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Applied Digital Corporation (APLD)
NASDAQ:APLD
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Applied Digital Corporation
(NASDAQ:APLD)
44Neutral
Positive Factors
Financial Performance
Q2 results were better than expected and showed the second quarter in a row of excellent execution in both the Bitcoin hosting and AI Cloud businesses.
Financing
Macquarie's backing validates the long-term viability of Applied Digital's HPC- and AI-focused model.
Growth Potential
Significant growth in data center demand is expected, driven by AI innovation and adoption, which is a tailwind for the industry.
Negative Factors
Contract Delays
Hyperscaler contract negotiations are taking longer than hoped and AI hosting revenue is removed from CY25 estimates.
Partnership Uncertainty
There have been discussions that Microsoft may be reducing its involvement in data center leases.
Profitability Challenges
HPC costs with no offsetting revenue remain a drag on profitability.
Applied Digital Corporation (APLD) vs. S&P 500 (SPY)
Market Cap
$1.58B
Dividend YieldN/A
Average Volume (3M)28.28M
Price to Earnings (P/E)―
Beta (1Y)3.58
Revenue Growth84.57%
EPS Growth-390.70%
CountryUS
Employees57
SectorFinancial
Sector Strength85
IndustrySoftware
Share Statistics
EPS (TTM)-1.73
Shares Outstanding222,903,470
10 Day Avg. Volume18,160,153
30 Day Avg. Volume28,284,301
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)7.45
Price to Cash Flow (P/CF)-7.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.88Price Target Upside82.18% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Applied Digital Corporation Business Overview & Revenue Model
Company DescriptionApplied Digital Corporation (APLD) is a technology company that focuses on developing and operating next-generation digital infrastructure. The company specializes in providing solutions for high-performance computing applications, including data centers for cryptocurrency mining, artificial intelligence, and other intensive computing processes. Its operations are primarily within the technology infrastructure sector, where it leverages advanced technology to optimize performance and efficiency.
How the Company Makes MoneyApplied Digital Corporation generates revenue primarily through the operation and management of data centers that host and manage computing power for various applications. A significant portion of its revenue comes from hosting services for cryptocurrency mining operations, where the company provides infrastructure and power solutions to mining clients. Additionally, APLD may engage in mining activities directly, further contributing to its income. The company may also benefit from partnerships and agreements with technology providers and clients who require high-performance computing capabilities. These revenue streams are supported by the demand for efficient and scalable infrastructure solutions in the rapidly growing digital and cryptocurrency economies.
Applied Digital Corporation Financial Statement Overview
Summary
Applied Digital Corporation exhibits robust revenue growth but faces significant challenges in profitability and financial stability. High leverage and negative cash flows pose risks that could impact future operations and financial health. While revenue growth is promising, addressing operational inefficiencies and managing financial leverage are crucial for sustainable improvement.Income Statement
Applied Digital Corporation has shown significant revenue growth over recent periods, with a notable increase from $8.5 million in 2022 to $211.6 million TTM (Trailing-Twelve-Months) in 2024. However, the company struggles with profitability, as indicated by negative EBIT and net income margins, reflecting operational inefficiencies and high costs relative to revenue.45
Neutral
Balance Sheet
The company's balance sheet shows a high debt-to-equity ratio, indicating substantial leverage, which poses a financial risk. Stockholders' equity increases suggest some improvement in asset accumulation, but the high level of liabilities relative to equity and assets reflects financial instability.40
Negative
Cash Flow
The cash flow analysis reveals negative operating and free cash flows in the TTM period, highlighting cash management and operational challenges. While there is significant financing cash flow, primarily from debt, the negative free cash flow indicates issues in generating sufficient internal cash.38
Negative
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 211.62M | 165.57M | 55.39M | 8.55M | 0.00 | 0.00 | Gross Profit |
