Applied Digital Corporation (Nasdaq: APLD)
("Applied Digital" or the "Company"), a designer,
builder and operator of next-generation digital infrastructure that
is designed for High Performance Computing (“HPC”) applications,
today reported financial results for the fiscal second quarter of
2023 ended November 30, 2022. The Company also provided an
operational update and outlook.
Recent Operational and Financial
Highlights
- Fiscal second quarter 2023 revenue
of $12.3 million
- Fiscal second quarter 2023
adjusted EBITDA of $(2.1) million
- 100-Megawatt (“MW”) facility in
Jamestown, North Dakota operated at full capacity during the
quarter
- Changed name to “Applied Digital
Corporation” through successful shareholder vote on November 10,
2022, reflecting the Company’s broad services and offerings for HPC
applications
- Signed first two
non-cryptocurrency customers for HPC applications at Jamestown,
North Dakota, for machine learning and Web3 applications
- Launched an independent fund of up
to $100 million targeting distressed cryptocurrency asset
acquisitions in a 50/50 joint venture with GMR Limited to be
managed by a newly formed entity, “Highland Digital”
- Continued buildout of second and
third co-hosting facilities in Ellendale, North Dakota and Garden
City, Texas with Ellendale expected to be energized by end of
fiscal third quarter and Garden City expected to be energized
pending final regulatory approval
Management Commentary“Our fiscal
second quarter was characterized by growth and adaptability, as we
operated our Jamestown facility at full capacity for the entirety
of the quarter while simultaneously growing our non-cryptocurrency
opportunity set,” said Applied Digital Chairman and CEO Wes
Cummins. “Following our corporate name change, we secured our first
two non-cryptocurrency customers, one of which will be hosted in a
new 5MW specialized processing center.
“In parallel with our newer strategic objectives, we continued
to progress our next two datacenters, Garden City and Ellendale,
both of which we anticipate to begin energizing by the end of
February. Once fully online, we will have nearly 500MW of hosting
capacity that we expect will put us at an annualized adjusted
EBITDA run rate of approximately $100 million. The fact that we are
accomplishing this in one of the most challenging cryptocurrency
market cycles is a testament to our differentiated business model
and operational execution.
“We look forward to continuing to deliver for our existing
cryptocurrency customers and further buildout of our broader HPC
hosting capabilities where we are in active discussions with
additional customers. Demand for our services from both customer
sets remains robust, which validates our position as a financially
strong and leading digital infrastructure provider.”
Jamestown, North Dakota Facility Update
(100MW)Applied Digital’s first facility is in Jamestown,
North Dakota with capacity of 100MW. The entire 100MW of capacity
has been fully contracted on multi-year contracts, providing
revenue visibility for the Company. Additionally, the facility is
powered through a five-year Energy Services Agreement (ESA) with a
local utility, providing visibility into the cost structure as a
stable pricing mechanism for energy costs has been negotiated.
Jamestown operated at full capacity throughout the quarter.
Garden City, Texas Facility Update
(200MW) Applied Digital’s second facility is in Garden
City, Texas, planned for capacity of 200MW and is co-located with a
wind farm. Construction of the facility is complete and miners are
actively being installed. The Company has received regulatory
approval for this site and is finalizing technical details with the
utility provider and energy partner. The site is currently expected
to energize before the end of February.
Ellendale, North Dakota Facility Update
(180MW) Applied Digital’s third co-hosting facility is in
Ellendale, North Dakota with planned capacity of 180MW. The site is
close to significant wind power capacity and is at a different
location than the Company's Jamestown facility. The Company entered
into a five-year ESA with a utility partner and broke ground on the
site on September 8, 2022. Concrete has been successfully poured,
ahead of the prohibitively cold winter weather, and the Company is
actively constructing buildings with energization expected before
the end of February.
HPC Customer UpdateOn December 14,
2022, Applied Digital announced groundbreaking of a 5MW specialized
processing center in Jamestown, North Dakota, adjacent to its
existing 100MW facility. The new building, planned for energization
in the first calendar quarter of 2023, will host a new HPC customer
for a machine learning application. Additionally, the Company
recently retrofitted a small portion of its existing 100MW facility
to host a Web3 application for a second HPC customer.
The Company’s next-generation datacenters are ideal hosting
sites for HPC applications that can offer lower cost, high compute
power solutions compared to traditional datacenters that are
typically higher cost with ultra-low latency. Applied Digital is in
active discussions with additional non-cryptocurrency customers as
it continues to build out its broader HPC capabilities.
