Applied Digital Corporation stock research
FY2025 Q4
Applied Digital (APLD) Gross Margin — Quarter Ended May 31, 2025
Revenue decreased sharply from the prior quarter while cost of revenue increased relative to the year-ago quarter, resulting in a gross loss and a deeply negative gross margin. Gross profit turned negative as cost of revenue exceeded revenue by a wide margin.
Gross margin takeaway
Quarter ended May 31, 2025 · FY2025 Q4
Revenue decreased sharply from the prior quarter while cost of revenue increased relative to the year-ago quarter, resulting in a gross loss and a deeply negative gross margin. Gross profit turned negative as cost of revenue exceeded revenue by a wide margin.
- The strongest observable margin driver is the contrast between cost of revenue and revenue—cost of revenue was substantially larger than revenue, pulling gross margin deeply negative. This relationship indicates that the cost structure was not aligned with revenue generation in the current quarter.
- Compared to the immediately preceding quarter, gross margin weakened sharply from positive to negative, as revenue fell and cost of revenue rose. Versus the same quarter one year earlier, gross margin also weakened, moving from strongly positive to deeply negative, driven by a higher cost of revenue relative to revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
-83.5%
Gross profit
$27.8M
Revenue
-$33.3M
Cost of revenue
-$61.1M
Quarter-over-quarter change
-90.7 pts
Year-over-year change
-152.3 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 |
|---|---|---|---|---|
| Aug 31, 2024 | $34.8M | $12.1M | $22.7M | 34.7% |
| Nov 30, 2024 | $36.2M | $13.5M | $22.7M | 37.3% |
| Feb 28, 2025 | $52.9M | $3.8M | $49.1M | 7.1% |
| May 31, 2025 | -$33.3M | $27.8M | -$61.1M | -83.5% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Feb 28, 2025
-90.7 pts
Year-over-year change
May 31, 2024
-152.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the contrast between cost of revenue and revenue—cost of revenue was substantially larger than revenue, pulling gross margin deeply negative. This relationship indicates that the cost structure was not aligned with revenue generation in the current quarter.
Compared to the immediately preceding quarter, gross margin weakened sharply from positive to negative, as revenue fell and cost of revenue rose. Versus the same quarter one year earlier, gross margin also weakened, moving from strongly positive to deeply negative, driven by a higher cost of revenue relative to revenue.
The relationship between revenue and cost of revenue should be monitored for whether cost of revenue can be brought below revenue, given the current quarter’s large gross loss.