Core Viewpoint - Applied Digital Corporation has announced a private financing arrangement, issuing $53.2 million in convertible preferred stock for net proceeds of $50 million, aimed at supporting growth initiatives and expansion plans in the high-performance computing (HPC) sector [1]. Financing Details - The convertible preferred stock has a stated value of $1,000 per share and an interest rate of 8%, payable in kind (PIK) or cash [1]. - The investor received 53,191 shares, with 3,191 shares representing a 6% original discount [1]. - Upon shareholder approval, the preferred stock can be converted into common stock at an initial conversion price of $7.00 per share, which is over 80% premium to the latest common stock price [1]. Use of Proceeds - The proceeds from this investment will be utilized to fund various growth initiatives across the company's business segments, particularly to support the ongoing Ellendale HPC buildout and finalize a long-term hyperscaler lease [1]. Company Overview - Applied Digital designs, develops, and operates next-generation data centers across North America, focusing on providing digital infrastructure solutions for the rapidly growing HPC industry [4].

Core Viewpoint - Applied Digital (NASDAQ: APLD) has experienced significant stock decline since its IPO in April 2022, with shares down 56% and a recent drop of 13.38% to $3.82, despite a bullish average price target of $8.20 indicating a potential upside of 110% [1][2][8]. Company Overview - Applied Digital specializes in high-performance computing (HPC) and operates data centers, providing hosting services for both AI tasks and cryptocurrency mining [4][6]. - The company initially focused on cryptocurrency mining but rebranded from Applied Blockchain to Applied Digital in November 2022 due to poor performance and a need to diversify its offerings [5][6]. Financial Performance - In the latest earnings report, Applied Digital reported revenue of $47.3 million, nearly doubling from the previous year but remaining flat compared to the prior quarter, surpassing analyst expectations of $39.1 million [7][8]. - The company posted an adjusted loss of $0.36 per share, which is a larger loss than the previous quarter and worse than the expected loss of $0.22 per share [7][8]. Margin and Cost Challenges - The gross margin has been negative for two consecutive quarters, attributed to high energy costs, depreciation, and personnel expenses, raising concerns about the sustainability of profitability [8][10]. - The current negative gross margin may be influenced by unusually high electricity prices, but the company has not provided guidance on future energy costs [10]. Strategic Developments - Applied Digital has signed a letter of intent (LOI) with a U.S. hyperscaler customer for 400 MW of capacity for its cloud business, although this agreement is non-binding and did not positively impact the share price [9].

