Fiscal Third Quarter 2026 Financial Highlights
- Revenues:
$126.6 million , up 139% from the prior year comparable period - Net loss attributable to common stockholders:
$100.9 million , down 179% from the prior year comparable period - Net loss attributable to common stockholders per basic and diluted share:
$0.36 , down 125% from the prior year comparable period - Adjusted revenue:
$108.6 million - Adjusted net income:
$33.2 million - Adjusted net income per diluted share:
$0.09 - Adjusted EBITDA:
$44.1 million
Adjusted revenue, Adjusted net Income, Adjusted net income per diluted share, and Adjusted EBITDA are non-GAAP measures. A reconciliation of each of these Non-GAAP Measures to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in
Recent Highlights
- Broke ground on
Delta Forge 1, a 430MW AI Factory campus spanning more than 500 acres in a strategic southern U.S. market. The project leverages the Company’s provenAI Factory blueprint and is designed to deliver up to 300 MW of critical IT load for high-density AI workloads, with initial operations expected to begin in mid-calendar 2027. - Entered into a
$100 million DevCo Facility withMacquarie Equipment Capital , to fund the initial sourcing, planning, development and construction costs for a new data center project and other potential projects. - Appointed the Company's co-founder
Jason Zhang as President to strengthen leadership as the Company scales itsAI Factory platform.
Subsequent to the Quarter
- Completed a
$2.15 billion private offering of 6.750% Senior Secured Notes due 2031, issued at 98% of par through its subsidiary APLD ComputeCo 2 LLC. Proceeds will fund the development and construction of 200 MW of critical IT load at the Polaris Forge 2AI Factory campus inHarwood, North Dakota . - Entered into agreements with CoreWeave intended to enhance the credit quality of the tenants under the 100 MW (ELN-02) and 150 MW (ELN-03) data center leases at the Polaris Forge 1 campus in
Ellendale, North Dakota . As part of CoreWeave’s refinancing of related debt obligations, which received an investment-grade A3 rating (compared to CoreWeave Inc.’s BB rating), the Company restructured its leases with CoreWeave through a creditworthy CoreWeave SPV subsidiary, receiving unconditional springing guarantees from CoreWeave, Inc., guaranteeing CoreWeave's SPV's obligations under the restructured leases, and CoreWeave, Inc. posting a$50 million letter of credit securing the ELN-02 lease. These enhancements are expected to provide additional security for the Company’s 9.250% Senior Secured Notes due 2030.
Management Commentary
“We now operate one of the only 100 MW direct-to-chip liquid-cooled data centers online today, and more importantly, it is fully operational. We believe that's what matters to our customers – turning power into live AI capacity, delivered on time and performing as expected. We are also starting to see the earnings power of our platform come through, with a full quarter of revenue from our first building now recognized. That initial 100 MW represents approximately one-sixth of our contracted capacity and one-tenth of what is operating or under construction, but we believe it begins to show what's possible from here as we continue to bring additional capacity online in the coming quarters,” said
Construction remains on schedule across our
During the quarter, we broke ground on
Our power pipeline remains robust. While developing large-scale power infrastructure involves many variables, such as new generation, transmission lines, and regulatory approvals, we believe we have currently contracted only a small fraction, roughly one-sixth, of our long-term power potential.
With the addition of
“We are seeing a clear acceleration in demand for high-performance AI data center capacity, with hyperscalers as aggressive as we have ever seen them,” said Cummins. “Just three months ago, we referenced approximately
Our Data Center Hosting business, which operates 286 MW for bitcoin mining, continues to deliver strong results and the highest return on assets in the company, generating nearly
As previously announced, we are completing a business combination of our Cloud business with EKSO Bionics Holdings, Inc. (Nasdaq: EKSO) to form
We are also proud to invest in our communities. Through Applied Digital Cares, we recently awarded our first round of grants supporting education, health and wellness, innovation, and public safety, including upgrades for local fire departments.
