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    APLD
    Earnings call· May 2026(Q4 FY26)

    Applied Digital Q4 FY26 earnings call APLD

    Jul 27, 2026 Source

    Executive summary

    Applied Digital Q4 FY26 — Record Contracted Lease Value and Accelerated AI Infrastructure Build-out

    Applied Digital capped a transformational year, securing record contracted lease value and expanding its AI infrastructure footprint with hyperscalers. The company demonstrated strong execution in delivering capacity on time and significantly lowered its cost of capital, positioning itself for continued growth in the burgeoning AI infrastructure market. The spin-off of ChronoScale also progressed, with Applied Digital retaining a significant ownership stake.

    Highlights

    5

    • Signed leases for 5 campuses, including 3 in the last 4 months, increasing total contracted long-term lease value to $36 billion.

    • Achieved 1.41 gigawatts of contracted critical IT load across all campuses.

    • Delivered 100 megawatts of Polaris Forge 1 on time and on budget, and 75 additional megawatts on schedule.

    • Adjusted EBITDA increased to $42.4 million from $1 million in the comparative prior quarter.

    • Secured $2.15 billion of 6.75% senior secured notes and $1.59 billion of 7% senior secured notes, significantly lowering cost of capital.

    Concerns

    2

    • Net loss attributable to common shareholders was $111.6 million or $0.39 per share.

    • SG&A expense increased $124.3 million to $165.3 million, primarily due to $116.8 million in stock-based compensation.

    Guidance & targets

    8
    CategoryTargetConfidence
    Net operating income (NOI) run rate
    $1 billion
    high materiality
    High
    Additional capacity marketed
    1.7 gigawatts
    medium materiality
    High
    Expansion leases (100 MW and 150 MW)
    Materially higher lease rates and possibly longer duration
    medium materiality
    High
    Total capacity (if expansion leases executed)
    1.66 gigawatts
    medium materiality
    High
    Financing for next 3 campuses
    Relatively straightforward
    low materiality
    High
    Capital expenditure (CapEx)
    ~$600 million
    medium materiality
    High
    New campus additions
    Continue to add new campuses
    medium materiality
    High
    Base Electron power generation online
    2029 and 2030
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    HPC hosting
    Primarily reflects only the initial 100 megawatts that are online and contributing during the quarter.
    Tenant fit-out services: $152.4 millionBase rent: $44.1 millionTenant recoveries: $6.5 million
    		$203 million———
    Data center hosting
    Operates crypto data centers, continues to deliver the highest return on assets in the company with stable operating conditions.
    Reported assets: $113.8 million
    		$37.3 millionmaterially consistent year-over-year—$12.5 million segment operating profit
    ChronoScale
    Consolidated due to 96% ownership, but excluded from non-GAAP results as it operates as a separate publicly traded company pursuing a separate strategy.
    		$18.8 million———

    Operational metrics

    24
    Total revenues
    $258.7 million407% increase
    Q4 FY26

    Total revenues from continuing operations.

    Services cost of revenues
    $208.2 million$138.9 million increase
    Q4 FY26

    Increase driven primarily by tenant fit-out services within HPC hosting business.

    Data center rental and other cost of revenues
    $25.1 million
    Q4 FY26

    Primarily driven by depreciation, reimbursable expenses, and operating costs for Polaris Forge 1.

    SG&A expense
    $165.3 million$124.3 million increase
    Q4 FY26

    Increase primarily driven by stock-based compensation and personnel expenses due to headcount increase and ChronoScale separation.

    Stock-based compensation
    $116.8 million
    Q4 FY26

    Included in SG&A expense.

    Net loss attributable to common shareholders
    $111.6 million
    Q4 FY26

    GAAP net loss.

    Non-GAAP EPS
    $0.04
    Q4 FY26

    Adjusted diluted EPS.

    Adjusted net income
    $12.9 million
    Q4 FY26

    Non-GAAP adjusted net income.

    Depreciation
    $18.2 million
    Q4 FY26

    Total depreciation for the quarter.

    Adjusted EBITDA
    $42.4 millionup from $1 million
    Q4 FY26

    Adjusted EBITDA for the quarter.

    Net operating income (NOI)
    $39.9 million
    Q4 FY26

    Defined as HPC base rental revenue less rental property operating expenses, property taxes, and insurance expenses.

    NOI margin
    91%
    Q4 FY26

    Margin for Net Operating Income.

    Cash and investments balance
    $4.2 billion
    Q4 FY26

    Balance at quarter end.

    Total debt
    $5 billion
    Q4 FY26

    Balance at quarter end.

