Applied Digital Closes $2.35B Senior Notes Offering: Key Milestone in $16B HPC Lease Execution
Applied Digital Corporation (APLD) filed an 8-K on November 20, 2025, disclosing the completion of a massive $2.35 billion private offering of 9.25% senior secured notes due 2030. Issued at 97% of par through subsidiary APLD ComputeCo LLC, the proceeds target construction of 250MW across ELN-02 and ELN-03 data centers at the 400MW Ellendale, North Dakota campus (Polaris Forge 1), debt repayment, reserves, and fees. This caps a flurry of material agreements, including multi-billion-dollar CoreWeave leases and Macquarie partnerships, fueling APLD's pivot to high-performance computing (HPC) hosting.
Shares surged 6.5% to $25.29 on April 1, 2026—the latest trading day—reflecting momentum from execution milestones, though down 17% over the prior month amid market volatility. With a $7.07 billion market cap, APLD trades at a 25x TTM P/S and 29x EV/S, premiums betting on AI-driven demand for its low-PUE (1.18 projected), water-efficient facilities.
Financing Cascade Unlocks Polaris Forge Ramp
The notes offering builds on a layered capital stack:
| Agreement | Date | Key Terms | Impact |
|---|---|---|---|
| CoreWeave Leases (Bldgs 2-4) | May-Aug 2025 | 400MW total, ~$11B initial 15-yr value | $16B prospective revenue across ND campuses |
| Macquarie Preferred Equity (PEPA Amends) | Aug-Oct 2025 | Commitment to $1.59B (from $300M) | $900M drawn for Polaris Forge 1/2 |
| Senior Secured Notes | Nov 2025 | $2.35B at 9.25%, secured | Funds 250MW build, repays prior debt |
Q2 FY2026 (ended Nov 2025) earnings highlighted Polaris Forge 1's 100MW energization on schedule—the first of three contracted buildings. A new $5B, 15-year hyperscaler lease for 200MW at Polaris Forge 2 adds firepower, with management eyeing $1B NOI within five years as leases ramp over 18-24 months.
Revenue Trajectory Amid Capex Firehose
APLD's financials underscore the high-stakes buildout:
| Period | Revenue | Gross Profit | Op Income | FCF | Total Debt | Net Debt |
|---|---|---|---|---|---|---|
| Q2 FY26 (2025-11) | $127M | $26M | -$31M | -$568M | $2.61B | $695M |
| Q1 FY26 (2025-08) | $64M | $9M | -$19M | -$331M | $700M | $626M |
| FY25 | $216M (+58% YoY) | $23M | -$72M | -$797M | $703M | $589M |
Revenue doubled quarter-over-quarter in Q2 FY26, driven by tenant fit-outs ahead of lease revenue. Yet, $552M capex in Q2 reflects aggressive expansion—free cash flow remains deeply negative, with debt tripling YoY to $2.61B. Balance sheet strength shines: $1.91B cash, $5.23B assets, and $1.45B equity provide runway, bolstered by Macquarie's right-of-first-refusal on $4.1B pipeline.
Earnings calls reinforce momentum: CEO Wes Cummins touted reduced build times (12-14 months vs. 24), supplier consolidation, and Dakotas' power edge. Q1 FY26 guidance flagged sequential revenue jumps from fit-outs, with cloud spin-out (ChronoScale via Ekso merger) streamlining focus on hosting.
Market Reaction and Valuation Stretch
Post-notes announcement, APLD's price rocketed 26% over three months to recent highs, outpacing peers amid AI hype. Daily volume spiked to 16.8M shares on April 1, signaling conviction. At EV/S 29x, valuation embeds ~50% CAGR to hit NOI targets—plausible given 600MW leased ($16B backlog) vs. today's 286MW crypto hosting.
Risks loom: Construction delays (weather, supply chain), hyperscaler onboarding (lengthy diligence), and dilution from PEPA puts (3% discount, $75M caps). Net debt/EBITDA could pressure if ramps lag, but multilayered financing (equity, debt, leases) de-risks execution.
Bullish Bet on HPC Dominance
APLD's material agreement streak—culminating in the $2.35B notes—marks a pivot from crypto to AI goldmine. With CoreWeave locked for 400MW and hyperscaler #2 at 200MW, $7B+ near-term revenue visibility crushes TTM's $216M. P/S expansion to 25x reflects this, but dips below $24 offer entry.
Buy APLD: Execution track record (on-schedule energization) and $1B NOI path outweigh capex drag. Watch Polaris Forge 2 groundbreaking, Q3 FY26 lease ramps, and Macquarie draws. Risks: Delay in Building 2/3 online (mid-2026/2027) or energy cost spikes could cap upside—monitor Q3 earnings May 2026.