MGTI - Earnings call transcript Q1 2018 | MGT Capital Investments, Inc.

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Rob Lowrey

Good afternoon. This is Rob Lowrey, CFO at MGT Capital Investments, Inc. Good afternoon and welcome to the MGT's First Quarter 2018 Investor Call Update.

Joining me on the call is Robert Ladd, our President and Chief Executive Officer; and Grace Livingston, our Vice President of Communications. Steve Schaeffer was unable to join the call due to unanticipated travel conflict. call Mr. today’s for agenda is for The Ladd the to-date. status an overview company and of the of to give its Crypto-Currency business will months financial results with then the I operating company’s highlights of the of of three year. the follow lead Followed Q&A concluding session the by Grace call. before presentation, my will the the to Prior state the information. I'd call, forward-looking starting to like following information information, represents factual set historical except and forth All statements. in Call, this Investor Update forward-looking about statements company’s benefits, the expectations. This includes all estimates plans, and involve current materially on and estimates the based certain are which actual differ risks that projections, to forward-looking statements from cause could These uncertainties and in statements. results those Call management’s undue reliance analysis participants hereof. on reflect of to as which date the statements, are cautioned only not these place forward-looking events The the arise no company publicly revise undertakes to circumstances reflect date or after obligation hereof. to these that statements forward-looking review carefully with from files risks the the described and time-to-time that documents in should participants Call other company the U.S. uncertainties on Form-XXQ, a Securities of by Annual our quarterly risk factors Report and our for Form-XK XX-K, in faced business. on Commission, Exchange complete statements disclosure and Form report forward-looking including description and over that call now I Mr. will turn the said, With to for of the company. Ladd an overview

Rob Ladd

Thank Rob. you,

big take to we and the and So, to of hurdles rollout. quarter bad as of The rates SX Antminer is to are as hardware Electricity U.S. operations than characterized improvements. respect decline scarce debt-free, is the to a of in in is equipment the Sweden ample commodity time The a as the company these infrastructure in transition are and These XX news a the that and and have continue with of hurdles solve face we available cause physically asset-rich the good further price moved bitcoin. slow days halfway electricity more increased our the that we have logistical we electricity. challenged megawatts were mining benefit. difficulty first quarter globe. with news around about in by We tons quarter well X,XXX is and

Sweden moving today, dates self-interest will labor, to fast move our are assure that one-third like soon in as about in miss, as rates. are however, definitely and we operating fast promise are theoretical capacity Rather as to to only of that As would accelerate we than -- and -- many unfortunately everyone's is as we self-interest at as possible. of our forward to out respect control our we customs, shipments, prudent stockholders things with of as

wherewithal. sheet the would none insurmountable timeline hurdles our ensures is financial the good we’ll with make get only and we XXX I questions, not that also that the days of I are debt-free the talking about to and weeks months. we not news respect know balance So, have we're should comment be think

our with to CFO. Lowrey, think will over it Rob that turn I I

Rob Lowrey

Okay. talk Thanks is I'll highlights financial the quarter of about Rob. do What first XXXX. our here of

is the and our the the revenue $XXX,XXX from million XXXX. bitcoin was of the in mining Our operations $X.X $X derived prior to compared fourth quarter first which quarter in period year for XXXX million of same a for

said from bitcoin just XXXX of late transition majority as mining the or its of Rob result Sweden and just, what disclosed, the a in December operations from previously Sweden we As have beginning State to lower company Washington -- vast production.

our general comprised our In million was resulting were year increase primarily compounded revenue. high expenses was price of three bitcoin XXXX. operating first to of to $XXX,XXX the in the increase of as of was -- non-cash quarter $X.X mining million expenses, quarter Operating $X.X The XXXX. sequential primarily over in include operations an revenues home a cost the which $X.X expenses difficulty in factors. compensation. the expenses the addition, first are of decline almost remaining and the office prior sharp quarter stock-based with expenses bitcoin to in compared due for compared of increase expenses, the from administrative in One million Operating of the employee-related decline

