Shares of Cerebras Systems fell nearly 20% on Wednesday after the company released its first quarterly results since going public and provided guidance for the full year.
For the quarter, revenue reached $193 million, up 94% year-over-year. Net loss narrowed to $14 million, compared with $23.9 million a year earlier.
Despite those operational improvements, Cerebras forecast a full-year gross margin of 38% to 41%, below the 47% gross margin reported for the first quarter. That guidance prompted a negative market reaction and sent the stock to a new low on Wednesday, approaching the company's IPO price.
CEO Andrew Feldman told CNBC that investors had misunderstood the margin guidance. He explained the company will temporarily rent back some of its equipment from one of its largest customers, a step the company said it has taken to make additional capacity available sooner.
On its earnings call, Cerebras said it decided to accelerate capacity availability by temporarily renting its own systems from an existing customer while it builds out and deploys its own data center capacity. The company said that arrangement will weigh on profit margins this year.
In short, Cerebras reported sizable revenue growth and a reduced net loss in Q1, but the decision to use a temporary equipment rental to meet near-term capacity needs led management to guide toward a lower full-year gross margin, a move that triggered the sharp stock decline.
