Despite financing pressure, outstanding execution prevails; Citi maintains “Buy” rating on CoreWeave (CRWV.US) with a price target raised to $128.

According to the information from Zhihui Finance APP, despite challenging financing and data center construction environments, CoreWeave (CRWV.US) delivered a strong third quarter report. Citi pointed out in a research note that CoreWeave broadly exceeded expectations in revenue, capacity, pricing, and profitability, demonstrating outstanding execution “within controllable limits.” Based on this, Citi maintained its “Buy/High Risk” rating and set the target price at $128.

Performance Surpasses Expectations; Annual Guidance Significantly Raised

The financial report shows that CoreWeave’s third-quarter revenue reached $3.661 billion, not only exceeding the company’s midpoint guidance by $136 million, but also far surpassing Citi and Wall Street consensus expectations of $1.08 billion and $1.1 billion. This was mainly attributed to strong pricing power and capacity delivery.

Regarding profitability, the adjusted operating margin reached 10.4%, topping Citi and Wall Street expectations by 330 to 350 basis points, and expanding by 540 basis points quarter-on-quarter. Adjusted loss per share was $0.95, better than the $1.18 and $1.20 forecasted by Citi and Wall Street, respectively.

In addition, due to ahead-of-schedule delivery progress, capital expenditures excluding construction-in-progress reached $14.5 billion, exceeding Citi and Wall Street expectations by 14% and 17%.

Supported by strong demand trends and steady advancement in customer commitments, management sharply raised the fourth quarter and full-year performance guidance. Annual revenue guidance was raised from the previous $12.4–13.2 billion to $13.0–13.3 billion; the lower and median limits of year-end ARR (Annual Recurring Revenue) were both raised by $1.5 billion to $20.0–21.0 billion. The median increased by 226% year-on-year, higher than Citi and Wall Street expectations of $19.3 billion and $19.0 billion.

Annual operating profit guidance was raised to $1.275–1.375 billion, with the median up 26%. Based on this, it is estimated that the median fourth-quarter operating margin will be about 16.5%, well above the upper bound of buy-side expectations. Citi noted that, driven by robust execution, CoreWeave’s stock price is expected to rise moderately.

Capacity and Orders Steadily Expand, Customer Base Continues to Diversify

On the operational side, CoreWeave’s active power capacity increased by more than 200 megawatts quarter-on-quarter, with total capacity surpassing 1.7 gigawatts. Although the growth rate slowed compared to the roughly 500 megawatts in the second quarter, it was in line with the market’s expectations. Contracted power capacity, however, jumped by more than 900 megawatts, with total capacity exceeding 4.6 gigawatts, including more than 1.3 gigawatts of international business.

Revenue backlog (Backlog) reached $132.5 billion, up 138% year-on-year, with a sequential increase of about $28 billion. This closely matches the more than $25 billion in commitments signed at the beginning of the third quarter but not counted in second-quarter data. However, short-term contract liabilities (CRPO, within 24 months) saw year-on-year growth slow from 177% last quarter to 114%.

In terms of customer expansion, this quarter saw the addition of brand clients such as Canva, Substack, and Wayne. Meanwhile, existing clients including OpenAI, Jane Street, and Perplexity expanded their cooperation, further diversifying the client mix. On the technology side, Vera Rubin NVL72 has started running production workloads (bringing 4.8 times GB200 token throughput for Cognition).

It is noteworthy that backlog growth is relatively moderate. Citi believes this may indicate the company is focusing more on financing and prepayments. Management revealed that, in the next three months alone, advances and customer deposits will reach about $9.0 billion, providing additional liquidity support for ongoing infrastructure construction.