Nebius Group N.V.(NBIS) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2025, the company reported group revenue of $228 million, representing a year-over-year growth of 547% and a quarter-over-quarter growth of 56% [10] - The annualized run rate revenue for the core AI cloud business reached $1.2 billion at the end of December, exceeding the high end of the Q3 guidance range of $1.1 billion [10][11] - Group adjusted EBITDA margin improved from 19% in Q3 to 24% in Q4, with positive adjusted EBITDA achieved at the group level [11][12] Business Line Data and Key Metrics Changes - The core AI cloud business revenue grew 830% year-over-year and 63% quarter-over-quarter, driven by high utilization and strong pricing [11] - The average contract duration for new cloud customers increased by 50%, indicating a growing commitment from clients [5][25] Market Data and Key Metrics Changes - The company sold out of capacity in Q3 and Q4 of 2025, with demand continuing to exceed available capacity [4][11] - The company is on track to exceed 3 gigawatts of contracted power by the end of 2026, having already secured over 2 gigawatts as of February [6][12] Company Strategy and Development Direction - The main strategic focus is to scale the core AI cloud business, expanding both organically and through targeted acquisitions [7] - The company plans to invest $16 billion to $20 billion in capital expenditures in 2026 to capture growth opportunities [16][29] 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, citing strong demand and a robust pipeline [8][12] - The company noted that AI startups are evolving into enterprise-scale customers, significantly increasing their demand for compute resources [5][24] Other Important Information - The company announced the acquisition of Tavily, enhancing its platform capabilities and expanding its developer ecosystem [7][66] - The company is exploring various funding options, including corporate debt and asset-backed financing, to support its growth plans [17][29] Q&A Session Summary Question: What gives you conviction that the demand for AI will continue to justify these investments? - Management highlighted the ongoing conversations with large clients about expanding capacity and the growth of AI startups into real enterprises, indicating strong demand signals across sectors [21][24] Question: How are you thinking through to meet the expectations for CapEx? - The COO stated that cash flows from long-term contracts will finance around 60% of the CapEx needs, with plans to optimize the capital structure by incorporating some debt [28][29] Question: Can you help us bridge to the 3 GW of contracted power guidance by year-end? - The company is accelerating the build-out and deployment of capacity, with ongoing projects expected to contribute to the contracted power goals [36][38] Question: How should we think about your progress against the $7 billion-$9 billion ARR guide? - Management clarified that the 2026 ARR target is not dependent on new mega deals, as strong pipeline growth and existing customer commitments will drive revenue [44][45] Question: What drove the upside in the December 2025 ARR? - The upside was attributed to solid execution, strong pricing, and utilization, with robust demand trends continuing into Q1 2026 [50][51] Question: How is Nebius handling data center equipment shortages? - The company is managing risks by securing long lead items and diversifying its portfolio of sites to ensure capacity deployment [55][56]