Nebius Group NV

NASDAQ:NBIS

Q3-2025 Earnings Call

[Neil Doshi, executive]

Thank you, and welcome to Nebius Group's Third Quarter 2025 Earnings Conference Call. I'm 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 forth in today's earnings press release and in our 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, shareholder letter and accompanying investor presentation are available on our website at nebius.com/investor-hub.

And now I'd like to turn the call over to Arkady.

[Arkady Volozh, executive]

Thanks, Neil, and thank you, everyone, for joining the call today. I'd like to share my thoughts about the demand environment, about our capacity plans and what we are doing in our product.

First about the demand. Q3 demand was very strong. We sold out all of our available capacity. We continue to see a consistent trend every time we bring capacity online, we sell it all of it. With the new generation of NVIDIA Blackwells coming online, more customers are interested in purchasing capacity in advance and securing it for a longer period of time.

Today, we're very pleased to announce that we signed another major deal at this time with Meta for approximately $3 billion over the next 5 years. In fact, the demand for this capacity was overwhelming, and the size of the contract was limited to the amount of capacity that we had available, which means that if we had more, we could have sold more.

This deal comes on top of the Microsoft deal we announced early in September with a contract value between $17.4 billion and $19.4 billion. As we said before, we expect to sign more of these large long-term deals, and we are delivering that promise.

As busy as we are with these mega deals, our main focus is still to build our own core AI cloud business. We made great progress here with AI [indiscernible] start-ups like Prosus, Blackforce, Labs and others. The economics and the cash flow of mega deals are attractive in their own rate but they also enable us to build our core AI cloud business faster. This is our real future opportunity.

Now on the capacity. In order to meet the growing demand, we have accelerated our plans to secure more capacity. And this is actually our main focus for now. Capacity today is the main bottleneck to revenue growth. And we are now working to remove this bottelneck. As we look to 2026, we expect our contracted [indiscernible] to grow to 2.5 gigawatts contracted. This is up from the 1 gigawatt, which we discussed in our previous earnings call in August. Furthermore, we plan to have [indiscernible] connected to our data centers which means fully built of approximately 800 megawatts to 1 gigawatt by the end of 2026 -- by the end of next year.

While we made significant investments in our capacity footprint, we are also investing in our main product, our AI cloud. To extend our addressable market opportunity to large enterprise customers, we released our new enterprise-ready cloud platform version 3.0 called Ether and our new influence platform called Nebius [indiscernible] factory. We believe Ether gives organizations with trust, control and simplicity they need to run their most critical AI workloads. Nebius [indiscernible] factory is a production scale inference platform that enables organizations to run open source models with reliability, visibility and control.

And we have a large pipeline of new software and services that we are continuing to build, which will differentiate us from other cloud companies. Based on the strength in demand that we see and our accelerated capacity growth plan, we believe we can achieve annualized run rate revenue, IRR of $7 billion to $9 billion by the end of 2026.

In summary, Nebius is positioned to win in this large and rapidly expanding AI cloud market. We're just beginning to realize the powerful potential of the AI revolution that is underway. And we are quickly becoming one of the primary cloud and infrastructure providers to support it.

And with this, I would like to hand the call over to our CFO, Dado Alonso. Dado, please?

[Dado Alonso, executive]

Thank you, Arkady. While the details of our Q3 financial performance can be found in our shareholder letter, I'd like to provide some additional color to the quarter, discuss our financing options and conclude with 2025 guidance. Q3 group revenue was $146 million, up nearly 355% year-over-year and 39% quarter-over-quarter. Annualized run rate revenue for the core business at the end of September was $551 million. The core infrastructure business, which accounted for nearly 90% of total revenue, grew 400% year-over-year and 40% sequentially. Once again, we sold out our capacity and our revenue growth was limited only by the capacity that we were able to bring online.

I'm also pleased to say that adjusted EBITDA margin for the core infrastructure business expanded quarter-over-quarter to nearly 19%. On financing, in order to support our aggressive growth plans in 2026 and to maintain this stage of growth in 2027, we will be utilizing at least 3 sources: corporate debt, asset-backed financing and equity. We are in the process of raising asset-backed debt, which will be able to secure with attractive terms supported by creditworthiness of our largest customers.

