Two leading AI companies suffered significant setbacks after their earnings reports.

業績會第一現場

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NEBIUS 2025Q3業績直播

Key Takeaways (AI-Generated)

Financial Performance

- Q3 group revenue was $146 million, up nearly 355% year over year and 39% quarter over quarter

- Annualized run rate revenue for core business reached $551 million at end of September

- Core infrastructure business grew 400% year over year, accounting for nearly 90% of total revenue

- Adjusted EBITDA margin for core infrastructure business expanded to nearly 19% quarter over quarter

Business Highlights

- Signed major deal with Meta for approximately $3 billion over next five years

- Previously announced Microsoft deal valued between $17.4-19.4 billion strengthens strategic partnerships

- Released enterprise-ready Aether platform version 3.0 and new Nebius Token Factory inference platform

- Launched operations in Israel and UK with capacity pre-sold before launch

Financial Guidance

- Tightened full year 2025 group revenue guidance to $500-550 million range, pacing to midpoint

- Targeting annualized run rate revenue of $7-9 billion by end of 2026

- Raised 2025 CapEx guidance from approximately $2 billion to circa $5 billion

- Expect slightly positive group level EBITDA by year end while remaining negative for full year

Opportunities

- Accelerated capacity growth plan with contracted power expected to reach 2.5 GW by end 2026

- Major long-term deals with Microsoft and Meta enable faster core AI cloud business development

- Enterprise-ready platforms address broader market segments beyond current customer base

- Vertically integrated approach focusing on margins at each stage of data center development

Risks

- Supply chain limitations and physical world constraints limit ability to scale capacity rapidly

- Potential GPU oversupply as new suppliers enter market, though supply expected constrained through 2026

Full Transcript (AI-Generated)

Operator

Thank you and welcome to Nebius Group's third quarter 2025 earnings conference call. I'm Neil Doshi, Vice President of Investor Relations. Joining me today are Arkadi Volozh, Founder and CEO, and our broader management team.

Our remarks today will include forward-looking statements which are based on assumptions as of today. Actual results may differ materially as a result of various factors including those set forth in today's earnings press release and in our report on Form 20-F filed with the SEC. We undertake no obligation to update any forward-looking statements.

During this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The earnings press release, shareholder letter and accompanying investor presentation are available on our website at nebius.com/investor-hub.

And now I'd like to turn the call over to our CEO, Arkadi.

Arkadi Volozh

Thanks, Neil, and thank you everyone for joining the call. Today, I'd like to share my thoughts about the demand environment, about our capacity plans and what we're doing in our product.

First, about the demand. Q3 demand was very strong. We sold out all of our available capacity. We continue to see a consistent trend. Every time we bring capacity online, we sell all of it. With the new generation of NVIDIA Blackwell coming online, more customers are interested in purchasing capacity in advance and securing it for a longer period of time.

Today, we're very pleased to announce that we signed another major deal, this time with Meta for approximately $3 billion over the next five years. In fact, demand for this capacity was overwhelming and the size of the contract was limited to the amount of capacity that we had available, which means that if we had more we could have sold more.

This deal comes on top of the Microsoft deal we announced in early September with contract value between $17.4 and $19.4 billion. As we said before, we expect to sign more of these large long-term deals and we're delivering that promise.

As busy as we are with these mega deals, our main focus is still to build our own core AI cloud business. We made great progress here with AI native startups like Cursor, Black Forest Labs and others. The economics and the cash flow of mega deals are attractive in their own right, but they also enable us to build our core AI cloud business faster. This is our real future opportunity.

Now on the capacity, in order to meet the growing demand, we have accelerated our plans to secure more capacity and this is actually our main focus for now. Capacity today is the main bottleneck to revenue growth and we are now working to remove this bottleneck as we look to 2026.

We expect our contracted power to grow to 2.5 GW contracted. This is up from the one GW which we discussed in our previous earnings call in August. Furthermore, we plan to have power connected to our data centers, which means fully built, of approximately 800 MW to one GW by the end of 2026.

While we made significant investments in our capacity footprint, we're also investing in our main product, our AI cloud. To extend our addressable market opportunity to large enterprise customers, we released our new enterprise-ready cloud platform version 3.0 called Aether and our new inference platform called Nebius Token Factory.

