Applied Digital (APLD) Q1 2027 earnings call transcript

Before we begin, Matt Glover from Gateway Group will make a brief introductory statement. Mr. Glover, you may begin. Thank you, Pascal. Hello everyone and welcome to Applied Digital's Fiscal First Quarter 2027 Conference Call. Before management begins for remarks, we would like to remind everyone that some statements we're making today may be considered for-looking statements under securities laws and involve a number of risks and uncertainties.

As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the form-looking statements. For more detailed risks and uncertainties and assumptions relating to a for-looking statements, please see the disclosures and earnings released in public filings made with the SEC.

We display many obligations or undertaking to update for-looking statements to reflect circumstances or events that occur after the date before-looking statements are made, except as required by law. We also discuss non-gap financial metrics and encourage you to read our disclosures and the reconciliation tables to the applicable gap measures and earnings released carefully as you consider these metrics.

Referring to our filings at the SEC for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified under the caption risk factors in our annual report on Form 10K and our quarterly reports on Form 10Q. You may access the Applied Digital's SE filings for free by visiting the SEC website at www. scc. gov.

But I'll select our miter one that the call is being recorded and made available for replay via a link in the investor relations section of Applied Digital's website. I'll turn the call over to Applied Digital's chairman and CEO, West Cummins, West.

Thanks, Matt, and good afternoon, everyone. Thank you for joining our fiscal first quarter, 2027 earnings conference call. As we begin fiscal 2027, I'd like to provide an update on our vision, our strategy, and most importantly, our execution. Today, we have approximately 36 billion in contracted revenue across five campuses, three states, and two very different geographic regions of the country.

Our focus is on converting our contracted portfolio into sustainable, profitable growth while continuing to selectively pursue new opportunities across our expansive land and power portfolios.

During the past year, success was primarily measured by aggressively growing our portfolio of campuses and our total contracted value associated with those campuses. Over the near to medium term, we expect to continue expanding our existing campuses and selectively adding new locations with a strong focus on execution and bringing contracted capacity online for our customers. Over the next 12 months, we expect to place over 600 megawatts into service versus 250 megawatts over the past 12 months.

Let me turn to our vision and strategy, which remains unchanged. Our goal is to become the category leader in design, build, deployment, and operation of our purpose-built AI factories. Achieving that requires us to balance several things well, selecting the right customers, matching those customers with a funding strategy that optimizes our financial returns, and executing consistently on our builds.

We believe we are well positioned to do all three. We have a proprietary and proven data center design that has gained acceptance by the leading top tier hyperscalers. We have a well home supply chain, deep energy partnerships, and a demonstrated ability to deliver on our lease commitment. Importantly, our data center design is different from many of our competitors.

Some competitors' facilities are designed primarily around the typical five to six year lifecycle of the GPU. We've taken a different approach and are building for the long term with 30-plus year horizons. We believe our AI factories are designed to be substantially more adaptable as compute architectures, network configurations, and electrical and mechanical requirements of all over time.

Our design and our investment strategy are based on a set of core principles intended to extend the useful life of our AI factories and campuses well beyond any single generation of compute architecture. That matters because we believe the customer signing long-term leases with us expect these facilities to continue serving their needs well beyond the initial lease term.

As a result, we believe our design and build strategy together with our franchise model are highly differentiated and will generate outsized returns for our stockholders over the long term. Our primary focus remains straightforward. Build large, sustainable AI factory campuses and sign durable high quality long-term contracts.

We target take or pay contracts of at least 15 years with proven tier one investment grade hyperscalers that are leaders in the AI industry and are well positioned to convert their investment into sustainable and profitable growth. We view our customer's ability to convert their AI investments into durable and sustainable earnings as an important metric as we make decisions on who we will build for.

This is a relatively narrow group of customers who represent enormous demand and significant long-term spending potential. These customers have told us that they value our quality of design, the quality of our builds, and the strength of our world class team. In addition to finding new contracts, one of our priorities is to continue to expanding our existing campuses.

We also see opportunity to capture premium pricing as demand grows and we realize the economies of scale inherent in large AI campus developments.

