Applied Digital Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
July 30, 2025

Key Takeaways

  • Positive Sentiment: Applied Digital signed a 15-year, 250 MW lease with CoreWeave at Polaris Forge One, valuing approximately $7 billion in contracted revenue, and CoreWeave has already exercised an option for an additional 150 MW.
  • Positive Sentiment: The company has streamlined its data center build process—cutting SKUs by 50% and reducing construction times from 24 to 12–14 months—to accelerate large-scale deployments.
  • Positive Sentiment: Post-quarter, Applied Digital raised approximately $270 million through its ATM program and Series G preferred stock and expects to finalize project financing for Polaris Forge One within 4–10 weeks.
  • Neutral Sentiment: Fiscal Q4 revenues rose 41% year-over-year to $38 million, with adjusted EBITDA of $1 million and a GAAP net loss of $26.6 million (adjusted loss of $7.6 million).
  • Neutral Sentiment: The board continues to review strategic alternatives for its cloud services business and will update shareholders when a decision is reached.
AI Generated. May Contain Errors.
Earnings Conference Call
Applied Digital Q4 2025
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Good afternoon, and welcome to the Applied Digital's Fiscal Fourth Quarter twenty twenty five Conference Call. My name is John, and I will be your operator today. Before this call, Applied Digital issued its financial results for the fiscal fourth quarter ended 05/31/2025, in a press release, a copy of which has been furnished in a report in a Form eight ks filed with the SEC will be available in the Investor Relations section of the company's website. Joining us on today's call are Applied Digital's Chairman and CEO, Wes Cummins and CFO, Saital Momand. Following their remarks, we will open the call for questions.

Operator

Before we begin, Matt Glover from Gateway Group will make a brief introductory statement. Mr. Glover, you may begin.

Matt Glover
Senior MD at Gateway Investor Relations

Thank you, operator. Hello, everyone, and welcome to Applied Digital's fiscal fourth quarter twenty twenty five conference call. Before management begins formal remarks, we'd like to remind everyone that some statements we're making today may be considered forward looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, that could cause actual results and events to differ materially from those described in the forward looking statements. For more detailed risks, uncertainties and assumptions related to our forward looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission or SEC.

Matt Glover
Senior MD at Gateway Investor Relations

We disclaim any obligation or undertaking to update forward looking statements to reflect circumstances or events that occur after the date the forward looking statements are made except as required by law. We also discuss non GAAP financial measures and encourage you to read our disclosures and the reconciliation tables to the applicable GAAP measures and earnings release carefully as you consider these metrics. We refer you to our filings with the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including, but not limited to, risks and uncertainties identified in the Risk Factors section of our Annual Report on Form 10 ks and our quarterly reports on Form 10 Q. You may access Applied Digital's SEC filings for free by visiting the SEC website at www.sec.gov. I would like to remind everyone that this call is being recorded and will be available for replay via a link available in the Investor Relations section of Applied Digital's website.

Matt Glover
Senior MD at Gateway Investor Relations

Now I'd like to turn the call over to Applied Digital's Chairman and CEO, Wes Cummins. Wes?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Thanks, Matt, and good afternoon, everyone. Thank you for joining our fourth quarter twenty twenty five conference call. I want to start by expressing gratitude to our employees for their continued hard work and service in supporting our mission of providing purpose built infrastructure to the rapidly growing high performance compute industry. Before turning the call over to our CFO, Saddam Momand, for a detailed review of our financial results, I'd like to share some recent developments across our business. Let me start with an update on our HPC data center hosting segment.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

During the quarter, we signed a transformative fifteen year lease agreements with CoreWeave, the AI hyperscaler, to deliver two fifty megawatts of critical IT load at our Ellendale, North Dakota campus, now named Polaris Forge One. These agreements are expected to generate approximately $7,000,000,000 in contracted revenue over the lease terms and to position Applied Digital as a leader in AI and HPC infrastructure. Last week, CoreWeave exercised their option for an additional 150 megawatts in a third building at Polaris Forge 1, underscoring the campus' potential as a scalable hub for next generation AI workloads. These long term leases mark a defining moment for Polaris Forge One, one of North America's most ambitious data center projects. Purpose built for artificial intelligence and high performance computing, the campus combines massive power capacity with rapid deployment and is designed to scale up to one gigawatt.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

