Applied Digital Corporation
10/07/2026 | Press release | Distributed by Public on 10/07/2026 15:19
Quarterly Report for Quarter Ending August 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. You can identify these forward-looking statements through our use of words such as "will," "may," "can," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "seek," "estimate," "continue," "plan," "point to," "project," "predict," "could," "intend," "target," "potential" and other similar words and expressions of the future. Statements that contain these words and other statements that are forward-looking in nature should be read carefully because they discuss future expectations, contain projections of future results of operations or of financial positions, or state other "forward-looking" information.
These statements are based on our management's beliefs and assumptions, which are based on currently available information. Our actual results, and the assumptions on which we relied, could prove materially different from our expectations. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. There are a number of important factors that could cause our actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:
•our ability to complete construction of our data center campuses;
•our dependence on principal customers, including our ability to execute leases with key customers;
•availability of financing to continue to grow our business;
•labor and other workforce shortages and challenges;
•power or other supply disruptions and equipment failures;
•the addition or loss of significant customers or material changes to our relationships with these customers;
•delays or denials of entitlements or permits, including zoning, siting, utility and other permits, or other delays resulting from requirements of public agencies and utility companies;
•our sensitivity to general economic conditions including changes in disposable income levels and consumer spending trends;
•our ability to timely and successfully build new data center facilities with the appropriate contractual margins and efficiencies; and
•uncertainties of regulation policy.
You should carefully review the risks described in Item 1A of the Company's Annual Report on Form 10-K for the year ended May 31, 2026, which was filed with the SEC on July 29, 2026, as well as any other cautionary language in this Quarterly Report on Form 10-Q, as the occurrence of any of these events could have an adverse effect, which may be material, on our business, results of operations, financial condition or cash flows.
A comparison of our results of operations and cash flows for the three months ended August 31, 2025 can be found under "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q for the quarter ended August 31, 2025, filed with the SEC on October 9, 2025.
During the fiscal year 2026, we completed the contribution of our Cloud Services Business to ChronoScale (as defined below), formerly Ekso (as defined below). As a result of this transaction, certain prior-period amounts presented in this Quarterly Report have been recast to conform to the current period presentation. The recast primarily reflects changes associated with the transaction, including revisions to the presentation of certain historical financial statement line items and related disclosures. As a result, certain fiscal quarter 2025 amounts presented in this Quarterly Report differ from the amounts previously reported in our Quarterly Report on Form 10-Q for the quarter ended August 31, 2025.
Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time, and it is not possible for our management to predict all risk factors and uncertainties, nor are we able to assess the impact of all of these risk factors on our business or the extent to which any risk factor, or combination of risk factors, may cause actual results to differ materially from those contained in any forward-looking statements. These risks are not exhaustive.
Executive Overview
The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q.
Business Overview
We are a U.S. designer, developer, and operator of high-performance, sustainably engineered data centers and colocation services for artificial intelligence ("AI"), networking, and blockchain workloads. We provide digital infrastructure solutions to the rapidly growing industries of high-performance computing ("HPC") and AI. We operate in two distinct business segments, data center hosting (the "Data Center Hosting Business") and HPC data center hosting (the "HPC Hosting Business"), both of which are included in our unaudited consolidated financial statements, as further discussed below. Management considers the Data Center Hosting Business and the HPC Hosting Business to be our core operations for long-run strategic and performance evaluation purposes.
We consolidate entities that meet the definition of a variable interest entity ("VIE") for which the Company is considered the primary beneficiary or entities that meet the definition of a voting interest entity ("VOE"). The Company consolidates a VIE where it has been determined that the Company is the primary beneficiary of the entity's operation in accordance with ASC Topic 810, Consolidations. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its variable interest holders. The Company also evaluates its economic interests in the VIE.
On May 5, 2026, we completed the separation of our cloud services business. As of August 31, 2026 we owned approximately 96% of the outstanding common stock of ChronoScale Holdings Corporation ("ChronoScale"). We consolidate ChronoScale under the voting interest model because we hold a controlling financial interest. The ownership interests in ChronoScale not attributable to us are presented as noncontrolling interests in the unaudited condensed consolidated financial statements.
Trends and Other Factors Affecting Our Business
Regulatory Environment
The regulatory landscape surrounding AI and blockchain hosting services is evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near and long term. Any such developments may significantly impact our business and operations in ways that are difficult to predict.
Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines. For example, in the U.S Senate, committees of jurisdiction have passed several AI bills that establish industry standards and impose significant obligations in relation to the use of AI systems. On the state level, several U.S. states have considered AI legislation, which aims to reduce risk associated with the use of AI; while certain states have passed comprehensive AI legislation. A number of states have recently issued moratoriums on future AI data centers while other states are considering the same. In Europe, the EU AI Act has been adopted, portions of which have started to take effect, with other portions continuing to take effect over the next several years.
The amount of energy used for AI and crypto mining has also received significant attention. The U.S. Energy Information Administration has recently launched surveys relating to electricity consumption from both data centers and cryptocurrency mining in the U.S. Certain U.S. states have also conducted similar studies. This indicates that more focus is being placed on the energy usage of these activities. It is unclear how the information collected will be used for future regulations, but it is expected that energy efficiency and sustainability will be critical factors regulating our industries. While there is currently insufficient support for any particular proposal, we expect that regulatory efforts in this area will continue to evolve and potentially impact our business.
As a company operating at the intersection of data center and HPC hosting services, we are committed to maintaining a proactive and adaptive approach to regulatory compliance. We closely monitor legislative and regulatory developments and engage in dialogue with relevant stakeholders to ensure our business practices align with the evolving legal and regulatory framework. Despite the uncertainties posed by the changing regulatory landscape, we remain committed to delivering
innovative and responsible solutions in the data center and HPC hosting markets while prioritizing compliance and risk management. However, if we fail to comply with applicable laws and regulations, we may be subject to significant liabilities, including fines and penalties, and our business, financial condition, or results of operations could be adversely affected.
