Applied Digital (APLD) 10-Q 10 Oct 23 2024 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Aug. 31, 2023	Oct. 09, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Aug. 31, 2023
Document Transition Report	false
Entity File Number	001-31968
Entity Registrant Name	APPLIED DIGITAL CORPORATION
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	95-4863690
Entity Address, Address Line One	3811 Turtle Creek, Blvd.
Entity Address, Address Line Two	Suite 2100
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75219
City Area Code	214
Local Phone Number	556-2465
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	APLD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		106,300,245
Entity Central Index Key	0001144879
Current Fiscal Year End Date	--05-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Aug. 31, 2023	May 31, 2023
Current assets:
Cash and cash equivalents	$ 5,942	$ 28,999
Restricted cash	25,271	14,575
Accounts receivable	27	82
Prepaid expenses and other current assets	2,308	2,103
Total current assets	33,548	45,759
Property and equipment, net	222,666	195,593
Operating lease right of use assets, net	11,183	1,290
Finance lease right of use assets, net	55,691	14,303
Other assets	26,065	7,012
TOTAL ASSETS	349,153	263,957
Current liabilities:
Accounts payable	16,229	6,446
Accrued liabilities	12,743	8,330
Current portion of operating lease liability	1,807	320
Current portion of finance lease liability	23,471	5,722
Current portion of debt	9,163	7,950
Sales and use tax payable	62	1,630
Total current liabilities	151,679	115,460
Long-term portion of operating lease liability	9,573	1,005
Long-term portion of finance lease liability	25,071	8,334
Other long-term related party liabilities	0	1,000
Total liabilities	221,205	194,278
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 166,666,667 shares authorized, 110,850,885 shares issued and 105,849,157 shares outstanding at August 31, 2023, and 100,927,358 shares issued and 95,925,630 shares outstanding at May 31, 2023	110	101
Treasury stock, 5,001,728 shares at August 31, 2023 and 5,001,728 shares at May 31, 2023, at cost	(62)	(62)
Additional paid in capital	240,073	160,194
Accumulated deficit	(112,173)	(100,716)
Total stockholders’ equity attributable to Applied Digital Corporation	127,948	59,517
Noncontrolling interest	0	10,162
Total stockholders' equity including noncontrolling interest	127,948	69,679
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	349,153	263,957
Nonrelated Party
Current liabilities:
Customer deposits	32,559	32,559
Deferred revenue	50,863	47,168
Long-term debt	34,882	33,222
Related Party
Current liabilities:
Customer deposits	3,811	3,811
Deferred revenue	971	1,524
Long-term debt	$ 0	$ 35,257

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Aug. 31, 2023	May 31, 2023
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	166,666,667	166,666,667
Common stock, shares issued (in shares)	110,850,885	100,927,358
Common stock, shares outstanding (in shares)	105,849,157	95,925,630
Treasury stock, (in shares)	5,001,728	5,001,728

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Revenue:
Total revenue	$ 36,323	$ 6,924
Costs and expenses:
Cost of revenues	24,398	6,093
Selling, general and administrative	17,052	5,008
Total costs and expenses	41,450	11,101
Operating loss	(5,127)	(4,177)
Interest Expense	2,074	356
Loss on extinguishment of debt	2,353	94
Loss from legal settlement	2,300	0
Net loss before income tax expenses	(11,854)	(4,627)
Income tax expense	0	32
Net loss	(11,854)	(4,659)
Net loss attributable to noncontrolling interest	(397)	(128)
Net loss attributable to Applied Digital Corporation	$ (11,457)	$ (4,531)
Basic and diluted net (loss) gain per share:
Basic net loss per share (in dollars per share)	$ (0.12)	$ (0.05)
Diluted net loss per share (in dollars per share)	$ (0.12)	$ (0.05)
Basic weighted average number of shares outstanding (in shares)	100,521,673	93,105,835
Diluted weighted average number of shares outstanding (in shares)	100,521,673	93,105,835
Hosting revenue | Nonrelated Party
Revenue:
Total revenue	$ 29,987	$ 4,338
Hosting revenue | Related Party
Revenue:
Total revenue	4,184	2,586
Cloud services revenue
Revenue:
Total revenue	$ 2,152	$ 0

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) $ in Thousands	Total	Stockholders’ Equity	Common Stock	Treasury Stock	Additional Paid in Capital	Accumulated Deficit	Noncontrolling interest
Common stock, shares outstanding (in shares) at May. 31, 2022			97,837,703
Beginning balance at May. 31, 2022	$ 79,235	$ 72,259	$ 98	$ (62)	$ 128,293	$ (56,070)	$ 6,976
Beginning balance, treasury stock (in shares) at May. 31, 2022				(36,296)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	579	579			579
Capital contribution to noncontrolling interest	1,746						1,746
Common stock forfeited (in shares)				(4,965,432)
Net loss	(4,659)	(4,531)				(4,531)	(128)
Common stock, shares outstanding (in shares) at Aug. 31, 2022			97,837,703
Ending balance at Aug. 31, 2022	$ 76,901	68,307	$ 98	$ (62)	128,872	(60,601)	8,594
Ending balance, treasury stock (in shares) at Aug. 31, 2022				(5,001,728)
Common stock, shares outstanding (in shares) at May. 31, 2023	95,925,630		100,927,358
Beginning balance at May. 31, 2023	$ 69,679	59,517	$ 101	$ (62)	160,194	(100,716)	10,162
Beginning balance, treasury stock (in shares) at May. 31, 2023	(5,001,728)			(5,001,728)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued in offering, net of costs (in shares)			7,908,528
Shares issued in offering, net of costs	$ 64,482	64,482	$ 8		64,474
Shares issued from award vestings (in shares)			530,732
Stock-based compensation	5,641	5,641			5,641
Net loss	$ (11,854)	(11,457)				(11,457)	(397)
Extinguishment of noncontrolling interest (in shares)	1,500,000		1,484,267
Extinguishment of noncontrolling interest	$ 0	9,765	$ 1		9,764		(9,765)
Common stock, shares outstanding (in shares) at Aug. 31, 2023	105,849,157		110,850,885
Ending balance at Aug. 31, 2023	$ 127,948	$ 127,948	$ 110	$ (62)	$ 240,073	$ (112,173)	$ 0
Ending balance, treasury stock (in shares) at Aug. 31, 2023	(5,001,728)			(5,001,728)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$ (11,854)	$ (4,659)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	7,860	1,136
Stock-based compensation	5,641	579
Deferred income taxes	0	32
Loss on extinguishment of debt	2,353	94
Loss from legal settlement	2,300	0
Amortization of debt issuance costs	235	0
Loss on abandonment of assets	173	0
Changes in operating assets and liabilities:
Accounts receivable	55	177
Prepaid expenses and other current assets	(205)	(164)
Accounts payable	205	196
Accrued liabilities	2,113	0
Lease assets and liabilities	39	0
Sales and use tax payable	(1,568)	0
Other assets	(5,972)	0
CASH FLOW PROVIDED BY OPERATING ACTIVITIES	4,517	17,294
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of property and equipment and other assets	(32,591)	(31,673)
Finance lease prepayments	(7,560)	0
Purchases of investments	(390)	0
CASH USED IN INVESTING ACTIVITIES	(40,541)	(31,673)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of finance leases	(4,849)	(209)
Borrowings of long-term debt	3,750	15,000
Borrowings of related party debt	3,000	0
Repayments of long-term debt	(3,463)	(7,488)
Repayment of related party debt	(39,257)	0
Payment of deferred financing costs	0	(140)
Noncontrolling interest contributions	0	1,747
Proceeds from issuance of common stock	64,482	0
CASH FLOW PROVIDED BY FINANCING ACTIVITIES	23,663	8,910
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(12,361)	(5,469)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	43,574	46,299
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	31,213	40,830
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	1,839	356
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Operating right-of-use assets obtained by lease obligation	10,272	0
Finance right-of-use assets obtained by lease obligation	46,952	922
Property and equipment in accounts payable	6,729	8,352
Conversion of non-controlling interest	9,765	0
Loss from legal settlement	2,300	0
Nonrelated Party
Changes in operating assets and liabilities:
Customer deposits	0	4,042
Current deferred revenue	3,695	15,316
Related Party
Changes in operating assets and liabilities:
Customer deposits	0	545
Current deferred revenue	$ (553)	$ 0

