NBIS

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 live stream player. Just type in your question and click Submit. You can submit questions at any time during the presentation, and the Nebius management team will tryand answer them during the Q&A portion of the call. I will now hand over to Gili Naftalovich, Head of Investor Relations, to start the call.

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, Dado, along with the broader Nebius executive management team. 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. Now I'd like to turn the call over to Arkady.

Thanks, Gili, and welcome everyone to our call. We have had a great start to the year. We're building an AI-native hyperscaler. 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. 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. 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 lit live. This is our second owned gigawatt scale site in the United States. Our platform is most efficient when we own the full stack, and we are building towards that. Our owned contracted capacity now accounts for more than 75% of our total power. 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-tenancy to inference to agentic and more. We have made significant progress in on that front. It's not just developing our platform and launching Aster version 3.5 this quarter.

Our three acquisitions this year, Tavily, Eigen AI, and Clarifai demonstrate the uniqueness of what we're building. All three companies bring industry leading engineers and researchers to Nebius. Eigen AI and Clarifai strengthen our inference optimization solutions. Eigen AI was recognized as the number one speed inference provider by NVIDIA. While Eigen AI optimizes at the model level, Clarifai optimizes at the system level, and they both strengthen our in-house Token Factory offering. We also acquired Tavily earlier this year, extending our platform reach to agentic search, an increasingly significant part of the market. This acquisition brought us a rare capabilities 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 GB300 for training workloads. We're among a small group of providers to achieve this status across multiple GPU generations.

At our core, we're a technology company. We have top AI engineers and deep proprietary expertise across every layer of the stack, both hardware and software. We're quickly becoming a magnet for top talent. We're happy with our ability to enlarge our offering 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 of takers.

Our pipeline generation in the first quarter grew 3.4x, 3.5x over the fourth quarter. This is a record for us. The demand is broadening across industries. Today, we typically see several customers competing for every GPU we bring online. We're 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 Factory. 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 diseases in ways that were previously impossible.

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 with is sold. That is what is driving us to build more and to raise our 2026 CapEx guidance to between $20 billion and $25 billion, which is up from our prior range of $16 billion-$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 and commitments in place. Meta is one such customer. We need to invest to fully realize it. This requires capital, which is our fourth dimension. 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 the 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're very proud of our relationship with Meta, and there is tremendous respect between our tech teams. Formally, this is a $27 billion 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 contract with Meta 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 prepayments we get from customers to asset-backed financing of our paymaster contracts, to corporate debt, and so on. To close, it has been a great quarter. We're even more focused on what is ahead. We will continue to execute, expanding capacity, building our cloud platform, expanding our customer reach, and financing growth 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. With that, let me hand it over to Dado.

Thank you, Arkady. Indeed, we are off to a strong start to the year with a number of important achievements. First, we accelerated revenue growth during the quarter. 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. Let's start with our revenue and ARR. In Q1, we grew the group revenue by 684% year-on-year to $399 million, up 75% from Q4. Once again, we sold out our capacity as demand continued to exceed available supply. Our Nebius AI business, which excludes our consolidated investments in TripleTen and Avride, 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 of pricing. Annualized run rate revenue for our Nebius AI business reached $1.9 billion at the end of March, up over 50% from $1.25 billion in the previous quarter. We delivered strong top-line growth, we also remain focused on profitability. Group-adjusted EBITDA was $130 million compared to $15 million last quarter and compared to a loss of $54 million a year ago. Group-adjusted EBITDA margin was 13%, continuing the inflection in Q4 and reflecting operating 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 Avride and TripleTen. 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, deconsolidate them in the future. Net income of $621 million benefited from a valuation adjustment on the back of ClickHouse recent RP round. This is a non-cash item that captures the growth in the underlying value of the asset. 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 notes, raising $4.3 billion in gross proceeds at attractive premiums and coupons of 1.25% and 2.60%. In the same month, we announced a $2 billion equity investment from NVIDIA, reinforcing our alignment with one of our key strategic partners. Prepayments 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 quarter end. Let's speak about our CapEx.

As Arkady mentioned, today we are raising our CapEx expectations to $20 billion-$25 billion for the year. The expansion of our infrastructure footprint remains one of our highest priorities given the strength of market demand and customer activity. We are building for 2027 demands where we have customer commitments already in place. We have near-term visibility into 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 build and how we'll 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-backed financing. We expect this to be at attractive terms based on Microsoft and Meta credit ratings, 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. On top of that, our financing options include our at-the-market program. We have not utilized this program to date, we are evaluating it regularly. 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 we'll 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 to enable us to access a wide range of potential funding sources. 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 billion-$9 billion, group revenue of between $3 billion 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-through. On utilization, 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-line results from quarter to quarter. We anticipate a nonlinear 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 a 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 Gili for Q&A.

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.

Thank you, moderator. The first question from our investors on the portal is from Alex Dubov, 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? Marc, would you be able to answer this one for us?

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 are seeing strong expansion as well. 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.

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

Sure. Thanks, Gili. 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 first half of 2027 than this year, that requires more CapEx spend in the, well, starting from now in the later part of this year. We have been able to secure sites and power and customer commitments for 2027, we are ramping up construction activities accordingly. In short, the high number reflects confidence in our contracted demand pipeline and our ability to secure the infrastructure to deliver against it. It's not the cost pressure.

The impact of the component inflation in our 2026 program was quite material around low single digits as a percentage of total spend. Because we secured a lot of 2026 back in 2025 at the previous price levels.

