10-Q - CoreWeave, Inc. (0001769628) (Filer)

Thu, May 15, 10:07 AM (40 days ago)

CoreWeave, Inc. (CRWV) reported a significant increase in revenue for Q1 2025, reaching $981.6 million, up from $188.7 million in Q1 2024. This growth was driven by increased demand from both existing and new customer contracts, emphasizing the strength of customer relationships and the ability to meet evolving industry needs. However, the company reported a net loss of $314.6 million for Q1 2025, compared to $129.2 million in Q1 2024, primarily due to higher operating expenses and interest costs. The company's cash flow from operating activities was $61.2 million for Q1 2025, down from $2.0 billion in Q1 2024, due to fewer committed contracts and increased accounts receivable. CoreWeave's cash flow from investing activities was -$1.4 billion for Q1 2025, compared to -$1.8 billion in Q1 2024, reflecting investments in infrastructure. The company's cash flow from financing activities was $1.9 billion for Q1 2025, up from $919.5 million in Q1 2024, driven by proceeds from the IPO and debt issuances. CoreWeave's total debt obligations were $8.8 billion as of March 31, 2025, with $4.9 billion in non-current debt. The company's weighted-average interest rate on short-term debt was 10.1% as of March 31, 2025. CoreWeave's future principal payments for total debt were $8.8 billion as of March 31, 2025, with significant payments due in 2026 and 2027. The company's total interest expense for Q1 2025 was $257.4 million, up from $40.5 million in Q1 2024, due to increased borrowing levels. CoreWeave's future lease payments included in the measurement of operating lease liabilities were $5.2 billion as of March 31, 2025, with significant payments due in 2026 and 2027. The company's aggregate amount of estimated future undiscounted lease payments associated with additional lease agreements was $19.9 billion, with commencement dates between 2025 and 2028. CoreWeave's total liquidity was $5.4 billion as of March 31, 2025, with $1.3 billion in cash and cash equivalents and $4.1 billion in availability under existing facilities. The company's future capital requirements may depend on various factors, including the ability to generate or obtain additional capital on favorable terms. CoreWeave's effective tax rate was -17.1% for Q1 2025, compared to -13.5% for Q1 2024, primarily due to nondeductible losses on fair value adjustments. The company's net loss per share attributable to common stockholders was -$1.40 for Q1 2025, compared to -$0.62 for Q1 2024. CoreWeave's stock-based compensation expense for Q1 2025 was $183.9 million, up from $8.2 million in Q1 2024, primarily due to the recognition of stock-based compensation expense associated with vested RSUs. The company's total stockholders' equity was $1.9 billion as of March 31, 2025, compared to -$413.6 million as of December 31, 2024. CoreWeave's accumulated deficit was $1.8 billion as of March 31, 2025. The company's total assets were $21.9 billion as of March 31, 2025, with significant investments in property and equipment, operating lease right-of-use assets, and intangible assets. CoreWeave's total liabilities were $18.8 billion as of March 31, 2025, with significant debt obligations and operating lease liabilities. The company's total revenue was $981.6 million for Q1 2025, with significant contributions from committed contracts. CoreWeave's cost of revenue was $262.4 million for Q1 2025, with significant contributions from data center costs and personnel expenses. The company's technology and infrastructure expense was $561.4 million for Q1 2025, with significant contributions from depreciation and amortization and personnel costs. CoreWeave's sales and marketing expense was $10.5 million for Q1 2025, with significant contributions from personnel costs. CoreWeave's general and administrative expense was $174.8 million for Q1 2025, with significant contributions from personnel costs and professional services expenses. The company's gain (loss) on fair value adjustments was $26.8 million for Q1 2025, compared to -$97.5 million for Q1 2024, primarily due to changes in the valuation of derivatives and warrants. CoreWeave's interest expense, net was -$263.8 million for Q1 2025, up from -$40.7 million for Q1 2024, due to increased borrowing levels. The company's other income (expense), net was -$4.1 million for Q1 2025, compared to $7.5 million for Q1 2024, primarily due to foreign exchange losses. CoreWeave's provision for (benefit from) income taxes was $46.0 million for Q1 2025, compared to $15.4 million for Q1 2024, primarily due to an increase in pre-tax income excluding nondeductible losses. The company's effective tax rate may fluctuate significantly in the future due to additional impacts from nondeductible items and future changes in the valuation allowance on net deferred tax assets. CoreWeave's liquidity and capital resources are sufficient to meet obligations due or anticipated to be due within one year from the date of this Quarterly Report on Form 10-Q, including operating expenses, working capital, and current commitments for capital expenditures. The company's future capital requirements may depend on many factors, including those set forth in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.” CoreWeave's business is subject to numerous risks and uncertainties, including those related to growth management, supplier limitations, power availability, data center provider performance, customer concentration, platform enhancement, AI technology adoption, capital expenditures, operating results fluctuations, competition, indebtedness, stock price volatility, and ownership structure. The company's recent growth may not be indicative of future growth, and the ability to effectively manage future growth is critical to the business, operating results, financial condition, and prospects. CoreWeave's limited number of suppliers for significant components of the equipment used to build and operate the platform exposes the company to various risks, including asymmetry between component availability and contractual performance obligations, shifts in market-leading technologies, reduced control over production costs, limited ability to control aspects of the quality, performance, quantity, and cost of the infrastructure or of its components, potential for binding price or purchase commitments with suppliers at higher than market rates, reliance on suppliers to keep up with technological advancements, consolidation among suppliers, labor and political unrest at facilities, geopolitical disputes disrupting supply chains, business, legal compliance, litigation, and financial concerns affecting suppliers or their ability to manufacture and ship components, impacts on the supply chain from adverse public health developments, and disruptions due to natural disasters. CoreWeave's business would be harmed if the company were not able to access sufficient power or by increased costs to procure power, prolonged power outages, shortages, or capacity constraints. The company depends on being able to secure power in a cost-effective manner, and any inability to secure sufficient power or any power outages, shortages, supply chain issues, capacity constraints, or significant increases in the cost of securing power could have an adverse effect on the business, operating results, financial condition, and prospects. CoreWeave's data center providers may fail to meet the requirements of the business, or the data center facilities may experience damage, interruption, or a security breach, negatively impacting the ability to provide access to the infrastructure and maintain the performance of the network. The company leases space in or otherwise licenses use of third-party data centers located in the United States, Europe, and the United Kingdom, and the business is reliant on these data center facilities. Given that the company leases or licenses use of this data center space, the company does not control the operation of these third-party facilities. Consequently, the company could be subject to service disruptions as well as failures to provide adequate support for reasons that are outside of the direct control. The data center facilities and network infrastructure are vulnerable to damage or interruption from a variety