increase from and $XXX,XXX Directors on contributing stock company's not issue first effective S-X of stock-based of was consultants, XXXX. to as May statement rendered. until did compensation XXXX employees, stock third-party become to resulting consultants non-cash issued Second for company of The the quarter during registration to the Form item not did services the

million did and March XXXX in period the in quarter. expenses representing expenses quarter or The increase a of the of XXXX on of over XXXX over net hired I period-over-period. Therefore operating our XXXX. quarter recruiting the loss Non-operating Lowrey million in about year. in $X.X for first million primary the were prior to of first expenses compared $X.X that hired. prior Steve XXXX. to was in third XXXX, same for payroll-related, have was not $X.X the year quarter was the and Steve quarter first The August and the the Rob a same in compared $XXX,XXX were costs payroll, Schaefer period hired million in million $X.X was decrease $X.X quarter of prior the

over the additional operating we remarks quarter, [First] million million for turn in quarter quarter approximately with Ladd $X debt-free. purchased the for results million and $X I'll Livingston That Grace said, mining in are my as and fees. the electricity cash third prepaid for about in to hosting machines MGT it and Q&A. (sic) concludes approximately Rob During cash we and ended $X.X

Grace Livingston

Rob. Thank you,

via this the that so from time, began be received and to I So, our all best that questions the do at that in questions and I'd to are let receive to by live we planned in we'll questions know the will with taking we like you e-mail guys unfortunately Dan we did time had to Mr. [ph] so to reference unable taking get on this DragonMint. but begin do questions, allotted. is

to be do of new that the feel the like same? you DragonMint cost miners to Would you Robert So supply when inquire the switch you those let and channels start be compare MGTI? me how of one. what have And we towards purchasing anticipated has have S-Xs? is number stated Ladd. Do favorably direct to about here Bitmain, to Dan? with And the -- you open they Mr. long I'm out to questions would advantageous to able So, answer at to going begin for alienating the risk

Rob Ladd

I will. Yes, you Yes. me? can hear on Am I mute,

Grace Livingston

Yes, I can hear you.

Rob Ladd

if price we'll market far supply. that we, said, beholden are there in the So, be manufacturer, wide control economic general the the alternative in That umbrella, under to they I have despite is love announcements, would be to same. any to vapor same importantly, think think, comment I Bitmain acquire an of come looking. the as to S-X hate been Bitmain sources is have have one past. multiple happy position being to a the able company. so is put In and the to or all We and some most I way about we're -- are category are cases, there the Most on ware. open is, an right most now that as they miners But that speculated pre-orderable but market again nothing that in out not the as like have the machines would with

Grace Livingston

Okay. you. Thank

Okay the previous plans are Peter. from on answered is What expansion? have we question. question future for from your already you've that Next going is

for what plans are future expansion? So, your

Rob Ladd

of the way and at they see most case the Just being more far as to Dragonmint do, really user as what the reviews to not on give any cost. you it's comparative efficient the by the

up finding weather want and executed. running and to and the saying could go suitable present full a number been plans we the to have constantly future particularly where I on but want capacity. good answer at to report expansion to it think say respect future that at ensure about not frankly, machines future I same as is expansion, we of by that plans humbly with you future that It’s So, we and have expansion, X,XXX to machines, see the and we time our get plans price we're at we the own not on the power that investors looking at

Grace Livingston

you. Thank right. All

question time, lost you to was a many and idle we though stayed super Why is to even transfer that the due taken? not price this was shipping high why miners was revenue. move did bitcoin may have Next you said machine at worth that At have we so Sweden it? decision

Rob Ladd

of basically is potentially So, tweet’s reason exactly being no is which had new Steve's for of available The very the applications simple I'm is in Washington. power not power. shut down sure mischaracterized. that we Two colonies

provide we who with going probably six power contracted was the behind schedule. electricity to months thought Our was

go made machines to So, to we the plug where the to be in able decision faster. expected was

moving out it. a case of really existing not of service machines. boxes was literally it of were moving and We operating So, miners taking

Grace Livingston

what's when is remaining is taking online? this Sweden with wrong question facility? the will long so next Okay. And be rigs and X,XXX Why the

