To The Moon

‌$APPLIED DIGITAL CORP(APLD)$  ‌

Key Fundamental Facts and Figures from Applied Digital’s Fiscal Second Quarter 2025 Report

Revenue

Total Revenue (Q2 FY25): $63.9 million, up from $42.2 million in Q2 FY24 (51% year-over-year growth).

Six-Month Revenue (H1 FY25): $124.6 million, compared to $78.5 million for H1 FY24 (58.7% growth).

Revenue Concentration: Customer A accounted for 49% of revenue in the six months ended November 30, 2024.

Profitability

Net Loss (Q2 FY25): $(138.7) million, significantly higher than $(10.5) million in Q2 FY24.

Six-Month Net Loss (H1 FY25): $(143.0) million, compared to $(22.4) million in H1 FY24.

Operating Loss (Q2 FY25): $(18.6) million, compared to $(7.9) million in Q2 FY24.

Costs and Expenses

Cost of Revenue (Q2 FY25): $52.4 million, up from $29.8 million in Q2 FY24, reflecting operational scaling and higher hosting expenses.

Selling, General, and Administrative Expenses (Q2 FY25): $29.8 million, compared to $20.3 million in Q2 FY24.

Liquidity and Financial Position

Cash and Cash Equivalents (November 30, 2024): $286.2 million, a sharp increase from $3.3 million on May 31, 2024.

Long-Term Debt (November 30, 2024): $468.2 million, up from $79.5 million on May 31, 2024, reflecting new financing activities.

Working Capital Deficit: $(96.0) million, although management suggests liquidity concerns are alleviated due to subsequent events.

Financing and Equity

Convertible Notes: Issued $450 million in Senior Unsecured Convertible Notes due June 2030, with an initial conversion price of $9.75 per share.

Preferred Stock Issuance:

Series E and E-1 Preferred: Raised $12.8 million.

Series F Convertible Preferred: Raised $43 million.

Stock-Based Compensation (H1 FY25): $542,000, significantly lower than $10.4 million in H1 FY24.

Operational Highlights

Segment Contributions:

Data Center Hosting: Major revenue driver with contracts offering fixed-rate pricing.

Cloud Services: Targeting AI and machine learning developers; growth potential identified but specifics not disclosed.

HPC Hosting: Emerging focus on high-compute applications, though financial details are limited.

Growth and Expansion

Construction in Progress: Increased to $609 million as of November 30, 2024, reflecting significant investment in new facilities.

Revenue Growth Projections: Not explicitly detailed but implied by operational scaling and new customer acquisition.

Key Figures Requiring Further Verification

Revenue Growth Assumptions:

Year-over-year growth rates appear strong, but a closer review of the sustainability of customer concentration (e.g., Customer A) is essential.

Debt Obligations and MOIC:

The company has several large, complex debt instruments (e.g., Macquarie Promissory Note with MOIC terms). Verification of repayment plans and their impact on future cash flows is needed.

Competitive Positioning:

Claims about technological superiority in AI and HPC hosting require more details on unique value propositions versus competitors.

Customer Pipeline:

While growth in cloud and HPC services is mentioned, specifics on the pipeline and contract backlog are absent.

Summary

Applied Digital shows promising revenue growth and strong liquidity, supported by substantial capital raises and debt instruments. However, the significant net losses, heavy debt burden, and dependency on a few customers necessitate closer scrutiny of its growth assumptions, operational scaling efficiency, and competitive differentiation.

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