Applied Digital Earnings: Hyperscaler Leases Not Live Yet

By Stock Titan Editorial Team · Published October 7, 2026

Analysis Earnings earnings Applied Digital APLD AI data centers CoreWeave Non-GAAP

The quarter in the release’s own numbers

For the three months ended August 31, 2026, Applied Digital reported total revenue of $341.9 million, up from $80.9 million a year earlier, and a net loss from continuing operations attributable to common stockholders of $221.0 million, or $0.76 per share, against $18.5 million, or $0.07, in the same quarter of 2025, per the results release. Adjusted revenue, which leaves out the majority-owned ChronoScale unit, was $300.4 million against $64.2 million a year earlier, since the year-earlier $80.9 million included $16.7 million of ChronoScale revenue. Adjusted net loss was $4.1 million, or $0.01 per diluted share, adjusted EBITDA came to $64.4 million and net operating income, the company’s measure of rent left after property costs, was $58.8 million.

The headline growth rate comes with a caution, because most of the new revenue was construction work. Of the $262.6 million the HPC Hosting segment booked (it builds and leases the AI data centers), $183.5 million was tenant fit-out services, the construction-related work on halls being handed over to tenants, and by our read that kind of revenue tends to last only as long as the campuses are being built. Base rent was $65.8 million, tenant recoveries (costs the tenant pays back) were $13.3 million, the older crypto mining hosting business brought in $37.8 million against $37.9 million a year earlier, and ChronoScale’s $41.5 million included $23.0 million of GPU hardware sales.

Show the data

Part	Value	Share
Tenant fit-out services	$183.5M	53.7%
HPC base rent	$65.8M	19.2%
ChronoScale (excluded from adjusted)	$41.5M	12.1%
Crypto mining hosting	$37.8M	11.1%
Tenant recoveries	$13.3M	3.9%

Fit-out work also comes with a matching cost. Services cost of revenue rose to $245.7 million, and the release puts about $151.1 million of the increase down to fit-out expenses, against about $157.2 million of added fit-out revenue, so the added fit-out work came with nearly matching added cost; the release does not give a margin for fit-out on its own. Rent looks very different, with a net operating income margin of 89% by the company’s measure, which takes base rent before the non-cash amortization of one-time lease incentives and subtracts property operating costs, property taxes and insurance (depreciation and interest sit outside it). The HPC segment as a whole earned $33.4 million of operating profit, a 12.7% margin on its revenue by our arithmetic.

Live capacity against leased capacity

As of October 1, 2026, Applied Digital had 250 MW of critical IT load at Ready for Service, all of it at Polaris Forge 1 in Ellendale, North Dakota, out of about 1,410 MW under lease across five campuses, which works out to 17.7%. Ready for Service is the construction milestone the company reports, and the release does not say when billing began on each phase, although the rent line in the next section is consistent with rent starting close to it. At the August 31 quarter end the figure was 175 MW, or 12.4%, because the second 75 MW phase of Building 2 only reached Ready for Service on October 1, after the quarter closed, according to the release.

The tenant split is what the headline figures blur. The release says Polaris Forge 1 is leased to CoreWeave, Polaris Forge 2 to an investment-grade hyperscaler, and Delta Forge 1, Polaris Forge 3 and Delta Forge 2 to a tier-one investment-grade hyperscaler. Every live megawatt today sits in the CoreWeave campus. The four hyperscaler campuses add up to 1,010 MW (200 plus 300 plus 300 plus 210, using the per-campus figures in the fiscal 2026 Form 10-K), and the release lists all of them as “in various stages of construction”. The tier-one hyperscaler alone holds 810 MW and about $20.2 billion of base-term contract value, 57% of the leased megawatts and 56% of the contract value by our arithmetic.

Show the data

Category	Ready for Service (MW)	Not yet delivered (MW)
Polaris Forge 1	250	150
Polaris Forge 2	0	200
Polaris Forge 3	0	300
Delta Forge 1	0	300
Delta Forge 2	0	210

Hyperscaler megawatts could start arriving by the end of 2026. Management expects initial operations at Polaris Forge 2 in Harwood to lift delivered critical IT load across the North Dakota campuses to 300 MW by the end of calendar 2026. Since the 10-K puts the third Polaris Forge 1 building in 2027, the gap between 250 and 300 MW would come from Polaris Forge 2, which would make roughly 50 MW the first hyperscaler capacity to go live; that split is our inference from the two documents, and the company does not state it in those words.

Contract value follows the same pattern. The 10-K values the five leases at about $36.2 billion over their 15-year base terms (the release now rounds this to about $36 billion, or about $86 billion if every renewal option is used), and the CoreWeave campus accounts for about $11.0 billion of it. Roughly $25.2 billion, or about 70%, sits with the hyperscaler campuses whose delivery windows run from the second half of 2026 to the second half of 2028.