of sources, including earthquakes, floods, fires, power loss, system failures, computer and other cybersecurity vulnerabilities, physical or electronic break-ins, human error, malfeasance or interference, as well as terrorist acts and other catastrophic events. The company and the data center facilities the company leases space in or licenses use of have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including availability or sufficiency of power, infrastructure changes, and capacity constraints, occasionally due to an overwhelming number of customers accessing the infrastructure simultaneously. The data center facilities the company leases space in or licenses use of may also be subject to cybersecurity attacks, including supply chain attacks, due to the actions of outside parties or human error, malfeasance, insider threats, system errors or vulnerabilities, insufficient cybersecurity controls, a combination of these, or otherwise, which may cause service outages and otherwise impact the ability to provide the solutions and services. While the company reviews the security measures of the third-party data centers, the company cannot ensure that these measures will be sufficient to prevent a cybersecurity attack or to protect the continued operation of the platform in the event of a cybersecurity attack, and any impact to the solutions and services may also impact the business, operating results, financial condition, and prospects. Data center facilities housing the 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. In addition, while the company has 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 the company with certain data, equipment, and utilities information required to run the business. Furthermore, the company may require the data centers the company leases to have certain highly specific attributes in order to effectively run the business. The state-of-the-art data centers may also require networking equipment, high-speed interconnects, enhanced access to power, and liquid cooling infrastructure. In some cases, these third-party data centers are required to undergo extensive retrofitting and improvement efforts, including to incorporate novel developments in the industry, which are time-consuming, expensive, and less efficient than if the company were to lease from spaces already designed for the operations, and which may not ultimately be successful in meeting all of the requirements. If third parties fail to successfully deliver on such performance requirements, the ability to maintain the performance of the network would be negatively impacted. Other factors, many of which are beyond the control, that can affect the delivery, performance, and availability of the platform include the development, maintenance, and functioning of the infrastructure of the internet as a whole, the performance and availability of third-party telecommunications services with the necessary speed, data capacity, and security for providing reliable internet access and services, the success or failure of the redundancy systems, the success or failure of the disaster recovery and business continuity plans, decisions by the owners and operators of the data center facilities where the infrastructure is installed or by global telecommunications service provider partners who provide the company with network bandwidth to terminate the contracts, discontinue services to the company, shut down operations or facilities, increase prices, change service levels, limit bandwidth, declare bankruptcy, breach their contracts with the company, or prioritize the traffic of other parties, the ability to enter into data center agreements and leases according to the business needs and on terms and with counterparties acceptable to the company, and changing sentiment by government regulators relating to data center development, including in response to public concerns regarding environmental impact and development, which may result in restrictive government regulation or otherwise impact the future construction of additional data centers. In addition, many of the leases the company has entered into for third-party data centers have multi-year terms and fixed capacity. If the company does not accurately anticipate the data center capacity required by the customers, including if they use less or more of the infrastructure than expected, the company would incur additional costs due to leasing more capacity than is used and paid for by the customers or, alternatively, in seeking additional data center capacity to fulfill unexpected demand on terms that may not be economically reasonable or acceptable to the company, if the company is able to lease additional capacity at all. The company may also need to seek additional data center capacity in the event any leases with third parties are terminated or not renewed, which the company may be unable to do on reasonable terms or at all. The occurrence of any of these factors, or the inability to efficiently and cost-effectively fix such errors or other problems that may be identified, could damage the reputation, negatively impact the relationship with the customers, or otherwise materially harm the business, operating results, financial condition, and prospects. In the future, the company may develop its own data centers, rather than relying on third parties and, because of the limited experience in this area, the company could experience unforeseen difficulties. For example, any potential expansion of the data center infrastructure would be complex, and unanticipated delays in the completion of those projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of the 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 the company has started to fully utilize the underlying equipment, that could further degrade the platform or increase the costs. A substantial portion of the revenue is driven by a limited number of the customers, and the loss of, or a significant reduction in, spend from one or a few of the top customers would adversely affect the business, operating results, financial condition, and prospects. A substantial portion of the revenue is driven by a limited number of customers. The company recognized an aggregate of approximately 83% of the revenue from the top three customers for the three months ended March 31, 2024. The company recognized an aggregate of approximately 72% and 33% of the revenue for the three months ended March 31, 2025 and 2024, from the largest customer, Microsoft. None of the other customers represented 10% or more of the revenue for the three months ended March 31, 2025. Any negative changes in demand from Microsoft, in Microsoft’s ability or willingness to perform under its contracts with the company, in laws or regulations applicable to Microsoft or the regions in which it operates, or in the broader strategic relationship with Microsoft would adversely affect the business, operating results, financial condition, and prospects. During the three months ended March 31, 2025, the company entered into a master services agreement with OpenAI OpCo LLC ("OpenAI") and, as a result, the company expects OpenAI to be a significant customer in future periods. The company anticipates that the company will continue to derive a significant portion of the revenue from a limited number of customers for the foreseeable future, and in some cases, the portion of the revenue attributable to certain customers may increase in the future. The composition of the customer base, including the top customers, may fluctuate from period to period given that the customer composition has evolved and is expected to continue to evolve significantly as the business continues to evolve and scale and as the use cases for AI continue to develop. However, the company may not be able to maintain or increase revenue from the top customers for a variety of reasons, including the following: customers may develop their own infrastructure that may compete with the services, some of the customers may redesign their systems to require fewer of the services with limited notice to the company and may choose not to renew or increase their purchases of the platform, solutions, and services, and the customers may have pre-existing or concurrent relationships with, or may be, current or potential competitors that may