Applied Digital Stock Falls 30% After Revenue Miss and Cloud Unit Sale Announcement
Shares of Applied Digital (APLD), a Texas-based company transitioning from cryptocurrency mining to high-performance computing (HPC), plummeted 30% on Tuesday after the company reported earnings that missed Wall Street expectations.
For the quarter ending February 28, 2025, Applied Digital posted revenue of $52.9 million, marking a 22% year-over-year increase but falling short of analysts’ projections of $64.5 million, resulting in an 18% revenue miss. Despite this, the company managed to beat earnings expectations, reporting a non-GAAP net loss of $0.08 per share, better than the anticipated $0.10 loss per share. However, its adjusted EBITDA of $10 million was significantly lower than the expected $16.9 million, reflecting ongoing margin pressures amid its significant investments in infrastructure.
The significant drop in shares came amid disappointing results from the company’s Cloud Services unit, which saw a 36% decrease in sequential revenue, dropping from $27.7 million in the previous quarter to $17.8 million. Applied Digital attributed this decline to challenges during its shift from single-tenant contracts to a multi-tenant, on-demand GPU model.
In response to the underperformance, the company announced on April 10 that it plans to sell its Cloud Services division entirely. This move is part of its strategy to refocus on its core HPC data center business, with the potential future consideration of transforming into a real estate investment trust (REIT).
CEO Wes Cummins explained, “By separating the Cloud Services business from our data center operations, we believe we can better position the company for long-term growth and maximize value for our shareholders.”