Data Center Hosting Business - Data Center Hosting Business operated at full capacity with 106 MW in Jamestown, North Dakota, and resolved power outage issues at the 180 MW Ellendale facility, now operating at full capacity[254] - The Garden City hosting facility was sold for $87.3 million in cash, with an additional $10.0 million consideration, resulting in a $15.4 million loss[255] - Data Center Hosting Business revenue increased to $136.6 million in FY 2024 from $55.4 million in FY 2023[341] - Revenue recognition for Data Center Hosting is based on a fixed rate over the term of agreements, with advanced payments recorded as deferred revenue[339] Cloud Services Business - Cloud Services Business generated $29.0 million in revenue during fiscal year 2024 from two customers[258] - Cloud Services revenue is recognized based on a fixed rate over the term of agreements, net of any credits for non-performance[340] HPC Hosting Business - HPC Hosting Business broke ground on a 100 MW HPC data center in Ellendale, North Dakota, with a 369,000-square-foot building expected to support HPC applications[259] - The company entered into a 400 MW capacity lease with a US-based hyperscaler, including the 100 MW facility under construction and two forthcoming buildings in Ellendale[260] Financial Performance and Revenue Growth - Revenue increased by $109.8 million (268%) from $41.0 million in FY2023 to $150.8 million in FY2024, driven by increased capacity and the launch of Cloud Services Business[301] - Related party revenue increased by $0.4 million (2%) from $14.4 million in FY2023 to $14.8 million in FY2024, primarily due to increased uptime at the Jamestown facility[301] - Adjusted EBITDA was $24.5 million in FY2024, representing 15% of revenues, compared to $0.8 million (1% of revenues) in FY2023[298] - Adjusted EBITDA (Non-GAAP) for May 31, 2024 was $24.46 million, compared to $0.81 million in 2023[318] Costs and Expenses - Cost of revenues increased by $104.0 million (234%) from $44.4 million in FY2023 to $148.3 million in FY2024, driven by growth in business and increased energy costs[303] - Selling, general and administrative expenses increased by $43.4 million (79%) from $55.1 million in FY2023 to $98.5 million in FY2024, due to growth in business and increased depreciation and amortization[302] - The company expects general and administrative expenses and operating expenditures to increase as it continues to expand operations[328] Losses and Impairments - Loss on classification of held for sale was $15.4 million in FY2024 due to the write-down of Garden City assets[303] - Loss on change in fair value of debt was $7.4 million in FY2024 due to valuation associated with Yorkville Advisors Loan[306] - Loss on change in fair value of related party debt was $13.8 million in FY2024, with $8.1 million due to AI Bridge Loan and $5.7 million due to warrants issued to AI Bridge Funding LLC[307] - The company recorded impairment expense on long-lived assets of $0.5 million in FY 2024, compared to $0.2 million in FY 2023[346] Debt and Financing Activities - The AI Bridge Loan was issued for up to $20.0 million, with $15.0 million funded immediately, bearing an interest rate of 12.5% per annum[272] - The company recognized a $13.8 million loss on the change in fair value of the AI Bridge Loan during fiscal year 2024[274] - The company issued 8,421,146 shares of common stock to extinguish the $20.0 million principal balance of the AI Bridge Loan[274] - Vantage Transformer Loan: $3.7 million term loan with a 6.50% annual interest rate, fully repaid as of the report date[276] - B. Riley Loan: $50 million term loan with a 9.00% annual interest rate, early repayment of $44.5 million with a $2.5 million loss on debt