Applied Digital Corporation (Nasdaq: APLD) is a designer, builder, and operator of next-generation digital infrastructure tailored for high-performance computing (HPC) applications. The company has shown significant growth, reporting revenues of $63.9 million for its fiscal second quarter ended November 30, 2024, which is an increase of 51% from the prior year’s comparable period. This growth is largely attributed to the expansion of its cloud services segment, which generated revenues of $27.7 million, up 523% from $4.5 million in the same prior period.

The cost of revenues for the quarter rose to $52.4 million from $29.8 million a year earlier, reflecting the increased business activity and additional services provided. Selling, general, and administrative expenses also rose, amounting to $29.8 million compared to $20.3 million a year ago. Depreciation and amortization expenses surged to $26.4 million, increasing from $13.4 million in the same quarter of the prior year, primarily due to the amortization of GPU leases. However, adjustments to lease terms allowed the company to extend the amortization period, anticipated to further reduce depreciation expenses by about $7 million per quarter.

Applied Digital reported a net loss of $138.7 million, equating to a loss of $0.66 per share, which includes significant losses on debt conversion and changes in fair value of debt amounting to $25.4 million and $87.2 million, respectively. Conversely, the adjusted net loss was reported at $12.6 million, or $0.06 per share, marking an increase from an adjusted net loss of $5 million in the prior year. Adjusted EBITDA improved substantially, rising 93% to $21.4 million compared to $11.1 million for the same quarter last year.

The financial fundamentals are supported by a robust balance sheet, with $314.6 million in cash and equivalents and $479.6 million in total debt as of November 30, 2024. Recently, the company completed a $450 million offering of 2.75% convertible senior notes due 2030 and announced a $5 billion perpetual preferred equity financing facility with Macquarie Asset Management for its HPC business segment. This agreement includes a provision for Macquarie to invest up to $900 million in the development of Applied Digital’s Ellendale HPC campus.

Overall, Applied Digital appears to be positioned for continued growth with significant investments being funneled into its operations, particularly in the HPC sector, which is expected to benefit from increasing demand for high-performance computing solutions. The company’s commitment to developing its capabilities and infrastructure suggests a focused approach toward expanding its market presence in this burgeoning sector.