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Call sheet · Q2'25

Applied Digital (APLD)

Q2'25 earnings call · held January 14, 2025 · compared with the Q1'25 call · management-credibility review
2/12
Disclosure score
4 high, 3 medium flags
Financial quality
Bottom line
The sleeper story is that APLD just signed the most expensive financing I've seen in data centers: 12.75% perpetual preferred that makes their economics impossible. The market sees a $5B war chest, but it's really a $900M Band-Aid at distressed debt pricing. The hyperscaler lease that was '99% done' three months ago has devolved into 'we can't control their speed,' which is management-speak for 'deal's probably dead.' The binding constraint isn't power or construction, it's that nobody wants to be their first customer at prices that work with 12.75% cost of capital. Most revealing quote: 'We believe it is in our shareholders' best interest to avoid speculating on an exact date' after three months of date speculation. My view changes if they sign any hyperscaler at $200+ per kW monthly rates, which they'll need to make these numbers work.

The 30-second version

  • Macquarie deal creates a $5B blank check but with 12.75% perpetual preferred terms that kill the equity story
  • The hyperscaler lease that was '99% done' in Q1 is now in 'late-stage discussions' with multiple parties after exclusivity expired
  • Cloud services D&A magically dropped $8.5M this quarter after 'renegotiating' GPU lease terms to 5-year amortization

What changed this quarter

MetricQ1'25Q2'25Change
Total Revenue$60.7M (67% YoY)$63.9M (51% YoY)Deceleration from 67% to 51% YoY
Data Center Hosting Revenue$34.8M$36.2M+4% QoQ crawl
Cloud Services Revenue$25.9M$27.7M+7% QoQ growth
Adjusted EBITDA$20.0M$21.4M+7% QoQ but 93% YoY slowing
Net Loss$21.6M loss$138.7M loss6.4x worse QoQ
Adjusted Net Loss Per Share$0.15 loss$0.06 lossImproved 60% on accounting games
Cash & Equivalents$86.6M$314.6M+263% from convertible raise
Total Debt$143.6M$479.6M+234% debt explosion
D&A Expense$34.4M$26.4M23% drop from accounting change
Cloud Segment D&A$30.2M implied$21.7M28% reduction via lease renegotiation

Accountability tracked

5 new promises made5 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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