Nebius Q3: revenue up 571%, but 2027 capex jumps to $40-45 billion

Nebius just posted the best quarter of its life as a public company and gave back 10% of its share price for it. The numbers beat. The plan for 2027 is what the market refused to pay for.

The quarter was a genuine beat

Nebius reported third-quarter revenue of $980.8 million, up 571% from $146.1 million a year earlier, ahead of the $907.5 million LSEG consensus, according to the company's results release and CNBC's report on the print. Adjusted EBITDA swung to $465.8 million from a $5.2 million loss in the same quarter last year. The net loss from continuing operations narrowed to $37.5 million, or 13 cents a share, from $119.6 million and 50 cents a year earlier. Adjusted net income came in at $90.9 million. Operating income turned positive at $50.4 million, against a $130.2 million operating loss a year ago.

The margin expansion buried under the guidance headline is the part worth pausing on. Cost of revenue fell to 22% of revenue from 29%, product development to 12% from 31%, and sales, general and administrative expense to 24% from 61%. That is what a company looks like when the data centres it built two years ago finally fill with paying customers: a 47% adjusted EBITDA margin on a business that was losing money on every dollar of revenue in 2025.

Two lines keep the GAAP picture honest. Depreciation and amortisation reached $354.7 million, or 36% of revenue, and interest expense rose to $112.5 million from $14.7 million. Those two items alone are larger than the operating profit. The GPUs are now being paid for twice — once in the capex line, once in the depreciation and interest that follow it.

The guidance is the story

Nebius told investors to expect fiscal 2026 revenue at the low end of its $3 billion to $3.4 billion range, where FactSet had $3.35 billion. For 2027 it guided to $12 billion to $13 billion, roughly in line with the $12.09 billion consensus. Then came the capex numbers. Fiscal 2026 capital expenditure is now expected at $27 billion, up from a prior $20 billion to $25 billion range and well above the $23.85 billion FactSet expectation. For 2027, Nebius guided to $40 billion to $45 billion — against a consensus of $28.77 billion.

CEO Arkady Volozh framed the revenue side in his quarterly letter as "reflecting a conservative approach to the pace of our build-out," as CNBC reported. Read the two numbers together and the arithmetic is stark. Nebius plans to spend $40 billion to $45 billion in 2027 to produce $12 billion to $13 billion of revenue: more than three dollars of capex for every dollar of sales, before a single GPU is depreciated. The 2026 ratio is worse, roughly eight to one, because the revenue arrives after the concrete.

The quarterly run-rate shows how steep the ramp is. Nebius spent $7.3 billion on property and equipment and intangibles in the three months to September, 7.4 times its own revenue for the quarter. Nine-month capex stands at $15.4 billion, which implies roughly $11.6 billion in the fourth quarter alone — about 60% more than the quarter just reported. If the 2027 plan is honoured, the company's quarterly capex roughly doubles again next year.

Where the money comes from, and where it goes

Cash flow is the tell. Nebius used $273 million of cash in operations in the third quarter, worse than the $80.6 million it burned a year earlier, even as adjusted EBITDA reached $465.8 million. The nine-month figure is still positive at $4.23 billion, thanks to cash collected earlier in the year, but the direction of the third quarter matters: the business is now consuming cash at the same time it is consuming capital.

The balance sheet explains how it is funded. Nebius closed the quarter with $7.4 billion of cash and equivalents, against $19.3 billion of net property and equipment and total liabilities of $26.4 billion on $38.7 billion of assets. Over the first nine months it raised $10.1 billion of convertible notes, sold $3.9 billion of treasury shares, issued $2 billion of pre-funded warrants and took on $773 million of long-term debt. This is not a company funding expansion from operations. It is a company renting capital markets at scale and converting the proceeds into GPUs and shells.

One line deserves more attention than it got in the coverage. Accounts receivable stood at $4.04 billion at the end of September, up from $720 million at the start of the year — very nearly the company's entire annualised revenue run-rate of $3.9 billion sitting in unpaid invoices. The release does not break the figure down, so it is impossible to say from the outside how much is one or two large customers billed annually in advance and how much is collection slipping. Either way, a receivables book that large is the number to watch in the fourth quarter, because capex is paid in cash and revenue is not.

The peers make the same trade

Nebius is the fourth neocloud to report in a week, and the pattern is consistent. CoreWeave beat expectations on $3.7 billion of quarterly revenue, up 168%, guided to $13 billion to $13.3 billion for the year, and pointed to a $132.5 billion backlog, while telling analysts it expects to keep parent-level debt financing under $5 billion through 2027, per CNBC. IREN also beat. Both stocks rallied on their prints; Nebius fell on its guidance.

The credit backdrop got worse in between. Reuters reported on November 9 that banks and investors were growing less willing to add AI debt exposure, spooked by the market selloff. CoreWeave's bond yields briefly traded past 16% last week. For a sector that raised its money by selling paper, that is the input that sets the price of the next data centre — as we argued when AI neoclouds hit a credit wall as SpaceX borrowed $40 billion in October.

The case for the bulls, stated fairly

Demand is not the problem, and it is worth saying so plainly. Microsoft told investors on its October earnings call that demand still exceeded available capacity. The Sequence noted on November 12 that Ornn's November 8 benchmarks put H100 and B200 rental prices above their levels a month earlier — the opposite of what a glut looks like. Nebius's own growth is billed revenue at a 47% adjusted EBITDA margin, not a backlog slide, and its cost ratios are improving as capacity fills.

Volozh is also choosing the slower build. A $12 billion to $13 billion revenue guide for 2027, at the bottom half of what the sell side modelled, is a company telling you it will not buy growth with debt it cannot price. That is conservative in the way a CFO is conservative before a refinancing, not in the way a management team is when the orders stop.

Why investors marked it down anyway

The market has stopped pricing neocloud revenue growth and started pricing the financing gap. When a company spends $27 billion in a year to bill $3.2 billion, the entire equity case rests on two assumptions: that the hardware will still be worth renting in 2029, and that someone will lend against it in 2027. The first is an open question the industry has not answered, and the second just got more expensive for everyone in the sector.

There is a third factor specific to this week. Nvidia is the backstop of the neocloud model — an investor in the companies, a guarantor of some of their projects, and the supplier whose allocation decisions set their economics. Nvidia held about $329 million of Nebius shares at the end of June. With Nvidia's board moving to oust Jensen Huang and the stock down 9%, neocloud investors are pricing a supplier in leadership crisis on top of a credit market that has turned.

Add the physical layer. US voters backed dozens of ballot initiatives restricting data centre development this month, and Democrats took both houses of Congress — the permitting and power side of the buildout is now a political variable, not an engineering one. For a company that needs to bring gigawatts online on a schedule, that is another line item in the risk column.

What to watch

• The 8 a.m. ET call. The three numbers that matter: how 2027 capex is phased across quarters, how much of the $12 billion to $13 billion is under signed contract, and whether the next $40 billion comes from converts, asset-level project debt, or prepayments from customers.
• The fourth quarter. Roughly $11.6 billion of capex is implied by the full-year guide against $273 million of operating cash burn in the quarter just reported. Watch whether receivables convert to cash before the next raise.
• The read-across. CoreWeave's pledge to hold parent debt under $5 billion through 2027 and IREN's print are the sector's other tests of the same question: whether AI compute can be financed at these rates without the equity taking the loss.

If you run GPU capacity for a living, the number that decides your 2027 is not the rental rate. It is the coupon.

Would you buy the capex or the revenue — and at what cost of debt does the buildout stop making sense?