Data center delays push $7 billion annualized revenue target to February. One-third of quarterly revenue attributed to one-off items; capital expenditure to reach up to $45 billion next year.
Shares of AI cloud company Nevius closed down 16.84% at $128.64 on the 12th (local time). Despite reporting revenue that exceeded market expectations, the company faced investor scrutiny over data center operational delays and heavy investment burdens.
Nevius reported third-quarter revenue of $980.8 million, a 571% increase compared to the same period last year, surpassing the $907.5 million consensus estimate compiled by LSEG. Adjusted EBITDA turned positive at $465.8 million, compared to a $5.2 million loss in the same period last year, though the company remained in the red with a net loss of $37.5 million.
On the same day, Nvidia announced the resignation of CEO Jensen Huang. Nvidia is a notable investor in Nevius. Nvidia shares fell 4.34%, while Nevius competitor CoreWeave dropped 6.86%. Amid a broader decline in AI cloud stocks, Nevius suffered a steeper drop than its peers.
Annualized Revenue Target Pushed from December to February
The company now expects its Annualized Revenue Run-rate (ARR) to surpass $7 billion by February of next year, delaying the previous target of $7 billion to $9 billion set for December of this year. The company also narrowed its full-year revenue guidance from $3 billion–$3.4 billion to $3 billion–$3.2 billion during the earnings call.
The delay is attributed to supply chain issues from external facility providers. Some facilities originally slated for operation this year have been pushed to the first half of next year. In New Jersey, while the company plans to provide over half of the computing capacity contracted with Microsoft by year-end, the remaining supply schedule has been adjusted to the second quarter of next year. The company confirmed that the customer contracts remain intact.
Nevius announced it will discontinue providing ARR guidance starting next year, citing limitations in ARR as a comprehensive business metric. Moving forward, the company plans to provide guidance on revenue, pre-tax profit, and facility capacity.
One-Off Items Account for One-Third of Revenue
Third-quarter revenue included approximately $325 million in one-time items, accounting for roughly 33% of the total. Excluding these, core revenue stands at approximately $656 million. This revenue was generated in the early stages of a project where Nevius applies its design and platform to facilities funded by partners. While the company expects such revenue to become more regular as the business scales, it has not factored this into its revenue outlook for next year.
2025 Revenue Forecast at $13 billion with $45 billion in Capex
Despite facility delays, Nevius is ramping up investment. It raised its capital expenditure forecast for this year to approximately $27 billion and plans to invest $40 billion to $45 billion next year. With next year's revenue forecast at $12 billion to $13 billion, capital expenditure is expected to exceed revenue by more than three times.
The company justifies this strategy through its secured contract backlog. Remaining Performance Obligations (RPO) stood at $38.7 billion as of the end of September. Customer prepayments are expected to reach $17 billion to $20 billion next year. Nevius plans to fund 75% to 85% of next year's capital expenditure through prepayments and debt secured by contracts with high-credit-rated customers.
The cash burden from large-scale investments remains significant. In the third quarter, the company saw a net cash outflow of $273 million from operating activities and spent approximately $7.3 billion on asset acquisitions, including facilities. The critical factor for the company will be whether delayed facilities become operational on time to convert contracts into actual revenue and cash flow.