    Equity
    $1.7 billion
    Q4 FY26

    Balance at quarter end.

    Cost of capital (Polaris Forge 1 notes)
    7%225 basis points inside first placement
    Q4 FY26

    Rate for $1.59 billion senior secured notes to fund the fourth building at Polaris Forge 1 campus, compared to first placement at roughly 9.25%.

    Revolving credit facility cost
    SOFR + 225
    Q4 FY26

    Cost for the recently secured revolving credit facility of up to $550 million.

    Macquarie JV MOIC
    1.8x
    long-term

    Multiple on Invested Capital for the Macquarie joint venture.

    Macquarie JV IRR
    mid-teens
    long-term

    Internal Rate of Return for the Macquarie joint venture.

    Leverage ratio
    sub 7x
    Q4 FY26

    Leverage ratio based on 80% LTC for 1.4 GW contracted and $2 billion annualized NOI, well below private market comps.

    AI infrastructure build-out commitment
    $850 billionincrease of roughly $570 billion year-over-year
    next several years

    Long-term contractual commitments by US technology companies for data center lease obligations.

    AI infrastructure spending as % of US GDP
    3.2%
    2027

    Projected spending by major hyperscalers, surpassing projected U.S. national defense spending for the first time.

    Electricity credits to local ratepayers
    $45 million
    to date

    Returned to local ratepayers through the use of excess regional grid capacity at Polaris Forge 1.

    Leased to high investment-grade customer
    over 80%
    Q4 FY26

    Percentage of total contracted capacity leased to a high investment-grade customer (also stated as 76%).

    Industry KPIs

    4
    MetricValueDetails
    Headcount dsoincreased
    Infra economicsover 5 gigawattsGW
    Rpo current rpo1.41 gigawattsGW
    Bookings tcv book to bill$36 billionUSD

    Orderbook & backlog

    5
    Total contracted long-term lease value$36 billionQ4 FY26

    125% increase

    Approximately $20 billion added in the last quarter, up from $7 billion.

    Contracted critical IT load1.41 gigawattsQ4 FY26

    Across all campuses.

    Additional capacity marketed1.7 gigawattsQ4 FY26

    Actively marketing across multiple states, expected to command higher pricing.

    Expansion options (Polaris Forge 2)100 megawattsQ4 FY26

    In advanced negotiations with existing investment-grade customer for additional capacity at Polaris Forge 2.

    Expansion options (Delta Forge campus)150 megawattsQ4 FY26

    In advanced negotiations with existing investment-grade customer for a third building at one of the Delta Forge campuses.

    Deals & partnerships

    3
    High investment-grade hyperscalerLeases for 3 new campuses: Delta Forge 1, Polaris Forge 3, and Delta Forge 2$20 billionlong-term

    These campuses span 3 states across 2 distinct regions of the country, representing approximately $20 billion in long-term contracted revenue from a single world-class customer.

    MacquarieStrategic partnership to fund equity for new campuses$5 billion JV

    This arrangement provides a programmatic and consistent approach for funding the majority of the equity for future developments.

    Base ElectronStrategic investment in an independent power producer

    Base Electron is collaborating with Babcock & Wilcox for regional utilities to develop roughly 1.2 gigawatts of front-of-the-meter natural gas-fired generation in the Dakotas, expected online in 2029 and 2030.

    Capital programs

    4
    Polaris Forge 2 campus financingclosed$2.15 billion
    Funding: 6.75% senior secured notes

    Closed during and shortly after the quarter to fund the Polaris Forge 2 campus.

    Polaris Forge 1 (fourth building) financingclosed$1.59 billion
    Funding: 7% senior secured notes

    Closed during and shortly after the quarter to fund the fourth building at the Polaris Forge 1 campus.

    Macquarie JVunderway$5 billion
    Funding: Macquarie funds 3/4 of equity

    Benefit: Funds equity for next 3 campuses

    Joint venture with Macquarie to fund equity for new campuses, offering a programmatic and consistent approach to capital.

    Base Electron power generationunderway

    Benefit: 1.2 gigawatts of front-of-the-meter natural gas-fired generation

    Base Electron, in which Applied Digital owns approximately 10%, is developing 1.2 gigawatts of generation in the Dakotas to unlock expansion at existing campuses and enable new ones.

    Risks & headwinds

    3
    High stock-based compensation impacting profitabilityQ4 FY26

    $116.8 million in stock-based compensation, including $47.9 million tied to one-time awards for ChronoScale transaction and $65.1 million for performance stock units, contributed to a $111.6 million net loss.

    Mitigation: Management did not explicitly state mitigation for the one-time charges, but the ChronoScale transaction is complete, and performance stock units are tied to future performance.

