Applied Digital Corporation — APLD

[x] I    THE BUSINESS     what they sell, how it earns, who pays
[ ] II   THE MOAT         pricing power, and the clock on it
[ ] III  OWNER EARNINGS   what it really earns, and where the cash goes
[ ] IV   INVERT           what kills it — ranked and dated
[ ] V    THE LADDER       the cycle this name is standing on
[ ] VI   THE PRICE        what you pay against what you get

Resume at Chapter II.

IDENTITY

Name        Applied Digital Corporation
            Builds, owns and operates data centers, and leases the
            finished buildings and their power to AI compute customers
            on 15-year take-or-pay leases.
            Two segments: HPC Hosting · Data Center Hosting.
Ticker      APLD  (Nasdaq Global Select)
Form        C-corp
Filed in    Nevada [^1]
HQ          3811 Turtle Creek Boulevard, Suite 2100, Dallas, TX 75219
Founded     2021, the operating business [^2]  Listed  2022-04-13 at $5.00 [^3]
Named       2021-04-26 Applied Blockchain, Inc. → 2022-11-14 Applied
            Digital Corporation [^2]
Fiscal year fixed year end, May 31 every year
            Q1 Jun–Aug · Q2 Sep–Nov · Q3 Dec–Feb · Q4 Mar–May
            FY2026 ended 2026-05-31 · reported 2026-07-29, the full year
Earnings    2026-10-08 estimated [C] — Q1 FY2027, June–August 2026 [^9]
Bought      2026-05-05 Ekso Bionics Holdings, Inc. — a listed exoskeleton
              maker, taken in exchange for the cloud business and renamed
              ChronoScale Corporation (Nasdaq: CHRN) [^4]
Separated   2026-05-05 the cloud business, into ChronoScale — ~97% still
              held and still consolidated; no shares distributed [^4]
Selling     Legacy Ekso, the exoskeleton business — held for sale from
              2026-06-04, reported as discontinued operations [^4]
Contracted  1,410 MW of critical IT load leased across five campuses,
            ~$36.2B over the initial 15-year base terms, take-or-pay and
            non-cancellable; ~100 MW operating at 2026-05-31 [^5]
Employees   256 full-time at 2026-05-31 [^6]
Industry    Technology · Information Technology Services [^7]
Runs it     Wesley Cummins, Chairman & CEO (47, serving 5 years) [^8]
            Saidal Mohmand, CFO (34, serving 5 years) [^8]
            Laura Laltrello, COO (51, serving 1 year) [^8]
            Jason Zhang, Co-Founder & President (32, serving 5 years) [^8]
Ownership   9.9% insiders · 75.9% institutions · 14.2% retail [F] 2026-08-29

THE NUMBERS

The opening snapshot — all [F] 2026-08-29 unless tagged otherwise.

Scale       revenue $611.3M ttm · 291.47M shares · $7.39B market cap [^10]
Growth      revenue +167.4% y/y ttm [^11]
            HPC Hosting $0 → $385.3M · Data Center Hosting $144.2M →
              $154.4M · ChronoScale and corporate $84.4M → $71.6M
            EPS  FY24 −$1.31 → FY25 −$1.16 → FY26 −$0.91 → −$0.91 ttm
Margins     gross 25.8% [M] · operating −38.7% · net −30.2% [^12]
Balance     cash $1.59B · debt $5.03B · net debt $3.44B [^13]
            net debt 46.6% of market cap · cap + net debt $10.83B
Capital     no dividend and no buyback on the common — all cash retained
            preferred dividends $6.3M paid in FY2026 [^14]
            FY2026 raised $7.77B — $4.96B debt, $1.80B Macquarie preferred
              units, $0.81B Series G preferred, $0.20B common
Price       $25.34 close 2026-08-28 [^15]
            1 wk −6.9% · 1 mo −4.8% · 3 mo −49.0% · 1 yr +52.7% ·
              3 yr +337.7%
            52-wk range $13.89 – $49.65 · since 2022-07-21 $1.51 – $49.65
EPS         −$0.91 trailing  ·  −$0.25 forward [C]
P/E         none — loss-making trailing and forward [^16]
            FY24 n/m · FY25 n/m · FY26 n/m · today n/m [^16]

THE BUSINESS

Joe, 2026-08-29, at the gate:

"Applied Digital is a landlord. They're a data center. They rent out their building, their power, and their racks. Two segments: one provides to Bitcoin data mining, which is demand-based; the other is 15-year fixed leases for AI tenants. One of their customers is CRWV."

Right, with one substitution and one addition. They do not rent out compute. The tenant brings its own GPUs in both segments; the machines belong to the customer. Renting GPUs is what ChronoScale does, and ChronoScale is a separately listed company Applied Digital happens to own ~97% of.