Business and Organization

Business and Organization	3 Months Ended
	Aug. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business and Organization	Business and OrganizationApplied Digital Corporation (the “Company”), is a designer, builder, and operator of next generation digital infrastructure providing cost-competitive solutions to customers in High-Performance Compute (“HPC”), artificial intelligence cloud service (“Cloud services”), and datacenter hosting (“Hosting”) industries. The Company has three reportable segments. Financial information for each segment is contained in Note 10 - Business Segments.

Basis of Presentation and Signi

Basis of Presentation and Significant Accounting Policies	3 Months Ended
	Aug. 31, 2023
Accounting Policies [Abstract]
Basis of Presentation and Significant Accounting Policies	Basis of Presentation and Significant Accounting Policies Principles of Consolidation The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of May 31, 2023 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements. In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. For further information, please refer to and read these interim unaudited condensed consolidated financial statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2023 filed with the SEC on August 2, 2023. Significant Accounting Policies and Use of Estimates There were no material changes in the Company’s significant accounting policies for the three months ended August 31, 2023 as compared to the year ended May 31, 2023. See Note 3 - Property and Equipment to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2023, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates of the valuation allowance associated with the Company’s deferred tax assets. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers. Hosting Revenue The Company provides energized space to customers who locate their hardware within the Company’s co-hosting facility. All hosting performance obligations are achieved simultaneously by providing the hosting environment for the customers’ operations. Customers pay a fixed rate to the Company in exchange for a managed hosting environment supported by Company-provided equipment. Hosting revenues are recorded monthly in fixed amounts, net of credits for non-performance, based on the terms of the agreements. Any ancillary revenue for maintenance or installation services is at a point in time when the customer has received the full service. As these services support the hosting operation as a whole, this revenue is captured within the hosting revenue caption. Customer contracts include advance payment terms. Advanced payments are recorded as deferred revenue until the related service is provided. Cloud Services Revenue The Company also provides cloud services applicable to artificial intelligence. Customers pay a rate to the Company in exchange for managed services supported by Company-provided equipment. Revenues are recorded based on the fixed rate, net of any credits for non-performance, based on the terms of the agreements. Segments The Company has identified three reportable segments: artificial intelligence cloud services (“Cloud services”), high performance computing (“HPC”) datacenter hosting, and datacenter hosting (“Hosting”). Our chief operating decision-maker evaluates performance, makes operating decisions and allocates resources on both a consolidated basis and on these three reportable segments. Intercompany transactions between segments are excluded for management reporting purposes. The Cloud services segment operates through our Sai Computing brand and provides cloud services applicable to artificial intelligence. Customers pay a fixed rate to the Company in exchange for a managed hosting environment supported by Company-provided equipment. The HPC datacenter segment designs, builds, and operates next generation datacenters which are designed to provide massive computing power and support high-compute applications within a cost-effective model. The Hosting segment provides infrastructure, including energized space, and colocation services to crypto mining customers. Customers place hardware they own into the Company’s facilities and the Company provides operational and maintenance services for a fixed fee. Recent Accounting Pronouncements We reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements. Reclassifications We have reclassified certain prior period revenue amounts from hosting revenue to cloud services revenue and related party revenue on our condensed consolidated statements of operations. We have also reclassified amounts from accounts payable and accrued expenses and prepaid expenses and other current assets to accounts payable, accrued expenses, prepaid expenses, and other current assets as well as from customer deposits and deferred revenue to the associated related party caption lines in our condensed consolidated balance sheets to conform to our current period presentation. These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities. Cash, Cash Equivalents, and Restricted Cash Cash, cash equivalents, and restricted cash within the consolidated balance sheets that are included in the consolidated statements of cash flows as of August 31, 2023 and August 31, 2022 were as follows (in thousands): August 31, 2023 May 31, 2023 Net Cash & Equivalents $ 5,942 $ 28,999 Restricted Cash 25,271 14,575 Total Cash & Cash Equivalents $ 31,213 $ 43,574

Property and Equipment

Property and Equipment	3 Months Ended
	Aug. 31, 2023
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and Equipment Property and equipment consisted of the following as of August 31, 2023, and May 31, 2023 (in thousands): Estimated Useful Life August 31, May 31, Hosting equipment Electric generation and transformers 15 years $ 7,763 $ 4,655 Other equipment and fixtures 5 years - 7 years 3,101 1,684 Construction in progress 97,280 106,226 Information systems and software 5 years 27,570 21,173 Land and building Land 2,152 2,152 Land improvements 15 years 1,296 1,293 Building 39 years 88,346 63,350 Leasehold improvements 3 years - 6 years 2,299 — Total cost of property and equipment 229,807 200,533 Accumulated depreciation (7,141) (4,940) Property and equipment, net $ 222,666 $ 195,593

