Key Takeaways
- First-quarter revenue reached $193.4M, reflecting 94% year-over-year growth and exceeding the $181M analyst forecast
- Second-quarter revenue outlook of $194M surpassed Wall Street’s $178M projection
- Shares plummeted more than 9% in extended trading despite beating estimates, after closing regular session at $226.72
- Profitability margins face pressure throughout 2025 as the company leases hardware back to OpenAI amid unprecedented demand
- A major lock-up period expires Thursday, releasing approximately 13% of IPO shares for potential sale
Cerebras Systems (CBRS) delivered its inaugural quarterly report as a publicly-traded company since its May debut, showcasing solid fundamentals across the board. Despite topping revenue projections, improving guidance, and narrowing losses, the shares tumbled over 9% in after-hours trading.
Shares concluded Tuesday’s regular session at $226.72, representing a notable premium to the company’s $185 IPO pricing.
First-quarter revenue registered $193.4 million, marking a robust 94% increase compared to the prior-year period and surpassing analyst expectations of $181 million. The cloud and services segment experienced explosive growth of 178% year-over-year. The adjusted operating deficit narrowed dramatically to $3.5 million, a substantial improvement from the $19.3 million loss recorded in the comparable quarter last year.
[[SCRIPT_0]]Management’s second-quarter revenue forecast of $194 million exceeded consensus projections of $178 million, implying 88% annual growth.
Profitability Margins Face Headwinds
The challenge centers on margin dynamics. Full-year gross margin expectations landed at 38-41%, while Q2 guidance tightened to a narrower 36-38% range. The culprit: Cerebras is leasing back infrastructure previously sold to third parties and reallocating it to OpenAI, whose requirements are exceeding the pace of new server deployment.
The company’s $20 billion long-term agreement with OpenAI fuels revenue expansion but simultaneously compresses near-term profitability. Management anticipates converting $3.7 billion of its massive $24.6 billion order book into revenue during 2026 and 2027.
Another complication exists. Cerebras issued OpenAI warrants covering 33.4 million shares at minimal cost. These equity instruments vest progressively and are treated as contra-revenue, creating a non-cash deduction that diminishes reported sales. Needham analyst Quinn Bolton has identified this as an escalating challenge as the OpenAI partnership expands.
OpenAI leverages Cerebras’ cloud infrastructure to operate Codex-Spark, a specialized coding model. The platform recently introduced enterprise pilot programs for Kimi K2.6 and Gemma 4.
Share Lock-Up Release Creates Additional Headwind
Merely 15% of total outstanding shares were distributed during the initial public offering. The remainder remain restricted under lock-up agreements.
This Thursday marks a critical milestone when approximately 13% of IPO shares become eligible for trading ā primarily held by company insiders and early-stage investors. This event could intensify selling pressure on the stock in the immediate term.
A subsequent, more substantial unlock is scheduled for two days following second-quarter earnings disclosure, liberating an additional 17% of shares.
Since debuting at $386 on its first trading day, the stock has experienced price swings exceeding 3% in 19 of 26 trading sessions. This volatility pattern shows no signs of moderating.
Eleven Wall Street analysts have published research coverage, establishing an average price objective of $294 with a consensus Buy recommendation, per FactSet data. Forecasts project core revenue climbing to $7.2 billion by 2028, accompanied by adjusted earnings per share of $5.53. Based on Tuesday’s closing price, shares trade at 41 times that forward earnings estimate.
Cerebras also finalized a revolving credit arrangement worth up to $850 million in April to finance data center expansion initiatives, complementing the $6.4 billion secured through its IPO and a $1 billion working capital financing facility provided by OpenAI.
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