Keel Infrastructure posts deeper losses after pivot
The company reported a $98.4 million operating loss in its first quarter as a pure-play data-center developer.
Keel Infrastructure (KEEL) swung further into the red in its first quarter as a rebranded high-performance-computing developer, as costs for its strategic pivot outpaced revenue.
The quarter marked the company’s first full period after completing its April 1 redomiciliation and exit from Bitcoin mining, a shift that left gross margins deeply negative and operating losses nearly triple those of a year earlier.
Revenue fell 22% year-over-year to $37 million, while gross margin collapsed to negative 71% from positive 1% in the same period last year. Cost of revenues jumped 34% to $63.3 million, driven by higher depreciation and professional fees tied to the U.S. conversion.
The operating loss widened to $98.4 million from $34.8 million a year earlier, a 182% increase. A $41.4 million loss from changes in the fair value of digital assets—down from a $23 million loss in the prior-year quarter—accounted for much of the deterioration. Adjusted EBITDA margin fell to negative 45% from positive 14%.
General and administrative expenses surged 52% to $26.8 million, reflecting professional fees for the redomiciliation and GAAP conversion. The company also recorded a $21.6 million loss on extinguishment of long-term debt, a charge absent in the prior-year period.
To fund its pivot, Keel closed a $458 million convertible senior notes offering in June, netting $445.4 million after discounts and commissions. Proceeds were earmarked for capped call transactions and general corporate purposes, including data-center development. The notes carry a 1.250% coupon and mature in 2032. The company entered capped call transactions with an initial cap price of $11.86 per share, a 100% premium to its June 4 closing price.
Liquidity tightened, with unrestricted cash declining from $336 million as of May 8 to an unspecified level, though the notes proceeds provided a near-term buffer. Bitcoin holdings, once a $197 million unencumbered asset, were not mentioned in the latest release, following a $20 million sale in the prior quarter. The company also completed its exit from Latin American assets, classifying them as discontinued operations in the prior quarter.
Keel did not disclose second-quarter revenue or provide updated guidance, leaving its near-term financial trajectory unclear.