Applied Digital (APLD)2025-01-14 21:16Revenue and Cost Analysis - Revenue increased by $51.9 million (73%) from $70.7 million to $122.6 million for the six months ended November 30, 2024, driven by growth in the Cloud Services Business[208] - Cost of revenues increased by $58.4 million (106%) from $55.0 million to $113.4 million for the six months ended November 30, 2024, primarily due to business growth and increased service provision[210] - Selling, general and administrative expense increased by $7.7 million (21%) from $36.4 million to $44.1 million for the six months ended November 30, 2024, driven by overall business growth[211] Interest and Debt-Related Expenses - Interest expense, net increased by $10.0 million (211%) from $4.8 million to $14.8 million for the six months ended November 30, 2024, primarily due to increases in finance leases and debt obligations[217] - Loss on change in fair value of debt was $85.4 million for the six months ended November 30, 2024, primarily due to changes in the fair value of the conversion option derivative of the 2.75% Senior Unsecured Convertible Note[219] Business Segment Performance - Data Center Hosting Business operating profit increased by $28.5 million (143%) from $19.9 million to $48.4 million for the six months ended November 30, 2024, due to operational improvements and favorable power pricing[225] - Cloud Services Business operating loss increased by $2.7 million from $19.0 million to $21.6 million for the six months ended November 30, 2024, primarily due to amortization expense on finance leases and stock-based compensation[226] - HPC Hosting Business operating loss increased by $7.1 million from $1.7 million to $8.8 million for the six months ended November 30, 2024, largely due to legal expenses and stock-based compensation[227] Non-GAAP Measures and Adjustments - Adjusted Operating Loss and Adjusted net loss attributable to Applied Digital Corporation are non-GAAP measures excluding stock-based compensation, non-recurring expenses, and other items not representative of ongoing costs[231] Capital Raising and Financing Activities - Company issued and sold approximately 2.9 million shares under the Sales Agreement for net proceeds of $16.4 million, net of issuance costs of $0.5 million[176] - Company completed a private offering of $450 million in 2.75% Senior Unsecured Convertible Notes due 2030, with net proceeds of approximately $435.2 million[168][249] - Company entered into a $150 million Macquarie Promissory Note with an 18-month term and 0.25% annual interest rate[171][250] - Company closed on three offerings of Series E Preferred Stock, selling 301,673 shares for net proceeds of $6.9 million[242][180] - Company entered into a $50.0 million Series F Convertible Preferred Stock private placement, with proceeds of $50.0 million before fees[246][181] - Company completed a private placement of 49,382,720 shares of common stock for gross proceeds of approximately $160 million[247] - Company entered into a Standby Equity Purchase Agreement (SEPA) with YA Fund, allowing the sale of up to $250.0 million of common stock over a 36-month period[178][245] Debt Repayment and Asset Sales - Company repaid the CIM Promissory Note in full, including all outstanding principal, accrued interest, fees, and expenses, using proceeds from the Macquarie Promissory Note[164][250] - Gain on classification of held for sale was $24.6 million for the six months ended November 30, 2024, primarily due to the receipt of $25.0 million from the sale of the Garden City facility[214] - Company received $25 million in escrowed funds from the sale of the Garden City hosting facility[177] Future Service Payments - Company received $28.3 million in payments for future cloud services and $59.2 million in payments for future data center hosting services during the six months ended November 30, 2024[252] Stock Conversions - 10,191 shares of Series F Convertible Preferred Stock were converted into approximately 1.5 million shares of common stock during the three months ended November 30, 2024[186] - The remaining 43,000 shares of Series F Convertible Preferred Stock were converted into approximately 6.1 million shares of common stock subsequent to the quarter ended November 30, 2024[186]