We continue to focus on lowering the cost of our project-level debt. We recently completed a
In summary, we remain focused on long-term execution, building a world-class data center region in the Dakotas with multiple hyperscalers while expanding into other strategic locations. Every new campus is intended to create one of the most valuable annuity streams available, a 15- to 30-year revenue stream backed by some of the strongest credits in the world. We remain confident in our ability to exceed our long-term goal of
HPC Hosting Update
Our HPC Hosting Business designs, builds, and operates next-generation data centers, providing massive computing power to support HPC applications in a cost-effective model.
Operations commenced at our first HPC data center at Polaris Forge 1 with 100 MW of capacity in the previous quarter. A second 150 MW HPC data center is under construction at the same campus and is expected to come online in calendar 2026, while a third 150 MW facility is anticipated in calendar 2027.
On
As noted above, during the quarter we also broke ground on
Revenue from our HPC Hosting business totaled
Data Center Hosting Update
Applied Digital’s Data Center Hosting Business operates data centers to provide energized space to Bitcoin/crypto mining customers. As of
During the three months ended
We are very pleased with our Data Center Hosting Business, which generated
Cloud Services Business Update
On
The proposed Business Combination is subject to the receipt of customary regulatory approvals and satisfaction of closing conditions and is expected to close in the fourth fiscal quarter of 2026.
As Management’s plan for the Cloud Services Business changed in connection with the execution of the definitive agreements for the Business Combination, the Cloud Services Business no longer qualifies as held for sale and discontinued operations. As such, for all periods presented herein, the assets and liabilities associated with the Cloud Services Business have been reclassified on the condensed consolidated balance sheet back to their respective financial statement lines and the results of operations recast as continuing operations on the condensed consolidated statements of operations.
We consider the Data Center Hosting Business and the HPC Hosting Business to represent our core operations for long-run strategic and performance evaluation purposes as we evolve into a pure-play data center platform moving forward. Accordingly, we excluded the results of the Cloud Services Business in our Non-GAAP results presented herein. See “Reconciliation of GAAP to Non-GAAP Measures.”
Financial Results from Operations for Fiscal Third Quarter 2026
Operating Results
Total revenues in the fiscal third quarter 2026 were
Cost of revenues in the fiscal third quarter 2026 were
Selling, general and administrative expenses in the fiscal third quarter 2026 were
Loss on classification of held for sale was
Interest (income) expense, net in the fiscal third quarter 2026 was interest income, net of
Gain on change in fair value of derivatives was
Gain on change in fair value of investment was
Net loss attributable to common stockholders for the fiscal third quarter 2026 was
Adjusted revenue, a non-GAAP financial measure, was
Adjusted net income, a non-GAAP financial measure, was
Adjusted EBITDA, a non-GAAP financial measure, was
Balance Sheet
As of
Conference Call
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About
Forward-Looking Statements
This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position, business strategy and objectives and future financing plans. These statements use words, and variations of words, such as "intend," “will,” “continue,” “build,” “future,” “increase,” “drive,” “believe,” “look,” “ahead,” “confident,” “deliver,” “outlook,” “expect,” “project” and “predict.” Other examples of forward-looking statements may include, but are not limited to, (i) statements that reflect perspectives and expectations regarding lease agreements and any current or prospective data center campus development; (ii) statements about the high-performance computing (HPC) industry; (iii) statements of Company plans and objectives, including the Company’s evolving business model, or estimates or predictions of actions by suppliers; (iv) statements of future economic performance; (v) statements of assumptions underlying other statements and statements about the Company or its business; (vi) the Company’s plans to obtain future project financing; (vii) statements regarding the closing of, the proposed Business Combination; (viii) statements regarding the business to be created by the proposed Business Combination, including the anticipated benefits of ChronoScale’s accelerated compute platform; (ix) statements regarding the combined business and (x) statements regarding the proposed Business Combination enabling both the cloud compute and data center businesses’ ability to scale independently and enhancing shareholder value. