CoreWeave will fund AI growth with $9 billion in customer prepayments

CoreWeave told investors on Monday that it will stop raising money through the unsecured bond market. The report is by Rebecca Bellan at TechCrunch. She cited CoreWeave's third-quarter earnings call. Chief executive Michael Intrator said on the call that the company does not need the bond market at current yields. CoreWeave will now take about $9 billion in customer prepayments over the next three months. That money will fund its AI growth.

What Intrator said and why

Intrator said CoreWeave will not use the unsecured debt market at current yields, and does not need to. Some CoreWeave bonds yielded over 15 percent last month, TechCrunch said. That is the price a bondholder asks to lend the company money without a specific contract behind it.

TechCrunch said CoreWeave will replace that funding in three ways. Customers will prepay for capacity. About $9 billion is expected in the next three months. More than $3 billion of that is for capacity CoreWeave has already built. The money arrives before new hardware has to be bought. In August, CoreWeave closed a $2.6 billion loan tied to specific customer contracts. The loan is called DDTL 5.5 and is designed for shorter-term deals.

Q3 numbers and prices

TechCrunch reported CoreWeave's third quarter at $3.66 billion in revenue. That is up 168 percent from a year earlier. The company's net loss was $709 million. Interest expense alone was $846 million for the quarter. The signed backlog was $132.5 billion.

The company also raised its prices twice in the quarter. Prices went up about 25 percent in July and another 10 percent later in Q3. Short-term contracts now cost more than $40 million per megawatt per year, TechCrunch said. Four to five-year contracts cost $20 to $25 million per megawatt. CoreWeave is giving more of its new capacity to the shorter-term deals.

What this says about the AI compute market

For a buyer of GPU time, the shape has shifted. A short lease costs about twice what a long one does per megawatt. That gap used to be smaller. It now pays the risk CoreWeave would otherwise pay the bond market to carry.

TechCrunch named two rivals, Nebius and IREN, that also take large prepayments from technology companies like Microsoft. Bond investors are still cautious about all three. A customer on a long contract gets a lower price. They take the credit risk of a company whose interest bill is almost a quarter of its revenue. A customer on a short contract pays more. They can walk away if a cheaper provider arrives. The AI compute market is quietly pricing that choice.

Source

• TechCrunch