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

•Our supply chain is long, complex, and global, with many interdependencies. Any significant fluctuations ofin supply and demand or disruption to our supply chain may harm our ability to manufacture and deliver our products to our customers.

We have experienced significant growth in a short period of time. Our revenue increased from $290.3 million for the year ended December 31, 2024 to $510.0 million for the year ended December 31, 2025, and $193.4to $373.5 million in the threesix months ended MarchJune 31,30, 2026. We may not achieve similar growth rates in future periods. You should not rely on our results of operations for any prior quarterly or annual periods as an indication of our future operating performance. If we are unable to maintain adequate revenue growth, our financial results could suffer, and our stock price could decline.

We incurred net lossesloss of $14.0$450.5 million and $23.9net income of $309.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and net loss of $464.5 million and net income of $285.6 million for the six months ended June 30, 2026 and 2025, respectively, and have a history of generating net losses. We incurred core net loss of $2.5$6.9 million and $14.7core net loss of $40.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and core net loss of $9.4 million and core net loss of $55.3 million for the six months ended June 30, 2026 and 2025 after excluding the impact of stock-based compensation expenseexpense, pass-through revenue and costs, amortization of customer warrant assets and other one-time adjustments from our GAAP net loss. For more information and for a reconciliation of core net loss to net loss, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures.” As of MarchJune 31,30, 2026, we had an accumulated deficit of $919.3$1.4 million.billion. These losses and our accumulated deficit are a result of the substantial investments we have made to grow our business. We expect our costs will increase over time and our losses may continue if such increases in costs are not more than fully offset by increases in our revenue. We expect to continue to invest significant additional funds in expanding our business and research and development activities as we continue to develop new products. We launched our cloud-based inference offering in 2024, which required new investments in cloud infrastructure and data center capacity that we historically did not need for hardware system sales. We expect to significantly increase our investments in cloud infrastructure and data centers to enable growth in our inference service. We also expect to incur additional general and administrative expenses as a result of our growth and expect our costs to increase to support our operations as a public company. Moreover, during the quarter in which the IPO was completed this year, we began recording stock-based compensation expense for RSUs and PRSUs that we have granted to our service providers, which generally vest upon the satisfaction of both service-service-based or market-based and liquidity-based vesting conditions occurring before the award’s expiration date. The liquidity-based vesting condition for such RSUs and PRSUs was satisfied in connection with the IPO, resulting in significant increases to our stock-based compensation expense.

A substantial portion of our revenue is driven by a limited number of customers. Mohamed bin Zayed University of Artificial Intelligence (“MBZUAI”) accounted for 34% and 70% of our total revenue for the three months ended June 30, 2026 and 2025, respectively, and 49% and 47% for the six months ended June 30, 2026 and 2025, respectively. Group 42 Holding Ltd (together with its affiliates, “G42”) accounted for 11%9% and 64% of our total revenue18% for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and in10% and 41% for the threesix months ended MarchJune 31,30, 2026 and 2025, Mohamed bin Zayed University of Artificial Intelligence (“MBZUAI”) accounted for 63% and 24%, respectively, of our total revenue.respectively. In December 2025, we entered into the MRA with OpenAI, which represents a substantial portion of our projected revenues over the next several years.

Further, as of MarchJune 31,30, 2026, threetwo customers accounted for 86%76% of our accounts receivable balance. As of December 31, 2025, one customer accounted for 78% of our accounts receivable balance. This customer concentration increases the risk of quarterly fluctuations in our results of operations and our sensitivity to any material adverse developments experienced by, or in our relationships with, our significant customers. G42 and MBZUAI are considered related parties with respect to each other as defined by Accounting Standards Codification 850, Related Party Disclosures. The loss of, any substantial reduction in sales to, or the default on payments by, any of our significant customers would harm our business, financial condition, results of operations, and prospects.

In June 2026, we entered into a commercial agreement with AWS (“AWS Commercial Agreement”) that provides for a strategic collaboration to deploy a joint compute solution in AWS data centers. The AWS Commercial Agreement, which memorializes the binding term sheet that was entered into in March 2026,Agreement includes an initial multi-year lease of our systems, options for future procurement of products and services, pricing commitments, exclusivity, minimum manufacturing capacity guarantees, and certain other protections in favor of AWS. These commitments may limit our ability to satisfy demand from other customers or prospective customers. In addition, if AWS does not purchase additional products or services under the agreement, we may have excess inventory and manufacturing capacity. Conversely, if AWS purchases additional products and services, as contemplated by our minimum capacity commitments in the AWS Commercial Agreement, AWS may represent a material percentage of our revenue at such time. Any adverse developments in our relationship with AWS, including any delays in the strategic collaboration, reduced sales or AWS’s decision not to purchase products or services beyond the initial lease, or our failure to perform under the AWS Commercial Agreement, would harm our business, financial condition, results of operations, and prospects.