Critical Accounting Estimates
Our unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our unaudited condensed consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material. Our critical accounting estimates are identified and described in our annual consolidated financial statements and the related notes included in our Annual Report on Form 10-K and our subsequent Quarterly Reports on Form 10-Q.
Business Update
HPC Hosting Business
Our HPC Hosting Business designs, constructs, and operates next-generation data centers, which are designed to provide massive computing power and support HPC applications within a cost-effective model.
In the prior fiscal year, we commenced operations at our first HPC data center at our Polaris Forge 1 campus in Ellendale, North Dakota, with 100 MW of capacity. During the quarter, we began commencing operations at our second HPC data center at our Polaris Forge 1 campus, which reached its full 150MW of capacity as of the date of filing of this Form 10-Q.
Our third HPC building at our Polaris Forge 1 campus, which is expected to provide an additional 150MW of capacity, is currently under construction. We anticipate reaching full ready for service in calendar year 2027.
Our two buildings at our Polaris Forge 2 campus, with an aggregate 300MW of capacity, are currently under construction. We anticipate reaching initial ready for service in the second half of calendar year 2026 and full capacity in early calendar year 2027.
Our two buildings at our Polaris Forge 3 campus, with an aggregate 300MW capacity, are currently under construction. We anticipate reaching initial ready for service in the second half of calendar year 2027 and full capacity in the second half of calendar year 2028.
Our two buildings at our Delta Forge 1 campus, with an aggregate 300MW capacity, are currently under construction. We anticipate reaching initial ready for service in the first half of calendar year 2027 and full capacity in early calendar 2028.
On June 5, 2026, we entered into an approximately 15-year lease (with three five-year renewal options) with a high investment-grade hyperscaler at our Delta Forge 2 campus located in our southern region, comprising a single 210 MW building under construction. The lease is for the full 210 MW of critical IT load, representing approximately $5.2 billion of contracted revenue over the base term, with expected delivery in the first half of calendar year 2028.
We recognized $262.6 million in revenue from this business segment during the three months ended August 31, 2026, with $183.5 million related to services and other revenue and $79.1 million related to data center rental and other revenue.
Data Center Hosting Business
Our Data Center Hosting Business provides energized infrastructure services to crypto mining customers. Our custom-designed data centers allow customers to rent space based on their power requirements. As of August 31, 2026, our 106 MW facility in Jamestown, North Dakota and our 180 MW facility in Ellendale, North Dakota continue to operate at full capacity.
We recognized $37.8 million in revenue from this business segment during the three months ended August 31, 2026.
ChronoScale
In the prior fiscal year, we completed the separation of our cloud business in a series of transactions. As of August 31, 2026, we own approximately 96% of the issued and outstanding equity of ChronoScale Holdings Corporation ("ChronoScale Holdings"). ChronoScale Holdings owns and operates our historic cloud business through its wholly owned subsidiary, ChronoScale Corporation, and is consolidated into our financial statements.
The cloud business currently operates in three states: Colorado, Minnesota and Utah. This business provides cloud services to customers, such as AI and machine learning developers by renting space at third party co-location centers and providing the customers with access to its cloud computing equipment. Additionally, effective in the first quarter of fiscal year 2027, ChronoScale Holding's cloud business provides AI infrastructure, or GPU-related, hardware, and ancillary support and maintenance services, through resale arrangements.
On July 1, 2026, we completed a holding company formation transaction (the "Holding Company Transaction") that created the new parent holding company as the public company, with its operating companies as wholly-owned subsidiaries, including Applied Digital Cloud Corporation, which changed its name to ChronoScale Corporation. We effected the holding company structure to better reflect our individual operating businesses, which allows for and can accommodate future growth from internal operations and generally provides for greater administrative and operational flexibility. ChronoScale Holdings has the exact same classes and number of shares outstanding after the Holding Company Transaction as its predecessor had outstanding immediately before the Holding Company Transaction, and as such, the shareholders of ChronoScale Corporation prior to the Holding Company Transaction were not diluted as a result thereof. Following the Holding Company Transaction, ChronoScale Holdings became the successor issuer to ChronoScale and continues to trade on Nasdaq under the ticker symbol "CHRN" with the same CUSIP.
On August 6, 2026, ChronoScale entered into a two-year strategic partnership with Microsoft to support the planned development of approximately 50 MW of AI compute capacity. On August 24, 2026, ChronoScale entered into a one-year extension of such strategic partnership, resulting in a total of a three-year service term. Upon projected completion, the deployment is expected to expand available compute capacity and further strengthen ChronoScale's digital infrastructure supporting AI and cloud computing applications.
Debt and Equity Offerings and Changes to Equity
Cloud SAFE Payoff
During the fiscal year ended May 31, 2025, we entered into two Simple Agreements for Future Equity ("SAFEs") with an investor for equity in Cloud, which was, at that time, our wholly-owned subsidiary, for aggregate proceeds of $12.0 million. On June 2, 2026, following an agreement reached with the investor, we paid off all amounts outstanding under the SAFEs, totaling $13.3 million.
$1.59 Billion Senior Secured Notes due 2031
On June 16, 2026, APLD ComputeCo 3 LLC refinanced the Bridge Facility with the closing of a $1.59 billion offering (the "2031 7.000% Notes Offering") of 7.000% senior secured notes due 2031 (the "2031 7.000% Notes") at an issue price of 100.000% of par. The 2031 7.000% Notes are senior secured obligations of APLD ComputeCo 3 LLC 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 principal amount of the 2031 7.000% Notes will amortize on a semi-annual basis on June 15 and December 15 of each year, pursuant to the terms and amounts set forth in the 2031 7.000% Notes Indenture. The 2031 7.000% Notes will mature on June 15, 2031, unless earlier redeemed or repurchased in accordance with their terms. The 2031 7.000% Notes are fully and unconditionally guaranteed by the subsidiary guarantors, all of which are wholly owned subsidiaries of APLD ComputeCo 3 LLC. The Company provided a customary completion guarantee for the 2031 7.000% Notes Offering.