We believe Aether gives organizations the trust, control and simplicity they need to run their most critical AI workloads. Nebius Token Factory is a production-scale inference platform that enables organizations to run open source models with reliability, visibility and control. And we have a large pipeline of new software and services that we are continuing to build, which will differentiate us from other cloud companies.

Based on the strength in demand that we see and our accelerated capacity growth plan, we believe we can achieve annualized run rate revenue of $7 to $9 billion by the end of 2026.

In summary, Nebius is positioned to win in this large and rapidly expanding AI cloud market. We're just beginning to realize the powerful potential of the AI evolution that is underway and we are quickly becoming one of the primary cloud infrastructure providers to support it. And with this, I would like to hand the call over to our CFO, Dado Alonso.

Dado Alonso

Thank you, Arkadi. The details of our Q3 financial performance can be found in our shareholder letter. I'd like to provide some additional color to the quarter, discuss our financing options and conclude with 2025 guidance.

Q3 group revenue was $146 million, up nearly 355% year over year and 39% quarter over quarter. Annualized run rate revenue for the core business at the end of September was $551 million. The core infrastructure business, which accounted for nearly 90% of total revenue, grew 400% year over year and 40% sequentially.

Once again, we sold out our capacity and our revenue growth was limited only by the capacity that we were able to bring online. I'm also pleased to say that Adjusted EBITDA margin for the core infrastructure business expanded quarter over quarter to nearly 19%.

On financing, in order to support our aggressive growth plans in 2026 and to maintain this pace of growth in 2027, we will be utilizing at least three sources: corporate debt, asset-backed financing and equity. We are in the process of raising asset-backed debt which we will be able to secure with attractive terms supported by credit worthiness of our largest customers.

Tomorrow, November 12th, we will be putting in place an at-the-market equity program for up to 25,000,000 Class A shares and plan to file a prospectus supplement. We will evaluate the program regularly based on our capital needs. The program enables us to access equity funding on an efficient ongoing basis. However, we will remain dilution sensitive as we prepare to finance future growth opportunities.

Now I would like to turn to 2025 guidance. As we approach the end of the year, we are tightening our full year group revenue guidance to a range of $500 to $550 million and we are currently pacing to the midpoint of that range. This compared to the $450 to $630 million in our previous guidance.

The reason we are in the middle and not at the top of that range simply relates to the exact timing of when capacity comes online. Our current momentum and long-term trajectory remain strong. Our annual run rate revenue, which is a good reflection of our future growth opportunity, continues to expand, demonstrating the resilience and the scalability of our business model.

As such, we remain well on track to hit our ARR guidance of $900 million to $1.1 billion by the end of 2025, while also paving the way for substantial annualized run rate revenue growth in 2026 and beyond.

In terms of the mega deals, we will begin serving Microsoft and Meta late in the quarter and almost all of the revenue from these deals will start to be realized and ramp up during the course of 2026. We plan to give full year revenue guidance for 2026 next quarter.

Turning to adjusted EBITDA, as we have previously indicated, we expect to be slightly positive at the group level by year end, while remaining negative for the full year.

On CapEx, we are raising our 2025 guidance from approximately $2 billion to circa $5 billion. This acceleration reflects our strong conviction in the demand outlook and our decision to secure critical infrastructure, including hardware, power, land and key sites. These investments are strategic enablers of future growth and will position us exceptionally well to capture the opportunities ahead.

In summary, we have a large and rapidly growing opportunity in front of us and we are executing with focus and discipline to capture it while delivering substantial sustainable growth and setting the stage for strong long-term profitability. Now let me turn the call over to Neil for Q&A.

Neil Doshi

Great, thank you, Dado. We'll give it a moment to collect questions from the online platform and then we'll begin the Q&A. All right, let's start with the first question coming from Alex Platt of DA Davidson. Can you tell us more about the new Meta deal? Why did they choose you? And how should we model the deal, Arkadi?

Arkadi Volozh

Well, again, we're happy to announce today this new deal with Meta, approximately $3 billion. As I said, the size of the deal was limited only by the capacity that we had available. And if we had more capacity, we could have signed a bigger deal probably.

After we announced Microsoft in September, we said that we'll have more deals of this kind, more large deals and actually we're delivering on that promise and we're optimistic these deals will arise more and more.

