CoreWeave Inc. (CRWV) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
Revenue and operating income showed significant growth, driven by strong demand for AI infrastructure. Despite a net loss, the revenue backlog indicates future growth. Elevated costs and interest expenses are concerns, but management's strategic investments and optimistic guidance suggest a positive outlook. No shareholder return plan was announced, but the overall sentiment remains positive due to the strong financial performance and future growth potential.
Key Financial Performance
Revenue $982 million, up 420% year-over-year due to strong demand for AI infrastructure and long-term committed contracts.
Adjusted Operating Income $163 million, up 550% year-over-year driven by exceptional revenue growth and operational efficiency.
Net Loss $315 million, compared to a $129 million net loss in Q1 2024, primarily due to one-time stock-based compensation from the IPO and higher interest expenses.
Adjusted Net Loss $150 million, compared to a $24 million adjusted net loss in Q1 2024, impacted by higher-than-expected interest expense.
Adjusted EBITDA $606 million, nearly 6x greater than Q1 2024, with an adjusted EBITDA margin of 62%, up 6 points year-over-year.
Operating Expenses $1 billion, increased due to investments in data center and server infrastructure, and one-time IPO-related expenses.
Capital Expenditures (CapEx) $19 billion, reflecting investments in property and technology to drive platform expansion.
Revenue Backlog $259 billion, up 63% year-over-year, indicating strong future revenue visibility.
Interest Expense $264 million, higher than expected due to improved vendor payment terms reducing capitalized interest.
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Operating Highlights
New Product Launch: Released next generation CoreWeave AI object storage, purpose-built for demanding training and inference use cases.
Acquisition: Completed acquisition of Weights & Biases, enhancing offerings for AI developers with over 1,400 customers.
Market Expansion: Opened a new data center in Spain in partnership with Merlin Edged, with Mistral AI as the anchor client.
Operational Efficiency: Added approximately 300 megawatts of incremental contracted power to the portfolio in Q1.
Performance Benchmark: Set a new industry benchmark with MLPerf inference v5.0 results using NVIDIA's GB200 Grace Blackwell Superchips.
Strategic Deal: Completed a strategic deal with OpenAI valued at up to $11.9 billion.
Expansion Agreement: Signed a $4 billion expansion agreement with a large AI enterprise.
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Risk or Challenges
Global Trade Policy Uncertainty: Ongoing volatility in the global trade policy environment may create uncertainties for the company, although customer demand remains strong.
Elevated Equipment Costs: There are elevated costs for certain equipment across the industry, which may impact the company's operations, though these effects are expected to be relatively marginal.
Interest Expense Fluctuations: Interest expense for Q1 was higher than expected due to improved vendor payment terms, which reduced the days between vendor payment and assets being put in service, leading to increased costs.
Tax Rate Variability: The company's tax rate may fluctuate significantly in the future due to non-deductible items and valuation allowances on net deferred tax assets.
Capacity Constraints: The rapid growth and demand for AI infrastructure may lead to capacity constraints, which the company is actively working to address.
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Guidance & Outlook
Strategic Deal with OpenAI: Completed a strategic deal with OpenAI, with a contract value of up to $11.9 billion.
Acquisition of Weights & Biases: Acquired Weights & Biases, enhancing capabilities for AI developers with over 1,400 customers.
Capacity Expansion: Added approximately 300 megawatts of incremental contracted power in Q1.
New Data Center: Opened a new data center in Spain to expand global footprint.
Technology Differentiation: First to deploy NVIDIA's GB200 Grace Blackwell systems at scale.
Q2 Revenue Guidance: Expect Q2 revenue in the range of $1.06 billion to $1.1 billion.
Q2 Adjusted Operating Income Guidance: Anticipate Q2 adjusted operating income between $140 million to $170 million.
FY 2025 Revenue Guidance: Expect revenue for FY 2025 in the range of $4.9 billion to $5.1 billion.
FY 2025 Adjusted Operating Income Guidance: Expect adjusted operating income in the range of $800 million to $830 million.
FY 2025 CapEx Guidance: Expect CapEx of $20 billion to $23 billion due to increased investments.
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Shareholder Return Plan
Shareholder Return Plan: CoreWeave has not announced any specific share buyback program or dividend program during this earnings call.
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Key Q&A
Q:What happened differently from your expectations initially that enabled that level of outperformance?
A:The revenue beat was attributed to a concerted strategic effort by the company to invest in infrastructure to build and scale and deliver compute more quickly to client contracts.
Q:What is it about the OpenAI contract that doesn't put it into RPO, but it does still go into that revenue backlog side of the equation?
A:The accounting treatment for the OpenAI deal has not yet been finalized, hence it is not included in the RPO. It is a single large contract at a single site, and the company is being prudent with the accounting analysis.
Q:How more broadly diversified is your revenue stream as you look into the future quarters?
A:The company is focusing on bringing additional enterprise clients onto their infrastructure over time, and while there are large consumers of AI, they expect to see an increase in traction around enterprise clients.
Q:Could you unpack the new hyperscaler and enterprise customers? What do they look like?
A:The company has restrictions on discussing specific clients, but they believe the new hyperscaler relationship can lead to tremendous growth.
Q:Can you give us some insight into the elevated costs for certain equipment?
A:There was a small increase in costs due to tariffs on certain components, but it is not expected to have a material impact on financials.
Q:How should we think about CapEx on an ongoing basis?
A:CapEx guidance reflects increased investment to meet customer demand, and it can be lumpy based on committed customer contracts and infrastructure deployment.
Q:What are the main factors driving the higher interest expense?
A:The higher interest expense is due to a decrease in the number of days for vendor payments and the need to build CapEx to fulfill customer demand.
Q:Can you size how much accelerated investments are impacting the adjusted operating margin?
A:The accelerated investments in large-scale infrastructure are impacting margins as costs are incurred before revenue generation.
Q:What drives the large expansion deals?
A:Expansion deals are driven by demand for next-generation GPUs and the layering of contracts as clients experience the infrastructure.
Q:What is the source of funding for the incremental CapEx?
A:The increase in CapEx is driven by new client contracts requiring more infrastructure, not due to increased prices.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the specific nature of new enterprise customers and the details of the OpenAI contract's accounting treatment.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI developer
AI enterprise
AI infrastructure
AI object
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compute
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customer
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industry
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CRWV Transcript
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The earnings call summary presents a mixed picture. Basic financial performance shows strong revenue guidance, but increased interest expenses and CapEx could raise concerns. Product development is positive with fungible infrastructure and strong market strategy. However, Q&A reveals systemic delays and vague responses from management, creating uncertainty. Shareholder return plans are not mentioned. Despite some optimistic guidance, risks from supply chain issues and lack of clear solutions temper enthusiasm, resulting in a neutral sentiment.
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CRWV Slides
Frequently Asked Questions
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