With the first 100 megawatt facility scheduled to be operational in 2025, the second in 150 megawatt facility coming online in mid-twenty twenty six, and the third 150 megawatt facility planned for 2027. Polaris Forge One serves as a launchpad for the future of AI infrastructure, and we believe validates our vision to deliver reliable, power dense solutions and become a category leader in designing and building AI factories. Building on the momentum from these leases and the surging demand for AI infrastructure, we're actively marketing our multi gigawatt pipeline to a diverse group of customers. We believe one of our key strengths over the past two years has been refining our process by reducing the number of SKUs by approximately 50% and consolidating our suppliers. We believe our proprietary building design offers greater flexibility, and we've developed a repeatable process with minimal customization supported by a strong supply chain.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

As a result, we believe we've reduced our projected build times from twenty four months to twelve to fourteen months, allowing us to deliver on large scale commitments faster and more efficiently than before. At the same time, we're highlighting the many advantages of building in The Dakotas along with our unique design that features an innovative closed loop, direct to chip liquid cooling system. This design seeks to achieve a projected PUE of 1.18 and near zero water consumption intended to ensure exceptional efficiency and sustainability. We like this location for its abundant low cost energy, some of which is generated from stranded power with over two hundred days of free natural cooling. We have calculated that a 100 megawatt data center customer could save up to $2,700,000,000 over a thirty year period as compared to the current industry data centers in other regions.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Our strategic decisions in location and design are intended to position us to grow dramatically within the Dakotas and across other regions within our pipeline. Besides CoreWeave, we have completed the diligence and onboarding process with two other investment grade North American hyperscalers. This is an accomplishment that cannot be overstated. We have learned over the past two years that the onboarding, internal approval and contracting process with hyperscalers is longer and more complex than originally anticipated. We believe that the market leading experience gained from this process in signing our first leases will benefit us as we continue to engage potential tenants and execute on our pipeline.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

We also expect to benefit from this competitive advantage as new entrants to the market confront the time, money, and effort it takes to overcome these industry syncretic barriers to entry for other players. We also for us, we feel we are now in a position to do business with these companies in the future with a much shorter negotiating and contracting completion process. In fact, we are currently in various stages of negotiation with several investment grade hyperscalers for large capacity campuses other than our Polaris Forge 1 campus, with one of those negotiations being in an advanced stage. Given our past experience, we know these large and complex lease agreements require multiple levels of of approval, making it difficult to determine when and if any of them will be finalized. Now turning to our data center hosting business.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

We currently operate two eighty six megawatts of fully contracted data center hosting capacity for our cryptocurrency customers across two locations in North Dakota. Bitcoin prices remain strong, which is positive for our customers, and we remain optimistic about the business and its future prospects. Next, let's discuss our cloud services business, which provides high performance computing infrastructure for AI applications. As announced on our prior quarterly call, our Board of Directors determined that we would be reviewing strategic alternatives for this business. This process is ongoing, and we will provide an update as soon as we have more details to share with shareholders.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

With that, I will now turn the call over to our CFO, Saddal Momon, to walk through our financials. Saddal?

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

Thanks, Wes, and good afternoon, everyone. Now that we've signed the leases for Polaris Forge One, we're actively working with our financing partners to finalize the project financing for these data centers, which we expect to occur over the next four to ten weeks. Since the end of the quarter, we've raised approximately $270,000,000 between our ATM and Series G preferred stock. Combined with the significant equity we already have in the campus, we believe this puts us in a very strong position as we seek to wrap up the new financing package. Now let's turn to the quarter.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

Please note that unless otherwise specified, the figures we are about to discuss reflect continuing operations only and exclude the cloud services business. Revenues for the 2025 were 38,000,000 up 41% year over year over the prior comparable period. This increase was driven predominantly by an increase of capacity online in our data center hosting business. Cost of revenues increased $7,500,000 to $30,200,000 from the prior comparable period. This increase was also driven by an increase of capacity online in our data center hosting businesses.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

