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Applied Digital FQ1’27: $341.9M revenue and a related-party gas PPA

Applied Digital reported fiscal first-quarter 2027 revenue of $341.9 million, up 322% from a year earlier, on a $221.0 million GAAP loss to common shareholders from continuing operations. It has about 1.41 GW leased across five campuses and expects 300 MW delivered in North Dakota by the end of 2026. After the quarter it signed a power purchase agreement with Base Electron, a gas developer formed by Applied Digital executives, directors and/or affiliates, in which the company holds about 10%. PPA term, price and megawatt allocation are undisclosed.

By Cole Harlan · 8 Oct 2026 · 11 min

Applied Digital, the Dallas-based developer that builds and leases AI data centers to hyperscalers, reported results for its fiscal first quarter of 2027 on 7 October. The quarter ended 31 August. Revenue was $341.9 million, against $80.9 million a year earlier. The GAAP loss attributable to common stockholders from continuing operations was $221.0 million, or $0.76 a share.

Both numbers need a closer read. Most of the revenue jump came from building out space for tenants; rent was the smaller piece. Most of the loss came from interest, stock compensation and a markdown on a stake in Babcock & Wilcox, the boiler maker that is also building a gas plant meant to power Applied Digital’s North Dakota campuses.

That plant is the second story in this print. After the quarter closed, Applied Digital signed a power purchase agreement with Base Electron, the independent power producer developing the plant. Base Electron was formed by certain Applied Digital executive officers, directors and/or affiliates, according to the company’s March filing. Applied Digital holds about 10% of it.

CTN ran a Brief on Polaris Forge 1’s added 75 MW on 2 October and a Brief on the Finland power agreement on 6 October. This piece does not repeat those. It works from the filed documents: the quarter, the lease book, the balance sheet and the new PPA.

The quarter in numbers

All figures below come from the earnings release and the Ex. 99.1 filed with the 8-K, unless marked otherwise.

  • Revenue: $341.9 million, up 322% year on year.
  • Net loss attributable to common stockholders, continuing operations: $221.0 million ($0.76 per basic and diluted share). Including a $16.1 million loss from discontinued operations, the total was $237.1 million ($0.82).
  • Adjusted revenue (non-GAAP, excludes ChronoScale): $300.4 million, against $64.2 million.
  • Adjusted net loss (non-GAAP): $4.1 million ($0.01 per diluted share), against $7.6 million.
  • Adjusted EBITDA (non-GAAP): $64.4 million, against $0.5 million.
  • Net Operating Income (non-GAAP, HPC base rent less property costs): $58.8 million, an 89% margin on base rent.
  • Cash, cash equivalents and restricted cash: $3.7 billion. Debt: $6.4 billion.

The company did not include a guidance table in the release.

MarketWatch, citing FactSet, reported that analysts had expected an adjusted loss of $0.29 a share on $116.3 million of revenue, and that shares rose 2.1% after hours. CTN has not checked which revenue line FactSet’s estimate maps to. Treat that comparison as secondary.

Where the revenue came from

Applied Digital reports three pieces: HPC Hosting, the AI data center leasing business; Data Center Hosting, its older crypto-mining hosting business; and ChronoScale, a majority-owned GPU cloud company it consolidates.

HPC Hosting revenue was $262.6 million. Of that, $183.5 million was tenant fit-out services, $65.8 million was base rent and $13.3 million was tenant recoveries. By CTN’s arithmetic, fit-out was about 70% of the segment. The segment earned $33.4 million of operating profit.

Fit-out is the work of building halls to a tenant’s specification. It counts as revenue, it moves with construction milestones, and the cost side tracks it closely. Services cost of revenue rose to $245.7 million from $58.8 million, driven by about $151.1 million of fit-out expense. Base rent recurs. It is still the smaller line.

Data center rental revenue was $79.1 million, up from zero a year ago, because rental operations at Polaris Forge 1 only started in the company’s fiscal second quarter of 2026.

Data Center Hosting, the crypto business, brought in $37.8 million, flat with $37.9 million a year earlier. Its 106 MW Jamestown and 180 MW Ellendale facilities ran at full capacity. The segment earned $13.3 million of operating profit.

