Applied Digital Corporation

Good morning, and welcome to Applied Digital's Fiscal First Quarter 2024 conference call. My name is Rob, and I'll be your operator for today. Before this call, Applied Digital issued its financial results for the Fiscal First Quarter ended August 31, 2023, in a press release, a copy of which will be furnished in a report on Form 8K filed with the SEC, and will be available in the Investor Relations section of the company's website. Joining us on today's call are Applied Digital's Chairman and CEO, Wes Cummins, and CFO David Wrench. Following their remarks, we'll open the call for questions. Before we begin, Alex Covington from Gateway Group will make a brief introductory statement. Mr. Covington, please proceed.

Great. Thank you, operator. Good morning, everyone, and welcome to Apply Digital's fiscal first quarter 2024 conference call. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties. As a result, we caution that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We will also discuss non-GAAP financial metrics and encourage you to read our disclosures and the reconciliation tables, applicable GAAP measures, and our earnings release carefully as you consider these metrics. we refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business, as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption Risk Factors in our quarterly report on Form 10-Q. You may get Applied Digital's Securities and Exchange Commission filings for free by visiting the SEC website at www.applieddigital.com. I would also like to remind everyone that this call is being recorded and will be made available for replay via a link available in the Investor Relations section of Applied Digital's website. Now, I will turn the call over to Applied Digital's Chairman and CEO, Wes Cummins. Wes?

Thanks, Alex, and good morning, everyone. Thank you for joining our fiscal first quarter 2024 conference call. I want to start by thanking our employees for their ongoing hard work and service in advancing our mission of providing digital infrastructure solutions to the rapidly growing high-performance computing industry. Before turning the call over to our CFO, David Wrench, for a detailed review of our financial results, I'd like to briefly discuss some recent developments across our business. Let's start with our existing blockchain hosting operations. We aim to have all three of our blockchain hosting facilities fully online shortly with high reliability and performance for our customers. Our 100 megawatt Jamestown facility continues to perform as expected and operates at full capacity with consistent uptime throughout the quarter. This marks the fourth consecutive quarter in which the Jamestown facility has operated at full capacity. Our 180 megawatt Ellendale facility in North Dakota was fully energized and became fully operational during the first quarter of fiscal year 2024 and contributed to our Results this quarter, the facility is fully online and operating with consistent uptime during the second quarter, bringing our total hosting capacity to 280 megawatts across our North Dakota facilities, all of which are contracted out to customers on multi-year terms. In September, we entered into a facilities extension agreement with Encore for the transmission and metering of power to our Garden City, Texas facility. With this in place, metering and telemetry equipment owned by the power provider will be installed, and once complete, the site will be energized. This installation is expected to be completed by October 23rd. Once our Garden City facility becomes fully energized, we will have approximately 500 megawatts of hosting capacity across our three facilities. We expect our three sites to produce around $300 million in revenue and $100 million in EBITDA on an annualized basis. Presence of all three Operational facilities with high uptime will provide us with consistent cash flow, supporting our capital requirements for the build-out of our HPC data centers and purchasing GPUs to service our AI cloud customers. Let's move to our AI cloud services, which launched this calendar year to provide accelerated computing power for AI applications. Our AI cloud service continues to ramp up as we make further progress in supporting our existing contracts and pursue additional opportunities in our pipelines. In July, we activated the first cluster of GPUs for Character AI and since then have made meaningful progress receiving our second cluster of GPUs in September with the expectation of receiving additional GPUs this month. Since our last earnings announcement, we have added two additional AI cloud customers. Both customers have an established user base and are growing quickly. These customer agreements have a similar structure to our first two. They also include significant prepayments to fund a large portion of the capital requirements. for purchasing the GPUs. This brings our total annual contract value of AI cloud services contracts at full capacity to approximately $378 million. In addition to substantial prepayments we receive from customers, we are using vendor financing and actively exploring other tailored financing options to support the capital requirements for the 34,000 GPUs we have on order to support our cloud service. We remain on track for delivery of the majority of these GPUs by April of next year. Our established partnerships with leading OEMs like Supermicro, Hewlett Packard Enterprise, and Dell, combined with our recent Elite Partner Status and NVIDIA's Partner Network, provide us with visibility into the delivery timeline, ensuring timely receipt of these GPUs. As previously mentioned, we will initially provide this service from our 9-megawatt HPC Jamestown facility, along with third-party co-location space as we continue to execute on the element of our dedicated next-gen HPC data centers. The pipeline of opportunities for our AI cloud service business remains robust. We look forward to capitalizing further on this opportunity and providing further updates on our newly signed customers going forward. Lastly, let me provide a quick update on our purpose-built HPC data centers. We have 300 megawatts of capacity in development and have begun initial groundwork for our Ellendale facility. In order to proceed with the construction of these facilities and obtain the necessary financing, we're in the process of securing a credit-rated anchor tenant. We have been actively engaged in ongoing discussions with several potential anchor tenants for our Ellendale and Utah facilities. Similar to our new customers for our AI cloud service, we will provide more information once available. We aim to secure an anchor tenant customer for each facility and have these facilities fully energized and operational within the next 24 months. With that, I now turn the call over to our CFO, David Wrench, to walk you through our financials and provide an update on guidance before providing my closing remarks. David?