Thank you, Andrey. Next question we have is from James Kisner at Water Tower Research. Nebius said AI cloud-adjusted EBITDA margin nearly doubled quarter-over-quarter to 45% in Q1, while you're targeting around 40% for the full year. What's driving the implied step down? Can you walk us through the adjusted EBITDA margin progression for the year? Dado, please.

Thanks, James. Indeed, indeed. As you saw in the quarter, our Q1 margins were really strong. Nebius AI-adjusted EBITDA margin reached 45%, nearly doubling from Q4. That really reflects the underlying strength of the business. On the one hand side, the demand we are seeing in the market, the terms that we are also able to negotiate with our contracts and the unique economics of the platform itself. As I mentioned earlier, as we move throughout the year, you will see some quarter-to-quarter variability. I think this is worth, you know, 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.

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-end 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. Really, what you are seeing across the quarters is a timing dynamic, not a structural one. The investments land first, and the capacity and the revenue it supports come online shortly after. 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.

For the full year group, we expect a margin around 40% as we have guided. 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 you, Dado. The next question is around capacity from Andrew Beale at Arete. Andrew, Andrey, 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?

Thanks, Gili. Andrew, first, about the Pennsylvania. Pennsylvania is gonna have lights up by the end of 2027 with the first around 250 MW-300 MW probably. Then the schedule looks like adding 300 MW each year up to 1.2 GW in total. Actually, 1.2 GW according to our power contract we have in our possession by mid 2030 or the beginning of 2030, to be more correct, more precise. Overall, our capacity schedule is just ramping up. This year is heavily towards the second half of the year. Q3s March is a very significant improvement for us in terms of the capacity going online. Q4, also very significant. Q1 next year is where our bigger projects like Alabama and probably the first Missouri will kick in also.

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

We delivered all our capacity commitments across our Microsoft and Meta customers. The first Meta, as we already spoke, I believe the first Meta contract was fully delivered in Q1 this year. 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 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.

Great. Thank you. 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? If you can get a customer with better unit economics on that capacity, will you take that instead? Marc, let me come to you here to walk us through this.

Thank you, Alex. First, I wanna 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, and it is structured in two parts. First, there's a $12 billion commitment to dedicated compute capacity with delivery starting in early 2027. Second, as you pointed out, there's another $15 billion 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 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-backed 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.

Thank you, Marc. We have a question from Alex Dubov, Goldman Sachs, about M&A. Could you explain the rationale behind your move to acquire Eigen AI and Clarifai? How does this move improve your AI cloud platform capabilities? To what extent does this move mean that you could improve customer stickiness? Roman, I think we'll go to you.

Yeah. Thank you, Gili. Thank you, Alex, for the question. First of all, I want to say that we're super excited with these two incredible teams of talented people from Eigen and Clarifai will join us. To deep dive in rationale, let's start from foundations. Our view is that we should own the compute stack. 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 adds capabilities 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 example of Tavily that has incredible developer adoption that would, in general, take us meaningfully longer to build organically. Acquisition is the fastest path. We evaluate every potential deal against the clear criteria. Does it deepen customer engagement, increase lifetime value, 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, Roman. We're getting more questions on M&A, 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 there.

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

Thanks, all. 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 non-core holdings? Dado, over to you.

Happy to take this question, Tal. Well, our, look, our balance sheet is strong. 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? Mainly, you know, coming from payments from our customers. Currently more than 90% of the CapEx range that we projected in February is already secured by cash and contractual commitments. The incremental capacity reflected in our raised $20 billion-$25 billion guidance will be funded through additional financing. As I have mentioned in previous calls, right? 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.

We may also raise corporate level debt. On the equity side, we have established an at the market program from up to $25 million Class A shares. We have not utilized these programs to date, 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.

Thanks, Dado. We have gotten a few questions on pipeline. One from Nehal Chokshi at Northland Capital. Your pipeline is up 3.5x or quarter-over-quarter in 1Q 2026. 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? Marc?

Thank you, Gili. Thank you, Nehal. The referenced pipeline growth of 3.5x a quarter, which 3.5x quarter-over-quarter, which we're very proud of, is for our AI cloud business. 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.

You can see this with some of the strong wins that we have, such as Sword Health at in healthcare life sciences, and Rhoda AI and 1X 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 Rubin. 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 Haarer, who has joined as GM for Asia Pacific and Japan, and Raja Agrawal, our VP for the Middle East.

Thanks, Marc. 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 stack today? Why are customers choosing Nebius? Roman, over to you.

Yeah. Thank you, Gili. I think it 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. We see a very lucrative place where Nebius is positioned. We have the winning combination with capacity and customers need scale. We have the strong software stack, and we invest in-house and with the new announced 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 like cost of tokens for our customers through the full stack optimization of the stack. Of course, we care a lot about the developer experience.

We think that, in a way, we combine the best from different worlds, of specialized inference platforms, the scale of AI specialized clouds, the scale of hyperscalers and specialization of AI specialized cloud. Token Factory is our primary inference product now, and we are seeing good product market fit. If you look on the next layer, on agentic, it's still to be defined what is the final shape of the product and who will be the winners. We expect that Nebius will play the same role of foundation for people to build at scale, and will provide the set of tools and platforms to optimize workloads in agentic world.

Thanks, Roman. We have a question on customer concentration. Marc, 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?

