for the cooling, but also for the compute that we are providing. And we're always ranking in the top three most efficient Bitcoin miners who are publicly listed. And we are making sure that we can continue developing our operation, not only in Canada, but also in North America, in order to grow and to expand our operation from what we have today available in Joliette in Quebec. Myself, my name is Romain. I'm the CEO and co-founder of the company. I'm in the tech world since more than 25 years. Created my first company when I was 18 years old, I think, or 19 years old in France. I'm fully devoted to the success of SATO, not only for Bitcoin mining, but also for the AI strategy and also for everything related to digital asset treasury strategy that we will talk about in a few minutes. Our vision is simple. We are compute people, compute power people. We are managing energy, transforming it into computing power. We started and we have acquired lots of expertise, lots of experience for the past 7 years now. We are running our data centers at full capacity, 20 MW, extremely performant, extremely efficient. What we have learned and what we have done in the past, we are now applying it to any type of compute. We don't want to do only Bitcoin mining. We are big Bitcoin miners, or Bitcoin believers, but we also want to do any kind of compute, mainly developing an AI factory in our center number 1. At the same time, we are focusing on developing our digital asset treasury strategy, probably and mainly in Bitcoin, so that we can increase our Bitcoin holding over time with the profit made from Bitcoin mining, which is our core business, but also from the profit from AI factory that we will be developing. We will give you more information on this part very soon. The strategic focus for the company has been very simple also. We are making sure that our core business, Bitcoin mining, is providing the most and the best results possible. We are keeping a positive mining profit with our mining operation, our 20 MW. It's making money. The number of Bitcoin we make is superior of the cost it is to make those Bitcoin. It's very important for us because it's a way for us to make sure that we can continue and sustain the company while at the same time invest in other parts of the other solution of the company, mainly the AI factory, which we have been doing for the past few months since I would say end of the year of last year. The digital asset treasury strategy is also something that is important for us to focus on. Very early on, we decided to have Bitcoin on our balance sheet. We are using this Bitcoin sometimes, but we are also trying to keep as much Bitcoin as we can. We feel there is a way for us to develop this strategy even better and stronger, and we will be announced in the next week and month as soon as we have something to share with you all. For the AI factory, we've been invested our money as I was telling earlier, and with a great result so far, that we will also explain in more detail in the coming slides. The reason why we are moving into a AI factory is because we want to use the benefit and the knowledge we have acquired from running compute for the past seven years. We really believe that as it is said here, into this quote from Jensen Huang, the CEO of Nvidia, that in the future, every company will have their own AI factory. What is an AI factory? It's a data center, kind of a data center that is only running AI compute, and it should be made for 1 company. This is essential for the business today, but also in the future. We wanna be part of this revolution, we wanna bring something to the market. We believe with our, with our data center, our first data center in Quebec, with 20 MW, we are extremely well positioned to be able to address this market. Why? Because we already have a 20 MW line dedicated directly connected to Hydro-Joliette and Hydro-Québec. It's something that has been working since 2017. We already have a building that is in place, so it means that the design for our AI factory is very much advanced, and we can go very quick to market for developing this first AI factory. We are already in touch with lots of contractors, and we have a short list of contractors that are ready to start working to do the development of this transformation for our center. In terms of financing, an AI factory is way more expensive than developing Bitcoin mining. We're talking in the range of CAD 10 million-CAD 12 million per MW just for the infrastructure. The way we want to finance it is to do a mix of debt and equity, and we have created a subsidiary only dedicated to our AI initiative called Qritical.ai. You can come again on our website on www.bysato.com or Qritical.ai and know more about this subsidiary. The other part by which we want to raise money is to get access to debt with traditional banks while understanding that what we are building are long-term infrastructure that will work for the next 10, 15, 20, 30 years. Because again, it's about transforming energy into compute and whatever happen in the next 20-50 years, what we are building will be needed. Far we have made extremely good progress with 1 equity investors who has sent us an expression of interest to invest up to CAD 25 million in equity in this project. The same way we have received an expression of interest from a big large bank in Canada who wants to put CAD 100 million in debt into this AI transformation. It's about finding clients in order to use the energy and the AI factory load that we are developing. We have made also pretty good progress, but nothing we can announce so far. Please stay tuned, follow us on Twitter, follow us on LinkedIn, and