8-K: Applied Digital Q2 2026 Earnings: Revenue Soars, AI Factory Advances

Applied Digital reports significant revenue growth in Q2 2026, driven by its HPC Hosting Business and progress on AI data center campuses, alongside strategic financing and a planned cloud spin-out.

Summary

• Revenues for the fiscal second quarter 2026 were $126.6 million, marking a 250% increase from the prior year comparable period.
• Net loss attributable to common stockholders was $31.2 million, a 76% improvement from the prior year's $129.0 million loss.
• Net loss attributable to common stockholders per basic and diluted share decreased by 82% to $0.11.
• Adjusted net income reached $0.1 million, compared to an adjusted net loss of $1.5 million in the prior year.
• Adjusted EBITDA increased to $20.2 million from $6.1 million in the prior year comparable period.
• Polaris Forge 1 achieved Ready-for-Service, delivering 100 MW on schedule and fully energizing the first building (ELN-02), completing the first of three contracted buildings for CoreWeave's 400 MW AI Factory campus.
• Secured an approximately 15-year lease with a U.S. based investment-grade hyperscaler for 200MW of AI and HPC capacity at the under-construction Polaris Forge 2 campus, expected to deliver approximately $5 billion in revenue.
• Completed a $2.35 billion private offering of 9.25% senior secured notes due 2030, issued at 97% of par.
• Drew an additional $562.5 million from Macquarie Asset Management under the preferred equity financing facility of up to $5.0 billion.
• Invested $15 million into, and led, a $25 million funding round for Corintis, a developer of advanced direct-to-chip liquid-cooling technology.
• Subsequent to the quarter, an additional $337.5 million was drawn from Macquarie Asset Management for Polaris Forge 1 development.
• Entered into a development loan facility with Macquarie Equipment Capital, including an initial $100 million, to fund pre-lease sourcing, planning, and construction for new AI Factory campuses.
• Announced plans to spin out Applied Digital Cloud and combine it with EKSO Bionics Holdings to form ChronoScale, with Applied Digital expected to initially own over 80% of the combined company.
• Total leased capacity now stands at 600 MW, with aggregate prospective lease revenue of approximately $16 billion before renewal options.
• The HPC Hosting Business generated $85.0 million in revenue for the quarter, including $73.0 million for tenant fit-out services and $12.0 million in rental revenues.
• The Data Center Hosting Business contributed $41.6 million in revenue, a 15% increase from the prior year, and generated $16.0 million in segment operating profit.
• As of November 30, 2025, the company held $2.3 billion in cash, cash equivalents, and restricted cash, $5.2 billion in total assets, $3.2 billion in total liabilities, and approximately $2.1 billion in temporary and stockholders' equity.

Sentiment

Score: 8

Explanation: The company demonstrated strong operational execution and significant financial growth, particularly in its HPC Hosting segment. The substantial increase in revenue, reduction in net loss, and positive adjusted net income, coupled with major new lease agreements and robust financing, indicate a very positive trajectory. While a net loss persists, the trend is highly favorable, and strategic initiatives like the cloud spin-out and investments in cooling technology position it well for future growth in the high-demand AI infrastructure market.

Positives

• Revenue increased by 250% year-over-year to $126.6 million, demonstrating significant growth.
• Net loss attributable to common stockholders decreased by 76% to $31.2 million, indicating improved profitability trends.
• Achieved positive Adjusted net income of $0.1 million, a turnaround from a loss in the prior year.
• Adjusted EBITDA grew substantially to $20.2 million from $6.1 million, reflecting strong operational performance.
• Successfully brought 100 MW of AI data center capacity online at Polaris Forge 1 on schedule, fully energizing the first building for CoreWeave.
• Secured a new approximately 15-year lease for 200 MW at Polaris Forge 2 with an investment-grade hyperscaler, projected to generate $5 billion in revenue.
• Total leased capacity reached 600 MW, with aggregate prospective lease revenue of approximately $16 billion.
• Completed a $2.35 billion senior secured private notes offering, strengthening the balance sheet.
• Drew $900 million from Macquarie Asset Management's preferred equity facility, providing significant capital for projects.
• Established a repeatable financing framework that allows retention of over 85% common equity ownership of sites with limited corporate capital commitment.
• Maintained a strong liquidity position with $2.3 billion in cash, cash equivalents, and restricted cash.
• Strategic investment in Corintis, a developer of advanced direct-to-chip liquid-cooling technology, enhances leadership in AI-optimized data centers.
• Launched 'Applied Digital Cares' initiative, demonstrating commitment to community development.
• Expects to exceed its $1 billion Net Operating Income (NOI) target within the next five years.
• Data Center Hosting Business generated a healthy $16.0 million in segment operating profit on $41.6 million in revenue.

Negatives

• Despite significant improvements, the company still reported a net loss attributable to common stockholders of $31.2 million.
• Cost of revenues increased by 344% to $100.6 million, primarily driven by expenses associated with tenant fit-out services for the HPC Hosting Business.
• Selling, general and administrative expenses rose by 119% to $57.0 million, largely due to increased stock-based compensation and professional service expenses.
• Interest expense, net, increased by 292% to $11.5 million, primarily due to higher loan activity.
• Total liabilities stand at $3.2 billion, with long-term debt at $2.6 billion, representing a substantial debt load.