extinguishment[277][278] - Cornerstone Bank Loan: $16.0 million term loan with an 8.59% annual interest rate, $15.6 million outstanding as of May 31, 2024[279] - Yorkville Convertible Debt: Initial YA Notes totaling $50 million, $26.0 million converted into 7.4 million shares of common stock[280][281] - May Note: $42.1 million convertible note, $38.0 million converted into 8.8 million shares of common stock[282][283] - CIM Promissory Note: Initial borrowing of $15 million, total outstanding balance of $105 million as of the report date[287] Equity and Stock Issuances - The company sold 18.9 million shares for net proceeds of $121.2 million under an at-the-market sale agreement with Craig-Hallum Capital Group LLC[261] - The company entered into a Dealer Manager Agreement for the offering of up to 2,000,000 shares of Series E Preferred Stock at $25.00 per share, with no shares sold as of May 31, 2024[264] - Series E Preferred Stock: 301,673 shares sold for net proceeds of $6.9 million[286] - At-the-Market Sales Agreement: 2.9 million shares of common stock issued for proceeds of $16.4 million[292] - SEPA Agreement: Option to sell up to $250.0 million of common stock to YA Fund, with a $2.125 million commitment fee paid in shares[294][295] Cash Flow and Liquidity - As of May 31, 2024, the company had unrestricted cash and cash equivalents of $3.3 million and negative working capital of $355.3 million[320] - During the fiscal year ended May 31, 2024, the company received $148.1 million in payments for future data center hosting services[323] - The company sold approximately 18.9 million shares under an "at the market" sales agreement, generating net proceeds of $121.2 million[322] - The company received net cash proceeds of approximately $61.1 million from the sale of its data center facility in Garden City, Texas[323] - Net cash provided by operating activities decreased by $44.9 million, or 77%, from $58.7 million in 2023 to $13.8 million in 2024[332] - The company expects to have sufficient liquidity to support ongoing operations for at least the next 12 months[327] - Net cash used in investing activities increased by $40.3 million, from $132.1 million in FY 2023 to $172.4 million in FY 2024, primarily due to increased lease prepayments for hosting equipment to support the Cloud Services Business[333] - Net cash provided by financing activities increased by $76.1 million (108%), from $70.6 million in FY 2023 to $146.8 million in FY 2024, driven by net proceeds from common stock offerings and related party debt[334] Business Segments and Operations - The company operates three reportable business segments: Data Center Hosting Business, Cloud Services Business, and HPC Hosting Business[337] - The company assesses going concern uncertainty quarterly, evaluating cash, working capital, and projected cash expenditures to ensure operational viability for at least one year[347] Fair Value and Valuation Models - The fair value of the YA Notes was estimated at $80.2 million, with a loss on the change in fair value of debt recorded at $7.4 million[344] - The company uses a Black-Scholes Option Pricing model to determine the fair value of AI Warrants, with Level 3 inputs including expected share-price volatility and risk-free interest rate[343] Net Loss and Adjusted Operating Loss - Net loss attributable to Applied Digital Corporation was $149.3 million in FY2024, compared to $44.6 million in FY2023[298] - Adjusted operating loss (Non-GAAP) for May 31, 2024 was $50.99 million, compared to $7.32 million in 2023, with an adjusted operating margin of (31)% versus (13)% in 2023[316] - Net loss attributable to Applied Digital Corporation (GAAP) for May 31, 2024 was $149.27 million, compared to $44.65 million in 2023[318]

