Applied Digital Corp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nick Giles - B. Riley Securities - Analyst : First, on the cloud services business. Can you remind us what the updated split would be between on-demand versus contracted? And how you're thinking about total value there?

Question: Nick Giles - B. Riley Securities - Analyst : Got it. And just to clarify, none of the clusters today are in applied data centers, so there wouldn't be a structure where you would still operate some of the capacity for those GPUs, correct?

Question: Nick Giles - B. Riley Securities - Analyst : Great. And my second question was just on the BTC hosting business. Where does this business fit in the long term? And especially as you remain focused on converting to a REIT structure later down the road?

Question: Nick Giles - B. Riley Securities - Analyst : Got it. That's very helpful, Wes. I'll turn it over for now, but continue best of luck.

Question: Thomas Shinske - Cantor Fitzgerald - Analyst : This is Thomas Shinske on for Brett. So first, I guess, you mentioned Macquarie and SMBC are playing an instrumental role in finding potential leasing partners for Ellendale I. Guess, with their involvement, are you seeing faster diligence time lines or improved leasing momentum because of their support?

Question: Thomas Shinske - Cantor Fitzgerald - Analyst : Awesome. Great. And then just on CapEx, I guess, can you provide an update on your expected capital needs over the next 12 to 18 months and whether the current construction of Ellendale is being still in line with past projections of CapEx?

Question: Thomas Shinske - Cantor Fitzgerald - Analyst : Awesome. And then one more, if I may. On the Bitcoin hosting business. I guess, could you provide clarity on when those contracts are up for expiration? And if you see any risk in your large client potentially rolling off at the expiration of those contracts?

Question: Rob Brown - Lake Street Capital Markets - Analyst : First question on the kind of the remaining steps to complete the Ellendale facility. You said that kind of fourth quarter would be running. But what's sort of left there and how much CapEx is left to go just in that facility?

Question: Rob Brown - Lake Street Capital Markets - Analyst : Okay. Excellent. And then in terms of selling the cloud business, what's sort of your sense on the plans there? You start marketing it now and hope to have it sold by kind of year-end or any kind of insight outside in terms of time line there?

Question: Darren Aftahi - ROTH Capital Partners LLC - Analyst : On the AI cloud business, did you get the inbounds pre making this announcement about putting the asset up for sale? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 14, 2025 / 9:00PM, APLD.OQ - Q3 2025 Applied Digital Corp Earnings Call

Question: Darren Aftahi - ROTH Capital Partners LLC - Analyst : Fair enough. And then a clarification, moving from a single tenant to multi-tenant and the technical issues. Was that a prior inter-quarter, in the February you guys just reported meaning it's kind of trued up starting the May quarter?

Question: Darren Aftahi - ROTH Capital Partners LLC - Analyst : Got it. And then just one last one, if I may. The existing hyperscalers, you've been talking to sort of post Macquarie, has disposition about data center build change at all just given kind of the current macro environment, maybe has anything changed in the last three to four, five weeks?

Question: Mike Grondahl - Northland Securities - Analyst : And while you covered demand a little bit, Wes, for the 100 megawatts, are you still talking to multiple hyperscalers for that? Or has that been kind of narrowed down to one hyperscaler you're negotiating with? And if you could talk a little bit about pricing trends the last 90 days. What are you seeing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 14, 2025 / 9:00PM, APLD.OQ - Q3 2025 Applied Digital Corp Earnings Call

Question: Mike Grondahl - Northland Securities - Analyst : Got it. And then the decision to pursue a sale of the cloud business, you kind of talked about some of your hyperscale customers kind of view that as a friction point or potential competition. And you talked about how it doesn't fit into the REIT structure and the recent core [weave] IPO. Would you say there was a fair bit of pressure from your hyperscale potential customers to exit that business? I'm just trying to understand if that was a little bit more external-driven or internal driven.

Question: Mike Grondahl - Northland Securities - Analyst : Got it. And then do you still see that cloud business is roughly $110 million to $120 million annual business (multiple speakers)

Question: George Sutton - Craig-Hallum Capital Group LLC - Analyst : Just a question on the sale process with your potential lessors having issues with the ownership, are they good with an in-process sale? Would they require a definitive agreement? I'm just curious how significant they would view this.

Question: George Sutton - Craig-Hallum Capital Group LLC - Analyst : Got you. I know you've been carrying some third-party data center capacity that was unused. I'm curious how that part is involved in this process.

Question: John Todaro - Needham & Company LLC - Analyst : Two here, and maybe we'll start with the AI cloud business. So 2023 pricing, that's interesting, how long is, I guess, left on those leases. And then what other piece would effectively be? There's the GPUs? Is there anything else that would kind of get sold off in that process?

Question: John Todaro - Needham & Company LLC - Analyst : Got it. Understood. And then on the HPC side of things, it sounds like you guys are pretty close to a lease just with those expectations for generating revenue. Is the thinking still that whoever takes the 100 megawatts at Ellendale, does the full 400 megawatts for the campus? Is that still thinking. And if not, kind of the expectation for Building 2, it seems like you're far along with someone given that, that time line seems a bit aggressive with what the Q2 '26 generating revenue?