However, these mega deals are important, it is important to stress that we will remain focused on developing our own AI cloud, which currently serves not only these big deals, but AI startups and enterprises. And ultimately, we believe that these large contracts provide us with great sourcing of financing for us to continue building our core AI cloud business.

Neil Doshi

Great. Thank you, Arkadi. We'll take the next question from Alex Duval, analyst from Goldman Sachs. So we provided the updated 2026 ARR outlook of $7-9 billion, what exactly is in the $7-9 billion ARR target and is this based on pre-existing core business plus Microsoft and Meta? Is there anything else in terms of signing up for large deals? Mark, maybe you can take this one.

Mark Thurmond

Thank you, Alex for your question and let me walk you through the building blocks of how we get to the $7 to $9 billion in ARR. First of all, as we already shared, we had a bottleneck in capacity and we worked extremely hard over the last several months to unblock this bottleneck. As we shared, we plan to have 800 megawatts to one GW of connected power by the end of 2026 and 2.5 gigawatts of contracted power.

Second, we see the demand out there from AI startups to enterprises to the large strategics and we see that client demand that we were unable to sell this past year due to a lack of capacity. And we strongly believe that the capacity we are putting in place in 2026 will help us to meet more of this demand. At the end of the day, we will allocate between the categories of customers based on the individual economics of the deals they represent.

Thirdly, this new capacity that we are putting in place together with our current capacity that has already been sold and the long-term contracts that we signed with Microsoft and Meta gives us the confidence that we can achieve the $7 billion to $9 billion of ARR of which more than half is already booked.

Neil Doshi

Great, thank you Mark. We'll take another question from Alex at Goldman. Can you walk us through the timeline of your infrastructure build outs for Q4 2025 and 2026 and what gives you confidence that you can reach your 2.5 gigawatts goal for contracted capacity? Andre?

Andre Hagemeister

Yeah, thanks Neil. So we are ramping up our capacity as fast as we can to accelerate our growth for the next year and beyond. We are happy to launch now already Israel and UK and all the capacity in those regions were pre-sold before the launch and we are growing with the numbers of the regions where we are present. And we also bring new capacity online in the current sites.

We are coming online in New Jersey. We are launching new phases of Finland in Q4, which are also pre-sold by the way. In 2026, we will continue scaling the existing data centers including UK, Israel, New Jersey and we have new data centers already in development both in US and Europe and they start to come online in the first half of 2026.

We also in the process of securing several new large sites, which we believe will let hundreds of megawatts and some of those will go online by the end of 2026. So overall at the moment we are looking at more than around 2.5 gigawatts of contracted power by the end of 2026. And as we said, demand is growing massively and we are very focused on rapidly building the capacity and the future pipeline to meet the demand in 2026 and beyond.

Neil Doshi

Great. Thank you, Andre. All right, we'll take a question from some of the folks who have been submitting questions. We're getting a lot of questions on Microsoft and Meta revenue. How should we be thinking about revenue contribution from Microsoft and Meta deals for this year and going forward, Dado?

Dado Alonso

Well, the Microsoft contract will not have a material effect on our revenue and ARR in 2025 as the first tranche was delivered. All of our remaining tranches will be delivered in 2026 with more than half of them during the second-half. So we actually expect revenue to ramp up over the course of the year. Starting 2027, we will begin to recognize the full annual revenue run rate of this Microsoft.

With regards to Meta, we will be concluding the deployments within the next three months. So we expect to mostly be at a full revenue run rate in 2026.

Neil Doshi

Great, thank you, Dado. Maybe another question from our online audience, What does the overall demand environment look like in Q4 and into the next year? Mark, do you want to take this?

Mark Thurmond

Certainly, I joined the company about 5 months ago, and I've had an extraordinary experience in these past five months. It's extraordinary from the standpoint that I've never seen the kind of demand profile that we're experiencing. It is literally accelerating for Nebius and I believe as well for the broader market.

As an example, in the recent quarter and quarters before we saw pipeline generation, this is opportunities by customers that want to buy from us expand. As a matter of fact, in the past quarter, Q3, we saw pipeline generation expand 70% quarter on quarter and we generated $4 billion in pipeline in that quarter, but we were only able to convert a portion of that given to the constraints of our capacity.

