Applied Digital Corp (NASDAQ:APLD) Reports Stellar Q2 Revenue Beat, Secures $16B in Hyperscaler Leases

Applied Digital Corporation (NASDAQ:APLD), a designer and operator of high-performance data centers, reported financial results for its fiscal second quarter of 2026 that significantly exceeded analyst revenue expectations, though it posted a wider-than-expected loss on a per-share basis. The company’s stock experienced notable volatility in after-hours trading following the announcement.

Earnings Snapshot: Revenue Beat, EPS Miss

The company’s performance against Wall Street estimates presents a mixed picture, with a clear standout in top-line growth.

• Revenue: Applied Digital reported quarterly revenue of $126.6 million, a staggering increase of 250% compared to the prior-year period. This figure substantially surpassed the analyst consensus estimate of approximately $89.3 million.
• Earnings Per Share (EPS): The company reported a net loss attributable to common stockholders of $0.11 per share. This was wider than the analyst estimate for a loss of $0.0986 per share. On a non-GAAP adjusted basis, the company reported net income of $0.1 million, or $0.00 per share.

The dramatic revenue growth was primarily driven by the company's burgeoning High-Performance Computing (HPC) Hosting Business, which contributed $85.0 million during the quarter. This includes revenue from tenant fit-out services and initial rental income from its newly operational Polaris Forge 1 data center campus.

Market Reaction and Price Action

Following the earnings release, Applied Digital's stock moved lower in after-hours trading, declining approximately 1.76%. This reaction suggests investors may be focusing on the wider-than-anticipated GAAP net loss and the complexities of the company's rapid scaling, despite the impressive revenue beat. Over recent weeks, the stock has shown modest gains, up about 0.23% in the last week and 0.06% over two weeks, but remains down roughly 0.08% for the month, indicating a degree of investor caution ahead of the earnings report.

Operational Highlights and Strategic Updates

Beyond the financial figures, the earnings press release outlined significant operational milestones and strategic developments that underscore the company's transition into a major player in AI and hyperscale data center infrastructure:

• Major Lease Agreements: Applied Digital has secured long-term leases totaling 600 megawatts (MW) of capacity with two hyperscaler customers—AI cloud provider CoreWeave and an unnamed investment-grade U.S. hyperscaler. These contracts represent an aggregate of approximately $16 billion in prospective lease revenue over their terms.
• Project Execution: The company achieved "Ready-for-Service" status for the first 100 MW building at its Polaris Forge 1 campus in North Dakota, delivering it on schedule for CoreWeave. Construction continues on additional facilities at this site and at the new Polaris Forge 2 campus.
• Strengthened Balance Sheet: To fund its multi-billion dollar construction pipeline, Applied Digital has established a comprehensive financing framework. This includes a $2.35 billion senior secured notes offering, draws on a $5.0 billion preferred equity facility with Macquarie Asset Management, and a new development loan facility. The company ended the quarter with approximately $2.3 billion in cash, cash equivalents, and restricted cash.
• Corporate Restructuring: The company announced a plan to spin out its Applied Digital Cloud business and combine it with EKSO Bionics Holdings to form a new entity called ChronoScale. Upon closing, Applied Digital is expected to retain over 80% ownership of the combined company, aiming to allow both its data center and cloud compute businesses to scale independently.

Forward Outlook and Analyst Estimates

While the press release expressed confidence in demand and projected exceeding a $1 billion Net Operating Income target within five years, it did not provide specific quantitative financial guidance for the coming quarters. This leaves analyst estimates as the primary benchmark for near-term expectations.

• Current Analyst Forecasts: For the next quarter (Q3 FY2026), analysts are currently modeling a revenue estimate of $72.6 million and an EPS loss of $0.126. For the full fiscal year 2026, the sales estimate stands at $308.4 million with an expected EPS loss of $0.391.

The company's ability to continue converting its large contracted backlog into recognized revenue will be critical in meeting or exceeding these forward-looking estimates.

Conclusion

Applied Digital's fiscal Q2 results highlight a company in the midst of a profound transformation, successfully landing massive, long-term contracts with key hyperscale customers. The substantial revenue beat confirms the strong demand for its AI-optimized data centers. However, the market's initial negative reaction points to investor scrutiny on profitability metrics and the execution risks associated with its aggressive capital expenditure and construction plans. The company's formidable liquidity position provides a significant runway to execute its strategy, but the path to sustained GAAP profitability remains a key focus.

For a detailed look at Applied Digital’s historical earnings, future estimates, and analyst projections, you can review the data here.

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