SG and A expense increased $15,000,000 to $28,100,000 The increase was driven by the company's overall business growth, which included an increase of $9,400,000 in stock based compensation due to accelerated vesting of certain employee stock awards and expenses related to the PSUs. Dollars 3,400,000.0 of personnel expense also increased largely driven by increases in headcount to support the business and $2,300,000 of other expenses, mainly software expenses and insurance premiums. This quarter, our depreciation and amortization expense increased to $4,100,000 compared to $3,600,000 in the same period in 2024. Interest expense decreased 9,300,000 to $4,500,000 Net loss attributable to common stockholders was $26,600,000 or $0.12 per basic and diluted share. The adjusted net loss attributable to common stockholders was $7,600,000 or $03 per diluted share.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

Our adjusted EBITDA was $1,000,000 for the quarter and we provided reconciliation for these metrics in the press release earlier today. Moving to our balance sheet, we ended the fiscal fourth quarter with $120,900,000 of cash, cash equivalents and restricted cash along with $688,200,000 in debt.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

As noted earlier, this does not include the additional $268,900,000 in proceeds from our ATM and Series G preferred stock offering that occurred post quarter. Turning to guidance. We historically have not provided specific forward looking guidance. However, given some of the near term dynamics related to the core releases, we will provide some directional guidance for the next quarter. We expect revenue to increase significantly sequentially beginning in the quarter ending for August 2025 due to the technical fit out of our first Polaris Forge one building.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

Note, our customer pays the cost of this fit out of a small margin to the company. This fit out revenue will largely be recognized in both the current fiscal quarter and as well as the quarter ending November 3025. Now this is before the actual lease revenue for the facility begins to be recognized. With that, I'll turn over the call to Wes for closing remarks.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Over the past two years, we've sought to build strong relationships with nearly all my major hyperscalers and demonstrated our advanced building capabilities by passing what we believe is some of the most rigorous technical due diligence and processes imposed by them in the industry. As a result, we've established relationships with several hyperscalers, which should position us for future projects. With the core we've leased, we believe we're now roughly halfway toward our internal goal of generating $1,000,000,000 in annual net operating income over the next five year over the next three to five years. We feel confident this is achievable, thanks to what we believe to be our competitive advantages for our multi gigawatt pipeline, proven design and construction expertise, and strong relationships with hyperscalers who appear to be more active than ever in pursuing land, power, and data center capacity. Overall, we see this as just the beginning for Applied Digital as we help drive the future of AI and high performance computing infrastructure, and we remain very optimistic about the road ahead. We welcome your questions at this time. Operator?

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed with the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline for the polling process, please press star followed by the number two.

Operator

Your first question comes from the line of Nick Giles from B. Riley Securities. Your line is now open.

Nick Giles
Senior Research Analyst at B.Riley Securities

Thanks, operator. Good afternoon, everyone. My my first question was just how we should think about development cadence over the course of 2026. And just wondering if there's a window where you could be breaking ground on a second campus, or would this be more of a twenty twenty seven groundbreaking, on a site other than Pigeon Forge?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Alright. Thanks, Nick. We we do expect to, break ground and work has already started for that on one additional campus and potentially two before the end of this year.

Nick Giles
Senior Research Analyst at B.Riley Securities

Got it. Okay. Thanks, Wes. Maybe just my second question would be, I think you provided a range on the financing for four to ten weeks. So I was just curious if you could add any additional color.

Nick Giles
Senior Research Analyst at B.Riley Securities

What would be the largest gating items at this point? Or or, you know, what could ultimately take you to, either end of that range?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

I'll I'll I'll say something first, Nick, and then turn it to Cital. But the I think the the biggest gating item in my mind right now in the process is just, how things generally slow down in the, you know, the August before they turn back on in September in the industry in general. And then I'll turn it over to Sidal for any comments he would like to make.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

I I think that's fair, Wes. I I would also add, you know, you're also relying on professional service providers to think about, consultants who will provide construction reports as well as, you know, these lawyers can do documents and turning documents. So that can always add some lag, but, we have a good team as well as a great, identified lead banking partner, who's both incentivized to, get this done on a expedited time frame given, there's a there's a lot to do. People excited of in the space in general.

Nick Giles
Senior Research Analyst at B.Riley Securities

Great. Well, guys, thanks for the update and, continue best of luck.

Operator

Thanks, Nick. Your next question comes from the line of Rob Brown from Lake Street Capital Market. Your line is now open.

Rob Brown
Senior Research Analyst, Founding Partner & Chief Strategy Officer at Lake Street Capital Markets

Good afternoon. Congratulations on all the progress.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Thanks, Rob.

