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Earnings documents stored for CHRN.
Investor releaseQuarter not tagged2026-07-27Applied Digital Reports Fiscal Fourth Quarter and Full Year 2026 Results
GlobeNewswire
Applied Digital Reports Fiscal Fourth Quarter and Full Year 2026 Results
DALLAS, July 27, 2026 (GLOBE NEWSWIRE) -- Applied Digital Corporation (Nasdaq: APLD) ("Applied Digital" or the Company"), a U.S.-based designer, developer, owner, and operator of large-scale, purpose-built data centers engineered to support high-performance computing (“HPC”) workloads, including artificial intelligence (“AI”), machine learning, and other accelerated-compute applications, reported financial results for the fiscal fourth quarter ended May 31, 2026. The Company also provided operational updates. During the quarter, the Company completed the separation of its Cloud Services Business in a series of transactions that resulted in the Company owning approximately 96% of the issued and outstanding equity of ChronoScale Holdings Corporation, f/k/a ChronoScale Corporation ("ChronoScale") as of the end of the fiscal year. ChronoScale, a public company, owns and operates our historic cloud services business and is consolidated into our financial statements, but excluded from the non-GAAP financial measures set forth below. Unless otherwise specified, disclosures in this earnings release, including the below, reflect continuing operations only. Fiscal Fourth Quarter 2026 Financial Highlights Revenues: $258.7 million, up 407% from the prior year comparable period Net loss attributable to common stockholders: $110.6 million, down 108% from the prior year comparable period Net loss attributable to common stockholders per basic and diluted share: $0.39, up 63% from the prior year comparable period Adjusted revenue: $240.4 million Adjusted net income: $12.9 million Adjusted net income per diluted share: $0.04 Adjusted EBITDA: $42.4 million Net Operating Income: $39.9 million Fiscal Year 2026 Financial Highlights Revenues: $611.3 million, up 167% from the prior year comparable period Net loss attributable to common stockholders: $249.2 million, down 7% from the prior year comparable period Net loss attributable to common stockholders per basic and diluted share: $0.91, down 22% from the prior year comparable period Adjusted revenue: $539.7 million Adjusted net income: $36.1 million Adjusted net income per diluted share: $0.11 Adjusted EBITDA: $107.2 million Net Operating Income: $90.4 million Adjusted revenue, Adjusted net income (loss), Adjusted net income (loss) per diluted share, Adjusted EBITDA, and Net Operating Income are non-GAAP measures. A reconciliati…Read full documentShow less
DALLAS, July 27, 2026 (GLOBE NEWSWIRE) -- Applied Digital Corporation (Nasdaq: APLD) ("Applied Digital" or the Company"), a U.S.-based designer, developer, owner, and operator of large-scale, purpose-built data centers engineered to support high-performance computing (“HPC”) workloads, including artificial intelligence (“AI”), machine learning, and other accelerated-compute applications, reported financial results for the fiscal fourth quarter ended May 31, 2026. The Company also provided operational updates. During the quarter, the Company completed the separation of its Cloud Services Business in a series of transactions that resulted in the Company owning approximately 96% of the issued and outstanding equity of ChronoScale Holdings Corporation, f/k/a ChronoScale Corporation ("ChronoScale") as of the end of the fiscal year. ChronoScale, a public company, owns and operates our historic cloud services business and is consolidated into our financial statements, but excluded from the non-GAAP financial measures set forth below. Unless otherwise specified, disclosures in this earnings release, including the below, reflect continuing operations only. Fiscal Fourth Quarter 2026 Financial Highlights Revenues: $258.7 million, up 407% from the prior year comparable period Net loss attributable to common stockholders: $110.6 million, down 108% from the prior year comparable period Net loss attributable to common stockholders per basic and diluted share: $0.39, up 63% from the prior year comparable period Adjusted revenue: $240.4 million Adjusted net income: $12.9 million Adjusted net income per diluted share: $0.04 Adjusted EBITDA: $42.4 million Net Operating Income: $39.9 million Fiscal Year 2026 Financial Highlights Revenues: $611.3 million, up 167% from the prior year comparable period Net loss attributable to common stockholders: $249.2 million, down 7% from the prior year comparable period Net loss attributable to common stockholders per basic and diluted share: $0.91, down 22% from the prior year comparable period Adjusted revenue: $539.7 million Adjusted net income: $36.1 million Adjusted net income per diluted share: $0.11 Adjusted EBITDA: $107.2 million Net Operating Income: $90.4 million Adjusted revenue, Adjusted net income (loss), Adjusted net income (loss) per diluted share, Adjusted EBITDA, and Net Operating Income are non-GAAP measures. A reconciliation of each of these Non-GAAP Measures to the most directly comparable financial measure presented in accordance with accounting principles generally accepted in the United States (“GAAP”) is set forth below. These non-GAAP measures exclude the results of ChronoScale. See “Reconciliation of GAAP to Non-GAAP Measures.” Recent Highlights Signed a 15-year take-or-pay lease with a new U.S. based, high investment-grade hyperscaler for 300 megawatts ("MW") of critical IT load at Delta Forge 1, a new AI Factory campus in Boyce, Louisiana. The lease provides for approximately $7.5 billion in base-term contracted revenue, with initial operations expected to commence calendar year 2027. Signed a second 15-year take-or-pay lease with the same high investment-grade hyperscaler for 300 MW at Polaris Forge 3, which provides for approximately $7.5 billion in base-term contracted revenue, with initial operations expected to commence during calendar year 2027. Completed a $2.15 billion private offering of 6.750% Senior Secured Notes due 2031 (issued at 98% of par) through its subsidiary APLD ComputeCo 2 LLC. Proceeds will fund development of 200 MW of critical IT load at Polaris Forge 2 in Harwood, North Dakota. Closed a revolving credit facility of up to $550 million ($350 million committed + $200 million accordion), arranged by Goldman Sachs and maturing in May 2029, to support pre- and post-lease development across campuses. Enhanced credit quality on existing CoreWeave leases through a restructured SPV subsidiary, unconditional springing guarantees from CoreWeave, Inc., and a $50 million letter of credit. These changes followed CoreWeave’s investment-grade A3-rated refinancing and provide additional security for the Company’s 9.250% Senior Secured Notes due 2030. Closed a $300 million senior secured bridge facility led by Goldman Sachs to support development of the fourth building (150 MW) at Polaris Forge 1 (which has been repaid with the proceeds from the Senior Secured Notes Offering described below). Completed the separation of our cloud services business, combining it with Ekso Bionics Holdings, Inc. to form ChronoScale (Nasdaq: CHRN), an independent publicly traded accelerated-compute platform. Applied Digital currently owns approximately 96% of ChronoScale. Subsequent to the Quarter Signed a third 15-year take-or-pay lease with the same high investment-grade hyperscaler for 210 MW at Delta Forge 2 (fifth AI Factory campus, third consecutive with this customer) in a new southern state. The lease provides for approximately $5.2 billion in base-term contracted revenue, with initial