Applied Digital (US:APLD)2023-10-09 16:00Revenue Growth - Total revenue increased by $29.4 million, or 425%, from $6.9 million for the three months ended August 31, 2022, to $36.3 million for the same period in 2023[94]. - Hosting revenue rose to $29.99 million, up from $4.34 million, while cloud services revenue was $2.15 million, marking the start of revenue recognition from the first cloud services contract[91]. - Cloud services revenue increased by $2.2 million, or 100%, from zero in the prior year, reflecting the commencement of services in this segment[103]. - Hosting revenue increased by $27.2 million, or 394%, from $6.9 million in Q3 2022 to $34.2 million in Q3 2023 due to full energization of facilities in North Dakota[104]. - The company expects revenues to increase as additional capacity is brought online at its Garden City, Texas location and within cloud services contracts[119]. Expenses and Losses - Cost of revenues increased by $18.3 million, or 300%, primarily due to a $12.8 million rise in energy costs and a $3.9 million increase in depreciation and amortization expenses[96]. - Selling, general, and administrative expenses rose by $12.1 million, or 241%, driven by a $5.1 million increase in stock-based compensation expenses[97]. - Net loss for the three months ended August 31, 2023, was $11.85 million, compared to a net loss of $4.66 million for the same period in 2022[91]. - Interest expense increased by $1.7 million, or 483%, due to higher finance leases and interest-bearing loans[98]. - Cloud services operating loss increased by $7.4 million, or 100%, from zero in Q3 2022 to $7.4 million in Q3 2023 as the segment began operations[106]. - High performance compute (HPC) hosting operating loss increased by $0.7 million, or 100%, from zero to $0.7 million due to the launch of the segment[108]. Profitability Metrics - Adjusted EBITDA for the three months ended August 31, 2023, was $10.02 million, representing 28% of revenues, compared to an adjusted EBITDA loss of $1.85 million, or 27% of revenues, in the prior year[92]. - Hosting segment operating profit rose by $9.7 million, or 1,462%, from a loss of $0.7 million in Q3 2022 to a profit of $9.0 million in Q3 2023[107]. - Adjusted operating loss improved to $1.8 million in Q3 2023 from a loss of $3.0 million in Q3 2022, resulting in an adjusted operating margin of 4.8%[114]. Cash Flow and Financial Position - Net cash provided by operating activities decreased by $12.8 million, or 74%, from $17.3 million in Q3 2022 to $4.5 million in Q3 2023[122]. - Net cash used in investing activities increased by $8.9 million, or 28%, from $31.7 million in Q3 2022 to $40.5 million in Q3 2023 due to finance lease prepayments for hosting equipment[123]. - Net cash provided by financing activities increased by $14.8 million, or 166%, from $8.9 million in Q3 2022 to $23.7 million in Q3 2023, primarily from common stock offerings[124]. - As of August 31, 2023, the company had approximately $5.9 million in cash and cash equivalents and negative working capital of $118.1 million[115]. Operational Developments - The company is constructing a new facility in North Dakota to support its HPC datacenter business, alongside existing operational facilities[89]. - As of August 31, 2023, the company's 106 MW facility in Jamestown and 180 MW facility in Ellendale were fully operational, with a 200 MW facility in Garden City expected to energize in Q4 2023[90].