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00:05The pluses were actually so good, your revenue was amazing, the adjusted losses, much less
00:10than I thought, margins improved a quarter ahead of the plan, but I think maybe if you
00:13can just start by saying the demand and how outsized it is, because there were some analysts
00:19who still seem to think that this is the tail end of this revolution.
00:24Yeah, that doesn't really actually track with the facts on the ground.
00:27The demand for this infrastructure, and I've said this to you guys now for years, outpaces
00:34the world's capacity to deliver infrastructure.
00:39That is the case, I think I said that we are 10x oversubscribed to the existing capacity
00:46that we have left in 2027, and we are multiples oversubscribed on the capacity we have out
00:52in 2028.
00:54So, I heard those questions, too, and I would like to reiterate what you're hearing across
01:02the market, which is the demand for the infrastructure is and remains overwhelming.
01:06There is a story that we've been believing since the so-called blue wave, which is that
01:11basically we're not going to have a lot of new data centers because of what's happening
01:14in the United States.
01:15So, your international exposure makes me think that maybe we're being too parochial about
01:23our own country.
01:24There is worldwide demand, and it's growing.
01:27It's insatiable.
01:28Yeah, that's certainly true.
01:30There is a massive groundswell of demand around the world for computing infrastructure.
01:37But, you know, taking a moment and talking about the U.S., right, you know, we don't see
01:43any impact on our ability to deliver the data centers within the U.S. that are required for
01:50us to deliver on our backlog.
01:53You know, in Texas, Governor-Elect, you know, said that, you know, facilities that are permitted
01:59and under construction should continue.
02:01And, you know, we've been really, really thoughtful about the broad distribution.
02:06You sent her a letter, which just said basically, listen, we're good citizens, and I like that.
02:11Now, I think it's very important that we get to the fact that a lot of us regretting your
02:16company by looking at public debt and thinking $15, $16, well, that is very close to where
02:21I regard it as a danger zone.
02:23You pretty much cleared that up by doing two things.
02:28One, the H-100s are worth a lot more than you think when you get them, but also you indicated
02:33there's another kind of debt to the company that actually is basically trading a par.
02:38That is correct.
02:39Our asset level debt has basically been rock solid through this entire thing.
02:44There is an enormous demand for that product.
02:47We're about to launch another asset level debt in the next week or two that has already been
02:53rated high investment grade.
02:55You know, we suspect that that will be underwritten in the market at a 7 to a 7.
03:037.5 percent interest is what we expect, and that will once again bring down the average
03:07cost, average-weighted cost of capital for CoreWeave.
03:10And that's really, really exciting.
03:12You know, it has been a priority for the company to monitor that.
03:16And, you know, the high-yield debt is just one corner of how CoreWeave accesses capital.
03:23And you saw that in our earnings when I said, OK, high-yield debt is getting expensive.
03:28We'll go to prepayments, which we have done in the past, and we raised $9 billion worth
03:32of prepayments and deposits.
03:34And, you know, that's just another way for us to go about financing the business to ensure
03:39that we have the capital at reasonable costs to be able to execute on our roadmap.
03:45Right.
03:46I mean, a key focus for investors is adjusted operating income and interest expense.
03:52And, I mean, I am still looking.
03:54I think in the fourth quarter, interest expense is still going to outpace your adjusted operating
03:58income.
03:59When do those two actually change trajectories?
04:03And so your interest expense is actually going to be less than your operating income
04:06adjusted.
04:07So our interest expense went up by 20 percent.
04:12Our adjusted operating income went up by 300 percent.
04:18Right.
04:18If you look at the trajectory, it is clear that our interest expense, while growing, as
04:24it should, because we are delivering massive scale of infrastructure.
04:28You know, we have 1.7 gigawatts in the ground.
04:32We will get to 1.85 gigawatts by the end of the year.
04:36That is massive amounts of infrastructure.
04:38And so, yes, the debt is growing and the interest expense associated with it, but it is not growing
04:42nearly as fast as the adjusted operating income, which will cover that debt by a large amount
04:48as we talk about reaching adjusted operating income profitability in 2028.
04:56Right.
04:56Does your inability or your unwillingness to issue unsecured debt, certainly at the prices you'd
05:01have to right now, in any way mitigate certain expansion plans you had?
05:07For example, building your own data center.
