Q4 2024 Applied Digital Corp Earnings Call

Shemali: Good afternoon and welcome to apply digital success fiscal fourth quarter 2024 conference call. My name is Shemali and I will be your operator today.

Shamali: My name is Shamali, and I will be your operator today. Before this call, Applied Digital issued its financial results for the fiscal fourth quarter and made 31st, 2024, in a press release, a copy of which will be furnished in a report on a form 8-K filed with the SEC and will be available in the Investor Relations section of the company's website.

Speaker Change: Before this call, apply digital issues to finance a result for the fiscal fourth quarter and it made 31, 2024, and a press release, a copy of which will be furnished and report on a form 8K, while with the SEC, and will be available in the investigation section of the company's website.

Unknown Executive: Joining us on today's call are Applied Digital's chairman and CEO, Wes Cummins, and CFO, David Rench.

Matt Glover: Join us on today's call, our Applied Digital's Chairman and CEO, Wes Cummins and CFO, David Rench. Following the remarks, we will open the call for questions. Before we begin, Matt Glover from Gateway Group will make a brief introductory statement. Mr. Glover, please proceed.

Matt Glover: Following, before we begin, Matt Glover from Gateway Group will make a brief introductory statement.

Matt Glover: Mr. Glover, please proceed.

Matt Glover: Thank you, Shamali.

Matt Glover: Good afternoon, everyone, and welcome to Applied Digital's fourth quarter 2024 conference call. Before management begins their four more marks, we would like to remind everyone that some statements we are making today may be considered forelooking under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results to differ materially from those described in the four-looking statements. For more detailed risks, uncertainties, assumptions relating to our four-looking filings made with the Securities and Exchange Commission, we disclaim any obligation or any undertaking to update four-looking statements to reflect circumstances or events that occur after the date, except as required by law.

Matt Glover: Great, thank you, Schmolley. Good afternoon everyone and welcome to Applied Digital's 4th Quarter, 2024 Conference Call. Before measurement begins, there are four more marks. We'd like to remind everyone that some statements we're making today may be considered for looking under security's laws and involve a number of risks and uncertainties.

Matt Glover: As a result, we cautioned you that there are a number of factors, many of which are beyond our control, which could cause actual results differ. I'm materialy from those described in the forward-looking statements.

Matt Glover: For more detailed risks on certainties of assumptions relating to or forlicking, filing, made with the Securities and Exchange Commission. We just claim any obligation or any undertaking to update forlicking statements to reflect circumstances or events that occur after the date.

Matt Glover: We will also discuss non-GAAP financial metrics and encourage you to read our disclosures in the reconciliation tables, the applicable GAAP measures, and our earnings release, which can be found on the Investor Relations section of our website carefully as you consider these metrics. Before you do our filings with the SEC for detailed disclosures and descriptions for our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors and our end report on Form 10-K or quarterly report on Form 10-Q.

Matt Glover: except as required by law. We've also discussed not got financial metrics and encouraged you to read our disclosures in the reconciliation tables, the applicable gap measures, and our answer really is which can be found on the Investor Relations section of our website, carefully as you consider these metrics.

Shamali: My name is Shamali and I will be your operator today. Before this call, Applied Digital issued its financial results for the fiscal fourth quarter and it made 31st, 2024 in a press release, a copy of which will be furnished in a report on a form 8K filed with the SEC and will be available in the Invest relations section of the company's website. Joining us on today's call are Applied Digital's Chairman and CEO, Wes Cummins, and CFO, David Rench.

Matt Glover: We refer you to our filings with the SEC for detailed disclosures and descriptions for our business as well as uncertainties and other variable circumstances including but not limited to risk and uncertainties and identify under the caption risk factors in our end to report on form 10k or quarterly report on form 10k.

Matt Glover: You may get Applied Digital Security and Exchange Commission filings for free by visiting the SEC website at www.sec.gov.

Matt Glover: You may get applied digital security and exchange commission filings for free by visiting the SEC website at www.scc.gov

Matt Glover: I would like to remind everyone that this call is being recorded and will be made available for replay via a link available in the Investor Relations section of the Applied Digital's website.

Matt Glover: I would like to remind everyone that this call is being recorded and will be made available for replay via link available in the Investor Relations section of the Flight Digital's website. Now I'd like to turn the call over to the Flight Digital's Chairman and CEO, Wes Cummins, Wes.

Wes Cummins: Now, I'd like to turn the call over to Applied Digital's chairman and CEO, West Cummins.

Matt Glover: Following before we begin, Matt Glover from Gateway Group will make a brief introductory statement.

Wes Cummins: West.

Matt Glover: Mr. Glover, please proceed. Great. Thank you, Shamali.

Wes Cummins: Thanks, Matt, and good afternoon, everyone. Thank you for joining our fiscal fourth quarter 2024 conference call.

Unknown Executive: Good afternoon, everyone, and welcome to Applied Digital's fourth quarter, 2024 conference call. Before management begins their four more marks, we'd like to remind everyone that some statements we're making today may be considered forelooking under securities laws and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results differ materially from those described in the four-looking statements.

Wes Cummins: Thanks Matt and good afternoon everyone. Thank you for joining our fiscal fourth quarter 2024 conference call.

Wes Cummins: I want to start by expressing gratitude to our employees for their ongoing hard work and service and supporting our mission of providing purpose-built infrastructure to the rapidly growing high performance computing industry. Before turning the call over to our CFO, David Ranch, for a detailed review of our financial results, I'd like to share some recent developments across our business. During the quarter, we faced several challenges that impacted our financial performance due to the facility power outages in our data center hosting business. Despite the short-term setbacks, the company has made significant progress with our key growth initiatives, including the development of our cloud services business and the construction of our purpose-built 100-megawatt HPC data center in Elendale.

Unknown Executive: For more detailed risks, uncertainties, assumptions relating to our four-looking filings made with the Securities and Exchange Commission. We disclaimer any obligation or any undertaking to update four-looking statements to reflect circumstances or events that occur after the date, except as required by law. We will also discuss non-gap financial metrics and encourage you to read our disclosures in the reconciliation tables, the applicable gap measures, and our earnings release, which can be found on the Investor Relations section of our website, carefully as you consider these metrics.

Wes Cummins: I want to start by expressing gratitude to our employees for their ongoing hard work and service and supporting our mission of providing purpose-built infrastructure to the rapidly growing high performance computing industry.

Speaker Change: for turning the call over to our CFO David Rench for a detailed review of our financial results. I'd like to share some recent developments across our business.

Speaker Change: During the quarter we face several challenges that impacted our financial performance due to the facility power outages in our data center hosting business.

Speaker Change: Despite the short-term setbacks, the company has made significant progress with our key growth initiatives including the development of our cloud services business and the construction of our purpose still 100 megawatt HPC data center in LNL.

Wes Cummins: As previously announced, we executed an LOI with a U.S.-based hyper-scaler for 400 megawatts at our Elendale campus, inclusive of our current 100-megawatt facility and two forthcoming buildings.

Speaker Change: As previously announced, we had executed an ROI with the U.S. based hyper-staylor for 400 megawatts at our L&L campus, inclusive of our current honeymegawafi facility and two forthcoming buildings.

Unknown Executive: Before you do our filings with the SEC, for detailed disclosures and descriptions for our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption risk factors in our end-to-report on Form 10K or quarterly report on Form 10Q. You may get Applied Digital Security and Exchange Commission filings for free by visiting the SEC website at www. SEC.gov.

Wes Cummins: Now, we'll provide an update on each of our business units. Let's begin by discussing our data center hosting business. Our 106-megawatt Jamestown facility has consistently met expectations, operating at full capacity with uninterrupted uptime throughout the quarter. This achievement marks the seventh consecutive quarter of full capacity operation for this facility. While we are pleased with James Townsend's performance, we encounter challenges at other facilities. As previously disclosed, our 180-megawatt Ellen Del facility in North Dakota experienced a power outage starting in January, which we determined was caused by transformer failures. By the end of the fourth quarter, we had successfully replaced the transformers and related components with equipment from industry-leading North American manufacturers.

Speaker Change: Now, we'll provide an update on each of our business units. Let's begin by discussing our data-centered hosting business.

Speaker Change: Our 106-megawatts James Town Facility has consistently met expectations, operating at full capacity with uninterrupted up time throughout the quarter.

Speaker Change: The achievement marks the seventh consecutive quarter of full capacity operation for this facility. While we are pleased with James Townsend's performance, we encounter challenges at other facilities.

Unknown Executive: I would like to remind everyone that this call is being recorded and will be made available for replay via a link available in the Investor Relations section of Applied Digital's website.

Speaker Change: As previously disclosed our 180 megawatt Ellen Delphacility in North Dakota experienced a power outage starting in January, which we determined was caused by transform of failures.

Wes Cummins: Now I'd like to turn the call over to Applied Digital's Chairman and CEO, Wes Cummins. Wes. Thanks, Matt, and good afternoon, everyone.

Wes Cummins: Thank you for joining our fiscal fourth quarter 2024 conference call. I want to start by expressing gratitude to our employees for their ongoing hard work and service and supporting our mission of providing purpose-built infrastructure to the rapidly growing, high-performance computing industry. Before turning the call over to our CFO, David Ranch, for a detailed review of our financial results, I'd like to share some recent developments across our business. During the quarter, we faced several challenges that impacted our financial performance due to the facility power outages in our data center hosting business.

Speaker Change: By the end of the fourth quarter we could successfully replace the transformers and related components with equipment from industry leading North American manufacturers.

Wes Cummins: As a result of the transformers being replaced, we now have 286 megawatts of data center hosting capacity for our blockchain clients across our two fully contracted locations in North Dakota.

Speaker Change: As a result of the Transformers being replaced, we now have 286 mW of data center hosting capacity for a blockchain client across our two fully contracted locations in North Dakota.

Wes Cummins: Let's move on to our cloud services business, which provides high performance computing power for AI applications. This segment continues to experience growth as we advance in fulfilling our existing contracts and explore new opportunities in our pipeline. As of the end of the fourth quarter, we had four clusters online, and we brought another two clusters online in the first quarter of 2025.

Speaker Change: Let's move on to our cloud services business, which provides high performance computing power for AI applications. This segment continues to experience growth as we advance in fulfilling our existing contracts and explore new opportunities in our pipeline.

Wes Cummins: Despite the short-term setbacks, the company has made significant progress with our key growth initiatives, including the development of our cloud services business, and the construction of our purpose-built 100-megawatt HPC data center and L&DL. As previously announced, we executed an L.O.I, with a U.S.-based hyper-scaler for 400 megawatts at our L&DL campus, inclusive of our current 100-megawatt facility and two forthcoming buildings.

Speaker Change: As of the end of the fourth quarter we had four clusters online and we brought another two clusters online in the first quarter of 2025.