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections. These risks, uncertainties, and other factors include, among others: our ability to complete construction of our data center campuses as planned; the lead time of customer acquisition and leasing decisions and related internal approval processes; changes to artificial intelligence and HPC infrastructure needs and their impact on future plans; costs related to the HPC operations and strategy; our ability to timely deliver any services required in connection with completion of installation under the lease agreements; our ability to raise additional capital to fund the ongoing datacenter construction and operations; our ability to obtain financing of datacenter leases on acceptable financing terms, or at all; our dependence on principal customers, including our ability to execute and perform our obligations under our leases with key customers, including without limitation, the datacenter leases with CoreWeave and at our Polaris Forge 2 campus and future tenants; our ability to timely and successfully build new hosting facilities with the appropriate contractual margins and efficiencies; power or other supply disruptions and equipment failures; the inability to comply with regulations, developments and changes in regulations; cash flow and access to capital; availability of financing to continue to grow our business; decline in demand for our products and services; maintenance of third party relationships; conditions in the debt and equity capital markets; and, with respect to the proposed Business Combination - our ability to close the proposed Business Combination, including due to possible delays in receipt of regulatory approvals, difficulties and delays in integrating the combined business resulting from the proposed Business Combination, higher than anticipated transaction costs, our ability to realize the contemplated financial, business or strategic benefits associated with the proposed Business Combination. A further list and description of these risks, uncertainties and other factors can be found in the Company’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, including in the sections captioned “Forward-Looking Statements” and “Risk Factors,” and in the Company’s subsequent filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, on the Company’s website (www.applieddigital.com) under “Investors,” or on request from the Company. Information in this Current Report on Form 8-K is as of the dates and time periods indicated herein, and the Company does not undertake to update any of the information contained in these materials, except as required by law.
Use and Reconciliation of Non-GAAP Financial Measures
To supplement our unaudited condensed consolidated financial statements presented under GAAP, we are presenting certain non-GAAP financial measures. We are providing these non-GAAP financial measures to disclose additional information to facilitate the comparison of past and present operations by providing perspective on results absent one-time or significant non-cash items. We utilize these measures in the business planning process to understand expected operating performance and to evaluate results against those expectations. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our core business operating results regarding factors and trends affecting our business and provide a reasonable basis for comparing our ongoing results of operations. Management considers its Data Center Hosting Business and its HPC Hosting Business to be its core operations for long-run strategic and performance evaluation purposes. Accordingly, these non-GAAP financial measures exclude the results of our Cloud Services Business. The Cloud Services Business is included in our consolidated financial statements and results of continuing operations. Due to its strategic role relative to the Company’s core business, Management believes the Cloud Services Business results may obscure underlying trends in the performance of core operations when included in certain non-GAAP measures.
These non-GAAP financial measures are provided as supplemental measures to our performance measures calculated in accordance with GAAP and therefore, are not intended to be considered in isolation or as a substitute for comparable GAAP measures. Excluding the results of the Cloud Services Business in our non-GAAP financial measures removes revenues and expenses that are part of the Company’s consolidated results and continuing operations and should not be viewed as measures or reflections of liquidity or profitability in accordance with
Adjusted Revenue
“Adjusted revenue” is a non-GAAP financial measure that represents revenue excluding the Cloud Services Business. Adjusted revenue is Total Revenue excluding Total Revenue from the Cloud Services Business.
Adjusted Operating Income, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per Diluted Share
“Adjusted operating income” and “Adjusted net income (loss)” are non-GAAP financial measures that represent operating income (loss) and net income (loss) from operations excluding the Cloud Services Business, respectively. Adjusted operating income (loss) is Operating income (loss) excluding operating income (loss) from the Cloud Services Business, and stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, (gain) loss on abandonment of assets, gain on classification of held for sale, accelerated depreciation and amortization, restructuring expenses and other non-recurring expenses that Management believes are not representative of our expected ongoing costs. Adjusted net income (loss) is Adjusted operating income further adjusted for interest expense directly attributable to the Cloud Services Business, gain on change in fair value of derivative, gain on change in fair value of investment, loss on change in fair value of warrants, loss on conversion of debt, loss on change in fair value of debt, loss on extinguishment of related party debt and interest expense on convertible debt. We define “Adjusted net income (loss) per diluted share” as Adjusted net income (loss) divided by weighted average diluted share count.
