LM Funding (LMFA) Q1 2026 Earnings Transcript

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DATE

Friday, May 15, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Bruce Rodgers
• President, U.S. Digital Mining — Ryan Duran
• Chief Financial Officer — Richard Russell

TAKEAWAYS

• Bitcoin Production -- 26.1 Bitcoin mined, up 19% sequentially from 22 Bitcoin in the prior quarter, reflecting expanded fleet and increased energized hash rate.
• Energized Hash Rate -- Reached approximately 790 petahash at quarter-end, the highest in company history, up from approximately 750 petahash at year-end.
• March Output -- 9.6 Bitcoin produced, the highest monthly figure in company history.
• Bitcoin Treasury -- 338.2 Bitcoin held at quarter-end, valued at approximately $23.1 million; subsequent increase to approximately $27.3 million as of May 11, 2026 at higher Bitcoin prices.
• Revenue -- $2.1 million for the period, compared to $2.4 million in both the prior quarter and the same period last year, the decline driven by Bitcoin price decreases.
• Mining Margin -- 24.1%, supported by $368,000 in curtailment and energy sales offsetting reduced average Bitcoin price of $75,700.
• Net Loss -- $10.1 million, including a $7 million noncash negative fair value adjustment on digital assets and Bitcoin collateral receivables.
• Core EBITDA Loss -- $8.4 million, compared to $2.8 million in the prior year period.
• Operational Cash Flow -- $200,000 net adjusted cash used, accounting for $3.1 million in proceeds from digital asset sales against $3.3 million in net cash used in operations.
• Galaxy Digital Loan -- $10.9 million outstanding, with facility maturity extended to June 26, 2026, supported by 174 Bitcoin posted as collateral.
• Winter Storm Curtailment Revenue -- Generated $305,000 in January, largely over three days by redirecting mining power to the grid during Storm Fern, equivalent to approximately 4 Bitcoin in value.
• Fleet Upgrades -- 160 Bitmain S21 immersion miners and 300 Bit S19 XP miners deployed in Oklahoma during the quarter to improve efficiency and output; higher-terahash units relocated to Mississippi.
• Bitcoin Network Dynamics -- A network hash rate decline of approximately 27% year-to-date, alongside five downward difficulty adjustments, as public miners reallocate capacity toward AI workloads.
• Asset Value Gap -- Company highlighted being valued at a "material discount" to Bitcoin treasury value, with per-share implied Bitcoin treasury value reaching $1.27 as of May 11, compared to the common share price.

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RISKS

• Richard Russell reported, "net loss for the first quarter of 2026 was approximately $10.1 million" due mainly to a $7 million fair value adjustment following a Bitcoin price decline from approximately $87,500 at year-end to $68,300 at quarter-end.
• Revenue decreased to $2.1 million from $2.4 million in the prior periods, driven primarily by "a significantly lower Bitcoin price."
• Management cautioned regarding "seasonal headwinds that warmer temperatures bring to mining efficiency and output" in the upcoming quarter.

SUMMARY

LM Funding America (NASDAQ:LMFA) executed record quarterly output and hash rate, with 26.1 Bitcoin mined and energized hash rate achieving 790 petahash, even as reported revenue fell to $2.1 million under lower average Bitcoin prices. The company deployed new mining hardware that supported its operational scale-up and generated $305,000 in incremental curtailment revenue by supplying power to the grid during Storm Fern. Despite the sequential 19% increase in Bitcoin output, the quarter ended with a net loss of $10.1 million, primarily from noncash fair value adjustments on digital assets due to a falling Bitcoin price. Bitcoin holdings grew in value subsequent to quarter-end, reaching $27.3 million as of May 11 at prevailing market rates, yet management asserted that the share price remains materially below the implied per-share Bitcoin asset value.

• The company extended the Galaxy Digital Master Digital Currency Loan maturity to June 26, 2026, maintaining financial flexibility around its core Bitcoin collateral.
• Management described "a buyer's market" for potential five–20-megawatt expansion sites, citing slow transaction velocity due to price negotiations and site suitability complexities.
• Bruce Rodgers stated, "Our priorities for the remainder of 2026 are unchanged: Grow Bitcoin production, improve fleet efficiency, increase Bitcoin per share and evaluate accretive acquisitions in the five to 20-megawatt range with the same value discipline that produced the Mississippi acquisition."
• ASIC hardware efficiency improvements across recent generations were reported as "compressed," with supply chain constraints tied to AI chip manufacturing lengthening miner upgrade cycles industry-wide.