In addition, the size of our data centers, and the total value of such data center contracts, have increased substantially over a short period of time, and may continue to increase in the near future. The types of financing arrangements, corporate structure, contract terms, and risk allocation for our prior data center transactions may not be appropriate for such larger commitments. Breaches or early terminations of data center agreements expose us to substantial damages and early termination fees. Regardless of size, we have limited experience evaluating data center providers, including their ability to build, operate, and finance their properties. In addition, demand for data center capacity is currently very high and in many cases, developers lack demonstrable experience across required phases of data center projects, making accurate assessments of project timing and quality difficult. We have in the past contracted, and may in the future contract, with data center providers that prove to be unsatisfactory, and have had disputes with such providers. Such disputes are and may continue to be costly to us. Any disputes with data center providers, and data center downtime, malfunctions, and delayed ready-for-service dates, have and may again cause us to incur litigation costs, settlement costs, damages, or penalties to our customers for missed service-level agreements or committed delivery dates. Any adverse developments with our data center providers may cause us to miss delivery obligations to our customers and revenue targets, and have a negative impact on our business, financial condition, results of operations, and prospects.

Our offerings include a cloud-based platform, where customers can purchase our AI computing solutions on a consumption-based or dedicated capacity model. This business model is intended to allow customers to choose the solution that best aligns with their budgetary, security, and scalability requirements. The risks and challenges of a cloud-based business model may be different from selling our products for on-premises use. For instance, building and scaling a cloud-based platform requires us to make significant capital expenditures to manufacture more hardware systems, to lease data centers with sufficient power and cooling infrastructures,infrastructure, and to maintain sufficient units on hand, which requires resources to be reallocated from producing units that could otherwise be sold to customers for on-premises use. In order to support a cloud-based business model, we also incur additional IT and personnel costs to service and manage our clusters, including managing and optimizing capacity allocations and utilization rates, as well as rely on third-party infrastructure, such as AWS for certain data transmission needs. The success of our cloud-based offering may further be impacted by our ability to obtain or maintain industry security certifications for our platform and, with respect to public sector customers, our ability to navigate factors such as budget cycles, procurement rules, eligibility criteria, and domestic preference rules. There is no assurance that investments in our cloud-based platform will lead to increased revenue as compared to other business models. In addition, we introduced our cloud-based inference offering in 2024. Such a product presents new and additional risks to us, including substantially increasing the number of users accessing our cloud, which may increase cybersecurity and compliance risk as well as risk of outages due to overcapacity or otherwise.

Data center facilities housing our network infrastructure may also be subject to local administrative actions, changes to legal or permitting requirements, labor disputes, litigation to stop, limit, or delay operations, and other legal challenges, including local government agencies seeking to gain access to customer accounts for law enforcement or other reasons. The imposition of tariffs, regulatory requirements, and increased focus on data sovereignty and data localization requirements around the world could also impact our business model with respect to the storage, management, and transfer of data, and may impact where we choose to lease data centers, which can affect our opportunities for international expansion. Additionally, government authorities have in the past sought to restrict data center development based on environmental considerations and have imposed moratoria on data center development, citing concerns about energy usage, requiring new data centers to meet energy efficiency requirements. We may face higher costs from any laws requiring enhanced energy efficiency measures, changes to cooling systems, caps on energy usage, land use restrictions, limitations on back-up power sources, or other environmental requirements. Because data center agreements tend to have long terms and high upfront costs, any changes in regulations, government actions, customer preferences, or otherwise that occur after an investment is made into a data center could cause significant financial loss. In addition, while we have entered into various agreements for the lease of data center space, equipment, maintenance, and other services, those third parties could fail to deliver on their contractual obligations under those agreements, including agreements to provide us with certain data, equipment, and utilities information required to run our business. Furthermore, we require the data centers we lease to have certain highly specific attributes in order to effectively run our business. For example, these state-of-the-art data centers require networking equipment, high-speed interconnects, enhanced access to power, and liquid cooling infrastructures.infrastructure. In many cases, these third-party data centers are required to undergo extensive retrofitting and improvement efforts, including to incorporate novel developments in our industry, which are time consuming, expensive, and less efficient than if we were to lease from spaces already designed for our operations, and which may not ultimately be successful in meeting all of our requirements. If third parties fail to successfully deliver on such performance requirements, our ability to maintain the performance of our network would be negatively impacted. In addition, if data center operators are delayed in making the facilities available to us, we may not be able to fulfill our customer contractual obligations in a timely manner, causing us financial and reputational harm.

In addition, the MRA with OpenAI and most of our customer agreements and terms of service contain service-level commitments and capacity ramp schedules. If we are unable to meet the stated service-level commitments or capacity ramp schedules due to data center downtime, performance problems, or defects, we may be contractually obligated to provide the affected customers with service credits or refunds, or be subject to breach of contract damages, which could significantly affect our results of operations in the periods in which any issues occur and the credits or refunds are applied or when damages are awarded. As a result of degradation of service and interruptions to our platform, we have provided, and may continue to provide, service credits and/or refunds to certain of our affected customers. Under the MRA, if we experience a certain level of failure with respect to such service levels, OpenAI has the right to terminate a portion of or all of the agreement. We could also face customer terminations with refunds of prepaid amounts, which could significantly affect our results of operations. Any failures to achieve or maintain the performance standards required under the MRA or other customer agreements would harm our business and result in substantial financial penalties, loss of contractual protections, customer dissatisfaction, damage to our reputation, and substantial harm to our business, financial condition, and results of operations.

