Applied Digital Q3 Earnings Call Highlights

Key Points

• Applied Digital says demand from hyperscalers is accelerating as it brings online “one of the only 100 MW direct-to-chip liquid‑cooled data centers,” with PF1 and PF2 campuses progressing on time and Delta Forge One (300 MW) targeting initial operations in mid‑2027.
• Quarterly results showed a sharp operational step‑up with total revenue of $126.6M (up 139% q/q), adjusted EBITDA of $44.1M and adjusted net income of $33.2M, while GAAP net loss was $100.9M largely due to a $59.7M cloud write‑down.
• Financing moved forward for campus builds, including a disclosed $2.15B private offering of 6.75% secured notes for PF2, a CoreWeave lease restructuring that lifted an SPV to an A3 rating with a $50M LOC, and access to $4.1B of preferred equity for future projects.

Applied Digital NASDAQ: APLD executives highlighted accelerating demand for high-performance computing (HPC) data center capacity, progress across multiple large-scale campus builds, and a sharp step-up in quarterly revenue and adjusted profitability during the company’s fiscal third quarter 2026 earnings call.

AI data center buildout expands; first 100 MW liquid-cooled facility operating

Chairman and CEO Wes Cummins said Applied Digital’s early move into high-power-density AI infrastructure is translating into both operational credibility and financial contribution. Cummins noted the company now operates “one of the only 100 MW direct-to-chip liquid-cooled data centers in the world online today,” which he said helps demonstrate execution to hyperscalers.

On project execution, Cummins said buildings under construction at Polaris Forge One (PF1) and Polaris Forge Two (PF2) are “progressing on time and on budget,” despite winter conditions in North Dakota. At PF1, he said the first 100-megawatt building on the 400 MW CoreWeave campus is operating, while teams are building two additional 150 MW facilities in parallel. At PF2, described as a “200-MW investment-grade hyperscaler campus,” Cummins said foundations are largely complete, with work shifting to precast and interior mechanical, electrical, and plumbing activities.

The company also broke ground during the quarter on Delta Forge One, a planned 300 MW “critical IT load AI factory campus” in a southern U.S. market. Cummins said initial operations are expected in mid-2027. In the Q&A, he added that to meet that timeline he expects a lease for Delta Forge One “in the near term.”

Development pipeline shifts; South Dakota site delayed, four sites marketed

Applied Digital adjusted its site pipeline during the quarter. Cummins said the company decided to delay a South Dakota site as it evaluates long-term viability and looks to reallocate related power agreements. In the Q&A, he attributed the pause to not receiving a desired tax exemption from the legislature during the session.

Following those changes, Cummins said Applied Digital is now actively marketing four development sites and has added two additional sites into the pipeline. He listed the actively marketed sites as including Delta Forge One, an additional North Dakota site, and two sites in unnamed states. Subject to approvals, Cummins said the total grid power capacity across these locations is approximately 1 gigawatt, with some negotiations in advanced stages.

In response to questions about why the company is targeting southern markets, Cummins said site selection is driven first by “where power is available,” followed by factors such as fiber, market crowding, labor availability, and business-friendly state leadership. He also emphasized the company’s focus on grid power, saying hyperscalers it is targeting still prefer grid-connected solutions versus “behind the meter” or on-site generation concepts.

Quarterly results: revenue jumps to $126.6M; adjusted EBITDA $44.1M

CFO Saidul Momand said the quarter reflected a full period of lease revenue from the company’s 100 MW data center in the HPC hosting business. Applied Digital reported total revenue of $126.6 million, which Momand said represented a 139% increase from the comparative prior quarter.

By segment, Momand reported:

• HPC hosting revenue: $71.0 million, including $44.1 million in base rents, $18.9 million in tenant fit-out services, and $8.1 million from power pass-through and other ancillary revenue. Segment operating profit was $17.6 million.
• Data center hosting (crypto sites): $37.5 million, up 7% year-over-year, with operating profit of $13.9 million. Momand called it the company’s highest return-on-assets business, noting $13.9 million in operating profit on $119.6 million of reported assets.
• Cloud: $18.1 million in revenue was consolidated. Momand said the company recorded a $59.7 million non-cash write-down due to reclassification from held-for-sale, resulting in a segment loss of $52.2 million. Because the cloud business is being separated, the company excluded the segment from non-GAAP results.

Applied Digital posted a net loss attributable to common stockholders of $100.9 million, or $0.36 per share. On an adjusted basis, Momand reported adjusted net income of $33.2 million, or $0.09 per share. Depreciation was approximately $18.5 million, and adjusted EBITDA was $44.1 million.

