Applied Digital Reports Fiscal Second Quarter 2025 Results

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)   Six Months Ended  November 30, 2024 November 30, 2023CASH FLOW FROM OPERATING ACTIVITIES    Net loss $(142,973) $(22,383)Adjustments to reconcile net loss to net cash (used in) provided by operating activities:    Depreciation and amortization  60,761   21,284 Stock-based compensation  542   10,440 Lease expense  15,380   2,294 Loss on extinguishment of debt  —   2,353 Loss on legal settlement  —   2,380 Amortization of debt issuance costs  2,424   352 Gain on classification of held for sale  (24,616)  — Loss on conversion of debt  33,612   — Loss on change in fair value of debt  85,439   — Loss on abandonment of assets  769   189 Changes in operating assets and liabilities:    Accounts receivable  (8,466)  (225)Prepaid expenses and other current assets  (7,153)  496 Customer deposits  2,306   4,274 Related party customer deposits  (1,549)  — Deferred revenue  (31,487)  2,883 Related party deferred revenue  (1,692)  429 Accounts payable  (82,849)  6,440 Accrued liabilities  (2,515)  (1,914)Due to customer  (5,647)  — Lease assets and liabilities  (19,382)  (19,198)Other assets  (1,058)  (1,040)CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES  (128,154)  9,054 CASH FLOW FROM INVESTING ACTIVITIES    Purchases of property and equipment and other assets  (225,847)  (45,828)Proceeds from satisfaction of contingency on sale of assets  25,000   — Finance lease prepayments  (5,270)  (19,388)Purchases of investments  (1,422)  (390)CASH FLOW USED IN INVESTING ACTIVITIES  (207,539)  (65,606)CASH FLOW FROM FINANCING ACTIVITIES    Repayment of finance leases  (62,170)  (13,071)Borrowings of long-term debt  275,000   4,732 Borrowings of related party debt  —   8,000 Repayments of long-term debt  (133,314)  (4,472)Repayment of related party debt  —   (45,500)Payment of deferred financing costs  (28,927)  — Proceeds from issuance of common stock  191,590   98,156 Common stock issuance costs  (10,233)  (234)Proceeds from issuance of preferred stock  67,085   — Preferred stock issuance costs  (5,947)  — Dividends issued on preferred stock  (672)  — Proceeds from issuance of SAFE agreement included in long-term debt  12,000   — Repurchase of shares  (31,342)  Proceeds from convertible notes  450,000   — Purchase of capped call options  (51,750)  — Purchase of prepaid forward contract  (52,736)  — CASH FLOW PROVIDED BY FINANCING ACTIVITIES  618,584   47,611 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH  282,891   (8,941)CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD  31,688   43,574 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $314,579  $34,633  APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)continued   Six Months Ended  November 30, 2024 November 30, 2023SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION    Interest paid $33,144  $4,370 SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES    Operating right-of-use assets obtained by lease obligation $—  $69,329 Finance right-of-use assets obtained by lease obligation $97,489  $96,946 Property and equipment in accounts payable and accrued liabilities $165,721  $23,572 Conversion of debt to common stock $104,945  $— Extinguishment of non-controlling interest $—  $9,765 Loss from legal settlement $—  $2,300 Conversion of preferred stock to common stock  10,191   — Cashless exercise of warrants  4   — Issuance of warrants, at fair value $44,115  $—  APPLIED DIGITAL CORPORATION AND SUBSIDIARIESReconciliation of GAAP to Non-GAAP Measures (Unaudited)(In thousands, except percentage data)   Three Months Ended  Six Months Ended$ in thousands November 30, 2024 November 30, 2023  November 30, 2024 November 30, 2023Adjusted operating loss         Operating loss (GAAP) $(18,615) $(7,912)  $(9,131) $(15,280)Stock-based compensation  3,308   4,799    236   10,440 Non-recurring repair expenses (1)  139   —    170   — Diligence, acquisition, disposition and integration expenses (2)  8,780   525    11,667   535 Litigation expenses (3)  759   195    1,167   576 Research and development expenses (4)  —   —    36   184 Loss/(gain) on classification of held for sale  192   —    (24,616)  — Loss on abandonment of assets  142   —    769   — Accelerated depreciation and amortization (5)  —   24    45   177 Loss on legal settlement  —   80    —   2,380 Other non-recurring expenses (6)  213   (49)   251   258 Adjusted operating loss (Non-GAAP) $(5,082) $(2,338)  $(19,406) $(730)Adjusted operating margin  (8)%  (6)%   (16)%  (1)%          Adjusted net loss attributable to Applied Digital Corporation         Net loss attributable to Applied Digital Corporation (GAAP) $(138,726) $(10,529)  $(142,973) $(21,986)Stock-based compensation  3,308   4,799    236   10,440 Non-recurring repair expenses (1)  139   —    170   — Diligence, acquisition, disposition and integration expenses (2)  8,780   525    11,667   535 Litigation expenses (3)  759   195    1,167   576 Research and development expenses (4)  —   —    36   184 Loss/(gain) on classification of held for sale  192   —    (24,616)  — Accelerated depreciation and amortization (5)  —   24    45   177 Loss on abandonment of assets  142   —    769   — Loss on conversion of debt (7)  25,410   —    33,612   — Loss on change in fair value of debt (8)  87,218   —    85,439   — Loss on extinguishment of debt  —   —    —   2,353 Loss on legal settlement  —   80    —   2,380 Other non-recurring expenses (6)  213   (49)   251   258 Adjusted net loss attributable to Applied Digital Corporation (Non-GAAP) $(12,565) $(4,955)  $(34,197) $(5,083)Adjusted net loss attributable to Applied Digital Corporation per diluted share (Non-GAAP) $(0.06) $(0.05)  $(0.19) $(0.05) APPLIED DIGITAL CORPORATION AND SUBSIDIARIESReconciliation of GAAP to Non-GAAP Measures (Unaudited) continued(In thousands, except percentage data)   Three Months Ended  Six Months Ended$ in thousands November 30, 2024 November 30, 2023  November 30, 2024 November 30, 2023EBITDA and Adjusted EBITDA         Net loss attributable to Applied Digital Corporation (GAAP) $(138,726) $(10,529)  $(142,973) $(21,986)Interest expense, net  7,482   2,617    14,790   4,750 Income tax expense (benefit)  1   —    1   — Depreciation and amortization (5)  26,445   13,448    60,806   21,460 EBITDA (Non-GAAP)  (104,798)  5,536    (67,376)  4,224 Stock-based compensation  3,308   4,799    236   10,440 Non-recurring repair expenses (1)  139   —    170   — Diligence, acquisition, disposition and integration expenses (2)  8,780   525    11,667   535 Litigation expenses (3)  759   195    1,167   576 Research and development expenses (4)  —   —    36   184 Loss/(gain) on classification of held for sale  192   —    (24,616)  — Loss on abandonment of assets  142   —    769   — Loss on conversion of debt (7)  25,410   —    33,612   — Loss on change in fair value of debt (8)  87,218   —    85,439   — Loss on extinguishment of debt  —   —    —   2,353 Loss on legal settlement  —   80    —   2,380 Other non-recurring expenses (6)  213   (49)   251   258 Adjusted EBITDA (Non-GAAP) $21,363  $11,086   $41,355  $20,950 (1) Represents costs incurred in the repair and replacement of equipment at the Company's Ellendale data center hosting facility as a result of the previously disclosed power outage.(2) Represents legal, accounting and consulting costs incurred in association with certain discrete transactions and projects.(3) Represents non-recurring litigation expense associated with the Company’s defense of class action lawsuits and legal fees related to matters with certain former employees.

