Core Insights - Applied Digital Corporation (APLD) shares have increased by 52% in June, outperforming the Financial - Miscellaneous Services industry's 9.3% rise, driven by growing demand for AI services and infrastructure progress [1][8] - APLD has entered into two 15-year lease agreements with CoreWeave, expected to generate $7 billion in total revenues, enhancing its AI and HPC infrastructure presence [7][8] Industry Trends - Major tech companies like Microsoft and Meta are signaling increased demand for hyperscale, colocation, and AI workloads, with Meta planning to invest $62.5 billion and Microsoft projecting $80 billion in capital expenditures by 2025 [2] - Other tech giants, including Amazon, Alphabet, and Oracle, are also expanding their AI data center capacities to support cloud services [2] Financial Performance - APLD reported a loss of $0.16 per share for Q3 FY2025, compared to earnings of $0.52 per share a year ago, despite robust sales growth [3] - The company is expected to see a small sales uptick in Q4, with earnings projected to improve by nearly 81% year over year [3] Growth Drivers - APLD has deployed nearly $1 billion in assets over the past year for data center construction, currently operating 286 megawatts of contracted hosting capacity, primarily for Bitcoin miners [9] - The company is building three new facilities expected to add 700 megawatts of capacity by 2027, significantly scaling its footprint for HPC and AI workloads [9] Capital and Funding - APLD secured a $150 million equity facility to raise capital for HPC infrastructure expansion, addressing significant cash burn from elevated capital expenditures [10] - The company ended Q3 with $100 million in cash, down from $308 million in the previous quarter, but the new facility is expected to provide necessary liquidity for growth [10] Sales and Earnings Estimates - Zacks Consensus Estimates project sales of $44.78 million for the current quarter and $46.83 million for the next quarter, with year-over-year growth estimates of 34.25% for the current year [11] - EPS estimates show a year-over-year growth of 80.77% for the current quarter, with expectations of improved profitability in the coming periods [12] Challenges - APLD faces rising costs due to increased depreciation of newly built facilities, which may pressure near-term profitability [13] - Seasonal fluctuations in power costs have impacted margins, and a significant drop in Cloud Services revenues was noted during the transition to a multi-tenant model [13][14] Valuation - APLD stock is currently trading at a premium, with a forward price-to-sales ratio of 9.24X compared to the industry average of 3.86X, indicating a lofty valuation [16] Conclusion - Despite near-term challenges, APLD is strategically positioned for long-term growth in the AI and HPC infrastructure market, with strong partnerships and expansion plans [19] - The outlook remains promising for APLD as it aims to convert investments into sustainable revenue streams [19]

Core Viewpoint - Applied Digital Corporation (APLD) has experienced a significant share price increase of 69.4% over the past month, driven by positive industry trends despite previous declines due to industry-specific challenges [1][2]. Company Performance - APLD reported a loss of 16 cents per share in the first quarter, a decline from earnings of 52 cents per share a year ago, attributed to higher depreciation and amortization expenses despite robust sales growth [3]. - The company's stock has outperformed the broader Finance sector, which grew by 2.6%, and the S&P 500 Index, which increased by 4.4% [2]. Industry Trends - Major hyperscalers like Microsoft and Meta are planning substantial investments in AI services, with Meta investing $62.5 billion and Microsoft potentially reaching $80 billion in capital expenditures by 2025, indicating strong demand for AI-focused data centers [6]. - APLD's Data Center Hosting sales declined by 7% year over year in the first quarter, but rising demand may lead to securing its first hyperscaler customer at the Ellendale facility, which could significantly boost future sales [6]. Expansion and Financial Position - APLD has invested nearly $1 billion in assets over the past year, primarily for data center construction, and currently operates 286 megawatts of fully contracted data center hosting capacity [7]. - The company secured a $150 million equity facility to support its HPC infrastructure expansion, addressing substantial cash burn from high capital expenditures [8]. Short-Term Challenges - Rising costs, particularly from higher depreciation expenses and seasonal power cost fluctuations, are expected to pressure APLD's bottom line in the near term [9]. - APLD experienced a 35.7% sequential decline in Cloud Services revenues due to technical challenges in transitioning to a multi-tenant on-demand model, although the issue has been resolved [9][10]. Valuation Concerns - APLD's stock is currently trading at a premium, with a forward 12-month price-to-earnings (P/S) ratio of 7.02X compared to the industry average of 3.48X, indicating a lofty valuation [11]. Conclusion - The recent surge in APLD's share price has led to a significant increase in its valuation, making it an expensive choice currently, with margins likely to remain under pressure [15].

