Looks like good results
- Revenu grew 420% YoY to $982.6M
- Adjusted EBITDA margin 62%
- Adjusted operating income margin 17%
- Revenue Backlog $25.9B
Luffy
17 Likes
Thanks Luffy. I have been interested in following CoreWeave, however my principle concerns with them are 1) Intrinsic profitability 2) Customer concentration. Will have to look through the report to gauge how these concerns are playing out.
Ant
2 Likes
Some notes I took while reading transcripts:
The Bulls
- "In Q1, we completed a strategic deal with OpenAI, the contract value for which is up to $11.9 billion. We have also added new enterprise customers and a new hyperscaler and signed expansion agreements with several large customers, including a recent $4 billion expansion with a large AI enterprise, the details of which will be included in our 10-Q. "(Me: A new hyperscaler customer is really bullish. It means concentration risks could be improved)
- "At the end of Q1, there was no entity that was more than 50% of our backlog. "(Me: so concentration is indeed improving)
- “So at this moment, we don’t expect tariffs to have a material impact to our financials, but we are closely monitoring that situation.”
- “we’re very excited to see the acceleration of AI adoption curve in the enterprise and we’re seeing that in our pipeline as well as in our signed contract. In addition to inference being, a larger portion of what our AI labs are using our infrastructure for. Both those factors are very encouraging for us in terms of the AI adoption curve and the use of purpose-built infrastructure underlying those.”
- Revenue Backlog of $25.9B, up 63% YoY. This did not include another $4B contract they just signed in Q2. Somehow the RPO is only $14.7B, which did not include the Open AI deal. But management explained that this would just take longer to figure out accounting details. The number was included in the revenue backlog.
- Management said multiple times that the demand of AI computing is accelerating.
- Full year revenue guidance is $4.9B ~ $5.1B, so looks like they could be growing in triple digits YoY at least till end of 2025.
The Bears
- The revenue guidance looks a little bit weak. Q2 revenue is expected to be between $1.06B and $1.1B. This would only be 12% QoQ without a beat, while the previous QoQ growth has been 109% → 48% → 28% → 31%. I tend to believe that the management might be just significantly sandbagging, but it’s also possible that the revenue generation from existing customers are slowing down. Although they signed contract with OpenAI, my understanding is that it will take them 3+ months to deploy the GPUs and infrastructures first before they could earn revenue from new customers. Unfortunately, no analyst asked about the weak revenue guidance.
- The guidance on CapEx was insanely high. $20B ~ $23B for the full year… This made the revenue guidance of $5.1B look tiny. They did guide $800M ~ $830M adjusted operating income for the full year as well, which has a 16% margin, only slightly lower than the Q1 margin.
- With the high debt, high CapEx and high leverage (e.g. long-term lease commitments as shown in S1), I think this company will either be very successful or fail very hard…
- I will expect massive share dilution to raise funds in the next few months as they spend at this speed.
I will recommend taking a look at their slides as well where there’s more data than in the transcripts. I find this slide especially important, which helps us understand why CoreWeave spends huge CapEx before they earn revenue.
Overall, I’m bullish about this company. Despite the apparent risks, I’m excited the opportunities in the AI computing industry and am comfortable with my small size position (~4-5%). I may add more if the stock price drops due to concerns about the guidance or CapEx.
Cheers
Luffy
16 Likes