Applied Digital Corporation (APLD) Earnings & Analysis

Latest quarter

Applied Digital reported Q1 FY2027 revenue of $341.9 million. A comparison with the consensus for quarterly revenue and adjusted EPS is not available.

The company’s filing attributed growth in services and other revenue primarily to tenant fit-out work, with additional revenue from GPU hardware sales. The filing said data center rental revenue also began contributing after the HPC hosting business commenced operations in the second half of the prior fiscal year. CFO Saidal Mohmand said the HPC business generated revenue from base rent, fit-out services and tenant recoveries.

Applied Digital reported a gross margin of 15.3%, compared with 13.4% a year earlier, while its operating margin was −18.2%, compared with −34.7%. Diluted EPS was −$0.82, compared with −$0.07 a year earlier. The filing attributed higher selling, general and administrative expenses in part to stock-based compensation and professional services, and said interest expense increased as the company entered more debt arrangements.

Free cash flow was −$2.0 billion, compared with −$331.4 million a year earlier. The filing said increased investing cash use was primarily due to property and equipment investments as construction payments rose across its data center campuses.

What management said on the call

CEO Wesley Cummins said Applied Digital’s focus is shifting toward bringing contracted capacity online while expanding existing campuses and selectively adding sites. He said customers want additional capacity at locations where they have confidence it can be delivered, and that the company is being more selective about which customers it builds for.

Asked about demand, Cummins said customers were still seeking capacity for the following year, while the company was also seeing demand further out. He expects some lease expansions and new campuses to be signed at materially higher rates than its preceding contracts. He also said tenant fit-outs are becoming more flexible, allowing customers to accommodate different workloads and equipment mixes.

Cummins said local moratoriums, tighter zoning and longer permitting timelines are affecting some markets. In his view, those restrictions increase the value of established campuses where land, power and permits are already in place. On competition and supply, he said the company had secured key components in advance and was seeking to increase the supply available for future construction.

CFO Saidal Mohmand said the contracted capacity at Polaris Forge 1 and Polaris Forge 2 is fully funded. For the next campuses, he said Applied Digital plans to use preferred equity followed by project-level debt, while retaining majority ownership. Asked about financing options, Mohmand said the company is considering several markets and is focused on terms that would allow refinancing with minimal penalties after construction.

Cummins also discussed Applied Digital’s entry into Finland. He said initial power at the site is expected to arrive later, with further payments tied to additions of power capacity; the arrangement allows the company to exit before making those additional payments.

Guidance

A comparison with Applied Digital’s previous guidance is not available, so changes to its outlook and any guidance it may have stopped giving cannot be determined.