Nscale filed for its IPO on a $103.4B contract book

It's Tuesday, September twenty-second. Nscale has filed to go public on a hundred and three point four billion dollars of customer promises, and two point six billion dollars of it has gone live. Amazon says it is blocking Meta's Muse from buying on Amazon dot com. And Google opens Googlebook pre-orders at eight hundred and ninety-nine dollars.

On September eighteenth, Nscale filed a Form S-1 with the SEC. A Form S-1 is the document a company files before it can sell shares to the public. Nscale is a London company that builds and runs AI data centers. Nscale wants to trade on the New York Stock Exchange as NSCL.

Nscale sells its data center capacity on take-or-pay contracts. In the filing's own words, customers are billed monthly on the capacity they reserved, whether or not they use it. That hundred and three point four billion dollar figure is Nscale's active and contracted book as of August thirty-first.

Total contract value is Nscale's own measure. Add up what every signed contract promises to pay across its whole committed term, measured on the day the contract is signed, leaving out extensions, renewals and capacity the customer has not ordered. The average contract runs five point seven years. So a hundred and three point four billion dollars is five point seven years of promises, counted at signature.

Microsoft's signed orders provide for payments of up to forty-three point eight billion dollars. The Anthropic Services Agreements, signed August twenty-fifth, provide for up to forty-four point six billion dollars. Those two figures add to eighty-eight point four billion dollars, about eighty-five percent of the active and contracted book. The addition is ours; Nscale prints no total. On August twenty-fourth, Nscale signed a services agreement with Figure AI, a humanoid robotics company, for up to a hundred thousand of NVIDIA's Vera Rubin GPUs, and the filing puts no value on that agreement.

Nscale calls the path from a signature to a dollar its Contract-to-Cash Cycle. Phase one is contract signing. Nscale generally takes a prepayment, money the customer pays up front, which counts as a debt until Nscale delivers the service. That prepayment averaged twenty-three percent of the active and contracted book on August thirty-first. Phase two is buying and installing the hardware. At the end of June, Nscale had twenty-four billion dollars of purchase commitments for equipment its suppliers have not delivered yet. Phase three is go-live and revenue recognition. Revenue starts when a block of GPUs goes live, and Nscale recognizes it over the contract term.

A hundred billion dollars signed, with cash pouring in, sounds like a company making money. Here are the six months to June thirtieth. Revenue was a hundred and forty point six million dollars. The net loss was one point zero two billion dollars, and four hundred and fifty-seven point one million of that loss is paper losses on Nscale's own financing instruments, which move no cash. Cash from operations was plus one point six nine billion dollars, and Nscale says that came from upfront prepayments its customers provided. The cash coming in is the customers' money.

Nscale has four hundred and sixty-one thousand GPUs active and contracted, and twenty-five thousand of them are running. Nscale's active and contracted data center capacity is one point three seven gigawatts.

Nscale held one point four eight billion dollars of cash at the end of June. The filing also discloses material weaknesses in Nscale's own financial controls. That is the auditors' term for a hole big enough that a real error could slip through, and Nscale says remediation is in its early stages.

Amazon rewrote its Conditions of Use on August fourteenth and added a section called Agents, which requires any software shopping on a person's behalf to identify itself in every request. Amazon says it has now blocked Meta's Muse, Meta's own shopping assistant, from buying on Amazon dot com, and that Muse hides what it is. Meta says Muse never sees anyone's passwords.

Google opened Googlebook pre-orders yesterday. Acer, ASUS, Dell, HP and Lenovo are all building a Googlebook, starting at eight hundred and ninety-nine dollars. Googlebooks reach shelves on October fourth in the United States. Every Googlebook ships with Gemini, Google's own AI assistant.

File the Monarch Compute Campus in West Virginia. Monarch is where the forty-four point six billion dollars of Anthropic work is supposed to run, and the filing says this about paying for it, in Nscale's own words. As of the date of this prospectus, we have not obtained binding commitments for any of the financings required to fund performance under the Anthropic Services Agreements, and all such financings remain in process. Anthropic and Microsoft have published nothing about those agreements, and Nscale has published nothing since September eighteenth. The open question is whether Nscale finances Monarch in time, and a financing announcement or an amended filing would settle it.

A hundred and three point four billion dollars is what Nscale has been promised. Two point six billion dollars is what Nscale is delivering. The distance between those two numbers is financing and hardware. Back Wednesday.