Group 1: Blockchain Stocks Overview - Blockchain stocks provide a diversified exposure to the cryptocurrency market, allowing investors to avoid regulatory and liquidity issues associated with direct cryptocurrency investments [1] - The upcoming Bitcoin halving event is expected to drive interest in blockchain stocks, making it a strategic time for investment [1] Group 2: Mastercard (MA) - Mastercard is leveraging blockchain technology to enhance financial transactions, focusing on security and efficiency through strategic partnerships [2] - The company's Provenance solution aims to increase transparency across industries, while its Start Path program supports blockchain startups [2] - Mastercard continues to show double-digit growth in its business and has maintained a growing dividend for 17 consecutive years [3] Group 3: CleanSpark (CLSK) - CleanSpark is a leading Bitcoin miner, planning to double its operational hash rates to 20 EH/s by mid-2024, positioning itself well for the upcoming halving event [4] - The company aims to secure 160,000 S21 miners to achieve a new standard of 50 EH/s, enhancing mining efficiency and investor confidence [5] - CleanSpark's proactive strategy is expected to capitalize on the anticipated post-halving bull market [5] Group 4: Applied Digital Corporation (APLD) - Applied Digital focuses on high-capacity computing and AI, recently selling its BTC mining campus to concentrate on data centers [6] - The company has experienced triple-digit sales growth and is projected to grow sales by over 200% in the coming years [6][7] - The rebranding from Applied Blockchain to Applied Digital signifies a strategic shift to dominate the data center space, aligning with the growing demand for advanced computing infrastructure [7]

Core Insights - Applied Digital (NASDAQ: APLD) reported a significant earnings miss for fiscal Q3 2024, with adjusted earnings per share at -24 cents, compared to the expected -7 cents and a prior year result of -1 cent [1] - The company's revenue for the quarter was $43.35 million, falling short of analysts' expectations of $51.92 million, although it represented a 208% increase year-over-year from $14.09 million [1][2] Financial Performance - Adjusted earnings per share: -24 cents vs. expected -7 cents and -1 cent from the previous year [1] - Revenue: $43.35 million vs. expected $51.92 million, but up 208% year-over-year from $14.09 million [1][2] Stock Market Reaction - APLD stock fell 5.5% following the earnings report, contributing to a year-to-date decline of 55.9% as of the previous day's close [3] - Trading volume was approximately 216,000 shares, significantly below the daily average of about 3.5 million shares [3]

Financial Data and Key Metrics Changes - Revenues for Q3 2024 were $43.3 million, up from $14.1 million in Q3 2023, driven by increased capacity in data center hosting and cloud services contracts [16] - Adjusted EBITDA loss was approximately $2.3 million, compared to an adjusted EBITDA of $0.9 million in Q3 2023 [19] - Net loss for Q3 2024 was $62.8 million, or $0.52 per share, compared to a net loss of $7 million, or $0.07 per share, in Q3 2023 [17][18] Business Line Data and Key Metrics Changes - Data center hosting segment generated $37.7 million in revenue, while cloud services segment generated $5.6 million [16] - The cloud services business reported a 21.6% operating loss, including $16.5 million in depreciation and amortization expenses [18] Market Data and Key Metrics Changes - The Ellendale facility was reenergized to approximately 14% of its full capacity, with expectations to reach 65% to 75% by the end of May 2024 [10] - The company maintained 280 megawatts of data center hosting capacity across two fully contracted locations in North Dakota [10] Company Strategy and Development Direction - The company is focusing on high-performance computing (HPC) and cloud services, with a strategic decision to divest the Garden City facility to optimize asset portfolio [10][11] - A letter of intent was executed with a US-based hyperscaler for 400 megawatts of capacity at the Ellendale campus, which includes the current 100-megawatt facility [7][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges due to power outages at the Ellendale facility but expressed confidence in growth initiatives and positive trends across the business [6][13] - The company is pursuing remedies to recoup lost revenues and additional costs incurred due to outages [15] Other Important Information - The company ended Q3 2024 with $41 million in cash and $61.8 million in debt, with plans to improve cash position through asset sales and financing transactions [19][20] - The company is in the process of securing a large debt facility for cloud services to fund GPU purchases, with a potential size in the multi-hundred million range [21][31] Q&A Session Summary Question: Are the Ellendale and Jamestown assets strategic and will they be sold? - Management confirmed that these assets are strategic and have no immediate plans to sell them [26] Question: What is the status of the 600 megawatts of future capacity? - The 600 megawatts includes the current B2C business, with 535 megawatts secured at the site [28] Question: Can you provide details on the 400 megawatt hyperscaler contract? - The 400 megawatts is inclusive of the previously announced 100 megawatts, and the original customer did not proceed [34] Question: What is the timeline for the new transformers at Ellendale? - All transformers have been procured and will be on-site within weeks, with ramp-up expected to proceed smoothly [44] Question: How many GPUs are generating revenue currently? - As of the end of February, 4,000 GPUs were generating revenue, with an additional 2,000 expected to be operational by the end of May [49][60] Question: What is the expected run rate for GPUs exiting May? - The expected run rate could be between 6,000 and 8,000 GPUs generating revenue [60] Question: What is the status of financing for the Ellendale facility? - Financing is expected to be secured with the execution of the lease on the current 100-megawatt building [23][64]

