Nebius (NBIS.US) reported a 514% year-over-year surge in cloud business sales for the second quarter, driven by robust demand for AI computing power.
According to its financial report, AI cloud revenue, which accounts for the vast majority of its business, reached $575 million in the quarter. Total quarterly revenue surpassed $582 million, a 454% year-over-year increase, beating analyst expectations of $557 million. The company reported a loss per share of $0.68, exceeding estimates by $0.18. In pre-market trading on Wednesday, the company's stock rose approximately 16%.
The company also reaffirmed its full-year 2026 guidance, stating that demand for AI computing power continues to accelerate, helping secure larger, more profitable customer contracts. In its first-quarter earnings report released in May, Nebius had reiterated its full-year 2026 outlook, projecting annualized revenue of $7 billion to $9 billion, group revenue of $3 billion to $3.4 billion, and a group adjusted EBITDA margin of around 40%. The market consensus for revenue is $3.38 billion.
CEO Arkady Volozh stated, "Everything we set out to do this quarter, we did. In most cases, we did more." The statement noted that the value of contracts won in the quarter quadrupled sequentially, including four agreements with an average value exceeding $1 billion each. The company said pricing improved during the quarter due to demand for next-generation AI chips and higher rates for older-generation GPUs. Approximately 70% of contracts signed during the period included customer prepayments, covering 50% to 60% of related capital expenditures.
Nebius said it finalized four landmark AI cloud deals in the quarter, each with an average total contract value exceeding $1 billion, nearly quadrupling the total contract value sequentially. Volozh noted that new pricing initiatives launched at the start of the third quarter, such as the first auction and short-term computing power trades, are showing promising results. He added that the company sees pricing opportunities in the $40 million to $50 million per megawatt range and signed its first such contract this week.
Competitor CoreWeave Inc., fueled by the ongoing AI spending frenzy, predicted on Tuesday that its third-quarter sales would exceed expectations.
Shortened Capital Expenditure Payback Period
Nebius is one of several so-called "new cloud" companies renting out computing power in data centers, capitalizing on the massive global demand for infrastructure capable of handling AI workloads. The company was spun off from Russian internet giant Yandex in 2024 and has secured partnerships with Nvidia, as well as major data center operators like Microsoft and Meta Platforms Inc.
Building infrastructure for AI workloads is an expensive business. Nebius stated in its announcement that in July, it secured $775 million in financing, backed by assets including GPUs. In the second quarter, the company spent approximately $5.7 billion on purchasing chips, equipment, and expanding data centers.
Volozh said that overall, the expected payback period for capital expenditures and related operating costs associated with second-quarter transactions was 1 year and 10 months, down from the previously expected 2 to 3 years. Nebius noted that it will continue to increase capital expenditure this year and plans to adopt diversified financing channels.
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