Nebius lifts spending to $27 billion as capacity delays push revenue into 2027

Nebius reported annualized run-rate revenue of $6.4 billion at the end of September, up from $3.0 billion at the end of June. The delay affects its next milestone: it previously guided to annualized run-rate revenue of $7 billion–$9 billion in December 2026; it now expects to exceed $7 billion in February 2027, before New Jersey reaches full capacity. The revised forecast exceeds the old range's lower threshold, without reiterating its upper end.

Company-reported Q3 revenue included approximately $325 million from an initial asset-light partnership phase. The contribution is included in total revenue; the bars are not additive. Source: Nebius financial results.

What the revenue beat contains

The unaudited financial results show revenue of $980.8 million for the quarter ended September 30, up 571% from a year earlier. That exceeded the $907.5 million LSEG analyst average cited in a report on the results. The same report put analysts' full-year revenue expectation at $3.37 billion, above the company's revised outlook near $3 billion.

Nebius disclosed in its shareholder letter that the quarterly total included approximately $325 million of non-recurring revenue from the initial phase of an asset-light partnership. Under this model, partners fund capacity using Nebius architecture and its cloud platform. Nebius earns revenue both when it enables that architecture and platform and as the capacity comes online.

That initial contribution represents about 33% of quarterly revenue, calculated as $325 million divided by $980.8 million. Management expects such activities to become more regular as the partnership business grows, and says partner capacity should begin contributing at a small scale in 2027. The quarter's recognized revenue should therefore be distinguished from capacity already operating for customers.

The AI cloud business supplied $973.8 million, approximately 99% of group revenue. Nebius sells computing infrastructure, cloud software and managed AI services spanning model training, post-training and inference—the use of developed models to produce outputs.

Founder and chief executive Arkady Volozh, a Yandex cofounder, leads the expansion. The group's predecessor, Dutch parent company Yandex N.V., announced in July 2024 that it had completed the divestment of its Russian businesses and planned to develop the retained operations under the Nebius Group name. Its subsequent launch announcement described a research and development backbone of more than 1,000 AI engineers. The current expansion builds on that inherited technical base.

The business also extends beyond selling dedicated compute. Nebius says Token Factory, its managed service for running open-weight and custom models, is approaching a multi-hundred-million-dollar run rate. It also disclosed first multi-year agreements with enterprise data and AI platforms including Databricks and Datadog. Management argues that selling infrastructure and managed services together lets it earn more revenue from each megawatt. That is its commercial case for the platform, rather than an independently verified comparison with rivals.

Specialist AI cloud rival CoreWeave offers an alternative in the same market. An account of the sector's earnings reaction said CoreWeave’s management raised its 2026 revenue guidance to $13.0 billion–$13.3 billion. That is a different period from Nebius's $12 billion–$13 billion preliminary forecast for 2027. The figures indicate the rival's scale, rather than a like-for-like comparison of growth or profitability.

The premarket price reports differ: one recorded Nebius down 9%, while the other described shares marginally higher in volatile trading. Both followed a gain of more than 15% on Wednesday after CoreWeave's results. Neither establishes the closing reaction to Nebius's earnings. The reports also place the results against a recent neocloud selloff driven by investor concerns about debt and access to funding.

Company-reported outlook: prepayments and asset-backed financing against existing investment-grade customer contracts are expected to fund 75%–85% of planned 2027 capital expenditure. Source: Nebius shareholder letter.

Better customer terms help fund a much larger build

Nebius says customers committed more than $12 billion of contract value since the start of Q3. Its financial update puts remaining performance obligations at $38.7 billion at quarter-end, up 3% from $37.5 billion at the end of June. These are future contracted obligations, distinct from revenue earned or cash collected during the quarter.

The strongest counterweight to the funding risk is improved customer terms. Prepayments on Q3 agreements covered more than 100% of associated capital expenditure, including construction and networking, versus 50%–60% in Q2, Nebius says. Its coverage measure excludes deals shorter than a year; it does not mean all company spending is prepaid. More than 90% of contract value signed in Q3 carried a prepayment.

