CoreWeave turns to customer prepayments, shorter contracts to fund AI growth

Summary

• CoreWeave reported $3.66 billion in revenue for the third quarter, a 168% increase from the prior year.
• The company posted a $709 million net loss & $846 million in quarterly interest expense.
• CoreWeave plans to finance its $132.5 billion backlog using loans backed by specific customer contracts rather than unsecured debt.
• The company expects approximately $9 billion in customer prepayments & deposits over the next three months.
• CoreWeave raised prices by about 25% in July & an additional 10% later in the quarter.
• Short-term contracts command prices exceeding $40 million per megawatt annually, while four to five-year contracts are priced between $20 million & $25 million per megawatt.
• In August, CoreWeave closed a $2.6 billion loan facility known as DDTL 5.5 designed for shorter-term customer contracts.
• Yields on some of the company's bonds exceeded 15% last month due to investor concerns regarding debt needed for data center buildouts.
• Rivals Nebius & IREN have also utilized large prepayments from Microsoft to fund computing capacity.
• CoreWeave CEO Michael Intrator stated the company will not use the unsecured debt market at current yields.