We have continued to make progress on expansion opportunities with our existing customers while also advancing discussions around additional campuses. We currently expect approximately 250 megawatts of expansion leases to be executed by calendar year end of materially higher pricing compared to prior leases. As we continue to expand our existing campuses and seek to lock in premium pricing, we believe these campuses can contain significant and underappreciated embedded value.

We expect that value to grow over time as we execute against our contract portfolio and focus on delivering outside long-term returns to our stockholders. I'd like now to turn to our execution in North Dakota, where we are currently building multiple AI factories across three campuses. North Dakota is our largest operating region and remains core to our strategy.

We have repeatedly said it's low cost of power, abundant energy resources, low population density, and favorable climate may get one of the most compelling regions in North America for large-scale AI factory development. We expect additional tier one hyperscalers to recognize those advantages over time.

It is also the place where we have made the majority of our investments today, both in the both and the campuses we are building and in the communities with which we have partnered. Power remains the single largest getting factor in our industry, and North Dakota is one of the few regions where we believe new generation can be added at a meaningful scale. Speaking to that scale, we recently took a significant step in expanding our power position in North Dakota by entering into a long-term power purchase agreement with base electron, an independent power producer in which we hold an approximate 10% x with equity stake.

The agreement covers an approximately 1200 megawatt natural gas facility that base electron is developing in center North Dakota adjacent to our Polaris Force III campus with deliveries expected to begin in 2030. This is exactly the kind of outcome our model is built to produce. While many operators are waiting in interconnection queues for capacity, they do not control. We are contracting for dedicated generation at the scale of our campuses with an agreement that can follow our tenets and a timeline aligned with our future development needs. We believe this dedicated supplies substantially strengthens our ability to expand our North Dakota campus on our own timeline rather than the grids and gives us greater visibility into the power resources that will support our future growth in the region.

To put the pace of our execution in North Dakota in perspective, we signed our first lease with Corweven May of 2025 for our first two buildings at Polaris Forge I, the first of which was then under construction. By the end of calendar year 2025, the first building was fully operational, capable of supporting more than 40,000 liquid cooled and bitty at GV 300. The second building which broke ground in summer 2025 became operational approximately one year later. As of today, we have achieved full ready for service or RFS across our first two buildings at our Polaris Forge I campus with our third building progressing on schedule. The operational buildings encompassed 10 data halls and are supported by 250 megawatts of critical IT load.

This represents a 150 percent increase in delivered capacity. At L&L alone, we believe we are substantially ahead of our closest competitors in delivered capacity.

And with the expected initial operation of our hardwood North Dakota campus, we anticipate having 300 megawatts of critical, total critical IT online across North Dakota by the end of this calendar year. We believe this level of delivered capacity places us among the leading companies in our category regardless of geography. In the United States, beyond North Dakota, we are developing campuses with substantial expansion potential in Louisiana and Alabama. These markets offer compelling characteristics, including access to power and strong state and local support for the build out of national AI capacity. We view the presence of other top tier hyperscalers developing large scale AI large scale AI campuses in these regions as further reinforcing their strategic importance.

Our development activity in Louisiana and Alabama continues to progress and we remain encouraged by the scale of customer demand across the region.

We expect revenue contribution from this region of the country to begin in the first half of calendar year 2027. We recently took our first steps outside the United States. While our focus remains firmly on executing our domestic projects, we believe select European markets may provide attractive opportunities to leverage our expertise and extend our platform over time as we continue to build a flight digital into a category leader. As part of that early look, we signed an agreement for up to one gigawatt of potential power capacity in Finland. We view this as a measured first step. The agreement provides meaningful long-term potential while limiting our initial exposure and protecting downside risk while our near-term execution priorities remain centered on the United States.

Turning to our data center hosting business, our 286 megawatts capacity for Bitcoin mining across our two North Dakota sites continues to operate efficiently and provide steady high margin revenue with minimal ongoing capital investment. And now to chronoscale in which we have an approximately 96 percent ownership stake. Neoclouds continue to represent one of the fastest growing segments in this market. Nvidia expects Neoclouds to exit this year with eight gigawatts of installed capacity up from three gigawatts at the end of 2025. During the quarter, chronoscale announced plans with Microsoft for a 50 megawatt AI compute deployment in North America featuring NVIDIA GB 300 NVL 72 systems. This deployment is expected to significantly expand chronoscale's existing business with a tier one investment-grade customer and represents another important step in scaling the platform.

