Why Are Applied Digital Shares Tumbling Today?

Applied Digital Corp APLD is trading lower by over 20% after the company reported worse-than-expected second-quarter FY24 financial results and guided a weak outlook.

The company reported revenue of $42.2 million, up 242% Y/Y, which missed the consensus of $57.3 million.

Revenues benefited from a full quarter of revenue from its Ellendale facility and the Garden City facility beginning the second quarter of 2024.

Adjusted EBITDA came in at $10.6 million in Q2 compared to an adjusted EBITDA loss of $(2.2) million in the prior year. 

Adjusted EPS loss of five cents, missing the consensus of EPS of one cent.

As of Nov. 30, 2023, cash, cash equivalents, and restricted cash stood at $9.2 million. 

Wes Cummins, Chairman and CEO, said, “Our Garden City facility was energized in October, and we remain on track to reach 500 MW across our three hosting facilities in the near term. We broke ground on our first 100 MW high-performance compute facility in Ellendale, North Dakota. The pipeline of opportunities in our Cloud Services segment remains robust, and we continued to deploy GPUs for existing customer agreements during the quarter.”

Outlook Revised: For FY24, the company now expects revenue and adjusted EBITDA to be below the lower end of the previously guided range of $385 million–$405 million and $195 million–$205 million, respectively.

The company lowered the outlook due to the delayed delivery of certain networking components for GPU clusters.

APLD projects to exit FY24 at an annual revenue run rate of around $500 million (+360% Y/Y) and an annualized adjusted EBITDA run rate of about $250 million (+935% Y/Y). 

In a separate release, APLD disclosed it penned a conditional agreement to provide datacenter capacity at its Ellendale, North Dakota campus for a contract value of $2.2 billion over the 10-year term.

Price Action: APLD shares are down 22.96% at $5.77 at the time of publication Tuesday.

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