For comparable one-to-three-year deals, management's expected payback period shortened from one year and ten months to one year and seven months. This covers operating and capital costs on a revenue basis, excluding prepayment benefits. Nebius attributes the improvement primarily to higher contracted pricing, with average prices per GPU-hour more than 20% above Q2. Its new five-year AI cloud agreements were expansions by existing customers on new capacity.

For 2027, Nebius forecasts $12 billion–$13 billion of revenue and $40 billion–$45 billion of capital expenditure. The spending develops infrastructure that can earn revenue across multiple years; comparing it with one year's sales does not measure lifetime project returns.

Management expects $10 billion in committed customer prepayments in 2026 and $17 billion–$20 billion in 2027. Together with asset-backed financing against existing investment-grade customer contracts, it expects prepayments to fund 75%–85% of next year's capital spending. That coverage combines customer cash with borrowing. Even on those assumptions, 15%–25% of the spending would need other funding, for which the company lists its balance sheet, further prepayments, debt and equity among its options.

The company cites a July facility as a precedent: $775 million priced at the SOFR interest-rate benchmark plus 2.50%, secured against long-term customer agreements. It says agreements with Microsoft and Meta can be financed under the same framework. This is management's financing expectation, rather than evidence that every planned loan has closed.

External capital already plays a large role. Nebius raised $5.75 billion of convertible notes in August and approximately $1 billion of net proceeds from its at-the-market share program in Q3. It added a $3.5 billion senior secured Citi facility in October. At September 30, it held $7.4 billion in cash and cash equivalents and approximately $14.2 billion in current and non-current debt combined.

Cash collection is another test. Operating activities used $273 million in Q3 despite generating $4.23 billion over the first nine months. The quarterly cash-flow statement includes a negative $3.76 billion adjustment for receivables and a positive $3.43 billion adjustment for deferred revenue. Contract commitments and advance billing therefore need to be distinguished from cash available to pay for construction and hardware. Quarterly capital expenditure was approximately $7.3 billion.

Company-reported Q3 adjusted EBITDA was positive while continuing operations recorded a net loss. Adjusted EBITDA excludes depreciation, interest and other items; these bars show separate measures. Source: Nebius financial results.

The next test is delivered capacity and profit after financing costs

Nebius says it has more than 4 gigawatts of contracted power and still targets 5 gigawatts by year-end. Separately, it expects to bring more than 1 gigawatt of new capacity online annually. Securing power is an input to construction, rather than proof of computing capacity already serving customers.

Management expects owned sites in Missouri, Finland and Alabama to deploy capacity in 2027. Their eventual combined scale exceeds 3 gigawatts, to be delivered over three to three-and-a-half years. It says the power and components planned for 2027 are secured, and that its owned sites are on time or ahead of schedule. Management argues that ownership improves control over construction and economics. That is a material counterpoint to the third-party delays, but remains a company assessment of projects still being developed.

From 2027, Nebius plans to guide on revenue, pre-tax earnings and capacity instead of annualized run-rate revenue. Management argues that annualizing one month poorly represents a business with uneven partnership revenue.

Its target is pre-tax breakeven in Q4 2027, after financing costs and assuming a five-year depreciation life for compute. Nebius extended the useful life of server and network equipment from four years before 2026 to five years, citing usage patterns and utilization commitments. That accounting assumption affects when hardware costs are recognized.

The results show a substantial difference between adjusted earnings and profit. In Q3, AI-cloud adjusted EBITDA was $518.2 million, or 53.2% of that business's revenue. Group adjusted EBITDA was $465.8 million, while operating profit was $50.4 million and the net loss from continuing operations was $37.5 million. Adjusted EBITDA excludes depreciation, interest, share-based compensation and other items; group depreciation and amortization was $354.7 million and interest expense was $112.5 million.

The next evidence needed is delivery of the delayed Microsoft capacity, collection of committed prepayments and completion of borrowing on the expected terms. Those results will show whether stronger customer commitments can support the construction schedule and carry Nebius toward profit after the costs of hardware and financing.