Earnings Call Transcript - NBIS Q1 FY2026

Operator

Welcome to Nebius Group's Q1-2026 Earnings Conference Call. The presentation will be followed by a Q&A session. If you would like to ask a question, you can click the Ask a Question tab in the top right of the livestream player. Then just type in your question and click Submit. You can submit questions at any time during the presentation, and the Nebius Management team will try and answer them during the Q&A portion of the call. I will now hand over to Gili Noftalovic, Head of Investor Relations, to start the call.

Speaker 2

Hi, everyone, and welcome to Nebius' first quarter 2026 earnings conference call. Joining us on the call today are co-founder and CEO, Arkady, and our CFO, Dodd-Elder,

Speaker 3

along with the broader Nebius executive management team.

Speaker 2

Now, I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to our Form 20-F, which has a list of our risk factors. We undertake no obligation to update any forward-looking statements. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website, located at nebius.com. And now, I'd like to turn the call over to Arkady.

Speaker 9

Thanks, Gili, and welcome everyone to our call. We have had a great start to the year. We're building an AI-native hyperscaler, and I would say we're developing it across four dimensions. The first is capacity and scale. Second, product and functionality. Third dimension is customers and demand. And finally, capital, our fourth dimension. All of our focus is on execution across all four of these dimensions. Let me put our results of the quarter in this context. First on capacity. As you see, we are building big. Last quarter, we told you that we already contracted more than 2 GW of power while targeting more than 3 GW by the end of the year. Three months later today, we have already contracted more than 3.5 GW, and we are now targeting at least 4 GW of contracted power this year. Today we announced a new site in Pennsylvania to support 1.2 GW of power once fully live. This is our second owned GW scale site in the United States. Our platform is most efficient when we own the full stack. And we're building towards that. Our own contracted capacity now accounts for more than 75% of our total power. But more importantly, we continue to build our full stack platform. And this is our second dimension. What does it mean? It means we don't just offer compute. We offer cloud services. Services that span across the AI lifecycle, from bare metal to multi-denancy to inference to agentic and more. And we have made significant progress on that track. And it's not just developing our platform and launching Acer version 3.5 this quarter. Our three acquisitions this year, Tavili, Agen, and Clarify, demonstrate the uniqueness of what we're building. All three companies bring industry-leading engineers and researchers to neighbors. Agin AI and Clarify strengthen our inference optimization solution. Agin was recognized as the number one speed inference provider by NVIDIA. While Agin optimizes at the model level, Clarify optimizes at the system level. And they both strengthen our in-house talking factory offering. We also acquired Tavini earlier this year, extending our platform reach to agentic search in an increasingly significant part of the market. This acquisition brought us regular abilities of what this new class of developers need. We also expanded our technology partnership with NVIDIA. We again achieved NVIDIA Exemplar Cloud status, this time on our GBC 100 for training workloads. We are among a small group of providers to achieve this status across multiple GPU generations. At our core, we are a technology company. We have top AI engineers and deep proprietary expertise across every layer of the stack, both hardware and software. We are quickly becoming a magnet for top talent. We are happy with our ability to enlarge our offerings through strategic acquisitions. Our clients appreciate the full extent of our offering. This is not common in our market. This is our strengths, and this is our uniqueness. We believe this is what will enable us to win. Demand is our third dimension, and it continues to be increasingly strong, but more importantly, our full stack platform allows us to capture and service a large and diverse range of hundreds of customers, not just several big bare-metal alternatives. Our popular generation in the first quarter grew 3.5 times over the fourth quarter, and this is a record for us. And the demand is broadening across industries. Today, we typically see several customers competing for every GPU we bring online. We are building to support this demand with scale and discipline. New customers across a number of use cases are using our full range of offerings to solve their most challenging problems. For example, European fintech leader Revolut recently began using our token tech. In physical AI, 1x technologies is using our cloud platform to build general purpose robots. In life sciences, our cloud platform is enabling startups to build more powerful models that accelerate drug discovery and advance the fight against Adidas in ways that were previously impossible. And beyond technology sectors, larger companies in industries such as manufacturing, energy, heavy equipment, and pharmaceuticals are increasingly engaging with us. Demand is high. Everything we build is sold. That is what is driving us to build more and to raise our 2026 CAPEX guidance to between $20 and $25 billion, which is up from our prior range of $16 to $20 billion. This increase reflects investments in our 2027 capacity that will come online early next year we expect these investments to contribute positively to revenue in the first half of 2027 where we already have customer commitments in place matter is one such customer we need to invest to fully invest to fully realize this requires capital which is our fourth image. We're doing a very good job in tapping the market at scale. We raised significant capital this year, more than $6 billion. More than $4 billion of that came from converts and $2 billion from NVIDIA equity investment. This leaves us with a strong cash position of more than $9 billion. More importantly, we have laid in foundation to raise substantial further capital this year. There are a variety of ways for us to do this. There is our recent Meta contract. First, let me just say that we are very proud of our relationship with Meta and there is tremendous respect between our tech teams. Formerly, this is a 27 billion dollar contract with Meta, but in fact, it's worth a lot more for us. This contract alone can unlock billions of dollars of capital for our own multi-tenant cloud at attractive rates that may not otherwise be available to us on top of this we also have our first contact with momentum and our microsoft agreement that will provide additional financing opportunities obviously there are many other untapped options for us to finance our public cloud build out from the significant repayments we get from customers to asset-backed financing of our payment of contracts to corporate debt and so on so to close it has been a great order we're even more focused on what we're what is ahead we will continue to execute expanding capacity building our cloud platform expanding our customer coverage, and financing grows diligently. Everything we build, we sell, and we are still in the very early days. I want to thank our team for the incredible work day after day and night after night, and to thank our shareholders for your continued support. And with that, let me hand it over to Doug.

