On its third‑quarter earnings call Thursday, neocloud company Nebius outlined plans to spend $40–45 billion on capital projects for 2027. The company intends to fund much of the buildout through customer prepayments and asset‑backed loans tied to customer contracts — effectively using the future revenue potential of its data centers to finance their construction.
Risks from third‑party delays and contractual terms
That approach becomes risky when projects are delayed or canceled. "Building at this scale is hard, and delays are part of our industry right now," Nebius CEO Arkady Volozh said on the call. "We are not immune."
Because Nebius increasingly depends on repayments and timely delivery, delays can mean ongoing costs while revenue growth lags.
The Vineland, New Jersey site: Microsoft contract and DataOne delays
One of Nebius’s largest customers, Microsoft, is paying for AI compute capacity at a Vineland, New Jersey data center that is months behind schedule. The Microsoft contract is worth up to $19.4 billion, but deadlines have slipped: a bit more than half of the Microsoft capacity is now planned for delivery by year‑end, with the remainder scheduled for Q2 2027.
Nebius said the delay stems from the site operator, DataOne, which "decided to wind down the temporary generation faster than it was expected" as the site transitions to Bloom Energy fuel cells, according to Andrey Korolenko, Nebius’s chief product and infrastructure officer.
Permitting and regulatory issues
The transition was not entirely voluntary. Floodlight reported in August that at least 45 natural‑gas generators were operating at the DataOne site without permits. New Jersey regulators fined the DataOne facility $1.1 million, finding the generator use violated federal law.
DataOne also faces a noise‑complaint lawsuit from nearby residents alleging a constant humming noise from the data center.
Contractual consequences and financial exposure
Nebius’s public summary of the Microsoft contract states that Microsoft can terminate affected service after a grace period if dates are missed and no alternative capacity is offered. The tranches were originally meant to be deployed in 2025 and 2026, so a Q2 2027 delivery falls well outside the original schedule. The contract also includes financial penalties for late delivery.
Nebius said Microsoft "has been part of the planning process," but did not state whether Microsoft agreed to the revised dates; Microsoft has not publicly canceled anything.
Industry context: Microsoft tightening oversight
Reports preceding the earnings announcement indicated Microsoft is tightening oversight of third‑party projects and reconsidering whether to sign new agreements. Microsoft itself said lower‑than‑expected capex was driven by third‑party delays in its quarterly report. Bloomberg also reported Microsoft pulled back on options and anchor‑customer commitments for other third‑party projects.
Nebius’ response and cash position
Nebius says the delays are occurring primarily at sites it does not control, while data centers it builds directly are on time or ahead of schedule and will supply most of its 2027 capacity. Marc Boroditsky, Nebius’s chief revenue officer, said deals with Microsoft and Meta included substantial prepayments that arrived well before delivery. Nebius ended the quarter with $7.4 billion in cash.
CFO Maria Del Dado Alonso Sanchez said total prepayments plus asset‑backed financing of investment‑grade contracts could cover up to 85% of the $40–45 billion 2027 capex. Boroditsky added the company could "tap prepayments to shore up any additional cash requirements."
Financial outlook and recent results
Nebius forecasted 2027 revenue of $12–13 billion and expects to reach pre‑tax break‑even by the fourth quarter. For Q3, Nebius reported revenue of $981 million, up 571% year over year; roughly one‑third of that figure was a one‑time payment tied to a new partnership model. The company cut its 2026 revenue forecast by $200 million to $3 billion, citing delays at third‑party sites like the New Jersey facility. Nebius shares closed the day down 17%.
Why this matters
Nebius’s plan and financing model exemplify how neocloud providers are relying on customer prepayments and contract‑backed financing to scale quickly for AI demand. If delays at third‑party sites become widespread, they could undermine revenue timing and increase financing risk across the sector, prompting customers to tighten oversight or reconsider large forward commitments.