EBITDA and Adjusted EBITDA
“EBITDA” is defined as earnings before interest expense, net, income tax expense, and depreciation and amortization and excluding results of the Cloud Services Business. “Adjusted EBITDA” also excludes results of the Cloud Services Business and is defined as EBITDA adjusted for stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, gain on classification of held for sale, gain on change in fair value of derivative, gain on change in fair value of investment, (gain) loss on abandonment of assets, loss on conversion of debt, loss on change in fair value of debt, loss on change in fair value of warrants, loss on extinguishment of related party debt, restructuring expenses and other non-recurring expenses that Management believes are not representative of our expected ongoing costs.
| Investor Relations Contacts | Media Contact |
| JSA ( | |
| (949) 574-3860 | (856) 264-7827 |
| APLD@gateway-grp.com | jsa_applied@jsa.net |
| APPLIED DIGITAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share and par value data) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,730,440 | $ | 43,950 | ||||
| Restricted cash | 198,423 | 72,368 | ||||||
| Accounts receivable | 20,753 | 6,830 | ||||||
| Prepaid expenses and other current assets | 478,705 | 9,652 | ||||||
| Total current assets | 2,428,321 | 132,800 | ||||||
| Property and equipment, net | 3,011,751 | 1,252,287 | ||||||
| Operating lease right of use assets, net | 77,457 | 92,335 | ||||||
| Finance lease right of use assets, net | 135,581 | 213,315 | ||||||
| Other assets | 593,708 | 179,353 | ||||||
| TOTAL ASSETS | $ | 6,246,818 | $ | 1,870,090 | ||||
| LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 377,429 | $ | 251,491 | ||||
| Accrued liabilities | 376,985 | 30,121 | ||||||
| Current portion of operating lease liability | 18,101 | 16,785 | ||||||
| Current portion of finance lease liability | 51,151 | 147,040 | ||||||
| Current portion of debt | 98,174 | 10,331 | ||||||
| Customer deposits | 16,752 | 16,125 | ||||||
| Deferred revenue | 12,550 | 3,594 | ||||||
| Due to customer | 2,658 | 4,807 | ||||||
| Other current liabilities | 65,518 | 19,431 | ||||||
| Total current liabilities | 1,019,318 | 499,725 | ||||||
| Long-term portion of operating lease liability | 45,051 | 58,800 | ||||||
| Long-term portion of finance lease liability | 20,502 | 15 | ||||||
| Long-term debt | 2,594,501 | 677,825 | ||||||
| Total liabilities | 3,679,372 | 1,236,365 | ||||||
| Commitments and contingencies (Note 14) | ||||||||
| Temporary equity | ||||||||
| Series E preferred stock, | 6,432 | 6,932 | ||||||
| Series E-1 preferred stock, | 56,728 | 57,011 | ||||||
| Series G preferred stock, | — | 72,094 | ||||||
| Redeemable noncontrolling interest | 923,065 | — | ||||||
| Stockholders' equity: | ||||||||
| Common stock, | 293 | 230 | ||||||
| (52,737 | ) | (31,400 | ) | |||||
| Additional paid in capital | 2,216,722 | 1,009,913 | ||||||
| Accumulated deficit | (583,057 | ) | (481,055 | ) | ||||
| Total stockholders’ equity attributable to | 1,581,221 | 497,688 | ||||||
| TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY | $ | 6,246,818 | $ | 1,870,090 | ||||
| APPLIED DIGITAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| Revenue: | |||||||||||||||||
| Revenue | $ | 126,637 | $ | 52,921 | $ | 352,562 | $ | 175,567 | |||||||||
| Related party revenue | — | — | — | 1,926 | |||||||||||||
| Total revenue | 126,637 | 52,921 | 352,562 | 177,493 | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Cost of revenues (1) | 72,832 | 49,141 | 235,398 | 162,562 | |||||||||||||