As a matter of fact, I've learned a new skill when I don't think many go-to-market professionals have ever had to experience and that's learning to say no to customers as we routinely sell out and have to actually let them down lightly and try to convince them to purchase in the future. As I look out to 2026 and I think through the demand profile, the kind of pipeline that we're generating right now is giving us high confidence to continue to expand our results and drive towards the ARR growth that Arkadi mentioned earlier on the call.

Neil Doshi

Great. Thanks, Mark. We have a question now from one of our analysts, Nehal Chokshi from Northland. Incremental ARR in September quarter was around $12 million, down from $180 million in the prior quarter and $159 million in the March quarter. Why is incremental ARR down?

Neil, it's a great question. You know, as we've stated, a lot of our revenue and our ARR is really dependent on us being able to bring on capacity and because capacity really has been the bottleneck, that's why we've seen a little bit of that trend. However, as we're bringing on a lot of capacity in Q4, you should see that incremental ARR in Q4 will be significantly higher.

All right. Let's go to another question from online. In terms of the CapEx, you have just announced or plan to achieve connected capacity of 800 megawatts to one GW by the end of 2026, how are you thinking about CapEx and what is your philosophy on CapEx spending? I think Arkadi should take it.

Arkadi Volozh

Again, as we see at least this year, our revenue growth was limited by our capacity and everything we built was ultimately sold. So in theory, we should try to build as much as we can. In practice, though, we're limited by certain physical world limitations. Physical world cannot grow 5 or 10 times a year. We have limitations in supply chain and obtaining permits, amount of capital that we can deploy.

So when we plan for data center CapEx, there are actually 3 stages there. The first stage is securing the land and power. The second stage is building the data centers themselves. Shell, electrical, cooling equipment, batteries and so physical installation, which we call connected power. And the third part is finally deploying the GPUs themselves.

And if you look at it from the CapEx point of view, roughly speaking, it breaks into three spending blocks. So first stage securing land and power, it's pretty cheap. It's around, again, it depends on the scale, but it's around 1% of total CapEx for securing those works and existing. The second stage building connected power is something around 18-20%. And the remaining 80%, the main part is for deploying the actual GPUs. This is the main part of CapEx.

So if we want to build as much as our capital will allow us, what should we do? First, we should secure as much capacity as we can because the cost actually it's immaterial at this scale. Second, we should build as much as our capital allows. And third, we will fill GPUs in line with contracted or clearly visible demand. We will need this massive 80% spend will come only when we see real demand.

That's why we say that in 2026 we will be securing 2.5 GW total contract capacity and we are planning to physically build 800 to one GW of connected data centers. This will be done by the end of next year.

Neil Doshi

Great. Thank you. Let's see. Another question from Alex Duval from Goldman Sachs. You have announced your target is 2.5 gigawatts of contracted power, whereas before it was one GW. Is it fair to assume that if you get 2.5 gigawatts, this will equate to over $20 billion of revenue? By when do you envisage you could do this and how? Maybe we'll give this to Andre.

Andre Hagemeister

Thank you, Neil. I guess it's fair to assume, but as our colleague just mentioned, we will, we are securing the access to the power and the ability to build, but we will invest CapEx actually in building out and deploying the GPUs in those. Keep in mind the constraints that we have with the capital and according to the demand in the future periods. It's just important that we are able to accelerate when it will be needed. So we don't like being blocked by the capacity constraints all the time.

Neil Doshi

Great. All right, we'll take a question from some of the folks who have been submitting questions. We're getting a lot of questions on Microsoft and Meta revenue. How should we be thinking about revenue contribution from Microsoft and Meta deals for this year and going forward, Dado?

Dado Alonso

With regards to Meta, we will be concluding the deployments within the next three months. So we expect to mostly be at a full revenue run rate in 2026.

Neil Doshi

Great, thank you, Dado. Maybe another question from our online audience, is it in a situation when you are sold out, is that the same issue or is that really an issue with your future growth and differentiation of servicing a broader range of customers? Mark, can you take this one?

Mark Thurmond

Certainly. Thank you, Neil. It's a great question. I mean, in theory the situation of being sold out is a nice problem to have, but the person asking the question is right for our business model. It's really important for us to be able to not only service large tech companies, but also be able to support our AI cloud and a very diverse set of customers.

