NBIS — Earnings Review Q4 FY25 (GauchoRico)

Date: 2026-02-22 Quarter: Q4 FY25 (Dec-25) Market Cap: ~$24.6B | EV/TTM Rev: ~47x | EV/FY26 Rev: ~7.8x wsm007 holds: 10.5% portfolio weight Prior GR writings on NBIS: None — first look

Headline

Holy smokes!! Nebius just reported 547% YoY revenue growth in Q4 — and the forward guidance is even more jaw-dropping. $3.0-3.4B revenue guided for FY26 against $530m TTM. ARR of $7-9B targeted by year-end. EBITDA turned positive. I don't have prior writings on NBIS so this is a first look at the numbers — but these are among the most extraordinary metrics I've seen outside of NVDA's recent trajectory.

This is not a conventional growth stock analysis. Nebius is in a category of its own: a company that barely existed 18 months ago, is now doing $227m/quarter in revenue and guiding to $3.2B next year. Let's dig in.

Atlas Baseline

Atlas rated NBIS Conviction 4/5 — "exceptional growth profile with meaningful execution risk." I mostly agree. Where I'll add nuance: the FCF trajectory matters enormously here, and the CapEx opacity is a more serious concern than Atlas rated it. I'll also note the deferred revenue + ARR combination as the most important leading indicator I've seen in a portfolio company in years.

Six-Factor Scorecard

The Numbers (10-Quarter Table)

| | Q323 | Q423 | Q124 | Q224 | Q324 | Q424 | Q125 | Q225 | Q325 | Q425 | | | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 | |---|---|---|---|---|---|---|---|---|---|---| | Revenue ($m) | 5.0 | 6.7 | 11.4 | 14.5 | 32.1 | 35.2 | 50.9 | 105.1 | 146.1 | 227.7 | | QoQ % | — | 34% | 70% | 27% | 121% | 10% | 45% | 107% | 39% | **56%** | | YoY % | — | — | — | — | 542% | 425% | 347% | 625% | 355% | **547%** | | Gross Margin [GAAP] | — | — | — | — | — | — | — | — | — | **70.0%** | | Op Margin [GAAP] | -1552% | -1396% | -727% | -774% | -251% | -430% | -254% | -106% | -89% | **-103%** | | EBITDA ($m) | -67.6 | -81.3 | -70.9 | -58.1 | -45.9 | -75.5 | -62.6 | -21.0 | -5.2 | +15.0 | | Core AI Rev (m)|—|—|—|—|27.1|—|38.2|93.6|131.1|* * 214.2 * *||CoreAIAdjEBITDAMargin|—|—|—|—|—|—|—|—|19.1|CapEx(m) | — | — | — | — | — | 417.6 | 544.0 | 510.6 | 955.5 | 2,056.0 | | ARR Run-Rate ($m) | — | — | 31.8 | — | — | 90.0 | 249.0 | 430.0 | 551.0 | 1,250.0 |

FY25 Total Revenue: ~529.8m. * *FY24TotalRevenue : ** 93.2m. FY25 YoY Growth: +468%.

What I Love

1. The ARR-to-revenue gap is extraordinary. $1.25B ARR run-rate versus $910m annualised revenue (Q4 x 4). That $340m delta represents contracted demand not yet in the P&L. Then layer on $1.58B deferred revenue — prepaid contracts waiting to be recognised. This is the single most powerful leading indicator I track. CRM had a deferred revenue advantage too but never with this kind of ARR-to-revenue divergence at this stage.

2. EBITDA inflection. EBITDA turned positive in Q4 at $15.0m. The Core AI business is already at 24% Adj EBITDA margin and growing. Management guided 40% Adj EBITDA for FY26 on $3.2B revenue — that's $1.28B of Adj EBITDA in a single year from a company that lost $75m EBITDA just 12 months ago. If they execute, this becomes a genuine FCF story by FY27.

3. Trajectory is the most important thing I track. And it's accelerating. Sequential dollar adds: Q224 $+3.1m → Q324 $+17.6m → Q424 $+3.1m → Q125 $+15.7m → Q225 $+54.2m → Q325 $+41.0m → Q425 $+81.6m. The Q424 deceleration was concerning; Q225 reacceleration was the signal. Q425 confirms it.

4. Gross margins of 70% [GAAP] at this scale. That's higher than I expected for an infrastructure business. This is not a commodity GPU rental operation — the full-stack managed services carry real pricing power. CRM ran at 70-75% GM in its growth phase. This comparison holds.

