Applied Digital files 10-K: annual report (10-K)
This Item generally discusses fiscal year 2026 and 2025 items and year-to-year comparisons between fiscal year 2026 and 2025. A comparison of our results of operations and cash flows for fiscal year 2025 and fiscal year 2024 is not included in this Annual Report and can be found under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, filed with the SEC on July 30, 2025.
During the fiscal year 2026, we completed the contribution of our Cloud Services Business to ChronoScale (each as defined below), formerly Ekso (as defined below). As a result of this transaction, certain prior-period amounts presented in this Annual Report have been recast to conform to the current period presentation. The recast primarily reflects changes associated with the transaction, including revisions to segment reporting and the presentation of certain historical financial statement line items and related disclosures. As a result, certain fiscal year 2025 and fiscal year 2024 amounts presented in this Annual Report differ from the amounts previously reported in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Applied Digital Corporation and its subsidiaries.
Business Overview
We are a U.S. designer, developer, and operator of high-performance, sustainably engineered data centers and colocation services for artificial intelligence (“AI”), networking, and blockchain workloads. We provide digital infrastructure solutions to the rapidly growing industries of high-performance computing (“HPC”) and AI. As of May 31, 2026, we operated in two distinct business segments, data center hosting (the "Data Center Hosting Business") and HPC data center hosting (the “HPC Hosting Business”), all of which are included in our consolidated financial statements, as further discussed below. Management considers the Data Center Hosting Business and the HPC Hosting Business to be its core operations for long-run strategic and performance evaluation purposes.
We consolidate variable interest entities (“VIE”) and voting interest entities ("VOE") where it has been determined that the Company is the primary beneficiary of the entities' operation in accordance with ASC Topic 810, Consolidations . The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's/VOE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE/VOE that could potentially be significant to the VIE/VOE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE/VOE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its variable interest holders. The Company also evaluates its economic interests in the VIE/VOE.
On May 5, 2026, the Company completed the previously announced divestiture of its cloud business pursuant to that certain Contribution and Exchange Agreement (the “Contribution and Exchange Agreement”), dated February 15, 2026, by and among Ekso Bionics Holdings, Inc. (“Ekso”), APLD Intermediate HoldCo LLC, a Delaware limited liability company (“APLD Intermediate”), APLD ChronoScale HoldCo LLC, a Delaware limited liability company and a wholly owned subsidiary of APLD Intermediate (“Contributor”), each a wholly owned direct or indirect subsidiary of the Company, and Applied Digital Cloud Corporation, a Nevada corporation, a wholly owned indirect subsidiary of the Company and a direct subsidiary of Contributor (“Cloud”), for purposes of consummating a business combination (the “Cloud Business Combination”).
Business Update HPC Hosting Business
Our HPC Hosting Business designs, constructs, and operates next-generation data centers, which are designed to provide massive computing power and support HPC applications within a cost-effective model.
We recently commenced operations at our first HPC data center at our Polaris Forge 1 campus with 100MW of capacity. We continue building our second HPC data center at Polaris Forge 1 to provide an additional 150MW of capacity. These facilities are being designed and purpose-built to host high-density graphics processing unit architecture or other HPC applications, such as artificial intelligence, natural language processing, machine learning, and additional HPC developments. Our third HPC focused data center facility at Polaris Forge 1, which is expected to provide an additional 150MW of capacity, is currently under construction, with an anticipated ready for service date in calendar year 2027.
On May 28, 2025, APLD ELN-02 LLC and APLD ELN-03 LLC, our subsidiaries, each entered into a data center lease (the “ELN-02 Lease” and the “ELN-03 Lease”) with CoreWeave, Inc. (“CoreWeave”) to deliver an aggregate of 250 MW of infrastructure to host CoreWeave’s HPC operations at Polaris Forge 1. The ELN-02 Lease is for the full capacity of our 100 MW data center that was completed and became operational in October 2025, and the ELN-03 Lease is for the full capacity of our 150 MW data center that is also under construction. We have guaranteed the obligations of APLD ELN-02 LLC and APLD ELN-03 LLC under the respective lease to which such subsidiary is a party.
On March 30, 2026, the Company and CoreWeave amended the ELN-02 Lease to suspend the term for two of the four data halls covered by the lease (the “ELN-02 Lease Amendment”) and the Company entered into a new datacenter lease with CoreWeave Compute Acquisition Co. VIII, LLC (“CoreWeave SPV”), a wholly owned subsidiary of CoreWeave, for those two data halls on substantially the same terms as the ELN-02 Lease (the “ELN-02 SPV Lease”). The ELN-02 SPV Lease is conterminous with the initial term of the ELN-02 Lease. Upon the expiration or earlier termination of the ELN-02 SPV Lease, the suspended term under the ELN-02 Lease will resume and all four data halls of ELN-02 will once again be governed by the ELN-02 Lease. As further credit enhancement, CoreWeave delivered to APLD ELN-02 LLC an Unconditional Springing Guaranty of Payment and Performance (the “ELN-02 Guaranty”) in connection with CoreWeave SPV’s obligations under the ELN-02 SPV Lease. CoreWeave is obligated to provide a letter of credit in the amount of $50 million to secure obligations under the ELN-02 Lease within 30 days of March 30, 2026.