Key Highlights
- APLD shares climbed more than 6% during extended trading hours after releasing fiscal Q4 earnings results
- Quarterly revenue reached $258.7 million, representing a 581% year-over-year increase and significantly exceeding the $104.3 million consensus
- Earnings per share of $0.04 surpassed analyst expectations of a $0.19 loss
- Management disclosed a massive $20 billion backlog connected to a prominent hyperscaler client
- Analysts maintain a Strong Buy rating with a consensus price target of $71.50
Shares of Applied Digital experienced a sharp uptick of over 6% in after-hours trading on July 27 following the release of its fiscal fourth-quarter financial results, which exceeded Wall Street projections across virtually all key performance indicators.
The stock was hovering near $26.91 prior to the earnings announcement.
The company reported quarterly revenue of $258.7 million, marking a dramatic 581% surge compared to the same period last year. This figure demolished the Wall Street consensus of $104.3 million by an impressive 148%.
The explosive revenue growth stemmed from fresh AI infrastructure rollouts and escalating demand from hyperscale clients requiring specialized computing capabilities.
From a profitability standpoint, APLD delivered adjusted earnings per share of $0.04. The Street had anticipated a loss of $0.19 per share. This represents a significant turnaround for a business still in aggressive expansion phase.
Adjusted EBITDA registered at $42.35 million, surpassing the $29.78 million consensus by 42.2%. The company’s adjusted operating margin enhanced to 1.2%, marking a 9.3 percentage point improvement year over year.
Quarterly free cash flow stood at -$1.16 billion versus -$191.4 million in the prior-year period, underscoring the magnitude of its current infrastructure investment program.
$20 Billion Order Book Steals the Spotlight
The most significant catalyst driving the stock’s after-hours movement was the disclosure of a $20 billion order backlog linked to a major hyperscaler partner.
This backlog encompasses multi-year agreements for compute infrastructure and data center hosting solutions, providing APLD with exceptional long-term revenue predictability that few emerging data center providers can claim.
Company leadership indicated that this substantial backlog will support ongoing expansion initiatives and establish a solid foundation for future profitability.
CEO Wes Cummins said: “Nearly three years ago, we made a deliberate decision to build a company that scales, not just a company that builds data centers.”
Additionally, the company’s HPC Hosting Business launched operations at its inaugural HPC data center located at the Polaris Forge 1 campus during the reporting period, generating approximately $270.6 million in revenue from tenant fit-out services.
Wall Street’s Perspective
Analysts currently assign APLD a Strong Buy consensus rating, supported by seven Buy recommendations and one Hold issued within the last three months.
The consensus price target stands at $71.50, suggesting potential upside exceeding 171% from current trading levels. These projections are likely to undergo revisions following the stronger-than-expected earnings performance.
For the forward 12-month period, analysts project revenue expansion of 59.2%, representing a deceleration from recent growth rates but still indicating robust momentum.
The earnings outlook presents a more measured picture. Analysts anticipate full-year EPS will shift from $0.10 to -$1.29 over the next year, attributed to sustained capital investment as APLD continues its scaling operations.
Over the past four years, Applied Digital has achieved a compound annual revenue growth rate of 172%, positioning it among the fastest-growing companies in the data center sector.
Prior to the earnings release, the stock commanded a market capitalization of $7.77 billion.
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