INDUSTRY GLOSSARY

• ASIC: Application-Specific Integrated Circuit, a type of specialized hardware used for high-efficiency cryptocurrency mining.
• Hash Rate: The total computational power dedicated to securing and verifying transactions on a blockchain, measured here in petahash (PH/s).
• Curtailment Revenue: Income received from scaling back electricity consumption and redirecting contracted power back to the grid, often during periods of high demand or grid stress.
• Immersion Cooling: A data center technique in which computer hardware is submerged in a non-conductive liquid to improve operational efficiency and cooling for high-power ASIC miners.

Full Conference Call Transcript

Bruce Rodgers: Thank you, Cody, and good morning, everyone. The first quarter of 2026 saw us continue to grow and improve our operations in a softer Bitcoin environment. Since completing our site integrations in 2025, our focus has shifted to running our vertically integrated platform at scale. We mined 26.1 Bitcoin during the quarter, an increase from 22 Bitcoin in the fourth quarter of 2025. We did this with higher energized hash rate and continued improvements in fleet efficiency. In March, energized hash rate reached approximately 790 petahash, the highest level in the company's history. And the month delivered 9.6 Bitcoin of production, our strongest of the quarter. On March 31, 2026, our 338.2 Bitcoin treasury was valued at approximately $23.1 million.

With the recovery in Bitcoin price since quarter end, our 334 Bitcoin treasury on April 30 was valued at approximately $25.3 million and approximately $27.3 million as of earlier this week. Despite this trend, our market capitalization continues to trade at a material discount to the value of our Bitcoin holdings alone. While Bitcoin price weakness is driving the reported financial results, the underlying operating profile improved across every relevant measure, Bitcoin produced, energized hash rate, fleet efficiency and uptime. The first quarter of 2026 represents the first full period in which the platform we assembled in 2025 has operated at scale, and we are very happy with the numbers being produced.

I'll now turn the call over to the President of U.S. Digital Mining, Ryan Duran. Ryan?

Ryan Duran: Thank you, Bruce. The first quarter of 2026 was the first full period during which our expanded fleet operated at scale across both sites. We produced 26.1 Bitcoin, an increase of 19% over the fourth quarter, while energized hash rate grew from approximately 750 petahash at year-end to approximately 790 petahash at quarter end, the highest in company's history. In January, we energized our second BC40 Elite immersion cooled unit at Oklahoma, adding approximately 35 petahash via 160 Bitmain S21 immersion miners. The same month, winter Storm Fern gave us an opportunity to demonstrate the value of our grid relationships.

We proactively curtailed mining operations and redirected power to the grid, generating approximately $305,000 in energy and curtailment revenue in January with the majority earned in just 3 days during the storm, equivalent to roughly 4 Bitcoin. In late February, we deployed approximately 300 Bit S19 XP miners at Oklahoma, replacing older hardware and reallocating higher terahash units to Mississippi. The upgrade lifted February production to 8.7 Bitcoin. March closed the quarter at 9.6 Bitcoin, our highest monthly output and highest hash rate on record. As we move into the second quarter, we are mindful of the seasonal headwinds that warmer temperatures bring to mining efficiency and output.

We look to continue incremental fleet upgrades where opportunities present themselves with the goal of partially offsetting those effects and maintaining the competitive position we have built through the first quarter. Looking at the fleet more broadly, the competitive economics of our hardware are better than the market typically appreciates. ASIC efficiency gains have compressed materially across recent generations. Early generational LEAPs, S9 to S17, S17 to S19 delivered efficiency improvements of 30% to 55%. The last 2 air-cooled generations have produced gains in the 18% to 23% range, modest by historical standards. The driver is structural.