affect such customers’ decisions to purchase the platform, solutions, and services. Customer relationships often require the company to continually improve the platform, which may involve significant technological and design challenges, and the customers may place considerable pressure on the company to meet tight development and capacity availability schedules. Accordingly, the company may have to devote a substantial amount of the resources to the strategic relationships, which could detract from or delay the completion of other important development projects. Delays in making capacity available could impair the relationships with the customers and negatively impact forecasted sales of the services under development. Moreover, it is possible that the customers may develop their own infrastructure that may compete with the services or adopt a competitor’s infrastructure for services that they currently buy from the company. If that happens, the revenue would be adversely impacted and the business, operating results, financial condition, and prospects would be materially and adversely affected. If the company fails to efficiently enhance the platform and develop and sell new solutions and services and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences, the platform may become less competitive. The market in which the company competes is relatively new and subject to rapid technological change, evolving industry standards and regulatory changes, as well as changing customer needs, requirements, and preferences. The success of the business will depend, in part, on the ability to, predict, adapt, and respond effectively to these changes on a timely basis. If the company is unable to develop and sell new solutions and services that satisfy and are adopted by new and existing customers and provide enhancements, new features, and capabilities to the infrastructure that keep pace with rapid technological and industry change, the business, operating results, financial condition, and prospects could be adversely affected. Further, prospective or existing customers may influence the product roadmap by requiring features optimal for their particular use case. If the company is unable to adapt to meet customers’ requirements, they may use competitive offerings or internal solutions that eliminate reliance on third-party providers, and the business, operating results, financial condition, and prospects could be adversely affected. Moreover, prioritizing development of such features may require significant engineering resources and may not be compatible with the requirements of other customers, which could impact overall adoption of the platform. If new technologies emerge that limit or eliminate reliance on AI cloud platform providers like the company, or that enable the competitors to deliver competitive services at lower prices, more efficiently, more conveniently, or more securely, such technologies could adversely impact the ability to compete. If the solutions do not allow the company or the customers to comply with the latest regulatory requirements, sales of the platform, solutions, and services to existing customers may decrease and new customers will be less likely to adopt the platform. The future growth is dependent upon the ability to continue to meet the needs of new customers and the expanding needs of the existing customers as their use of the platform, solutions, and services grows. As sales of the platform grow, the company will need to devote additional resources to expanding, improving, and maintaining the infrastructure and integrating with third-party applications. In addition, the company will need to appropriately scale the internal business systems and the services organization, including customer support, to serve the growing customer base, and to improve the IT and financial infrastructure, operating and administrative systems, and the ability to effectively manage headcount, capital and processes, including by reducing costs and inefficiencies. Any failure of, or delay in, these efforts could result in impaired system performance and reduced customer satisfaction, which would negatively impact the revenue growth and the reputation. The company may not be successful in developing or implementing these technologies. In addition, it takes a significant amount of time to plan, develop, and test improvements to the technologies and infrastructure, and the company may not be able to accurately forecast demand or predict the results that will be realized from such improvements. In some circumstances, the company may also determine to scale the technology through the acquisition of complementary businesses and technologies rather than through internal development, which may divert management’s time and resources. To the extent that the company does not effectively scale the operations to meet the needs of the growing customer base and to maintain performance as the customers expand their use of the services, the company will not be able to grow as quickly as the company anticipates, the customers may reduce or terminate use of the platform and the company will be unable to compete as effectively and the business, operating results, financial condition, and prospects will be adversely affected. The company continually works to upgrade and enhance the platform, solutions, and services in response to customer demand and to keep up with technological changes. Part of this process entails cycling out outdated components of the infrastructure and replacing them with the latest technology available. This requires the company to make certain estimates with respect to the useful life of the components of the infrastructure and to maximize the value of the components of the infrastructure, including the GPUs, to the fullest extent possible. The company cannot guarantee that the estimates will be accurate or that the attempts at maximizing value will be successful. Any changes to the significant assumptions underlying the estimates or to the estimates of the components’ useful lives, or any inability to redeploy components of the existing infrastructure to extend past their contracted life could significantly affect the business, operating results, financial condition, and prospects. The platform must also integrate with a variety of network, hardware, storage, and software technologies, and the company needs to continuously modify and enhance the capabilities of the platform to adapt to changes and innovation in these technologies. If the customers widely adopt new technologies, the company may need to redesign parts of the platform to work with those new technologies. These development efforts may require significant engineering, marketing, and sales resources, all of which would affect the business, operating results, financial condition, and prospects. Any failure of the infrastructure’s capabilities to operate effectively with future technologies and software platforms could reduce the demand for the platform. If the company is unable to respond to these changes in a cost-effective manner, the platform may become less marketable and less competitive or obsolete, and the business may be harmed. In addition, the company must also continue to effectively manage the capital expenditures by maintaining and expanding the data center capacity, servers and equipment, grow in geographies where the company currently has limited or no presence, and ensure that the performance, features, and reliability of the services and the customer service remain competitive in a rapidly changing technological environment. If the company fails to manage the growth, the quality of the platform may suffer, which could negatively affect the brand and reputation and harm the ability to retain and attract customers and employees. The broader adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain. Failure by the customers to continue to use the CoreWeave Cloud Platform to support AI use cases in their systems, or the company's ability to keep up with evolving AI technology requirements and regulatory frameworks, could have a material adverse effect on the business, operating results, financial condition, and prospects. As part of the growth strategy, the company seeks to attract and acquire customers requiring high-performance computing, such