CoreWeave (NASDAQ:CRWV) shares climbed 17% in premarket trading on Wednesday, reaching $105.68, as investors focused on the company's record second-quarter results and an improved full-year outlook, despite an elevated capital expenditure forecast that raises questions about cash generation.
The company reported revenue of $2.58 billion for the second quarter, a 112% increase year-over-year and slightly above the consensus estimate of $2.56 billion. Adjusted operating income surged to $128 million from $21 million in the prior quarter, with margins expanding to approximately 5% from 1%. Adjusted loss per share came in at $1.03, narrower than the projected loss of $1.21.
Guidance and Backlog
Management raised its full-year revenue guidance to a range of $12.4 billion to $13.2 billion, up from the previous $12.0 billion to $13.0 billion. For the third quarter, revenue is expected to be between $3.45 billion and $3.60 billion, representing 34% to 40% growth over the second quarter.
The company's backlog reached $104.2 billion, up 5% sequentially, providing unusual visibility into future revenue. Over half of the backlog is tied to contracts with customer deliveries already underway.
CEO Michael Intrator said on the earnings call, "We outperformed our plan across the board," adding that near-term capacity is essentially sold out and new agreements are being signed on even more favorable terms.
Capital Expenditure Concerns
However, CoreWeave also raised its capital expenditure forecast to $35 billion to $39 billion, with a midpoint of $37 billion. That represents 2.9 times the midpoint of the new revenue guidance, up from a ratio of about 2.6 times under the previous outlook. Capital spending in the second quarter totaled $9.4 billion, outpacing revenue growth.
Analysts have noted that the increased capex plan could pressure cash flow and require additional financing. The company secured over $25 billion in net new commitments during the quarter, but the scale of infrastructure investment remains a key risk.
Analyst Reactions
Prior to the earnings release, analysts were largely optimistic. Jefferies' Brent Thill reaffirmed a Buy rating with a $150 price target, while Mizuho's Gregg Moskowitz kept a Hold and raised his target to $115. J.P. Morgan's Samik Chatterjee also maintained a Hold with a $110 target.
Andrew Rocco, strategist at Zacks, described the quarter as "a pivotal one for CoreWeave," noting the backlog offers unusual visibility. However, he added that the greater challenge lies in converting that demand into capacity and cash flow.
Market Context
CoreWeave's shares closed Tuesday at $90.32, up 2.42%, giving the company a market capitalization of $49.28 billion. The 52-week range is $60.55 to $153.20, with the premarket price still 31% below the peak.
The company counts Nvidia (NASDAQ:NVDA) as both a top supplier and investor, and Microsoft (NASDAQ:MSFT) as one of its largest clients. The stock has been volatile in recent weeks, with a 26% rebound this week following a 15.6% rise after a loan restructuring, and an 11% slide on backlog timing concerns.
Investors will be watching whether CoreWeave can continue to grow operating income faster than revenue to justify the aggressive capex plan. If not, the increased spending could overshadow the strong earnings performance.
