Fiscal First Quarter 2027
Filed Oct 7, 2026Applied Digital reported fiscal first-quarter revenue of $341.9 million, up 322% from the prior-year comparable period, while adjusted EBITDA was $64.4 million and net loss attributable to common stockholders from continuing operations was $221.0 million.
Revenue growth, HPC Hosting deployment, adjusted profitability, and operating cash flow were strong, but GAAP losses widened sharply amid higher stock-based compensation, interest expense, derivative and investment fair-value losses, and discontinued-operations losses.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $341.9M | – | up 322% |
| Services revenueGAAP | $262.8M | – | up 225% |
| Data center rental and other revenueGAAP | $79.1M | – | – |
| Services cost of revenueGAAP | $245.7M | – | 318% |
| Data center rental and other cost of revenueGAAP | $43.9M | – | – |
| Selling, general and administrative expensesGAAP | $114.7M | – | 289% |
| Total costs and expensesGAAP | $404.3M | – | – |
| Operating lossGAAP | −$62.38M | – | – |
| Interest expenseGAAP | $77.4M | – | 866% |
| Interest incomeGAAP | $35.8M | – | 4,080% |
| Loss on change in fair value of derivativesGAAP | $49.5M | – | – |
| Loss on change in fair value of investmentGAAP | $11.4M | – | – |
| Income tax expenseGAAP | $1.89M | – | – |
| Net loss from continuing operationsGAAP | −$168.0M | – | – |
| Net loss from discontinued operationsGAAP | $16.1M | – | – |
| Net lossGAAP | −$184.1M | – | – |
| Net loss attributable to common stockholdersGAAP | −$237.1M | – | – |
| Net loss attributable to common stockholders from continuing operationsGAAP | $221M | – | – |
| Net loss attributable to common stockholders from discontinued operationsGAAP | −$16.05M | – | – |
| Basic and diluted net loss per share attributable to common stockholders from continuing operationsGAAP | $0.76 | – | – |
| Basic and diluted net loss per share attributable to common stockholders from discontinued operationsGAAP | $0.06 | – | – |
| Basic and diluted net loss per share attributable to common stockholdersGAAP | $0.82 | – | – |
| Adjusted revenuenon-GAAP | $300.4M | – | – |
| Adjusted operating income (loss)non-GAAP | $37.82M | – | – |
| Adjusted operating marginnon-GAAP | 13 % | – | – |
| Adjusted net loss from continuing operationsnon-GAAP | $4.1M | – | – |
| Adjusted net loss from continuing operations per diluted sharenon-GAAP | $0.01 | – | – |
| EBITDAnon-GAAP | −$72.63M | – | – |
| Adjusted EBITDAnon-GAAP | $64.4M | – | – |
| HPC Hosting Business base rental revenueGAAP | $65.8M | – | – |
| Net Operating Incomenon-GAAP | $58.8M | – | – |
| Net Operating Income marginnon-GAAP | 89 % | – | – |
| Net cash provided by (used in) operating activitiesGAAP | $63.92M | – | – |
| Purchases of property and equipment and other assetsGAAP | −$2.07B | – | – |
| Cash flow used in investing activitiesGAAP | −$2.08B | – | – |
| Cash flow provided by financing activitiesGAAP | $1.54B | – | – |
| Net decrease in cash, cash equivalents, and restricted cashGAAP | −$475.5M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| HPC Hosting BusinessRevenue included $65.8 million related to base rent, $183.5 million related to tenant fit-out services, and $13.3 million related to tenant recoveries; segment operating profit was $33.4 million. | $262.6M | – | – |
| Data Center Hosting BusinessRevenue was compared with $37.9 million during the three months ended August 31, 2025, with results described as materially consistent year over year due to stable operating conditions across the data center hosting facilities. Segment operating profit was $13.3 million. | $37.8M | – | – |
| ChronoScaleChronoScale revenue was excluded from adjusted revenue; during the quarter ChronoScale announced plans with Microsoft for a 50 MW AI compute deployment in North America featuring NVIDIA GB300 NVL72 systems and advanced liquid cooling. | $41.48M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Dividends issued on preferred stock: $ (1,543) (In thousands), compared with (1,576) (In thousands).
- Redemption of preferred stock: $ (6,996) (In thousands), compared with (225) (In thousands).
- Proceeds from issuance of preferred stock: $ 274,999 (In thousands), compared with 175,000 (In thousands).
What drove it
- Services revenue increased primarily due to an increase in tenant fit-out services of approximately $157.2 million and $23.0 million in GPU hardware sales related to ChronoScale.
- Data center rental and other revenue reflected $65.8 million in base rental revenue and $13.3 million related to tenant recoveries after the HPC Hosting Business commenced rental operations in the second quarter of fiscal year 2026.
- Phase 1 of Building 2 at Polaris Forge 1, representing 75 MW, was Ready for Service on July 1, 2026.
- The Company closed $1.59 billion of 7.000% Senior Secured Notes due 2031 to fund construction of the third HPC building at Polaris Forge 1 and repay the $300 million bridge facility.
- As of August 31, 2026, the Company had leases for approximately 1.41 GW of critical IT load across five campuses, representing approximately $36 billion of contracted revenue over their initial base terms, or approximately $86 billion if all renewal options are exercised.
Concerns
- Selling, general and administrative expenses increased by $85.2 million, including increases of $51.7 million in stock based compensation, $9.9 million in personnel expenses, and $12.1 million in professional service expense.
- Interest expense increased $69.4 million to $77.4 million due to an increase in debt arrangements between the periods.
