Nebius Group N.V.(NBIS) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue grew nearly 400% year over year, with an annualized run rate revenue increase of nearly 700% [5] - The company ended the quarter with a solid cash balance of $1.4 billion [5] - April's annualized run rate revenue was $310 million, indicating strong demand continuing into May [16][43] - The company is maintaining its overall revenue guidance for the year in the range of $500 million to $700 million [18] Business Line Data and Key Metrics Changes - Significant progress was made in developing the AI cloud offering, with notable product launches including SLURM-based cluster upgrades and enhanced object storage [8][9] - The company reported a 5% improvement in available nodes for commercial use due to infrastructure enhancements [8] - New partnerships were announced with NVIDIA and other industry leaders, enhancing the company's technology stack [6][12] Market Data and Key Metrics Changes - The demand environment for AI compute remains robust, with strong sales momentum continuing into Q2 [16] - The company is expanding its capacity footprint globally, with new data centers in the US, Europe, and the Middle East [5][6] Company Strategy and Development Direction - The company aims to build a robust AI cloud infrastructure to serve a wide variety of customers, including tech, media, entertainment, and life sciences [14][15] - Future growth is expected to come from AI-native companies, enterprise clients, and national AI projects [58][60][62] - The company plans to achieve mid-single-digit billions in revenue in the midterm, with a focus on building out data center capacity [21][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive adjusted EBITDA in the second half of the year, with a focus on profitability [46][47] - The company anticipates medium-term EBIT margins to range from 20% to 30% as the AI cloud business scales [23] - Management highlighted the importance of software in driving higher margins and customer retention [24][96] Other Important Information - The company plans to increase CapEx to approximately $2 billion for 2025, up from previous guidance of $1.5 billion [18][19] - The deconsolidation of Teloka will be reflected in the upcoming Q2 earnings report, as the company retains a significant majority economic stake [64] Q&A Session Summary Question: What do you mean by midterm, and what are the building blocks to get there? - The midterm revenue target is several billion dollars over the next few years, with a focus on scaling capacity to support this goal [36] Question: What drove the strength in Q1 ARR, and how do you feel about the full year? - Strong demand for GPUs and improved sales processes contributed to the growth, with continued robust demand expected [40][43] Question: When do you expect to achieve positive adjusted EBITDA? - Positive adjusted EBITDA is expected in the second half of the year, with the core infrastructure business likely reaching it in Q3 [46][47] Question: Can you provide an update on the reasons for the raised CapEx guidance? - The increase is due to some CapEx spending being pushed from Q4 to Q1 and the desire to ramp up capacity in response to demand [48][50] Question: Where do you see future growth in this business? - Future growth is anticipated from AI-native companies, enterprise clients, and national AI projects, with a focus on expanding data center capacity [58][60][62] Question: How does Teloka deconsolidation impact your business? - Teloka has high growth prospects, and the company retains a significant economic stake, which will be reflected in future financials [64] Question: Can you provide an update on your capacity expansion plans for this year? - The company is aggressively building data center capacity, with several new sites expected to be operational soon [66][68] Question: How is the NVIDIA relationship progressing? - The company has a long-standing collaboration with NVIDIA, with several joint announcements and product offerings expected to drive growth [85][86]