BE 10-K & 10-Q changes, risk factors and insider trading

•Distributed energy generation and hydrogen production are emerging markets that may not receive widespread acceptance or demand.demand may be lower than we expect.

•Our products involve a lengthy sales and installation cycle, whichand may lengthen further asif we seekfail largerto transactions.close sales on a regular timely basis, our business could be harmed

•Deployment of our fuel cell products can be affected by interconnection requirements, export tariff arrangements and utility tariff requirements that are each subject to change.

•WeCertain havefeatures long-termor characteristics of some of our supply agreements that could resultexpose inus to risks, such as excess or, if one or more suppliers do not produce for any reason,inventory, insufficient inventory, or above market pricing or higher costs, andwhich could negatively affect our results of operations.

•Possible new tradeTrade tariffs could have a material adverse effect on our business.

•We have a limited history of manufacturing new products, such as our Electrolyzers.products.

•We are subject to laws and regulations,regulations includingthat environmentalcould lawsimpose substantial costs upon us and regulations,cause regarding our products.delays

•We are in an unsettled regulatory and legal environment with increasing compliance complexity and costs.

•Our failureinability to effectively protect and enforce our intellectual property rights may undermine our competitive position, and litigation to protect our intellectual property rights may be costly.

•We may issue additional shares of our common stock in connection with future conversions of theoutstanding Greenconvertible Notes,notes, which may dilute our existing stockholders and potentially adversely affect the market price of our common stock.

•Future sales of our common stock by SK ecoplant Co., Ltd.current or itspotential affiliates,future significant holders, or the perception that such sales could occur, may adversely affect the market price of our common stock.

•Provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit stockholders’ rights, and limit the market price of our common stock. In addition, provisions in the convertible notes we have issued could delay or prevent an otherwise beneficial takeover of us.

Distributed energy generation and hydrogen production are still emerging markets. It is uncertain whether potential customers will embrace distributed generation or hydrogen production in general, or our solutions in particular. Enterprises may be unwilling to adopt our solutions over traditionaltraditional, competing, and/or competingalternative power sources such as distributed solar or electricity from the grid, nuclear, hydro, coal, geothermal and/or intermittent solar and/or wind power paired with storage, or alternative means of producing hydrogen. This could be due to the perception that our technology or our company is unproven, lack of confidence in our business model, unavailability of third-party service providers to operate and maintain our solutions, lack of awareness of our products, or their perception of regulatory or political challenges, including challenges pertaining to technologies that use natural gas fuels or have carbon emissions.

•the introduction, emergence, continuance, maturation or success of, or increased government support for, other hydrogen production or alternative energy generation or hydrogen production technologies and products (including, for example, small scale nuclear and geothermal);

Our sales cycle is typically 128 to 1812 months but can vary considerably. To make a sale, we must typically provide a significant level of education to prospective customers regarding the use and benefits of our products and technology. The period between initial discussions with a potential customer and the eventual sale usually depends on a number of factors, including the potential customer’s budget, selection of financing type, and term of the contract. InAI addition,and wedata havecenter startedcustomers toand focusother onlarge larger projects, whichloads, tend to have longer sales cycles. Prospective customers often undertake a significant evaluation process that may further extend the sales cycle, and which evaluation may be negatively impacted by general market and economic conditions such as inflation, rising interest rates, availability of capital, a recessionary environment, geopolitical instability, energy availability and costs, and the availability and effects of government initiatives. Once a customer decides to purchase our product, it takesmay take a significant amount of time for us to fulfill the sales order.order, generally due to variables within the customer’s control including permitting, building, availability of gas infrastructure. Generally, it takes between ninesix to eighteentwelve months or more from the entry into a sales contract until the installation of our products. The lengthy sales and installation cycles are subject to a number of significant risks, some of which are outside of our control. Due to the long sales and installation cycles, we may expend significant resources without being certain of generating a sale.

Our products have significant upfront costs, and, for some customers, we need to attract investorsfinanciers to help them finance purchases.

Our products have significant upfront costs, which may be a barrier for some customers who may not have the financial capability to purchase our products directly. To address this, we have developed various financing options that allow customers to use our products through third-party financing arrangements. These options enable our customers to access our products without making a direct purchase. For more information on the different financing arrangements available, please see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations — Purchase and Financing Options. If in any given quarter we or our customers are not able to secure funding, our financial condition and results of operations would be harmed. To attract new customers, we regularly innovate our customer contracts which may have different terms and financing conditions from prior transactions.

In the U.S., our capacity to offer our Energy Server systems through financed arrangements depends in large part on the ability of financing parties to optimize the tax benefits associated with the Energy Server systems, such as the recently expired ITC for fuel cells running on a non-zero carbon fuel or accelerated depreciation.systems. Interest rate fluctuations, and internationally, currency exchange rate fluctuations, may also impact the attractiveness of any financing offerings for our customers. Our ability to finance a PPA or a lease is also related to, and may be limited by, the creditworthiness of the customer.

We believe that the customer’s decision to purchase our Energy Server system is significantly influenced by its price, the price predictability of electricity generated by our Energy Server systems in comparison to the retail price, and the future price outlook of electricity from the local utility grid and other energy sources. These prices are subject to change and may affect the relative benefits of our Energy Server systems. Factors that could influence these prices and are beyond our control includeand include, without limitation, the impact of energy conservation initiatives that reduce electricity consumption; construction of additional power generation plants (including renewables, storage, nuclear, coal or natural gas); technological developments by others in the electric power industry; the imposition of interconnection, “departing load,” “standby,” power factor charges, greenhouse gas emissions charges, or other charges by local electric utility or regulatory authorities; and changes in the rates offered by local electric utilities and/or in the applicability or amounts of charges and other fees imposed or incentives granted by such utilities on customers. In addition, even with available subsidies for our products, in those areas where the current cost of grid electricity is low, including in some states in the U.S. and some foreign countries, our Energy Server systems may not be economically attractive.

Furthermore, actual or perceived potential increases in the price of natural gas or other fuels or curtailment of availability (e.g., as a consequence of physical limitations or adverse regulatory conditions for the delivery or production of natural gas or other fuels) or the inability to obtain natural gas or other fuel services could make our Energy Server systems less economically attractive to potential customers and reduce demand. While our Energy Server systems can operate using hydrogen or biofuels, the availability and/or current high cost of those natural gas alternatives in a particular location may make them less attractive to potential customers, reducing the demand for our products.

We need to reduce the manufacturing costs for our products to expand our markets. Additionally, certain of our existing service contracts rely on projections regarding service cost reductions that may not be realized. Increases in component and raw material costscosts, including those caused by tariffs and lack of available supply could offset our cost-cutting efforts, slowing our growth and causing our financial results and operational metrics to suffer. In the past, we have experienced price increases in raw materials, which are used in our components and subassemblies for our fuel cell products.

