Q2 Earnings Review: An 'Expensive' Quarter For WhiteFiber

Summary WhiteFiber reported strong 48% YoY revenue growth but swung to an operating loss due to surging G&A expenses post-spinout. WYFI's cloud services dominate revenue, while Q2's spike in expenses was driven by share-based compensation, salaries, and consulting ￰0￱ an 11.5x forward sales multiple, WYFI is priced for growth. Interestingly, Bit Digital offers exposure to WYFI and ETH at a discount. I initiate WYFI with a cautious 'buy' rating, preferring BTBT as a value proxy until WYFI's stock price settles ￰1￱ in August, Bit Digital ( BTBT ) spun out its HPC/AI subsidiary business, WhiteFiber ( WYFI ), through an IPO at $17 per ￰2￱ company recently released its first quarterly report as a standalone public entity for the three months that ended June ￰3￱ market likes what it sees, with shares eclipsing $28 on September ￰4￱ this initial coverage of WYFI, we'll look at that earnings report, equity valuation, and assess whether investors should consider WYFI shares over BTU shares.

Q2 Earnings 3 Months Ended June 2025 2024 YoY Revenue $18,662,249 $12,589,701 48.2% COGS -$7,201,168 -$4,595,301 56.7% Depreciation/Amortization -$5,140,713 -$4,322,291 18.9% General & Admin -$15,476,832 -$1,261,489 1126.9% Total Opex -$27,818,713 -$10,179,081 173.3% Loss From Operations -$9,156,464 $2,410,620 -479.8%) That said, GPU lease expense actually came down in the ￰5￱ where I sit, the biggest operational expense shareholders should keep an eye on going forward is the G&A. The large spike in general and administrative expense in Q2 was due to $6.5 million in share-based compensation, $1.3 million in salaries and bonuses, as well as $5.7 million in consulting ￰6￱ Sheet and Valuation Shifting to the balance sheet, at the end of the quarter, WhiteFiber had $16.4 million in cash and $50.3 million in current ￰7￱ company's equity was mainly derived from its property, plant and equipment of $230 million: WhiteFiber Assets (WhiteFiber 10-Q) Keeping in mind that the IPO happened after this quarter ended, WYFI likely has roughly $200 million in cash and equivalents as of article ￰8￱ Liabilities came in at $78.3 million at the end of June, with nearly $38 million of those liabilities being non-current lease liabilities.

We'll get a better sense of the company's balance sheet position in the next ￰9￱ given Bit Digital's balance sheet management history, I would assume WhiteFiber is in good financial ￰10￱ by YCharts If we look at Bit Digital's valuation through an annualized P/S multiple, the company is now trading in line with 'AI/HPC' peers like CoreWeave ( CRWV ) or Core Scientific ( CORZ ). At an 11.5x forward sales multiple, the company is clearly priced for growth. There's certainly nothing wrong with ￰11￱ frankly, I think WYFI is one of the market's better AI/HPC pure plays. However, for those who want WYFI at a cheaper entry, there may be an alternative stock that makes more sense ￰12￱ Digital Ownership After spinning out WhiteFiber through IPO, Bit Digital retained the overwhelming majority of WYFI shares.

Currently, Bit Digital owns about 71.5% of WYFI ￰13￱ I find so interesting about the post-earnings explosion in the price of WYFI is that it isn't benefiting BTBT at all so ￰14￱ by YCharts In fact, over the last month, WYFI shares are up by almost 50%, while BTBT shares have appreciated by less than 8%. This would perhaps be understandable if Bit Digital's WYFI position wasn't a large component of the company's total assets. Yet, the opposite is true: Bit Digital Holdings Units Unit Value Total Value Ethereum 121,252 $4,484.58 $543,764,294 WYFI Shares 27,043,750 $28.00 $757,225,000 Combined value $1,300,989,294 Not only does Bit Digital hold more WYFI than it does Ethereum ( ETH-USD ) at current prices for each asset, but at a $1 billion market capitalization, BTBT shares are trading at nearly a 30% discount to the ETH and WYFI that shareholders of BTBT would ￰15￱ in the $181 million in cash and $90 million in total liabilities Bit Digital had at the end of Q2, buying BTBT instead of WYFI is almost like acquiring WYFI and cash and getting the ETH nearly for ￰16￱ Summary I think WYFI is a great trading asset at this point because it has a relatively low float and has been very volatile in its brief trading history.

I have held WYFI in the past and will likely hold it again in the future. Fundamentally, I'd like to see the company return to operational profitability before getting overly exposed in a direct investment ￰17￱ me, the spike in G&A expense is a concern and something to watch in future earnings reports. Today, I like the idea of holding BTBT as a WYFI proxy because I'm getting the WYFI shares and the ETH for less than market value. I'm going to initiate WYFI with a cautious 'buy' ￰18￱ again, I'm planning to wait for this post-earnings moonshot to settle down before I have any significant direct position.