Applied Digital Corporation stock research
FY2024 Q3
Applied Digital (APLD) Gross Margin — Quarter Ended Feb 29, 2024
In the current quarter, revenue was higher than the prior quarter, but cost of revenue exceeded revenue, resulting in a negative gross profit and a negative gross margin. Compared to the same quarter a year ago, revenue also increased, yet cost of revenue grew more, causing gross margin to decline from positive to negative.
Gross margin takeaway
Quarter ended Feb 29, 2024 · FY2024 Q3
In the current quarter, revenue was higher than the prior quarter, but cost of revenue exceeded revenue, resulting in a negative gross profit and a negative gross margin. Compared to the same quarter a year ago, revenue also increased, yet cost of revenue grew more, causing gross margin to decline from positive to negative.
- The strongest observable margin driver is the sharp increase in cost of revenue relative to revenue. In the current quarter, cost of revenue surpassed revenue, reversing the positive gross profit seen in both the prior quarter and the year-ago quarter.
- Compared to the immediately preceding quarter, gross margin weakened from positive to negative, as cost of revenue increased substantially while revenue rose only slightly. Relative to the same quarter one year earlier, gross margin also declined from positive to negative, with revenue growth outpaced by a larger increase in cost of revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
-8.6%
Gross profit
-$3.7M
Revenue
$43.3M
Cost of revenue
$47.1M
Quarter-over-quarter change
-38.0 pts
Year-over-year change
-33.8 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| May 31, 2023 | $22.0M | $6.1M | $15.9M | 27.6% |
| Aug 31, 2023 | $36.3M | $11.1M | $25.2M | 30.6% |
| Nov 30, 2023 | $42.2M | $12.4M | $29.8M | 29.5% |
| Feb 29, 2024 | $43.3M | -$3.7M | $47.1M | -8.6% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Nov 30, 2023
-38.0 pts
Year-over-year change
Feb 28, 2023
-33.8 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the sharp increase in cost of revenue relative to revenue. In the current quarter, cost of revenue surpassed revenue, reversing the positive gross profit seen in both the prior quarter and the year-ago quarter.
Compared to the immediately preceding quarter, gross margin weakened from positive to negative, as cost of revenue increased substantially while revenue rose only slightly. Relative to the same quarter one year earlier, gross margin also declined from positive to negative, with revenue growth outpaced by a larger increase in cost of revenue.
Monitor the trend of cost of revenue relative to revenue in subsequent quarters, as it has become the primary factor driving gross margin.