Key Takeaways
- Q2 core revenue reached $210 million, surpassing analyst expectations of $191 million and representing a 100% year-over-year increase.
- Shares plummeted 17% in extended trading despite climbing 12% during the regular session.
- The company’s adjusted operating loss of $34 million significantly outperformed the Street’s $63 million loss projection.
- Full-year 2026 core revenue guidance was increased to $890 million, while gross margin projections improved to 41%-43%.
- The company’s backlog remained unchanged at approximately $25 billion, heavily anchored by a substantial OpenAI cloud infrastructure agreement.
Despite delivering results that exceeded Wall Street’s expectations on Wednesday, Cerebras Systems couldn’t maintain investor enthusiasm. Shares plunged approximately 17% in after-hours activity to roughly $219, reversing a 12% gain achieved during the day’s regular trading session.
The AI chip manufacturer posted core revenue of $210 million for the second quarter, surpassing consensus estimates of $191 million and marking a 100% jump from the prior-year period.
It’s worth noting that Cerebras employs a customized revenue metric. The calculation excludes pass-through revenue that generates zero margin while incorporating warrant amortization expenses. For Q2, traditional reported revenue stood at $180.1 million before adjustments brought it to $210 million under the core revenue framework.
Management now anticipates a full-year adjusted operating margin of approximately -18%, representing a significant upgrade from the -30% projection issued in June.
This improvement is noteworthy. Following the Q1 earnings release in June, the company had guided toward a -30% adjusted operating margin. The revised -18% target demonstrates accelerated progress toward profitability beyond initial expectations.
Third-quarter projections similarly exceeded analyst forecasts. The Street anticipates Cerebras achieving adjusted operating profitability by 2027, and the current trajectory suggests this milestone could arrive as scheduled or potentially sooner.
However, bottom-line performance presented a challenge. Cerebras recorded a net loss of $450.5 million in Q2, a stark reversal from net income of $309.5 million during the same quarter last year.
The company’s order backlog remained essentially unchanged at approximately $25 billion. Growth-oriented investors typically prefer to see expansion in this metric, signaling increasing future demand.
Multi-Year OpenAI Partnership Drives Backlog
A substantial portion of the backlog originates from an extended cloud computing agreement with OpenAI, under which the AI leader leases Cerebras server infrastructure. The partnership includes expansion options for OpenAI and includes stock warrant compensation.
The company has secured additional partnerships with Amazon and AMD. These agreements enable Cerebras’ Wafer Scale Engine (WSE) chips to operate in conjunction with Amazon and AMD processors for accelerated inference workloads. Amazon is similarly receiving equity warrants as part of its arrangement.
Extreme Price Swings Continue Post-IPO
Cerebras completed its initial public offering in May with a pricing of $185 per share. The stock debuted at $350 and peaked at $386 during its first trading day, before retreating to $161 by late June.
Subsequently, the stock has fluctuated between $162 and $266. Shares have experienced daily movements exceeding 3% in either direction on 43 of the 62 trading days since going public.
The company currently carries a market capitalization of approximately $59.37 billion.
Management elevated its annual core revenue projection from $880 million to $890 million and enhanced gross margin expectations to a 41% to 43% range.
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