Applied Digital Reports Fiscal Third Quarter 2025 Results

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Applied Digital Reports Fiscal Third Quarter 2025 Results - GlobeNewswire

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For the three and nine months ended February 29, 2024, amounts include related party interest expense of $0.2 million and $0.8 million, respectively. APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended February 28, 2025 February 29, 2024CASH FLOW FROM OPERATING ACTIVITIES Net loss$(178,528) $(85,221)Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Depreciation and amortization 79,540 47,664 Stock-based compensation 10,233 13,634 Lease expense 23,911 6,708 Loss on extinguishment of debt 1,177 — Loss on extinguishment of related party debt — 2,353 Loss on legal settlement — 2,380 Amortization of debt issuance costs 11,515 498 Loss/(gain) on classification of held for sale (24,616) 21,723 Loss on change in fair value of related party debt — 2,612 Loss on conversion of debt 33,612 — Loss on change in fair value of debt 85,439 — Loss on abandonment of assets 769 — Loss on change in fair value of warrants issued 6,421 — Changes in operating assets and liabilities: Accounts receivable (10,722) (143)Prepaid expenses and other current assets (4,072) (4,115)Customer deposits 2,306 (150)Related party customer deposits (1,549) — Deferred revenue (32,795) 15,953 Related party deferred revenue (1,692) (237)Accounts payable (88,378) 55,463 Accrued liabilities (12,319) 5,811 Due to customer (8,195) — Lease assets and liabilities (13,557) (35,674)Other assets (757) (3,921)CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES (122,257) 45,338 CASH FLOW FROM INVESTING ACTIVITIES Purchases of property and equipment and other assets (483,340) (84,437)Proceeds from satisfaction of contingency on sale of assets 25,000 — Finance lease prepayments (4,840) (35,132)Purchases of investments (2,498) (390)CASH FLOW USED IN INVESTING ACTIVITIES (465,678) (119,959)CASH FLOW FROM FINANCING ACTIVITIES Repayment of finance leases (93,992) (27,527)Borrowings of long-term debt 650,000 8,422 Borrowings of related party debt — 23,000 Repayments of long-term debt (290,535) (6,764)Repayment of related party debt — (45,500)Payment of deferred financing costs (42,903) — Tax payments for restricted stock upon vesting (2,970) (606)Proceeds from issuance of common stock 191,590 121,237 Common stock issuance costs (10,253) (235)Proceeds from issuance of preferred stock 100,489 — Preferred stock issuance costs (8,914) — Dividends issued on preferred stock (1,213) — Proceeds from issuance of SAFE agreement included in long-term debt 12,000 — Repurchase of shares (31,342) Proceeds from convertible notes 450,000 — Purchase of capped call options (51,750) — Purchase of prepaid forward contract (52,736) — CASH FLOW PROVIDED BY FINANCING ACTIVITIES 817,471 72,027 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 229,536 (2,594)CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD 31,688 43,574 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD$261,224 $40,980 APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) continued Nine Months Ended February 28, 2025 February 29, 2024SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest paid$54,855 $9,121 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES Operating right-of-use assets obtained by lease obligation$20,280 $95,018 Finance right-of-use assets obtained by lease obligation$106,754 $219,268 Property and equipment in accounts payable and accrued liabilities$142,787 $41,100 Conversion of debt to common stock$104,945 $— Extinguishment of non-controlling interest$— $9,765 Loss on legal settlement$— $2,300 Conversion of preferred stock to common stock 53,191 — Cashless exercise of warrants 5 — Issuance of warrants, at fair value$50,586 $— APPLIED DIGITAL CORPORATION AND SUBSIDIARIESReconciliation of GAAP to Non-GAAP Measures (Unaudited)(In