Series G Preferred Stock
On June 26, 2026, we entered into the sixth amendment to the PEPA to increase the aggregate commitment amount under the PEPA for the issuance of shares of Series G Preferred Stock from $1,590,000,000 to $2,000,000,000.
As Series G Preferred Stock may be reissued, during the three months ended August 31, 2026, we issued and sold 283,250 shares of Series G Preferred Stock for gross proceeds of $275.0 million. During the three months ended August 31, 2026,
154,500 shares of Series G Preferred Stock were converted into 4.5 million shares of our common stock. As of August 31, 2026, 128,750 shares of Series G Preferred Stock were issued and outstanding.
Satisfaction of Escrow Release Condition for 6.750% Senior Secured Notes due 2031
On June 18, 2026, APLD ComputeCo 2 satisfied the escrow release condition under the escrow agreement for 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 of 2026 Revolving Credit Facility
On June 26, 2026, in connection with the 2026 Revolving Credit Facility, the Company, APLD Intermediate HoldCo, and certain subsidiaries of APLD Intermediate HoldCo entered into an Incremental Assumption Agreement No. 1 (the "Incremental Assumption Agreement"), with First National Bank of Omaha (in its capacities as administrative agent and collateral agent under the 2026 Revolving Credit Facility) and the lenders and issuing banks party thereto, providing for an Incremental Revolving Facility Commitment (as defined in the Incremental Assumption Agreement) in an aggregate principal amount of up to $80.0 million (the "Incremental Revolving Financing"). After giving effect to the Incremental Assumption Agreement, the aggregate revolving commitments under the 2026 Revolving Credit Facility increased to $430.0 million, with an additional $120 million accordion option remaining. The Incremental Revolving Financing constitutes a part of the 2026 Revolving Credit Facility and is subject to the terms and conditions of the Revolving Credit Agreement and the other loan documents entered into in connection therewith.
Loan and Security Agreement
On June 30, 2026, we entered into a Loan and Security Agreement (the "Texas Capital Loan Agreement") with Texas Capital Bank ("Texas Capital") and a related Promissory Note in favor of Texas Capital in the stated principal amount of $58.5 million (the "Texas Capital Note"). The Texas Capital Loan Agreement contains standard terms, conditions and covenants. Interest is payable on the Texas Capital Note at the sum of an adjusted term SOFR plus an applicable margin. The Texas Capital Note matures on June 30, 2031.
Series E and Series E-1 Redemptions
During the three months ended August 31, 2026, 276,673 shares of Series E Preferred Stock were redeemed as well as 78 shares of Series E-1 Preferred Stock.
Recent Developments
Series G
Subsequent to the quarter, 128,750 shares of Series G Preferred Stock were converted into an aggregate of 5.2 million shares of the Company's common stock.
Sale of Legacy Ekso Business
On September 30, 2026, ChronoScale, through its wholly-owned subsidiary ChronoScale Intermediate LLC, completed the sale of its legacy Ekso business through two related transactions: Ekso and its wholly-owned German subsidiary sold substantially all of the assets of Ekso's "EksoWorks" industrial exoskeleton business, including the EVO product line, to DynaWear Tech, Inc. under an asset purchase agreement, and immediately thereafter, ChronoScale Intermediate LLC sold all of the outstanding capital stock of Ekso, which held the remaining neuro-rehabilitation business, to WanderEkso Inc., a subsidiary of Wandercraft SAS, under a stock purchase agreement.
Base Electron Power Purchase Agreement
On October 4, 2026, the Company entered into a Power Purchase Agreement with Base Electron, for the purchase of capacity and energy from an approximately 1,200 MW natural gas-fired generation facility to be developed by Base Electron in North Dakota, which is intended to provide dedicated generation for our Polaris Forge 3 campus expansion.
Results of Operations
Comparative Results for the Three Months Ended August 31, 2026 and August 31, 2025:
The following table sets forth key components of the results of operations (in thousands) during the three months ended August 31, 2026 and August 31, 2025.