★ The addition is where the money comes from: not from the business. FY2026 operating cash flow was $89.7M against $3,042.2M of capital expenditure. The $2,952.5M gap was closed in the capital markets — $4.96B of new debt at a 7.1% weighted average, $1.80B of Macquarie preferred at 12.75% compounding, $0.81B of Series G preferred and $0.20B of common: $7.77B raised in one fiscal year. The tenants pay it back later.

The unit of sale — two segments, two different transactions

Data Center Hosting. Applied Digital owns the building and the power; the customer brings its own machines and is billed for what it draws. One crypto mining customer remains, on a contract with about a year and a half left, across Jamestown (106 MW) and Ellendale (180 MW), North Dakota — 286 MW of hosting capacity. The 10-K calls it "a legacy line of business" expected "to represent a declining share."

HPC Hosting. Applied Digital signs an approximately 15-year lease on a whole data center with one anchor tenant, before the building exists. Rent is fixed, take-or-pay and non-cancellable. Revenue begins at each building's commencement date — delivery, commissioning and acceptance, not signature.

★ The lease sold the upside. Fixed rent for fifteen years does not grow when the tenant has a great year. Applied Digital is not an AI company; it is a landlord with AI tenants, and it exchanged participation in compute demand for certainty of rent.

Which segment carries the profit

FY2026                  revenue   segment profit   segment assets
Data Center Hosting     $154.4M          $48.3M          $113.8M
HPC Hosting             $385.3M          $39.1M        $8,999.1M

HPC Hosting earns 2.5x the revenue on 79x the assets, for less segment profit. 8,999.1 / 113.8 = 79.1x. Total segment profit was $87.5M against a $236.5M operating loss; the $323.9M difference is "Other" — corporate plus ChronoScale.

The hosting business is a paid-for building with a tenant on a short leash. The lease business consumed $2,988.7M of FY2026 capex and pays nothing until each building is delivered: ~100 MW of 1,410 MW contracted was operating and revenue-generating at 2026-05-31.

★ Take-or-pay protects against the tenant changing its mind. It does not protect against Applied Digital failing to build. The notes carry completion guarantees obliging the company to fund whatever shortfall is needed to hit each commencement date.

Who pays

FY2026 revenue concentration
Customer A   59%          Customer B   25%          Customer C   12%
                                            three customers = 96%

The 10-K does not say which is which. Of the five campuses, only Polaris Forge 1's tenant is named — CoreWeave, 400 MW, ~$11.0B over 15 years. The other four are described as an "investment-grade" or "high investment-grade" hyperscaler; the credit adjective is applied to every tenant except CoreWeave.

⚠ On 2026-03-30 the CoreWeave counterparty got thinner. CoreWeave suspended two of the four ELN-02 data halls and re-leased them to CoreWeave Compute Acquisition Co. VIII, LLC, a wholly owned subsidiary; on ELN-03 it assigned the whole lease to that subsidiary and was "released from the ELN-03 Lease." In place of the parent's direct obligation Applied Digital holds an "Unconditional Springing Guaranty of Payment and Performance" — dormant until a trigger fires — and a $50 million letter of credit. The 10-K calls this "further credit enhancement."

CoreWeave was partly paid in Applied Digital stock.

2025-05-28  warrant  13,062,521 shares @ $7.19    ELN-02 / ELN-03
2025-08-28  warrant   8,393,611 shares @ $10.75   Building 4
            ─────────────────────────
            21,456,132 shares = 7.4% of the 291.5M count

Both are ten-year warrants, exercisable on issue. CoreWeave assigned them away within weeks — half to PEAK6 Capital Management and the rest to Jane Street, then the Building 4 warrant on 2025-10-31. They sit outside the diluted share count, the losses making them antidilutive.

What take-or-pay does not reach

The company's own sentence: each lease "is non-cancellable, such that a termination for convenience would require payment of the full remaining contractual value." That covers a tenant that chooses to leave. It does not cover a tenant that cannot pay.

A tenant in Chapter 11 rejects a lease rather than terminating it, and the landlord's damages on a rejected real-property lease are capped by §502(b)(6) at roughly the greater of one year's rent or 15% of the remaining term, not to exceed three years — as an unsecured claim. Straight-lined, Polaris Forge 1's ~$11.0B over 15 years is ~$733M a year [M], so a capped claim is on the order of $2.2B [M] behind the secured creditors. Whether these agreements are real-property leases at all is a live question: Applied Digital's own FY2026 HPC revenue splits $270.6M "services" against $114.7M "data center rental."

Nor does it reach assignment. Moving a lease to a thinner subsidiary terminates nothing, so the clause never engages.