Financial Results for Fiscal Second
Quarter 2023 Ended November 30, 2022Note: Applied Digital
did not have operations in the prior year comparable period and
thus no comparative analysis is included.
Revenues in the fiscal second quarter 2023 were
$12.3 million. Hosting revenues were generated entirely from
the Company’s first hosting facility in Jamestown, North Dakota.
The Jamestown facility operated at full capacity during the
quarter.
Cost of revenues in the fiscal second quarter 2023 was
$11.8 million, consisting of approximately $10.3 million
of energy costs, $900,000 of depreciation and amortization expense,
and $700,000 of personnel expenses for employees directly working
at the Jamestown hosting facility.
Adjusted Gross Profit, a non-GAAP measure, for the fiscal second
quarter of 2023 was $1.5 million, or 12% of revenue. Gross
profit was negatively impacted in the quarter by billing
adjustments related to the Jamestown site being partially offline
in the prior quarter.
Operating expenses for the fiscal second quarter of 2023 were
$27.2 million, which included $21.8 million in stock-based
compensation, $4.7 million in other selling, general and
administrative costs and $700,000 of depreciation and amortization
expenses not attributable to cost of sales. Stock-based
compensation during the quarter was elevated as the Company had a
registration statement declared effective during the quarter
related to the potential resale of previously awarded restricted
stock and restricted stock units (RSUs), which required a catch-up
of recording these expenses. In addition to multiple quarters of
expense being recognized in a single quarter, the value of the RSUs
in many cases were significantly higher compared to the recent
share price.
Adjusted net loss from continuing operations for the fiscal
second quarter of 2023 was $3.8 million, or $(0.04) per basic
share, based on a weighted average share count during the quarter
of 93.4 million.
Net loss attributable to Applied Digital for the fiscal second
quarter of 2023 was $26.6 million, or $(0.29) per basic and
diluted share, based on a weighted average share count during the
quarter of 93.4 million
Adjusted EBITDA, a non-GAAP measure, for the fiscal second
quarter of 2023 was a loss of $(2.1) million.
Applied Digital ended the fiscal second quarter 2023 with cash
and cash equivalents of $18.1 million and $20.5 million in
debt outstanding.
Conference CallApplied Digital
will host a conference call today, January 9, 2023 at 5:00 p.m.
Eastern Time (2:00 p.m. Pacific Time) to discuss these results. A
question-and-answer session will follow management’s
presentation.
To participate, please dial the appropriate number at least ten
minutes prior to the start time and ask for the Applied Digital
conference call.
U.S. dial-in number: 1-877-407-0792International number:
1-201-689-8263Conference ID: 13735048
The conference call will broadcast live and be available for
replay here.
A replay of the call will be available after 8:00 p.m. Eastern
time today through January 23, 2023.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Conference ID: 13735048
About Applied DigitalApplied
Digital Corporation (Nasdaq: APLD) designs, develops and operates
next-generation datacenters across North America to provide digital
infrastructure solutions to the rapidly growing high performance
computing (HPC) industry. Find more information at
www.applieddigital.com. Follow us on Twitter at @APLDdigital.
Forward-Looking StatementsThis
release contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995 regarding, among
other things, future operating and financial performance, product
development, market position, business strategy and objectives.
These statements use words, and variations of words, such as
"continue," "build," "future," "increase," "drive," "believe,"
"look," "ahead," "confident," "deliver," "outlook," "expect," and
"predict." Other examples of forward-looking statements may
include, but are not limited to, (i) statements of Company plans
and objectives, including our evolving business model, or estimates
or predictions of actions by suppliers, (ii) statements of future
economic performance, and (iii) statements of assumptions
underlying other statements and statements about the Company or its
business. You are cautioned not to rely on these forward-looking
statements. These statements are based on current expectations of
future events and thus are inherently subject to uncertainty. If
underlying assumptions prove inaccurate or known or unknown risks
or uncertainties materialize, actual results could vary materially
from the Company's expectations and projections. These risks,
uncertainties, and other factors include: decline in demand for our
products and services; the volatility of the crypto asset industry;
the inability to comply with developments and changes in
regulation; cash flow and access to capital; and maintenance of
third party relationships. Information in this release is as of the
dates and time periods indicated herein, and the Company does not
undertake to update any of the information contained in these
materials, except as required by law.