Revenue from Contracts with Cus

Revenue from Contracts with Customers	3 Months Ended
	Aug. 31, 2023
Revenue from Contract with Customer [Abstract]
Revenue from Contracts with Customers	Revenue from Contracts with Customers Below is a summary of the Company’s revenue concentration by major customers for the three months ended August 31, 2023 and 2022, respectively. Three Months Ended August 31, 2023 2022 Customer A 68 % — % Customer B 10 % 12 % Customer C — % 36 % Customer D — % 21 % Customer E — % 17 % Customer F — % 14 % Deferred Revenue As of August 31, 2023, the Company had $51.8 million in deferred revenue, which represents the Company’s remaining performance obligations, and expects to recognize the entire balance within the next 12 months. Changes in the Company's deferred revenue balances for the three months ended August 31, 2023 and 2022, respectively, are shown in the following tables (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Balance, beginning of period $ 48,692 $ 3,877 Advance billings 39,465 22,240 Revenue recognized (36,323) (6,924) Balance, end of period $ 51,834 $ 19,193 Customer Deposits Changes in the Company's customer deposits balances for the three months ended August 31, 2023 and 2022, respectively, are shown in the following table (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Balance, beginning of period $ 36,370 $ 9,524 Customer deposits received — 4,587 Balance, end of period $ 36,370 $ 14,111

Related Party Transactions

Related Party Transactions	3 Months Ended
	Aug. 31, 2023
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Related Party Revenue The following table illustrates related party revenue for the three months ended August 31, 2023 and August 31, 2022 (in thousands): Three Months Ended August 31, 2023 2022 Customer D* $ 2,332 $ 1,450 Customer E** $ 1,852 $ 1,136 * Customer D is a subsidiary of an entity which is deemed to beneficially own over 5% of the Company's outstanding common stock ** Customer E is 60% owned by an individual who is deemed to beneficially own over 5% of the Company's outstanding common stock The following table illustrates related party deferred revenue and deposits balances as of August 31, 2023 and May 31, 2023 (in thousands): Customer D balances as of Customer E balances as of August 31, 2023 May 31, 2023 August 31, 2023 May 31, 2023 Deferred revenue $ 923 $ 1,474 $ 48 $ 50 Customer Deposits $ 2,450 $ 2,450 $ 1,361 $ 1,361 Related Party Sublease Income For three months ended August 31, 2023 and August 31, 2022, the Company received sublease income of $23 thousand and $27 thousand, respectively, from B. Riley Asset Management, which is also a wholly-owned subsidiary of B. Riley Financial, Inc. Mr. Cummins, the CEO of the Company, is also the President of B. Riley Asset Management.

Debt

Debt	3 Months Ended
	Aug. 31, 2023
Debt Disclosure [Abstract]
Debt	Debt Long-term debt consisted of the following components (in thousands): August 31, 2023 May 31, 2023 6.50% Starion term loan $ 12,109 $ 12,786 6.15% Vantage Garden City loan 13,154 10,074 7.48% Starion Ellendale loan 18,859 19,728 Other long-term debt 386 354 Debt issuance costs, net of amortization (463) (3,012) Less: Current portion of term loan (9,163) (7,950) Long-term debt, net $ 34,882 $ 31,980 Letters of Credit As of August 31, 2023, the Company had letters of credit totaling $25.3 million. As of May 31, 2023, the Company had letters of credit totaling $14.5 million. The Company has restricted cash related to its letters of credit and is required to keep these balances in separate accounts for the duration of the letter of credit agreements, which all have terms ending within the 12 months following August 31, 2023. B. Riley Loan On May 23, 2023, Sai Computing LLC, a wholly-owned subsidiary of the Company (“SAI”), entered into a Loan and Security Agreement (the "B. Riley Loan") with B. Riley Commercial Capital, LLC and B. Riley Securities, with the Company as Guarantor. The B. Riley Loan provides for a term loan of up to $50 million in the principal with an interest rate of 9.00% per annum and a 3% commitment fee on outstanding balances as of each quarter. The proceeds of the B. Riley Loan are being used to provide additional liquidity to help fund the buildout of the Company’s recently announced cloud services platform and datacenters by the Company, and for general corporate purposes and working capital. As of August 31, 2023, the Company had repaid all balances on the loans. Total remaining unused capacity on the B. Riley Loan as of August 31, 2023 was $10.5 million. Remaining Principal Payments Below is a summary of the remaining principal payments due over the life of the term loans as of August 31, 2023 (in thousands): Remainder of FY24 $ 6,930 FY25 9,831 FY26 10,508 FY27 11,221 FY28 6,018 Total $ 44,508

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Aug. 31, 2023
Equity [Abstract]
Stockholders' Equity	Stockholders' Equity Equity Plans On October 9, 2021, the Company’s Board of Directors approved two equity incentive plans, which the Company’s stockholders approved on January 20, 2022. The two plans consist of the 2022 Incentive Plan, previously referred to in the Company’s SEC filings as the 2021 Incentive Plan (the “Incentive Plan”), which provides for grants of various equity awards to the Company’s employees and consultants, and the 2022 Non-Employee Director Stock Plan previously referred to in the Company’s SEC filings as the 2021 Non-Employee Director Stock Plan (the “Director Plan” and, together with the Incentive Plan, the “Plans”), which provides for grants of restricted stock to non-employee directors and for deferral of cash and stock compensation if such deferral provisions are activated at a future date. As of August 31, 2023, the Company had issued awards for approximately 13.8 million shares of common stock of the Company (the “Common Stock”) under the plans. Restricted Stock Awards As of August 31, 2023, total remaining expense to be recognized related to these awards was $0.3 million and the weighted average remaining recognition period for the unvested awards was 0.2 years. Restricted Stock Units The Company has granted restricted stock unit awards (“RSUs”) to certain consultants and full-time employees. The following is a summary of the activity and balances for unvested restricted stock units granted for the three months ended August 31, 2023: Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of May 31, 2023 12,465,935 $ 2.53 Granted 1,311,900 7.79 Vested (573,428) 2.69 Forfeited (286,699) 2.21 Outstanding as of August 31, 2023 12,917,708 $ 3.06 As of August 31, 2023, total remaining expense to be recognized related to these awards was $32.3 million and the weighted average remaining recognition period for the unvested awards was 1.9 years. Public Offering During the three months ended August 31, 2023, the Company began issuing and selling common stock under an "at the market" sale agreement pursuant to which the Company may sell up to $125 million in shares of Common Stock. As of August 31, 2023, the Company has sold approximately 7.9 million shares. Net proceeds, less commission and legal fees of approximately $2.2 million, were approximately $64.5 million. Extinguishment of Noncontrolling Interest On August 31, 2023, pursuant to the joint venture agreement, the minority partner in 1.21 Gigawatts LLC exercised the option to exchange their interest in the joint venture for approximately 1.5 million shares for a value of $9.8 million of the Company’s common stock. The Company is now the sole member of 1.21 Gigawatts LLC and will report all activity as attributable to the Company in future periods.