We plan investment levels for our cloud-based offerings based on estimates of future customer demand and future anticipated rates of growth. In recent periods, our cloud services and license support expenses have grown to meet current and expected demand for our inference solutions, including investments to increase our data center capacity and to establish data centers in new geographic locations. In connection with these investments, we entered, and expect to continue to enter, into long-term lease commitments with third-party data center providers and other significant commitments with suppliers, including investments in scaling up our contract manufacturers. If we underestimate customer demand or our data center capacity needs, we may face shortages of available infrastructure, limiting our ability to support customer growth and potentially causing us to lose business to competitors. Conversely, if we overestimate customer demand or our data center capacity needs, we could be locked into multi-year commitments for excess data center space, or be required to pay significant contract termination fees to early exit such obligations.obligations early. Further, we typically depreciate our assets over their estimated useful lives, which could be shortened should our inference solutions and related strategy change, which could harm our business, financial condition, results of operations, and prospects.

In contrast to the long-term data center commitments, our customer agreements for cloud-based offerings have shorter terms, which makes it more difficult to forecast customer demand. For example, the MRA with OpenAI provides for multi-year initial capacity commitments along with potential multi-year renewal terms, but there can be no assurance that OpenAI will renew these commitments or that we will be able to fully utilize the capacity if OpenAI elects not to renew. Further, the volatility of the industry we operate in makes it difficult for us and our customers to accurately forecast needs. Data centers in geographies that we desire may also be unavailable onwithin the timingtimeframe we require, on commercially reasonable terms, or at all. Under the MRA, unless otherwise agreed to, we are required to deliver capacity tranches across specified numbers of data centers with minimum capacity thresholds per campus, which may constrain our flexibility in selecting data center locations and providers. We are also required to achieve certain physical and cybersecurity requirements at data centers, which could also limit the pool of available data center providers or increase our costs.

We may develop our own data centers in the future, rather than relying on third parties, which may result in additional difficulties. For example, any potential expansion of our data center infrastructure would be complex, and unanticipated delays in the completion of those projects, including permitting, land and construction issues, and availability of componentscomponents, may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of our platform. In addition, there may be issues related to this infrastructure that are not identified during the testing phases of design and implementation, which may only become evident after we have started to fully utilize the underlying equipment, that could further degrade our platform or increase our costs. We would also have to invest in expertise in large scale infrastructure projects and hire appropriate talent that areis different from our current employee base.

In addition to releasing next generation versions of existing products, our business strategy may involve introducing new offerings to the market, which are subject to different risks and uncertainties. There can be no assurance that such new offerings will be broadly accepted. For instance, we released our inference solution in 2024, and if we fail to win broad customer adoption, we will be unable to participate in a significant segment of the AI market. Our customers, in particular for our cloud-based offerings, may also not be able to accurately forecast their AI compute needs. Accordingly, we may not be able to enter into long-term contracts or even if we do, we may be asked by customers to revise contracts later if their circumstances change. If contracts are terminated, breached, or not renewed, we may have large quantities of idle systems in our cloud, that take time to resell. In addition, if market demand for high-speed inference, including for real-time, agent-based, or other similar applications, does not exist or increase as expected, our inference solution may not be successful. The competitive landscape, customer preferences, market pressures, and technical and product challenges for new products or services may be different from our existing offerings. We can provide no assurance that new product offerings will achieve success on a timely basis, or at all. Evolving legal and regulatory landscape may also influence customer preferences. For example, prospective customers may favor closed-source AI model providers who provide indemnification against copyright infringement claims as compared to open source AI models, and such biases may change as the current cohort of AI copyright infringementcopyright-infringement litigation proceed through the courts. If our solutions do not allow us or our customers to comply with the latest regulatory requirements, sales of our solutions and services to existing customers may decrease and new customers will be less likely to adopt our offerings.

Our supply chain is long, complex, and global, with many interdependencies. Any significant fluctuations ofin supply and demand or disruption to our supply chain may harm our ability to manufacture and deliver our products to our customers.

We have grown rapidly since we were founded in 2016. For example, our total headcount has grown to 784 people as of March 31, 2026,grown, and we have employees located in the United States, Canada, India, and other countries. Our customer base has also grown and we expect it to continue to grow. The rapid growth and expansion of our business places a continuous and significant strain on our management, operational, and financial resources.