Our expenses have increased and may increase in the future due to factors such as increases in wages or other labor costs, marketing and sales. We may need to reduce costs to expand into new markets (in which the price of electricity from the grid is lower) while maintaining our current margins. Any failure to achieve cost reductions could adversely affect our results of operations and financial condition and harm our business and prospects. Our inability to reduce product costs may impact our profitability, which could have a material adverse effect on our business and prospects.

Fuel cell net metering can be affected by local utility tariffs and fees, changes to interconnection agreement terms and fuel cell net metering requirements, and some jurisdictions do not allow the export of excess electricity. At times in the past, such changes have had the effect of significantly reducing or eliminating the benefits of such programs. Changes in the availability of, or benefits offered by, utility tariffs, the applicable net metering requirements or interconnection agreements could adversely affect the demand for our Energy Server systems. For example, in California, the fuel cell net metering tariff expressly addressing fuel cells and providing certain incentives and export capability (referred to as the “Fuel Cell Net Energy Metering” (“FC NEM”)) expired at the end of 2023 and is no longer available to new customers. Existing customers can remain on the tariff if they comply with greenhouse gas emission standards that are intended to ensure they operate at a rate that is the same or better than the grid resources they are displacing. If at some point fuel cell resources cease to operate at a rate that is the same or better than the grid resources they are displacing, this may result in increased cost. There are also some more generally applicable tariffs available for customers deploying fuel cells, however, they have limitations, and while the loss of FC NEM has not yet impacted our ability to sell our Energy Server systems for use in California, that could change at some point in the future. We cannot predict the outcome of the many regulatory proceedings addressing tariffs that would include customers utilizing fuel cells. If an economical tariff for customers utilizing fuel cells is not available in a given jurisdiction, it may limit or end our ability to sell and install our Energy Server systems in that jurisdiction. Further, permits and other requirements applicable to electric and gas interconnections are subject to change. For example, some jurisdictions are limiting new gas interconnections, although others are allowing new gas interconnections for non-combustion resources like our Energy Server systems.

Our Energy Server systems are designed to operate at a constant output 24x7. Therefore, they need a constant source of fuel such as natural gas, biogas, or hydrogen to keep them running. Fuel for our Energy Server systems is typically provided by local gas utilities. Our customers rely on such utilities to provide a constant supply of fuel that meets our specifications. However, if new regulations require a switch to different fuel for which there may be limited availability,availability and/or which may be more costly, such as biogas, it canmay createreduce challengesdemand for our products and their sales. Adverse fuel supply constraints or fuel outside of our fuel specifications may delay or prevent the deployment of our Energy Server systems.

We compete for customers, financing partners and incentive dollars from other electric power providers. Our Bloom Energy Server systems compete with a broad range of companies and technologies, including traditional energy suppliers, such as public utilities, and other energy providers utilizing traditional co-generation systems, nuclear, hydro, coal or geothermal power, companies utilizing intermittent solar or wind power paired with storage, and other commercially available fuel cell companies. We also compete with traditional backup energy equipment such as diesel generators. Our Electrolyzers compete with low temperature electrolyzer companies using Alkaline, Proton, PEM or AEM electrolysis.

Many of our competitors, such as traditional utilities and other companies offering distributed generation products, have longer operating histories, customer incumbency advantages, access to and influence with local and state governments, and access to more capital resources than us. Despite advantages offered by our products, prospective customers may still select such competitors to fulfill their energy needs after weighing all of the foregoing and any other applicable considerations. Significant developments in alternative technologies, such as energy storage, wind, solar or hydro power generation, or improvements in the efficiency or cost of traditional energy sources, including coal, oil, natural gas used in combustion, or nuclear power, may materially and adversely affect our business and prospects in ways we cannot anticipate. We may also face new competitors with better technologies, products, or resources. If we fail to adapt to changing market conditions and to compete successfully with grid electricity or new competitors, our growth will be limited, which would adversely affect our business results.

We plan to enhance our future growth opportunities by expanding our energy and hydrogen solutions. This includes expanding the features of and uses for our Energy Server systems, including providing options for carbon capture and heat output, by expanding our production and sales of our Electrolyzer, and by expanding the markets in which we sell our products. These opportunities will demand our focus, including the allocation of personnel, financial resources, and management oversight. If we fail to effectively allocate our resources or follow through on these opportunities, our business and operational results may be adversely affected.

ToWe plan to double our factory capacity from 1 gigawatt to 2 gigawatts by the extent we are successful in growing our business, we may need to increase the production capacityend of our products.2026. Our ability to plan,complete constructthis expansion, and equipany additionalfuture manufacturing facilitiesexpansions, is subject to significant risks and uncertainties, including delays, cost overruns, geopolitical instability,instability and labor shortages. We also need to hire, train and retain skilled employees to manage this expansion and operate our facilities effectively. The manufacture of our products is capital-intensive, and equipment, once purchased, may break down or require costly maintenance or may become obsolete due to technological improvements or other factors. We may also experience quality control issues as we implement any production upgrades. Expanding manufacturing capacity internationally may also expose us to new laws and regulations including those pertaining to labor and employment, environmental and export/import and carries risks. There is also a possibility that we may not be able to achieve our production targets for a variety of reasons, including reliance on third parties who do not fulfill their obligations to us.

If we are unable to expand our manufacturing facilities or develop our existing facilities to achieve the production throughput necessary to achieve our targeted production rate in a timely manner, we may be unable to further scale our business, which would negatively affect our results of operations and financial condition. Conversely, if the demand for our products or our production output does not rise as expected, we may not be able to spread a significant amount of our fixed costs over the production volume, resulting in a greater than expected per unit fixed cost, which would have a negative impact on our financial condition and results of operations.

If any of our solutions are defective or fail because of their design, including those incorporating third party hardware such as CCUS,carbon CHP,capture, microgrids,heat batteriescapture, microgrids and other distributed energy resources, or if changes in applicable laws or regulations, or in the enforcement thereof, require us to redesign or recall our products, we may incur additional costs and expenses. The process of identifying and recalling a product may be lengthy and require significant resources, and we may incur significant replacement costs, contract damage claims from our customers, product liability, property damage, personal injury or other claims and liabilities, and brand and reputational harm. In addition, applications such as CCUScarbon capture may impact the overall risk profile of our solutions, which could impact where our systems can be located to comply with various zoning and permit restrictions. Significant costs or payments made in connection with warranty and product liability claims and product recalls could harm our financial condition and results of operations.

