Nebius Q1-25 | Earning & Call
Everything we want to see.
If you do not know about Nebius, everything you need is here.
Business.
I do not have an overview for Nebius as the company is really new and does not have long-term interesting comps. So let’s directly dive in, starting with the computing power branch of the company.
Very healthy, as we could have expected it.
“We are continuing to see strong dynamics in Q2, with April ARR of approximately $310 million, and have maintained this strong momentum into May.”
The growth is really rapid & could even be more if they had the capacities.
The market doubted last quarter as ARR was not growing as fast as it expected, which management explained by a weaker sales force. Data seems to prove them right, and management confirmed that things changed this quarter and that their teams were now much more efficient.
“We also saw the benefits of our sales team ramping up and especially the investments in our presales and solution architects and customer success team. Now we can provide twenty four seven wide globe support, And I believe it, like, significantly contributed to improve our sales process and, obviously, post sale customer success.”
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“In addition, the sales and go-to-market team that we have been building out over recent quarters also made solid contributions, resulting in selling out most of our capacity in March 2025.”
They said “selling out,” which is pretty huge & confirms again that there is no problem of demand at all.
“Customers wanted access to GPUs, and we see that demand strengthen each month.”
Management confirmed having “hundreds of customers”, their highest customer count ever. Important not to rely on one or two major ones, although we had no color on the proportion of revenues coming from each. Still nice to know they treat volume, and hard to believe one or two would account for the majority of revenues when they treat with hundreds.
I shared some time ago the bear case for Nebius - the lack of differenciation between their services & competition in time. Something which should not happen as long as they have priority access to Nvidia’s hardware.
I also say that it won’t happen before a few years and that we’d have time until then, something confirmed once again as Nebius will be part of the first ones to propose the GB300 NVL72 by year-end & support the Nvidia DGX Cloud Leptos Marketplace when it is launched, giving them direct access to customers who pass by Nvidia for their computing power needs.
“Also, we see that our approach to bring the newest chips online as early as possible, like, not responding to specific contracts, but in this, like, more cloud manner. And our flexibility to provide the real cloud terms, the combination of pay as you go or reservations of different length is paying back as well.“
We do not have more information on the contract types or length except a rapid confirmation that they go from “several months to years and beyond.”
In terms of geographies, Nebius is now present in Europe, America and the Middle East with their datacenter in Israel. The latter was not planned; management took an opportunity, which also raised costs for this quarter.
Once again, geographies are really important in this business for latency & supporting clients at any time. American companies without local datacenters will struggle to compete overseas, while demand will eventually grow there.
Other Branches.
We’ve gone over all the important news in the weeklies, so I won’t detail them again but they all are doing well or really well.
On Toloka, Bezos’ fund is doing a funding round to accelerate growth & valuation, while Nebius will lose its majority voting power.
“Nebius will retain a significant economic stake in Toloka, securing long-term upside for shareholders from its continued growth. At the same time, Nebius will relinquish majority voting control, giving Toloka greater governance independence & flexibility while focusing on its core AI infrastructure business.”
ClickHouse is also doing well & rasing Nebius’ shares value as I detailed in the same write-up.
TripleTen continues to grow healthily with revenues up 145% YoY & more than 4,000 new students on the platform.
On Avride, the company signed a partnership with Hyundai to manage the software part of their future autonomous vehicles with the objective to have a test through Uber by year-end - Uber again, just to point it out.
And their delivery robots are doing wonderfully on the different campuses with the plan to expand to Japan, in Tokyo.
I had some doubts on this part of Nebius’ business, but it became a major part of my bull case for the company through the months as they are delivering a demanded service with lots of potential really fast.
Financials.
There isn’t much to comment on here.
Nebius is far from being profitable which is normal. Management is talking about EBITDA profitability during H2-25, but I do not use that metric and a profitable business will take time. Until then, we do see really strong growth as expected, matched with growing expenses to fuel the next quarters.
More importantly, the balance sheet remains very strong in terms of cash first, with a net debt of $1.25B & their stakes in different companies now, which are growing rapidly & receiving funding - notably ClickHouse & Toloka.
This is really important as it gives management the opportunity to use those equities to finance their business if they need to. More below.
Guidance.
Management reaffirmed its guidance of $750M – $1B ARR by year-end, which is the most important metric right now for Nebius. One more detail: the revenue guidance still includes Toloka which won’t be part of the next report, so this number should decline next quarter. It’ll be normal.
Few words on CapEx & financing which really matters for this kind of business and is, in my opinion, the big problem of CoreWeave. As said above, Nebius has $1.25B of net debt & equity in Toloka & ClickHouse which could be valued around $2B or so now. Management is anticipating $2B of CapEx FY25 and already spent around $500M, hence $1.5B left, slightly more than their net debt.
Nebius could use those equities to fuel its own business before even thinking about contracting debt - which it also could do, or to dilute shareholders - they said they’d focus on others first but it would remain the easiest way of doing.
“As we have minimal debt, we will be opportunistic in tapping capital markets for more traditional types of financing, while seeking to minimize dilution to our shareholders and to be prudent with respect to any future debt load.”
Bottom line being: Nebius has lots of doors left to open in order to fuel growth & build its infrastructures, on a sector which has a demand hard to satisfy.
My Take & Valuation.
First of all, this quarter was really good & confirms the bull case after a slow Q4-24 due to the training of their sales team - something we can confirm today. Nothing more to say; any shareholder should be happy in my opinion, and I sure am.
Second, I did sell 50% of the remaining of my Aug15’25 $35 calls & still hold the rest - I shared the positions in my last portfolio modification. I do not have fundamental reasons to sell, I believe Nebius is getting stronger but options are here to leverage convictions and have to be sold for profits. The gains on those calls were enough to cover my initial position of all my Nebius calls, so the stock could now go to $0 and I wouldn’t lose money. Peace of mind matters, and I’ll have liquidity if needed.
I won’t do a valuation as I usually do because this is a growth stock & we do not have enough data as the company is public since a few quarters only. As I shared few days ago, Nebius is actually trading at 12.8x of its FY25 low-range revenue guidance. Core Weave actually trades at 15x LTM sales and I see no reason why it should trade at a higher multiple with its massive debt & not necessarily stronger growth.
To me, Nebius is a much better company with many more opportunities to grow, a better management & deserves a bigger premium. I do not believe Nebius to be a $40 stock, more like a $50 as a base case this year, assuming they continue to execute like this quarter. Maybe even higher, depending on market conditions.
I wouldn’t be a buyer though after such a leg up but I am a happy holder, and will be an opportunistic buyer if we see the stock back in the low $30s.
Excited to read your analysis. Happy shareholder here as well