Tomorrow, November 12, we will be putting in place and at the market equity program for up to 25 million Class A shares and a plan to file a prospective supplement. We will evaluate the program regularly based on our capital needs. The program enables us to access equity funding on an efficient ongoing basis. However, we will remain [indiscernible] as we prepare to finance future growth opportunities.

Now I would like to turn to 2025 guidance. As we approach the end of the year, we are tightening our full year group revenue guidance to a range of $500 million to $550 million and we are currently pacing to the midpoint of that range. This compared to the $450 million to $630 million in our previous guidance. The reason we are in the middle and not at the top of that range simply relates to the exact timing of when capacity comes online.

Our current momentum and long-term trajectory remains extremely strong. Our annual run rate revenue, which is a good reflection of our future growth opportunity, continues to expand, demonstrating the resilience and scalability of our business model. As such, we remain well on track to hit our ARR guidance of $900 million to $1.1 billion by the end of 2025, while also paving the way for substantial annualized run rate revenue growth in 2026 and beyond.

In terms of the mega deals, we will begin serving Microsoft and Meta late in the quarter, and almost all of the revenue from these deals will start to be realized on ramp-up during the course of 2026. We plan to give full year revenue guidance for 2026 next quarter.

Turning to adjusted EBITDA. As we have previously indicated, we expect to be slightly positive at the group level by year-end, while remaining negative for the full year. Regarding CapEx, we are raising our 2025 guidance from approximately $2 billion to circa $5 billion. This acceleration reflects our strong conviction in the demand outlook and our decision to secure critical infrastructure, including hardware, power, land and key sites. These investments are strategic enablers of future growth and will position us exceptionally well to capture the opportunities ahead.

In summary, we have a large and rapidly growing opportunity in front of us, and we are executing with focus and discipline to capture it while delivering substantial sustainable growth and setting the stage for strong long-term profitability.

Now let me turn the call over to Neil for Q&A.

[Neil Doshi, executive]

Great. Thank you, Dado. We'll give it a moment to collect questions from the online platform, and then we'll begin the Q&A.

All right. Let's start with the first question coming from Alex Platt of D.A. Davidson. Can you tell us more about the new Meta deal? Why did you choose -- why would they choose you? And how should we model the deal? Arkady?

[Arkady Volozh, executive]

Well, again, as we were happy to announce today this new deal with Meta approximately $3 billion. As I said, the size of the deal was limited only by the capacity that we had available. And if we had more capacity, we could have signed a bigger deal probably. After we announced Microsoft in September, we said that we will have more deals of this kind, more large deals and actually we are delivering on that promise. And we actually -- we are optimistic as these deals -- those deals will arise more and more.

However -- however, these deals are important, these mega deals. It is important to stress that we will remain focused on developing of our own AI cloud, which -- which currently serves not only these big deals, but AI start-ups and enterprises. And ultimately, we believe that these large contracts provide us with great sourcing of financing for us to continue building our core cloud business.

[Neil Doshi, executive]

Great. Thank you, Arkady. We'll take the next question from Alex Duval, or analyst from Goldman Sachs. So we provided the updated 2026 ARR outlook of $7 billion to $9 billion. What exactly is in the $7 billion to $9 billion ARR target? And is this based on pre-existing core business plus Microsoft and Meta? Is there anything else in terms of signing up for large deals? Marc, maybe you can take this one.

[Marc Boroditsky, executive]

Thank you, Alex, for your question. And let me walk you through the building blocks of how we get to the $7 billion to $9 billion in ARR. First of all, as we already shared, we had a bottleneck in capacity, and we worked extremely hard over the last several months to unblock this bottleneck. As we shared, we plan to have 800 megawatts to 1 gigawatt of connected power by the end of '26 and 2.5 gigawatts of contracted power.

Second, we see the demand out there from AI start-ups to enterprises to the large strategics, and we see that client demand that we were unable to sell this past year due to a lack of capacity, and we strongly believe that the capacity we are putting in place in '26, will help us to meet more of this demand. At the end of the day, we will allocate between the categories of customers based on the individual economics of the deals they represent.

Thirdly, this new capacity that we are putting in place, together with our current capacity that has already been sold and the long-term contracts that we signed with Microsoft and Meta gives us the confidence that we can achieve the $7 billion to $9 billion of ARR, of which more than half is already booked.

