Detailed narrative
Strategy and contracted portfolio
Applied Digital has ~$36B contracted revenue across 5 campuses, 3 states and 2 regions. Success metric shifts from adding contracted value to converting it into profitable growth. Target customers are Tier 1 investment-grade hyperscalers on take-or-pay leases of at least 15 years. Management is explicitly 'selective' given limited build capacity, meaning credit quality over volume.
Execution in North Dakota
Polaris Forge 1's first two buildings are fully RFS with 10 data halls and 250 MW critical IT, a 150% increase in delivered capacity; the third building is on schedule. First CoreWeave lease was signed May 2025; building two broke ground summer 2025 and went operational about a year later.
With Harwood, ~300 MW critical IT is expected online in ND by calendar year-end. A ~1 GW hyperscaler self-build also exists in the state, and management is in talks with several other Tier 1 hyperscalers.
Power and Europe
A long-term PPA with Base Electron (~10% equity stake) covers a ~1,200 MW gas plant near Polaris Forge 3 with deliveries from 2030; procured equipment is roughly 2.4-2.5 GW of generation, and a new WBI pipeline supports Center, Harwood and possibly Jamestown.
In Finland, the company bought a site with options for up to 1 GW; there is an off-ramp before additional payments. About 30-40 sites were reviewed over ~12 months, and build cost is expected to be similar in dollars, with a longer delivery timeline.
The site is ~30 km from a hyperscaler self-build.
Financing and balance sheet
The $1.59B 7% senior secured notes due 2031 were issued at par and repaid a $300M May bridge facility. The revolver was upsized to $430M commitments with a $120M accordion. Cash was ~$2.9B plus $0.7B restricted, against ~$6.4B debt, over 80% of which is due fiscal 2031 or later; equity ~$1.6B.
Management cites a 25-100 bps construction risk premium and a 50-100 bps rate swing range, and aims to refinance post-construction with minimal penalties.
Quarter P&L composition
HPC hosting revenue of $262.6M comprised base rent, tenant fit-out and recoveries; tenant fit-out cost of revenue was $176.1M, close to its revenue, so it is near pass-through. Services and other cost of revenues were $245.7M and data center rental cost $43.9M.
SG&A of $114.7M included $65.4M stock comp (with $41.3M one-time📎 PSUs), $16M professional services, $15.6M personnel and $4.8M lease expenses. B&W warrant/stock fair-value loss was $67.5M.
ChronoScale and Bitcoin hosting
ChronoScale (~96% owned) is in GAAP but excluded from non-GAAP; it had $41.5M revenue including ~$23M GPU hardware sales and announced a 50 MW Microsoft GB-300 NVL72 deployment. Management targets $1B ARR in 2027 and sees modular 50-100 MW grid-tied sites as its path, separate from the large Applied Digital campuses.
The 286 MW Bitcoin hosting business earned $13.3M segment operating profit on ~$111.9M of segment assets.
Terminal value, community and moratorium thesis
Management argues local moratoriums and permitting delays raise the scarcity value of existing powered campuses, supporting renewals and expansion pricing. Community evidence: MDU customers saved ~$45M, Harwood substation/grid upgrades of over $100M self-funded, Ellendale local tax revenue up from ~$400,000 to nearly $4M a year, and a $350,000 Applied Digital Cares commitment across 5 organizations in Oliver County.
Supply chain is secured through multi-year factory-capacity purchases (~4 years); TFO is becoming larger and more flexible.