ChronoScale contributed $41.5 million of revenue, which the company strips out of its non-GAAP figures. ChronoScale, listed on Nasdaq and about 96% owned by Applied Digital, also booked $23.0 million of GPU hardware sales in the quarter. During the quarter it announced plans with Microsoft for a 50 MW AI compute deployment in North America using NVIDIA GB300 NVL72 systems.

Why the loss was so large

Three lines explain most of the GAAP loss.

Interest expense rose to $77.4 million from $8.0 million as the company added debt to fund construction. Interest income rose to $35.8 million on cash held in interest-bearing accounts, which offsets part of it. Cash interest paid in the quarter was $242.9 million, per the cash flow statement.

Selling, general and administrative expense rose to $114.7 million from $29.5 million. The release attributes $51.7 million of the increase to stock-based compensation, tied to performance awards and headcount.

The third line is Babcock & Wilcox. Applied Digital holds B&W common stock and a B&W stock warrant. The warrant lost $56.1 million of fair value in the quarter, which fed a $49.5 million loss on derivatives. The stock holding lost another $11.4 million. That adds up to about $61 million of non-cash markdowns on the contractor building Base Electron’s plant.

Strip those items out, along with ChronoScale and some smaller adjustments, and the company gets to its $4.1 million adjusted net loss. That reconciliation is in the filing. For cash, the cash flow statement is more useful. Operating cash flow was $63.9 million positive. Purchases of property and equipment were $2.07 billion.

The lease book and the build schedule

As of 31 August, Applied Digital had leases for about 1.41 GW of critical IT load across five campuses:

  • Polaris Forge 1, Ellendale, North Dakota: leased to CoreWeave.
  • Polaris Forge 2, Harwood, North Dakota: leased to an investment-grade hyperscaler.
  • Polaris Forge 3, Center, North Dakota: leased to a tier-one investment-grade hyperscaler.
  • Delta Forge 1, Louisiana: same tier-one hyperscaler.
  • Delta Forge 2, Alabama: same tier-one hyperscaler.

The company does not name the hyperscalers. It says those leases carry about $36 billion of contracted revenue over their initial terms, or about $86 billion if every renewal option is exercised. Those are company figures.

No new lease was announced in this print. The most recent, flagged as previously announced, is the 210 MW, 15-year Delta Forge 2 lease signed on 8 June, worth about $5.2 billion over its base term.

On the build side, Polaris Forge 1 now has 250 MW live across two buildings and 10 data halls. The first 100 MW building went live in October 2025. Building 2’s 150 MW came in two 75 MW phases, on 1 July and 1 October. A third 150 MW building is under construction, funded by $1.59 billion of 7.000% senior secured notes due 2031, issued at par through a subsidiary, APLD ComputeCo 3. Those notes also repaid a $300 million bridge facility.

The release’s main forward number is 300 MW. The company expects initial operations at Polaris Forge 2 in Harwood to lift delivered critical IT load across its North Dakota campuses to 300 MW by the end of calendar 2026. The gap between 1.41 GW leased and roughly 250 MW live today is the construction pipeline, and most of the execution risk.

The Base Electron PPA

The release covers the deal in one line. Applied Digital “entered into a Power Purchase Agreement with Base Electron, for the purchase of capacity and energy from an approximately 1,200 MW natural gas-fired generation facility to be developed by Base Electron in North Dakota.”

The plant itself is not new. On 4 March, Babcock & Wilcox said it had received full notice to proceed on a $2.4 billion design-build agreement with Base Electron for four 300 MW gas-fired boiler and steam turbine units, about 1.2 GW in total. The same day, Applied Digital filed an 8-K saying it had guaranteed Base Electron’s obligations under that contract. In return, Base Electron agreed to issue Applied Digital 10% of its equity.

The signed offtake is the new part. In March, both companies said the plant would supply Applied Digital’s campuses “under future separate power supply agreements.” The July FQ4’26 release described the initiative without a signed deal. CTN found no earlier filing announcing a signed PPA. The FQ1’27 release lists it under events after the quarter.