operations expected in the first half of calendar 2028. Entered a Memorandum of Understanding with CoreWeave to assign the Building 4 lease at Polaris Forge 1 to a CoreWeave subsidiary upon achieving an investment-grade credit rating. Closed $1.59 billion of 7.000% Senior Secured Notes due 2031 (issued at par) through our subsidiary APLD ComputeCo 3 LLC. Proceeds from this offering were used to repay the $300 million bridge facility and will fund the construction of the fourth building (150 MW), at Polaris Forge 1. Upsized the revolving credit facility, bringing the total committed amount to $430 million, with an additional $120 million accordion remaining. Achieved Ready for Service for Phase 1 of Building 2 (75 MW) at Polaris Forge 1 on schedule, bringing total live capacity at the campus to 175 MW. Management Commentary This was a defining quarter for Applied Digital, capping a defining year. Since the end of last quarter, we have signed three new leases — at Delta Forge 1, Polaris Forge 3, and Delta Forge 2 — all with the same high investment-grade hyperscaler and each in a different state. Delta Forge 1 and Polaris Forge 3 each provides for approximately $7.5 billion in base-term contracted lease revenue, while Delta Forge 2 adds approximately $5.2 billion. Together, these deals represent roughly $20 billion in long-term contracted revenue from a single, world-class customer that has now chosen us three times in a row. With these agreements, we have secured 1.4 gigawatts ("GW") of contracted critical IT load, representing approximately $36 billion in total contracted lease revenue — or approximately $86 billion if all renewal options are exercised. We are building five multibillion-dollar AI Factory campuses for two hyperscalers and CoreWeave— a scale that we believe speaks to both the quality of our platform and the trust these customers place in our ability to execute. “Nearly three years ago, we made a deliberate decision to build a company that scales, not just a company that builds data centers,” said Wes Cummins, Chairman and Chief Executive Officer of Applied Digital. “We call it our franchise model — a core team of design, construction, and operations professionals replicated across every campus, in each market. Combined with our proven supply chain and design approvals from every major hyperscaler, we believe this repeatable, differentiated platform is why we have emerged as one of the clear leaders in AI infrastructure.” “We believe delivering on time is a genuine differentiator in this industry,” Cummins continued. “We brought Polaris Forge 1’s first 100 MW online on schedule and have now scaled total live capacity at the campus to 175 MW. We’re not just securing power — we’re turning it into operational AI capacity.” Beyond the contracted portfolio and the approximately 1.4 GW already under construction, Applied Digital is actively marketing an additional 1.7 GW of capacity across multiple states, we see as underscoring robust demand for its AI Factories. To fuel sustainable expansion, the Company is advancing a strategic power initiative. Applied Digital is working with Base Electron Corp., an independent power producer who has engaged Babcock & Wilcox to develop approximately 1.2 GW of front-of-the-meter natural gas-fired generation in the Dakotas, in collaboration with regional utilities. Applied Digital shareholders own approximately 10% of Base Electron Corp. through our investment in Base Electron. This deepens access to abundant, reliable, low-cost power — a critical competitive advantage for both existing campuses and future growth. “We are still in the early innings of what we believe will likely be the largest buildout of critical infrastructure in modern economic history,” Cummins added. “We see demand for high-power-density, purpose-built AI data centers remaining extremely robust. Our approach is simple: Do it the right way. For customers, that means delivering high-quality, GPU-ready facilities on time. For communities, it means creating lasting economic value. When we do right by both, our shareholders win over the long term.” Cummins also pointed to the continued strength of the Company’s Data Center Hosting business: “Our Data Center Hosting business, which operates 286 MW for bitcoin mining across our two North Dakota sites, remains the highest return-on-assets business in the company. We are paid based on the data center capacity provided to our customer, so as long as they are mining, we are paid regardless of where the price of bitcoin trades — which makes this a steady, high-margin source of cash flow.” The Company also completed the separation of its cloud services business during the quarter and currently owns approximately 96% of ChronoScale, a public company trading on Nasdaq under the symbol “CHRN.” ChronoScale has continued to build out its leadership team, including the appointments of Raj Jegannathan, previously a Vice President at Tesla, as Chief Technology Officer, and Lawrence Lam, who brings more than twenty years scaling global cloud and AI platforms at companies including Supermicro, as Chief Product Officer. HPC Hosting Update Applied Digital's HPC Hosting Business designs, builds, and operates next-generation, purpose-built AI Factory data centers. As of May 31, 2026, the Company had executed long-term leases representing approximately 1,410 MW of contracted critical IT load across five campuses — Polaris Forge 1, 2, and 3 in North Dakota and Delta Forge 1 and 2 in Louisiana and another southern state — representing approximately $36 billion of total contracted revenue over the initial 15-year base lease terms, or approximately $86 billion if all renewal options are exercised. The first 100 MW data center at Polaris Forge 1 became operational in October 2025, and the Company delivered Phase 1 of Building 2 (75 MW) on June 30, 2026, bringing the total live capacity at the campus to 175 MW. Additional buildings at Polaris Forge 1, along with Polaris Forge 2, Polaris Forge 3, Delta Forge 1, and Delta Forge 2, are in various stages of construction. Revenue from our HPC Hosting business totaled $203.0 million for the quarter, including $44.1 million related to base rent, $152.4 million related to tenant fit-out services, and $6.5 million related to tenant recoveries. This resulted in $26.2 million of segment operating profit for the quarter ended May 31, 2026. Data Center Hosting Update Applied Digital’s Data Center Hosting Business operates data centers to provide energized space to crypto mining customers. As of May 31, 2026, the Company’s 106 MW facility in Jamestown, ND, and 180 MW facility in Ellendale, ND, were operating at full capacity. During the three months ended May 31, 2026, the Company generated $37.3 million in revenue from the Data Center Hosting Business segment, compared to $38.0 million during the three months ended May 31, 2025. The results were materially consistent year over year due to stable operating conditions across the Company’s data center hosting facilities. We are very pleased with our Data Center Hosting Business, which generated $12.5 million in segment operating profit for the three months ended May 31, 2026 on $113.8 million in reported assets at the end of the period. Cloud Services Business Update On May 5, 2026, we completed the separation of our cloud services business, combining it with Ekso Bionics Holdings, Inc. to form ChronoScale Holdings Corporation, an independent, publicly traded accelerated-compute platform that is trading on the Nasdaq Capital Market under the symbol "CHRN." Applied Digital currently owns approximately 96% of ChronoScale. We consider the Data Center Hosting Business and the