as AI, machine learning, and automated decision-making technologies, including proprietary AI algorithms and models (collectively, “AI Technologies”). AI has been developing at a rapid pace, and continues to evolve and change. As demand continues for AI services, AI providers, including the customers, have sought increased compute capacity to enable advancements in their AI models and service the demands of end users. The company cannot predict whether additional computing power will continue to be required to develop larger, more powerful AI models, or if the practical limits of AI technology will plateau in the future regardless of available compute capacity. Further, there have been recent advancements in AI technology, including open-source AI models, that may lead to compute and other efficiencies that may impact the demand for AI services, including the platform, solutions, and services, which may adversely impact the revenue and profitability. In the event that existing scaling laws do not continue to apply as they have in the past, demand by the customers for compute resources, including the solutions and services, may not continue to increase over time, or may decrease if overall demand for AI is impacted by a lack of further technological development. If the company is unable to keep up with the changing AI landscape or in developing services to meet the customers’ evolving AI needs, or if the AI landscape does not develop to the extent the company or the customers expect, the business, operating results, financial condition, and prospects may be adversely impacted. Additionally, the company may incur significant costs and experience significant delays in developing new solutions and services or enhancing the current platform to adapt to the changing AI landscape, and may not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain. Further, market acceptance, understanding, and valuation of solutions and services that incorporate AI Technologies are uncertain and the perceived value of AI Technologies used and/or provided by the customers could be inaccurate. If AI is not broadly adopted by enterprises to the extent the company expects, or if new use cases do not arise, then the opportunity may be smaller than the company expects. Further, if the consumer perception and perceived value of AI Technologies is inaccurate this could have a material adverse effect on the customers, which in turn could have a material adverse effect on the business, operating results, financial condition, and prospects. Concerns relating to the responsible use by the customers of new and evolving technologies, such as AI, which are supported by the platform, may result in collateral reputational harm to the company. AI may pose emerging ethical issues and if the platform enables customer solutions that draw controversy due to their perceived or actual impact on society, the company may experience brand or reputational harm, competitive harm, or legal liability. Furthermore, the rapid pace of innovation in the field of AI has led to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex as AI continues to evolve. Regulators and lawmakers around the world have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. Regulations related to AI Technologies have been introduced in the United States at the federal level and are also enacted and advancing at the state level. Additional regulations may impact the customers’ ability to develop, use and commercialize AI Technologies, which would impact demand for the platform, solutions, and services and may affect the business, operating results, financial condition, and prospects. AI and related industries, including cloud services, are under increasing scrutiny from regulators due to their concerns about market concentration, anti-competitive practices, and the pace of partnerships and acquisitions involving generative AI startups. As the industry continues to grow, transactions and business conduct will likely continue to draw scrutiny from regulators. The customers may become subject to further AI regulations, including any restrictions on the total consumption of compute technology, which could cause a delay or impediment to the commercialization of AI technology and could lead to a decrease in demand for the customers’ AI infrastructure, and may adversely affect the business, operating results, financial condition, and prospects. The operations require substantial capital expenditures, and the company will require additional capital to fund the business and support the growth, and any inability to generate or obtain such capital on acceptable terms, if at all, or to lower the total cost of capital, may adversely affect the business, operating results, financial condition, and prospects. The company requires substantial capital expenditures to support the growth and respond to business challenges. The company has made significant financial investments in the business, and the company intends to continue to make such investments in the future, including expenditures to procure components for, maintain, upgrade, and enhance the platform, including costs related to obtaining third-party chips and leasing and maintaining, enhancing, and expanding the data centers. While the company has historically been able to fund capital expenditures from cash generated from operations, equity and debt financings, and borrowings under the term loan facilities, factors outside of the control, including those described in the “Risk Factors” section, and particularly those under “—Risks Related to Indebtedness,” could materially reduce the cash available from operations, impede the ability to raise additional capital, or significantly increase the capital expenditure requirements, which may result in the inability to fund the necessary level of capital expenditures to maintain and expand the operations. This could adversely affect the business, operating results, financial condition, and prospects. Additional financing may not be available on terms favorable to the company, if at all. If adequate financing is not available on acceptable terms, the company may be unable to invest in future growth opportunities, which could harm the business, operating results, financial condition, and prospects. If the company raises additional funds through equity or convertible debt issuances, the existing stockholders may suffer significant dilution and these securities could have rights, preferences, and privileges that are superior to those of holders of the Class A common stock. If the company obtains additional funds through debt financing, the company may not be able to obtain such financing on terms favorable to the company. Further, the current global macroeconomic environment could make it more difficult to raise additional capital on favorable terms, if at all. Such terms may involve restrictive covenants making it difficult to engage in capital raising activities and pursue business opportunities, including potential acquisitions. The sale of additional equity would result in dilution to the stockholders. The incurrence of additional debt would result in debt service obligations, and the instruments governing such debt could provide for operational and/or financial covenants that further restrict the operations. There can be no assurances that the company will be able to raise additional capital on favorable terms or at all. The inability to raise capital could adversely affect the ability to achieve the business objectives. The following table summarizes the principal sources of liquidity: March 31, 2025 December 31, 2024 (dollars in thousands) Cash and cash equivalents $ 1,276,456 $ 1,361,083 Availability under existing facilities (1) 4,102,697 4,406,181 Total liquidity $ 5,379,153 $ 5,767,264 (1) Refers to secured commitments under the revolving credit facility and delayed draw term loan agreements. Revolving Credit Facility On June 21, 2024, the company entered into the Revolving Credit Facility with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the guarantors party thereto, and the lenders and issuing banks party thereto (as amended, the "Revolving Credit Facility"). The Revolving Credit Facility matures on June 21, 2027. On October 7, 2024, the credit agreement was amended to provide for a $650 million