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    FRMI
    Earnings call· Jun 2026(Q2 FY26)

    Fermi Q2 FY26 earnings call FRMI

    Aug 13, 2026 Source

    Executive summary

    Fermi Inc. Q2 FY26 — All 5 Commitments Delivered, Anchor Customer Secured

    Fermi Inc. delivered on all five of its aggressive 90-day commitments, securing a binding customer agreement with TensorWave for up to 650 megawatts and strengthening its balance sheet with a $431 million convertible notes offering. The company also formed a strategic alliance with Hillcore to double its power capacity to 4.8 gigawatts, accelerating its ability to meet the surging demand for AI compute power. With a new CEO focused on large-scale project delivery and significant operational milestones achieved, Fermi is positioned to execute its strategy of providing critical power infrastructure for the AI ecosystem.

    Highlights

    5

    • Secured a binding agreement with TensorWave for up to 650 megawatts of power, representing approximately $6.5 billion in revenue over the initial 15-year term for the first 222 megawatts.

    • Enhanced liquidity with an upsized $431 million convertible notes offering, yielding net proceeds of $382 million after capped call.

    • Formed a strategic alliance with Hillcore Energy Partners, adding 2.6 gigawatts of power capacity to Project Matador, doubling total output to 4.8 gigawatts.

    • Made substantial operational progress, including the arrival of three Siemens Energy F-class turbines at the Port of Houston and advanced site development.

    • Appointed Lee McIntire as CEO, bringing extensive experience in large-scale project delivery to accelerate power to site.

    Concerns

    4

    • Power constraint on AI compute

    • Grid interconnection queues and equipment availability

    • Variable energy charge risk

    • Regulatory hurdles from Governor Abbott's data center audit

    Guidance & targets

    6
    CategoryTargetConfidence
    First power to site
    2027
    high materiality
    High
    Additional power capacity (Hillcore alliance)
    2.6 gigawatts
    high materiality
    High
    Total power output (Project Matador)
    4.8 gigawatts
    high materiality
    High
    Nameplate capacity delivery
    640 megawatts
    high materiality
    High
    First power (Hillcore alliance)
    within 24 months of notice to proceed
    medium materiality
    High
    Additional customer agreements
    other deals to be announced
    low materiality
    Medium

    Operational metrics

    10
    Convertible notes offering
    $431 millionupsized
    Q2 FY26

    Uptake included full exercise of initial purchasers' option for an additional $56 million.

    Net proceeds from convertible notes
    $382 million
    Q2 FY26

    Net proceeds after the capped call.

    Cash decrease
    50%
    Q2 FY26

    In line with general preparation activities.

    Power side CapEx per megawatt
    $3M-$4M
    current

    Typical range for gross power capacity.

    Data center CapEx per megawatt (turnkey)
    $10M-$12M
    current

    Typical range for a turnkey solution.

    EBITDA per gigawatt deployed
    $700 million to $900 million
    annual

    Analyst's prior expectation, management stated that contract value and profit expectations are similar to other market deals.

    Total runway
    17 gigawatts
    long-term

    Refers to the total potential capacity at the site.

    Air permit capacity
    6 gigawatts
    current

    Refers to the existing air permit for the site.

    TensorWave campus size
    330 acres
    current

    Area TensorWave is signed up for.

    Signed-not-commenced (SNC) backlog
    222 megawatts
    initial phase

    Initial phase of the TensorWave agreement, representing gross power through a turnkey data center solution.

    Industry KPIs

    1
    MetricValueDetails
    Bookings leasing volume signedUp to 650 megawattsMW

    Deals & partnerships

    6
    TensorWaveBinding agreement for data center capacity and powerUp to 650 megawatts capacity; initial 15-year commitment for 222 megawatts representing ~$6.5 billion revenue15 years (initial phase)

    Binding agreement for up to 650 megawatts of capacity if all expansion options are exercised. Initial phase is a 15-year commitment for 222 megawatts of gross power through a turnkey data center solution. Finalizing backstop agreement with a leading IT infrastructure provider.

    PrimorisEPC partnership for balance of plant on Phase 1

    EPC partnership for balance of plant on Phase 1, supporting 6 Siemens SGT-800 turbines.

    TSKEPC partnership for early works engineering on Phase 2

    EPC partnership for early works engineering on Phase 2, specifically for the 3 Siemens F-class units.

    Relevant Power SolutionsEPC partnership for GE 6B units and TM2500s

    EPC partnership for 3 GE 6B units and 7 TM2500s, all in simple cycle.

    Hillcore Energy PartnersStrategic alliance for additional power generation

    Alliance to bring 2.6 gigawatts of additional power to Project Matador under a build, own, operate, transfer (BOOT) structure. Hillcore finances, builds, owns, and operates its facility. Fermi holds an option to acquire the facility at fair market value after year 10.

    Lee McIntireAppointment as CEO

    Appointed as CEO effective this Tuesday. Lee has served on the Board since September 2025 and has a career delivering large-scale projects, including at Bechtel, McDermott, and TerraPower.

    Capital programs

    3
    Project Matadorunderway
    Spent to date: $1.5 billion

    Overall project for which Fermi has already built over $1.5 billion in assets. The goal is to maximize long-term value for shareholders.

