Financials

Financials — What the Numbers Say

Read this section together with the Industry and Business tabs. NBIS is the renamed/restructured continuation of Yandex N.V. after the July 2024 sale of its Russian assets. Continuing-operations revenue effectively starts in FY2024, so almost every financial number on this page describes a company that, in commercial terms, is two years old.

1. Financials in One Page

Nebius is an early-stage AI-infrastructure roll-up that has bolted a hyperscale-grade balance sheet onto a sub-$1B-revenue cloud business. FY2025 revenue of $530M (up ~6x YoY) and Q1 2026 revenue of $399M (up 684% YoY, 75% QoQ) reflect a step-function capacity build, not steady-state operations. Operating margin is deeply negative (-115% in FY2025), but Q1 2026 marked an inflection: group adjusted EBITDA flipped to +$130M (32% margin) and Nebius AI's segment EBITDA margin reached 45%. Reported free cash flow is sharply negative — -$3.7B in FY2025 on capex of $4.1B — and management funded the gap with $4.2B of late-2025 convertibles, an additional $4.3B of Q1 2026 convertibles, and a $2B equity investment from NVIDIA in Q1 2026, leaving an end-Q1 cash position of $9.3B alongside about $4.9B of YE2025 reported debt (LT debt rises to ~$8.4B on a Q1 2026 basis after the new converts). Valuation is the central tension: ~$52.6B market cap (May 2026) implies ~16x forward revenue at guidance midpoint and ~6–7x exit-2026 ARR, prices the business as a tier-1 AI compute platform, and leaves zero room for capacity slippage. The financial metric that matters most is annualized run-rate revenue (ARR) versus the $7–9B year-end-2026 guide — that single number sets whether the price is rational or stretched.

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2. Revenue, Margins, and Earnings Power

Plain-English primer. Revenue is the cash value of cloud capacity sold. Gross profit is what's left after the direct cost of running GPUs, power, and bandwidth. Operating income is what's left after Nebius pays its engineers, salespeople, and administrative staff. Operating margin = operating income ÷ revenue; for a software-like business it should be positive at scale; for an infrastructure business in build-out mode it is usually deeply negative.

Annual revenue and operating income (FY2022–FY2025)

The legacy Yandex P&L was reset to near-zero in FY2022 once Russian operations were classified as discontinued. The chart below is the continuing-operations view that ties to today's company.

Revenue scaled 5.8x in FY2025 to $530M, but operating losses widened from $400M to $612M as the company hired ahead of revenue and absorbed the depreciation of new GPU fleets coming online. This is the expected shape of a capacity buildout: opex shows up before revenue does. The relevant question is whether each subsequent quarter narrows that gap.

Quarterly revenue trajectory — the actual story

Three observations:

1. The 75% sequential jump in Q1 2026 is faster than any prior quarter, which is unusual at this scale and reflects new owned-capacity sites coming online plus utilization-driven uplift on existing fleets.
2. Q1 2025 was the only sequential decline — caused by an end-of-quarter timing effect on capacity activation, not lost customers. The trend reasserted in Q2 2025.
3. Group revenue and Nebius AI revenue are now ~98% aligned ($399M vs $390M in Q1 2026), so the consolidated number is effectively a cloud number with two tiny early-stage attachments (Avride and TripleTen).

Annualized run-rate revenue (ARR) and the FY2026 setup

ARR is calculated by multiplying Nebius AI's last-month-of-quarter revenue by twelve. It is the cleanest read on the run-rate the business will exit the year at, and it is what management guides on.

Management's FY2026 guide is $3.0B–$3.4B in reported revenue and $7B–$9B exit ARR, alongside ~40% adjusted EBITDA margin. The implied math: ARR exits the year at roughly 2.4x reported revenue, which only works if a large block of new capacity activates late in 2026. That is consistent with the company's stated power-online schedule.