05:09Yeah.
05:09So look, CoreWeave has so many levers to manage our cost of capital.
05:17It has so many levers, including accelerating, slowing down.
05:20But we are a success-based business.
05:22We are only going to place deals into the market if they make economic sense, including
05:30the cost of the components, including the cost of capital, including the price we're
05:36able to sell at.
05:37And so we are targeting margins here, and the margins are expanding.
05:42And that is the key to this.
05:43The margins for the infrastructure, for the product, for the cloud that we are delivering
05:47is expanding.
05:48What does it mean for more equity issuance?
05:51So, once again, we really do look at all of the tools available to us to ensure that
05:58we are raising money in the most cost-effective way possible.
06:02We have issued equity in the past through pipes, through other vehicles.
06:05We have also issued convertible notes.
06:09But right now, the least expensive capital available to us was the prepayments.
06:16And you saw us move very aggressively to raise $9 billion of prepayments and deposits, because
06:22that is the right way for CoreWeave to raise the capital that it needs now.
06:26And because our product, because our cloud, because the infrastructure we deliver is so
06:32in demand, we were able to turn those levers very, very quickly in order to raise the capital
06:37that we need to continue to execute on our business plan.
06:40It's fantastic.
06:41All right, so, Michael, you are an NVIDIA shop.
06:45You're known as a NVIDIA shop.
06:46But the day I met you, you're incredibly close to Jensen-Wong.
06:49First, what has he told you since all this has occurred?
06:53Second, is there someone to deal with at this 40,000-person company, 42,000, besides the
07:00man who founded it and we all think is the only person that you'll ever hear or see from
07:05this company?
07:05Okay, so, look, NVIDIA is an extraordinary company, right?
07:11It is not one person.
07:13It is an extraordinary company.
07:14There are thousands of people over there that interface with thousands of people at my company
07:20every day.
07:20They integrate on the technology.
07:23They integrate on the physical infrastructure.
07:26They integrate on the networking.
07:28We have a close relationship with them up and down the companies.
07:32And they are a great partner.
07:35They have been a great partner for us for years.
07:37They will continue to be a great partner for us.
07:40With regards to Jensen, I just don't think it's really appropriate for me or, for that
07:45matter, for anyone to really have too much of an opinion here.
07:48They've begun a process.
07:49Let's let the process run.
07:51All right.
07:51Well, how about the chips themselves?
07:52A lot of people felt that these things, wait for five years, would be worthless, including
07:56people who told me, out of my mind, that I thought his chips, this company's chips,
08:01would be worthwhile.
08:02The value of a five-year-old H100 chip, is it worth more than you paid for it five years
08:08ago?
08:08So this is one of the most exciting aspects of the earnings report that we just went through.
08:13It's where I got to talk about the H100s that we installed four years ago.
08:19will be coming off contract in 2027, and how that technology has now been contracted at
08:28a 20% to 50% premium over where it was originally contracted.
08:34The demand for the infrastructure is enormous and overwhelming.
08:38The life cycle of this has been a—this has been an ongoing discussion in the market.
08:43And I believe that this should resoundingly put this to bed.
08:47This infrastructure will last beyond the depreciable life.
08:52And when it—
08:52Do you see a two-way market at the computer because of this?
08:55I think it's one of the tools that the world is building.
08:58Are you hoping to do it because you know the country needs it?
09:00We absolutely are participating in it.
09:03We have a lot of things we got to do.
09:04And two-way market is definitely part of what has to happen in order for there to be transparency
09:09on pricing.
09:10I mean, speaking about pricing, I think you raised prices 25% in July, another 10% later
09:15in the quarter.
09:16Any pushback at all from customers?
09:22The customer base realizes that there is a supply-demand imbalance, and they are looking
09:30at it from the perspective of what can they generate at their companies from the compute.
09:35So they are happy to pay an increased level because the margins that they are making—and
09:41you saw this in the Anthropic paperwork—the margins that they're making, they support
09:48higher prices for compute.
09:51And therefore, we have tremendous demand for this infrastructure.
09:55And with that, we were able to raise prices.
09:57I think you've seen that universally across the space.
10:01Did Enojosa respond to your letter, and can you address how much of planned capacity might
10:08migrate into 28?
10:09Because you did say you're waiting for 28 to season, I think is how you put it.
