Applied Digital says it has signed $36bn of contracted lease revenue, and it lost $249m in the year it signed most of it
Read the two biggest numbers in this release together, because they are describing different things.
Applied Digital Corporation, which builds data centres for high-performance and artificial intelligence computing, closed its fiscal year on May 31 and reported on Monday. Revenue from continuing operations was $611.3 million for the year, up 167 percent. The net loss attributable to common stockholders was $249.2 million. In the fourth quarter alone revenue was $258.7 million against roughly $51 million a year earlier, and the loss attributable to common stockholders was $110.6 million.
The other number is $36 billion. That is what the company says its executed long-term leases are worth over their initial 15-year base terms, across approximately 1,410 megawatts of contracted critical IT load at five campuses in North Dakota, Louisiana and a southern state it does not identify. If every renewal option were exercised the figure is approximately $86 billion. Almost none of that capacity exists yet. The company delivered Phase 1 of a second building at its Polaris Forge 1 campus on June 30 and puts total live capacity there at 175 megawatts.
Three of the leases came from one customer. The release says a new United States based hyperscaler with a high investment-grade rating signed for 300 megawatts at Delta Forge 1 and another 300 megawatts at Polaris Forge 3, each at approximately $7.5 billion of base-term revenue, then signed again after the quarter ended for 210 megawatts at Delta Forge 2 at approximately $5.2 billion. The company does not name it. That is roughly $20.2 billion of the $36 billion resting on a counterparty investors cannot identify from this document.
Building it is being financed with secured debt at rates that tell you how the market prices the risk. During the year a subsidiary sold $2.15 billion of 6.750 percent senior secured notes due 2031 at 98 percent of par, and after the quarter closed another subsidiary sold $1.59 billion of 7.000 percent notes due 2031 at par, repaying a $300 million bridge from Goldman Sachs. A revolving credit facility arranged by Goldman Sachs has been upsized to $430 million committed with a $120 million accordion remaining.
The quarter's cost line deserves its own sentence. Selling, general and administrative expense was $165.3 million against $41.0 million a year earlier, and the company attributes $116.8 million of that increase to stock-based compensation, driven by accelerated vesting of employee awards and grants connected to the separation of the cloud business.
That separation closed on May 5, when Applied Digital combined its cloud services business with Ekso Bionics Holdings, Inc. to form ChronoScale Holdings Corporation, now trading on Nasdaq. Applied Digital still owns about 96 percent of it, consolidates it, and excludes it from every non-GAAP figure in the release.
The oldest business is still the steadiest one. Two North Dakota sites host 286 megawatts of bitcoin mining capacity, and they produced $37.3 million of revenue and $12.5 million of segment operating profit in the quarter on $113.8 million of reported assets. Wes Cummins, the chairman and chief executive, said the company is paid for the capacity provided regardless of where the bitcoin price trades.