Speaker 6

Thank you, Artanik. Indeed, we are off to a strong start to the year, with a number of important achievements. First, we accelerated revenue growth during the portal. We also significantly expanded our margins, and we strengthened our balance sheet. I will touch on each of these, share some color on our results, and conclude with guidance. Please note that all comparisons are year over year, unless noted otherwise. So, let's start with our revenue and ARR. In Q1, we grew the group revenue by 684% year-on-year to $399 million, and 75% from Q4. Once again, we sold out our capacity, as demand continued to exceed available sublime. Our debut AI business, which excludes our consolidated investments in Triple 10 and ARI, delivered even stronger results. Revenue grew 841% from last year to $390 million, representing an 82% quarter-over-quarter increase and 98% of group revenue. Growth was driven by capacity scaling and was further supported by strong utilization annualized run rate revenue for our nephew's AI business reached $1.9 billion at the end of March, up over 50% from $1.25 billion in the previous quarter. As we delivered strong top-line growth, we also remained focused on profitability. Group adjusted EBITDA was $130 million compared to to $15 million last quarter and compared to a loss of $54 million a year ago. Group adjusted EBITDA margin was 32%, continuing the inflection in Q4 and expecting operating new leverage in our model. Nebius' AI business adjusted EBITDA margin expanded to 45%, up from 24% in Q4. This improvement was driven by strong revenue growth. The gap between Group and Nebius margin essentially reflects our investments in ABI right and triple 10. Both are still early stage companies and require substantial operating investments as they scale. We expect Nebius to represent the significant majority of Group adjusted EBITDA for the foreseeable future. As mentioned in the past, our intention is to find strategic and financial partners for these businesses and to consolidate them in the future. Net income of $621 million benefited from a valuation adjustment on the back of Geekhaugh's recent Harpy Crown. This is a non-cast item that captures the growth in the underlying value of the asset. And now turning to our balance sheet. Since our last call, we have continued to strengthen our financial position. In March, we closed a private offering of convertible senior nodes, raising $4.3 billion in gross proceeds, at attractive premiums and complements of 1.25% and 260%. In the same month, we announced a $2 billion equity investment from NVIDIA, reinforcing our alignment with one of our key strategic partners. Pre-payments from our customers also reached a new quarterly record. Operating cash flow of $2.3 billion was up from an operating cash outflow of $198 million in Q1 last year. The sharp increase was primarily driven by upfront payments from our customers. Together, these sources of capital increased cash and cash equivalents to $9.3 billion at Forta End. Now let's speak about our cappings. As Arcadi mentioned, today we are raising our cappings' expectations to $20-$25 billion per the year. The expansion of our infrastructure footprint remains one of our highest priorities, given the strength of market demand and customer antinical we are building for 2027 demands where we have customer commitments already increased and so we have near-term visibility in future revenue associated with this investment as always we will invest in capacity with discipline and rigor including the capacity we are bringing online in 2026. in terms of how we deal and how will fund the capacity in the year ahead we will continue to leverage a diversified range of funding sources on the debt side during the past year we built our ability to take on debt capacity for example with our microsoft contract and our two meta contracts we expect to unlock the ability to raise significant capital through asset back financing we expect this to be at attractive terms based on Microsoft and Meta credit rankings, and we'll inject this capital into building our cloud business. In addition, we expect to raise corporate level debt. We plan to start tapping into these financing options in the near term. And on top of that, our financing options include our At The Martit program. We have not utilized this program to date, but we are evaluating its trade journey. Obviously, we are very focused on generating prepayments from our current and future customers in order to reduce the capital needed from equity and debt financing. We may also evaluate other financing options, but will ultimately pursue whichever vehicles serve best the long-term interest of the business to support our expected capital spending in 2026. The bottom line is that, as of now, given our strong balance sheet and the work we have done putting in place the various long-term contracts we have laid the foundation can enable us to access a wide range of potential funding sources. And now, turning to our outlook for the year. While it remains early in the year, our strong Q1 performance reinforces our confidence in our annual targets. As such, we are reiterating our full year 2026 guidance for annualized run rate revenue of $7 to $9 billion, group revenue of between $3 and $3.4 billion, and group adjusted EBITDA margin of around 40%. Three key parameters will determine our growth profile and margin progression throughout the year – utilization, pricing, and capacity. At present, neither of the first two parameters is limiting our growth. The third, capacity, will play an important role in unlocking our growth potential and driving margin flow flow. On hybridization, we continue to sell out our capacity. And we expect this to be the case for the foreseeable future due to strong market demand and our healthy pipeline. on pricing strong market demand is translating into pricing gains in our latest deals on capacity the timeline of deploying the new capacity impacts both top and bottom

