Nvidia-supported cloud computing firm CoreWeave has dismissed allegations of contract withdrawals following a Financial Times report stating that Microsoft, its largest client, had stepped back from certain agreements. “We pride ourselves in our client partnerships and there have been no contract cancellations or walking away from commitments. Any claim to the contrary is false and misleading,” a CoreWeave representative told Reuters via email.
According to the Financial Times, Microsoft has retreated from some commitments with CoreWeave, potentially affecting the startup’s $35bn initial public offering (IPO) planned for next month. CoreWeave provides Microsoft with data centre computing resources crucial for expanding AI models such as OpenAI’s ChatGPT.
Microsoft remains key partner for CoreWeave amid contractual adjustments
The publication, citing sources familiar with the matter, reported that Microsoft withdrew from some agreements due to delivery challenges and unmet deadlines. While specifics were not disclosed, one source mentioned that these issues influenced Microsoft’s trust in CoreWeave. Nonetheless, Microsoft continues to hold several active contracts with CoreWeave, which remains a key partner.
This situation could present a challenge for CoreWeave, as Microsoft is its primary client, accounting for 62% of CoreWeave’s expected 2024 revenue, totalling $1.2bn. Earlier this week, CoreWeave submitted documents for a New York IPO, targeting a public market entry, with an anticipated valuation surpassing $35bn, making it a notable AI-focused IPO this year.
CoreWeave, in its filing, said: “Any negative changes in demand from Microsoft, in Microsoft’s ability or willingness to perform under its contracts with us, in laws or regulations applicable to Microsoft or the regions in which it operates, or in our broader strategic relationship with Microsoft would adversely affect our business, operating results, financial condition, and future prospects.”
In its IPO filing, CoreWeave reported a revenue increase to $1.92bn in 2024, marking a growth of over 700%, despite a net loss of $863.4m.
In the fourth quarter of 2024, CoreWeave reported revenue of $747.4m, with a gross margin of approximately 76%. Despite generating an operating income of $112.7m, the company incurred a net loss of $51.4m due to interest expenses. By the year’s end, CoreWeave’s total debt approached $8bn.
Microsoft has agreed to invest over $10bn in CoreWeave services by 2030 under five contracts between the two firms.
Earlier this week, the cloud computing firm announced the acquisition of AI developer platform Weights & Biases, aiming to bolster its cloud platform before the IPO. The acquisition will merge CoreWeave’s infrastructure and managed cloud services with Weights & Biases’ platform used by tech companies like OpenAI and Meta for AI model training and deployment.
Read more: CoreWeave eyes Nasdaq debut with $35bn valuation