Core Viewpoint - Cipher Mining Inc. intends to offer $150 million in convertible senior notes due 2030, with an option for underwriters to purchase an additional $22.5 million to cover over-allotments [1][2]. Group 1: Offering Details - The notes will be senior, unsecured obligations, accruing interest payable semiannually and maturing on May 15, 2030 [2]. - Noteholders can convert their notes under certain conditions, with settlement options including cash, common stock, or a combination of both [2][5]. - The notes are redeemable at Cipher's option starting May 22, 2028, if the stock price exceeds 130% of the conversion price for a specified period [3]. Group 2: Repurchase Rights - In the event of a "fundamental change," noteholders may require Cipher to repurchase their notes for cash at the principal amount plus accrued interest [4]. - Noteholders can also require repurchase on May 15, 2028, under similar terms [4]. Group 3: Use of Proceeds - The net proceeds from the offering will be used to complete Phase 1 of the Black Pearl data center project, including purchasing mining rigs, paying tariffs, and other capital expenditures [6]. - An amendment to the Future Sales and Purchase Agreement with Bitmain Technologies allows for an updated delivery schedule and a 10% cost reduction for early payment [6]. Group 4: Concurrent Offering - Morgan Stanley will conduct a concurrent delta offering of Cipher's common stock to facilitate hedging transactions for purchasers of the notes [7]. - The completion of both the notes offering and the concurrent delta offering is interdependent [7]. Group 5: Regulatory Compliance - The offerings are made under an effective shelf registration statement with the SEC, and detailed information will be provided in prospectus supplements [8]. Group 6: Company Overview - Cipher focuses on developing and operating industrial-scale data centers for bitcoin mining and high-performance computing (HPC) hosting, aiming to be a market leader in innovation [10].

Core Viewpoint - Applied Digital Corporation (APLD) has experienced a significant decline in its stock price following disappointing third-quarter fiscal 2025 results, raising concerns about its near-term performance while maintaining a long-term growth potential in high-performance computing [1][2][17]. Financial Performance - APLD reported a loss of 16 cents per share, which was worse than the Zacks Consensus Estimate of a loss of 11 cents, and a revenue of $52.9 million, missing the estimate by 16.75% [1][2]. - The company had earnings of 52 cents per share in the same quarter last year, indicating a substantial year-over-year decline [2]. Revenue and Business Segments - The revenue miss was primarily due to a 35.7% sequential decline in the Cloud Services business, attributed to technical challenges in transitioning to a multi-tenant on-demand model [6]. - APLD has invested nearly $1 billion in assets over the past year, focusing on building infrastructure for its High-Performance Computing (HPC) Data Center Hosting business [7]. Future Growth Potential - APLD is constructing three new buildings expected to increase its data center hosting capacity by 700 megawatts by 2027, with the first building, a 400 megawatt campus, anticipated to be operational by 2025 [8]. - The global high-performance computing market is projected to grow from $48.51 billion in 2022 to $87.31 billion by 2030, with a CAGR of 7.5%, indicating a favorable environment for APLD's growth [13]. Strategic Moves - The company is planning to sell its Cloud Service business to focus on its HPC segment, which is expected to generate significant funds for further investment in data centers [14]. - APLD's partnerships with major companies like NVIDIA, which holds a significant stake in APLD, could provide additional support for its growth strategy [16]. Investment Outlook - Despite the current stock price decline, APLD is viewed as a speculative investment with potential for significant rewards in the HPC hosting sector, appealing to investors with a high risk tolerance [15]. - The recommendation is to hold APLD stock for now, as the company may recover from its current challenges, particularly in the Cloud Service business [17].