Part I - Financial Information This part presents the company's unaudited condensed consolidated financial statements and management's analysis of financial condition [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes for the three and nine months ended February 29, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and stockholders' equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | ASSETS | Feb 29, 2024 | May 31, 2023 | | :--------------------------- | :----------- | :----------- | | Cash and cash equivalents | $4,435 | $28,999 | | Restricted cash | $29,545 | $14,575 | | Current assets held for sale | $65,369 | — | | Total current assets | $105,701 | $45,668 | | TOTAL ASSETS | $643,168 | $263,957 | | LIABILITIES | | | | Accounts payable | $93,918 | $6,446 | | Total current liabilities | $349,160 | $115,460 | | Total liabilities | $524,680 | $194,278 | | Total stockholders' equity | $118,488 | $69,679 | - Total assets significantly increased from **$263.96 million** at May 31, 2023, to **$643.17 million** at February 29, 2024, primarily driven by increases in property and equipment, operating and finance lease right-of-use assets, and current assets held for sale[9](index=9&type=chunk) - Total liabilities also saw a substantial increase from **$194.28 million** to **$524.68 million** over the same period, largely due to higher accounts payable, current and long-term lease liabilities, and current portion of debt[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, costs, and net loss for the three and nine months ended February 29, 2024 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :----------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenue | $43,348 | $14,090 | $121,876 | $33,354 | | Total costs and expenses | $99,170 | $21,079 | $193,296 | $71,229 | | Operating loss | $(55,822) | $(6,989) | $(71,420) | $(37,875) | | Net loss attributable to Applied Digital Corp. | $(62,838) | $(7,025) | $(84,824) | $(38,173) | | Basic and diluted net loss per share | $(0.52) | $(0.07) | $(0.77) | $(0.41) | - Total revenue for the three months ended February 29, 2024, increased by **207% YoY** to **$43.3 million**, and for the nine months, it increased by **265% YoY** to **$121.9 million**, primarily due to increased capacity and the launch of Cloud services[11](index=11&type=chunk) - The company reported a significant increase in net loss attributable to Applied Digital Corporation, reaching **$(62.8) million** for the three months and **$(84.8) million** for the nine months ended February 29, 2024, compared to **$(7.0) million** and **$(38.2) million** in the prior year periods, respectively. This was largely driven by increased costs of revenue, selling, general and administrative expenses, and a **$21.7 million** loss on classification of assets held for sale[11](index=11&type=chunk)[123](index=123&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in stockholders' equity, including net loss, stock offerings, and stock-based compensation Key Changes in Stockholders' Equity (in thousands) | Metric | Nine Months Ended Feb 29, 2024 | | :-------------------------------------- | :----------------------------- | | Balance, May 31, 2023 | $69,679 | | Shares issued in offering, net of costs | $121,002 | | Stock-based compensation | $13,634 | | Net loss | $(85,221) | | Extinguishment of noncontrolling interest | $9,765 | | Balance, February 29, 2024 | $118,488 | - Total stockholders' equity increased from **$69.7 million** at May 31, 2023, to **$118.5 million** at February 29, 2024, primarily due to **$121.0 million** in net proceeds from common stock offerings and **$13.6 million** in stock-based compensation, partially offset by a net loss of **$85.2 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $47,896 | $54,144 | | Net cash used in investing activities | $(122,518) | $(96,314) |\n| Net cash provided by financing activities | $72,028 | $18,792 | | Net decrease in cash, cash equivalents, and restricted cash | $(2,594) | $(23,378) | | Cash, cash equivalents, and restricted cash, end of period | $40,980 | $22,921 | - Net cash provided by operating activities decreased by **$6.2 million (12%)** to **$47.9 million** for the nine months ended February 29, 2024, mainly due to decreased revenue prepayments and increased operating lease payments, partially offset by a large increase in accounts payable[165](index=165&type=chunk) - Net cash used in investing activities increased by **$26.2 million** to **$122.5 million**, primarily driven by higher finance lease prepayments for Cloud services equipment, despite a decrease in property and equipment investments compared to the prior year's datacenter construction[166](index=166&type=chunk) - Net cash provided by financing activities significantly increased by **$53.2 million (283%)** to **$72.0 million**, largely due to proceeds from common stock offerings and related party debt, partially offset by increased debt and finance lease repayments[167](index=167&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's business, accounting policies, and significant financial events [1. Business and Organization](index=9&type=section&id=1.%20Business%20and%20Organization) This note describes Applied Digital Corporation's business model, operating segments, and digital infrastructure solutions - Applied Digital Corporation designs, builds, and operates digital infrastructure, offering cost-competitive solutions across three reportable segments: Cloud services, high-performance compute (HPC) hosting, and datacenter hosting[19](index=19&type=chunk)[28](index=28&type=chunk) [2. Basis of Presentation and Significant Accounting Policies](index=9&type=section&id=2.%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This note outlines the financial statement preparation basis, key accounting policies, and reclassifications - The interim unaudited condensed consolidated financial statements are prepared in accordance with SEC rules and GAAP, requiring management estimates and assumptions, particularly for deferred tax assets valuation[20](index=20&type=chunk)[22](index=22&type=chunk) - Revenue recognition follows ASC 606, with datacenter hosting revenue recognized over the service term based on fixed rates, and cloud services revenue also recognized over the term for managed cloud infrastructure[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company reclassified certain prior period balance sheet and income statement amounts to conform to current period presentation, including separating 'Accounts payable and accrued expenses' and reclassifying 'Restricted cash' and 'Interest income', with no impact on net income, cash flows, or total assets/liabilities[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [3. Property and Equipment](index=11&type=section&id=3.