senior revolving credit facility consisting of (i) a $500 million secured facility and (ii) a $150 million unsecured facility. On December 2, 2024, the Revolving Credit Facility was further amended to provide for the $650 million senior revolving credit facility to be fully secured. On May 2, 2025, the Revolving Credit Facility Agreement was further amended to increase the commitments thereunder to $1.5 billion, with a $350 million letter of credit sub-facility. The Revolving Credit Facility may be increased by the sum of $500 million plus an unlimited amount that does not result in the total net leverage ratio exceeding 6.00x or the secured net leverage ratio exceeding 4.00x, pursuant to the exercise of an uncommitted accordion feature through which existing and new lenders may, at their option, agree to provide additional financing. The proceeds of the Revolving Credit Facility may be used for working capital and general corporate purposes (including the financing of acquisitions and investments). As of March 31, 2025, the company had drawn $50 million, had $11 million of issued outstanding letters of credit, and had $589 million of remaining capacity on the Revolving Credit Facility. Amounts borrowed under the Revolving Credit Facility are subject to an interest rate per annum equal to, at the company's option, either (a) for base rate loans, an applicable margin of 0.75% plus a base rate (subject to a 1.00% floor) determined by reference to the highest of (i) the prime rate, (ii) the greater of (a) the federal funds effective rate and (b) the overnight bank funding rate, in each case, plus 0.50%, and (iii) the one month term Secured Overnight Financing Rate (“SOFR”) plus 1.00% or (b) for term benchmark loans, an applicable margin of 1.75% plus the term SOFR (subject to a 0.00% floor) for a one, three or six month interest period. The company may voluntarily prepay outstanding loans under the Revolving Credit Facility at any time without premium or penalty, other than customary “breakage” costs. Additional Secured Commitments Delayed Draw Term Loan Facility 1.0 On July 30, 2023, one of the subsidiaries entered into a delayed draw term loan with various lenders and U.S. Bank, N.A., as the administrative agent. The agreement provides for a delayed draw term loan facility of up to $2.3 billion (as amended, the “DDTL 1.0 Facility”). All obligations under the DDTL 1.0 Facility are unconditionally guaranteed by the company and secured, subject to certain exceptions, by substantially all of the subsidiary’s assets and a pledge of 100% of the equity interests in the subsidiary. Borrowings under the DDTL 1.0 Facility were used to finance a portion of the purchase consideration, fees, and expenses relating to the acquisition of computing equipment. On May 15, 2024, the interest rate was modified to term SOFR plus 9.62% or the alternative base rate plus 8.62%. The principal amount of the loans is required to be repaid in quarterly installments, with the final balloon payment due on March 29, 2028. The loans are prepayable at any time, from time to time, at the company's option, and are required to be prepaid upon the occurrence of an event of default or change of control of the company, or with the proceeds of certain asset dispositions or incurrences of indebtedness. If the loans are prepaid prior to the fourth anniversary of the loan commitment termination date, in addition to principal and accrued interest, the company is required to pay an applicable premium equal to (a) with respect to prepayments made prior to the third anniversary of the loan commitment termination date, an amount equal to the present value of future interest payments that would have accrued on the principal amount of the loans being prepaid through the third anniversary of the loan commitment termination date based on the interest rate in effect plus 1.00% of the principal amount of the loans being prepaid and (b) with respect to prepayments made between the third and fourth anniversary of the loan commitment termination date, an amount equal to 1.00% of the principal amount of the loans being prepaid. As of March 31, 2025 and December 31, 2024, the company had $1.9 billion and $2.0 billion outstanding, respectively, under the DDTL 1.0 Facility. Delayed Draw Term Loan Facility 2.0 On May 16, 2024, another of the subsidiaries entered into a second delayed draw term loan facility with various lenders and U.S. Bank, N.A. as the administrative agent. The agreement provides for a delayed draw term loan facility of up to $7.6 billion assuming the relevant collateralization requirements are met (as amended, the “DDTL 2.0 Facility”). Under the DDTL 2.0 Facility, additional loans may be drawn until June 2025, with an option to extend the commitment period by three months subject to lender consent. The total loans available are limited to a percentage of the depreciated purchase price of GPU servers and related infrastructure for the contract that the loans are being used to finance, with such percentage based upon the credit rating of the applicable customer. All obligations under the DDTL 2.0 Facility are unconditionally guaranteed by the company and secured, subject to certain exceptions, by substantially all of the subsidiary’s assets and a pledge of 100% of the equity interests in the subsidiary. Borrowings under the DDTL 2.0 Facility will be used to finance a portion of the purchase consideration, fees, and expenses relating to the acquisition of computing equipment. Interest on outstanding borrowings on the DDTL 2.0 Facility accrued at a rate per annum equal to either, at the company's election, term SOFR or the alternative base rate plus a spread based on the credit quality of the associated customer contracts. For specified investment-grade customers, the spread is equal to 6.00% for term SOFR loans and 5.00% for base rate loans. For investment-grade customers, the spread is equal to 6.50% for term SOFR loans and 5.50% for base rate loans. For non-investment-grade customer contracts, the spread is equal to 13.00% for term SOFR loans and 12.00% for base rate loans. The principal amount of the loans is required to be repaid in quarterly installments, beginning in October 2025, with the final balloon payment due five years after the applicable loan was funded. The loans are prepayable at any time, from time to time, at the company's option, and are required to be prepaid upon the occurrence of an event of default or change of control of the company, or with the proceeds of certain asset dispositions or incurrences of indebtedness. If the loans are prepaid prior to the 30-month anniversary of the loan commitment termination date, in addition to principal and accrued interest, the company is required to pay an applicable premium equal to the present value of future interest payments that would have accrued on the principal amount of the loans being prepaid through the 30-month anniversary of the loan commitment termination date based on the interest rate in effect. As of March 31, 2025 and December 31, 2024, the company had borrowed $4.4 billion and $3.8 billion, respectively, against the DDTL 2.0 Facility and $3.2 billion and $3.8 billion, respectively, remained available for borrowing. 2024 Term Loan Facility On December 16, 2024, the company entered into a credit agreement providing for a $1.0 billion term loan facility (the "2024 Term Loan Facility") consisting of (i) a $229 million secured facility and (ii) a $771 million unsecured facility, with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, the guarantors party thereto, and the lenders party thereto. On December 16, 2024, the company borrowed the full $1.0 billion of loans available under the 2024 Term Loan Facility. The 2024 Term Loan Facility may be increased by $500 million pursuant to the exercise of an uncommitted accordion feature. The proceeds of the 2024 Term Loan Facility may be used for working capital and general corporate purposes (including the financing of acquisitions and investments). In connection with the IPO, the maturity date of the 2024 Term Loan Facility was accelerated and it was repaid on April 11, 2025. 