Applied Digital Sees 30% Decline in Stock Price Due to Revenue Miss, Announces Cloud Computing Unit Sale

Applied Digital Shares Plunge 30% After Revenue Miss; Announces Sale of Cloud Unit

Shares of Applied Digital (APLD), a Texas-based company that transitioned from cryptocurrency mining to high-performance computing (HPC), fell dramatically on Tuesday after reporting weaker-than-expected quarterly earnings.

For the quarter ending February 28, 2025, Applied Digital posted a revenue of $52.9 million, reflecting a 22% year-over-year increase but falling short of analysts’ consensus estimate of $64.5 million—an 18% miss. Following the disappointing earnings report, the company’s stock dropped as much as 30%, hitting $3.90 per share in early trading.

Despite the revenue shortfall, the company reported a non-GAAP net loss of $0.08 per share, outperforming analysts’ expectations of a $0.10 loss per share. However, adjusted EBITDA came in at $10 million, which was 41% lower than the expected $16.9 million, highlighting continued challenges with margin compression due to heavy infrastructure investments.

A primary factor in the weak results was the performance of Applied Digital’s Cloud Services unit, which experienced a sharp 36% decline in sequential revenue, dropping from $27.7 million to $17.8 million. The company attributed this decline to difficulties associated with transitioning to a multi-tenant, on-demand GPU model from its previous single-tenant contracts.

In light of these challenges, the company’s board of directors approved a plan on April 10 to divest its Cloud Services business. The sale is intended to help Applied Digital refocus on its core HPC data center operations and may eventually lead the company to explore real estate investment trust (REIT) opportunities.

“We believe that shedding the Cloud Services business will allow us to better align our resources with our long-term strategic goals and enhance shareholder value,” stated CEO Wes Cummins during the earnings call.