|
APPLIED
DIGITAL CORPORATION AND SUBSIDIARIESCondensed
Consolidated Balance Sheets (Unaudited)(In
thousands, except number of shares and par value
data) |
|
|
|
November 30, 2022 |
|
May 31, 2022 |
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
18,074 |
|
|
$ |
46,299 |
|
Accounts receivable |
|
|
276 |
|
|
|
227 |
|
Prepaid expenses and other current assets |
|
|
2,397 |
|
|
|
1,336 |
|
Total current assets |
|
|
20,747 |
|
|
|
47,862 |
|
Property and equipment,
net |
|
|
132,893 |
|
|
|
64,260 |
|
Right of use asset, net |
|
|
12,353 |
|
|
|
6,408 |
|
Utility deposits |
|
|
1,450 |
|
|
|
1,450 |
|
TOTAL
ASSETS |
|
$ |
167,443 |
|
|
$ |
119,980 |
|
|
|
|
|
|
LIABILITIES, MEZZANINE
EQUITY AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
7,472 |
|
|
$ |
13,260 |
|
Current portion of lease liability |
|
|
3,664 |
|
|
|
1,004 |
|
Current portion of term loan |
|
|
4,122 |
|
|
|
1,333 |
|
Customer deposits |
|
|
24,689 |
|
|
|
9,524 |
|
Current deferred revenue |
|
|
29,394 |
|
|
|
3,877 |
|
Sales and use tax payable |
|
|
865 |
|
|
|
— |
|
Total current liabilities |
|
|
70,206 |
|
|
|
28,998 |
|
Deferred tax liability |
|
|
260 |
|
|
|
540 |
|
Long-term portion of lease liability |
|
|
8,631 |
|
|
|
5,310 |
|
Long-term term loan |
|
|
16,376 |
|
|
|
5,897 |
|
Total liabilities |
|
$ |
95,473 |
|
|
$ |
40,745 |
|
Commitments and
contingencies |
|
|
|
|
Stockholders' equity
(deficit): |
|
|
|
|
Common stock, $0.001 par value, 166,666,667 shares authorized,
93,982,650 shares issued and 93,946,353 shares outstanding at
November 30, 2022, and 97,837,703 shares issued and 97,801,406
shares outstanding at May 31, 2022 |
|
$ |
94 |
|
|
$ |
98 |
|
Additional paid in capital |
|
|
150,695 |
|
|
|
128,293 |
|
Treasury stock, 36,300 shares at November 30, 2022 and
May 31, 2022, at cost |
|
|
(62 |
) |
|
|
(62 |
) |
Accumulated deficit |
|
|
(87,218 |
) |
|
|
(56,070 |
) |
Total stockholders’ equity
attributable to Applied Digital Corporation |
|
|
63,509 |
|
|
|
72,259 |
|
Noncontrolling interest |
|
|
8,461 |
|
|
|
6,976 |
|
Total Stockholders' equity
(deficit) including noncontrolling interest |
|
$ |
71,970 |
|
|
$ |
79,235 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT |
|
$ |
167,443 |
|
|
$ |
119,980 |
|
|
APPLIED
DIGITAL CORPORATION AND SUBSIDIARIESCondensed
Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data) |
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
November 30,2022 |
|
November 30,2021 |
|
|
November 30,2022 |
|
November 30,2021 |
Revenues: |
|
|
|
|
|
|
|
|
|
Hosting revenue |
|
$ |
12,340 |
|
|
$ |
— |
|
|
|
$ |
19,264 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
$ |
11,812 |
|
|
$ |
— |
|
|
|
$ |
17,905 |
|
|
$ |
— |
|
Gross profit |
|
|
528 |
|
|
|
— |
|
|
|
|
1,359 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
$ |
26,502 |
|
|
$ |
1,181 |
|
|
|
$ |
31,212 |
|
|
$ |
14,216 |
|
Depreciation and
amortization |
|
|
703 |
|
|
|
174 |
|
|
|
|
1,001 |
|
|
|
177 |
|
Total costs and expenses |
|
$ |
27,205 |
|
|
$ |
1,355 |
|
|
|
$ |
32,213 |
|
|
$ |
14,393 |
|
Operating loss |
|
$ |
(26,677 |
) |
|
$ |
(1,355 |
) |
|
|
$ |
(30,854 |
) |
|
$ |
(14,393 |
) |
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest Expense |
|
$ |
(385 |
) |
|
$ |
— |
|
|
|
$ |
(741 |
) |
|
$ |
— |
|
Loss on extinguishment of
debt |
|
|
— |
|
|
|
— |
|
|
|
|
(94 |
