APLD

• The company requires substantial additional capital to fund data center campus construction and may be unable to access it on acceptable terms, potentially impairing growth.
• Significant customer concentration exists, with one HPC Hosting customer accounting for 59% of revenue and the sole Data Center Hosting customer for 25%, creating material dependency.
• Changes in U.S. trade policy, including tariffs, could increase costs and delay procurement of electrical infrastructure and construction materials for HPC and AI facilities.
• The evolving regulatory landscape for AI and cryptoassets could adversely affect customers and the company's business, potentially limiting or preventing revenue generation.
• The company consolidates ChronoScale's financial results, and any delays or inaccuracies in ChronoScale's reporting could cause material misstatements in Applied Digital's financial statements.
• Operations are substantially concentrated in North Dakota, exposing the company to state-specific regulatory, market, and natural disaster risks.

We lease office space located in Dallas, Texas for our principal offices. In addition, we lease office and warehouse space in Irving, Texas to support our operations. We own our Polaris Forge and Delta Forge data centers, including the land on which such data centers are located in North Dakota and Louisiana. See Item 1. Business for further descriptions of our facilities and sites. ChronoScale leases office space in Menlo Park, California for its principal offices. ChronoScale also leases data center colocation space in Colorado, Utah, and Minnesota to support its operations. We believe that our leased and owned facilities are adequate to support our near-term business needs and that should it be needed, suitable additional or alternative space will be available to support our operations.

• A putative securities class action (McConnell v. Applied Digital) alleges false or misleading statements about data center profitability, cloud transition, and board independence under NASDAQ rules.
• The securities lawsuit is stayed and administratively closed as of September 2025 pending resolution of the defendants' motion to dismiss.
• A derivative lawsuit (Weich v. Cummins) asserted breach of fiduciary duty, corporate waste, and unjust enrichment based on similar allegations.
• The derivative lawsuit was dismissed without prejudice in June 2024 for failure to plead demand futility or a breach claim; plaintiff has not yet refiled.
• The Company cannot estimate a loss range and states an adverse outcome could be material to results of operations if it becomes probable and estimable.
• As of May 31, 2026, no other pending or threatened lawsuits are expected to have a material adverse effect on consolidated operations.

• Total revenue rose to $611.3M in FY2026 from $228.6M, fueled by $385.3M from the newly operational HPC Hosting Business at Polaris Forge 1.
• Data Center Hosting revenue grew 7% to $154.4M on improved performance, while ChronoScale cloud revenue fell 15% to $71.6M due to lower service rates.
• GAAP operating loss deepened to $236.5M from $72.2M, primarily due to a $198.3M surge in stock-based compensation and a $59.7M loss on cloud assets reclassified from held-for-sale.
• Adjusted EBITDA, excluding ChronoScale and non-recurring items, improved sharply to $107.2M from $19.6M, with an 11% adjusted operating margin.
• Cash provided by operations turned positive at $89.7M; financing activities raised $6.9B through subsidiary note offerings and equity, funding $2.9B in capex.
• Liquidity remains robust with $4.2B in cash and restricted cash, supported by $1.8B from a Macquarie unit purchase agreement and $2.1B in 6.750% senior secured notes.

• Interest rate risk is not material because the majority of debt carries a fixed coupon rate.
• Electricity is the primary commodity exposure, managed in part through fixed-price power contracts at certain locations.
• Data center construction exposes the company to price risk for materials such as steel and copper.
• Procurement lead-times for equipment like generators could delay data center openings and raise project costs.
• The company does not use forward contracts or other financial instruments to hedge commodity risk beyond the power contracts.
• Foreign currency risk is minimal since substantially all business is transacted in U.S. dollars or dollar-based currencies.

• Total revenue grew 167% to $611.3M, driven by $496.6M in services and $114.7M in new data center rental revenue from HPC hosting.
• Total assets ballooned to $9.9B from $1.9B, primarily due to $4.2B in property and equipment and $4.0B in cash and restricted cash from massive debt and equity raises.
• The company reported a net loss of $184.3M, impacted by a $59.7M loss on a failed held-for-sale classification of its cloud business and $332.1M in SG&A, including $220.1M in stock-based compensation.
• Long-term debt increased to $5.0B, including $2.35B in 9.25% Senior Secured Notes due 2030 and $2.15B in 6.75% Senior Secured Notes due 2031, to fund data center construction.
• A $1.8B investment from Macquarie Asset Management into a subsidiary (TopCo 2) was recorded as a redeemable noncontrolling interest, with $163.3M in related derivative assets recognized.
• The company reorganized from three to two reportable segments—Data Center Hosting and HPC Hosting—after contributing its Cloud Services Business to a new public entity, ChronoScale.