Speaker 5

land results from quarter to point where we anticipate a non-linear quarterly adjusted EBITDA margin progression during 2026. we will see this in q2 given the backend weighted nature of the capacity we bring online. These investments unlock growth by increasing capacity substantially from Q2 to Q3, leading us to be confident in our adjusted EBITDA margin returning to Q1 levels in Q3 before moving even higher in Q4. Overall, we are confident in our full-year targets. In closing, Q1 was another quarter of rigorous execution across the business. We delivered strong revenue growth, margin expansion, new business wins, and continued capital discipline. As we look ahead, we will continue to scale rapidly to capture the tremendous market opportunity ahead, while remaining balanced, disciplined, and focused on delivering long-term value for our shareholders. With that, I'll turn the call back over to Gillie for Q&A.

Operator

As a reminder, if you would like to ask a question, please click the Ask a Question tab in the top right of the live stream player. Then just type in your question and click Submit.

Speaker 3

Thank you, moderator. The first question from our investors on the portal is from Alex Duval at Goldman Sachs. To what extent have you started to see the impact of stronger GPU pricing reflecting in your core AI business? Additionally, is there a way for us to think about the share of older, shorter term contracts that could benefit from this pricing dynamic? Mark, would you be able to answer this one for us?

Speaker 7

Thank you, Alex. We continue to see strong pricing across both old and new GPU generations as demand continues to exceed our available capacity. We just raised prices again in the latest quarter, and we are still selling out across all chip types at the higher prices. We're in a very dynamic market. and we have built a resilient set of processes that allow us to adapt and respond accordingly in any market environment for both new and existing customers. The strength is showing up in a number of ways beyond just price. Contract durations are extending with the average duration of contracts growing meaningfully over the past few quarters. Also, average contract values continue to increase across new logos and existing accounts where we're seeing strong expansion as well. And finally, prepayments are becoming more significant. Customers of all types are prepaying in order to lock in future capacity, including the hyperscalers. This improves our working capital position and gives us flexibility around external financing needs. Our go-to-market model is being built to be agile and adapt to the market and yield outcomes that can best help us continue to scale our business.

Speaker 3

Thanks, Mark. We have a few questions coming in on a CapEx guide and cost inflation. Andre, can you please discuss how much our raise in CapEx was driven by higher capacity growth versus component cost inflation?