we will announce something as soon as we can. This is our most focused project right now for the transformation of the company. We are not stopping Bitcoin mining. We are still believing in Bitcoin and Bitcoin mining. We just wanna make sure that we can bring something that is hybrid in some sort. What we are developing at the company level is a playbook of transforming this energy from Bitcoin mining to AI compute. Once we have done it, we wanna be able to scale up and scale out in our data centers. We have already identified lots of sites outside of Quebec and even outside of Canada. We have more than 800 MW of energy that are aligned, first we are focusing on this first site. We believe that we can succeed because we are different in the market than traditional data centers and also from hyperscalers. One of the benefits that we have is because we are Bitcoin miners and because we are self-Bitcoin miners, self-Bitcoin mining, we are deciding on where and how to manage our compute load. If today I want to reduce my Bitcoin mining to add more AI, it's our own choice, and we don't have contract to respect like a traditional data center has. At the same time, we have this power expertise that we have developed since 2017. We know how to innovate in the infrastructure and to be quick and nimble into developing new infrastructures, and we are very efficient on the compute part of the business, which are the three models that are important to have into the business. An important point also is that we're extremely well located in Canada. As you know, the sovereignty of data is a big subject everywhere in the world. Canada is obviously one of this part where it's very important for the Canadian companies, the Canadian administration, the Canadian research, the military to have compute that is sovereign for Canada, and we are answering to that demand right now. At the same time, Canada is pushing companies like us with grants, helping developing AI infrastructures. We are also participating in this program. Nothing has been announced yet, but we are hoping we could get a positive results into having the help of the Canadian government at some point. I will now leave the stage to Kyle Appleby, who will present you the financial results for Q2, 2025. Again, what is important is that our core business makes money, and we're investing into new lines of business, the digital asset strategy on one side, and mainly the AI factory transformation that we are developing. Kyle Appleby? Thanks, Romain Nouzareth. As mentioned, I'll present our financial highlights for our 3 and 6 months ended June 30th, 2025, all in Canadian dollars and in accordance with IFRS. For the 3 and 6 months ended June 30th, we earned each quarter approximately 22 Bitcoin compared to 129 Bitcoin in the same period in 2024. Main reasons for the reduction in earning Bitcoin was number 1, main reason, the halving event in April of 2024, reducing the block reward by half. There was an increase in the network hash rate compared to 2024, reflecting an increase in competition, which reduces the number of Bitcoin earned per unit of computing power. Three, last summer in 2024, there was a fire in our facility, and we lost 5.5% of our capacity that has yet to be replaced. Cost of revenue. We continue to remain have low costs revenue, cost of revenue in terms of our electricity, low repairs and maintenance. As a reduction, we have a gross profit in Q1 of CAD 298. We had a loss of CAD 110,000 in Q2 and a gross profit for the six months of CAD 188,000. Operating income takes our gross profit, and then again adds in our G&A expenses, our salaries, professional fees, regulatory and other administrative costs. We've managed to reduce our G&A costs about CAD 300,000 in Q2 compared to 2024 Q2, and about CAD 480,000 for the six months ended June 30, 2025, compared to the same period in 2024. We're always conscious of reducing costs where we can and keep our costs low. In the next slide here we have our Compute Power Profit, which shows how much we're earning at our operations, not reflective of depreciation. You can see we're profitable. Q2, CAD 431,000. Q1, CAD 835,000. We continue to remain profitable at our operations and keeping our costs low. EBITDA, we have also our adjusted EBITDA, which takes EBITDA and reflects non-cash items out of EBITDA, such as share-based compensation and unrealized foreign exchange gains or losses. In this slide, you can see, for assets at the end of the quarter, we had CAD 151,000 in cash and CAD 3.1 million in digital assets, primarily Bitcoin, approximately 21 Bitcoin held at the end of June 30. Our capital structure at June 30, we had low shares outstanding of 73.3 million, fully diluted 80.4 million shares outstanding. Our share price at June 30 was CAD 0.14. Our tickers on the TSX.V are SATO, OTCQB should be CCPUF. Thank you, Kyle. Again, as a sum up, as Kyle explained, we reduced our costs mainly on the G&A, reducing our debt and every other liabilities. We have also continuing developing and being efficient at the operation level, making gross profit as it was explained, and we are now investing into AI and into the digital treasury strategy. Finally, please meet us if you are in New York on September 8 to 10. We are going to present at the H.C. Wainwright investment conference. You can go online on the link that is available here, and you will be able to take a 1-to-1 meeting with us face-to-face. This is concluding our meeting. Thank you very much for watching us today. If you want to follow us, you can do it on Twitter, X now, or LinkedIn. You can scan this QR code and this will make you go directly to us. Thank you very much.