Applied Digital Inc. Reports Robust Growth in 2026 Annual Report
Applied Digital Inc. has released its annual report for the fiscal year ending May 31, 2026, revealing impressive growth in revenue, particularly from its newly operational high-performance computing (HPC) hosting business. The company, which specializes in state-of-the-art data centers tailored for artificial intelligence (AI) and blockchain workloads, has solidified its position as a key player in the rapidly expanding tech infrastructure sector.
1. Business Overview and Segment Performance
Applied Digital operates through two primary segments: the HPC Hosting Business and the Data Center Hosting Business. As of May 31, 2026, these segments have evolved significantly, contributing to a total revenue of $496.6 million, marking a staggering 119% increase from the previous year.
HPC Hosting Business
The HPC Hosting Business commenced operations at its first data center located in the Polaris Forge 1 campus, with a robust capacity of 100 MW. The company is currently constructing a second facility on the same site, which is expected to add an additional 150 MW of capacity. This strategic move is expected to bolster the company's service offerings and revenue streams significantly.
In fiscal 2026, the HPC Hosting Business generated $385.3 million in revenue, with $270.6 million from services revenue and $114.7 million from data center rental and other revenue. This segment's growth is attributed to a recent lease agreement with CoreWeave, Inc., which has brought an additional 250 MW of infrastructure for HPC operations.
Data Center Hosting Business
The Data Center Hosting Business, primarily serving crypto mining customers, operates two facilities in North Dakota with a combined capacity of 286 MW. For the fiscal year 2026, this segment reported revenue of $154.4 million, maintaining stability despite the fluctuations in the crypto market.
2. Financial Highlights
Income Statement Overview
The financials for 2026 show significant operational challenges, primarily due to increased expenses associated with the expansion of operations. The company reported a net loss of $250.2 million, which includes a net income from discontinued operations related to its cloud business.
- Total Revenue: $496.6 million
- Operating Income: -$236.4 million
- Net Income: -$250.2 million
| Jul 2025 | Jul 2026 | |
|---|---|---|
Net Income | -231.0M | -184.3M |
Profit | -231.0M | -184.3M |
Net Income Discontinued | -72.73M | -1.02M |
Net Income Continuing | -158.3M | -183.3M |
Income Tax Expense | 102K | 1.78M |
Pretax Income | -158.2M | -181.5M |
Non-operating Income | -141.3M | 54.93M |
Operating Income | -16.84M | -236.4M |
Revenue | 144.1M | 611.3M |
Costs and Expenses | 161.0M | 847.7M |
Cost of Revenue | 101.4M | 396.8M |
Operating Expenses | 59.58M | 450.9M |
Selling, General & Administrative | 83.06M | 332.0M |
Other Operating Expenses | -23.47M | 118.8M |
Balance Sheet Strength
As of May 31, 2026, Applied Digital's total assets surged to $9.92 billion, a significant increase from $1.87 billion in 2025. The company has actively managed its liabilities, which totaled $6.18 billion, ensuring a healthy equity position of $1.72 billion.
- Total Assets: $9.92 billion
- Total Liabilities: $6.18 billion
- Total Equity: $1.72 billion
| Jul 2025 | Jul 2026 | |
|---|---|---|
Total Assets | 1.87B | 9.92B |
Total Current Assets | 430.5M | 4.66B |
Cash and Equivalents | 41.55M | 1.59B |
Accounts Receivable | 3.04M | 56.30M |
Restricted Cash and Investments | 31.34M | 2.38B |
Prepaid Expenses | 9.43M | 613.6M |
Other Current Assets | 345.2M | 19.84M |
Total Non-current Assets | 1.43B | 5.26B |
Net PP&E | 1.27B | 4.23B |
Lease Assets | 18.78M | 199.4M |
Other Non-current Assets | 144.8M | 830.7M |
Total Liabilities and Equity | 1.87B | 9.92B |
Temporary Equity and Redeemable Non-controlling Interest | 136.0M | 2.01B |
Total Liabilities | 1.23B | 6.18B |
Total Current Liabilities | 558.1M | 1.16B |
Accounts Payable and Accrued Liabilities | 277.0M | 943.9M |
Current Debt | 24.65M | 82.49M |
Current Deferred Revenue | 0 | 4.66M |
Other Current Liabilities | 256.4M | 131.7M |
Total Non-current Liabilities | 678.2M | 5.02B |
Long-term Debt | 677.8M | 4.97B |
Other Non-current Liabilities | 381K | 52.63M |
Total Equity and Non-controlling Interests | 497.6M | 1.72B |
Total Equity | 497.6M | 1.71B |
Non-controlling Interests | 0 | 7.03M |
Cash Flow Dynamics
The company reported a net cash increase of $4.03 billion, largely driven by financing activities, including long-term debt borrowings. However, cash used for investing activities also rose, reflecting ongoing investments in property and equipment.
- Net Cash from Financing Activities: $6.87 billion
- Net Cash from Investing Activities: -$2.93 billion
| Jul 2025 | Jul 2026 | |
|---|---|---|
Net Change in Cash | 91.63M | 4.03B |
Net Cash from Operating Activities | -115.4M | 89.68M |
Operating Profit | -231.0M | -184.3M |
Adjustment to Operating Profit | 115.6M | 274.0M |
Net Cash from Investing Activities | -667.6M | -2.93B |
Investments | 4.87M | 12M |
Productive Assets | 656.6M | 2.86B |
Other Investing Activities | -6.17M | -58.63M |
Net Cash from Financing Activities | 874.6M | 6.87B |
Debt | 695.7M | 4.34B |
Dividends | 2.61M | 6.25M |
Equity Issuance/Repurchase | 358.4M | 1.02B |
Other Financing Activities | -176.9M | 1.51B |
3. Recent Developments and Strategic Moves
Applied Digital completed the divestiture of its cloud business on May 5, 2026, establishing ChronoScale Corporation as a wholly-owned subsidiary. This strategic move enables the company to focus on its core competencies in data center operations while enhancing its operational efficiency.
In addition, the company appointed Jason Zhang as President on January 15, 2026, a decision that is expected to steer the company towards further growth and innovation in its service offerings.
Financing Activities
The company has made significant strides in financing, including the issuance of senior secured notes totaling $4.5 billion, which will facilitate further expansion and operational enhancements.
4. Conclusion: A Future-Oriented Outlook
Despite facing operational challenges and a reported net loss, Applied Digital Inc. is well-positioned for future growth, thanks to its strategic focus on HPC and AI infrastructure. The company's ongoing investments in data centers and its commitment to innovative solutions suggest a promising trajectory in the ever-evolving digital infrastructure landscape. With the increasing reliance on high-performance computing and AI, Applied Digital is set to play a pivotal role in shaping the future of tech infrastructure.
As the company continues to expand its footprint and enhance its service capabilities, stakeholders are keenly observing the developments that will unfold in the coming fiscal years.