With recent new contracts, chronoscale is on track to reach $1 billion of ARR in 2027 and momentum for additional contracts continues to build. With that, I'll turn the call over to our CFO SEDAL-MOMAND for a detailed review of the financials. SEDAL.

Thank you, Wes, and good afternoon everybody. This quarter, we completed the financing of our first canvas. Earlier this year, we had only one remaining tranche of debt to place for the final 150 megawatt building at Polaris Forge 1. In June, as we discussed on our last call, we closed that tranche, a $1.59 billion offering of 7% senior secured notes due to 2031 issued at par. With the proceeds of the offering, we have funded construction of the third HPC building at Polaris Forge 1 and have repaid the 300 million bridge facility we put in place in May.

With that, the full 400 megawatts of the core weave campus of Polaris Forge 1 and the 200 megawatts of contracted capacitive Polaris Forge 2 are not fully funded. The pricing of that deal is worth pointing out. Our first Polaris Forge 1 related notes place last year carry a 9 and a quarter coupon. This tranche placed priced at 7%.

We believe the pricing reflects the credit enhancements we secured of core weave earlier this year and growing investor confidence in our platform. We are earning that confidence by executing and delivering our buildings on-track and on-budget and we expect the first building at Polaris Forge 2 to similarly be on-track and on-budget. This success supports market confidence and our ability to execute. It drives us to reach a previously stated goal to keep bringing our cost to capital down first at the project level and over time by refinancing operating buildings into lower cost markets such as ABS. We also add the flexibility at the corporate level. In June, we upsized a revolving credit facility to 430 million of commitments with an additional 120 million accordion remaining available.

Looking ahead, the next campuses we need to finance are Polaris Forge 3, Delta Forge 1 and Delta Forge 2. All of these are leased to the same tier 1 investment grade hyper-scaler under 15 year take or pay at leases. We believe this fact changes the financing conversations with potential creditors. We call tier 1 investment grade tenants open access to a deeper pool of capital which we believe supports more attractive terms. We are following the same framework, preferred equity from Aquari asset management followed by project level debt which allows applied digital shareholders to retain a majority ownership stake in each site. We are already in active discussions with leading London institutions and given the credit quality of this customer, we have a high level of confidence in our ability to fund these campuses at fairable rates and terms.

Now let's turn to the quarter. As a reminder, corona scale is included in our gap consolidated results but is excluded from our non-gap financial measures. We reported total revenue of 341.9 million, up 322% from 80.9 in the prior year quarter. Our HPC hosting business generated 262.6 million of revenue consisting of 65.8 million of base rent, 183.5 million of tenant fed out services, and 13.3 million of tenant recoveries. Our data center hosting segment which operates our two bitcoin hosting sites generated 37.8 million in revenue in line with the prior year quarter. We continue to be very 4.3 million of operating profit in a single quarter on approximately 111.9 million of segment assets.

Segment operating profit this quarter more than doubled from 6 million in the prior quarter driven by a favorable power pricing. Corona scale's revenue was 41.5 million this quarter including approximately 23 million of GPU hardware sales. Services and other cost of revenues was 245.7 million primarily consisting of 176.1 million and tenant fed out services performed within our HPC hosting business. 22.4 million associated with corona scale's GPU hardware sales, 19.8 million in energy cost, and 17.6 million in depreciation and amortization. Data center rental and other cost of revenues was 43.9 million primarily due to 22.4 million in depreciation and amortization expense on our operational AI facilities at our Polaris 4-1 campus. 13.3 million in expenses which are reimbursable at tenant recoveries, and 7.8 million in personnel and other operating costs supporting our facilities.

SG&A was 114.7 million this quarter. This was primarily due to 65.4 million in stock based comp, 16 million of professional services mainly related to transactions, 15.6 million of personnel expenses, and 4.8 million of lease expenses. One item worth calling out in the quarter. Our stock based compensation expense included 41.3 million tied to one-time performance stock units. We also recorded 67.5 million of a non-cash loss from the change and fair value of our Babcock and Wilcox warrants and the common stock investment. Both were marked to market every quarter as BMW stock price changes. Net loss from continuing operations attributable to common stockholders was 221 million or 76 cents per share. Adjusted net loss was 4.1 million or 1 cent per diluted share.

