Applied Digital (APLD) 9 Oct 242025 Q1 Earnings call transcript

Good afternoon, and welcome to the Applied Digital's Fiscal First Quarter 2025 Conference Call. My name is Julian, and I will be your operator for today.

Before this call, Applied Digital issued its financial results for the fiscal first quarter ended August 31, 2024, in a press release, a copy of which will be furnished in a report on a Form 8-K filed with the SEC and will be available in the Investor Relations section of the company's website.

Joining us on today's call are Applied Digital's Chairman and CEO, Wes Cummins; and CFO, David Rench.

Following their remarks, we will open the call for questions.

Glover Group Matt brief make begin, statement. introductory we from will Gateway a Before Mr. proceed. please Glover,

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forward-looking today management Before begins be and making that number of formal to securities risks considered involve may and a like remind remarks, everyone statements some statements laws under uncertainties. we'd we're

in results you from there are which control, beyond a result, forward-looking and to of materially number the actual differ events a described As that factors, we those our could caution are many which statements. cause of

For risks, the reflect statements, obligation filings any Exchange detailed or circumstances the release in uncertainties more and to and occur disclaim to are statements forward-looking public our please our or as events that assumptions undertaking forward-looking made, made and date disclosures Securities except We relating with to the see after law. required update the Commission. statements earnings by forward-looking

and descriptions and not variable identified our and uncertainties Form to, well of on as XX-Q. metrics disclosures, but our the you refer our uncertainties We encourage to detailed filings non-GAAP discuss Risk you release including, under to on carefully our risks and caption our earnings Factors GAAP Form XX-K as limited the circumstances, financial in applicable these other as SEC report you our read business metrics. also disclosures annual for the consider and We and measures quarterly tables with reconciliation in report

Applied the get may and Commission SEC visiting You Securities www.sec.gov. by Exchange at for filings Digital website free

section available in is be everyone website. to recorded like call for the of and via Digital's made remind I'd replay Lastly, Applied link being Investor Relations this will that

CEO Digital's Cummins. the to Applied of like call to Chairman turn Now Wes I'd Wes? over and

afternoon, XXXX call. Matt, everyone. our first joining fiscal you quarter for conference Thank and for us good Thanks,

industry. high-performance I to work gratitude of rapidly purpose-built growing, service for start hard infrastructure providing by to the our and ongoing to supporting expressing computing employees their our in mission want

share the CFO, of David Rench, a for turning our some detailed developments financial over business. Before call across to to our recent our review like I'd results,

quarter, We digital close strategic After of companies. accredited the and to sector. in of investments and NVIDIA confidence deploying appreciate related the group forward capital infrastructure in our vote significantly investors, the of investors institutional improved high-return the to sincerely balance and our from the from due a projects look this sheet

on I'll update Next, give our schedule. HPC progress an our continues Campus. of on Ellendale Building

hyperscaler. We are finalizing U.S.-based the a with lease

after We our is Digital debt beginning which Additionally, shortly see site lease is we're close initial progressing level executed. XXX-megawatt this pipeline. designed gigawatt location financing, with we have X buildings for the X.X expected building our as megawatts. Applied to monetization and is the capacity we of are the we'll our to additional over exploring at opportunities this just XXX accelerate to currently expand Simultaneously,

at clients Now center business North currently our starting our with capacity. contracted for data which I'll cryptocurrency center capacity data on of hosting operating fully We update provide an Dakota, business. full XXX units, megawatts each have across in of are locations hosting X our

for our explore and our computing Next, opportunities discuss existing we as AI our high-performance new let's business, in cloud growth fulfill contracts segment provides which pipeline. experience This to power continues services applications.

first the had of online. end clusters the of As quarter, we X

significantly the and accurately over GPUs versus reported the reflect improve which business. to financing economics amendment the life amortize have allow more us results amending as which complete The for the of will our the will life our the the lease contemplated We significant quarter. progress made expect current GPUs, lease, useful value of expected the in on we of to this

XXXX, in second the business remain trends growth increased and additional we which fiscal confident starting business, expect X. to in begins our significantly has market the year December round summary, positive investment and clusters the we for are by our deploy encouraged of cloud recent visibility across trajectory. Our in our In our half

you With financials our provide that, David I'll guidance. and update an now turn on David? the walk Rench, to our call through over CFO, to

