Skip to content
    FRMI
    Earnings call· Dec 2025(Q4 FY25)

    Fermi Q4 FY25 earnings call FRMI

    Mar 30, 2026 Source

    Executive summary

    Fermi Inc. Q4 FY25 — Project Matador Progress and Tenant Negotiations

    Fermi Inc. substantially completed the initial phase of Project Matador, deploying significant capital into physical infrastructure and securing a massive air permit, positioning itself as a key player in AI power generation. Despite being pre-revenue with a GAAP net loss, the company demonstrated capital discipline and secured substantial equipment financing. The next phase of development hinges on securing definitive tenant agreements and project-level financing, with management actively negotiating with multiple investment-grade counterparties while navigating the bottleneck of tenant MEP readiness.

    Highlights

    5

    • Substantial completion of initial phase of Project Matador, with $570 million deployed into physical infrastructure.

    • Secured a 6-gigawatt air permit, with an additional 5-gigawatt permit filed, positioning the company for large-scale power generation.

    • Demonstrated capital discipline with cash used for G&A at approximately $45 million and operating cash use at $34 million for the full year.

    • Secured $785 million in new equipment financing facilities post-year-end, including a $500 million MUFG turbine warehouse and a $165 million Yellowstone facility.

    • Active negotiations with multiple investment-grade counterparties for initial power, with potential tenants reportedly competing for capacity.

    Concerns

    5

    • Pre-revenue status with a GAAP net loss of $486 million for the full year 2025, though largely non-cash.

    • Next phase of capital deployment is gated by definitive tenant agreements and project financing, which are not certain to occur.

    • Potential for delays, amending purchase commitments, or surrendering collateral if capital is not available on needed terms.

    • MEP (mechanical, electrical, and plumbing) readiness of potential tenants identified as a significant bottleneck, potentially impacting power deployment timelines.

    • REIT 550 rules require an orderly sell-down of management's significant ownership stake (38% owned by CEO's family).

    Guidance & targets

    6
    CategoryTargetConfidence
    Tenant revenue commencement
    2027
    high materiality
    Medium
    REIT election
    Beginning with short taxable year ended December 31, 2025
    medium materiality
    High
    Dividend payment
    No dividends until taxable income requires it
    medium materiality
    High
    Texas Tech tenant agreement
    200-megawatt tenant by end of 2026
    medium materiality
    High
    Project Matador capital deployment trigger
    Timed to definitive tenant agreement and project financing
    high materiality
    High
    Project Matador total capital deployment
    Exceed $3 billion
    high materiality
    High

    Operational metrics

    39
    Total assets
    $1.4 billion
    as of Dec 31, 2025

    Total assets as of year-end.

    Property, plant and equipment
    $935 million
    as of Dec 31, 2025

    Property, plant and equipment, almost entirely construction in progress.

    Cash and cash equivalents
    $409 million
    as of Dec 31, 2025

    Cash and cash equivalents at the end of the year.

    Accounts payable and accrued liabilities
    $177 million
    as of Dec 31, 2025

    Reflecting the pace of construction and vendor activity.

    Total stockholders' equity
    $1.1 billion
    as of Dec 31, 2025

    Total stockholders' equity at year-end.

    Common shares outstanding
    630 million
    as of March 2026

    Approximately 630 million common shares outstanding.

    Net loss
    $486 million
    FY25

    Net loss for the full year.

    Non-cash portion of net loss
    $445 million
    FY25

    Approximately $445 million of the net loss was non-cash.

    General and administrative expenses
    $178 million
    FY25

    Total G&A expenses for the full year.

    Non-cash share-based compensation
    $133 million
    FY25

    Non-cash share-based compensation tied to equity incentive arrangements.

    Cash used for G&A
    $45 million
    FY25

    Cash portion of G&A expenses.

    Personnel costs (cash G&A)
    $12 million
    FY25

    Personnel costs for a lean team of roughly 35 employees.

    Professional services (cash G&A)
    $22 million
    FY25

    Professional services expenses.

    Other corporate expenses (cash G&A)
    $11 million
    FY25

    Other corporate expenses such as recruiting, travel, and marketing.

    Other expenses net
    $312 million
    FY25

    Other expenses net, almost entirely non-cash.

    Charitable contribution of Class B units
    $174 million
    FY25

    Related to charitable contribution of Class B units prior to the IPO.

    Fair value losses on Series B convertible notes
    $61 million
    FY25

    Fair value losses on Series B convertible notes.

    Losses on embedded derivatives
    $46 million
    FY25

    Losses on embedded derivatives associated with preferred unit financing.

    Preferred unit issuances (loss related to)
    $24 million
    FY25

    Loss related to preferred unit issuances.

    Operating cash use
    $34 million
    FY25

    Operating cash use for the year.

