Yahoo Finance Applied Digital Corp (APLD) Q3 2024 Earnings Call Transcript Highlights: Tripling Revenues ...
Revenue: $43.3 million for Q3 2024, up from $14.1 million in Q3 2023.
Datacenter Hosting Revenue: $37.7 million.
Cloud Services Revenue: $5.6 million.
Cost of Revenues: $47.1 million for Q3 2024, up from $10.5 million in Q3 2023.
SG&A Expenses: $30.4 million for Q3 2024, up from $10.5 million in Q3 2023.
Net Loss: $62.8 million or $0.52 per share for Q3 2024, compared to $7 million or $0.07 per share in Q3 2023.
Adjusted Net Loss: $28.9 million or $0.24 per share for Q3 2024.
Adjusted EBITDA: Loss of $2.3 million for Q3 2024, compared to a gain of $0.9 million in Q3 2023.
Cash and Equivalents: $41 million at the end of Q3 2024.
Debt: $61.8 million at the end of Q3 2024.
Release Date: April 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Jamestown facility operated at full capacity with uninterrupted uptime throughout the quarter, marking the sixth consecutive quarter of full capacity operation.
Entered into exclusivity and executed an LOI with a US-based hyperscaler for 400 megawatts of capacity at the Ellendale campus, which is a significant development for future growth.
Strengthened balance sheet post-quarter with $160 million of announced asset sales and financing transactions.
Successfully procured replacement transformers from North American industry-leading manufacturers for the Ellendale facility, which is now reenergized to approximately 14% of its full capacity.
Revenue for the fiscal third quarter of 2024 was $43.3 million, compared to $14.1 million for the fiscal third quarter of 2023, driven primarily by increased capacity across data center hosting facilities and revenue from cloud services contracts.
Negative Points
Encountered challenges in the data center hosting business due to facility power outages, particularly at the 180 megawatt Ellendale facility, which impacted financial performance.
Adjusted EBITDA loss of approximately $2.3 million for the quarter, with several one-time significant items affecting financial performance and comparability.
Incurred unexpected expenses from addressing power outages at the Ellendale data center hosting facility, estimated at $4.5 million impact on operating loss during the quarter.
Recorded a $21.7 million loss on held-for-sale classification related to the Garden City transaction and $4.2 million of accelerated depreciation and amortization related to the disposal of damaged equipment.
Lack of significant sequential revenue growth in the cloud services business due to delays in clusters entering revenue generation.
Q & A Highlights
Q: At West, you described Ellendale and Jamestown as strategic. So I wanted to ask if it's fair to conclude from that comment that those assets would not be sold on specifically just the BTC. piece of it. Thank you very much. A: Wes Cummins - Applied Digital Corp - Chairman & CEO: Sure. Thanks, Lucas. So those assets are strategic to us and that they have a really good fiber connectivity at those sites versus what we had in Texas. And we have no plans of selling those in the US in the immediate future.
Q: On Ellendale, you mentioned you have more than 600 megawatts of future capacity. Is this 600 megawatt inclusive of the current PTC business or incremental? And then how is this power capacity secured? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: So it's inclusive of the one 180 on the BTC. com. And right now, we've secured 535 megawatts at that site, but we believe it goes to 605.
Q: On the debt facility that you had mentioned for the GPUs, what potential size could we think about for that? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: I'm hesitant to say the size, but it's somewhere in the multi-hundred million, maybe $500 million to $1 billion range.
Q: Regarding the 400 megawatt hyperscaler contract, is this in addition to or a completely new move on your part with respect to what you have out there for sale? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: The 400 megawatts is inclusive of the 100. So it will take that the previous customer didn't go forward. As I've mentioned on our call last call in January, we've we have had a significant amount of interest at that site. And I think you don't know feel like we're moving forward with the best party for us to move forward with now, which is effectively for the entire site.
Q: Could you give us a quick update on sort of where your orders sit, where the supply of GPUs, how well that's coming in, including inclusive of InfiniBand? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: Yes, sure. So couple of things on that. We feel good on the supply. We're seeing shipments on including everything. One of the the blocks we hit a little bit in the quarter is we've been hiring more people because there is a significant amount of work to put these together to commission them and turn them over to customers. And we have a bill or a limited team. And so we've been adding to that team. I think it's tens of thousands of cables that need to be connected. The cabling takes a long time and in the commissioning, but there's a lot of work involved. So hopefully, we'll shorten that with experience and with more bodies in the future. But the right now you should be thinking about eight weeks from when we receive all components on site two, the clusters being turned over to customers.
Q: On the large potential new contract, could you give us a sense of the steps that go into that as is it? Is it contingent on financing? Or are there some details to negotiate contracts and then you go out and get financing sense of the steps and timing and how that plays out? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: So I'm not worried about financing on this one on. There's just a process that the steps you go through from a from where we are now, you know, some some diligence, a lot of things that we have to provide. And there's a lot of work to be done from a legal contracting perspective from. And then, you know, I would expect this to be kind of a 60 to 90 day process from when we started.
Q: On the cloud services GPU side, how many GPUs did you own at the end of February and how many were generating revenue? And then what's your kind of estimate for the same, how many you'll own and will be generating revenue at the end of May? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: Yes. So we own, I believe, 5,120 for the H-100 class GPUs. So there's 4,000 -- I'm having trouble doing the math in my head to round it to the exact number, but -- So rounded to 4,000. So there's 4,000 in revenue generation now and then there's 2000 that are needed being brought up to that stage and we should have more before the end of the quarter.
Q: Roughly, how much does the transformers cost that you need to do put in to Ellendale the new one? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: I have David here. 300,000 apiece.
Q: Do you guys have a rough committed CapEx number for the rest and lender '24? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: We have seven more weeks of -- calendar '24. I'm sorry, let me let me come back to you on that, Mike, I don't have that in front of me. We didn't have it here for the call.
Q: On the GPU piece, you mentioned, I think it's 4,000 generating revenue now, 2,000 to 4,000-plus online end of May. So kind of as we think about that exiting may run rate, fair to say about 8,000 generating revenue? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: Could be close to 8,000. Somewhere between 6,000 and 8,000 is the right number to think about.
Q: On the enterprise customers that you'd want to diversify into two of those still aren't signed. So the slowdown is just you still would need to go out and sign those or kind of I guess just where are we in that process? A: Wes Cummins - Applied Digital Corp - Chairman & CEO: Yes. So it's advanced since the last quarter. I think I'd mentioned we're in proof of concept with some and there's more move to contract negotiation, um, so that's that's definitely made an advancement. Those take just take longer. Having talked. I don't know. I think I've talked about this
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