The vocabulary

critical IT load    MW delivered to the computers, not drawn at the gate
commencement date   when rent starts — delivery and acceptance, not signing
take-or-pay         the rent is owed whether or not the capacity is used
springing guaranty  a parent guarantee dormant until a trigger fires
SPV                 a subsidiary built to hold one contract, thin by design

What it costs to own — the capital behind the revenue

FY2026                            APLD
revenue                         $611.3M
total assets                  $9,929.3M
revenue per $1 of assets            6.2¢
  excluding cash and restricted    10.3¢   [M]

611.311 / 9,929.312 = 6.2%; ex-cash 611.311 / 5,956.297 = 10.3%. Most of the asset base is construction in progress and produces nothing yet, so the turn is understated and should be re-measured once the campuses deliver.

At full delivery the portfolio collects ~$36.2B over 15 years — ~$2.41B a year straight-lined [M]. The capital raised so far costs about $607M a year against that: $5,306.7M × 7.1% = $377M on the term debt and $1,800M × 12.75% = $230M accruing to Macquarie [M]. That is ~25% of the eventual rent, on a stack funding ~7% of the megawatts.

Weighted average shares went 201.2M → 275.2M in FY2026, +36.8%: a holder kept 1 / 1.368 = 73¢ of the company they owned a year earlier, while revenue rose 167.4%.

What is hard about it — the bridge into the moat

Concrete and transformers can be bought. Grid interconnection cannot: utility queues run years and carry no front-of-the-line ticket. Five years spent assembling North Dakota power access under a mining business is what an AI tenant is paying for. The 10-K quotes the Department of Energy projecting ~100 GW of new US grid capacity needed by 2030, roughly half of it data centers; Applied Digital's 1,410 MW contracted is ~2.8% of that half [M].

[^1]: SEC EDGAR entity record, CIK 0001144879, and the FY2026 10-K cover page.

[^2]: The listed shell is far older than the business. The same CIK filed as Reel Staff, Inc. (2001), Flight Safety Technologies, Inc. (2002–2011) and Applied Science Products, Inc. (2011–2020). Wes Cummins and Jason Zhang founded the operating business in 2021 and the IPO prospectus states the company ceased to be a shell company as of 2021-11-30. The Applied Digital name took effect 2022-11-14, when the Certificate of Amendment was filed in Nevada following the 2022-11-10 stockholder vote.

[^3]: The IPO sold 8,000,000 shares at $5.00 and priced 2022-04-13 on the Nasdaq Global Select Market. The stock had traded on OTC Pink under the same symbol beforehand — $10.20 on 2022-04-12, adjusted for the one-for-six reverse split effected for the listing. Bars in this archive begin 2022-07-21 at $2.25, so the return windows below do not reach the IPO; against the $5.00 offering price the stock is +406.8%.

[^4]: On 2026-05-05 Applied Digital contributed 100% of Applied Digital Cloud Corporation to Ekso Bionics Holdings, Inc. for 138,216,820 newly issued Ekso shares. Ekso was the legal acquirer and Cloud the accounting acquirer, so it is booked as a reverse acquisition; Ekso was renamed ChronoScale Corporation and began trading as CHRN the same day. Applied Digital holds ~97% and still consolidates it, so this listed the cloud business rather than disposing of it. Consideration was $57.6M — 4,357,026 equity interests at Ekso's $13.22 close — producing $54.5M of goodwill. On 2026-06-04 ChronoScale's board committed to divest Legacy Ekso; it is reported as discontinued operations, FY2026 revenue $0.4M and net loss $1.0M, with $19.8M of assets and $7.4M of liabilities held for sale. On 2026-07-01 ChronoScale reorganised under ChronoScale Holdings Corporation, still CHRN.

[^5]: FY2026 10-K, Item 1. Polaris Forge 1 (CoreWeave, 400 MW, ~$11.0B), Polaris Forge 2 (200 MW, ~$5.0B), Polaris Forge 3 (300 MW, ~$7.5B), Delta Forge 1 (300 MW, ~$7.5B) and Delta Forge 2 (210 MW, ~$5.2B, signed 2026-06-05, after the year end). Every tenant but CoreWeave is named only as an investment-grade hyperscaler. Delivery runs 2H25 through 2H28. The $36.2B excludes renewal options.

[^6]: Plus consultants and contractors the 10-K does not count.

[^7]: The vendor feed's classification. SEC EDGAR files APLD under SIC 7374, "Services—Computer Processing & Data Preparation."

