v3.26.3
Debt
 3 Months Ended
Aug. 31, 2026
Debt Disclosure [Abstract]  
Debt Debt
The Company’s outstanding debt consisted of the following components (in thousands):
Interest RateMaturity DateAugust 31, 2026May 31, 2026
2030 9.250% Senior Secured Notes (1)
9.25%
December 2030
$2,350,000 $2,350,000 
2031 6.750% Senior Secured Notes (2)
6.75%March 20312,150,000 2,150,000 
2031 7.000% Senior Secured Notes
7.00%June 20311,590,000 — 
Convertible Notes, senior unsecured (3)
2.75%
June 2030
450,000 450,000 
Bridge Facility (4)
See belowApril 2027— 300,000 
2026 Revolving Credit Facility (5)
See belowSee below82,390 — 
Other debt (6)
99,215 56,680 
Deferred financing costs, net of amortization
(345,013)(330,742)
Less: Current portion of debt
(112,645)(16,422)
Long-term debt, net$6,263,947 $4,959,516 
(1)The 2030 9.250% Senior Secured Notes are guaranteed by APLD ELN-02 HoldCo LLC, APLD ELN-03 HoldCo LLC, APLD ELN-02 LLC, APLD ELN-03 LLC, APLD ELN-02 LandCo LLC and APLD ELN-03 LandCo LLC, each a majority-owned subsidiary of the Company, and are secured by the equity interests of the issuer and guarantors, the Project Accounts (as defined in the 2030 Notes Indenture), and substantially all of the assets of the issuer and guarantors.
(2)The 6.750% 2031 Senior Secured Notes are guaranteed by APLD FAR-01 HoldCo LLC, APLD FAR-02 HoldCo LLC, APLD FAR-01 LLC, APLD FAR-02 LLC, APLD FAR-01 LandCo LLC and APLD FAR-02 LandCo LLC, each majority-owned subsidiaries of the Company, and are secured by the equity interests of the issuer and guarantors, the
Project Accounts (as defined in the 2031 6.750% Notes Indenture), and substantially all of the assets of the issuer and guarantors.
(3)The net carrying amount of the Convertible Notes was $276.6 million and $276.0 million and the remaining unamortized deferred financing costs related to the issuance was $173.4 million and $174.0 million, each as of August 31, 2026 and May 31, 2026, respectively.
(4)The Bridge Facility is guaranteed by the wholly owned subsidiaries of APLD ComputeCo 3 LLC and by the Company and is secured by substantially all assets of APLD ComputeCo 3 LLC and the subsidiary guarantors, as well as a pledge of the equity interests of APLD ComputeCo 3 LLC by APLD HPC Holdings 2 LLC. The Bridge Facility bears interest at a rate equal to either Daily SOFR plus 2.75% per annum or the Base Rate plus 1.75% per annum, depending on the type of loans under any Borrowing.
(5)The 2026 Revolving Credit Facility is guaranteed by the Company, APLD Intermediate HoldCo LLC (as the borrower), Applied Talent Resources LLC, James River Housing LLC, APLD Holdings 1 LLC, APLD Holdings 2 LLC, APLD HPC TopCo LLC, and APLD HPC Holdings LLC and is secured by substantially all assets of the loan parties, subject to certain exclusions. The 2026 Revolving Credit Facility bears interest at a rate per annum equal to, at the borrower’s election, either Term SOFR plus 2.25% or the Alternate Base Rate plus 1.25%. Additionally, there is an unused commitment fee of 0.25% per annum based on the daily unused amount, payable quarterly in arrears at the end of each quarter. The 2026 Revolving Credit Facility matures on the earlier of (i) May 29, 2029 and (ii) the date that is ninety-one (91) days prior to a specified date under the Preferred Equity Purchase Agreement.
(6)Other debt as of August 31, 2026 includes three secured terms loans totaling $19.2 million (previously disclosed in our Annual Report on Form 10-K for the year ended May 31, 2026), as well as two promissory notes the Company entered into during the second fiscal quarter of 2026 for a total of approximately $18.5 million and the Texas Capital Note entered into during the current quarter for $58.5 million (as defined and discussed below). As of May 31, 2026, the balance includes the three secured term loans and two promissory notes referenced above, as well as $12.0 million of proceeds from the issuance of two SAFE agreements, classified as liabilities, which were repaid during the three months ended August 31, 2026 (as discussed below).
