Nebius Plans $40B in 2027 Spending as Microsoft Deliveries Slip

What happened

The headline number from the call was the 2027 spend: capital expenditure of $40 billion to $45 billion. Wall Street had expected about $28.8 billion on a FactSet consensus, so the plan runs roughly 40% above it. The 2026 capex guide was also raised to about $27 billion, up from a $20 billion to $25 billion range; third-quarter capex alone was about $7.3 billion. The company plans to add more than 1 gigawatt of capacity a year.

Where the money comes from is the other half of the plan. Chief financial officer Maria Del Dado Alonso Sanchez said on the call that customer prepayments plus asset-backed financing of investment-grade contracts are expected to cover 75% to 85% of the 2027 spending, and that the Microsoft and Meta contracts can be financed this way. The company expects committed customer prepayments of $10 billion in 2026 and $17 billion to $20 billion in 2027; prepayments on contracts signed in the third quarter covered more than 100% of the related capital spending, up from 50% to 60% in the second quarter. In July, the company closed its first asset-backed financing, $775 million at SOFR plus 2.50 percentage points, secured against a long-term agreement with an investment-grade customer. Remaining performance obligations stood at $38.7 billion at the end of September, and more than $12 billion of contract value has been signed since the start of the third quarter. Chief executive Arkady Volozh wrote in the shareholder letter: "Demand is not the question."

The crack in delivery sits on the largest customer's order. Microsoft's site in Vineland, New Jersey, operated by third-party DataOne, is months behind schedule: only slightly more than half of the Microsoft capacity is now planned for delivery by the end of the year, with the rest pushed to the second quarter of 2027, against an original deployment window of 2025 to 2026. Chief product and infrastructure officer Andrey Korolenko said on the call that the slip came from DataOne winding down temporary generation faster than expected as the site switches to Bloom Energy fuel cells. In August, investigative outlet Floodlight found at least 45 natural gas generators running at the site without permits; New Jersey regulators later fined the facility $1.1 million, and nearby residents have sued over the data center's constant noise. The Microsoft contract is worth up to $19.4 billion — a filing from September 2025 put it at about $17.4 billion, rising to about $19.4 billion if Microsoft takes additional capacity. Nebius's public summary of the contract says Microsoft can terminate affected service after a grace period if no alternative capacity is offered, and late delivery carries financial penalties; Nebius said Microsoft has been part of the planning process but did not say whether it has accepted the new timetable.

The quarter itself was mixed. Third-quarter revenue was $981 million, up 571% year over year and above the $907.5 million LSEG consensus; about a third came from a one-time partnership payment of about $325 million. Adjusted EBITDA was $465.8 million, against a $5.2 million loss a year earlier. Full-year 2026 revenue guidance fell to the low end of a $3.0 billion to $3.4 billion range, and the target of more than $7 billion in annualized revenue slipped about two months, to February 2027. For 2027, the company guided revenue of $12 billion to $13 billion and expects to break even on a pre-tax basis by the fourth quarter; cash at quarter-end was $7.4 billion. Shares fell 17% on the day. Nebius said the data centers it builds itself are on time or ahead of schedule and will supply most of its new capacity from 2027.

What they said

Nebius chief executive Arkady Volozh said on the call: "Building at this scale is hard, and delays are part of our industry right now." In the shareholder letter he wrote that demand is not the question: "Demand is not the question."

Chief financial officer Maria Del Dado Alonso Sanchez said on the call that prepayments and asset-backed financing of investment-grade contracts are expected to cover 75% to 85% of the 2027 spending, and that the Microsoft and Meta contracts can be financed this way. Chief revenue officer Marc Boroditsky said the Microsoft and Meta deals came with significant prepayments that arrived long before delivery; prepayments on third-quarter deals covered more than 100% of the related capital spending, and the company could draw on prepayments to meet additional cash needs.

Chief product and infrastructure officer Andrey Korolenko said on the call that the Vineland delay came from operator DataOne winding down temporary generation sooner than expected. TechCrunch said it has reached out to Nebius, Microsoft and DataOne for comment.

Microsoft has not publicly cancelled anything, but Bloomberg reported last week that Microsoft is tightening oversight of projects run by third parties, naming Nebius, IREN and Nscale, and debating whether to sign new agreements; Microsoft has also sent employees to the New Jersey site. Microsoft's own quarterly report said its capital spending came in lower than expected because of third-party delays. Bloomberg also reported that Microsoft will not use an option to more than double its Nscale agreement for a Texas data center and has stopped being the anchor customer for Nscale's planned Essex site after power delays.

Key facts

1. 2027 Plan: Capital spending of $40 billion to $45 billion, against a Wall Street expectation of about $28.8 billion; 2026 capex of about $27 billion
2. Funding: Prepayments and asset-backed financing of investment-grade contracts expected to cover 75% to 85%; committed prepayments of $10 billion in 2026, $17 billion to $20 billion expected in 2027
3. Microsoft: Contract worth up to $19.4 billion; the Vineland site is months behind schedule, with only slightly more than half the capacity due by year-end and the rest in Q2 2027
4. Terms: Microsoft can terminate affected service after a grace period if no alternative capacity is offered, and late delivery carries penalties; the original deployment window was 2025 to 2026
5. Quarter: Third-quarter revenue of $981 million, up 571% year over year, about a third from a one-time partnership payment; adjusted EBITDA of $465.8 million
6. Guidance: 2026 revenue guidance fell to the low end of a $3.0 billion to $3.4 billion range; 2027 revenue of $12 billion to $13 billion, pre-tax breakeven in the fourth quarter; shares fell 17%
7. Backlog: Remaining performance obligations of $38.7 billion; more than $12 billion of contract value signed since the start of the third quarter; $7.4 billion in cash at quarter-end
8. Self-built: Data centers Nebius builds itself are on time or ahead of schedule and will supply most of its new 2027 capacity; more than 1 gigawatt of new capacity planned a year