5. FY26 guide is extraordinary. $3.0-3.4B revenue means roughly 6-7x sequential revenue growth in one year. The ARR guide of $7-9B means they expect to sign $5.75-7.75B of new contracts in 2026. That is either the most ambitious forward guidance I've seen — or there are already contracts in the pipeline supporting it. The deferred revenue of $1.58B tells me it's real demand.

What Concerns Me

The CapEx situation is the big one. $2.056B of CapEx in Q4 alone. FY25 CapEx exceeded the 2Binitialguidesignificantly.ForFY26, managementguided408B+ annualised), the FCF will be severely negative regardless of EBITDA. The difference between Adj EBITDA and FCF is the entire debate here.

To put it in context: FCF was -$1.22B in Q4 alone. That's -537% FCF margin on $227m revenue. This is the CRM anti-pattern — CRM maintained 20%+ FCF margins from very early on. Nebius is currently the opposite. The question is whether that reverses as CapEx matures into revenue-generating assets.

The debt position ($4.1B) with negative FCF is manageable now — they have $3.7B cash and $1.58B in deferred revenue (essentially prepaid cash). But the runway requires careful monitoring. If growth does not convert to cash, this becomes a dilution or refinancing story.

EPS miss of -$0.14 vs consensus (-25.9%). Without a transcript I can't fully diagnose this. Likely the Q4 CapEx acceleration drove higher depreciation and interest costs than modelled. Worth tracking whether management addresses this in Q1 commentary.

Customer concentration is unknown. $1.58B of deferred revenue concentrated in a few customers is a very different risk profile than diversified. We simply don't know.

Valuation Assessment

The valuation argument is straightforward: if $3.2B FY26 revenue at 40% Adj EBITDA materialises, you're paying 19.5x next year's earnings. For a company growing at this rate with a multi-year secular tailwind, that's fair. The CRM Case Study supports this — CRM traded at 7-12x forward revenue for years during its growth phase and compounded 30%+ annually.

The risk is the CapEx gap. We need to know: what happens to FCF in FY26? My working assumption is CapEx peaks in H1 FY26 as the infrastructure buildout matures, and FCF starts improving in H2. We will see what happens.

Prior Beliefs / Updated Beliefs

Prior beliefs: No prior writings. This is a first look.

Updated beliefs from this quarter:

1. The revenue trajectory is the most compelling I've seen in the portfolio outside of NVDA's run.
2. The deferred revenue + ARR structure is a genuine moat on the demand side.
3. The CapEx opacity is a legitimate concern — 40% Adj EBITDA guidance without CapEx disclosure is incomplete. I want to see Q1 FY26 numbers before sizing up aggressively.
4. At 7.8x FY26 guided revenue, wsm007's 10.5% position seems appropriately sized. I would not add until we see the CapEx profile clarify.
5. This is a LEAPS candidate for a "fat pitch" entry — any broader market correction that takes NBIS to $60-70 range would warrant leveraged upside expression. The growth visibility from ARR/deferred revenue makes that timing risk manageable.

Action

Hold. The thesis is intact and strengthening. The Q4 results validate the revenue ramp, the EBITDA inflection, and the leading indicator story. I am not adding here because: (a) the CapEx opacity needs to resolve — I need to see Q1 FY26 CapEx numbers (b) the EPS miss needs explanation (transcript not available as of this writing) (c) valuation at $97/share with an opaque capital structure deserves patience

At 10.5% portfolio weight this is already a major position. If Q1 FY26 shows CapEx moderating and revenue tracking toward $3.2B annual, that would be the signal to add or initiate LEAPS.

LEAPS watch: Evaluate Jan '27 or Jan '28 calls on the next broad market pullback. The $1.58B deferred revenue provides strong downside protection on the revenue story.

Management Assessment

Promises made:

• Core AI EBITDA positive Q3 → Delivered Q2 (beat by 1 quarter)
• Group EBITDA positive H2 2025 → Delivered Q4 ✅
• ARR 750m−1B by year-end → Beat at $1.25B ✅
• FY25 CapEx ~$2B → Exceeded significantly (Q4 alone was $2.056B) — underpromised on capital intensity

FY26 promises to track:

• $3.0-3.4B revenue
• $7.0-9.0B ARR by year-end
• 40% Adj EBITDA margin
• No CapEx guidance given — management must address this on Q1 call

The pattern is: management tends to beat operating metrics (revenue, ARR, EBITDA) while the capital side comes in hotter than guided. That's actually the right kind of execution bias for a buildout-phase company. Still want the CapEx picture.

GauchoRico | First look at NBIS | wsm007 holds 10.5%

GR