CoreWeave shifts funding strategy to customer prepayments and shorter contracts to fuel AI expansion

CoreWeave, a neocloud provider, is altering its financing approach for its AI growth, increasingly requiring customers to pay upfront and favoring shorter-term agreements, according to its third-quarter earnings report released on Tuesday. The company reported $3.66 billion in revenue, a 168% increase from the previous year, yet also posted a $709 million net loss and $846 million in quarterly interest expense. CEO Michael Intrator stated that the firm would not utilize the unsecured debt market at current interest rates. Instead, CoreWeave plans to secure funding through loans collateralized by specific customer contracts to support its backlog of $132.5 billion. The company anticipates receiving approximately $9 billion in prepayments and deposits over the next three months, including over $3 billion tied to existing capacity contracts. To capitalize on demand, CoreWeave is also prioritizing higher-priced, shorter-term deals, with capacity being sold at over $40 million per megawatt annually. This strategy is supported by a new $2.6 billion loan, DDTL 5.5, secured in August specifically for these short-term contracts. While rivals like Nebius and IREN have also used large Microsoft prepayments, bond investors remain cautious, with some of CoreWeave's bond yields exceeding 15% last month.