Wes. Thanks,

to revenue in Let was our contributions me $XX.X This growth, by million. begin which from services segment highlighting our segment increased by this by while cloud hosting generated million $XX.X data contributed our specifically cloud $XX.X contracts, XX% driven primarily services quarter. growth million center revenue,

depreciation higher see expenses. While cost, we largely due this an did was increase and in to amortization

depreciation totaled period the $XX.X amortization same million quarter, in million, and up from year. the For last $X

center GPU incurring clusters not data leases It's currently locations. significant in for expenses to business also related we're we cloud those note our to as have important that deployed yet

facilities As the for a result, quarter revenue. yet million not that this in generating $X.X expenses are company incurred

to centers which these is future, help these will costs. data offset plan in Our utilize the

Our the adjusted significantly to $XX EBITDA for quarter increased million.

of million Our $XX.X $XX share average count was net adjusted for quarter loss XXX based shares. and weighted million or the share per on a basic diluted

the We balance with million in cash Turning and cash in million to ended first sheet. debt. fiscal the cash, $XXX.X quarter restricted equivalents $XX.X alongside

which a from equity investors. large was cash past doubled X recent $XXX.X million, over months, infusion has the Lastly, nearly shareholders' driven by

turn call the closing Wes I'll over Now remarks. to for

David. you, Thank

substantial data workloads we As support high-density the we in began running many foot for response, at requirements HPC construction In facility, late square of year applications. XXX,XXX state-of-the-art first centers. AI in scale power large-scale, advanced designed among the demands you on for necessary a know, specifically industry the last compute recognize were to to

contract a control interconnectivity, design what's advanced and the site a in regarding requirements with Dakota positioned extreme compliance We lease by proprietary cooling, and in now center HPC financing industry discussions hyperscaler. for a campus believe advanced us possible This density, supporting our for facility. advanced data architecture to North our in be level U.S.-based and purpose-built redefines investment power early significant security,

be together are with data from site-level trend of reaffirms believe -- and this higher high-growth positions proprietary in our centers hyperscalers this for attractive the addition, among early financing need purpose-built our We an leading rates demand strategic leader thought direction witnessing to segment. facilities we players. for industry our us and are announcements lease In rising these believe pursuing. we and Recent top-tier market we for from underscores debt the facilities HPC thousands

In highly are break a building for significant interest X is the short extremely a this to full increase and capacity and assembled us as we from top-tier can developer in and and team past demand an allowing XXXX which is for substantial have The market hyperscalers that a fact deliver seen high-growth capacity, segment into other we weeks, for XXXX stack XXXX have supply. hyperscalers. experienced

to We our Furthermore, that campuses power have plan. strategic potential strengthens investors strategic for monetize other believe the on investments the that not We growing prominent available XXXX. will our affirms this in recognition immense the believe us strongly believe position path. highlights only this our will market but right we're we allow also from

vision Our potential to become optimal we'll building ahead, to continue capable scale. to allocate and and risk-adjusted data value. strategically is excited capital HPC of about our a maximize operating the and multiple at catalysts shareholder platform We're centers returns achieve

Monday, Rench our with assume these changes and intended making and to our growth, better October us. will role role to effective will Officer; XX. David to continue of assume among Saidal be Administrative moves some are navigate Chief team are the of executive Financial Mohmand we Officer, the expansion that we position As Chief

welcome this your At questions. we time, Operator?

first Riley from our And Instructions] Securities. Lucas [Operator comes question Pipes, B.

had congratulations and the period understanding exclusivity was operating team, And first has exclusivity prior and my is lease round my it progress. still are wondered, negotiation. that extended exclusivity? the Or Wes it on you that that about renewed? investment the Wes, under recent the LOI. period has been the Or expired? question under we And I

exclusivity renew We're the officially just actual I pursuing document. So not chose saw just to the document. complete any think to reason the neither exclusivity lease the of exclusivity. We extend period to parties Then has expired. finalization the

question Darren comes ROTH Aftahi, Capital from Partners, next LLC. Our

Congrats David something the talks the first the It to finalization megawatts. Could of for Saidal clarify PR. their XXX lease on in the hyperscaler about with and appointments. you

do for to that -- on capacity XXX want megawatts? campus? just Or options I the is have lease additional be the in is clear, just they So hyperscaler

Yes. Darren, thanks.