We rely on a number of internal business processes and IT systems to support key business functions, including our supply chain and inventory management systems, and the efficient operation of these processes and systems is critical to our business. Our business processes and IT systems need to be sufficiently scalable to support the growth of our business and may require modifications or upgrades that expose us to a number of operational risks. As such, our IT systems will continually evolve and adapt in order to meet our business needs. These changes may be costly and disruptive to our operations and could impose substantial demands on management time. These changes may also require changes in our IT systems, modification of internal control procedures and significant training of employees and third parties, as well as other resources. We continuously work on simplifying our IT systems and applications through consolidation and standardization efforts. There can be no assurance that our business and operations will not experience any disruption in connection with this transition. Our IT systems, and those of our third-party IT providers or business partners, may also be vulnerable to damage or disruption caused by circumstances beyond our control including catastrophic events, power anomalies or outages, natural disasters, viruses or malware, cyber-attacks, insider threat attacks, unauthorized system or data modifications, data breaches and computer system or network failures, exposing us to significant cost, reputational harm and disruption or damage to our business. In addition, as our IT environment continues to evolve, we are embracing new ways of communicating and sharing data internally and externally with customers and partners using methods such as mobility and the cloud that can promote business efficiency. However, these practices can also result in a more distributed IT environment, making it more difficult for us to maintain visibility and control over internal and external users, and meet scalability and administrative requirements. If our security controls cannot keep pace with the speed of these changes or if we are not able to meet regulatory and compliance requirements, or if we are unable to address any of the concerns described above, our businessbusiness, financial condition, results of operations, and prospects may be harmed.

While we do not license for profit, sell access to, or otherwise derive revenue directly from the use of AI models, we have trained AI models on publicly available datasets, similar to many other developers of AI models, and released certain of such models to the community under certain open-source licenses. We also provide AI model services to our customers, where we leverage our expertise to help customers train their models with architectures, parameter sizes, and data sets and types of their choosing, which may include publicly available or proprietary data sets or a combination of both. The act of such training necessarily involves transmission and use of certain data on our systems. Like other developers of AI models who are subject to litigation and other disputes arising from the training, fine-tuning, use, or development of AI models, we are currently (see Note 16 - Commitments and Contingencies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and may in the future be subject to lawsuits alleging that we reproduced, copied, displayed, distributed, or made derivative works of, or otherwise misused copyrighted materials to train our or our customers’ AI models without the authorization of the relevant copyright owners, or otherwise infringed third-party proprietary rights in training data, including rights of publicity. However, this remains an unsettled area of U.S. law and U.S. courts are currently weighing a number of lawsuits involving claims that the reproduction of data for training AI models, or the use of AI models trained on copyrighted data, infringes the rights of copyright holders. In addition, we have and may continue to fine-tune certain third-party AI models. While we believe we are in compliance with the applicable license terms of such models, the interpretation of such licenses may vary, and we may be subject to claims that we have violated the terms of such licenses.

From time to time, we may be subject to warranty or product liability claims arising from defects or perceived defects in our products or in third-party components that we integrate into our products, which may lead to significant expenses. If a customer’s equipment fails in use, the customer may incur significant expenses, as well as lost revenue. The customer may claim that a defect in our product caused the equipment failure and assert a claim against us to recover monetary damages, including indirect and consequential damages. The process of identifying a defective or potentially defective product in complex systems may be lengthy and require significant resources, and we may incur significant replacement costs and contract damage claims from our customers. In certain situations, we may consider incurring the costs or expenses related to a recall of one of our products in order to avoid the potential claims that may be raised should a customer suffer a failure due to a design or manufacturing process defect. Any such liabilities may greatly exceed any revenue we receive from the relevant products. Costs, payments, or damages incurred or paid by us in connection with warranty and product liability claims could exceed our product liability insurance coverage, or warranty reserves, and could harm our business, financial condition, results of operations, and prospects.

Prior to the completion of the IPO, we were a private company since our inception and, as such, we did not have the internal control and financial reporting requirements that are required of a publicly traded company. In connection with the preparation of our financial statements, we identified certain material weaknesses in our internal control over financial reporting,reporting includingthat mostexisted recentlyas forof theJune three30, months ended March 31, 2026, and 2025.2026. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

We have identified material weaknesses in our internal control over financial reporting in the past, most recently for the yearperiod ended DecemberJune 31,30, 2025,2026, and cannot assure you that there will not be material weaknesses or significant deficiencies in our internal controls in the future. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs, new internal processes and procedures, and significant management oversight. If any of these new or improved controls and systems do not perform as expected, we may experience further deficiencies in our controls.

Following the Phase Two Effective Date (as defined in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”), the Revolving Credit Agreement (as defined in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) imposes operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions (in each case, subject to certain exceptions) on our ability to:

Immediately following the completion of the IPO, no stockholder or group of stockholders controlcontrols over 50% of the voting power of our outstanding capital stock. However, if in the future a stockholder or group of stockholders controls over 50% of the voting power of our outstanding capital stock, we may be eligible to elect the “controlled company” exemptions to the Nasdaq corporate governance rules for publicly listed companies. If we are a “controlled company,” we would not be required to have a majority of our board of directors be independent, nor would we be required to have a compensation committee or an independent nominating and corporate governance committee. If we chose to take advantage of the “controlled company” status in the future, our status as a “controlled company” could cause our Class A common stock to be less attractive to certain investors and the market price of our Class A common stock could decline.