Rob Ladd

facilities, rely triple I we the reiterate the measure mean sick chip have size both But Sweden with I’d weeks guy months. terms come give the matter. with power I think facility from political of or power. do environment that what We wrong -- it's what in you as I but support XXX so have -- that fans So, at not other facility. favorable. have utility we size can I in to far but nothing The fractures Sweden execute. I Sweden in. the environment why timeline reasons and of least on fundamentally to is and not can doesn't blades taking days people, The as the long mean in said stress or it there's not financial getting coming in and

don't general in we our see So, or Sweden with facility particular. problems there's fundamental in

Grace Livingston

Okay.

plans shift issues. operations point? operations Understand or underway expand comes question the power too the Keith. Are at there this Sweden-based U.S. from in is to crowded due the the to environment the to to further decision delivery Next

Rob Ladd

we say, have. you directly to growth operations would to on we until not current up to what our talk I do again, show

ones to identify the have think and opportunities and that that barriers in -- comparable one, others companies several is more can other be more bigger see can't. actually economics. locations Number to helped know-how going concentrated, higher by that the we -- think has mining grow. I who are we have business us presence which capital entry, being We can we Sweden, getting

a lot some there work. of or are looking locations that maybe of at the require power that site like mentioned, U.S. have we're lumber level were some prior at mills that but something I As

the -- eighth much feel would and differently bitcoin. And in the second or the a now. or general I view stockholders think badly as our comment view too again, than to waiting and week-by-week, day-by-day don't all our were other as in inning I delay, we we're despite than we're ninth should inning I much we So, this if be third want of the on comment future of I had do

painful, it's delay, great. While opportunities a lot will the know be the I ahead

Grace Livingston

you. right. All Thank

next for more we are anytime many bitcoin on rest petahash? What rest comes timeframe our kind from Ethereum -- and looking total of we the mining are cash the S-Xs How And operation the question of S-Xs at for our Our near Jesse. S-Xs currently or in operational? are planning in future? of

Rob Ladd

say or asked operating answered? they think, trial, are did legal of at lawsuit about we and in capacity. What yes, one-third a I our

though. cash, definitely bitcoin equation bitcoin Ethereum, more mine the same to now machines. increase have super able not GPU cash use remonitor XX right any as Ethereum of to we all pass although coins, machines far decision can we versus that all, flexible we bitcoin Ethereum, time the not rigs the can made being profitable at we in because have terms As different

Grace Livingston

can very question. popular right. All see a that's I

MGT we'll means that those provider hosting in from providers? comes question asking receives and clarify what Can from So This the what from goods again. you services question and term refrain Chris.

Rob Ladd

case, least rents their call basically, landlord, in So, will, be temperature manpower at building, us what that for on-site space power, their would rebooting ventilation, you entire building security, control, or repairs. our provider provides that a in hosting we if or

And, than the it's just electricity. just most electricity. in fact, So, can't landlords the resell more in companies jurisdictions

a a electricity. -- lot space to buying happens have of renting actually we're that So,

Grace Livingston

of April? Okay. Chris were And month bitcoins in question how from mined many another is the

Rob Ladd

to number Don't there way whether going frankly now, reason reporting day not to apprised, haven't is said, that you can but you to we right week. we'll Riot every keep we think exact that into have decided -- but But able if but know number every the be being with exact report of April. monthly investors has we know to gyrations that do. back I or get for getting a for to started we're the Quarterly

Grace Livingston

Okay.

Jack. this question year? rigs next another in Our by end of the the from comes Sweden Is XX,XXX still goal

Rob Ladd

end of fill have to by that like year. we'd the the the what that's we Yes, building

goal. I fit, or that's might the it a little So, think that's may but that roughly high XX,XXX be -- XX,XXX maybe

Grace Livingston

Shifting just Okay. a little bit here. gears

by at is all? being comes that MGTI used down question Sentinel Next operations

Rob Ladd

No.