We provide performance warranties and guaranties covering the efficiency and output performance of our products. Our pricing of these contracts and our reserves for warranty and replacement are based upon our estimates of the useful life of our products and those components that are replaced as a part of standard maintenance, including assumptions regarding improvements in power module life that may fail to materialize. WeWhile we continue to make progress in streamlining our installation and maintenance processes, we have in the past experienced certain project‑specific delays. These delays underscored the operational complexities inherent in coordinating large deployments with multiple external stakeholders. If we are delayed in or unable to perform maintenance, our previously installed products would likely experience adverse performance impacts, including reduced output and/or efficiency, which could result in warranty and/or guaranty claims by our customers. In addition, we do not have a long history at a large scale, and our estimates may prove to be incorrect. Failure to meet these warranty and performance requirements may require us to replace the products or to make cash payments to customers. Actual warranty expenses may exceed estimates. If our estimates are inaccurate or we fail to accrue adequate reserves to make cash payments as required, our business and financial results could be harmed.

Our business is subject to project execution risks, including risks associated with construction, utility interconnection, fuel supply, cost overruns and delays, including those related to obtaining government permits and other contingencies that may arise in the course of completing installations.

Our financial results depend on the execution of customer projects and the timely installation of our products, which may be on a fixed price basis, subjecting us to the risk of cost overruns or other unforeseen expenses in the installation process. Our products are subject to regulation and oversight in compliance with laws and ordinances relating to building codes, safety, environmental protection, and related matters in the jurisdictions where we operate, and typically require various local and other governmental approvals and permits, including environmental approvals and permits. Delays in obtaining these approvals and permits could stall the installation process of our products and adversely affect our revenue. For more information regarding these restrictions, please see the risk factors in the section titled “Risks Related to Legal Matters and Regulations.”

Furthermore, we rely on the ability of our third-party contractors to install products at our customers’ sites and to meet our installation requirements. We particularly rely on third-party installation resources and contractors for projects in Asiaboth U.S. and Europe.international markets. We currently work with a limited number of contractors, which could impact our ability to make installations as planned in the future. Our work with contractors may have the effect of our being required to comply with additional rules unique to our customers, site remediation, and other requirements, which can add costs and complexity to an installation project. The timeliness, thoroughness, and quality of the installation-related services performed by some of our contractors in the past have not always met our expectations or standards and may not meet our expectations and standards in the future.

Lengthy sales and installation cycles can increase the risk of customer disputes or delayed or incomplete installations. Sometimes, a customer may cancel an order placed under a definitive agreement but prior to installation,installation (a “post-order cancellation”). We have sought to mitigate risks associated with post-order cancellations through imposing cancellation fees which are sized both to discourage customer cancellations and to defray our costs in the event of a cancellation. However, no assurances can be given that such mitigation measures (if available) will be successful, meaning we may be unable to recover some, or allall, of our costs incurred in connection with design, permitting, installation and site preparations. CancellationFactors which may affect cancellation rates canwhich be as high as 5% to 10% in any given period due to factorsare outside of our control,control such asinclude permitting or regulatory issues, delays or unexpected costs in securing interconnection approvals, utility infrastructure, cost changes, or other reasons unique to each customer. Our operating expenses are based on anticipated sales levels, and many of our expenses are fixed. If we are unsuccessful in closing sales after expending significant resources or if we experience customer disputes, delays or cancellations, our reputation, business, financial condition, results of operations or cash flows could be materially and adversely affected. Additionally, under our revenue recognition policy, we do not recognize revenue on product sales until delivery or complete installation. Therefore, a small fluctuation in the timing of the sales transaction’s completion could cause our operating results to vary materially from period to period.

We rely on a limited number of suppliers and other third parties, and in some cases sole suppliers, for some of the raw materials and components used to manufacture our products, including certain rare earth materials and other materials that are in limited supply. If our suppliers provide insufficient inventory to meet customer demand, or such inventory is not at the level of quality required to meet our standards, or if our suppliers are unable or unwilling to provide us with the contracted quantities (as we have limited or in some case no alternatives for supply), our results of operations could be materially and negatively impacted. We are also reliant on other third-party providers of storage equipment, infrastructure equipment and pipelines,installations, and other materials and technologies that work with our products to provide an energy solution for customers. If we fail to develop or maintain our relationships with suppliers or other third party providers, or if there is otherwise a shortage or lack of availability of any required raw materials or components, we may be unable to manufacture our products, or our solutions may be available only at a higher cost or after a long delay.

The global supply chain for certain raw materials and components, including semiconductor components and specialty metals, has experienced significant strain in recent years. The macroeconomic environmentenvironment, tariff uncertainty and geopolitical instability have also contributed to and exacerbated this strain. There can be no assurance that the impact of these issues on the supply chain will not continue, or worsen, in the future. Significant delays and shortages could prevent us from delivering our solutions to customers within the required time frames and cause order cancellations, and could increase our costs, which would adversely impact our cash flows and the results of operations.

In some cases, we have had to create our own supply chain for some of the components and materials utilized in our fuel cells. WeAs we have scaled our business, we have made significant expenditures to expand and bolster our supply chain.chain Inacross manyvendors cases,and geographies. As we enteredsell an innovative fuel cell technology, we historically have and will continue to enter into contractual relationships with suppliers to jointly develop the components we needed. These joint development activities are time and capital intensive.intensive and it takes time to develop and qualify multiple suppliers for these unique parts. In addition, some of our suppliers use proprietary processes to manufacture components.components that adds to the difficulty of developing and qualifying multiple suppliers for certain parts. We may be unable to obtain comparable components from alternative suppliers without considerable delay, expense, or at all, as replacing these suppliers could require us either to make significant investments to bring the capability in-house or to invest in a new supply chain partner. Some of our suppliers are smaller, private companies, which are heavily dependent on us as a customer.customer and may be more challenged to scale with our business than our more diversified supplier base. If our suppliers face difficulties obtaining the credit or capital necessary to expand their operations when needed, they could be unable to supply necessary raw materials and components to meet our requirements, which would negatively impact our sales volumes and cash flows.flows, particularly as we grow and need to ramp our business. Although prior disruptions have not been material, the inability of a supplier to deliver, and our inability to secure timely and cost-effective alternatives, could impair our ability to timely provide products to our customers.

The failure by us to obtain raw materials or components in a timely manner or to obtain raw materials or components that meet our requirements could impair our ability to manufacture our products, increase the costs of our products or solutions, or increase the costs of servicing our existing portfolio of products.products, or impact our ability to ramp our business at a pace to meet growing demand. If we cannot obtain substitute materials or components on a timely basis or on acceptable terms, we could be prevented from delivering our solutions to our customers or service our existing fleet of products, which could result in sales and installation delays, cancellations, penalty payments, warranty breaches, or damage to our brand and reputation, any of which could have a material adverse effect on our business and results of operations. In addition, we rely on our suppliers to meet quality standards, and the failure of our suppliers to meet those quality standards could cause delays in the delivery of our solutions, unanticipated service costs, and damage to our brand and reputation.

