Nebius Group Q3 Revenue Surges 571 Percent to $981M but Shares Fall Despite Strong Beat

Nebius Group posted third-quarter revenue of $980.8 million, a 571 percent year-on-year increase that topped analyst estimates of $908 million, with AI Cloud revenue alone climbing 643 percent to $973.8 million and accounting for roughly 99 percent of total group revenue. Adjusted EBITDA came in at $465.8 million against an estimate of $353 million, and adjusted net income turned positive at $90.9 million, reversing an adjusted net loss of $100.4 million from a year earlier. GAAP diluted EPS was -$0.13, beating estimates by $1.11. Despite the broad beat, shares fell after the report.

The company's annualized run-rate revenue reached $6.4 billion at the end of September, up 113 percent from $3 billion in June, but management pushed back its ARR target, now expecting to exceed $7 billion in February rather than by December as previously guided. Remaining performance obligations expanded to $38.7 billion, and customers committed over $12 billion in total contract value since the start of Q3. Upfront prepayments on third-quarter deals covered more than 100 percent of related capital expenditures, up from 50 to 60 percent in Q2, and payback periods on comparable one-to-three-year contracts improved to one year and seven months from one year and ten months.

Nebius raised its 2026 capital expenditure guidance to approximately $27 billion, above its prior range of $20 billion to $25 billion, and issued an initial 2027 outlook projecting revenue of $12 billion to $13 billion, roughly four times expected 2026 revenue of about $3 billion, alongside capex of $40 billion to $45 billion to build more than 1 gigawatt of new capacity. Management expects 75 to 85 percent of that capex to be funded through customer prepayments and asset-backed financing. The company is targeting pre-tax breakeven in Q4 2027. Contracted power capacity currently exceeds 4 gigawatts, with 5 gigawatts still expected by year-end.

Nebius also announced it will transition its guidance framework in 2027 away from ARR and toward revenue, pre-tax earnings, and capacity. The company extended depreciation schedules for servers and network equipment to five years from four. The results follow strong beats from fellow AI cloud operators IREN and CoreWeave in the prior week. Cash on hand stood at $7.4 billion at quarter-end.