Leases

Leases	3 Months Ended
	Aug. 31, 2023
Leases [Abstract]
Leases	Leases The Company enters into leases for hosting equipment, office space, and land. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company presents operating and finance right of use assets and liabilities separately on the balance sheet as their own captions, with the liabilities split between current and long-term, respectively. Components of lease expense were as follows (in thousands): Three months ended August 31, 2023 August 31, 2022 Operating lease cost: Operating lease expense $ 485 $ 82 Short-term lease expense 82 63 Total operating lease cost 567 145 Finance lease expense: Amortization of right-of-use assets (1) 5,630 298 Interest on lease liabilities 1,082 109 Total finance lease cost 6,712 407 Sublease Income (23) (27) Total net lease cost $ 7,256 $ 525 (1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues and selling, general and administrative expense in the condensed consolidated statements of operations. The following table represents the Company’s future minimum lease payments as of May 31, 2023: Operating Leases Finance Leases Total Remainder of FY24 $ 1,921 $ 20,185 $ 22,106 FY25 2,681 25,678 28,359 FY26 2,782 4,339 7,121 FY27 2,536 188 2,724 FY28 2,336 180 2,516 Thereafter 1,398 89,944 91,342 Total lease payments 13,654 140,514 154,168 Less: imputed interest (2,274) (91,972) (94,246) Total lease liabilities 11,380 48,542 59,922 Less: Current portion of lease liability (1,807) (23,471) (25,278) Long-term portion of lease liability $ 9,573 $ 25,071 $ 34,644 Supplemental cash flow and other information related to leases is as follows: Three Months Ended August 31, 2023 August 31, 2022 Weighted-average years remaining (in years): Finance leases 8.4 years 51.0 years Operating leases 5.0 years 4.2 years Weighted-average discount rate: Finance leases 8.5 % 8.0 % Operating leases 7.7 % 12.5 %
Leases	Leases The Company enters into leases for hosting equipment, office space, and land. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company presents operating and finance right of use assets and liabilities separately on the balance sheet as their own captions, with the liabilities split between current and long-term, respectively. Components of lease expense were as follows (in thousands): Three months ended August 31, 2023 August 31, 2022 Operating lease cost: Operating lease expense $ 485 $ 82 Short-term lease expense 82 63 Total operating lease cost 567 145 Finance lease expense: Amortization of right-of-use assets (1) 5,630 298 Interest on lease liabilities 1,082 109 Total finance lease cost 6,712 407 Sublease Income (23) (27) Total net lease cost $ 7,256 $ 525 (1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues and selling, general and administrative expense in the condensed consolidated statements of operations. The following table represents the Company’s future minimum lease payments as of May 31, 2023: Operating Leases Finance Leases Total Remainder of FY24 $ 1,921 $ 20,185 $ 22,106 FY25 2,681 25,678 28,359 FY26 2,782 4,339 7,121 FY27 2,536 188 2,724 FY28 2,336 180 2,516 Thereafter 1,398 89,944 91,342 Total lease payments 13,654 140,514 154,168 Less: imputed interest (2,274) (91,972) (94,246) Total lease liabilities 11,380 48,542 59,922 Less: Current portion of lease liability (1,807) (23,471) (25,278) Long-term portion of lease liability $ 9,573 $ 25,071 $ 34,644 Supplemental cash flow and other information related to leases is as follows: Three Months Ended August 31, 2023 August 31, 2022 Weighted-average years remaining (in years): Finance leases 8.4 years 51.0 years Operating leases 5.0 years 4.2 years Weighted-average discount rate: Finance leases 8.5 % 8.0 % Operating leases 7.7 % 12.5 %

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Aug. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Energy Commitment The Company also has a minimum commitment of approximately $95.7 million related to the energy services agreement for its Jamestown, North Dakota cohosting facility with a remaining term of approximately 3.5 years as of August 31, 2023. Claims and Litigation From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. On August 12, 2023, a putative securities class action complaint, captioned McConnell v. Applied Digital Corporation, Wesley Cummins and David Rench , No. 3:23-cv-1805, was filed in the U.S. District Court for the Northern District of Texas, Dallas Division against Applied Digital Corporation (the “Company”) and two of its officers, Chief Executive Officer Wesley Cummins and Chief Financial Officer David Rench, asserting violations of Sections 10(b) and 20(a) of the Securities Exchange Act. The complaint alleges that the defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, the complaint alleges that the Company overstated the profitability of its datacenter hosting business and its ability to successfully transition into a low- cost cloud services provider and that the Company’s board of directors was not “independent” within the meaning of NASDAQ listing rules. The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in this action. If an unfavorable action were to occur, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable. As of August 31, 2023 and May 31, 2023, there were no other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated operations. There are also no legal proceedings in which any of the Company’s management or affiliates is an adverse party or has a material interest adverse to the Company’s interest. Settlement of Potential Claim Subsequent to August 31, 2023, the Company entered into a settlement agreement in respect of employment-related claims by a former executive. The terms of the settlement include payment to the claimant of $2.3 million, which was included in accrued liabilities on the condensed consolidated balance sheets as of August 31, 2023.

Business Segments

Business Segments	3 Months Ended
	Aug. 31, 2023
Segment Reporting [Abstract]
Business Segments	Business Segments Revenue by segment (excluding HPC as that segment has no revenue) was as follows (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Cloud services segment $ 2,152 $ — Hosting segment 34,171 6,924 Total revenue $ 36,323 $ 6,924 Segment profit and a reconciliation to net income (loss) before income tax expenses is as follows (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Segment Profit: Cloud services segment $ (7,434) $ — Hosting segment 8,958 (658) HPC hosting segment (730) — Total segment profit 794 (658) Other (1) (8,221) (3,519) Interest expense 2,074 356 Loss on debt extinguishment 2,353 94 Income before income taxes $ (11,854) $ (4,627) (1) Other includes corporate related items not allocated to reportable segments. We also provide the following additional segment disclosures (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Depreciation and amortization: Cloud services segment $ 4,508 $ — Hosting segment 3,199 1,115 HPC hosting segment 126 — Other (1) 27 21 Total depreciation and amortization $ 7,860 $ 1,136 Capital expenditures: Cloud services segment $ 45,717 $ — Hosting segment 18,298 33,097 HPC hosting segment 11,644 — Total capital expenditures $ 75,659 $ 33,097 (1) Other includes corporate related items not allocated to reportable segments. Information on segment assets and a reconciliation to consolidated assets are as follows (in thousands): August 31, 2023 May 31, 2023 Cloud services segment $ 68,075 $ 3,127 Hosting segment 232,451 224,447 HPC hosting segment 23,449 10,949 Total segment assets 323,975 238,523 Other (1) 25,178 25,434 Total assets $ 349,153 $ 263,957 (1) Other includes corporate related items not allocated to reportable segments.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Aug. 31, 2023
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Basic net income (loss) per share (“EPS”) of common stock is computed by dividing the Company’s net earnings (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if the securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. The table below shows the calculation for earnings per share: Three Months Ended August 31, 2023 August 31, 2022 Net loss $ (11,854) $ (4,659) Net loss attributable to noncontrolling interest (397) (128) Net loss attributable to Applied Digital Corporation $ (11,457) $ (4,531) Basic and diluted net (loss) gain per share: Basic and diluted net loss per share $ (0.12) $ (0.05) Basic and diluted weighted average number of shares outstanding 100,521,673 93,105,835

Subsequent Events

Subsequent Events	3 Months Ended
	Aug. 31, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events B. Riley Loan SAI borrowed an additional $5.0 million under the remaining capacity from the existing B. Riley Loan that the Company entered into in May 2023.

