Northern Data AG Reports Robust Growth and Positive Outlook

Northern Data AG ((DE:NB2)) has held its Q4 earnings call. Read on for the main highlights of the call.

Northern Data AG’s latest earnings call paints a promising picture of growth and profitability, buoyed by significant achievements in cloud revenue and GPU deployments. The company has demonstrated strong financial positioning, although challenges with GPU deployment delays and customer diversification were noted. Despite these hurdles, Northern Data’s strategic initiatives and financial strength suggest an optimistic future.

Record Cloud Revenue Growth

Northern Data AG achieved a record cloud revenue of EUR 121 million, representing a remarkable 722% increase from 2023. This impressive growth was primarily driven by the deployment of Europe’s largest pool of GPUs, underscoring the company’s strategic focus on expanding its cloud capabilities.

Significant Revenue and Profitability Increase

The company reported a notable 159% year-on-year revenue growth, reaching EUR 200.5 million. Furthermore, the adjusted EBITDA saw a significant turnaround, increasing from negative EUR 5.5 million in 2023 to a projected EUR 60 million to EUR 80 million in 2024. These figures highlight Northern Data’s successful efforts in driving profitability.

Successful GPU Deployment

Northern Data acquired over 22,000 NVIDIA H100 and H200 GPUs, which played a crucial role in sequential revenue growth each quarter of 2024. This strategic acquisition illustrates the company’s commitment to advancing its technological infrastructure.

Strong Financial Position

With EUR 120 million in cash and cash equivalents at year-end, Northern Data is well-funded to support further investments and growth. This financial strength provides a solid foundation for the company to execute its strategic plans.

Operational Improvements in Mining

The company increased its Bitcoin mining capacity to 7.9 exahash, resulting in an 88% year-on-year revenue growth in Peak Mining during Q4. This operational improvement highlights Northern Data’s ability to enhance its mining operations effectively.

Expansion in the United States

Northern Data’s expansion plans include new facilities in Georgia and Pittsburgh, Pennsylvania, to support the growing demand for high-performance computing (HPC). This move underscores the company’s commitment to broadening its geographical footprint.

Challenges in GPU Deployment

The company faced delays in finalizing highly complex GPU clusters and component supplies, impacting the speed of GPU ramp-up. These challenges indicate areas where Northern Data needs to enhance its operational efficiencies.

Limited Customer Diversification

Revenue in Q4 was concentrated among nine customers, highlighting a need for Northern Data to diversify its customer base further. This diversification will be crucial for long-term stability and growth.

Operating Cash Flow Challenges

The full-year operating cash flow was an outflow of EUR 39 million, although the company expects positive cash flow in 2025. Addressing these cash flow challenges will be vital for sustaining Northern Data’s growth trajectory.

Forward-Looking Guidance

Looking ahead, Northern Data has ambitious plans to expand its AI cloud infrastructure and fully deploy its GPUs by the end of Q1 2025. The company anticipates positive operating cash flow in the coming year, supported by a robust cash position of EUR 120 million. Executives emphasized strategic partnerships, enhanced data center capabilities, and a strong governance framework as key focus areas to solidify their leadership in the AI market.

In conclusion, Northern Data AG’s earnings call reflects a positive sentiment with substantial growth achievements and strategic plans for the future. While challenges exist, the company’s robust financial health and clear strategic direction provide confidence in its ability to sustain growth and leadership in the AI and cloud sectors.