Applied Digital Q1 Revenue Jumps 322% to $341.9M

Applied Digital Corporation (Nasdaq: APLD) reported fiscal first quarter 2027 results on October 7, 2026, posting revenue of $341.9 million, up 322% from the prior-year comparable period, alongside a net loss attributable to common stockholders of $221.0 million, or $0.76 per basic and diluted share. Adjusted revenue, which excludes the company's majority-owned ChronoScale platform, was $300.4 million. Adjusted net loss was $4.1 million, or $0.01 per diluted share, and Adjusted EBITDA came in at $64.4 million. Net Operating Income was $58.8 million, per the company's release.

Context — why the AI data center backlog matters now

Applied Digital designs, builds, and operates purpose-built data centers for high-performance computing workloads, including artificial intelligence and machine learning. The company said it holds leases for approximately 1.41 GW of critical IT load across five campuses, representing roughly $36 billion of contracted revenue over initial base terms, or about $86 billion if all renewal options are exercised.

The gap between reported revenue and adjusted revenue traces to ChronoScale Holdings Corporation, a majority-owned accelerated-compute platform that Applied Digital owns approximately 96% of. ChronoScale consolidates into the financial statements but is stripped out of the non-GAAP figures. The company said it considers its Data Center Hosting and HPC Hosting businesses its core operations for long-term strategic evaluation.

The headline loss of $221.0 million against a $4.1 million adjusted net loss is the central tension in this quarter. The difference sits in items the company excludes from adjusted results: stock-based compensation, derivative fair value swings, and discontinued operations. Applied Digital reported a $49.5 million loss on the change in fair value of derivatives, tied to a $56.1 million decrease in the value of its Babcock & Wilcox common stock warrant and a $6.6 million increase in derivative assets tied to preferred units held by APLD HPC TopCo 2's redeemable noncontrolling interest.

A separate $11.4 million loss came from a decrease in the fair value of its B&W common stock investment. Net loss from discontinued operations was $16.1 million, representing the Ekso business at ChronoScale, which is classified as held for sale.

Data — what the numbers show

Services revenue reached $262.8 million, up 225% from $80.9 million a year earlier. The company attributed the increase primarily to roughly $157.2 million in additional tenant fit-out services and $23.0 million in GPU hardware sales tied to ChronoScale. Data center rental and other revenue was $79.1 million versus none a year earlier, since the HPC Hosting business began rental operations in the second quarter of fiscal 2026.

Metric	Fiscal Q1 2027	Fiscal Q1 2026
Revenue	$341.9M	~$80.9M
Adjusted revenue	$300.4M	$64.2M
Adjusted net loss	$4.1M	$7.6M
Adjusted EBITDA	$64.4M	$0.5M
Net loss to common	$221.0M	$18.5M

The HPC Hosting segment generated $262.6 million in revenue, including $65.8 million of base rent, $183.5 million of tenant fit-out services, and $13.3 million of tenant recoveries. Segment operating profit was $33.4 million. The Data Center Hosting segment, which serves crypto mining customers, produced $37.8 million in revenue against $37.9 million a year earlier, with $13.3 million in segment operating profit on $111.9 million in reported assets.

Operating costs scaled with the build-out. Services cost of revenues rose 318% to $245.7 million. Selling, general and administrative expenses climbed 289% to $114.7 million, driven by $51.7 million in additional stock-based compensation, $9.9 million in added personnel costs, and $12.1 million in professional services. Interest expense jumped 866% to $77.4 million, offset partly by $35.8 million of interest income, up from $0.9 million. The company reported $3.7 billion in cash, cash equivalents, and restricted cash against $6.4 billion in debt as of August 31, 2026.

Analysis — what it means for markets and sectors

The capital structure is the story behind the income statement. Applied Digital closed $1.59 billion of 7.000% Senior Secured Notes due 2031 through subsidiary APLD ComputeCo 3 LLC, funding the third 150 MW HPC building at Polaris Forge 1 and repaying a $300 million bridge facility. At $6.4 billion of debt against $3.7 billion of cash, the company is financing a construction pipeline with fixed-rate obligations while revenue arrives as buildings reach service.

The distinction between base rent and fit-out revenue matters for anyone modeling this business. Tenant fit-out services contributed $183.5 million of the quarter's $262.6 million HPC revenue, but the company described fit-out as a pass-through-like activity with matching costs. Base rent of $65.8 million is the recurring line tied to the contracted backlog. The company did not disclose the margin split between the two.

Applied Digital's exposure runs through the AI infrastructure supply chain. Its lease counterparties are CoreWeave at Polaris Forge 1 and tier-one investment-grade hyperscalers at the other campuses. Power, not construction, is the stated constraint: the company said the Dakotas are among the few regions where meaningful new capacity can be added at scale, and it holds roughly 10% equity in Base Electron Corp., an independent power producer developing front-of-the-meter generation.

The counter-argument is concentration. Roughly $36 billion of contracted base-term revenue rests on a small set of counterparties, and the company's own guidance depends on delivering megawatts on schedule. Interest expense of $77.4 million in a single quarter now exceeds segment operating profit from both core segments combined.

Outlook — what to watch next

The company expects initial operations at Polaris Forge 2 in Harwood to lift delivered critical IT load across its North Dakota campuses to 300 MW by the end of calendar 2026. That follows Ready for Service delivery of the second 75 MW phase of Building 2 at Polaris Forge 1 on October 1, 2026, bringing the campus to 250 MW across two buildings and ten data halls.

Beyond that, the third 150 MW building at Polaris Forge 1, Polaris Forge 3, Delta Forge 1, and Delta Forge 2 are in various stages of construction. Applied Digital also signed an agreement for up to approximately 1 GW of potential power capacity in Finland, and entered a Power Purchase Agreement with Base Electron for capacity and energy from an approximately 1,200 MW natural gas-fired facility to be developed in North Dakota.

Investors should watch the Base Electron generation timeline and the pace of Polaris Forge 2 commissioning, since both feed the 300 MW target. The company did not disclose pricing terms for the Finland agreement or the Base Electron PPA.

Frequently Asked Questions

Why is Applied Digital's net loss so much larger than its adjusted net loss?

The $221.0 million net loss includes items excluded from the $4.1 million adjusted figure. The largest are a $49.5 million derivative fair value loss tied to the Babcock & Wilcox warrant, an $11.4 million loss on the B&W stock investment, and $16.1 million of discontinued operations from ChronoScale's Ekso business, which is held for sale. Stock-based compensation of $51.7 million also sits outside adjusted results.

What does the $36 billion contracted revenue figure actually cover?

It covers approximately 1.41 GW of critical IT load across five campuses under leases at their initial base terms, the company said. If all renewal options are exercised, that figure rises to roughly $86 billion. The leases run to CoreWeave at Polaris Forge 1 and tier-one investment-grade hyperscalers at Polaris Forge 2, Polaris Forge 3, Delta Forge 1, and Delta Forge 2.