How has the demand environment changed in the last 90 days, and what is the breadth of your discussions with hyperscalers?

Wes stated that hyperscalers remain aggressive in the market, with demand varying by location. Applied Digital focuses on diversifying customers and aims for 70% investment-grade contracted revenue. He emphasized that the company's assets (grid power, available in '27) are premium and attract multiple hyperscalers, and they prioritize securing the right tenant and contract over speed. “But we still see every hyperscaler that we target engaged pretty aggressively in the market. And it just depends also location by location. So it's hard to give a total market view.”

What does the mid-2027 operational target for Delta Forge 1 imply about the lease signing timeline? Also, an update on the 3 sites under exclusivity with a hyperscaler.

Wes expects a lease for Delta Forge 1 "in the near term" to meet the mid-2027 Ready-for-Service (RFS) date. He confirmed that Applied Digital is still in exclusivity with a hyperscaler for three sites and is optimistic about signing those leases this year, or even sooner, but will not sign a "bad lease" just for an announcement. “I expect a lease in the near term on that for hitting that goal. As you -- as everyone knows, we've been working on that for a few months now. We've made a lot of great progress there. And so feel good about getting the lease in the time frame to hit that RFS date as well.”

Does the ultimate value from contracts and properties increase if deals extend out due to moratoriums or other delays?

Wes confirmed that this has been the trend observed so far, suggesting that value capture is ultimately greater with delays. He noted that Applied Digital is working through moratoriums, particularly in North Dakota, by educating communities on the economic benefits and positive impact on ratepayers, citing $31 million in savings for North Dakota ratepayers from their operational site. “George, it's been the trend we've seen so far. So I think that's directionally correct. And on those -- on the moratoriums on those things, we're working through those, and we feel really good about getting through just in an education process.”

APLD

Applied Digital (APLD) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Feb 2026 (Q3 FY26)· Information Technology· Apr 8, 2026

Source: earnings call transcript

Executive summary

Applied Digital Q3 FY26 — AI Data Center Expansion and Strategic Financing

Applied Digital continued its aggressive expansion in AI data center capacity, with significant revenue growth driven by its HPC hosting segment and strategic financing moves. The company is focused on securing new leases, diversifying its customer base, and developing power infrastructure through its Base Electron initiative, while also spinning off its Cloud business into ChronoScale Corporation. Management aims to achieve substantial NOI targets and refinance debt at lower rates as construction progresses.

Highlights

Total revenues increased 139% year-over-year to $126.6 million.
Adjusted EBITDA reached $44.1 million for the quarter.
HPC hosting generated $71 million in revenue with $17.6 million in operating profit.
Data Center (crypto) revenue grew 7% year-over-year to $37.5 million, delivering $13.9 million in operating profit.
CoreWeave lease restructuring improved credit support to an A3 investment-grade rating, derisking 250 MW of capacity.

Concerns

Cloud business recorded a $59.7 million noncash write-down due to reclassification from held for sale.
Net loss attributable to common stockholders was $100.9 million, or $0.36 per share.
SG&A expense increased $57 million to $79.7 million, primarily driven by $39.3 million in stock-based compensation.
Development of the South Dakota site was delayed due to the lack of a desired tax exemption.

Guidance & targets

Category	Target	Timeline	Confidence
Revenue ramp	Significantly over the next 12 months medium materiality	Next 12 months · FY27	Medium
Delta Forge 1 lease signing	In the near term high materiality	Q4 FY26	High
Uncontracted 100 MW at PF2	Contracted in the near term high materiality	Q4 FY26	High
NOI target	$1 billion high materiality	Within 5 years · FY31	High
NOI internal targets	$1 billion and $2 billion high materiality	Long-term	High
Total campuses	5 to 6 total campuses medium materiality	Over time	Medium
Critical IT load capacity	5 or 6 gigawatts high materiality	Over time	Medium
Total contracted revenue mix	70% investment grade, 30% other high materiality	Long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
HPC hosting Realized a full quarter of lease revenue from the 100-megawatt data center. Revenues are expected to ramp significantly over the next 12 months as new buildings come online. Base rents: $44.1 millionTenant fit-out services: $18.9 millionPower pass-through and other ancillary revenue: $8.1 million	$71 million	—	—	$17.6 million
Data Center (crypto) Another strong quarter, continuing to deliver the highest return on assets in the company. Reported assets: $119.6 million	$37.5 million	7%	—	$13.9 million
Cloud Revenues consolidated for the quarter. Reported a noncash write-down due to reclassification from held for sale, as the business is merging with EKSO Bionic Holdings to form ChronoScale Corporation. Noncash write-down: $59.7 million	$18.1 million	—	—	Loss of $52.2 million