Basis of Presentation and Sig_2

Basis of Presentation and Significant Accounting Policies (Policies)	3 Months Ended
	Aug. 31, 2023
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of May 31, 2023 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements. In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented. The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year. For further information, please refer to and read these interim unaudited condensed consolidated financial statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2023 filed with the SEC on August 2, 2023.
Significant Accounting Policies and Use of Estimates	Significant Accounting Policies and Use of Estimates There were no material changes in the Company’s significant accounting policies for the three months ended August 31, 2023 as compared to the year ended May 31, 2023. See Note 3 - Property and Equipment to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2023, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates of the valuation allowance associated with the Company’s deferred tax assets.
Revenue Recognition	Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers. Hosting Revenue The Company provides energized space to customers who locate their hardware within the Company’s co-hosting facility. All hosting performance obligations are achieved simultaneously by providing the hosting environment for the customers’ operations. Customers pay a fixed rate to the Company in exchange for a managed hosting environment supported by Company-provided equipment. Hosting revenues are recorded monthly in fixed amounts, net of credits for non-performance, based on the terms of the agreements. Any ancillary revenue for maintenance or installation services is at a point in time when the customer has received the full service. As these services support the hosting operation as a whole, this revenue is captured within the hosting revenue caption. Customer contracts include advance payment terms. Advanced payments are recorded as deferred revenue until the related service is provided.
Segments	Segments The Company has identified three reportable segments: artificial intelligence cloud services (“Cloud services”), high performance computing (“HPC”) datacenter hosting, and datacenter hosting (“Hosting”). Our chief operating decision-maker evaluates performance, makes operating decisions and allocates resources on both a consolidated basis and on these three reportable segments. Intercompany transactions between segments are excluded for management reporting purposes. The Cloud services segment operates through our Sai Computing brand and provides cloud services applicable to artificial intelligence. Customers pay a fixed rate to the Company in exchange for a managed hosting environment supported by Company-provided equipment. The HPC datacenter segment designs, builds, and operates next generation datacenters which are designed to provide massive computing power and support high-compute applications within a cost-effective model. The Hosting segment provides infrastructure, including energized space, and colocation services to crypto mining customers. Customers place hardware they own into the Company’s facilities and the Company provides operational and maintenance services for a fixed fee.
Recent Accounting Pronouncements	Recent Accounting PronouncementsWe reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.
Reclassifications	Reclassifications We have reclassified certain prior period revenue amounts from hosting revenue to cloud services revenue and related party revenue on our condensed consolidated statements of operations. We have also reclassified amounts from accounts payable and accrued expenses and prepaid expenses and other current assets to accounts payable, accrued expenses, prepaid expenses, and other current assets as well as from customer deposits and deferred revenue to the associated related party caption lines in our condensed consolidated balance sheets to conform to our current period presentation. These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

Basis of Presentation and Sig_3

Basis of Presentation and Significant Accounting Policies (Tables)	3 Months Ended
	Aug. 31, 2023
Accounting Policies [Abstract]
Schedule of Cash, Cash Equivalents and Restricted Cash	Cash, cash equivalents, and restricted cash within the consolidated balance sheets that are included in the consolidated statements of cash flows as of August 31, 2023 and August 31, 2022 were as follows (in thousands): August 31, 2023 May 31, 2023 Net Cash & Equivalents $ 5,942 $ 28,999 Restricted Cash 25,271 14,575 Total Cash & Cash Equivalents $ 31,213 $ 43,574

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Aug. 31, 2023
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment	Property and equipment consisted of the following as of August 31, 2023, and May 31, 2023 (in thousands): Estimated Useful Life August 31, May 31, Hosting equipment Electric generation and transformers 15 years $ 7,763 $ 4,655 Other equipment and fixtures 5 years - 7 years 3,101 1,684 Construction in progress 97,280 106,226 Information systems and software 5 years 27,570 21,173 Land and building Land 2,152 2,152 Land improvements 15 years 1,296 1,293 Building 39 years 88,346 63,350 Leasehold improvements 3 years - 6 years 2,299 — Total cost of property and equipment 229,807 200,533 Accumulated depreciation (7,141) (4,940) Property and equipment, net $ 222,666 $ 195,593

Revenue from Contracts with C_2

Revenue from Contracts with Customers (Tables)	3 Months Ended
	Aug. 31, 2023
Revenue from Contract with Customer [Abstract]
Schedules of Concentration of Risk, by Risk Factor	Below is a summary of the Company’s revenue concentration by major customers for the three months ended August 31, 2023 and 2022, respectively. Three Months Ended August 31, 2023 2022 Customer A 68 % — % Customer B 10 % 12 % Customer C — % 36 % Customer D — % 21 % Customer E — % 17 % Customer F — % 14 %
Schedule of Deferred Revenue	Changes in the Company's deferred revenue balances for the three months ended August 31, 2023 and 2022, respectively, are shown in the following tables (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Balance, beginning of period $ 48,692 $ 3,877 Advance billings 39,465 22,240 Revenue recognized (36,323) (6,924) Balance, end of period $ 51,834 $ 19,193
Schedule of Customer Deposits	Changes in the Company's customer deposits balances for the three months ended August 31, 2023 and 2022, respectively, are shown in the following table (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Balance, beginning of period $ 36,370 $ 9,524 Customer deposits received — 4,587 Balance, end of period $ 36,370 $ 14,111

Related Party Transactions (Tab

Related Party Transactions (Tables)	3 Months Ended
	Aug. 31, 2023
Related Party Transactions [Abstract]
Schedule of Related Party Transactions	The following table illustrates related party revenue for the three months ended August 31, 2023 and August 31, 2022 (in thousands): Three Months Ended August 31, 2023 2022 Customer D* $ 2,332 $ 1,450 Customer E** $ 1,852 $ 1,136 * Customer D is a subsidiary of an entity which is deemed to beneficially own over 5% of the Company's outstanding common stock ** Customer E is 60% owned by an individual who is deemed to beneficially own over 5% of the Company's outstanding common stock The following table illustrates related party deferred revenue and deposits balances as of August 31, 2023 and May 31, 2023 (in thousands): Customer D balances as of Customer E balances as of August 31, 2023 May 31, 2023 August 31, 2023 May 31, 2023 Deferred revenue $ 923 $ 1,474 $ 48 $ 50 Customer Deposits $ 2,450 $ 2,450 $ 1,361 $ 1,361

