Strong performance
Applied Digital posted better-than-expected results for its fiscal second quarter, showing how rising demand for AI infrastructure is boosting its business. The company reported revenue of $126.6 million for the quarter ended November 30. This was well above Wall Street estimates of about $88 million. After the results were announced, Applied Digital shares rose about 7% in extended trading. Investors reacted positively to the strong revenue growth and the company’s outlook for future demand. Applied Digital operates large data centers and is focusing more on facilities built to support AI and high-performance computing work.
Deals
The company said customers need large amounts of computing power to train and run AI models. This has increased demand for data centers that can handle heavy workloads. It also said this trend is helping it sign long-term deals with major technology companies. One of the largest deals includes a $5 billion lease agreement with a US-based hyperscaler for 200 megawatts of capacity at its Polaris Forge 2 campus in North Dakota. The company has now signed lease agreements with two hyperscalers across two campuses in the state. CEO Wes Cummins said the Dakotas are an attractive location for large data centers. He pointed to the region’s cool climate and access to energy as key advantages. He also said Applied Digital’s early move into the area gives it an edge over rivals.
High earnings
Applied Digital said revenue rose 250% compared with the same quarter last year. Adjusted earnings per share came in at zero, which was better than expectations of a loss. The high-performance computing hosting business led this growth. This segment generated $85 million in revenue during the quarter. It included income from tenant fit-out services and rental revenue, as the first building at the Polaris Forge 1 campus became fully operational. The data center hosting business added $41.6 million in revenue, up 15% from last year.
Business changes
The company ended the quarter with $2.3 billion in cash, cash equivalents, and restricted cash. It recently raised funds through a private debt offering and a preferred equity deal with Macquarie Asset Management. It also announced plans to spin off its cloud services business and merge it with EKSO Bionics. The new company will be called ChronoScale and will focus on AI services. Applied Digital is expected to keep a majority stake as it moves toward becoming a data center-focused real estate investment trust.
