Applied Digital Corporation Reports 31% Revenue Growth to $52.9 Million, Net Loss of $35.6 Million

Applied Digital Corporation reported significant financial developments in its latest 10-Q filing for the quarter ending February 28, 2025. The company achieved total revenue of $52.9 million for the three months ended February 28, 2025, marking a 31% increase from $40.3 million in the same period the previous year. For the nine months, revenue rose to $175.6 million, a 58% increase from $111.0 million. The growth was primarily driven by the expansion of the Cloud Services Business, which generated $17.8 million in revenue during the quarter, attributed to the deployment of additional GPU clusters.

Despite the revenue growth, Applied Digital reported a net loss of $35.6 million for the quarter, compared to a loss of $62.8 million in the prior year. The nine-month net loss also increased to $178.5 million from $85.2 million. The company’s operating loss for the quarter was $18.9 million, a notable improvement from the $55.5 million loss reported in the same quarter last year. The reduction in operating loss was influenced by a significant decrease in selling, general, and administrative expenses, which fell to $22.7 million from $30.0 million, largely due to lower depreciation and amortization costs.

In terms of strategic developments, Applied Digital has initiated discussions regarding the potential sale of its Cloud Services Business, which has been classified as "held for sale." This move is part of a broader strategy to streamline operations and focus on core business segments. The company also reported a substantial increase in its cash position, with cash and cash equivalents rising to $68.7 million from $3.3 million at the end of the previous fiscal year. This increase was bolstered by financing activities, including the issuance of $450 million in senior unsecured convertible notes and various equity offerings.

Operationally, the company has seen a rise in its customer base and engagement metrics, with the Cloud Services Business now accounting for 34% of total revenue for the quarter. The Data Center Hosting Business also reported a profit of $8.8 million, a significant turnaround from the previous year's loss, primarily due to the absence of losses related to the sale of the Garden City facility. The company’s total assets increased to $1.7 billion, up from $762.9 million, reflecting ongoing investments in property and equipment, particularly for the construction of its Ellendale HPC Facility.

Looking ahead, Applied Digital's management expressed optimism about its ability to navigate the evolving regulatory landscape and capitalize on growth opportunities in the high-performance computing and cloud services sectors. The company plans to continue its focus on expanding its digital infrastructure capabilities while managing its capital expenditures and operational costs effectively. However, the ongoing losses and working capital deficit of $119.3 million raise concerns about the company's liquidity and ability to sustain operations without additional financing.