As a matter of fact, servicing startups and software vendors and enterprises is not only about delivering on their capacity needs today. We want to build partnerships with these customers and help them to meet their capacity requirements in the future, especially with enterprises because they don't want to actually have a multitude of vendors. They prefer to align with a strategic partner.

That's why we are working very closely with Andre. And as Andre mentioned earlier, as we look forward and think about deploying capacity, it's going to be based on the demand that we're seeing out there. So utilizing the pipeline that we're building and the demand that we're experiencing to work with Andre to identify the capacity that we should deploy. It's a very dynamic model that we're trying to put in place.

Neil Doshi

Great. Thank you, Mark. Appreciate that. We have a question from Nehal Chokshi from Northland who's asking, you know, so you've done equity deals. We've also done equity linked deals as well, Dado. How will we focus on debt and asset backed financing for large deals?

Dado Alonso

Thank you, Nehal. Well as you know this is a capital intensive business and as we've said previously, funding our growth will require raising a significant amount of capital. In this context, we are actively evaluating a range of financing options today including asset backed financing, corporate level debt and equity financing and we are working on all fronts in order to maintain a disciplined capital structure to maximize our shareholder value.

With regards to asset backed financing, we believe that we will be able to secure such a facility with attractive terms supported by the credit worthiness of our largest customers. I would like to reiterate that as we are growing our business, our focus and ultimate goal is to maximize our shareholder value.

Neil Doshi

Great. Thanks Dado. And maybe just sticking on the theme of financing from the online portal, why are you planning to pursue an ATM? You just completed a secondary and this will result in additional dilution to shareholders. Any thoughts, Dado?

Dado Alonso

We will be putting in place an at-the-market equity program for up to 25,000,000 Class A shares and we plan to file the prospectus supplement tomorrow. We want to make sure that we have more tools at our disposal to access capital markets when needed. This is a long lasting program which will be used along with other capital raising options including corporate debt, asset backed financing and others as I mentioned in my opening remarks and just before this question.

So the program enables us to access equity funding on an efficient ongoing basis. However, we will remain dilution sensitive as we seek to finance future growth opportunities.

Neil Doshi

Great, Thanks Dado. Let's see another question from online. How are the early operations of your new UK facility progressing, Tom?

Tom Wehmeier

Yeah, absolutely. So it's short answer is progressing very well. You may have seen just actually last week Arkadi and a few of us were there. We had our official launch as we brought the data center to the UK market. This is actually capacity that will be coming online really actually in the next week or so, so very in the coming days.

You might remember actually that in June was when we first announced our intention to launch in the UK. And actually even in the time since June and now we've already come close to doubling the capacity that we're bringing on stream, and that's just really a function of extremely strong demand that we're seeing in the UK. And actually as is often the case with new capacity that we bring on even before going live we're pretty much sold out. So I think it's already fully sold out with that capacity so that's a trend that just continues.

I would just say overall a few words about the UK actually. I mean, we're very bullish actually about the opportunity in the UK. It's a vibrant AI market. It's probably one of the most dynamic that we see outside of US and China. The government's making a big push to support the growth of the industry and having a reasonable degree of success in this field.

So there's a lot of AI start-ups, VC environment is strong. You also see some of the large tech companies establishing regional R&D and presence there. So really there's a lot happening in the UK and we think a lot still to come from this in the UK and we're very happy to be there. And actually although this specific facility that we have, I think with the capacity once by January will have reached peak capacity there, we see a lot of other opportunities to expand capacity in the UK overall.

Neil Doshi

Great, Let's see in terms of we'll take another question on capacity. So you mentioned this quarter that you're fully sold out of available capacity. What are your constraints to growing in the near term and medium term to capture more of that demand? And could you also address some of the recent comments on the market around power equipment constraints?

Andre Hagemeister

Yeah, I'll take it. Yeah, thanks, Neil. As we discussed in most of the questions capacity remains our main bottleneck. Everything we deploy we sell out. And we see the demand that continues to significantly outstrip our supply each time we add new clusters.

So in near term, the key challenges to increasing capacity of securing power and the supply chain and we're addressing this. We have managed these situations in the past, have quite a bit of expertise of building data centers and operating those. So overall, we are doing quite well actually with the pipeline and when we spoke last quarter, I believe that we announced that we have secured the road map of the one GW of the power now we are talking about the number 2.5 gigawatts and we are still putting a lot of focus on growing this number and making this number reliable and effective and actually bigger.