WeCertain have,features inor characteristics of some instances,of entered into long-termour supply agreements that could resultexpose inus to risks, such as excess or,inventory, insufficient inventory (if one or more suppliers do not produce for any reason,reason), insufficient inventory,or above market pricing or higher costs, andwhich could negatively affect our results of operations.

We have long-termentered into supply agreements with certain suppliers. Some of these supply agreements providecontain forlong-term commitments, fixed or inflation-adjusted pricing, substantial prepayment obligationsobligations, andtake-or-pay arrangements and, in a few cases, contain supplier purchase commitments. These arrangementsfeatures or characteristics could meanexpose us to risks, such as limiting our flexibility to move to alternative suppliers in circumstances in which it may be beneficial, paying higher prices for supplies than the market, inflation-adjusted pricing that adversely affects our margins in the event we endare upnot payingable forto correspondingly increase the price of our products, storing aging inventory that we do not needneed, orand thatfailing isto atrecover aprepayments higherfrom pricesuppliers, thanparticularly the market. Further, we face significant specific counterparty risk under long-term supply agreements whenif dealing with suppliers without a long, stable production and financial history. Given the uniqueness of our products, many of our suppliers do not have a long operating history and are private companies thatWe may not haveaccurately substantialpredict capital resources. Inwhether the eventterms of any suchsupply supplieragreement experiencesmay financialprove difficulties,beneficial to us over time particularly if it may be difficult or impossible, or may require substantial time and expense, for us to recover any or all of our prepayments. We do not know whether we will be able to maintaincontains long-term supplycommitments, relationshipsincluding withpurchase our critical suppliers or whether we may secure new long-term supply agreements.commitments. Additionally, manysome of our parts and materials are procured from foreign suppliers, which exposes us to certain risks including unforeseen increases in costs or interruptions in supply arising from changes in applicable international trade regulations such asregulations, taxes, tariffs, or quotas. AnyIf we are unable to mitigate any of thethese foregoingrisks pertaining to our supply contracts or foreign suppliers, it could materially harm our financial condition and results of operations.

Possible new tradeTrade tariffs could have a material adverse effect on our business.

Our business is dependent on the availability of raw materials and components for our products. Prior tariffs imposed on steel and aluminum imports increased the cost of raw materials for our products and decreased the available supply, and, accordingly, we expect the 25%50% tariffs imposed on U.S. imports of steelsteel, aluminum, copper, and aluminumsubsequent derivative products to adversely impact our costs. Additional new trade tariffs or other trade protection measures that are being considered or threatened by the newcurrent U.S. federal administration and possible reciprocating tariffs from other countries in which we operate or do business in response to any such U.S. tariffs or other trade protection measures could have a material adverse effect on our business, results of operations and financial condition, particularly if the countries where we source a significant amount of our components or where we sell or seek to sell our solutions are impacted.

A failure to properly comply with foreign trade zone laws and regulations could increase the cost of our duties and tariffs.tariffs including by causing us to have to pay deferred duties and tariffs on goods located within such foreign trade zones.

We have established foreign trade zones in California and Delaware, through qualification with U.S. Customs and Border Protection, which allow for “zone to zone” transfers between our facilities located in those states. Materials received in aThe foreign trade zone areallows notthe subjectdeferment toof certain U.S. duties or tariffs until the materialgoods entersenter U.S. commerce.commerce, Weas benefitwell as the opportunity for duty and tariff avoidance on goods directly exported from the adoption of foreign trade zones by reduced duties, deferral of certain duties and tariffs, and reduced processing fees, which helpdo usnot realizeenter aU.S. reductioncommerce. inOther dutysavings and tariff costs. However, the operation of our foreign trade zones requiresfrom compliance with applicable regulationsrules and continuedregulations supportinclude ofreductions U.S.in Customsprocessing andfees Border Protection with respect tothrough the foreign trade zone program. If we are unable to maintain the qualifications of our foreign trade zones, or if foreign trade zones are limited or unavailable to us in the future, ourwe dutywould be liable to pay outstanding duties and tarifftariffs costsowed wouldon increase,goods located within such zones, which could have an adverse effect on our businessbusiness, cash flows, and results of operations.

Our limited history of manufacturing new products,products such as our Electrolyzers, makesmake it difficult to evaluate our future prospects and the challenges we may encounter.

While we have a history of manufacturing and selling our Energy Server systems, we have a limited history with regard to ourother Electrolyzers,technologies, whichsuch areas basedcarbon incapture partand on the same technology.storage. As a result, there is little historical basis to make judgments on the capabilities associated with our enterprise, management, and ability to produce Electrolyzers.new products. Our ability to generate the profits we expect to achieve from the sale of Electrolyzersnew products will depend, in part, on our ability to effectively manufacture Electrolyzers,them, respond to market demand, and add new manufacturing capacity in an efficient, cost-effective manner.

The global energy transition towards a net-zero environment has created new challenges and opportunities for utilities,the supplierspower of energy solutions, and customers.sector. Shifts and uncertainty in marketthe policy, regulatory, and regulatorymarket dynamicsenvironment and corporate and governmental policies are currently impacting the selling process and impacting sales cycles and timelines forimpact our products.business. Increasing electricity rates, decreasing energy security and reliability, and delays in the development of transmission infrastructure and grid interconnection as well as other time-to-power challenges have led to increased customer interest in our power solutions. At the same time, ongoing natural gas supply and pricing concerns due to geopolitical stresses, as well as customers’ interest in meeting sustainability targets, have led to increased caution from potential customers in their buying decision for energy solutions. Increasing demand for power has forcedcreated utilities,a statesmismatch in supply and countries to revisit less clean sources of baseload and intermediate power, which our technology is designed to replace.demand. This supply and demand mismatch globally has threatened energy security, reliability, and availability.availability and forced policymakers, utilities and business alike to reimagine energy generation and procurement strategy.

BloomWe enablesenable customers to address these energy market challenges by offering fuel flexible solutions that are designed to provide cost predictable, resilient, and reliable energy in a timely fashion. As customers and utilities navigate the energy transition and evolving landscape, the ability of our power solutions to fit their business, economic, regulatory, and policy needs depends on a number of factors, including natural gas availability and pricing, electrical interconnection needscosts, availability and availability,timing, redundant back up power requirements, cost requirements, and sustainability profiles. These factors may impactinfluence a customer’s buying decision forto pursue an alternative on-site power solution suchlike as ours, even in those situations where the time to power from a utility is measured in years because the total cost to interconnect, including the cost to build out energy transmission infrastructure, is unknown before all interconnection studies are completed.ours.