Rob Brown
Senior Research Analyst, Founding Partner & Chief Strategy Officer at Lake Street Capital Markets

You talked about a, one customer being in advanced negotiations and and part of your large pipeline, but but could you give us a sense of, is this the customer that you've gotten through through a lot of the onboarding work, and and it's really down to the the contract, negotiation at this point? Or just give us a sense of where that's at.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Yes. So there's I I don't wanna give a lot of detail on it, Rob, from an to identify the customer, but it is an investment grade North American hyperscaler that we're we're we're in advanced negotiations with. So that's a pretty small group. And but but we're having ongoing discussions with, you know, four, five, six of the hyperscalers for the campuses that we're working on, both in in the Dakotas and outside of the Dakotas. But I would say that things have accelerated from that perspective, just in the market in general, in in the past month.

Rob Brown
Senior Research Analyst, Founding Partner & Chief Strategy Officer at Lake Street Capital Markets

Yep. Okay. Great. And then and then on the Ellendale facility, I think, you're doing fit out sort of starting, this this coming quarter. Just just what what's left to complete on that building, or is it really just getting the fit out and the customer started to to load the facility?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Yeah. It's mostly fit out, which is is is underway. And then, you know, the the customer will bring gear on-site and cabling and, you know, racking and cabling, and that's really what's left. And and the expectation is, you know, in calendar q four of this year that that that'll start to ramp up in in kind of October through November.

Rob Brown
Senior Research Analyst, Founding Partner & Chief Strategy Officer at Lake Street Capital Markets

Okay. Great. Thank you. I'll open it over.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Thanks, Rob.

Operator

Your next question comes from the line of Mike Grondahl from Northland Securities. Your line is now open.

Mike Grondahl
Head - Equities & Director - Research at Northland Capital Markets

Hey, Wes and Siedel. Hey, first, congratulations on the 150 megawatt option signed by CoreWeave. And related to the first two fifty from CoreWeave, the 100 megawatt building and the 150 megawatt building, how are terms looking on that project financing? Are those kinda coming in with with how you expected? Any color you could give us there.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Yeah. They're largely coming in as expected. I'll let Sydal give, any any details that he wants to give on that, but it's largely for me as expected.

Saidal Mohmand
Saidal Mohmand
CFO at Applied Digital

Yeah. Correct. And I think this is this is, you know, call it known within the industry for, similar financings for for this type of, tenant. Think about it if your investment grade, you're somewhere in the high two's, think about it low Silver plus low four's is generally where the cost is coming for this type of tenant as well as loan to cost or LTC's in the 70% range. That that is what we're seeing in the market, and it's it's becoming somewhat universal.

Mike Grondahl
Head - Equities & Director - Research at Northland Capital Markets

Got it. And then, you know, thinking of the 100 megawatts, then the 150, and then the second 150, do you have rough go live dates for each of those buildings?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Yeah. The so the the first hundred, as we mentioned, is q four of this year and then mid twenty six for the the second building, the one fifty, and then '27 for the following January. Got it. Yeah. And, Robert sorry, Mike. These are these are in, calendar quarters.

Mike Grondahl
Head - Equities & Director - Research at Northland Capital Markets

Got it. So that but that continues to progress well. Okay. Hey. Thanks, guys, and congratulations.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Thanks, Mike.

Operator

Your next question comes from the line of Darren Aftahi from ROTH. Your line is now open.

Darren Aftahi
MD & Senior Research Analyst at Roth Capital Partners, LLC

Hey, guys. Thanks for taking my questions and congrats as well. Question on Building 2. I know you said you guys have already broken ground, and I know you've invested a lot of money for the campus in general. The time frame looks like it's twelve months from now, plus or minus.

Darren Aftahi
MD & Senior Research Analyst at Roth Capital Partners, LLC

I I guess, is that an aggressive time frame? And if there's any slippage, are you penalized in terms of a credit against the lease? Or just kinda help me if you're a month or two late on that with CorWeave, how that kinda works out. And then my second question, there's a lot of commentary in the release in your white paper that you wrote about the Dakotas. I'm just kinda curious beyond South Dakota.

