CoreWeave's Q4 interest bill of up to $1.15 billion closes in on its full-year adjusted operating income

CoreWeave▲+4.48% — CoreWeave, up 4.48 percent today, the New Jersey company that rents out Nvidia▼−4.93% — Nvidia, down 4.93 percent today-chip computing capacity to AI labs and enterprises, filed third-quarter results tonight↗, and one of the two arguments about the company is answered for now. Revenue of $3.66 billion landed above the $3.45 to $3.6 billion the company had guided ^{1 2}.

The backlog of signed contracts grew to $132.5 billion ³, and the shares rose slightly in extended trading ³. The other argument was put hours before the filing by MoffettNathanson analyst Nick Del Deo, on CNBC: unsecured parent bonds yielding about 16 percent against a market value of roughly $30 billion↗, and "one of those two things is wrong" ².

The loss comes from the interest line, not from weak demand

Adjusted EBITDA margin held at 62 percent ¹. The line that decides the quarter sits below it: third-quarter net interest expense of $846 million ran well past operating income of $207 million ¹, and the quarter ended in a net loss of $709 million ¹. The bond market's 16 percent is a price on CoreWeave's access to money, and tonight's numbers did not move it ¹¹.

Customers, converts and new shareholders are the lenders now

Full-year capital spending is guided at $37 to $39 billion ¹, and the unsecured market that once helped carry it is, in Del Deo's word, largely shut ². The filing lists the replacements. About $9 billion of customer prepayments and deposits are expected in the next three months, $4.2 billion of convertible notes were raised in the quarter, and a first at-the-market equity program, which drips up to 35 million new shares into the market at the prevailing price, has been established ¹. Chief executive Michael Intrator called it growth "supported by multiple sources of funding" ¹.

The cheapest money is the customers' own

Prepayments are the cheapest of the three, customers in effect lending against their own contracts, and analysts at the brokerage Truist·+0.14% — Truist, up 0.14 percent as of its last quote read rising prepayments as the path off external capital↗ ⁴. The equity program sells into a share count already 13 percent larger than a year earlier ². This gap is familiar from our October 23 report, which put estimates of it between $23 billion and $76 billion; tonight's beat answers the revenue end and leaves the financing end where it was ².

One landlord rides on the same answer

Applied Digital▲+1.61% — Applied Digital, up 1.61 percent today, the developer whose Polaris Forge 1 campus in Ellendale, North Dakota runs on CoreWeave rent, has leased its tenant all 400 megawatts on a 15-year take-or-pay contract worth about $11.0 billion↗, 30.4 percent of the landlord's contracted revenue ⁶. In March, CoreWeave moved parts of those leases into a subsidiary rated A3 with a parent guarantee, so some of that rent now comes from a stronger credit than CoreWeave's own ⁶. The first two buildings, holding 250 megawatts of critical IT load, are already fully operational ⁷.

The shares still hit a 52-week low last week ⁶, and the pattern suggests the market is pricing this landlord off its tenant while it has money of its own to raise: chief executive Wes Cummins has said funding is still needed for roughly 800 megawatts over the next twelve months ⁶.

One quarter of interest now rivals a full year of adjusted operating profit

Fourth-quarter interest expense is guided to $1.05 to $1.15 billion, against full-year adjusted operating income guidance of $1.275 to $1.375 billion ¹. Three things would change that picture: the prepayments landing by February as guided, the at-the-market program actually selling shares, and a new unsecured bond priced near the coupons CoreWeave paid earlier this year, which would show that market reopening ². Whichever moves first decides which of Del Deo's two prices was the wrong one.