Live Earnings Coverage: Applied Digital Reports Earnings After the Bell

We’ll be slowing down updates on this live blog as we’ve posted our notes from the conference call and there’s no further news.

As of 6:20 p.m. ET, Applied Digital shares are up 13.8%. As we stated earlier in the live blog, staying for the conference call was important as it could move shares. That situation has come to pass.

The big news on the call was initially Applied Digital discussing a deepening of their partnership with CoreWeave. The second big event investors are digesting is that Applied Digital is in discussions with a hyperscaler for its campus and are in negotiations with two additional hyperscalers for 2 new locations.

In addition, the company is now discussing 4 gigawatts in development and under review.

So, it was an action-packed earnings call that turned out to be far more interesting than the release of Applied Digital’s earnings. We’d imagine there will be plenty of notes from Wall Street tomorrow speculating what new information shares on tonight’s call could mean for sales growth in the years ahead.

• Lastly, while availability of power has been the primary focus for the overall market, it is becoming a secondary focus for us. With 4 gigawatts in our active development pipeline and more under review, our primary focus has become scaling, development and construction.
• With that, the campus designed for future expansion. The initial development cost is projected to be approximately $3 billion with the potential to increase as additional power becomes available. We remain in finance discussions with an investment-grade hyperscaler regarding lease for this campus. We have also entered negotiations with 2 additional hyperscalers for 2 new locations.

Question 1 – Nicholas Giles (B. Riley)

• Question: Giles asked for an update on project financing for Polaris Forge 1 and whether the facility would cover only the first 150 MW or the entire 400 MW. He also asked what power infrastructure is in place at Polaris Forge 2 and how that supports the 2026–2027 timeline.

• Answer (CFO – Saidal): He said the company is pursuing a single project-finance facility that will cover both Ellendale buildings, which together represent the full 400 MW, and that terms are intended to be in line with or better than comparable transactions.

• Answer (CEO – Wes): He added that the Harwood site (Polaris Forge 2) is planned with roughly 280 MW of initial utility power, that required site infrastructure is underway, and that the company still expects first power in 2026 and full capacity in 2027.

Question 2 – Rob Brown (Lake Street)

• Question: Brown asked about the timeline for potential new hyperscaler wins at new locations and whether the company expects those discussions to move quickly. He also asked what constrains scaling Polaris Forge 1 and 2 to approximately one gigawatt each.

• Answer (CEO – Wes): He said negotiations with customers have become continuous, with some deals able to close in 90 to 120 days, and he expects a near-term contract for Polaris Forge 2 as part of an accelerating ~4 GW active pipeline. He explained that the limiting factors for scaling are transmission upgrades and incremental generation on the broader grid, and he noted a long-term goal of about 1.4 GW at Ellendale and just over 1 GW at Harwood, paced to match build cadence through 2027 with additional power targeted in 2028.

Question 3 – Mike Grondahl (Northland)

• Question: Grondahl asked what the $5 billion Macquarie Asset Management preferred facility enables strategically and how it affects future financing. He also asked for indicative project-finance terms for the Ellendale 400 MW.

• Answer (CEO – Wes): He said the Macquarie structure provides a repeatable, scalable funding model that ring-fences dilution at a subsidiary, reduces the need for public equity raises, and, when paired with project finance, can unlock $20–$25 billion of total capital for growth.

• Answer (CFO – Saidal): He said they expect loan-to-cost of about 70% (within a 70–80% market range) and pricing around SOFR + 400–450 bps, with a typical split between a lower-cost mortgage tranche (about SOFR + 300–335 bps) and a smaller second-lien/mezz piece (around 10%), blending near SOFR + ~425 bps; he added they aim to complete this within the fiscal quarter.

Question 4 – Darren Aftahi (ROTH)

• Question: Aftahi asked how the company defines its “active pipeline” and where the ~4 GW figure sits within that framework. He also asked whether the company has the people and supply chain to execute multiple sites on a roughly 12-month build schedule and what risks could threaten timelines.

• Answer (CEO – Wes): He said “active pipeline” refers to opportunities that can move into construction within six to twelve months, distinct from the longer-dated pipeline; he noted 700 MW are currently under construction and that the ~4 GW is in the active category. He added that internal staffing and processes are in place, that supply chain is the key industry bottleneck but they pre-secured capacity and standardized SKUs, and that they can execute at least one additional Dakota campus in parallel (possibly two, subject to local labor), while also adding other regions to diversify labor pools.