The price of our Class A common stock has fluctuated and may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

In addition, as of MarchJune 31, 2026, after giving effect to (i) the reclassification of our outstanding Class A common stock into a newly created Class B common stock and the authorization of a new Class A common stock, which occurred in connection with the IPO, (ii) the net issuance of 2,550,477 shares of our Class B common stock issued upon the vesting and settlement of RSUs subject to service-based and liquidity-based vesting conditions outstanding as of May 13, 2026, for which the service-based vesting condition was satisfied as of May 13, 2026, and for which the liquidity-based vesting condition was satisfied in connection with the IPO, and (iii) the conversion of certain shares of and awards for our Class B common stock to shares of or awards for, as applicable, our Class A common stock that occurred in May30, 2026, we had stock options outstanding that, if fully exercised, would result in the issuance of 21,906,818 shares of our Class A common stock and 5,315,618 shares of our Class B common stock and 15,145,010 shares of our Class A common stock and 12,483,860 shares of our Class B common stock issuable upon vesting of outstanding RSUs. We intendhave to file one or more registration statements on Form S-8 under the Securities Act to registerregistered the shares of our common stock subject to outstanding stock options and RSUs, as of the date of our ProspectusRSUs and shares that will be issuable pursuant to future awards granted under our equity incentive plans.plans Onceon weForm registerS-8 theseunder shares,the theySecurities Act. These shares can be freely sold in the public market upon issuance, subject to applicable vesting requirements, compliance by affiliates with Rule 144, and other restrictions provided under the terms of the applicable plan and/or the award agreements entered into with participants.

TheCertain holders of up to an aggregate of approximately 147.7 million shares of our common stock (excluding shares of our Class N common stock issued or issuable upon the exercise of the OpenAI Warrant) have rights, subject to some conditions, to require us to file registration statements for the public resale of shares of the Class A common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file for us or other stockholders. Any registration statement we file to register additional shares, whether as a result of registration rights or otherwise, could cause the price of our Class A common stock to decline or be volatile.

We will incur increasedsignificant costs as a result of operating as a public company, and our management will beis required to devote substantial time to support compliance with our public company responsibilities and corporate governance practices.

As a public company, we will incur significant finance, legal, accounting, and other expenses, including director and officer liability insurance, that we did not incur as a private company, and which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, stock exchange listing requirements, and other applicable securities rules and regulations impose various requirements on public companies in the United States. Our management and other personnel are expected to devote a substantial amount of time to support compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs, including hiring additional personnel, and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.

In December 2025, we entered into a master relationship agreement (the “MRA”) with OpenAI OpCo, LLC (“OpenAI”), under which OpenAI committed to purchase 750MW of AI inference compute capacity and related services, with deployment expected in tranches during 2026 through 2028. OpenAI also has the option to purchase an additional 1.25GW of capacity for deployment by the end of 2030. DuringIn the threefirst monthsquarter ended March 31,of 2026, we began recognizing revenue from the arrangement, and the initial tranche of the warrant issued to OpenAI vested upon the funding of a working capital loan of approximately $1.0 billion (the “Working Capital Loan”) in January 2026. Refer to Note 3 –- Revenue, Note 10 –- Working Capital Loan,Debt, and Note 12 –- Common Stock to our unaudited condensed consolidated financial statements for additional information regarding the OpenAI collaboration, including the revenue arrangement, Working Capital Loan, and warrant, respectively. The Company has to date repaid,repaid a portion of the balance using non-cash service credits and expects to continue to repay,repay the balance using non-cash service credits.

On May 13, 2026, our registration statement on Form S-1 (File No. 333-295145) related to the IPO was declared effective by the SEC, and our Class A common stock began trading on the Nasdaq Global Select Market on May 14, 2026. The IPO was completed on May 15, 2026. As a result, our unaudited condensed consolidated financial statements as of March 31, 2026 do not reflect the impact of the IPO. For additional information, see Note 172 –- SubsequentBasis Eventsof Presentation and Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Hardware revenue consists of sales of our AI systems and other equipment that can be used for both training and inference on-premise.on-premises. We recognize revenue from sales of AI systems when control of the goods transfers to the customer, which generally occurs upon shipment or delivery, depending on shipping terms or upon meeting the contractual acceptance terms. Beginning in the first quarter of 2026, we began recognizing amortization of customer warrant assets as a reduction in revenue. Refer to Note 12 - Common Stock,Stock for additional information on common stock warrants issued to customers. This non-cash reduction in revenue negatively impacts sequential revenue growth trends in the near term.

Customers procure cloud capacity from us through two primary models: Dedicated Capacity and On-Demand. Dedicated Capacity contracts are generally structured as take-or-pay commitments, under which customers pay for dedicated compute capacity irrespective of utilization. We recognize revenue from sales of these cloud-based computing services, including hosted inference, over the service term, as the customer benefits from our services throughout the contract period. Beginning in the first quarter of 2026, we began recognizing revenue for pass-through data center costs due to a customer agreement. Also beginning in the first quarter of 2026, we began amortization of customer warrant assets as a reduction in revenue. Refer to Note 12 - Common Stock,Stock for additional information on warrants issued to customers. This non-cash reduction in revenue negatively impacts sequential revenue growth trends in the near term.