) |
|
|
(1,342 |
) |
Total other expense, net |
|
|
(385 |
) |
|
|
— |
|
|
|
|
(835 |
) |
|
|
(1,342 |
) |
Net loss from continuing
operations before income tax expenses |
|
|
(27,062 |
) |
|
|
(1,355 |
) |
|
|
|
(31,689 |
) |
|
|
(15,735 |
) |
Income tax benefit
(expense) |
|
|
312 |
|
|
|
(214 |
) |
|
|
|
280 |
|
|
|
(214 |
) |
Net loss from continuing
operations |
|
|
(26,750 |
) |
|
|
(1,569 |
) |
|
|
|
(31,409 |
) |
|
|
(15,949 |
) |
Net gain from discontinued
operations, net of income taxes |
|
|
— |
|
|
|
1,398 |
|
|
|
|
— |
|
|
|
1,681 |
|
Net loss including
noncontrolling interests |
|
|
(26,750 |
) |
|
|
(171 |
) |
|
|
|
(31,409 |
) |
|
|
(14,268 |
) |
Net loss attributable to
noncontrolling interest |
|
|
(133 |
) |
|
|
— |
|
|
|
|
(261 |
) |
|
|
— |
|
Net loss attributable to
Applied Digital Corporation |
|
$ |
(26,617 |
) |
|
$ |
(171 |
) |
|
|
$ |
(31,148 |
) |
|
$ |
(14,268 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net (loss)
gain per share: |
|
|
|
|
|
|
|
|
|
Continuing Operations |
|
$ |
(0.29 |
) |
|
$ |
(0.03 |
) |
|
|
$ |
(0.34 |
) |
|
$ |
(0.32 |
) |
Discontinued Operations |
|
$ |
— |
|
|
$ |
0.03 |
|
|
|
$ |
— |
|
|
$ |
0.03 |
|
Basic and diluted net loss per
share |
|
$ |
(0.29 |
) |
|
$ |
— |
|
|
|
$ |
(0.34 |
) |
|
$ |
(0.29 |
) |
Basic and diluted weighted
average number of shares outstanding |
|
|
93,422,427 |
|
|
|
53,396,920 |
|
|
|
|
93,263,266 |
|
|
|
49,143,981 |
|
|
APPLIED
DIGITAL CORPORATION AND SUBSIDIARIESCondensed
Consolidated Statements of Cash Flows (Unaudited)(In thousands of
dollars) |
|
|
Six Months Ended |
|
November 30, 2022 |
|
November 30, 2021 |
CASH FLOW FROM
OPERATING ACTIVITIES |
|
|
|
Net loss attributable to
Applied Digital Corporation |
$ |
(31,148 |
) |
|
$ |
(14,268 |
) |
Net loss from discontinued
operations, net of income taxes |
|
— |
|
|
|
1,681 |
|
Net Loss attributable to
noncontrolling interest |
|
(261 |
) |
|
|
— |
|
Net Income (loss) from
continuing operations |
|
(31,409 |
) |
|
|
(15,949 |
) |
Adjustments to reconcile net
loss to net cash provided by (used in) operating activities: |
|
|
|
Depreciation and Amortization |
|
2,704 |
|
|
|
177 |
|
Loss on extinguishment of debt |
|
94 |
|
|
|
1,342 |
|
Stock-Based Compensation |
|
22,398 |
|
|
|
12,337 |
|
Lease Expense |
|
97 |
|
|
|
28 |
|
Deferred Tax |
|
(280 |
) |
|
|
214 |
|
Changes in assets and
liabilities: |
|
|
|
Accounts receivable |
|
(49 |
) |
|
|
— |
|
Prepaid expenses and other current assets |
|
(1,061 |
) |
|
|
(1,644 |
) |
Customer deposits |
|
15,165 |
|
|
|
— |
|
Deferred revenue |
|
25,517 |
|
|
|
— |
|
Accounts payable and accrued liabilities |
|
(5,745 |
) |
|
|
5,254 |
|
Sales and use tax payable |
|
865 |
|
|
|
— |
|
Lease Assets and Liabilities |
|
(317 |
) |
|
|
(25 |
) |
Net cash provided by operating
activities of continuing operations |
|
27,979 |
|
|
|
1,734 |
|
Net cash provided by operating
activities of discontinued operations |
|
— |
|
|
|
600 |
|
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
27,979 |
|
|
|
2,334 |
|
CASH FLOW FROM INVESTING ACTIVITIES |
|
|
|
Purchases of property and equipment |
|
(70,305 |
) |
|
|
(10,314 |
) |
Deposit on equipment |
|
— |
|
|
|
(23,230 |
) |
Net cash used in investing activities of continuing operations |
|
(70,305 |
) |
|
|
(33,544 |
) |
Net cash provided by investing activities of discontinued