- The Company recorded a $49.5 million loss on the change in fair value of derivatives and an $11.4 million loss on change in fair value of investment.
- Net loss from discontinued operations was $16.1 million and represented income statement activity related to the Ekso business at ChronoScale, which is classified as held for sale and discontinued operations.
- The Company reported $6.4 billion in debt as of August 31, 2026.
What to watch
- Initial operations at Polaris Forge 2 in Harwood are expected to increase delivered critical IT load across North Dakota campuses to 300 MW by the end of calendar 2026.
- On October 1, 2026, the Company achieved Ready for Service for the second 75 MW phase of Building 2 at Polaris Forge 1, bringing fully operational critical IT load at the campus to 250 MW across two buildings and 10 data halls.
- The third 150 MW HPC building at Polaris Forge 1, along with Polaris Forge 2, Polaris Forge 3, Delta Forge 1, and Delta Forge 2, are in various stages of construction.
- The Company entered into a Power Purchase Agreement with Base Electron for capacity and energy from an approximately 1,200 MW natural gas-fired generation facility to be developed in North Dakota.
- The Company signed an agreement for up to approximately 1 GW of potential power capacity in Finland.
Balance sheet and cash flow
- Cash, cash equivalents, and restricted cash: $3.7 billion as of August 31, 2026.
- Debt: $6.4 billion as of August 31, 2026.
- Cash and cash equivalents: $ 2,949,909 (In thousands) as of August 31, 2026, compared with $ 1,591,988 (In thousands) as of May 31, 2026.
- Restricted cash: 313,385 (In thousands) as of August 31, 2026, compared with 2,381,027 (In thousands) as of May 31, 2026.
- Property and equipment, net: 6,330,411 (In thousands) as of August 31, 2026, compared with 4,236,300 (In thousands) as of May 31, 2026.
- Long-term debt: 6,263,947 (In thousands) as of August 31, 2026, compared with 4,959,516 (In thousands) as of May 31, 2026.
- Borrowings of long-term debt: 1,648,500 (In thousands), compared with 65 (In thousands).
- Repayments of long-term debt: (315,932) (In thousands), compared with (2,416) (In thousands).
Analysis
Applied Digital’s fiscal first quarter showed a step change in reported revenue as total revenue reached $341.9 million, up 322% from $80.9 million. Services revenue rose to $262.8 million, driven primarily by approximately $157.2 million of incremental tenant fit-out services and $23.0 million of ChronoScale GPU hardware sales. Data center rental and other revenue was $79.1 million, including $65.8 million of base rental revenue and $13.3 million of tenant recoveries, following the commencement of HPC Hosting rental operations in the second quarter of fiscal 2026.
The HPC Hosting business was the principal operating driver. It generated $262.6 million of quarterly revenue and $33.4 million of segment operating profit. At Polaris Forge 1, the first 75 MW phase of Building 2 was Ready for Service on July 1, 2026. After quarter end, the second 75 MW phase was delivered on October 1, bringing live capacity at the campus to 250 MW. The Data Center Hosting business remained stable, generating $37.8 million of revenue compared with $37.9 million in the prior-year period, and $13.3 million of segment operating profit.
Adjusted measures improved substantially as adjusted revenue was $300.4 million, adjusted operating income was $37.8 million, adjusted EBITDA was $64.4 million, and Net Operating Income was $58.8 million. The Company reported a 13 % adjusted operating margin and an 89 % Net Operating Income margin. These non-GAAP measures exclude ChronoScale and include substantial adjustments, including $59.4 million of stock-based compensation, $49.5 million of derivative fair-value loss, and $11.4 million of investment fair-value loss in the adjusted net-loss reconciliation.
GAAP profitability deteriorated as operating loss was $62.4 million, compared with $9.8 million in the prior-year period, and net loss attributable to common stockholders was $237.1 million. The loss attributable to common stockholders from continuing operations was $221.0 million, or $0.76 per basic and diluted share, compared with $18.5 million, or $0.07 per basic and diluted share. Higher costs included $114.7 million of SG&A, up 289%, while interest expense increased to $77.4 million from $8.0 million as debt arrangements expanded. Discontinued operations added a $16.1 million net loss.
Capital deployment remained intensive. Operating cash flow was $63.9 million, while purchases of property and equipment and other assets were $2.1 billion. Financing activities provided $1.5 billion, including $1.6 billion of long-term debt borrowings and $275.0 million of preferred-stock issuance proceeds. The Company ended the quarter with $3.7 billion in cash, cash equivalents, and restricted cash and $6.4 billion in debt. Management did not provide financial guidance, but highlighted expected Polaris Forge 2 initial operations by the end of calendar 2026 and further power-development initiatives in North Dakota and Finland.
Management, verbatim
Our goal is to establish Applied Digital as the category leader in the design, construction, deployment, and operation of purpose-built AI factories.
Wes Cummins, Chairman and Chief Executive Officer of Applied Digital
As new data center development becomes more difficult in certain markets, we believe the scarcity value of established, powered, and community-supported campuses increases.
Wes Cummins, Chairman and Chief Executive Officer of Applied Digital
Not in the filing
stated, not guessed- Financial guidance was not provided.
- Prior guidance/outlook was not provided.
- Gross profit and gross margin were not reported.
- Free cash flow was not reported.
- Common-stock repurchases were not reported.
- Common-stock dividend was not reported.
- A GAAP tax rate was not reported.
- Sequential revenue, segment revenue, margin, earnings, and cash-flow comparisons were not reported.
- Prior-year Net Operating Income was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.