Wes Cummins: Lastly, let me provide an update on our HPC data centers. We currently have 400 megawatts of capacity under development across North Dakota. This is in addition to the 7.5 megawatts by T capacity at our HPC facility in James Town, which, due to its proximity to Elendale, should allow for a low latency interconnected extended campus in North Dakota. During the quarter, we continued to make significant strides in the construction of our first proprietary 100 megawatt high performance computing facility in Elendale, North Dakota. This state-of-the-art facility will feature cost-effective, highly efficient liquid-cooled infrastructure specifically designed for the most demanding HPC applications.

Speaker Change: Lastly, let me provide an update on our HPC data centers.

Speaker Change: We currently have 400 megawatts of capacity under development across North Dakota. This is in addition to the 7.5 megawatts by T. Capacet, our HPC facility in Jamestown, which due to its proximity to Ellendale, should allow for a low latency interconnected extended campus in North Dakota.

Wes Cummins: Now we'll provide an update on each of our business units. Let's begin by discussing our data center hosting business. Our 106-megawatt Jamestown facility has consistently met expectations operating at full capacity with uninterrupted up time throughout the quarter. This achievement marks the seventh consecutive quarter of full capacity operation for this facility. While we are pleased with James Townsend's performance, we encounter challenges at other facilities. As previously disclosed, our 180 megawatt Ellen Del Facility in North Dakota experienced a power outage starting in January, which we determined was caused by transformer failures.

Speaker Change: During the quarter, we continued to make significant strides in the construction of our first proprietary 100 megawatt high performance computing facility in Elendell, North Dakota.

Speaker Change: This state-of-the-art facility will feature cost-effective, highly efficient, liquid-cooled infrastructure, specifically designed for the most demanding HPC applications.

Wes Cummins: We have made substantial progress in the construction of the 369,000 square foot facility.

Speaker Change: We have made substantial progress in the construction of the 369,000 square foot facility.

Wes Cummins: I encourage you to visit our new website for some recent images of the facility. As previously mentioned, we have entered into exclusivity and executed a letter of intent with a U.S.-based hyperscaler for a 400 megawatt capacity lease. We believe the hyperscaler has completed their technical and site due diligence on the location and are now working to finalize the details of the lease. This will be followed by finalizing the project-level financing for this investment-grade tenant. We are focused on finalizing the lease and project financing for Elendale Campus. And we have started marketing three additional campuses totaling 1.4 gigawatts.

Speaker Change: I encourage you to visit our new website for some recent images of the facility. As previously mentioned, we have entered into the exclusivity and executed a letter of intent with a USB type or scaler for a 400-megawaks pass release.

Wes Cummins: By the end of the fourth quarter, we had successfully replaced the transformers and related components with equipment from industry leading North American manufacturers. As a result of the transformers being replaced, we now have 286 megawatts of data center hosting capacity for our blockchain clients across our two fully contracted locations in North Dakota.

Speaker Change: We believe the hyperscaler has completed their technical and site due diligence on the location and now working to finalize the details of the lease. This will be followed by finalizing the project level financing for this investment great tenant.

Wes Cummins: Let's move on to our cloud services business, which provides high performance computing power for AI applications. This segment continues to experience growth as we advance in fulfilling our existing contracts and explore new opportunities in our pipeline. As of the end of the fourth quarter, we had four clusters online and we brought another two clusters online in the first quarter of 2025.

Speaker Change: We are focused on finalizing the lease and project financing and project financing for L&L campus and we have started marketing three additional campuses totaling 1.4 data lots. All of these campuses have power available in 2026.

Wes Cummins: All of these campuses have power available in 2026.

Wes Cummins: In summary, we are encouraged by the positive trends we are witnessing across our business. We remain confident in our growth trajectory. We are excited about the numerous potential catalysts on the horizon that are committed to strategically allocating our capital to achieve the highest risk-adjusted returns and maximum shareholder value.

Speaker Change: In summary, we are encouraged by the positive trends we are witnessing across our business remain confident in our growth trajectory. We are excited about the numerous potential catalysts on the horizon, or are committed to strategically allocating our capital to achieve the highest risk adjusted returns and maximum shareholder value.

Wes Cummins: Lastly, let me provide an update on our HPC data centers. We currently have 400 megawatts of capacity under development across North Dakota. This is in addition to the 7.5 megawatts by T capacity at our HPC facility in James Town, which due to its proximity to Ellen Del should allow for a low latency, inter-connected extended campus in North Dakota. During the quarter, we continued to make significant strides in the construction of our first proprietary 100 megawatt high-performance computing facility in Ellen Del, North Dakota.

Wes Cummins: With that, I will now turn the call over to our CFO, David Ranch, to walk you through our financials and provide an update on guidance.

David Rench: with that. I will now turn the call over to our CFO David Rench to walk you through our financials and provide an update on guidance. David.

David Rench: David? Thanks, Wes, and good afternoon everyone. Let me begin by addressing the complexity of this quarter's financial reporting. We reported an adjusted EBITDA of approximately 4.8 million. However, several one-time items significantly impacted our financial performance and comparability to prior quarters. Notably, a large portion of the power was out in our data center hosting facility in Elendale, North Dakota, which then largely came online right at the end of the quarter. Additionally, we encourage many one-time professional service expenses, primarily related to our capital raising initiatives, financial analysis, for data center financing, and strategic transactions. We continue to pursue all available remedies to recoup lost revenues and additional costs incurred from the transformer outage.

David Rench: Thanks, Wes and good afternoon, everyone. Let me begin by addressing the complexity of this quarter's financial reporting. We reported an adjusted EBITDA of approximately 4.8 million. However, several one-time items significantly impacted our financial performance and comparability to prior quarters.

Wes Cummins: This state-of-the-art facility will feature cost-effective, highly efficient liquid cooled infrastructure specifically designed for the most demanding HPC applications. We have made substantial progress in the construction of the 369,000 square foot facility. I encourage you to visit our new website for some recent images of the facility. As previously mentioned, we have entered into exclusivity and executed a letter of intent with a U.S.-based hyper-scaler for a 400 megawatt capacity lease. We believe the hyper-scaler has completed their technical and site due diligence on the location and are now working to finalize the details of the lease.

David Rench: Notably, a large portion of the power was out in our data center hosting facility in Elendil, North Dakota, which then largely came online right at the end of the quarter.

David Rench: Additionally, we encourage many one-time professional service expenses.

David Rench: primarily related to our capital raising initiatives, financial analysis, for data center financing and strategic transactions. We continue to pursue all available remedies to recruit lost revenues and additional costs incurred from the transformer challenges.

David Rench: Let's delve into the results of the quarter. Revenues for the fiscal 4th quarter of 2024 were 4.3 million compared to 22 million for the same period in 2023. The increase was primarily driven by expanded capacity across our data center hosting facilities and revenue contributions from the cloud service contracts. Specifically, our data center hosting segment generated 26.9 million revenue, while our cloud services segment contributed 16.8 million. Starting to cost the revenue for the fiscal 4th quarter of 2024, it amounted to 46.3 million, up from 15.9 in the same quarter of 2023. This increase can be attributed to higher energy costs resulting from the increased number of megawatts used to generate hosting revenues.

David Rench: Let's delve into the results of the quarter, revenues for the fiscal 4th quarter of 2024, we're 43.7 million compared to 22 million for the same period in 2023.

Wes Cummins: This will be followed by finalizing the project level financing for this investment grade tenant. We are focused on finalizing the lease and project financing for Ellen Del campus. And we have started marketing three additional campuses totaling 1.4 GW. All of these campuses have power available in 2026.

David Rench: The increase was primarily driven by in-capacity across our data center hosting facilities and revenue contributions from the cloud service contracts. Specifically, our data center hosting segment generates 26.9 million revenue while our cloud services segment contributed 16.8 million.

Wes Cummins: In summary, we are encouraged by the positive trends we are witnessing across our business remain confident in our growth trajectory. We are excited about the numerous potential catalysts on the horizon that are committed to strategically allocating our capital to achieve the highest risk-adjusted returns and maximum shareholder value.

David Rench: During the cost of revenue for the fiscal fourth quarter of 2024

David Rench: It amounted to 46.3 million up from 15.9 in the same quarter of 2023.

David Rench: With that, I will now turn the call over to our CFO, David Ranch, to walk you through our financials and provide an update on guidance. David? Thanks, Wes, and good afternoon everyone.

David Rench: This increase can be attributed to higher energy costs resulting from the increased number of megalose use to generate hosting revenues. Additionally, depreciation and amazitation expenses along with personal costs rose due to growth of the business as more facilities came online.

David Rench: Additionally, depreciation and amortization expenses, along with personnel costs, rose due to growth of the business as more facilities came online. Summary in general, administrative expenses for the fiscal 4th quarter of 2024 were 31.3 million compared to 12.3 million in the prior year's comparable period. The increase was primarily due to startup costs as we ramped up the cloud service business. This included higher depreciation, amortization, and lease costs on assets not yet supporting revenue, as well as personnel costs to support the overall growth of the business.

David Rench: Let me begin by addressing the complexity of this quarter's financial reporting. We reported an adjusted EBITDA of approximately 4.8 million. However, several one-time items significantly impacted our financial performance and comparability to prior quarters. Notably, a large portion of the power was out in our data center hosting facility in Ellen Del North Dakota, which then largely came online right at the end of the quarter. Additionally, we incurred many one-time professional service expenses, primarily related to our capital raising initiatives, financial analysis, for data center financing, and strategic transactions. We continue to pursue all available remedies to recoup lost revenues and additional costs incurred from the transformer outage.

David Rench: Delling in general administrative expenses for the fiscal fourth quarter of 2024 were 31.3 million compared to 12.3 million in the prior year's comparable period. The increase was primarily due to startup costs as we ramp up the cloud service business.

David Rench: This included higher depreciation, amersation and lease costs on assets not yet supporting revenue, as well as personal costs to support the overall growth of the business.

David Rench: The net loss for the fiscal 4th quarter of 2024 was 64.8 million, or 52 cents per basic and diluted share. This calculation is based on a weighted average share count during the quarter of approximately 124.7 million in comparison. The net loss for the fiscal 4th quarter of 2023 was 6.5 million, or 7 cents per basic and diluted share, based on a weighted average share count during the quarter with approximately 94.1 million. Adjusted net loss, a non-GAAP measure for the fiscal 4th quarter of 2024, was 45.3 million or adjusted net loss for basic and diluted share of 36 cents based on a weighted average share count during the quarter of approximately 124.7 million.

David Rench: The net loss for the fiscal fourth quarter of 2024 was 64.8 million or 52 cents per basic and deleted share.