%20Property%20and%20Equipment) This note details the company's property and equipment, including depreciation expenses and asset abandonments Property and Equipment, Net (in thousands) | Category | Feb 29, 2024 | May 31, 2023 | | :---------------------------------------- | :----------- | :----------- | | Total cost of property and equipment | $222,741 | $200,533 | | Accumulated depreciation | $(11,569) | $(4,940) | | Property and equipment, net | $211,172 | $195,593 | - Depreciation expense significantly increased to **$7.9 million** for the three months and **$12.9 million** for the nine months ended February 29, 2024, compared to **$0.9 million** and **$2.6 million** in the prior year, reflecting increased owned and leased assets[40](index=40&type=chunk) - The company recognized **$2.8 million** in accelerated depreciation and **$1.4 million** in accelerated amortization for the three months ended February 29, 2024, related to the abandonment of certain transformers at its Ellendale datacenter facility, recorded within Cost of revenues[41](index=41&type=chunk) [4. Revenue from Contracts with Customers](index=12&type=section&id=4.%20Revenue%20from%20Contracts%20with%20Customers) This note provides details on revenue concentration, deferred revenue, and recognition policies Revenue Concentration by Major Customers | Customer | Three Months Ended Feb 29, 2024 | Nine Months Ended Feb 29, 2024 | | :--------- | :------------------------------ | :----------------------------- | | Customer A | 68% | 69% | | Customer G | 10% | — | Deferred Revenue (in thousands) | Metric | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :---------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of period | $48,692 | $3,877 | | Advance billings | $129,044 | $76,961 | | Revenue recognized | $(121,875) | $(33,354) | | Balance, end of period | $63,121 | $45,184 | - Deferred revenue increased to **$63.1 million** at February 29, 2024, from **$48.7 million** at the beginning of the nine-month period, driven by **$129.0 million** in advance billings[44](index=44&type=chunk) [5. Related Party Transactions](index=13&type=section&id=5.%20Related%20Party%20Transactions) This note discloses transactions with related parties, including revenue, debt, and loan extinguishments Related Party Revenue (in thousands) | Customer | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :--------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Customer D | $1,662 | $2,250 | $5,980 | $5,690 | | Customer E | $1,402 | $1,786 | $4,903 | $4,525 | - Related party revenue decreased by **$0.9 million (24%)** for the three months ended February 29, 2024, but increased by **$0.7 million (7%)** for the nine months, primarily due to reduced uptime and pricing for Customer D and E in the shorter period, offset by increased uptime at Jamestown facility over the longer period[46](index=46&type=chunk)[121](index=121&type=chunk)[128](index=128&type=chunk) - The company early repaid a **$44.5 million** B. Riley Loan during the nine months ended February 29, 2024, incurring a **$2.4 million** loss on debt extinguishment, and subsequently terminated the loan agreement[48](index=48&type=chunk)[49](index=49&type=chunk) - An Unsecured Promissory Note (AI Bridge Loan) of up to **$20.0 million** was issued on January 30, 2024, with **$15.0 million** funded immediately, bearing **12.5%** interest. The company recognized a **$2.6 million** loss on change in fair value of this debt[50](index=50&type=chunk)[52](index=52&type=chunk) [6. Debt](index=14&type=section&id=6.%20Debt) This note details the company's long-term debt, including various loan instruments and reclassifications Long-term Debt Components (in thousands) | Debt Instrument | Interest Rate | Maturity Date | Feb 29, 2024 | May 31, 2023 | | :---------------------- | :------------ | :------------ | :----------- | :----------- | | Starion term loan | 6.50% | July 25, 2027 | $10,730 | $12,786 | | Vantage Garden City loan | 6.15% | April 26, 2028 | $12,757 | $10,074 | | Starion Ellendale loan | 7.48% | Feb 3, 2028 | $17,079 | $19,728 | | Vantage transformer loan | 6.50% | Feb 8, 2029 | $3,660 | — | | Long-term debt, net | | | $24,845 | $33,222 | - Total long-term debt, net, decreased from **$33.2 million** at May 31, 2023, to **$24.8 million** at February 29, 2024, despite new borrowings like the Vantage Transformer Loan (**$3.7 million**)[57](index=57&type=chunk) - The **$12.8 million** outstanding balance on the Vantage Garden City loan was reclassified to current portion of long-term debt due to plans to sell the Garden City facility, making the loan callable[60](index=60&type=chunk) - The company entered into a **$16.0 million** Cornerstone Bank Loan on February 28, 2024, and a **$3.7 million** Vantage Transformer Loan on February 8, 2024, to finance property improvements and a transformer for its Ellendale HPC location, respectively[61](index=61&type=chunk)[62](index=62&type=chunk) [7. Stockholders' Equity](index=15&type=section&id=7.%20Stockholders'%20Equity) This note outlines changes in stockholders' equity, including stock-based compensation and common stock offerings - The company recognized **$3.2 million** and **$13.6 million** in stock-based compensation for the three and nine months ended February 29, 2024, respectively, under its equity incentive plans[64](index=64&type=chunk) - During the nine months ended February 29, 2024, the company completed an 'at the market' common stock offering, selling approximately **18.9 million** shares for net proceeds of **$121.0 million**[67](index=67&type=chunk) - On August 31, 2023, the noncontrolling interest in 1.21 Gigawatts LLC was extinguished, with the minority partner exchanging their interest for approximately **1.5 million** shares of the company's common stock, valued at **$9.8 million**[68](index=68&type=chunk) [8. Fair Value Measurements](index=17&type=section&id=8.%20Fair%20Value%20Measurements) This note explains fair value measurements, particularly for the AI Bridge Loan and related losses - The AI Bridge Loan is measured at fair value due to an accelerated redemption feature, resulting in a **$2.6 million** loss on change in fair value of debt for the three and nine months ended February 29, 2024[71](index=71&type=chunk)[52](index=52&type=chunk) Fair Value of AI Bridge Loan (in thousands) | Debt instrument | Fair Value Hierarchy | Outstanding Principal | Fair Value | | :-------------- | :------------------- | :-------------------- | :--------- | | AI Bridge Loan | Level 3 | $15,000 | $17,612 | [9. Leases](index=17&type=section&id=9.