We expect overall gross profit will decreaseincrease in absolute dollars in the near term, drivenprimarily by start-up costs relateddue to expeditinghigher gross profit from Cloud and other services as revenue increases in connection with the availabilitycontinued ramp-up of dedicated cloud capacity to fulfill the significant increase in near-term demand.deployments.

Research and development expenses primarily consist of costs incurred in performing research and development activities and include salaries, stock-based compensation, employee benefits, tape-out costs, which include layout services, mask sets, prototype components, system qualification and testing incurred before releasing new system designs into production, shipping, data center costs, depreciation and amortization, professional services fees, cloud computing, artificial intelligence tooling costs, and facilities expenses. We expense research and development costs as incurred.

We expect research and development expenses to increase in absolute dollar terms as we continue to build new innovations with our wafer-scale technology and to remain competitive in the dynamic AI market. We expect to have significantly higher stock-based compensation expense related to equity awards, including the Executive Grants for our CTO discussed in Note 13 - Stock-Based Compensation, for which the liquidity-based vesting condition was satisfied in connection with the IPO on May 13, 2026. The Company will beginbegan recognizing the stock-based compensation expense for these awards in the second quarter of 2026.

We expect general and administrative expenses to increase in absolute dollar terms as we grow the business and have more employees around the world, and incur additional expenses to operate as a public company, including expenses to comply with rules and regulations applicable to companies listed on a securities exchange, expenses related to compliance and reporting obligations in various jurisdictions, and professional services. We expect to have significantly higher stock-based compensation expense related to equity awards, including the Executive Grants for our CEO as discussed in Note 13 - Stock-Based Compensation, for which the liquidity-based vesting condition was satisfied in connection with the IPO on May 13, 2026. The Company will beginbegan recognizing the stock-based compensation expense for these awards in the second quarter of 2026.

Stock-based compensation expense included $3.9$2.0 million and $1.6$5.9 million for the three and six months ended MarchJune 31,30, 20262026, respectively, and $1.5 million and $3.0 million for the three and six months ended June 30, 2025, respectively, related to secondary transactions in each period. Refer to Note 13 –- Stock-Based Compensation to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion.

Pursuant to our 2016 Equity Incentive Plan (as amended, the “2016 Plan”), our restricted stock units (“RSUs”) vest upon the satisfaction of both service-service-based and liquidity-based vesting conditions. The service-based vesting condition for these awards is generally satisfied by rendering continuous service through the applicable vesting periodperiod, which is generally four years. The liquidity-based vesting condition was satisfied in connection with the IPO. Since the liquidity-based vesting condition had not been satisfied as of March 31, 2026, we had not recorded any stock-based compensation expense for our RSUs at that date.

For such RSUs, we recognize stock-based compensation expense using the accelerated attribution method over the requisite service period if it is probable that the performance conditions will be achieved. ForWe therecognized three$273.6 monthsmillion ended March 31, 2026 and 2025, noof stock-based compensation expense has been recognized for RSUs asduring the liquidity events, as described above, were deemed not probable. As of March 31, 2026, 3,921,423 RSUs had met the service-based vesting condition but not the liquidity-based vesting condition. If a liquidity event had occurred as of March 31, 2026, we would have recognized stock-based compensation expense of $222.1 million, and unrecognized stock-based compensation expense related to RSUs for which the service-based vesting condition had not been satisfied as of March 31, 2026 would have been $769.3 million, which would have been recognized over a weighted-average requisite service period of 2.8 years. In the threesix months endingended June 30, 2026, weassociated expectwith tovested recordRSUs as a cumulative stock-based compensation expense of $366.8 million, determined using the grant date fair valuesresult of the RSUs,satisfaction for which we expectof the service-based vesting condition will be satisfied as of June 30, 2026 and for which the liquidity-based vesting conditionconditions, one of which was satisfied in connection with the IPO. We will record the remaining stock-based compensation expense related to RSUs using the accelerated attribution method over the remaining requisite service period now that the liquidity-based vesting condition is satisfied.

Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

GrossTotal profitrevenue for the three months ended MarchJune 31,30, 2026 wasincreased $86.2by $76.8 million, anor increase of $44.6 million74%, compared to $41.6 million in the same period in 2025. Gross marginRevenue for the threesix months ended MarchJune 31,30, 2026 increased toby 44.6%$170.7 frommillion, 41.8%or 84%, compared to the same period in 2025. The increaseincreases waswere primarily driven by higher hardware gross margin, resulting from lower material costs and improved manufacturing efficiency. In addition, gross margin from cloud and other services was higher dueattributable to higher pricingcustomer consumption, the continued ramp of dedicated cloud capacity and improvedrelated capacityservices, utilization.and Thesehigher increasesrevenue wereunder existing customer arrangements, partially offset by the impacts of amortization of customer warrant assets,assets andas lower-margina pass-throughreduction dataof center revenues.revenue.

