Nebius Group N.V.(US:NBIS)2025-11-11 14:02Financial Data and Key Metrics Changes - Q3 group revenue reached $146 million, representing a year-over-year increase of nearly 355% and a quarter-over-quarter increase of 39% [7] - Annualized run rate revenue for the core business at the end of September was $551 million, with the core infrastructure business growing 400% year-over-year and 40% sequentially [7][9] - Adjusted EBITDA margin for the core infrastructure business expanded to nearly 19% quarter-over-quarter [7] Business Line Data and Key Metrics Changes - The core infrastructure business accounted for nearly 90% of total revenue, with significant growth attributed to capacity constraints limiting revenue growth [7][9] - The company sold out all available capacity in Q3, indicating strong demand and a bottleneck in revenue growth due to capacity limitations [2][4] Market Data and Key Metrics Changes - The company signed a major deal with Meta valued at approximately $3 billion over the next five years, following a previous deal with Microsoft valued between $17.4 billion and $19.4 billion [3][12] - The demand environment is characterized by overwhelming interest in capacity, with a 70% quarter-on-quarter expansion in pipeline generation [22] Company Strategy and Development Direction - The company is focused on building its core AI cloud business while also pursuing large long-term deals to support growth [3][4] - Plans to grow contracted power to 2.5 gigawatts by the end of 2026, up from 1 gigawatt previously discussed, with significant investments in capacity and infrastructure [4][10] - The launch of new enterprise-ready cloud platform version 3.0, called Aether, and the inference platform Nebius Token Factory aims to expand the addressable market [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving an annualized run rate revenue of $7 billion to $9 billion by the end of 2026, driven by strong demand and capacity growth [6][17] - The company remains focused on maintaining healthy margins and a sustainable business model while navigating the rapid growth in the AI sector [42][63] Other Important Information - The company is raising its 2025 CapEx guidance from approximately $2 billion to around $5 billion to support aggressive growth plans [10] - The company is actively evaluating financing options, including corporate debt, asset-backed financing, and equity, to support its growth strategy [8][32] Q&A Session Summary Question: Can you tell us more about the new Meta deal? - The Meta deal is approximately $3 billion, limited by available capacity, indicating strong demand for larger contracts [12][13] Question: What is included in the $7 billion-$9 billion ARR target? - The target includes contracted power and existing capacity, with more than half already booked [15][17] Question: What is the timeline for infrastructure build-out? - The company is ramping up capacity in various regions, with new data centers expected to come online in 2026 [18][19] Question: How will Microsoft and Meta revenue contribute in 2025? - Microsoft revenue will ramp up in 2026, while Meta is expected to reach full revenue run rate in 2026 [21] Question: What does the demand environment look like? - Demand is accelerating, with a 70% increase in pipeline generation in Q3 [22] Question: Why is incremental ARR down? - Incremental ARR decreased due to capacity constraints, but is expected to increase significantly in Q4 [24] Question: How is the U.K. facility progressing? - The U.K. facility is progressing well, with strong demand leading to pre-sold capacity [35][36] Question: What is the company's approach to financing? - The company is focused on maintaining a disciplined capital structure while exploring various financing options [32][34] Question: How is the enterprise initiative ramping up? - The company is making strides in becoming enterprise-ready with new product launches and compliance certifications [48]