Applied Digital (US:APLD)2025-04-14 21:00Financial 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]