Risks

• Ability to complete construction of data center campuses as planned.
• 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 HPC operations and strategy.
• Ability to timely deliver any services required in connection with completion of installation under lease agreements.
• Ability to raise additional capital to fund ongoing data center construction and operations.
• Ability to obtain financing of data center leases on acceptable financing terms, or at all.
• Dependence on principal customers, including the ability to execute and perform obligations under leases with key customers (CoreWeave and the Polaris Forge 2 hyperscaler) and future tenants.
• Ability to timely and successfully build new hosting facilities with appropriate contractual margins and efficiencies.
• Power or other supply disruptions and equipment failures.
• Inability to comply with regulations, developments, and changes in regulations.
• Cash flow and access to capital.
• Availability of financing to continue business growth.
• Decline in demand for products and services.
• Maintenance of third-party relationships.
• Conditions in the debt and equity capital markets.
• Risks related to the proposed Business Combination: ability to negotiate and execute definitive documentation, ability to close, difficulties and delays in integrating the combined business, higher than anticipated transaction costs, and ability to realize contemplated financial, business or strategic benefits.

Future Outlook

The company anticipates exceeding its $1 billion Net Operating Income (NOI) target within the next five years, driven by expected expansion from existing hyperscaler customers and new customer acquisitions across additional sites. Management is in advanced discussions with another investment-grade hyperscaler for multiple regions, including the Dakotas and select southern U.S. markets, and expects to begin construction on new sites in the near term. The proposed spin-out of Applied Digital Cloud into ChronoScale is expected to enable independent scaling for both the cloud compute and data center businesses, enhancing strategic and capital flexibility and long-term shareholder value.

Management Comments

• "Applied Digital has now signed leases with two hyperscalers across two campuses in North Dakota. CoreWeave holds 400 MW under contract at Polaris Forge 1, representing approximately $11 billion of prospective lease revenue over the term of its leases, while a U.S. based investment-grade hyperscaler holds 200 MW at Polaris Forge 2, representing approximately $5 billion of prospective lease revenue over the term of its lease. Collectively, these lease agreements bring total leased capacity to 600 MW and aggregate prospective lease revenue to approximately $16 billion before exercise of any renewal options."
• "During the quarter, Polaris Forge 1 reached Ready-for-Service, delivering 100 MW on schedule and fully energizing the first building (ELN-02). This marks the completion of the first of three contracted buildings at the campus and represents a significant milestone in the 400 MW AI Factory buildout for CoreWeave."
• "The Dakotas represent a compelling region for hyperscalers due to their cool climate and abundant energy. We believe our first-mover advantage, combined with our proven ability to execute technically complex data center construction, positions Applied Digital with a strong competitive advantage. Having already secured two hyperscalers in the region, inbound demand has increased meaningfully. We are also in advanced discussions with another investment-grade hyperscaler across multiple regions, including additional locations in the Dakotas and select southern U.S. markets. While there can be no assurance of future contracts, we believe we are well positioned to begin construction in the near term on these new sites." Wes Cummins, Chairman and Chief Executive Officer.
• "To support these multi-billion-dollar contracts, Applied Digital has established a repeatable financing framework with top-tier financial institutions. This includes a development loan facility with Macquarie Equipment Capital for pre-lease sourcing, planning, and early construction, as well as our previously announced financing arrangement with Macquarie Asset Management. Under the terms of that preferred equity arrangement, upon lease execution with an investment-grade hyperscaler, the Company may access a preferred equity financing facility with Macquarie Asset Management, subject to mutual agreement between the parties, providing up to $4.1 billion of remaining preferred equity capital for these projects. To date, the Company has drawn $900 million in funds under this preferred equity arrangement. These agreements allow Applied Digital to retain over 85% common equity ownership of each site while committing limited corporate capital, significantly reducing the need to access public capital markets."
• "In addition, a special purpose subsidiary of the Company recently completed a $2.35 billion senior secured private notes offering with Morgan Stanley as lead, further strengthening the balance sheet. As of period end, Applied Digital held approximately $2.3 billion in total cash, cash equivalents, and restricted cash, $5.2 billion in total assets, $3.2 billion in liabilities, and approximately $2.1 billion in temporary and stockholders' equity, with the majority of its debt not maturing until 2030. These figures do not include the $382.5 million in proceeds from financings that closed after the quarter ended. This strong liquidity position gives us flexibility to complete construction, bring assets online, and generate cash flow to refinance and pay down debt. We are committed to maintaining one of the strongest balance sheets in the industry while preserving access to capital and strategic partnerships, which we believe provides a meaningful competitive advantage by reducing both risk and our cost of capital." Saidal Mohmand, Chief Financial Officer.
• "AI infrastructure represents a once-in-a-generation investment opportunity, driven by hyperscaler capital expenditures that now exceed $400 billion annually and are accelerating rapidly. Applied Digital positioned itself early through strategic investments in purpose-built, next-generation data centers. Our initial hyperscaler customers are expected to expand within our existing campuses, while additional customers are anticipated across new sites. This strong demand across our campuses, together with our current expectation for additional leases leads us to expect that we will now exceed our $1 billion NOI target within the next five years."

