Soluna Holdings Secures $34M Cloud Services Deal with HPE
Soluna Holdings, Inc., a finance services company, has entered a big agreement with Hewlett Packard Enterprise Company (HPE) to provide datacenter and cloud services. This deal, which started last Monday, June 18, 2024, involves a 36-month contract with HPE for AI (Artificial Intelligence) and supercomputing processes using Nvidia H100 GPUs.
Important Terms of the Agreement:
- Total Value: $34.0 million
- Initial Pre-Payment: $10.3 million, due immediately
- Expandable Services: The services can be expanded upon both parties’ consent
Revenue Projection:
Soluna Holdings expects this contract to generate substantial revenue, projecting between $16.0 million to $26.0 million annually. Over the contract life, this could mean total revenue of $38.0 million to $80.0 million.
Supporting Obligations:
To support CloudCo's obligations:
- Soluna Cloud, Inc. (another subsidiary) has entered into a Corporate Guaranty. This means they are guaranteeing full and timely payment for products and services delivered by HPE.
- Soluna Cloud has also established itself as a tier-1 partner of HPE.
Disclosure and Financial Impact:
Details of the HPE Agreement and the Guaranty will be included in Soluna Holdings' next periodic report with the Securities and Exchange Commission (SEC). This strategic partnership is a significant investment and is expected to positively impact Soluna Holdings’ financial position.
Recent Positive Developments for Soluna Holdings
- First-Quarter Results for 2024: Significant increase in Quarterly Adjusted EBITDA and rise in cash reserves.
- 166 MW Power Purchase Agreement (PPA): With EDF Renewables and Masdar for Project Kati in Texas.
- Financing for Project Dorothy 2: Spring Lane Capital has committed up to $30 million.
- Strategic Collaboration for AI Business: Through new subsidiary, Soluna Cloud.
- New CFO: John Tunison, an expert in the global energy sector, focusing on capital allocation for growing data center projects.
Explanation:
- Datacenter and Cloud Services: These are services that provide storage, management, and processing of data over the internet.
- Artificial Intelligence (AI): Refers to machines programmed to mimic human intelligence.
- Corporate Guaranty: A promise made by one company to cover another company's debts or obligations.
- EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's overall financial performance.
- PPA: An agreement to purchase electricity at predetermined rates.
Growth Metrics:
Soluna Holdings is seeing impressive revenue growth:
- 36.84% increase over the last twelve months as of Q1 2024
- 307.17% quarterly revenue growth in Q1 2024
However, the company's financial health shows some concerns, with negative profit margins and operating income.
Negative P/E Ratio: Indicates the company is currently not profitable.
Soluna Holdings continues to expand its green data center and hosting services. Their proprietary software, MaestroOS, is crucial in maintaining operations.
This marks a significant achievement for Soluna Holdings, reinforcing their investment in cutting-edge technologies and solidifying their role in the cloud services market.
