Bloom Energy Corp

Previous wording

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, we 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.

Current wording

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. We 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.

Previous wording

Global freight and logistics markets remained volatile during the first quarter of 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. Given the size, weight, and modular configuration of Bloom 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 continue to pursue mitigation 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.

Current wording

Given the size, weight, and modular configuration of Bloom 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 continue to pursue mitigation strategies including negotiating indexed freight arrangements where feasible, renegotiating air freight rates, 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.

Previous wording

Commodity input pricing remained an important factor affecting our cost structure during the first quarter of 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.

Current wording

Commodity input pricing remained an important factor affecting our cost structure during the first half 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.

Previous wording

Although headline inflation moderated compared to prior periods, inflationary pressures persisted across several cost categories relevant to our business during the first quarter of 2026, including labor, manufacturing services, field installation and long‑term service operations. 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. 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.

Current wording

Although headline inflation moderated compared to prior periods, inflationary pressures have continued to persist across several cost categories relevant to our business during the first half of fiscal year 2026, including certain electrical parts and components, labor, manufacturing and field installation 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.

Previous wording

As of March 31, 2026, and December 31, 2025, we had unrestricted cash and cash equivalents of $2,491.4 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 million and $2,386.6 million as of March 31, 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.

Current wording

As of June 30, 2026, and December 31, 2025, we had unrestricted cash and cash equivalents of $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 $2,218.8 million and $2,386.6 million as of June 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.

Previous wording

As of March 31, 2026, and December 31, 2025, we had $2,598.7 million and $2,613.7 million of recourse debt, $4.0 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 March 31, 2026, and December 31, 2025, $4.0 million and $4.2 million of our debt were classified as short-term, respectively, and $2,598.7 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.

Current wording

As of June 30, 2026, and December 31, 2025, we had $2,475.4 million and $2,613.7 million of recourse debt, $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 June 30, 2026, and December 31, 2025, $7.3 million and $4.2 million of our debt were classified as short-term, respectively, and $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.

Previous wording

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 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 will be six (6) months from the date of the issuance of the Oracle Warrant, (ii) the Oracle Warrant will include customary anti-dilution adjustments, transfer restrictions and exercise procedures, and (iii) the Oracle Warrant will 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 are 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.

Current wording

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 Warrant would be six (6) months from the date of the issuance of the Warrant, (ii) the Warrant would include customary anti-dilution adjustments, transfer restrictions and exercise procedures, and (iii) the Warrant would 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 Warrant. The Warrant and the shares underlying the Warrant were 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.

Previous wording

On April 9, 2026, we issued the warrant to Oracle pursuant to the previously disclosed strategic partnership agreement. The warrant is fully vested upon issuance, immediately exercisable in whole or in part, at any time during six months from the grant date.

Current wording

On April 9, 2026, we issued the Warrant pursuant to the previously disclosed strategic partnership agreement with Oracle. The Warrant was fully vested upon issuance, immediately exercisable in whole or in part, at any time during six months from the grant date. On May 1, 2026, Oracle performed a cashless exercise of the Warrant. As a result of the cashless exercise, we issued 1,905,433 shares of our common stock on a net basis. Under the terms of the warrant agreement, Oracle could elect either net or gross settlement. Because net settlement would result in 1.4 million fewer shares being issued than a gross settlement, we agreed to issue Oracle an additional 248,798 shares of common stock as an inducement for Oracle to elect net settlement. These incremental shares represented additional consideration with a fair value of $72.3 million.

Previous wording

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 Facilityin our 2025 Form 10-K. As of March 31, 2026, and December 31, 2025, no amounts were drawn under the Revolving Credit Facility.

Current wording

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 Facilityin our 2025 Form 10-K. As of June 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.

Previous wording

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 months ended March 31, 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.

Current wording

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 June 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.

Previous wording

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 three months ended March 31, 2026, was primarily due to business‑driven changes in working capital totaling $41.3 million. These changes included:

Current wording

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 six months ended June 30, 2026, was primarily due to business‑driven changes in working capital totaling $88.2 million. These changes included:

Previous wording

•A $51.9 million increase in accounts receivable and contract assets, which grew due to the timing of milestone billings and customer acceptance cycles.

