Can you elaborate on your strategy for managing the cost of capital, covering both debt and equity?

Saidal Mohmand outlined a three-component financing strategy: 1) utilizing Applied's balance sheet (corporate cash flows, low-cost revolver), 2) Macquarie's 3/4 equity funding through a $5 billion JV, which offers an attractive MOIC/IRR compared to dilutive common stock or risky convertibles, and 3) site-specific debt through project bond markets and project finance, transitioning to permanent financing post-construction. He emphasized maintaining conservative leverage. “Our flywheel really has 3 components. So the first component, as Macquarie funds 3/4 of the equity, the first component comes from the Applied's balance sheet... The MAM equity, I think, is 1 part where I think people tend to overlook and how that's an attractive form of capital.”

What is the expected cadence of CapEx spend for the remainder of the calendar year and into 2027?

Saidal Mohmand projected CapEx to be around $600 million for the upcoming quarter, with a subsequent step-up as new campuses progress into more advanced construction stages. He noted that financing markets are being tapped earlier for these newer sites. “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.”

Could you provide more details on the 2 customer expansions (100 MW and 150 MW) and the commentary about rate increases?

Wes Cummins clarified that the 100 MW expansion is for Polaris Forge 2 with an existing tenant, and the 150 MW is for a third building at one of the Delta Forge campuses. He reiterated the expectation for materially higher pricing on both these expansions and any new capacity, citing positive market trends. “We expect in the near term to contract that additional 100 megawatts with the same tenant at that campus. And then on 1 of our Delta Forge campuses, we were negotiating... for a third building on 1 of those campuses.”

APLD

Applied Digital (APLD) Q4 FY26 earnings call: guidance and Q&A

Earnings call· May 2026 (Q4 FY26)· Information Technology· Jul 27, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Net operating income (NOI) run rate	$1 billion high materiality	Next year · FY27	High
Additional capacity marketed	1.7 gigawatts medium materiality	Future	High
Expansion leases (100 MW and 150 MW)	Materially higher lease rates and possibly longer duration medium materiality	Future	High
Total capacity (if expansion leases executed)	1.66 gigawatts medium materiality	Future	High
Financing for next 3 campuses	Relatively straightforward low materiality	Future	High
Capital expenditure (CapEx)	~$600 million medium materiality	Q1 FY27	High
New campus additions	Continue to add new campuses medium materiality	This year and next year · FY27-FY28	High
Base Electron power generation online	2029 and 2030 medium materiality	CY29-CY30	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 million	materially 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	—	—	—

APLD operating KPIs by quarter

APLD operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Feb 2026 Q3 FY26	This call 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 long-term lease value $36 billion Q4 FY26

125% increase

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

Contracted critical IT load 1.41 gigawatts Q4 FY26

Across all campuses.

Additional capacity marketed 1.7 gigawatts Q4 FY26

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

Expansion options (Polaris Forge 2) 100 megawatts Q4 FY26

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

Expansion options (Delta Forge campus) 150 megawatts Q4 FY26

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

Deals & partnerships

High investment-grade hyperscaler Leases for 3 new campuses: Delta Forge 1, Polaris Forge 3, and Delta Forge 2 $20 billion long-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.

Macquarie Strategic 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 Electron Strategic 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

Polaris Forge 2 campus financing closed $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) financing closed $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 JV underway $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 generation underway

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

High stock-based compensation impacting profitability Q4 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-out Ongoing

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 constraints Ongoing

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

CapEx spend

Next quarter and beyond

Current ~$600 million for upcoming quarter

Target Step 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.

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

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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