CoreWeave is pursuing a large loan secured by its Nvidia chips as it shifts away from unsecured debt markets amid rising interest costs and investor concern over its aggressive data-center build-out. CEO Michael Intrator said, 'Looking ahead, we will not use the unsecured debt market to fund our business at current yields. Nor do we need to.' He added that chip-backed loans are an effective way to raise money under current conditions.
The company reported third-quarter revenue of $3.66 billion, up 168% year-over-year, beating Wall Street estimates of about $3.56 billion. Its net loss widened to $709 million from $110 million a year earlier, while net interest expense nearly tripled to $846 million from $310 million. CoreWeave raised its full-year revenue forecast to $13.0 billion to $13.3 billion, above its earlier upper forecast of $13.2 billion and the $12.9 billion analyst estimate.
CoreWeave expects the chip-backed loans to carry an interest rate of 7% to 7.5%, cutting unsecured borrowing costs by more than half and covering 70% to 100% of equipment costs depending on the customer. The company also expects about $9 billion in client deposits and advance payments over the next three months.
Shares closed Tuesday at $48.73, down 0.5% on the day, but rose after hours to about $51.51, a 5.7% gain. The stock has lost roughly 40% over the past month and about 73% from its highs. CoreWeave's backlog stood at about $132.5 billion as of 30 September, up from about $104 billion at the end of June.
Despite the revenue beat, funding costs remain a key risk. Fourth-quarter interest expense is guided to $1.05 billion to $1.15 billion, meaning financing costs are still rising faster than operating income. Microsoft, historically CoreWeave's largest customer, has said it is scaling back capital expenditures because some neocloud partners are running behind schedule, which could pressure CoreWeave's growth plans. Analyst price targets before the results ranged from $70 at Morgan Stanley to $160 at Rosenblatt, though several firms cut targets in the run-up to the report.
