Applied Digital targets $7B in contracted revenue with long-term AI data center leases as company accelerates build-out timeline

Earnings Call Insights: Applied Digital Corporation (APLD) Q4 2025

Management View

• CEO Wesley Cummins announced the signing of transformative 15-year lease agreements with CoreWeave for 250 megawatts of IT load at the Ellendale, North Dakota campus, now named Polaris Forge 1. Cummins stated these agreements “are expected to generate approximately $7 billion in contracted revenue over the lease terms and to position Applied Digital as a leader in AI and HPC infrastructure.” Cummins highlighted that CoreWeave exercised an option for an additional 150 megawatts, bringing the total to 400 megawatts across three buildings, with the campus designed to scale up to 1 gigawatt.
• Cummins emphasized the company’s ability to reduce projected build times from 24 months to 12–14 months by refining processes, reducing SKUs by approximately 50%, and consolidating suppliers. He noted, “We believe our proprietary building design offers greater flexibility, and we’ve developed a repeatable process with minimal customization supported by a strong supply chain.”
• Applied Digital completed diligence and onboarding with two additional investment-grade North American hyperscalers, which Cummins described as a significant achievement given the complexity and length of the process. He stated, “We are currently in various stages of negotiation with several investment-grade hyperscalers for large capacity campuses other than our Polaris Forge 1 campus with 1 of those negotiations being in an advanced stage.”
• Cummins reported 286 megawatts of fully contracted data center hosting capacity for cryptocurrency customers and ongoing optimism given strong Bitcoin prices.
• Regarding the Cloud Services business, Cummins reiterated that the strategic review process is ongoing.
• CFO Mohammad Saidal L. Mohmand reported, “Since the end of the quarter, we’ve raised approximately $270 million between our ATM and Series G preferred stock. Combined with the significant equity we already have in the campus, we believe this puts us in a very strong position as we seek to wrap up the new financing package.”
• Mohmand disclosed, “Revenues for the fiscal fourth quarter of 2025 were $38 million, up 41% year-over-year over the prior comparable period.”

Outlook

• Mohmand indicated, “We expect revenue to increase significantly sequentially, beginning in the quarter ending for August 2025 due to the technical fit out of our first Polaris Forge 1 building.” He clarified that this fit-out revenue will be recognized in the current and following quarter before lease revenue begins.
• Management did not provide specific forward-looking numerical guidance but suggested a ramp in revenue due to project milestones.

Financial Results

• Mohmand reported, “Cost of revenues increased $7.5 million to $30.2 million from the prior comparable period.”
• SG&A expense rose $15 million to $28.1 million, primarily due to stock-based compensation, increased headcount, and higher software and insurance costs.
• Depreciation and amortization expense increased to $4.1 million from $3.6 million in the prior year period.
• Interest expense decreased $9.3 million to $4.5 million.
• Net loss attributable to common stockholders was $26.6 million or ($0.12) per basic and diluted share. Adjusted net loss was $7.6 million or ($0.03) per diluted share. Adjusted EBITDA was $1 million for the quarter.
• The quarter ended with $120.9 million in cash, cash equivalents and restricted cash, and $688.2 million in debt, excluding the additional $268.9 million raised post quarter.

Q&A

• Nicholas Giles, B. Riley Securities, asked about development cadence and the timing of breaking ground on new campuses. Cummins responded, “We do expect to break ground and work has already started for that on 1 additional campus and potentially 2 before the end of this year.”
• Giles inquired about financing timelines. Cummins described industry slowdowns in late August, and Mohmand added, “You also relying on professional service providers… that can always add some lag, but we have a good team as well as a great identified lead banking partner who’s both incentivized to get this done on an expedited time frame.”
• Robert Brown, Lake Street Capital Markets, asked about customer negotiations and facility completion. Cummins stated negotiations are with an advanced-stage investment-grade hyperscaler and noted, “It’s mostly fit-out, which is underway. And then the customer will bring gear on-site… and the expectation is in calendar Q4 of this year that, that will start to ramp up in kind of October through November.”
• Michael Grondahl, Northland Securities, questioned project financing terms and building timelines. Mohmand said costs are “becoming somewhat universal,” with LTCs in the 70% range, and Cummins confirmed building timelines: “the first 100… is Q4 of this year and then mid-26 for the second building, the 150 and then first half of ’27 for the following 150.”
• Darren Aftahi, ROTH, explored construction timelines and site preferences. Cummins detailed, “the building is actually going up, and it’s going up quickly and feel great about that time line… we’ve worked really hard… streamlining what we do.”
• George Sutton, Craig-Hallum, asked about business models and progress in South Dakota. Cummins clarified, “Right now, we’re very focused on full stack… we’re really sticking with the full stack colo versus powered shell,” and progress in South Dakota will likely occur in the next legislative session.

Sentiment Analysis

• Analyst tone was inquisitive, focusing on development timelines, financing details, and strategy, with a generally neutral to slightly positive sentiment as congratulations were offered and questions centered on operational progress.
• Management tone in prepared remarks was confident and detailed, emphasizing milestones and future positioning with statements such as, “We feel confident this is achievable, thanks to what we believe to be our competitive advantages… and strong relationships with hyperscalers.” In the Q&A, management maintained composure, acknowledged uncertainties in negotiation timelines, and reiterated operational confidence.
• Compared to the previous quarter, management showed increased confidence due to execution on major leases and capital raises. Analysts’ tone remained constructive but slightly more focused on execution risks and milestones.

Quarter-over-Quarter Comparison

• The current quarter featured the announcement of long-term, high-value leases with CoreWeave, whereas the previous quarter focused on financial partnerships and ongoing lease negotiations.
• Management’s tone shifted from cautious optimism about securing leases to emphasizing achievement and future growth opportunities, with a clear message on accelerating build timelines and capital position.
• Analysts moved from questions about leasing timelines and capital needs to more detailed inquiries about project execution, financing, and customer negotiations.
• Key metrics changed with a reported revenue decrease from the previous quarter but a significant year-over-year increase, and a marked reduction in interest expense.
• Strategic focus shifted more heavily toward scaling AI and HPC infrastructure, with less emphasis on the Cloud Services business than in the prior quarter.

Risks and Concerns

• Management acknowledged the complexity and length of onboarding hyperscalers, highlighting that “the onboarding internal approval and contracting process with hyperscalers is longer and more complex than originally anticipated.”
• Financing completion timelines were discussed as a risk, with dependencies on professional service providers and market slowdowns.
• Late delivery penalties for construction delays were noted as a contractual risk in lease agreements.
• Analysts raised questions on execution timelines, financing certainty, and progress in new regions.

Final Takeaway

Applied Digital’s fourth quarter was defined by the signing of landmark long-term leases with CoreWeave, positioning Polaris Forge 1 as a central hub for AI and HPC infrastructure and targeting $7 billion in contracted revenue. The company emphasized a major reduction in build times, successful onboarding of additional hyperscaler clients, and robust capital raises to support ongoing expansion. Management projects significant sequential revenue growth in the coming quarters due to project milestones and remains optimistic about the company’s ability to scale and lead in next-generation data center solutions.

Read the full Earnings Call Transcript