Current wording

•A $276.7 million increase in accounts receivable and contract assets, which grew due to the timing of milestone billings and customer acceptance cycles.

Previous wording

•A $93.1 million increase in deferred revenue and customer deposits, primarily driven by a higher level of new customer deposits compared to the prior year period. This reflected the timing and mix of system deployments, including a lower proportion of projects without significant upfront billings. Deferred revenue increased modestly compared to the prior year period;

Current wording

•A $226.2 million increase in deferred revenue and customer deposits, primarily driven by a higher level of new customer deposits compared to the prior year period. This reflected the timing and mix of system deployments, including a lower proportion of projects without significant upfront billings. Deferred revenue increased modestly compared to the prior year period;

Previous wording

•A $54.2 million increase in prepaid expenses and other current assets due to upfront service‑related payments aligned with expanding field service activity; and

Current wording

•A $132.3 million increase in prepaid expenses and other current assets due to upfront service‑related payments aligned with expanding field service activity, and $50.0 million payment in connection with the assignment of certain option rights related to a customer project arrangement;

Previous wording

•A $88.6 million increase in inventory. Inventory increased as we built additional units to support anticipated 2026 demand and to manage lead times in our supply chain;

Current wording

•A $115.1 million increase in inventory. Inventory increased as we built additional units to support future customer demand and to manage lead times in our supply chain; and

Previous wording

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

Current wording

•A $36.5 million increase in deferred cost of revenue as associated systems reached acceptance milestones during the reporting quarter.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026, was $73.6 million, representing a $184.3 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 million attributable to contract assets, (ii) an increase of $49.1 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 million attributable to deferred revenue and customer deposits, (vii) an increase of $9.5 million attributable to accounts receivable, and (viii) an increase of $2.6 million attributable to deferred cost of revenue. 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.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026, was $300.0 million, representing a $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 $172.3 million attributable to contract assets, (ii) an increase of $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, (iv) an increase of $122.4 million attributable to deferred revenue and customer deposits, (v) an increase of $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 (b) a decrease of $27.5 million attributable to 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.

Previous wording

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 three months ended March 31, 2026, was $45.9 million, an increase of $31.7 million compared to the prior year period. The increase was primarily due to a $19.8 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 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.

Current wording

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 six months ended June 30, 2026, was $100.5 million, an increase of $79.1 million compared to the prior year period. The increase was primarily due to a $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 $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.

Previous wording

Our financing activities consist of payment of debt issuance costs, repayments of financing obligations, proceeds from issuance of our common stock, and other cash flows from financing activities. Net cash provided by financing activities during the three months ended March 31, 2026, was $7.1 million, an increase of $1.9 million compared to the prior year period, predominantly due to a $8.2 million increase in proceeds from issuance of common stock, partially offset by (i) an increase in cash outflows of $0.8 million for repayment of debt issuance costs, and (ii) a $5.3 million increase in repayment of financing obligations.

Current wording

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 six months ended June 30, 2026, was $8.3 million, an increase of $10.2 million compared to the prior year period, predominantly due to (i) a $15.5 million increase in proceeds from issuance of common stock, and (ii) a decrease in cash outflows of $1.2 million for repayment of debt and debt issuance costs, partially offset by a $6.4 million increase in repayment of financing obligations.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026, consisted primarily of (i) the proceeds from issuance of common stock of $15.8 million, (ii) the repayment of financing obligations of $8.0 million, and (iii) payment of debt issuance cost of $0.8 million.

Current wording

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

Previous wording

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. 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 needsin our 2025 Form 10-K, for more information regarding the terms of and risks associated with our debt.

Current wording

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. 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 needsin our 2025 Form 10-K, for more information regarding the terms of and risks associated with our debt.

Previous wording

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

Current wording

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 June 30, 2026 and 2025, was as follows:

Previous wording

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 million (including $473.2 million related to portfolio financing entities and $110.1 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 million as of March 31, 2026. For the three months ended March 31, 2026 and 2025, we made performance guarantee payments of $8.4 million and $11.6 million, respectively.