APLD operating KPIs by quarter

APLD operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Feb 2026 Q3 FY26	May 2026 Q4 FY26	Aug 2026 Q1 FY27	Change vs prior quarter
Operating capacity High-Performance Computing (HPC)	100 megawatts First, we now operate one of the only 100-megawatt direct-to-chip liquid cooled data centers in the world online today. Source: earnings call transcript	100 megawatts As you evaluate these results, keep in mind that our current financials on the HPC data center side primarily reflect only the initial 100 megawatts that are online and contributing during the quarter. Source: earnings call transcript	250 megawatts The operational buildings encompass 10 data halls and are supported by 250 megawatts of critical IT load. Source: earnings call transcript	+150%
Operating sites Data Center Hosting	2 Turning to our data center hosting business, where we host 2 sites for Bitcoin mining. Source: earnings call transcript	2 This segment provides energized space for Bitcoin mining across our 2 sites in North Dakota. Source: earnings call transcript	2 Our 286 megawatts of capacity for Bitcoin mining across our 2 North Dakota sites continues to operate efficiently and provide steady high-margin revenue with minimal ongoing capital investment. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total contracted lease revenue $16 billion Q3 FY26

$11 billion from CoreWeave, $5 billion from an investment-grade hyperscaler

Deals & partnerships

CoreWeave Restructuring portions of ELN-02 and ELN-03 leases through a special purpose vehicle (SPV), including an unconditional springing parent guarantee and a $50 million letter of credit.

Executed amendments and related agreements on March 30, 2026. The SPV's A3 rating is a meaningful improvement from its previous BB rating.

EKSO Bionic Holdings Proposed business combination to separate Applied Digital Cloud and combine it with EKSO Bionic Holdings to form ChronoScale Corporation.

ChronoScale Corporation will be a dedicated accelerated compute platform for GPU-optimized AI infrastructure.

Macquarie Asset Management Access to preferred equity financing. $4.1 billion

Access is available following a mutually agreed upon executed lease with an investment-grade hyperscaler.

Base Electron Applied Digital providing limited credit support for Base Electron, an independent power producer, to build a 1.2 gigawatt natural gas-fired power plant.

Base Electron will work with Babcock and Wilcox to build the power plant in the Dakotas region to supply grid power.

Capital programs

Polaris Forge 1 (CoreWeave campus) underway 400 megawatts

Benefit:First 100 MW building operating; 2 new 150 MW facilities progressing

The first 100-megawatt building is now operating, and 1,200 skilled craft professionals are progressing in parallel on two new 150-megawatt facilities.

Polaris Forge 2 (Hyperscaler campus) underway 200 megawatts

Benefit:Both buildings advancing well

Both buildings are advancing well with foundations largely complete and work now shifting to precast direction as well as mechanical, electrical and plumbing trades mobilizing for interior fit-out.

Delta Forge 1 (AI factory campus) underway 300 megawatts critical IT load

Start: Q3 FY26

Benefit:300 MW critical IT load AI factory campus

Broke ground on Delta Forge 1, a 300-megawatt critical IT load AI factory campus spanning more than 600 acres in a strategic Southern U.S. market with initial operations expected in mid-2027.

Base Electron Power Plant underway 1.2 gigawatts

Funding: Will raise its own capital; Applied Digital providing limited credit support

Benefit:Natural gas-fired generation capacity to the grid in the Dakotas region

Base Electron will work with Babcock and Wilcox to build a power plant that will supply initially roughly 1.2 gigawatts of natural gas-fired generation capacity to the grid in the Dakotas region. Commissioning expected towards the end of 2028.

Risks & headwinds

Delay in South Dakota site development Ongoing

South Dakota site delayed

Mitigation:Evaluating long-term viability, exploring opportunities to reallocate associated power agreements, and brought two additional sites into the pipeline.