HPC Hosting Business to represent our core operations for long-run strategic and performance evaluation purposes as we evolve into a pure-play data center platform moving forward. Accordingly, although we consolidate ChronoScale’s financial results as our majority owned subsidiary, we excluded the results of ChronoScale, including its cloud services business, in our Non-GAAP results presented herein. See “Reconciliation of GAAP to Non-GAAP Measures.” Financial Results from Operations for Fiscal Fourth Quarter 2026 Operating Results Services revenue in the fiscal fourth quarter 2026 was $208.2 million compared to $51.1 million, up 308% from the fiscal fourth quarter 2025. The growth was primarily driven by revenue of approximately $152.4 million related to tenant fit-out services within our HPC Hosting Business, which we began providing during the fiscal year ended 2026. Data center rental and other revenue in the fiscal fourth quarter 2026 was $50.6 million as the first HPC data center at our Polaris Forge 1 campus was fully operating during the current quarter. This revenue consisted of $44.1 million related to base rent, and $6.5 million related to tenant recoveries. Services cost of revenues in the fiscal fourth quarter 2026 were $193.1 million compared to $54.2 million, up 256% from the fiscal fourth quarter 2025. This increase was primarily driven by an increase of $145.6 million in expenses associated with tenant fit-out services for our HPC Hosting Business. Data center rental and other cost of revenues in the fiscal fourth quarter 2026 were $25.1 million. Data center rental and other cost of revenue included approximately $14.1 million in depreciation and amortization expense on our first HPC data center at our Polaris Forge 1 campus, $6.4 million in expenses which are reimbursable as tenant recoveries, and $4.5 million in personnel and other expenses directly supporting revenue. Selling, general and administrative expenses in the fiscal fourth quarter 2026 were $165.3 million compared to $41.0 million, up 303% from the fiscal fourth quarter of 2025 driven by the Company’s overall business growth. This increase was primarily due to increases of $116.8 million in stock based compensation due to accelerated vesting of certain employee stock awards as well as grant activity associated with separation of the cloud services business and the increase in headcount, $7.3 million in personnel expenses related to the increase in headcount, and $5.6 million in professional service expense primarily related to legal services provided on discrete transactions and projects, as well as general support of the business. These increases were partially offset by a decrease of $5.4 million in other selling, general, and administrative expense such as travel, computer and software expenses. Interest expense, net in the fiscal fourth quarter 2026 was $10.6 million compared to $8.5 million, up 26%, from the fiscal fourth quarter 2025. As we entered into new debt arrangements during the current fiscal year, there was an increase of $31.9 million in interest expense. The increase in expense was partially offset by an increase of $30.5 million in interest income due to larger balances of funds held in interest-bearing demand deposit accounts. Gain on change in fair value of derivatives was $53.3 million for the three months ended May 31, 2026, due to an increase of $69.9 million in the fair value of our Babcock & Wilcox Enterprises, Inc. (“B&W”) common stock warrant which was partially offset by a decrease of $16.7 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 noncontrolling interest. Gain on change in fair value of investment was $4.8 million for the three months ended May 31, 2026, due to the increase in the fair value of our investment in B&W common stock. Net loss from discontinued operations was $1.0 million for the three months ended May 31, 2026 and represents the income statement activity related to the Ekso business at ChronoScale which was classified as held for sale and discontinued operations during the fiscal fourth quarter 2026. Net loss from continuing operations attributable to common stockholders for the fiscal fourth quarter 2026 was $110.6 million, or $0.39 per basic and diluted share. This compares to a net loss attributable to common stockholders from continuing operations of $53.1 million, or $0.24 per basic and diluted share for the fiscal fourth quarter of 2025. Adjusted revenue, a non-GAAP financial measure, was $240.4 million for the fiscal fourth quarter 2026 compared to $38.0 million for the fiscal fourth quarter of 2025. Adjusted net income, a non-GAAP financial measure, was $12.9 million, or $0.04 per diluted share for the fiscal fourth quarter 2026. This compares to an adjusted net loss, a non-GAAP financial measure, of $7.6 million, or $0.03 per diluted share, for the fiscal fourth quarter of 2025. Adjusted EBITDA, a non-GAAP financial measure, was $42.4 million for the fiscal fourth quarter 2026 compared to an Adjusted EBITDA of $1.0 million for the fiscal fourth quarter 2025. Net Operating Income, a non-GAAP financial measure, was $39.9 million for the fiscal fourth quarter 2026. Financial Results for Fiscal Year Ended May 31, 2026 Services revenue increased $270.0 million, or 119%, from $226.6 million for the fiscal year ended May 31, 2025 to $496.6 million for the fiscal year ended May 31, 2026. Our HPC Hosting Business commenced operations at our first HPC data center at our Polaris Forge 1 campus resulting in the recognition of approximately $270.6 million related to tenant fit-out services. Additionally, there was an increase of $12.1 million in revenue generated by our Data Center Hosting Business due to performance improvements compared to the fiscal year ended May 31, 2025. These increases were partially offset by a decrease of $12.4 million in revenue generated from ChronoScale primarily due to a reduction in rates for cloud services. Data center rental and other revenue was $114.7 million for the fiscal year ended May 31, 2026, which is the period during which our HPC Hosting Business commenced operations. This revenue consisted of approximately $99.8 million related to base rent and $14.9 million related to tenant recoveries. Services cost of revenues increased by $180.1 million, or 83%, from $216.8 million for the fiscal year ended May 31, 2025 to $396.9 million for the fiscal year ended May 31, 2026. The increase was primarily due to $258.1 million in expenses associated with tenant fit-out services for our HPC Hosting Business which we began providing during the current fiscal year. This increase was partially offset by decreases of approximately $62.3 million in depreciation and amortization expense and $17.2 million in lease and related expense primarily due to the renegotiations of certain of our leases during fiscal year ended May 31, 2026, as well as due to the Cloud Services Business (one of our three operating business segments at the time) being classified as held for sale until February 15, 2026, which resulted in decreased depreciation and amortization recorded. Data center rental and other cost of revenue was $56.8 million for the fiscal year ended May 31, 2026, which is when we commenced our data center rental operations within our HPC Hosting Business. The primary components of data center rental and other cost of revenue include approximately $32.2 million in depreciation and amortization expenses associated with our HPC Hosting Business, $14.9 million in expenses which are reimbursable as tenant recoveries, $8.5 million in rental property operating expenses, which are not eligible for recovery from our tenant, $0.7 million in property insurance