Northern Data Group — First European provider of NVIDIA’s H200 GPUs

Northern Data Group (XETRA: NB2)

Last close As at 17/07/2024

EUR21.20

−0.15 (−0.70%)

Market capitalisation

EUR1,143m

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Research: TMT

Northern Data Group — First European provider of NVIDIA’s H200 GPUs

Northern Data has acquired 2,000 NVIDIA H200 graphic processing units (GPUs) through a newly formed strategic partnership with Supermicro, an established provider of high-performance computing (HPC) server and storage solutions. Taiga Cloud, Northern Data’s cloud platform, will be the first in Europe to offer access to H200 GPU hardware, the most advanced GPUs currently available, demonstrating management’s commitment to be a leading innovator in the European HPC market. Delivery and deployment of these H200 GPUs is expected in Q424. The acquisition enhances Northern Data’s GPU capacity beyond its planned deployment of 20,000 NVIDIA H100 GPUs in FY24, solidifying its position as Europe’s largest AI hardware cluster and cloud service provider. At the end of June management confirmed that for FY23, revenue is expected to be towards the top end of its €65–€75m range, while adjusted EBITDA is anticipated at the higher end of the negative €20m to negative €5m range. For FY24, management expects revenue within a €200–240m range, underpinning its confidence in achieving FY25 revenues of €520–570m.

Written by

Milo Bussell

Analyst, Consumer and TMT

TMT

Northern Data Group

First European provider of NVIDIA’s H200 GPUs

Company update

Tech hardware and equipment

4 July 2024

Price

€28.50

Market cap

€1,525m

Net cash (€m) at 31 December 2022

39.9

Shares in issue

53.5m

Free float

100%

Code

NB2

Primary exchange

Frankfurt

Secondary exchange

N/A

Share price performance

Business description

Northern Data Group is a German-listed company, operating highly energy-efficient data centres across Europe and the US. The group is pivoting from a pure-play cryptocurrency miner into a diversified provider of high-performance computing solutions. Its updated strategy was marked with the launch of three new divisions: Peak Mining, Ardent Data Centers and Taiga Cloud, with each targeting a different area of the value chain.

Analysts

Milo Bussell

+44 (0)20 3077 5700

Dan Ridsdale

+44 (0)20 3077 5700

Northern Data Group is a research client of Edison Investment Research Limited

Northern Data has acquired 2,000 NVIDIA H200 graphic processing units (GPUs) through a newly formed strategic partnership with Supermicro, an established provider of high-performance computing (HPC) server and storage solutions. Taiga Cloud, Northern Data’s cloud platform, will be the first in Europe to offer access to H200 GPU hardware, the most advanced GPUs currently available, demonstrating management’s commitment to be a leading innovator in the European HPC market. Delivery and deployment of these H200 GPUs is expected in Q424. The acquisition enhances Northern Data’s GPU capacity beyond its planned deployment of 20,000 NVIDIA H100 GPUs in FY24, solidifying its position as Europe’s largest AI hardware cluster and cloud service provider. At the end of June management confirmed that for FY23, revenue is expected to be towards the top end of its €65–€75m range, while adjusted EBITDA is anticipated at the higher end of the negative €20m to negative €5m range. For FY24, management expects revenue within a €200–240m range, underpinning its confidence in achieving FY25 revenues of €520–570m.

Year end

Revenue (€m)

Adjusted EBITDA (€m)

PBT*
(€m)

EPS*
(€)

P/sales
(x)

P/E
(x)

12/20

16.4

(12.3)

(83.0)

(7.3)

93.1

N/A

12/21

189.9

89.6

342.1

13.2

8.0

2.2

12/22

193.3

42.4

(251.6)

(10.6)

7.9

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

The acquisition of the 2,000 H200 GPUs through Supermicro GPU servers will mean Northern Data will be the first provider of H200 hardware in Europe, with the largest AI hardware cluster in the region. The NVIDIA H200 Tensor Core GPU has almost doubled the capacity of its H100 Tensor Core GPU predecessor with 1.4x more memory bandwidth, operating at 4.8 terabytes per second and with 141 gigabytes of HBM3e memory. The H200 has up to two times the inference performance on large language models while operating at 50% greater energy and cost efficiency when compared to the H100. NVIDIA stated in November 2023 that the H200 would be shipped in Q224, making it the most advanced GPU currently available on the market. The purchase underpins management’s focus on being the leading HPC and AI-cloud infrastructure provider in Europe, while its status as an NVIDIA Elite Partner ensures it can provide the most advanced generative AI technology.

We expect to initiate forecasts after the publication of Northern Data’s FY23 annual report, scheduled for 12 July.

General disclaimer and copyright

This report has been commissioned by Northern Data Group and prepared and issued by Edison, in consideration of a fee payable by Northern Data Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Northern Data Group and prepared and issued by Edison, in consideration of a fee payable by Northern Data Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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