Speaker 10

Sure. Thanks, Gideon. Well, the increase in this spending is driven by visibility into 2027 and our need to invest ahead of capacity that we expect to bring online. We'll add much more capacity in the first half of 2027 than this year. and that requires more cap expense in the uh well starting from now in the later part of these years this year we have been able to secure sites and power and customer commitments for 2027 and so we are ramping up construction activities accordingly And, in short, the high number reflects confidence in our contracted demand pipeline and our ability to secure the infrastructure that we were against it. It's not the cost fresher. The impact of the component inflation in our 2026 program was quite material around low single digit as a percentage of total spent also because we secured a lot of 2026 back in 2025 at the previous price levels thank you andre next question we have is from james kisner at

Speaker 3

water tower research navia said ai cloud adjusted evita margin nearly doubled quarter over quarter to 45 percent in q1 while you're targeting around 40 percent for the full year what's driving the implied step down can you walk us through the adjusted ebita margin progression for the year

Speaker 6

daro please i think thanks games yeah indeed indeed as you saw in the quarter our q1 margins were really strong they've used ai adjusted every the margin reached 45 percent nearly dabbling from q4 and that really reflects the underlying strength of the business on the one hand side the demand we are seeing in the market then the terms that we are also able to negotiate with our contracts and the unique economics of the platform itself so as i mentioned earlier as we move throughout the year you will see some quarter to quarter variability and i And I think this is worth taking a moment to explain the dynamic. We have made a number of important investments in the first half of the year. Hiring across go-to-market and engineering our recent acquisitions and continued development of new product capabilities. And those investments are already in the cost base today. And we expect them to actually benefit from the business going forward. on the capacity side our delivery this year is back and weighted and we have a meaningful step up coming in q3 we have very clear visibility into both the investments that we have made and also the capacity that we are bringing online so really what you are seeing across the quarters is a timing dynamic not a structured one the investments land first and the capacity and the revenue it supports come online shortly after so given the timing of our investments in q2 and the timing of the deployment towards the end of the quarter we actually expect those margins in q2 to go a little bit lower returning to q1 levels in q3 and stepping even higher in q4 so for the full year group we expect a margin around 40 as we have guided and on the longer term those dynamics will smooth over time and our capacity footprint continues to scale and higher value software solutions will become larger part of the mix thank

Speaker 3

you Dara the next question is around capacity from Andrew Biel at a read Andrew Andre maybe I can come to you here can you talk about the timing of capacity additions beginning in Q2 and when you expect key sites such as Pennsylvania to reach full capacity.

Speaker 10

Thanks, Gillian. So Andrew, first about the Pennsylvania. Pennsylvania is going to have lights up by the end of 2027 with the first around 250 to 300 megawatts, probably. And then this schedule looks like adding 300 megawatts each year up to 100, 1.2 gigawatts in total, actually. And 1.2, according to our power contract, we have now a possession by mid-2030 or the beginning of 2030, to be more correct, more precise. But overall, our capacity schedule is just ramping up. This year is heavily towards the second half of the year. Q3 is March. It's a very significant improvement for us in terms of the capacity going online. Q4 is also very significant. And then Q1 next year is where our bigger projects like Alabama and probably the first Missouri will kick in also.

Speaker 3

Great. Thank you. We'll probably stick with you, Andrea, as we have a question from Josh Barrett, Morgan Stanley. Can you address the media reports indicating delays at the Vinland, New Jersey site? Understanding you've delivered commitments so far, are there any delays to note for the remainder of the Microsoft contract?

Speaker 10

um so we delivered uh all our capacity commitments across our uh microsoft and meta customers so the first meta uh as we already spoke i believe the first meta contract was fully delivered in q1 this year um uh the microsoft contract is way more stretched and we have the delivery schedule up to the end of this year. We delivered the first tranche in November last year. We, yeah. And so we continue to be in the contract schedule. Again, it ramps up starting from the mid-year. And most of the volumes will be coming in Q3 and Q4.

