Applied Digital (US:APLD) ZACKS·2024-12-20 17:45Core Insights - Applied Digital Corporation (APLD) shares have increased by 47.9% over the past six months, significantly outperforming the broader Finance sector's return of 15.6% and the Zacks Financial Miscellaneous Services industry's appreciation of 3.9% [1] Financial Performance - In the first quarter of fiscal 2025, APLD's revenues surged by 67% year over year to $60.7 million, primarily driven by strong contributions from Cloud Services contracts [2] - The Data Center hosting segment generated $34.8 million in revenues, while the Cloud Services segment contributed $25.9 million [2] - The Zacks Consensus Estimate for fiscal 2025 revenues is projected at $270.77 million, indicating a year-over-year growth of 63.54% [11] - The consensus estimate for second-quarter fiscal 2025 revenues is pegged at $63.65 million, reflecting a year-over-year growth of 50.83% [29] Industry Trends - The growing complexity and power requirements of AI models are leading to increased energy consumption, with data centers' electricity consumption expected to grow by 125% by 2030, accounting for 9% of all electricity used in the United States [3] - APLD's access to hundreds of megawatts of affordable energy and its capability to construct high-quality AI data centers are enhancing its growth prospects [3] Operational Developments - APLD is finalizing a lease agreement with a U.S.-based hyperscaler for its 100 MW facility at the Ellendale HPC campus, which is currently under construction [5] - The company has successfully energized its on-site main substation transformer in the Ellendale HPC center [6] - APLD plans to accelerate the monetization of its more than 1.4 gigawatt pipeline and expects to deploy additional clusters in the second half of fiscal 2025 [7] - The company has added two additional clusters to its Cloud Services Business, increasing the total to six clusters, each containing 1,024 GPUs [16] Partnerships and Collaborations - APLD has partnered with Hewlett Packard, which provides powerful and energy-efficient supercomputers to support large-scale AI through APLD's cloud service [8] - The company has supply agreements with Dell for the delivery of AI and GPU servers [8] - APLD has a diverse partner base that includes NVIDIA, Super Micro Computer, Hewlett Packard, and Dell Technologies [20] Financial Position - APLD's liquidity position has improved, ending the first quarter of fiscal 2025 with $86.6 million in cash, cash equivalents, and restricted cash, compared to $31.7 million at the end of fiscal 2024 [10] - The company entered into definitive agreements for a $160 million private placement with institutional and accredited investors, including NVIDIA [9] - APLD's debt increased to $143.6 million compared to $125.4 million at the end of fiscal 2024 [10] Valuation Metrics - APLD is currently trading at a forward 12-month Price/Sales (P/S) ratio of 5.08X, which is higher than its median of 2.34X and the industry's 2.63X [12] - The company's valuation is considered stretched, with a Value Score of F indicating potential concerns for investors [25]