Neil Doshi

Great. Thank you Andre online we're getting just a few questions about any updates on the New Jersey facility. Andre, do you wanna take that?

Andre Hagemeister

Yeah, New Jersey facility goes as planned and the first tranche already was handed over to Microsoft and we are continuing on the further expansion.

Neil Doshi

Great. All right, looks like a question from online. Maybe more of a market question are you concerned that we are in an AI bubble, Arkadi?

Arkadi Volozh

Everybody asks this question these days. Well, what we see today, the demand is here, right? We understand that we are in the center of once in a generation AI revolution. Much no doubt that much more compute will be needed and much more will be built. This situation of unbalanced demand supply is temporary. Of course, eventually demand supply will level up.

And what we are doing in addition just to growing this raw capacity, we are building our AI cloud which will support real businesses, real industries, real enterprise market where AI will be creating value. And we are a big believer that the industry in general, specifically it's going to be OK.

Ultimately, we just need to be sure that A, we're diversified in terms of customers and workloads and this is actually what our software is basically doing, B, that we invest conservatively and that we finance our growth responsibly and we have very much focused on this and also where we're growing rapidly five times more a year, we still remain focused on maintaining healthy margins and a sustainable business model as a whole. In old days, I would say healthy unit economics. So we are focused on that and whatever comes will come. We hope that we will be OK.

Neil Doshi

Great. Thank you, Arkadi. Next question is from Alex Platt from DA Davidson. How should we think about the lead time between when power is connected to and when it is hooked up to GPUs and generating revenue? Andre.

Andre Hagemeister

Yeah, Thanks, Neil. So on the technical side, it also depends if it's a new site or if it's expansion of a current site. But generally speaking from the connected power and start up the GPU deployment until it can go in the platform engineering revenues anywhere from 6 to 12 weeks. If it's already existing site, that can be even quicker. But generally we also have a flexibility. That's why we're building infrastructure. We have a flexibility when they deploy and when the deployment. How much we deploy?

Neil Doshi

Great. Thanks, Andre. All right. Question from online. Can you update us on your progress with your primary customer segments? Mark, can you help us with this?

Mark Thurmond

Certainly, we continue to see extremely strong demand from our customers in our core AI business and we're continuing to expand business overall with our existing customers. We, as a matter of fact, we added a number of new customers in Q3, most notably some very disruptive startups like Cursor AI, Black Forest Labs and World Labs.

I'm sure everybody's heard of Cursor. We're very proud to be their partner. For those that haven't, they're an extraordinarily popular AI powered code editor that is helping millions of developers to write and debug and optimize their code faster, and they're making great strides into the enterprise.

Black Forest Labs is an interesting customer that is developing cutting edge generative AI models specifically for image and video generation. Their popular Flux One model helps turn text and images into high quality media ready visuals and World Labs is building something they call a large world model, which is able to simulate 3D worlds and it gives developers and AI engineers the necessary spatial awareness to build applications for things like media and gaming and architectural design and as well for physical AI and robotics.

We've also, as I mentioned, seen expansion with existing customers. As a matter of fact, as an example, we've seen expansion with our software vendor customers like Shopify. And then also we've made great strides with our efforts around driving vertical market success, adding significant customers in our healthcare life sciences part of the business and we're also making significant advancements in physical AI and media entertainment customer segments.

Neil Doshi

Right. Thank you. Mark, maybe a question looks like this is a question for Dado. Few people are asking any puts and takes that you can provide on your revised 2025 year end revenue guidance.

Dado Alonso

Well, our business is actually scaling rapidly. There can always be fluctuations in the exact time of deployments in such a fast growing company like ours. And our focus remains on building a very large company, obviously much larger than today and significantly bigger than our plans for 2026. This was and continues to be our main focus.

In any event, our annualized run rate revenue, which is a better reflection of our future growth opportunity, continues to expand, demonstrating the resilience and scalability of our business model. As such, we remain well on track to hit our ARR guidance range of $900 million to $1.1 billion at the end of 2025, while also paving the way from substantial revenue growth in 2026 and beyond.

