A：The highlights of Apply Digital's fiscal fourth quarter 2026 include the signing of leases for five campuses, three of which were closed in just the past four months, creating a total of $36 billion in long-term lease value with approximately $20 billion in the last quarter. The company also achieved a 125% increase in contract lease value, underpinned by 1.41 GW of contracted IT load for all campuses.

A：In the past year, Apply Digital constructed 100 MW of Polaris Forge 1 on time and on budget. They also enhanced their partnership with local communities, focusing on trust-building and investments to improve residents' quality of life.

A：The franchise model contributes to Apply Digital's leadership by establishing a core group of leadership positions at each new campus, leveraging a proprietary data center design, and a world-class supply chain. This model allows for efficient replication of construction across diverse geographies and climate conditions and is considered a key reason for the company's leadership position.

A：Apply Digital is actively marketing an additional 1.7 GW of data center capacity across multiple states, which is expected to command higher pricing. They are in advanced negotiations with two customers for approximately 100 MW of expansion, potentially adding 150 MW of capacity. These expansion leases could bring an additional $6 billion of contracted revenue based on current rates and duration, with the possibility of higher rates and longer durations.

A：The significance of the company's power generation strategy lies in its potential to unlock expansion opportunities, especially in the Dakotas, which are rich in low-cost, abundant energy sources and have a business-friendly environment. The strategy positions shareholders to benefit from the success of Base Viron and creates a competitive advantage due to the unique combination of abundant power resources and favorable climate conditions.

A：All of Apply Digital's construction projects are currently on time and on budget, a significant achievement considering that roughly 90% of industry-wide projects costing more than $1 billion are delivered late or over budget.

A：The cloud business separation was completed, and the entity began trading on Nasdaq under the ticker CHRNS. Apply Digital currently holds 96% ownership, allowing shareholders to participate in the upside as the business seeks to scale independently.

A：Chronos Scale has added Raj as Chief Technology Officer, who previously served as Vice President at Tesla, reporting to Elon Musk and led a broad portfolio including AI infrastructure and one of the largest GPU clusters. Additionally, Lawrence Lamb has been named Chief Product Officer, having scaled global cloud and AI platforms at companies like Supermicro, bringing more than 20 years of experience.

A：Chronos Scale has scaled its customer contract with higher pricing for its deployed fleet of GPUs and started demonstrating a secure enterprise environment to select partners. The company's platform allows AI deployment in a secure, controlled environment for on-premise data and supports multiple AI models. Chronos Scale is also pursuing large enterprise compute contract opportunities that could deploy hundreds of megawatts of compute on a take-or-pay long-term contract.

A：Chronos Scale closed a $300 million senior secured bridge facility led by Goldman Sachs and a revolving credit facility of up to $550 million. It also closed $1.5 billion in 6.375% senior secured notes to fund the fourth building at the Polaris Forge 1 campus. These moves were aimed at securing lower cost of capital, and the recent placement of the 1.5 billion notes was at a tight spread, indicating a lower cost of capital. The company continues to drive down the cost of capital and has now secured the financing needs for the full 400 MW at Polaris Forge 1 and the 200 MW of Polaris Forge 2.

A：For the fourth quarter, total revenues were $258.7 million, with $208.2 million from services and $50.6 million from data center rental and other revenue, marking a 407% increase from the prior quarter. HPC hosting business generated $203 million in revenue, and the data center hosting segment had revenue of $37.3 million, which was materially consistent year over year. Net loss attributable to common shareholders was $111.6 million, or 39 cents per share, while adjusted net income was $12.9 million, or 4 cents per diluted share.

A：Chronos Scale ended the quarter with $44.2 billion in cash, $5 billion in debt, and approximately $1.7 billion in equity. The financials primarily reflect only the initial 100 MW that were online and contributing during the quarter. With ongoing construction towards 1.5 GW of HPC AI infrastructure, the company expects a significant step-up in numbers over the coming quarters and years, with meaningful growth in revenue, EBITDA, and NOI as the additional megawatts come into service.

A：AI infrastructure commitments from technology companies are projected to be around $850 billion in data center lease obligations over the next several years, which is more than triple the prior levels and backed by companies with strong balance sheets and credit ratings. The major hyperscale AI spending is expected to reach approximately 3.2% of US GDP by 2027, surpassing projected US national defense spending for the first time. These commitments reinforce the belief that the industry is in the early stages of one of the largest infrastructure investment cycles in modern economic history, and Chronos Scale is well positioned to capitalize on this opportunity.

A：The guiding principles for building AI infrastructure at scale include doing it the right way for customers, delivering high-quality GPU-ready data center capacity on time, and creating lasting economic value through community partnerships.

A：The measurable benefits at Polaris Sports 1 include the use of excess regional grid capacity to provide over 45 million in electricity credits to local rate payers.

A：The company has set a goal for $1 billion in net operating income within five years, expecting to achieve this run rate goal a year ahead of schedule. It now supports approximately $36 billion of long-term contracted lease revenue, with most contracts being directly with investment-grade customers.

A：The company plans for future expansion by relying on the ability to expand on current campuses, which could provide up to 5 GW of critical IT load through 2032. It is focusing on disciplined execution, delivering for customers and communities, and creating long-term value for shareholders.

