Applied Digital Corp. earnings recap
Q1 FY2027, reported October 7, 2026 · Beat 2 of last 6 quarters
Applied Digital Corp. reported Q1 FY2027 EPS of $-0.01, a beat of 96.6% against consensus.
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Applied Digital's quarter is a delivery milestone for the AI factory buildout: full RFS on the first two Polaris Forge 1 buildings took it to 250 megawatts of critical IT load, with management guiding to 300 megawatts total online across North Dakota by year-end and more than 600 megawatts placed into service over the next 12 months. The company's emphasis on contracting dedicated generation — an approximately 1,200-megawatt natural gas PPA with Base Electron adjacent to Polaris Forge 3 for 2030 delivery — speaks directly to power, rather than chips or shells, being the binding constraint on AI capacity. Its comments that tenant fit-out scope is growing and becoming less predictable could signal that compute, network and storage configurations inside these facilities are still changing materially, which may affect how much of the buildout spend lands in electrical, cooling and other infrastructure versus tenant-supplied equipment.
| Estimate | Actual | vs est | ||
|---|---|---|---|---|
| Revenue | $116M | $342M | — | Not comparable |
| EPS | -$0.30 | -$0.01 | +96.6% | beat |
Revenue: The gap is too large to be a like-for-like comparison (the estimate and the result may be on different bases), so we do not call it a beat or a miss.
Applied Digital reported total revenue of $341.9 million, up 322% year over year, with HPC hosting contributing $262.6 million and the Data Center Hosting (crypto) segment contributing $37.8 million, in line with the prior-year quarter. The company achieved full Ready for Service across the first two buildings at Polaris Forge 1, encompassing 10 data halls supported by 250 megawatts of critical IT load, which Cummins said represents a 150% increase in delivered capacity, with the third building progressing on schedule. The crypto hosting segment generated $13.3 million of operating profit in the quarter on approximately $111.9 million of segment assets, more than double the $6 million of segment operating profit in the prior quarter on favorable power pricing. Saidal Mohmand said the company closed a $1.59 billion offering of 7% senior secured notes due 2031, funding the third HPC building at Polaris Forge 1 and repaying a $300 million bridge facility, and that the full 400 megawatts at Polaris Forge 1 and 200 megawatts at Polaris Forge 2 are now fully funded. The quarter included a $221 million net loss from continuing operations attributable to common stockholders, or $0.76 per share, driven in part by $41.3 million of stock-based compensation tied to one-time performance stock units and a $67.5 million noncash loss on the change in fair value of Babcock & Wilcox warrants and common stock investment; adjusted net loss was $4.1 million, or $0.01 per diluted share.
Management framed the coming year around converting contracted capacity into operating capacity and said it expects to place over 600 megawatts into service over the next 12 months versus 250 megawatts over the past 12 months. On pricing, Wes Cummins said the company expects approximately 250 megawatts of expansion leases to be executed by calendar year-end at materially higher pricing than prior leases, and in Q&A he characterized that as potentially longer duration and 'definitely north of 15% plus increases on the lease rate.' The next campuses to be financed — Polaris Forge 3, Delta Forge 1 and Delta Forge 2 — are all leased to the same Tier 1 investment-grade hyperscaler under 15-year take-or-pay leases; CFO Saidal Mohmand said Applied Digital is following the same framework of Macquarie preferred equity followed by project-level debt, is in active discussions with leading lending institutions, and has 'a high level of confidence' in funding these at favorable rates and terms, with 80%+ of existing principal not due until fiscal 2031 or later. Management pointed to a long-term Power Purchase Agreement with Base Electron covering an approximately 1,200-megawatt natural gas facility in Center, North Dakota with deliveries expected to begin in 2030, and to an agreement for up to 1 gigawatt of potential power capacity in Finland, where the first 100 megawatts is available in 2028 and ramps to the full gigawatt through 2031. On the long-term scale ambition, Cummins said the company believes it can grow its operating portfolio to 3.5 to 4 gigawatts by the end of calendar year 2030, which would require roughly 1 gigawatt per year of delivery in 2029 and 2030 and getting to around 2 gigawatts by the end of calendar year 2028. Cummins also said ChronoScale is on track to reach $1 billion of ARR in 2027, and that revenue contribution from Louisiana and Alabama is expected to begin in the first half of calendar year 2027.
“Over the next 12 months, we expect to place over 600 megawatts into service versus the 250 megawatts over the past 12 months.”
on Capacity delivery ramp
“We currently expect approximately 250 megawatts of expansion leases to be executed by calendar year-end at materially higher pricing compared to prior leases.”
on Expansion pricing
“If demand continues on its current path and we continue to execute and deliver for our customers and our communities as we've been doing, we believe we have the ability to grow our operating portfolio to 3.5 to 4 gigawatts by the end of calendar year 2030.”
on Long-term portfolio scale
Applied clearly has a first-mover advantage in North Dakota. Can you talk about the perception of North Dakota as a market and the receptivity you're seeing from hyperscalers?
Cummins said Applied Digital already has three customers in the state, is aware of a roughly 1-gigawatt self-build project by a Tier 1 hyperscaler in the state, and is having multiple conversations with other Tier 1 hyperscalers for additional capacity there. He said he thinks all of them will eventually be in North Dakota, citing the state's power, climate, low population density and, importantly, an established framework for how data centers are treated that lets developers know exactly what to expect.
Relative to the 250 megawatts of expansions that you've defined as likely coming at premium pricing, can you give us a sense of how you're defining premium pricing? How broad is that statement versus just the base rent?
Cummins said the company is pushing for potentially longer duration and significantly higher lease rates, and while he did not want to pin it down, investors can think of 'definitely north of 15% plus increases on the lease rate,' and the terms could also include longer duration on the leases.
As we look out to the 4 gigawatts or so by year-end 2030, what steps do you need to take to ensure you get there? How much is reliant on Base Electron, and do you need other sites in Europe as well?
Cummins reiterated the figure is 3.5 to 4 gigawatts by the end of 2030 and said the power is in the pipeline, with some of it including additional Base Electron capacity coming on in 2030. He said the real exercise was how much more the company can ramp build and delivery: reaching the high end would require delivering about 1 gigawatt per year in 2029 and 2030, with roughly 2 gigawatts reached by the end of calendar year 2028, and that this is much more about construction and delivery capacity than about power.