Applied Digital Q4 Earnings Call Highlights

Key Points

• Revenue surged 407% year over year to $258.7 million, while adjusted EBITDA rose to $42.4 million from $1 million. The company still reported a net loss of $111.6 million, driven partly by elevated stock-based compensation.
• Applied Digital’s contracted AI data center capacity reached 1.41 gigawatts, representing approximately $36 billion in long-term lease value. Management is negotiating an additional 250 megawatts that could add more than $6 billion in contracted revenue.
• The company secured billions in project financing and ended the quarter with $4.2 billion in cash against $5 billion in debt. Management targets more than 5 gigawatts of capacity by 2032 and expects to reach its $1 billion net operating income run rate in about a year.

Applied Digital NASDAQ: APLD reported fiscal fourth-quarter revenue of $258.7 million for the period ended May 31, 2026, as the company expanded its contracted AI data center capacity and secured financing for additional campuses.

Chairman and CEO Wes Cummins said the company signed leases for five campuses during the fiscal year, including three during the past four months. Those agreements produced approximately $36 billion in total contracted long-term lease value, including about $20 billion added during the fourth quarter. Applied Digital said its contracted critical IT load across all campuses reached 1.41 gigawatts.

Cummins said the company recently signed leases for Polaris Forge 1, Polaris Forge 2 and Polaris Forge 3 with the same high investment-grade hyperscale customer. The campuses span three states and two regions. He said two of the campuses each represent about $7.5 billion in base-term contracted lease revenue, while the third adds approximately $5.2 billion, for roughly $20 billion in long-term revenue from that customer.

Financial Results and Segment Performance

Total revenue increased 407% from the comparable prior-year quarter, according to CFO Saidal Mohmand. Services revenue was $208.2 million, while data center rental and other revenue totaled $50.6 million.

The company’s HPC hosting business generated $203 million of revenue, including $152.4 million from tenant fit-out services, $44.1 million in base rent and $6.5 million in tenant recoveries. Its data center hosting segment, which provides energized space to Bitcoin-mining customers at two North Dakota locations, generated $37.3 million in revenue and $12.5 million in segment operating profit.

Applied Digital also consolidated $18.8 million of revenue from ChronoScale, its cloud business that began trading separately on Nasdaq under the ticker CHRN in early May. Applied Digital retains a 96% ownership interest in ChronoScale, but excluded the unit from its non-GAAP results because it now operates as a separate publicly traded company.

The company reported a net loss attributable to common shareholders of $111.6 million, or $0.39 per share. Adjusted net income was $12.9 million, or $0.04 per diluted share. Adjusted EBITDA was $42.4 million, compared with $1 million in the comparative prior-year quarter.

SG&A expenses rose to $165.3 million, primarily reflecting $116.8 million in stock-based compensation. Mohmand said that amount included $47.9 million in one-time awards related to the ChronoScale transaction and $65.1 million tied to performance stock units. Net operating income was $39.9 million, representing a 91% margin under the company’s definition of HPC base rental revenue less rental operating expenses, property taxes and insurance.

Capacity Buildout and Customer Expansion

Applied Digital delivered its first 100 megawatts at Polaris Forge 1 last fall and recently delivered another 75 megawatts at the campus, Cummins said. He said all current construction projects are on time and on budget.

The company is marketing an additional 1.7 gigawatts of capacity across multiple states. Cummins said market rental rates have increased over the past six months and that the company expects the new capacity to command higher pricing.

Management also said it is in advanced negotiations with two existing investment-grade customers on expansion leases totaling approximately 250 megawatts. The potential additions include 100 megawatts at Polaris Forge 2 and 150 megawatts at a Delta Forge campus. If completed, the expansions would bring total capacity to 1.66 gigawatts and add more than $6 billion in contracted revenue based on existing rates and durations, with management expecting higher pricing and potentially longer terms.

During the question-and-answer session, Cummins said the company expects materially higher pricing on both proposed expansions and future capacity agreements. He also said power availability and supply-chain capacity remain the principal constraints on growth, while Applied Digital continues to improve its construction process and manage labor availability in less-crowded development markets.

Financing and Balance Sheet

Mohmand said Applied Digital completed several financing transactions during and shortly after the quarter, including $2.15 billion of 6.75% senior secured notes for Polaris Forge 2, a $300 million senior secured bridge facility led by Goldman Sachs, a revolving credit facility of up to $550 million, and $1.59 billion of 7% senior secured notes for a fourth building at Polaris Forge 1.

The company said it has secured financing needs for the full 400 megawatts at Polaris Forge 1 and 200 megawatts at Polaris Forge 2. Mohmand said restructuring leases at Polaris Forge 1 through a special-purpose vehicle and establishing an agreement related to credit support helped the company place its recent notes at 7%, compared with roughly 9.25% for its initial placement.

Applied Digital ended the quarter with $4.2 billion in cash, $5 billion in debt and approximately $1.7 billion in equity. Mohmand said the vast majority of restricted cash was associated with the Polaris Forge 2 bond and had been released from escrow in June following the release of an energy services agreement.

The company expects capital expenditures of roughly $600 million in the upcoming quarter, with spending expected to rise as newer campuses move into more advanced construction stages.

Power Strategy and Long-Term Outlook

Applied Digital is working with Base Electron, an independent power producer in which it holds an approximately 10% stake, on roughly 1.2 gigawatts of front-of-the-meter natural-gas generation in North Dakota. Cummins said the initial Base Electron capacity is expected to come online in 2029 and 2030. He said additional generation and transmission projects would support future campus expansion in the region.

Cummins said the company sees a path to more than 5 gigawatts of critical IT load across existing campuses through 2032. He added that Applied Digital now expects to achieve its previously stated $1 billion net operating income run-rate target a year from now, which would be three years ahead of its original five-year goal.

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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