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, only take them when we see terms favorable for our core mission. Again, serving our AI cloud business. We also very diligently capacity plan, 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, Marc. We have a question from James Kisner at Water Tower Research. On the $2 billion investment from NVIDIA and expanded 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 Rubin deployment in the second half of 2026? Andrey?

Okay, Gili. Thanks, James, for the question. First of all, the NVIDIA strategic investment is meaningful across several dimensions, beyond the $2 billion of equity and line of sight to 5 GW 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 supply is a competitive advantage, so to say. We gain differentiated supply chain certainty on the future Rubin, Vera CPUs and the network. We also have a close collaboration with NVIDIA for the design and early support of the future SKUs. As of today, this is Vera Rubin and Vera CPU platforms.

We are able actually to have a early deployment and support on 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 excited about our partnership driving vertical specific advancements. We are also partnering with them to build software for inference and agentic work, and just recently achieved NVIDIA Exemplar Cloud status on GB300 for training. We are very much among the first cloud providers globally to receive for all the NVIDIA generation where this status is available. Yeah, that's it.

Thanks, Andrey. Marc, 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?

Thank you, Gili. First of all, 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 are typically seeing four or more customers competing for every GPU we bring online. We have significant expansion plan for 2027, including Vera Rubin, and we'll start selling that capacity as we move into the second half of this year.

Thank you, Marc. 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?

For sure, Gili. I mean, definitely this is a big topic. It's something that, you know, 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 found to be quite effective. I would basically say there's a few sort of components of that approach and how we think about this. Number one, I think, you know, first of all, not all companies that build data centers build them the same way. We're not all alike, and I think you've heard kind of Andrey and team, you know, talk about how we build, the efficiencies that we're able to achieve, what we do around creative use, you know, interesting technological ways of heat reuse and so on and so forth.

We build very efficiently, very effectively, and I think that's an important part of our story and what we talk about when we, when we come into new regions. Of course, that's not enough. I think that, you know, 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, 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 know, you can see us showing up at community town hall meetings or, you know.

I'm looking actually right now at Andrey Korolenko across the table in Amsterdam, who's just flown in from our event in Independence, Missouri, yesterday, where we were engaging with the local government and community. We try and just be very clear and transparent about what we do, how we do, and what the benefit that it brings. 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, therefore, we have to look at these relationships with communities as long-term partnerships and relationships.

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 Nebius Academy academic offerings, working with local universities, helping to train, reskill, retool, and so on. We view this very much holistically as a long-term partnership, and so far, we found that this approach resonates well. There's no room for complacency here, so you know, 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.

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

Welcome to Nebius Group N.V.'s Q4 2025 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 live stream player. Then just type in your question and click submit. You can submit questions at any time during the presentation, and the Nebius Group N.V. management team will try and answer as many questions as they can during the Q&A portion of the call. I will now hand over to Neil Doshi, VP, Head of Investor Relations, to start the call.

Thank you, and welcome to Nebius Group N.V.'s fourth quarter 2025 earnings conference call. My name is Neil Doshi, Vice President of Investor Relations. Joining me today are Arkady Volozh, Founder and CEO, and our broader management team. Our remarks today will include forward-looking statements, which are based on assumptions as of today. Actual results may differ materially as a result of various factors, including those set in today's earnings press release and in our Annual Report on Form 20-F filed with the SEC. We undertake no obligation to update any forward-looking statements. During this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The earnings press release and shareholder letter are available on our website at nebius.com. I will now turn the call over to Arkady Volozh. Thanks, Neil, and thanks to everyone for joining this call. Well, 2025 was a very strong year for us.

Our team did an outstanding job scaling capacity and delivering it to customers with speed and reliability. We also made great progress in developing our own hyperscale AI cloud. But, before going into more detail around our 2025 results, I want to take a step back. It is hard to believe we only launched this company a year and a half ago. At that time, we had built the foundation of a global AI cloud business growing at exponential scale. And we have been operating with very high intensity, building and scaling at extraordinary speed. Today, we are already one of the world's leading and most reliable AI cloud compute providers. We have attracted a diverse pool of clients who value the quality, performance, and flexibility of the platform we built from the ground up. And we have an amazing team who every day seem to do the impossible. And I know they will continue to do so. With this foundation, we are proud of what we have achieved and confident about what we will be delivering. Now back to 2025. As I said, it was an excellent year. We exceeded our financial targets, and we significantly exceeded our capacity plans, setting the stage for the next phase of scale. Demand remains robust, and our pipeline continues to grow substantially. We sold out of capacity in Q3 and Q4 last year, and we are already now in 2026 also sold out. Even before we bring capacity online, it is often sold out. As a result, the average contract duration of new cloud customers grew by 50%, and the prices of GPUs did not fall even on previous generations of GPUs, as the industry may have expected. Customers are demanding more compute and increasingly sophisticated solutions to run their AI workloads. AI startups are quickly evolving to real customers with revenues from their products resonating with real customers. Their demand quickly grows from hundreds of GPUs to tens of thousands. This is already a range the market saw from the biggest customers last year. We are seeing the same trends in the enterprise, who are utilizing AI for more and more vital business processes. Meanwhile, access to compute remains constrained. This imbalance creates a favorable environment for us as we secure and deploy more capacity into a robust demand environment. To capture this opportunity, we are accelerating our capacity plans. Just today, we announced nine new data centers across the globe. Last quarter, we said we would secure 2.5 gigawatts of power by the end of the year. We are already at more than 2 gigawatts now in February, which is why we are raising our forecast for 2026 to more than 3 gigawatts. And we are well on track to deliver 800 megawatts to 1 gigawatt of those as available data center capacity. Just like we spoke about last quarter. Capacity is one of two dimensions of our growth. The other is product. Our main strategic focus is to scale our core AI cloud business, which is our multi-tenant AI cloud. We will expand our platform both organically and through targeted acquisitions that can enhance and accelerate the development of this platform. We recently launched Token Factory, and this is an example, a testament, actually, to our in-house capabilities. And we are also very excited about our recent acquisition of Tavily, which adds agentic search capabilities to our customers and also brings almost 700,000 developers to our platform. Based on the strength in demand, we are reiterating our strong execution; we remain confident in our plans for the year ahead: our annualized run-rate revenue of $7 to $9 billion by 2026. When we announced this target three months ago, there were questions about our ability to get to this range. Over the last few months, our conviction in this range has become stronger. Why? Because we exceeded the high end of our 2025 ARR guidance and showed more than $1,200,000,000 ARR. Because we already contracted more than 2 gigawatts of capacity, and are on track to exceed 3 gigawatts this year. Because we have already delivered all of our capacity for the Meta contract. Because we are on track to deliver the capacity for Microsoft through the course of 2026 exactly as planned. And lastly, the demand for our AI cloud continues to be strong. Pricing is strong. We are seeing more and more customers coming into the platform and committing larger and longer contracts. Everything we build, we sell. We are in the very early days of one of the biggest industrial and technological revolutions in history. That is what we believe. And Nebius Group N.V. is quickly becoming the AI cloud provider of choice. I want to thank again all of our employees for their dedication and hard work, as well as our shareholders for your trust and support. And we will continue to deliver. I will now turn the call over to our CFO, Dado Alonso. Dado, please.