Sales and marketing expenses increased by $68.7 million, or 377%, for the three months ended MarchJune 31,30, 20262026, increasedand by $4.4$73.1 million, or 42%,256%, for the six months ended June 30, 2026, compared to the same periodperiods in 2025. The increaseincreases inwere salesprimarily attributable to $75.0 million and marketing$80.0 expensesmillion, wasrespectively, primarilyof dueIPO-related tostock-based a $4.1 million increase in headcount-related costs including commissionscompensation and anrelated increasetax incosts, otherpartially go-to-marketoffset activities.by lower data center cloud spend on trial customers.

General and administrative expenses increased by $85.4 million, or 830%, for the three months ended MarchJune 31,30, 20262026, increasedand by $4.0$89.4 million, or 57%,517%, for the six months ended June 30, 2026, compared to the same periodperiods in 2025. The increaseincreases were primarily attributable to $65.0 million of IPO-related stock-based compensation and related tax costs in generaleach period, as well as higher legal and administrativeother expensesprofessional wasservices, primarilypersonnel-related duecosts, to a $1.7 million increase in headcount-relatedinsurance costs and a $2.0 million in increase in consulting and software subscription costs associated with the Company’s preparationfees to operate as asupport public company.company operations.

Other income, net decreased by $341.4 million, or 93%, for the three months ended MarchJune 31,30, 20262026, decreasedand by $3.8$345.1 million, or 60%,92%, for the six months ended June 30, 2026, compared to the same periodperiods in 2025. The decrease in other income, net was primarily dueattributable to $18.9the non-recurring $363.3 million gain recognized in the prior-year period from the release of the forward contract liability following cancellation of the committed purchase obligation. Other decreases include $19.7 million and $38.6 million, respectively, of non-cash interest expense onrecognized against the Working Capital Loan underand added to deferred revenue as part of the agreementOpenAI witharrangement, OpenAI,as andfurther adiscussed $1.4in millionNote loss10 due- Debt to foreignour currencycondensed transactionconsolidated adjustments.financial statements. The decreasedecreases waswere partially offset by $16.2$43.5 million inand $59.7 million, respectively, from higher interest and dividend income due to higher balances of cash, cash equivalents, and investments.investment balances.

Income tax expense decreased by $1.4 million, or 84%, for the three months ended MarchJune 31,30, 2026 decreasedand $1.6 million, or 47%, for the six months ended June 30, 2026, compared to the same periodperiods in 2025. The decreasedecreases waswere primarily dueattributable to a decrease in currentlower state tax expense ofresulting $0.7from milliontax benefits from employee stock-based compensation deductions in connection with the IPO, partially offset by anhigher increase in non-U.S. current and deferredincome tax expense offor $0.5international million.subsidiaries.

We define Corecore gross profit as gross profit presented in accordance with GAAP, adjusted to exclude pass-through revenue and related data center costs as these are not part of our core technology or service offerings. In addition, we exclude non-cash amortization of customer warrant assets, stock-based compensation expense, and employer payroll tax related to stock-based compensation expense.from the IPO. We present Corecore gross profit because it provides investors and other users of our financial information with additional information to evaluate the value of our hardware delivery to customers, whether through direct hardware sales or cloud services. This measure also provides an additional basis for comparing business performance across companies and periods by excluding the effects of items that may vary for reasons unrelated to core technology and service offerings andthat did not occur in prior periods.

We define Corecore operating loss as loss from operations presented in accordance with GAAP, adjusted to exclude pass-through revenue and data center costs, amortization of customer warrant assets, stock-based compensation expense, and employer payroll tax related to stock-based compensation expense.from IPO. We have presented core operating loss because we consider core operating loss to be a useful metric for investors and other users of our financial information in evaluating our overall operating performance. This metric also provides investors and other users of our financial information with an additional tool to compare business performance across companies and periods, while eliminating the effects of items that may vary for different companies for reasons unrelated to core operating performance.

We monitor core net loss for planning and performance measurement purposes. We define core net loss as net income (loss) presented in accordance with GAAP, adjusted to exclude pass-through revenue and data center costs, amortization of customer warrant assetsassets, stock-based compensation, the extinguishment of forward contract liability, and employer payroll tax related to stock-based compensation expense.from IPO. We have presented core net loss because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance. Our calculation of core net loss does not currently include the tax effects of the stock-based compensation expense adjustment because such tax effects have not been material to date.

As of MarchJune 31,30, 2026, our principal sources of liquidity were cash, cash equivalents, and restricted cash of $2.7$7.4 billion and marketable securities of $515.6$1.2 million.billion. Our cash and cash equivalents primarily consisted of cash deposited in money market or holding accounts with financial institutions. Marketable securities were comprised of investments in U.S. government securities with an original maturity greater than three months at the time of purchase but less than or equal to one year at period-end.