[Neil Doshi, executive]

Great. Thank you, Marc. So we'll take another question from Alex at Goldman. Can you walk us through the time line of your infrastructure build-outs for Q4 '25 and '26? And what gives you confidence that you can reach your 2.5 gigawatts goal for contracted capacity? Andrey?

[Andrey Korolenko, executive]

Thanks, Alex. So we are ramping up our capacity as fast as we can to accelerate our growth for the next year and beyond. We are happy to launch now already Israel and U.K. and all the capacity in those regions were presold before the launch. And we are growing with the numbers of the regions where we are present. And we are also bringing new capacity online in the current sites. We are also coming online in New Jersey. We are launching new phases of Finland in Q4 which are also presold, by the way.

In 2026, we will continue to scale in the existing data centers, including U.K., Israel, New Jersey, and we have new data centers already in development both in U.S. and Europe, and they start to come online in the first half of 2026. We also in the process of securing several new life sites, which we believe will add hundreds of megawatts. And some of those will go online by the end of 2026.

So overall, at the moment, we are looking at more than -- around 2.5 gigawatts of contracted power by the end of 2026. And as we said, demand is growing massively, and we are very focused on rapidly building the capacity and the future pipeline to meet the demand in '26 and beyond.

[Neil Doshi, executive]

Great. Thank you, Andrey. All right. We'll take a question from some of the folks who have been submitting questions. We're getting a lot of questions on Microsoft and Meta revenue. How should we be thinking about revenue contribution from Microsoft and Meta deals for this year and going forward? Dado?

[Dado Alonso, executive]

Well, the Microsoft contract will not have a material effect on our revenue and ARR in 2025 as the first tranche was just delivered. All of our remaining tranches will be delivered in 2026 with more than half of them during the second half. So we actually expect revenue to ramp up over the course of the year. Starting in 2027, we will begin to recognize the full annual revenue run rate of the Microsoft deal. With regards to Meta, we will be concluding the deployments within the next 3 months. So we expect to mostly be at a full revenue run rate in 2026.

[Neil Doshi, executive]

Great. Thank you, Dado. Maybe another question from our online audience. What does the overall demand environment look like in Q4 and into the next year? Marc, do you want to take this?

[Marc Boroditsky, executive]

Certainly, certainly. I joined the company about 5 months ago, and I've had an extraordinary experience in these past 5 months. It's extraordinary from the standpoint that I've never seen the kind of demand profile that we're experiencing. It is literally accelerating for Nebius and I believe as well for the broader market. As an example, in the recent quarters before, we saw pipeline generation. This is opportunities by customers that want to buy from us expand. As a matter of fact, in the past quarter, Q3, we saw pipe gen expand 70% quarter-on-quarter, and we generated $4 billion in pipeline in that quarter.

But we were only able to convert a portion of that given to the constraints of our capacity. As a matter of fact, I've learned a new skill, one, I don't think many go-to-market professionals have ever had to experience, and that's learning to say no to customers as we routinely sell out and have to actually let them down lightly and try to convince them to purchase in the future.

As I look out to '26 and I think through the demand profile, the kind of pipeline that we're generating right now has given us high confidence to continue to expand our results and drive towards the ARR growth that Arkady mentioned earlier on the call.

[Neil Doshi, executive]

Great. Thanks, Marc. We have a question now from one of our analysts, Nehal Chokshi from Northland. Incremental ARR in September quarter was around $12 million, down from $180 million in the prior quarter and $159 million in the March quarter. Why is incremental ARR down?

[Unknown Executive]

Neil, it's a great question. As we've stated, a lot of our revenue and our ARR is really dependent on us able to bring on capacity. And because capacity really has been the bottleneck. That's why we've seen a little bit of that trend. However, as we're bringing on a lot of capacity in Q4, you should see that incremental ARR in Q4 will be significantly higher.

[Neil Doshi, executive]

All right. Let's go to another question from online in terms of the CapEx. You have just announced your plan to achieve connected capacity of 800 megawatts to 1 gigawatt by the end of '26. How are you thinking about CapEx? And what is your philosophy on CapEx spending? I think, Arkady, care to take this?