2025 Term Loan Facility On March 7, 2025, the company entered into a credit agreement providing for a $300 million unsecured term loan facility (the “2025 Term Loan Facility”). Amounts borrowed under the 2025 Term Loan Facility may only be borrowed in a single funding. There were no borrowings under the 2025 Term Loan Facility and in connection with the IPO, the 2025 Term Loan Facility was terminated. Cash Flows Three Months Ended March 31, 2025 2024 (in thousands) Net cash provided by operating activities $ 61,168 $ 2,039,038 Net cash used in investing activities (1,433,051) (1,771,243) Net cash provided by financing activities 1,853,866 919,495 Operating Activities Net cash provided by operating activities was $61 million for the three months ended March 31, 2025 as compared to $2.0 billion for the three months ended March 31, 2024. The decrease was driven by fewer committed contracts from new customer contracts involving upfront payments, as well as an increase in accounts receivable. The decrease was partially offset by higher accounts payable and accrued expenses due to the growth of the business and timing of accrual payments. Investing Activities Net cash used in investing activities was approximately $1.4 billion for the three months ended March 31, 2025, as compared to $1.8 billion for the three months ended March 31, 2024. The decrease was driven by an increase of the unpaid portion of capital investments in the infrastructure, including the GPU fleet, networking equipment, and software development. Financing Activities Net cash provided by financing activities was $1.9 billion for the three months ended March 31, 2025, as compared to $919 million for the three months ended March 31, 2024. The increase was driven by proceeds from the IPO and issuances of debt, partially offset by payments on debt. Off-Balance Sheet Arrangements The company did not have during the periods presented, and the company does not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Critical Accounting Estimates Management’s discussion and analysis of the financial condition and results of operations is based on the condensed consolidated financial statements and the related notes thereto, which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). In preparing the condensed consolidated financial statements, the company applies accounting policies and estimates that affect the reported amounts and related disclosures. Inherent in such policies are certain key assumptions and estimates made by management, which the company believes best reflect the underlying business and economic conditions. The company bases its estimates on historical experience and assumptions that management considers reasonable. The company regularly re-evaluates its estimates used in the preparation of the condensed consolidated financial statements based on the latest assessment of the current and projected business and economic environment. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates. There have been no material changes to the critical accounting policies and estimates as described in the Prospectus. For additional information about the critical accounting estimates, see the disclosure included in the Prospectus. Recent Accounting Pronouncements See the section titled “Recent Accounting Pronouncements Not Yet Adopted” in Note 1—Overview and Summary of Significant Accounting Policies to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information. Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risk in the ordinary course of its business. Market risk represents the risk of loss that may impact the financial position due to adverse changes in financial market prices and rates. The market risk exposure is primarily the result of fluctuations in interest rates. Interest Rate Risk As of March 31, 2025, the company had cash and cash equivalents and marketable securities of $1.3 billion. In addition, the company had $1.2 billion of restricted cash and cash equivalents and marketable securities consisting of bank deposits related to collateralized loan facilities and letters of credit. The cash, cash equivalents, and marketable securities are held for working capital purposes. The company does not enter into investments for trading or speculative purposes. The exposure to market risk for changes in interest rates relates primarily to the DDTL 1.0 Facility, DDTL 2.0 Facility, 2024 Term Loan Facility, and Revolving Credit Facility (described above), which bear floating interest rates, and a rising interest rate environment may increase the amount of interest paid on these loans. For the three months ended March 31, 2025, each 100-basis point increase or decrease in interest rates would have increased or decreased the interest expense related to these facilities by approximately $18 million. Foreign Currency Risk The company transacts business globally in multiple currencies. The international revenue, as well as costs and expenses denominated in foreign currencies, expose the company to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. The company is exposed to foreign currency risks related to the revenue and operating expenses denominated in currencies other than the U.S. dollar, including the British pound, Euro and Swedish krona. Accordingly, changes in exchange rates may negatively affect the future revenue and other operating results as expressed in U.S. dollars. The company has experienced and will continue to experience fluctuations in the net income (loss) as a result of transaction gains or losses related to remeasurement of the asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. The company does not currently hedge against the risks associated with currency fluctuations but may do so, or use other derivative instruments, in the future. It is difficult to predict the impact hedging activities would have on the results of operations. Inflation Risk The company does not believe that inflation has had a material effect on the business, financial condition or results of operations, other than its impact on the general economy, which includes labor costs. Nonetheless, if the costs, in particular personnel-related costs, continue to become subject to significant inflationary pressures, the company may not be able to fully offset such higher costs through price increases. The inability or failure to do so could harm the business, financial condition and results of operations. Item 4. Controls and Procedures Limitation on Effectiveness of Controls and Procedures In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures The management, with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 (the "Exchange Act"), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the evaluation of the disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2025 due to the material weaknesses in the internal control over financial reporting described below. Previously Reported Material Weaknesses in Internal Control Over Financial Reporting A material weakness is a deficiency or combination of deficiencies in the internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements would not be prevented or detected on a timely basis. As disclosed in the section titled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q, the company previously identified material weaknesses in the internal control over financial reporting related to the lack of effectively designed, implemented, and maintained IT general controls over applications that support the financial reporting processes, insufficient segregation of duties across financially relevant functions, and lack of sufficient number of qualified personnel within the accounting, finance, and operations functions who possessed an appropriate level of expertise to provide reasonable assurance that transactions were being appropriately recorded and disclosed. The company has concluded that these material weaknesses existed because the company did not have the necessary business processes, systems, personnel and related internal controls. The deficiencies identified did not result in a material misstatement to the financial statements. Remediation Efforts to Address Previously Identified Material Weaknesses The company has taken and will continue to take action to remediate these material weaknesses, including: engagement with external consultants with extensive Sarbanes-Oxley Act experience, implementation of IT general controls to manage access and program changes within the IT