Current wording

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 $846.1 million (including $473.2 million related to portfolio financing entities and $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 $468.9 million as of June 30, 2026. For the three and six months ended June 30, 2026, 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 $3.0 million and $14.6 million, respectively.

Previous wording

There were no significant changes in our international channel partners during the three months ended March 31, 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 Partnersin our 2025 Form 10-K.

Current wording

There were no significant changes in our international channel partners during the three and six months ended June 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 Partnersin our 2025 Form 10-K.

Previous wording

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

Current wording

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

Previous wording

Product revenue increased by $441.5 million, or 208.4%, for the three months ended March 31, 2026, compared to the prior year period. The increase was primarily due to stronger demand for our Energy Server systems to meet the time‑to‑power needs of a growing market, driven largely by multiple projects executed through the joint venture with Brookfield, including a major hyperscaler project.

Current wording

Product revenue increased by $638.8 million and $1.1 billion, or 215.4% and 212.5%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The increase was primarily due to stronger demand for our power solutions to meet the time‑to‑power needs of a growing market, including a significant deployment for a large AI infrastructure customer and multiple projects executed through the joint venture with Brookfield.

Previous wording

Service revenue increased by $8.3 million, or 15.6%, for the three months ended March 31, 2026, compared to the prior year period. The increase was primarily driven by higher revenue from maintenance contracts associated with our fleet of Energy Server systems, which contributed $9.4 million, partially offset by higher product performance guarantee costs of $1.6 million.

Current wording

Service revenue increased by $14.6 million and $22.9 million, or 26.8% and 21.2%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The increase was primarily attributable to higher revenue from maintenance contracts associated with our fleet of Energy Server systems, which contributed $17.3 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 $3.0 million and $4.6 million for the same periods.

Previous wording

Electricity revenue decreased by $17.1 million, or 63.3%, for the three months ended March 31, 2026, compared to the prior year period. The decrease 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.

Current wording

Electricity revenue decreased by $2.9 million and $19.9 million, or 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 June 30, 2026, was primarily due to lower straight-line electricity 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.

Previous wording

Cost of product revenue increased by $289.7 million, or 207.5%, for the three months ended March 31, 2026, compared to the prior year period. Product costs increased primarily due to higher sales volumes driven by increased demand for our Energy Server systems, and an increase in product warranty. The increase was partially offset by ongoing improvements in manufacturing efficiency and automation that reduced material, labor, and overhead costs.

Current wording

Cost of product revenue increased by $395.2 million and $684.9 million, or 198.9% and 202.4%, for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. Product costs increased primarily due to higher sales volumes driven by increased demand for our power solutions, an increase in product warranty, and an increase in stock-based compensation. The increase was partially offset by (i) lower material, labor, and overhead 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.

Previous wording

Cost of electricity revenue decreased by $4.0 million, or 34.9%, for the three months ended March 31, 2026, compared to the prior year period. The decrease 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.

Current wording

Cost of electricity revenue decreased by $0.9 million and $4.9 million, or 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 June 30, 2026, was primarily due to the reduction in 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.

Previous wording

Gross profit increased by $136.8 million in the three months ended March 31, 2026, compared to the prior year period. This increase was predominantly driven by a $151.8 million increase in product gross profit, and a $7.5 million increase in service gross profit, partially offset by a $13.0 million decrease of electricity gross profit, and a $9.5 million decrease of installation gross margin.

Current wording

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

Previous wording

Product gross profit increased by $151.8 million in the three months ended March 31, 2026, compared to the prior year period. The increase was primarily driven by (i) an increase in demand for our products, largely resulting from multiple projects executed through the joint venture with Brookfield, including our major hyperscaler project, and (ii) our continued efforts to reduce material, labor, and overhead costs through enhanced manufacturing processes and increased automation. The overall increase was partially offset by an increase in product warranty.

Current wording

Product gross profit increased by $243.6 million and $395.4 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The increase was primarily attributable to (i) increased product demand driven by a significant deployment for a large AI infrastructure customer and multiple projects executed through our joint venture with Brookfield; (ii) the recognition of a $37.4 million recovery of previously paid import tariffs; and (iii) lower material, labor, and overhead costs due to ongoing manufacturing process improvements and increased automation. The overall increase was partially offset by an increase in product warranty.

