Digi Power X (DGXX) Q3 2026 earnings review
Digi Power X AI sales jump, but 2027 spending climbs
Digi Power X, a former Bitcoin miner building AI data centers, generated nearly half its sales from AI while its operating profit stayed thin. Revenue rose 85% from last quarter to $12.25 million as AI services reached $5.66 million, though total sales landed 8% below chief executive Michel Amar's call target to more than double Q2 revenue by our math. Net income of $1 million relied on crypto and warrant gains, while heavy equipment depreciation kept gross margin negative.
| Revenue | $12.25M +50% from a year ago (+85% from Q2) |
|---|---|
| AI share of revenue | 46% 16% last quarter and 0% a year ago |
| EBITDA, excluding one-offs | $0.6M -$1.0M a year ago |
| Q3 2027 revenue run-rate outlook | Unchanged $250–300M annualized ($143M supported) |
⚖️ Verdict: 🟢 Bullish
The story got better because the company kept its December 15 Alabama delivery date on schedule and secured a $200 million loan commitment arranged by Goldman Sachs. Closing that loan in the fourth quarter would fund Phase 2 of the Cerebras contract without repeating the heavy share sales of the past year. One caution: management unveiled a $350 million capital spending plan for 2027 that exceeds its cash and the proposed loan by about $55 million, by our math.
The question now is whether Digi Power X can fund and contract the rest of its 2027 expansion without diluting shareholders further. Either customer prepayments and the new loan cover the buildout, or the company must tap its share-sale program again while half of its $250 million to $300 million revenue target still lacks a signed tenant. Closing the $200 million credit facility before year-end and delivering Alabama Phase 1 on December 15 will provide the first test.
🐂 Bull Case
AI Services Now Generate Nearly Half of Revenue
"Our third-quarter results demonstrate that Digi Power X’s transformation into an AI infrastructure company is beginning to take hold," chief executive Michel Amar said. The former cryptocurrency miner is replacing its old Bitcoin business with data centers and graphics processing units (GPUs, the specialized chips that run artificial intelligence).
Total revenue rose 85% from last quarter to $12.25 million, and AI services more than quintupled to $5.66 million, or 46.2% of the total. That fell 7.6% short of Amar's call target to more than double Q2 revenue, by our math, but it reversed four straight quarters of year-over-year sales declines.
- Tier III colocation services (renting high-reliability data center space): $3.20 million, up from nil last quarter
- GPU rental on the NeoCloudz platform: $2.46 million, up 127% from $1.08 million last quarter
- Legacy Bitcoin colocation and mining: $3.29 million, down to 26.9% of sales from 63% a year ago
What to watch: the segment footnote in the upcoming third-quarter Form 10-Q filing. It will show whether the $3.20 million of colocation sales came from recurring hosting fees or one-time construction payments ahead of the January billing start.
Alabama Phase 1 Holds Its December Delivery Date
Digi Power X has a ten-year agreement with AI chipmaker Cerebras to lease up to 40 megawatts (MW, a measure of electrical capacity) at its Columbiana, Alabama campus. After three earlier equipment milestones slipped by one quarter in early 2026, keeping the Alabama schedule is critical because the contract carries penalty and termination clauses for late delivery.
The company confirmed that Phase 1 (15 MW) remains on schedule to give Cerebras access and begin testing liquid-cooling systems on December 15, 2026. Billing starts in January 2027 at $35.1 million a year initially, averaging about $40 million over ten years, while Phase 2 (25 MW) construction is underway for March 2027 access alongside longer-term plans in New York, North Carolina and West Virginia.
What to watch: an announcement confirming Phase 1 commissioning on or before December 15, 2026. On-time delivery unlocks about $8.8 million of quarterly revenue starting in the first quarter of 2027.
A $200 Million Loan Commitment Nears Closing
Phase 2 of the Cerebras contract is worth $58.5 million a year, but it is conditioned on Digi Power X securing adequate financing. Until now, management funded construction by selling new stock, which more than tripled the share count between late 2024 and August 2026.
On October 13, the data center operator received a commitment letter from a major lender for $200 million in project debt, arranged by Goldman Sachs, and expects to close it in the fourth quarter. Because a commitment letter is still "subject to definitive documentation and the satisfaction of various conditions, including the lender’s completion of its diligence", the financing risk is fading rather than settled.
What to watch: a filing confirming the signed credit agreement before year-end. Closing the loan removes the main condition blocking Phase 2 and its $58.5 million of annual revenue.
🐻 Bear Case
New $350 Million Spending Plan Outstrips Committed Funding
Chairman Michel Amar said the group will "fund expansion principally through customer contributions and contract-backed financing" while minimizing dilution. Digi Power X has relied on an at-the-market equity program (which sells newly created shares into the open market) to fund its buildout so far.
For the first time, the release put a price tag on next year's buildout: $350 million of 2027 capital spending for 10 MW of AI chip capacity and Alabama Phase 2. Even if the $200 million loan closes, combining it with $95.1 million of cash on hand (excluding crypto) leaves a $54.9 million gap by our math, before counting fourth-quarter spending.
Shareholders' equity also rose $14.9 million in the third quarter despite only $1.0 million of net income and $2.2 million of stock compensation. By our math, that leaves $11.7 million of unexplained equity increases, indicating that share issuance continued during the quarter.
What to watch: the share count and cash flow statement in the third-quarter Form 10-Q. Further share sales below $4 would consume much of the per-share value of the Alabama contract.