operations |
|
— |
|
|
|
1,931 |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
(70,305 |
) |
|
|
(31,613 |
) |
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
|
Issuance of preferred stock |
|
— |
|
|
|
34,500 |
|
Repayment of finance leases |
|
(778 |
) |
|
|
— |
|
Preferred issuance costs |
|
— |
|
|
|
(2,926 |
) |
Term loan payoff |
|
(7,056 |
) |
|
|
— |
|
Proceeds from issuance of term loan |
|
21,711 |
|
|
|
— |
|
Term Loan Issuance Costs |
|
(378 |
) |
|
|
— |
|
Loan Payments |
|
(1,102 |
) |
|
|
— |
|
Payments of employee restricted stock tax withholdings |
|
(43 |
) |
|
|
— |
|
Equity contributions to subsidiaries |
|
1,747 |
|
|
|
— |
|
Net cash provided by financing activities of continuing
operations |
|
14,101 |
|
|
|
31,574 |
|
Net cash provided by financing activities of discontinued
operations |
|
— |
|
|
|
— |
|
CASH FLOW PROVIDED BY FINANCING ACTIVITIES |
|
14,101 |
|
|
|
31,574 |
|
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS |
|
(28,225 |
) |
|
|
2,295 |
|
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD |
|
46,299 |
|
|
|
11,750 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
18,074 |
|
|
|
14,045 |
|
Less: cash and cash equivalents of discontinued operations |
|
— |
|
|
|
— |
|
Cash and cash equivalents of continuing operations |
$ |
18,074 |
|
|
$ |
14,045 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION |
|
|
|
Interest Paid |
$ |
707 |
|
|
$ |
— |
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH
ACTIVITIES |
|
|
|
Right-of-use asset obtained by lease obligation |
$ |
6,925 |
|
|
$ |
1,291 |
|
Fixed assets in accounts payable |
$ |
3,466 |
|
|
$ |
513 |
|
|
|
|
|
|
|
|
|
Use and Reconciliation of Non-GAAP Financial
MeasuresThis press release and our related earnings call
contain certain non-GAAP financial measures. See below for
discussion on each non-GAAP metric.
Adjusted Operating Loss and Adjusted Net
LossAdjusted operating loss and adjusted net loss are
non-GAAP measures that represent operating loss and net loss from
continuing operations excluding stock-based compensation and
nonrecurring expenses. We believe these are useful metrics as they
provide additional information regarding factors and trends
affecting our business and provide perspective on results absent
one-time or significant non-cash items. However, Applied Digital’s
presentation of these measures should not be construed as an
inference that its future results will be unaffected by unusual or
non-recurring items. Applied Digital’s computation of Adjusted
Operating Loss and Adjusted Net Loss may not be comparable to other
similarly titled measures computed by other companies, because all
companies may not calculate Adjusted Operating Loss and Adjusted
Net Loss in the same fashion.
Because of these limitations, Adjusted Operating Loss and
Adjusted Net Loss should not be considered in isolation or as a
substitute for performance measures calculated in accordance with
GAAP. Applied Digital compensates for these limitations by relying
primarily on its GAAP results and using Adjusted Operating Loss and
Adjusted Net Loss on a supplemental basis. You should review the
reconciliation of operating loss to Adjusted Operating Loss and net
loss to Adjusted Net Loss above and not rely on any single
financial measure to evaluate Applied Digital’s business.
