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    APLD
    Earnings call· Feb 2026(Q3 FY26)

    Applied Digital Q3 FY26 earnings call APLD

    Apr 8, 2026 Source

    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

    5

    • 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

    4

    • 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

    8
    CategoryTargetConfidence
    Revenue ramp
    Significantly over the next 12 months
    medium materiality
    Medium
    Delta Forge 1 lease signing
    In the near term
    high materiality
    High
    Uncontracted 100 MW at PF2
    Contracted in the near term
    high materiality
    High
    NOI target
    $1 billion
    high materiality
    High
    NOI internal targets
    $1 billion and $2 billion
    high materiality
    High
    Total campuses
    5 to 6 total campuses
    medium materiality
    Medium
    Critical IT load capacity
    5 or 6 gigawatts
    high materiality
    Medium
    Total contracted revenue mix
    70% investment grade, 30% other
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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 million7%—$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

    Operational metrics

    17
    Revenue growth
    139%YoY
    Q3 FY26

    Total revenues increased significantly year-over-year.

    Adjusted EBITDA
    $44.1 million
    Q3 FY26

    Adjusted EBITDA for the quarter across core businesses.

    Adjusted net income
    $33.2 million
    Q3 FY26

    Adjusted net income for the quarter.

    Non-GAAP EPS
    $0.09
    Q3 FY26

    Adjusted EPS for the quarter.

    Depreciation
    $18.5 million
    Q3 FY26

    Depreciation expense for the quarter.

    Cost of revenues increase
    $23.7 million
    Q3 FY26

    Increase in cost of revenues for the quarter.

    SG&A expense increase
    $57 million
    Q3 FY26

    Increase in SG&A expense, reaching $79.7 million for the quarter.

    Net interest income
    $2.4 million
    Q3 FY26

    Positive net interest income for the quarter.

    Cash and investments balance
    $2.1 billion
    Q3 FY26

    Cash and cash equivalents at quarter end.

    Total debt
    $2.7 billion
    Q3 FY26

    Total debt at quarter end.

    Development pipeline grid power capacity
    1 gigawatt
    Current

    Total grid power capacity across the company's development pipeline.

    Hyperscaler annual capital expenditures
    $700 billionUp from $400 billion 3 months ago
    Annual

    Reported increase in annual capital expenditures by largest U.S. hyperscalers.

    CoreWeave credit rating
    A3Up from BB
    Q3 FY26

    Investment-grade rating for CoreWeave's SPV following lease restructuring.

    CoreWeave letter of credit
    $50 million
    Q3 FY26

    Secured as part of the CoreWeave lease restructuring.

    Macquarie Asset Management preferred equity access
    $4.1 billion
    Current

    Access to preferred equity following an executed lease with an investment-grade hyperscaler.

    Applied Digital shareholders common equity ownership (future sites)
    Over 85%
    Future

    Expected ownership retention for future sites using the Macquarie preferred equity structure.

    North Dakota ratepayer savings
    $31 million
    Since site operational

    Savings for ratepayers due to the use of infrastructure and siting of campuses in North Dakota.

    Industry KPIs

    2
    MetricValueDetails
    Infra economics900 megawattsMW
    Rpo current rpo$16 billionUSD

    Orderbook & backlog

    1
    Total contracted lease revenue$16 billionQ3 FY26

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

    Deals & partnerships

    4
    CoreWeaveRestructuring 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 HoldingsProposed 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 ManagementAccess to preferred equity financing.$4.1 billion

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

    Base ElectronApplied 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

    4
    Polaris Forge 1 (CoreWeave campus)underway400 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)underway200 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)underway300 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 Plantunderway1.2 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

    4
    Delay in South Dakota site developmentOngoing

    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 capitalCurrent

    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 developmentOngoing

    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 challengesOngoing

    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

    5

    Delta Forge 1 lease signing

    Near term
    CurrentBroke ground, initial operations expected mid-2027
    TargetLease 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.

    Q&A highlights

    5

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.