8-K: Applied Digital Reports Strong Q3 FY26 Results, Expands AI Data Centers

Applied Digital announced robust third fiscal quarter 2026 financial results, with revenues soaring 139% year-over-year, driven by significant expansion in its AI data center operations.

Summary

• Applied Digital reported a 139% increase in revenue for the third fiscal quarter ended February 28, 2026, reaching $126.6 million.
• The company experienced a net loss attributable to common stockholders of $100.9 million, or $0.36 per share.
• Adjusted revenue was $108.6 million, with adjusted net income of $33.2 million, or $0.09 per diluted share.
• Adjusted EBITDA reached $44.1 million, a significant increase from the prior year.
• Key operational highlights include breaking ground on Delta Forge 1, a 430 MW AI Factory campus, and securing a $100 million DevCo Facility.
• The company completed a $2.15 billion private offering of Senior Secured Notes to fund development.
• Agreements with CoreWeave were enhanced to improve credit quality for data center leases.
• The Data Center Hosting business, serving bitcoin mining, generated $13.9 million in segment operating profit.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive report, with significant revenue growth, a turnaround to adjusted profitability, and substantial progress on major development projects, despite a GAAP net loss.

Positives

• Revenue surged by 139% year-over-year to $126.6 million for the fiscal third quarter.
• Adjusted EBITDA increased significantly to $44.1 million from $6.3 million in the prior year.
• Adjusted net income turned positive at $33.2 million, compared to an adjusted net loss of $2.6 million in the prior year.
• Broke ground on Delta Forge 1, a 430 MW AI Factory campus, indicating significant expansion plans.
• Secured a $100 million DevCo Facility with Macquarie Equipment Capital for new data center projects.
• Completed a $2.15 billion private offering of Senior Secured Notes, strengthening financial position for development.
• Enhanced agreements with CoreWeave to improve credit quality and security for data center leases.
• The Data Center Hosting business continues to deliver strong results with a segment operating profit of $13.9 million.

Negatives

• Reported a GAAP net loss attributable to common stockholders of $100.9 million for the quarter.
• GAAP net loss per basic and diluted share was $0.36, a decrease from the prior year's $0.16 loss.
• Selling, general and administrative expenses increased significantly by 251% to $79.7 million, driven by growth and stock-based compensation.
• A loss on classification of held for sale of $59.7 million was recorded due to the Cloud Services Business no longer qualifying as held for sale.

Risks

• The company is subject to risks associated with completing construction of data center campuses as planned.
• Customer acquisition and leasing decisions involve lead times and internal approval processes that can impact timelines.
• Changes in artificial intelligence and HPC infrastructure needs could impact future plans.
• Costs related to HPC operations and strategy may fluctuate.
• The company depends on principal customers and its ability to execute and perform under lease agreements.
• There is a risk of power or other supply disruptions and equipment failures.
• The company may face challenges in obtaining financing for ongoing data center construction and operations on acceptable terms.
• The proposed business combination with EKSO Bionics Holdings, Inc. is subject to regulatory approvals and closing conditions, with potential for delays.

Future Outlook

The company is focused on long-term execution, building a world-class data center region in the Dakotas and expanding into other strategic locations. They aim to create valuable, long-term revenue streams backed by strong credits and remain confident in exceeding their long-term goal of $1 billion in NOI within five years. The proposed business combination of the Cloud Services business with EKSO Bionics is expected to close in the fourth fiscal quarter of 2026.

Management Comments

• Applied Digital continues to differentiate itself in the high-power AI data center industry.
• 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.
• We believe these enormous investments highlight the intense pressure on power and infrastructure and that these trends will only increase the long-term value of our high-quality, lower-cost sites like those we operate today.
• We believe that, over time, we will be able to further reduce our overall cost of debt as these data centers become stabilized, cash-flowing assets.
• We expect this progress to serve as a key inflection point that will meaningfully enhance shareholder returns.
• 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.

Industry Context

StockSavvy.ai notes that Applied Digital's results reflect the accelerating demand for high-performance AI data center capacity, with hyperscalers significantly increasing their capital expenditures. The company's focus on large-scale, high-density AI workloads positions it to capitalize on this trend, while its expansion into new markets like the southern U.S. indicates strategic growth beyond its established North Dakota presence.

Comparison to Industry Standards

• The company's revenue growth of 139% significantly outpaces the general IT infrastructure market growth.
• The development of 430 MW AI Factory campuses aligns with the trend of hyperscalers building massive data center facilities, though the scale of individual projects can vary.
• The $2.15 billion private offering of Senior Secured Notes is a substantial capital raise, indicative of the significant investment required in the data center sector, comparable to large infrastructure financing rounds.
• The company's focus on AI and HPC workloads is a direct response to industry-wide demand driven by advancements in AI model training and deployment, a key focus for major cloud providers like Microsoft, Amazon, and Google.

Management Changes

Related Party Transactions

• Related party revenue of $1.926 million for the nine months ended February 28, 2026.
• Related party selling, general and administrative expense of $0.2 million for the nine months ended February 28, 2026.
• Gain on change in fair value of investment in Base Electron (a related party) of $2.0 million for the three and nine months ended February 28, 2026.

Stakeholder Impact

• Shareholders: Potential for increased long-term value through expansion and improved profitability, offset by current GAAP net loss.
• Creditors: Strengthened financial position through a $2.15 billion note offering, potentially improving debt servicing capabilities.
• Employees: Appointment of Jason Zhang as President signals leadership focus on scaling operations.
• Customers: Continued delivery of high-performance data center capacity to meet growing AI and HPC demands.
• Communities: Applied Digital Cares initiative awarded grants supporting education, health, wellness, innovation, and public safety.

Next Steps

• Continue construction and development of AI Factory campuses, including Delta Forge 1 and Polaris Forge 2.
• Bring additional capacity online in the coming quarters.
• Complete the business combination of the Cloud Services business with EKSO Bionics Holdings, Inc. in Q4 FY26.
• Continue to focus on lowering the cost of project-level debt.
• Market four development sites in total, including Delta Forge 1, one in North Dakota, and two in unnamed states.

Key Dates

Recommendation

The company demonstrates exceptional revenue growth and a significant turnaround in adjusted profitability, driven by strategic expansion in the high-demand AI data center market. The successful capital raise and development of large-scale AI factories, coupled with positive operational updates and management's confident outlook, suggest strong future performance and shareholder value creation.

Keywords

Applied Digital, APLD, Data Centers, AI Factory, HPC Hosting, Cloud Services, Nasdaq, Earnings