Previous wording

Service gross profit increased by $7.5 million in the three months ended March 31, 2026, compared to the prior year period. The increase was primarily driven by: (i) a reduction in the deployment of field replacement units, contributing to cost savings of $3.2 million, (ii) a $9.4 million increase in revenue from maintenance contracts associated with our fleet of Energy Server systems, and (iii) our cost reduction efforts to proactively manage fleet optimizations. The increase was partially offset by a $1.6 million increase in product performance guarantee costs, reflecting the effects of fleet degradation.

Current wording

Service gross profit increased by $7.8 million and $15.4 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The increase was primarily attributable to higher revenue from maintenance contracts associated with our fleet of Energy Server systems, which contributed $17.3 million and $26.7 million for the three and six months ended June 30, 2026, respectively. The increase was partially offset by higher product performance guarantee costs of $3.0 million and $4.6 million for the same periods, reflecting the effects of fleet degradation.

Previous wording

Electricity gross profit decreased by $13.0 million in the three months ended March 31, 2026, compared to the prior year period. This decrease 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.

Current wording

Electricity gross profit decreased by $2.0 million and $15.0 million 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 June 30, 2026, was not material. 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.

Previous wording

Research and development expenses increased by $16.2 million in the three months ended March 31, 2026, compared to the prior year period. This overall increase was primarily driven by (i) an increase in employee compensation and benefits of $9.6 million, largely due to higher stock-based compensation, (ii) an increase in consumable laboratory supplies and other laboratory-related costs of $5.5 million, reflecting expanded research activities, (iii) an increase in consulting, advisory and other professional services costs of $0.4 million, predominantly due to third‑party engineering, certification, and regulatory support for scaling our solid‑oxide platforms and for AI data‑center power programs, and (iv) an increase in amortization and depreciation expenses of $0.3 million.

Current wording

Research and development expenses increased by $18.1 million and $34.3 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The increases were primarily attributable to higher employee compensation and benefits expense, including increased stock-based compensation, which contributed $11.1 million and $20.7 million of the increase for the three- and six-month periods, respectively. Research and development expenses also increased due to higher consumable laboratory supplies and other laboratory-related costs of $3.6 million and $9.2 million, respectively, reflecting expanded research activities. In addition, consulting, advisory, and other professional services costs increased by $1.5 million and $1.9 million, respectively, primarily driven by third-party engineering, certification, and regulatory support related to the scaling of our solid oxide platforms and AI data center power programs.

Previous wording

Sales and marketing expenses increased by $16.2 million in the three months ended March 31, 2026, compared to the prior year period. The increase was primarily driven by (i) an increase in employee compensation and benefits of $11.0 million, predominantly due to higher stock-based compensation, (ii) an increase in consulting, advisory and other professional services costs of $4.1 million, due to our efforts to continue to expand our portfolio of AI data-center power programs, and (iii) an increase in travel and entertainment expenses of $0.5 million, due to higher in-person engagement and event participation.

Current wording

Sales and marketing expenses increased by $19.0 million and $35.2 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year. The increases were primarily attributable to higher employee compensation and benefits expense, including increased stock-based compensation, which contributed $12.4 million and $23.5 million of the increase for the three- and six-month periods, respectively. Sales and marketing expenses also increased due to higher consulting, advisory, and other professional services costs of $5.5 million and $9.6 million, respectively, primarily related to efforts to expand our portfolio of AI data center power programs.

Previous wording

General and administrative expenses increased by $13.2 million in the three months ended March 31, 2026, compared to the prior year period. This increase was primarily driven by (i) an increase in employee compensation and benefits of $8.2 million, primarily due to higher stock-based compensation expenses, (ii) an increase in consulting, advisory and other professional services costs of $4.0 million, reflecting higher external legal and related professional services, (iii) an increase in facilities costs of $2.3 million, predominantly due to an increase in utility and rental costs, and (iv) an increase in computer equipment costs of $1.9 million, driven by higher spending on hardware and software maintenance. The overall increase was partially offset by a decrease in other operating expenses of $4.0 million.