PolicyProposed changesand commencingenacted policies that have emerged in 2025 may also affect customers’customer demand for power solutions. ChangesFor inexample, changes to permitting rules could boostaccelerate domestic fossil fuel productioninfrastructure and infrastructure,production, while proposals to limit environmental reviews under the National Environmental Policy Act and other statutes could incentivize investment in, and lowerreduce the cost of, fossil fuels, including natural gas. FERC is now addressing a DOE proposed rulemaking on large load interconnection that could significantly impact new onsite generation by creating uniform pathways for onsite fuel cell deployment at data centers. At the same time, federal directives and state proposals to halt new permits for wind projects, particularly offshore wind, could slow renewable energy adoption and decrease the projected available supply of renewable energy. Some data center customers and other large power users have signed exclusivity arrangements with their utilities, which can introduce limitations to move to on-site solutions. Rising natural gas costs in some regions, increases in gas distribution rates, limited availability of supply, and disruptions in global gas markets are some of the market challenges we face, and can increase the cost of power solutions for customers. Bloom stands ready to meet these new opportunitieschallenges withand our low-emission Energy Server systems.opportunities.

In part because of the increases in demand for power, the importance of time to power has increased. According to a study published in AprilDecember 20242025 by the Lawrence Berkeley National Laboratory, the time from initiating a request for interconnection to the grid to the start of commercial operations has more than doubled to 55 months in 2024 from less than two years duringin the period from 2000-2007, to more than four years from 2018-2023.2008. Bloom Energy Server systems can be configured as on-site fully-islanded, microgrid solutions that are not interconnected to the grid, which often can provide a customer power in months instead of years. ManyIn many markets, utilities have informedacknowledged datadelays centerin andserving manufacturinglarge customersload thatcustomers, theywhich cannotwe interconnectbelieve for a period of years because the utility has no power available to serve a customer’s needs, thus makingmakes the Bloom Energy Server system an attractive alternative. In addition, our fully-islanded microgrid solutions can provide power on-site, without the need for costly transmission and distribution system upgrades that often are required before a customer can interconnect to the electrical grid. We are seeing greater interest in fully-islanded, microgrid solutions among data center customers because of these interconnection-related delays. If a customer desires back up power or a “grid parallel” solution in combination with the Bloom Energy Server system, required interconnection studies and lengthy interconnection queues may remain, eroding the time to power value proposition.solution.

Our islanded microgrid solutionsolutions allow data center and other customers the ability to skip the interconnection queue and start construction. A key to this solution is that our Be FlexibleTM load following capability allows us to follow a customer’s variable loads without the need to import power from the transmission grid. We believe avoiding lengthy interconnection queues is key to unlocking time to power for our customers. Our islanded microgrid solution also creates ratepayer savings by reducing congestion charges resulting from constraints on the transmission grid and avoiding the need for network transmission investments and upgrades that may be allocated to all ratepayers. In addition to our distributed generation microgrid solution serving a single customer, utility companies can employ it to serve as an energy transmission asset, helping utility companies to serve their customers while avoiding the costs of new transmission and distribution infrastructure.

Our utility customers are recognizing the challenge of keeping pace with the growing demand for power. Aging infrastructure, coupled with transmission and distribution bottlenecks, are making it more difficult for utilities to integrate additional sources of energy to add capacity. Building new transmission and distribution infrastructure is expensive, takes many years, and would likely cause utility rates to increase. As demand for power continues to grow, utility companies are struggling to meet the soaring demand of data centers, while customers’ time to power becomes increasingly important. Utility companies are exploring alternative means of producing and supplying energy to their end customers, including our Energy Server systems. We entered into multiple agreements with utilities in 2024, including a landmark 1 GW supply agreement with a customer that included a 100 MW order in 2024. We expect more utility customers in the future to supplement their power generation with the Bloom Energy Server system. As we work to reduce our product costs, and with utility rates expected to increase with new significant infrastructure investments projected to be needed over the next five years to meet rapid demand growth, we expect our energy solutions to become more cost competitive in more countries, communities, and industries around the world.

The imbalance between power demand and supply has contributed to utilities seeking alternative sources of power to supply to their end customers. Utilities have been unable to meet this demand through the deployment of renewable sources of energy such as solar and wind power. Bloom Energy Server systems can be installed at the utility’s point of distribution or directly on the customer’s site. The energy produced by our systems can be utilized by utilities to provide power to a specific customer or customers or may be used by customers generally. As demand for power continues to grow, and time to power becomes increasingly important, utilities are exploring alternative means of producing and supplying energy to their end customers, including our Energy Server systems. We entered into multiple agreements with utilities in 2024, including a landmark 1 GW supply agreement with aAmerican customerElectric Power (AEP) that included a 100 MW order in 2024. WeIn expect2025, morewe utilitybegan customersworking inwith AEP to deploy projects across the futureservice toterritory supplementas well as the project development landscape broadly through their powercapacity generationas with the Bloom Energy Server system. Increasing the supply of available power can allow utilities to encourage end customers to remain in their current locations rather than relocating to areas where power is more available. In addition, co-locating our Energy Server systems on-site with large loads, can enableboth a utility to provide power to a large energy user without impacting its rate basechannel and providingfinancing the onsite power as an islanded microgrid can avoid interconnection studies and wait times.partner.

The timing of the development of hydrogen and the hydrogen market ecosystem is relevant to our business as it is a fuel that can be utilized in our Energy Server systems that support decarbonization efforts and we have an electrolyzer technology to produce hydrogen. The interest, investment, and stimulation of clean hydrogen in the U.S., Europe and in many other regions across the globe have not yet had significant impacts on the supply of hydrogen. To date, while the number of proposed hydrogen production projects has grown rapidly, only a small fraction has reached the final investment decision stage, and an even smaller fraction has been deployed. In addition, the infrastructure needed to transport hydrogen, whether through pipelines or maritime or land-based tankers, is currently only sufficient for existing uses, and has not begun to be significantly extended for anticipated future uses, with hydrogen blending and other approaches remaining at pilot stages. It remains unclear whether regulators in some jurisdictions will allow hydrogen to be introduced into gas distribution systems, which could limit our customers’ ability to transport hydrogen from the point of production to the point of consumption. Additionally, while U.S. Treasury Department rules regarding the use of market-based renewable energy have been clarified, hurdles remain that could makehinder itthe morelarge-scale difficultdevelopment of hydrogen projects. Finally, the OBBBA significantly reduces the ITC for hydrogen projectsunder toSection scale significantly, and uncertainty exists45V as potentialit changes may be sought byterminates the newSection U.S.45V federalcredit administrationfor andprojects U.S.that Congress.begin construction after December 31, 2027.

