Invest1 publisher3 min readPublished
Nscale's $35 billion IPO prices $33 million of 2025 revenue at about 1,060 times
The Financial Times reported that ByteDance supplied 73 percent of that revenue. Nscale's S-1 warns about customer concentration in general terms, and the customer's name sits in an exhibit to a Macquarie loan.
The Investor · Invest desk
What happened
- The Financial Times reported that ByteDance, TikTok's Chinese corporate parent, accounted for 73 percent of Nscale's 2025 revenue. The S-1 itself never names the company.
- Nscale has since signed an agreement with Microsoft worth $43.8 billion through December 2033, and one with Anthropic worth $44.6 billion over an unspecified period.
- The filing puts remaining performance obligations, future contracts not yet paid for, at $56.4 billion, alongside $103 billion of total contract value.
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Why it matters
- decision Anyone buying has to choose a denominator: about 1,060 times 2025 revenue, about 124 times the annualised first half, or some discount on a contracted book measured in tens of billions.
- contradiction Two contracts worth $88.4 billion sit $32 billion above the remaining performance obligations in the filing, so the headline values and the accounting measure of booked work cannot both be read as current.
- constraint The prospectus discloses the concentration but not the customer. That leaves diligence on the single largest revenue source to outside reporting and an exhibit attached to a bank loan.
Divide the $35 billion attached to the offering by $33 million of 2025 revenue and you are paying about 1,060 times last year's sales [4][2][17]. Annualise the first half of 2026 instead, $140.6 million doubled to $281.2 million, and the multiple is roughly 124 [16][18]. The $56.4 billion of remaining performance obligations in the filing works out to about 200 years of revenue at that annualised rate [12][19].
The concentration figure is more useful converted into dollars. Seventy-three percent of $33 million is about $24.1 million, which is what the Financial Times' reporting implies ByteDance paid Nscale in 2025 [1][14]. In the first half of 2026 the largest customer supplied 52 percent of $140.6 million, about $73.1 million [3][15]. Fortune attributes the 2025 share to ByteDance and describes the later one only as Nscale's largest customer [25]. If it is the same buyer, the percentage fell 21 points while the dollars roughly tripled [23][24].
The S-1 does warn about the general problem. "A substantial portion of our revenue is driven by a limited number of our customers, and the loss of, or a significant reduction in, spend from one or a few of our top customers would adversely affect our business, operating results, financial condition, and future prospects," the filing says [9]. ByteDance is nowhere in it [5]. The name is reachable through Exhibit 10.9 to a September 2025 draft registration statement, which disclosed a Macquarie loan secured on Nscale's customer contracts and cited a client called "Spring (SG) Pte. Ltd., a company incorporated and registered in Singapore with company number 202325236K" [6]. Spring is a ByteDance subsidiary [7].
Then there is what that customer was buying. The Financial Times, quoted by Fortune, reported that "ByteDance used Nscale's cloud facility in Norway to access Nvidia chips that it would otherwise have been unable to buy in China, exploiting a loophole in US trade restrictions, according to filings. ... The arrangement is entirely legal but exposes companies such as Nscale to regulatory and reputational risks, at a time when the U.S. and China are engaged in a high-stakes race to dominate the fast-growing technology" [8]. For a buyer of the stock, the live risk is a change in the rules.
Against the 2025 picture sits $88.4 billion of newer contracted value, Microsoft at $43.8 billion through December 2033 and Anthropic at $44.6 billion over an unspecified period [10][11][20]. That is $32 billion more than the remaining performance obligations the company disclosed, and Fortune's account leaves the RPO measurement undated [21][12]. Either most of the headline contract value has not yet passed into the accounting measure of booked work, or the two figures were struck at different moments.
I would price this off conversion. The 73 percent tells you what Nscale was in 2025, a $33 million business selling Norwegian capacity mostly to one buyer [2][1][8]; the $103 billion of total contract value is the number that has to turn into collected cash [13]. The reading that beats mine arrives in the first filing showing Microsoft revenue recognised on schedule, at which point the concentration argument is history. The reading that breaks the bull case is narrower: if the offshore route closes before the new contracts start paying, what remains is the other 48 percent of the first half, about $67.5 million, or $135 million annualised [22].
What to watch
- Whether an amended S-1 names the largest customer or dates the $56.4 billion remaining performance obligations figure.
- The first filing that shows revenue recognised under the Microsoft contract, and at what quarterly rate against $43.8 billion.
- Any US rule change covering access to Nvidia chips through data centres outside the United States.