| Three Months Ended | |||||||||||
| August 31, 2026 | August 31, 2025 | ||||||||||
| Revenue: | |||||||||||
| Services and other revenue | $ | 262,755 | $ | 80,934 | |||||||
| Data center rental and other revenue | 79,120 | - | |||||||||
| Total revenue | 341,875 | 80,934 | |||||||||
| Costs and expenses: | |||||||||||
| Services and other cost of revenue | 245,709 | 58,831 | |||||||||
| Data center rental and other cost of revenue | 43,862 | 140 | |||||||||
|
Selling, general and administrative (1)
|
114,683 | 29,482 | |||||||||
| Loss on abandonment of assets | - | 2,243 | |||||||||
| Total costs and expenses | 404,254 | 90,696 | |||||||||
| Operating loss | (62,379) | (9,762) | |||||||||
| Interest expense | 77,383 | 8,013 | |||||||||
|
Interest income (2)
|
(35,821) | (857) | |||||||||
| Loss on change in fair value of derivatives | 49,511 | - | |||||||||
| Loss on change in fair value of investment | 11,352 | - | |||||||||
| Other expense, net | 1,311 | - | |||||||||
| Net loss before income tax expense | (166,115) | (16,918) | |||||||||
| Income tax expense | 1,886 | 8 | |||||||||
| Net loss from continuing operations | (168,001) | (16,926) | |||||||||
| Net loss from discontinued operations | (16,054) | - | |||||||||
| Net loss | (184,055) | (16,926) | |||||||||
| Net loss attributable to noncontrolling interest and redeemable noncontrolling interest | (51,484) | - | |||||||||
| Preferred dividends | (1,543) | (1,576) | |||||||||
| Net loss attributable to common stockholders | $ | (237,082) | $ | (18,502) | |||||||
| Net loss attributable to common stockholders | |||||||||||
| Continuing operations | $ | (221,028) | $ | (18,502) | |||||||
| Discontinued operations | (16,054) | - | |||||||||
| Net loss | $ | (237,082) | $ | (18,502) | |||||||
| Basic and diluted net loss per share attributable to common stockholders | |||||||||||
| Continuing operations | $ | (0.76) | $ | (0.07) | |||||||
| Discontinued operations | (0.06) | - | |||||||||
| Basic and diluted net loss per share | $ | (0.82) | $ | (0.07) | |||||||
| Basic and diluted weighted average number of shares outstanding | 291,557,618 | 255,892,902 | |||||||||
|
Adjusted Amounts (3)
|
|||||||||||
|
Adjusted revenue
|
$ | 300,393 | $ | 64,216 | |||||||
| Adjusted operating income (loss) | $ | 37,816 | $ | (3,616) | |||||||
|
Adjusted operating margin
|
13 | % | (6) | % | |||||||
| Adjusted net loss from continuing operations attributable to common stockholders | $ | (4,053) | $ | (7,570) | |||||||
| Adjusted net loss from continuing operations attributable to common stockholders per diluted share | $ | (0.01) | $ | (0.03) | |||||||
|
Other Financial Data (3)
|
|||||||||||
| EBITDA | $ | (72,625) | $ | (18,140) | |||||||
|
as a percentage of adjusted revenue
|
(24) | % | (28) | % | |||||||
| Adjusted EBITDA | $ | 64,412 | $ | 537 | |||||||
|
as a percentage of adjusted revenue
|
21 | % | 1 | % | |||||||
| Net operating income | $ | 58,829 | $ | - | |||||||
| Net operating income margin | 89 | % | - | % | |||||||
(1)Includes related party selling, general and administrative expense of $49.7 thousand and $74.3 thousand for the three months ended August 31, 2026 and August 31, 2025, respectively. See Note 7 - Related Party Transactions for further discussion of related party transactions.
(2)Includes related party income of $0.7 million for the three months ended August 31, 2026. See Note 7 - Related Party Transactions for further discussion of related party transactions.
(3)Adjusted Amounts and Other Financial Data are non-GAAP performance measures. These non-GAAP measures exclude the results of the Cloud Services Business. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliation" section of Management's Discussion and Analysis.
Commentary on Results of Operations Comparative Results for the Three Months Ended August 31, 2026 compared to the Three Months Ended August 31, 2025
Revenue
Services and other revenue increased $181.8 million, or 225%, from $80.9 million for the three months ended August 31, 2025 to $262.8 million for the three months ended August 31, 2026. The increase was primarily due to an increase in tenant fit-out services of approximately $157.2 million. This revenue also consisted of approximately $23.0 million in GPU hardware sales related to ChronoScale. The remaining increase in services and other revenue was due to performance improvements in Data Center Hosting Business and ChronoScale during the three months ended August 31, 2026 compared to the three months ended August 31, 2025.
Data center rental and other revenue was $79.1 million for the three months ended August 31, 2026 compared to no revenue for the three months ended August 31, 2025, as our HPC Hosting Business commenced operations in the second half of the fiscal year 2026, resulting in approximately $65.8 million related to base rent, net of $0.9 million in amortization of customer lease incentives, and $13.3 million related to tenant recoveries.
Cost of revenues
Services and other cost of revenues increased $186.9 million, or 318%, from $58.8 million for the three months ended August 31, 2025 to $245.7 million for the three months ended August 31, 2026. The increase in services and other cost of revenues was due to the following changes:
•approximately $151.1 million increase in expenses associated with tenant fit-out services for our HPC Hosting Business;
•approximately $22.4 million in cost of revenue associated with GPU hardware sales related to ChronoScale, which commenced during the current fiscal quarter;
•approximately $14.2 million increase in depreciation and amortization expense due to the Cloud Services Business no longer being classified as held for sale;
•approximately $3.6 million increase in lease and lease related expenses primarily related to ChronoScale's operating leases; and
•approximately $0.3 million increase in personnel expenses and other costs due to the increases in headcount as well as other related costs directly supporting revenue.
These increases were partially offset by a decrease of approximately $4.7 million in energy costs associated with our Data Center Hosting Business and other costs directly supporting revenue.
Data center rental and other cost of revenue increased by $43.7 million, from $0.1 million for the three months ended August 31, 2025 to $43.9 million for the three months ended August 31, 2026 as the Company's HPC hosting operations were not fully commenced during the first fiscal quarter 2026. The increase in data center rental and other cost of revenue was categorized as follows:
•approximately $22.4 million increase in depreciation and amortization associated with our HPC Hosting Business;
•approximately $13.3 million increase in expenses which are reimbursable as tenant recoveries;
•approximately $5.6 million increase in rental property operating expenses, which are not eligible for recovery from our tenant;
•approximately $1.3 million increase in property insurance expenses associated with our HPC Hosting Business; and
•approximately $0.8 million increase in property tax expenses associated with our HPC Hosting Business.
Selling, general and administrative expense
Selling, general and administrative expense increased $85.2 million, or 289%, from $29.5 million for the three months ended August 31, 2025 to $114.7 million for the three months ended August 31, 2026. The increase in selling, general and administrative expense was categorized as follows:
•approximately $51.7 million increase in stock based compensation primarily due to an increase in shares awarded related to the increase in headcount and increase in performance stock awards granted in the period after the three months ended August 31, 2025;
•approximately $12.1 million increase in professional service expense primarily related to legal services provided on discrete transactions and projects, as well as general support of the business;
•approximately $9.9 million increase in personnel expenses related to the increase in headcount;
•approximately $9.5 million increase in other selling, general, and administrative expense such as travel, computer and software expenses; and
•approximately $2.0 million increase in lease and lease related expense primarily related to ChronoScale's operating leases.