environment, implementation of processes and controls to better identify and manage segregation of duties risks, designing and implementing controls related to significant accounts and disclosures to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over account reconciliations, segregation of duties and the preparation and review of journal entries, continued hiring of additional accounting, finance and operations resources with appropriate and sufficient technical expertise and to better allow for segregation of conflicting duties, and consulting with experts on technical accounting matters, internal controls, and in the preparation of the financial statements. The company believes it is making progress toward achieving effectiveness of the internal control over financial reporting. The actions that the company is taking are subject to ongoing management review and audit committee oversight. The company will not be able to conclude whether the steps it is taking will fully remediate the material weaknesses in the internal control over financial reporting until the company has completed the remediation efforts and subsequently evaluated their design and effectiveness over a sufficient period of time, and management concludes, through testing, that these are operating effectively. The company may also conclude that additional measures are required to remediate the material weaknesses in the internal control over financial reporting. Changes in Internal Control Over Financial Reporting Except for the remediation measures in connection with the material weaknesses described above, there were no changes in the internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, the internal control over financial reporting. The company is subject to various risks and uncertainties, including those related to growth management, supplier limitations, power availability, data center provider performance, customer concentration, platform enhancement, AI technology adoption, capital expenditures, operating results fluctuations, competition, indebtedness, stock price volatility, and ownership structure. The company's recent growth may not be indicative of future growth, and the ability to effectively manage future growth is critical to the business, operating results, financial condition, and prospects. The company's limited number of suppliers for significant components of the equipment used to build and operate the platform exposes the company to various risks, including asymmetry between component availability and contractual performance obligations, shifts in market-leading technologies, reduced control over production costs, limited ability to control aspects of the quality, performance, quantity, and cost of the infrastructure or of its components, potential for binding price or purchase commitments with suppliers at higher than market rates, reliance on suppliers to keep up with technological advancements, consolidation among suppliers, labor and political unrest at facilities, geopolitical disputes disrupting supply chains, business, legal compliance, litigation, and financial concerns affecting suppliers or their ability to manufacture and ship components, impacts on the supply chain from adverse public health developments, and disruptions due to natural disasters. The company's business would be harmed if the company were not able to access sufficient power or by increased costs to procure power, prolonged power outages, shortages, or capacity constraints. The company depends on being able to secure power in a cost-effective manner, and any inability to secure sufficient power or any power outages, shortages, supply chain issues, capacity constraints, or significant increases in the cost of securing power could have an adverse effect on the business, operating results, financial condition, and prospects. The company's data center providers may fail to meet the requirements of the business, or the data center facilities may experience damage, interruption, or a security breach, negatively impacting the ability to provide access to the infrastructure and maintain the performance of the network. The company leases space in or otherwise licenses use of third-party data centers located in the United States, Europe, and the United Kingdom, and the business is reliant on these data center facilities. Given that the company leases or licenses use of this data center space, the company does not control the operation of these third-party facilities. Consequently, the company could be subject to service disruptions as well as failures to provide adequate support for reasons that are outside of the direct control. The data center facilities and network infrastructure are vulnerable to damage or interruption from a variety of sources, including earthquakes, floods, fires, power loss, system failures, computer and other cybersecurity vulnerabilities, physical or electronic break-ins, human error, malfeasance or interference, as well as terrorist acts and other catastrophic events. The company and the data center facilities the company leases space in or licenses use of have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including availability or sufficiency of power, infrastructure changes, and capacity constraints, occasionally due to an overwhelming number of customers accessing the infrastructure simultaneously. The data center facilities the company leases space in or licenses use of may also be subject to cybersecurity attacks, including supply chain attacks, due to the actions of outside parties or human error, malfeasance, insider threats, system errors or vulnerabilities, insufficient cybersecurity controls, a combination of these, or otherwise, which may cause service outages and otherwise impact the ability to provide the solutions and services. While the company reviews the security measures of the third-party data centers, the company cannot ensure that these measures will be sufficient to prevent a cybersecurity attack or to protect the continued operation of the platform in the event of a cybersecurity attack, and any impact to the solutions and services may also impact the business, operating results, financial condition, and prospects. Data center facilities housing the 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. In addition, while the company has 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 the company with certain data, equipment, and utilities information required to run the business. Furthermore, the company may require the data centers the company leases to have certain highly specific attributes in order to effectively run the business. The state-of-the-art data centers may also require networking equipment, high-speed interconnects, enhanced access to power, and liquid cooling infrastructure. In some cases, these third-party data centers are required to undergo extensive retrofitting and improvement efforts, including to incorporate novel developments in the industry, which are time-consuming, expensive, and less efficient than if the company were to lease from spaces already designed for the operations, and which may not ultimately be successful in meeting all of the requirements. If third parties fail to successfully deliver on such performance requirements, the ability to maintain the performance of the network would be negatively impacted. Other factors, many of which are beyond the control, that can affect the delivery, performance, and availability of the platform include the development, maintenance, and functioning of the infrastructure of the internet as a whole, the performance and availability of third-party telecommunications services with the necessary speed, data capacity, and security for providing reliable internet access and services, the success or failure of the redundancy systems, the success or failure of the disaster recovery and business continuity plans, decisions by the owners and operators of the data center facilities where the infrastructure is installed or by global telecommunications service provider partners who provide the company with network bandwidth to terminate the contracts, discontinue services to the company, shut down operations or facilities, increase prices, change service levels, limit bandwidth, declare bankruptcy, breach their contracts with the company, or