Applied Digital APLD Q2 2025 Earnings Transcript

Core Insights - Applied Digital reported strong financial results for the fiscal second quarter of 2025, with revenues of $63.9 million, representing a 51% increase year-over-year, driven by growth in cloud services and data center hosting segments [13][14] - The company announced a strategic partnership with Macquarie Asset Management, which includes a $5 billion perpetual preferred equity financing facility, aimed at supporting the development of its high-performance computing (HPC) data center campus in Ellendale, North Dakota [9][10] - The demand for data center capacity is expected to grow significantly, with a projected shortfall of approximately 36 gigawatts in power available for U.S. data centers by 2028, positioning Applied Digital favorably to capitalize on this trend [18][19] Financial Performance - Revenues for the fiscal second quarter were $63.9 million, up from the previous year, with the Data Center Hosting segment generating $36.2 million and the Cloud Services segment contributing $27.7 million [13] - Cost of revenues increased to $52.4 million, primarily due to the growth in business operations [14] - The net loss attributable to common stockholders was $138.7 million, influenced by a loss on the conversion of debt and changes in fair value [15][16] Business Developments - The company has 286 megawatts of data center capacity for cryptocurrency clients, fully contracted and operating at full capacity [4] - Applied Digital is constructing a 400-megawatt campus in Ellendale, North Dakota, with a significant milestone reached in December 2024 [5][6] - The partnership with Macquarie will allocate up to $900 million for the Ellendale campus and provide the right of first refusal for an additional $4.1 billion for future projects [10][11] Market Positioning - Applied Digital aims to establish itself as a leader in the Tier 3 data center infrastructure sector, leveraging its strategic partnerships to enhance its market position [12][19] - The company is well-positioned to meet the growing demand for high-performance computing and AI applications, with ongoing evaluations of new opportunities in its pipeline [5][19] - The strategic investments from Macquarie and others validate the company's vision and approach, lowering the cost of capital and accelerating development [19]