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Applied Digital (APLD) - 2026 Q1 - Quarterly Results

Executive Summary Applied Digital achieved substantial revenue growth in Q1 2026, driven by HPC hosting and data center services, while securing a major CoreWeave lease and initiating Polaris Forge 2 construction for future AI infrastructure expansion Q1 2026 Performance Overview Applied Digital reported 84% revenue growth in Q1 2026, primarily from HPC hosting, alongside a net loss, while securing a 400 MW CoreWeave lease and breaking ground on 300 MW Polaris Forge 2 | Metric | Q1 2026 (USD) | Q1 2025 (USD) | Change (%) | | :--------------------------------------- | :------------ | :------------ | :--------- | | Revenues | $64.2 million | $34.8 million | +84% | | Net loss attributable to common stockholders | $(27.8) million | $15.9 million | -275% | | Net loss per basic and diluted share | $(0.11) | $0.11 | -200% | | Adjusted net loss attributable to common stockholders | $(7.6) million | $(0.8) million | -850% | | Adjusted EBITDA | $0.5 million | $6.3 million | -92% | - Secured an additional 150 MW lease with CoreWeave for Polaris Forge 1, bringing the campus to full 400 MW capacity under contract and securing approximately $11 billion in prospective lease revenue over 15 years67 - Drew an initial $112.5 million from a $5 billion preferred equity facility with Macquarie Asset Management to fund Polaris Forge 1 completion and reduce future equity funding requirements7 - Broke ground on Polaris Forge 2, a 300 MW IT load AI Factory campus near Harwood, North Dakota, with initial 200 MW expected online in 20267 Company Overview Applied Digital specializes in designing, building, and operating high-performance, sustainably engineered data centers for AI, cloud, networking, and blockchain workloads Company Profile Applied Digital Corporation designs, builds, and operates high-performance, sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads, recognized for its hyperscale expertise, proprietary waterless cooling, and rapid deployment capabilities - Applied Digital designs, builds, and operates high-performance, sustainably engineered data centers and colocation services for AI, cloud, networking, and blockchain workloads33 - The company combines hyperscale expertise, proprietary waterless cooling, and rapid deployment capabilities to deliver secure, scalable compute33 - Awarded 'Best Data Center in the Americas 2025' by Datacloud33 Fiscal First Quarter 2026 Highlights This section details Applied Digital's key financial and operational achievements during the first fiscal quarter of 2026, including revenue growth, strategic leases, and infrastructure expansion Key Financial Metrics The fiscal first quarter 2026 saw an 84% increase in revenues year-over-year, primarily driven by HPC hosting tenant fit-out services, despite reporting a significant net loss and decreased Adjusted EBITDA | Metric | Q1 2026 (USD) | Q1 2025 (USD) | Change (%) | | :--------------------------------------- | :------------ | :------------ | :--------- | | Revenues | $64.2 million | $34.8 million | +84% | | Net loss attributable to common stockholders | $(27.8) million | $15.9 million | -275% | | Net loss per basic and diluted share | $(0.11) | $0.11 | -200% | | Adjusted net loss attributable to common stockholders | $(7.6) million | $(0.8) million | -850% | | Adjusted net loss per diluted share | $(0.03) | $(0.01) | -200% | | Adjusted EBITDA | $0.5 million | $6.3 million | -92% | Recent Operational Highlights Applied Digital achieved significant operational milestones, including fully leasing its Polaris Forge 1 campus with CoreWeave, securing substantial future revenue, and commencing construction on its second major AI Factory campus, Polaris Forge 2 - Finalized a new lease agreement with CoreWeave for an additional 150 MW at Polaris Forge 1, making the campus fully leased and bringing total anticipated contracted lease revenue for Polaris Forge 1 to approximately $11 billion7 - Drew an initial $112.5 million from the $5 billion preferred equity facility with Macquarie Asset Management to fund Polaris Forge 1 completion and reduce future equity funding requirements7 - Broke ground on Polaris Forge 2, a 300 MW IT load AI Factory campus, with the initial 200 MW expected to come online in 20267 - Raised an additional $200 million from an expanded offering of Series G Preferred Stock7 Management Commentary and Strategic Outlook Management discusses the validation of Applied Digital's platform through strategic partnerships, capital strategy, and future vision for AI infrastructure expansion and financial targets Operational Progress and Partnerships Management highlighted the validation of their platform through the third CoreWeave lease, positioning Applied Digital as a strategic partner to major technology companies, with potential for significant expansion at Polaris Forge 1 and 2 - The third lease