%20Leases) This note details the company's lease costs, including operating and finance leases, and future commitments Total Net Lease Cost (in thousands) | Lease Type | Three Months Ended Feb 29, 2024 | Nine Months Ended Feb 29, 2024 | | :------------------ | :------------------------------ | :----------------------------- | | Total operating lease cost | $5,215 | $8,226 | | Total finance lease cost | $21,603 | $40,834 | | Total net lease cost | $26,843 | $49,115 | - Total net lease cost significantly increased to **$26.8 million** for the three months and **$49.1 million** for the nine months ended February 29, 2024, compared to **$1.4 million** and **$3.1 million** in the prior year periods, primarily due to increased finance lease amortization and interest on lease liabilities[73](index=73&type=chunk) - The company has executed but not yet commenced leases with total minimum payments of approximately **$120.7 million**, with terms ranging from 2 to 6.7 years[74](index=74&type=chunk) [10. Commitments and Contingencies](index=18&type=section&id=10.%20Commitments%20and%20Contingencies) This note discloses significant commitments, legal proceedings, and potential financial impacts - The company has a minimum commitment of approximately **$82.2 million** related to an energy services agreement for its Jamestown facility, with a remaining term of about 2.9 years[75](index=75&type=chunk) - Applied Digital, its CEO, and CFO are defendants in a securities class action lawsuit and a derivative action, both alleging false or misleading statements and breaches of fiduciary duties. The company is currently unable to estimate potential losses but does not expect a material adverse effect on operations or financial position[77](index=77&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - A **$2.3 million** loss from legal settlement was recognized for the nine months ended February 29, 2024, related to employment-related claims by a former executive[82](index=82&type=chunk)[132](index=132&type=chunk) [11. Business Segments](index=19&type=section&id=11.%20Business%20Segments) This note provides financial performance details for the datacenter hosting, cloud services, and HPC hosting segments Revenue by Segment (in thousands) | Segment | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Datacenter hosting | $37,795 | $14,090 | $109,720 | $33,354 | | Cloud services | $5,553 | — | $12,156 | — | | Total revenue | $43,348 | $14,090 | $121,876 | $33,354 | Segment Loss (in thousands) | Segment | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Datacenter hosting | $(24,443) | $(3,117) | $(4,647) | $(18,218) | | Cloud services | $(21,565) | $(741) | $(40,694) | $(741) | | HPC hosting | $(1,445) | $(18) | $(3,106) | $(18) | | Total segment loss | $(47,453) | $(3,876) | $(48,447) | $(18,977) | - Datacenter hosting revenue increased significantly, while its operating loss widened for the three months due to the Garden City facility's held-for-sale classification and accelerated depreciation at Ellendale. However, for the nine months, the datacenter hosting operating loss decreased due to full operations at Ellendale and Garden City[83](index=83&type=chunk)[85](index=85&type=chunk)[138](index=138&type=chunk)[142](index=142&type=chunk) - Cloud services generated **$5.6 million** in revenue for the three months and **$12.2 million** for the nine months ended February 29, 2024, but incurred substantial operating losses of **$(21.6) million** and **$(40.7) million**, respectively, as the segment ramps up operations, driven by amortization of finance leases and occupancy costs[83](index=83&type=chunk)[85](index=85&type=chunk)[140](index=140&type=chunk)[143](index=143&type=chunk) - HPC hosting reported no revenue but significant operating losses of **$(1.4) million** for the three months and **$(3.1) million** for the nine months, primarily from stock-based compensation, payroll, and finance lease amortization as the company ramps up its operations[83](index=83&type=chunk)[85](index=85&type=chunk)[141](index=141&type=chunk)[144](index=144&type=chunk) [12. Earnings Per Share](index=21&type=section&id=12.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted net loss per share for the reporting periods Basic and Diluted Net Loss Per Share | Metric | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :----------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss attributable to Applied Digital Corp. | $(62,838) | $(7,025) | $(84,824) | $(38,173) | | Basic and diluted net loss per share | $(0.52) | $(0.07) | $(0.77) | $(0.41) | | Weighted average number of shares outstanding | 121,426,622 | 94,119,944 | 110,500,556 | 93,545,687 | - Basic and diluted net loss per share increased to **$(0.52)** for the three months and **$(0.77)** for the nine months ended February 29, 2024, compared to **$(0.07)** and **$(0.41)** in the prior year periods, reflecting the higher net losses and increased weighted average shares outstanding[88](index=88&type=chunk) [13. Assets Held for Sale](index=21&type=section&id=13.%20Assets%20Held%20for%20Sale) This note describes the classification of the Garden City facility as held for sale and related financial impacts - The company's board approved plans to sell its Garden City facility, classifying it as 'held for sale' as of February 29, 2024, and recording a **$21.7 million** loss on classification to fair value less costs to sell[89](index=89&type=chunk)[90](index=90&type=chunk) Assets and Liabilities Held for Sale (in thousands) | Category | Amount | | :------------------------------ | :----------- | | Property and equipment, net | $57,260 | | Finance lease right of use assets | $8,109 | | Total assets held for sale | $65,369 | | Current portion of finance lease liability | $3,657 | | Long-term portion of finance lease liability | $4,622 | | Total liabilities held for sale | $8,279 | - The sale agreement for the Garden City facility, entered into on March 14, 2024, has a total potential cash consideration of **$87.3 million**, including a **$34.0 million** contingent amount based on regulatory approval for additional energy capacity, which was not considered probable for fair value calculation as of February 29, 2024[89](index=89&type=chunk)[92](index=92&type=chunk) [14. Subsequent Events](index=22&type=section&id=14.