expenses associated with our HPC Hosting Business, and $0.2 million in property tax expenses associated with our HPC Hosting Business. Selling, general and administrative expense increased by $224.2 million, or 208%, from $107.9 million for the fiscal year ended May 31, 2025 to $332.1 million for the fiscal year ended May 31, 2026. The increase was primarily due to the overall growth in the business, with a $198.3 million increase in stock-based compensation primarily due to an increase in grant activity related to the separation of the cloud services business, the increase in headcount and performance stock awards granted during the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025, $16.0 million increase in professional service expenses primarily related to legal services provided on discrete transactions and projects as well as general support of the business, $15.4 million increase in personnel expenses driven by increases in headcount to support the business, and $6.2 million increase in other selling, general, and administrative expense primarily related to travel, computer and software expenses. These increases were partially offset by a decrease of $11.7 million in lease and related expenses and depreciation and amortization expense, primarily due to the renegotiations of certain of our leases during the fiscal year ended May 31, 2026. Loss (gain) on classification of held for sale changed by $84.3 million, or 342%, from a gain of $24.6 million for the fiscal year ended May 31, 2025 to a loss of $59.7 million for the fiscal year ended May 31, 2026. The loss during the fiscal year ended May 31, 2026 was primarily due to the write down of the Cloud Services Business assets to carrying value as of February 15, 2026 when it no longer qualified as held for sale. Comparatively, the gain during the fiscal year ended May 31, 2025 was due to the sale of our former Garden City facility. Interest expense, net decreased $2.6 million, or 8%, from $32.1 million for the fiscal year ended May 31, 2025 to $29.5 million for the fiscal year ended May 31, 2026. As we entered into more debt arrangements during the current fiscal year, there was an increase of $53.3 million in interest expense. The increase in expense was partially offset by an increase of $52.6 million in interest income due to larger balances of funds held in interest-bearing demand deposit accounts. Gain on change in fair value of derivatives was $75.8 million for the fiscal year ended May 31, 2026, due to an increase of $89.2 million in fair value of our Babcock & Wilcox Enterprises, Inc. (“B&W”) common stock warrant partially offset by a decrease of $13.3 million in fair value of the derivative assets related to the preferred units and corresponding common units held by APLD HPC TopCo 2’s noncontrolling interest. Gain on change in fair value of investments was $10.8 million for the fiscal year ended May 31, 2026, due to an increase of $8.8 million in fair value of our investment in B&W common stock and an increase of $2.0 million in fair value of our investment in Base Electron, a related party. Loss on conversion of debt was $33.6 million for the fiscal year ended May 31, 2025, due to the difference in the fair value compared to the price at which the promissory notes, totaling $92.1 million, entered into with YA II PN, LTD in the year ended May 31, 2024 (the “YA Notes") were converted. There was no such loss recorded in the current fiscal year. Loss on change in fair value of debt was $85.4 million for the fiscal year ended May 31, 2025, primarily due to a loss of approximately $89.6 million related to the change in fair value of the conversion option derivative of the Convertible Notes during the two week period in which we did not have sufficient authorized shares to settle such conversion fully in shares, which was partially offset by a gain of approximately $4.1 million related to the change in the fair value of the YA Notes. Net loss from discontinued operations was $1.0 million for the fiscal year ended May 31, 2026 and represents the income statement activity related to the Legacy Ekso business at ChronoScale classified as held for sale and discontinued operations. Net loss from continuing operations attributable to common stockholders was $249.2 million, or $0.91 per basic and diluted share, for the fiscal year ended May 31, 2026. This compares to a net loss attributable to common stockholders from continuing operations of $233.7 million, or $1.16 per basic and diluted share, for the fiscal year ended May 31, 2025. Net loss from discontinued operations attributable to common stockholders for the fiscal year ended May 31, 2026 was $1.0 million. There was no such activity in the prior fiscal year. Adjusted revenue, a non-GAAP financial measure, was $539.7 million for the fiscal year ended May 31, 2026 compared to $144.2 million for the fiscal year ended May 31, 2025. Adjusted net income from continuing operations attributable to common stockholders, a non-GAAP financial measure, was $36.1 million or $0.11 per diluted share for the fiscal year ended May 31, 2026. This compares to an adjusted net loss attributable to common stockholders of $12.5 million, or $0.06 per basic and diluted share, for the fiscal year ended May 31, 2025. Adjusted EBITDA, a non-GAAP financial measure, was $107.2 million for the fiscal year ended May 31, 2026 compared to an Adjusted EBITDA of $19.6 million for the fiscal year ended May 31, 2025. Net Operating Income, a non-GAAP financial measure, was $90.4 million for the fiscal year ended May 31, 2026. Balance Sheet As of May 31, 2026, the Company had $4.2 billion in cash, cash equivalents, and restricted cash, along with $5.0 billion in debt. Conference Call As previously announced, Applied Digital will host a conference call today, July 27, 2026, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss these results. A question-and-answer session will follow the management’s presentation. Date: Monday, July 27, 2026 Time: 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) North America Dial-In: 1-833-461-5787 International Dial-In: +1 (585) 542-9983 Conference ID: 735983255 The conference call will be broadcast live and available for replay for one year here. Please call the conference telephone number approximately 10 minutes before the start time. An operator will register your name and organization. If you have difficulty connecting with the conference call, please get in touch with Applied Digital’s investor relations team at 1-949-574-3860. About Applied Digital Applied Digital Corporation (Nasdaq: APLD) named Best Data Center in the Americas 2025 by Datacloud - designs, develops, owns, and operates large-scale, purpose-built data centers engineered to support HPC workloads, including AI, machine learning, and other accelerated-compute applications. Headquartered in Dallas, TX, and founded in 2021, the Company combines hyperscale expertise, closed-loop cooling, and rapid deployment capabilities to deliver secure, scalable compute at industry-leading speed and efficiency, while creating economic opportunities in underserved communities through its award-winning Polaris Forge AI Factory model. Find more information at www.applieddigital.com. Follow us on X (formerly Twitter) at @APLDdigital. Forward-Looking Statements This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position, business strategy and objectives and future financing plans. These statements use words, and variations of words, such as "intend," “will,” “continue,” “build,” “future,” “increase,” “drive,” “believe,” “look,” “ahead,” “confident,” “deliver,” “outlook,” “expect,” “project” and “predict.” Other examples of forward-looking statements may include, but are not limited to, (i) statements that reflect perspectives and expectations regarding lease agreements and any current or prospective data center campus development; (ii) statements about the high-performance computing (HPC) industry; (iii) statements of Company plans and objectives, including the Company’s evolving business model, or estimates or predictions of actions by suppliers; (iv) statements of future economic performance; (v) statements of assumptions underlying other statements and statements about the Company or its business; (vi) the Company’s plans to obtain future project financing; and (vii) statements regarding ChronoScale. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections. These risks, uncertainties, and other factors include, among others: our ability to complete construction of our data center campuses as planned; the lead time of customer acquisition and leasing decisions and related internal approval processes; changes to artificial intelligence and HPC infrastructure needs and their impact on future plans; costs related to the HPC operations and strategy; our ability to timely deliver any services required in connection with completion of installation under the lease agreements; our ability to raise additional capital to fund the ongoing datacenter construction and operations; our ability to obtain financing of datacenter leases on acceptable financing terms, or at all; our dependence on principal customers, including our ability to execute and perform our obligations under our leases with key customers; our ability to timely and successfully build new HPC hosting facilities with the appropriate contractual margins and efficiencies; power or other supply disruptions and equipment failures; the inability to comply with regulations, developments and changes in regulations; cash flow and access to capital; availability of financing to continue to grow our business; decline in demand for our products and services; maintenance of third party relationships; conditions in the debt and equity capital markets. A further list and description of these risks, uncertainties and other factors can be found in the Company’s most recently filed Annual Report on Form 10-K and Quarterly Report on Form 10-Q, including in the sections captioned “Forward-Looking Statements” and “Risk Factors,” and in the Company’s subsequent filings with the Securities and Exchange Commission. Copies of these filings are available online at www.sec.gov, on the Company’s website (www.applieddigital.com) under “Investors,” or on request from the Company. Information in this earnings release is as of the dates and time periods indicated herein, and the Company does not undertake to update any of the information contained in these materials, except as required by law. Use and Reconciliation of Non-GAAP Financial Measures To supplement our 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 its 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 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 earnings release 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 revenue is total revenue excluding total revenue from ChronoScale. Adjusted Operating Income, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per Diluted Share “Adjusted operating income” and “Adjusted net income (loss) from continuing operations attributable to common stockholders” are non-GAAP financial measures that represent operating income and net income (loss) from operations excluding ChronoScale, respectively. Adjusted operating income is Operating loss excluding operating loss from ChronoScale, stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, loss on abandonment of assets, (gain) loss on classification of held for sale, accelerated depreciation and amortization, loss on legal settlement, restructuring expenses and other non-recurring expenses that management believes are not representative of our expected ongoing costs. Adjusted net income (loss) is Adjusted operating income further adjusted for interest expense directly attributable to ChronoScale, gain on change in fair value of derivatives, gain on change in fair value of investments, loss on conversion of debt, loss on change in fair value of debt, loss on change in fair value of related party debt, loss on change in fair value of warrants, loss on change in fair value of warrants issued to related parties, loss on extinguishment of debt and loss on extinguishment of related party debt. We define “Adjusted net income (loss) per diluted share” as Adjusted net income (loss) divided by weighted average diluted share count. EBITDA and Adjusted EBITDA “EBITDA” is defined as earnings before interest expense, net, income tax expense, and depreciation and amortization and excluding the results of ChronoScale. “Adjusted EBITDA” also excludes results of ChronoScale and is defined as EBITDA adjusted for stock-based compensation, non-recurring repair expenses, diligence, acquisition, disposition and integration expenses, litigation expenses, (gain) loss on classification as held for sale, loss on abandonment of assets, gain on change in fair value of derivatives, gain on change in fair value of investments, loss on conversion of debt, loss on change in fair value of debt, loss on change in fair value of related party debt, loss on change in fair value of warrants, loss on change in fair value of warrants issued to related parties, loss on extinguishment of debt and loss on extinguishment of related party debt, loss on legal settlement, 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 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. (1) Includes a related party loan receivable of $58.6 million as of May 31, 2026. (1) Includes related party selling, general and administrative expense of $0.1 million for each of the three months ended May 31, 2026 and May 31, 2025, respectively, and $0.3 million for each of the fiscal years ended May 31, 2026 and May 31, 2025, respectively. (2) For the fiscal year ended May 31, 2026, amount includes a loss on classification of held for sale of $59.7 million representing the write down of our cloud services business' (the "Cloud Services Business") assets to their carrying value as of February 15, 2026 when it no longer qualified as held for sale. For the fiscal year ended May 31, 2025, amount includes $25.0 million received in connection with the sale of our Garden City facility once conditional approval requirements were met and escrowed funds were released. (3) For the three months and fiscal year ended May 31, 2026, amount includes related party income of $0.1 million. (1) Represents costs incurred for the non-recurring repair and replacement of equipment at our data center facilities.(2) Represents legal, accounting and consulting costs incurred in association with certain discrete transactions and projects.(3) 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.(4) Represents the acceleration of expense related to assets that were abandoned by us due to operational failure or other reasons. Depreciation and amortization in this amount is included in Depreciation and Amortization expense within our calculation of EBITDA, and therefore is not added back as a management adjustment in our calculation of Adjusted EBITDA.(5) Represents non-recurring expenses associated with employee separations.(6) Represents expenses that are not representative of our expected ongoing costs.(7) Potentially dilutive securities or other contracts to issue common stock are only included for each period if the effect is dilutive to Adjusted net income (loss) from continuing operations per diluted share.