Question 5 –  George Sutton (Craig-Hallum)

• Question: The analyst asked whether hyperscalers now expect sites to deliver an initial 200 MW quickly and to scale to one gigawatt, and whether the two other discussed sites offer similar expansion paths. He also asked whether lease economics at Harwood should resemble those at Ellendale.

• Answer (CEO – Wes): He said the typical request is fast delivery of about 200 MW with a clear path to one gigawatt, with initial power requests shifting toward 2027, and he confirmed their sites are generally designed to scale accordingly, with some discussions even contemplating much larger single-site builds. He added that while headline rent can vary with tenant credit (e.g., investment-grade), the company targets a similar economic spread between lease rates and cost of capital so that returns are comparable.

Question 6 – Michael Donovan (Compass Point)

• Question: Donovan asked about supply-chain conditions and lead times for long-lead equipment like transformers and generators, and whether pricing or availability has shifted in the past six months. He also asked how much incremental funding Polaris Forge 1 still needs beyond Macquarie and project finance.

• Answer (CEO – Wes): He said industry lead times have stretched, but Applied Digital locked in capacity roughly two years ago and even bought manufacturing slots, so the company has not experienced meaningful pricing inflation or schedule slippage on its orders. He added that they do not expect to contribute additional parent-level funding to Polaris Forge 1 because the combination of Macquarie capital and project finance will cover it.

Question 7 – Needham (John Todaro)

• Question: The analyst asked for an update on South Dakota, including whether power could be available in 2026 or 2027.

• Answer (CEO – Wes): He said power should be available in 2026, but the gating item is a sales-tax exemption for IT equipment (already present in roughly 41 states), which they and other hyperscalers are actively pursuing; he emphasized that power availability is not the constraint there.

Question 8 – Nicholas Giles (B. Riley) – follow-up

• Question: Giles asked whether “within the quarter” for project-finance completion refers to the fiscal or calendar quarter and, if timing slips, how much additional draw is available from Macquarie. He also asked whether demand beyond 2027–2028 will still be driven primarily by power.

• Answer (CFO – Saidal): He clarified that “within the quarter” refers to the fiscal quarter; he did not provide a specific figure for additional Macquarie draw capacity in this exchange.

• Answer (CEO – Wes): He said that as the market matures, execution reliability will become as important as power, predicting a shakeout where new entrants miss construction timelines and proven developers capture greater share in 2027–2028.

Applied Digital’s conference call has ended and shares are up 9%. We’re going through our notes from the call and will post a summary shortly.

We put the quote that’s moving shares above. We said earlier in this live blog that the conference call could move shares and now its happened.

“Before I turn the call over to our CFO, Saidal Mohmand, I want to highlight several key developments across the business, beginning with our HPC data center hosting segment. This quarter, we expanded our long-term lease agreements with CoreWeave, a publicly traded AI hyperscaler. Previously, we had 250 megawatts under contract or our L&D North Dakota campus, Alaris Forge One. That agreement represents approximately $7 billion in contracted revenue over 15 years.

CoreWeave has since exercised its option and our leases now cover the full 400 megawatts of capacity currently under construction at Polaris Forge 1, increasing the total contract value to approximately $11 billion. In addition to the underlying leases, CoreWeave has engaged us to perform the tenant fit out for the first 100 megawatts of the 400-megawatt campus. This further deepens our operational integration and demonstrates the added value we bring as a strategic partner to our tenants. We will continue to invest in new technologies and continue to grow our technical expertise as we believe that we can replicate this value-added business model to other tenants. As a reminder, we believe Polaris Forge 1 has the potential to scale beyond 1 gigawatt starting in 2028 to 2030 when new transmission capabilities are expected to come online.

We also broke ground on a new campus, Polaris Forge 2, near Hardwood North Dakota, where we are initially constructing 2 buildings totaling 300 megawatts of critical IT load. Over time, we believe this campus can scale to 1 gigawatt as additional generation capacity is added to the grid. We are already in early discussions with multiple parties to support that expansion. “

Shares are now up 3.9% and all the price movement has been after the company’s conference call started. We’re sorting through the call for the most important news.

Shares of Applied Digital are down .80% as of 4:38 p.m. ET. Surely, some investors in Applied Digital see the company’s massive beat on revenue ($64.2 million vs. Wall Street expectations of $45.5 million) and are scratching their head, wondering why the stock isn’t up more.

The reality is that the largest movements for many neoclouds now come from announcements that are more forward-looking than earnings they report. For example, Nebius shares took off after an announcement the company had signed a multi-billion arrangement with Microsoft. These deals are what most affect the long-term trajectory of revenue, so the largest share price reactions will typically happen around them rather than any earnings announcement that’s backward-looking.