Base rent per live megawatt

The base rent line is consistent with rent starting close to the Ready for Service dates, at about $1.75 million per megawatt a year. In fiscal Q4 2026, when only the first 100 MW building was live, base rent was $44.1 million, per the fiscal Q4 2026 results release, which annualizes to about $1.76 million per megawatt. In fiscal Q1 2027 base rent rose 49% to $65.8 million while the first 75 MW phase of Building 2 was live for about 62 of the quarter’s 92 days (the Q1 release dates its Ready for Service to July 1, the Q4 release to June 30).

Weighting the new phase by those days gives an average of 150.5 MW live during the quarter, and $65.8 million over that average annualizes to about $1.75 million per megawatt. Another way to read it is to assume the first 100 MW kept earning the $44.1 million it earned in Q4, which leaves $21.7 million for the new phase, or about $1.72 million per megawatt a year if its rent started at Ready for Service; a later start would put the phase’s rate higher. For comparison, the contract values in the 10-K imply about $1.83 million per megawatt a year for Polaris Forge 1 ($11.0 billion over 400 MW and 15 years), about $1.65 million for Delta Forge 2 and about $1.71 million across the whole portfolio.

Those numbers set the scale of what is still to come. Annualized, the Q1 recognized base rent comes to about $263 million, while $36.2 billion spread evenly over 15 years is an undiscounted average contract value of about $2.4 billion a year across the base terms. That is arithmetic on contracts already signed, and it is no forecast of revenue in any given year, nor of timing beyond the delivery windows the company itself gives, which the 10-K calls estimates “subject to construction, permitting, interconnection, and other risks”.

The bridge from a $221.0 million loss to $4.1 million

Five groups of items, totalling $217.0 million, take the GAAP loss to the adjusted one. Four of them sit in the reconciliation table at the end of the release, and the fifth comes from the statement of operations (the figures are rounded, so the steps do not add up exactly). Grouping them shows that the biggest pieces are net fair value losses, mostly on Babcock & Wilcox securities the company holds, stock-based compensation, and the share of results that belongs to outside holders of a subsidiary.

Show the data

Step	Value
GAAP loss	-$221.0M
Minority and preferred	+$53.0M
Stock comp	+$59.4M
Fair value marks	+$60.9M
ChronoScale	+$26.9M
Deal, legal, other	+$16.8M
Adjusted loss	-$4.1M

$53.0 million of the gap comes from a difference in starting points. The $221.0 million figure is the loss attributable to common stockholders, while the company’s adjusted reconciliation starts from the $168.0 million net loss from continuing operations, a line above two deductions: $51.5 million attributed to noncontrolling and redeemable noncontrolling interests, and $1.5 million of preferred dividends. The 10-K explains that APLD HPC TopCo 2, an indirect subsidiary, sold $1.8 billion of preferred units to MIP HPC Holdings, an affiliate of Macquarie Asset Management, through May 31, 2026, and that those units accrue dividends at 12.75% a year, payable in cash or in kind.

The 10-K also says the company adjusts noncontrolling interest for the attribution of TopCo 2’s results and preferred dividends to that holder. At 12.75%, $1.8 billion of units would accrue about $57 million a quarter before compounding, our estimate, which is of the same order as the $51.5 million line. The cash flow statement lists $60.1 million of non-cash dividends paid in kind during the quarter. However the adjusted figure is read, this is value assigned to someone other than APLD’s common shareholders.

Stock-based compensation is $59.4 million of the reconciliation, and the release’s definition includes the employment taxes owed when awards vest. SG&A went up $51.7 million from stock-based compensation alone (the company points to performance awards and more staff), and the consolidated add-back in the cash flow statement is $66.5 million. Separately, the financing section of the cash flow statement shows $99.4 million of tax payments for restricted stock upon vesting in the quarter, up from $4.5 million a year before, which the release reports apart from the compensation expense and does not tie to it.

Net fair value marks account for $60.9 million, mostly on Babcock & Wilcox securities. The company lost $56.1 million on its B&W common stock warrant and $11.4 million on its B&W shares, partly offset by a $6.6 million gain on derivative assets linked to the TopCo 2 units. ChronoScale, the 96%-owned accelerated-compute business listed as CHRN, adds $26.9 million (a $25.4 million operating loss plus $1.6 million of its net interest). The last $16.8 million is mostly $11.9 million of diligence, acquisition and integration costs, with litigation, lease incentive amortization, restructuring and other items making up the rest.

Reconciling items that recur and items that swing

Some of these items are set by contract or by the business itself and will tend to show up again, while others move with outside prices. The preferred dividend accrues under the TopCo 2 agreement at 12.75%, and the 10-K says the rate steps up by 87.5 basis points on October 7, 2030 and again on October 7, 2031 if the units are still outstanding, so the accrual rises with the units outstanding and with those step-ups. Stock-based compensation sat in the year-earlier reconciliation too, at $14.4 million, and ChronoScale remains a consolidated subsidiary that the adjusted figures leave out by definition.

