Applied Digital's Revenue Recognition Delayed Until 2029
Applied Digital (NASDAQ: APLD) has signed $36 billion in long-term leases for its AI data centers, but the company is not yet generating significant rental revenue. As of late July, only 175 MW out of a total contracted capacity of 1,410 MW was operational. The firm reported $611.3 million in fiscal year revenue and a net loss of $249.2 million for the same period. The company's leases are structured on a take-or-pay basis but only begin generating rental income once construction is complete and tenants occupy the facilities. Minimum lease payments will ramp up significantly, with over $2 billion expected in fiscal 2027-2028 combined before reaching an annualized $2.3 billion by full delivery. Applied Digital faces high capital expenditures and a heavy debt load of $5 billion against $4.2 billion cash reserves as it builds out its data centers, with construction costs currently financed at interest rates between 6.75% to 9.25%. The company's stock has declined from over $50 in the past year to around $26 today.
Tickers: $APLD
Topics: AI data centers Applied Digital leasing contracts net loss revenue growth