Higher cost of capital Current

Cost of capital is higher than it should be

Mitigation:Plan to refinance debt at more attractive rates (ABS or equivalent market) over time as the company shifts from project finance loans and construction risk is removed.

Uncertainty in large-scale power infrastructure development Ongoing

Many variables and uncertainty involved

Mitigation:Executing effectively with trusted partners, leveraging years of experience, and supporting Base Electron to add reliable power to the grid.

Moratoriums and zoning challenges Ongoing

Moratoriums put on by local counties

Mitigation:Working through education processes, citing specific evidence of economic benefits and positive ratepayer impact from existing operations in North Dakota.

What to watch in Q4 FY26

Delta Forge 1 lease signing

Near term

Current Broke ground, initial operations expected mid-2027

Target Lease signed

Why it matters

Essential for hitting the mid-2027 operational goal and expanding AI data center capacity, validating the company's growth trajectory.

I expect a lease in the near term on that for hitting that goal.

Find out whether APLD delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you provide more insight into the restructured leases at PF1 and estimate potential cost savings from refinancing after the credit rating improvement?

Saidal explained that the A3 investment-grade rating for CoreWeave's SPV, combined with a lockbox structure and parent guarantee, significantly improves the lease's credit positioning. He noted that investment-grade spreads are sub-300 basis points (low to mid-2s), compared to 350-450 basis points for BBs, indicating potential for substantial borrowing cost reduction.

“So it's a significant improvement. In terms of rate, we've seen that CoreWeave through their DTL, they've been able to lower their financing costs significantly. We expect, obviously, no guarantee, but we expect to continue to move our borrowing costs more in line with an investment-grade tenant under the structure as we go forward.”

asked by Mike Grondahl · answered by Mohammad Saidal Mohmand

2 min read 5 chapters

Detailed narrative

AI Data Center Expansion and Construction Progress

Applied Digital is rapidly expanding its AI data center footprint, with the first 100-megawatt liquid-cooled facility now operational. Construction is progressing on schedule and on budget for two new 150-megawatt facilities at Polaris Forge 1 (CoreWeave campus) and two buildings at Polaris Forge 2 (200-megawatt hyperscaler campus).

The company also broke ground on Delta Forge 1, a 300-megawatt AI factory campus in the Southern U.S., with initial operations anticipated by mid-2027, demonstrating significant execution capabilities in large-scale infrastructure development.

Strategic Power Infrastructure Development

Recognizing the intense demand for power, Applied Digital is supporting Base Electron, an independent power producer, to build a 1.2 gigawatt natural gas-fired power plant in the Dakotas. This initiative aims to add reliable grid power, contain electricity costs, and enable further large-scale data center development in the region.

Applied Digital shareholders will own approximately 10% of Base Electron, with the company providing limited credit support that will terminate upon Base Electron raising $50 million or completing an IPO.

Financing and Capital Structure Enhancements

The company has made significant strides in its financing strategy, including restructuring CoreWeave leases (ELN-02 and ELN-03) to achieve an investment-grade A3 rating for CoreWeave's SPV. This enhancement, coupled with a $50 million letter of credit, derisks 250 megawatts of lease capacity and is expected to lower Applied Digital's cost of capital for future debt placements.

The company also has access to $4.1 billion in preferred equity from Macquarie Asset Management, allowing it to retain over 85% common equity ownership in future sites.

Cloud Business Spin-off into ChronoScale Corporation

Applied Digital announced plans to separate its Cloud business and combine it with EKSO Bionic Holdings to form ChronoScale Corporation. This strategic move aims to position the Cloud business to raise capital independently, drive accelerated growth in GPU-optimized AI infrastructure, and eventually spin off to Applied Digital shareholders.

The company recorded an $18.1 million revenue contribution from Cloud this quarter, but also a $59.7 million noncash write-down related to its reclassification.

Market Demand and Future Growth Pipeline

Management highlighted the clear acceleration in demand for high-performance AI data center capacity, noting that hyperscaler annual capital expenditures have increased from $400 billion to nearly $700 billion in three months. Applied Digital is actively marketing four development sites, including Delta Forge 1 and sites in North Dakota and two unnamed states, with a total grid power capacity of approximately 1 gigawatt.

The company's focus is on diversifying customers, achieving 70% investment-grade contracted revenue, and expanding existing campuses.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.