[Arkady Volozh, executive]

I should take it. Again and again, as we see at least this year, our revenue growth was limited by our capacity and everything will we built was ultimately sold. So in theory, we should try to build as much as we can. In practice, though, we are limited by certain physical [indiscernible] limitations. [indiscernible] cannot grow 5 or 10x a year. We have limitations in supply chain and obtaining permits, amount of capital that we can deploy.

So when we plan for data center CapEx, there are actually 3 stages there. The first stage is securing the land and pulp. The second stage is building the data centers themselves, [indiscernible] physical installation which we call connected [indiscernible]. And the third part is finally deploying the GPUs themselves. And if we look at it from the CapEx point of view, roughly speaking, it breaks into 3 spending blocks. So first stage, securing land and power. It's pretty cheap. It's around, again, it depends on the scale, but it's around 1% of total CapEx for [indiscernible].

The second stage, building [indiscernible] is something around, I don't know, 18%, 20%. And the remaining 80%, the main part is for deploying the actual GPUs. This is the main part of CapEx. So if we want to build as much as our capital will allow us, what should we do? First, we should secure as much capacity as we can because the cost, actually, it's not so -- it's immaterial at this scale. Second, we should build as much as our capital allows. And third, we will fuel GPUs in line with contracted or clearly visible demand. We will need this massive 80% spend will come only when we see real demand. That's why we say that in 2026, we will be securing 2.5 gigawatt total contracted capacity. And we are planning to physically build 800 to 1 gigawatt of connected data centers. This will be done by the end of next year.

[Neil Doshi, executive]

Great. Thank you, Arkady. Another question from Alex Duval from Goldman Sachs. You have announced your target is 2.5 gigawatts of contracted power, whereas before it was 1 gigawatt. Is it fair to assume that if you get 2.5 gigawatts, this will equate to over $20 billion of revenue? By when do you envisage you could do this and how? Maybe we'll give this to Andrey.

[Andrey Korolenko, executive]

Thank you, Neil. I guess it's fair to assume. But as Arkady just mentioned, we will -- we are securing the access to the power and the ability to build but we will invest CapEx actually in building out and deploying the GPU in those, keep in mind the constraints that we have with the capital and according to the demand in the future periods. It's just important that we are able to accelerate when it will be needed. So we don't like being blocked by the capacity constraints all the time.

[Neil Doshi, executive]

Great. All right. Take another question from online. Is it -- in a situation when you are sold out, is that the same issue -- or is that really an issue with your future growth and differentiation of servicing a broader range of customers? Marc, can you take this one?

[Marc Boroditsky, executive]

Certainly. Thank you, Neil. It's a great question. I mean, in theory, the situation of being sold out is a nice problem to have. But the person asking the question is right for our business model, it's really important for us to be able to not only service large tech companies but also be able to support our AI cloud and a very diverse set of customers. As a matter of fact, servicing start-ups and software vendors and enterprises is not only about delivering on their capacity needs today. We want to build partnerships with these customers and help them to meet their capacity requirements in the future, especially with enterprises because they don't want to actually have a multitude of vendors. They prefer to align with a strategic partner. That's why we are working very closely with Andrey.

And as Andrey mentioned earlier, as we look forward, and think about deploying capacity, it's going to be based on the demand that we're seeing out there. So utilizing the pipeline that we're building and the demand that we're experiencing to work with Andre to identify the capacity that we should deploy. It's a very dynamic model that we're trying to put in place.

[Neil Doshi, executive]

Great. Thank you, Marc. Appreciate that. We have a question from Nehal Chokshi from Northland. He's asking going, so you've done equity deals. You've also done equity-linked deals as well, Dado. How will we focus on debt and asset-backed financing for large deals?

[Dado Alonso, executive]

Thank you, Nehal. Well, as you know, this is a capital-intensive business. And as we've said previously, funding our growth will require raising a significant amount of capital. In this context, we are actively evaluating a range of financing options today, including asset-backed financing, corporate level debt and equity financing. And we are working on all fronts in order to maintain a disciplined capital structure to maximize our shareholder value.

With regards to asset-backed financing, we believe that we will be able to secure such a facility with attractive terms, supported by the creditworthiness of our largest customers. I would like to reiterate that as we are growing our business, our focus and ultimate goal is to maximize our shareholder value.