The Babcock & Wilcox marks cut both ways. In fiscal 2026 the same warrant produced an $89.2 million gain, per the 10-K, so a quarter like this one can flip in the next period without any change in the data center business. The release describes the litigation and restructuring costs as non-recurring and ties the diligence costs to discrete transactions and projects, which is the company’s own description, though all three categories also appeared, in smaller amounts, in the year-earlier quarter’s reconciliation ($1.2 million of diligence costs, for example).

The size of the gap has grown with the business. It was $134.1 million in fiscal Q3 2026 ($100.9 million GAAP loss against $33.2 million of adjusted net income, per the fiscal Q3 2026 release) and $123.5 million in fiscal Q4 2026 ($110.6 million against $12.9 million of adjusted net income), before reaching $217.0 million now. The lists of adjustments are not identical across those releases, so the three gaps are not strictly like for like.

Debt, interest and the cash behind the build

Applied Digital ended August with $3.7 billion of cash, cash equivalents and restricted cash and $6.4 billion of debt, so debt less all cash including restricted cash was about $2.7 billion by our subtraction, and the $6.38 billion of balance-sheet debt less the $2.95 billion of unrestricted cash and equivalents was about $3.43 billion. The balance sheet also carries $2.01 billion of redeemable noncontrolling interest in temporary equity, outside the stockholders’ equity that belongs to common shareholders.

During the quarter the company spent $2.07 billion on property and equipment, against $63.9 million of cash from operations, and closed $1.59 billion of 7.000% senior secured notes due 2031 to fund the third 150 MW building at Polaris Forge 1 and repay a $300 million bridge facility. Property and equipment on the balance sheet rose from $4.24 billion at May 31 to $6.33 billion.

Interest expense was $77.4 million in the quarter, more than the $65.8 million of base rent, while interest income on cash balances was $35.8 million. The cash flow statement’s supplemental lines show $242.9 million of interest paid in the quarter, more than three times the expense recognized. The release does not explain that difference, and the quarterly 10-Q, which had not been filed on EDGAR when we checked on October 7, is where it would be broken down. The $63.9 million of operating cash flow also got help from working capital, including $106.7 million from higher accrued liabilities and $34.5 million from deferred revenue, so it is no measure of rent collected.

APLD shares after past results releases

APLD closed the October 7 regular session at $23.83, down 5.96% from $25.34, according to StockTitan’s price data, on 35.2 million shares, and that move came before the 4:27 p.m. ET release. Other AI infrastructure names fell the same day: CoreWeave lost 3.55%, IREN 6.32%, Core Scientific 4.49%, Nebius 5.09% and Cipher Digital 6.06%. In the first minutes after the release, alerts on StockTitan’s momentum scanner recorded APLD at $24.98, 4.8% above the close, at 4:28 p.m. ET and at $23.56, 1.1% below it, at 4:33 p.m. ET, so the after-hours price had swung both ways before the 5:00 p.m. call.

Past results have not led to a steady pattern. Across the ten previous results releases Applied Digital put out after the close since April 2024, the next regular session closed lower six times and higher four times. The median change was a fall of 4.44%, and the median size of the move in either direction was 9.89%, with a range from a 35.94% drop in April 2025 to a 31.01% gain in July 2025.

Show the data

Category	Change
Apr 2024	-11.7%
Aug 2024	-13.4%
Oct 2024	-6.9%
Jan 2025	-2.0%
Apr 2025	-35.9%
Jul 2025	+31.0%
Oct 2025	+16.1%
Jan 2026	+8.1%
Apr 2026	-8.0%
Jul 2026	+0.9%

Signals that would show the picture changing

Polaris Forge 2 is the one closest in time, since the company expects initial operations there by the end of calendar 2026, and those would be the first hyperscaler megawatts to go live. The base rent line for fiscal Q2 2027, the quarter that ends on November 30, comes next; if the delivered capacity stays available, that quarter would have the first 175 MW at Ready for Service throughout and the second 75 MW phase for two months, so its base rent could be compared with that exposure, although a total for the quarter would not show when each phase began earning rent.

Beyond that, the delivery windows in the 10-K are the schedule to check results against: Delta Forge 1 in the first half of 2027 to the first half of 2028, Polaris Forge 3 from the second half of 2027, and Delta Forge 2 in the first half of 2028. On the accounting side, the TopCo 2 preferred balance (redeemable noncontrolling interest was $2.01 billion at August 31) is the balance behind the attribution line, and the 10-Q may break down the interest figures and the fit-out costs.

Frequently asked questions

Our guide to GAAP and non-GAAP earnings goes through how adjusted figures relate to reported ones in general, and the explainer on releases before the open and after the close covers why companies like Applied Digital publish results at 4:27 p.m.; the way we pick and check sources is set out in our editorial policy.

The information provided in this article is for educational and informational purposes only. It does not constitute financial advice, investment recommendation, or an endorsement of any particular investment strategy. Past performance does not guarantee future results. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.

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