| Selling, general and administrative (2) (3) | 79,723 | 22,723 | 166,814 | 66,852 | |||||||||||||
| Loss (gain) on classification of held for sale (4) | 59,650 | — | 59,650 | (24,616 | ) | ||||||||||||
| Loss on abandonment of assets | 99 | — | 2,343 | 769 | |||||||||||||
| Total costs and expenses | 212,304 | 71,864 | 464,205 | 205,567 | |||||||||||||
| Operating loss | (85,667 | ) | (18,943 | ) | (111,643 | ) | (28,074 | ) | |||||||||
| Interest (income) expense, net | (2,387 | ) | 8,897 | 18,883 | 23,687 | ||||||||||||
| Gain on change in fair value of derivatives | (9,417 | ) | — | (22,543 | ) | — | |||||||||||
| Gain on change in fair value of investment (5) | (3,305 | ) | — | (6,072 | ) | — | |||||||||||
| Loss on conversion of debt | — | — | — | 33,612 | |||||||||||||
| Loss on change in fair value of debt | — | — | — | 85,439 | |||||||||||||
| Loss on extinguishment of debt | — | 1,177 | — | 1,177 | |||||||||||||
| Loss on change in fair value of warrants | — | 6,421 | — | 6,421 | |||||||||||||
| Net loss before income tax expense | (70,558 | ) | (35,438 | ) | (101,911 | ) | (178,410 | ) | |||||||||
| Income tax (benefit) expense | (2 | ) | 117 | 21 | 118 | ||||||||||||
| Net loss | (70,556 | ) | (35,555 | ) | (101,932 | ) | (178,528 | ) | |||||||||
| Net loss attributable to redeemable noncontrolling interest | (28,747 | ) | — | (31,910 | ) | — | |||||||||||
| Preferred dividends | (1,558 | ) | (540 | ) | (4,705 | ) | (1,213 | ) | |||||||||
| Net loss attributable to common stockholders | $ | (100,861 | ) | $ | (36,095 | ) | $ | (138,547 | ) | $ | (179,741 | ) | |||||
| Basic and diluted net loss per share attributable to common stockholders | $ | (0.36 | ) | $ | (0.16 | ) | $ | (0.51 | ) | $ | (0.93 | ) | |||||
| Basic and diluted weighted average number of shares outstanding | 281,982,553 | 222,454,578 | 271,670,830 | 193,405,721 | |||||||||||||
(1) Includes depreciation and amortization of (2) Includes depreciation and amortization of (3) Includes related party selling, general and administrative expense of (4) Includes (5) Includes related party gain on change in fair value of investment of | |||||||||||||||||
| APPLIED DIGITAL CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) | ||||||||
| Nine Months Ended | ||||||||
| CASH FLOW FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (101,932 | ) | $ | (178,528 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 33,552 | 79,540 | ||||||
| Stock-based compensation | 94,741 | 10,233 | ||||||
| Lease expense | 16,310 | 23,911 | ||||||
| Gain on change in fair value of derivatives | (22,543 | ) | — | |||||
| Gain on change in fair value of investment | (6,072 | ) | — | |||||
| Loss on extinguishment of related party debt | — | 1,177 | ||||||
| Non-cash interest expense | 74,989 | 11,515 | ||||||
| Loss (gain) on classification of held for sale | 59,650 | (24,616 | ) | |||||
| Loss on conversion of debt | — | 33,612 | ||||||
| Loss on change in fair value of debt | — | 85,439 | ||||||
| Loss on abandonment of assets | 2,343 | 769 | ||||||
| Loss on change in fair value of warrants issued | — | 6,421 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (13,923 | ) | (10,722 | ) | ||||
| Prepaid expenses and other current assets | (88,229 | ) | (4,072 | ) | ||||
| Customer deposits | 627 | 2,306 | ||||||
| Related party customer deposits | — | (1,549 | ) | |||||
| Deferred revenue | 8,956 | (32,795 | ) | |||||