[Neil Doshi, executive]

Great. Thanks, Dado. And maybe just sticking on the theme of financing from the online portal. Why are you planning to pursue an ATM? You just completed a secondary and this will result in additional solution to shareholders? Any thoughts, Dado?

[Dado Alonso, executive]

Any thoughts on perspective? We will be putting in place and at the market equity program for up to 25 million Class A shares, and we plan to file the prospective supplement tomorrow. We want to make sure that we have more tools at our disposal to access capital markets for EBIT. This is a long-lasting program, which will be used along with other capital raise options, including corporate debt asset bank financing and others, as I mentioned in my opening remarks and just before this question. So the program enables us to access equity funding on an recent ongoing basis. However, we will remain dilution-sensitive as we seek to finance future growth opportunities.

[Neil Doshi, executive]

Great. Thanks, Dado. See another question from online. How are the early operations of your new U.K. facility progressing? Tom?

[Tom Blackwell, executive]

Yes. No. Absolutely. So short answer is progressing very well. You may have seen just actually last week, Arkady and a few of us [indiscernible] we had our official launch as we brought the data -- presented the data center to the U.K. market. This is actually capacity that will be coming online really actually in the next week or so, so pretty -- very in the coming days. You might remember actually that in June was when we first announced our intention to launch in the U.K. and actually even in the time since June and now we've already come close to doubling the capacity that we're bringing on stream. And that's just really a function of extremely strong demand that we're seeing in the U.K.

And actually, as often the case with the new capacity that we bring on, even before going live, we're pretty much sold out. So I think they've not already fully sold out with that capacity. So that's a trend that just continues.

I would just say, overall, a few words about the U.K. actually, I mean, we're very bullish actually about the opportunity in the U.K. It's a vibrant AI market. It's probably one of the most dynamics that we see outside of U.S. and China. The government is making a big push to support the growth of the industry and having a reasonable degree of success in this field. So there's a -- we see a lot of AI start-ups. We see environment is strong. You also see some of the kind of the large tech companies establishing regional R&D and presence there. So really, there's a lot happening in the U.K., and we think a lot still to come from Nebius in the U.K. and we're very happy to be there.

And actually, although this specific facility that we have, I think with the capacity once by January, we'll have reached the peak capacity there, we see a lot of other opportunities to expand capacity in the U.K. overall.

[Neil Doshi, executive]

Great. Let's see. In terms of -- we'll take another question on capacity. So you mentioned this quarter that you're fully sold out of available capacity, what are your constraints to growing in the near term and medium term to capture more of that demand? And could you also address some of the recent comments in the market around power equipment constraints?

[Andrey Korolenko, executive]

Yes. I'll take it. Yes. Thanks, Neil. As we discussed in most of the previous question, capacity remains our main bottleneck, everything we deploy we sell. And we see the demand that continues to significantly outstrip our supply each time we add new clusters. So in near term, the key challenges to increasing capacity, securing power and the supply chain, and we're addressing this. We have managed these situations in the past, have quite a bit of expertise both building on the data centers and the [indiscernible] those. So overall, we are [indiscernible].

Generally speaking, we are doing quite well actually with the pipeline. And when we spoke last quarter, I believe that we announced that we have secured the road map or the -- to 1 gigawatt of the power. Now we are talking about the number, 2.5 gigawatts. And we are still putting a lot of focus on growing this number and making this number reliable and effective and actually bigger.

[Neil Doshi, executive]

Great. Thank you, Andrey. And online we're getting just a few questions about any updates on the New Jersey facility? Andrey, do you want to take that?

[Andrey Korolenko, executive]

Yes, the New Jersey facility goes as planned and the first tranche already was handed over to Microsoft, and we are continuing on the further expansion [indiscernible].

[Neil Doshi, executive]

All right. It looks like a question from online. Maybe more of a market question. Are you concerned that we are in an AI bubble? Arkady?

