Key Takeaways
- First-quarter revenue reached $193.4M, representing 94% year-over-year growth and exceeding the $181M analyst estimate
- Second-quarter revenue forecast of $194M surpassed Wall Street’s $178M expectation
- Shares declined more than 9% in extended trading, having closed the regular session at $226.72
- Profitability margins face downward pressure throughout 2025 as the company leases hardware back to OpenAI amid capacity constraints
- Approximately 13% of IPO shares become tradeable this Thursday following the expiration of insider lock-up restrictions
Cerebras Systems (CBRS) delivered its inaugural earnings report as a publicly-traded company, exceeding expectations across multiple metrics including revenue, forward guidance, and operating losses. Despite these positive results, shares tumbled over 9% in after-hours trading.
Shares finished Tuesday’s regular session at $226.72, marking a significant appreciation from the company’s May IPO pricing of $185.
First-quarter revenue totaled $193.4 million, marking a 94% increase compared to the prior-year period and exceeding analyst consensus of $181 million. Cloud and services segment revenue surged 178% year-over-year. The adjusted operating loss narrowed substantially to $3.5 million, a dramatic improvement from the $19.3 million loss recorded in the comparable quarter last year.
Management’s second-quarter revenue outlook of $194 million also exceeded Wall Street’s $178 million consensus, implying 88% annual growth.
Profitability Margins Face Headwinds
The primary concern centers on margin compression. Full-year gross margin guidance stands at 38-41%, with second-quarter projections narrowing to 36-38%. The underlying cause: Cerebras is leasing equipment previously sold to existing customers and reallocating it to OpenAI, whose infrastructure requirements are exceeding the pace of new server deployments.
The massive $20 billion multi-year OpenAI partnership is fueling Cerebras’ revenue expansion, but simultaneously compressing near-term profitability metrics. Management indicated that $3.7 billion from its $24.6 billion total backlog will convert to revenue during 2026 and 2027.
Another complicating factor exists. OpenAI received warrants for 33.4 million Cerebras shares at essentially no cost. These warrants vest progressively and are accounted for as contra-revenue, a non-cash accounting entry that diminishes reported sales. Needham analyst Quinn Bolton has identified this as an increasingly significant obstacle as the OpenAI agreement expands.
OpenAI leverages Cerebras’ cloud infrastructure to operate Codex-Spark, a specialized coding model. The company has also recently initiated enterprise testing of Kimi K2.6 and Gemma 4.
Imminent Lock-Up Expiration Compounds Concerns
Merely 15% of total outstanding shares were offered during the initial public offering. Remaining shares remain subject to lock-up agreements.
This Thursday marks a critical milestone, enabling approximately 13% of IPO shares to become eligible for sale—primarily held by company insiders and early-stage investors. This could intensify selling pressure on shares in the immediate term.
A subsequent, more substantial unlock is scheduled for two trading days following the Q2 earnings announcement, releasing an additional 17% of total shares.
Since its trading debut when shares reached $386, 19 of the 26 trading sessions have experienced volatility exceeding 3%. This price turbulence appears likely to persist.
Eleven Wall Street analysts have published coverage, establishing an average price target of $294 with a consensus Buy recommendation, per FactSet data. Analysts forecast core revenue climbing to $7.2 billion by 2028, with projected adjusted earnings per share of $5.53. Based on Tuesday’s closing price, the stock trades at 41 times that forward earnings estimate.
Cerebras also secured a revolving credit facility of up to $850 million in April to fund data center buildout, supplementing the $6.4 billion raised through its IPO and a $1 billion working capital loan facility from OpenAI.
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