Industry Context

Applied Digital is strategically positioned to capitalize on the rapidly expanding AI infrastructure market, driven by hyperscaler capital expenditures exceeding $400 billion annually. The company's focus on high-performance, sustainably engineered data centers in regions like the Dakotas, which offer cool climates and abundant energy, aligns with industry demands for efficient and scalable compute power. Its investment in advanced direct-to-chip liquid cooling technology (Corintis) and power infrastructure (Babcock & Wilcox) demonstrates a commitment to next-generation data center solutions. The planned spin-out of its cloud services into ChronoScale reflects a broader industry trend towards specialized, GPU-optimized platforms to meet the unique demands of AI workloads.

Comparison to Industry Standards

• Named 'Best Data Center in the Americas 2025 by Datacloud,' indicating strong industry recognition and competitive standing.
• Successfully secured multi-billion dollar, multi-year leases with investment-grade hyperscalers (CoreWeave and another unnamed hyperscaler) for 600 MW of capacity, totaling $16 billion in prospective revenue, demonstrating competitive success in attracting major industry players.
• The established financing framework, which allows the company to retain over 85% common equity ownership of each site while committing limited corporate capital, is a significant competitive advantage in the capital-intensive data center industry.
• Management's commitment to maintaining one of the strongest balance sheets in the industry, coupled with substantial liquidity, positions the company favorably against peers in terms of financial stability and access to capital.
• Proprietary waterless cooling and rapid deployment capabilities are highlighted as industry-leading efficiencies for secure, scalable compute.

Legal Proceedings

• Incurred non-recurring litigation expense associated with the defense of class action lawsuits.
• Incurred legal fees related to matters with certain former employees.

Related Party Transactions

• Related party revenue of $1.9 million for the six months ended November 30, 2024.
• Related party selling, general and administrative expense of $0.1 million for the three and six months ended November 30, 2025, and November 30, 2024, respectively.
• Related party customer deposits of $(1.5) million for the six months ended November 30, 2024.
• Related party deferred revenue of $(1.7) million for the six months ended November 30, 2024.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value through significant growth in AI infrastructure, strategic spin-out of the cloud business, and strong balance sheet management. Dilution risk from potential future capital raises is mitigated by the current financing strategy.
• Employees: Business growth and expansion imply potential for job creation and stability. Accelerated vesting of certain employee stock awards provided benefits.
• Customers (Hyperscalers): Timely delivery of 100 MW capacity and securing new large-scale leases demonstrate reliability and capacity to meet high demand for AI/HPC infrastructure.
• Suppliers/Partners: Continued construction and development projects provide ongoing opportunities for suppliers and service providers. Strategic investments (e.g., Corintis, Babcock & Wilcox) strengthen partnerships and foster innovation.
• Creditors: Strong liquidity position and a significant senior secured notes offering, with debt maturing in 2030, provide comfort regarding the company's repayment capacity and financial health.
• Local Communities: The 'Applied Digital Cares' initiative provides grants to support education, health, innovation, and local community development in operating areas.

Next Steps

• Continue development of the Polaris Forge 1 and Polaris Forge 2 campuses.
• Bring the second 150 MW HPC data center at Polaris Forge 1 online in calendar 2026.
• Achieve initial capacity at Polaris Forge 2 in calendar 2026, with full capacity online by early calendar 2027.
• Anticipate the third 150 MW facility at Polaris Forge 1 in calendar 2027.
• Advance negotiations with another investment-grade hyperscaler for new sites across multiple regions.
• Complete the proposed business combination to spin out Applied Digital Cloud and form ChronoScale.
• Host a conference call on January 7, 2026, to discuss these results.

Key Dates

Recommendation

The filing demonstrates exceptional growth in a high-demand sector (AI/HPC data centers), with revenue up 250% and a significant reduction in net loss. The company has successfully brought 100 MW of capacity online on schedule and secured a new 15-year, $5 billion lease with an investment-grade hyperscaler, bringing total prospective lease revenue to $16 billion. Strategic financing, including a $2.35 billion notes offering and substantial preferred equity draws, has significantly strengthened the balance sheet and provides ample capital for future expansion while limiting common equity dilution. The planned spin-out of the cloud business into ChronoScale is a strategic move to unlock value. The company's first-mover advantage in key regions and its ability to execute complex projects position it strongly for continued growth, making it a compelling 'strong buy' for investors seeking exposure to the accelerating AI infrastructure market.

Keywords

Data centers, AI, HPC, Colocation, Blockchain, Cloud services, Financial results, Earnings, Infrastructure, North Dakota, Hyperscaler, CoreWeave, Polaris Forge, Senior secured notes, Preferred equity, Liquid cooling, ChronoScale, EKSO Bionics