On expenses, Momand said cost of revenue rose $23.7 million, driven mainly by tenant fit-out services, higher personnel costs, higher energy costs in the data center hosting business, and increased depreciation and amortization, partially offset by lower lease-related expenses. SG&A increased $57 million to $79.7 million, driven primarily by $39.3 million of stock-based compensation, professional services expenses tied to legal support for transactions and growth, higher personnel costs, and other SG&A items.

Financing and credit enhancements: CoreWeave lease restructuring, PF2 notes, remaining PF1 tranche

Momand said Applied Digital has completed the majority of its equity and debt financing for its first two campuses. He referenced a previously disclosed $2.15 billion private offering of 6.75% senior secured notes due 2031 to support 200 MW of critical IT load at PF2. He said the company has “only one remaining tranche of debt to place for the final 150-MW building” at PF1.

Momand also described amendments executed March 30, 2026 with CoreWeave that restructured portions of the ELN-02 and ELN-03 leases through a CoreWeave-owned special purpose vehicle. He said the changes included “unconditional springing parent guarantees from CoreWeave Inc” and a $50 million letter of credit. Momand said the SPV received an investment grade A3 rating, “a meaningful improvement from its previous BB rating,” and he believes the improved credit support de-risks existing lease capacity and could help lower cost of capital for the remaining financing, while cautioning there are no guarantees on timing or pricing.

In the Q&A, Momand said investment-grade spreads are generally “sub 300 basis points,” while “single Bs to double Bs can be anywhere from 350-450 basis points,” depending on structure and offtake. Asked about PF2 financing escrow tied to the 2031 notes, Momand said the energy services agreement (ESA) must be finalized among the utility and counterparties, and noted substation construction as the “longest pole in the tent,” while stating progress is on schedule.

Momand also outlined a longer-term financing approach, saying the company has access to $4.1 billion in preferred equity from Aquaria Asset Management following an executed lease with an investment-grade hyperscaler, with debt financing intended to follow a similar approach.

Demand commentary, contracting goals, and power strategy including Base Electron

Cummins said he is seeing “clear acceleration” in demand for AI data center capacity and described hyperscalers as “as aggressive as we’ve ever seen them.” In the Q&A, he said Applied Digital is seeing “multiple hyperscalers at every location with interest” for the sites being marketed, but emphasized the company is focused on getting the “right tenant and the right contract,” rather than setting artificial deadlines for announcements.

Cummins detailed an internal goal to have 70% of contracted revenue investment grade. He said the company has approximately $16 billion in contracted lease revenue, consisting of $11 billion with CoreWeave and $5 billion with an investment-grade hyperscaler. He also said Applied Digital remains in exclusivity with a hyperscaler on three sites, and he expects PF2’s remaining 100 MW to be contracted “in the near term.”

On ramp timing, Cummins said PF1’s next building has an RFS date of July 1, with data halls energizing in stages through July, August, and September. He said revenue should begin stepping up in the August quarter, with a “close to a full quarter” contribution in the November quarter, followed by a ramp pattern as PF2’s first building comes online later in the year and additional capacity comes online in fiscal 2027.

Cummins also discussed Applied Digital’s support of Base Electron, an independent power producer, which he said plans to work with Babcock & Wilcox to build a power plant supplying roughly 1.2 GW of natural gas-fired generation capacity to the grid in the Dakotas. Cummins said Applied Digital is providing limited credit support via a project guarantee that will terminate once Base Electron raises at least $50 million in financing or completes an IPO. In exchange, Cummins said Applied Digital shareholders will own approximately 10% of the new company. He said the structure keeps power generation risk outside of Applied Digital while still providing upside, and he described the effort as intended to add power to the grid rather than build generation solely for Applied Digital’s sites.

Momand said the company ended the quarter with $2.1 billion in cash and cash equivalents and $2.7 billion in debt, with no significant maturity due in the next two years, and approximately $1.6 billion in equity. Cummins closed by reiterating a long-term NOI target of $1 billion within five years and said management has implemented internal targets at both $1 billion and $2 billion NOI levels.

About Applied Digital NASDAQ: APLD

Applied Digital NASDAQ: APLD is a technology company specializing in the development and operation of large-scale digital infrastructure and sustainable Bitcoin mining solutions. Through its integrated platform, the company designs, builds and manages turnkey data center facilities while also providing comprehensive hosting services for cloud, colocation and enterprise computing needs. Applied Digital's modular approach to facility design enables rapid deployment of capacity and streamlined integration of power, cooling and network connectivity.

In addition to its data center business, Applied Digital operates a network of Bitcoin mining sites that leverage vertically integrated capabilities, including hardware procurement, mining farm engineering, energy management and real-time performance monitoring.

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