Many of the factors discusseddiscussed, aboveincluding the development size, scale and complexity, permitting and financing timelines for many projects and the number of discreet parties involved have lengthened the selling cycles for our products and we have experienced delays in our anticipated bookings as a result. Our revenue, margins, and cash flow in any given year are dependentdepend on bookings duringfrom previousprior years inas additionwell toas currentcurrent-year bookings. Historically, the majority of our bookings have occurred in the second half of the year, with a significant portion occurring in the fourth quarter,quarter; andhowever, this occurredhistorical oncedynamic againcould inbe 2024.changing However,due ifto athe substantialtime-to-power portionneeds of our anticipated bookings are delayed beyond our expectations, our revenue, margins,customers and cashthe flowaccelerating inbuildout aof particularAI perioddata couldcenters bedriving materiallylarge adversely impacted.deals.

Supply Chain Constraints and Trade Tariff Uncertainties

In fiscalprevious year 2024,years, our installation projects experienced some delays relatingrelated to, among other things,factors, permitting, utility delays,coordination, and access to customer facilities. However,While thesewe continued to make progress in streamlining our installation and maintenance processes, we did experience certain project‑specific delays didduring not2025. significantlyThese impactdelays ourunderscored revenue.the operational complexities inherent in coordinating large deployments with multiple external stakeholders. If we are delayed in or unable to perform maintenance, our previously installed products would likely experience adverse performance impacts, including reduced output and/or efficiency, which could result in warranty and/or guaranty claims by our customers. If we experience a significant increase of product failure in the future, our service expense may increase and we may fail to achieve the performance commitments to our customers, which could result in warranty and/or guaranty claims. Additionally, product failure and service costs may increase as we initially deploy new applications for our Energy Server system, including Be FlexibleTM load following, CCUS, and CHP.

As we grow our business globally and increase the size and number of customer orders, we will need to secure new customer financing options, and we will need to increase the amount of financing available as well as the number of financing partners. As we offer an innovative new technology solution, obtaining new financing partners and available funds for customer financings often involves a rigorous and timely due diligence process on our technology, manufacturing and service capabilities. IfWhile we arewere unablesuccessful in securing a new financing arrangement with Brookfield Asset Management (“Brookfield”) in the third quarter of 2025 (refer to obtainPart adequateII, Item 8, Note 7—Investments in Unconsolidated Affiliates), in light of the potential power needs for AI data center sites and resultant mega-watt size, additional financing for our customers who desire to use third-party financing rather than purchasing the Energy Server systems for their own balance sheet, our revenue couldwill be delayed or impacted. In addition, our ability to arrange financing for our products depends partly on the creditworthiness of our customers, and deterioration of our customers’ credit ratings could impact this financing. When interest rates rise, the cost of financing for our customers also increases, and the financiers of our installations demand a higher rate of return, putting pressure on our margins.required.

Strategic InvestmentPartnership

There were no material changes in risk factors as disclosed in our 2025 Form 10-K.10-K, except as set forth below:

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors including those discussed in the section titled "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“2025 Form 10-K”), as well as those described from time to time in our others filings filed with the Securities and Exchange Commission. Moreover, weWe operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements we may make in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur. Actual results, events or circumstances could differ materially and adversely from those described or anticipated in the forward-looking statements.

Global freight and logistics markets remained volatile during the first quarterhalf of fiscal year 2026, with continued pressure on ocean, ground and specialized heavy-equipment transportation rates. While transportation availability improved relative to peak levels experienced in prior years, higher fuel prices, labor costs, and routing inefficiencies related to geopolitical conditions contributed to elevated logistics costs. GivenIn theaddition, size,on weight,a selective basis we also incurred higher logistics costs in connection with expediting deliveries of materials and modularsupplies configurationby ofair Bloomcarrier to manufacture, and deliver our Energy Server systems and related balance‑of‑plant components, changes in freight pricing can meaningfully affect our cost of revenues and project-level margins, particularly for large multi-megawatt deployments and international shipments. We continueproducts to pursuemeet mitigationcustomer strategies including negotiating indexed freight arrangements where feasible, optimizing factory-to-site routing, consolidating shipments, and increasing regional sourcing; however, there can be no assurance that such actions will fully offset future freight rate increases, especially in periods of elevated demand or fuel price volatility.timelines.

Commodity input pricing remained an important factor affecting our cost structure during the first quarterhalf of fiscal year 2026. Certain raw materials and components used in our fuel cell stacks, power electronics, structural assemblies, and balance‑of‑plant systems—including steel alloys, specialty metals, electronic components, natural gas‑linked inputs, and rare earth‑dependent materials— experienced price fluctuations. While we do not generally purchase commodities directly at spot prices, supplier pricing may reflect changes in underlying commodity indices over time. Increases in commodity prices may not be immediately recoverable through customer pricing due to contractual arrangements, competitive dynamics, or fixed‑price project structures, creating potential margin pressure. We utilize supplier diversification, long‑term sourcing agreements, inventory planning, and selective contractual pass‑through mechanisms where available to mitigate commodity cost risks; however, sustained or rapid commodity price increases could adversely affect our results of operations.

Inflationary Pressures on ManufacturingParts and Service CostsLabor

Although headline inflation moderated compared to prior periods, inflationary pressures persistedhave continued to persist across several cost categories relevant to our business during the first quarterhalf of fiscal year 2026, including certain electrical parts and components, labor, manufacturing services,and field installation and long‑term service operations.services. Wage inflation in skilled manufacturing and technical field labor categories, coupled with higher costs for third‑party contractors, continued to exert upward pressure on our operating expenses and cost of revenues. In addition, increases in insurance, regulatory compliance, and professional services costs contributed to higher overhead compared to prior periods. General inflationary impacts on labor and services are passed on to us by our suppliers through increased prices for parts. We seek to manage inflationary impacts through productivity initiatives, automation, supplier negotiations, selective price adjustments, and ongoing cost‑reduction programs. However, the timing and extent of these mitigations may not fully align with the pace of cost increases, particularly in periods of rapid scale‑up or accelerated deployment schedules.

As of MarchJune 31,30, 2026, and December 31, 2025, we had unrestricted cash and cash equivalents of $2,491.4$2,666.9 million and $2,454.1 million, respectively. Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds of $2,431.0$2,218.8 million and $2,386.6 million as of MarchJune 31,30, 2026, and December 31, 2025, respectively. We seek to maintain these balances with high credit quality counterparties, regularly monitor the amount of our credit exposure to any one issuer and diversify our investments in order to minimize our exposure.

As of MarchJune 31,30, 2026, and December 31, 2025, we had $2,598.7$2,475.4 million and $2,613.7 million of recourse debt, $4.0$2.6 million and $4.2 million of non-recourse debt, and $9.2 million and $10.0 million of other long-term liabilities, respectively. As of MarchJune 31,30, 2026, and December 31, 2025, $4.0$7.3 million and $4.2 million of our debt were classified as short-term, respectively, and $2,598.7$2,470.7 million and $2,613.7 million of our debt were classified as long-term, respectively. For a complete description of our outstanding debt, please see Part I, Item 1, Note 8—Outstanding Loans and Security Agreements in this Quarterly Report on Form 10-Q.

