Applied Digital Corp.APLD
Applied Digital Corp. Segments Disclosure
Business Segments
The Company's business is made up of two operating segments: the Data Center Hosting Business and the HPC Hosting Business. These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker ("CODM"), which is the Company’s Chief Executive Officer.
The Company's CODM evaluates performance and makes operating decisions primarily based on revenue and segment profit (loss) on a consolidated basis and for each of the Company's reportable segments. Operating results by segment include costs or expenses directly attributable to each segment, which include selling, general, and administrative expenses, (gain)/loss on classification of held for sale, (gain)/loss on sale of assets, and (gain)/loss from legal settlement. The Company derives the segment results from its internal management reporting system. The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes. Segment revenues and segment profit are regularly reviewed by the CODM and compared against historical results, forecast and budget information in order to make decisions about how to allocate capital and other resources to each segment.
The Company does not allocate loss on conversion of debt, loss on change in fair value of debt, loss on change in fair value of related party debt, loss on change in fair value of warrants, loss on change in fair value of related party warrants, loss on legal settlement, or income tax expense to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance. The "Other" includes corporate related items not allocated to reportable segments for purposes of making operating decisions or assessing financial performance.
In accordance with applicable accounting guidance, the results of the Cloud Services Business are presented as discontinued operations in the consolidated statements of operations and, as such, have been excluded from both continuing operations and segment results for all periods presented. See "Note 5 - Discontinued Operations" for operations and segment results for the Cloud Services Business.
The following tables present segment information, including revenue by segment and segment profit (loss) for the fiscal years ended May 31, 2025, 2024, and 2023 (in thousands):
| Fiscal Year Ended May 31, 2025 | |||||||||||
Data Center Hosting Business | HPC Hosting Business | ||||||||||
| Revenue | $ | 142,267 | $ | — | |||||||
| Related party revenue | 1,926 | — | |||||||||
Total segment revenue | 144,193 | — | |||||||||
Costs and expenses | |||||||||||
| Cost of revenues | 100,744 | 143 | |||||||||
| Selling, general and administrative | 3,006 | 11,943 | |||||||||
(Gain) on classification of held for sale | (24,616) | — | |||||||||
| Loss on sale of assets | 1,132 | — | |||||||||
| Total costs and expenses | 80,266 | 12,086 | |||||||||
Segment profit (loss) | $ | 63,927 | $ | (12,086) | |||||||
| Fiscal Year Ended May 31, 2024 | |||||||||||
Data Center Hosting Business | HPC Hosting Business | ||||||||||
| Revenue | $ | 121,858 | $ | — | |||||||
| Related party revenue | 14,761 | — | |||||||||
Total segment revenue | 136,619 | — | |||||||||
Costs and expenses | |||||||||||
| Cost of revenues | 106,023 | 50 | |||||||||
| Selling, general and administrative | 10,367 | 4,761 | |||||||||
| Loss on classification of held for sale | 15,417 | — | |||||||||
| Total costs and expenses | 131,807 | 4,811 | |||||||||
Segment profit (loss) | $ | 4,812 | $ | (4,811) | |||||||
| Fiscal Year Ended May 31, 2023 | |||||||||||
Data Center Hosting Business | HPC Hosting Business | ||||||||||
| Revenue | $ | 40,984 | $ | — | |||||||
| Related party revenue | 14,408 | — | |||||||||
Total segment revenue | 55,392 | — | |||||||||
Costs and expenses | |||||||||||
| Cost of revenues | 44,374 | — | |||||||||
| Selling, general and administrative | 29,200 | 246 | |||||||||
| Total costs and expenses | 73,574 | 246 | |||||||||
Segment loss | $ | (18,182) | $ | (246) | |||||||
The following table presents a reconciliation to net loss from continuing operations before income tax expense (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| May 31, 2025 | May 31, 2024 | May 31, 2023 | |||||||||||||||
| Segment profit (loss) | |||||||||||||||||
Data Center Hosting Business | $ | 63,927 | $ | 4,812 | $ | (18,182) | |||||||||||
| HPC Hosting Business | (12,086) | (4,811) | (246) | ||||||||||||||
Total segment profit (loss) | 51,841 | 1 | (18,428) | ||||||||||||||
Other (1) | (68,686) | (32,853) | (24,483) | ||||||||||||||
| Operating loss | (16,845) | (32,852) | (42,911) | ||||||||||||||
| Interest expense, net | 14,739 | 17,708 | 2,006 | ||||||||||||||
Loss on conversion of debt | 33,612 | — | — | ||||||||||||||
Loss on change in fair value of debt | 85,439 | 7,401 | — | ||||||||||||||
Loss on change in fair value of related party debt | — | 8,116 | — | ||||||||||||||
Loss on extinguishment of debt | 1,177 | — | 94 | ||||||||||||||
Loss on extinguishment of related party debt | — | 2,507 | — | ||||||||||||||
Loss on change in fair value of warrants | 6,421 | — | — | ||||||||||||||
Loss on change in fair value of related party warrants | — | 5,696 | — | ||||||||||||||
Net loss from continuing operations before income tax expense | $ | (158,233) | $ | (74,280) | $ | (45,011) | |||||||||||
(1)Other includes corporate related items not allocated to reportable segments.
We also provide the following additional segment disclosures (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| May 31, 2025 | May 31, 2024 | May 31, 2023 | |||||||||||||||
| Depreciation and amortization: | |||||||||||||||||
Data Center Hosting Business | $ | 13,312 | $ | 19,948 | $ | 7,025 | |||||||||||
HPC Hosting Business | 3,733 | 1,233 | 59 | ||||||||||||||
Other (1) | 244 | 296 | 29 | ||||||||||||||
Total depreciation and amortization (2) | $ | 17,289 | $ | 21,477 | $ | 7,113 | |||||||||||
| Capital expenditures: | |||||||||||||||||
Data Center Hosting Business | $ | 9,320 | $ | 38,266 | $ | 135,946 | |||||||||||
HPC Hosting Business | 976,506 | 207,299 | 9,813 | ||||||||||||||
Other (1) | — | 4,291 | (1,164) | ||||||||||||||
| Total capital expenditures | $ | 985,826 | $ | 249,856 | $ | 144,595 | |||||||||||
(1)Other includes corporate related items not allocated to reportable segments.
(2)Includes amortization of the finance lease right-of-use assets.
Information on segment assets and a reconciliation to consolidated assets are as follows (in thousands):
| Fiscal Year Ended | |||||||||||
| May 31, 2025 | May 31, 2024 | ||||||||||
Data Center Hosting Business | $ | 141,764 | $ | 145,222 | |||||||
HPC Hosting Business | 1,363,341 | 220,648 | |||||||||
| Total segment assets | 1,505,105 | 365,870 | |||||||||
Cloud Services Business (Discontinued operations) | 304,466 | 374,216 | |||||||||
Other (1) | 60,519 | 22,781 | |||||||||
| Total assets | $ | 1,870,090 | $ | 762,867 | |||||||
(1) Other includes corporate related items not allocated to reportable segments.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jul 30, 2025 | Showing above |
| 2024 | Aug 30, 2024 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.