Nebius vs. CoreWeave: First Impressions from Q1 2025 Earnings
A Tale of Two AI Clouds Continues
Today, Nebius reported its Q1 2025 results. CoreWeave released their first ER a few days earlier. I’ve written extensively about both companies before their stock prices experienced such remarkable growth — dare I say, some of it driven by factors beyond fundamental business improvement. This is a first-pass analysis of what stood out to me following their Q1 earnings reports.
1. Headline Metrics (US $ millions)
2. Nebius: Software-Led, Cash-Funded, and Patient
Revenue mix & trajectory
~75% of Nebius revenue now comes from its AI cloud segment. ARR grew to $249m in March and hit ~$310m in April, implying a >$750m exit run-rate for FY25. Its customers are mostly month-to-month — no long-term lock-ins — but new cohorts are adopting integrated products like Slurm, MLOps, and object storage, helping drive gross margin improvement (cost of revenue fell from 78% to 53%).
Depreciation-heavy GAAP loss
Nebius’ $113m net loss is mostly non-cash. Depreciation and amortization surged from $8.9m to $49.2m (+453%) as three GPU clusters transitioned from construction-in-progress to active service. Nebius depreciates its infrastructure on a strict four-year straight-line schedule, front-loading expenses relative to peers. Without this, adjusted EBITDA loss narrowed 12% YoY.
Self-financing model
After its $2.5bn asset divestment and $0.7bn pre-IPO raise in 2024, Nebius finished Q1 with $1.44bn in cash and just ~$6m in lease-related debt. Management reiterated that it does not intend to raise debt or equity in the near term.
Funding strategy
Instead, Nebius plans to fund future builds by monetizing non-core equity stakes (ClickHouse, Toloka, Avride). This allows for internal scaling without shareholder dilution or interest burden, but depends on well-timed exits.
Outlook
Nebius reaffirmed that it expects adjusted EBITDA breakeven in H2 2025 — a clean target for a software-forward, balance-sheet-conscious AI platform.
3. CoreWeave: Contract-Backed, Debt-Fueled, and Relentless
Explosive top-line, delayed cash
CoreWeave’s $982m revenue came primarily from multi-year, fixed-price GPU compute contracts. Adjusted operating margin hit 17%, up 3 points YoY, but GAAP losses widened due to $184m in IPO-triggered stock-based comp (SBC).
Backlog vs. working capital
CoreWeave’s backlog rose to $25.9bn, but RPO fell slightly due to the $11.2bn OpenAI deal being booked as “future revenue.” There’s a 3–5 month delay between GPU payment and customer billing — so restricted cash keeps rising, even while free cash flow remains negative.
Rising interest drag
Q1 interest expense ballooned to $264m, up sharply as more clusters were activated. As fewer costs are capitalized under construction, more interest hits the income statement directly. This pressure will continue quarter after quarter.
CapEx program
Q1 CapEx was $1.9bn (slightly down from Q4). Management reaffirmed FY25 CapEx guidance of $20–23bn, implying ~$5bn per quarter. Power buildout is racing ahead, with 1.6 GW contracted — more than 15× Nebius’ target.
Financing model
CoreWeave’s model is built on vendor- and customer-backed debt: each new contract (e.g., OpenAI) enables a matched project finance facility (likely from NVIDIA, power vendors, or colocation partners). Debt is amortized through customer payments. The system is elegant — but only if timing aligns and capital markets stay open.
4. Adjusted EBITDA: What It Tells Us, and What It Leaves Out
Both firms emphasize Adjusted EBITDA. Nebius uses it to benchmark toward H2 breakeven. CoreWeave uses it to highlight its 62% margin and rapid scale.
Adjusted EBITDA removes interest, taxes, depreciation, and one-time expenses — but not all bridges are created equal. It’s critical to understand what’s being added back and how that relates to the company’s capital structure.
Nebius Adjusted EBITDA = Net loss + D&A, selected SBC(Stock-Based Compensation), FX/tax/reserve items. Excludes interest income and investment gains.
CoreWeave Adjusted EBITDA = Net loss + D&A, full net interest expense, IPO SBC ($184m), onboarding costs, FV revaluations. Excludes $200m+ in real financial costs.
Capital structure context matters
Nebius’ EBITDA losses are mostly depreciation, not burn. With minimal debt and $1.4bn in cash, it doesn’t need to manufacture profit.
CoreWeave’s positive EBITDA excludes $264m in quarterly interest — a real cost of its debt-driven model. The bridge looks clean, but it hides a cash-flow timing risk that only works if the whole machine stays synchronized.
5. Capital Structure & Strategy Contrast
Nebius is running a low-leverage, cash-first model with a flexible ramp and optional equity taps.
CoreWeave is executing a bold, debt-intensive plan that only works if capital remains cheap and customer contracts remain rock-solid.
6. Allow Me to Talk About Coreweave’s Working Capital, Again
CoreWeave’s Q1 2025 results lay bare the tension between its powerful earnings engine and a fragile working capital structure that depends heavily on perfect operational timing. The company posted a record $606 million in adjusted EBITDA on $982 million in revenue, yet only generated $61 million in operating cash flow—a striking gap that points to serious cash-conversion issues. The breakdown shows why: accounts receivable increased by $639 million, pushing DSO (days sales outstanding) to nearly 97 days, meaning roughly a full quarter’s worth of revenue is sitting unpaid on the books.
Simultaneously, deferred revenue—an indicator of upfront customer cash—flipped from a $1.44 billion inflow in Q1 2024 to a $15.9 million outflow this quarter. That swing signals a structural shift: newer contracts are increasingly backloaded, with less cash collected upfront. Yet CoreWeave’s spending didn’t slow. It logged $1.41 billion in CapEx for property / equipment / capitalized software usage, and interest expense ballooned to $264 million, up 6.5x from a year ago, as more GPU clusters moved from “construction-in-progress” to active service—cutting off interest capitalisation and pushing full charges to the P&L.
To fund this growing working capital gap, CoreWeave raised $785 million in new debt in Q1, and is reportedly lining up another $1.5 billion in unsecured high-yield bonds just weeks after its IPO. This cash cycle—spend first, earn later—only works if every element stays synchronized: hardware deliveries, cluster go-lives, billing ramp-up, and customer payments. Q1’s data shows that even as revenue and adjusted margins remain strong, the company’s financial flywheel is increasingly sensitive to timing mismatches that could strain liquidity and increase its dependence on external financing.
7. What I am Watching
Pick your own Risk