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What's in Store for Applied Digital's (APLD) Q4 Earnings?

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Applied Digital Corporation (APLD - Free Report) is scheduled to report fourth-quarter and fiscal 2023 results on Jul 24, before market open. The company’s earnings and revenues are expected to have witnessed year-over-year growth.

The next-generation digital infrastructure provider’s third-quarter fiscal 2023 loss of 1 cent was better than expected. This was supported by higher hosting revenues, while the cost of revenues was an offsetting factor.

APLD has an impressive earnings surprise history. Applied Digital’s earnings outpaced estimates in the trailing four quarters, the average beat being 52.14%.

Applied Digital Corporation Price and EPS Surprise

 

Applied Digital Corporation Price and EPS Surprise

Applied Digital Corporation price-eps-surprise | Applied Digital Corporation Quote

Key Factors to Note

In the fiscal fourth quarter, Applied Digital is likely to have continued to benefit from being an early mover in AI cloud and the high-performance computing (HPC) space after successfully establishing itself as a BTC hosting provider with preeminent customers.

In May, Applied Digital announced the launch of its Cloud Services to provide HPC power for AI applications. Following this, the company signed its first AI customer with an agreement worth up to $180 million over 24 months. This was followed by securing the second AI customer in June, with an agreement worth up to $460 million over a 36-month period.

These deals, along with past ones, are expected to have contributed to revenues in the fiscal fourth quarter.

In the quarter under review, Applied Digital increased its hosting capacity across its facilities in North Dakota. This is likely to have increased hosting revenues and driven top-line growth in the quarter.

On Jun 26, 2023, Applied Digital announced the current and preliminary expectations of results for the quarter to be reported (ended May 31). For fourth-quarter fiscal 2023, the company expected overall revenues of $22 million and adjusted EBITDA of $2.7-$3.2 million. The consensus estimate for revenues of $22 million indicates a rise of 193.4% from the year-ago reported figure.

However, APLD activities in the to-be-reported quarter were inadequate to gain analysts’ confidence. As a result, the Zacks Consensus Estimate for the fiscal fourth-quarter loss of 5 cents per share has widened from a loss of 3 cents mentioned in the past month. Nonetheless, the figure indicates a 16.7% improvement from the year-ago quarter’s reported figure. Management expected a net loss of $6.8 million.

For Fiscal 2023, the Zacks Consensus Estimate for the loss is pegged at 46 cents, suggesting a wider loss from the prior year’s reported loss of 13 cents. Revenue estimates of $56 million indicate a jump of 554%.

What Our Quantitative Model Predicts

Our proven model does not predict an earnings beat for Applied Digital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Applied Digital is -40%.

Zacks Rank: Applied Digital currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

First Citizens BancShares, Inc. (FCNCA - Free Report) and The Bancorp, Inc. (TBBK - Free Report) are a couple of stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases.

The Earnings ESP for FCNCA is +3.21% and the stock currently carries a Zacks Rank #3. It is slated to report the second-quarter 2023 results on Aug 3.

The Zacks Consensus Estimate for FCNCA’s second-quarter earnings has moved 4.3% south over the past 30 days.

TBBK currently has an Earnings ESP of +1.16% and a Zacks Rank #2. It is scheduled to release the second-quarter 2023 results on Jul 27.

The Zacks Consensus Estimate for TBBK’s second-quarter earnings has moved 1.1% south over the past week.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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