| Related party deferred revenue | — | (1,692 | ) | |||||
| Accounts payable | (171,583 | ) | (88,378 | ) | ||||
| Accrued liabilities | 64,613 | (12,319 | ) | |||||
| Due to customer | (2,149 | ) | (8,195 | ) | ||||
| Lease assets and liabilities | 14,773 | (13,557 | ) | |||||
| Other assets | (6,983 | ) | (757 | ) | ||||
| CASH FLOW USED IN OPERATING ACTIVITIES | (42,860 | ) | (122,257 | ) | ||||
| CASH FLOW FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment and other assets | (1,576,697 | ) | (483,340 | ) | ||||
| Proceeds from satisfaction of contingency on sale of assets | — | 25,000 | ||||||
| Finance lease prepayments | — | (4,840 | ) | |||||
| Investment in companies | (17,000 | ) | (2,498 | ) | ||||
| CASH FLOW USED IN INVESTING ACTIVITIES | (1,593,697 | ) | (465,678 | ) | ||||
| CASH FLOW FROM FINANCING ACTIVITIES | ||||||||
| Repayment of finance leases | (94,455 | ) | (93,992 | ) | ||||
| Borrowings of long-term debt | 2,504,863 | 650,000 | ||||||
| Repayments of long-term debt | (432,536 | ) | (290,535 | ) | ||||
| Payment of deferred financing costs | (81,168 | ) | (42,903 | ) | ||||
| Tax payments for restricted stock upon vesting | (24,838 | ) | (2,970 | ) | ||||
| Noncontrolling interest contributions | 900,000 | — | ||||||
| Noncontrolling interest issuance costs | (62,018 | ) | — | |||||
| Proceeds from issuance of common stock | 196,366 | 191,590 | ||||||
| Common stock issuance costs | (5,949 | ) | (10,253 | ) | ||||
| Proceeds from issuance of preferred stock | 739,998 | 100,489 | ||||||
| Preferred stock issuance costs | (11,868 | ) | (8,914 | ) | ||||
| Redemption of preferred stock | (793 | ) | — | |||||
| Dividends issued on preferred stock | (4,705 | ) | (1,213 | ) | ||||
| Warrant issuance costs | (8,250 | ) | — | |||||
| Exercise of warrants | 6,265 | — | ||||||
| Proceeds from issuance of SAFE agreement included in long-term debt | — | 12,000 | ||||||
| Repurchase of shares | — | (31,342 | ) | |||||
| Proceeds from convertible notes | — | 450,000 | ||||||
| Purchase of capped call options | — | (51,750 | ) | |||||
| Purchase of prepaid forward contract | — | (52,736 | ) | |||||
| CASH FLOW PROVIDED BY FINANCING ACTIVITIES | 3,620,912 | 817,471 | ||||||
| Nine Months Ended | ||||||||
| NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 1,984,355 | 229,536 | ||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD | 123,318 | 31,688 | ||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | 2,107,673 | 261,224 | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | 93,455 | $ | 54,855 | ||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES | ||||||||
| Operating right-of-use assets obtained by lease obligation | — | 20,280 | ||||||
| Finance right-of-use assets obtained by lease obligation | $ | 25,214 | $ | 106,754 | ||||
| Property and equipment in accounts payable and accrued liabilities | $ | (564,230 | ) | $ | 142,787 | |||
| Conversion of debt to common stock | $ | — | $ | 104,945 | ||||
| Consideration for guarantee of an affiliate's obligations | $ | 2,000 | $ | — | ||||
| Conversion of preferred stock to common stock | $ | 800,214 | $ | 53,191 | ||||
| Cashless exercise of warrants | $ | 1 | $ | 5 | ||||
| Issuance of warrants, at fair value | $ | 104,705 | $ | 50,586 | ||||
| Non-cash dividends paid in-kind | $ | (31,980 | ) | $ | — | |||
| APPLIED DIGITAL CORPORATION AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures (Unaudited) (In thousands, except percentage data) | |||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| Adjusted revenue | |||||||||||||||||