David Rench: Let's delve into the results of the quarter. Revenues for the fiscal 4th quarter of 2024 were $4.7 million compared to $22 million for the same period in 2023. The increase was primarily driven by expanded capacity across our data center hosting facilities and revenue contributions from the cloud service contracts. Specifically, our data center hosting segment generated 26.9 million revenue while our cloud services segment contributed $16.8 million. Starting to cost the revenue for the fiscal 4th quarter of 2024, it amounted to $46.3 million up from $15.9 in the same quarter of 2023.

David Rench: This calculation is based on a weighted average share count during the quarter of approximately 1.4.7 million in comparison the net loss for the fiscal fourth quarter of 2023.

David Rench: was $6.5 million or $7 per basic in the literature based on a weighted average share count during the quarter of approximately $94.1 million.

David Rench: Adjusted NetLoss, a non-gap measure for the fiscal fourth quarter of 2024, was 45.3 million.

David Rench: or Justin Netloss for basic and deleted share of 36 cents based on a weighted average share.

David Rench: This compares to an adjusted net loss of 100,000 or less than a penny per basic and diluted share for the 4th quarter of 2023 based on a weighted average share count of approximately 94.1 million during the quarter. Adjusted EBITDA, another non-GAAP measure for the fiscal 4th quarter of 2024, was 4.8 million compared to adjusted EBITDA for the fiscal 4th quarter of 2023, which stood at 3.4 million. The significant difference between our adjusted earnings and our adjusted EBITDA is largely driven by our accelerated depreciation schedule of our GPU hardware.

David Rench: count during the quarter approximately one hundred twenty -four point seven million this comparesis to an adjusted net loss of one cent per million i'm sorry adjusted that loss of point

David Rench: This increase can be attributed to higher energy costs resulting from the increased number of megawatts used to generate hosting revenues. Additionally, depreciation and amortization expenses along with personnel costs rose due to the growth of the business as more facilities came online. Selling in general administrative expenses for the fiscal 4th quarter of 2024 were $31.3 million compared to $12.3 million in the prior year's comparable period. The increase was primarily due to startup costs as we ramped up the cloud service business. This included higher depreciation, amortization, and lease costs on assets not yet supporting revenue as well as personnel costs to support the overall growth of the business.

Speaker Change: There are 100,000 or less than a penny per basic and blueish hair for the fourth quarter of 2023. Based on a weighted average share count of approximately 9,4.1 million during the quarter.

Speaker Change: A Justice EBITDA, another non-gap measure for the fiscal fourth quarter of 2024, was 4.8 million compared to a Justice EBITDA for the fiscal fourth quarter of 2023, which stood at 3.4 million. The significant difference between our just earnings and our justice EBITDA is largely driven by our accelerated appreciation schedule of our GPU hardware.

David Rench: Moving to our balance sheet, we ended the fiscal 4th quarter with 31.7 million cash clearance and restricted cash, along with 125.4 million in debt. Subsequent to the fiscal year, we secured over 150 million in funding for various finances in the settlement of the Garden City contingency. We continued to explore additional financing for the cloud service business, which will better align the economics of that business with the life of the assets by extending the depreciation from two to six years, the industry norm. I would like to reiterate that we are focused on project-level financing for the Ellen Dell HVC campus, which we expect to fund shortly after the finalization of a lease agreement with the U.S.-based hybridscale.

Speaker Change: Moving to our balance sheet, we ended the fiscal fourth quarter with 31.7 million cash, cash clilence and restricted cash, along with 125.4 million in debt. Subsequent to the fiscal year and we secured over 150 million funding from various finances in the settlement of the Garden City contingency.

David Rench: The net loss for the fiscal 4th quarter of 2024 was $64.8 million or $52 cents per basic and deleted share. This calculation is based on a weighted average share count during the quarter of approximately $124.7 million in comparison. The net loss for the fiscal 4th quarter of 2023 was $6.5 million or $7 cents per basic and deleted share based on a weighted average share count during the quarter with approximately $94.1 million.

Speaker Change: We continue to explore additional financing for the cloud service business which will better align the economics of that business with the life of the assets by extending the depreciation from two to six years the industry norm.

West: I would like to reiterate that we are focused on project level financing for the Ellendale HPC campus which we expect to fund shortly after the finalization of a lease agreement with the U.S. base type or skillet. Now I'll turn the call over to West for closing remarks.

David Rench: Adjusted net loss, a non-gap measure for the fiscal 4th quarter of 2024 was $45.3 million or adjusted net loss for basic and deleted share of $36 cents based on a weighted average share count during the quarter of approximately $124.7 million. This compares to an adjusted net loss of $100,000 per million, I'm sorry, adjusted net loss of $100,000 or less than a penny per basic and deleted share for the 4th quarter of 2023 based on a weighted average share count of approximately $94.1 million during the quarter.

Wes Cummins: Now I'll turn the call over to Wes for closing remarks.

Wes Cummins: Thank you, David. We understand the past year it's seen challenges as the company has faced a multi-month outage at our Elendale Hosting Facility in the financial burden of funding a billion dollar data center while funding our cloud business. Nevertheless, we've made substantial progress towards securing greater than a decade-long lease agreement with a Fortune 50 company for our Elendale campus. Finalizing this lease will solidify our position as a leader in the HPC, data center market, and have a cascading effect on our ability to secure asset-level financing in the developed additional sites. Throughout this process, we've diligently worked to secure project-level debt for our facility with multiple interested parties.

West: Thank you, David

Speaker Change: We understand the past year, it's seen challenges as the company is faced a multi-month outage at our L&L hosting facility in the financial burden of funding, the L&L data center wealth funding or cloud business.

West: Nevertheless, we've made substantial progress towards securing greater than the decade long lease agreement with a Fortune 50 company for our LNL campus.

West: Finalizing this lease, we'll solidify our position as a leader in the HPC data center market and have a cascading effect on our ability to secure asset-level financing and the developer digital sites.

David Rench: Adjusted EBITDA, another non-gap measure for the fiscal 4th quarter of 2024 was $4.8 million compared to adjusted EBITDA for the fiscal 4th quarter of 2023 which stood at $3.4 million. The significant difference between our adjusted earnings and our adjusted EBITDA is largely driven by our accelerated depreciation schedule of our GPU hardware.

West: Throughout this process, we've diligently worked to secure project level debt for our facility with multiple and supporties. Upon execution of the lease with the hyperscaler, we anticipate our financing partner, Sem Group will release additional capital to support ongoing construction while we continue to work for project level finance.

Wes Cummins: Upon execution of the lease with the hyperscaler, we anticipate our financing partner, SEM Group, will release additional capital to support ongoing construction while we continue to work toward project level finance.

Wes Cummins: In summary, despite significant challenges this quarter, largely due to external factors, we remain fully committed to delivering strong long-term shareholder value. Our vision is to become a development platform capable of building and operating multiple HPC data centers. This starts with our Elendale campus and continues with three additional campuses where actively marketing today, totaling 1.4 gigawatts. To support this vision, we have added several industry veterans to our team, and we're already working on the design of two buildings which will provide 300 megawatts of capacity.

David Rench: Moving to our balance sheet, we ended the fiscal 4th quarter with $31.7 million cash, cash clearance and restricted cash, along with $125.4 million in debt. Subsequent to the fiscal year end, we secured over 150 million in funding for various finances in the settlement of the Garden City contingency. We continued to explore additional financing for the cloud service business, which will better align the economics of that business with the life of the assets by extending the depreciation from two to six years, the industry norm. I would like to reiterate that we focused on project-level financing for the Ellen Dell HVC campus, which we expect to fund shortly after the finalization of a lease agreement with the U.S.-based hyperscale.

West: and summary, despite significant challenges this quarter largely due to external factors were remained fully committed to delivering strong long-term shareholder value.

West: Our vision is to become a development platform capable of building and operating multiple HPC data centers. This starts with our LDL campus and continues with three additional campuses where actively marketing today, totaling 1.4 gigawatts.

West: To support this vision, we have added several industry veterans to our team and we're already working on the design of our next two buildings which will provide 300 megawatts of capacity.

Wes Cummins: We're incredibly proud of the progress made this quarter and look forward to providing further updates as we move into Fiscal 2025. Looking ahead, we believe Q4 marked the bottom for our revenues and anticipate sequential improvements in the top line as we enter the first quarter.

West: We're incredibly proud of the progress made this quarter and look forward to providing further updates as we move into fiscal 2025. Looking ahead, we believe Q4 marked bottom for a revenue as an anticipated quenchful improvements in the top line as we enter the first quarter.

Wes Cummins: Now I'll turn the call over to Wes for closing remarks. Thank you, David. We understand the past year, it's seen challenges as the company has faced a multi-month outage at our L&DL hosting facility in the financial burden of funding a billion dollar data center, wealth funding our cloud business.

Unknown Executive: We now welcome your questions.

Unknown Executive: Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask the question, please press star 1 on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. The participants use to speak your equipment and may be necessary to pick up your handset before pressing the lead star keys.

Speaker Change: We now welcome your questions. Operator.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask the question, please first start one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may first start to, if you would like to remove your question from the queue.

Wes Cummins: Nevertheless, we've made substantial progress towards securing greater than a decade-long lease agreement with a Fortune 50 company for our L&DL campus. Finalizing this lease will solidify our position as a leader in the HPC data center market and have a cascading effect on our ability to secure asset level financing and develop additional sites. Throughout this process, we've diligently worked to secure project level debt for our facility with multiple interest parties. Upon execution of the lease with the hyper-scaler, we anticipate our financing partner, SEM Group will release additional capital to support ongoing construction while we continue to work toward project level finance.

Speaker Change: The park is supposed to be a used speaker equipment and may be necessary to pick up your handset before pressing the these star keys.

Unknown Executive: One woman, please, while we pull four questions.

Lucas Pipes: Our first question comes from the line of Lucas Pipes with B-Ridey Securities.

Speaker Change: One moment to see who I would call for our questions.

Speaker Change: Our first question comes from the line of Lucas Pipes with B-Ride's Securities. Please receive a short question.

Wes Cummins: Please join us. My first question is on the L&DLHBC campus. I wondered if you could speak to the percentage completion on the first 100 megawatts and the remaining capital requirements from here.

Lucas Pipes: Thank you very much operator. Good afternoon everyone. Wes, Wes, and see my first question is on the Ellen Dale HBC campus and I wonder if you could speak to the percentage completion on the first 100 megawatts in the remaining capital requirements from here. Thank you very much.

Wes Cummins: In summary, despite significant challenges this quarter largely due to external factors, we remain fully committed to delivering strong one term shareholder value. Our vision is to become a development platform capable of building and operating multiple HPC data centers. This starts with our L&DL campus and continues with three additional campuses where actively marketing today, totaling 1.4 GW. To support this vision, we have added several industry veterans to our team and we're already working on the design of our next two buildings which will provide 300 MW capacity.

