CoreWeave Shifts Funding: Debt and Pre-payments Replace Unsecured Loans

CoreWeave, a leading AI infrastructure group, is strategically altering its funding approach to finance its ongoing expansion. The company is now prioritizing asset-backed debt and customer pre-payments over unsecured debt.

This change is driven by the performance of its unsecured debt, which is currently trading at distressed yields, making new corporate-level debt issuance less attractive. CoreWeave's CEO, Michael Intrator, confirmed they will avoid the unsecured debt market at current yields.

The company is preparing a significant chip-backed loan, expected to be worth several billion dollars. This financing will support the acquisition of Nvidia chips and other computing equipment for a contract with an investment-grade customer.

Furthermore, CoreWeave anticipates receiving approximately $9 billion in customer pre-payments and deposits within the next three months. Intrator highlighted the increased attractiveness of such pre-payments in the current financial environment.

CoreWeave reported substantial revenue growth, with a 168% year-on-year increase to $3.7 billion in the third quarter. The company also raised its full-year revenue forecast to between $13 billion and $13.3 billion, with its revenue backlog growing to $132.5 billion.

Despite the revenue surge, rising borrowing costs led to a widening net loss of $709 million for the quarter. Interest expenses nearly tripled, reaching $846 million, with expectations of further increases.

CoreWeave, with over 1.7GW of active power, is the largest among its peers in AI computing capacity. The company's capital expenditure in the third quarter was $14.5 billion, against operating cash flow of $2 billion, and it expects to spend up to $39 billion on capex this year.