%20Subsequent%20Events) This note reports significant events occurring after the reporting period, including loan fundings and asset sales - On March 1, 2024, the company received **$15.7 million** in funding (net of fees) under the Cornerstone Bank Loan[94](index=94&type=chunk) - Subsequent to quarter-end, the remaining **$5 million** under the AI Bridge Loan was borrowed, bringing the total outstanding to **$20.0 million**. An amendment on March 27, 2024, waived prepayment obligations and increased the repayment fee to **1.30x** the principal[95](index=95&type=chunk)[96](index=96&type=chunk) - The Garden City facility sale closed on April 1, 2024, and the company entered into a Prepaid Advance Agreement with YA II PN, LTD. on March 27, 2024, for up to **$50.0 million** via two convertible unsecured promissory notes, with the first **$40.0 million** note issued for approximately **$38.0 million** cash[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, results of operations, liquidity, and non-GAAP measures for the reported periods [Forward-Looking Statements](index=24&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements regarding future expectations, projections of results, and financial positions, which are subject to substantial risks and uncertainties, and actual results may differ materially[101](index=101&type=chunk)[102](index=102&type=chunk) [Executive Overview](index=24&type=section&id=Executive%20Overview) This section provides an overview of Applied Digital Corporation's business and the impact of the regulatory environment - Applied Digital Corporation operates in high-performance compute (HPC) hosting, cloud services, and datacenter hosting, providing digital infrastructure solutions[105](index=105&type=chunk) - The company's business is significantly affected by the regulatory environment, particularly for crypto mining customers, with evolving and uncertain laws that could impact operations and revenue[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Business Update](index=25&type=section&id=Business%20Update) This section provides updates on datacenter operations, asset sales, and the progress of Cloud and HPC services - The Jamestown datacenter operated at full capacity, but the Ellendale facility experienced a power outage in January, with re-energization to **14% capacity (25 MW)** and a target of **65%-75%** by May 2024 after transformer replacements[111](index=111&type=chunk) - The Garden City facility increased energy capacity to **132 MW** but was classified as held for sale, resulting in a **$21.7 million** loss, with a purchase agreement for up to **$87.3 million** cash consideration and an additional **$10.0 million** from surrendered prepayments[112](index=112&type=chunk)[113](index=113&type=chunk) - Cloud Services began generating revenue near the end of the quarter, with expectations for positive financial impact in the fiscal fourth quarter, while HPC hosting broke ground on its first **100 MW** facility in Ellendale and is in advanced discussions for a **400 MW** capacity lease with a US-based hyperscaler[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue, costs, operating loss, and other financial results for the periods Key Financial Results (in thousands, except per share data) | Metric | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :----------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenue | $43,348 | $14,090 | $121,876 | $33,354 | | Total costs and expenses | $99,170 | $21,079 | $193,296 | $71,229 | | Operating loss | $(55,822) | $(6,989) | $(71,420) | $(37,875) | | Net loss attributable to Applied Digital Corp. | $(62,838) | $(7,025) | $(84,824) | $(38,173) | | Basic and diluted net loss per share | $(0.52) | $(0.07) | $(0.77) | $(0.41) | - Total revenue increased by **207%** for the three months and **265%** for the nine months ended February 29, 2024, driven by increased datacenter capacity and the launch of Cloud services[120](index=120&type=chunk)[127](index=127&type=chunk) - Cost of revenues increased by **347%** for the three months and **259%** for the nine months, primarily due to higher energy costs, depreciation, and personnel expenses as more facilities were energized and services provided[122](index=122&type=chunk)[129](index=129&type=chunk) - Selling, general and administrative expenses rose by **188%** for the three months and **57%** for the nine months, mainly due to increased depreciation, lease expenses for unutilized datacenter space, and professional service fees, partially offset by a decrease in stock-based compensation for the nine-month period[122](index=122&type=chunk)[124](index=124&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Operating loss significantly widened to **$(55.8) million** for the three months and **$(71.4) million** for the nine months, largely impacted by a **$21.7 million** loss on classification of assets held for sale and a **$2.4 million** loss from legal settlement[118](index=118&type=chunk)[123](index=123&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Interest expense, net, increased substantially by **1151%** for the three months and **733%** for the nine months, driven by higher finance leases and interest-bearing debt[125](index=125&type=chunk)[133](index=133&type=chunk) - A **$2.6 million** loss on change in fair value of related party debt was recognized for both periods due to the AI Bridge Loan valuation, and a **$2.4 million** loss on extinguishment of debt was recorded for the nine months due to the B. Riley loan termination[126](index=126&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Non-GAAP Measures](index=31&type=section&id=Non-GAAP%20Measures) This section presents non-GAAP financial measures to provide additional insight into the company's performance - The company presents non-GAAP financial measures like Adjusted Operating Loss, Adjusted Net Loss, Adjusted Net Loss per Diluted Share, EBITDA, and Adjusted EBITDA to provide additional insight into performance by excluding one-time or significant non-cash items[145](index=145&type=chunk)[146](index=146&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Beginning in **Q3 2024**, the company updated its non-GAAP presentation, no longer excluding start-up costs from its adjusted measures[148](index=148&type=chunk) Adjusted Non-GAAP Financial Measures (in thousands, except per share data) | Metric | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :----------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Adjusted operating loss | $(24,507) | $(1,017) | $(26,021) | $(7,613) | | Adjusted net loss | $(28,911) | $(1,401) | $(34,857) | $(8,552) | | Adjusted net loss per diluted share | $(0.24) | $(0.01) | $(0.32) | $(0.09) | | Adjusted