Since our inception, we have financed our operations primarily through sales of common stock and redeemable convertible preferred stock and payments from our customers, including prepayments from customers. On May 15, 2026, we completed the IPO, in which we issued and sold 34,500,000 shares of Class A common stock at $185.00 per share. We received net proceeds of approximately $6.2 billion from the IPO, after deducting underwriting discounts and commissions and estimated offering expenses. As of MarchJune 31,30, 2026, we had an outstanding Working Capital Loan of $982.9$918.2 million related to the remaining principal balance of the Working Capital Loan with OpenAI. Our principal uses of cash in recent periods have been to fund our operations and invest in research and development. As of MarchJune 31,30, 2026, we had an accumulated deficit of $919.3$1.4 million.billion.

We believe that our current cash, cash equivalents, restricted cash, and marketable securities will be sufficient to fund our operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q. Our future capital requirements, however, will depend on many factors, including our growth rate, the portion of our business that comes from cloud services requiring additional capital expense for our systems and related long termlong-term data center obligations, the timing and extent of our sales and marketing and research and development expenditures including personnel costs, capital expenditures for tape-outs of our chip designs, the continuing market acceptance of our products, and the use of cash to fund potential mergers or acquisitions. In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. The sale of additional equity would result in dilution to our stockholders. The incurrence of debt would result in debt service obligations, and the instruments governing such debt could provide for operational and/or financial covenants that further restrict our operations. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected.

Net cash used in operating activities was $54.9$47.5 million for the threesix months ended MarchJune 31,30, 2025,2026, reflecting a net loss of $23.9$464.5 million and a $51.3$142.4 million net use of cash from changes in operating assets and liabilities, partially offset by $20.2$559.5 million of non-cash charges. The net use of cash from changes in operating assets and liabilities was primarily driven by a $159.6 million decrease in customer deposits, a $15.3 million decrease in other liabilities, and a $5.7 million decrease in accounts payable, partially offset by a $56.8 million decrease in accounts receivable, a $53.8 million decrease in inventories, a $15.1 million increase in deferred revenue, and a $3.7 million decrease in prepaid expenses and other assets. Non-cash charges consisted primarily of $9.2$386.6 million of stock-based compensation expense, $4.5$46.3 million of provisionamortization forof productcustomer warranties,warrant $3.9assets, and $42.6 million of depreciation and amortization expense, and $2.9 million of non-cash lease expense, partially offset by $0.3 million of other non-cash adjustments.expense.

Net cash used in investing activities of $236.6$1.3 millionbillion for the threesix months ended MarchJune 31,30, 2026 was the result of $308.8$1.3 millionbillion in purchases of various investments and $132.0$548.9 million in purchases of property and equipment primarily for systems to deliver Cerebras Cloud services, offset by $204.2$514.5 million in maturities and sales of these investments.

Net cash used in investing activities of $56.7$87.3 million for the threesix months ended MarchJune 31,30, 2025,2025 was the result of $98.2$185.1 million in purchases of property and equipment and purchases of $20.2 million in various investments offset by $61.7$118.0 million in maturities and sales of these investments.

Net cash provided by financing activities of $2.0$7.9 billion for the threesix months ended MarchJune 31,30, 2026 was the result of $6.2 billion in proceeds from our initial public offering, net of underwriting discounts and commissions, $1.0 billion net proceeds from the saleissuance of sharesSeries of ourH redeemable convertible preferred stock, $1.0 billion received from the Working Capital Loan from OpenAI, $20.2 million in proceeds from stock option exercises, and $15.0 million in proceeds from issuance of common stockstock, partially offset by $416.7 million of tax withholding related to the tender offer and $5.3the IPO, $12.7 million in proceedspayments fromof stockdeferred optionoffering exercises.costs and other financing activities, and $3.8 million in fees paid for the revolving credit facility.

Net cash provided by financing activities of $1.6$5.1 million for the threesix months ended MarchJune 31,30, 2025 was primarily the result of $1.6$5.2 million in proceeds from stock option exercises.

Operating lease commitments. As of MarchJune 31,30, 2026, our operating lease commitments included data centers and corporate office leases, for which we had fixed lease payment obligations of $460.3$690.3 million. During the three months ended June 30, 2026, we executed non-cancelable lease agreements for additional data center capacity with lease commencement dates in 2026. These agreements are not included in the $690.3 million amount above. In the third quarter of 2026, we entered into additional non-cancelable lease agreements for data center capacity, also with lease commencement dates in 2026. Aggregate undiscounted future minimum lease payments under these agreements total approximately $2.3 billion over the respective lease term. Refer to Note 15 –- Leases and Note 17 - Subsequent Events to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion.

Purchase commitments. As of MarchJune 31,30, 2026, future payments related to non-cancelable commitments for contracts with a remaining term of over one year are as follows: $5.4$3.6 million (remaining 96 months of 2026), $6.2 million (2027), and $0.5 million (2028). Refer to Note 16 –- Commitments and Contingencies to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion.