Applied Digital (NASDAQ: APLD) delivered a fiscal fourth quarter that was less a beat and more a statement of arrival. Revenue hit $258.7 million, more than 2.5 times the $96.9 million consensus estimate and up 407% from $51.1 million a year ago. Adjusted net income swung to $12.9 million ($0.04 per diluted share) from an adjusted net loss of $7.6 million a year ago. The headline numbers are striking, but the composition matters more than the magnitude.
The quarter's revenue was dominated by the HPC Hosting business, which generated $203.0 million. Within that, $152.4 million came from tenant fit-out services — essentially construction-phase revenue tied to building out data center space for hyperscaler tenants. Another $44.1 million came from base rent at the Polaris Forge 1 campus, which reached 100 MW operational in October 2025 and has since scaled to 175 MW. The fit-out revenue is lumpy by nature, tied to construction milestones rather than recurring operations. The base rent, however, is the structural foundation: 15-year take-or-pay leases with investment-grade counterparties produce predictable cash flows once campuses go live.
The Data Center Hosting business, which operates 286 MW for bitcoin mining across two North Dakota sites, contributed $37.3 million in revenue, essentially flat year over year. Management describes it as the highest return-on-assets segment, and the $12.5 million in segment operating profit on $113.8 million of assets supports that claim. The business is paid based on capacity provided, not bitcoin price, which gives it a steady cash-flow profile that contrasts with the lumpier HPC construction revenue.
The GAAP picture is messier. Net loss attributable to common stockholders was $110.6 million ($0.39 per share), widening from a $53.1 million loss a year ago. The culprit was $165.3 million in SG&A, which included $127.8 million in stock-based compensation tied to accelerated vesting and grants related to the cloud services separation. Exclude those non-cash charges and the adjusted operating income of $24.2 million tells a cleaner story: the core data center operations are generating operating profit.
The quarter's real strategic signal is the leasing momentum. Since the end of last quarter, Applied Digital signed three new 15-year take-or-pay leases with a single high-investment-grade hyperscaler — at Delta Forge 1 (300 MW), Polaris Forge 3 (300 MW), and Delta Forge 2 (210 MW) — representing roughly $20 billion in base-term contracted revenue. That brings total contracted critical IT load to 1.4 GW across five campuses, with approximately $36 billion in total contracted lease revenue over initial terms. The fact that the same customer has now committed to three consecutive campuses suggests the company's franchise model — replicating a core team across each site — is resonating with hyperscalers who value execution reliability over price.
Management is signaling that the delivery track record matters as much as the contract wins. Polaris Forge 1's first 100 MW came online on schedule, and Phase 1 of Building 2 (75 MW) achieved Ready for Service on June 30, 2026, bringing live capacity to 175 MW. In an industry where construction delays are common, on-time delivery is a genuine differentiator. The company is actively marketing an additional 1.7 GW of capacity across multiple states, suggesting the pipeline is far from exhausted.
The balance sheet is well-capitalized for the buildout. Cash, cash equivalents, and restricted cash totaled $4.2 billion as of May 31, 2026, against $5.0 billion in debt. The company closed $2.15 billion in 6.750% Senior Secured Notes to fund 200 MW at Polaris Forge 2, and upsized a revolving credit facility to $430 million committed. The $2.15 billion note offering at 6.750% is a relatively attractive cost of capital for infrastructure debt, though the coupon is fixed and will weigh on net income as interest expense grows alongside the asset base.
The separation of the cloud services business into ChronoScale (NASDAQ: CHRN), with Applied Digital retaining ~96% ownership, simplifies the equity story. Management is positioning the company as a pure-play data center platform, and the non-GAAP measures now exclude ChronoScale entirely. For investors, the key question is whether the HPC hosting business can sustain the operating profit trajectory as more campuses come online and fit-out revenue converts to recurring rent. The $39.9 million in Net Operating Income (base rent less property-level expenses) on $44.1 million of base rent implies a 91% margin — a high-quality earnings stream that will compound as additional buildings achieve Ready for Service.
What to watch next: the pace at which the 1.4 GW of contracted capacity converts to live, revenue-generating capacity. The next milestone is the 150 MW Building 4 at Polaris Forge 1, funded by the $1.59 billion of 7.000% Senior Secured Notes closed subsequent to quarter end. If Applied Digital can repeat the on-time delivery pattern across Delta Forge and Polaris Forge 2 and 3, the recurring rent base will grow substantially. The $20 billion in new lease signings from a single hyperscaler is a vote of confidence, but the market will be watching whether that customer expands further or whether new customers emerge. For now, the company has the contracts, the capital, and the operational proof points. Execution is the only variable left.