with CoreWeave validates Applied Digital's platform and execution, positioning it as a trusted strategic partner to the world's largest technology companies9 - Polaris Forge 1 campus has the potential to expand beyond 1 gigawatt (GW) starting in 2028-20308 - Polaris Forge 2 could ultimately scale to 1 GW, with advanced discussions underway with an investment-grade hyperscaler for a potential 200 MW initial lease9 Capital Strategy and Expansion The company focuses on efficient capital securing, building repeatable financing structures, and scaling development across the U.S., while committing to minimizing environmental impact through advanced cooling designs - Team remains focused on securing capital at the lowest possible cost and building repeatable financing structures to scale development across the United States11 - Built and funded over $1.6 billion in property and equipment11 - Secured a structure with Macquarie Asset Management to recycle a portion of equity invested in Polaris Forge 1 into future developments12 - Committed to minimizing environmental impact through advanced design innovations, including closed-loop, direct-to-chip liquid-cooling that lowers water use13 Future Vision and Targets Applied Digital is positioned to capitalize on growing demand for advanced infrastructure with a multi-GW pipeline, projecting significant annualized Net Operating Income (NOI) and aiming for a $1 billion NOI target within five years - Poised to capitalize on a generational opportunity with a multi-GW pipeline, active and increasing hyperscaler interest, and long-term contracted visibility14 - Projected annualized NOI run rate of approximately $500 million once Polaris Forge 1 is fully operational15 - Firmly on the path toward a $1 billion NOI target within the next five years15 - Positioned to become a leading force in AI infrastructure and on track to evolve into the next AI-focused data center REIT15 Business Segment Updates This section provides updates on Applied Digital's High-Performance Computing (HPC) Hosting, Data Center Hosting, and Cloud Services business segments HPC Hosting Business The HPC Hosting Business is rapidly advancing, with the first 100 MW facility at Polaris Forge 1 on track for Q4 2025 operation, contributing $26 million in revenue this quarter, and planning ultra-low-cost, liquid-cooled infrastructure - First 100 MW facility at Polaris Forge 1 remains on track to be operational in calendar Q4 2025, with technical fit-out activities underway16 | Metric | Q1 2026 (USD) | | :-------------------------------- | :------------ | | Revenue from tenant fit-out services | $26 million | - Facilities are designed to deliver ultra-low-cost, highly efficient liquid-cooled infrastructure, featuring a closed-loop, direct-to-chip liquid cooling system with an expected Design PUE of 1.18 and near-zero water consumption17 - Estimated 100 MW customer could save up to $2.7 billion over 30 years compared to traditional data centers due to efficient design and low-cost energy17 Data Center Hosting Business Applied Digital's Data Center Hosting Business is operating at full capacity across its Jamestown (106 MW) and Ellendale (180 MW) facilities, generating $37.9 million in revenue, an increase of 9% year-over-year, driven by increased online capacity and robust demand - 106 MW facility in Jamestown, N.D., and 180 MW facility in Ellendale, N.D., are operating at full capacity as of August 31, 202518 | Metric | Q1 2026 (USD) | Q1 2025 (USD) | Change (%) | | :----------------------- | :------------ | :------------ | :--------- | | Revenue from Data Center Hosting | $37.9 million | $34.8 million | +9% | - Growth was primarily driven by increased capacity online across the Company's Data Center Hosting facilities19 - Demand for these services remains robust, with Bitcoin prices hitting all-time highs20 Cloud Services Business The strategic review for the Cloud Services Business, initiated in the prior fiscal year, is still ongoing, with updates to shareholders to be provided once more information becomes available - Strategic options for the Cloud Services Business are under review by the Board of Directors, and the process remains ongoing21 Financial Results from Continuing Operations This section presents Applied Digital's detailed financial performance for Q1 2026, covering operating results, net loss, non-GAAP measures, and a balance sheet snapshot Operating Results Overview Total revenues for Q1 2026 increased by 84% year-over-year, largely due to HPC hosting tenant fit-out services and improvements in the Data Center Business, despite significant increases in cost of revenues and selling, general and administrative expenses leading to an operating loss | Metric | Q1 2026 (USD) | Q1 2025 (USD) | Change (%) | | :-------------------------------- | :------------ | :------------ | :--------- | | Total revenues | $64.2 million | $34.8 million | +84% | | Cost of revenues | $55.6 