EBITDA and Adjusted EBITDA“EBITDA” is defined
as earnings before interest, taxes, and depreciation and
amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for
stock-based compensation, gain on extinguishment of accounts
payable, loss on extinguishment of debt, and one-time professional
service costs not directly related to the company’s offering and
therefore not deferred under the guidance in ASC 340 and SAB Topic
5A. These costs have been adjusted as they are not indicative of
business operations. Adjusted EBITDA is intended as a supplemental
measure of Applied Digital’s performance that is neither required
by, nor presented in accordance with, GAAP. Applied Digital
believes that the use of EBITDA and Adjusted EBITDA provides an
additional tool for investors to use in evaluating ongoing
operating results and trends and in comparing its financial
measures with those of comparable companies, which may present
similar non-GAAP financial measures to investors. We also believe
EBITDA and Adjusted EBITDA are useful metrics to investors because
they provide additional information regarding factors and trends
affecting our business, which are used in the business planning
process to understand expected operating performance, to evaluate
results against those expectations, and because of their importance
as measures of underlying operating performance, as the primary
compensation performance measure under certain programs and plans.
However, you should be aware that when evaluating EBITDA and
Adjusted EBITDA, Applied Digital may incur future expenses similar
to those excluded when calculating these measures. In addition,
Applied Digital’s presentation of these measures should not be
construed as an inference that its future results will be
unaffected by unusual or non-recurring items. Applied Digital’s
computation of Adjusted EBITDA may not be comparable to other
similarly titled measures computed by other companies, because all
companies may not calculate Adjusted EBITDA in the same
fashion.
Because of these limitations, EBITDA and Adjusted EBITDA should
not be considered in isolation or as a substitute for performance
measures calculated in accordance with GAAP. Applied Digital
compensates for these limitations by relying primarily on its GAAP
results and using EBITDA and Adjusted EBITDA on a supplemental
basis. You should review the reconciliation of net loss to EBITDA
and Adjusted EBITDA above and not rely on any single financial
measure to evaluate Applied Digital’s business.
Adjusted Gross Profit“Adjusted Gross Profit” is
a non-GAAP measure that represents gross profit adjusted for
depreciation expense within cost of revenues. We believe this is a
useful metric as it provides additional information regarding gross
profit aside from significant non-cash expense in depreciation.
However, Applied Digital’s presentation of this measure should not
be construed as an inference that its future results will be
unaffected by other factors within cost of revenues. Applied
Digital’s computation of Adjusted Gross Profit may not be
comparable to other similarly titled measures computed by other
companies, because all companies may not calculate Adjusted Gross
Profit in the same fashion.
Because of these limitations, Adjusted Gross Profit should not
be considered in isolation or as a substitute for performance
measures calculated in accordance with GAAP. Applied Digital
compensates for these limitations by relying primarily on its GAAP
results and using Adjusted Gross Profit on a supplemental basis.
You should review the reconciliation of gross profit to Adjusted
Gross Profit above and not rely on any single financial measure to
evaluate Applied Digital’s business.
|