| Total Revenue (GAAP) | $ | 126,637 | $ | 52,921 | $ | 352,562 | $ | 177,493 | |||||||||
| Less: Cloud Services Business revenue | (18,087 | ) | (17,754 | ) | (53,207 | ) | (71,313 | ) | |||||||||
| Adjusted revenue (Non-GAAP) | $ | 108,550 | $ | 35,167 | $ | 299,355 | $ | 106,180 | |||||||||
| Adjusted operating income | |||||||||||||||||
| Operating loss (GAAP) | $ | (85,667 | ) | $ | (18,943 | ) | $ | (111,643 | ) | $ | (28,074 | ) | |||||
| Operating loss from the Cloud Services Business | 52,194 | 10,308 | 24,919 | 31,928 | |||||||||||||
| Stock-based compensation | 48,946 | 9,035 | 91,444 | 10,935 | |||||||||||||
| Non-recurring repair expenses (1) | 107 | 3 | 280 | 173 | |||||||||||||
| Diligence, acquisition, disposition and integration expenses (2) | 6,145 | 992 | 20,904 | 12,360 | |||||||||||||
| Litigation expenses (3) | 320 | 174 | 872 | 1,341 | |||||||||||||
| (Gain) loss on abandonment of assets | (7 | ) | — | 1,744 | 769 | ||||||||||||
| Gain on classification of held for sale | — | — | — | (24,616 | ) | ||||||||||||
| Accelerated depreciation and amortization (4) | — | — | — | 45 | |||||||||||||
| Restructuring expenses (5) | 358 | 43 | 1,093 | 43 | |||||||||||||
| Other non-recurring expenses (6) | 3,219 | 271 | 4,001 | 558 | |||||||||||||
| Adjusted operating income (Non-GAAP) | $ | 25,615 | $ | 1,883 | $ | 33,614 | $ | 5,462 | |||||||||
| Adjusted operating margin | 24 | % | 5 | % | 11 | % | 5 | % | |||||||||
| Adjusted net income (loss) | |||||||||||||||||
| Net loss (GAAP) | $ | (70,556 | ) | $ | (35,555 | ) | $ | (101,932 | ) | $ | (178,528 | ) | |||||
| Operating loss from the Cloud Services Business | 52,194 | 10,308 | 24,919 | 31,928 | |||||||||||||
| Interest expense directly attributable to the Cloud Services Business | 2,058 | 4,541 | 7,897 | 13,444 | |||||||||||||
| Stock-based compensation | 48,946 | 9,035 | 91,444 | 10,935 | |||||||||||||
| Non-recurring repair expenses (1) | 107 | 3 | 280 | 173 | |||||||||||||
| Diligence, acquisition, disposition and integration expenses (2) | 6,145 | 992 | 20,904 | 12,360 | |||||||||||||
| Litigation expenses (3) | 320 | 174 | 872 | 1,341 | |||||||||||||
| (Gain) loss on abandonment of assets | (7 | ) | — | 1,744 | 769 | ||||||||||||
| Gain on classification of held for sale | — | — | — | (24,616 | ) | ||||||||||||
| Accelerated depreciation and amortization (4) | — | — | — | 45 | |||||||||||||
| Gain on change in fair value of derivative | (9,417 | ) | — | (22,543 | ) | — | |||||||||||
| Gain on change in fair value of investment | (3,305 | ) | — | (6,072 | ) | — | |||||||||||
| Loss on change in fair value of warrants | — | 6,421 | — | 6,421 | |||||||||||||
| Loss on conversion of debt | — | — | — | 33,612 | |||||||||||||
| Loss on change in fair value of debt | — | — | — | 85,439 | |||||||||||||
| Loss on extinguishment of debt | — | 1,177 | — | 1,177 | |||||||||||||
| Restructuring expenses (5) | 358 | 43 | 1,093 | 43 | |||||||||||||
| Interest expense on convertible debt (7) | 3,094 | — | — | — | |||||||||||||
| Other non-recurring expenses (6) | 3,219 | 271 | 4,001 | 558 | |||||||||||||
| Adjusted net income (loss) (Non-GAAP) | $ | 33,156 | $ | (2,590 | ) | $ | 22,607 | $ | (4,899 | ) | |||||||
| Diluted weighted average number of shares outstanding (Non-GAAP) (8) | 382,306,393 | 222,454,578 | 325,850,275 | 193,405,721 | |||||||||||||
| Adjusted net income (loss) per diluted share (Non-GAAP) | $ | 0.09 | $ | (0.01 | ) | $ | 0.07 | $ | (0.03 | ) | |||||||