Adjusted EBITDA was 64.4 million up from $500,000 in the prior year quarter. Net operating income which is exclusive to our HPC hosting business was 58.8 million representing the 89 percent margin.

From a balance sheet perspective, we believe we remain well positioned. We ended the quarter of approximately 2.9 billion in cash and cash equivalents plus 0.7 billion of restricted cash and approximately 6 against approximately 6.4 billion a debt. Note more than 80 percent of that principle does not come due until fiscal 2031 or later. Stockholders equitably was approximately 1.6 billion. Our goal remains to maintain one of the strongest balance sheets in the industry through the majority of the construction phase and will execute as such.

With that, I'll turn the call back over to watch the recording remarks. Thank you.

Thank you, said all. Before we open the call for questions, I want to close on something that comes up in nearly every investor conversation we have today. The growing scrutiny around data center development across the country. We are seeing more local moratoriums, tighter zoning requirements, longer permitting timelines and greater community resistance in certain markets. Some may view this as a risk to our industry. We see it differently.

We believe it actually increases the strategic value of our campuses that are already powered operating and supported by their communities. We think the reason is straightforward. At our campuses, once they're established, we believe much of the hardest work has already been done. The land is controlled, power and interconnection are in place, permits have been secured, fiber, workforce and local supply chains have been established and perhaps most importantly to us, the community knows who we are and sees how we operate. This is why we think expanding in existing campuses is materially different than starting from scratch in a new market.

We are already seeing this dynamic across our portfolio. Customers tell us they want additional capacity in places where they have confidence it can actually be delivered.

As new data center development becomes more difficult than certain markets, we believe the scarcity value of established, powered and community supported campuses increases. We think that dynamic creates meaningful barriers to entry and can support stronger economics on expansions and renewals and over the long term, higher terminal values for our assets. Put simply our view is that every new restriction elsewhere means what we already own harder to replicate and more valuable. This is also important when we think about the long-term value of these assets. Our leases have 15 year base terms, but the land, power, interconnection and community support behind these campuses have the capacity to last far longer than any single lease. When a base term ends, then we see that that attendant with tens of thousands of GPUs deployed in a powered liquid-cooled campus faces a simple choice.

Renew with us or try finding comparable power and approval somewhere else in a market where new sites are becoming increasingly difficult to approve. We believe that makes renewals more likely support stronger renewable pricing and allows our tenants to continue refreshing their technology within the same facility for decades.

This is why we believe in the durability of our leases and that the terminal value of these campuses is meaningfully higher than a traditional real estate model would have so. We also believe that the value should continue to grow as new supply becomes harder to build. And local leaders have told us the reason our communities want us to expand is because we have worked hard to earn their trust. Our approach has always been simple, do it the right way.

In North Dakota, MDU's customers have saved about $45 million since our LNDL project began because we use excess grid capacity and help spread fixed costs across more load. In Harwood, we paid for over $100 million of substation and grid upgrades ourselves which benefit the entire community. And our model already meets the rate payer protection pledge that Governor Armstrong joined alongside 21 other governors. Local leaders have also shared with us the positive economic impact on these communities has been significant.

It's drawing national attention, including coverage on Fox Business News and the All-In podcast. LNDL is a great example. Since we began our partnership with the community, local tax revenues expanded roughly tenfold from approximately 400,000 a year to nearly 4 million. These tax dollars are helping fund schools, infrastructure, and emergency services. Construction workers on our sites are in six figure incomes on average than many of those dollars stay in the local economy. We were honored that Mid-America Economic Development Council recently named Polaris 4-1 as Project of the Year, recognizing the campus for its economic, impact, community investment, partnerships, and technological innovation.

That award belongs as much to the LNDL community as it does to us, and we are incredibly grateful to everyone who continues to make Polaris 4-1 possible. We also invest directly in our local communities. Through applied digital care, we recently committed $350,000 across five organizations in Oliver County, home to Polaris 4-3. That includes funding the new sheriff's deputy, the new life pack for the county ambulance repairs to two fire trucks, computers, so every student in grades 7-12 at center Stanton has a device, and repairs to the community center and pool and center. As Governor Armstrong put it, North Dakota wins when companies like Applied Digital choose to be more than an employer.