thousands, except percentage data) Three Months Ended Nine Months Ended$ in thousandsFebruary 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024Adjusted operating loss Operating loss (GAAP)$(18,943) $(55,456) $(28,074) $(70,734)Stock-based compensation 9,170 3,071 9,405 13,511 Non-recurring repair expenses (1) 3 — 173 — Diligence, acquisition, disposition and integration expenses (2) 561 3,168 12,228 3,703 Litigation expenses (3) 174 81 1,341 657 Research and development expenses (4) — (65) 36 119 Loss on abandonment of assets — — 769 — Loss/(gain) on classification of held for sale — 21,723 (24,616) 21,723 Accelerated depreciation and amortization (5) — 4,043 45 4,220 Loss on legal settlement — — — 2,380 Other non-recurring expenses (6) 271 (13) 522 245 Adjusted operating loss (Non-GAAP)$(8,764) $(23,448) $(28,171) $(24,176)Adjusted operating margin(17)% (54)% (16)% (20)% Adjusted net loss attributable to common stockholders Net loss attributable to common stockholders (GAAP)$(36,095) $(62,838) $(179,741) $(84,824)Stock-based compensation 9,170 3,071 9,405 13,511 Non-recurring repair expenses (1) 3 — 173 — Diligence, acquisition, disposition and integration expenses (2) 561 3,168 12,228 3,703 Litigation expenses (3) 174 81 1,341 657 Research and development expenses (4) — (65) 36 119 Loss on abandonment of assets — — 769 — Loss/(gain) on classification of held for sale — 21,723 (24,616) 21,723 Accelerated depreciation and amortization (5) — 4,043 45 4,220 Loss on legal settlement — — — 2,380 Loss on change in fair value of warrants 6,421 — 6,421 — Loss on conversion of debt (7) — — 33,612 — Loss on change in fair value of debt (8) — — 85,439 — Loss on change in fair value of related party debt — 2,612 — 2,612 Loss on extinguishment of debt 1,177 — 1,177 — Loss on extinguishment of related party debt — — — 2,353 Preferred dividends 540 — 1,213 — Other non-recurring expenses (6) 271 (13) 522 245 Adjusted net loss attributable to common stockholders (Non-GAAP)$(17,778) $(28,218) $(51,976) $(33,301)Adjusted net loss attributable to common stockholders per diluted share (Non-GAAP)$(0.08) $(0.23) $(0.27) $(0.30) APPLIED DIGITAL CORPORATION AND SUBSIDIARIESReconciliation of GAAP to Non-GAAP Measures (Unaudited) continued(In thousands, except percentage data) EBITDA and Adjusted EBITDA Net loss attributable to common stockholders (GAAP)$(36,095) $(62,838) $(179,741) $(84,824)Interest expense, net 8,897 4,770 23,687 9,522 Income tax expense 117 — 118 — Depreciation and amortization (5) 18,779 26,204 79,585 47,664 EBITDA (Non-GAAP)$(8,302) $(31,864) $(76,351) $(27,638)Stock-based compensation 9,170 3,071 9,405 13,511 Non-recurring repair expenses (1) 3 — 173 — Diligence, acquisition, disposition and integration expenses (2) 561 3,168 12,228 3,703 Litigation expenses (3) 174 81 1,341 657 Research and development expenses (4) — (65) 36 119 Loss/(gain) on classification of held for sale — 21,723 (24,616) 21,723 Loss on abandonment of assets — — 769 — Loss on conversion of debt (7) — — 33,612 — Loss on change in fair value of debt (8) — — 85,439 — Loss on change in fair value of related party debt — 2,612 — 2,612 Loss on change in fair value of warrants 6,421 — 6,421 — Loss on extinguishment of debt 1,177 — 1,177 — Loss on extinguishment of related party debt — — — 2,353 Loss on legal settlement — — — 2,380 Preferred dividends 540 — 1,213 — Other non-recurring expenses (6) 271 (13) 522 245 Adjusted EBITDA (Non-GAAP)$10,015 $(1,287) $51,369 $19,665 (1)Represents costs incurred in the repair and replacement of equipment at our Ellendale data center hosting facility as a result of the previously disclosed power outage.(2)Represents legal, accounting and consulting costs incurred in association with certain discrete transactions and projects.(3)Represents non-recurring litigation expense associated with our defense of class action lawsuits and legal fees related to matters with certain former employees.

"Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, research and development expenses, loss/(gain) on classification of held for sale, loss on abandonment of assets, loss on conversion of debt, loss on change in fair value of debt and related party debt, respectively, loss on change in fair value of warrants, loss on extinguishment of debt and related party debt, respectively, loss on legal settlement and preferred dividends as well as other non-recurring expenses that Management believes are not representative of our expected ongoing costs. Investor Relations Contacts Matt Glover or Ralf Esper Gateway Group, Inc.(949) 574-3860 APLD@gateway-grp.com Media Contact Buffy Harakidas, EVP JSA (Jaymie Scotto & Associates) (856) 264-7827 jsa_applied@jsa.net APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets (Unaudited)(In thousands, except share and par value data) February 28, 2025 May 31, 2024ASSETS Current assets: Cash and cash equivalents$68,743 $3,339 Restricted cash Funds for construction 154,139 — Letters of credit 31,342 21,349 Accounts receivable 14,619 3,847 Prepaid expenses and other current assets 5,416 1,343 Current assets held for sale — 384 Total current assets 274,259 30,262 Property and equipment, net 1,002,206 340,381 Operating lease right of use assets, net 153,434 153,611 Finance lease right of use assets, net 235,203 218,683 Other assets 42,245 19,930 TOTAL ASSETS$1,707,347 762,867 LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable$170,517 $116,117 Accrued liabilities 19,268 26,282 Current portion of operating lease liability 27,496 21,705 Current portion of finance lease liability 140,135 107,683 Current portion of debt 10,138 10,082 Current portion of debt, at fair value — 35,836 Customer deposits 16,125 13,819 Related party customer deposits — 1,549 Deferred revenue 4,879 37,674 Related party deferred revenue — 1,692 Due to customer 4,807 13,002 Other current liabilities 216 96 Total current liabilities 393,581 385,537 Long-term portion of operating lease liability 104,679 109,740 Long-term portion of finance lease liability 32,232 63,288 Long-term debt 678,988 79,472 Total liabilities 1,209,480 638,037 Commitments and contingencies (Note 10) Temporary equity Series E preferred stock, $0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and outstanding at February 28, 2025, and no shares authorized, issued or outstanding at May 31, 2024 6,932 — Series E-1 preferred stock, $0.001, 62,500 shares authorized, 39,763 shares issued and outstanding at February 28, 2025, and no shares authorized, issued or outstanding at May 31, 2024 36,287 — Stockholders' equity: Common stock, $0.001 par value, 400,000,000 shares authorized, 233,682,359 shares issued and shares outstanding at February 28, 2025, and 144,083,944 shares issued and 139,051,142 shares outstanding at May 31, 2024 230 144 Treasury stock, 9,291,199 shares at February 28, 2025 and 5,032,802 shares at May 31, 2024, at cost (31,400) (62)Additional paid in capital 914,336 374,738 Accumulated deficit (428,518) (249,990)Total stockholders’ equity attributable to Applied Digital Corporation 454,648 124,830 TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY$1,707,347 762,867 APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Operations (Unaudited)(In thousands, except per share data) Three Months Ended Nine Months Ended February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024Revenue: Revenue$52,921 $40,284 $175,567 $110,993 Related party revenue — 3,064 1,926 10,883 Total revenue 52,921 43,348 177,493 121,876 Costs and expenses: Cost of revenues 49,141 47,061 162,562 102,051 Selling, general and administrative (1) 22,723 30,020 66,852 66,456 Loss/(gain) on classification of held for sale (2) — 21,723 (24,616) 21,723 Loss on abandonment of assets — — 769 — Loss on legal settlement — — — 2,380 Total costs and expenses 71,864 98,804 205,567 192,610 Operating loss (18,943) (55,456) (28,074) (70,734)Interest expense, net (3) 8,897 4,770 23,687 9,522 Loss on conversion of debt — — 33,612 — Loss on change in fair value of debt — — 85,439 — Loss on change in fair value of related party debt — 2,612 — 2,612 Loss on extinguishment of debt 1,177 — 1,177 — Loss on extinguishment of related party debt — — — 2,353 Loss on change in fair value of warrants 6,421 — 6,421 — Net loss before income tax expenses (35,438) (62,838) (178,410) (85,221)Income tax expense 117 — 118 — Net loss (35,555) (62,838) (178,528) (85,221)Net loss attributable to noncontrolling interest — — — (397)Preferred dividends (540) — (1,213) — Net loss attributable to common stockholders$(36,095) $(62,838) $(179,741) $(84,824) Basic and diluted net loss per share attributable to common stockholders$(0.16) $(0.52) $(0.93) $(0.77)Basic and diluted weighted average number of shares outstanding 222,454,578 121,426,622 193,405,721 110,500,556 (1)Includes related party selling, general and administrative expense of $0.1 million and $0.1 million for the three months ended February 28, 2025 and February 29, 2024, respectively, and $0.2 million and $0.5 million for the nine months ended February 28, 2025 and February 29, 2024, respectively.(2)Includes $25 million received in connection with the sale of our Garden City facility once conditional approval requirements were met and escrowed funds were released during the nine months ended February 28, 2025.

Fiscal Third Quarter 2025 Financial Highlights Revenues: $52.9 million, up 22% from the prior year comparable periodNet loss attributable to common stockholders: $36.1 million, up 43% from the prior year comparable periodNet loss attributable to common stockholders per basic and diluted share: $0.16, up 69% from the prior year comparable periodAdjusted net loss attributable to common stockholders: $17.8 millionAdjusted net loss attributable to common stockholders per diluted share: $0.08Adjusted EBITDA: $10.0 million Adjusted Net Loss Attributable to Common Stockholders, Adjusted Net Loss Attributable to Common Stockholders per Diluted Share, and Adjusted EBITDA are non-GAAP measures.