Investor Relations Contacts Matt Glover or Ralf EsperGateway Group, Inc.(949) 574-3860 APLD@gateway-grp.com Media Contact Buffy Harakidas, EVP JSA (Jaymie Scotto & Associates) (856) 264-7827 jsa_applied@jsa.net  APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Balance Sheets (Unaudited)(In thousands, except share and par value data)   November 30, 2024 May 31, 2024ASSETS    Current assets:    Cash and cash equivalents $286,237  $3,339 Restricted cash  21,342   21,349 Accounts receivable  12,313   3,847 Prepaid expenses and other current assets  8,496   1,343 Current assets held for sale  —   384 Total current assets  328,388   30,262 Property and equipment, net  772,664   340,381 Operating lease right of use assets, net  140,583   153,611 Finance lease right of use assets, net  261,452   218,683 Other assets  40,082   19,930 TOTAL ASSETS $1,543,169   762,867      LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY    Current liabilities:    Accounts payable $192,017  $116,117 Accrued liabilities  31,625   26,282 Current portion of operating lease liability  23,096   21,705 Current portion of finance lease liability  136,511   107,683 Current portion of debt  6,543   10,082 Current portion of debt, at fair value  4,798   35,836 Customer deposits  16,125   13,819 Related party customer deposits  —   1,549 Deferred revenue  6,187   37,674 Related party deferred revenue  —   1,692 Due to customer  7,355   13,002 Other current liabilities  96   96 Total current liabilities  424,353   385,537 Long-term portion of operating lease liability  97,821   109,740 Long-term portion of finance lease liability  62,397   63,288 Long-term debt  468,244   79,472 Total liabilities  1,052,815   638,037 Commitments and contingencies (Note 11)    Temporary equity    Series E preferred stock, $0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and outstanding at November 30, 2024, and no shares authorized, issued or outstanding at May 31, 2024  6,932   — Series F preferred stock, $0.001 par value, 53,191 shares authorized and issued, 43,000 outstanding at November 30, 2024, and no shares authorized, issued or outstanding at May 31, 2024  43,000   — Series E-1 preferred stock, $0.001, 62,500 shares authorized, 6,359 shares issued and outstanding at November 30, 2024, and no shares authorized, issued or outstanding at May 31, 2024  5,850   — Stockholders' equity:    Common stock, $0.001 par value, 400,000,000 shares authorized, 225,846,268 shares issued and 215,099,212 shares outstanding at November 30, 2024, and 144,083,944 shares issued and 139,051,142 shares outstanding at May 31, 2024  222   144 Treasury stock, 9,291,199 shares at November 30, 2024 and 5,032,802 shares at May 31, 2024, at cost  (31,400)  (62)Additional paid in capital  858,713   374,738 Accumulated deficit  (392,963)  (249,990)Total stockholders’ equity attributable to Applied Digital Corporation  434,572   124,830 TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS' EQUITY $1,543,169   762,867  APPLIED DIGITAL CORPORATION AND SUBSIDIARIESCondensed Consolidated Statements of Operations (Unaudited)(In thousands, except per share data)   Three Months Ended  Six Months Ended  November 30, 2024 November 30, 2023  November 30, 2024 November 30, 2023Revenue:         Revenue $63,868  $38,569   $122,646  $70,708 Related party revenue  —   3,634    1,926   7,819 Total revenue  63,868   42,203    124,572   78,527 Costs and expenses:         Cost of revenues  52,361   29,769    113,421   54,990 Selling, general and administrative (1)  29,789   20,266    44,129   36,437 Loss/(gain) on classification of held for sale (2)  192   —    (24,616)  — Loss on abandonment of assets  141   —    769   — Loss from legal settlement  —   80    —   2,380 Total costs and expenses  82,483   50,115    133,703   93,807 Operating loss  (18,615)  (7,912)   (9,131)  (15,280)Interest expense, net (3)  7,482   2,617    14,790   4,750 Loss on conversion of debt  25,410   —    33,612   — Loss on change in fair value of debt  87,218   —    85,439   — Loss on change in fair value of related party debt  —   —    —   — Loss on extinguishment of related party debt  —   —    —   2,353 Net loss before income tax expenses  (138,725)  (10,529)   (142,972)  (22,383)Income tax expense (benefit)  1   —    1   — Net loss  (138,726)  (10,529)   (142,973)  (22,383)Net loss attributable to noncontrolling interest  —   —    —   (397)Preferred dividends  (629)  —    (673)  — Net loss attributable to Common Stockholders $(139,355) $(10,529)  $(143,646) $(21,986)          Basic and diluted net loss per share attributable to common stockholders $(0.66) $(0.10)  $(0.80) $(0.21)Basic and diluted weighted average number of shares outstanding  209,560,339   109,663,030    179,119,398   105,067,375 (1) Includes related party selling, general and administrative expense of $0.1 million and $0.2 million for the three months ended  November 30, 2024 and November 30, 2023, respectively, and $0.1 million and $0.2 million for the six months ended November 30, 2024 and November 30, 2023, respectively. (2) Includes $25 million received in connection with the sale of our Garden City facility.(3) Includes related party interest expense of $0.7 million for the three and six months ended November 30, 2023.

Fiscal Second Quarter 2025 Financial Highlights Revenues: $63.9 million, up 51% from the prior year periodNet loss: $138.7 million, which was negatively impacted by $87.2 million from the loss on change in fair value of debt, $25.4 million from the loss on conversion of debt, $9.5 million from diligence, acquisition, disposition, integration expenses, and litigation expenses and $3.5 million in stock compensationNet loss per basic and diluted share: $0.66Adjusted net loss: $12.6 millionAdjusted EBITDA: $21.4 million up 93% from the prior year periodAdjusted net loss per diluted share: $0.06 Adjusted EBITDA, Adjusted Operating Loss, Adjusted Net Loss, and Adjusted Net Loss per Diluted Share are non-GAAP measures.

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Author / Journalist: Applied Digital

Category: Technology

Markets: ChinaIndiaUnited States

Topics: US0381691080 Nasdaq:APLD

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Published On: 2025-01-14 @ 21:05:00 (1 weeks ago)

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