Applied Digital Accelerates Growth Amid Record Revenue and Planned Cloud Spin-Off

• Revenue more than tripled and surpassed expectations
• GAAP loss per share larger than anticipated; adjusted earnings at break-even
• Cloud operations to be carved out into ChronoScale, in partnership with EKSO Bionics Holdings
• Large multi-year contracts in the HPC sector and a solid liquidity position

Reaching Record Revenue and Segment Dynamics

For the quarter ending November 30, 2025, Applied Digital posted revenue of $126.6 million, a jump of about 250% year over year, and well above the prior range of $86–89 million that had been projected.

A key driver was the High-Performance Computing (HPC) hosting business, which contributed $85 million to the top line. Of this, $73 million came from Tenant-Fit-Out Services and $12 million from initial rental revenues following the full commissioning of Polaris Forge 1, the campus’ first building.

The legacy Data Center Hosting segment also grew, delivering $41.6 million, up 15% year over year.

On the profitability front, GAAP net loss stood at $0.11 per share, modestly worse than the expected $0.0986 per share loss. However, on a non-GAAP basis, the company reached break-even with $0.00 per share, versus an anticipated loss of $0.12 per share. This implies improving operating margins despite substantial depreciation tied to rapid infrastructure expansion.

Strategic Reset: ChronoScale Spin-Off Planned

In conjunction with the quarterly results, management announced a broader strategic realignment. The Cloud Services division is slated for separation and a merger with EKSO Bionics Holdings to form a new company named ChronoScale. Applied Digital intends to own roughly 80% of ChronoScale. The objective is to clearly separate capital-intensive, volatile cloud activities from the more stable, revenue-generating data center infrastructure business.

Market Reaction and Key Commercial Milestones

Shares moved decisively following the results and the spin-off announcement, with pre-market and early trading fluctuations between $28.20 and $32.28 per share. The market is weighing a rapid revenue acceleration and the ongoing GAAP losses against the planned corporate restructuring.

CEO Wes Cummins highlighted the advantages of locating the company's data centers in the Dakotas, citing the favorable climate and abundant energy as a differentiator for attracting large HPC customers. This strategy is reflected in a substantial backlog of contracts.

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At the core of the contract backlog is a 400-megawatt (MW) agreement with CoreWeave at Polaris Forge 1, representing a potential leasing volume of roughly $11 billion over the life of the contract. In addition, there is a 200 MW lease with an investment-grade hyperscaler at Polaris Forge 2, with an estimated value around $5 billion.

The quarterly balance sheet strength improved notably. At quarter-end, Applied Digital held $2.3 billion in cash, cash equivalents and restricted cash. This liquidity foundation is supported by a secured private placement of $2.35 billion in notes and a $900 million preferred-equity facility with Macquarie Asset Management, designed to underpin the growing project pipeline.

Strategic Context: Shifting Toward AI Infrastructure

Applied Digital has evolved from a blockchain-centric group into a broader provider of AI and HPC infrastructure. The company rebranded from Applied Blockchain to Applied Digital in 2022, though investor awareness of the crypto origins persists.

The latest quarterly results underscore the strategic shift: HPC and AI workloads are now the primary growth engines. High demand for compute capacity to train and operate large language models and other AI applications has made ready-to-energize sites like Applied Digital's increasingly sought after by major cloud providers.

The flip side remains the heavy capital requirements of these initiatives. Large upfront investments and ongoing depreciation continue to generate GAAP losses, which remains a point of caution for some investors.

Outlook and Technical Considerations

Management reaffirmed its longer-term ambitions. Over the next five years, the company targets annualized net operating income (NOI) above $1 billion, supported by a contracted backlog with an aggregated value near $16 billion from signed leasing agreements.

In the near term, analysts may revise their 2026 and 2027 estimates upward, particularly given the faster-than-anticipated recognition of Tenant-Fit-Out revenue. From a chart-angle, the $32.00 area is viewed as a near-term resistance, while around $28.00 per share stands as a support level.

Looking ahead, the ChronoScale spin-off represents a pivotal next step, expected in the coming months. Market participants anticipate that the separation will influence the balance sheet, corporate structure, and valuation framework of the remaining infrastructure business, potentially unlocking additional strategic clarity and funding momentum.

Note: All figures are expressed in U.S. dollars unless stated otherwise. All data referenced is as disclosed in Applied Digital’s Q2 2025 results and accompanying disclosures.