Core Insights - Applied Digital Inc. has shifted its focus from cryptocurrency mining hosting to artificial intelligence (AI) and high-performance computing (HPC) workloads, reflecting a strategic pivot in its business model [1][11] - The company is currently constructing its first AI data center in Ellendale, North Dakota, with plans for additional facilities, aiming to meet the growing demand for AI data center capacity [7][8] - Applied Digital's stock has experienced volatility, with a significant drop in value despite the hype surrounding AI data centers, raising questions about the company's execution and ability to secure major clients [2][11] Company Performance - For fiscal Q3 2025, Applied Digital reported an earnings per share (EPS) loss of $0.08, which was better than consensus estimates by $0.02, while revenues grew 22.1% year-over-year to $52.92 million, falling short of the expected $64.82 million [9][10] - The Data Center Hosting business generated $35.2 million, down 7% year-over-year, while the Cloud Services business saw a significant increase of 220% year-over-year to $17.8 million, although this segment is planned for sale [10] Industry Context - The demand for AI data centers is being driven by major hyperscalers like Meta, Microsoft, Amazon, Alphabet, and Oracle, all of which are investing heavily in expanding their AI data center capabilities [6][5] - AI data centers require specialized infrastructure to handle higher electrical capacities and advanced cooling solutions, differentiating them from traditional data centers [4][3] Future Outlook - Macquarie Asset Management plans to invest $5 billion to support Applied Digital's AI data center initiatives, which will help build up to 2 GW of capacity [4] - Analysts have set a 12-month stock price forecast for Applied Digital at $10.67, indicating a potential upside of 170.73% from the current price of $3.94 [9]

Financial Performance - Applied Digital (APLD) reported a third-quarter fiscal 2025 loss of 16 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 11 cents, compared to earnings of 52 cents per share in the same quarter last year [1] - The company generated revenues of $52.9 million for the third quarter, reflecting a 22.1% year-over-year increase, although it missed the Zacks Consensus Estimate by 16.75% [2] - The Cloud Services business revenues increased by 220% year over year to $17.8 million, but saw a sequential decline of 35.7% due to a shift in contract models [3] Business Segments - The Data Center Hosting segment generated $35.2 million in revenues, representing a 7% year-over-year decline [3] - The High-Performance Computing (HPC) Data Center Hosting business is negotiating with multiple U.S.-based hyperscalers to lease up to 400 MW of capacity, including ongoing construction at the Ellendale HPC data center [4] Cost Management - Selling, general and administrative expenses decreased by 24.3% year over year to $22.7 million [6] - Adjusted EBITDA for the quarter was $10 million, a significant improvement from a loss of $1.3 million year over year [6] - Adjusted operating loss narrowed to $8.8 million from a loss of $23.4 million in the previous year [6] Strategic Initiatives - The board of directors approved a plan to divest the Cloud Services Business to focus on core data center operations [7] - APLD secured a $375 million financing arrangement with Sumitomo Mitsui Banking Corporation to repay outstanding debts and fund the development of new data center buildings [8] - The company maintains a strategic partnership with Macquarie Asset Management, which has the right to invest up to $5 billion for the expansion of next-generation data centers [9] Balance Sheet - As of February 28, 2025, APLD had cash, cash equivalents, and restricted cash totaling $261.2 million against a debt of $689.1 million [10]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $52.9 million, up 22% compared to the prior year [21] - Cost of revenues increased by $2.1 million to $49.1 million from the prior comparable period [23] - Net loss attributable to common stockholders was $36.1 million or $0.16 per share [24] - Adjusted net loss was $17.8 million or $0.08 per diluted share, with adjusted EBITDA increasing 878% to $10 million [25] Business Line Data and Key Metrics Changes - Data center hosting segment generated $35.2 million in revenue, while cloud services segment contributed $17.8 million [21] - Cloud services revenue declined sequentially due to a shift to an on-demand model, but technical issues have been resolved [22] Market Data and Key Metrics Changes - The company operates 286 megawatts of fully contracted data center hosting capacity, running at full capacity [9] - Bitcoin prices remain strong, positively impacting customer sentiment and business prospects [9] Company Strategy and Development Direction - The company is exploring strategic options for its cloud services business, driven by competitive dynamics and potential transition to a data center REIT structure [15][16] - Significant investments have been made, including a $5 billion potential investment