We don't just build in communities, we build with them, and that is why we are welcoming us back to grow and why we believe each of our campuses have significant embedded value that will continue to build over time.

In closing, we believe we're in the right place at the right time and doing this the right way. More than ever, we're in control of our own destiny across the full stack. We own the land, we design, we build, and operate the AI factories.

Through chronoscale, we reach all the way to GPU compute, and through partners like Base Electron, we have visibility into the power that feeds it all. If demand continues on its current path, and we continue to execute and deliver for our customers and our communities, as we've been doing, we believe we have the ability to grow our operating portfolio to three and a half to four gigawatts by the end of calendar year 2030.

With that operator, we're happy to open the call for questions. We will now begin with the question and answer session. Please limit yourself to one question and one follow up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile with Q&A roster.

Sure Mike, thanks for the question. So what we're seeing in North Dakota, obviously we have, you know, three customers there, ourselves already. We're aware of a self-filled project, a roughly one gigawatt self-filled project from one of the tier one hyperscalers in the state as well. And we've been speaking that it's outside of the ones that we already have in the state. And we're having multiple conversations with other of the tier one hyperscalers for additional capacity in the state of North Dakota. So the answer is I think all of them will eventually be there. And that's a state that has one of the most attractive things about the state beyond the power and the climate and the population density is they have a framework for how data centers are treated in the state.

And so everyone knows exactly what to expect as you go through a process in that state. And as long as you do the development the right way, it's an extraordinarily attractive state to be in. And I think it's just going to become more so over the remainder of this year of 27 and 28.

Yeah, thanks for the question, Mike. And it's a great question. As you can recall, we completed the Polaris Forge 2 and the Polaris Forge 1 as they execute great, great tenants to have. So when you think about the go-forward with Polaris Forge 3 and Delta Forge 1 and 2, given that it is in high investment grade hyperscalers, there's multiple options beyond the high yield bond market, which we have liked and we've been an issuer in the past project. So for instance, the project finance market is well open for high investment grade all takes, as well as there's some new innovations within the investment grade bond market. So what we've seen, there's flexibility amongst various products that we can tap, obviously we weigh those and find a mix that works for our profile.

But what we are focused on in a rate environment that can move around 50 to 100 basis points. One, we don't under at least is where 100 basis points would impact our economics really. But then two, we focus then on terms where we can refinance in a year or two years with minimal penalties. So once that construction risk, which generally is anywhere from 25 to 100 basis points of construction risk premium on a debt instrument, once we go past the construction phase, we have the flexibility to lower our costs relatively quick into a more permanent financing. That is our focus. We're nimble and it's great thing having a high investment grade hyperscaler with multiple options to run at.

Thanks Mike.

Sure Nick, thanks. So for the site, we purchased the site and then we have the option so that initial power of that site comes in 2028. And then additional power, which is typical of almost any site that's going to scale to a gigawatt, there's break points where they'll get approvals for additional power ads. There's pretty good line of sight to that. But then there would be additional payments at that point, but there's an off-ramp for us prior to those additional payments. So it's a pretty minimal amount for us to have this kind of exposure in a market that we think has become pretty attractive as far as the European market goes. And we've spent the last, I don't know, 12 months looking into that market and we've looked at probably 30 to 40 different sites and we landed on this one.

We think it's a good site and it's kind of coincided nicely to a point where our existing and the other potential customers that we talked to started asking more in the last four months about European capacity. So those things kind of go pretty well together, but it gives us a lot of optionality to the upside with pretty minimal financial risk.

Sure, Nick. So a couple of things we've talked for since we started the design that we use today. We call it our fourth generation data center design. With this design, we made it extraordinarily flexible with all of the learnings we had gathered through the processes we went through with all of the hyperscalers. So one, it's flexible enough to work for any of the hyperscalers, but two, we made it flexible to future proof it as much as possible. And some of that comes into how we do the electrical, some of it in the cooling. A big part of it is the amount of space that we put inside of the data hall. So the trend is for higher power densities, and that's the foreseeable future.