this, think XXX other megawatts. a be form. other talked is will in should different that you and the about lease initial expect, be the what the and will expectation XXX the the So on I But then is XXX reservation we've lease always include will

we've I talked started facilities We've script, designing we in those some earthwork this already the like early winters North times through work think the several some ran those in designed moving. we're Dakota. feel or I facilities. those, to get about on largely

already leases. making expectation take So those, come it that, will the is entire but X campus, the single will but that started on in we've tenant progress

Brown Our of next Capital Street Markets. Rob from Lake question comes

capacity. demand you the clusters? talked you clusters, at business, guess on What's your GPU Maybe additional thoughts I see strong on moving to full running do pretty how the additional and about that? you're there, timing And

So we about Rob, additional to we talked the in expect start script, clusters. deploying as

want center that market. that's data the I part of Blackwell year. the market and right the move want when calendar We on the demand The have we're to going later capacity to the add of do of hopper? wait Do the those capacity we half additional deploy really at clusters, customers prices. in to you deployment would now very you're holding for in attractive is see thing in next first

the really a what second at. begin of We've But of we're additional work our financing. which those you again. fiscal clusters expect having are that's we that right So deploying as half December make lot doing we're of know, type to we in sure the discussions, year, looking X to starts and done

years out talked the schedule that leases it better So of the matches X have that recognize depreciation business I X versus pushes model. again, years that rework the the payment we to the P&L appropriately that that with the so about we

sure we've past make that over we to push of So forward. have a appropriate lot to X that financing done work months the the

We've back lot boost a more really good visibility interest. We investment in got the us. a and have September, lot on a from of

deploying expect half. financing in should the So structure second you start under additional a clusters different we that

[ Our ]. Northernland next question Securities comes Grondahl, from (sic) Securities Mike Northland

the talking the data just located? you where are customer ideas environment talking potential #X? and Have any And on megawatts be might about that to after center started #X XXX leased Wes, already up. demand or

Yes.

for So thanks question. the

the one last to are week bit I significant Dakota increase XXXX market of that. to so make pushing we're call in So the August, of of want from working typically additional amount those X about capacity. on additional for X we target but a have talked we past, hyperscalers North the in in But last We're the XXXX I since aggressively alluded September, of saw saw hyperscalers, through significant with inbound data to late in month and our in a interest August one don't we my call, activity. a so point, prepared a little remarks,

'XX. But to get seeing We're this 'XX to and what seen that that have in basically working are for those moving and capacity LOI sites be half But customers. that especially half to the of Dakota, to for of we marketing site. in that second different perspective, the 'XX North From the and a amount for the the a is us for lot a point. 'XX megawatts we're say I step seeing significant there done Dakotas demand capacity. but at demand the our even significant up in wouldn't have we likely have amount XXX significant 'XX of we've likely no out the Ellendale we'll have. we at started into a There's to second additional 'XX Dakotas. be another a people first in location, of demand for

Any you rough in an to you LOI possible? think early when is guess have 'XX? calendar 'XX would that And as LOI or

Yes.

backup that we're us, end is for we're this I We've in, lot the good things dynamic had things from additional progress big site. of lot we're of had projects We've quarter a as seeing if market Mike, -- pushed we're longer. a some several on we've could on XXX This are industry happen. hit the by projects quarter, a currently the power for 'XX just something chain. seen, that pushed. where things happen for There investment. we are that is not of in getting the an We've power lines time a the supply years, really pushed megawatts for least, had us, see think at of seeing just had calendar example, for some little over their going activity such seeing, time an lines because get the market gen

so And into the they're resold market. being

of we've So taken advantage recently. that

from trying to X industry, accelerate Ellendale, perspective, advantage us both the sites. will because of it very dynamic, and supply here in can in as chain the nimble So there's take those a we additional be but help lot at to and play things we're and X a it's things also of as Building

things a just of lot So happening.

I can hear you, George.

be So you. it must

Okay.

George Sorry. Sutton.