Thank you, Arkady. Indeed, 2025 really was a fantastic year, with great execution and delivery,

We exceeded the targets we set, outperforming our ARR guidance and achieved positive EBITDA at the group level. We also raised significant capital to fund our growth during the year. Now, let me provide some color on the results, discuss our financing plans, and then I will conclude with 2026 guidance. In Q4, we delivered group revenue of $228,000,000, representing year-over-year growth of 547%. Revenue grew 56% from Q3 to Q4. Annualized run-rate revenue for the core business stood at $1,200,000,000 at December, exceeding the high end of our Q3 guidance range of $1,100,000,000. The results of our core AI cloud business were even more impressive. Revenue grew 830% year over year, and 63% quarter over quarter. This was driven by high utilization, strong pricing, and strong execution. As Arkady noted, we sold out our capacity once again in Q4, as demand continued to significantly exceed available capacity. Even as we delivered such strong growth, operating leverage and spending discipline enabled us to achieve notable progress on the bottom line. Group adjusted EBITDA inflected positively in Q4, consistent with our guidance, driven by the strength in our core AI cloud business, where adjusted EBITDA margin expanded from 19% in Q3 to 24%. Turning to the balance sheet, we ended the year with $3,000,000,000 in cash and cash equivalents and generated $834,000,000 in operating cash flow in Q4, which was primarily comprised of upfront payments from our long-term agreements. These early cash flows will continue over the course of the year as we execute against these commitments, providing us with significant visibility into future cash flow. Our cash on hand, projected operating cash flow, and strong balance sheet position us very well to fund our capacity build-out plans for 2026. I will share more detail about our capital plans in just a moment. Now I will turn to 2026 guidance. As Arkady mentioned, we remain confident in our ability to generate annualized run-rate revenue of between $7,000,000,000 and $9,000,000,000 by 2026. For the full year, we expect to achieve between $3,000,000,000 and $3,400,000,000 in revenue. Starting in Q2, we expect to begin bringing online some of the new sites we announced today, with the majority of the planned capacity to be deployed in the second half of the year. As of early February, Meta’s capacity was fully deployed and we are now fully servicing their contract. After delivering the first tranche of our Microsoft commitment on time, we expect to continue to deliver the remaining tranches throughout the year, with the majority expected in the second half. We expect Microsoft to begin contributing to revenue at the full annual run rate in 2027 once we have deployed all of these tranches. On adjusted EBITDA, we expect group adjusted EBITDA margin to be approximately 40% for 2026. We expect EBIT to remain at a loss in 2026 as we progress against our capacity expansion plans, deploy GPUs, and invest in R&D that will significantly enhance our technology stack and our future AI product. We believe the return on these investments are attractive and we remain committed to our medium-term EBIT target of 20% to 30%, with the potential to go higher. Starting in Q1 2026, we are updating our depreciation schedule from four years to five years, to reflect what we are seeing in the market and in our current utilization commitments. This approach is aligned with accounting best practices, and we continue to be conservative on this front.