Wes Cummins: Thank you very much. Sure, Lucas. We have a little over 200 million into the facility as it stands today. The building I'm sure you've seen some of the video footage is fully enclosed. We're progressing with MEP at this point, and then we'll do the final fit-out later this year, early next year. We'll go back to so that this facility will be roughly $1 billion, a little over $1 billion for the first 100 megawatts, which is on par with standard Tier 3 data center capacity. With the 200 in, I think I've talked about this in the past for working with banks that typically provide project-level finance in this space.

Lucas Pipes: it

Lucas Pipes: Sure Lucas, so...

Speaker Change: We have a little over 200 million into the facility as it stands today, but both the building, I'm sure you've seen some of the video footage is fully enclosed.

Speaker Change: We're progressing with MEP at this point and then we'll do the final fit out later to share early next year.

Wes Cummins: We're incredibly proud of the progress made this quarter and look forward to providing further updates as we move into fiscal 2025. Looking ahead, we believe Q4 marked the bottom for our revenues and anticipate sequential improvements in the top line as we enter the first quarter.

Speaker Change: and Bill back to this facility will be roughly one billion little over a billion dollars for the first hundred megawatts, which is on par with standard tier three data center capacity. And so with the 200 in, I think I've talked about this in the past. We're working with banks that typically provide project level finance in this space.

Unknown Executive: We now welcome your questions.

Wes Cummins: We have term sheets, and we've actually selected a bank that we're moving forward with, and the expectation is that they'll fund the remainder in the, you know, we've seen 80 to 90 percent loan-to-cost quotations from this. We just need to get past the lease finalization, and the project level process is already running at this point, so we'd hope to close that shortly, you know, thereafter.

Unknown Executive: Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask the question, please press star 1 on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press star 2 if you would like to remove your question from the queue. The participants use to speak your equipment and may be necessary to pick up your handset before pressing the lead star keys. One moment please while we pull four questions.

Speaker Change: We have term sheets and we've actually selected a bank that we're moving forward with.

Speaker Change: and the expectation is that they'll fund the remainder in the, you know, we've seen 80 to 90 percent known to cost quotations from this. We just need to get past the lease finalization and the project level finance process is already running at this point, so we hope to close that shortly, you know, thereafter.

Lucas Pipes: Our first question comes from the line of Lucas Pipes with B-Ridey Securities. Please watch Operator good afternoon everyone. Wes and T, my first question is on the Ellen Dale HBC campus. I wonder if you could speak to the percentage completion on the first 100 MW and the remaining capital requirements from here. Thank you very much. Sure, Lucas. We have a little over 200 million into the facility as it stands today. Both the building, I'm sure you've seen some of the video footage is fully enclosed.

Wes Cummins: Thank you very much for the detail. Wes, did I hear it right that you said kind of fit out early next year? And would that include completion, or how would you frame that up in terms of that timeline? Yeah, thank you. So look, if there's a couple of different timelines that we worked through here. We've gone through the process. There's our build timeline, and then there's, you know, when our customer wants the facility ready for service. That's not completely locked in at this point. But our schedule from the build perspective is what we've talked about in the past, you know, being ready late this year, early next year.

Speaker Change: Thank you very much for the detail and yesterday here, right, that you said kind of fit out early next year.

Speaker Change: with that include completion or how would you frame that up in terms of that time? Yep, thank you.

Speaker Change: So, look at there's a couple of different timelines that we work through here as we've gone through the process. There's our build timeline and then there's when our customer wants the facility ready for service. That's not completely...

Speaker Change: and walked in at this point. Our schedule from the bill perspective is what we've talked about in the past. Being ready to wait this year, early next year.

Lucas Pipes: We're progressing with MEP at this point and then we'll do the final fit out later this year, early next year. And we'll go back to so that this facility will be roughly one billion, a little over a billion dollars for the first 100 MW, which is on par with standard tier 3 data center capacity. And so with the 200 in, I think I've talked about this in the past. We're working with banks that typically provide project level finance in this space.

Unknown Executive: Thank you.

Lucas Pipes: Thank you very much for this and changing topics really quickly on the cloud services business. Can you speak to the ramp in your fiscal first quarter? How many clusters did you have online? And how would you kind of frame up the revenue opportunity? Q1 fiscal Q1 here versus just fiscal Q4 period that you just reported.

Speaker Change: Thank you, thank you very much for this and changing topics really quickly on the cloud services business. Can you speak to?

Speaker Change: The ramp in New Fiscal First Quarter, how many clusters did you have online and how would you frame up the revenue opportunity? Key 1, fiscal key 1 here versus fiscal key 4 period that you just reported.

Wes Cummins: Thank you. Sure, Lucas. So, so where we are. There's is which fell on the prepared remarks were six clusters online in Q1 and it won't be for the full Q1. But those came online, I believe, in June. So it'll be for the majority of it. So, with the six clusters of that business, is a roughly 100 million revenue run rate on an annual basis. And right now, you know, I've talked about on previous calls that our team is very focused on the enterprise market. We started with the AI labs and AI startups. But we're very focused on the enterprise market at this point.

Lucas Pipes: We have term sheets and we've actually selected a bank that we're moving forward with. And the expectation is that they'll find the remainder in the, you know, we've seen 80 to 90% loan to cost quotations from this. We just need to get past the lease finalization and the project level finance process is already running at this point, so we'd hope to close that shortly, you know, thereafter. Thank you very much for the detailing.

Speaker Change: Thank you.

Speaker Change: Six clusters online in Q1 and it won't be for the full Q1 but those came online I believe in June so it will be for the majority of it. So with the Six clusters of that business is roughly 100 million revenue run rate on an annual basis.

Speaker Change: and right now I've talked about on previous calls that our team is very focused on the enterprise market. We started with AI labs and AI startups.

Wes Cummins: Wes, did I hear it right that you said kind of fit out early next year and would that include completion or how would you frame that up in terms of that time line? Yeah, thank you. So look, there's a couple of different timelines that we work through here. We've gone through the process. There's our build timeline and then there's, you know, when our customer wants the facility ready for service, that's not completely locked in at this point. But our schedule from the build perspective is what we've talked about in the past, you know, being ready late this year or early next year. Thank you.

Wes Cummins: It's been working on it for, you know, seven or eight months now. And we've probably seen recently hired a new CRO that you came from IBM that's very focused on that market. And so we see the demand there, and we'll continue to ramp that. The other piece of the puzzle here is we have been working on financing that we're putting in place that. You know, it finances this deployment, this equipment in a way that makes it run through our income statement more fairly versus what it does today. So we don't want to keep adding a lot with the capital least structure that we currently have just because of you see what it does to the financials because we're forced to do the appreciation over two years versus, you know, the industry standard five or six.

Speaker Change: We're very focused on the enterprise market at this point, it's been working on it for seven or eight months now and we've probably seen recently we've hired a new CRL that you came from IBM that's very focused on that market.

Speaker Change: and so we see the demand there and we'll continue to ramp that the other piece of the puzzle here is we have been working on financing that we're putting in place that

Speaker Change: Here it's finances.

Speaker Change: This deployment, this equipment in a way that makes it run through our income statement more fairly versus what it does today, so we don't want to keep adding a lot with the capital least structure that we currently have just because of you see what it does to the financials because we're forced to do the depreciation over two years versus the industry standard of five or six.

Lucas Pipes: Thank you very much for this and changing topics really quickly on the cloud services business. Can you speak to the ramp in your fiscal first quarter? How many clusters did you have online and how would you kind of frame up the revenue opportunity, Q1, fiscal Q1 here versus just this fiscal Q4 period that you just reported? Thank you. Sure, Lucas. So where we are, there's which are on the prepared remarks. We're six clusters online in Q1 and it won't be for the full Q1.

Wes Cummins: So those two pieces are coming together, and then we do still see a significant amount of demand, but really growing demand from the enterprise side of the market.

Speaker Change: So those two pieces are coming together and then but we do still see a significant amount of demand, but really growing demand from the enterprise side of the market.

Lucas Pipes: Wes, I appreciate your details to you and the team. Best of luck. Thanks, Lucas.

Lucas Pipes: But those came online, I believe in June, so it'll be for the majority of it. So with the six clusters up, that business is a roughly 100 million revenue run rate on an annual basis. And right now, you know, I've talked about on previous calls that our team is very focused on the enterprise market. We started with the AI labs and AI startups. We were very focused on the enterprise market at this point.

Speaker Change: I appreciate your details to you and to team best of luck.

Rob Brown: Our next question comes from the line of Rob Brown with Lake Street Capital. Good afternoon. Just following up on the AI cloud business, I think the six clusters, what sort of the range of clusters you think you can grow that business into and how do you think about that versus the data? Business. On both of these businesses, Robert, we think about these businesses in the same way. These are asset-heavy businesses, capital-intensive businesses. We need to have the right mechanisms in place to do asset level financing for both of them. And so we've talked about that on the data center side.

Speaker Change: Thank you for your time.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Rob Brown with Lake Street Capital, who's the fewest.

Rob Brown: Okay, how good that feeling?

Rob Brown: Just following a thing I clouded up on the AI cloud business, the six clusters, what sort of the range of clusters do you think you can grow that business into and how do you think about that versus the Dave Center business?

Lucas Pipes: It's been working on it for, you know, seven or eight months now. And we've probably seen recently hired a new CRO that came from IBM that's very focused on that market. And so we see the demand there and we'll continue to ramp that. The other piece of the puzzle here is we have been working on financing that we're putting in place that, you know, it finances this deployment, this equipment in a way that makes it run through our income statement more fairly versus what it does today.

Speaker Change: On both of these businesses, Robert, we think about these businesses in the same way. These are asset, heavy businesses, capital intensive businesses. We need to have the right mechanisms in place to do asset level financing for both of them. And so we've talked about that on the data center side.

Wes Cummins: We're almost there. We've talked about it pretty extensively on the GPU side. I think we're almost there as well. And so when we have the correct asset level financing mechanism, we'll be able to grow significantly on both sides of that business. On the AI cloud portion of the business, with the data center capacity that we have in place today and what's available to us as we go through 25, we can generate significant growth in that business. And we see the demand for it, but we need to get the right capital base in that business to grow it aggressively.

Speaker Change: We're almost there, we've talked about it pretty extensively on the GPU side, I think we're almost there as well. And so when we have the correct asset level financing mechanisms in place, I think we'll be able to grow significantly on both sides of that business.

Lucas Pipes: So we don't want to keep adding a lot with the capital least structure that we currently have just because of, you see what it does to the financials because we're forced to do the depreciation over two years versus, you know, the industry standard of five or six. So those two pieces are coming together and then, but we do still see a significant amount of demand, but really growing demand from the enterprise side of the market. Wes, I appreciate your your details that you and the team best of luck. Thanks, Lucas. Thank you.

Speaker Change: on the AI cloud portion of the business with the data center capacity that we have in place today and what's available to us as we go through 25.

Speaker Change: We can generate significant growth in that business and we see the demand for it, but we need to get the right.