[Arkady Volozh, executive]

I haven't really been asked this question these days. Well, what we see today, the demand is here, right? And we understand that we are in the center of a once-in-generation [indiscernible]. Much -- no doubt that much more compute will be needed and much more will be built. The situation of unbalanced demand supply is temporary. Of course, eventually demand supply will level up. And what we are doing in addition just to growing this overall capacity. We are building our aircraft which will support real businesses, real industries, real enterprise market, where AI will be creating value. And we believe that AI industry, in general, [indiscernible] sector specifically, it's going to be okay.

Ultimately, we just we need to make sure that, a, we are diversified in terms of customers and workloads. And this is actually what our software is basically doing; b, that we invest conservatively and that we finance our growth responsibly and we are very much focused on this. And also where we're growing rapidly, 5x more a year. We still remain largely focused on meeting healthy margins and a sustainable business model as a whole. In old days, I would say, healthy [indiscernible]. So we are focused on that. And [indiscernible], I would hope that we will be okay.

[Neil Doshi, executive]

Great. Thank you, Arkady. Next question is from Alex Platt from D.A. Davidson. How should we think about the lead time between when power is connected to and when it is hooked up to GPUs and generating revenue? Andrey?

[Andrey Korolenko, executive]

Yes. Thanks, Neil. So on the technical side, it also depends if it's in use side or if it's expansion of the current side. But generally speaking, from the connected power and start of the GPU deployment [indiscernible] can go into platform [indiscernible] revenues anywhere from 6 to 12 weeks. If it's already existing site that can be even quicker. But generally, we also have flexibility. That's why we are building infrastructure. We have flexibility when we deploy and we will be [indiscernible] how much we deploy.

[Neil Doshi, executive]

Great. Thanks, Andrey. All right. Question from online. Can you update us on your progress with your primary customer segments? Marc, can you help us with this?

[Marc Boroditsky, executive]

Certainly, certainly. We continue to see extremely strong demand from our customers in our core AI business. And we're continuing to expand business overall with our existing customers. As a matter of fact, we added a number of new customers in most notably some very disruptive start-ups like [indiscernible] AI, Blackforce Labs and World Labs. I'm sure everybody's heard of Cursor. We're very proud to be their partner. For those that haven't, they're an extraordinarily popular AI-powered code editor that is helping millions of developers to write and debug and optimize their code faster, and they're making great strides into the enterprise.

Black Forest Labs is an interesting customer that is developing cutting-edge generative AI models, specifically for image and video generation their popular Flex One model helps turn text and images into high-quality media ready visuals. And World Labs is building something they call a large world model, which is able to simulate 3D world, and it gives developers and AI engineers the necessary spatial awareness to build applications for things like media and gaming and architectural design and as well for physical AI and robotics.

We've also, as I mentioned, seen expansion with existing customers. As a matter of fact, as an example, we've seen expansion with our software vendor customers like Shopify. And then also, we've made great strides with our efforts around driving vertical market success, adding significant customers in our health care life sciences part of the business. And we're also making significant advancements in physical AI and media entertainment customer segments.

[Neil Doshi, executive]

Great. Thank you, Marc. Maybe a question to -- looks like this is a question for Dado. Few people are asking, any puts and takes that you can provide on your revised 2025 year-end revenue guidance?

[Dado Alonso, executive]

Well, our businesses are to scale rapidly. There can always be fluctuations in the exact time of deployments in such a fast-growing company like ours. And our focus remains on building a very large company, obviously much larger than today and significantly bigger than our plans for 2026. This was and continues to be our main focus. In any event, our annualized run rate revenue, which is a better reflection of our future growth opportunity continues to expand, demonstrating the resilience and scalability of our business model.

As such, we remain well on track to hit our ARR guidance range of $900 million to $1.1 billion at the end of 2025 while also paving the way from substantial revenue growth in 2026 and beyond.

[Neil Doshi, executive]

Great. Thank you, Dado. See question from the online community, how is your enterprise initiative ramping up? Do you seem to make some good improvements there over the past couple of quarters. Marc, do you want to help take this?

[Marc Boroditsky, executive]

Certainly, certainly. Yes, we are making strides with regard to becoming enterprise ready. As you saw with the launch of Nebius 3.0, what we call [indiscernible], we've delivered a number of AI cloud improvements to support enterprise requirements. As an example, in the [indiscernible] release, we are delivering really important compliance and security certifications. And we did this as a matter of fact, in a matter of months when it would normally take other organizations a lot longer to deliver these types of capabilities. As a matter of fact, as well, we delivered some important functionality that enables enterprise administrators to proactively manage their implementation.