Margins: where the inflection is happening

Gross margin moved from negative to 69% in FY2025, which is a credible cloud-infrastructure level. Operating margin remained deeply negative because most depreciation hits the income statement before utilized revenue ramps. Q1 2026 is the first quarter to show real leverage: gross margin 74%, adjusted EBITDA margin 32% at group level and 45% at the Nebius AI segment. If that EBITDA margin holds, the FY2026 ~40% adjusted EBITDA guide is reachable.

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3. Cash Flow and Earnings Quality

Plain-English primer. Operating cash flow (OCF) is the cash a business produces from running its operations, before paying for new equipment. Capex is the cash spent on new long-lived assets (GPUs, data center build-outs). Free cash flow (FCF) = OCF + capex. For a capacity-buildout business, FCF can be very negative even when OCF is positive — that is the case here.

Net income vs operating cash flow vs free cash flow

The FY2022 and FY2023 figures embed gain-on-sale and discontinued-operations effects from the Yandex divestiture — they should not be read as cash earnings power. The two clean years are:

• FY2024: OCF +$246M, capex -$808M, FCF -$562M. Reported net income -$641M was distorted by buyback-related items; OCF is the cleaner read.
• FY2025: Net income flipped to +$83M largely from investment gains and divestiture residuals; OCF was +$385M; capex of -$4,066M (5x prior year) drove FCF to -$3.7B.

Free cash flow conversion is structurally negative — that's the design

Capex/revenue ran at ~770% in FY2025 — that is, every dollar of sales was matched by roughly $7.70 of investment in new GPU fleets, networking, and owned data-center build-outs. By contrast, mature hyperscalers run capex/revenue at 10–25%. The ratio will compress as revenue scales, but the company will be capex-heavy for at least three more years.

Cash-flow distortions to watch

Three things matter here:

1. SBC of $83M is ~16% of FY2025 revenue. That is high in absolute terms but lower than the 25–40% typical of pre-profit software peers. If the company hits its scale guide, SBC dilution becomes a smaller share of equity.
2. Q1 2026 reported $2.3B of operating cash flow despite revenue of only $399M — this is almost certainly inflated by customer prepayments on multi-year contracts (Microsoft, Meta, Eigen-related). Treat this as financing-like, not recurring OCF.
3. D&A is set to accelerate. PP&E grew 7x in FY2025 to $6.5B. Trailing depreciation of $469M will likely double over the next 12 months, pressuring reported operating income even as cash margins expand.

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4. Balance Sheet and Financial Resilience

Plain-English primer. Net debt = total debt minus cash. Net debt / EBITDA is the standard leverage gauge; <2x is conservative, >4x is stretched for an operating business. For a build-out company that pre-funds capex, cash runway matters more than the leverage ratio in a single year.

Cash, debt, and equity evolution

The FY2025 jump in debt is the $4.2B convertible senior notes raised in late 2025 alongside a concurrent Class A share offering. Combined with +$2B from NVIDIA's strategic equity investment in Q1 2026 and additional convertibles, end-Q1 2026 cash was $9.3B. That is roughly two-and-a-half years of capex at the FY2025 run rate without any operating contribution — substantial runway.

Liquidity, leverage, and resilience snapshot (FY2025)

Interest coverage screens poorly (EBITDA/interest of -2.3x in FY2025) — but that is a feature of the build phase, not a stress signal. The relevant questions are:

• Does the cash runway carry the company to operating-cash-flow breakeven? At FY2026 guide ($3.0–3.4B revenue, ~40% adj EBITDA), cash EBITDA will roughly cover ongoing capacity replacement capex even as growth capex continues to be funded externally.
• Are the convertibles equity-like or debt-like? They are zero-coupon convertibles with conversion premiums set above current prices at issue; if NBIS continues to compound, dilution is the more likely outcome than cash repayment.
• Is there off-balance-sheet capacity commitment? Yes — the company has contracted >4 GW of power and >100 MW of multiple new sites. Future GPU and power purchase commitments are large and disclosed in the 20-F; investors should size these alongside on-balance-sheet debt.

