Nebius: Yet Another Good Quarter

Nebius Group's Q1 2025 results showed strong ARR and revenue growth, with ARR at $249 million (+684% YoY) and revenue at $55.3 million (+385% YoY), though ARR fell short of expectations; however, April ARR exceeded $310 million. The company maintains its outlook for Nebius AI ARR of $750 million to $1 billion and group revenue of $500 million to $700 million for 2025, while increasing CapEx guidance to $2 billion for data center expansions. The author maintains a positive view on Nebius shares, updating the fair value per share to $55.5, primarily due to the revaluation of its ClickHouse stake, now estimated at $1.68 billion.

Analysis

Nebius Group (NASDAQ:NBIS) reported strong Q1 2025 growth, with March Annualized Recurring Revenue (ARR) reaching $249 million, a 684% year-over-year increase, and quarterly revenue hitting $55.3 million, up 385% YoY. Although March ARR was below an anticipated $300 million, Nebius AI's April ARR surpassed $310 million, indicating accelerating momentum. The company's adjusted EBITDA loss narrowed to $62.6 million from $70.9 million a year earlier, and it maintained a cash balance of $1.4 billion. For 2025, Nebius projects Nebius AI ARR between $750 million and $1 billion, group revenue of $500–$700 million, and positive adjusted EBITDA in H2 2025, with capital expenditures increased to $2 billion to fund data center expansions, including a new facility in New Jersey and expansion in Finland. Despite a downward revision in the analyst's 2025 Nebius AI revenue forecast to $605 million (from $845 million) due to lower GPU utilization assumptions (70% vs. 80%), the Q4 ARR is still expected to exceed $1 billion. The valuation of Nebius AI is now estimated at $5.9 billion, up from $4.25 billion, benchmarked against CoreWeave's EV/Sales'25 multiple. Significant revaluations occurred in Nebius's portfolio: the stake in ClickHouse is now valued at $1.68 billion (previously $0.21 billion) following reports of a new funding round at a $6 billion valuation, and TripleTen's valuation rose to $405 million from $230 million due to strong growth. Toloka, now an equity investment after Nebius lost voting control, is valued at $648 million. Avride's valuation remains $3.4 billion despite a delay in its Dallas robotaxi launch. Consequently, the analyst's fair value estimate for Nebius Group shares increased by 27% to $55.5 per share, primarily driven by the substantial upward revaluation of the ClickHouse stake and continued growth prospects for Nebius AI.

Key Decisions for Investors

• Consider maintaining or initiating long positions in Nebius Group (NBIS) given the analyst's positive outlook and increased fair value target of $55.5 per share, supported by strong growth in Nebius AI and significant upward revaluation of its ClickHouse investment.
• Monitor key catalysts including the ramp-up of the New Jersey data center, news regarding its potential anchor tenant, progress on achieving positive adjusted EBITDA in H2 2025, and further developments in the Avride robotaxi segment.
• Factor in the high capital expenditure of $2 billion and execution risks associated with aggressive data center expansion, alongside the revised, slightly more conservative GPU utilization and Nebius AI revenue forecasts for 2025, while acknowledging the substantial long-term potential in the AI infrastructure market.