Nebius plans to fund up to 85% of its $40 billion to $45 billion capital expenditure plan through client prepayments and loans backed by future contracts, supported by $7.4 billion in cash. Operational hurdles at a third-party Vineland, New Jersey site have pushed back capacity delivery for a massive Microsoft deal to 2027. The project suffered from local noise lawsuits and a $1.1 million fine over unpermitted generators, prompting a shift to Bloom Energy fuel cells. While Microsoft retains the right to penalize or terminate lagging contracts, Nebius asserts its proprietary sites remain fully on schedule.
Key points
Microsoft holds the contractual right to terminate services or apply financial penalties…: Microsoft holds the contractual right to terminate services or apply financial penalties if delayed infrastructure milestones are not met.
Full capacity delivery for the $19.4 billion Microsoft agreement has been delayed until t…: Full capacity delivery for the $19.4 billion Microsoft agreement has been delayed until the second quarter of 2027.
Nebius claims operational delays are restricted to third-party partners while its wholly…: Nebius claims operational delays are restricted to third-party partners while its wholly owned data centers remain on schedule.
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In its third-quarter earnings call Thursday, the neocloud company Nebius laid out $40 billion in planned spending for 2027, far more than Wall Street had expected. It’s an ambitious plan, but it rests on a string of planned projects that are already starting to show cracks.
Nebius plans to fund the buildout by relying on customer pre-payments and loans backed by customer contracts — essentially using the future value of its data centers to finance their construction. But that can be a risky strategy if those projects get bogged down by delays or cancellations.
“Building at this scale is hard, and delays are part of our industry right now,” CEO Arkady Volozh said during Thursday’s earnings call. “We are not immune.”
The earnings announcement comes on the heels of reports that Microsoft is cooling on neocloud deals that aren’t delivering on time. That’s a problem for companies like Nebius, whose financing strategy is becoming more dependent on repayments. Because if it can’t get to capacity on time, it will keep piling on costs while revenues slip.
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