So of into I'm specificity to has on been that us the the determine on could the remains? have What if a delivery lease. on little you the you facility in part a wondering more based connections date give based trying in been the assumption backup. My and part finalization

we So is that stand still the where on lease?

not the the George. that, really on let clarify That's up But lease. issue me

call. I around confusion think on there some was the last that

talking revenue in starts. be up some ways going to actually said the And So when that lease was it's I about tenant. to I really

is. that And so clarify to just what

then earlier then 'XX the middle in will the ready feed dual be half backup feed. of half gen. dual facility feed and in with 'XX of first And second 'XX of in the the So single

could if want what go feed they're feed. UPS for power redundancy, single wait to they technically, willing do with And client so dual just the to take then

think I looking a so second of half the site. And gen from dual so on full feed safe redundancy at full backup the perspective,

a there trying confusion that was to So up. just little I clear think

left and will happen -- just George. this it There's get in wrong try in really of to I not lease of really days. the in that up. process. weeks. in maybe that really And the somewhere specifically been It's times. There's there's be just a on on finalized. I've outside handicap feel the some that But window, could lease this, very could confident holding little chance reality, several matter lease, on this anything the time window, We and weeks. X It's It handicapping X

push We but site-level of it as process. the the lease lot And a we've really then done. confident in we on can, hard around control financing. don't getting as work We done the we're

signed. as up They're lined lease ready We whenever have group to the month as the there. end gets bank this the fund early of

lined that we this length the point, us. But work is shortly don't then give think will of the from the when from and will as a a So this have really thereafter. a the size contract could large the wish, the I through. is we're here first-time But announce it we'll get first-time the color, specific get and I even all pieces would if things, this take can you the we're months for to to supplier, just finalized just which that add I control I go, finalized and up for of XX third process. but at contract George, And very to it's customer supplier have working with customer, I be through typically funding we to and parties, heard that XX here,

the X So about at we're months.

it's we So very and we're like the moved fast, really at of feel this. end

The much pretty as to expectation every just But and deadlines here. with significantly keeps So that moving day few work color can. a trying our as missed on I'm doing we've every week. them forward obviously, give just I we're

piece to that every get It's this of we feel we just when happens. that signed. will confident handicap from information actually so have, And hard that really

going to as next hopefully one after I'm the as not before hurricane soon assume but that. the

you to give if sheet. on want sense starting us So structure to I you're you X this know of your all X, move do of look sits? Can and that you're X we that don't how to at you balance Building dirt. a where kind beginning mentioned buildings

Yes.

to of miniscule. dirt really the to or relative building the the relative cost work to cost earthwork total -- relative So the is

to few modifications, with. design be not should We've you're There design. you So kind will through easy time. improving, that's a working ahead been improving if be the it's go every one of

going now building So -- right expect that modifications, XXX-megawatt to we XXX. some plus IT be should it's to be it's in expected versus load

some there's changes. So

calendar we're second half to and ready calendar the the then But in second building pushing in of building that of have half third the XXXX 'XX.

so a work, to meet dollar-wise of amount already, but lines. we And of a significant significant work amount make done that time those expensive sure work not we've can

Company. Todaro, & John question Needham next comes Our from

X I and sort here, the to related Wes guess team, both lease. of

going the had additional the better think the mentioned each? a we just it just that and then now is XXX economics a as first point, to be could they're going harder think XXX? second of leases, economics and of we negotiate Any little bit maybe color Or it kind for then about same there? for the kind of almost the lease, that megawatts to here? think X relates kind weeks You X we of clerical to there's up to Do to take X be then key least all XXX. should really kind of first and XXX kind they other negotiated is And items the should part on at

Yes.

John. part to take And to game. up want correctly. -- it's little -- of a you're that second say the guessing thanks, yes, So But characterizing bit little a again, of a I again, don't it could

are leases, sense. On if part, economically, the that first there they'll X similar, really different look structures, makes X but

Okay.

kind the about EBITDA, kind economics model on thinking of be revenue as of should previous So and still we it. we

Okay.

Yes.

more a is on month. of per you sale remainder, And be lease a But similar. kilowatt the economically, lease they'll expected colo per very leases on One traditional kind the $X look of for cost where to model hyperscalers. that's yield

as a I at it. to mostly phase Got kind second point, point, of it clarify, clerical And you a kind would just just Understood. this characterize in of guess.

Yes.