    Net cash used in investing activities
    $570 million
    FY25

    Net cash used in investing activities.

    Capital deployed into PP&E at Matador
    $570 million
    FY25

    Virtually all of the net cash used in investing activities was invested directly into property, plant and equipment at Project Matador.

    Cash provided by financing activities
    $1 billion
    FY25

    Total cash provided by financing activities.

    Net proceeds from IPO
    $746 million
    FY25

    Net proceeds from the company's IPO.

    Preferred units (financing)
    $108 million
    FY25

    Cash provided by preferred units.

    Macquarie term loan (financing)
    $100 million
    FY25

    Cash provided by a Macquarie term loan.

    Series A convertible notes (financing)
    $76 million
    FY25

    Cash provided by Series A convertible notes.

    Seed convertible notes (financing)
    $26 million
    FY25

    Cash provided by seed convertible notes.

    MUFG nonrecourse turbine warehouse facility
    $500 million
    subsequent to FY25

    Executed subsequent to year-end to support Siemens F-Class procurement, also refinanced a Macquarie term loan.

    Keystone National Group facility
    $120 million
    subsequent to FY25

    Executed subsequent to year-end for high-voltage equipment, expandable to $220 million.

    Yellowstone facility
    $165 million
    subsequent to FY25

    Executed subsequent to year-end to finance additional Siemens SGT-800s.

    Total new equipment financing facilities
    $785 million
    subsequent to FY25

    Combined value of MUFG, Keystone, and Yellowstone facilities.

    Air permit capacity
    6 gigawatts
    current

    The company has a 6 gigawatt air permit.

    Additional air permit filed
    5 gigawatts
    current

    Filed for an additional 5 gigawatts, with high expectation for execution.

    SGT-800 tariff savings
    $27 million to $30 million
    past

    Saved by keeping SGT-800 units in a free trade zone until a Supreme Court ruling on tariffs.

    Family ownership percentage
    38%
    current

    CEO's family owns about 38% of the company, requiring an orderly sell-down for REIT 550 rules.

    Minimum deal size for tenants
    500 megawatts
    current strategy

    The company will likely only do deals 500MW or larger.

    F-Class units on their way
    2 units
    current

    Two F-Class units were observed in the loading dock in Germany.

    SGT-800 foundation cost estimate
    <$10 million
    near term

    CEO's estimate for the cost to complete SGT-800 foundations.

    Industry KPIs

    2
    MetricValueDetails
    Pricing per kilowattsame
    Bookings leasing volume signed200 megawattsMW

    Orderbook & backlog

    1
    Texas Tech tenant agreement200 megawattsEnd of 2026

    Fulfills ground lease requirement; expected to commence by end of 2026

    Deals & partnerships

    4
    MUFGNonrecourse turbine warehouse facility to support Siemens F-Class procurement.$500 million

    Executed subsequent to year-end, also fully refinanced a Macquarie term loan.

    Keystone National GroupFacility for high-voltage equipment, including transformers and switchgear.$120 million

    Executed subsequent to year-end, expandable to $220 million.

    YellowstoneFacility to finance additional Siemens SGT-800s.$165 million

    Executed subsequent to year-end.

    Texas TechAgreement for a tenant.200 megawattsBy end of 2026

    This agreement fulfills a requirement for the ground lease.

    Capital programs

    2
    Project Matador (Initial Phase)substantially completed
    Period spend: $570 million
    Spent to date: $570 million
    Funding: investor capital
    Start: January 10, 2025

    Benefit: physical infrastructure (450M cubic feet gas pipeline, 10M gallons water pipeline, 60-70% of 800MW substation, 6GW air permit)

    Moved from formation to IPO and substantially completed the initial phase of Project Matador, deploying investor capital into physical infrastructure.

    Project Matador (Phase 0 and Phase 1)plannedExceed $3 billion
    Funding: project level debt and strategic equity
    Start: Future

    Benefit: full build-out and operation at scale

    The next phase of capital deployment at Project Matador will be timed to definitive tenant agreements and project financing, with total aggregate capital deployment expected to exceed $3 billion.

    Risks & headwinds

    5
    Reliance on tenant agreements and project financing for next phase of capital deploymentOngoing

    Next phase of capital deployment for Project Matador will be timed to definitive tenant agreement and closing of project financing.

    Mitigation: Actively advancing both tenant negotiations and technical diligence for project financing in parallel.

    Capital availability riskOngoing

    If capital is not available in the amounts, timing, or terms needed, could be forced to delay investments, amend purchase commitments, or surrender collateral to preserve liquidity.

    Mitigation: Management states this is a reality of building a multibillion-dollar infrastructure platform, not an intended action.