So tooling and controls like identity and access management and dashboards for evaluating the performance and security of their implementation. I think as we all know, the sort of the critical foundation for enterprise readiness is to have these kinds of compliance and certifications in place and the enterprise functionality that enterprise is looking for.

And the third is to have an enterprise-ready sales team. On that front, we are adding a number of key leaders to our organization, and we are expanding the overall sales organization for coverage in enterprise software vendors and key verticals. It will take some time for the sales team to ramp but we are building the foundation between the functionality that I mentioned and the overall team coverage that I think will set us up for a strong 2026 with enterprises.

[Neil Doshi, executive]

Great. Thank you, Marc. Keeping with our online investor base. You recently launched [indiscernible] factory, what is the opportunity around this? And will this expand your market or open up new segments? Maybe we'll ask Roman to take this one.

[Roman Chernin, executive]

Thank you, Neil. Happy to talk about our new launch. So I will start a little bit from demand evolution. We fairly see now the next wave of AI demand growth. And it's mostly driven by the companies, but the people who apply real-world applications across all industries in B2C and B2B. It's not necessarily a foundational model builders like it was, let's call it, the first wave. And we as Nebius realized that we needed our inference as a service offering to make to make it serve a broader set of customers, including enterprises. So [indiscernible] factory gives vertical product builders, ICs and enterprises a platform to build, we call it flywheel of applying LLMs in vertical use cases at scale. Transforming -- we help them to transform open source models into optimized production-ready systems with guaranteed performance and transparent cost per token.

We obviously leveraged the underlying infrastructure to bring the most efficient and scalable solution to our customers when they can be sure that they get the best total cost of ownership and can confidently grow with us. So as a result, organizations can deploy and scale models such as OpenAI [indiscernible], DeepSeek, Lllama, [indiscernible] and many others on dedicated endpoints with guaranteed performance tuned for the super latency and 99.9% uptime. So in total, I must say we are excited about the opportunity of inference workloads. We believe that all companies will invest in inference to productize AI. And for us, it means like it will require significantly more compute and will support this wave of growth as well as we do for foundational model builders.

[Neil Doshi, executive]

Great. Thank you, Roman. Jumping back to online. It looks like we have some additional questions here. What demand are you seeing for new [indiscernible] generation? And how is this demand from the previous hopper generation? Marc, do you want to take this one?

[Marc Boroditsky, executive]

Yes, certainly. Thank you, Neil. Demand remains very strong across all types of GPUs. And as we said, we sold out our capacity in Q3, and that's across all types. And we're nearly sold out with respect to Q4. Talking about the hoppers, we continue to see extremely positive demand for these chips. An interesting set of dynamics that we're experiencing is that as customers come to their renewal, for hoppers or if they're looking to upgrade to, say, Blackwells in both cases, we're typically selling them immediately. And often case -- and often at better pricing than they were previously priced as we're actually in tandem rolling out the black wells. So very strong demand profile for existing offers. We're also seeing very strong demand for Blackwells.

And we're benefiting from the fact that we're one of the first companies to deliver them in the market. In our Israel data center, we launched with B200s. And in our U.K. data center, we launched with B300. And we've essentially presold much of that capacity before these facilities even opened. We're very excited as well that we're launching GB300s. We're the first to do so in Europe which will be coming online or finished data center later this quarter in December.

Thinking about in production capacity, right now, as I mentioned, selling the remnants of Q4 but we're also now preselling new capacity being delivered in future quarters. So we're seeing a very strong demand across all types of GPUs. And as I mentioned earlier and as Andrey mentioned earlier, we're working in close partnership with Andrey's team to make sure that our sales pipeline allows us to drive our model in order to be able to support GPU requirements in subsequent quarters.

[Neil Doshi, executive]

Thank you, Marc. Another question from Alex Platt from D.A. Davidson. He is was asking about our strategy regarding larger deals. Do we have medium-term capacity targeted for these deals and customers? Arkady?

[Arkady Volozh, executive]

Yes, we are very opportunistic here. The demand is there not only for our everyday deals, but for large mega deals as well. And we will enter into the deals, which provide us with the best margins. We're very much focused on margins and profitability, not only in growth itself and all our decisions actually direct from there.

