Nebius (NBIS) Q2 2025: ARR Guidance Raised to $1.1B as GPU Capacity Ramps
Nebius delivered a breakout Q2, doubling revenue and achieving core AI infrastructure EBITDA profitability ahead of plan, while raising ARR guidance to $1.1B on surging demand and imminent GPU capacity expansion. The company is aggressively scaling its data center footprint, with 220MW of connected power targeted by year-end and a path to 1GW by 2026, positioning Nebius to capture accelerating AI compute demand from both enterprise and native AI startups. Investor focus now shifts to execution in capacity deployment, contract conversion, and capital allocation as Nebius enters a pivotal scale phase for 2026 and beyond.
Summary
- Capacity-Driven Inflection: Surging demand and rapid data center buildout underpin Nebius’s raised growth targets.
- Enterprise Traction Emerges: Wins with Shopify and Cloudflare signal a pivot toward larger, multi-year contracts.
- 2026 Foundation Set: Aggressive GPU expansion and global site launches create a strong springboard for next year’s revenue acceleration.
Performance Analysis
Nebius posted hypergrowth in Q2, with revenue up 625% year over year and 106% sequentially, driven by robust AI cloud infrastructure demand and near-peak platform utilization. The company reached positive adjusted EBITDA in its core business ahead of schedule, demonstrating disciplined cost management even amidst rapid scaling. Notably, the group’s net income was bolstered by one-time gains from equity revaluations and discontinued operations, but management was clear these are non-recurring items.
Annualized run rate revenue (ARR) jumped from $249 million in March to $430 million in June, with continued momentum into July. The company’s ability to sell out available GPU supply, especially previous-generation hoppers, underscored both a supply-constrained environment and Nebius’s strong competitive win rate. However, much of the company’s new capacity—including the anticipated Blackwell GPUs—will come online in Q4, making revenue and ARR guidance back-end loaded for the year.
- Utilization Remains High: Peak platform use and rapid sell-through of new clusters validate demand and pricing power.
- Capital Intensity Persists: Capex guidance remains at $2B for 2025, with ongoing investments in both hardware and greenfield sites.
- Segment Shifts: Toloka, the data labeling business, has been deconsolidated, clarifying the focus on core AI infrastructure growth.
The company’s ability to convert new capacity into contracted ARR will be key as Nebius transitions from a supply-constrained to a scale-driven growth model in 2026.
Executive Commentary
"We more than doubled our revenue for the whole group from Q1. And this quarter, we also became EBITDA positive in our core AI infrastructure business ahead of our previous projections...We are aggressively ramping up. By the end of this year, we expect to have secured 220 megawatts of connected power that is either active or ready for GPU deployment."
Arkady Volosh, Founder and CEO
"We reported $105.1 million in revenue, up 625% year over year and up 106% quarter over quarter, driven by a strength in our core business and a solid execution from our Triple 10 team...Given our plans to further scale our platform this year, we are updating our full year outlook. For annualized run rate revenue...we are raising guidance from $750 million to $1 billion to $900 million to $1.1 billion."
Dada Alonso, Chief Financial Officer
Strategic Positioning
1. Capacity Expansion as Growth Catalyst
Nebius is executing an aggressive infrastructure buildout, targeting 220MW of connected power by year-end and over 1GW by 2026. Expansion is concentrated in New Jersey and Finland, with new greenfield sites in the US under negotiation. Greenfield builds enable full control over design and cost, reducing total cost of ownership by an estimated 20% versus market averages. This expansion is foundational for scaling revenue and attracting large, multi-year enterprise contracts.
2. Enterprise Market Penetration
Recent wins with Shopify and Cloudflare mark a strategic pivot toward the enterprise segment, moving Nebius beyond its core of AI-native startups. These customers are leveraging Nebius infrastructure for inference and data optimization, validating the platform’s appeal to scaled technology players. The company is actively building out its go-to-market leadership and regional presence to accelerate penetration of enterprise and vertical markets, including healthcare and life sciences in the UK.
3. Software and Platform Maturity
Significant enhancements to Nebius’s software stack, including network speed doubling, reliability upgrades, and MLPerf benchmark achievements, are positioning the company as a credible alternative to hyperscalers for demanding AI workloads. The launch of a vertically integrated inference-as-a-service platform targets enterprise-grade AI deployments, addressing pain points in latency and flexibility for ISVs and product builders.
