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SEC filingWhiteFiber swung to a net loss of $12.0M in Q1 2026 from a $1.4M profit a year ago, driven by a surge in operating expenses, particularly share-based compensation, despite a 31% revenue increase.
For the three months ended March 31, 2026, WhiteFiber reported total revenue of $21.9 million, a 30.7% increase from $16.8 million in the prior-year period. This top-line growth was driven by expansion in both business segments. However, the company swung to a net loss of $12.0 million, compared to a net income of $1.4 million in Q1 2025. The primary driver of this loss was a significant increase in operating expenses, which rose by $18.2 million to $32.9 million. General and administrative expenses were the largest factor, surging to $17.8 million from $4.2 million, largely due to $7.3 million in share-based compensation and increased professional fees and salaries following the company's IPO. Cost of revenue also increased by $2.1 million to $8.7 million, and depreciation and amortization rose by $2.6 million to $6.4 million, reflecting a larger asset base. Consequently, the company reported an operating loss of $11.0 million, a $13.1 million negative swing from the prior year's operating income.
WhiteFiber's revenue mix showed strong momentum in its colocation business. Cloud services revenue grew 13.0% to $16.8 million, driven by an increase in deployed GPU servers to new and existing customers. The cost of revenue for cloud services was $6.8 million, with GPU server lease expenses being the largest component at $3.7 million. Colocation services revenue experienced a dramatic increase, rising to $4.8 million from $1.6 million in Q1 2025. This 200% growth was primarily attributed to the MTL-3 facility in Saint-Jerome, Quebec, which became operational and commenced billing its anchor customer, Cerebras, in November 2025 at a rate of approximately $979,000 USD per month. The cost of revenue for colocation was $2.0 million, with electricity and lease expenses increasing substantially to support the new facility. The segment shift indicates a strategic diversification from purely GPU-focused cloud services to a more integrated model with recurring, long-term data center leasing revenue.
Management's outlook is heavily focused on the execution of its data center development pipeline. The most significant near-term catalyst is the Nscale Services Agreement at the NC-1 facility, a 10-year contract with approximately $865 million in total contracted revenue. Billing is expected to commence in Q2 2026, with full revenue contribution anticipated in Q3 2026 as the facility reaches contractual capacity. The company is also in discussions with its Initial Customer regarding a potential resolution of existing service agreements, which could result in an early termination fee. To fund its growth, WhiteFiber has bolstered its liquidity through a $230 million convertible note issuance and a new $20 million credit facility in Iceland, though cash on hand decreased to $75.8 million due to heavy investment in property, plant, and equipment. Management believes its cash, operations, and financing are sufficient for the next twelve months, but acknowledges future capital requirements will depend on revenue growth and the success of its development efforts.
As of March 31, 2026, WhiteFiber held $75.8 million in cash and cash equivalents, a significant decrease from $114.4 million at December 31, 2025. Restricted cash stood at $4.3 million. The company's liquidity was materially impacted by heavy investing activities, with $169.2 million used for purchases of and deposits for property, plant, and equipment. This was partially offset by $26.1 million in proceeds from the disposal of GPUs. Total assets grew to $796.3 million from $651.4 million, driven by a $95.3 million increase in net PP&E and a $15.1 million increase in deposits for PP&E. Total liabilities surged to $443.7 million from $168.9 million, primarily due to the issuance of $222.3 million in convertible notes (net of discount). Shareholders' equity decreased to $352.6 million from $482.5 million, largely due to a $120.0 million reduction in additional paid-in capital for the purchase of a zero-strike call option and a net loss of $12.0 million.
The company disclosed a massive remaining performance obligation backlog of $923.7 million as of March 31, 2026, with $921.0 million attributable to colocation services. The timing of these obligations is heavily weighted toward the long term, with $502.8 million due beyond 2030. Deferred revenue on the balance sheet totaled $144.5 million. The company also has contingent consideration liabilities related to the Unifi acquisition, with up to $8.0 million payable upon securing 99 MW of power within two years. An existing Electric Service Agreement with Duke Energy obligates the company to minimum monthly charges. A $20 million secured term loan facility with Landsbankinn hf was entered into but remained undrawn as of the quarter-end.
Capital allocation was dominated by aggressive investment in infrastructure. Cash used in investing activities totaled $143.1 million, including $169.2 million in PP&E purchases and deposits, partially offset by $26.1 million from asset sales. Financing activities provided $101.8 million, driven by $222.1 million in net proceeds from the issuance of 4.50% convertible senior notes due 2031. The company used $120.0 million of these proceeds to enter into a zero-strike call option transaction, which was recorded as a reduction to equity. No dividends or share buybacks were reported.
The company operates two reportable segments: Cloud Services and Colocation Services. For Q1 2026, Cloud Services generated $16.8 million in revenue with a 59.5% gross margin, while Colocation Services generated $4.8 million in revenue with a 59.2% gross margin. Cloud services revenue is primarily generated in Iceland, with an immaterial amount beginning in Canada. Colocation services revenue is generated in Canada. Other revenue of $0.4 million is from equipment leases.
WhiteFiber's cash flow statement for Q1 2026 reveals a company in aggressive expansion mode, heavily reliant on external financing to fund its growth. Operating cash flow (CFO) turned positive at $3.2 million, a significant improvement from the -$2.9 million used in the prior year period. However, the quality of this CFO is heavily dependent on a massive $65.0 million increase in deferred revenue, which masks an underlying $67.8 million consumption of cash from a surge in accounts receivable. The reported net loss of $12.0 million was more than offset by non-cash charges, primarily $6.4 million in depreciation and $7.3 million in share-based compensation.
Capital expenditure intensity is extreme. Capex of $169.2 million dwarfs CFO, resulting in a substantial free cash flow deficit. This spending was funded not by operations but by $222.1 million in net proceeds from convertible debt issuance. A notable anomaly is the simultaneous $120.0 million purchase of a zero-strike call option in connection with this debt, a sophisticated hedging transaction that consumed a large portion of the financing proceeds. The company did not pay dividends or repurchase shares. Overall, WhiteFiber's cash profile is characteristic of a high-growth infrastructure company, with operational cash generation still nascent and capital returns nonexistent, creating a dependency on capital markets to sustain its investment cycle.