    Complexity of AI infrastructure build-outOngoing

    Balancing aggressive construction schedules, customer expectations, power infrastructure, and community partnerships is no small task.

    Mitigation: The company emphasizes its guiding principles of 'doing it the right way,' focusing on delivering high-quality GPU-ready data center capacity on time and building strong community partnerships.

    Power and supply chain constraintsOngoing

    Power availability and supply chain limits are the two biggest governors to growth, with supply chain having limits around 700 megawatts per year of critical IT load, which is currently being exceeded.

    Mitigation: The company is working to expand supply chain limits, avoiding crowded labor markets, investing in local vocational training, and strategically developing power generation through Base Electron and other projects.

    What to watch in Q1 FY27

    5

    CapEx spend

    Next quarter and beyond
    Current~$600 million for upcoming quarter
    TargetStep up as new campuses enter advanced construction

    Why it matters

    Indicates the pace of AI infrastructure build-out and capital deployment efficiency, crucial for future revenue growth.

    So CapEx, so you should expect it around $600-ish million for the upcoming quarter, and that will take a step up as we enter more advanced stages of construction at the new campuses.

    Q&A highlights

    7

    Can you explain Applied's strategy for the 3 recent leases (810 MW) given concerns about lower yields compared to peers?

    Wes Cummins stated the strategy was to build a solid foundation with high investment-grade hyperscalers, achieving over 70% of contracted lease revenue from such customers. He asserted that their lease return rates are competitive and within the industry band for similar scale, duration, and customer quality, noting conservative cost estimates and anticipated higher pricing for future capacity.

    “I do think we're hitting on our lease return rates. I think that you comped the entire industry... we would be right in the band, if not at the middle towards the higher end of that band of contracted lease rates again for these types of customers with this kind of duration and this kind of scale.”

    asked by Michael Grondahl · answered by Wesley Cummins

    2 min read6 chapters

    Detailed Narrative

    01

    Record Contracted Lease Value and AI Infrastructure Expansion

    Applied Digital achieved a transformational year, signing leases for 5 campuses, including 3 new ones in the last four months, with a high investment-grade hyperscaler. This expanded total contracted long-term lease value to $36 billion, a 125% increase, and secured 1.41 gigawatts of contracted critical IT load. The company is currently constructing 5 multibillion-dollar AI factory campuses for 3 separate hyperscalers, leveraging its proprietary data center design and supply chain for efficient replication.

    02

    Strategic Power Development with Base Electron

    The company is strategically positioning itself for future growth through its 10% ownership in Base Electron, an independent power producer developing 1.2 gigawatts of natural gas-fired generation in the Dakotas. This initiative aims to unlock expansion at existing campuses and enable new developments in a region with abundant low-cost energy and a favorable climate for data centers, creating a significant competitive advantage and barrier to entry.

    03

    Operational Excellence and On-Time Delivery

    Applied Digital highlighted its strong execution, delivering 100 megawatts and an additional 75 megawatts at Polaris Forge 1 on time and on budget. Management emphasized that this track record of on-time delivery sets them apart from competitors, as industry data suggests roughly 90% of projects costing over $1 billion are delivered late or over budget. This performance builds trust with hyperscaler customers and is a meaningful differentiator.

    04

    ChronoScale Spin-off and Independent Growth

    The cloud business was successfully separated into ChronoScale, which began trading on NASDAQ under CHRN in early May. Applied Digital retains 96% ownership, allowing shareholders to participate in its independent growth as a dedicated accelerated compute platform. ChronoScale has made meaningful progress building its leadership team, extending customer contracts at higher pricing, and demonstrating its secure enterprise environment to partners.

    05

    Optimized Capital Structure and Cost of Capital

    The company successfully secured over $3.7 billion in senior secured notes and a revolving credit facility, significantly lowering its cost of capital. By restructuring leases at Polaris Forge 1 and establishing a memorandum of understanding with CoreWeave, Applied Digital placed recent notes at 7%, 225 basis points inside its first placement. The company's financing model, leveraging direct investment-grade hyperscaler leases and a Macquarie JV, is designed to be repeatable and increasingly efficient.

    06

    Future Growth and Expansion Opportunities

    Beyond the 1.41 gigawatts under construction, Applied Digital is actively marketing an additional 1.7 gigawatts and is in advanced negotiations for 250 megawatts of expansion options at existing campuses. These future capacities are expected to command higher pricing and potentially longer durations. The company sees a clear line of sight to over 5 gigawatts of critical IT load capacity through 2032, primarily through expansion on current campuses.

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