    Disclosure impacting negotiation dynamicsDuring active negotiations

    Discussing timing or specific details of multibillion-dollar transactions.

    Mitigation: Board advised against discussing timing or specific LOIs to maintain negotiation leverage and avoid changing dynamics to Fermi's disadvantage.

    Tenant MEP (mechanical, electrical, and plumbing) readiness bottleneckNear-term, impacting power deployment

    Tenants' ability to get their MEP and racks up in time to take power is a bigger bottleneck than originally anticipated.

    Mitigation: Doing 'reverse due diligence' on potential tenants' MEP capabilities; focusing on modular MEP solutions; prioritizing tenants who can deploy MEP faster.

    REIT 550 rules compliance for management ownershipWithin a few months post lockup expiry (March 30, 2026)

    CEO's family owns ~38% of the company, requiring an orderly sell-down to meet REIT 550 rules.

    Mitigation: Retained an adviser to run a process for an accretive block sale, aiming for a transaction that adds value to the brand of Fermi.

    What to watch in Q1 FY26

    5

    Definitive tenant agreement

    Next quarter / near term
    CurrentActive negotiations with multiple counterparties, LOIs signed
    TargetExecution of a definitive lease agreement

    Why it matters

    This is the first gate for the next phase of Project Matador's capital deployment and unlocks project financing.

    The next phase of capital deployment at Project Matador will be timed to 2 milestones: First, the execution of a definitive tenant agreement; and second, the closing of project financing.

    Q&A highlights

    6

    What are the key sticking points with tenants, and how is the timeline for SGT-800 deployment progressing?

    Tenants want all the power, but Fermi needs multiple tenants for efficiency. SGT-800s were moved from Houston after tariff ruling, saving $27M-$30M, and foundations are ready. Negotiations are complex, multiparty, and involve billions. Investment-grade wraps are required, and Fermi is doing reverse due diligence on tenant MEP readiness.

    “The #1 issue, the #2 issue and the #3 issue with our tenants is they want all of our power, and they want it all forever. But for our model to work, we need to have multiple tenants so that you deal with the differences in loads.”

    asked by Paul Golding · answered by Toby Neugebauer

    2 min read6 chapters

    Detailed Narrative

    01

    Project Matador Operational Progress

    Fermi has made significant strides in Project Matador, substantially completing its initial phase. This includes installing 450 million cubic feet of gas pipeline, 10 million gallons of water pipeline, and completing 60-70% of an 800-megawatt substation. The company secured a 6-gigawatt air permit, a critical milestone that significantly increased engagement from potential customers, and has filed for an additional 5-gigawatt permit, aiming to be the largest gas generation set on the planet.

    02

    Tenant Negotiation Dynamics

    The company is in active negotiations with multiple investment-grade counterparties, who are reportedly competing for initial power. A key challenge is that tenants desire all available power, while Fermi aims for multiple tenants to diversify demand and maximize grid efficiency. Management is prioritizing tenants based on their ability to finance and deploy their own mechanical, electrical, and plumbing (MEP) infrastructure, which has emerged as a significant bottleneck.

    03

    Financial Overview and Capital Discipline

    As a pre-revenue company in full-scale construction, Fermi reported a GAAP net loss of $486 million for FY25, primarily non-cash. The financial focus is on the balance sheet, with $570 million of investor capital deployed into physical infrastructure. The company demonstrated capital discipline, with operating cash use at $34 million for the year, covering formation, IPO, and initial construction, which is viewed as a strong demonstration of capital discipline.

    04

    Strategic Capital Deployment and Financing Gates

    The next phase of capital deployment for Project Matador is strictly gated by the execution of definitive tenant agreements and the closing of project-level financing. The company has secured $785 million in new equipment financing facilities post-year-end, including a $500 million nonrecourse turbine warehouse, providing liquidity for at least 12 months. Project-level financing is underwritten to future cash flows unlocked by tenant commitments, and technical diligence is progressing.

    05

    REIT Election and Shareholder Considerations

    Fermi intends to elect REIT status for FY25, aligning with its long-duration infrastructure assets. Due to expected non-cash depreciation, material REIT taxable income and dividends are not anticipated in the near term. The expiration of the IPO lockup agreement and the need to comply with REIT 550 rules will necessitate an orderly sell-down of management's significant ownership stake (38% owned by CEO's family), with the CEO aiming for an accretive block sale.

    06

    Modular MEP and Supply Chain Focus

    Recognizing the MEP bottleneck for tenants, Fermi is increasingly focused on modular MEP solutions, drawing on its experience from the oil and gas business. The company is bringing in expertise to diligence and engage with clients' supply chains for MEP, aiming to accelerate tenant readiness and deployment of power. Management believes modular MEP will be transformational and much more cost-effective than traditional stick building.

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