PP&E grew 7.3x in a single year. The risk is asset stranding if GPU prices fall faster than depreciation schedules assume; the opportunity is that owned capacity (now >75% of contracted power) gives margin leverage that lease-and-resell competitors cannot match.

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5. Returns, Reinvestment, and Capital Allocation

Plain-English primer. Return on invested capital (ROIC) answers "for every dollar of capital deployed, how much annual profit do we earn?" Return on equity (ROE) answers the same question from a shareholder lens. Both are negative or noisy here because the denominator (invested capital) has scaled faster than the numerator (operating profit) — by design.

Returns are still informational, not investable

Returns will remain negative or noisy through at least FY2027. The investable question is the exit ROIC once capacity fills: at a 40% adjusted EBITDA margin on $8B exit-2026 ARR, theoretical EBITDA run-rate is ~$3.2B against invested capital trending toward $20–25B. That implies a steady-state EBITDA-yield-on-invested-capital of ~13–16%, which is healthy if depreciation lives are honest and if pricing power holds.

Capital allocation — how Nebius is spending its capital

There are no dividends, no buybacks, no debt paydown — essentially every dollar (and every dollar borrowed and raised) is going into capacity. That is the correct strategy if and only if demand matches the buildout schedule. Two recent signals that demand exists:

• Microsoft, September 2025: $17.4B multi-year capacity agreement
• Meta, April 2026: ~$27B five-year capacity agreement (referenced in Morningstar fair-value revision)
• NVIDIA, Q1 2026: $2B strategic equity investment (signals technical alignment and supply priority)
• Eigen AI acquisition, May 2026: $643M to add inference-optimization technology

Share count: dilution is real but partly offset by capacity-driven per-share value

The drop in FY2024 reflects the Russian-business carve-out cancellation of legacy Yandex Class A shares. Since then, period-end share count has crept up from 236M to 254M as the company has raised equity. The bigger overhang is in diluted-share count: Q1 2026 diluted basic was 258M but fully diluted share count was 309M, reflecting potential issuance from convertible notes and NVIDIA-linked instruments. That is a ~20% buffer between basic and diluted — meaningful but understood.

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6. Segment and Unit Economics

Nebius reports three operating businesses, but one (Nebius AI cloud) carries effectively all of the consolidated revenue and economics today.

Group revenue mix — Q1 2026

Where the value is.

• Nebius AI Cloud — the GPU cloud / AI infrastructure business. Q1 2026 revenue $390M, ARR $1.9B, segment adjusted EBITDA margin 45%. This is the entirety of the investment thesis.
• Avride — autonomous driving and delivery robots. Reportedly valued at $15B in a January 2026 fundraise (strategic investment from Uber). Revenue is small but the equity stake is a real option.
• TripleTen — edtech reskilling business. Revenue grew 10% YoY in Q1, much smaller than Nebius AI.
• Equity stakes — ClickHouse and Toloka are minority positions, but ClickHouse in particular is now a multi-billion-dollar database company and the carrying value is potentially understated.

Geography concentration

Nebius does not break out revenue by geography in summary form, but disclosed data-center capacity is concentrated in:

Why this matters financially. Roughly 75% of contracted power is now owned rather than leased — important because owned capacity removes a third-party landlord margin from the P&L. That is the structural reason the segment EBITDA margin moved from 24% to 45% in one quarter.

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7. Valuation and Market Expectations

This is the most important section in the page. The financial profile is improving, but valuation is the active risk.

What the market is paying today

The single most informative multiple is EV / exit-2026 ARR ≈ 6.6x at the midpoint guide, falling to ~5x at the high end of the ARR range. CoreWeave (the closest public peer) trades at roughly 18–22x trailing revenue with comparable hyper-growth dynamics. By that yardstick NBIS is cheaper than CoreWeave on forward ARR — but that comparison only holds if the $7–9B ARR guide is met.

