To The Moon

$APPLIED DIGITAL CORP(APLD)$ is expected to release its quarterly earnings for fiscal Q3 2025 on 14 April 2025 after the market close.

In previous fiscal Q2 2025 earnings, revenues was $63.868M, for the upcoming reporting quarter, consensus estimate is expected to be at $62.913M which would represent 1.4% decline from the previous quarter.

For the earnings per share consensus estimate is at a loss of 10 cents.

Applied Digital Corp (APLD) Last Neutral Earnings Call Saw Share Price Drop By 39.93%

APLD had a neutral earnings call on 14 Jan 2025 which saw its share price dropped by 39.93%

The earnings call highlighted significant revenue growth and strategic partnerships, positioning Applied Digital for future expansion. However, challenges in leasing processes, increased expenses, and a notable net loss tempered the overall positive outlook.

Applied Digital Corp (APLD) Guidance On Cash Burn Rate

During the Applied Digital earnings call for Q2 2025, CFO Saidal Mohmand provided updated guidance and financial metrics, highlighting significant growth and strategic developments. The company reported a 51% increase in revenues to $63.9 million, driven by the cloud services segment's expansion, which contributed $27.7 million, while the data center hosting segment generated $36.2 million. The cost of revenues rose to $52.4 million, aligning with business growth, while SG&A expenses increased to $29.8 million. Applied Digital experienced a net loss of $138.7 million, or $0.66 per share, largely due to a $25.4 million loss on debt conversion and an $87.2 million fair value adjustment. Adjusted net loss was $12.6 million, or $0.06 per share, and adjusted EBITDA grew by 93% to $21.4 million. The balance sheet showed $314.6 million in cash and equivalents and $479.6 million in debt.

The company announced a strategic partnership with Macquarie Asset Management, which includes a $5 billion perpetual preferred equity financing facility to support future growth, specifically earmarking $900 million for the Ellendale campus.

Key Factors Impacting APLD’s Q3 2025 Earnings

Macroeconomic and Industry Trends

Cryptocurrency Market: APLD’s earnings are closely tied to demand for blockchain infrastructure (e.g., Bitcoin mining). A rebound in crypto prices or mining profitability in early 2025 could boost revenue.

Revenues for the fiscal second quarter of 2025 were $63.9 million, up 51% over the prior comparable period, driven by growth in the cloud services business.

AI/High-Performance Computing (HPC) Demand: APLD has pivoted toward AI/cloud infrastructure. Growth in AI workloads or partnerships with AI firms could drive data center utilization.

Energy Costs: Data centers are energy-intensive. Lower energy prices or improved efficiency (e.g., renewable energy adoption) would help margins.

Regulatory Risks: Potential crypto mining regulations (e.g., environmental rules, taxes) could impact operations.

Company-Specific Drivers

Capacity Expansion: Progress on new data centers (e.g., North Dakota facility) or upgrades to existing infrastructure.

Applied Digital announced a strategic partnership with Macquarie Asset Management, including a $5 billion perpetual preferred equity financing facility to fund data center projects. The company has 286 megawatts of data center capacity fully contracted and operating at full capacity in North Dakota, with strong demand due to Bitcoin reaching $100,000.

Customer Contracts: Securing long-term contracts with AI/cloud clients or crypto miners would stabilize revenue.

Debt and Liquidity: APLD’s ability to manage debt and fund expansion without diluting shareholders. SG&A expense increased by $9.5 million to $29.8 million, and interest expense increased by $4.9 million to $7.5 million due to finance leases and loans.

Net loss attributable to common stockholders was $138.7 million, impacted by a $25.4 million loss on conversion of debt and an $87.2 million loss on fair value change of convertible notes.

Competitive Landscape

Competition in AI/data center infrastructure (e.g., CoreWeave, Hut 8) and pricing pressures. The lease process for the Ellendale campus has been lengthy, with ongoing due diligence required by potential hyperscale customers.

Differentiation through energy-efficient designs or strategic partnerships (e.g., with cloud providers). Won the DCD Community Impact Award for initiatives in Ellendale, North Dakota, competing against major players like Google and NTT Data.

Applied Digital Corp (APLD) Price Target

Based on 8 Wall Street analysts offering 12 month price targets for Applied Digital Corporation in the last 3 months. The average price target is $12.88 with a high forecast of $20.00 and a low forecast of $10.00. The average price target represents a 151.07% change from the last price of $5.13.

We need to understand that APLD has its volatility and is highly speculative and sensitive to crypto/AI sentiment, which we can see that Bitcoin have been on volatile trend with the tariffs triggered market selloff.

And APLD has a significant execution risk where scaling data centers requires significant capital and operational expertise.

Another area which will hit APLD would be its energy dependency and power supply disruptions or price spikes could hurt profitability.

Technical Analysis - Exponential Moving Average (EMA)

From the technicals, we are still not seeing buying sentiment picking up, as RSI is not too much away from oversold region, and the stock is trading sideways and did not seem to benefit from the short rally on Wednesday (09 Apr).

So in order for APLD to have a bull case, we will need to see crypto resurgence (e.g., Bitcoin rally) and strong AI/HPC demand. APLD also need to show successful execution of expansion plans and cost controls. And with earnings beat expectations, driving stock upside.

But now we are in market potential bear market, and if we looked at bear case, the crypto bear market or regulatory crackdown on mining would worsen APLD performance.

Delays in AI contracts or higher energy costs squeezing margins and earnings miss or weak guidance, leading to sell-offs.

Summary

As we start on the earnings cycle after the tariffs triggered market selloff, we as investors might want to continue to track the crypto/AI market trends and energy prices and also how APLD management’s execution of strategic goals (e.g., AI partnerships).

We can also compare how APLD’s growth trajectory compared to peers in blockchain infrastructure (e.g., HIVE Blockchain, Marathon Digital) and AI/data centers (e.g., Digital Realty).

For the earnings, I would be watching the management commentary on customer diversification (reducing reliance on crypto), margins and energy-cost mitigation strategies and also APLD updates on debt and liquidity, especially on its cash burn rate as the market moving forward, fund raising would be tough.

Appreciate if you could share your thoughts in the comment section whether you think APLD could give a better cost control and can their cash burn rate improve.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.