Applied Digital Corporation Q2 FY2026 earnings call

Milestones - Polaris Forge 1 reached ready-for-service, energizing 100 megawatts on schedule and completing the first of 3 contracted buildings. - Announced a roughly $5 billion 15-year lease with a U.S.-based investment-grade hyperscaler for 200 megawatts at Polaris Forge 2. - These agreements represent 600 megawatts of lease capacity and approximately $16 billion in prospective lease revenue across North Dakota campuses. ### Financing - Completed a $2.35 billion private offering of senior secured notes to finance part of the Polaris Forge 1 site. - Utilized multilayered financing framework with third-party capital for upfront investment, retaining majority ownership. - Drew $900 million from Macquarie Asset Management's $5 billion preferred equity facility for Polaris Forge 1 and 2 campuses. ### Other Initiatives - Launched Applied Digital Cares community initiative. - Spun out Applied Digital Cloud to form ChronoScale, a dedicated GPU accelerated-compute platform.

The Data Center Hosting segment operated 286 megawatts of customer ASICs across two North Dakota facilities. It contributed $41.6 million of revenue in the fiscal second quarter, up 15% compared to the prior year. This segment generated roughly $16 million in segment operating profit in one quarter on a $131 million asset base. Total revenues for the fiscal second quarter of fiscal '26 were $126.6 million, up 250% from $36.2 million in the prior year, driven by tenant fit-out services and lease revenue from Polaris Forge 1.

- Expect lease revenues to ramp over the next quarter with meaningful revenue growth over the coming 18 to 24 months. ### - Expect to surpass $1 billion in NOI within 5 years. ### - Anticipate construction of additional campuses in the near term as they are well positioned, with inbound demand increased due to secured leases.

- Factors beyond control could cause actual results to differ from forward-looking statements. ### - Uncertainties in securing future contracts. ### - Construction delays or issues beyond control like weather. ### - Energy costs and availability may be more than anticipated as hyperscalers commit to long-term power plant developments.

Q: Get a sense for growth appetite in cloud business and how Applied could help ChronoScale attract customers A: ChronoScale will have access to Applied Digital's large-scale data center facilities, which is a big advantage. The relationship with Applied gives it an edge in deploying accelerated compute.

Q: Touch on agreement with Babcock & Wilcox and optionality A: BW solution uses proven technology, allows to go to market earlier. Utilities have positive reaction. Expect more info in first quarter on site and build schedule.

Q: Landscape for leases and pricing change, and pre-lease financing confidence A: Pricing has been stable to slightly better. Got more favorable terms in contracts. Pre-lease financing shows high confidence as they proceed with construction expecting to sign leases.

Q: Steps for ChronoScale spinout closing A: Will be a merger, expect definitive agreement later this month or early Feb, then shareholder vote, with closing expected in first half of 2026.

Q: Number of sites in advanced discussions and pipeline A: In advanced discussion on 3 sites in 900 megawatts. Pipeline remains robust, focus on scaling and execution capabilities rather than demand.

Q: Being qualified by investment-grade hyperscalers and simplicity of closing A: Been through onboarding process with most hyperscalers, so new buildings with them have abbreviated time frame vs starting from scratch.

Q: Execution lessons and confidence in future builds, and power opportunities A: Learned from first building, made refinements in design, construction, and supply chain. Still finding more power opportunities, mostly organic but also evaluating third-party ones.

Q: Expansion opportunities at PF-1 and PF-2 and Corintis' competitiveness A: Each campus has potential to expand to gigawatts, with plans for multiple campuses scaling to 2 gigawatts or more. Corintis' cold plate technology is competitive as it can future-proof infrastructure by handling increasing power densities of chips.