Nebius Group NV (NBIS) Q2 2025 Earnings Call Highlights: Surging Revenue and Strategic ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Nebius Group NV (NASDAQ:NBIS) more than doubled its revenue and became EBITDA positive in its core AI infrastructure business ahead of projections.
The company is aggressively expanding its data center capacity, expecting to secure 220 megawatts of connected power by the end of the year.
Nebius Group NV (NASDAQ:NBIS) has raised over $4 billion in capital and has access to potentially billions more through non-core businesses and equity stakes.
The company reported a 625% year-over-year increase in revenue, driven by strong demand for its AI cloud infrastructure.
Nebius Group NV (NASDAQ:NBIS) is expanding its customer base, gaining traction with large global technology customers like Cloudflare, Prosos, and Shopify.
Negative Points
The company is facing supply constraints, having been oversold on previous generation hoppers, which may limit growth until new GPUs are available.
Despite positive EBITDA in the core business, the overall group is expected to remain EBITDA negative for the full year.
Tariffs imposed by the US could potentially impact business margins, although the exact effects are still uncertain.
The company needs to raise significant capital to achieve its expansion plans, which may depend on market conditions.
Nebius Group NV (NASDAQ:NBIS) has not yet secured large multi-year deals with hyperscalers, which could be crucial for future growth.
Q & A Highlights
Warning! GuruFocus has detected 6 Warning Signs with NBIS.
Q: Can you discuss the overall demand environment and how it looks as we move into the second half of the year? A: The demand environment in Q2 was very strong, with peak utilization by the end of the quarter. As we bring on larger clusters, we can attract new large customers, indicating a growing market opportunity. If we had more capacity in Q2, we likely would have sold more. This trend is continuing into the current quarter. - Mark, Chief Revenue Officer
Q: How should we think about adjusted EBITDA for the core business and the whole group going forward? A: We are pleased to report that our core business achieved adjusted EBITDA profitability ahead of guidance. We expect the core business to remain positive throughout the year. At the group level, we anticipate turning adjusted EBITDA positive by the end of the year, although it will remain negative for the full year. We expect group adjusted EBITDA to be positive starting next year. - Daddo Alonso, CFO
Q: Can you provide an update on ARR and the dynamics around it for the year? A: We saw momentum in Q2, with annualized run rate revenue growing from $249 million in March to $430 million in June. While we don't provide monthly ARR updates, this positive trajectory continued into July. A significant portion of our increased annualized revenue guidance is already under contract, giving us strong visibility. We are confident in delivering on the revised ARR guidance. - Daddo Alonso, CFO
Q: Why is there an increase in ARR guidance but no change to revenue guidance? A: The increase in ARR guidance reflects strong demand and the effective delivery of additional GPU capacity later this year. Much of this capacity will come online by the end of the year, impacting ARR more than within-year revenue. This timing dynamic is why we are holding our 2025 revenue guidance steady. - Daddo Alonso, CFO
Q: How do you plan to finance the capacity expansion for this year and next year? A: Our business model is working well, and as we bring new capacity online, we can sell it efficiently. We have significant cash on hand and will approach additional capital raising opportunistically, depending on timing and market conditions. Our focus is on securing land and power to reach our 1 gigawatt target. - Daddo Alonso, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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