Now,

turning to CapEx. In order to capture the large and growing opportunity that we see for the future, we plan to invest in CapEx in the range of $16,000,000,000 to $20,000,000,000 in 2026. We already have about 60% of the capital needed for this range from our balance sheet, existing operations, and commitments. We evaluate several funding options available to us on a consistent basis, and will deploy two guardrails when we look at capital alternatives. First, we will focus on raising debt relative to our business needs and will be prudent with respect to the cost of capital. Second, we will be mindful about the shareholder dilution if we choose to issue equity. Given our balance sheet and minimal debt, we are fortunate to have many additional options to finance our growing business. For example, we are currently exploring adding corporate debt and asset-backed financing to our balance sheet. Our at-the-market equity program, which we have not used at all to date, remains an additional alternative for opportunistic capital. In addition, our equity stakes in ClickHouse and other businesses such as AV Wright can also be future sources of capital. We are excited about these holdings, especially as the market recognizes their significant value. As an example, it was recently reported that ClickHouse’s valuation was approximately $15,000,000,000 in the most recent funding round. So the wide array of funding options available to us allows us to fund growth in a way that is balanced, disciplined, and aligned with returns rather than committing to a single path. In conclusion, 2025 was a year of strategic progress for Nebius Group N.V., and we executed with focus and discipline across our business, generating strong momentum as we enter 2026. In the year ahead, we will continue to scale rapidly to capture the meaningful market opportunity in this once-in-a-generation moment in our space. And with that, I will turn the call back over to Arkady Volozh.

Before we turn the call over to Q&A, I want to provide one more update. After this earnings call, Neil Doshi, our VP of Investor Relations, is moving into a new strategy function role. And we would like to thank Neil for all his great work in building out our IR function to date. And I am also extremely pleased to welcome Gili Ostolovich, who will be our new VP of Investor Relations. Gili brings with her deep research and strategic finance experience from Goldman Sachs, UBS, and Minda.com. And we are very excited to have her onboard. With that, let us go to Q&A.

Great.

Right. We are just collecting some questions from the portal. And we will begin Q&A in just a moment. Alright. The first question from our investors on the portal is: Nebius Group N.V. is moving quickly to both bring demand online and to build a strong foundation for future capacity. What are you seeing in the market that gives you conviction that the demand for AI will continue to justify these investments? Let us give that to Arkady.

Well, first of all, we all look around and see what is going on practically everywhere. How we change our habits in everyday private lives, what happens in our corporations, in our company, for example. How much of

now and

utilizing AI capabilities in coding. And, actually, we now see the whole industries are actually changing. Look at the recent example again, coding, or look at the movie industry, or look at the research. Whatever you do now, you do it with AI. But, again, these are just general notions, but our conviction is mostly based on what we are seeing directly in our business. We see directly signals in all sectors of our business. First of all, in the large accounts, all large clients are talking to us, and not only to us, but the whole market about expanding, renting more capacity and more GPUs, because their AI businesses are growing. There is this ongoing, ongoing organization that actually will lead to more contracts everywhere. But we are, as you know, much more focused on our AI cloud business. And in AI cloud, we have these two major sectors, AI startups and enterprise. And look at AI-native customers. What happened to them in 2025? Some startups disappeared, but some of them are becoming real companies, real enterprises of the future. And they started getting traction. Their products became more and more used by their customers, and they are scaling quickly, scaling with real revenues, real demand. And we see such customers, such companies who were used to order hundreds of GPUs, thousands of GPUs. Now they are ordering tens of thousands of GPUs. And this is actually a magnitude of what we saw in the largest consumers last year. Frontier models were ordering tens of thousands of GPUs just a year, two years ago. Now it is yesterday's startups at this level. Again, this is real business. These are real customers of them paying real revenues. So AI traction is visible. There are a lot of customers from the sector starting with Cooco, Coosa, or Odo, Hicksville, Fodorov, Genes, Molecular, different sectors, and they all have the first structure, and they are becoming, as we speak, real companies. Actually, it is the future enterprise. And on the other hand, there are enterprise clients who involve more, who are actually switching most of their everyday business processes to AI and generate new profits through those AI implementations. We see the growing number of such customers, growing contracts from each of such a customer, the number of GPUs is growing, the duration of the contracts is growing. As I said, the average duration for new customers grew 50% last year. So from the signals we see from all the sectors of the market, from big clients, hyperscale labs, from AI startups becoming enterprise clients, for enterprise going AI everywhere, we see positive signals, and we just need to build more for them, more data centers, more tools. And if we could build faster and even more than we have today, we would do it. So we are building because it is three-year growth.

Right. Thank you, Arkady. Next question is from Josh Baer from Morgan Stanley who asks about our CapEx financing plans, especially now that we have $16 to $20,000,000,000 of CapEx guidance out there. How are we thinking through to meet these expectations for CapEx? Ophir?

Alright. I am Ophir Nadav, the COO and Board Member of Nebius Group N.V. Usually, I am not participating in these calls, but given the importance

of this question, most for our business and as well as to the investor community, I will take this one.

Basically,

this question has two parts. First, what is the optimal capital expenditure for our business in 2026? Second, how is this CapEx going to be financed? And, obviously, these questions are connected or related. So let us start actually with the second question, or the second part. How are we going to finance the CapEx? So obviously, we will first finance it from our cash flows. We have our cash on hand. We have cash that is generated from our core business. But most importantly, I would say, we have a significant amount of cash that we received and will continue to receive in 2026 from the favorable terms of our long-term agreements. We are talking about a significant amount, and these cash flows will actually finance the majority, actually around 60%, maybe even more, of all of our CapEx needs in 2026. So how are we going to finance the remaining amount? The rest

So

we all know we have a very healthy balance sheet. By the way, not by coincidence, because we are working very hard to have a very prudent, disciplined, healthy balance sheet. And as of today, we do not have any corporate-level debt. We do not have any asset-backed financing, even though we have multibillion-dollar revenues from long-term contracts. We do not have any bank report. And we did not have it to date by choice.

But

moving into 2026, and as we all know, an optimal capital structure in our business should include also debt. This should obviously be changed. And we plan during 2026 to use some of the tools that I mentioned in order to move toward a more optimal capital structure.

