Cloud computing company CoreWeave is seeking to reshape its financial strategy to fund the AI boom, according to its third-quarter financial results. The company, which specializes in leasing computing power, is relying on requiring customers to pay upfront, borrowing against specific contracts, and shifting toward short-term deals that allow it to charge higher prices to maximize the utility of its existing infrastructure.
CoreWeave recorded revenue of $3.66 billion, a 168% year-over-year increase; however, it also reported a net loss of $709 million and quarterly interest expenses of $846 million. CEO Michael Intrator confirmed during the earnings call that the company does not intend to use the unsecured debt market at current interest rates to fund its operations.
Funding Strategy and Reliance on Contracts
CoreWeave's plan relies on obtaining loans backed by specific customer contracts, with funds drawn as needed to finance the infrastructure required to execute its $132.5 billion backlog of contracts. The company also expects about $9 billion in upfront payments and deposits from customers over the next three months, including more than $3 billion linked to signing new contracts for previously built capacity that does not require additional hardware spending.
This move comes in parallel with the trend of competitors such as Nebius and IREN relying on large upfront payments from major technology companies to cover the costs of computing power, signaling a shift in the infrastructure sector toward involving tech giants in bearing the costs of early expansions.
Shift Toward Short-Term Contracts and Price Hikes
In addition to securing liquidity, CoreWeave is moving to capitalize on growing demand by entering into shorter-term contracts that allow it to achieve higher prices. The company raised its service prices by about 25% in July, followed by further increases of 10% later in the quarter, with prices continuing to rise.
The CEO noted that the company is allocating more capacity to short-term opportunities that justify higher prices, where capacity is sold for more than $40 million per megawatt annually, compared to prices for new infrastructure in four- and five-year contracts, which range between $20 and $25 million per megawatt.
What Does This Shift Represent Practically?
The short-term contract strategy gives CoreWeave greater flexibility in pricing services and adjusting them frequently, but it carries clear commercial risks related to contract renewals and cash flow stability compared to the long-term contracts preferred by lenders. Although Wall Street reacted positively to the results, bond investors have shown extreme caution after the yields on some of the company's bonds reached levels exceeding 15%, reflecting concerns associated with the volume of debt required to build data centers before achieving actual returns from those investments.