Loss on abandonment of assets
Loss on abandonment of assets was $2.2 million for the three months ended August 31, 2025, driven by the write down of assets to their fair value upon disposal. There was no such loss recorded in the current year comparative period.
Interest expense
Interest expense increased $69.4 million, or 866%, from $8.0 million for the three months ended August 31, 2025, to $77.4 million for the three months ended August 31, 2026. As we entered into more debt arrangements, there was an increase of approximately $66.4 million in interest expense, approximately $2.8 million in loan issuance discount, and approximately $2.4 million in loan issuance cost. These increases were partially offset by a decrease of $2.2 million in finance lease interest associated with the renegotiation of the majority of our finance leases during fiscal year ended May 31, 2026.
Interest income
Interest income increased $35.0 million, or 4,080%, from $0.9 million for the three months ended August 31, 2025 to $35.8 million for the three months ended August 31, 2026 due to an increase in funds held in interest-bearing accounts.
Loss on change in fair value of derivatives
Loss on the change in fair value of derivatives was $49.5 million for the three months ended August 31, 2026, due a decrease of $56.1 million in the fair value of our Babcock & Wilcox Enterprises, Inc. ("B&W") common stock warrant and an increase of $6.6 million in the fair value of the derivative assets related to the preferred units and corresponding common units held by APLD HPC TopCo 2's redeemable noncontrolling interest. There was no such loss recorded in the prior year comparative period.
Loss on change in fair value of investment
Loss on change in fair value of investment was $11.4 million for the three months ended August 31, 2026, due to a decrease in fair value of our investment in B&W common stock. There was no such loss recorded in the prior year comparative period.
Other expense, net
Other expense, net was $1.3 million for the three months ended August 31, 2026 and consisted of a loss of approximately $1.3 million due to the settlement of the SAFEs as a result of an agreement reached with the investor offset by a gain on the fair value of warrants issued to third parties. There was no such activity recorded in the prior year comparative period.
Income tax expense
Income tax expense was $1.9 million for the three months ended August 31, 2026, compared to nominal expense for the three months ended August 31, 2025. This change was driven by an increase in current federal and state income tax expense during the current fiscal quarter.
Net loss from discontinued operations
Net loss from discontinued operations was $16.1 million for the three months ended August 31, 2026 and represents the income statement activity related to the Ekso business at ChronoScale classified as held for sale and discontinued operations. There was no such activity in the prior year comparative period.
Comparative Segment Data for the Three Months Ended August 31, 2026 and August 31, 2025:
The following table sets forth the operating (loss) profit for each of our segments for the three months ended August 31, 2026 and August 31, 2025 (in thousands):
| Three Months Ended | |||||||||||
| August 31, 2026 | August 31, 2025 | ||||||||||
| Segment profit | |||||||||||
|
Data Center Hosting Business
|
$ | 13,327 | $ | 6,035 | |||||||
|
HPC Hosting Business
|
33,431 | (2,022) | |||||||||
| Total segment profit | $ | 46,758 | $ | 4,013 | |||||||
Commentary on Segment Data Comparative Results for the Three Months Ended August 31, 2026 compared to the Three Months Ended August 31, 2025
Data Center Hosting Business
Operating Profit
Data Center Hosting Business operating profit increased $7.3 million, or 121%, from $6.0 million for the three months ended August 31, 2025 to $13.3 million for the three months ended August 31, 2026 primarily due to a decrease of $6.4 million in cost of revenues due to more advantageous power pricing when compared to the to the three months ended August 31, 2025.
HPC Hosting Business
Operating Profit
HPC Hosting Business operating profit increased $35.5 million, or 1,753%, from a loss of $2.0 million for the three months ended August 31, 2025 to a profit of $33.4 million for the three months ended August 31, 2026. The change is primarily due to revenue generated from the first two buildings at our Polaris Forge 1 campus, as well as tenant fit-out services performed, net of expenses during the three months ended August 31, 2026 compared to the three months ended August 31, 2025.
Non-GAAP Measures
To supplement our unaudited condensed consolidated financial statements presented under GAAP, we are presenting certain non-GAAP financial measures. We are providing these non-GAAP financial measures to disclose additional
information to facilitate the comparison of past and present operations by providing perspective on results absent one-time or significant non-cash items. We utilize these measures in the business planning process to understand expected operating performance and to evaluate results against those expectations. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our core business operating results regarding factors and trends affecting our business and provide a reasonable basis for comparing our ongoing results of operations. Management considers the Data Center Hosting Business and the HPC Hosting Business to be our core operations for long-run strategic and performance evaluation purposes. Accordingly, these non-GAAP financial measures exclude the results of our consolidated subsidiary, ChronoScale. ChronoScale is included in our unaudited condensed consolidated financial statements and results of continuing operations. Due to its strategic role relative to the Company's core business, management believes the ChronoScale results may obscure underlying trends in the performance of core operations when included in certain non-GAAP measures.
These non-GAAP financial measures are provided as supplemental measures to our performance measures calculated in accordance with GAAP and therefore, are not intended to be considered in isolation or as a substitute for comparable GAAP measures. Excluding the results of ChronoScale in our non-GAAP financial measures removes revenues and expenses that are part of the Company's consolidated results and continuing operations and should not be viewed as measures or reflections of liquidity or profitability in accordance with GAAP. Further, these non-GAAP financial measures have no standardized meaning prescribed by GAAP and are not prepared under any comprehensive set of accounting rules or principles. Because of the non-standardized definitions of non-GAAP financial measures, we caution investors that the non-GAAP financial measures as used by us in this Quarterly Report on Form 10-Q have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. Further, investors should be aware that when evaluating these non-GAAP financial measures, these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, from time to time in the future there may be items that we may exclude for purposes of our non-GAAP financial measures and we may in the future cease to exclude items that we have historically excluded for purposes of our non-GAAP financial measures. Likewise, we may determine to modify the nature of the adjustments to arrive at our non-GAAP financial measures. Investors should review the non-GAAP reconciliations provided below and not rely on any single financial measure to evaluate our business.