Current wording

$16.5 million and $24.7 million of the increase for the three- and six-month periods, respectively. General and administrative expenses also increased due to higher consulting, advisory, and other professional services costs of $3.7 million and $7.7 million, respectively, primarily reflecting increased external legal and related professional services. In addition, computer equipment costs increased by $2.6 million and $4.5 million for the three- and six-month periods, respectively, driven by higher spending on hardware and software maintenance. For the six months ended June 30, 2026, facilities costs increased by $2.9 million, primarily due to higher rental costs. Overall increase for the six months ended June 30, 2026 was partially offset by a decrease in other operating expenses of $3.4 million.

Previous wording

Interest expense decreased by $5.8 million for the three months ended March 31, 2026, compared to the prior year period, primarily due to lower interest expense on our outstanding debt. The decrease was mainly attributable to (i) reductions of $3.0 million related to the 3% Green Notes due June 2029 and $5.2 million related to the 3% Green Notes due June 2028, both resulting from the induced conversion of these notes during the fourth quarter of fiscal year 2025 (see Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, section Induced Conversions of the Existing Notesin our 2025 Form 10-K), and (ii) a $1.0 million reduction in interest expense following the settlement of the 2.5% Green Notes in August 2025 (see Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, section 2.5% Green Notes Settlementin our 2025 Form 10-K). These decreases were partially offset by $3.0 million of debt issuance costs associated with the 0% Notes issued on November 4, 2025, and $0.6 million of amortization of issuance costs related to our revolving credit facility entered into on December 19, 2025 (see Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, section Revolving Credit Facilityin our 2025 Form 10-K).

Current wording

Interest expense decreased by $5.5 million and $11.3 million for the three and six months ended June 30, 2026, respectively, compared to the corresponding periods in the prior year, primarily due to lower interest expense on outstanding debt. The decrease was driven mainly by reductions in interest expense associated with the 3% Green Notes due June 2028 of $4.9 million and $10.0 million, respectively, and with the 3% Green Notes due June 2029 of $3.6 million and $6.6 million, respectively, for the three and six months ended June 30, 2026. These reductions primarily resulted from the induced conversion of the notes during the fourth quarter of fiscal year 2025 (see Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, section Induced Conversions of the Existing Notesin our 2025 Form 10-K). The decrease was partially offset by $3.0 million and $6.0 million of amortization of debt issuance costs related to the 0% Notes issued on November 4, 2025, and $0.8 million and $1.4 million of amortization of issuance costs associated with the revolving credit facility entered into on December 19, 2025, for the three and six months ended June 30, 2026, respectively (see Part II, Item 8, Note 8—Outstanding Loans and Security Agreements, section Revolving Credit Facilityin our 2025 Form 10-K).

Previous wording

Equity in Loss of Unconsolidated Affiliates

Current wording

Equity in Earnings (Loss) of Unconsolidated Affiliates

Previous wording

During the year ended December 31, 2025, the Company and Brookfield entered into joint venture structures. Brookfield is considered the principal owner, and accounts for the JVs on a consolidated basis. For the three months ended March 31, 2026, Equity in loss of unconsolidated affiliates reflects (i) the ASC 323, Investments—Equity Method and Joint Ventures elimination of intra‑entity profit on sales to joint ventures formed with Brookfield—deferred and recognized over the assets’ depreciable lives—and (ii) the Company’s equity pickup of those joint ventures’ net results under the HLBV method. For details, refer to Part II, Item 1, Note 7—Investments in Unconsolidated Affiliates in this Quarterly Report on Form 10-Q.

Current wording

During the year ended December 31, 2025, the Company and Brookfield entered into joint venture structures. Brookfield is considered the principal owner, and accounts for the JVs on a consolidated basis. For the three and six months ended June 30, 2026, Equity in earnings (loss) of unconsolidated affiliates reflects (i) the ASC 323, Investments—Equity Method and Joint Ventures elimination of intra‑entity profit on sales to joint ventures formed with Brookfield—deferred and recognized over the assets’ depreciable lives—and (ii) the Company’s equity pickup of those joint ventures’ net results under the HLBV method. For details, refer to Part II, Item 1, Note 7—Investments in Unconsolidated Affiliates in this Quarterly Report on Form 10-Q.