Applied Digital (APLD) Financials

Applied Digital’s financial profile is changing rapidly as it scales its data-center and high-performance computing infrastructure. Revenue reached $293.9 million in Q4 2026, more than doubling from approximately $126.6 million in each of the prior two quarters. Quarterly revenue also increased from $64.2 million in Q1. However, the sharp growth has not yet translated into operating profitability.

Gross profit improved substantially during fiscal 2026. Gross margin increased from approximately 13.4% in Q1 to 20.6% in Q2 and roughly 42.5% in Q3 and Q4. Despite this improvement, operating expenses remained elevated, reaching $223.5 million in Q4, including $166.2 million of selling, general and administrative expense and $56.8 million of other operating expenses. As a result, the company posted a $97.5 million operating loss in Q4 and an $82.4 million consolidated net loss.

Cash flow has improved on a quarterly basis, but the improvement has been accompanied by significant financing and capital spending. Operating cash flow rose from negative $82.0 million in Q1 2026 to positive $132.5 million in Q4. In contrast, capital expenditures increased to approximately $1.29 billion in Q4, compared with $775.2 million in Q3 and $552.1 million in Q2. Applied Digital funded much of this expansion through $2.45 billion of new debt and $929.5 million of common-stock issuance in Q4.

The latest available balance sheet, dated February 28, 2026, showed $1.73 billion of cash and equivalents plus $198.4 million of restricted cash. Current assets of $2.43 billion exceeded current liabilities of $1.02 billion. However, total debt was approximately $2.69 billion, while total liabilities reached $3.68 billion. The company’s retained earnings remained negative at $583.1 million, reflecting its history of net losses.

• Strong revenue acceleration: Q4 2026 revenue of $293.9 million was more than double the roughly $126.6 million reported in Q2 and Q3, indicating substantial expansion in the company’s operating platform.
• Significant gross-margin improvement: Gross margin expanded to approximately 42.9% in Q4 from 13.4% in Q1, suggesting better utilization, pricing, or revenue mix.
• Operating cash flow turned positive: Quarterly operating cash flow improved from negative $82.0 million in Q1 to positive $132.5 million in Q4, helped by favorable working-capital changes.
• Large liquidity position: The latest reported balance sheet included approximately $1.93 billion of cash and restricted cash, providing funding for continued construction and expansion.
• Asset base is expanding: Net property, plant and equipment increased from $772.7 million in November 2024 to $3.01 billion by February 2026, consistent with aggressive infrastructure investment.
• Cash flow quality requires monitoring: Q4 operating cash flow was supported by a $179.0 million increase from operating assets and liabilities, so some of the improvement may reflect working-capital timing rather than recurring earnings power.
• Reported figures include restatements and unusual items: Several earlier-period statements are identified as restated, and certain historical revenue and expense figures appear unusual, making long-term comparisons less precise.
• Persistent net losses: Applied Digital reported a consolidated net loss in each quarter of fiscal 2026, including an $82.4 million loss in Q4 and a $111.8 million loss attributable to common shareholders.
• Operating expenses remain too high: Q4 operating expenses of $223.5 million substantially exceeded gross profit of $126.0 million, leaving the company with a $97.5 million operating loss despite strong revenue growth.
• Capital intensity, leverage and dilution are rising: Q4 capital expenditures reached nearly $1.29 billion, while the company issued $2.45 billion of debt and $929.5 million of common equity. Weighted-average basic shares increased from 255.9 million in Q1 to 275.2 million in Q4, creating potential dilution for existing shareholders.

For investors, the central question is whether Applied Digital can convert its rapid infrastructure buildout into sustainable profits. Revenue growth, improving gross margins and positive operating cash flow are encouraging, but the company remains dependent on large debt and equity raises to finance expansion. Until operating expenses moderate and net income turns positive, APLD remains a high-growth, high-capital-intensity investment with considerable execution and financing risk.