Neil Doshi

Great. Thank you, Dado. Question from the online community. How is your enterprise initiative ramping up? To make some good improvements there of the past couple of quarters. Mark, do you want to help take this?

Mark Thurmond

Certainly, yeah, we are making strides with regard to becoming enterprise ready. As you saw with the launch of Nebius 3.0 what we call Aether, we've delivered a number of AI cloud improvements to support enterprise requirements.

As an example, in the Aether release, we are delivering really important compliance and security certifications. And we did this as a matter of fact in a matter of months when it would normally take other organizations a lot longer to deliver these types of capabilities. As a matter of fact, as well, we delivered some important functionality that enables enterprise administrators to proactively manage their implementation. So tooling and controls like identity and access management and dashboards for evaluating the performance and security of their implementation.

I think as we all know the critical foundation for enterprise readiness is to have these kinds of compliance and security certifications in place and the enterprise functionality that enterprise is looking for. And the third is to have an enterprise ready sales team. On that front, we are adding a number of key leaders to our organization and we are expanding the overall sales organization for coverage in enterprise software vendors and key verticals.

It'll take some time for the sales team to ramp, but we are building the foundation between the functionality that I mentioned and the overall team coverage that I think will set us up for a strong 2026 with enterprises.

Neil Doshi

Great, thank you, Mark, keeping with our online investor base, you recently launched Token Factory. What is the opportunity around this? And will this expand your market or open up new segments? Maybe we'll ask Roman to take this one.

Roman Shtykh

Yeah, thank you, Neil. Happy to talk about our new launch. So I will start a little bit from demand evolution. We fairly see now the next wave of AI demand growth and it mostly driven by the companies, by the people who apply AI real world applications across all industries in B2C and B2B. It's not necessarily foundational model builders like it was let's call in the first wave and we as Nebius realize that we needed our inference as a service offering to make it serve a broader set of customers including enterprises.

So Token Factory gives vertical AI product builders, ISVs and enterprises a platform to build. We call it flywheel of applying LLMs in vertical use cases at scale transforming. We help them to transform open source models into optimized production ready systems with guaranteed performance and transparent cost per token.

We obviously leverage the underlying infrastructure to bring the most efficient, scalable solution to our customers when they can be sure that they get the best total cost of ownership and can confidently grow with us. So as a result, organizations can deploy and scale models such as OpenAI OSS, Qwen, DeepSeek, Llama and Mistral and many others on dedicated endpoints with guaranteed performance tuned for the super latency and 99.9 uptime.

So in total, I mean, I must say we are excited about the opportunity of inference workloads. We believe that all companies will invest in inference to productize AI and it for us it means like it will requires significantly more compute and we'll support this wave of growth as well as we do for foundation model builders.

Neil Doshi

Great, thank you, Roman. Jumping back to online, looks like we have some additional questions here. What demand are you seeing for new Blackwell generation and how is this demand from the previous Hopper generation? Mark.

Mark Thurmond

Thank you, Neil. Yes, certainly. Demand remains very strong across all types of GPUs. And as we said, we sold out our capacity in Q3 and that's across all types and we're nearly sold out with respect to Q4.

Talking about The Hoppers, we continue to see extremely positive demand for these chips. An interesting set of dynamics that we're experiencing is that as customers come to their renewal for hoppers or if they're looking to upgrade to say Blackwells, in both cases, we're typically selling them immediately and often case and often at better pricing than they were previously priced as we're actually in tandem rolling out the Blackwell. So very strong demand profile for existing hoppers.

We're also seeing very strong demand for Blackwells and we're benefiting from the fact that we're one of the first companies to deliver them in the market. In our Israel data center we launched with B200s and in our UK data center we launched with B300s and we've essentially pre sold much of that capacity before these facilities even opened.

We're very excited as well that we're launching GB300s. We're the first to do so in Europe, which will be coming online our Finland data center later this quarter in December. Thinking about in production capacity right now, as I mentioned selling the remnants of Q4, but we're also now pre selling new capacity being delivered in future quarters.

So we're seeing a very strong demand across all types of GPUs. And as I mentioned earlier and as Andre mentioned earlier, we're working in close partnership with Andre's team to make sure that our sales pipeline allows us to drive our model in order to be able to support GPU requirements in subsequent quarters.