TranscriptFY2025 Q22025-07-28FY2025 Q2 earnings call transcript
Earnings source - 47 paragraphs
FY2025 Q2 earnings call transcript
Greetings and welcome to the Ekso Bionics Second Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. It is now my pleasure to introduce your host, Stephen Kilmer, Investor Relations. Thank you. You may begin.
Thank you, operator, and good afternoon, everyone. Earlier today, Ekso Bionics released financial results for the second quarter ended June 30, 2025. A copy of the press release is available on our website. I would like to point out that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including statements regarding our business strategy, future financial or operational expectations, our ability to close on delayed customer sales, our expectations of the regulatory landscape governing our products and operations, are based upon management's current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with the company's businesses, please see its filings with the Securities and Exchange Commission. Ekso Bionics disclaims any obligation, except as required by law, to update or revise any financial or operational projections, its regulatory outlook, or other forward-looking statements, whether because of new information, future events, or otherwise. Any forward-looking statements made on this call speak only as of the date of this call. Representing Ekso Bionics today are Scott Davis, our Chief Executive Officer, Jerome Wong, our Chief Financial Officer, and Jason Jones, our Chief Operating Officer. With that said, I will now turn the call over to Jerome.
Thank you, Steve. Good afternoon, everyone, and welcome to our second quarter 2025 conference call. On behalf of the management team and everyone at Ekso Bionics, I would like to thank you for your interest in our company. For those of you who are shareholders, we appreciate your support. For the benefit of those who are new to the Ekso Bionics story, I would like to take a moment to summarize our business. Ekso designs, develops, and markets exoskeleton products that augment human strength, endurance, and mobility. The primary end market for exoskeleton technology is healthcare, where our technology primarily serves people with physical disabilities or impairment in both physical rehabilitation and mobility. We operate as one operating and reportable segment with two markets. Enterprise health and personal health.
Our legacy enterprise health product consists mainly of our EksoNR device, which is a rare wearable robotic exoskeleton specifically designed to be used in a rehabilitation setting to assist individuals recovering from both acute and chronic conditions. Our newer Ekso Indego Personal device is a wearable lower extremity powered exoskeleton that enables certain individuals living with spinal cord injuries with the ability to stand and walk independently. Both products also include the sale of support and maintenance contracts. I will turn this call over to Scott in a moment for an update on our commercial activities and growth plans. However, before I do, I would like to provide a brief summary of our financial results. To streamline things, all of the numbers I will refer to have been rounded, so they are approximate. As we mentioned in today's press release, we experienced abnormal weakness in the second quarter of 2025.
The company recorded revenue of $2.1 million for the period, compared to $5 million for the second quarter of 2024. This was primarily driven by what we believe are short-term delays in completing certain multi-device enterprise health sales and was offset partially by higher Ekso Indego Personal device sales. As Scott will discuss shortly, we are working to get back on track for the second half of the year and beyond. Gross profit for the second quarter was $800,000, representing a gross margin of approximately 40% compared to a gross profit of $2.6 million and a gross margin of 53% for the same period of 2024. The change in gross profit was driven by a decrease in revenues associated with our enterprise health devices, partially offset by an increase in revenues associated with Ekso Indego Personal devices and a reduction in service costs.
The decrease in gross margin was primarily driven by fixed cost of goods in relation to the decrease of enterprise health device sales, lower margin sales related to increased volume through distribution, and an increase in shipping costs, partially offset by improved margins in service. Operating expenses for the second quarter of 2025, which consist of R&D, G&A, and sales and marketing expenses, were $4.8 million, a 4% improvement from $5 million for the second quarter of 2024. Net loss applicable to common stockholders for the 2025 second quarter was $2.7 million or $1.24 per basic and diluted share, compared to a net loss of $2.4 million or $1.99 per basic and diluted share for the same period of 2024. As of June 30, 2025, the company had cash and restricted cash of $5.2 million. That is it for my summary of our second quarter 2025 results.
Please see our Form 10-Q filed earlier today for further details regarding the results. I'll now turn the call over to Scott.
Thank you, Jerome, and good afternoon, everyone. I'll cut to the chase. Our second quarter revenues were disappointing. As Jerome noted, we believe this was a temporary setback driven mostly by short-term delays in completing two significant multi-unit enterprise health device sales that were anticipated in the quarter. As we discussed on our last call, we've also had a small percentage of U.S. customers impacted by loss of federal grants and/or concerns related to economic uncertainties who have pushed their purchases into later 2025 or early 2026. Nevertheless, we don't believe the second quarter revenue shortfall truly reflects the health of our current business, nor our prospects for the future. Several reasons are bolstering our confidence that we can get back on track for the second half of the year and beyond.
First, we're confident that we will be able to close a significant portion of the deferred multi-device enterprise health sales prior to year-end. At the same time, we are capitalizing on continued enterprise health customer demand by recently signing a master subscription agreement with another major integrated delivery network. To help support that, we are constantly looking for ways to help us raise awareness, acceptance, and adoption of our exoskeleton technology within the market. A good recent example is our launch of Ekso University, a new virtual platform providing continuing education courses to physical therapists and physical therapist assistants across the country. While we believe Ekso University can generate incremental revenue for us, the greater value is represented through the program's ability to educate the neurological physical therapy community on a wide range of relevant topics and ever-evolving patient treatment options.