Below is the weighted-average interest rate for the Company's term loans:
August 31, 2026August 31, 2025
Weighted-average interest rate7.3 %7.1 %
Remaining Principal Payments
Below is a summary of the remaining principal payments due over the life of the term loans as of August 31, 2026 (in thousands):
FY27$108,739 
FY28221,545 
FY29341,453 
FY30354,294 
FY314,256,666 
Thereafter1,438,908 
Total$6,721,605 
Debt Fair Value Measurements
The carrying value of the Company's variable rate borrowings approximate fair value at August 31, 2026 and May 31, 2026, as applicable, each balance sheet date due to the variable nature of the interest rates and the short period between interest rate resets. Further, the Company determined that the estimated fair values of the Promissory Note approximated their respective carrying amounts based on the relatively short period of time since the business combination acquisition date, the continued accretion of acquisition-date fair value adjustments through the effective interest method, and the
absence of significant changes in the underlying economics, contractual terms, or assumptions that would materially impact the estimated fair values of the instruments since the acquisition date.
The Company has determined the fair value of its 2030 Senior Secured Notes, 2031 Senior Secured Notes and 2031 7% Senior Secured Notes to be approximately $2.5 billion, $2.0 billion and $1.5 billion, respectively, as of August 31, 2026 using level 2 inputs. The Company has determined the fair value of its 2030 Senior Secured Notes and the 2031 Senior Secured Notes to be approximately $2.5 billion and $2.2 billion, respectively, as of May 31, 2026 using level 2 inputs. The Company has determined the fair value of its fixed rate term loans to be $18.4 million and $22.4 million, in aggregate, as of August 31, 2026 and May 31, 2026, respectively, based on discounted cash flow analysis, which uses Level 3 inputs. The Company has determined the fair value of its Convertible Notes, senior unsecured to be $399.1 million and $392.9 million as of August 31, 2026 and May 31, 2026, respectively, based on discounted cash flow analysis, which uses Level 3 inputs.
Cloud SAFE Payoff
During the fiscal year ended May 31, 2025, the Company entered into two Simple Agreements for Future Equity (“SAFEs”) with an investor for equity in Applied Digital Cloud Corporation, which was, at that time, a wholly-owned subsidiary, for aggregate proceeds of $12.0 million. On June 2, 2026, following an agreement reached with the investor, the Company paid off all amounts outstanding under the SAFEs, totaling $13.3 million. During the three months ended August 31, 2026, the Company recorded a loss of $1.3 million, which is included within other expense, net within the unaudited condensed consolidated statement of operations.
7.000% Senior Secured Notes due 2031
On June 16, 2026, the Company’s subsidiary APLD ComputeCo 3 LLC (“APLD ComputeCo 3”) completed a private offering of 7.000% Senior Secured Notes due 2031 (the “2031 7.000% Notes”). The 2031 7.000% Notes were sold pursuant to the terms of a purchase agreement, dated as of June 9, 2026, entered into by and among APLD ComputeCo 3, the subsidiary guarantors thereto and Goldman Sachs & Co. LLC, as representative (the “Representative”) of the several initial purchasers (the “Initial Purchasers”), in a Rule 144A/Regulation S offering. The aggregate principal amount of notes sold in the offering was $1.59 billion.
The 2031 7.000% Notes were issued at a price equal to 100% of their aggregate principal amount. APLD ComputeCo 3 used or intends to use the net proceeds from the offering to fund the construction and associated expenses of its ELN-04 data center project, repay in full the outstanding borrowings and related amounts under its then existing bridge facility, fund debt service reserves and interest during construction, and pay transaction and operating expenses.
Also on June 16, 2026, APLD ComputeCo 3, its direct parent and the subsidiary guarantors entered into an indenture for the 2031 7.000% Notes (the “2031 7.000% Notes Indenture”) with Wilmington Trust, National Association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”), governing the 2031 7.000% Notes. The 2031 7.000% Notes are senior secured obligations of APLD ComputeCo 3 and bear interest at a rate of 7.000% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2026. The 2031 7.000% Notes will mature on June 15, 2031, unless earlier redeemed or repurchased in accordance with their terms.
The principal amount of the 2031 7.000% Notes will amortize on a semi-annual basis beginning after the final commencement date of the applicable data center leases in effect on the issue date. The initial annual amortization amount will equal 2.70% of the original aggregate principal amount of the 2031 7.000% Notes and will increase by 0.50% per annum on each anniversary of the issue date commencing after the first installment is due, subject to adjustment as set forth in the 2031 7.000% Notes Indenture.
On or after June 15, 2028, APLD ComputeCo 3 may redeem the 2031 7.000% Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the 2031 7.000% Notes Indenture. Prior to June 15, 2028, APLD ComputeCo 3 may redeem the 2031 7.000% Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100% of the principal amount redeemed, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, prior to June 15, 2028, APLD ComputeCo 3 may redeem up to 40% of the aggregate principal amount of the 2031 7.000% Notes with the proceeds of
certain equity offerings at the redemption price set forth in the 2031 7.000% Notes Indenture, plus accrued and unpaid interest, , to, but excluding, the redemption date, subject to the conditions set forth in the 2031 7.000% Notes Indenture. Prior to June 15, 2028, APLD ComputeCo 3 may also redeem up to 10% of the original aggregate principal amount of the 2031 7.000% Notes during each calendar year at the redemption price set forth in the 2031 7.000% Notes Indenture, plus accrued and unpaid interest, to, but excluding, the redemption date.
The 2031 7.000% Notes Indenture limits the ability of APLD ComputeCo 3 and the subsidiary guarantors to, among other things: (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments; (iii) make certain investments; (iv) create or incur liens; (v) consummate certain asset sales; (vi) enter into sale and leaseback transactions; (vii) conduct certain operations or hold certain assets outside their permitted businesses; (viii) engage in certain transactions with affiliates; and (ix) merge, consolidate or transfer or sell all or substantially all of their assets. These covenants are subject to a number of important qualifications and exceptions as set forth in the 2031 7.000% Notes Indenture.
Additionally, upon the occurrence of specified change of control events, APLD ComputeCo 3 must offer to repurchase the 2031 7.000% Notes at 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date. Upon receipt of certain termination fees under an applicable data center lease, APLD ComputeCo 3 generally will be required to apply the proceeds to redeem the 2031 7.000% Notes at 100% of the principal amount, plus accrued and unpaid interest, to, but excluding, the redemption date, subject to the permitted deferral and replacement tenant provisions set forth in the 2031 7.000% Notes Indenture. The 2031 7.000% Notes Indenture also provides for customary events of default.
The 2031 7.000% Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by APLD ComputeCo 3’s subsidiaries, including APLD ELN-04 HoldCo LLC, APLD ELN-04 LLC and APLD ELN-04 LandCo LLC. The 2031 7.000% Notes and the related guarantees are secured, subject to permitted liens and certain exclusions, by first-priority liens on substantially all of the assets of APLD ComputeCo 3 and the subsidiary guarantors, including the applicable project accounts, and by a pledge of the equity interests of APLD ComputeCo 3 held by its direct parent.
In connection with the 2031 7.000% Notes, the Company provides a customary completion guarantee with respect to the construction and completion of the ELN-04 data center project. Other than the completion guarantee, the Company is not a guarantor of any obligations under the 2031 7.000% Notes.
As of August 31, 2026, the remaining unamortized debt issuance costs were approximately $28.7 million. The debt issuance costs are presented as a direct deduction from the outstanding principal balance of the 2031 7.000% Notes and are amortized to interest expense using the effective interest method.
Satisfaction of Escrow Release Condition for 6.750% Senior Secured Notes due 2031
On June 18, 2026, APLD ComputeCo 2 LLC satisfied the escrow release condition under the escrow agreement for the 6.750% Senior Secured Notes due 2031 (the “2031 6.750% Notes”) and executed and delivered to the escrow agent an escrow release certificate directing the escrow agent to release the funds in the escrow account to APLD ComputeCo 2 and apply such funds in accordance with the escrow agreement and the Indenture for the 2031 6.750% Notes.
Upsize 2026 Revolving Credit Facility
On June 26, 2026, the commitments under the 2026 Revolving Credit Facility were increased by $80.0 million, from $350.0 million to $430.0 million. Following the increase, the remaining accordion capacity under the facility was $120.0 million. The additional commitments are subject to the existing terms and conditions of the 2026 Revolving Credit Facility.
As of August 31, 2026, approximately $82.4 million was drawn under the 2026 Revolving Credit Facility and approximately $241.0 million of standby letters of credit were outstanding under the 2026 Revolving Credit Facility.
Loan and Security Agreement
On June 30, 2026, the Company entered into a Loan and Security Agreement (the “Texas Capital Loan Agreement”) with Texas Capital Bank (“Texas Capital”) and issued a related promissory note in the stated principal amount of $58.5 million (the “Texas Capital Note”). The Texas Capital Note bears interest at a rate per annum equal to one-month Term SOFR plus 2.75% and matures on June 30, 2031.
The Texas Capital Note is secured by certain corporate assets. The Texas Capital Loan Agreement requires the Company to maintain a specified level of liquidity based, in part, on the Company’s market capitalization and requires the Company’s market capitalization to remain above $2.0 billion as of the close of any trading day. The Texas Capital Loan Agreement also contains customary affirmative and negative covenants, cross-default provisions, and events of default.
The Company was in compliance with the applicable financial covenants under all outstanding debt arrangements as of August 31, 2026.