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(1)

Includes change in fair value of convertible notes, derivative liabilities, and SAFEs, which were $5.7 billion, $5.2 billion, $9.2 
billion, $14.2 billion, $12.8 billion, and $59.6 billion for the three months ended March 31, 2025, June 30, 2025, September 30, 
2025, December 31, 2025, March 31, 2026, and June 30, 2026, respectively, primarily driven by an increase in the fair value of 
our  outstanding  convertible  promissory  notes  resulting  from  an  increase  in  our  enterprise  valuation  during  each  of  the 
respective periods.

(2) Relates to non-cash charges from our donation matching program, the value of which is linked to employee equity awards and 

recorded in other operating and administrative expenses.

(3) Excluded from our calculation of Adjusted Net Income (Loss) as it is not indicative of ongoing operations.

Liquidity and Capital Resources

Since  inception,  we  have  financed  our  operations,  corporate  investments,  and  capital  expenditures  primarily 
through  proceeds  from  the  issuance  of  convertible  promissory  notes,  redeemable  convertible  preferred  stock, 
cash  generated  from  sales,  and  SAFEs.  To  date,  we  have  financed  our  compute  and  infrastructure  primarily 
under arrangements with our CSPs, as well as through proceeds from the financing activities described above 
and cash generated from operations. As of June 30, 2026, we had cash and cash equivalents of $112.4 billion, 
$19.3 billion of short-term investments, and $3.2 billion available under the Credit Facility, as described below. 
Cash and cash equivalents consist of cash held in checking and interest-bearing accounts, money market funds, 
and other highly liquid investments with original maturities of three months or less from the date of purchase.

We have generated losses from our operations, as reflected in our accumulated deficit of $132.9 billion, which 
includes $113.2 billion related to changes in the fair value of our convertible notes driven by increases in our 
enterprise valuation and derivative liabilities since 2023, including $72.4 billion during the six months ended 
June 30, 2026. Additionally, we have generated negative cash flows from operating and investing activities in 
2023,  2024,  and  2025,  driven  by  ongoing  expenditures  to  support  business  growth  including  investments  to 
secure  access  to  more  compute  and  infrastructure  capacity.  We  continue  to  invest  in  our  own  data  center 
infrastructure and enter into compute and infrastructure capacity arrangements to support anticipated demand 
for our intelligence service. Given the long lead times between contracting for, purchasing, or leasing compute 
and  that  compute  becoming  available  to  serve  workloads,  we  secure  these  arrangements  well  in  advance  of 
anticipated  demand.  To  secure  certain  data  center  development  projects,  which  require  significant  capital 
commitments  in  advance  of  deployment,  we  have  in  some  cases  relied,  and  expect  to  continue  to  rely,  on 
arrangements  with  financing  sources  or  partners  who  guarantee  the  lease  obligations  to  support  the 
development of data center capacity that is expected to host such partner’s chips or computing infrastructure. 
Our  ability  to  expand  compute  and  infrastructure  capacity  through  these  arrangements  in  the  future  may 
depend on the continued willingness and ability of a limited number of CSPs, partners, and financing sources to 
enter into and perform under such arrangements. In some cases, we may also make payments in advance of the 
delivery of the equipment or infrastructure. We anticipate making significant and increased investments for the 
foreseeable  future,  including  for  owned  or  leased  compute  and  infrastructure  in  advance  of  delivery.  These 
investments  help  ensure  we  have  the  technological  resources  to  maintain  and  expand  our  position  at  the 
frontier of AI.

Our increasing efforts to build out our compute and infrastructure require substantial capital expenditures and 
are  changing  the  cash  flow  profile  of  our  business.  Whereas  the  compute  purchased  through  our  CSP 
arrangements is generally paid as the compute becomes available to us, we expect an increasing portion of our 
compute  and  infrastructure  investment  to  take  the  form  of  capital  expenditures  and  other  commitments, 
including  lease  obligations,  that  require  significant  upfront  payments  well  in  advance  of  the  related  compute 
becoming operational. We expect our capital expenditures to increase significantly as we expand our build-out, 
and we expect these investments to result in significant net cash used in operating and investing activities for 
the  foreseeable  future.  Our  net  cash  used  in  these  activities  may  increase  regardless  of  whether  our  financial 
performance  improves.  The  magnitude  and  timing  of  these  investments  are  inherently  uncertain  and  may 
change materially over short periods, including as a result of decisions to accelerate or expand our build-out, 
and  such  changes  could  rapidly  and  significantly  affect  our  cash  flows  for  a  given  period. In  addition,  these 
investments are subject to known trends and uncertainties that could adversely affect our results of operations. 
The  compute  and  chips  necessary  for  frontier  model  development  are  available  from  a  limited  number  of 
suppliers  and  geographies  and  are  subject  to  intense  competition,  supply  constraints,  and  evolving  export 
controls,  and  we  have  historically  operated  in  a  compute-constrained  environment  in  which  demand  for 
compute has exceeded the supply available to us. In addition, certain of the CSPs and chip partners on which we 
rely provide us capital or credit support, serve as our infrastructure vendors, and develop and offer AI models 

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