I'm happy to share that we have already delivered our first official CEU certification to a Connecticut-based PT, coincidentally via a course entitled "Benefits of a Personal Exoskeleton." In addition, the general trend of lower but steady growth in our more mature legacy enterprise health business is being increasingly counterweighted by the growth in personal health from sales of the Ekso Indego Personal. To put that into perspective, despite total revenues for the first six months of 2025 being down 38% compared to the same period in 2024, personal health product revenues grew by more than 50%. As I've said in the past, while the majority of our revenue in 2025 is expected to still come from enterprise health, we believe that we will continue to see increasing contribution from our personal health products during the remainder of the year and beyond. There are a few things driving that.
First, as we've discussed in the past, CMS established pricing determination for our Indego Personal exoskeleton in Q2 2024. This regulatory change created a significant opportunity to help Medicare living with a spinal cord injury by removing what has historically been a primary barrier to accessing our exoskeleton. Accordingly, we immediately set out to establish a go-to-market strategy aimed at notifying as many early physician and provider adopters as possible of the new CMS benefit category redetermination and fee schedule listing. Additionally, we began working closely with our extensive network of neurorehabilitation partners across the country, focused on educational efforts and on appropriate patient selection and process for patients prescribed an Ekso Indego Personal for the home and community setting.
With that early work largely completed, we then shifted our primary focus from building awareness and providing customer education to advancing our scalable go-to-market strategy for the personal channel. One of the important changes we made was to engage Priya Healthcare, one of the leaders in market access services, which has been instrumental in the successful commercialization of over 300 medical devices. We are confident we made the right choice in partnering with Priya. Priya has been providing us with invaluable strategic guidance, leveraging its expertise to help us navigate the complexities of coding, coverage, and payment, thereby allowing us to more effectively put Ekso Indego Personal within reach of individuals who need this potentially life-changing, mobility-enhancing technology.
On the distribution front, I'm pleased to report that in the second quarter, we received the first order from National Seating & Mobility, or NSM, our exclusive Ekso Indego Personal device distributor within the complex rehabilitation technology, or CRT, industry in the United States. Also in Q2, we named Bionic P&O, a leading national provider of prosthetic and orthotic solutions, as our first O&P distributor. We're excited that they submitted an additional three patient claims for the Indego Personal exoskeleton to Medicare in the second quarter. Altogether, with Ekso's focused marketing efforts, we've now developed a pipeline of more than 45 Medicare beneficiaries that we believe are qualified candidates for Ekso Indego Personal in 2025. That's up more than 200% from where we were at the end of 2024.
As a reminder, factors considered for the candidates to be represented in our pipeline include, among other things, Medicare enrollment and appropriate indication for use and medical necessity. We again caution that we cannot guarantee that all of our pipeline will result in new claims submissions occur before the end of this year or ultimately be paid. Finally, we continue to innovate. In mid-May, we announced that Ekso joined a select group of medical device companies in the NVIDIA Connect program. NVIDIA Connect brings together emerging and established technology companies to accelerate product development and increase cost efficiency. Members gain specialized training, priority engineering support, and exclusive access to NVIDIA's advanced development kits, GPU platforms, and global ecosystem, helping facilitate the program members' ability to deliver next-generation solutions in AI and high-performance computing.
While we believe our advanced exoskeleton technology platforms are already state-of-the-art, we're working to use the valuable tools and resources provided through this prestigious NVIDIA program to support a new strategic initiative to build a proprietary foundation model for human motion in physical rehabilitation and to help develop and integrate related new AI capabilities across our portfolio of enterprise health and personal health devices. This aligns squarely with our mission of improving health and quality of life with advanced robotics designed to enhance, amplify, and restore human function. We are walking the talk. Indeed, just 34 calendar days after announcing our acceptance into the NVIDIA Connect program, we revealed initial proof of concept in the form of a new AI voice agent designed for intelligent control of our legacy EksoNR device.
Ekso Voice Agent is being implemented on NVIDIA Jetson Orin Nano hardware developed with the NVIDIA Jetpack SDK and OpenAI tools for voice recognition. The proof of concept is configured as an edge AI system, which can run with or without connection to the cloud. While this initial proof of concept was with the EksoNR, integration of new AI-powered capabilities into both our enterprise and personal health devices is a key pillar of our growth strategy. We are in the fortunate and enviable position of already having a repository consisting of approximately 350,000 patient sessions and over 15 million step-by-step data points, and that is growing by an additional 60,000 patient steps on average every day. The aim is to develop AI tools designed to leverage this proprietary data in order to help transform human-robot interaction.
In other words, while the AI hardware is coming from NVIDIA and others, and much of the software is open source, we believe our large and growing database sets us apart, making us uniquely positioned to utilize AI to advance exoskeleton technology platforms. In summary, the second quarter was abnormally weak from a revenue perspective, and that was primarily due to what we believe are short-term delays in completing some multi-device enterprise health sales. We are working diligently to get back on track for the second half of the year and beyond. At the same time, as we work to capture deferred sales and capitalize on anticipated customer demand in the legacy enterprise health market, we are continuing to build and execute on a scalable go-to-market strategy for Ekso Indego Personal, supported by established and new industry-leading DME, O&P, and market access partners.
That is driving an increased contribution from our personal health products, which grew by more than 50% year-over-year in the first half of 2025. Finally, we've launched a strategic initiative aimed at building a proprietary foundation model for human motion in physical rehabilitation and to help develop and integrate related new AI capabilities across our portfolio of enterprise health and personal health devices. We believe AI is a necessary component to enable broader adoption of exoskeletons for personal use. This ends our prepared remarks for today, and with that, we are happy to take any questions you might have. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Ben Haynor with Lake Street. Please proceed with your question.
Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, on the deferred sales that you guys have on the enterprise health side, it sounds like a lot of them are potentially going to fall into the current quarter. Can you quantify how much is deferred there? How much do you expect kind of the back half of the year?
Hello, Ben. Thanks for your question. As we had indicated, we had two multi-unit device sales that fell out of Q2. To shed a little bit more light on those, there were two. One was an international order that was delayed due to some regulatory challenges that we expect to occur in this calendar year. We have a strong belief that that will happen within 2025. The other was a North American IDN. This was a sizable multi-unit order that was comprised of renewals as well as new hospitals coming online. We believe that will occur in the third quarter, in the quarter that we're in today. That one is in the million dollar range. The other, between the two, it was about $1.4 million.