| 4.85M | 17.23M | 11.00M | -957.00K | -1.00K | 0.00 | EBIT |
| -77.14M | -99.02M | -44.05M | -20.90M | -332.00K | -263.00K | EBITDA |
| -88.84M | -43.38M | -36.88M | -20.71M | -331.00K | 0.00 | Net Income Common Stockholders |
| -270.57M | -149.27M | -45.61M | -22.49M | -804.00K | -263.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 286.24M | 3.34M | 43.57M | 38.80M | 11.75M | 0.00 | Total Assets |
| 1.54B | 762.87M | 263.96M | 119.98M | 15.05M | 0.00 | Total Debt |
| 799.41M | 427.81M | 91.81M | 13.54M | 2.13M | 1.90M | Net Debt |
| 513.17M | 424.47M | 48.24M | -25.25M | -9.62M | 1.90M | Total Liabilities |
| 1.11B | 638.04M | 194.28M | 40.74M | 17.64M | 2.02M | Stockholders Equity |
| 434.57M | 124.83M | 59.52M | 72.26M | -2.58M | -2.02M |
| Cash Flow | Free Cash Flow | ||||
| -219.40M | -128.01M | -72.54M | -59.12M | -3.38M | 0.00 | Operating Cash Flow |
| -123.42M | 13.79M | 58.73M | -872.00K | -83.00K | 0.00 | Investing Cash Flow |
| -314.37M | -172.44M | -132.09M | -45.87M | -3.30M | 0.00 | Financing Cash Flow |
| 717.73M | 146.76M | 70.63M | 81.29M | 15.13M | 0.00 |
Applied Digital Corporation Technical Analysis
Negative
7.07
Price Trends
7.91
Negative
8.22
Negative
6.98
Positive
Market Momentum
-0.31
Negative
46.40
Neutral
80.50
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For APLD, the sentiment is Negative. The current price of 7.07 is below the 20-day moving average (MA) of 7.25, below the 50-day MA of 7.91, and above the 200-day MA of 6.98, indicating a neutral trend. The MACD of -0.31 indicates Negative momentum. The RSI at 46.40 is Neutral, neither overbought nor oversold. The STOCH value of 80.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for APLD.
Applied Digital Corporation Risk Analysis
Applied Digital Corporation disclosed 85 risk factors in its most recent earnings report. Applied Digital Corporation reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Applied Digital Corporation Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
63 Neutral | $14.33B | 10.14 | 8.73% | 4.25% | 17.15% | -12.05% | |
63 Neutral | $2.78B | 23.08 | 4.35% | ― | 34.20% | ― | |
61 Neutral | $425.07M | 9.61 | 9.19% | ― | 140.56% | ― | |
55 Neutral | $4.28B | 9.02 | 18.84% | ― | 69.38% | 30.30% | |
45 Neutral | $371.52M | ― | -2.15% | ― | 27.99% | 90.99% | |
44 Neutral | $1.58B | ― | -83.77% | ― | 84.57% | -390.70% | |
44 Neutral | $282.32M | ― | -87.12% | ― | 5.59% | 32.06% |
* Financial Sector Average
Performance Comparison
APLD
Applied Digital Corporation
7.07
2.66
60.32%
RIOT
Riot Platforms
7.95
-4.49
-36.09%
MARA
Marathon Digital Holdings
12.38
-8.57
-40.91%
BTBT
Bit Digital
2.33
-0.08
-3.32%
TSE:HIVE
HIVE Digital Technologies
2.35
-1.98
-45.73%
CAN
Canaan
1.07
-0.35
-24.65%
Applied Digital Corporation Earnings Call Summary
Earnings Call Date: Jan 14, 2025 | % Change Since: -17.21% | Next Earnings Date: May 9, 2025
Earnings Call Sentiment Neutral
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.Highlights
Record Revenue Growth
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.
Strategic Partnership with Macquarie
Applied Digital announced a strategic partnership with Macquarie Asset Management, including a $5 billion perpetual preferred equity financing facility to fund data center projects.
Data Center Hosting Capacity
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.
Community Impact Recognition
Won the DCD Community Impact Award for initiatives in Ellendale, North Dakota, competing against major players like Google and NTT Data.
Lowlights
Increased Expenses
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
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.
Challenges in Data Center Leasing
The lease process for the Ellendale campus has been lengthy, with ongoing due diligence required by potential hyperscale customers.
Company Guidance
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.Applied Digital Corporation Corporate Events
Executive/Board ChangesShareholder MeetingsBusiness Operations and StrategyRegulatory Filings and Compliance
Applied Digital Expands Stock and Amends Incorporation
Positive
Nov 21, 2024
The Company announced a significant increase in its authorized stock, with common stock rising to 400 million shares and preferred stock to 10 million. At its Annual Meeting, key decisions included director elections, approval of executive compensation, and amendments to the Articles of Incorporation. These changes reflect the Company’s strategic moves to facilitate growth and compliance with Nasdaq rules, engaging investors interested in its evolving financial strategies.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.