million | $22.7 million | +144% | | Selling, general and administrative expenses | $29.2 million | $11.0 million | +165% | | Loss on abandonment of assets | $1.8 million | $0.6 million | +179% | | Interest expense, net | $3.9 million | $3.0 million | +33% | - Revenue increase primarily due to $26.3 million from HPC Hosting Business tenant fit-out services and $5.0 million from Data Center Business performance improvements22 - Increase in SG&A expenses driven by $16.6 million in stock-based compensation due to accelerated vesting and $3.9 million in personnel expenses24 Net Loss and EPS The company reported a net loss attributable to common stockholders of $27.8 million, or $0.11 per share, for Q1 2026, a significant decline from a net income in the prior year comparable period | Metric | Q1 2026 (USD) | Q1 2025 (USD) | | :--------------------------------------- | :------------ | :------------ | | Net loss attributable to common stockholders | $(27.8) million | $15.9 million | | Net loss per basic and diluted share | $(0.11) | $0.11 | Non-GAAP Financial Measures Applied Digital's non-GAAP financial measures show an adjusted net loss attributable to common stockholders of $7.6 million, or $0.03 per diluted share, and an Adjusted EBITDA of $0.5 million for Q1 2026, both indicating a decrease in profitability compared to the prior year | Metric | Q1 2026 (USD) | Q1 2025 (USD) | | :--------------------------------------------------- | :------------ | :------------ | | Adjusted net loss attributable to common stockholders | $(7.6) million | $(0.8) million | | Adjusted net loss per diluted share | $(0.03) | $(0.01) | | Adjusted EBITDA | $0.5 million | $6.3 million | Balance Sheet Snapshot As of August 31, 2025, Applied Digital held $114.1 million in cash, cash equivalents, and restricted cash, with total debt amounting to $687.3 million, excluding $362.5 million in proceeds from subsequent financings | Metric | As of August 31, 2025 (USD) | | :--------------------------------------- | :-------------------------- | | Cash, cash equivalents, and restricted cash | $114.1 million | | Total debt | $687.3 million | - Does not include $362.5 million in proceeds from financings that occurred subsequent to quarter end30 Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated balance sheets, statements of operations, and statements of cash flows for Applied Digital Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets show a significant increase in total assets from $1,870.1 million at May 31, 2025, to $2,399.0 million at August 31, 2025, primarily driven by increases in property and equipment, cash, and prepaid expenses, with total liabilities also increasing | ASSETS (in thousands) | August 31, 2025 | May 31, 2025 | | :------------------------------------ | :-------------- | :----------- | | Cash and cash equivalents | $73,911 | $41,552 | | Restricted cash | $40,193 | $72,368 | | Accounts receivable | $29,134 | $3,043 | | Prepaid expenses and other current assets | $188,491 | $9,430 | | Total current assets | $641,735 | $430,593 | | Property and equipment, net | $1,461,775 | $1,206,341 | | TOTAL ASSETS | $2,398,995 | $1,870,090 | | LIABILITIES (in thousands) | | | | Accounts payable | $172,823 | $247,528 | | Accrued liabilities | $182,948 | $29,549 | | Current portion of debt | $382,056 | $10,331 | | Total current liabilities | $985,493 | $558,144 | | Long-term debt | $305,283 | $677,825 | | Total liabilities | $1,291,007 | $1,236,365 | | Stockholders' equity | $1,044,260 | $497,688 | | TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY | $2,398,995 | $1,870,090 | Condensed Consolidated Statements of Operations Total revenue increased to $64.2 million in Q1 2026 from $34.8 million in Q1 2025, but significantly rising total costs and expenses led to an operating loss of $22.3 million and a net loss attributable to common stockholders of $18.5 million | Metric (in thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :------------------------------------------------- | :--------------------------------- | :--------------------------------- | | Total revenue | $64,216 | $34,849 | | Cost of revenues | $55,606 | $22,743 | | Selling, general and administrative | $29,152 | $10,993 | | Total costs and expenses | $86,509 | $9,556 | | Operating (loss) income | $(22,293) | $25,293 | | Net (loss) income before income tax expenses | $(26,239) | $15,912 | | Net loss attributable to common stockholders | $(18,502) | $(4,291) | | Basic and diluted net (loss) income per share (Continuing operations) | $(0.11) | $0.11 | | Basic and diluted net loss per share | $(0.07) | $(0.03) | Condensed Consolidated Statements of Cash Flows Cash flow from operating activities resulted in a net use of $82.0 million in Q1 2026, with investing activities using $249.4 million, while financing activities provided $322.2 million, driven by proceeds from common and preferred stock issuance | Cash Flow Activity (in thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :---------------------------------------- | :--------------------------------- | :--------------------------------- | | CASH FLOW USED IN OPERATING ACTIVITIES | $(82,023) | $(75,890) | | CASH FLOW USED IN INVESTING ACTIVITIES | $(249,420) | $(32,606) | | CASH FLOW PROVIDED BY FINANCING ACTIVITIES | $322,236 | $163,365 | | NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | $(9,207) | $54,869 | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $114,111 | $86,557 | | Supplemental Non-Cash Activities (in thousands) | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :---------------------------------------------- | :--------------------------------- | :--------------------------------- | | Conversion of preferred stock to common stock | $242,480 | — | | Issuance of warrants, at fair value | $121,204 | $36,479 | | Property and equipment in accounts payable and accrued liabilities | $132,113 | $116,440 | Non-GAAP Financial Measures and Reconciliation This section explains and reconciles Applied Digital's non-GAAP financial measures, providing additional insights into operational performance by excluding specific non-cash or one-time items Explanation of Non-GAAP Measures Applied Digital uses non-GAAP financial measures like Adjusted Operating (Loss) Income, Adjusted Net Loss, EBITDA, and Adjusted EBITDA to provide additional insight into its operational performance by excluding one-time or significant non-cash items - Non-GAAP measures are provided to disclose additional information, facilitate comparison of past and present operations, and provide perspective on results absent one-time or significant non-cash items35 - Adjusted Operating (Loss) Income excludes stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, loss on abandonment of assets, and other non-recurring expenses38 - Adjusted EBITDA is defined as EBITDA adjusted for stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, gain on classification of held for sale, loss on abandonment of assets, loss on change in fair value of debt, preferred dividends, restructuring expenses and other non-recurring expenses39 Reconciliation of GAAP to Non-GAAP Measures The reconciliation tables detail adjustments made to GAAP figures to arrive at non-GAAP measures, with significant adjustments for Q1 2026 including stock-based compensation and loss on abandonment of assets, transforming GAAP operating and net losses | Reconciliation Item (in thousands) | Q1 2026 (USD) | Q1 2025 (USD) | | :------------------------------------------------- | :------------ | :------------ | | Operating (loss) income (GAAP) | $(22,293) | $25,293 | | Stock-based compensation | $14,446 | $(2,383) | | Loss on abandonment of assets | $1,751 | $628 | | Adjusted operating (loss) income (Non-GAAP) | $(3,616) | $2,164 | | Net (loss) income from continuing operations attributable to common stockholders (GAAP) | $(27,823) | $15,868 | | Adjusted net loss from continuing operations attributable to common stockholders (Non-GAAP) | $(7,570) | $(795) | | EBITDA (Non-GAAP) | $(19,716) | $22,970 | | Adjusted EBITDA (Non-GAAP) | $537 | $6,262 | Additional Information This section provides details on the conference call, cautionary notes regarding forward-looking statements, and contact information for investor relations and media Conference Call Details Applied Digital hosted a conference call on October 9, 2025, to discuss its fiscal first quarter 2026 results, with details provided for participation and replay options - Conference call held on October 9, 2025, at 5:00 p.m. Eastern Time31 - Participant Dial-In: 1-800-549-8228, Conference ID: 3929031 - A phone replay was available from October 9, 2025, through October 16, 2025, with Replay Dial-In: 1-888-660-6264 and Playback Passcode: **39290 **32 Forward-Looking Statements This section serves as a cautionary note regarding forward-looking statements, emphasizing that future operating and financial performance, product development, and business strategy are subject to inherent uncertainties and risks - Statements regarding future operating and financial performance, product development, market position, business strategy, and objectives are forward-looking34 - These statements are inherently subject to uncertainty, and actual results could vary materially if underlying assumptions prove inaccurate or risks materialize34 - Risks include ability to complete data center construction, raise additional capital, dependence on principal customers, power disruptions, and regulatory changes34 Investor Relations Contact Contact information for investor relations and media inquiries is provided for stakeholders seeking further information about Applied Digital - Investor Relations Contacts: Matt Glover or Ralf Esper at Gateway Group, Inc. (949) 574-3860, APLD@gateway-grp.com40 - Media Contact: Buffy Harakidas, EVP at JSA (Jaymie Scotto & Associates) (856) 264-7827, jsa_applied@jsa.net40