EBITDA | $(2,346) | $909 | $17,423 | $(3,076) | [Sources of Liquidity](index=34&type=section&id=Sources%20of%20Liquidity) This section details the company's cash position, historical funding sources, and post-quarter liquidity events - As of February 29, 2024, the company had **$4.4 million** in unrestricted cash and cash equivalents and negative working capital of **$243.5 million**[155](index=155&type=chunk) - The company has historically relied on equity and debt financings, generating cash from term and related party loans, common stock issuance (**$121.0 million** net proceeds), and customer deposits/revenue payments[155](index=155&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk) - Post-quarter, the Garden City facility sale closed on April 1, 2024, yielding approximately **$61.1 million** in net cash proceeds, and the company received **$15.7 million** in funding from the Cornerstone Bank Loan[158](index=158&type=chunk)[159](index=159&type=chunk) [Funding Requirements](index=34&type=section&id=Funding%20Requirements) This section outlines the company's expected liquidity for the next 12 months and anticipated capital expenditures - The company expects sufficient liquidity for the next 12 months through cash on hand, customer payments, and access to debt and public capital markets, but acknowledges that estimates may be wrong, potentially requiring additional financing sooner[161](index=161&type=chunk) - General and administrative expenses and operating expenditures are expected to increase with continued expansion, particularly significant investments in property and equipment for HPC hosting facilities and Cloud services assets through fiscal year 2025[162](index=162&type=chunk) [Summary of Cash Flows](index=35&type=section&id=Summary%20of%20Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities for the nine-month periods Summary of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $47,896 | $54,144 | | Net cash used in investing activities | $(122,518) | $(96,314) | | Net cash provided by financing activities | $72,028 | $18,792 | | Net decrease in cash and cash equivalents | $(2,594) | $(23,378) | | Cash, cash equivalents, and restricted cash at end of period | $40,980 | $22,921 | - Operating cash flow decreased by **$6.2 million (12%)** due to lower revenue prepayments and higher operating lease payments, partially offset by increased accounts payable[165](index=165&type=chunk) - Investing cash flow increased by **$26.2 million (27%)** in usage, primarily due to higher finance lease prepayments for Cloud services equipment[166](index=166&type=chunk) - Financing cash flow increased by **$53.2 million (283%)** in provision, driven by common stock offering proceeds and related party debt, partially offset by increased debt and finance lease repayments[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company - The company has no applicable quantitative and qualitative disclosures about market risk[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to material weaknesses, with remediation efforts underway - Management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of February 29, 2024, due to material weaknesses[169](index=169&type=chunk) - Identified material weaknesses include: * Lack of controls to ensure accurate recording, processing, summarizing, and reporting of financial data * Ineffective user access controls for segregation of duties and restricted access to financially relevant systems * Inadequate controls for identifying and disclosing related party transactions * Absence of a properly designed internal control system to identify critical processes and key controls[171](index=171&type=chunk) - Remediation steps include: * Hiring additional qualified accounting and financial reporting personnel * Implementing specific controls for related party relationships and disclosures * Developing IT general controls for access and program changes * Implementing processes to better identify and manage segregation of duties[171](index=171&type=chunk) Part II - Other Information This part includes legal proceedings, risk factors, and other required disclosures [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a securities class action lawsuit and a derivative action, both alleging false or misleading statements and breaches of fiduciary duties. While the company cannot estimate potential losses, it does not currently expect a material adverse effect on its results of operations or financial position - The company, its CEO, and CFO are defendants in a securities class action lawsuit (McConnell v. Applied Digital Corporation, et al.) filed in August 2023, alleging false or misleading statements regarding business, operations, and compliance policies[175](index=175&type=chunk) - A derivative action (Weich v. Cummins, et al.) was filed in November 2023 against certain Board members, CEO, and CFO, asserting claims for breaches of fiduciary duties, unjust enrichment, and corporate waste based on similar allegations as the securities lawsuit[176](index=176&type=chunk) - The company is currently unable to estimate potential losses from these actions but does not expect a material adverse effect on its results of operations or financial position, though outcomes are subject to uncertainties[175](index=175&type=chunk)[176](index=176&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new or emphasized risks, including reliance on third parties, supply chain, regulatory changes, and pricing pressure - Key risk factors include: * **Reliance on Third Parties**: Dependence on third-party manufacturers for essential equipment (electrical infrastructure, GPUs) poses risks if timely delivery or quality standards are not met * **Supply Chain Efficiency**: Failure to maintain supply chain efficiency for timely facility and equipment availability could lead to customer loss * **Regulatory Developments**: The rapidly evolving regulatory landscape for HPC, AI, and blockchain hosting services, including concerns about ethical implications and potential misuse of AI, may significantly impact business operations * **Commoditization and Pricing Pressure**: The continuing commoditization of HPC hardware and software is increasing pricing pressure, which could negatively affect gross margins and operating results[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report - There were no unregistered sales of equity securities or use of proceeds to report[187](index=187&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there