Debt (Tables)

Debt (Tables)	3 Months Ended
	Aug. 31, 2023
Debt Disclosure [Abstract]
Schedule of Long-Term Debt Instruments	Long-term debt consisted of the following components (in thousands): August 31, 2023 May 31, 2023 6.50% Starion term loan $ 12,109 $ 12,786 6.15% Vantage Garden City loan 13,154 10,074 7.48% Starion Ellendale loan 18,859 19,728 Other long-term debt 386 354 Debt issuance costs, net of amortization (463) (3,012) Less: Current portion of term loan (9,163) (7,950) Long-term debt, net $ 34,882 $ 31,980
Schedule of Maturities of Long-Term Debt	Below is a summary of the remaining principal payments due over the life of the term loans as of August 31, 2023 (in thousands): Remainder of FY24 $ 6,930 FY25 9,831 FY26 10,508 FY27 11,221 FY28 6,018 Total $ 44,508

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	3 Months Ended
	Aug. 31, 2023
Equity [Abstract]
Schedule of Share-Based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity	The following is a summary of the activity and balances for unvested restricted stock units granted for the three months ended August 31, 2023: Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of May 31, 2023 12,465,935 $ 2.53 Granted 1,311,900 7.79 Vested (573,428) 2.69 Forfeited (286,699) 2.21 Outstanding as of August 31, 2023 12,917,708 $ 3.06

Leases (Tables)

Leases (Tables)	3 Months Ended
	Aug. 31, 2023
Leases [Abstract]
Schedule Of Components Of Lease Expense, Supplemental Cash Flow Information And Other Information	Components of lease expense were as follows (in thousands): Three months ended August 31, 2023 August 31, 2022 Operating lease cost: Operating lease expense $ 485 $ 82 Short-term lease expense 82 63 Total operating lease cost 567 145 Finance lease expense: Amortization of right-of-use assets (1) 5,630 298 Interest on lease liabilities 1,082 109 Total finance lease cost 6,712 407 Sublease Income (23) (27) Total net lease cost $ 7,256 $ 525 (1) Amortization of right-of-use assets is included within depreciation expense, and is recorded within cost of revenues and selling, general and administrative expense in the condensed consolidated statements of operations. Supplemental cash flow and other information related to leases is as follows: Three Months Ended August 31, 2023 August 31, 2022 Weighted-average years remaining (in years): Finance leases 8.4 years 51.0 years Operating leases 5.0 years 4.2 years Weighted-average discount rate: Finance leases 8.5 % 8.0 % Operating leases 7.7 % 12.5 %
Schedule Of Future Minimum Operating Lease Payments	The following table represents the Company’s future minimum lease payments as of May 31, 2023: Operating Leases Finance Leases Total Remainder of FY24 $ 1,921 $ 20,185 $ 22,106 FY25 2,681 25,678 28,359 FY26 2,782 4,339 7,121 FY27 2,536 188 2,724 FY28 2,336 180 2,516 Thereafter 1,398 89,944 91,342 Total lease payments 13,654 140,514 154,168 Less: imputed interest (2,274) (91,972) (94,246) Total lease liabilities 11,380 48,542 59,922 Less: Current portion of lease liability (1,807) (23,471) (25,278) Long-term portion of lease liability $ 9,573 $ 25,071 $ 34,644
Schedule Of Future Minimum Finance Lease Payments	The following table represents the Company’s future minimum lease payments as of May 31, 2023: Operating Leases Finance Leases Total Remainder of FY24 $ 1,921 $ 20,185 $ 22,106 FY25 2,681 25,678 28,359 FY26 2,782 4,339 7,121 FY27 2,536 188 2,724 FY28 2,336 180 2,516 Thereafter 1,398 89,944 91,342 Total lease payments 13,654 140,514 154,168 Less: imputed interest (2,274) (91,972) (94,246) Total lease liabilities 11,380 48,542 59,922 Less: Current portion of lease liability (1,807) (23,471) (25,278) Long-term portion of lease liability $ 9,573 $ 25,071 $ 34,644

Business Segments (Tables)

Business Segments (Tables)	3 Months Ended
	Aug. 31, 2023
Segment Reporting [Abstract]
Schedule of Segment Reporting Information, by Segment	Revenue by segment (excluding HPC as that segment has no revenue) was as follows (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Cloud services segment $ 2,152 $ — Hosting segment 34,171 6,924 Total revenue $ 36,323 $ 6,924 We also provide the following additional segment disclosures (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Depreciation and amortization: Cloud services segment $ 4,508 $ — Hosting segment 3,199 1,115 HPC hosting segment 126 — Other (1) 27 21 Total depreciation and amortization $ 7,860 $ 1,136 Capital expenditures: Cloud services segment $ 45,717 $ — Hosting segment 18,298 33,097 HPC hosting segment 11,644 — Total capital expenditures $ 75,659 $ 33,097 (1) Other includes corporate related items not allocated to reportable segments. Information on segment assets and a reconciliation to consolidated assets are as follows (in thousands): August 31, 2023 May 31, 2023 Cloud services segment $ 68,075 $ 3,127 Hosting segment 232,451 224,447 HPC hosting segment 23,449 10,949 Total segment assets 323,975 238,523 Other (1) 25,178 25,434 Total assets $ 349,153 $ 263,957 (1) Other includes corporate related items not allocated to reportable segments.
Schedule of Segment Profit and a Reconciliation to Net Income (Loss) Before Income Tax Expenses	Segment profit and a reconciliation to net income (loss) before income tax expenses is as follows (in thousands): Three Months Ended August 31, 2023 August 31, 2022 Segment Profit: Cloud services segment $ (7,434) $ — Hosting segment 8,958 (658) HPC hosting segment (730) — Total segment profit 794 (658) Other (1) (8,221) (3,519) Interest expense 2,074 356 Loss on debt extinguishment 2,353 94 Income before income taxes $ (11,854) $ (4,627) (1) Other includes corporate related items not allocated to reportable segments.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Aug. 31, 2023
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The table below shows the calculation for earnings per share: Three Months Ended August 31, 2023 August 31, 2022 Net loss $ (11,854) $ (4,659) Net loss attributable to noncontrolling interest (397) (128) Net loss attributable to Applied Digital Corporation $ (11,457) $ (4,531) Basic and diluted net (loss) gain per share: Basic and diluted net loss per share $ (0.12) $ (0.05) Basic and diluted weighted average number of shares outstanding 100,521,673 93,105,835

Business and Organization (Deta

Business and Organization (Details)	3 Months Ended
	Aug. 31, 2023 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	3

Basis of Presentation and Sig_4

Basis of Presentation and Significant Accounting Policies - Additional Information (Details)	3 Months Ended
	Aug. 31, 2023 segment
Accounting Policies [Abstract]
Number of reportable segments	3