[^8]: Ages are the vendor feed's. Tenure is years at the company, read off the September 2025 proxy. Cummins' employment agreement as CEO took effect 2021-11-01 and he rejoined the board 2021-03-11, having also sat on it from 2007 to 2020; he holds over 7% of the common. Mohmand joined as EVP of Finance in September 2021 and became CFO 2024-10-15. Laltrello became COO 2025-01-06, from Honeywell. Zhang co-founded the company in 2021, became Chief Strategy Officer 2025-08-01 and President 2026-01-15.

[^9]: The company has not announced the date. Applied Digital has filed its Q1 10-Q on 2023-10-10, 2024-10-09 and 2025-10-09 — the first full week of October each year — so early October is the pattern the vendor's estimate is built on.

[^10]: The price is the last settled daily close, from bars. Shares are the 10-K cover count at 2026-07-28: 291,469,112 × $25.34 = $7.386B. Caps quoted near $7.20B use 284.3M shares, the vendor's stale count. Revenue ttm equals FY2026, the year having closed 2026-05-31.

[^11]: $611.311M / $228.569M = 2.674 → +167.4%. Segment revenue sums to $539.707M against $611.311M consolidated; the $71.604M difference is "Other," which is corporate plus ChronoScale's cloud business, down from $84.376M. The EPS ladder is diluted GAAP attributable to common, as recast in the FY2026 10-K; discontinued operations rounded to $0.00 per share in every year.

[^12]: Gross margin is [M]. Applied Digital presents no gross profit subtotal — the statement runs revenue straight to total costs and expenses — so ($611.311M − $453.629M) / $611.311M = 25.8% is a definition chosen here, built from services cost of revenue $396.858M plus data center rental cost of revenue $56.771M. Operating −$236.462M / $611.311M = −38.7%; net −$184.339M / $611.311M = −30.2%. Net loss attributable to common is larger, −$250.263M or −40.9%, after $59.665M attributed to the noncontrolling interests and $6.259M of preferred dividends; that is the figure EPS is built on. The net loss is smaller than the operating loss: $54.9M of non-operating income sits between them — a $75.818M gain on the fair value of derivatives and a $10.840M gain on investments, against $29.516M of interest expense net and a $2.212M warrant markdown. Both gains are non-cash marks. Operating expenses also carry a $59.650M loss on classification as held for sale (FY2025: a $24.616M gain) and $220.135M of stock-based compensation, against $67.387M of depreciation and amortization.

[^13]: Debt is term debt carried at $4,975.9M — $5,306.7M of principal less $330.7M of unamortized deferred financing costs — plus $58.3M of finance-lease liabilities. The stack is $2.35B of 9.25% notes due December 2030, $2.15B of 6.75% notes due March 2031, $450M of 2.75% convertibles due June 2030, a $300M bridge facility due April 2027 and ~$57M of bank loans; weighted-average rate 7.1%, against 1.7% a year earlier. $4,195.0M of the principal falls due in FY2031. Cash is unrestricted cash and equivalents; a further $2,381.0M was restricted at 2026-05-31, held under the notes' escrow and reserve terms. Counting it, net debt would be $1,061.2M. Ahead of the common there is also $1,956.3M of redeemable noncontrolling interest — Macquarie's MIP HPC Holdings put $1.8B into APLD HPC TopCo 2 for preferred units accruing 12.75% a year, compounding semi-annually, carrying a minimum 1.80x multiple-of-invested-capital liquidation preference and redeemable from 2028-04-06. Counting that claim, cap + net debt + redeemable NCI is $12.78B. Two smaller redeemable preferred series sit in current liabilities at $62.8M.

[^14]: The common has never paid a dividend and no shares were repurchased in FY2026 ($31.3M was in FY2025). FY2026 investing consumed $2,936.4M, of which $2,865.8M was property and equipment; the segment note puts total capital expenditure at $3,042.2M, $2,988.7M of it in HPC Hosting. Operating cash flow was $89.7M on a $184.3M net loss, against −$115.4M the prior year.

[^15]: Return windows are calendar, taking the last session on or before the same day of the month: 2026-08-21 $27.21, 2026-07-28 $26.62, 2026-05-28 $49.65, 2025-08-28 $16.60, 2023-08-28 $5.79. The ranges are closes, not intraday; on an intraday basis the 52-week range is $13.16 – $50.73. The stock has fallen in a near-straight line since the FY2026 high, and the 3-month and 1-year windows disagree about the same tape for that reason.

[^16]: Each year's multiple would be that fiscal year's closing price over the same year's GAAP diluted EPS, both ends at the same date. There is none to compute: FY2024 (−$1.31 against a $4.23 close on 2024-05-31), FY2025 (−$1.16 against $6.83 on 2025-05-30) and FY2026 (−$0.91 against $47.28 on 2026-05-29) were all losses, as is the −$0.25 consensus forward EPS.