are no defaults upon senior securities to report - There are no defaults upon senior securities to report[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[189](index=189&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report - There is no other information to report[190](index=190&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - Key exhibits include: * 31.1*: Chief Executive Officer's Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2*: Chief Financial Officer's Certificate Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 32.1**: Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 32.2**: Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * 101.INS*: Inline XBRL Instance Document * 104*: Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)[192](index=192&type=chunk) [Signatures](index=40&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the filing of the report on behalf of Applied Digital Corporation - The report is signed by Wesley Cummins, Chief Executive Officer and Chairman of the Board of Directors, and David Rench, Chief Financial Officer, on April 11, 2024[198](index=198&type=chunk)

[Financial and Operational Highlights](index=1&type=section&id=Fiscal%20Third%20Quarter%202024%20Financial%20and%20Operational%20Highlights) Applied Digital reported $43.3 million revenue and a $2.3 million Adjusted EBITDA loss in Q3 FY2024, while strengthening its balance sheet and securing a 400 MW LOI post-quarter Q3 FY2024 Financial Highlights | Metric | Value | | :--- | :--- | | Total Revenue | $43.3 million | | Adjusted EBITDA | -$2.3 million | - Post-quarter, the company secured **$160 million** through asset sales and financing transactions to significantly strengthen its balance sheet[3](index=3&type=chunk) - Entered into an exclusivity and letter of intent (LOI) with a US-based hyperscaler for a **400 MW** capacity lease at the Ellendale campus[3](index=3&type=chunk) - The company is incrementally restoring capacity at the Ellendale facility, targeting **65%-75% capacity** by the end of May 2024 following outages[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management acknowledged Q3 financial impacts from power outages but highlighted progress in Cloud Services and a pivotal 400 MW LOI for the Ellendale campus - Management acknowledged that facility power outages in the datacenter hosting business impacted financial performance during the quarter[4](index=4&type=chunk) - A key achievement was entering into an LOI with a US-based hyperscaler for a **400 MW** capacity lease at the Ellendale HPC campus, which includes the current **100 MW** facility and two future buildings[4](index=4&type=chunk) - The company strategically decided to divest its Garden City Facility and welcomed Together AI as a new Cloud Services customer[4](index=4&type=chunk) [Business Segment Updates](index=2&type=section&id=Business%20Segment%20Updates) Business segment updates include Cloud Services earnings drag, a 400 MW LOI for Ellendale HPC, and Ellendale datacenter recovery from power outages [Cloud Service Update](index=2&type=section&id=Cloud%20Service%20Update) Cloud Services earnings and EBITDA were negatively impacted by expenses from non-revenue-generating equipment, with positive financial impact expected in Q4 - Earnings were negatively impacted by expenses from increased levels of in-service equipment that were not yet generating revenue[6](index=6&type=chunk) - The company anticipates a positive impact on financial performance in the fiscal fourth quarter as more equipment began generating revenue near the end of Q3[6](index=6&type=chunk) [High-Performance Computing (HPC) Datacenter Hosting Update](index=2&type=section&id=High-Performance%20Computing%20%28HPC%29%20Datacenter%20Hosting%20Update) The company executed a 400 MW LOI with a US-based hyperscaler for its Ellendale HPC campus, covering current and future facilities, and is in advanced financing discussions - Executed a letter of intent (LOI) with a US-based hyperscaler for a **400 MW** capacity lease at the Ellendale, North Dakota campus[8](index=8&type=chunk) - The company is in advanced discussions with traditional financing counterparties for this investment-grade tenant[8](index=8&type=chunk) [Datacenter Hosting Update](index=2&type=section&id=Datacenter%20Hosting%20Update) Jamestown operated at full capacity, while the 180 MW Ellendale facility experienced a power outage due to transformer failures, targeting 65%-75% restoration by May 2024 - The **180 MW** facility in Ellendale, North Dakota experienced a power outage starting in January due to transformer failures[9](index=9&type=chunk) - The company has begun re-energization and targets restoring the Ellendale facility to approximately **65%-75%** of full capacity by the end of May 2024[9](index=9&type=chunk) [Financial Results (Fiscal Third Quarter 2024)](index=2&type=section&id=Financial%20Results%20%28Fiscal%20Third%20Quarter%202024%29) Q3 FY2024 revenue grew 208% to $43.3 million, but increased costs led to a $62.8 million net loss and a $2.3 million Adjusted EBITDA loss, with $41.0 million cash and $61.8 million debt at quarter-end [Balance Sheet](index=2&type=section&id=Balance%20Sheet) As of February 29, 2024, Applied Digital held **$41.0 million** in cash and equivalents, with **$61.8 million** in total debt outstanding Key Balance Sheet Items (as of Feb 29, 2024) | Metric | Value | | :--- | :--- | | Cash, cash equivalents, and restricted cash | $41.0 million | | Debt outstanding | $61.8 million | [Operating Results](index=2&type=section&id=Operating%20Results) Q3 FY2024 revenue grew 208% to $43.3 million, but increased costs led to a $62.8 million net loss and a $2.3 million Adjusted EBITDA loss, impacted by non-revenue-generating facilities Q3 FY2024 vs. Q3 FY2023 Operating Results | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $43.3M | $14.1M | +208% | | Cost of Revenues | $47.1M | $10.5M | +349% | | SG&A Expenses | $30.4M | $10.5M | +190% | | Net Loss | $(62.8)M | $(7.3)M | Increased Loss | | Net Loss per Share | $(0.52) | $(0.07) | Increased Loss | | Adjusted EBITDA | $(2.3)M | $0.9M | Decreased | - Adjusted net loss was **$28.9 million** (**$0.24** per share), negatively impacted by **$15.6 million** of expenses associated with facilities and equipment not yet generating revenue[15](index=15&type=chunk) [Cash Flows](index=3&type=section&id=Cash%20Flows) For the nine months ended February 29, 2024, net cash decreased by $2.6 million, with