CoreWeave leans on prepayments and short-term AI contracts

The company expects about $9 billion in customer prepayments and deposits over the next three months. More than $3 billion is tied to new contracts for capacity already built, which would not require additional hardware spending. CoreWeave also plans to borrow against specific customer agreements, drawing funds as needed to build infrastructure for its $132.5 billion backlog.

“We will not use the unsecured debt market to fund our business at current yields, nor do we need to,” CEO Michael Intrator said on Tuesday’s earnings call. In August, CoreWeave closed a $2.6 billion loan facility, its first designed specifically for shorter-term customer contracts. The facility, known as DDTL 5.5, allows the company to borrow in installments.

CoreWeave has raised prices across its offerings by about 25% in July and a further 10% later in the quarter. Prices continued to rise this quarter, Intrator said, more than offsetting cost increases. The company is allocating more capacity to short-term deals when pricing justifies it, charging more than $40 million per megawatt annually. New infrastructure on four- and five-year contracts is priced at $20 million to $25 million per megawatt, he said.

Shorter contracts can let CoreWeave charge more and reset prices more often, but they may offer lenders less predictable cash flow than longer agreements. Prepayments also ease near-term borrowing needs while locking in service at agreed prices, which could look less favorable if demand and prices keep climbing. Some CoreWeave bond yields rose above 15% last month, a sign of investor concern about debt financing data centers before those investments pay off. Rivals Nebius and IREN have also used large Microsoft prepayments to fund computing capacity.