Reconciliation of GAAP to Non-GAAP Measures |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
$ in
thousands |
November 30, 2022 |
|
November 30, 2021 |
|
November 30, 2022 |
|
November 30, 2021 |
Adjusted operating
loss |
|
|
|
|
|
|
|
Operating Loss from Continuing Operations (GAAP) |
$ |
(26,677 |
) |
|
$ |
(1,355 |
) |
|
$ |
(30,854 |
) |
|
$ |
(14,393 |
) |
Add: Stock-based
compensation |
|
21,819 |
|
|
|
— |
|
|
|
22,398 |
|
|
|
12,337 |
|
Add: Gain on Extinguishment of
Accounts Payable |
|
— |
|
|
|
(285 |
) |
|
|
— |
|
|
|
(325 |
) |
Add: Loss on Extinguishment of
Debt |
|
— |
|
|
|
— |
|
|
|
94 |
|
|
|
1,342 |
|
Add: Non-recurring
professional service costs |
|
664 |
|
|
|
636 |
|
|
|
1,072 |
|
|
|
636 |
|
Add: One-time electricity
charges |
|
114 |
|
|
|
— |
|
|
|
114 |
|
|
|
— |
|
Add: Other non-recurring
expenses |
|
380 |
|
|
|
— |
|
|
|
580 |
|
|
|
— |
|
Adjusted Operating Loss from
Continuing Operations (Non-GAAP) |
$ |
(3,700 |
) |
|
$ |
(1,004 |
) |
|
$ |
(6,596 |
) |
|
$ |
(403 |
) |
Adjusted operating margin from
Continuing Operations |
(30.0 |
)% |
|
|
— |
% |
|
(34.2 |
)% |
|
|
— |
% |
|
|
|
|
|
|
|
|
Adjusted net income
(loss) |
|
|
|
|
|
|
|
Net Loss from Continuing
Operations (GAAP) |
$ |
(26,750 |
) |
|
$ |
(1,569 |
) |
|
$ |
(31,409 |
) |
|
$ |
(15,949 |
) |
Add: Stock-based
compensation |
|
21,819 |
|
|
|
— |
|
|
|
22,398 |
|
|
|
12,337 |
|
Add: Gain on Extinguishment of
Accounts Payable |
|
— |
|
|
|
(285 |
) |
|
|
— |
|
|
|
(325 |
) |
Add: Loss on Extinguishment of
Debt |
|
— |
|
|
|
— |
|
|
|
94 |
|
|
|
1,342 |
|
Add: Non-recurring
professional service costs |
|
664 |
|
|
|
636 |
|
|
|
1,072 |
|
|
|
636 |
|
Add: One-time electricity
charges |
|
114 |
|
|
|
— |
|
|
|
114 |
|
|
|
— |
|
Add: Other non-recurring
expenses |
|
380 |
|
|
|
— |
|
|
|
580 |
|
|
|
— |
|
Adjusted net loss from
Continuing Operations (Non-GAAP) |
$ |
(3,773 |
) |
|
$ |
(1,218 |
) |
|
$ |
(7,151 |
) |
|
$ |
(1,959 |
) |
|
|
|
|
|
|
|
|
EBITDA and Adjusted
EBITDA |
|
|
|
|
|
|
|
Net Loss from Continuing
Operations (GAAP) |
$ |
(26,750 |
) |
|
$ |
(1,569 |
) |
|
$ |
(31,409 |
) |
|
$ |
(15,949 |
) |
Add: Interest Expense |
|
385 |
|
|
|
— |
|
|
|
741 |
|
|
|
— |
|
Add: Income Tax Benefit
(Expense) |
|
(312 |
) |
|
|
214 |
|
|
|
(280 |
) |
|
|
214 |
|
Add: Depreciation and
Amortization |
|
1,568 |
|
|
|
174 |
|
|
|
2,704 |
|
|
|
177 |
|
EBITDA (Non-GAAP) |
$ |
(25,109 |
) |
|
$ |
(1,181 |
) |
|
$ |
(28,244 |
) |
|
$ |
(15,558 |
) |
Add: Stock-based
compensation |
|
21,819 |
|
|
|
— |
|
|
|
22,398 |
|
|
|
12,337 |
|
Add: Gain on Extinguishment of
Accounts Payable |
|
— |
|
|
|
(285 |
) |
|
|
— |
|
|
|
(325 |
) |
Add: Loss on Extinguishment of
Debt |
|
— |
|
|
|
— |
|
|
|
94 |
|
|
|
1,342 |
|
Add: Non-recurring
professional service costs |
|
664 |
|
|
|
636 |
|
|
|
1,072 |
|
|
|
636 |
|
Add: One-time electricity
charges |
|
114 |
|
|
|
— |
|
|
|
114 |
|
|
|
— |
|
Add: Other non-recurring
expenses |
|
380 |
|
|
|
— |
|
|
|
580 |
|
|
|
— |
|
Adjusted EBITDA
(Non-GAAP) |
$ |
(2,132 |
) |
|
$ |
(830 |
) |
|
$ |
(3,986 |
) |
|
$ |
(1,568 |
) |
|
|
|
|
|
|
|
|
Adjusted Gross
Profit |
|
|
|
|
|
|
|
Gross profit (GAAP) |
$ |
528 |
|
|
$ |
— |
|
|
$ |
1,359 |
|
|
$ |
— |
|
Add: Depreciation and
amortization in cost of revenues |
|
867 |
|
|
|
— |
|
|
|
1,703 |
|
|
|
— |
|
Add: One-time electricity
charges |
|
114 |
|
|
|
— |
|
|
|
114 |
|
|
|
— |
|
Adjusted Gross Profit
(Non-GAAP) |
$ |
1,509 |
|
|
$ |
— |
|
|
$ |
3,176 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Relations ContactsMatt Glover or Jeff
Grampp, CFAGateway Group, Inc.(949) 574-3860APLD@gatewayir.com
Media ContactBrenlyn MotlaghGateway Group,
Inc.(949) 899-3135APLD@gatewayir.com
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