Leading semiconductor foundries are allocating an increased share of advanced manufacturing capacity to AI chip production, extending ASIC lead times and compressing efficiency improvements across the Bitcoin supply chain. The practical result is that our deployed S19 XP, S21 and S21 immersion fleet retains its competitive position on the network, meaningfully longer than the same generational hardware that would have in prior cycles, a dynamic we expect to persist. I will turn the call over to Rick.

Richard Russell: Thank you, Ryan. Total revenue for the first quarter of 2026 was approximately $2.1 million compared with $2.4 million in the fourth quarter of 2025 and $2.4 million in the first quarter of 2025, a year-over-year decline of approximately 11%. The decrease reflects a significantly lower Bitcoin price, but partially offset by a 19% sequential increase in Bitcoin produced. Mining margin was approximately 24.1% in the first quarter of 2026 compared to 25% reported in the fourth quarter of 2025.

Mining margin in the quarter was supported by approximately $368,000 in curtailment and energy sales recognized as a reduction of cost of revenues set against an average Bitcoin price that declined from an average of $99,700 in the fourth quarter of 2025 as compared to an average of $75,700 in the first quarter of 2026. The net loss for the first quarter of 2026 was approximately $10.1 million and the core EBITDA loss was approximately $8.4 million compared with the Q1 2025 net loss of $5.4 million and core EBITDA loss of $2.8 million.

Net loss in the first quarter of 2026 reflects a $7 million negative fair market value adjustment on both mine digital assets and Bitcoin collateral receivables since the Bitcoin price declined from approximately $87,500 at year-end to approximately $68,300 on March 31, 2026. The company's net adjusted cash flow used in operations was approximately $200,000 after adding back the $3.1 million of proceeds from the sale of digital assets to the $3.3 million of net cash used in operating activities. On March 31, 2026, total assets were approximately $41.8 million, including Bitcoin holdings of 338.2 Bitcoin, of which 174 Bitcoin are held by Galaxy Digital as collateral.

The total value of all Bitcoin was approximately $23.1 million in cash of approximately $800,000. Total liabilities were approximately $22.7 million, essentially flat with year-end 2025, consisting primarily of the $10.9 million of the Galaxy Digital Master Digital currency loan and approximately $8.7 million of other notes payable, of which $1.9 million is long term. During the first quarter, we extended the maturity date of the Galaxy facility to June 26, 2026, providing flexibility to evaluate settlement options as Bitcoin market conditions evolve. As a subsequent event update, the underlying value of our Bitcoin treasury has recovered significantly since the close of the quarter.

As I noted previously, our March 31 Bitcoin treasury was valued at approximately $23.1 million or $1.06 per diluted share. On April 30, 2026, we held 334 Bitcoin, including the 134 Bitcoins held by Galaxy Digital Collateral, totally valued at approximately $25.3 million or $1.18 per diluted share at a Bitcoin price of approximately $75,800. As of May 11, that treasury was valued at approximately $27.3 million or $1.27 per diluted share at a Bitcoin price of approximately $81,700. The approximate 21% Bitcoin price recovery since March 31 represents roughly $5 million of incremental Bitcoin fair value across our holdings.

Because the substantial majority of our reported Q1 net loss, reflected noncash Bitcoin fair value adjustments, applying the May 11 Bitcoin price to our March 31 balance sheet on a pro forma basis, would reduce our reported Q1 net loss by a comparable amount. The implied per share value of our Bitcoin treasury held on April 30, 2026, but valued at the May 11 price now stands at approximately $1.27, well above our recent share price and a direct measure of the valuation disconnect we continue to work to close. Looking through the noncash fair value adjustments, the underlying operating profile remains consistent with the fourth quarter, stable mining margin, higher Bitcoin produced and a manageable balance sheet.

The operating leverage embedded in our 2 wholly owned low-cost power type translate directly to margin and cash flow expansion in any Bitcoin price recovery. I will now turn the call back to Bruce.

Bruce Rodgers: Thank you, Rick. Let me close with 4 points. First, the company is operationally in the strongest position in its history, record energized hash rate, record monthly production in March and 2 wholly owned sites running at scale. Second, during the quarter, we again extended the Galaxy Digital facility maturity this time to June 26, 2026. This helps further preserve our capital structure flexibility of our Bitcoin asset base. Third, our common equity continues to trade at a material discount to the underlying value of our Bitcoin treasury and the value of our operating platform.