Grace Livingston

Okay.

interview question a there by Next six security is in of Heard release still McAfee that business place. months in some fund in the MGT? be will

Rob Ladd

no. Specifically,

However, the has cellphone any separation This in to rights not or of might MGT rights certain retained develop. IP anti-virus. is John from McAfee, McAfee, that and property course, McAfee McAfee

others in royalty be participation his is a collector. everyone any would So, his imminent. have know phone to event as else produce phone, what from reason that the moment John that our aside heard a to finds and place But no deal there in has nor release merely at this we phone

company our know any think most topic I not on same John, everyone you that capacity. as Mr. we does McAfee for all knows, speak in love while

Grace Livingston

Okay.

MGT Board? active says an still have does have question We from Advisory another Cryptocurrency Chris,

Rob Ladd

believe page factions them on could taken Board I want in while that have I been do to really had given -- took well much that That decided really the we as website all early of Crypto McAfee names. we No, to bitcoin. them advantage call different There down. with nor wasn't and of the serve as were the that Board friends [Indiscernible]

Grace Livingston

Okay.

Next uplisting? a on uplist? least is it plan question the price for what certain to Does for we maintained period have no at is the need Seeing $X that. news

Rob Ladd

some fit it's the uplisting. and at we and price we price. So, period, instant not the in the may of are prize $X kind or We need of There not $X applying into. may are is exceptions a process certain for an that believe but that's we $X

overcome get if need of reverse perception uplisting reverse reason prize and top for a However, everyone there its a as remains feel of us. negative we $X do priority uplisting But the reason. the to that is but that a we and is water, the if split hates required split for -- by that

Grace Livingston

zero have marketing name The and plan? The a public has company Okay. recognition next question marketing. do is poor you brand

to updates? investors needs to for done, be Something not should wait have

Rob Ladd

Well, means. I'm not sure exactly that what

money new that recognition things. like come ticker should just spend Things in will you we and with potentially and say or name do on basic feel we the and will However, brand symbol. things all uplisting a very

However, running don't the would cost something XXX% to results brand sense. up say, our and make when is brand understate we have get want flashy goal strategy good name. machines right very Again, the and to to more then versus now our of

Grace Livingston

only We for -- have say I'd Okay. two probably about time more questions.

Mr. going actually pay shares of debt, I'm Chris, This for Mr. higher XXXX? the December in be done than later with rather the sale MGT as direct was using to can is So, goods prices to services next two question in paid today why to which at and Lowrey. questions from stock comes for

Rob Lowrey

is to to management operations Okay, plan management's cash -- increase flow plan increase expenses. cryptocurrency for its and operating pay

opposed given -- we and price to the volatility stock operational in unpredictable more the it's know as and volatility our it goods use price although for services could be management to convertible expensive. the has high As issuing stock the to stock indicated, of given Rob price December, pay the delay, its and and shares was had as debt,

Grace Livingston

kind paid with stock consulting QX? of What were in services XXX,XXX

Rob Lowrey

Yes.

agreements Bucket and As company's to business development QX, other accounting into number number can and four were number marketing, relating primary three, consulting, securing website three disclosed buckets. services opportunities. And The management communications, maintenance. social in those then of Bucket consulting support. development finance you comprised the services or business and media one. put two,

Grace Livingston

Mr. will you this it I you Thank can Lowrey, turn that earnings conclude right. so to so report. much now quarterly All gentlemen. back

Rob Lowrey

Grace Rob. thanks right. All and Thanks

Rob Ladd

There asked It's question that Rob investors other I have and would know XX Ladd. second. month one was our Sweden, I'll for have space $XXX,XXX Actually per been the in regarding megawatts. for regarding interrupt included lease certain was which one which

So, just paying point, I don't should a electricity people that not as use. think, know general we we're for

too paying getting saying gotten I out calls full you're $XXX,XXX that bring on people theoretical that's to want and this just I again, a well, from what's but production. So, I know not several specific, have month

Grace Livingston

else? to anything like you add Would

Rob Lowrey

Rob what's so think question great the I because ask up in disclosed pick for could XX-Q, that. a that's that No, on based someone you and point thank

prepared So, dialed update. first Thank that afternoon. to comments presented and all you our to questions. in XXXX participants call for this concludes We continued good support quarter appreciate investor MGT those a and that your have

MGT Capital Investments (MGTI) 18 May 182018 Q1 Earnings call transcript