So

having said all that, from the financing point of view, we believe that the $16 to $20,000,000,000 CapEx makes a ton of sense, and we will be able to finance it while keeping a very healthy, disciplined balance sheet. But moving to the first part, the first question, what should be our optimal CapEx for 2026? I mentioned, actually, Arkady said it time and again. Given that we are a fully vertically integrated company, our CapEx is basically divided into three parts. Less than 10% is used for securing power. And given the importance of power to our business and given the importance of securing power for our future hyperscales, we are moving full force ahead in order to secure as much power as possible given the relatively low cost of it. And I think that on this call, it was mentioned that we already secured a significant amount of power and we will continue to do so. The second part of the CapEx: building the data center. This is approximately 20% of the total CapEx. And we invested in building data centers. We invested this amount, and it turned out as we expected: that it became one of the best investments that we made. Why? Because when we have data centers ready, almost ready, where we can deploy GPUs in a very short period of time, we can serve this capacity on very attractive and favorable terms. We have done so to date and we plan to do it also in the future. We see the demand. We see the interest. We have a clear visibility on the demand for 2026 and for 2027, both from our cloud clients as well as from AI labs and hyperscalers. And we are positive that these investments, with the interest that we are getting from all these players, will play out again very beneficially for our company, as it did so in 2025. The remaining part of the CapEx is to deploy the GPUs. Again, this is a significant part of the CapEx. The beauty is that we deploy the GPUs in a short time period when we have great visibility about the demand and about the prices and about our margins. And we are very confident. We do not view it as a very risky place to be. So having said all that, we believe that $16 to $20,000,000,000 CapEx for 2026 makes the most sense for us. First of all, it is based on our visibility on the demand for 2027. It is based on the interest that we are getting from various buyers, both in our cloud platform and the AI labs and the hyperscalers. It will enable us to meet our $7 to $9,000,000,000 ARR in 2026. But more importantly, it will also put the foundation for our hypergrowth 2027 and beyond. But speaking about CapEx and investments, I think that it is worthwhile also to address two additional points. One is ATM. As you all know, we launched our ATM program last November. As of today, we did not use it at all. Actually, we do not have any concrete plans to use it also in the near future. However, it is another tool in our toolbox that will enable us to use it when it will make the most sense for our business as well as our shareholders. And this is another tool that will enable us to keep a prudent, balanced, disciplined balance sheet. And another point that I think was mentioned is obviously with non-core businesses. We are fortunate enough to have over a 25% stake in ClickHouse and our ownership in AV Wright. These non-core businesses, these stakes, are worth many billions of dollars as of today. This is great, but it is less interesting by itself. Most importantly, we truly believe that these stakes will significantly increase in the midterm. And when they do, they will enable us to continue growing our business in a hyper-paced mode, 2027 and beyond, while using this capital and continuing to keep a very disciplined balance sheet. We are really happy with these potential capital injections for the future. There you go. I think that gives the right overview of the CapEx needs and the ways to finance it. That was very helpful, Ophir. Thank you.

Alright. Next question comes from Alex Platt, D.A. Davidson. Can you help us bridge to not only the 800 megawatts to 1 gigawatt of connected power guidance, but now to the 3 gigawatts of contracted power guidance by year end. Andrey?

Yeah.

Thanks, Neil. For everyone. So what we can see now is we are accelerating the build-out deployment of the capacity in 2026 greatly. And we expect that the acceleration will continue in 2027 and beyond that.

So what we are doing is we are, as Arkady mentioned, doing the investments in building the foundation for 2027 and for the years beyond. We are well on track of achieving our goals that we mentioned about 2026 of this 800 megawatts to 1 gigawatt goal around year end. And we do that by launching a lot of sites with a mix of smaller and larger projects, and some of our bigger projects starting to come online in the end of this year. And in addition to that, in addition to the sites that we mentioned today, we have multiple ongoing projects, and we expect that some of these additional sites may materialize this year. So basically, expect that the colocations will help us grow faster starting in Q2 this year and ramping throughout the year. Our own projects, which are substantial in size, will really start to ramp up in 2027 and beyond. And that relates directly to the contracted power. Great. Thank you, Andrey.

Andrey, maybe just staying with you. Andrew Beal from ArrayTech is asking about an update on the New Jersey data center site.

Yeah. With New Jersey, we are very pleased with the progress there. We delivered the first tranche to Microsoft on time, and we are well on track to deliver the remaining commitments on time as well. We believe that our partners secured the components in the supply chain, and they are working extremely hard to get everything online. We also have some safety margin buffer times in our projects. And while all projects can have some fluctuation, we have built our plans with a large margin of safety. And we have high confidence of executing this. Great. Thanks, Andrey.

Alright. Looks like we have a question from Alex DeVal from Goldman Sachs. Looks like Nebius Group N.V. came in light on revenue versus consensus for Q4, but ARR was ahead of expectations. So which is the more meaningful metric and are there any timing considerations? And then just more broadly, lumping this with the ARR question, can you help us understand the difference between ARR guidance of $7,000,000,000 to $9,000,000,000 and the revenue guide for 2026. So, Dado, maybe you can take this.

