Driven by robust demand for AI computing power, Nebius (NBIS.US) saw its second-quarter cloud services sales soar 514% year-over-year. The financial report shows that revenue from its AI cloud business, which constitutes the vast majority of its operations, reached $575 million for the quarter. Total revenue for the quarter exceeded $582 million, a 454% increase year-over-year, surpassing analyst expectations of $557 million. The loss per share was $0.68, exceeding the expected loss of $0.18.
In pre-market trading on Wednesday, the company's stock rose approximately 16%.
The company also reaffirmed its full-year 2026 outlook, stating that the accelerating demand for AI computing power is helping it secure larger, more profitable customer contracts.
In its first-quarter earnings report released in May, Nebius had reiterated its full-year 2026 expectations, forecasting annualized revenue of $7 to $9 billion, group revenue of $3 to $3.4 billion, and an adjusted EBITDA margin for the group of approximately 40%. The market consensus was for revenue of $3.38 billion.
CEO Arkady Volozh stated, "Everything we set out to do this quarter, we have done. In most cases, we have done more."
The announcement noted that the value of contracts secured this quarter quadrupled compared to the previous quarter, including four agreements with an average value each exceeding $1 billion.
The company indicated that pricing strengthened during the quarter, benefiting from demand for next-generation AI chips and higher rates for older generation GPUs. Approximately 70% of the contracts signed during this period included customer prepayments, covering 50% to 60% of the related capital expenditures.
Nebius stated that it finalized four landmark AI cloud deals during the quarter, each with an average total contract value exceeding $1 billion, resulting in a total contract value nearly four times higher than the previous quarter.
Volozh pointed out that new pricing initiatives launched at the beginning of the third quarter, such as initial auctions and short-term computing power trading, are showing promising prospects. He added that the company sees price opportunities in the range of $40 to $50 million per megawatt and signed its first such contract this week.
Competitor CoreWeave Inc., propelled by the ongoing AI spending boom, on Tuesday forecast its third-quarter sales to be above expectations.
Capital Expenditure Payback Period Shortens
Nebius is one of several so-called "new cloud" companies renting out computing power from data centers, capitalizing on the immense global demand for infrastructure capable of handling AI workloads. The company was spun off from Russian internet giant Yandex in 2024 and has established partnership agreements 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 the announcement that in July, it secured $775 million in financing collateralized 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 the capital expenditures and related operating costs associated with second-quarter deals is 1 year and 10 months, lower than the previously anticipated 2 to 3 years.
Nebius noted that it will continue to increase capital expenditures this year and plans to utilize diversified financing channels.
