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Compute  and  infrastructure  expenses  as  a  percentage  of  revenue  decreased  from 251%  to 48% over the same 
period, as revenue growth outpaced the growth of our committed compute cost base.

Personnel

Personnel expenses increased sequentially in each of the quarters presented, driven by headcount growth and 
the associated increases in compensation, including stock-based compensation.

Bartz settlement

In the three months ended September 30, 2025, we recorded a $1.5 billion charge to settle the Bartz litigation. 
See Note 13 to our consolidated financial statements included elsewhere in this prospectus.

Sales, Marketing, and Partnerships

Sales, marketing, and partnerships expenses increased sequentially in each of the quarters presented, with the 
most  significant  increases  observed  in  the three  months  ended  March  31,  2026  and June  30,  2026.  The 
increases  were  primarily  driven  by  fees  paid  to  channel  partners,  reflecting  the  growth  of  our  business,  and 
increased marketing and advertising expenses, reflecting higher media spend to support product launches.

Other Operating and Administrative

Other  operating  and  administrative  expenses  increased  over  the  quarters  presented,  other  than  in  the  three 
months  ended  March  31,  2026,  which  reflected  lower  donation  matching  program  charges  than  in  the  three 
months  ended  December  31,  2025.  The  overall  increase  reflected  vendor  costs  related  to  data  quality  and 
performance  evaluation  services,  information  technology  and  cloud  software  costs,  payment  processing  and 
platform fees, and professional services costs as our business scaled. The increase in the three months ended 
December 31, 2025 was primarily driven by non-cash charges related to our donation matching program.

Operating Income (Loss)

Our  operating  loss  widened  in  the  three  months  ended  June  30,  2025,  primarily  driven  by  the  delivery  of 
additional committed compute under our CSP arrangements, the associated expenses of which grew faster than 
our  revenue  in  the  period,  and  in  the  three  months  ended  September  30,  2025,  which  included  the  Bartz 
settlement. Our operating loss narrowed in the three months ended December 31, 2025 and March 31, 2026, 
and  we  generated  operating  income  of $1.0  billion  for  the three  months  ended  June  30,  2026,  as  revenue 
growth  outpaced  the  growth  in  total  operating  expenses. We  expect  our  operating  results  to  continue  to 
fluctuate  from  quarter  to  quarter,  particularly  as  the  amount  of  incremental  compute  we  receive,  and  the 
associated expenses we incur, may vary from period to period.

Interest Income

Interest income increased sequentially in each of the quarters presented, from $51 million for the three months 
ended March 31, 2025 to $762 million  for  the three months ended June 30, 2026, primarily driven by higher 
average cash and cash equivalents and short-term investments balances.

Change in Fair Value of Convertible Notes, Derivative Liabilities, and SAFEs

Changes in the fair value of our convertible notes, derivative liabilities, and SAFEs resulted in expense in each 
of  the  quarters  presented,  primarily  driven  by  increases  in  the  fair  value  of  our  outstanding  convertible 
promissory  notes  resulting  from  increases  in  our  enterprise  valuation  during  each  period.  The  expense  was 
largest  in  the three  months  ended  June  30,  2026,  reflecting  the  increase  in  our  enterprise  valuation  in 
connection  with  our  Series  H  financing.  We  will  continue  to  recognize  changes  in  fair  value  until  these 
instruments are converted into equity, repaid, or otherwise settled. See Note 4 and Note 9 to our consolidated 
financial statements included elsewhere in this prospectus.

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