10:13So I want to be very clear.
10:15We're not—our build plans are not being delayed or affected or in any way transformed.
10:24The build plan for 2028 is in progress.
10:28So when we say that we're waiting for it to season, we just think that it is better
10:33for CoreWeave to wait with the infrastructure and be closer to delivery before we bring it
10:40to market to sell it.
10:41And that's really how we've approached it.
10:43We're trying to compress that timeline so that we're able to get the best prices, the
10:48best margins, and the best customers into that infrastructure.
10:51But Carl did reference a letter, I believe, you sent to the governor-elect in Texas, who's
10:55obviously ran on potentially pausing data centers.
10:58Any response there and or any expectations?
11:00I think you said the post-election ship was seismic, but it would not have an impact on
11:04your business?
11:05Yeah.
11:06So, look, I want to be clear.
11:08That letter got a lot of mileage in the media.
11:11But we have relationships, contacts, with all of the governors that are in states where
11:22we have data centers, and we have in excess of 53 data centers around the world.
11:27You know, the letter was picked up in the press aggressively because of the perspective that
11:35things are really changing in Texas.
11:37When I talk about our infrastructure and our build and our timelines, I'm talking about
11:42our backlog, which is an enormous amount of cash that will ultimately cover all of our
11:48debt, will cover all of our operating expenses, and drive enormous profit to the company.
11:53And that's what the important part is.
11:55And we want to make sure that the investing public and our clients know that there is not
12:01a disruption in our ability to deliver that infrastructure.
12:03And CoreWeave has done an incredible job delivering the infrastructure.
12:08Do you believe in the overall thesis, though, that if, in fact, fewer data centers are built,
12:12it actually makes the compute even more valuable that currently exists?
12:15So there is a great argument to be made that if there is, you know, our operating assumption is not
12:23a slowdown.
12:24But in the case that there is a slowdown, it does make the installed capacity that's operational,
12:30the GPUs that are coming out of contract, that, by the way, are fully paid off, right?
12:36Our DDTLs have paid off in excess of $4 billion already.
12:40And that is wonderful to see that machine work, right?
12:43Okay, so then, Michael, let me ask you.
12:44You're a trader.
12:45You've traded.
12:46I know you're a good one.
12:48Is the best investment that your company could make be the nine and three quarters of October 1st,
12:542031, which you could buy right now at 81.7?
12:57Should you be doing that instead of all this other stuff?
13:00So I would be lying if I said that I haven't spent a lot of time thinking about buying back
13:05our bonds, right?
13:06Well, then don't lie.
13:07Why don't you do it?
13:07Because I can deploy the capital internal to our company at a higher rate of return.
13:14Better than that rate of return?
13:15You better get a 16% return?
13:17I don't see a 16% return.
13:19You saw his guide to an adjusted operating income of between 16% and 17% next quarter.
13:27and you can look at the trajectory of our adjusted operating returns and realize that it's going to be far
13:35in excess of 16%.
13:36I would love to buy those bonds, but the truth of the matter is we have better uses for capital
13:40in our company than buying back the bonds.
13:42Well, maybe those who don't have better uses should be thinking about buying those bonds.
13:47Yeah, perhaps.
13:49Can I, real quickly, the bears on your stock will point to all the selling from you and your co
13:55-founders.
13:55I think $3.3 billion since the IPO, $2.4 billion this year.
13:59How do you respond to, you know, what are significant sales, obviously?
14:03So this is the, this is going to be the first time I've said this.
14:07I've canceled my 10B5.
14:09Yes, thank you.
14:10It is done.
14:11Thank you.
14:11I am, you know, any kind of selling from us will just be RSU's kind of normal tax stuff.
14:19But there will be, you know, until there is a material change in our equity pricing, my 10B5 is inside.
14:28ATM still?
14:29ATM is different.
14:30That's a corporate level.
14:31Yeah, that's corporate.
14:31That's not him selling.
14:32Yeah.
14:33No, but why not cancel?
14:33If the stocks don't cheap, why don't let it get harmed?
14:37The ATM sits on the shelf.
14:38We will use it opportunistically if we need to raise capital.
14:42That's the right thing for a company to do.
14:43All right.
14:43Thanks for sharing a little news with us, too, Michael.
14:46I appreciate that.
14:47Michael, thank you very much.