Closing that valuation gap remains a primary focus, managing the things we can control like disciplined operating execution, consistent communication with shareholders and selective accretive growth. Fourth, and the point of which I'd like to close, we remain a focused Bitcoin mining and treasury company. We plan to acquire and mine Bitcoin with low-cost power that presently does not suit HPC or AI compute demands, but may in the future as the profile of those demands evolve. We continue to evaluate selective expansion in the 5 to 20-megawatt range, including additional capacity in Mississippi.

These are assets that fall below the scale threshold required for hyperscaler hosting and appear to be increasingly available at relatively attractive prices in both power and acquisition cost. That positioning is reinforced by the broader market backdrop. Bitcoin network hash rate has declined approximately 27% from its October 25 peak as public miners reallocate capacity to AI hosting. Five downward difficulty adjustments have been recorded year-to-date. Public miners sold a record 32,000 Bitcoin in the first quarter alone to fund the GPU capital expenditure required for those AI build-outs and more than $70 billion of HPC contracts have been announced across the sector.

Each megawatt of mining capacity that exits the network for an AI workload is a megawatt of reduced difficulty for those of us mining Bitcoin. We view these dynamics as structural rather than cyclical, driven by foundry capacity allocation, accelerating hyperscaler power demand and the persistent spread between the available power costs and the Bitcoin mining revenue per megawatt. We believe the economic logic favors operators of our profile. Our priorities for the remainder of 2026 are unchanged: Grow Bitcoin production, improve fleet efficiency, increase Bitcoin per share and evaluate accretive acquisitions in the 5 to 20-megawatt range with the same value discipline that produced the Mississippi acquisition. Thank you for your continued support.

Operator, please open the line for questions.

Operator: [Operator Instructions]. And our first question is going to come from the line of Matthew Galinko with Maxim Group.

Matthew Galinko: Maybe firstly, given your comments about the impression of efficiency gains across ASIC generations more recently, how does that shape your thinking about adding hash rate to -- if you do acquire an additional site or as you look for fleet optimization? Are you still looking for new ASICs? Or would you purchase us older generations?

Unknown Executive: It is all driven by electricity tariffs and price and what can you buy electricity for. With the right electricity price then decides what sort of machines look best there and what -- whether it's going to be air cooled or immersion, et cetera. Our driving force is always payback time. So that being the sooner that, that machine is running at a constant price of constant electricity can pay for itself and be in the black, then that's what we want. And so that's taking us to into the used market or the second from the fastest generation area of machine because it's just where the terahash pay off and the revenues pay off for us.

Matthew Galinko: Got it. And then I guess you touched on continuing to evaluate sites in the 5 to 20-ish megawatt range. Can you maybe talk a little bit more about what you've seen over the last quarter as far as counterparty expectations for what those costs? Have they come down at all? Have you seen more entering the pipeline? Is there more evaluation going on today than a couple of quarters ago? Just a little bit more color on that side.

Unknown Executive: So the pipeline gets to be pretty robust because people that have a wire going over their land all assume that they are sitting on HPC or Bitcoin Gold. And then you do the due diligence and find out what that wire can carry and where the transformers and substations are and things fall apart quickly. Even when you find the electricity there, then you've got the Bitcoin mining the environmental issues, the noise issue, the heat, where is it going to go? Are you really going to be able to scale an operation on that site with a residential neighborhood or church or school nearby, that kind of thing.

So it's all of those things that drive you to where you can go. And then you asked about pricing. I think our Mississippi transaction sort of sizes it up. People that are exiting Bitcoin to go do HPC and greater things kind of start off with what their cost basis is plus something in terms of what they're hoping to realize. But it's kind of a buyer's market out there for these 5 to 20-megawatt sites. There's only a few of us left in this microcap land where you can do that kind of thing. So that's probably the explanation why there's less velocity so far this year on those type of acquisitions than we would have thought.

And it's all about price reconciliation.

Operator: Thank you. Showing there's no further questions, this concludes ML (sic) [ LM ] Funding America's First Quarter 2026 Earnings Conference Call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

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