Core Insights - Martin Insurance Group has chosen Applied Digital Agency as its foundational management platform to automate policy management and enhance business operations [1][2] - The integration of Applied's P&C policy management capabilities aims to improve staff productivity and reduce errors associated with disparate processes [1][2] Company Overview - Applied Systems is a leading global provider of cloud-based software for the insurance industry, recognized for its innovation and automation capabilities [5] - The company serves customers in the United States, Canada, the Republic of Ireland, and the United Kingdom, making it the largest provider of agency and brokerage management systems [5] Technology and Solutions - The Applied Digital Agency solution includes a foundational management system, online customer self-service, mobile technology, and commercial lines application digitization, all hosted in the cloud [2] - This integrated solution allows agencies to streamline operations, enhance customer service, and drive growth and profitability across various business lines [2][3] Industry Trends - There is a growing trend among agencies to adopt Applied's technology, as indicated by feedback from other agencies that have successfully implemented the platform [2] - The emphasis on automation and integrated systems reflects a broader industry shift towards improving operational efficiency and customer experience [2][3]

Financial Data and Key Metrics - Revenue for Q4 2024 was $43.7 million, up from $22 million in Q4 2023, driven by expanded data center hosting capacity and cloud service contracts [14] - Data center hosting segment generated $26.9 million in revenue, while cloud services contributed $16.8 million [14] - Cost of revenue increased to $46.3 million from $15.9 million in Q4 2023, primarily due to higher energy costs and depreciation expenses [15] - Net loss for Q4 2024 was $64.8 million ($0.52 per share), compared to a net loss of $6.5 million ($0.07 per share) in Q4 2023 [16] - Adjusted EBITDA for Q4 2024 was $4.8 million, up from $3.4 million in Q4 2023 [17] - Cash, cash equivalents, and restricted cash stood at $31.7 million, with $125.4 million in debt at the end of Q4 2024 [18] Business Line Performance - Data center hosting: The 106-megawatt Jamestown facility operated at full capacity, while the 180-megawatt Ellendale facility faced power outages due to transformer failures, which were resolved by the end of Q4 [8][9] - Cloud services: Six clusters were online by Q1 2025, with a revenue run rate of $110 million annually, focusing on enterprise demand [29][30] - HPC data centers: 400 megawatts of capacity under development in North Dakota, with a 100-megawatt facility in Ellendale nearing completion [10][11] Market and Strategic Developments - The company signed an LOI with a US-based hyperscaler for 400 megawatts at the Ellendale campus, with technical due diligence completed [11][12] - Three additional campuses totaling 1.4 gigawatts are being marketed, with power availability expected by 2026 [12][40] - The company is focused on securing project-level financing for the Ellendale campus and aligning cloud service financing with industry norms [18][30] Management Commentary on Environment and Outlook - Management expects Q4 2024 to mark the bottom for revenues, with sequential improvements anticipated in Q1 2025 [21] - The company is committed to becoming a development platform for multiple HPC data centers, starting with Ellendale and expanding to additional campuses [20][40] - Strong demand for near-term power and supply chain challenges are key industry dynamics, with the company well-positioned due to its power availability and supply chain expertise [61][62] Other Important Information - The company incurred one-time professional service expenses related to capital-raising initiatives and strategic transactions [13] - Accelerated depreciation of GPU hardware significantly impacted adjusted earnings, with efforts underway to extend depreciation to six years [17][30] Q&A Session Summary Question: Ellendale HPC Campus Progress and Capital Requirements - The Ellendale facility is over 90% complete, with $200 million invested and an estimated total cost of $1 billion for the first 100 megawatts [24][25] - Project-level financing is expected to cover 80-90% of the remaining costs, pending lease finalization [25] Question: Cloud Services Business Growth - Six clusters are online, generating a $110 million annual revenue run rate, with growth constrained until better financing structures are in place [29][44] - The company is focusing on enterprise demand and has hired a new CRO from IBM to drive this market [30] Question: Hyperscaler Lease Timeline - The lease agreement with the hyperscaler is over 90% complete, with final details being ironed out [35][38] Question: Competitive Environment and Strategy - The company differentiates itself by securing power availability first, then ensuring fiber connectivity and latency requirements, giving it an edge in site selection [64][66] - Competition primarily comes from private data center companies with longer track records, but the company’s focus on near-term power and supply chain expertise positions it well [61][62] Question: GPU Financing Structure - Financing interest has grown, with costs dependent on the off-taker (AI labs, enterprises, or hyperscalers) [51] - The company is working on a bankruptcy-remote SPV structure to align financing with customer contracts [53] Question: Cloud AI Business Capacity - The company has over 30 megawatts of ready capacity for deployment across multiple locations, including Jamestown, Denver, and Salt Lake City [73]