Historical valuation context

Trailing EV/Sales multiples are noisy because revenue was reset post-divestiture. The honest read: Nebius has never traded on trailing earnings. It trades on capacity contracts and ARR.

Analyst expectations and price-target dispersion

The price-target dispersion of $126 to $291 — a 2.3x range — is itself the story. It tells you the bull case (full ARR delivery, hyperscaler-class economics) and the bear case (capacity slippage, multiple compression) are both rational; the difference is execution.

Simple bear / base / bull frame

Bear assumes ARR plateaus mid-range, multiple compresses to CoreWeave-like 4x on missed guidance. Base roughly maps to the current price assuming guidance is met. Bull requires both upper-end ARR delivery and a multiple re-rating toward hyperscale-class. At today's price, the market is paying for the base case. To make money from here, you need to believe in something closer to the bull case.

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8. Peer Financial Comparison

Public peers fall into three camps: (1) the direct AI-cloud comp, CoreWeave; (2) the hyperscaler reference point, Oracle (OCI); and (3) the power-first HPC pivot stories — IREN, Applied Digital, and Hut 8.

What the table says.

• CoreWeave is the closest peer, with roughly 10x the trailing revenue ($5.1B vs $530M) and a market cap only ~20% larger ($62B vs $52.6B). CoreWeave is FCF -$7.3B, NBIS is FCF -$3.7B — both are burning cash, but CoreWeave is carrying nearly 3x the leverage ($14.7B debt vs $4.9B). On growth, NBIS is now growing faster (684% vs 168% YoY in latest reported period).
• Oracle is the only peer with real FCF discipline, but it grows at 9% — entirely different business. Useful as a "where the multiples eventually settle" reference, not as a near-term comp.
• IREN, APLD, HUT are direct power-first comps. APLD trades at ~90x trailing EV/sales because revenue is still re-pivoting; IREN and HUT are cheaper but lack NBIS's pure-AI revenue mix.

Peer positioning chart

NBIS sits in the high-growth, high-multiple quadrant — closest in shape to CoreWeave, with the highest growth rate among the comp set.

The peer-gap verdict. NBIS earns a premium for (1) faster growth, (2) lower leverage than CRWV, (3) the optionality of equity stakes and Avride, and (4) a more vertically integrated product stack with owned compute IP. The premium is fragile: it disappears if Q2 or Q3 of 2026 shows any sequential ARR deceleration. NBIS at this price is cheaper than CoreWeave on forward ARR but more expensive than IREN or APLD on trailing sales — defensible only if execution holds.

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9. What to Watch in the Financials

Closing read

What the financials confirm is the inflection: gross margin moved from negative to 69%; segment adjusted EBITDA margin jumped from 24% to 45% in a single quarter; cash and contracted power both expanded materially; and customer commitments now read like a hyperscaler client list (Microsoft, Meta, NVIDIA partnership). The business is no longer an early-stage venture, even if its income statement looks like one.

What the financials contradict is the easy bull case. Reported earnings are negligible. Free cash flow was -$3.7B in FY2025 and will be worse in FY2026 before it gets better. Asset stranding risk on a 7x PP&E expansion is real. Diluted share count is 20% above basic. The trailing EV/sales multiple of ~99x is only defensible if you swap "trailing" for "forward exit-ARR."

The first financial metric to watch is the Q2 2026 ARR print. If end-June ARR breaks $2.5B (about 30% QoQ growth), the FY2026 $7–9B exit guide becomes a layup and the stock can compound through the year. If end-June ARR comes in below $2.2B (15% QoQ growth or less), the bull case starts cracking — capacity activation has slipped or pricing is under pressure, the $7B low-end becomes the over-under, and the multiple compresses. That single number, due in early August 2026, will define the rest of the year.