Adjusted Revenue
"Adjusted revenue" is a non-GAAP financial measure that represents total revenue excluding ChronoScale revenue.
Adjusted Operating Income (Loss), Adjusted Net Loss from Continuing Operations, and Adjusted Net Loss from Continuing Operations per Diluted Share
"Adjusted operating income (loss)" and "Adjusted net loss from continuing operations" are non-GAAP financial measures that represent operating income and net income (loss) from operations excluding ChronoScale, respectively. Adjusted operating income (loss) is Operating loss excluding operating (loss) income from ChronoScale, stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, non-cash amortization of customer lease incentives, loss on abandonment of assets, restructuring expenses and other non-recurring expenses that management believes are not representative of our expected ongoing costs. Adjusted net loss from continuing operations is Adjusted operating income (loss) further adjusted for interest expense directly attributable to ChronoScale, loss on change in fair value of derivatives, and loss on change in fair value of investment. We define "Adjusted net loss from continuing operations per diluted share" as Adjusted net loss from continuing operations divided by weighted average diluted share count.
EBITDA and Adjusted EBITDA
"EBITDA" is defined as earnings before interest expense, interest income, income tax expense, and depreciation and amortization and excluding results of ChronoScale. "Adjusted EBITDA" is defined as EBITDA adjusted for stock-based compensation, non-cash amortization of customer lease incentives, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, loss on abandonment of assets, loss on change in fair value of derivatives, loss on change in fair value of investments, restructuring expenses, and other non-recurring expenses that management believes are not representative of our expected ongoing costs.
Net Operating Income
"Net Operating Income" is a non-GAAP financial measure that represents base rental revenue from the HPC Hosting Business. Net Operating Income is HPC Hosting Business base rental revenue, excluding the non-cash amortization of one-
time customer lease incentives provided at contract inception, less rental property operating expenses, property taxes, and property insurance expenses. "Net Operating Income Margin" is defined as Net Operating Income divided by HPC Hosting Business base rental revenue.
Reconciliation of GAAP to Non-GAAP Measures
(In thousands, except percentage data)
| Three Months Ended | |||||||||||
| August 31, 2026 | August 31, 2025 | ||||||||||
|
Adjusted revenue
|
|||||||||||
|
Total Revenue (GAAP)
|
$ | 341,875 | $ | 80,934 | |||||||
| Less: ChronoScale revenue | (41,482) | (16,718) | |||||||||
| Adjusted revenue (Non-GAAP) | $ | 300,393 | $ | 64,216 | |||||||
| Adjusted operating income (loss) | |||||||||||
| Operating loss (GAAP) | $ | (62,379) | $ | (9,762) | |||||||
| Operating loss from ChronoScale | 25,354 | (12,531) | |||||||||
|
Stock-based compensation (1)
|
59,391 | 14,446 | |||||||||
|
Non-recurring repair expenses (2)
|
72 | 173 | |||||||||
|
Diligence, acquisition, disposition and integration expenses (3)
|
11,911 | 1,196 | |||||||||
|
Litigation expenses (4)
|
1,177 | 190 | |||||||||
| Non-cash amortization of customer lease incentives | 854 | - | |||||||||
| Loss on abandonment of assets | - | 1,751 | |||||||||
|
Restructuring expenses (5)
|
129 | 431 | |||||||||
|
Other non-recurring expenses (6)
|
1,307 | 490 | |||||||||
| Adjusted operating income (loss) (Non-GAAP) | $ | 37,816 | $ | (3,616) | |||||||
|
Adjusted operating margin
|
13 | % | (6) | % | |||||||
| Adjusted net loss from continuing operations | |||||||||||
| Net loss from continuing operations (GAAP) | $ | (168,001) | $ | (16,926) | |||||||
| Operating loss from ChronoScale | 25,354 | (12,531) | |||||||||
| Net interest expense directly attributable to ChronoScale | 1,557 | 3,210 | |||||||||
|
Stock-based compensation (1)
|
59,391 | 14,446 | |||||||||
|
Non-recurring repair expenses (2)
|
72 | 173 | |||||||||
|
Diligence, acquisition, disposition and integration expenses (3)
|
11,911 | 1,196 | |||||||||
|
Litigation expenses (4)
|
1,177 | 190 | |||||||||
| Non-cash amortization of customer lease incentives | 854 | - | |||||||||
| Loss on abandonment of assets | - | 1,751 | |||||||||
| Loss on change in fair value of derivatives | 49,511 | - | |||||||||
| Loss on change in fair value of investment | 11,352 | - | |||||||||
|
Restructuring expenses (5)
|
129 | 431 | |||||||||
|
Other non-recurring expenses (6)
|
2,640 | 490 | |||||||||
| Adjusted net loss from continuing operations (Non-GAAP) | $ | (4,053) | $ | (7,570) | |||||||
| Diluted weighted average number of shares outstanding (Non-GAAP) | 291,557,618 | 255,892,902 | |||||||||
| Adjusted net loss from continuing operations per diluted share (Non-GAAP) | $ | (0.01) | $ | (0.03) | |||||||
| EBITDA and Adjusted EBITDA | |||||||||||
| Net loss from continuing operations (GAAP) | $ | (168,001) | $ | (16,926) | |||||||
| Operating loss from ChronoScale | 25,354 | (12,531) | |||||||||
| Interest expense | 77,383 | 8,013 | |||||||||
| Interest income | (35,821) | (857) | |||||||||
|
Income tax (benefit) expense
|
1,886 | 8 | |||||||||
| Depreciation and amortization | 26,574 | 4,153 | |||||||||
| EBITDA (Non-GAAP) | $ | (72,625) | $ | (18,140) | |||||||
|
Stock-based compensation (1)
|
59,391 | 14,446 | |||||||||
|
Non-recurring repair expenses (2)
|
72 | 173 | |||||||||
|
Diligence, acquisition, disposition, and integration expenses (3)
|
11,911 | 1,196 | |||||||||
|
Litigation expenses (4)
|
1,177 | 190 | |||||||||
| Non-cash amortization of customer lease incentives | 854 | - | |||||||||
| Loss on change in fair value of derivatives | 49,511 | - | |||||||||
| Loss on change in fair value of investment | 11,352 | - | |||||||||
| Loss on abandonment of assets | - | 1,751 | |||||||||
|
Restructuring expenses (5)
|
129 | 431 | |||||||||
|
Other non-recurring expenses (6)
|
2,640 | 490 | |||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 64,412 | $ | 537 | |||||||
| Net Operating Income | |||||||||||
| HPC Hosting Business base rental revenue (GAAP) | $ | 65,800 | $ | - | |||||||
| Non-cash amortization of customer lease incentives | 854 | - | |||||||||
| Rental property operating expenses | (5,726) | - | |||||||||
| Property taxes | (821) | - | |||||||||
| Property insurance expenses | (1,278) | - | |||||||||
| Net Operating Income (Non-GAAP) | $ | 58,829 | $ | - | |||||||
| Net Operating Income margin | 89 | % | - | % | |||||||
(1)Represents stock-based compensation expense and employment taxes incurred in connection with the vesting of stock-based awards.
