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    NBIS
    Earnings call· Mar 2025(Q1 FY25)

    Nebius Group N.V. Q1 FY25 earnings call NBIS

    May 20, 2025 Source

    Executive summary

    Nebius Group Q1 FY25 — Strong AI Compute Demand Drives Revenue Growth and Capacity Expansion

    Nebius Group reported a robust Q1 FY25, driven by exceptionally strong demand for AI compute, leading to significant revenue and annualized run rate growth. The company is aggressively expanding its global data center capacity and product offerings, while strategically leveraging non-core asset stakes to fund future growth with minimal shareholder dilution. Management anticipates achieving positive adjusted EBITDA in the second half of 2025.

    Highlights

    5

    • Revenue grew nearly 400% year-over-year in Q1 FY25.

    • Annualized run rate revenue grew nearly 700% year-over-year in Q1 FY25.

    • Ended Q1 FY25 with a solid cash balance of $1.4 billion.

    • April's annualized run rate revenue reached $310 million, indicating strong momentum into Q2 FY25.

    • Achieved industry recognition as a "Golden tier" AI cloud provider by SemiAnalysis.

    Concerns

    3

    • Adjusted EBITDA is expected to be negative for the full year 2025.

    • CapEx guidance for 2025 increased to $2 billion from $1.5 billion.

    • Regulatory issues around tariffs are a dynamic situation, though no major impact is currently expected.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full-year 2025 Annualized Run Rate (ARR) Revenue
    $750 million to $1 billion
    high materiality
    High
    Full-year 2025 Total Revenue
    $500 million to $700 million
    high materiality
    High
    Full-year 2025 Adjusted EBITDA
    Negative, turning positive in H2 2025
    high materiality
    High
    Full-year 2025 Capital Expenditure (CapEx)
    Approximately $2 billion
    high materiality
    High
    Midterm Revenue
    Mid-single-digit billions of dollars
    high materiality
    High
    Midterm EBIT Margins
    20% to 30% range
    high materiality
    High
    Longer-term EBIT Margins
    Well north of 30%
    medium materiality
    Medium
    Midterm Data Center Capacity
    More than 1 gigawatt
    high materiality
    High

    Operational metrics

    7
    Cash and investments balance
    $1.4 billion
    Q1 FY25

    Solid cash balance at the end of the quarter.

    Annualized run rate revenue
    $310 million
    April FY25

    April's annualized run rate revenue, confirming strong momentum into Q2.

    Capital expenditure
    $544 million
    Q1 FY25

    CapEx spent in the first quarter towards the overall $2 billion guidance.

    Available nodes for commercial use improvement
    5%
    Q1 FY25

    Improvement due to Slurm-based cluster upgrades reducing downtime.

    ClickHouse minority stake
    28%
    Current

    Minority stake in ClickHouse, a potential source of future capital.

    Toloka economic interest
    Significant majority economic interest
    Current

    Nebius maintains a significant majority economic interest in Toloka, despite voting shares dropping below 50% leading to deconsolidation.

    Depreciation schedule
    Full year
    Current

    Company applies a full-year depreciation schedule, which is considered conservative.

    Industry KPIs

    2
    MetricValueDetails
    Capacity CAPEXover 100megawatts
    Revenue growthnearly 400%%

    Product announcements

    12
    ProductTypeDetails
    Slurm-based cluster upgradesupdate
    MLflow and JupyterLab notebooklaunch
    Enhanced object storageupdate
    Integrations with external AI platformsexpansion
    NVIDIA Blackwell Ultra AI Factory platform supportlaunch
    NVIDIA Dynamolaunch
    NVIDIA Cloud Partner Programmilestone
    NVIDIA DGX Cloud Lepton marketplacelaunch
    Hopper's generation H200 chipsupdate
    Blackwell'sroadmap
    Grace Blackwell family (GB200)roadmap
    Blackwell Ultra generationroadmap

    Deals & partnerships

    5
    NVIDIAStrategic collaboration and investmentLong-standing

    NVIDIA is an investor in Nebius. Partnerships include offering Blackwell Ultra AI Factory platform, being a launch partner for NVIDIA Dynamo, being named a reference platform NVIDIA Cloud Partner, and supporting the NVIDIA DGX Cloud Lepton marketplace at launch.

    Meta and LlamaNew partnerships

    Announced new partnerships to build strong relationships.

    DDN, VAST, WEKAStorage solution providers

    Partnered with three leading storage providers to deliver the best possible experience for customer scenarios with Blackwell generation clusters.

    Uber, Hyundai, Grubhub, RakutenAvride partnerships

    Avride, Nebius's autonomous vehicle team, entered into partnerships with these players, underscoring its strength and placing it among global leaders.

    Bezos Expeditions and Mikhail ParakhinStrategic investors in Toloka

    Strategic investors came into Toloka's structure, expected to help Toloka scale up among top-tier AI data companies globally. Nebius maintains a significant majority economic interest.

