Nebius Group ($NBIS) Q2 Revenue Surges 625% YoY, Raises ARR Guidance

Nebius Group’s latest quarterly results underscore a pivotal acceleration in its AI infrastructure ambitions, with revenue surging well beyond expectations and guidance for annual recurring revenue (ARR) lifted to new heights, signalling robust demand and operational momentum that could redefine its trajectory in the competitive cloud computing landscape.

Revenue Surge Signals Market Dominance

The reported revenue of $105.1 million, marking a 625% year-over-year leap and a 106% quarter-over-quarter increase, highlights Nebius’s ability to capitalise on exploding demand for AI-driven cloud services. This beat against estimates of $101.2 million reflects not just topline strength but a strategic pivot towards high-margin AI workloads, where the company has positioned itself as a key provider of GPU-powered infrastructure. Historically, such growth rates evoke comparisons to early-stage hyperscalers; for instance, trailing twelve-month figures show Nebius transitioning from modest bases, with prior quarters building incrementally towards this breakout. The quarter-over-quarter doubling suggests an inflection point, where deployment of Nvidia-based clusters is translating into immediate revenue realisation, outpacing even optimistic analyst models that pegged sequential growth at more tempered levels.

Analysts had forecasted revenue around $124 million for the period, but the actual outperformance implies underestimated utilisation rates and customer adoption. This is not mere volume; it is efficiency in monetising assets, with core AI infrastructure likely contributing the lion’s share. Expanding upon this, the year-over-year multiplier of over six times aligns with broader industry trends where AI compute demand has driven similar surges for peers, yet Nebius’s figures suggest it is capturing a disproportionate slice, possibly through flexible pricing models that encourage long-term commitments.

EBITDA Improvement: Path to Profitability Accelerates

Adjusted EBITDA at negative $21 million, significantly better than the anticipated negative $59.6 million, points to tightening operational controls and a faster-than-expected march towards breakeven. Crucially, the core business achieving positive adjusted EBITDA ahead of schedule indicates that scale is finally yielding margins, a critical milestone for a company historically burdened by heavy capital expenditures in data centre buildouts. This improvement from previous quarters—where losses were steeper, such as the trailing twelve-month EPS of negative $1.65—demonstrates effective cost management amid rapid expansion, potentially setting the stage for positive cash flows sooner than the market anticipated.

Labelled sentiment from verified financial accounts on platforms like X reflects growing optimism, with posts highlighting this as a “neck-breaking” turnaround, though such views remain speculative and tied to the immediate earnings reaction. Working backwards from current live data as of 7 August 2025, with shares trading at $55.09 in pre-market sessions, this EBITDA beat could mitigate downside pressures if it convinces investors of sustainable profitability. Analyst models had eyed positive EBITDA in the second half of 2025, but this early positivity in the core segment accelerates that timeline, potentially unlocking valuation multiples closer to established cloud giants.

Core Business Momentum

Delving deeper, the core business’s positive EBITDA underscores a maturing model where recurring revenues from AI cloud services are outstripping fixed costs. This ahead-of-plan achievement implies optimised utilisation of existing capacity, with gross margins likely expanding as depreciation burdens lighten relative to revenue. Historical context from earlier filings shows Nebius grappling with negative margins in 2024, but this quarter’s shift suggests a breakeven ARR threshold has been crossed earlier, bolstering confidence in the raised guidance.

ARR Guidance Raise: Forecasting Hypergrowth

The elevation of year-end ARR guidance to $900 million to $1.1 billion represents a bold upward revision, implying confidence in sustained demand and capacity expansions that could propel Nebius into the upper echelons of AI infrastructure providers. This range, up from prior affirmations around $750 million to $1 billion, suggests internal projections are factoring in accelerated contract wins and higher utilisation rates. The implied quarterly run-rate by year-end would necessitate sequential ARR growth of 20-30% per quarter, a pace that historical data supports given the 140% quarter-over-quarter jump from December 2024’s $90 million to March 2025’s $220 million-plus.

Analyst-led forecasts had modelled ARR exits around $380-400 million for the second quarter, but this raise extrapolates to even stronger back-half performance. If achieved, it would validate Nebius’s strategy of targeting underserved European markets with Nvidia GPU access, potentially yielding a forward price-to-sales multiple that justifies the current market cap of approximately $13.15 billion. Sentiment from professional sources notes the stock’s rich valuation at 77 times price-to-sales, yet labels the outlook as bullish if profitability follows.

Implications for Valuation

Model-based projections, assuming conservative 25% margins on the upper ARR band, could see 2026 EBITDA approaching $275 million, supporting enterprise values well above current levels. This guidance raise is not isolated; it builds on patterns seen in prior quarters, where March ARR hit $249 million against $220 million estimates, setting a precedent for consistent over-delivery.

Power Securing: Fuelling Future Expansion

The initiative to secure over 1 gigawatt of power by the end of 2026 emerges as a strategic linchpin, addressing the primary bottleneck in AI infrastructure scaling—energy availability. This move positions Nebius to support massive data centre expansions, essential for meeting the projected ARR ramp. Contextualising this, 1 GW equates to powering roughly 800,000 homes or, in tech terms, sustaining hyperscale operations comparable to those of major cloud providers, enabling Nebius to deploy tens of thousands of additional GPUs.

Historically, power constraints have capped growth for AI firms; Nebius’s proactive securing could provide a multi-year competitive moat. Live data as of 7 August 2025 shows a 52-week high of $58.16, with the stock up 175% over that period, reflecting market bets on such infrastructure wagers paying off. Analyst commentary emphasises this as a critical inflection for AI cloud growth, potentially driving EBITDA positivity into 2026 and beyond.

Strategic Risks and Opportunities

• Capacity Utilisation: With power secured, the focus shifts to converting it into ARR, where any delays could temper the raised guidance.
• Competitive Landscape: Peers like CoreWeave are ramping similarly, but Nebius’s European footprint may offer regulatory advantages.
• Economic Sensitivities: AI demand remains tied to tech spending cycles, though the post’s metrics suggest resilience.

In summary, these earnings elements collectively paint a picture of Nebius not just meeting but exceeding the AI boom’s demands, with the power commitment ensuring the growth narrative extends well into 2026. Investors eyeing the pre-market dip to $55.09 might view it as an entry point, provided execution matches the ambition.

References

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