If you’re watching Applied Digital after hours and wondering if it could see more movement before tomorrow’s opening bell, the most important event to pay attention to is the company’s conference call.

It kicks off at 5 p.m. ET. You can register to attend by clicking here.

However, a better idea is to simply leave this live blog open and check back once the conference call starts, we’ll keep updating the blog and updates will push automatically.

Here’s what Applied Digital had to say about Polaris Forge 1:

“Applied Digital’s HPC Hosting Business continues to advance rapidly. Our first 100 MW facility at Polaris Forge 1 remains on track to be operational in calendar Q4 2025, with technical fit-out activities underway this quarter and continuing into next. These installations contributed approximately $26 million in revenue this quarter and are expected to ramp significantly next quarter as we approach the building’s ready-for-service date. While these are one-time, low-margin installation payments, they are a meaningful signal of our ability to deliver the full suite of data center capabilities. We believe they also reflect the trust our customer places in us as a full-stack developer of AI data centers.

Lease revenues are expected to ramp later this year as equipment installation is completed. Our second 150 MW facility is scheduled for mid-2026, followed by our third 150 MW facility planned for 2027. All three facilities are designed to deliver ultra-low-cost, highly efficient liquid-cooled infrastructure, featuring a closed-loop, direct-to-chip liquid cooling system expected to achieve a Design PUE of 1.18 and near-zero water consumption. Combined with abundant, low-cost energy and more than 200 days of naturally occurring free cooling annually, we estimate a 100 MW customer could save up to $2.7 billion over 30 years compared to traditional data centers.”

Shares of Applied Digital are now down 1.5% as of 4:20 p.m. ET.

Shares gained 4.8% during the day, so even with the slight drop after hours, they’re still trading for what they closed at yesterday.

Applied Digital historically hasn’t provided guidance but in their conference call last quarter did offer this:

“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 1 building. Note, our customer pays the cost of this fit out with 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 30, 2025. Now this is before the actual lease revenue for the facility begins to be recognized.”

We’ll see if the company once again provides guidance when their conference call begins shortly.

Shares of Applied Digital are now up 1% after hours. Earnigns generally looked fine to us, so maybe the initial reaction was investors expecting a massive beat getting out of the stock.

APLD | Applied Digital Q1’26 Earnings Highlights:

• Adj. EPS: -$0.03 [✅]; [DOWN] -200% YoY
• Revenue: $64.2M [✅]; [UP] +84% YoY
• Adj. Gross Margin: 13.0% [✅]
• Net Income: -$27.8M [✅]
• Adjusted EBITDA: $0.5M [✅]; [DOWN] -92% YoY

Q1 Segment Performance:

• HPC Hosting Revenue: $26.3M [✅]; [UP]
• Data Center Hosting Revenue: $37.9M [✅]; [UP] +9% YoY

Other Key Q1 Metrics:

• Adj. Operating Income: -$22.3M [✅]
• Adj. Operating Expenses: $29.2M [✅]; [UP] +165% YoY
• Free Cash Flow: -$82.0M; [DOWN]
• Effective Tax Rate: 0.0% (vs. 0.0% YoY)
• Cash and Cash Equivalents: $114.1M
• Total Debt: $687.3M

CEO Commentary:

• Wes Cummins: “We feel this third lease validates our platform and execution, positioning Applied Digital as a trusted strategic partner to the world’s largest technology companies. With hyperscalers expected to invest approximately $350 billion into AI deployment this year, we believe we are in a prime position to serve as the modern-day picks and shovels of the intelligence era.”

Despite the sound revenue beat shares are initially down, we’ll continue posting analysis and watching Wall Street’s reaction.

Earnings are out

Revenue: $64.2 million (beats)

GAAP Net Loss: $-.11 (beats)

Applied Digital’s Polaris Forge 1 data center is 100 megawatts. That might sound like small potatoes next ot the major bets OpenAI has announced in recent weeks, but its a serious endeavor for the company and Phase 1 is scheduled to go live in Q4 2025.

Updates on this schedule will be important tonight, especially since the company is racing to build a second phase will go operational across mid-2026 and early-2027.

Applied Digital shares are up 280% year-to-date as investors pile into neocloud stocks. That’s an impressive return that’s made Applied Digital shareholders happy. Yet, even that heady return trails the 515% returns from Iren (Nasdaq: IREN).

Shares have seen strong gains today across the neocloud space. Applied Digital is up 6.37% at 3:44 p.m. while Iren shares are up 7.01%.