Applied Digital Q2 Earnings Rise On AI Demand

Applied Digital Corporation’s fiscal second-quarter 2026 earnings, reported in a Jan. 7 press release, showed a sharp revenue increase driven by demand for AI high-performance computing. Management highlighted long-term hyperscaler leases that significantly expand contracted capacity and future revenue potential.

Quarter Results and Profitability

For the quarter ended Nov. 30, 2025, Applied Digital (Nasdaq: APLD) reported total revenue of $126.6 million, up 250% year over year. The company recorded a GAAP net loss attributable to common stockholders of $31.2 million, or $0.11 per share.

On an adjusted basis, Applied Digital was essentially break-even, with net income from continuing operations of $115,000 (about $0.00 per diluted share). Adjusted operating income rose to $11.6 million, yielding a 9% operating margin compared with 4% a year earlier. Adjusted EBITDA was $20.2 million. These non-GAAP figures exclude $28.1 million of stock-based compensation and $13.6 million of diligence, acquisition, and integration expenses.

Management attributed the revenue surge to AI data center demand, with turnkey tenant fit-out services contributing $73 million, data-center hosting revenue rising 15% year over year to $41.6 million, and a new CoreWeave lease adding about $12 million in rental revenue. The Jamestown and Ellendale data centers operated at full capacity.

Cost of revenues increased 344% year over year to $100.6 million, driven mainly by $69.5 million in tenant fit-out costs and higher energy expenses. Selling, general, and administrative expenses rose to $57.0 million, including $23.8 million of accelerated stock-based compensation, $4.7 million in professional services, and $2.5 million in personnel costs. The company recorded a GAAP operating loss of $31.0 million for the quarter.

Leases, Financing, and Outlook

Applied Digital reached Ready-for-Service status at Polaris Forge 1, fully energizing the first building (ELN-02) and delivering 100 MW on schedule. This marks the completion of the first of three contracted buildings at the 400 MW AI factory campus for CoreWeave. CoreWeave holds 400 MW under contract at Polaris Forge 1, representing approximately $11 billion in prospective lease revenue over the term.

The company broke ground on Polaris Forge 2 on Aug. 18, 2025, a $3.0 billion, 200 MW campus near Harwood, North Dakota. On Oct. 22, 2025, Applied Digital signed an approximately 15-year lease with a U.S. investment-grade hyperscaler for 200 MW at Polaris Forge 2. Phased delivery begins in 2026, with full capacity expected by early 2027. This lease is projected to generate about $5 billion in revenue over its term.

“Collectively, these lease agreements bring total leased capacity to 600 MW and aggregate prospective lease revenue to approximately $16 billion before exercise of any renewal options,” the company said.

Applied Digital ended the quarter with about $2.3 billion in cash, cash equivalents, and restricted cash, roughly $2.6 billion in debt—most maturing in 2030—and approximately $2.1 billion in total equity. For the six months ended Nov. 30, 2025, net cash provided by financing activities totaled $3.1 billion, driven by $2.4 billion of long-term borrowings and $562.5 million of noncontrolling-interest contributions. The company completed a senior secured notes offering of roughly $2.35 billion issued at 97% of par with a 9.25% coupon due 2030.

Applied Digital also announced plans to spin out its Applied Digital Cloud business and combine it with EKSO Bionics Holdings to form ChronoScale, a dedicated accelerated-compute platform for GPU-optimized AI infrastructure. Applied Digital expects to initially own more than 80% of the combined company. The separation aims to allow the cloud and data-center businesses to scale independently and provide greater strategic and capital flexibility. Management targets $1 billion in net operating income within five years based on current contracted capacity and expected additional leases.

Management described the results and contracts as evidence of durable hyperscaler demand, noting hyperscaler capital expenditures exceed $400 billion annually. The company said inbound demand has increased significantly after securing two hyperscalers in the Dakotas and is in advanced discussions with another investment-grade hyperscaler across multiple regions, including additional locations in the Dakotas and select southern U.S. markets. While there is no assurance of future contracts, management believes the company is well positioned to begin construction on new sites soon.