from Macquarie Asset Management and a $375 million financing arrangement with Sumitomo Mitsubishi Bank [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business and its future prospects, particularly in the high-performance computing industry [9] - The company is focused on completing construction on schedule and within budget, with plans for future expansions [28] Other Important Information - The company ended Q3 with $261.2 million in cash and $689.1 million in debt [27] - Construction for the first building is expected to generate revenue in Q4 2025, with subsequent buildings planned for 2026 and 2027 [13] Q&A Session Summary Question: Update on the split between on-demand and contracted cloud services - Currently, four of six clusters are in reserve contracts, while two have moved to on-demand, generating some revenue [33] Question: Long-term fit of the BTC hosting business - BTC assets are expected to align with HPC data center capacity, allowing for dynamic load adjustments [34] Question: Impact of Macquarie and SMBC on leasing momentum - Increased interest has been noted, with improved comfort levels among potential customers due to world-class financing partners [42] Question: Expected capital needs over the next 12 to 18 months - Capital expenditures are in line with past projections, running between $30 to $50 million per month for the first building [44] Question: Status of Bitcoin hosting contracts - Approximately two years remain on existing contracts, with some risk of non-renewal [46] Question: Remaining steps to complete the L&A facility - The facility is expected to be operational by Q4 2025, with remaining expenditures primarily for finishing touches and equipment deployment [51] Question: Plans for selling the cloud business - The process has just started, with various potential structures being evaluated [56] Question: Existing hyperscalers' disposition towards data center builds - Demand remains stable, with ongoing discussions with multiple hyperscalers [64] Question: Pricing trends for data center services - Pricing has been stable over the last 90 days but has increased year-over-year [69] Question: Sale process and potential lessors' requirements - There are no hard requirements for the sale process, but it is seen as the right time to separate the cloud business [83]

Financial Data and Key Metrics Changes - Revenues for Q3 2025 were $52.9 million, up 22% compared to the prior year, driven by growth in the cloud services business due to additional GPU clusters [21] - Cost of revenues increased by $2.1 million to $49.1 million, primarily due to business growth and additional services provided [23] - Net loss attributable to common stockholders was $36.1 million, or $0.16 per share, while adjusted net loss was $17.8 million, or $0.08 per diluted share [24][25] - Adjusted EBITDA increased by 878% to $10 million [25] - The company ended the quarter with $261.2 million in cash and $689.1 million in debt [27] Business Line Data and Key Metrics Changes - Data center hosting segment generated $35.2 million in revenue, while cloud services contributed $17.8 million [21] - Cloud services revenue declined sequentially due to a shift to an on-demand model, which caused technical hurdles that have since been resolved [22] Market Data and Key Metrics Changes - The company operates 286 megawatts of fully contracted data center hosting capacity, running at full capacity [9] - The Ellendale campus is viewed as a strategic asset with significant expansion opportunities beyond the initial 400 megawatts of critical IT load [12] Company Strategy and Development Direction - The company is exploring strategic options for its cloud services business, driven by customer perceptions of competition and potential transition to a data center REIT structure [15][16] - The construction of the first building at the Ellendale campus is on schedule, expected to generate revenue in Q4 2025, with additional buildings planned for 2026 and 2027 [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business due to strong Bitcoin prices and ongoing discussions with financial institutions for leasing opportunities [9][11] - The company remains confident in its growth trajectory and the positive trends across its business [17] Other Important Information - The company has deployed nearly $1 billion in assets over the past year, focusing on data center construction [18] - The high cost of capital remains a challenge, but recent financing arrangements have strengthened the company's financial position [19][20] Q&A Session Summary Question: Update on the split between on-demand and contracted for cloud services - Four of the six clusters remain in reserve contracts, while two have moved to on-demand, generating small revenue [33] Question: Long-term fit of the BTC hosting business - BTC assets are expected to fit into a restructure, with a long-term match between HPC data center capacity and Bitcoin hosting capacity [34] Question: Impact of Macquarie and SMBC on leasing momentum - Increased interest has been noted, with improved comfort levels regarding