[Neil Doshi, executive]

Great. Thank you, Arkady. Our next question from Andrew Beal from [indiscernible]. Can you provide more details regarding some of the greenfield sites? Do you have LOIs for further new U.S. and [indiscernible] locations? Or are you further down the road with these? Andrey?

[Andrey Korolenko, executive]

Yes. Thanks, Neil. Generally, we are making a great progress in [indiscernible]. We have a robust pipeline, both in Europe and U.S. We mentioned that we are on the way of securing 2.2 gigawatts of, well, road map for the power in the next year, we are in [indiscernible] also further down the road as well. But we are not in a position to say more at this stage.

[Neil Doshi, executive]

Great. All right. Question from online. Can you provide an update on your facility in Israel? Tom?

[Tom Blackwell, executive]

Yes, sure. So as you can see, we're growing rapidly. So just last week, we were in the U.K. launching; in just a couple of weeks before that, we were in Israel. And actually, the day center facility that we have there is already fully live. And as I think we've made various references to Marc's mentioned it previously, again, that was capacity that was effectively even presold. And we definitely have opportunities to expand further in terms of capacity. We think Israel is a great market. Again, we see a lot of demand. There's a lot happening in tech and in AI.

And actually, one of the things that's interesting about the market, I mean our decision to go in there was purely based on our own commercial considerations, we think there's a great -- there's a lot of growth for that. But actually, the government is also doing some interesting things, really to stimulate further demand. And so they're actually effectively putting money to subsidize sort of AI start-ups and institutions and helping them to access the compute as a way of getting -- having the growth move faster. So we think it's -- anyway, we're doing great there. We have -- we think it is a great opportunity for us. And actually, the model that might even be a model that we think [indiscernible] other countries might look at that are thinking about building up that domestic demand in AI industry. So overall, going great.

[Neil Doshi, executive]

Thanks, Tom. All right. From our online platform, let's see, how do you think about partnering with or buying potential companies that already have secured power or land or consolidating or consolidating other neo clouds? Arkady?

[Arkady Volozh, executive]

Well, companies -- we secure power and land, again and again, it's all about margins. We are pretty much focused on the margins when we enter into a new contract when we are raising capital, when we're developing new products for data centers, when we designed those data centers, when we build our own racks, software and so, we are vertically integrated, and we are looking on efficiency on each stage. We have looked into potential acquisitions of power/land market. But so far, our approach proved to bring, say, much higher margins so far. So we are still moving further and further into building our own facilities, and we're actually decreasing the share of our own [indiscernible] branded facilities. More and more, we will be our own facilities.

Obviously, we will continue to consider different opportunities. But as you can see, we were able to secure a significant level of contract power organically. So we strongly believe that sooner later, the margins for the infrastructure business will play a significant role in the ability to grow and develop. And we have basically remain very focused on that.

[Neil Doshi, executive]

Great. Thank you, Arkady. All right. Let's -- another question, kind of market-related question. Maybe this one will go to you Arkady. Is there any chance that GPUs are oversupplied in the coming year as new suppliers come to the market?

[Arkady Volozh, executive]

Two things here. First, we strongly believe that the market will still be supply constrained, at least in 2026. Means that data center capacity will be the [indiscernible]. Also, as we mentioned earlier, we plan our capital spend in those 3 stages: land power, building the [indiscernible] facilities and [indiscernible]. And this conservative stage approach keeps us from our spending actually and allows us to maintain a healthy financial position. If there are any changes in the market, we'll be in good shape to [indiscernible] any downturn, we hope.

[Neil Doshi, executive]

Thank you, Arkady. Let's see. Couple of ours analysts are asking in terms of any big challenges regarding the completion of the [indiscernible] facility or any challenges to meeting any performance obligations out [indiscernible] Microsoft deal?

[Unknown Executive]

Thanks, Neil. I think I already spoke about it. So yes, as of today, it goes as planned, and we already handed over the first tranche to the Microsoft. So we are continuing [indiscernible] according to the plan.

[Neil Doshi, executive]

Great. All right. I think we'll end the call there. Thank you, everyone, for joining, and we will speak to you again next quarter.