Thanks. Let me take it one by one. On the first question, of course, we were very pleased with our ARR of $1,200,000,000, which exceeded our ARR guide. Our revenue came in the middle of our guidance, which actually was what we anticipated. Look, as we are in hypergrowth phase, ARR is the north star metric. Now, on the next question around the difference between ARR and revenue guidance, let me say that first and foremost, at Nebius Group N.V. we are really taking a prudent approach to our revenue guidance. As we communicated, for 2026, our guidance is $3,000,000,000 to $3,400,000,000 in revenue. The difference between ARR and revenue is logical. Our revenues and ARR reflect the deployment schedule of our capacity throughout the year, with the majority of this capacity being installed in the second half of the year, as Andrey mentioned. We need also to consider that our largest enterprise partnerships are also still ramping. So the revenue guide simply reflects the ramp-up in capacity coming online.

Great.

Thank you, Dado.

Question from Alex Platt from D.A. Davidson. How should we think about your progress against the $7,000,000,000 to $9,000,000,000 of ARR guide? And are you really dependent on the large hyperscalers to get to that range? Marc, why do you not take this? Thank you, Alex. First of all, let me clarify. Our 2026 ARR target is not dependent on any new mega deals.

As we bring on our planned additional capacity, combined with the already strong pipeline and our go-to-market plans, we are very confident in our ability to deliver our 2026 ARR target. Our continued success with AI natives and the early progress we have seen with ISVs and enterprises set the foundation for capturing the market this year. Based on the traction we are experiencing and our extensive research on our total market opportunity, we are leaning into the verticals we have already laid out: healthcare and life sciences, media and entertainment, physical AI, and retail, which give us ample runway to capture share and grow our business. While we are happy to service large strategic customers like hyperscalers, we will remain opportunistic with such large deals as we look to balance the opportunity with the long-term positioning we plan to achieve with our AI cloud.

Great. Thank you, Marc. Now let us take a question from the portal. Can you provide an update on where you stand as it pertains to the delivery schedule with Microsoft and Meta? And remind us again about how those two contracts layer in throughout the year. Maybe on the first part, we will have Andrey, and then, Dado, you can take the second part on the contract layering.

Yeah. Thanks, Neil. As I mentioned earlier, the first tranche to Microsoft was delivered according to the plan in November. And the remaining capacity is on schedule, ongoing. All of the remaining tranches will be delivered throughout the whole 2026, and more than half of them will land during the second half of the year. About Meta, early in this month, we delivered both contracted tranches to Meta on time, and we are now fully in servicing stage. And, Dado, can you comment on the financials?

Of course. Thank you, Andrey. The deployments in Meta, as Andrey just mentioned, went live early February. As such, we expect to recognize 12 months of revenue for the first tranche and roughly 11 months for our second tranche. As for the Microsoft deal, we expect revenue to ramp over the course of the year in line with our plans to deliver the capacity tranches, which, as Andrey mentioned also, will happen throughout the year with the majority expected in the second half. So, Microsoft will begin to deliver a full-year revenue starting in 2027. And as we execute on these commitments, we expect them to contribute positively to our medium-term EBIT margin target of 20% to 30%.

Great.

Thanks, Dado.

Another question from the portal. What drove the upside in the December 2025 ARR? And as you look into Q1, what are the demand trends that you are seeing in the market today? Marc, why do you not take this?

Certainly. The upside in December ARR came from solid execution and strong pricing and utilization. We continue to make great progress in adding new logos and expanding with existing customers. On the second point, we are seeing very strong pricing across all families of GPUs, and we are at full utilization as we continue to sell out all available capacity. On Q1 demand, it remains extremely robust, and we are seeing the same trends that we shared in 2025 carrying into 2026. Three things that give me tremendous confidence and excitement as we enter 2026 are continued pipeline growth, positive deal trends, and the progress we are making with our vertical strategy. The pipeline creation trajectory in Q1 is on track to exceed $4,000,000,000, and as we expand our available capacity and add sales coverage, we expect it to continue to increase. In terms of deal trends, they are all moving in the right direction. Deal terms are getting longer, and average deal sizes are increasing. In Q4, we saw nearly twice as many transactions completed for over 12 months in duration over what we succeeded with in Q3, while average selling prices increased by more than 50%. As an example, we are sold out of Hoppers, and those that are coming up for renewal, often off of short reserve agreements, are getting renewed at 12 months or longer,

while we are

actually seeing pricing nudging up. Lastly, we are focusing on customers with premium workloads and use cases, which is resulting in superior terms, including increasing those who are willing to prepay for securing future capacity.

Great. Thanks, Marc. We had another question from the portal. There are headlines of data center equipment shortages in the market. How is Nebius Group N.V. handling this situation, ensuring access to these products? And do you expect it to have any impact on your deployment? I think, Andrey, this would be for you.

Yeah. Thanks, Neil.

On

the data center delays, well, generally, building the data centers is quite a complex task. And no one can get away from all the risks. But I think we are in quite good shape of managing this risk. And as you saw today, we are well ahead on our contracted power, and we are developing nine contracted sites we announced today. And the main idea and the main strategy is to have a portfolio of sites, so we are not dependent on any specific single data center project to achieve our guidances and deliver our plan. And it is pretty important to understand our differentiation: we are a full stack

cloud.

Allowing us to enjoy the flexibility that it provides, that we are not dependent on any site. We can move the loads in between, we can provide it from different locations. We iterate to ensure that we have enough capacity. And the second one is we already contracted the majority of our long-lead items around our own sites to ensure the capacity deployment beyond 2026 as well. And the second part of the shortages is the memory and storage. The first important point is our largest deals with Microsoft and Meta. We were able to secure the necessary components last year for the full scope of those contracts, and we secured it in 2025, before any price increase. And for the remaining, we are confident in our supply chain to get the parts we need to continue to deliver the capacity.

