Earnings Call Insights: Applied Digital Corporation (APLD) Q1 2026
Management View
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CEO Wesley Cummins began by highlighting the company’s expanding role in AI and high-performance computing infrastructure, stating, “This quarter, we expanded our long-term lease agreements with CoreWeave, a publicly traded AI hyperscaler. Previously, we had 250 megawatts under contract at our Ellendale, North Dakota campus, Polaris Forge 1. That agreement represents approximately $7 billion in contracted revenue over 15 years. CoreWeave has since exercised its option and our leases now cover the full 400 megawatts of capacity currently under construction at Polaris Forge 1, increasing the total contract value to approximately $11 billion.”
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Cummins announced that Applied Digital broke ground on Polaris Forge 2, a new campus near Harwood, North Dakota, with initial plans for 300 megawatts and the potential to scale to 1 gigawatt. The initial development cost is projected at $3 billion, and the company is in discussions with multiple hyperscalers to support expansion.
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Cummins emphasized speed, reliability, and readiness as critical differentiators, referencing industry-wide investment and the company’s early move into next-generation data center design.
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Cummins noted, “We have now scaled to develop multiple campuses in parallel. This has resulted in us now having 700 megawatts currently under construction.”
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CFO Mohammad Saidal Mohmand reported, “We secured an initial $112.5 million draw from a $5 billion preferred equity facility with Macquarie Asset Management to advance construction of Polaris Forge 1. This structure is designed to fully finance the build-out and materially reduce future equity requirements across our platform.”
Outlook
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Management indicated that the company expects continued revenue ramp as the CoreWeave fit-out progresses, with full lease income recognition for the first 100-megawatt building anticipated toward the end of the calendar year.
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Cummins stated, “We believe that a hyperscaler lease for Polaris Forge 2 would be a significant milestone for Applied Digital and the State of North Dakota. We think the 2 anchor customers under multi-billion long-term contracts would be a meaningful step toward reaching our low strengthening our position in the market and also establishing the region as a major hub for hyperscale infrastructure.”
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The company reasserted its goal of reaching a $1 billion NOI run rate within 5 years, supported by accelerating demand and long-term contracts.
Financial Results
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CFO Mohmand stated, “Revenues for the first fiscal quarter of fiscal ’26 were $64.2 million, up 84% from $34.8 million in the fiscal first quarter of 2025. The increase was primarily due to the $26.3 million of revenue generated from the tenant fit-out services associated with our HPC Hosting Business.”
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Cost of revenues was $55.6 million, with approximately $25 million linked to the tenant fit-out services. SG&A was $29.2 million, driven by a $16.6 million increase in stock-based compensation and $3.9 million in personnel expenses, partly offset by decreased professional service costs.
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The company reported a net loss of $27.8 million or $0.11 per share, with an adjusted net loss of $7.6 million or $0.03 per share, and adjusted EBITDA of $0.5 million.
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The balance sheet showed $114.1 million in cash, cash equivalents, and restricted cash, with $687.3 million in debt, not including $362.5 million in post-quarter financing proceeds.
Q&A
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Nick Giles, B. Riley Securities: Asked about project financing structure and timing. CFO Mohmand responded that both buildings at Polaris Forge 1 are included in the financing process and described it as one of the largest CoreWeave tenant-backed financings in the market, aiming for terms similar or more optimal than competitor offerings.
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Giles: Inquired about Polaris Forge 2’s power infrastructure. Cummins said 280 megawatts of initial utility power is in place and timelines for online dates remain as previously communicated.
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Robert Brown, Lake Street Capital: Asked about new hyperscaler negotiations and expansion timelines. Cummins explained that negotiations are now a constant, with multiple campuses in progress and a 4-gigawatt active pipeline.
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Brown: Questioned limiting factors for gigawatt-scale at campuses. Cummins responded that ramping depends on transmission infrastructure and grid generation, with careful matching to construction pace.
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Mike Grondahl, Northland Capital: Asked about the strategic impact of $5 billion Macquarie financing. Cummins explained the facility enables scaling, minimizes dilution, and supports $20-$25 billion in total capital needs.
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Grondahl: Inquired about project financing terms. Mohmand cited LTCs around 70% and pricing between 400-450 basis points over SOFR, with a bifurcated structure for mortgage and mezzanine portions.
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Darren Aftahi, ROTH Capital: Sought details on active pipeline definition and human capital scaling. Cummins described the active pipeline as projects likely to move to construction within 6-12 months and highlighted investments in supply chain and labor pool to enable parallel campus development.
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Logan Lillehaug, Craig-Hallum: Asked about lease economics at Harwood and expansion capability. Cummins confirmed similar economic spreads to Ellendale, with lower capital costs for investment-grade tenants.
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Michael Donovan, Compass Point: Questioned supply chain conditions. Cummins said Applied Digital secured manufacturing capacity early, mitigating inflation and lead time pressures seen elsewhere in the industry.
Sentiment Analysis
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Analysts were focused on financing progress, campus expansion, contract economics, and supply chain, with a neutral to slightly positive tone as they probed for details on execution and scalability.
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Management maintained a confident tone, emphasizing the company’s preparedness, strategic partnerships, and rapid scaling ability. Cummins asserted, “We remain confident in our strategy, our partnerships and our ability to lead this next chapter of digital infrastructure.”
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Compared to the previous quarter, both management and analysts exhibited increased confidence, with management more direct about long-term targets and expansion plans, while analysts pressed for specifics on execution and capital strategy.
Quarter-over-Quarter Comparison
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Guidance language shifted from directional to more explicit targets, with management now openly reiterating the $1 billion NOI run rate goal within 5 years.
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Strategic focus has advanced from initial contract wins to scaling multiple campuses and leveraging major financing arrangements.
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Analysts’ questions evolved from project timelines and customer onboarding to deeper inquiries on financing structures and resource scalability.
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Key metric changes include a substantial revenue increase driven by tenant fit-out services and a notable rise in SG&A due to stock-based compensation.
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Management’s tone became more assertive around growth prospects, while analysts maintained a constructive but increasingly detailed approach.
Risks and Concerns
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Management pointed to power availability shifting from a primary to a secondary concern as construction and scaling become the primary focus.
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Supply chain risks were addressed through early procurement and manufacturing partnerships, with Cummins noting, “We did this some time ago where we’ve landed with these key partners.”
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Analysts raised questions about human capital, supply chain lead times, and the status of legislative incentives in South Dakota, to which management responded with mitigation strategies and ongoing negotiations.
Final Takeaway
Applied Digital underscored its transformation into a key enabler of AI and high-performance computing infrastructure, with long-term hyperscaler contracts and major financing secured to fuel rapid expansion. The company reaffirmed its $1 billion NOI run rate target within five years, highlighted robust demand, and outlined plans to scale multiple campuses in parallel, supported by strategic partnerships and supply chain investments. Management’s tone reflected increased confidence in execution capabilities and market positioning as the company moves to capture a greater share of the accelerating AI infrastructure build-out.