Speaker 3

Great. Thank you. So we have had a number of questions around the Meta contract. A question from Alex Platt is, can you provide more details on the recently announced Meta deal? Can you explain how the 15 billion capacity option works? Should we view this as Meta backstopping 15 billion with a set attractive margin? And if you can get a customer with better unit economics on that capacity, will you take that instead? Mark, let me come to you here

Speaker 7

to walk us through this. Thank you, Alex. First, I want to say that we love working with Meta, and we're excited that they chose to buy more capacity from us. This expanded new agreement is, to make sure that we all understand this, a five-year contract for a total of 27 billion dollars and it is structured in two parts first there's a 12 billion dollar commitment to dedicated compute capacity with delivery starting in early 27 and then second as you pointed out there's another 15 billion dollars of additional capacity that we at our discretion can either allocate to meta or sell to our ai cloud customers as it comes online for the duration of the five-year contract let me explain this in a bit more detail meta is committed to buy up to 15 billion dollars of any capacity in these clusters at our option during the entire five-year contract this commitment will likely allow us to finance the clusters with asset based back financing at attractive terms while selling them to as i think you pointed out to our ai cloud customers at potentially higher market prices the unique combination of being able to sell at a premium along with the commitment by meta to purchase any capacity during the contract should provide us with higher margins less risk and more visibility in our revenue. If the market remains strong, we should generate more than the $27 billion in revenue from this great agreement.

Speaker 3

Thank you, Mark. We have a question from Alex Ubal, Goldman Sachs, about M&A. Could you explain the rationale behind your move to acquire Agin AI and clarify? How does this move improve your AI cloud platform capabilities? To what extent does this move mean that you could improve customer stickiness roma i think we'll go to you um yeah thank you gilly

Speaker 8

thank you alex for the question first of all i want to say that we are super excited with these two incredible teams of talented people from agon and clarify uh will join us um and to deep dive in rational let's start from foundations uh our view is that we should own the compute stack uh that is where our vertical integration our supply chain depth and our hardware engineering generate advantage and it's also the layer that drives the bulk of our economics above the compute stack we build the full cloud solution and software plays the role of enabler by the way we partner where partnership is the right path and as you see now we use m a selectively where it accelerates our roadmap brings in proven developer adoption or ads capability is complementary to what we are building acceleration is the key lens we apply to every potential transaction where we can find rare talent or proven adoption this is by the way the the example of tavidi that has incredible developer adoption that would in general take us meaningfully longer to build organically acquisition is the fastest path and we evaluate every potential deal against the clear criteria does it deepen customer engagement uh increase lifetime value uh unlock the new category of the customers or use cases we can address and in general strengthen our position as a full stack ai cloud thanks roma we're getting

Speaker 3

more questions on mna so we'll likely stay with you here several participants are asking on whether token factory and software more broadly are distinctly different from the infrastructure layer and training would love to get your insights around agentic monetization and the opportunity

Speaker 8

there. Yeah, thank you for the question. As I said, we look at the software as an enabler. So it's not that we build the software to generate a separate revenue stream. The software, Software, first of all, plays the role of unlocking the new capabilities for us, unlocking the new opportunities in the types of the workloads that are growing on the market and the types of the customers that we can address. Software changes the shape of the customer relationship. Every layer of the software unlocks another group of users and the customers. We want to meet customers where they need us and let them consume our vertically integrated solution in the way that they need, and it might be a different way for different types of the customers. Customers come to our platform for different needs. In essence, they all need to run AI at scale, which means that they need compute. But for example, people who use our multi-tenant cloud, they, to a big extent, come for large training jobs. People who, and these are like research-driven, data scientist-driven workloads. People who come to Token Factory, they build vertical AI integrated vertical AI products or apply AI in their enterprises. And they come for the tokens. And moving forward, we'll see new ways to consume infrastructure at scale that will be the agentic, end-to-end agentic workloads.

Speaker 3

Thanks, Tal. We have a question from Tal Liani at Bank of America. how do you plan to finance the additional capex and are you considering disposing some of your

Speaker 6

non-quarter holdings taro over to you happy to take this question tally um well our look our balance sheet is strong and at the end of the quarter 9.3 billion of cash and cash equivalents and this was supported by 2.3 billion of operating cash flow which was generated in the quarter right and maybe you know coming from up from payments from our customers so currently more than 90 percent of the capex range that we've rejected in february is already secured by cars and contractual commitments the incremental capacity reflected in a raised 20 to 25 billion dollars guidance will be funded through additional financing and as we have as i have mentioned in previous in previous calls, right? So, we have a wide range of sources available to us. On the debt side, we expect to use asset-backed financing against our contracts with Microsoft and Meta, and we may also raise corporate-level debt. On the equity side, we have established an at-the-market program from up to 25 million plus A shares. We have not utilized these programs to dates, but we are evaluating the program regularly. In any case, as we have done today, we will apply consistent guardrails on cost of capital and shareholder dilution while maintaining a disciplined capital structure.

