Applied Digital (US:APLD)2025-10-09 22:02Financial Data and Key Metrics Changes - Revenues for the first fiscal quarter of 2026 were $64.2 million, up 84% from $34.8 million in the fiscal first quarter of 2025, primarily due to $26.3 million from tenant fit-out services [18][19] - Adjusted net loss was $7.6 million or $0.03 per share, while adjusted EBITDA was $0.5 million compared to $6.3 million the prior year [20][21] - The company ended the first fiscal quarter with $114.1 million in cash and $687.3 million in debt, excluding $362.5 million in proceeds from financing that occurred after the quarter end [21] Business Line Data and Key Metrics Changes - The HPC data center hosting segment expanded its long-term lease agreements with CoreWeave, increasing total contract value to approximately $11 billion [5][6] - The blockchain hosting business continues to operate 286 megawatts of fully contracted capacity across two North Dakota locations, with strong Bitcoin prices positively impacting customers [14] - The cloud services business is under strategic review and classified as held for sale, with no further updates until a definitive plan is available [14] Market Data and Key Metrics Changes - Publicly traded hyperscalers are projected to invest over $350 billion in AI data centers this year, highlighting unprecedented investment levels in AI infrastructure [8] - The Department of Energy estimates a power shortfall for data centers in the range of 40 to 50 gigawatts, with some experts suggesting it could exceed 90 gigawatts [22] Company Strategy and Development Direction - The company aims to strengthen its market position by establishing long-term contracts with hyperscale tenants, targeting a net operating income run rate of $1 billion within five years [22] - The company is focused on scaling development and construction, with 4 gigawatts in the active development pipeline and plans to shorten construction timelines to 12 to 14 months [13][22] - The company is committed to minimizing environmental impact through innovative design and infrastructure upgrades [25] Management's Comments on Operating Environment and Future Outlook - Management believes that the limiting factor in AI infrastructure deployment is the lack of suitable data centers, positioning the company to meet this challenge [9] - The company expects to see significant increases in net operating income anchored by long-term contracts with hyperscale tenants [22] - Management anticipates potential delays in construction timelines for some competitors, which may benefit proven vendors and developers [83] Other Important Information - The company has secured an initial $112.5 million draw from a $5 billion preferred equity facility with Macquarie Asset Management to advance construction of Polaris Forge 1 [15][16] - The company is in advanced discussions with an investment-grade hyperscaler regarding a lease for Polaris Forge 2 [7][11] Q&A Session Summary Question: What are the largest remaining factors for project financing? - Management indicated that project financing will involve both buildings and is one of the largest tenant-backed financings occurring in the market [30] Question: What is the current status of power infrastructure at Polaris Forge 2? - The initial utility power for Polaris Forge 2 is 280 megawatts, with infrastructure being built to meet the timeline for coming online in 2026 [32] Question: What is the timeline for new hyperscaler negotiations? - Management stated that negotiations are ongoing and will be a constant process, with expectations for contracts in the near term [37] Question: What are the expected terms for project financing? - Management expects the loan-to-cost ratio to be around 70% with pricing between 400 to 450 basis points over SOFR [47] Question: What is the status of supply chain for long lead equipment? - Management noted that lead times have stretched in the industry, but they secured manufacturing capacity two years ago to mitigate potential issues [72] Question: Is there expected power availability in South Dakota? - Power will be available in South Dakota in 2026, with the main gating item being a sales tax exemption for IT equipment [77]