    Hillcore Strategic Allianceannounced
    Funding: Hillcore (finances, builds, owns, operates)

    Benefit: 2.6 gigawatts additional power

    Alliance to accelerate power delivery, doubling Project Matador's total power output to 4.8 gigawatts. Fermi adds dedicated, behind-the-meter power with no upfront capital outlay. Fermi holds an option to acquire the facility at fair market value after year 10.

    TensorWave Initial Phaseunderway

    Benefit: 222 megawatts gross power

    Initial phase of the binding agreement with TensorWave, structured as a 15-year commitment for a turnkey data center solution. Fermi is partnering with a well-known data center contractor for execution.

    Risks & headwinds

    4
    Power constraint on AI computecurrent

    Binding constraint

    Mitigation: Fermi's core business is to relieve this constraint by providing large-scale, reliable electricity on accelerated timelines.

    Grid interconnection queues and equipment availabilitycurrent

    Delays reported across announced projects worldwide

    Mitigation: Fermi has secured equipment (Siemens F-class turbines arrived) and has a behind-the-meter solution, reducing reliance on grid interconnection.

    Variable energy charge riskongoing

    Can go up

    Mitigation: Full pass-through of variable energy charge to the customer, eliminating commodity risk for Fermi.

    Regulatory hurdles from Governor Abbott's data center auditcurrent

    Potential for regulatory scrutiny on grid power

    Mitigation: Fermi's grid connection is through Xcel on SPS, not ERCOT, making it unaffected by the directive. Its behind-the-meter solution strengthens its business case.

    What to watch in Q3 FY26

    5

    TensorWave backstop agreement finalization

    coming days
    CurrentFinalizing
    TargetAnnounced counterparty and agreement completion

    Why it matters

    This backstop is crucial for project financing and reduces risk for the anchor customer agreement.

    We are finalizing the backstop agreement that sits behind it. Anna will walk you through the details in a moment. We will identify that counterparty once the agreement is complete, which we anticipate in the coming days.

    Q&A highlights

    8

    How is the power pass-through component of the $6.5 billion revenue structured, and how is Fermi hedging fuel given its private grid?

    Fermi's deal structure includes a base rent and a fixed power charge, with the variable energy charge being a full pass-through to the customer. This eliminates commodity risk for Fermi, meaning no hedging is required.

    “So to be clear, the way that the kind of deal is structured is that we take a base rent, we take a fixed power charge, and then that variable energy charge that does carry risk because it can go up, is a full pass-through on to the customer. And that is something that we plan to carry forward throughout all of our deals.”

    asked by Paul Golding · answered by Anna Bofa

    2 min read6 chapters

    Detailed Narrative

    01

    Execution on 90-Day Plan

    Fermi Inc. successfully delivered on all five aggressive commitments outlined in its 90-day plan. These included securing a binding customer agreement, appointing a new CEO, advancing strategic partnerships, enhancing liquidity, and progressing site development. The leadership team's focused execution during a period of external distractions and internal transitions demonstrated institutional discipline, positioning Fermi 2.0 for future growth.

    02

    Anchor Customer Agreement with TensorWave

    Fermi signed a binding agreement with TensorWave for up to 650 megawatts of capacity, with an initial 15-year commitment for 222 megawatts, representing approximately $6.5 billion in revenue. This deal validates Fermi's project concept and provides strategic access to the broader AI ecosystem, including chip manufacturers and multiple hyperscalers. The phased approach allows for capital deployment to match delivery timelines and reduces execution complexity.

    03

    Strategic Alliance with Hillcore Energy Partners

    A strategic alliance with Hillcore Energy Partners will bring an incremental 2.6 gigawatts of power to the Project Matador campus within three years, effectively doubling the total power output to 4.8 gigawatts. This build, own, operate, transfer (BOOT) structure allows Fermi to expand its power supply without upfront capital outlay, accelerating revenue streams. Fermi retains an option to acquire the facility at fair market value after year 10.

    04

    Strengthened Balance Sheet and Funding Strategy

    Fermi completed an upsized $431 million convertible notes offering with a 5% coupon due 2031, generating net proceeds of $382 million after a capped call. This move significantly strengthened the balance sheet, providing operational flexibility and financial runway. The company emphasizes thoughtful sourcing and disciplined deployment of capital, matching expenditures to commercial progress and signed deals.

    05

    Operational Milestones and Leadership Appointment

    Substantial progress was made on site development, including the arrival of three Siemens Energy F-class turbines at the Port of Houston. EPC partnerships with Primoris and TSK are in place for Phase 1 and Phase 2 engineering, respectively. Lee McIntire was appointed CEO, bringing extensive experience in large-scale project delivery from companies like Bechtel and TerraPower, which is critical for achieving first power to site in 2027.

    06

    Market Demand and Fermi's Unique Position

    The market continues to show tremendous demand for large-scale, reliable power on accelerated timelines, with power being the binding constraint on AI compute. Fermi's behind-the-meter solution and permitted land position it uniquely to meet this demand, especially given global delays in grid interconnection and equipment availability. The company's strategy is to offer flexible solutions, from powered land to full turnkey data centers, to meet diverse customer needs.

    AI-generated summary of the company’s earnings call. Not investment advice.