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Applied Digital (NASDAQ:APLD) Reports Bullish Q3
Digital infrastructure provider Applied Digital (NASDAQ:APLD) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 5.8% year on year to $64.22 million. Its non-GAAP loss of $0.03 per share was 80.6% above analysts’ consensus estimates.
Applied Digital (APLD) Q3 CY2025 Highlights:
“We feel this third lease validates our platform and execution, positioning Applied Digital as a trusted strategic partner to the world’s largest technology companies,” said Wes Cummins, Chairman and CEO of Applied Digital.
Company Overview
Pivoting from its origins in cryptocurrency mining to become a key player in the AI infrastructure boom, Applied Digital (NASDAQ:APLD) designs and operates specialized data centers that provide high-performance computing infrastructure for artificial intelligence and blockchain applications.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. With $219 million in revenue over the past 12 months, Applied Digital is a small player in the business services space. As you can see below, Applied Digital’s sales grew at an incredible 262% compounded annual growth rate over the last three years.
Applied Digital’s annualized revenue growth of 60.7% over the last two years is below its three-year trend. This quarter, Applied Digital reported year-on-year revenue growth of 5.8%, and its $64.22 million of revenue exceeded Wall Street’s estimates by 17.6%.
Looking ahead, sell-side analysts expect revenue to grow 53.9% over the next 12 months, a deceleration versus the last two years.
Operating Margin
Operating margin is a key measure of profitability. Applied Digital’s high expenses have contributed to an average operating margin of negative 46.8% over the last five years. On the plus side, Applied Digital’s operating margin rose by 29.7 percentage points over the last five years. In Q3, Applied Digital generated a negative 34.7% operating margin.
Cash Is King
Although earnings are valuable for assessing company performance, we believe cash is king. Applied Digital’s demanding reinvestments have drained its resources over the last five years. Its free cash flow margin averaged negative 271%.
Applied Digital burned through $331.4 million of cash in Q3, equivalent to a negative 516% margin. The company’s cash burn increased from $130.7 million of lost cash in the same quarter last year.
Key Takeaways from Applied Digital’s Q3 Results
It was good to see Applied Digital beat analysts’ revenue and EPS expectations this quarter. On the other hand, adjusted EBITDA missed, and operating margin worsened from the same period last year. The stock remained flat at $29.00 immediately after reporting.
This article has been published in stockstory.org via Yahoo News.