4. Multi-Channel Financing and Strategic Stakes
A robust balance sheet and strategic equity stakes in non-core assets (including AV Ride, ClickHouse, and Toloka) provide Nebius with multiple levers to fund expansion. Management highlighted the potential for several billion in liquidity from these assets, though there is no immediate need to monetize. This financial flexibility supports Nebius’s capital-intensive growth strategy without near-term dilution pressure.
5. Ecosystem Partnerships and NVIDIA Alignment
Deepening partnerships with NVIDIA (including DGX Cloud Lepton) and open-source platforms like Mistral and Lightning AI are expanding Nebius’s reach across the AI developer and enterprise ecosystem. These relationships are driving pipeline growth and broadening Nebius’s addressable market, particularly as the company positions itself as a launch partner for next-generation GPU clusters in key regions.
Key Considerations
Nebius is at a critical inflection point, balancing hypergrowth, operational discipline, and capital intensity as it attempts to cement its position as a leading AI cloud infrastructure provider amid surging global demand.
Key Considerations:
- Back-End Weighted Ramp: Majority of new GPU capacity and associated ARR will come online late in the year, making execution timing crucial for hitting revised targets.
- Enterprise Contract Conversion: Success in scaling from pilot wins to multi-year, high-value enterprise contracts will determine Nebius’s ability to sustain growth as the market matures.
- Capital Allocation Discipline: Ongoing $2B capex and greenfield site investments require diligent project management and prudent financing to avoid overextension.
- Tariff and Regulatory Volatility: US tariffs and evolving global trade dynamics introduce potential cost unpredictability, though management expects industry-wide impacts to normalize over time.
- Non-Core Asset Monetization: Strategic timing of equity stake monetization in assets like ClickHouse and AV Ride could unlock substantial funds for further expansion, but market conditions will dictate outcomes.
Risks
Execution risk remains elevated as Nebius must deliver on its ambitious capacity buildout, convert contracted ARR into realized revenue, and maintain pricing power in a competitive, supply-constrained GPU market. Tariff changes, regulatory shifts, and capital market volatility could impact margins and funding costs, while delays in greenfield site development or slower-than-expected enterprise adoption would challenge the growth narrative.
Forward Outlook
For Q3 2025, Nebius expects:
- Continued strong demand and rapid sell-through of new GPU capacity as it comes online
- Back-end loaded revenue and ARR realization, with most new installations in Q4
For full-year 2025, management raised guidance:
- ARR of $900 million to $1.1 billion (up from $750 million to $1 billion)
- Core business revenue maintained at $400 million to $600 million
- Group revenue guidance unchanged at $450 million to $630 million (excluding Toloka)
- Adjusted EBITDA expected to be slightly positive at year-end, but negative for full year
- Capex guidance maintained at $2 billion
Management emphasized that a significant portion of ARR is already under contract, providing strong visibility into the ramp as new capacity is deployed. The foundation is being laid for a material revenue acceleration in 2026, especially as Nebius targets large, multi-year enterprise and hyperscaler deals.
Takeaways
Nebius’s Q2 results mark a decisive inflection point, with operational and financial momentum converging as the company scales to meet global AI compute demand.
- Capacity Execution Is Pivotal: The ability to deploy and monetize new GPU clusters, especially Blackwell generation, will drive both near-term ARR and long-term enterprise contract wins.
- Enterprise Pipeline Validation: Recent customer wins and expanded go-to-market leadership suggest Nebius is gaining credibility with larger buyers, a necessary step for multi-billion revenue ambitions.
- 2026 Setup in Focus: Investors should monitor contract conversion rates, large deal announcements, and capex discipline as Nebius transitions from hypergrowth to scaled, sustainable expansion.
Conclusion
Nebius delivered a breakout Q2, raising ARR guidance and demonstrating early profitability in its core business as demand for AI compute remains insatiable. The next phase hinges on flawless capacity execution, enterprise contract conversion, and prudent capital deployment as Nebius aims to become a global AI infrastructure leader.
Industry Read-Through
Nebius’s results reinforce the ongoing surge in AI infrastructure demand, with capacity constraints and GPU supply dictating near-term outcomes across the sector. The company’s rapid transition from startup to enterprise contender highlights the urgency for both hyperscalers and new entrants to secure power, land, and hardware pipelines. Partnerships with NVIDIA and deepening ties to open-source AI platforms signal that ecosystem integration and differentiated infrastructure will be critical for capturing share. Tariff and regulatory volatility remain industry-wide risks, but the willingness to invest at scale suggests the AI compute cycle is far from peaking. Investors should watch for similar capacity-driven inflections and enterprise pivots among other AI cloud providers and data center operators globally.