But if it goes to much lower power densities, we have the space inside of the facility to accommodate that as well. So we just built maximum flexibility. We've talked about this for a few years now. But what I'm seeing in the market is a lot of things happening that are just hyper focused on how quickly something can come online and doing close to unnatural acts, I would say, to just put capacity online as quickly as possible. And while I'm not saying that's a good or a bad business strategy, I just want to differentiate from what we're doing, which is a much more longer term view of how we build the data centers so that they're very long term assets.

You can never fully know what the future brings, but that's the view that we have as a company. That's how we design them. That's how we design them from a redundancy, from both a power and cooling perspective, because we could build a slightly cheaper product. We do have to make sure that we can operate this product for at least 15 years on our current leases within the SLAs, but we want to operate them longer than that. But it's just really more insight into kind of the thought process and the longer term thinking behind our data center design and build in the operations versus some of the other things that we're seeing just overall going on in the market.

Appreciate your take us.

Sure. So from a demand perspective in the market, we're seeing no, I wouldn't say big change either way. I mean, it feels like we're at max. I've thought of that kind of the last two years and it continues to notch up, but demand remains extremely robust for right now. So people are still pushing for things they can get in 2027. Really, almost everything in 2017 should be fairly contracted. At this point, we start moving into 28 and 29. We have stopped this contracted into 28, but we're seeing a lot of demand for that as well. And really it sees locations. We keep pointing to North Dakota, but Louisiana is a great market for us as well.

So with Alabama, we've got a great experience there with the community. And the certainty of being able to continue to get the permits of existing power that we have at the campus, but the supply chain for us to continue to execute, I would just reiterate those comments about what we fully expect to do some lease expansion and new campuses of materially higher rates versus what we signed our last contracts for in the first half of 2026.

Yeah. So we've actually went through that exercise and the build cost is very, we expect it to be very similar on a dollar's basis versus euro. And so, and by that, I mean, you know, if we converted the euros back, it would be roughly the same dollars. What I would expect there is a more elongated delivery timeline in Europe, just kind of how it works versus what we do here in the US. But the goal is to replicate, you know, the same thing from supply chain and design and build perspective in the markets when we enter Europe versus here. But we've done that work and expect a very similar cost.

Thanks.

Sure. So we start to think about 2030, Rob, primarily on base electrons. So base electrons building that the 1.2 gigawatts and center expect base electron to build a significant amount of capacity on the eastern side of the state as well. We'll help campus expansion over in the Harwood campus and then potentially in the middle part of the state around Jamestown. So there's a new WBI pipeline that WBI is owned by MDU that they approved and are moving forward with that pipeline. It's been in the works for years and so we'll be an off-taker of gas at center and at Harwood for certain and possibly in Jamestown. But the way we have worked that with the gas pipeline is to have almost unlimited capacity for expansion and center.

It's going to be the closest location to the beginning of the pipeline and then these pipelines typically taper the further they go out so to have really big expansion capability at center this will all be front of the meter grid connected but also expanded to different locations across the state. From an equipment perspective we're looking at for cured equipment that's roughly 2.4 to 2.5 gigawatts of generation capacity there already but we expect it to go significantly larger given the demand that we're seeing in the future there in North Dakota.

I think it's tight across the industry and you have some components more so than others. The biggest, what we've talked about this before from a supply chain perspective the biggest thing we did was almost two years ago lock in key components in the supply chain with certain of our suppliers and in some of those instances we actually purchased full factory capacity output from certain factories for I believe a four-year time frame to make sure that we had those key components locked in so that's been a big help to us. We're going to need more supply chain to continue to build to the demand that we're seeing in the marketplace but that was the key piece for us is putting those relationships those key relationships in place quite some time ago to make sure that we're locked into our places in the supply chain for key components.

Yeah that's right George. The company today is in a different place versus what it was a year ago and we have a limited amount of capacity to build and so we're being more selective with the customers that we'll build for it and not do right on the credit quality aspect of that.

