CoreWeave turns to customer prepayments, shorter contracts to fund AI growth

The new strategies could help CoreWeave finance its growth more efficiently while squeezing more cash from existing infrastructure. But these bets only hold if today’s demand and pricing power continue.

CoreWeave reported $3.66 billion in revenue, up 168% from the year prior, but it also posted a $709 million net loss and $846 million in quarterly interest expense.

“We will not use the unsecured debt market to fund our business at current yields, nor do we need to,” CoreWeave CEO Michael Intrator said during Tuesday’s earnings call.

Instead, CoreWeave’s plan is to rely on loans backed by specific customer contracts, drawing on funds as needed to finance most of the infrastructure it still has to build to deliver on its significant backlog of $132.5 billion.

CoreWeave also said it expects about $9 billion in customer prepayments and deposits over the next three months, including more than $3 billion tied to signing new customer contracts for capacity it has already built, which requires no additional spending on hardware.

Rivals Nebius and IREN have also relied on hefty Microsoft prepayments to pay for computing capacity, signaling that the industry is moving toward asking Big Tech to pay up for their buildouts.

“We are also allocating more capacity to short-term opportunities, where the pricing justifies it, selling capacity at more than $40 million per megawatt annually, while pricing for new infrastructure on four- and five-year contracts is moving to $20 million to $25 million per megawatt,” the chief executive said.

CoreWeave’s financing strategy now revolves around those opportunities. In August, the company closed a $2.6 billion loan, its first designed specifically for shorter-term customer contracts. Known as DDTL 5.5, it lets CoreWeave borrow in installments as it needs the money.

Even though Wall Street reacted positively to CoreWeave’s earnings, bond investors are much less sanguine. Last month, yields on some of the company’s bonds hit above 15%, highlighting that investors are concerned about the debt needed to fund data center buildouts before those investments see a return.

In short, CoreWeave is finding new ways to expand without relying on unsecured debt. The strategy it has chosen could boost profits, but it also carries greater risk around contract renewals and pricing — and it just goes to show how dependent the AI infrastructure boom is on sustained, and as yet unproven, demand.

TechCrunch has reached out to CoreWeave for more information about its loan facility.

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Rebecca Bellan Senior Reporter

Rebecca Bellan is a senior reporter at TechCrunch where she covers the business, policy, and emerging trends shaping artificial intelligence. Her work has also appeared in Forbes, Bloomberg, The Atlantic, The Daily Beast, and other publications.

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