construction and operational capabilities [42] Question: Expected capital needs over the next 12 to 18 months - Capital expenditures are in line with past projections, running between $30 to $50 million a month for the first building [44] Question: Status of Bitcoin hosting contracts - Approximately two years remain on the contracts, with some risk of non-renewal [46] Question: Remaining steps to complete the Ellendale facility - The facility is expected to be operational by Q4 2025, with remaining CapEx focused on finishing touches and backup power systems [51] Question: Plans for selling the cloud business - The process has just started, with no specific updates or expectations provided at this time [56] Question: Existing hyperscalers' disposition towards data center builds - Demand remains stable, with ongoing discussions with multiple hyperscalers [64] Question: Pricing trends for data center services - Pricing has been stable over the last 90 days but has increased year-over-year [69] Question: Sale process and potential lessors' views - There are no hard requirements from potential lessors regarding the sale process [83]

Financial Data and Key Metrics Changes - In Q4 2024, GAAP revenues increased by 29% quarter-over-quarter, reaching $35 million from $27.1 million in Q3 2024, and year-over-year increased by 102% from $69.2 million in 2023 to $140.1 million in 2024 [28] - The GAAP net loss in Q4 2024 was $29.2 million compared to a net loss of $22.7 million in Q3 2024, while the net loss for 2024 was $72.4 million compared to a net loss of $73.4 million in 2023 [39] - Non-GAAP adjusted EBITDA for Q4 2024 was $2.5 million, down from $6.3 million in Q3 2024, while adjusted EBITDA for 2024 was $60.4 million compared to $31.9 million in 2023 [39] Business Line Data and Key Metrics Changes - The WULF Mining business doubled revenue and adjusted EBITDA year-over-year, driven by higher Bitcoin production and favorable Bitcoin pricing [10] - In Q4 2024, the company mined 423 Bitcoin, a 24% decrease from 555 Bitcoin in Q3 2024, but stable when excluding the impact of the Nautilus sale [27] - The hash rate achieved by WULF Mining was 9.7 exahash per second, with expectations to increase to 13.1 exahash per second upon full deployment of new miners [10] Market Data and Key Metrics Changes - The company reported a 55% increase in realized power prices from $0.038 per kilowatt hour in Q3 2024 to $0.059 per kilowatt hour in Q4 2024 [29] - The power cost per Bitcoin mined was $46,328 in Q4 2024, compared to $30,448 in Q3 2024, reflecting increased energy costs [30] Company Strategy and Development Direction - The company aims to contract and deploy 100 to 150 megawatts of HPC hosting capacity annually over the next three years, with a focus on scaling WULF Compute to meet demand for high-density compute infrastructure [16] - TeraWulf is prioritizing the Cayuga site for expansion, expecting to add 150 megawatts of capacity in 2026, scalable to 400 megawatts by 2028 [19] - The company is actively evaluating additional site opportunities beyond the 750 megawatts available at Lake Mariner, leveraging its expertise in energy infrastructure [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for HPC and AI compute infrastructure, despite some headlines suggesting a slowdown in hyperscaler demand [15] - The company remains focused on optimizing its mining operations while transitioning to HPC hosting, driven by customer demand rather than solely by Bitcoin prices [110] - Management highlighted the importance of energy development and ownership as a competitive advantage in securing new sites [120] Other Important Information - The company repurchased $150 million of stock as part of a $200 million buyback authorization, marking the first return of capital by any public Bitcoin miner [21] - TeraWulf's cash balance as of December 31, 2024, was $274 million, with total assets amounting to $787 million and total liabilities of $543 million [40] Q&A Session Summary Question: How is Mariner positioned for inference given the current demand? - Management indicated that both training and inference capabilities are supported at the Lake Mariner site, with existing contracts in place [48] Question: What geographies are attractive for additional site acquisitions? - The company is prioritizing the Cayuga site and is also looking at opportunities in Montana, Maryland, and Virginia [50][75] Question: What is the status of the initial 72 megawatts at CB-1? - Management stated that the initial 72 megawatts will be available in 2026, with ongoing discussions with customers regarding deployment [60] Question: How does the company view the impact of Bitcoin pricing on mining plans? - Management confirmed that the focus remains on becoming a premier HPC AI data center company, with Bitcoin mining being a secondary consideration [110] Question: What is the current status of project financing efforts? - Management expressed high confidence in project financing, noting significant demand from lenders and ongoing discussions with potential financing partners [126][130]