Wes Cummins: Right now, we're kind of feeding both of them. And we need to move that financing down. We want to ask that level from a company level.

Speaker Change: Capital-based in that business to grow aggressively. Right now we're kind of feeding both of them. And we need to move that financing down to an asset level from the company level.

Wes Cummins: Okay, great. Thank you. And then on your, your Piper scalar contract, I assume the, just in terms of the timeline, the long lead items there are the due diligence. I assume in the, in the site and the technical due diligence, but, but sort of what percentage of completion are you add in terms of getting that, getting the contract through its process. It's hard to handicap that, but I would, I would say we're, you know, north of 90% of the way there. Okay, okay, great. Thank you.

Speaker Change: Okay, great. Thank you. And then on your Piper Scaleer contract, I assume the just in terms of the timeline, the long lead items there are that you don't have to choose to assume in the...

Rob Brown: Our next question comes from the line of Rob Brown with Lake Street Capital. Is this you?

Speaker Change: in the site and the technical distilligence but sort of what percentage of completion are you at in terms of getting the contract through its process.

Rob Brown: Our good afternoon. Just following up on the AI Cloud business, I think the six clusters, what sort of the range of clusters you think you can grow that business into and how do you think about that versus the on both of these businesses, Robert. We think about these businesses in the same way. These are asset, heavy businesses, capital intensive businesses. We need to have the right mechanisms in place to do asset level financing for both of them.

Speaker Change: It's hard to handicap that but I would say we're north of 90% of the way there.

Unknown Executive: I'll turn it over.

Speaker Change: Okay, okay great, thank you, I'll turn north.

Darren Aftahi: Our next question comes from the line of bearing a chat with Rock Capital Party. Thank you. Thanks. Just following up on the, on the lease.

Speaker Change: Thank you. Our next question comes in the line of Darren, a child who is with Ross, a Catholic Department of Legacy, please introduce your question.

Rob Brown: And so we've talked about that on the data center side. I think we'll be able to grow significantly on both sides of that business on the AI Cloud portion of the business with the data center capacity that we have in place today and what's available to us as we go through 25. We can generate significant growth in that business and we see the demand for it, but we need to get the right capital base in that business to grow it aggressively. Right now, we're kind of feeding both of them and we need to move that financing down to an asset level from a company level.

Wes Cummins: Yes, from a big picture perspective, like how much of this is small detail being ironed out versus a larger framework. I guess my, my other question in regards to the lease is just how much is a backlog in the law firm that are actually doing this full, got this process. That's a good, that's a good question, Darren. So the, as far as the details, there's, there's large items. And then there's very small items, and sometimes the small items can take as long as the large items there. But, you know, there's an extensive process around your fiber connectivity, the power firm power redundancy on power.

Darren: Thanks, just follow up on the lease.

Darren: From a big picture perspective, how much of this is small detail of being ironed out versus larger framework.

Rob Brown: Okay, great.

Darren: I guess my other question in regards to the release is just how much is a backlog in the law firm that I've actually been doing this whole the got this process.

Darren: It's a good question, Darren.

Darren: So...

Speaker Change: As far as the details, there's large items, and there's very small items, and sometimes the small items can take as long as the large items there. But there's an extensive process around fiber connectivity, a power firm power redundancy on power that you know took.

Wes Cummins: That, that, you know, took a significant amount of time to complete, but there's a lot of, a lot of small details. So I would, I would say it's, it's, you know, to split between those, and it's, you know, funny. Sometimes, some of the smaller details take longer. But the, the question on the, you know, it's hard to get a view on the law firm, but there's only a few that deal with most of these contracts. And so there, there definitely is a backlog out there, but I can't handicap or talk about how much, you know, slowdown is due to that.

Rob Brown: Thank you. And then on your Piper Scaler contract, I assume the, just in terms of the timeline, the long lead items there are the due diligence I assume in the site and the technical due diligence, but sort of what percentage of completion are you adding in terms of getting the contract through its process? It's hard to handicap that, but I would say we're, you know, north of 90% of the way there.

Speaker Change: is a significant amount of time to complete, but there's a lot of small details. So I would say it's...

Speaker Change: You know, just split between those and you're funny sometimes some of the smaller details take longer, but the...

Speaker Change: Question on the, you know, it's hard to get a view on the law firm, but there's only a few that that deal with most of these contracts, and so they're definitely in the backlog out there, but I can't hand it out to talk about how much.

Rob Brown: Okay, okay, great.

Wes Cummins: This is our first time through, so this is the only environment we've experienced.

Rob Brown: Thank you.

Unknown Executive: I'll turn it over.

Speaker Change: You know, slow down is due to that. This is our first time through, so this is the only environment we've experienced.

Wes Cummins: Got one more on your pipeline of other campuses. I guess one, where are you in the marketing process, and then two. What's your propensity to diversify your customer base with those other campuses versus, say, it's the existing US hyper scaler via the LLI with a more interesting capacity. Sure. We just recently kicked that process off. You know, there's people who send up pair sheets and binders for these sites. And we have, you know, the more refined process, I would say, at this point than we did for the Ellendale campus. But we're still there. We're still pretty focused on hyperscalers for these sites.

Unknown Executive: Thank you.

Darren Aftahi: Our next question comes from the line of bearing a chat with rock capital partner. Thanks. Just following up on the lease, I guess from a big picture perspective, like how much of this is small detail being ironed out versus a larger framework? I guess my other question in regards to the lease is just how much is a backlog in the law firm that are actually doing this full to got this process.

Speaker Change: One more on your pipeline of other campuses, I guess one, where are you in the marketing process and then two?

Speaker Change: What's your propensity to diversify your customer base?

Speaker Change: with those other campuses versus say it's the existing U.S. type or scalar, the L.I. with and more interested in capacity if they want to take that down to speak on a comparison track, those box.

Speaker Change: Sure, so we've just recently kicked that process off, you know, there's...

Darren Aftahi: That's a good question, Darren. So the, as far as the details, there's large items. And then there's very small items and sometimes the small items can take as long as the large items there. But, you know, there's an extensive process around your fiber connectivity, the power firm power redundancy on power. That, you know, took a significant amount of time to complete, but there's a lot of small details. So I would, I would say it's, you know, to split between those and it's, you know, funny, sometimes some of the smaller details take longer.

Speaker Change: We have the more refined process, I would say at this point we did for the L&L campus, but we're still there, we're still there, we're still there.

Wes Cummins: You know, we're focusing on sites that are at least 200 plus megawatts of critical IT capacity. So that is going to equate to, depending on what part of the country you are in, somewhere between, you know, 250 to 300 megawatts of utility power. So those are the types of sites and customers that were focused on. There's other customers in the market. But we have a pretty narrow focus of how we go to market with these sites.

Speaker Change: Pretty focused on hyperscalers, for these sites, we're focusing on sites that are at least 200 plus megawatts of critical IT capacity, so that is going to equate to depending on what part of the country and somewhere between 250 to 300 megawatts of utility power.

Speaker Change: So those are the types of sites and customers that were focused on. There's other customers in the market, but we have a pretty narrow focus of how we go to market with these different sites.

Darren Aftahi: But the question on the, you know, it's hard to get a view on the law firm, but there's only a few that deal with most of these contracts. And so they're definitely at the backlog out there, but I can't handicap or talk about how much, you know, slow down is due to that.

Speaker Change: We're thank you.

Speaker Change: Thank you for watching!

Mike Gwanda: Our next question comes along from Mike Gwanda with Martin Securities. Please pursue your question. Hey, thanks, guys.

Darren Aftahi: This is our first time through so this is the only environment we've experienced.

Speaker Change: Thank you. Our next question comes in on of Mike Glando with Malcolm Security. Please proceed with your question.

Darren Aftahi: Yeah, one more on your pipeline of other campuses. I guess one, where are you in the marketing process and then two. What's your propensity to diversify your customer base with those other campuses versus say it's the existing US hyperscaler, the LLI with a more interested capacity. If they wanted to take that down, this would be kind of a comparison, trust those thoughts. Thanks. Sure. We just recently kicked that process off. You know, there's people who send up pair sheets and binders for these sites.

Wes Cummins: Wes, could you repeat what you said? The six clusters are driving an annualized run rate of how much revenue? I heard a hundred million, but it kind of came through a little garbled. Yeah, it's about a hundred to a hundred and ten million, Mike. Okay, a hundred to a hundred and ten. And I think what you were saying is, hey, there's a lot of demand for that business, but you're kind of going to stay at about six clusters until you get a better financing structure in place. And then you would expect to see more growth.

Mike Glando: Hey, thanks guys, Wes, could you repeat what you said the six clusters are driving an annualized run rate of how much revenue I heard a hundred million but it kind of came through a little garble.

Wes Cummins: Yeah, it's about a hundred to 110 million, Mike.

Speaker Change: Okay, Hunter do 110. And I think what you were saying is hate.

Speaker Change: There's a lot of demand for that business, but you're kind of going to stay at about six clusters until you get a better financing structure in place, and then you would expect to see more growth. Is that a fair summary?

Wes Cummins: Is that a fair summary? Yeah, that's a good summary. We're working on a better financing structure. Because you see, and we look at kind of where our adjusted even is versus where our earnings are. And that's driven largely by the accelerated depreciation schedule on those GPUs. And so we need to have the type of financing one that is at the right cost for us. And then two allows us to depreciate these over the useful life rather than during the financing period. If that makes sense. Sure, sure.

Darren Aftahi: And we have the more refined process, I would say at this point, than we did for the Ellendale campus. But we're still there. We're still pretty focused on hyperscalers for these sites. We're focusing on sites that are at least 200 plus megawatts of critical IT capacity. So that, you know, is going to equate to depending on what part of the country are in somewhere between, you know, 250 to 300 megawatts of utility power. So those are the types of sites and customers that were focused on. There's other customers in the market. But we have a pretty narrow focus of how we go to market with these sites.

Speaker Change: Yeah, that's a good summary, we're working on a better financing structure because you see and you can look at kind of where our adjusted event is versus where our earnings are and that's driven largely by the accelerated depreciation schedule on those GPUs.

Darren Aftahi: Great. Thank you.

Speaker Change: and so we need to have the type of financing one that is at the right cost for us and then two allows us to depreciate these over the useful life rather than during the financing period. If that makes sense.

Wes Cummins: And hey, in the press release, you kind of referred to this development platform on the HPC side, you know, with the potential to go from 400 megawatts to 1.4 gigawatts. Do you think that first hyper-scaler customer is interested in more than the existing 400 you're talking to them about? You know, could you end up being a one-stop shop for them for, you know, another big project or two? I definitely think we could, but there's other demand in the market as well from similar type customers. There's a significant amount of demand for this capacity, especially, you know, near-term power.

