Applied Digital Corporation Q4 FY2025 earnings call

• Signed a transformative 15-year lease with CoreWeave for 250 MW at Polaris Forge 1, North Dakota, expected to generate ~$7B in contracted revenue over lease terms. CoreWeave exercised option for an additional 150 MW.
• Polaris Forge 1 timeline: 100 MW operational in Q4 2025, 150 MW mid-2026, 150 MW in first half of 2027.
• Reduced SKUs by ~50%, consolidated suppliers, reduced build time from 24 months to 12-14 months.
• Advantages of Dakotas location: low-cost, abundant power, closed-loop direct-to-chip liquid cooling system with projected PUE 1.18 and near 0 water consumption.
• Completed diligence and onboarding with 2 other investment-grade North American hyperscalers, and in advanced negotiations with another large hyperscaler for a campus.

For the Data Center Hosting segment, fiscal fourth quarter 2025 revenues were $38 million, up 41% year-over-year. Cost of revenues increased to $30.2 million. SG&A expense was $28.1 million, driven by business growth including stock-based compensation, personnel expenses, and other expenses. Depreciation and amortization expense was $4.1 million. Interest expense decreased to $4.5 million. Net loss attributable to common stockholders was $26.6 million or $0.12 per basic and diluted share. Adjusted net loss was $7.6 million or $0.03 per diluted share. Adjusted EBITDA was $1 million. The Cloud Services business is under review for strategic alternatives, so its financials aren't included in the continuing operations discussed here.

• Historically didn't provide specific forward-looking guidance, but now provides directional guidance. Expect revenue to increase significantly sequentially starting in the quarter ending August 2025 due to fit-out of first Polaris Forge 1 building. Fit-out revenue will be recognized in current and next quarter before lease revenue begins.

• Delays in financing processes due to industry slowdowns in late August and early September, and reliance on professional service providers.
• Complex onboarding and contracting processes with hyperscalers, which can be lengthy and require multiple levels of approval.
• Market dynamics that could affect the finalization of large lease agreements with hyperscalers.

Q: How should we think about development cadence over the course of 2026 and if there's a window for breaking ground on a second campus?

A: Expect to break ground and work has already started on 1 additional campus and potentially 2 before the end of 2025.

Q: What are the largest gating items in the financing process?

A: Biggest gating item is industry slowdown in late August before picking up in September, and reliance on professional service providers like consultants and lawyers.

Q: Could you give a sense of the advanced negotiations with a customer?

A: It's an investment-grade North American hyperscaler in advanced negotiations, with ongoing discussions with several hyperscalers for campuses in Dakotas and other regions.

Q: What are the go-live dates for the buildings at Polaris Forge 1?

A: First 100 MW is Q4 2025, second 150 MW is mid-2026, and third 150 MW is first half of 2027.

Q: Question on Building 2 timeline and Dakotas locations?

A: Building 2 is under construction with significant work already done, timeline is aggressive and on track. Primarily focused in North Dakota but have sites in MISO and southern US as well.

Q: Are we talking about scenarios where hyperscalers own their own infrastructure or powered shells?

A: Very focused on full stack colo, not primarily interested in powered shell at present.