What happened
Data center designer, developer, and operator Applied Digital (APLD +6.20%) is having another big day on Monday -- perhaps not quite as big a day as two months ago, when it reported fiscal third-quarter earnings, but still big enough, as the shares surge 16% through 12:45 p.m. ET in response to an earnings beat in the fourth quarter ended May 31.
Analysts had forecast Applied Digital would lose $0.04 per share this past quarter, but management was able to hold that loss to just $0.01 per share.
NASDAQ: APLD
Key Data Points
So what
Sales were a different story. Inspired by projections of sales growing swiftly -- to the point where 2024 sales would be 5x as big as 2023 -- and by Applied Digital's strong performance last quarter, Wall Street was thinking the company could hit $29.6 million in fiscal fourth-quarter sales. As it turned out, Applied Digital maxed out at just $22 million -- a sizable sales miss.
Not to worry, though, says Applied Digital. Even just $22 million was already a threefold increase over fiscal Q4 2022 sales, and management still has "significant momentum" heading into fiscal 2024. CEO Wes Cummins added that Applied Digital has launched its "AI Cloud Service to provide high-performance computing power for AI applications" and can now offer a "differentiated and proprietary data center infrastructure" for its artificial intelligence customers.
Furthermore, the company has inked agreements with two such AI customers, for contracts worth up to $640 million.
Now what
And that's not all. Giving further detail on the customers, Applied Digital notes that the first has doubled its commitment to four years' duration at about $90 million per year, while the second customer has signed on for three years of service at more than $153 million per year. In total, therefore, Applied Digital has contracts in hand worth $1 billion in total, or more than $243 million per year over the next three to four years.
That's not a half-bad growth rate for a company that did all of $8.5 million in sales last year.