Okay, got it. That's definitely helpful. On the Ekso Indego Personal, I know that's obviously growing at a faster rate than you expect the enterprise health business to grow. Eventually it'll overtake the enterprise health business. Do you have any sense on what's your thinking, I guess, on when that sort of flip could happen?
That's a great question and something that we've been working really hard on as a management team, as a company. All of the work that we've done internally with our own resources, as well as working with Priya Healthcare, the onboarding of our two new distribution partners in the space for scalable go-to-market strategy, the work we've done to increase the marketing efforts to continue to increase leads and build pipeline demand, as well as the business development work we continue to do, looking for other national O&P providers to work with. We're already beginning to see the positive impacts of that work. In addition to that, we're doing a lot of work within the VA systems to increase those opportunities as well as workers' compensation.
As we're looking at that sort of blended ecosystem, and we look back at 2024, that represented approximately 10% of our revenue for the company. As we're looking at 2025, we believe that that will be closer to 25% contribution to our revenue, total revenue. As we move forward and cross into 2027, we believe that it will begin to overtake what we're seeing on enterprise.
Okay, so it's all a couple of years out, maybe 18 months from today. That's good. Just kind of thinking about Priya and just kind of curious, I mean, it does sound like you've really nailed down the patient profile. You know, how has that, how has nailing down the process come along? You know, have you been before any more ALJs? Learned anything new that's worth noting? Kind of anything on that front?
Yeah, I mean, that remains an area of focus for us as we work through the appeals process. We have a couple of patient claims that will go before ALJ in Q3. In Q2, we had one that went before ALJ that was remanded to a lower level in CMS and ultimately approved. We are seeing positive outcomes. The important part here is that we're being reaffirmed that these are medically necessary. They are getting reimbursed when we're able to get in front of these administrative law judges. They can really understand this a bit better. This is a ramp-up period.
What we're being very cautious with in working with our DME partners and O&P partners is to ensure that we're level-setting expectations with patients and healthcare providers and ensuring that we're putting forth the best claims possible so that we can pave a way to these happening on a more routine basis. With any new process, it takes a little time to climb it. We believe that we're starting to make some good progress.
Okay, got it. Lastly for me on Ekso University, is that going to be something that is solely focused on exoskeletons, or are there additional modules or CE content that we're going to be putting in there?
Yeah, great question. We see that as just an area that can really focus in on neurorehabilitation. Our first courses are centered more around exoskeleton technology, but we expect that they'll run the gamut in the latest in neurorehabilitation process and procedures that we're seeing out there. We have a rich population of neuro-PTs that are part of our ecosystem that are contributors as we're developing these materials. We have a lot to pull from as we're putting these courses together. For us, it's purely about education. If we can show, demonstrate, and expose more people to what's possible with technology, all different types of technology, then we believe it benefits the entire industry.
Okay, got it. Thanks for all the color, gentlemen. That's it for me.
Thanks, Ben.
Thank you. Our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Please proceed with your question.
Thank you. Good afternoon, Scott and Jerome. Sorry, I've been on the call on and off. Just to understand the new collaborations that you generated to ensure a smooth commercialization of the personal devices, how is that working out? Do you know when you think that the growth will be meaningful based on those new relationships just on the personal before we get into the enterprise? I have a couple of questions there.
Sure. Thanks, RK. As we talked about today in our comments, and as I had previously said, we're working diligently with industry partners, Priya Healthcare, on just helping us navigate the nuances of market access and working with CMS, and not only us, but also being a resource for our partners, for our distribution partners, whether on the complex rehabilitation technology side or on the O&P side, helping with the appeals process and really navigate and help us sort of build this new road brick by brick. That has been helping us tremendously. The partnerships that we have developed with Bionic P&O and with NSM and with other large O&P providers that we're also building relationships with, we see that progressing quarter over quarter.
What starts slow with initial discovery and then getting those first patients through and initial claims submitted to more claims submitted the following quarter, we're seeing the progression. We're going from one to a handful to more through these partners each quarter. Today, a lot of the leads that we've been developing have been ones that Ekso Bionics has created, but we're already beginning to see a bit of a shift through the ecosystem where, as we're out doing trainings and onboardings at the various rehabilitation sites, the sites themselves have patients that they want to bring in. These are our existing, maybe legacy customers who are using, who have used our technology for years where the training happens, are beginning to identify some individuals who could use the technology, as well as our distribution partners through their own connections.
We see this as a lead source that's just beginning to develop. This truly is what we believe is a scalable process working with best-in-breed providers, all focused on what we do best to bring this technology out to the people who can use it most.
Okay, great. On the enterprise sales, what do you think needs to be done immediately to manage, you know, to get back to growth, and how long do you think it'll take?
Yeah, as I had said, we are certainly disappointed with the results of Q2. To get back on track, the good news in that is that we had a number of devices and two large deals in particular that are still on the table, very much on the table, and the North American IDN, which was over $1 million in Q2, which we believe has potential for even more in Q3. We are bullish that we could pull that in in Q3. We don't view that as a lost deal, rather as one that's deferred. We are continuing to work in our rich pipeline that we've developed over the years to help enterprise customers who maybe have had some budget interruptions, whether it's a loss of a federal grant or just concerns in their budget.
We're working with them to identify potentially another option, other options for being able to onboard the technology that maybe isn't leveraging a capital budget or leveraging a grant. We are actually working with a new third-party financial partner that can also help these individuals switch this into their operational budgets from their capital budgets. We are, I will say, pulling out all the stops to help the enterprise customers who want to use this technology to treat patients still have the wherewithal to do that, even with some concerns over their 2025 budgets.
Thank you for that. The last question from me is, you know, so far we have been talking about enterprise, potential enterprise clients who are being impacted by the loss of federal grants. The corollary question is, how many of the current enterprise clients are actually utilizing federal grants? You know, how sure are we that those things will get extended over the next contract period?
Yeah, in general, we don't have a magic number on how many hospitals go for federal grants for this technology. I think if we look historically from a pure revenue standpoint in North America, I would approximate 10% of our enterprise customers rely on federal or outside grants to fund their technology. I think that's a conservative estimate.
Okay. Thanks. Thanks for taking all my questions.
Thank you, RK.
Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to CEO Scott Davis for closing remarks.
All right. Thank you, operator, and thank you to everyone for joining us today. We look forward to updating you as we continue to progress.
Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Have a great day.