Nebius Group N.V. Q1 FY2025 earnings call

• Demand for AI compute was very strong in Q1. Revenue grew nearly 400% YOY and annualized run rate revenue grew nearly 700%.
• Rapidly building capacity globally with new locations in U.S., Europe, Middle East, with more to come.
• Announced partnerships with NVIDIA, Meta, and Llama.
• Launched Slurm-based cluster upgrades with features like automatic recovery and proactive system checks, reducing downtime. Platform services like MLflow and JupyterLab moved to general availability. Enhanced object storage and partnered with leading storage providers.
• Expanded integrations with external AI platforms such as Metaflow, dstack, and SkyPilot.
• Served hundreds of customers across industries like tech, media, life science with 24x7 support and tailored solutions.

Revenue grew nearly 400% year-over-year, and annualized run rate revenue grew nearly 700%. Ended the quarter with a solid cash balance of $1.4 billion. There is no detailed breakdown of product segments beyond the AI compute infrastructure focus.

• ARR guidance for full year is $750 million to $1 billion, revenue guidance $500 million to $700 million.
• Adjusted EBITDA is expected to be negative for the full year but turn positive in the second half of 2025.
• CapEx planned at approximately $2 billion for 2025, up from previous $1.5 billion due to Q4 CapEx moving to Q1 and new opportunities like the Israel data center.
• Midterm revenue target is mid-single-digit billions, with midterm EBIT margins 20%-30%, longer term could be higher.
• Monetization of noncore business stakes (ClickHouse, Toloka, Avride) as a funding source for core business growth.

• Dynamic regulatory and tariff situation, actively monitoring the impact on expansion plans and costs.

Q: How does Toloka deconsolidation impact your business?

A: Toloka is an AI data solutions provider with high growth prospects, retaining a significant majority economic stake. Deconsolidation will be updated in Q2 earnings report ex Toloka.

Q: How does Nebius' customers choose it over other providers?

A: Daniel Bounds said customers choose Nebius for high-performance, resilient, scalable infrastructure, deep expertise, and role as a hands-on practitioner, enabling greater return on AI dollars spent, with examples like Captions and Quantori.

Q: What's the update on NVIDIA relationship?

A: Daniel Bounds reiterated robust collaboration, being an NVIDIA investor, announcing Nebius as one of first to offer NVIDIA Blackwell Ultra AI Factory platform, launch partner for NVIDIA Dynamo, and named 1 of 5 reference platform NVIDIA Cloud Partners, supporting NVIDIA DGX Cloud Lepton marketplace launch.

Q: Explain the software stack and its impact on revenue and margins?

A: Andrey Korolenko said Nebius has a full-stack AI cloud with hardware management, cloud platform, and application layers. Software stack products launched in Q1, improving downtime, storage speed, and integrations. Tom Blackwell said software is critical, sticky, drives revenue, and can become a higher-margin revenue driver over time.

Q: How are you financing CapEx expansion?

A: Tom Blackwell said they have $1.44 billion cash remaining, noncore business stakes provide funding sources, and access to traditional funding sources when value accretive, minimizing shareholder dilution.