significant outflows for property, leases, and debt repayments, partially offset by operating cash, borrowings, and stock issuance - Primary uses of cash for the nine months ended Feb 29, 2024 included: - Purchase of property and equipment: **$87.0 million**[16](index=16&type=chunk) - Finance lease payments (prepayments and recurring): **$62.6 million**[16](index=16&type=chunk) - Debt repayments: **$52.3 million**[16](index=16&type=chunk) - Primary sources of cash for the nine months ended Feb 29, 2024 included: - Net cash from operating activities: **$47.9 million**[16](index=16&type=chunk) - Net cash from issuance of common stock: **$121.0 million**[16](index=16&type=chunk) - Borrowings (including related party): **$54.4 million**[16](index=16&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted Operating Loss, Adjusted Net Loss, and Adjusted EBITDA for operational insight, with a Q3 2024 update to exclude start-up costs from calculations - The company uses non-GAAP measures to facilitate comparison of past and present operations by excluding one-time or significant non-cash items[21](index=21&type=chunk) - A change in presentation was made in Q3 2024: the company no longer excludes start-up costs as an adjustment in its calculation of Adjusted operating loss, Adjusted net loss, and Adjusted EBITDA[24](index=24&type=chunk) - Adjusted EBITDA is defined as EBITDA adjusted for stock-based compensation, litigation expenses, non-recurring professional service and R&D costs, and various losses on asset sales, debt, and legal settlements[26](index=26&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) This section presents Applied Digital's unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Operations, Cash Flows, and GAAP to Non-GAAP reconciliations for specified periods [Condensed Consolidated Balance Sheets](index=8&type=section&id=APPLIED%20DIGITAL%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) Total assets grew to **$643.2 million** from **$264.0 million**, and total liabilities increased to **$524.7 million** from **$194.3 million** between May 2023 and February 2024 Condensed Consolidated Balance Sheets (in thousands) | | February 29, 2024 | May 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$643,168** | **$263,957** | | Total current assets | $105,701 | $45,668 | | Property and equipment, net | $211,172 | $195,593 | | **Total Liabilities** | **$524,680** | **$194,278** | | Total current liabilities | $349,160 | $115,460 | | **Total Stockholders' Equity** | **$118,488** | **$69,679** | [Condensed Consolidated Statements of Operations](index=9&type=section&id=APPLIED%20DIGITAL%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) For Q3 FY2024, total revenue was **$43.3 million** with a **$62.8 million** net loss; for the nine-month period, revenue was **$121.9 million** with an **$85.2 million** net loss Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | **$43,348** | **$14,090** | **$121,876** | **$33,354** | | Operating loss | $(55,822) | $(6,989) | $(71,420) | $(37,875) | | **Net loss attributable to Applied Digital** | **$(62,838)** | **$(7,025)** | **$(84,824)** | **$(38,173)** | | **Basic and diluted net loss per share** | **$(0.52)** | **$(0.07)** | **$(0.77)** | **$(0.41)** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=APPLIED%20DIGITAL%20CORPORATION%20AND%20SUBSIDIARIES%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) For the nine months ended February 29, 2024, net cash from operations was **$47.9 million**, investing activities used **$122.5 million**, and financing activities provided **$72.0 million**, primarily from stock issuance Condensed Statements of Cash Flows (in thousands) | | Nine Months Ended Feb 29, 2024 | Nine Months Ended Feb 28, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$47,896** | **$54,144** | | **Net cash used in investing activities** | **$(122,518)** | **$(96,314)** | | **Net cash provided by financing activities** | **$72,028** | **$18,792** | | Net decrease in cash | $(2,594) | $(23,378) | | Cash, end of period | $40,980 | $22,921 | [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=APPLIED%20DIGITAL%20CORPORATION%20AND%20SUBSIDIARIES%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures%20%28Unaudited%29) Q3 FY2024 GAAP Net Loss of **$62.8 million** was adjusted to a non-GAAP Adjusted Net Loss of **$28.9 million** and a non-GAAP Adjusted EBITDA of **-$2.3 million** after various adjustments Adjusted EBITDA Reconciliation - Q3 FY2024 vs Q3 FY2023 (in thousands) | | Three Months Ended Feb 29, 2024 | Three Months Ended Feb 28, 2023 | | :--- | :--- | :--- | | **Net loss (GAAP)** | **$(62,838)** | **$(7,341)** | | Interest expense, net | $4,404 | $352 | | Depreciation and amortization | $26,204 | $1,927 | | **EBITDA (Non-GAAP)** | **$(32,230)** | **$(5,062)** | | Stock-based compensation | $3,194 | $4,480 | | Loss on classification as held for sale | $21,723 | — | | Other adjustments | $5,000 | $1,491 | | **Adjusted EBITDA (Non-GAAP)** | **$(2,346)** | **$909** |

Core Viewpoint - Applied Digital Corporation has rescheduled its fiscal third quarter 2024 earnings conference call to April 11, 2024, at 5:00 p.m. Eastern time, with financial results to be released after market close on the same day [1]. Group 1 - The earnings conference call will include prepared remarks from management followed by a question-and-answer session [1]. - The U.S. dial-in number for the conference call is 1-877-407-0792, and the international number is 1-201-689-8263, with a conference ID of 13745379 [1]. - A replay of the call will be available from April 11, 2024, at 9:00 p.m. Eastern time until April 25, 2024 [2]. Group 2 - Applied Digital designs, develops, and operates next-generation data centers across North America, focusing on providing digital infrastructure solutions for the high-performance computing (HPC) industry [2]. - The company is publicly traded on Nasdaq under the ticker APLD [2].

DALLAS, April 09, 2024 (GLOBE NEWSWIRE) -- Applied Digital Corporation (Nasdaq: APLD) ("Applied Digital" or the "Company"), a designer, builder and operator of next-generation digital infrastructure designed for High-Performance Computing (“HPC”) applications, today announced that, in light of a scheduling issue, has moved its fiscal third quarter 2024 earnings conference call to Thursday, April 11, 2024, at 5:00 p.m. Eastern time. Financial and operational results for the fiscal third quarter ended Februar ...

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