Neil Doshi

Perfect, thank you, Mark. Another question from Alex Platt from DA Davidson. He's asking about our strategy regarding larger deals. Do we have medium term capacity targeted for these deals and customers?

Arkadi Volozh

Yes, we're very opportunistic here. The demand is there not only for our everyday deals, but for large mega deals as well. And we'll enter into the deals which provide us with the best margins. We're very much focused on margins and not only in growth itself and all our decisions actually direct from there.

Neil Doshi

Great. Thank you, Arkadi. Next question from Andrew Beal from RTA. Can you provide more details regarding some of the Greenfield sites? Do you have LOIs or further new US and European DC locations or are you further down the road with these, Andre?

Andre Hagemeister

Yeah, thanks, Neil. Generally, we are making great progress to bring our capacity. We have a robust pipeline both in Europe and US. We mentioned that we're on the way of securing 2.5 gigawatts of road map for the power in the next year. We are in flow station also further down the road as well. But we are not in a position to say more this stage.

Neil Doshi

Great. Right. Question from online. Can you provide an update on your facility in Israel, Tom?

Tom Wehmeier

Yeah, sure. So as you can see, we're growing rapidly. So just last week we're in the UK launching and just a couple of weeks before that we were in Israel and actually the data center facility that we have there is already live and as I think we've made various references to Mark. As mentioned previously, again, that was capacity that was effectively even pre sold and we definitely have opportunities to expand further in terms of capacity.

We think Israel's a great market. We again, we see a lot of demand. There's a lot happening in tech and in AI. And actually one of the things that's interesting about the market, I mean our decision to go in there was purely based on our own commercial considerations. We think there's a great, there's a lot of growth for that, but actually the government's also doing some interesting things really to stimulate further demand.

And so they're actually effectively putting money to subsidize sort of AI startups and institutions and helping them to access the compute as a way of getting, having the growth move faster. So we think it's anyway we're doing great that we have a, we think that there's a great opportunity for us and actually that the model that might even be a model that we think I've been in other countries might look at. Thinking about building up that domestic demand and AI industry. So overall going great.

Neil Doshi

Great. Thanks, Tom. All right. Our online platform, let's see how do you think about partnering with or buying potential companies that already have secured power or land or consolidating other neoclouds, Arkadi?

Arkadi Volozh

Well companies. We secure power and land again and again. It's all about margins. We're pretty much focused on the margins when we enter into in new contract, when we're raising capital, when we're developing new plots for data centers, when we design those data centers, when we build our own racks software and so on. We vertically integrate and we're looking of on efficiency on each stage.

We have looked into potential acquisitions of power land market, but so far our approach proves to bring much higher margins so far. So we're still moving further and further. Into building our own facilities and we're actually decreasing the share of our own over collocated rented facilities more and more will be our own facilities.

Obviously, we will continue to consider different opportunities, but as you can see, we were able to secure a significant level of contract power organically. So we strongly believe that sooner than later the margins for the infrastructure business will play a significant role in the ability for the business to grow and develop and we basically remain very focused on that.

Neil Doshi

Great. Take care, honey. Right. Let's another question, kind of market related question. Maybe this will go to Arkadi is there any chance that GPUs are oversupplied in the coming year as new suppliers come to the market.

Arkadi Volozh

Two things here. First, we strongly believe that the market will still be supply constrained at least in 2026. That means that data center capacity will be the choking point. Also, as we mentioned earlier, we plan our capital spend in those three standards, 3 stages, land power built in the shell and facilities and then the GPUs.

And this conservative stage approach keeps us from always spending actually and allows us to maintain a healthy financial position. If there are any changes in the market, we'll be in good shape to within any downturn we hope.

Neil Doshi

Thank you, Arkadi. Let's see, a couple of our analysts are asking, in terms of any big challenges regarding the completion of the New Jersey facility or any challenges to meeting any performance obligations of your Microsoft deal.

Andre Hagemeister

Thanks, Neil. I think I already spoke about it. So yeah, as of today it goes as planned and we already handed over the first tranche to the Microsoft. So yeah, continue on working according to the plan.

Neil Doshi

Great. Thank you. All right. I think we'll end the call there. Thank you everyone for joining and we will speak to you again next quarter. Thank you.

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