Applied Digital (APLD): Q1 FY2027 Earnings Analysis

Results reported October 7, 2026 (after market close) | NASDAQ: APLD | AI data center infrastructure

The Quick Take

Applied Digital blew past expectations on the top line: revenue of $341.9M (up 322% year over year) against a consensus of roughly $111M to $135M. Adjusted EBITDA hit $64.4M, up from $0.5M, and adjusted EPS was -$0.01 versus about -$0.30 expected. The quality of the revenue is the catch: $183.5M came from one-time tenant fit-out services that are passed through at low margin. GAAP net loss from continuing operations was $221M (-$0.76 per share), driven by stock compensation and a non-cash investment loss. The story is the $36B contracted backlog and the pace of capacity build, not this quarter’s earnings. Shares closed down about 6% at $23.81 and rose roughly 4% after hours to around $24.79.

Results

Metric	Q1 FY2027	Change / vs. expectations
Total revenue	$341.9M	+322% YoY; consensus about $111M to $135M
Adjusted revenue (ex-ChronoScale)	$300.4M	vs. $64.2M a year ago
Adjusted EBITDA	$64.4M	vs. $0.5M a year ago; consensus about $40M
Adjusted EPS	-$0.01	consensus about -$0.30
GAAP EPS (continuing)	-$0.76	Net loss $221.0M
HPC Hosting net operating income	$58.8M	89% margin
Operating cash flow	+$63.9M	vs. -$81.5M a year ago
Capital expenditure	$2.07B	vs. $250M a year ago

Segment Detail

• HPC Hosting: $262.6M, made up of $183.5M tenant fit-out services, $65.8M base rent and $13.3M tenant recoveries. Segment operating profit was $33.4M.
• Data Center Hosting (crypto-mining tenants): $37.8M, flat year over year, with $13.3M of operating profit.
• ChronoScale: $41.5M, excluded from non-GAAP figures. A 50 MW AI compute deployment with Microsoft was announced.
• Why GAAP is so much worse than adjusted: about $65M of stock-based compensation and a $67.5M non-cash loss on Babcock & Wilcox warrants and stock.

Capacity, Backlog and Pipeline

• Live capacity: 250 MW at Polaris Forge 1 after Building 2 phases delivered on July 1 and October 1, plus fully utilized hosting sites. Building 3 (150 MW) is under construction.
• Contracted leases: about 1.41 GW of critical IT load across five campuses and three states, worth about $36B in base-term revenue (about $86B with renewal options).
• Tenants: CoreWeave at Polaris Forge 1 and investment-grade hyperscalers at the other campuses, including a 210 MW, 15-year lease at Delta Forge 2 (about $5.2B).
• Targets: over 600 MW placed in service in the next 12 months (vs. 250 MW in the prior 12), about 250 MW of new expansion leases by end of 2026 at higher pricing, about 300 MW delivered in North Dakota by year-end, and a 3.5 to 4 GW portfolio by 2030. ChronoScale is targeting $1B of annual recurring revenue in 2027.
• No formal revenue or earnings guidance was given.

Financing and Balance Sheet

• Issued $1.59B of 7.000% senior secured notes due 2031, versus a 9.25% coupon on an earlier Polaris Forge 1 tranche, a meaningful drop in funding cost.
• Cash of about $2.9B plus restricted cash, against about $6.4B of total debt. Over 80% of principal matures in fiscal 2031 or later. The revolver was upsized to $430M.
• Next campuses are planned with Macquarie preferred equity followed by project-level debt.
• New initiatives: a Finland agreement for up to about 1 GW of potential power and a roughly 1,200 MW natural gas power purchase agreement in North Dakota.

Why the Beat Is Lower Quality

Most of the revenue upside is fit-out pass-through, which inflates sales without matching profit. Recurring base rent was $65.8M, which is the better indicator of earning power today. Free cash flow remains deeply negative because the company is spending about $2B a quarter on construction. The beat shows execution speed, not yet profitability.

Risks

• Heavy dependence on debt and equity markets to fund roughly $2B per quarter of capex.
• Tenant concentration (CoreWeave and a few hyperscalers) and dependence on sustained AI spending.
• Construction and delivery execution, which management calls the real constraint.
• Persistent GAAP losses, high stock compensation and possible dilution from preferred equity.
• Local permitting, power and community pushback on data centers; added complexity from the Finland expansion.
• Extreme volatility: the stock is far below its 52-week high of $50.73 and moved 6% on the day.

Recommendation: SPECULATIVE BUY (small position only)

The $36B backlog with investment-grade tenants, falling financing costs and a clear build schedule make this one of the more tangible AI infrastructure stories. But the valuation already prices in flawless execution, cash burn is massive, and revenue includes low-quality fit-out income. Suitable only for investors who accept high volatility, sized small, and ideally added to on pullbacks or after proof that new leases land at the targeted higher pricing and that on-time delivery continues. Conservative investors should wait for sustained positive free cash flow.

This is educational analysis, not personalized investment advice. Do your own research before investing.

Sources: Applied Digital fiscal Q1 2027 earnings release (GlobeNewswire, October 7, 2026); Q1 FY2027 earnings call transcript summary (Investing.com); StockStory/FinancialContent consensus comparison; Benzinga earnings calendar.