Applied Digital Corporation (APLD) Q4 2025 Earnings Call Transcript

Applied Digital (APLD) reported Q4 2025 revenue of $38 million, a 41% year-over-year increase, alongside an adjusted net loss of $7.6 million and adjusted EBITDA of $1 million. The company announced transformative 15-year lease agreements with AI hyperscaler CoreWeave for 250 megawatts at its Polaris Forge 1 campus, projected to generate $7 billion in contracted revenue, with an additional 150-megawatt option already exercised. APLD expects the first 100 megawatts to be operational by calendar Q4 2025, with subsequent phases in 2026 and 2027, and is actively pursuing project financing while targeting $1 billion in annual net operating income within 3-5 years, underpinned by advanced negotiations with another investment-grade hyperscaler.

Analysis

Applied Digital Corporation (APLD) has announced a transformative operational pivot, underscored by 15-year lease agreements with AI hyperscaler CoreWeave for an initial 250 megawatts (MW) at its Polaris Forge 1 campus. These agreements are projected to generate approximately $7 billion in contracted revenue, fundamentally de-risking the company's long-term outlook. The partnership was further validated when CoreWeave exercised an option for an additional 150 MW, bringing the total commitment to 400 MW. While fiscal Q4 2025 results show modest current-state financials, with $38 million in revenue (+41% YoY) and an adjusted EBITDA of just $1 million, the forward-looking narrative is compelling. The first 100 MW facility is scheduled to be operational in calendar Q4 2025, with subsequent phases in mid-2026 and 2027. Management is actively securing project financing, expected within 4-10 weeks, and has fortified its balance sheet with a post-quarter capital raise of approximately $270 million. The company's pipeline appears robust, with management citing 'advanced stage' negotiations with another investment-grade North American hyperscaler for a separate campus. This progress positions APLD as roughly halfway toward its internal goal of achieving $1 billion in annual net operating income within three to five years, shifting its primary value driver from cryptocurrency hosting to long-term, contracted AI infrastructure.

Key Decisions for Investors

• Investors should prioritize monitoring the company's execution on the Polaris Forge 1 construction timeline, as delivering the first 100 MW to CoreWeave by calendar Q4 2025 is a critical milestone for revenue recognition and market credibility.
• The finalization of the project financing package, guided for the next 4-10 weeks, and any definitive agreement with the second hyperscaler in 'advanced negotiations' represent major near-term catalysts that could significantly de-risk the investment thesis.
• Evaluate the company's valuation based on its future as a contracted AI infrastructure provider rather than its historical performance in cryptocurrency hosting, factoring in the long-term, $7 billion revenue stream from the CoreWeave deal.
• Pay close attention to the upcoming quarter's revenue, which is guided to increase significantly from fit-out services, as this will provide the first tangible financial evidence of the HPC segment's contribution before lease payments commence.