A：Recent achievements include expanding from one campus to five, increasing contracted revenue from $7 billion to $36 billion, and adding over a day of water capacity with investment-grade grid customers, with over 80% of the new leases being with high investment-grade customers.

A：Recent lease signings are part of the strategy to achieve a solid foundation for applied digital by signing with investment-grade hyperscalers. The company has managed to secure a high percentage of investment-grade customers and believes the yields are competitive and conservative, with an expectation to drive financing costs lower. It also aims to grow from solid customers with predictable return rates.

A：M&A equity is portrayed as an attractive form of capital because it can offer a mid-teens internal rate of return (IRR) compared to the highly dilutive common stock issuance. It can also be more advantageous than large convertible debt offerings as these can negatively impact credit ratings and create an overhang on equity during financial turbulence.

A：The cost of capital for issuing equity when it's severely undervalued can be in the high teens or even north of 20%, which is considered well above the cost of M&A equity, suggesting that M&A equity could be a more cost-effective option.

A：The third form of the flywheel mentioned is site-specific debt, which is approached by tapping predominantly through project bond markets for construction. As construction progresses and project finance markets become available, it allows for a transition into more permanent financing, such as commercial mortgage-backed securities (CMBS) or the 144a IG market, which decreases construction costs and financing rates by removing construction risk.

A：The company manages leverage at a very conservative level. For an 80% loan-to-value (LTC) ratio, the company aims to keep its average annualized net operating income (NOI) sub-7 times leveraged, which is well below industry comparables that operate in excess of 10 terms of leverage.

A：The expected CapEx spend for the upcoming quarter is around $600 million. This amount is anticipated to increase as the company enters more advanced stages of construction at the new platform and campus sites.

A：The majority of the restricted cash was held in escrow for the Polaris II bond and was released in June. The subsequent release of this cash will be detailed in upcoming reports, with more information available in other accounts.

A：The potential expansion for customers includes an additional 100 to 150 MW, which would be at the same campus as Polaris Forge 2 and on a different campus. Materially higher pricing is expected for these expansions and new campuses, as the industry is seeing increased contract pricing which is an indicator of strong demand.

A：The new base electronic capacity in North Dakota will deliver grid capacity to the data center campuses and other ratepayers in the region. This will not only expand the data centers' capacity but also encourage additional power generation projects in the area, which will eventually allow for further expansion of the campuses. The company sees clear potential to expand their existing campuses to over 5 GW of critical IT load capacity with the addition of base electronic generation.

A：There has not been a change in demand based on inflationary pressures, with pricing moving higher in the market which indicates robust demand.

A：The cost range of projects is influenced by factors such as site-specific expenses like campus costs, new subs and missions, land, and power site itself. Economies of scale are expected as additional buildings are added to campuses over time, reducing costs. Specific regional factors like soil conditions can also lead to higher costs in certain areas. Labor conditions and availability do not seem to be a factor as the company solves and continues to solve labor issues in almost every region.

A：The company manages labor costs and conditions by avoiding the most crowded markets, staying in less competitive markets, and educating local labor markets through collaborations with technical colleges. They work with local vocational and technical schools to set curriculum, make donations, and train people for construction and operations roles in their facilities.

A：The company's growth is not limited by demand but by power availability and managing the supply chain. The company has contracted for 2.1 GW of utility power over the past year and focuses on the timing of building construction to match when power becomes available. Supply chain challenges are managed through good processes and experience in the industry.

A：The company believes that managing supply chain and power are the two biggest constraints to growth and are focusing on these areas. They are managing these constraints by having durable, high-quality customer contracts with SLAs that ensure efficient operation of data centers for the long term, thus mitigating concerns related to NIMBY and open models.

A：The company's strategy is to focus on high-quality customers with durable contracts, ensuring the ability to deliver and the ability for customers to cancel if needed. They aim to build efficient data centers that can be operated cost-effectively for at least 15 years, meeting SLAs for a long period, with an emphasis on high investment grade hyperscalers and investment grade hyperscalers.

A：Compute power is seen as foundational because it is required by both open source and closed models, and the same amount is used for inference. The company feels confident about its positioning in the compute market, regardless of future technological shifts.

A：The company is currently working on 5 campuses simultaneously, up from a previous capability of handling 7. The number of simultaneous campuses might be pushed higher, and the company is considering whether its current capacity of 1.7 GW will be fully utilized.

A：The company's priorities are to ensure it is not overextended, maintains the ability to execute and deliver on time, and operates efficiently. They are mindful of supply chain limitations but have been able to expand despite these challenges. The company will assess the potential to exceed the current limit of 7 campuses based on construction process management.

A：The company aims for conservative NOI margin targets and strives to deliver to the high end. Initial campus operations should see margins increase over time as the site improves and economies of scale are achieved with more buildings within a campus.

A：Base electron is expected to come online in 2029 and 2030 with an initial class C and subsequent ramp-up. The company has other projects, including transmission and generation, planned for 2026, 2027, and 2028 to fill in and expand the campuses. Power capacity is important for meeting goals alongside base electron growth.

A：The market for power projects is characterized by new customer interest, with the expectation that the power will be utilized by new customers. The focus is on base electron capacity, and power projects are an important part of expanding that capacity.

A：The company's AI architecture is very flexible and supports various types and densities of compute deployed. However, specific customer requirements for CPUs, memory, and networking cannot be relied upon as indicative trends as each customer's needs are evaluated on a case-by-case basis.