Speaker Change: Sure, and hey, in the press release, you kind of referred to this development platform on the HPC side, you know, with the potential to go from 400 megawatts to 1.4 gigawatts.

Mike Grondahl: Our next question comes in line of Mike Grondahl with Martin Securities. Please proceed with your question. Hey, thanks, guys.

Speaker Change: Do you think that first hyperscaler customer is interested in more than the existing 400 year talking to them about, you know, could you end up being a one-stop shop for them for another big project or two?

Mike Grondahl: Wes, could you repeat what you said? The six clusters are driving a manualized run rate of how much revenue? I heard 100 million, but it kind of came through a little garbled. Yeah, it's about 100 to 110 million, Mike. Okay, 100 to 110. And I think what you were saying is, hey, there's a lot of demand for that business, but you're kind of going to stay at about six clusters until you get a better financing structure in place.

Speaker Change: I definitely think we could, but there's other demand in the market as well, from similar type customers. There's significant amount of demand for this capacity, especially.

Wes Cummins: So 25 power, you know, 25 power is done unless, you know, we have that for Ellen Dale. Now we're focused on, you know, 2026 power and then 2027 power, but I think near-term power is key. And you need to have the right type of power.

Speaker Change: You know, near-term power. So, 25 power, you know, 25 power is done. You know, we have that for L&L.

Speaker Change: Now we're focused on the F-2026 power and then F-2027 power, but I think...

Mike Grondahl: And then you would expect to see more growth. Is that a fair summary? Yeah, that's a good summary is we're working on a better, you know, financing structure because you see and you look at kind of where our adjust even is versus where our earnings are. And that's driven largely by the accelerated depreciation schedule on those GPUs. And so we need to have the type of financing one that is at the right cost for us. And then two allows us to depreciate these over the useful life rather than during the financing period. If that makes sense. Sure, sure.

Speaker Change: New York Term Power is key and you need to have the right type of power. Again, one of the reasons we talked about selling our Texas facility, we don't believe that facility works for HPC. We have the way we want to develop it.

Wes Cummins: Again, you know, one of the reasons when we talked about selling our Texas facility, we don't believe that facility works for HPC, at least not the way we want to develop it. So you need the right type of power. So we're really focused on near-term power. And I might just to clarify that the 1.4 gigawatts is just the additional three sites. It doesn't include Ellen Dale. So, you know, that's what we're focused on in the market there. I think the potential current customer as well as others like them, you know, there's a significant amount of demand for near-term power in the market.

Speaker Change: So you need to write type of power so we're really focused on your term power and my tip to clarify that the 1.4 gigawatts is just the additional three sites. It doesn't include out and down.

Speaker Change: So, you know, that's what we're focused on the market there, but I think the potential current customer as well as others like them, you know, there's a significant amount of demand for near-term power in the market.

Mike Grondahl: And hey, in the press release, you kind of referred to this development platform on the HPC side, you know, with the potential to go from 400 megawatts to 1.4 gigawatts. Do you think that first hyper-scaler customer is interested in more than the existing 400 you're talking to them about? You know, could you end up being a one-stop shop for them for, you know, another big project or two? I definitely think we could, but there's other demand in the market as well from similar type customers.

Speaker Change: Got it. Great. Hey. Thanks for what?

George Sutton: Thank you, George Sutton, with Craig Allen.

Speaker Change: the

Speaker Change: Thank you. Next time, next question. Come from the line of George Sutton with Craig Allen. Please proceed with your question.

George Sutton: Thank you, Wes. Nothing on the call has surprised me except for one statement. You mentioned it's not clear when the customer might want to go live with the lease. Can you just clarify that statement?

George Sutton: Thank you. Less nothing on the fall has surprised me except for one statement. You mentioned it's not clear when the customer might want to go live with the least. Can you just clarify that statement?

Wes Cummins: We want to get this up and running as fast as humanly possible, and that's why you're building out as rapidly as you are. Yeah, so that's correct, George; a correct way to look at it. But there's different stages for this as far as when you're doing fit-out, what we're adding in for the fit-out, so there's a lot of moving parts there.

Speaker Change: We want to get this stuff in running as fast as you really possible, and that's why you're building out as rapidly as you are.

Mike Grondahl: There's a significant amount of demand for this capacity, especially, you know, near-term power. So 25 power, you know, 2025 power is done unless, you know, we have that for L&DL. Now we're focused on, you know, 2026 power and then 2027 power, but I think near-term power is key and you need to have the right type of power. Again, you know, one of the reasons when we talked about selling our Texas facility, we don't believe that facility works for HPC, at least not the way we want to develop it.

Speaker Change: Yeah, so that's correct, Georgia correct way to look at it.

Speaker Change: But there's different stages for this as far as when you're doing fit out what we're adding in for the fit out so there's a lot of moving parts there. I mean it's fairly buttoned down but we'll say the details of that for when this is finished and we can share that publicly.

Wes Cummins: I mean, it's fairly buttoned down, but we'll save the details of that for when this is finished and we can share that publicly.

George Sutton: Okay, relative to the GPU financing structure, our understanding, knowing that market pretty well, is it's gotten a lot better. It's gotten a lot more financeable. Can you just talk about the level of interest you've had from folks and putting a structure together there? Where does that stand? Yeah, so we started this process a while ago, and you are correct; and just the interest level has grown, and the cost of capital has come down. It really, George, depends on the kind of the off-taker here, just like on the data center side. So the financing pricing depends a lot on the off-taker, and so your highest costs are going to be AI labs and startups, and then enterprises are going to be significantly lower, and then if you were doing the deployment with a hyperscaler, it's going to go even lower from there.

Speaker Change: Okay, relative to the GPU financing structure, our understanding, knowing that market pretty well is it's gotten a lot better, it's gotten a lot more financeable. And you just talk about the level of interest you had from folks and putting a structure together there, kind of where does that stand?

Mike Grondahl: So you need to write type of power, so we're really focused on near-term power. And I might just to clarify that the 1.4 gigawatts is just the additional three sites. It doesn't include L&DL. So, you know, that's what we're focused on the market there, but I think the potential current customer, as well as others like them, you know, there's a significant amount of demand for near-term power in the market. He's got it.

Speaker Change: Yeah, so, you know, we started this process a while ago and you are correct in that just the interest level has grown and the cost of capital has come down.

Speaker Change: is really George's depends on the kind of the off-taker here, just like on the data center side. So the financing pricing...

Mike Grondahl: Great. Hey, thanks a lot.

Speaker Change: Depends a lot on the off-paper, and so your highest costs are going to be AI labs and startups and then enterprise is going to be to get familiar lower and then if you are doing deployment with a hyper-scaler it's going to go even lower from there.

George Sutton: Thank you. Our next question comes from the line of George Sutton with Craig Allen. Please proceed with your question.

Wes Cummins: But we're seeing a significant amount of new entrance into that market, and we've seen a lot of interest, and I think we'll have the successful in putting that structure in place for ourselves. So, just to clarify on that, the financiers are saying we're happy to put something together. We want to see the customer names, and once you provide a high-quality enough name, we would want to fund this. Is that specific to some extent?

George Sutton: Thank you. Wes, nothing on the call has surprised me except for one statement. You mentioned that it's not clear when the customer might want to go live with the lease. Can you just clarify that statement? We want to get this up and running as fast as humanely possible and that's why you're building out as rapidly as you are. Yeah, so that's correct, George, a correct way to look at it. But there's, you know, there's different stages for this as far as when you're doing fit out what we're adding in for the fit out.

Speaker Change: but we're seeing a significant amount of new entrants into that market and we've seen a lot of interest and I think we'll have the successful and putting that structure in place for ourselves.

Speaker Change: So, just a clarifying on that.

Speaker Change: The financiers are saying we're happy to put them together. We want to see the customer names.

Speaker Change: and once you provide a high quality enough name, we would want to fund this, we got a strict internet to some extent.

Wes Cummins: It kind of is, George. What you should think of is a facility that gets put in place and it's you do show customer contracts and typically the kind of the structures that we see and this is you'll form bankruptcy remote SPV and then the loans go into that, the GPUs go into that and the customer contracts go into that and in some cases the co-location contracts go into that as well and so it's kind of a self-contained financing solution.

George Sutton: So there's a lot of moving parts there. I mean, it's fairly buttoned down, but we'll save the details of that. For when you know this is finished and we can share that, you know, publicly. Okay, relative to the GPU financing structure, our understanding knowing that market pretty well is it's gotten a lot better. It's gotten a lot more financeable. Can you just talk about the level of interest you've had from folks and putting a structure together there?

Speaker Change: It kind of is your, what you should think of is a facility that gets put in place, and it's a draw-down facility, as you buy equipment.

Speaker Change: and you do show customer contracts and typically the kind of structures that we see in this is you'll form like a bankruptcy remote SPV.

Speaker Change: and then the loans go into that, the GPUs go into that, and the customer contracts go into that, and in some cases the co-location contracts go into that as well, and so it's kind of a self-contained financing solution.

George Sutton: Kind of where does that stand? Yeah, so, you know, we started this process a while ago, and you are correct in the, just the interest level has grown and the cost of capital has come down. It really, George, depends on the kind of the off-taker here, just like on the data center side. So the financing pricing depends a lot on the off-taker. And so, you know, your highest costs are going to be AI labs and startups, and then enterprises are going to be significantly lower.

George Sutton: And then if you were doing, you know, the deployment with a with a hyperscaler, it's going to go, you know, even lower from there. But we're seeing a significant amount of. New entrance into that market, and we've seen a lot of interest, and I think we'll, you know, have the successful in putting that structure in place for ourselves. So, just to clarify on that, the financiers are saying we're happy to put something together.

Speaker Change: Yeah, I'm true. Okay, thank you.

John Gidarro: Our next question comes from the line of John Gidarro with the Meeting Company. A. West, thanks for taking my question to for you. First, just trying to do diligence and much as possible on the timeline for the release agreement. So, you'd mention they finalize technical requirements.

Speaker Change: i

Speaker Change: Thank you.

Speaker Change: Our next question comes in the line of John Giberal with meeting company.

John Giberal: Hey, Wesley. Thanks for taking my question. Two for you. First, just trying it.

John Giberal: Do you do this as much as possible, Conmit, the timeline for the release agreement? So you'd mention they finalize their technical requirements.

Wes Cummins: Is that kind of you think of the first stage and how many stages would you say there are, or is it really now just kind of done down to some final details? And then second question, you had mentioned that the Garden City site that you didn't think it was suitable for HPC. Obviously, a lot of the Bitcoin miners out there are kind of trying to go down that West Texas route. It hasn't been done yet. Just curious why did you think that site and maybe that region wouldn't really be possible for HPC. So, hey John, on the, I would not say, I mean, it's all kind of when you say is that the first step of the process on the, on the leaf side, you know, it all kind of goes together. But I would say we're finalizing the last details of that is the way I would characterize it.

