0001144879-26-000030
SEC filingRevenue surged 139% to $126.6M driven by HPC hosting, but a $59.7M impairment loss pushed net loss to $70.6M.
For the three months ended February 28, 2026, Applied Digital reported total revenue of $126.6 million, a 139% increase from $52.9 million in the prior-year period. The growth was driven primarily by the HPC Hosting segment, which contributed $71.0 million (including $44.1 million base rent, $18.9 million tenant fit-out services, and $8.1 million power pass-through). Cost of revenues rose 48% to $72.8 million, mainly due to tenant fit-out expenses and higher energy costs. Selling, general and administrative expenses surged 251% to $79.7 million, largely attributable to $48.9 million in stock-based compensation and increased professional services. The most significant non-recurring item was a $59.7 million loss on classification as held for sale related to the Cloud Services Business, which was reclassified back to continuing operations. Net loss widened to $70.6 million from $35.6 million, with basic loss per share of $(0.36) versus $(0.16).
The Data Center Hosting segment posted operating profit of $13.9 million, up 58% from $8.8 million, benefiting from site performance improvements and lower power costs. The HPC Hosting segment generated $17.6 million in operating profit, a sharp turnaround from a $(0.2) million loss in the prior year, reflecting the full operation of the 100 MW Polaris Forge 1 facility. The Cloud Services segment recorded an operating loss of $52.2 million, which included the $59.7 million impairment; excluding that, the segment's underlying loss would have been approximately $7.5 million. On a non-GAAP basis, adjusted revenue (excluding Cloud Services) was $108.6 million, and adjusted operating income reached $25.6 million (23.6% margin). Adjusted EBITDA was $44.1 million, representing 40.6% of adjusted revenue.
Management emphasized the company's focus on the Data Center Hosting and HPC Hosting segments as core operations, with the Cloud Services Business no longer classified as held for sale due to the planned transaction with EKSO. Construction continues at Polaris Forge 1 (additional 150 MW under lease with CoreWeave), Polaris Forge 2 (200 MW lease with a hyperscaler), and Delta Forge 1 (300 MW). Financially, the company ended the quarter with $1.7 billion in unrestricted cash, supported by $2.35 billion in 2030 senior secured notes and $900 million from the MAM partnership. Management expressed confidence in sufficient liquidity for at least the next 12 months to fund construction and operations. No specific quantitative guidance was provided.
Cash and cash equivalents surged to $1.73B from $43.9M as of May 31, 2025, driven by $2.35B in 2030 Senior Secured Notes and $900M from noncontrolling interest. Total debt rose to $2.69B, including $2.35B in secured notes at 9.25% due 2030, $450M convertible notes, and $87M DevCo facility. Shareholders' equity increased to $1.58B from $498M, aided by preferred stock issuances and warrant exercises.
Purchase commitments are modest, with a $26.2M energy service agreement for the Jamestown facility. However, the company has significant future revenue from lessor leases: $15.5B in minimum contracted payments from data center leases (CoreWeave and hyperscaler). Additionally, a guarantee for Base Electron's performance under a $1.2 GW power generation design-build agreement exists, with potential termination fees of $50-100M.
No common stock buybacks occurred; preferred dividends totaled $4.7M. Debt issuance of $2.5B was partially offset by $432.5M in repayments. Capex of $1.58B reflects ongoing construction of HPC data centers. The $2.35B 2030 Notes will fund the Ellendale facilities.
Three segments: Data Center Hosting ($37.5M revenue, $13.9M profit), Cloud Services ($18.1M revenue, -$52.2M loss including $59.7M impairment), and HPC Hosting ($71.0M revenue, $17.6M profit). HPC Hosting is the growth driver, with leases for 400MW at Polaris Forge 1 and 200MW at Polaris Forge 2.