Basis of Presentation and Sig_5

Basis of Presentation and Significant Accounting Policies - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Aug. 31, 2023	May 31, 2023
Accounting Policies [Abstract]
Net Cash & Equivalents	$ 5,942	$ 28,999
Restricted cash	25,271	14,575
Total Cash & Cash Equivalents	$ 31,213	$ 43,574

Property and Equipment - Schedu

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Aug. 31, 2023	May 31, 2023
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 229,807	$ 200,533
Accumulated depreciation	(7,141)	(4,940)
Property and equipment, net	$ 222,666	195,593
Electric generation and transformers
Property, Plant and Equipment [Line Items]
Estimated Useful Life	15 years
Total cost of property and equipment	$ 7,763	4,655
Other equipment and fixtures
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 3,101	1,684
Other equipment and fixtures | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Other equipment and fixtures | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years
Construction in progress
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 97,280	106,226
Information systems and software
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Total cost of property and equipment	$ 27,570	21,173
Land
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 2,152	2,152
Land improvements
Property, Plant and Equipment [Line Items]
Estimated Useful Life	15 years
Total cost of property and equipment	$ 1,296	1,293
Building
Property, Plant and Equipment [Line Items]
Estimated Useful Life	39 years
Total cost of property and equipment	$ 88,346	63,350
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 2,299	$ 0
Leasehold improvements | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	3 years
Leasehold improvements | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	6 years

Property and Equipment - Narrat

Property and Equipment - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation	$ 2.2	$ 0.8

Revenue from Contracts with C_3

Revenue from Contracts with Customers - Schedule of Concentration Risk by Major Customer (Details) - Customer Concentration Risk - Revenue Benchmark	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Customer A
Concentration Risk [Line Items]
Concentration risk	68%	0%
Customer B
Concentration Risk [Line Items]
Concentration risk	10%	12%
Customer C
Concentration Risk [Line Items]
Concentration risk	0%	36%
Customer D
Concentration Risk [Line Items]
Concentration risk	0%	21%
Customer E
Concentration Risk [Line Items]
Concentration risk	0%	17%
Customer F
Concentration Risk [Line Items]
Concentration risk	0%	14%

Revenue from Contracts with C_4

Revenue from Contracts with Customers - Narrative (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-09-01 $ in Millions	Aug. 31, 2023 USD ($)
Revenue, Major Customer [Line Items]
Revenue, remaining performance obligation, amount	$ 51.8
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

Revenue from Contracts with C_5

Revenue from Contracts with Customers - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Movement in Deferred Revenue [Roll Forward]
Balance, beginning of period	$ 48,692	$ 3,877
Advance billings	39,465	22,240
Revenue recognized	(36,323)	(6,924)
Balance, end of period	$ 51,834	$ 19,193

Revenue from Contracts with C_6

Revenue from Contracts with Customers - Schedule of Customer Deposits (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Customer Deposits [Roll Forward]
Balance, beginning of period	$ 36,370	$ 9,524
Customer deposits received	0	4,587
Balance, end of period	$ 36,370	$ 14,111

Related Party Transactions - Re

Related Party Transactions - Related Party Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022	May 31, 2023	May 31, 2022
Related Party Transaction [Line Items]
Total revenue	$ 36,323	$ 6,924
Deferred revenue	$ 51,834	19,193	$ 48,692	$ 3,877
Customer D
Related Party Transaction [Line Items]
Related party ownership interests	5%
Customer D | Related Party
Related Party Transaction [Line Items]
Total revenue	$ 2,332	1,450
Deferred revenue	923		1,474
Customer Deposits	$ 2,450		2,450
Customer E
Related Party Transaction [Line Items]
Related party ownership interests	60%
Customer E | Related Party
Related Party Transaction [Line Items]
Total revenue	$ 1,852	$ 1,136
Deferred revenue	48		50
Customer Deposits	$ 1,361		$ 1,361
Customer E by Individual
Related Party Transaction [Line Items]
Related party ownership interests	5%

Related Party Transactions - Na

Related Party Transactions - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Related Party Transaction [Line Items]
Sublease Income	$ 23	$ 27
Related Party
Related Party Transaction [Line Items]
Sublease Income	$ 23	$ 27

Debt - Schedule of Long-Term De

Debt - Schedule of Long-Term Debt (Details) - Medium-term Notes - USD ($) $ in Thousands	Aug. 31, 2023	May 31, 2023
Debt Instrument [Line Items]
Long-term debt, gross	$ 44,508
Debt issuance costs, net of amortization	(463)	$ (3,012)
Less: Current portion of term loan	(9,163)	(7,950)
Long-term debt, net	$ 34,882	31,980
6.50% Starion term loan
Debt Instrument [Line Items]
Interest rate	6.50%
Long-term debt, gross	$ 12,109	12,786
6.15% Vantage Garden City loan
Debt Instrument [Line Items]
Interest rate	6.15%
Long-term debt, gross	$ 13,154	10,074
7.48% Starion Ellendale loan
Debt Instrument [Line Items]
Interest rate	7.48%
Long-term debt, gross	$ 18,859	19,728
Other long-term debt
Debt Instrument [Line Items]
Long-term debt, gross	$ 386	$ 354

Debt - Narrative (Details)

Debt - Narrative (Details) - USD ($) $ in Millions	May 23, 2023	Aug. 31, 2023	May 31, 2023
B. Riley Loan and Security Agreement | Medium-term Notes
Debt Instrument [Line Items]
Promissory note amount	$ 50
Interest rate	9%
Commitment fee	3%
Total remaining unused capacity		$ 10.5
Letter of Credit
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity		$ 25.3	$ 14.5

Debt - Schedule of Maturities o

Debt - Schedule of Maturities of Long-Term Debt (Details) - Medium-term Notes $ in Thousands	Aug. 31, 2023 USD ($)
Debt Instrument [Line Items]
Remainder of FY24	$ 6,930
FY25	9,831
FY26	10,508
FY27	11,221
FY28	6,018
Total	$ 44,508

Stockholders' Equity - Narrativ

Stockholders' Equity - Narrative (Details) $ in Thousands	3 Months Ended
	Aug. 31, 2023 USD ($) shares	Aug. 31, 2022 USD ($)	Oct. 09, 2021 plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity incentive plans | plan			2
Gross proceeds from sale	$ 125,000
Number of shares sold in transaction (in shares) | shares	7,900,000
Payments of stock issuance costs	$ 2,200
Issuance of common stock	$ 64,482	$ 0
Extinguishment of noncontrolling interest (in shares) | shares	1,500,000
Extinguishment of noncontrolling interest	$ 0
Stockholders’ Equity
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Extinguishment of noncontrolling interest	$ (9,765)
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants to date (in shares) | shares	13,800,000
Unrecognized stock compensation expense	$ 32,300
Unrecognized stock compensation expense, period for recognition	1 year 10 months 24 days
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense	$ 300
Unrecognized stock compensation expense, period for recognition	2 months 12 days

