AI cloud computing company Nebius Group released its third-quarter results, with both revenue and profit exceeding market expectations. However, the combination of a lowered ARR growth guidance and a significantly raised capital expenditure plan raised investor doubts about its path to profitability, sending shares down more than 14% at one point in premarket trading.
Nebius reported third-quarter revenue of $981 million, about 6.7% above the market expectation of $919 million; adjusted EBITDA was $466 million, also well above the expected $357 million. However, the company lowered its annualized recurring revenue (ARR) target from its previous commitment of "reaching $7 billion to $9 billion by December 2026" to "reaching more than $7 billion by February 2027." At the same time, the company also said that "ARR is no longer the right metric to measure the business," raising questions about the clarity of its strategic direction.
It is worth noting that broad selling pressure also appeared in the semiconductor sector on the same day, with CoreWeave also falling about 10% in premarket trading. Some market participants believe that Nebius's individual stock decline resonated with broader sector sentiment and cannot be fully separated from it.
Revenue and profit both beat expectations, pace of scale expansion accelerated significantly
In the third quarter, Nebius generated revenue of $981 million, up 571% year over year; adjusted EBITDA was $466 million, a sharp turnaround from a loss of $5.2 million in the same period last year. For the first three quarters, cumulative revenue was $1.962 billion, up 549% year over year; cumulative adjusted EBITDA was $832 million.
On operating costs, total operating costs and expenses in the third quarter were $930 million, below analysts' expectation of $1.16 billion, showing a degree of cost control capability. Among these, depreciation and amortization expenses reached $355 million, accounting for about 36% of revenue, reflecting the rapid accumulation of the company's asset base.
Third-quarter capital expenditure was approximately $7.3 billion, and cash and cash equivalents at period end were $7.426 billion. On a GAAP basis, the third-quarter net loss from continuing operations was $37.5 million, but adjusted net income was $90.9 million.
Guidance update: 2027 revenue target maintained, capital expenditure sharply raised
Nebius maintained its expectation that full-year 2026 revenue will fall at the low end of the $3 billion to $3.4 billion range, and for the first time provided 2027 revenue guidance, expecting $12 billion to $13 billion.
What drew market attention, however, was the significant upward revision to capital expenditure. The company raised its 2026 capex guidance from the previous $20 billion to $25 billion to about $27 billion; for 2027, capex is planned at $40 billion to $45 billion to support the construction of more than 1 GW of additional computing capacity. Continued investment at this scale means the company will face considerable pressure on free cash flow in the medium term.
The company also postponed its ARR target date from "December 2026" to "February 2027," narrowed the lower bound of the target range from $7 billion to "more than $7 billion," and hinted that it may adopt other metrics in the future to replace ARR in measuring business progress. This statement further increased uncertainty about the comparability of performance tracking.
Balance sheet expanded rapidly, financing activities at a massive scale
As of September 30, 2026, Nebius's total assets reached $38.744 billion, more than tripling from $12.430 billion at the end of 2025, mainly driven by the rapid expansion of net property and equipment, which reached $12.431 billion at period end.
In the first three quarters, the company obtained about $16.618 billion in net cash from financing activities, including $5.750 billion in proceeds from convertible note issuance, $3.809 billion from treasury stock sales, and $773 million in long-term borrowings. At the same time, cash outflow from investing activities reached $15.924 billion, mainly for purchases of property and equipment.
As of the end of the reporting period, the company had total shares outstanding of 292,902,405, including 259,597,352 Class A shares and 33,305,053 Class B shares, with an additional 29,138,539 Class A treasury shares not included in the float.
Business composition: AI cloud at the core, diversified layout in parallel
Nebius positions itself as a full-stack AI cloud platform for developers and enterprises, covering the complete chain from data processing and model training to production deployment, serving startups and large enterprises worldwide that are building AI products, agents, and services.
In addition to its core AI cloud business, the group also includes autonomous driving and delivery robot developer Avride, tech career retraining education platform TripleTen, and equity investments in ClickHouse and Toloka. Among these, after Toloka completed a third-party investment transaction in the second quarter of 2025, Nebius no longer held its majority voting rights, and the business was deconsolidated from the consolidated financial statements and accounted for as an equity-method investment.
Founder and Chief Executive Officer Arkady Volozh has issued a quarterly open letter to shareholders regarding the third-quarter results and hosted an earnings conference call at 8 a.m. Eastern Time on November 12.
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