    Capital programs

    5
    New Jersey data centerunderway

    Build-to-suit project built by partner according to specifications and design, with first capacity operational in late summer and periodical rollout thereafter.

    Kansas City data centerunderway

    First part is fully operational with Hopper GPUs. Blackwells are deployed in the second part and will be available on the platform later in Q2.

    Iceland data centercompleted

    Fully operational as of Q1 FY25.

    Finland data centerunderway

    Build-out is on track, with the first phase of expansion expected to be operational in late Q3 and the second phase closer to year-end.

    Israel data centerunderway

    New strategic investment, not initially on the roadmap, but seen as a great opportunity in a great market. Capacity will be in place later this year, with revenue contributing in 2026.

    Risks & headwinds

    2
    Adjusted EBITDA profitabilityFY25

    Negative for the full year 2025

    Mitigation: Plan to turn positive in the second half of 2025, with core infrastructure business turning positive in Q3.

    Regulatory issues around tariffsCurrent

    No major changes to expansion plans or significant impact to costs currently expected

    Mitigation: Actively monitoring the dynamic situation; company believes it can navigate the current environment.

    What to watch in Q2 FY25

    5

    Core Infrastructure Adjusted EBITDA

    Q3 FY25
    CurrentNegative
    TargetPositive

    Why it matters

    Indicates the core business's path to profitability ahead of the overall company, a key milestone for financial health.

    if we break it down and look at the core infrastructure business, then we'll get -- we'll move even faster there, and we'll get to positive adjusted EBITDA probably sometime in the third quarter.

    Q&A highlights

    6

    Clarification on the definition of 'midterm' and the building blocks for achieving the stated revenue and margin targets.

    Roman Chernin defined 'midterm' as the 'next few years,' aiming for several billion dollars in revenue, supported by scaling capacity to over 1 gigawatt. He explained that 20-30% EBIT margins are driven by high GPU utilization and high-margin software/services, noting a conservative depreciation approach.

    “Our base case plan calls for several billion dollars of revenue in the midterm over the next few years. While our base case assumes that we grow our capacity to support this type of revenue growth from 2025 levels of 100 megawatt. Our ambition is to grow much larger and much faster.”

    asked by Unknown Analyst · answered by Roman Chernin

    2 min read6 chapters

    Detailed Narrative

    01

    Strong AI Compute Demand Drives Q1 Performance

    Nebius Group reported exceptional Q1 FY25 results, with revenue growing nearly 400% year-over-year and annualized run rate revenue increasing by almost 700%. This significant growth was attributed to very strong demand for AI compute and momentum in the core infrastructure business. The company ended the quarter with a solid cash balance of $1.4 billion, reflecting its ability to fund aggressive expansion plans.

    02

    Aggressive Global Capacity Expansion

    The company is rapidly building out its global data center footprint, adding three new locations in Q1 across the U.S., Europe, and the Middle East. Plans are in place to deploy over 100 megawatts of capacity in 2025, including new build-to-suit projects in New Jersey, expansions in Kansas City, Iceland, and Finland, and a new strategic site in Israel. This expansion aims to support future revenue growth and meet escalating customer demand.

    03

    Strategic Partnerships and Product Innovation

    Nebius strengthened its product offerings with Slurm-based cluster upgrades, enhanced object storage, and expanded integrations with external AI platforms like Metaflow, dstack, and SkyPilot. Key partnerships were announced with NVIDIA, including being one of the first to offer the Blackwell Ultra AI Factory platform and becoming a launch partner for NVIDIA Dynamo. Collaborations with leading storage providers DDN, VAST, and WEKA were also highlighted.

    04

    Funding Growth Through Non-Core Asset Monetization

    Management outlined a strategy to finance significant CapEx expansion through existing cash and potential monetization of equity stakes in non-core businesses. Examples include a 28% minority stake in ClickHouse, potentially valued at $6 billion, and a significant majority economic interest in Toloka, which recently attracted strategic investors like Jeff Bezos and Mikhail Parakhin. Discussions are also active for third-party investors in Avride, the autonomous vehicle platform.

    05

    Path to Profitability and Midterm Financial Targets

    Nebius reiterated its full-year adjusted EBITDA guidance to be negative but turning positive in the second half of 2025, with the core infrastructure business expected to achieve positive adjusted EBITDA in Q3. Midterm targets include achieving mid-single-digit billions in revenue and 20-30% EBIT margins, with potential for over 30% longer term, driven by scale, high GPU utilization, and high-margin software services.

    06

    Diverse Customer Base and Market Opportunities

    The company serves a wide variety of customers, from venture-backed AI natives to enterprises and national AI projects. Daniel Bounds highlighted new wins in vertical industries like healthcare, life sciences, media, and financial services, showcasing Nebius's high-performance infrastructure and deep expertise. Arkady Volozh emphasized the global nature of the enterprise market, where Nebius's European and global infrastructure presence will be in high demand.

    AI-generated summary of the company’s earnings call. Not investment advice.