Cerebras Systems Inc. reported third-quarter revenue that beat Wall Street expectations and disclosed a new customer agreement with Microsoft Corp., lifting its shares nearly 18% in late trading.
Core adjusted revenue for the quarter reached $230.9 million, a 70% increase from a year earlier and above the $214.7 million analysts had targeted. The company posted a loss before certain costs such as stock compensation of 67 cents per share, compared with guidance of a 14-cent-per-share loss, though Cerebras said accounting idiosyncrasies make its figures not directly comparable with that guidance. Those adjustments reflect pass-through revenue that is subtracted from the total and warrants issued to major customers that are amortized as noncash reductions in revenue.
Investors also took note of progress toward profitability. Cerebras has not yet shown a profit, but its adjusted operating margin of -14% was considerably better than the -24% guidance it gave three months earlier.
Chief Executive Andrew Feldman told analysts that competitors are struggling to meet customer demand and working through growing order backlogs, which he said creates an opening for Cerebras, particularly in hardware sales, as long lead times and higher costs for GPUs create opportunity. Cerebras faces its own backlog, which rose from $25 billion in August to $26 billion at the end of the quarter, with a significant portion tied to its deal with OpenAI Group PBC.
The company has recently signed deals with Amazon Web Services Inc. and Oracle Corp., and announced Microsoft as a new customer without providing many details. Feldman said the Microsoft agreement was signed a month earlier and that revenue from it should begin appearing in the first quarter of fiscal 2027. He added that Cerebras is evaluating financing options to meet customer demand and work through its backlog.
Cerebras projected core gross margin of 47% to 49% for the fourth quarter, with revenue between $310 million and $330 million, above analyst expectations of 42.1% margin on $271 million in sales. Feldman also said the company believes its revenue will triple by the end of fiscal 2027. The results come as rival Nvidia Corp. seeks stability under interim CEO Colette Kress, its longtime chief financial officer, following the resignation of co-founder and CEO Jensen Huang.
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