Speaker Change: You know, is that kind of you think what is the first stage and how many stages would you say there are or is it really now just kind of done down to some final details?

Speaker Change: and then second question you had mentioned that the Garn City site that you didn't think it was.

George Sutton: We want to see the customer names. And once you provide a high quality enough name, we, we would want to fund this is that. Yeah, to some extent. It kind of is, George, what you should think of is a facility that gets put in place, and it's a drawdown facility as you buy equipment. And, you know, the, you do show customer contracts, and typically the kind of the structures that we see in this is you'll, you know, form like a bankruptcy, bankruptcy remote SPV.

Speaker Change: Super Bowl for HPC. Obviously a lot of the Bitcoin miners out there are trying to go down that West Texas route. It hasn't been done yet. Just curious why did you think that that site and maybe that region would it really be possible for each group soon?

George Sutton: And then the loans go into that, the GPUs go into that, and the customer contracts go into that. And in some cases, you know, the co-location contracts go into that as well. And so it's kind of a self-contained financing solution. Gotcha. Okay.

George Sutton: Thank you.

Speaker Change: So, hey, hey John, I would not say, I mean, it's all kind of when you say that the first step of the process on the, on the least side, you know, all kind of goes together, but I would say we're finalizing the last details of that is the way I would characterize it. And then on.

Wes Cummins: And then on, you know, what we've learned, you know, through this process and what we have seen previously but especially through this process is the, I don't think for us, for our company, you know, everyone else has their own strategy but I don't think for us having a large flexible load in the ERCOT market is going to be suitable for the kind of customers that we are pursuing in that business. You know, I don't know what changes will happen, but I know there are changes in the legislature that have been proposed in the legislature in the state of Texas that will make, you know, even harder with the large flexible load structure to serve, again, the type of customers we're looking at serving.

John Giberal: You know what we've learned through this process and what we've seen previously, but especially through this process is

Speaker Change: I don't think for us, for our company, everyone else has their own strategy but I don't think for us.

Speaker Change: Having a large flexible road in the ERCOT market is going to be suitable for the kind of customers that we are pursuing in that business.

John Guiderro: Our next question comes to the line of John Guiderro with meeting company. Hey, Wes, thanks for taking my question to for you. First, just trying to do do deal with this and much of possible kind of the timeline for the release agreement. So you mentioned they finalize their technical requirements. And, you know, it is that kind of you think what the first stage and how many stages would you say there are, was it really now just kind of done down to some final details.

Speaker Change: I don't know what changes will happen, but I know there are changes in the legislature that have been proposed in the legislature and the state of Texas that will make even harder with the large flexible load structure to serve again the type of customers we're looking at serving.

Wes Cummins: So, right now we're not pursuing anything in the state of Texas at the moment that could change in the future, but there's, you know, firm power, power redundancy and not just redundancy of what you build on the site, like, you know, like UPS or backup gen redundancy in having, you know, multiple power lines or feeds in from different directions into this substation or switching station that you're drawing power from. There's a lot of pieces that we've learned going through this process, and that's the type of sites that we, you know, have locked up and are locking up and marketing. But there's, you know, I'm not that bullish on the, just specifically, the large flexible load in the, in the state of Texas.

Speaker Change: So right now we're not pursuing anything in the state of Texas at the moment that could change in the future. But there's firm power, power with redundancy and not just redundancy of what you build.

John Guiderro: And then second question, you had mentioned that the Garden City site that you didn't think it was suitable for HPC. Obviously, a lot of the Bitcoin miners out there are kind of trying to go down that West Texas route. It hasn't been done yet. Just curious, why did you think that site and maybe that region wouldn't really be possible for HPC?

Speaker Change: on the site, like UPS or backup gen, redundancy in having multiple power lines or feeds and from different directions into the substation or switching station, that you're drawing power from. There's a lot of pieces that we've learned going through this process and that's the type of sites that we...

Wes Cummins: So, hey John, on the, I would not say, I mean, it's all kind of when you say is that the first step of the process on the, on the leaf side, you know, it all kind of goes together, but I would say we're, we're finalizing the last details of that is the way I would characterize it. And then on, you know, what we've learned, you know, through this process and what we've seen previously, but especially through this process is the, I don't think for us, for our company, you know, everyone else has their own strategy, but I don't think for us having a large flexible load in the ERCOT market is going to be suitable for the kind of customers that we are pursuing in that business.

Speaker Change: You know, or have locked up and are locking up and marketing, but there's, you know, I'm not that bullish on the, just specifically the large flexible load in the, in the state of Texas.

Unknown Executive: That's helpful. I'd appreciate that.

Speaker Change: Good, that's helpful, I appreciate that, thank you.

Speaker Change: [inaudible]

Kevin Dede: And our next question comes from the line of Kevin. Thank you. Winwright, please proceed with your question. Thanks. I was wondering if you could take a little time just to characterize the overall environment. Understand your targeting one point for gigawatts. What's the competitive environment like, and how are you confident that applied wins versus, you know, your competitors? Sure. So there's two parts of that. So from the environment, as I mentioned earlier, we see the very strong demand for near-term power. So we're very focused on power that can come online through the end of 27. So power is the number one bottleneck at the moment, and then we step back to where I believe the number two bottleneck is supply chain, and there are a lot of stretched components in the supply chain.

Speaker Change: Thank you.

Speaker Change: and our next question comes from the line of Kevin. Jesus, A.C. We pray for please receive the two questions.

Wes Cummins: Thanks, I Wes.

Kevin: I was wondering if you could take a little time just to characterize the overall environment. Understand your targeting 1.4 gigawatts.

Wes Cummins: You know, I don't know what changes will happen, but I know there are changes in the, in the legislature and the state of Texas that will make, you know, even harder with the large flexible load structure to serve, again, the type of customers we're looking at serving. So right now, we're not pursuing anything in the state of Texas at the moment that could change in the future, but there's, you know, firm power, power redundancy and not just redundancy of what you build on the site, like, you know, like UPS or backup gen redundancy and having, you know, multiple power lines or feeds in from different directions into this substation or switching station that you're drawing power from.

Kevin: What's the competitive environment like and how are you confident that applied wins?

Kevin: versus...

Speaker Change: You know, you're competitors.

Speaker Change: Sure, so there's two parts of that. So from the environment, as I mentioned earlier, we see a very strong demand for near-term power, so we're very focused on.

Speaker Change: Power, they can come online through the end of 2017, so Power is the number one bottleneck at the moment. And then we step back to where I believe the number two bottleneck is supply chain. And there are a lot of stretch.

Wes Cummins: I'm happy to walk through those, but that's the second part. So we have a significant amount of experience in the supply chain. A lot of the things, you know, we, for the first native center build, we had ordered last year; we bought our places in line for, you know, switch gear, transformers, a lot of the key components that are needed to build these. So those are the two pieces. And I think we're in a great position from all of those, those kind of competitive dynamics.

Speaker Change: and the Supply Chain. I'm happy to walk through those, but that's the second part. So we have a significant amount of experience in the Supply Chain. A lot of the things, you know, we sort of, the first data center build. We had ordered last year, bought our places in line for, you know, switch gear transformers, a lot of the key components that are needed to build these. So those are the two pieces, and I think we're in a great position from both of those. Kind of competitive dynamics. You know, I think the biggest thing for us is...

Wes Cummins: There's a lot of pieces that we've learned going through this process and that's the type of sites that we, you know, have locked up and are locking up and marketing, but there's, you know, I'm not that bullish on the, just specifically the large flexible load in the, in the state of Texas. That's helpful. We'll have to appreciate that. Thank you.

Wes Cummins: You know, I think the biggest thing for us is getting through this first lease that will be, you know, something that validates what we're doing as a company in North Dakota and our ability to go and find these sites, develop them, and bring them online for very large companies and demanding companies. And so there's a lot of competition in the market. We see the majority of our competition being private data center companies that have been building for hyperscalers for years already, you know, a decade even. So those are the ones that we see as the majority of the competition in the market.

Kevin Dede: And our next question comes from the line of Kevin. A.C. Winwright, please proceed with your question. Oh, thanks. Hi, Wes. I was wondering if you could take a little time just to characterize the overall environment. Understand your targeting 1.4 gigawatts. What's the competitive environment like? And how are you confident that applied wins versus, you know, your competitors? Sure. So there's two parts of that. So from the environment, as I mentioned earlier, we see a very strong demand for near-term power.

Speaker Change: getting through this first lease that'll be something that validates what we're doing as a company.

Speaker Change: in North Dakota and our ability to go.

Speaker Change: and find these sites developed and bring them online for very large companies and demanding companies. There's a lot of competition in the market. We see the majority of our competition being private data center companies that have been building.

Speaker Change: for hyperscalers for years already, you know, decade even. So those are the ones that we see is the majority of the competition in the market. And there's...

Wes Cummins: And there's, you know, a handful of those platforms out there that are building hundreds of megawatts or, in some cases, over a gigawatt of power out for hyperscalers. So this is not necessarily a new market. It's just a new style of data. Center.

Speaker Change: You know, a handful of those platforms out there that are building hundreds of megawatts or in some cases over a gigawatt of power for hyperscalers, so this is not necessarily a new market, it's just a new style of data center.

Kevin Dede: So we're very focused on power that can come online through the end of 27. So power is the number one bottleneck at the moment. And then we step back to where I believe the number two bottleneck is supply chain. And there are a lot of stretched components in the supply chain. I'm happy to walk through those, but that's the second part. So we have a significant amount of experience in the supply chain.

Wes Cummins: Well, as you go up to bid for a site, and you see these other private companies that have been doing this a little bit longer than Applied has, why would you win that contract? Why should we believe that you're going to have a foot up in that competition? So I think it's important to understand the companies that we have historically been in this market, and the way data center industry has been historically is when a company wants to build new capacity. They typically look for the region they want to be in. So let's say I'm sitting in Dallas.

Speaker Change: Well, as you go up to bid for a site and you see these other private companies that have been doing this a little bit longer than applied has

Speaker Change: Why would you in that contract? Why should we believe that you're going to have a foot up in that competition?

Kevin Dede: A lot of the things, you know, we, for the first native center build, we had ordered last year. We bought our places in line for switch gear, transformers, a lot of the key components that are needed to build these. So those are the two pieces, and I think we're in a great position from all of those, those kind of competitive dynamics. You know, I think the biggest thing for us is getting through this first lease that will be, you know, something that validates what we're doing as a company in North Dakota and our ability to go and find these sites, develop them, and bring them online for very large companies and demanding companies.

Speaker Change: So I think it's important to understand that the company that we at Historicly are the historically been in this market and the way kind of data center the industry has been historically.

Speaker Change: is when a company wants to build new capacity, they typically look for.