Speaker 3

Thanks, Dara. We have gotten a few questions on pipeline, one from Nahal Choksi at Northland Capital. Your pipeline is up 3.5 times or quarter over quarter in 1Q26. Does this pipeline include hyperscalers like Meta, like the Meta deal? Can you also provide more details on what this number represents and how likely are you to convert pipeline to revenue?

Speaker 7

Thank you, Geely, and thank you, Nehal. The referenced pipeline growth of three and a half times a quarter, which three and a half times quarter over quarter, which we're very proud of, is for our AI cloud business. And it does not include any strategic hyperscaler deals like the Meta deal. It does include qualified opportunities across our core AI cloud and token factory products, as well as across all of our key customer segments, including AI natives, software vendors, and enterprises. What we can share about conversion is that we have maintained our solid win rates at the same time as we've accelerated our sales cycles and increased our average selling prices. And you can see this with some of the strong wins that we have, such as Sward Health in Healthcare Life Sciences and Rhoda and OneX in Physical AI and Core Automation, one of our AI native model builders, as well as Revolut and Monday.com new customer wins for Token Factory. What we are doing is enabling our go-to-market teams to have a consultative conversation with our customers about their plans and for current and future workloads, including, as an example, what they're thinking about with regard to Vera Rubens. We're also focusing and scaling our go-to-market and success teams to help customers to realize their plans, which turns into durable revenue for us. Speaking about scaling, by the way, we have a number of recent appointments, including key leaders for the Americas, Dan Lawrence, who is our SVP and GM for the Americas, and John Haar, who is joining, who has joined as GM for Asia Pacific and Japan, and Raja Agrawal, our VP for the Middle East.

Speaker 3

Thanks, Mark. Another question that we have from the portal is saying that you emphasize the momentum in your software stack. Where are you seeing the most momentum across the stock today? Why are customers choosing Nebius? Roma, over to you.

Speaker 8

Yeah, thank you, Gilia. I think it's said so many times by different people that now is the time of inference, and we see the same. Inference is the fastest growing segment, new segment in our stack, and we see a very lucrative place where Nebius is positioned. Uh, we have the winning combination with, uh, capacity and customers need scale. We have, uh, the strong software stack and we invest, uh, in-house and with the new announced, uh, acquisitions to be on the top performance of supporting the most popular open source models and specialized models. we can provide the best total cost of ownership and cost of tokens for our customers through the full stack optimization of the stack and of course we care a lot about the developer experience so we think that in a way we combine the best from different worlds of specialized specialized inference platforms, the scale of AI specialized clouds, the scale of hyperscalers and the specialization of AI specialized cloud. So TokenFactor is our primary inference product now, and we are seeing good product market If you look on the next layer, on Argentic, it's still to be defined what is the final shape of the product and who will be the winners. We expect that Nebios will play the same role of foundation for people to build at scale and will provide the set of tools and platforms to to optimize workloads in a genetic world.

Speaker 3

Thanks, Ruma. We have a question on customer concentration. Mark, how do you think about concentration risk given how large your contracts are with Meta and Microsoft? What does the rest of your revenue base look like in terms of customer diversification?

Speaker 7

Thank you, Gili. As a reminder, I think we say this over and over again, but I think it's important to recognize that our priority is our AI cloud business. As such, we are very intentional about how we are pairing these key strategic relationships with the likes of Meta and Microsoft with a diversified core of our AI cloud customer base. We do not take these big strategic deals lightly and only take them when we see terms favorable for our core mission, again, serving our AI cloud business. we also very diligently capacity plan and we're always looking to add capacity to best serve our core ai cloud customers from developers all the way through to enterprises our ai cloud business is experiencing strong traction across all of the products that we're offering as well as customer segments and the verticals that we're chasing the diversified ai cloud book of business as well gives us both customer and use case visibility that helps to fuel our go-to-market and drives our pipeline and revenue diversification overall thanks mark we have a question from james