Darren Aftahi
MD & Senior Research Analyst at Roth Capital Partners, LLC

Are you more partial to looking at places where PUEs are super attractive maybe then, like, Southern Part Of The United States? Any color on that would be all. Thanks.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Sure, Darren. So on on Building 2, I got the most recent pictures from the campus today that the building's actually being erected now, so there's been a a significant amount of work done already from foundation and and dirt work. So the building is actually going up, and it's going up quickly. And feel, you know, great about that timeline. As I've mentioned in the script, you know, we we've worked really hard, and the team's worked really hard over the the past year streamlining what we do.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

And so we significantly reduced the the number of, you know, components to different suppliers so that we have a very repeatable streamlined process that's designed to to to be deployed in about half of the time that we did Building 1. There's a lot of learning, for us in Building 1 and some and a and a design that's much more flexible as well. So a higher liquid air mix, so that, you know, different tenants require different liquid air mixes. And then and then also designed to lower cost as well. So feel good about where that is, especially, you know, we're in the middle of the summer there, and the building's already going up.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

So we'll be enclosed for, for construction and fit out in the winter. And there but there are just standard lease, there are late delivery penalties for us. And then to the to your point on other campuses, it's not exclusively the Dakotas. We we feel really good in in North Dakota. You know, we have the the site in South Dakota we've been working on, but we have multiple campuses, large campuses in North Dakota.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

We have workforce there. We have the GC there that we worked really well with. And so we're we're really comfortable with all all of the pieces of the puzzle of North Dakota. And then, obviously, the the fiber, with the new line coming through as well, really enhancing the fiber connectivity in the state. But we have other sites, mostly in MISO that that that go, you know, really all the way to the southern part of of the country as well, but we're primarily focused in North Dakota right now.

Darren Aftahi
MD & Senior Research Analyst at Roth Capital Partners, LLC

Got it. Thank you.

Operator

Your next question comes from the line of George Sutton from Craig Hallum. Your line is now open.

George Sutton
Senior Research Analyst at Craig-Hallum Capital Group LLC

Thank you. My congrats as well. Wes, you mentioned that the hyperscalers are more active than ever. And I'm curious because some of them are seeming to wanna own their own infrastructure. Are we talking about scenarios where you would own the campus, like Ellendale, or are we talking, in some cases, about powered shelves?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

No. And and and thanks thanks for the congrats. The the the right now, we're very focused on full stack. We wanna own, the the full building. We wanna do operations, and that's really all of the the negotiations and the interest that we're fielding.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

There there is a preference, and there always has been, with hyperscalers to do self builds or powered shell. And then, when, you know, conditions are tight, they typically do colo agreements like the ones that we have and the ones that we're seeking to have in the future. But but right now, George, we're really sticking with the the full stack colo, versus powered shell. I don't I you know, it it might be interesting for us if we blended a campus, with some full stack and some powered shell, but right now, I don't have a lot of interest in just the powered shell. I I don't think it's necessarily a great business model as as a as a public company, maybe more so as a private company on the on the powered shell side.

George Sutton
Senior Research Analyst at Craig-Hallum Capital Group LLC

Great. And and then relative to what you're defining as the Dakota advantage, I'm just curious. Have you made any progress in South Dakota relative to the sales tax since that's a a very key gating item to deals?

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Yeah. We we have not, and that that's likely something in the next next legislative session next year. So we're right now, we're focused on, another large campus in North Dakota. That that's that's where we're in the advanced negotiations, and then a a campus in the Southern Part of The US and and MISO as well.

George Sutton
Senior Research Analyst at Craig-Hallum Capital Group LLC

Perfect. Thank you very much.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Thanks, George.

Operator

There are no further questions at this time. I will now turn the call over to Wes Cummins. Please continue.

Wes Cummins
Wes Cummins
Chairman and CEO at Applied Digital

Great. Thanks everyone for joining and I look forward to speaking to you in October.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Executives
Analysts
    • Matt Glover
      Senior MD at Gateway Investor Relations
    • Nick Giles
      Senior Research Analyst at B.Riley Securities
    • Rob Brown
      Senior Research Analyst, Founding Partner & Chief Strategy Officer at Lake Street Capital Markets
    • Mike Grondahl
      Head - Equities & Director - Research at Northland Capital Markets
    • Darren Aftahi
      MD & Senior Research Analyst at Roth Capital Partners, LLC
    • George Sutton
      Senior Research Analyst at Craig-Hallum Capital Group LLC
Powered by Quartr