NBIS

Business Context and Reporting Period

Nebius Group N.V. (Nasdaq: NBIS) filed its Annual Report on Form 20-F for the fiscal year ended December 31, 2024. The company underwent a fundamental strategic transformation in 2024, completing the divestment of its Russian and related international businesses (formerly Yandex) in July 2024. These divested operations, which previously accounted for over 95% of consolidated revenues, are now reported as discontinued operations. The continuing business is a global technology company focused on full-stack AI cloud infrastructure, autonomous driving (Avride), AI data solutions (Toloka), and edtech (TripleTen).

Key Financial Metrics (Year Ended Dec 31, 2024)

Note: The company reported a net loss of $641.4 million for the full year when including discontinued operations, driven by a $784.6 million loss on disposal of the divested businesses.

Material Changes vs. Prior Period

• Revenue Surge: Revenues from continuing operations increased 462% year-over-year to $117.5 million. This was driven primarily by the core AI infrastructure business (Nebius), which grew 600% to $68.3 million, alongside significant growth in Toloka (138%) and TripleTen (251%).
• Divestment Impact: The company received approximately $2.6 billion in cash and 162.5 million Class A shares as consideration for the divestment. This resulted in a massive increase in cash reserves from $116.1 million to $2.45 billion.
• Capital Intensity: Capital expenditures surged to $807.7 million (from $83.4 million) to fund the rapid expansion of GPU clusters and data center capacity, primarily for AI workloads.
• Profitability: While the Adjusted EBITDA loss narrowed slightly to $266.4 million, the GAAP net loss from continuing operations widened to $393.5 million due to increased operating expenses and depreciation/amortization ($77.3 million) associated with new infrastructure.

Guidance, Outlook, and Risks

Management Commentary and Outlook

Management views July 2024 as the "real starting point" for the new Nebius. The company aims to become one of the world's largest dedicated AI infrastructure providers. In December 2024, the company completed a $700 million strategic equity raise with investors including Accel, Nvidia, and Orbis. The company plans to expand its data center footprint in the U.S. and Europe, with a new build-to-suit facility in New Jersey expected to come online in late 2025, dedicated to NVIDIA Blackwell GPUs.

Key Risks and Contingencies

• Internal Control Weaknesses: The company identified material weaknesses in internal control over financial reporting related to IT infrastructure, revenue recognition, and fixed asset reconciliation. These are attributed to the complex divestment and the implementation of a new ERP system. Remediation is expected to be completed by Q4 2025.
• Capital Requirements: The business is capital-intensive and currently unprofitable. Future growth depends on the ability to raise additional equity or debt financing.
• Supply Chain: The company relies heavily on a limited number of suppliers, specifically NVIDIA for GPU chips. Supply chain disruptions or inability to secure hardware could materially impact growth.
• Regulatory Environment: The company faces evolving regulations regarding AI, data privacy, and export controls, particularly concerning semiconductor equipment.

Investor Verification Checklist

• Remediation Timeline: Verify the progress of remediation efforts for the identified material weaknesses in internal controls by Q4 2025.
• GPU Supply Chain: Confirm the status of orders for NVIDIA Blackwell and Blackwell Ultra GPUs and the timeline for deployment in the New Jersey facility.
• Cash Burn Rate: Monitor the rate of cash consumption given the high capital expenditure ($807.7M in 2024) and operating losses to assess runway without further financing.
• Customer Concentration: Review customer concentration risks, as the filing notes that a single customer accounted for 21% of revenue in 2024.
• Divestment Tax Liability: Confirm the settlement of the $180.9 million contingent tax liability related to the divestment shares (paid in February 2025).