Maybe sticking with you. A few of our analysts are asking, with the announced nine new sites for data centers that are going to be a mix of owned and colocations, how do you evaluate when you want to buy versus lease, and how do you expect this mix to shift longer term?

I think we discussed it quite a few times. Generally, we are focused on bringing most of our largest projects as self-developed projects. There are three main reasons. First, we get much better total cost of ownership with this. We have much more control over the execution of the project because we have expertise and experience of building our own sites. We also can achieve greater efficiency at scale because, generally, we tailor the design specifically for what we need and for our technical requirements. But this takes time, and we use leases and partnerships to fill the gaps before we are at full speed with our own ones. So just to sum up, the preference is to develop the infrastructure ourselves. But, again, we still need partners and leases occasionally to support the growth. Great. Thank you, Andrey.

Next question from Josh Baer at Morgan Stanley. It is really around the software stack. What are the most common software tools that your broader customer base—startups and large enterprises—are using and paying for from your AI cloud, and what proportion of your customers utilize your software and services in addition to your compute capacity? And then any color on just how much ARR comes from the software stack today? Marc, why do you not take this?

Certainly. Thanks, Josh, for the question. As I think you know, our AI cloud is purpose-built for AI and is battle-tested with our AI customer base. At this stage, 100% of our AI cloud customers are utilizing our AI cloud software, obviously. So we have a 100% attach rate. We are very excited, by the way, about the new products that we have launched, like Token Factory and the Aether releases, which have opened up TAM and give us an opportunity to expand into enterprise. Our new acquisition of Tavily also extends our platform capabilities by providing agentic search for AI developers, creating more routes into accounts. I should also mention that we continue to see demand for embedded storage from customers across key verticals, including physical AI, media and entertainment, and healthcare and life sciences. As a result, we are creating solutions that are vertically specific to meet the demands of these customers. We are really in the early stages of our monetization journey, but our software and services make our platform sticky, which enables us to charge more on a relative per GPU-hour. We are exploring other monetization models including consumption-based, such as per-token pricing with Token Factory, so Josh, stay tuned for more monetization in the future.

Great. Thanks, Marc. Another question from Alex DeVal from Goldman Sachs. It is really on the 40% EBITDA margin target that we gave. What gives us confidence in that? Dado, can you take this one?

Nebius Group N.V. is scaling, and as we do, so will our margins. Sure. Thanks for the question, Alex. Let me bring the bigger picture. Now, let us come to adjusted EBITDA margin guidance. In Q4, the group achieved adjusted EBITDA margin of 7%. And for 2026 we are expecting to reach 40%. We see a tremendous demand for our AI cloud business, and we are investing appropriately to serve this demand. As we reported, the margin of the core AI cloud business is actually significantly higher than the group. And as we scale the AI business, most of our revenue and margin will continue to be driven by the core AI business. So we expect, of course, the other businesses to still operate at EBITDA loss in 2026, but their contribution to EBITDA will be smaller and smaller. So, the guidance of 40% adjusted EBITDA margin reflects the current expansion stage of the business.

Great.

Thank you, Dado. We have a few of our analysts, including James Kisner from WaterTower Research, asking about Tavily. What is the strategic rationale behind Tavily? How is this complementary to your existing offering? And really, is there a lot of demand for this product from your cloud customers? Roman, why do you not take this?

Yeah. Thank you for the question. I was afraid we would not come to it. It is quite an exciting event.

For us, and we are super excited to announce our first M&A deal with the acquisition of Tavily and welcome the Tavily team and Tavily customers into the Nebius Group N.V. family. Tavily is an agentic search company. They connect AI agents to the web.

And

it very much fits in our strategy to become and to be the platform where all the AI developers from startups and enterprises are building their AI applications and agents. Tavily got quite a significant progress. They already serve many Fortune 500 customers. And they have great adoption in the developer community and are loved by developers. We will continue to evaluate potential acquisitions of companies that can deepen customer engagement, stickiness, and increase our lifetime value and strengthen our positions as a full-stack AI cloud provider. And this game is so large that we obviously will not build everything ourselves. We will be in the strategic opportunities and we will be in the strategic partnerships, moving forward looking for the companies and partners that have a great product, great developer experience, and similar to our DNA, to build a platform that will be loved by AI developers long term.

Great.

Thank you, Roman.

We have another question just on capital allocation and M&A. In terms of build versus buy, like, Nehal Chokshi is asking this from Northland. Arkady, when you are thinking about capital allocation, especially whether it is investing in capacity,

Yeah.

or doing M&A, how do you think about this?

What we are building here, we are building one of the largest platforms for AI developers to build their applications. The largest platform means two dimensions: the scale and functionality, product. And we could allocate capital between these two dimensions. We need to build scale. That is why we need to build all these data centers and buy all those hundreds of thousands of GPUs. And we need to build the product, and we build this product both organically, internally, by our own developers. But we do not cover everything, so we go into acquisitions. And we spend some capital on acquisitions as well, to enhance our product, to get more talent, and ultimately to develop more, even faster. And Tavily is a perfect example of such an increase. Hopefully, not the last one.

Great. Thank you, Arkady. I think we are at the top of the hour. So thank you, everyone, for joining our fourth quarter 2025 earnings call. And next quarter, Gili will be leading the earnings process. Thank you, everyone.