Applied Digital's Q3 Earnings & Revenues Miss Estimates, Stock Down

Applied Digital APLD reported a third-quarter fiscal 2025 loss of 16 cents per share, wider than the Zacks Consensus Estimate of a loss of 11 cents. The company registered earnings of 52 cents per share in the year-ago quarter.

APLD reported revenues of $52.9 million for the third quarter of fiscal 2025, marking a 22.1% year-over-year increase. The growth was primarily driven by the ongoing expansion of the company’s Cloud Services segment, supported by the deployment of additional GPU clusters during the quarter. However, the top line missed the Zacks Consensus Estimate by 16.75%. 

Cloud Services business revenues jumped 220% year over year to $17.8 million, driven by the deployment of additional GPU clusters. However, revenues declined 35.7% sequentially due to a shift from single-tenant reserve contracts to a multi-tenant on-demand model.

The Data Center Hosting business segment generated $35.2 million in revenues, representing a 7% year-over-year decline.

Applied Digital Corporation Price, Consensus and EPS Surprise

Applied Digital Corporation price-consensus-eps-surprise-chart | Applied Digital Corporation Quote

The unimpressive results negatively impacted investors' sentiment, leading to a sharp 10.6% drop in APLD’s share price in today’s pre-market trading session.

Applied Digital’s earnings surprise missed the Zacks Consensus Estimate in three of the trailing four quarters and exceeded the remaining one, the average negative surprise being 113.42%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

APLD’s HPC Data Center & Data Center Hosting Update

Applied Digital’s High-Performance Computing (HPC) Data Center Hosting business designs, builds and operates next-generation data centers intended to provide massive computing power and support high-performance computing applications within a cost-effective model. The company is in negotiations with multiple U.S.-based hyperscalers to lease up to 400 MW of capacity, including the Ellendale HPC data center under construction and two forthcoming buildings at the Ellendale Campus.

Data Center Hosting business, which provides energized space for cryptocurrency mining customers, generated $35.2 million in revenues. As of Feb. 28, 2025, the company’s 106 MW facility in Jamestown, ND, and 180 MW facility in Ellendale, ND, are operating at full capacity.

APLD’s Quarterly Details

In the reported quarter, selling, general and administrative expenses were down 24.3% year over year to $22.7 million.

Adjusted EBITDA was $10 million for the fiscal third quarter, a notable improvement from a loss of $1.3 million year over year.

Adjusted operating loss was $8.8 million, narrower than the year-ago quarter’s loss of $23.4 million.

APLD’s Strategic Progress

As part of its strategic shift, Applied Digital’s board of directors approved a plan to divest its Cloud Services Business. This move is aimed at sharpening the company’s focus on its core data center operations.

During the reported quarter, Applied Digital also secured a $375 million financing arrangement with Sumitomo Mitsui Banking Corporation. The proceeds from this deal were used to fully repay the outstanding Macquarie Promissory Note and will fund the development of the first and second data center buildings at the company’s Ellendale HPC Campus.

Applied Digital maintained the strategic partnership with Macquarie Asset Management, which holds the right to invest up to $5 billion to support the continued expansion of its next-generation data centers.

APLD’s Balance Sheet

As of Feb. 28, 2025, Applied Digital had cash, cash equivalents and restricted cash of $261.2 million against a debt of $689.1 million.

APLD’s Zacks Rank & Stocks to Consider

Currently, Applied Digital carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Finance sector are Barclays BCS, Associated BancCorp ASB and Guild GHLD. While Barclays sports a Zacks Rank #1 (Strong Buy), Associated BancCorp and Guild carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rates for BCS, ASB and GHLD are pegged at 18.17%, 9.65% and 10.63%, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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