Stockholders' Equity - Schedule

Stockholders' Equity - Schedule of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - $ / shares	3 Months Ended
	Aug. 31, 2023	May 31, 2023
Number of Shares
Outstanding at beginning of period (in shares)	12,465,935
Granted (in shares)	1,311,900
Vested (in shares)	(573,428)
Forfeited (in shares)	(286,699)
Outstanding at end of period (in shares)	12,917,708
Weighted Average Grant Date Fair Value Per Share
Weighted average grant date fair value, outstanding at beginning of period (in dollars per share)	$ 3.06	$ 2.53
Granted (in dollars per share)	7.79
Vested (in dollars per share)	2.69
Forfeited (in dollars per share)	2.21
Weighted average grant date fair value, outstanding at end of period (in dollars per share)	$ 3.06

Leases - Components of Lease Ex

Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Operating lease cost:
Operating lease expense	$ 485	$ 82
Short-term lease expense	82	63
Total operating lease cost	567	145
Finance lease expense:
Amortization of right-of-use assets	5,630	298
Interest on lease liabilities	1,082	109
Total finance lease cost	6,712	407
Sublease Income	(23)	(27)
Total net lease cost	$ 7,256	$ 525

Leases - Schedule of Future Min

Leases - Schedule of Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Aug. 31, 2023	May 31, 2023
Operating Leases
Remainder of FY24	$ 1,921
FY25	2,681
FY26	2,782
FY27	2,536
FY28	2,336
Thereafter	1,398
Total lease payments	13,654
Less: imputed interest	2,274
Total lease liabilities	11,380
Less: Current portion of lease liability	(1,807)	$ (320)
Long-term portion of lease liability	9,573	1,005
Finance Leases
Remainder of FY24	20,185
FY25	25,678
FY26	4,339
FY27	188
FY28	180
Thereafter	89,944
Total lease payments	140,514
Less: imputed interest	(91,972)
Total lease liabilities	48,542
Less: Current portion of lease liability	(23,471)	(5,722)
Long-term portion of lease liability	25,071	$ 8,334
Total
Remainder of FY24	22,106
FY25	28,359
FY26	7,121
FY27	2,724
FY28	2,516
Thereafter	91,342
Total lease payments	154,168
Less: imputed interest	(94,246)
Total lease liabilities	59,922
Less: Current portion of lease liability	(25,278)
Long-term portion of lease liability	$ 34,644

Leases - Schedule of Supplement

Leases - Schedule of Supplemental Cash Flow and Other Information (Details)	Aug. 31, 2023	Aug. 31, 2022
Weighted-average years remaining (in years):
Finance leases	8 years 4 months 24 days	51 years
Operating leases	5 years	4 years 2 months 12 days
Weighted-average discount rate:
Finance leases	8.50%	8%
Operating leases	7.70%	12.50%

Leases - Narrative (Details)

Leases - Narrative (Details) $ in Millions	Aug. 31, 2023 USD ($)
Lessee, Lease, Description [Line Items]
Operating lease, not yet commenced, minimum payments	$ 143.4
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, not yet commenced, term of contract	60 months
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, not yet commenced, term of contract	84 months

Commitments and Contingencies -

Commitments and Contingencies - Narrative (Details) $ in Millions	3 Months Ended
	Aug. 31, 2023 USD ($)
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Service contract, term	3 years 6 months
Mediation Related To The Threatened Claim Of Sexual Harassment | Settled Litigation
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Settlement amount	$ 2.3
Energy Service
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Contractual obligation	$ 95.7

Business Segments - Schedule of

Business Segments - Schedule of Segment Reporting Information, by Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022	May 31, 2023
Segment Reporting Information [Line Items]
Total revenue	$ 36,323	$ 6,924
Total depreciation and amortization	7,860	1,136
Total capital expenditures	75,659	33,097
Total assets	349,153		$ 263,957
Cloud services segment
Segment Reporting Information [Line Items]
Total revenue	2,152	0
Operating Segments
Segment Reporting Information [Line Items]
Total assets	323,975		238,523
Operating Segments | Cloud services segment
Segment Reporting Information [Line Items]
Total revenue	2,152	0
Total depreciation and amortization	4,508	0
Total capital expenditures	45,717	0
Total assets	68,075		3,127
Operating Segments | Hosting segment
Segment Reporting Information [Line Items]
Total revenue	34,171	6,924
Total depreciation and amortization	3,199	1,115
Total capital expenditures	18,298	33,097
Total assets	232,451		224,447
Operating Segments | HPC hosting segment
Segment Reporting Information [Line Items]
Total revenue	0	0
Total depreciation and amortization	126	0
Total capital expenditures	11,644	0
Total assets	23,449		10,949
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Total depreciation and amortization	27	$ 21
Total assets	$ 25,178		$ 25,434

Business Segments - Schedule _2

Business Segments - Schedule of Segment Profit and a Reconciliation to Net Income (Loss) Before Income Tax Expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Segment Reporting Information [Line Items]
Total segment profit	$ (5,127)	$ (4,177)
Interest Expense	2,074	356
Loss on extinguishment of debt	2,353	94
Net loss before income tax expenses	(11,854)	(4,627)
Operating Segments
Segment Reporting Information [Line Items]
Total segment profit	794	(658)
Operating Segments | Cloud services segment
Segment Reporting Information [Line Items]
Total segment profit	(7,434)	0
Operating Segments | Hosting segment
Segment Reporting Information [Line Items]
Total segment profit	8,958	(658)
Operating Segments | HPC hosting segment
Segment Reporting Information [Line Items]
Total segment profit	(730)	0
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Other	$ (8,221)	$ (3,519)

Earnings Per Share - Schedule o

Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Aug. 31, 2023	Aug. 31, 2022
Earnings Per Share [Abstract]
Net loss	$ (11,854)	$ (4,659)
Net loss attributable to noncontrolling interest	(397)	(128)
Net loss attributable to Applied Digital Corporation	$ (11,457)	$ (4,531)
Basic and diluted net (loss) gain per share:
Basic net loss per share (in dollars per share)	$ (0.12)	$ (0.05)
Diluted net loss per share (in dollars per share)	$ (0.12)	$ (0.05)
Basic weighted average number of shares outstanding (in shares)	100,521,673	93,105,835
Diluted weighted average number of shares outstanding (in shares)	100,521,673	93,105,835

Subsequent Events (Details)

Subsequent Events (Details) - B. Riley Loan and Security Agreement - Medium-term Notes - USD ($) $ in Millions	Oct. 10, 2023	May 23, 2023
Subsequent Event [Line Items]
Debt instrument, face amount		$ 50
Subsequent Event
Subsequent Event [Line Items]
Debt instrument, face amount	$ 5