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Applied Digital (APLD) Q4 Earnings call transcript Aug 28, 2024

AInvestThursday, Aug 29, 2024 11:56 am ET
1min read

Applied Digital, a leading player in the high-performance computing (HPC) industry, recently held its fiscal fourth quarter 2024 earnings call, shedding light on the company's performance and future outlook. The call, led by Chairman and CEO, Wesley Cummins, and CFO, David Rench, provided a comprehensive overview of Applied Digital's recent developments, financial results, and strategic initiatives.

Strong Performance Amidst Challenges

Applied Digital reported a challenging fiscal fourth quarter due to power outages at several data centers, primarily at its Ellendale facility in North Dakota. Despite these setbacks, the company made significant strides in its key growth initiatives, particularly in the development of its cloud services business and the construction of a 100-megawatt HPC data center in Ellendale.

Expansion into Cloud Services

Applied Digital's cloud services business, which provides high-performance computing power for AI applications, continues to show strong growth. As of the end of the fourth quarter, the company had 4 clusters online, with 2 more coming online in the first quarter of 2025. This segment is expected to contribute significantly to the company's revenue growth, with a current run rate of $110 million annually.

HPC Data Center Development

The company's strategic focus on HPC data centers was evident in the progress made on its 100-megawatt facility in Ellendale. Despite the power outage challenges, Applied Digital has secured an LOI with a U.S.-based hyperscaler for a 400-megawatt capacity lease at the site. This agreement is expected to solidify the company's position as a leading player in the HPC data center market.

Financial Results and Outlook

The financial results for the fiscal fourth quarter of 2024 showed a significant increase in revenues, with $43.7 million compared to $22 million in the same period the previous year. However, the company reported a net loss of $64.8 million, primarily due to the power outages and related expenses. Despite these challenges, Applied Digital remains optimistic about its future prospects, with a focus on securing project-level financing for its Ellendale campus and marketing additional campuses totaling 1.4 gigawatts.

Conclusion

In conclusion, Applied Digital's fiscal fourth quarter 2024 earnings call provided a clear picture of the company's resilience in the face of challenges and its strategic focus on growth initiatives. With a strong presence in the HPC industry and a strategic shift towards cloud services, Applied Digital is well-positioned to capitalize on the growing demand for high-performance computing power. As the company continues to navigate the complexities of the data center hosting market and secure strategic partnerships, investors and analysts will be watching closely to see how these initiatives translate into long-term growth and shareholder value.

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