Wes Cummins: Let's say they want to be in Dallas. And so there's a couple of different tools that you can license for locating data center space in the DFW area. And those tools really focus on the fiber maps. And so what it will do is basically match the type of fiber connectivity you need, and then available real estate on the map, and then you'll find a location, purchase that location, and then you'll make a request to the utility for power. And so what's happened in the market now is companies are still doing that, but those power requests go in a queue in a lot of the most popular markets that is stretching out five plus, and in some cases over 10 years before you're going to get that power especially at the amounts of power that are needed for these new style facilities.

Speaker Change: the region they want to be in. So let's say they want to be in Dallas and so there's a couple of different tools that you can license.

Speaker Change: for locating data center space in the DFW area. And those tools really focus on the fiber maps. And so what it will do is basically match the type of fiber connectivity you need and then available real estate on the map and then you'll find a location, purchase that location.

Kevin Dede: And so there's a lot of competition in the market. We see the majority of our competition being private data center companies that have been building for hyperscalers for years already, you know, decade even. So those are the ones that we see as the majority of the competition in the market. And there's, you know, a handful of those platforms out there that are building hundreds of megawatts, or in some cases over gigawatt of power, out for hyperscalers.

Speaker Change: and then you'll make a request to the utility for power.

Speaker Change: and so what's happened in the market now is...

Speaker Change: are still doing that, but those power requests that goes in a queue and in a lot of the most popular markets that is stretching out.

Speaker Change: You know, five plus and in some cases over 10 years before you're going to get that power especially at the amounts.

Wes Cummins: And so that's the big, you know, gating item now. Us, on the other hand, we go about it kind of the inverse way. We find power availability, and then we make sure that that power is the type of power that can be used for our type of development. So, you know, what I've mentioned before on redundancy, and then we make sure that the fiber connectivity is there. And now we've refined that even further to include kind of latencies to different locations. And then we can go and then either start developing that site like we did in Elendale or marketing some of our other locations.

Speaker Change: of power that are needed for these new style facilities. And so that's the big, you know, dating item now, us on their hand, we go about it kind of the inverse way. We find power availability, and then we make sure that that power is the type of power that can be used for our type of development. So, you know, what I've mentioned before on redundancy, and then we make sure that the fiber connectivity is there. And now we've refined that even further to include kind of latencies to different locations.

Kevin Dede: So this is not necessarily a new market, it's just a new style of data. Center. Well, as you go up to bid for a site and you see these other private companies that have been doing this a little bit longer than Applied has, why would you win that contract? Why should we believe that you're going to have a foot up in that competition? So I think it's important to understand the companies that we have historically been in this market and the way data center industry has been historically is when a company wants to build new capacity.

Speaker Change: and then we can go and start developing that site like we did in Elendale or marketing.

Wes Cummins: So I think we're unique in one of the few companies that goes about it that way. And is this far along, you know, if you look back at our history, we started down this path in 2022. And so we have, you know, a few years of experience doing this. And now, you know, our knowledge level has gone up dramatically in the last six months, you know, inside the company about how to go about this. So I think just the availability of power and the right kind of power at the right type of sites with the right type of fiber connectivity or what really give us an advantage.

Speaker Change: Some of our other locations. So I think we're unique in one of the few companies that goes about it that way and is this far along, you know, a few look back at our history we started down this path.

Kevin Dede: They typically look for the region they want to be in. So let's say I'm sitting in Dallas. Let's say they want to be in Dallas. And so there's a couple of different tools that you can license for locating data center space in the DFW area. And those tools really focus on the fiber maps. And so what it will do is basically match the type of fiber connectivity you need, and then available real estate on the map, and then you'll find a location, purchase that location, and then you'll make a request to the utility for power.

Speaker Change: in 2022 and so we have.

Speaker Change: You know, a few years of experience doing this and now, you know, our knowledge level has went up dramatically in the last six months, you know, inside the company about how to go about this. So, I think just the availability of power and the right kind of power, the right type of sites with the right type of fiber connectivity or what really give us an advantage.

Wes Cummins: Would you think it's also fair to say that you're looking under rocks and perhaps more rural locations with less concern of latent on latency. So, so we are for sure. That's what I was mentioning earlier about how traditional data center companies go about it. And we go about it in a very different way. We've definitely tightened the bands on what we know about kind of the latency requirements. So, you know, we're not necessarily going to be looking at really far form locations. But we have a lot more knowledge base around, you know, the type of latency requirements, you know, in North America that we will need to meet for the site.

Speaker Change: Would you think it's also fair to say that you're looking under rocks and perhaps more rural locations with less concern of latent on latency?

Kevin Dede: And so what's happened in the market now is companies are still doing that, but those power requests goes in a queue and in a lot of the most popular markets that is stretching out five plus, and in some cases over 10 years before you're going to get that power especially at the amounts of power that are needed for these new style facilities. And so that's the big gating item now us on the other hand, we go about it kind of the inverse way.

Speaker Change: So we are, for sure, that's what I was mentioning earlier about how traditional data center companies go about it and we go about it in a very different way. We've definitely tightened the bands on what we know about the latency requirements.

Speaker Change: So...

Speaker Change: We're on that necessarily going to be looking at really far-fone locations, but we have a lot more knowledge based around the type of latency requirements in North America that we will need to meet for the site, so it's helped us with our site selection even more.

Kevin Dede: We find power availability, and then we make sure that that power is the type of power that can be used for our type of development. So you know what I mentioned before on redundancy. And then we make sure that the fiber connectivity is there. And now we've refined that even further to include kind of latencies to different locations. And then we can go and then either start developing that site, like we did in Elendale or remarketing some of our other locations.

Wes Cummins: So it's helped us with our site selection even more.

Wes Cummins: Can you talk a little bit about the where Applied stands now on the Cloud AI biz? How many sites do you have and what's active and what do you think once you're financing, you know, your structured financing in place, how you'll be able to access those this fiscal year? Yeah, so, you know, we have a lot of the same locations, right? We have Minnesota, we have our site in Jamestown, we have Coloss capacity in Denver and Salt Lake City; those are the primary large ones. We have a smaller one in Las Vegas, so we have that capacity. There's open capacity, which is, I think, a very big asset in the market; it's extremely difficult to find.

Speaker Change: Can you talk a little bit about this?

Speaker Change: We're applied for now on the Cloud AI biz. How many sites do you have?

Speaker Change: What's active and what do you think once you're financing your structure financing in place?

Kevin Dede: So I think we're unique in one of the few companies that goes about it that way, and is this far along, you know, a few look back at our history, we started down this path in 2022. And so we have you know, a few years of experience doing this. And now, you know, our knowledge level has went up dramatically in the last six months, you know, inside the company about how to go about this.

Speaker Change: How you'll be able to access those.

Goliara: This is Goliara.

Speaker Change: Yeah, so, you know, we have a lot of the same locations right with Minnesota, we have our site in James Town.

Kevin Dede: So I think just the availability of power and the right kind of power at the right type of sites with the right type of fiber connectivity or what really give us an advantage. Would you think it's also fair to say that you're looking under rocks and perhaps more rural locations with less concern of latent on latency? So we are for sure. That's what I was mentioning earlier about how traditional data center companies go about it.

Speaker Change: Colos Capassian Denver and Salt Lake City. Those are the primary large ones we have a smaller one in Las Vegas. So we have that capacity. There's open capacity which is...

Wes Cummins: Then ready for deployment, we have demanded coming through on enterprise side and there still is strong demand in that market, so when we get the right type of financing in place, we'll be able to reaccelerate the growth of that business. So, all told, can you give us a rough ballpark on the megawatts that you have access to? We have that, megawatt capacity, secured of just over for deployment, just over 30 megawatts. Perfect, thanks very much. Kevin, that's right now; that's not for in the future. Yeah, that was the nature of my question. I appreciate the color west, appreciate the color.

Speaker Change: I think a very big asset in the market is extremely difficult to find.

Speaker Change: and ready for deployment. We have demand that's coming through on enterprise side and that there's still a strong demand in that market. So when we get the right type of financing in place, we'll be able to re-excelerate the growth of that business.

Kevin Dede: And we go about it in a very different way. We've definitely tightened the bands on what we know about kind of the latency requirements. So, you know, we're not necessarily going to be looking at really far-form locations. But we have a lot more knowledge base around, you know, the type of latency requirements, you know, in North America that we will need to meet for the site. So it's helped us with our site selection even more.

Speaker Change: So all told, can you give us rough ballpark on the megawatts that you have access to?

Speaker Change: We have that, make a lot capacity, secure of just over 30 megawatts.

Speaker Change: Perfect. Thanks for my dress. Kevin, that's ready now. That's not for the future. Yeah, that was the nature of my collection. I appreciate the color with. Appreciate the color. Thank you very much.

Kevin Dede: Can you talk a little bit about where Applied stands now on the Cloud AI biz, how many sites do you have and what's active and what do you think once you're financing, you know, your structured financing in place, how you'll be able to access those this fiscal year? Yeah, so, you know, we have a lot of the same locations, right, we have Minnesota, we have our site in Jamestown, we have Coloss capacity in Denver and Salt Lake City, those are the primary large ones, we have a smaller one in Las Vegas.

Unknown Executive: Thank you very much.

Wes Cummins: Thank you, and we have reached the end of the questioning and access session; therefore, I'll turn the call back over to West Coming for closing remarks. Thanks operator, thanks everyone for joining the call and look forward to speaking to your next quarter.

Speaker Change: Thank you, and we have reached the end of the question and answer session. Therefore I will turn the call back over to Wes Cummins for closing remarks.

Wes Cummins: Thanks, operator, thanks everyone for joining the call and look forward to speaking to you next quarter.

Unknown Executive: And this concludes today's conference, and you may disconnect your line at this time. Thank you for your cooperation participation. Thank you very much.

Wes Cummins: i

Speaker Change: and this concludes the conference and you may just connect your lines at this time. Thank you for your correct participation.

Kevin Dede: So we have that capacity, there's open capacity, which is, I think, a very big asset in the market, it's extremely difficult to find. And ready for deployment, we have demanded coming through on enterprise side and there still is strong demand in that market. So when we get the right type of financing in place, we'll be able to re-accelerate the growth of that business. So I'll told, can you give us rough ballpark on the megawatts that you have access to?

Kevin Dede: We have that, megawatt capacity, secured, of just over for deployment, just over 30 megawatts. Perfect, thanks very much, then Kevin, that's right now, that's not for any of you. Yeah, no, that was the nature of my question. I appreciate the color, I appreciate the color, thank you very much. Thank you, and we have reached the end of the questioning and access session, therefore I'll turn the call back over to West Cummins for closing remarks.

Kevin Dede: Thanks operator, thanks everyone for joining the call and look forward to speaking to you next quarter. And this concludes today's conference and you may disconnect your line at this time. Thank you for your cooperation, participation. [inaudible]

Speaker Change: I hope you enjoyed this video.

Speaker Change: [inaudible]