In October 2025, in connection with our partnership with Oracle to provide on-site solid state power for AI data centers, subject to the negotiation of a warrant mutually acceptable to us and Oracle, we agreed to issue to Oracle a warrant (the “Warrant”) to purchase up to an aggregate of 3,531,073 shares of our common stock, with an exercise price of $113.28 per share, which was the closing market price of our common stock on October 28, 2025. We and Oracle agreed that (i) the expiration date of the Oracle Warrant willwould be six (6) months from the date of the issuance of the Oracle Warrant, (ii) the Oracle Warrant willwould include customary anti-dilution adjustments, transfer restrictions and exercise procedures, and (iii) the Oracle Warrant willwould not entitle the holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise and settlement of the Oracle Warrant. The Oracle Warrant and the shares underlying the Oracle Warrant arewere expected to be issued in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

For information on a senior secured multicurrency revolving credit facility (the “Revolving Credit Facility”) which we entered into on December 19, 2025, see Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, section Revolving Credit Facility in our 2025 Form 10-K. As of MarchJune 31,30, 2026, and December 31, 2025, no amounts were drawn under the Revolving Credit Facility. As of June 30, 2026, the $90.0 million letter of credit sub-facility under our Revolving Credit Facility was fully utilized, reducing our available borrowing capacity to $510.0 million.

The combination of our cash and cash equivalents and cash flow expected to be generated by our operations is expected to be sufficient to meet our anticipated cash flow needs for at least the next 12 months. If these sources of cash are insufficient or not received in a timely manner to meet our near-term or future liquidity needs, we may require additional equity or debt financing to fund our operations, manufacturing capacity, product development, and market expansion initiatives, as well as to respond to competitive pressures or strategic opportunities. We may, from time to time, engage in a variety of financing transactions for such purposes, including factoring our accounts receivable. There were no factoring arrangements during the three and six months ended MarchJune 31,30, 2026 and 2025. We may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional financing may limit our financial and operational flexibility. Although we currently do not have any floating-rate notes on our balance sheet, our overall cost of capital may increase if interest rates rise and we refinance our fixed-rate convertible notes. If we raise additional funds through the issuance of equity or equity-linked securities, our existing stockholders could experience dilution in their ownership percentage, and any new securities may have rights, preferences, and privileges senior to those of our common stock.

Our operating activities consisted of net income adjusted for certain non-cash items plus changes in our operating assets and liabilities or working capital. Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026, was primarily due to business‑driven changes in working capital totaling $41.3$88.2 million. These changes included:

These•A movements were partially offset by (i) a $53.9$36.5 million benefit from the timing of vendor payments, and (ii) a $7.3 million decreaseincrease in deferred cost of revenue as associated systems reached acceptance milestones during the reporting quarter.

Net cash provided by operating activities for the threesix months ended MarchJune 31,30, 2026, was $73.6$300.0 million, representing a $184.3$623.8 million increase compared to the prior year period. The year-over-year change in operating assets and liabilities was primarily driven by: (i) an increase of $63.1$172.3 million attributable to contract assets, (ii) an increase of $49.1$167.7 million attributable to accounts payable and accrued expenses, (iii) an increase of $126.2 million attributable to prepaid expenses and other current assets, (iii) an increase of $37.0 million attributable to accounts payable and accrued expenses, (iv) an increase of $23.7 million attributable to other long-term assets, (v) an increase of $23.0 million attributable to inventories, (vi) an increase of $18.7$122.4 million attributable to deferred revenue and customer deposits, (viiv) an increase of $9.5$95.8 million attributable to other long-term assets, and (vi) an increase of $9.9 million attributable to deferred cost of revenue, partially offset by (a) a decrease of $40.3 million attributable to accounts receivable, and (viiib) ana increasedecrease of $2.6$27.5 million attributable to deferred cost of revenue.inventories. These working‑capital variances represent gross movements and therefore do not reconcile directly to the total year‑over‑year change in net cash provided by operating activities, which also reflects non‑cash adjustments and other operating items included in the reconciliation from net income to operating cash flows.

Our investing activities have consisted of capital expenditures, including investments to increase our production capacity, and investments in unconsolidated affiliates. Cash used in investing activities during the threesix months ended MarchJune 31,30, 2026, was $45.9$100.5 million, an increase of $31.7$79.1 million compared to the prior year period. The increase was primarily due to a $19.8$22.8 million investment in the joint ventures between the Company and Brookfield (see Part I, Item 1, Note 7—Investments in Unconsolidated Affiliates in this Quarterly Report on Form 10-Q), and a $11.9$56.3 million increase in expenditures on tenant improvements for a leased engineering and manufacturing facility in Fremont, California, which opened in July 2022. We expect to continue to make capital investments to expand production capacity at our manufacturing facilities in Fremont, California and Delmarva, Delaware. These investments, which include the purchase of new equipment and tenant improvements, are part of our strategic plan to continually increase capacity to meet orders and customer deliver requirements. The magnitude and timing of these capital expenditures will depend on implementation milestones, supplier lead times, and customer demand. We intend to fund these capital expenditures from cash on hand as well as cash flow expected to be generated from operations. We may also evaluate and arrange equipment lease financing to fund these capital expenditures.

Our financing activities consist of payment of debt and debt issuance costs, repayments of/proceeds from financing obligations, proceeds from issuance of our common stock, payment of dividends and other cash flows from financing activities. Net cash provided by financing activities during the threesix months ended MarchJune 31,30, 2026, was $7.1$8.3 million, an increase of $1.9$10.2 million compared to the prior year period, predominantly due to (i) a $8.2$15.5 million increase in proceeds from issuance of common stock, partially offset byand (iii) ana increasedecrease in cash outflows of $0.8$1.2 million for repayment of debt and debt issuance costs, andpartially (ii)offset by a $5.3$6.4 million increase in repayment of financing obligations.

Net cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026, consisted primarily of (i) the proceeds from issuance of common stock of $15.8$23.2 million, (ii) the repayment of financing obligations of $8.0$11.8 million, (iii) repayment of debt of $1.3 million, (iv) payment of dividends of $0.9 million, and (iiiv) payment of debt issuance cost of $0.8 million.

