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As our compute needs have grown substantially, we are shifting from sourcing compute solely through fixed-
term cloud agreements to a hybrid model that also includes leasing chips directly and hosting them in dedicated 
facilities operated on our behalf. We refer to this additional source of compute as Anthropic Direct, which helps 
to address our scaling compute requirements and provides potential long-term economic advantages of direct 
hosting.  Anthropic  Direct  provides  us  with  a  more  flexible  use  of  capital  by  allowing  us  to  separate  our 
commitments  for  data  center  capacity  from  our  commitments  for  the  AI  accelerators  deployed  inside  them. 
Because  data  centers  require  longer  lead  times  but  represent  a  smaller  fraction  of  total  compute  costs,  this 
approach enables us to secure data center capacity early while deferring larger accelerator investments until our 
specific compute needs are more certain.

Optimizing the utilization of our compute is equally important to our success in satisfying customer demand. 
We  continuously  direct  compute  to  its  highest-value  use  case,  balancing  the  need  to  advance  research  and 
model  development  with  the  need  to  serve  our  customers  and  support  internal  usage  of  Claude.  We  rely  on 
compute efficiencies, such as the discovery of compute multipliers, to get the most out of the compute that we 
procure.  Our  ability  to  effectively  direct  compute  and  drive  compute  efficiencies  will  be  an  important 
determinant of both our pace of innovation and our financial results over time. 

Attracting and Retaining Technical Talent

Advancing the frontier and maximizing the return on our compute investment require that we attract, hire, and 
retain top technical talent. Talent attraction and retention start with our seven co-founders, all of whom have 
remained  with  the  company.  We  believe  our  culture  and  mission  alignment  enable  us  to  hire  and  retain  the 
talent  required  to  continuously  push  the  frontier  of  AI  forward  in  a  safe  and  responsible  way.  We  expect  our 
ability  to  continue  attracting  and  retaining  top  technical  talent  to  remain  a  key  determinant  of  our  pace  of 
innovation and our financial results in future periods.

Our Continued Access to Capital

We  must  make  significant  investments  in  compute  for  research,  model  development,  serving  customers,  and 
internal usage of Claude. Our compute requires substantial upfront commitments and ongoing payments as the 
compute becomes available to us. Our compute commitments will continue to grow as we scale our business. 
Our ability to secure sufficient compute is directly linked to our ability to access capital on favorable terms, such 
as through equity or debt financing or cash flow from operations.

In  order  to  maintain  our  access  to  capital,  we  must  continue  to  demonstrate  that  we  are  able  to  invest  that 
capital in a highly productive way. The best measures of our progress are Claude’s intelligence and capability, 
and customer adoption of Claude. Our ability to convert compute investment into frontier model performance, 
and then increase customer adoption, will be a key determinant of our access to capital.

Our  ability  to  sustain  access  to  capital  depends  in  part  on  demonstrating  a  credible  trajectory  toward 
profitability. Our revenue growth, compute efficiency, and operating efficiency have significantly improved our 
operating margin and Adjusted Operating Margin, but we plan to keep investing heavily, which will adversely 
impact  our  results  of  operations.  Our  compute  commitments  are  substantial  and  generally  must  be  satisfied 
regardless  of  our  revenue  or  utilization,  while  our  access  to  additional  capital  depends  on  a  number  of 
conditions,  many  of  which  are  outside  our  control,  including  market  conditions  and  investor  demand.  In 
addition,  a  portion  of  our  compute  and  infrastructure  build-out  has  been  funded  or  supported  by  capital  or 
credit  support  provided  or  facilitated  by  certain  of  our  CSPs  and  chip  partners.  Our  ability  to  reduce  this 
reliance over time is a function in part of our ability to obtain financing from independent sources on our own 
credit.

Our Ability to Diffuse Claude in the Enterprise

Our financial performance depends on the pace and breadth at which AI, and in particular Claude, is adopted 
across the global economy. While Claude’s capabilities already address a wide range of enterprise use cases, we 
believe  that  enterprise  adoption  remains  nascent.  We  believe  that  our  ability  to  capture  this  opportunity  and 
drive revenue growth in future periods will depend on three dynamics:

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