(2)Represents costs incurred for the non-recurring repair and replacement of equipment at our data center facilities.
(3)Represents legal, accounting and consulting costs incurred in association with certain discrete transactions and projects.
(4)Represents non-recurring litigation expense associated with our defense of class action lawsuits and legal fees related to matters with certain former employees. We do not expect to incur these expenses on a regular basis.
(5)Represents non-recurring expenses associated with employee separations.
(6)Represents expenses that are not representative of our expected ongoing costs.
Funding Requirements
We have experienced net losses through the period ended August 31, 2026. Our transition to profitability is dependent on the successful operation of our business.
We expect to have sufficient liquidity, including cash on hand, payments from customers, access to debt financing, and access to public capital markets, to support ongoing operations and meet our working capital needs for at least the next 12 months and all of our known requirements and plans for cash. However, we may be unable to raise additional funds or enter into such arrangements when needed on favorable terms, or at all, which would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our ongoing operations and development plans. We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, in which case, we would be required to obtain additional financing sooner than currently projected, which may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.
We expect that our general and administrative expenses and our operating expenditures will continue to increase as we continue to expand our operations. We believe that the significant investments in property and equipment will remain throughout fiscal year 2027 as we continue construction of our HPC hosting facilities.
Sources of Liquidity
Our primary capital requirements are to fund the development and expansion of our data center infrastructure, support working capital needs, cover operating expenses, and finance capital expenditures associated with technology upgrades and facility enhancements. As of August 31, 2026, we had unrestricted cash and cash equivalents of $2.9 billion and restricted cash of $728.0 million. Historically, we have incurred losses and have relied on equity and debt financings to fund our operations. We have primarily generated cash in the last 12 months from the proceeds of our term loans, issuances of preferred stock, senior secured notes (issued by our subsidiaries), debt facilities and the receipt of contractual deposits and revenue payments from customers.
We believe that existing cash balances, cash flows from operations, existing debt facilities, and access to capital markets will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, and other contractual obligations, for at least the next twelve months.
Recent Financing Activities
See Note 9 - Debt in the notes to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on our term loans and other debt instruments.
7.000% Senior Secured Notes due 2031
On June 16, 2026, APLD ComputeCo 3 LLC refinanced the Bridge Facility with the closing of a $1.59 billion offering (the "2031 7.000% Notes Offering") of 7.000% senior secured notes due 2031 (the "2031 7.000% Notes") at an issue price of 100.000% of par. 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 principal amount of the 2031 7.000% Notes will amortize on a semi-annual basis on June 15 and December 15 of each year, pursuant to the terms and amounts set forth in the 2031 7.000% Notes Indenture. The 2031 7.000% Notes will mature on June 15, 2031, unless earlier redeemed or repurchased in accordance with their terms. The 2031 7.000% Notes are fully and unconditionally guaranteed by the subsidiary guarantors, all of which are wholly owned subsidiaries of APLD ComputeCo 3 LLC. The Company provided a customary completion guarantee for the 2031 7.000% Notes Offering.
Series G Convertible Preferred Stock
During the three months ended August 31, 2026, the Company issued and sold 283,250 shares of Series G Preferred Stock for gross proceeds of $275.0 million. During the three months ended August 31, 2026, 154,500 shares of Series G Preferred Stock were converted into 4.5 million shares of the Company's common stock. As of August 31, 2026, 128,750 shares of Series G Preferred Stock were issued and outstanding.
Upsize of 2026 Revolving Credit Facility
On June 26, 2026, in connection with the 2026 Revolving Credit Facility, the Company, APLD Intermediate HoldCo, and certain subsidiaries of APLD Intermediate HoldCo entered into an Incremental Assumption Agreement No. 1 (the Incremental Assumption Agreement"), with First National Bank of Omaha (in its capacities as administrative agent and collateral agent under the 2026 Revolving Credit Facility) and the lenders and issuing banks party thereto, providing for an Incremental Revolving Facility Commitment (as defined in the Incremental Assumption Agreement) in an aggregate principal amount of up to $80.0 million (the "Incremental Revolving Financing"). After giving effect to the Incremental Assumption Agreement, the aggregate revolving commitments under the 2026 Revolving Credit Facility increased to $430.0 million, with an additional $120.0 million accordion option remaining. The Incremental Revolving Financing constitutes a part of the 2026 Revolving Credit Facility and is subject to the terms and conditions of the Revolving Credit Agreement and the other loan documents entered into in connection therewith.
As of August 31, 2026, approximately $241.0 million of standby letters of credit were outstanding under the 2026 Revolving Credit Facility. Refer to Note 9 - Debt in the accompanying notes to the unaudited condensed consolidated financial statements for additional information.
Loan and Security Agreement
On June 30, 2026, we entered into a Loan and Security Agreement (the "Texas Capital Loan Agreement") with Texas Capital Bank ("Texas Capital") and a related Promissory Note in favor of Texas Capital in the stated principal amount of $58.5 million (the "Texas Capital Note"). The Texas Capital Loan Agreement contains standard terms, conditions and covenants. Interest is payable on the Texas Capital Note at the sum of an adjusted term SOFR plus an applicable margin. The Texas Capital Note matures on June 30, 2031.
Material Contractual Obligations
In the ordinary course of business, we enter into contractual arrangements that require future cash payments. The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of August 31, 2026 (in thousands):
| Payments Due by Period | |||||||||||||||||||||||
| Total | Remainder of FY 2027 | FY 2028 | FY 2029 | FY 2030 | FY 2031 | Thereafter | |||||||||||||||||
|
Debt obligations(1)
|
$ | 6,721,605 | $ | 108,739 | $ | 221,545 | $ | 341,453 | $ | 354,294 | $ | 4,256,666 | $ | 1,438,908 | |||||||||
|
Interest on debt obligations(2)
|
2,156,434 | 326,507 | 490,014 | 464,054 | 437,126 | 391,956 | 46,777 | ||||||||||||||||
|
Operating lease obligations(3)
|
69,074 | 16,036 | 23,967 | 18,391 | 4,812 | 1,315 | 4,553 | ||||||||||||||||
|
Financing lease obligations(4)
|
48,342 | 37,374 | 10,968 | - | - | - | - | ||||||||||||||||
|
Power commitments(5)
|
12,121 | 12,121 | - | - | - | - | - | ||||||||||||||||
|
Preferred share dividends(6)
|
31,999 | 4,174 | 5,565 | 5,565 | 5,565 | 5,565 | 5,565 | ||||||||||||||||
(1)Debt obligations presented in the table reflect scheduled principal payments related to our outstanding debt as described in Note 9 - Debt to the unaudited condensed consolidated financial statements for further discussion.
(2)Estimated interest payments on our debt obligations include estimated future interest payments based on the terms of the debt agreements. See Note 9 - Debt to the unaudited condensed consolidated financial statements for further discussion.
(3)Operating lease obligations include future minimum payments for our operating leases.
(4)Financing lease obligations include future minimum payments for our finance leases.
(5)Power commitments represents our obligation related to the energy services agreement for our Jamestown, North Dakota co-hosting facility payable. See Note 18 - Commitments and Contingencies to the unaudited condensed consolidated financial statements for further discussion.
(6)Preferred share dividends represent estimated future dividend payments per year in accordance with preferred stock that has been issued. The estimated future dividend payments will continue until preferred stock is redeemed.
Summary of Cash Flows
The following table provides information about our net cash flow for the three months ended August 31, 2026 and August 31, 2025, respectively.
| Three Months Ended | |||||||||||
| $ in thousands | August 31, 2026 | August 31, 2025 | |||||||||
| Net cash provided by (used in) operating activities | $ | 63,921 | $ | (81,531) | |||||||
| Net cash used in investing activities | (2,082,879) | (249,914) | |||||||||
| Net cash provided by financing activities | 1,543,472 | 322,236 | |||||||||
| Net decrease in cash and cash equivalents, and restricted cash | (475,486) | (9,209) | |||||||||
| Cash, cash equivalents, and restricted cash, beginning of period, including cash from discontinued operations | 4,153,431 | 123,318 | |||||||||
| Cash, cash equivalents, and restricted cash, end of period, including cash from discontinued operations | $ | 3,677,945 | $ | 114,109 | |||||||
| Less: Cash, cash equivalents, and restricted cash from discontinued operations | $ | 2 | $ | - | |||||||
| Cash, cash equivalents, and restricted cash from continued operations | $ | 3,677,943 | $ | 114,109 | |||||||
Commentary on the change in cash flows between the Three Months Ended August 31, 2026 and Three Months Ended August 31, 2025
Operating Activities
The net cash provided by (used in) operating activities changed by $145.5 million, or 178%, from $81.5 million used in operating activities for the three months ended August 31, 2025 to $63.9 million provided by operating activities for the three months ended August 31, 2026. Activities that positively impacted operating cash flows during the three months ended August 31, 2026 included stock-based compensation, loss on change in fair value of derivatives, loss on change in fair value of investment, loss on classification of held for sale and non-cash interest expense. Other impacts included changes in operating assets and liabilities primarily affected by changes in the timing and quantity of services provided and associated working capital needs.
Investing Activities
The net cash used in investing activities increased by $1.8 billion, or 733%, from $249.9 million for the three months ended August 31, 2025, to $2.1 billion for the three months ended August 31, 2026. This increase was primarily due to an increase of approximately $1.8 billion in investments in property and equipment during the three months ended August 31, 2026 as our payments in the current period for construction of each of our Polaris Forge 1, Polaris Forge 2, Polaris Forge 3, Delta Forge 1, and Delta Forge 2 campus data center facilities increased as well as investment in companies.
Financing Activities
The net cash provided by financing activities increased by $1.2 billion, or 379%, from $322.2 million for the three months ended August 31, 2025 to $1.5 billion for the three months ended August 31, 2026. The primary reason for the change was an increase in the net borrowings of long-term debt of $1.6 billion from the issuance of our 2031 Notes as well as an our draw on the 2026 Revolver of $82.4 million. Additionally, there was an increase in receipt of net proceeds from offerings of our preferred stock of approximately $104.5 million during the three months ended August 31, 2026 compared to the three months ended August 31, 2025. These increases were partially offset by an increase of $313.5 million in repayments of long-term debt as well as a decrease of $196.4 million in proceeds from common stock during the three months ended August 31, 2026 compared to the three months ended August 31, 2025.
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