Our H.C. Dede next question Wainwright. Kevin from of comes

calling David, Michael of Donovan in and on is behalf Kevin. this Wes

demand? with Cloud how you're pricing customer what seeing can discuss you with And changed Services, has For turnover?

the on from let's on hour has just it hopper an metal. for somewhat surprisingly year last the almost -- for flat bare call been pricing, So lined

lined. on has flat our metal mean pretty sorry, then price with we per we have bare XX-ish -- we're GPU still largest range per hour to customer the on turnover, in stick average we hour. XX -- And been quoting out customer. I on X expanding keep So

We that know character have happened mark have that a more in payment. there the question around of details it the payment. a got changes has with of the the don't and customer I

is here of read the detail Street billion, the the $X.X same roughly believe, was I everyone what which number. I as think Journal Wall do, I knows I

clusters the we been to a there, those very have calls, question swap marks And has So there's of a been market we're I'll more which the talking customers back demand couple some grow. that, is last there's go we we're on and for market, more continue enterprise what about seeing I've chance but demand to and focused around out which enterprise and market. the in developing to

would and more gotten market I in I it's AI the that that feel prudent lab like What of say kind the is about much the AI start-up market.

if You're get lot many how at business XX XX looking going thought went a you were lot seeing of can models GPUs online more quickly. back how a better, and instead or months, into you I

a people actually our in think great that are And their customers around company and around we models as a has more customers customer have well. and more looking I So largest of and feel a business just about that a little really some I thinks comfortable companies. range those on together lot think wide end AI, and

AI both pricing has market the perspective start-ups. back But in to still largely enterprise from and seeing demand the set market, that customer entrants seeing But and on stable been AI the growth. is labs there. new that a significant We're

for Are Okay. to cost you are about any Wes. solutions trying customers Then engineer recirculation? to offset thinking And obtaining so, conceptual that, guys more I question. appreciate for there? if tower heat you

heat capture mean on for data you the centers. Yes,

Exactly.

Yes.

of amount been we've that. fair for methods So time on spending a

much our harder. it's with centers, Bitcoin So data

that offload waste create doing to of any in expect that the opportunities really examining easier or It's the you in about with to much we're greenhouses But areas. use the facility, or that to air we towards start for move heat, you're created to XXXX areas opportunities some harder creates X it thinking for we opportunity comes facility So and facility we ambient online. that as much the to capture calendar look case. and heat facility in things in, that's But deploying look Ellendale and to as cool, in agriculturally based mushrooms are like a could agricultural that or we're you're the liquid aquafarming things we capture HPC co-locate that cool. that heat need the that really the

heat We are from make in Dakota facility. use waste for to try that to North of that the

Gruber question next from from McBaine. comes Gruber Our Jon &

my on rating gave at we XX.X% the call, we are now? we question we are last us Or XX%, last in you XX%? write Wes, sort at Where at stand do a call... were you -- of is

think had would asked that work mostly It's last I this just call, there, last question, complete. And us. line Jon Jon. for time I And of on But what it's remember a great on say if trouble is correctly the think handicapping the you we're I XX% clerical at -- I XX. XX% the the we're or point I XX.X%

said, I team we push a great the I I had but at process. of can. we of more But we're we there. the think where this job The end very So process, done getting has like control wish

Aftahi, Our comes Darren from LLC. Partners, Capital next question ROTH

you guess -- before what of kind on a of lease, piece there fund X I'm kind target you Are way at curious, when sort the leases. looking on second cost to the buildings getting get then of you range is kind some you about looking on And of the follow-up, on second made talk of guys a one, just comments booked? help the to Just terms about in client prepayment are that X Wes, given X building yield that? a on the you forward? going and I maybe

on I'm actual talk yields pricing about for going there. rates for the Darren, not to -- So lease

about talk from in But always model about talked fits that. it we've that to really premature it's the still think an economic I perspective.

expectation -- we'll and low X we're some in like putting internally. as for As big dollars, in money and or X B far project -- CapEx spend. financing build is the very place not do I have C as The The our expectation is there. vernacular buildings lease we'll a signed said, and to,

go X, close so you is again, to to seen the and I through I expect was we doing that from full one I've a anything we developer where are before in again CapEx that hyperscalers well to September, the those market market, signed speed from offering market and spend. and of upfront to working But there break build of on a the for anything the think, for it's say market us capital I last But will dollar we payments. really won't what to into we've I stack did we're back first think us. in on potential out Building And perspective, repeated, just the this month that's out think and X -- seeing going and offers way what

demand some We in 'XX of But we'll of just have market some are to the seeing for down for that be and our as 'XX other that the out we it campuses. the scarcity what's there. -- of that down speaks and

turn this I like closing Thank you. further CEO no floor back Cummins, and questions for remarks. would There of, Chairman at are to Wes time. to the

on call. I January. to Thanks, look the everyone, you for forward speaking in joining us with

today's participation. you. This thank for Thank your you does teleconference. conclude We

this at lines disconnect You may your time.