Both sides of this deal are related parties. The March 8-K describes Base Electron as “an independent power producer formed by certain executive officers, directors and/or affiliates of Applied Digital,” and says the guarantee and equity issuance “constitute related-party transactions” under SEC rules. The filing says Applied Digital’s board, acting through its audit committee and disinterested directors, reviewed and approved the arrangement.

The March 8-K also set out how Applied Digital could exit the guarantee, including a termination fee of $50 million if paid by 1 August 2026 and Base Electron was current on its payments to B&W, or $100 million otherwise. The FQ1’27 release does not say whether the guarantee remains in place.

In the new release, Applied Digital says Base Electron “operates independently” and is developing front-of-the-meter generation “that could add multiple gigawatts of new power in the Dakotas over time.” The company says the new supply source “strengthens its ability to expand its Polaris Forge campuses on its own timeline.” The multi-gigawatt line is company framing. In March, CEO Wes Cummins said the company was evaluating an option with Base Electron for another 1.2 GW.

The release does not give the PPA’s term, its price, how many of the roughly 1,200 MW Applied Digital will take, when deliveries start, or how the power reaches the campuses. CTN is not estimating any of those.

Finland, as far as the documents go

The release repeats the 6 October announcement: an agreement for “up to approximately 1 GW of potential power capacity in Finland,” the company’s first step outside the United States. New language calls it “a measured, opportunistic step” and says management believes the deal limits “the Company’s initial exposure.” Near-term priorities, it says, “remain firmly centered” on the US portfolio.

The release names no site, municipality, utility, capex figure or customer.

More came out on the call. According to the Benzinga transcript, Cummins said: “We purchased the site and then we have the option.” He said “the first 100 megawatts is available in 2028 and then it continues to ramp up through 2031 to the full gigawatt,” and that later tranches carry additional payments, with “an off ramp for us prior to those additional payments.” He said the search took about a year and covered “probably 30 to 40 different sites,” and that the site is about 30 km from a large hyperscaler’s self-build.

CTN has not yet matched those quotes against the company’s webcast replay, so they stay attributed to the call. The company did not name the hyperscaler or the location, and CTN is not linking this site to any other Finnish data center project.

What the call added, on soft hold

Per the same transcript, Cummins restated a target of 3.5 to 4 GW of power by the end of 2030. He said revenue from the Louisiana and Alabama campuses should begin in the first half of calendar 2027. He also said ChronoScale was “on track to reach 1 billion of ARR in 2027.” None of these appear in the release or the 8-K. Treat them as management targets from a call transcript.

What buyers, lenders and grid watchers should ask

  1. PPA economics: What are the term, price and MW allocation in the Base Electron agreement, and will Applied Digital file it?
  2. Related-party controls: How does the audit committee oversee pricing and changes to the PPA, given who formed Base Electron?
  3. Guarantee status: Is the March guarantee of Base Electron’s B&W obligations still in force, and what is the current exposure?
  4. Grid path: Is the plant connecting front-of-the-meter through a regional utility, and which interconnection filings cover it?
  5. Fit-out versus rent: When does base rent overtake fit-out revenue in HPC Hosting?
  6. Build risk: What is the MW-by-quarter schedule from about 250 MW live to 1.41 GW leased?
  7. B&W exposure: How large are the remaining B&W stock and warrant positions, and how volatile could markdowns get?
  8. Finland: When will the company name the site and utility, and what are the option payments?

What this piece is not

This piece is not investment advice on Applied Digital (Nasdaq: APLD), ChronoScale (Nasdaq: CHRN) or Babcock & Wilcox (NYSE: BW). It is not a re-run of CTN’s 2 October Polaris Forge Brief or 6 October Finland Brief. It does not estimate PPA prices, plant timing or Finnish capex.

Disclosure: Lone Cowry / Cowry Tech News has no commercial relationship with Applied Digital, ChronoScale, Base Electron or Babcock & Wilcox.

Sources

Related reading: Read the brief: Applied Digital FQ1’27 (Oct 8 Morning Brief) · Applied Digital Finland 1 GW power (Oct 6 Brief) · Polaris Forge 1 +75 MW (Oct 2 Brief)