Speaker 3

kizner at water tower research on the two billion dollar investment from nvidia and expand your collaboration on inference and agentic software around token factory what concrete deliverables should we expect over the next few quarters and does the partnership affect the timing or scale of your vera root bin deployment in the second half of 2026. andrey

Speaker 10

yeah okay get it thanks james for the question so first of all the nvidia strategic investment is meaningful across several dimensions beyond the 2 billion of equity and line of sight to 5 gigawatts of capacity commitment by the end of 2030 that we've done. It really deepens a multi-year partnership with our most important hardware supplier at the moment when access to GPU supplies is a competitive advantage, so to say. We gain differentiated supply chain certainty on the future Rubin, Vero CPUs, and the networking. We also have a close collaboration with NVIDIA for the design and early support of the future SKUs. As of today, this is Vero Rubin's and Vero CPU platforms. and we are able actually to have a early deployment that support in our cloud platform as soon as they will be publicly available again it reinforces our position as a preferred builder of AI infrastructure and aligns our roadmap with the nvidia product cycle which is very critical for the price and the performance and the utilization and just leadership overall we are also expanding our software integration our announcement around physical ai is one example and we are very very excited about our partnership driving vertical specific advancements we are also partnering with them to build software for imprints and argentin park and just recently achieved nvidia exemplary cloud status on gb300 for training we are very much among the first cloud providers globally receive uh for all the nvidia generation where this status is uh available yeah that's it

Speaker 3

thanks andre mark maybe this one for you on a question from the portal some of your competitors have mentioned they are sold out for most of 2026 and even into 2027 if you are future selling how much of your future capacity is sold out for this year and next uh thank you daily um yeah first of

Speaker 7

we are sold out again in q1 as we have for several quarters as demand continues to significantly exceed available capacity the vast majority of capacity coming online over the next several quarters to 12 months is already under contract or earmarked for our ai cloud customers we do retain a portion of capacity for self-service to serve those ai builders that roman mentioned earlier and then we proactively manage those allocations to keep the segment supplied as demand evolves. Separately, we're typically seeing four or more customers competing for every GPU we bring online. We have significant expansion plan for 2027, including Vera Rubens, and we'll start selling that capacity as we move into the second half of this year.

Speaker 3

Thank you, Mark. We also have a question on U.S. data center opposition. Tom, can you touch on some of the political opposition here in the U.S. related to data center construction?

Speaker 4

Yeah, for sure, Gili. I mean, so definitely this is a big topic. It's something that we pay a lot of attention to, but overall, I think what I would say is that the approach that we've taken so far, we've found to be quite effective. And I would basically say there's a few sort of components of that approach and how we think about this. Number one, I think, first of all, not all companies that build data centers build in the same way. We're not all alike. And I think you've heard Andrea's team talk about how we build, the efficiencies that we're able to achieve, what we do around creating interesting technological ways of heat reuse and so on and so forth. So we build very efficiently, very effectively. And I think that's an important part of our story and what we talk about when we come into new regions. But of course, that's not enough. I think that we also, the second thing is that we take a very transparent approach to what we do and how we talk about ourselves. I think that's not something that's necessarily universal in our industry, but it's right from the very beginning when we're looking at a site and we're engaging, it's very clear who we are. We engage very actively in communities and talking about what our plans are, what we do, how we build, how we contribute. You can see us showing up at community town hall meetings or I'm looking actually right right now, Andrej Karajninkov across the table in Amsterdam, who's just blown in from our event in Independence, Missouri yesterday, where we were engaging with the local government and community. So we're trying to just be very clear and transparent about what we do, how we do, and the benefit that it brings. And I think the last thing is that, look, when we come into a new region to build, we don't just build and then move on to the next city. These are long-term investments, and so therefore we have to look at these relationships with communities as long-term partnerships and relationships. So we think very much beyond what we do in terms of the building, but where else we can contribute through it, whether it's through our Nearby's Academy academic offerings, working with local universities, helping to train, re-skill, re-tool, and so on. So we view this very much realistically as a long-term partnership, and so far we've found that this approach resonates well. But there's no room for complacency here, so we continue to pay attention and make sure that we're doing the best we can to be a positive contributor to the local ecosystems.

Operator

This concludes today's call. Thank you everyone for joining. You may now disconnect.