Half the 2027 Revenue Target Has No Signed Customer
Digi Power X reiterated its outlook for $250 million to $300 million in annualized revenue by the end of the third quarter of 2027. For the first time, the company published an illustrative table breaking down how much of that target is backed by current operations and the Cerebras contract.
- Current Q3 operations annualized: $49.0 million
- Columbiana Phase 1 (contracted Year 1 rate): $35.1 million
- Columbiana Phase 2 (conditional on financing): $58.5 million
- Total supported run-rate: $142.6 million, leaving $132.4 million uncontracted at the $275 million middle of the range by our math
The company said the remaining $107 million to $157 million must come "from additional AI colocation and GPU capacity currently in development and in customer negotiations". Because its New York sites only begin converting to AI in the third and fourth quarters of 2027, the timeline to build and fill that extra capacity by September 2027 is tight.
What to watch: signed customer contracts with committed minimum payments for the planned 10 MW of GPU capacity before mid-2027. Without them, the company cannot reach its $250 million floor on time.
Equipment Depreciation Kept Gross Margin Negative
As AI services grew to nearly half of sales, gross profit before depreciation and amortization (the non-cash charge for wearing out equipment) flipped from a $1.46 million loss in Q2 to a $3.08 million profit, or 25.1% of revenue by our math. However, putting $30 million of GPUs and new infrastructure into service drove depreciation in cost of sales up by 25.2 percentage points of revenue from a year ago, to 44.8%.
That non-cash charge left GAAP gross profit at a loss of $2.41 million (-19.7% gross margin, 9.2 percentage points worse than a year ago). Reported net income of $1.0 million relied on $7.1 million of crypto price gains and $1.5 million of warrant revaluation gains; excluding those one-offs, Digi Power X lost $7.6 million by our math, and EBITDA excluding one-offs was just $0.6 million.
What to watch: gross margin after Alabama Phase 1 billing begins in the first quarter of 2027. High-margin colocation fees must cover the rising depreciation bill from the $145.6 million fixed asset base.
Risks this quarter didn't answer
Because the earnings release contained only summary tables rather than full financial statements, three standing concerns from prior filings received no update today.
- Share count and ATM dilution: the release omitted the exact share count and any share sales after August; the Form 10-Q cover page and equity footnote will show the dilution.
- Customer concentration: the release named no new colocation tenant beyond Cerebras and did not update the usage-based GPU contract with investee SubQ; the 10-Q lease footnote will test this.
- Governance and internal controls: the release gave no update on remediating prior material weaknesses in financial reporting or the terms of the West Virginia power letter of intent with a board member's firm.
👓 Other Themes
Token Factory Launches to Sell AI Computing Directly
"Going live with the NeoCloudz Token Factory is a major step for Digi Power X," president Alec Amar said. Instead of only renting out raw GPU servers at wholesale rates, the new platform uses the company's own power and chips to sell AI inference tokens (the unit of output when an AI model answers a prompt) directly to customers, though the release reported no token sales yet.
💲 Other KPIs
Property and equipment nearly doubled in a single quarter, rising 99% from $73.24 million in Q2 and 646% from $19.5 million a year ago. The $72.4 million sequential jump reflects rapid construction and equipment installation at the Columbiana, Alabama data center ahead of its December 15 Phase 1 commissioning.
Total liquidity fell 16% from $142.42 million at the end of Q2 as the company paid for Alabama construction, while borrowings stayed at zero. Digital currencies (Bitcoin and Ethereum) made up $24.5 million of the total, up 56% from a year ago, leaving $95.14 million in cash and cash equivalents by our math.
Power sales to the electrical grid rose 68% from $1.96 million last quarter and 9% from $3.03 million a year ago, accounting for 26.9% of total revenue. The segment provides steady cash flow from the company's New York power assets while it prepares those sites for AI conversion in late 2027.
🔮 Guidance
Unchanged. The plan calls for monthly revenue of $21 million to $25 million by September 2027, which implies $68.75 million of quarterly sales at the middle of the range (+461% from Q3 2026 by our math). Current operations and the Cerebras contract (including conditional Phase 2) supply $142.6 million of that annualized pace, leaving $132.4 million to come from uncontracted capacity.
New. Management expects to spend about $350 million next year to build 10 MW of AI token factory capacity and finish Phase 2 at Columbiana. The US group plans to fund the bill through customer prepayments, cash on hand, and contract-backed debt, including the proposed $200 million Goldman Sachs facility.
❓ Key Questions
What generated the $3.20 million of Tier III colocation revenue?
Chief executive Michel Amar noted that third-quarter results arrived "all before the expected start of Columbiana colocation billing in January 2027". Investors need to know whether the $3.20 million of colocation sales came from one-time Cerebras construction fees or another customer.
How many shares were issued under the ATM in Q3?
Shareholders' equity grew by $14.87 million in Q3, which is $11.67 million more than net income and stock-based compensation combined by our math. The release omitted the share count, leaving unclear how much stock was sold and at what price.
Where will the remaining $55 million of 2027 capex come from?
Even if the $200 million debt facility closes, combining it with $95.1 million of cash on hand falls $54.9 million short of the $350 million 2027 spending plan by our math. Management has not said how much customer prepayment it has secured.
Have the internal control weaknesses from 2025 been fixed?
In late 2025 the company reported material weaknesses in its financial reporting controls and targeted remediation by the end of 2025. Neither the second-quarter nor the third-quarter release updated investors on whether those controls are now effective.