Well we're pushing for on that George and we're we're done to get into too much detail but we've talked about this before which is potentially longer duration and higher significantly higher lease rates. I don't want to to pin that but you you know as you can think of definitely north of about 15% plus increases on the lease rate but also could include longer duration on the on the leases. That's how we're defining that.

Thanks George.

Sure. So we view the location that we found in Finland you know it felt a lot like the communities that we built in in North Dakota. So there's there's a really positive receptivity from a local level on the community level. The country as a whole has been fairly receptive to data center. So we really focused on that for our you know to make this decision on the site plus you know the land availability that the fiber this this site happens to be about 30 kilometers from a self build of one of the large hyperscalers. And then as far as the staging of the of the power the first 100 megawatts is available in 2028 and then it continues to ramp up through 2031 to the to the full gig lot.

Yeah so so thanks John and I I'll just clarify and I thought we went right to the four gigawatts was three three and a half to four gigawatts that we talked about by the end of 2030. So that that's really from a power perspective we we have power in the power pipeline. Some of that includes the additional capacity from base electron that comes on in 2030 but from a power perspective we believe we have that in the pipeline. This was really an exercise around how much can more can we ramp up our build and delivery and if you kind of work through the math for us internally if you want to get to the high end of that number to get to the high end of that number that really has us delivering about one gigawatt per year in in 29 and 30 right so that kind of you take a bridge to the end of 20 county or 28 getting to around two gigawatts.

We as a company think that that's kind of the level we can ramp our construction and delivery up to so that it's really those two things combined but much more so on the the ability and capacity to do construction and deliver for customers.

Yeah so so thanks for that question that's a great question so when we look at that right now and you've seen you know over the coming month or so the strategy we're using to secure data center capacity for chronoscale is outside of the large scale applied digital sites. Those sites we contract to what we have said which is tier one and you know investment grade hyperscalers. The ability to secure other capacity with we have found a nice strategy for securing more near-term grade capacity that isn't it that that scale at a single location but at multiple locations but I think you could see you know chronoscale moving up to multiple hundreds of megawatts in capacity online outside or applied digital data center builds it with you know over 27 and 28 but I want to bifurcate this where if it is two separate strategies where you know by digital strategies it remains the same build for high quality tenants at large scale and then we're we're using our knowledge base to help chronoscale secure capacity at you know sites that are more like you see the the first microsoft side of 50 megawatts that are kind of 50 to 100 megawatts sites that have been passed over because they don't scale to the gigawatt side or the multi-hundred megawatt side but there's a lot of those around the country that are grid tied that we think we can help them bring online over the next you know two or three years a significant amount actually in 2027 so that's really I appreciate you letting me make that that clarification around the strategy yeah sounds great thank you wet appreciate it thanks john your next question comes from the line of michael donovan with compass point michael your line is open please go ahead hi guys thanks to take my question is it fair to senior existing mccory relationship would extend to thinland the so core weave has been I I couldn't have asked her better mccory mccory mccory i thought i'd say core weave i was going to talk about the partnership there uh mccory is uh north america that that partnership is in north america i'm not saying we couldn't have something similar but the current agreement we have is just north america appreciate that and and if he had a big interesting accord that will not stop you there but uh good enough and then uh that's all that's what I have for that excellent and it's a follow-up next question as in front becomes a larger share of customer workloads are you seeing changes in the mix of gpu cpu storage requirements and if so are any of those changes contributing to the premium lease rates that you mentioned or expecting so so i'll tell you where we're seeing a change um so we're seeing a change it over the past you know 18 months on the the tenant set out or the technical fit out tfo and and what we're seeing in because we we execute that for in almost actually every every lease that we have we execute that um that the tfo is becoming much more flexible uh is what i would say so if you rolled back uh a year ago or especially 18 months ago the the tfo we we would know exactly what was going into our data center based on the tfo and now we we can't really tell uh and the tfo's you know become a larger dollar amount for our customers but i think they're building in a significant amount of flexibility inside the facilities uh to be able to accommodate whatever workloads they want to deploy and that you know between we'd always stuck it like gpu tpu but i think it's also in the amount of cpu mix the storage uh all of those pieces that work topology um but that's that's really where we're seeing that appreciate that and then one more if i may um you mentioned economies of scale for your current builds are there any circumstances where you would consider smaller modular build outs?