We believe we have sufficient capital to operate our business over the next 12 months. Our working capital was strengthened with the supplemented liquidity through issuing the 0% Notes, the 3.0% Green Notes due June 2029, and the 3.0% Green Notes due June 2028 in the fourth quarter of fiscal year 2025, the second quarter of fiscal year 2024, and the second quarter of fiscal year 2023, respectively, as well as financing activities with SK ecoplant in the first quarter of 2023.Notes. In addition, we may still enter the equity or debt market as needed to support the expansion of our business. Please refer to Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, and Part I, Item 1A, Risk Factors—Risks Related to Our Liquidity—Our indebtedness, and restrictions imposed by the agreements governing our outstanding indebtedness, may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs in our 2025 Form 10-K, for more information regarding the terms of and risks associated with our debt.

Our customers have several purchase alternatives for our Energy Server systems. The portion of total revenue attributable to each purchase option for the three and six months ended MarchJune 31,30, 2026 and 2025, was as follows:

As of MarchJune 31,30, 2026, and December 31, 2025, we had incurred no liabilities due to failure to repair or replace the Energy Server systems pursuant to any performance warranties made under the O&M Agreements (“O&M Agreements”).

For the O&M Agreements that are subject to renewal, our future service revenue from such agreements are subject to our obligations to make payments for underperformance against the performance guaranties, which are capped at an aggregate total of approximately $583.3$846.1 million (including $473.2 million related to portfolio financing entities and $110.1$372.9 million related to all other transactions, and include payments for both low output and low efficiency) and our aggregate remaining potential payment related to these underperformance obligations was approximately $470.9$468.9 million as of MarchJune 31,30, 2026. For the three and six months ended MarchJune 31,30, 20262026, we made performance guarantee payments of $5.4 million and $13.8 million, respectively. For the three and six months ended June 30, 2025, we made performance guarantee payments of $8.4$3.0 million and $11.6$14.6 million, respectively.

There were no significant changes in our international channel partners during the three and six months ended MarchJune 31,30, 2026. For information on international channel partners, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, section International Channel Partners in our 2025 Form 10-K.

A discussion regarding the comparison of our financial condition and results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, is presented below.

Total revenue increased by $425.0$664.1 million,million and $1.1 billion, or 130.4%,165.5% and 149.8%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior yearyear. period. ThisThe increase was primarily driven by a $441.5 million increase inhigher product revenue, which increased by $638.8 million and $1.1 billion, an $8.3 million increase in service revenue,revenue by $14.6 million and $22.9 million, and an increase in installation revenue by $13.6 million and $5.9 million, respectively. These increases were partially offset by a $17.1 million decreasedecreases in electricity revenue,revenue of $2.9 million and a $7.7$19.9 million decreasefor inthe installationthree revenue.and six months ended June 30, 2026, respectively.

Product revenue increased by $441.5$638.8 million,million and $1.1 billion, or 208.4%,215.4% and 212.5%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior year period.year. The increase was primarily due to stronger demand for our Energypower Server systemssolutions to meet the time‑to‑power needs of a growing market, drivenincluding largelya bysignificant deployment for a large AI infrastructure customer and multiple projects executed through the joint venture with Brookfield, including a major hyperscaler project.Brookfield.

Service revenue increased by $8.3$14.6 million and $22.9 million, or 15.6%,26.8% and 21.2%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior year period.year. The increase was primarily drivenattributable byto higher revenue from maintenance contracts associated with our fleet of Energy Server systems, which contributed $9.4$17.3 million,million and $26.7 million for the three and six months ended June 30, 2026, respectively. This increase was partially offset by higher product performance guarantee costs of $1.6$3.0 million.million and $4.6 million for the same periods.

Electricity revenue decreased by $17.1$2.9 million and $19.9 million, or 63.3%,22.3% and 50.1%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The decrease for the three months ended MarchJune 31,30, 2026, comparedwas primarily due to thelower priorstraight-line yearelectricity period.revenue resulting from repowering of certain Managed Services related sites. The decrease for the six months ended June 30, 2026, was predominantly due to a one-time settlement of a customer contract after redeploying assets for our partner in the first quarter of fiscal year 2025, as well as lower straight-line electricity revenue resulting from repowering of certain Managed Services related sites.

Total cost of revenue increased by $288.2$415.7 million and $703.9 million, or 121.4%,141.3% and 132.4%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior year period.year. The increase was primarily driven by a $289.7 million increase inhigher cost of product revenue, awhich $1.8increased by $395.2 million and $684.9 million, an increase in costsinstallation cost of installationrevenue revenue,by $14.6 million and a$16.4 $0.8million, millionand an increase in service cost ofrevenue serviceby revenue,$6.7 million and $7.5 million, respectively. These increases were partially offset by a $4.0 million decreasedecreases in electricity cost of electricityrevenue revenue.of $0.9 million and $4.9 million for the three and six months ended June 30, 2026, respectively.

Cost of product revenue increased by $289.7$395.2 million and $684.9 million, or 207.5%,198.9% and 202.4%, for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior year period.year. Product costs increased primarily due to higher sales volumes driven by increased demand for our Energypower Serversolutions, systems,an increase in product warranty, and an increase in productstock-based warranty.compensation. The increase was partially offset by ongoing(i) improvements in manufacturing efficiency and automation that reducedlower material, labor, and overhead costs.costs resulting from ongoing manufacturing efficiency improvements and increased automation and (ii) the recognition of a $37.4 million recovery of previously paid import tariffs during the period.

Cost of electricity revenue decreased by $4.0$0.9 million and $4.9 million, or 34.9%,11.4% and 25.5%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The decrease for the three months ended MarchJune 31,30, 2026, comparedwas primarily due to the priorreduction yearin period.the number of installed units. The decrease for the six months ended June 30, 2026, was mainly due to (i) redeploying assets for our partner to enable a one-time settlement of a customer contract in the first quarter of fiscal year 2025, and (ii) the reduction in the number of installed units.

Gross profit increased by $136.8$248.4 million inand $385.3 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior year period.year. This increase was predominantly driven by a $151.8$243.6 million and a $395.4 million increase in product gross profit, and a $7.5$7.8 million and a $15.4 million increase in service gross profit, partially offset by a $13.0$2.0 million and a $15.0 million decrease of electricity gross profit, and a $9.5$1.0 million decreaseand a $10.5 million increase of installation gross margin.loss.

Product gross profit increased by $151.8$243.6 million inand $395.4 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the corresponding periods in the prior year period.year. The increase was primarily drivenattributable byto (i) anincreased increase inproduct demand driven by a significant deployment for oura products,large largelyAI resultinginfrastructure fromcustomer and multiple projects executed through theour joint venture with Brookfield, including our major hyperscaler project, andBrookfield; (ii) ourthe continuedrecognition effortsof toa reduce$37.4 million recovery of previously paid import tariffs; and (iii) lower material, labor, and overhead costs throughdue enhancedto ongoing manufacturing processesprocess improvements and increased automation. The overall increase was partially offset by an increase in product warranty.