分组1 - Applied Digital Corporation reported a quarterly loss of $0.52 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.23, and compared to a loss of $0.07 per share a year ago, indicating a significant decline in performance [1] - The company's revenues for the quarter ended May 2024 were $43.7 million, exceeding the Zacks Consensus Estimate by 2.34%, and showing an increase from $22.04 million in the same quarter last year [1] - Over the last four quarters, Applied Digital Corporation has not surpassed consensus EPS estimates, indicating ongoing challenges in meeting market expectations [1] 分组2 - Since the beginning of the year, Applied Digital Corporation shares have decreased by approximately 29.8%, contrasting with the S&P 500's gain of 17.9%, highlighting underperformance relative to the broader market [2] - The current consensus EPS estimate for the upcoming quarter is -$0.51 on revenues of $39.49 million, and for the current fiscal year, it is -$1.18 on revenues of $275.78 million, suggesting continued challenges ahead [4] - The Zacks Industry Rank for Financial - Miscellaneous Services is in the top 21% of over 250 Zacks industries, indicating a favorable industry outlook that could positively influence stock performance [5]

Revenue Growth - Fiscal fourth quarter 2024 revenue of $43.7 million, up 98% from the fiscal fourth quarter 2023[2][16] - Fiscal 2024 revenue of $165.6 million, a 199% increase from $55.4 million in 2023[3][12] - Total revenue for the three months ended May 31, 2024, was $43.7 million, compared to $22.0 million for the same period in 2023[35] - Cloud Services recognized $29.0 million in revenues during fiscal year 2024[8] Net Loss and Financial Performance - Fiscal 2024 net loss of $149.7 million, compared to $45.6 million in 2023[3][13] - Adjusted net loss for fiscal 2024 was $77.5 million, negatively impacted by $38.5 million of expenses related to non-revenue generating facilities[14] - Net loss attributable to Applied Digital Corporation for the three months ended May 31, 2024, was $64.8 million, compared to $6.5 million for the same period in 2023[35] - Net loss increased to $149.671 million in 2024 from $45.606 million in 2023, reflecting a significant decline in financial performance[37] - Net loss attributable to Applied Digital Corporation (GAAP) for the three months ended May 31, 2024, was $(64,756) thousand, compared to $(6,464) thousand for the same period in 2023[42] Adjusted EBITDA and Non-GAAP Measures - Adjusted EBITDA for fiscal 2024 was $24.5 million, up from $0.8 million in 2023[3][15] - Adjusted EBITDA is defined as EBITDA adjusted for stock-based compensation, non-recurring repair expenses, and other items[32] - Adjusted EBITDA (Non-GAAP) for the three months ended May 31, 2024, was $4,794 thousand, compared to $3,386 thousand for the same period in 2023[42] - Adjusted Net Loss per Diluted Share is calculated as Adjusted net loss divided by weighted average diluted share count[31] - The company cautions investors that non-GAAP financial measures have limits in their usefulness and may not be directly comparable to similarly titled measures used by other companies[28] Cash Flow and Financing - Cash and cash equivalents decreased to $3.3 million as of May 31, 2024, from $29.0 million as of May 31, 2023[34] - Cash flow from operating activities decreased to $11.360 million in 2024 from $58.735 million in 2023, indicating reduced operational cash generation[37] - Cash flow used in investing activities increased to $172.436 million in 2024 from $132.088 million in 2023, driven by higher capital expenditures[37] - Cash flow provided by financing activities rose to $146.757 million in 2024 from $70.628 million in 2023, primarily due to increased borrowings[37] - The Company secured over $150 million in funding post-fiscal year end[4] Assets and Liabilities - Total assets as of May 31, 2024, were $762.9 million, a significant increase from $264.0 million as of May 31, 2023[34] - Property and equipment, net, increased to $340.4 million as of May 31, 2024, from $198.2 million as of May 31, 2023[34] - Total liabilities increased to $638.0 million as of May 31, 2024, from $194.3 million as of May 31, 2023[34] - Operating right-of-use assets obtained by lease obligation amounted to $159.197 million in 2024, indicating expansion in leased assets[39] Operational Updates - The Ellendale Data Center Hosting facility was restored to full operating capacity by June 28, 2024[4][11] - The Company entered into an exclusivity agreement for 400 MW capacity with a U.S.-based hyperscaler[6][9] - The Company currently operates 286 MW of data center hosting capacity[10] Expenses and Adjustments - Adjusted operating loss improved to $26.947 million in 2024 from $50.991 million in 2023, reflecting cost management efforts[41] - Adjusted net loss attributable to Applied Digital Corporation decreased to $45.346 million in 2024 from $77.522 million in 2023, showing progress in reducing losses[41] - Stock-based compensation decreased to $17.108 million in 2024 from $32.072 million in 2023, indicating reduced equity-based expenses[41] - Loss on classification as held for sale was $15.417 million in 2024, impacting the financial results[41] - Interest paid increased significantly to $20.216 million in 2024 from $1.118 million in 2023, reflecting higher debt servicing costs[39] - Depreciation and amortization for the three months ended May 31, 2024, was $31,696 thousand, compared to $2,636 thousand for the same period in 2023[42] - Stock-based compensation for the three months ended May 31, 2024, was $3,597 thousand, compared to $5,195 thousand for the same period in 2023[42] - Non-recurring repair expenses for the three months ended May 31, 2024, were $645 thousand, compared to $0 for the same period in 2023[42] - Diligence, acquisition, disposition, and integration expenses for the three months ended May 31, 2024, were $1,652 thousand, compared to $727 thousand for the same period in 2023[42] - Litigation expenses for the three months ended May 31, 2024, were $929 thousand, compared to $0 for the same period in 2023[42] - Research and development expenses for the three months ended May 31, 2024, were $50 thousand, compared to $0 for the same period in 2023[42] - Loss on change in fair value of debt for the three months ended May 31, 2024, was $4,789 thousand, compared to $0 for the same period in 2023[42] Non-GAAP Measures Update - The company updated its presentation of non-GAAP measures starting in the third quarter of 2024, no longer excluding start-up costs[29]

DALLAS, Aug. 28, 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, cloud services (“Cloud Services”), and data center hosting (“Data Center Hosting”), reported financial results for the fiscal fourth quarter and full year ended May 31, 2024. The Company also provided an operational update. Fiscal Fourth Quarter 2024 ...

DALLAS, Aug. 14, 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 the appointment of Gary Smith as its new Senior Director of Physical Security. Smith has over 40 years of experience in law enforcement and corporate security and is expected to play a pivotal role in the ongoing safety and integrity of ...

DALLAS, July 30, 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, announced today that it has met the conditional approval requirements related to the release of the escrowed funds from the sale of its Garden City, Texas facility. The Company has now received the remaining $25 million of the purchase price held in escr ...