Nscale IPO filing shows $1.69bn Q3 loss as Microsoft retreats

Nscale, the London-based "neocloud" backed by Nvidia, published an updated prospectus for its planned US initial public offering on Thursday 12 November 2026. According to CNBC, the filing shows a third-quarter net loss of $1.69bn on revenue of $307.5m. A neocloud is a company that rents out access to computing chips, mainly Nvidia graphics processing units (GPUs), to customers that train and run AI models.

How large is Nscale's loss?

The numbers in the filing point in two directions at once. According to CNBC, revenue rose 1,344% year on year in the third quarter, to $307.5m. The net loss, however, widened from $1.02bn in the second quarter, when revenue was $140.6m, up 1,252% year on year. On those figures, the third-quarter loss was roughly 5.5 times revenue, a ratio that investors will want explained before they buy shares.

Nscale filed to go public in September but had not updated its prospectus since then, CNBC reports. The company has not said how much it intends to raise in the offering, which is planned for the New York Stock Exchange, according to the same report.

Why has Microsoft pulled back?

The update lands after several public setbacks. Microsoft walked away from an Nscale data centre it had planned to use in England, according to CNBC. Darren Hardman, Microsoft's chief executive for the UK and Ireland, told CNBC in October that the decision was linked to Nscale's ability to secure electricity.

CNBC also relays a Financial Times report that Microsoft decided against renewing a contract with Nscale in Texas. Bloomberg, as cited by TechCrunch, adds that Microsoft will not use an option to more than double its Nscale agreement for the Texas site, and that it recently stopped being an anchor customer for Nscale's planned Essex site after power delays. Bloomberg also reported last week that Microsoft is tightening oversight of projects run by third parties, including Nebius, IREN and Nscale, and is debating whether to sign new agreements, according to TechCrunch.

Nscale still says in its filing that it expects Microsoft to be a "significant customer in future periods", CNBC notes.

What does Anthropic add?

The company can point to a growing relationship with Anthropic, which is itself aiming to go public, according to CNBC. In late September, Anthropic exercised its right to contract for additional computing power at an Nscale site in West Virginia, the same report says.

What does Nebius's $40bn plan show about the sector?

The mood in the neocloud market is tense. According to CNBC, Nebius shares fell about 17% on Thursday after the company issued light full-year guidance. CoreWeave, a larger rival, rose almost 25% on Wednesday on strong results, then fell about 7% on Thursday after Jensen Huang resigned as Nvidia chief executive, according to CNBC. Huang had overseen Nvidia's investments in the neocloud sector.

TechCrunch details the Nebius plan. On its third-quarter earnings call, Nebius set out $40bn of planned spending for 2027, far more than Wall Street expected, according to TechCrunch. The company says that prepayments from customers, plus loans secured on investment-grade customer contracts, should cover up to 85% of a $40bn to $45bn capital expenditure budget.

The model carries a clear risk. In TechCrunch's words, it uses the future value of data centres to finance their construction, which is risky if projects are delayed or cancelled. Nebius chief executive Arkady Volozh acknowledged this on the call:

Building at this scale is hard, and delays are part of our industry right now. We are not immune.

The pressure is visible in Nebius's own figures, as reported by TechCrunch:

• Third-quarter revenue of $981m, up 571% year on year, of which roughly a third was a one-off payment tied to a new partnership model.
• A 2026 revenue forecast cut by $200m to $3bn, because of delays at third-party sites.
• A Microsoft contract worth up to $19.4bn, with only just over half of the capacity at the Vineland, New Jersey, site planned for the end of the year and the rest in the second quarter of 2027.
• $7.4bn of cash at the end of the quarter, and a 2027 revenue forecast of $12bn to $13bn.

Microsoft can terminate affected service after a grace period if dates are missed and no alternative capacity is offered, according to Nebius's summary of the contract quoted by TechCrunch. Nebius did not say whether Microsoft has agreed to the new dates, and Microsoft has not publicly cancelled anything, TechCrunch adds.

What does this change for a UK business?

For a company that depends on rented AI capacity, the lesson is about delivery risk rather than price. Delays at sites the provider does not control, and access to electricity, are the two causes named in these reports. A British buyer should check which data centre will actually host its workloads, what happens contractually if delivery slips, and whether the provider's financing depends on prepayments from a few large customers.

It is also prudent to avoid a single supplier. Nscale's filing will be read closely in London, where the company is based, but a loss of this size means its ability to finish projects on schedule is a question for the market, not a given. Until the IPO terms are published, nothing in the sources says how much capital Nscale will raise or when.