| EBITDA and Adjusted EBITDA | |||||||||||||||||
| Net loss (GAAP) | $ | (70,556 | ) | $ | (35,555 | ) | $ | (101,932 | ) | $ | (178,528 | ) | |||||
| Operating loss from the Cloud Services Business | 52,194 | 10,308 | 24,919 | 31,928 | |||||||||||||
| Interest (income) expense, net | (2,387 | ) | 8,897 | 18,883 | 23,687 | ||||||||||||
| Income tax (benefit) expense | (2 | ) | 117 | 21 | 118 | ||||||||||||
| Depreciation and amortization (4) | 18,524 | 4,375 | 31,263 | 13,230 | |||||||||||||
| EBITDA (Non-GAAP) | $ | (2,227 | ) | $ | (11,858 | ) | $ | (26,846 | ) | $ | (109,565 | ) | |||||
| Stock-based compensation | 48,946 | 9,035 | 91,444 | 10,935 | |||||||||||||
| Non-recurring repair expenses (1) | 107 | 3 | 280 | 173 | |||||||||||||
| Diligence, acquisition, disposition and integration expenses (2) | 6,145 | 992 | 20,904 | 12,360 | |||||||||||||
| Litigation expenses (3) | 320 | 174 | 872 | 1,341 | |||||||||||||
| Research and development expenses (4) | — | — | — | — | |||||||||||||
| Gain on classification of held for sale | — | — | — | (24,616 | ) | ||||||||||||
| Gain on change in fair value of derivative | (9,417 | ) | — | (22,543 | ) | — | |||||||||||
| Gain on change in fair value of investment | (3,305 | ) | — | (6,072 | ) | — | |||||||||||
| (Gain) loss on abandonment of assets | (7 | ) | — | 1,744 | 769 | ||||||||||||
| Loss on conversion of debt | — | — | — | — | 33,612 | ||||||||||||
| Loss on change in fair value of debt | — | — | — | 85,439 | |||||||||||||
| Loss on change in fair value of related party debt | — | — | — | — | |||||||||||||
| Loss on change in fair value of warrants | — | 6,421 | — | 6,421 | |||||||||||||
| Loss on extinguishment of debt | — | — | — | — | |||||||||||||
| Loss on extinguishment of debt | — | 1,177 | — | 1,177 | |||||||||||||
| Loss on legal settlement | — | — | — | — | |||||||||||||
| Restructuring expenses (5) | 358 | 43 | 1,093 | 43 | |||||||||||||
| Other non-recurring expenses (6) | 3,219 | 271 | 4,001 | 558 | |||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 44,139 | $ | 6,258 | $ | 64,877 | $ | 18,647 | |||||||||
(1) Represents costs incurred for the non-recurring repair and replacement of equipment at our data center facilities. (2) Represents legal, accounting and consulting costs incurred in association with certain discrete transactions and projects. (3) Represents non-recurring litigation expense associated with our defense of class action lawsuits and legal fees related to matters with certain former employees. We do not expect to incur these expenses on a regular basis. (4) Represents the acceleration of expense related to assets that were abandoned by us due to operational failure or other reasons. Depreciation and amortization in this amount is included in Depreciation and Amortization expense within our calculation of EBITDA, and therefore is not added back as a management adjustment in our calculation of Adjusted EBITDA. (5) Represents non-recurring expenses associated with employee separations. (6) Represents expenses that are not representative of our expected ongoing costs. (7) Represents interest expense excluded from the calculation of Adjusted net income (loss) per diluted share (Non-GAAP) that would occur if the Convertible Notes had been converted into stock at the beginning of the period. This adjustment is only present in periods where its effect would be dilutive. (8) Includes shares that would be issued upon conversion of our outstanding Convertible Notes totaling 46,144,395 shares. | |||||||||||||||||