prioritize the traffic of other parties, the ability to enter into data center agreements and leases according to the business needs and on terms and with counterparties acceptable to the company, and changing sentiment by government regulators relating to data center development, including in response to public concerns regarding environmental impact and development, which may result in restrictive government regulation or otherwise impact the future construction of additional data centers. In addition, many of the leases the company has entered into for third-party data centers have multi-year terms and fixed capacity. If the company does not accurately anticipate the data center capacity required by the customers, including if they use less or more of the infrastructure than expected, the company would incur additional costs due to leasing more capacity than is used and paid for by the customers or, alternatively, in seeking additional data center capacity to fulfill unexpected demand on terms that may not be economically reasonable or acceptable to the company, if the company is able to lease additional capacity at all. The company may also need to seek additional data center capacity in the event any leases with third parties are terminated or not renewed, which the company may be unable to do on reasonable terms or at all. The occurrence of any of these factors, or the inability to efficiently and cost-effectively fix such errors or other problems that may be identified, could damage the reputation, negatively impact the relationship with the customers, or otherwise materially harm the business, operating results, financial condition, and prospects. In the future, the company may develop its own data centers, rather than relying on third parties and, because of the limited experience in this area, the company could experience unforeseen difficulties. For example, any potential expansion of the data center infrastructure would be complex, and unanticipated delays in the completion of those projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of the 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 the company has started to fully utilize the underlying equipment, that could further degrade the platform or increase the costs. A substantial portion of the revenue is driven by a limited number of the customers, and the loss of, or a significant reduction in, spend from one or a few of the top customers would adversely affect the business, operating results, financial condition, and prospects. A substantial portion of the revenue is driven by a limited number of customers. The company recognized an aggregate of approximately 83% of the revenue from the top three customers for the three months ended March 31, 2024. The company recognized an aggregate of approximately 72% and 33% of the revenue for the three months ended March 31, 2025 and 2024, from the largest customer, Microsoft. None of the other customers represented 10% or more of the revenue for the three months ended March 31, 2025. Any negative changes in demand from Microsoft, in Microsoft’s ability or willingness to perform under its contracts with the company, in laws or regulations applicable to Microsoft or the regions in which it operates, or in the broader strategic relationship with Microsoft would adversely affect the business, operating results, financial condition, and prospects. During the three months ended March 31, 2025, the company entered into a master services agreement with OpenAI OpCo LLC ("OpenAI") and, as a result, the company expects OpenAI to be a significant customer in future periods. The company anticipates that the company will continue to derive a significant portion of the revenue from a limited number of customers for the foreseeable future, and in some cases, the portion of the revenue attributable to certain customers may increase in the future. The composition of the customer base, including the top customers, may fluctuate from period to period given that the customer composition has evolved and is expected to continue to evolve significantly as the business continues to evolve and scale and as the use cases for AI continue to develop. However, the company may not be able to maintain or increase revenue from the top customers for a variety of reasons, including the following: customers may develop their own infrastructure that may compete with the services, some of the customers may redesign their systems to require fewer of the services with limited notice to the company and may choose not to renew or increase their purchases of the platform, solutions, and services, and the customers may have pre-existing or concurrent relationships with, or may be, current or potential competitors that may affect such customers’ decisions to purchase the platform, solutions, and services. Customer relationships often require the company to continually improve the platform, which may involve significant technological and design challenges, and the customers may place considerable pressure on the company to meet tight development and capacity availability schedules. Accordingly, the company may have to devote a substantial amount of the resources to the strategic relationships, which could detract from or delay the completion of other important development projects. Delays in making capacity available could impair the relationships with the customers and negatively impact forecasted sales of the services under development. Moreover, it is possible that the customers may develop their own infrastructure that may compete with the services or adopt a competitor’s infrastructure for services that they currently buy from the company. If that happens, the revenue would be adversely impacted and the business, operating results, financial condition, and prospects would be materially and adversely affected. If the company fails to efficiently enhance the platform and develop and sell new solutions and services and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing customer needs, requirements, or preferences, the platform may become less competitive. The market in which the company competes is relatively new and subject to rapid technological change, evolving industry standards and regulatory changes, as well as changing customer needs, requirements, and preferences. The success of the business will depend, in part, on the ability to, predict, adapt, and respond effectively to these changes on a timely basis. If the company is unable to develop and sell new solutions and services that satisfy and are adopted by new and existing customers and provide enhancements, new features, and capabilities to the infrastructure that keep pace with rapid technological and industry change, the business, operating results, financial condition, and prospects could be adversely affected. Further, prospective or existing customers may influence the product roadmap by requiring features optimal for their particular use case. If the company is unable to adapt to meet customers’ requirements, they may use competitive offerings or internal solutions that eliminate reliance on third-party providers, and the business, operating results, financial condition, and prospects could be adversely affected. Moreover, prioritizing development of such features may require significant engineering resources and may not be compatible with the requirements of other customers, which could impact overall adoption of the platform. If new technologies emerge that limit or eliminate reliance on AI cloud platform providers like the company, or that enable the competitors to deliver competitive services at lower prices, more efficiently, more conveniently, or more securely, such technologies could adversely impact the ability to compete. If the solutions do not allow the company or the customers to comply with the latest regulatory requirements, sales of the platform, solutions, and services to existing customers may decrease and new customers will be less likely to adopt the platform. The future growth is dependent upon the ability to continue to meet the needs of new customers and the expanding needs of the existing customers as their use of the platform, solutions, and services grows. As sales of the platform grow, the company will need to devote additional resources to expanding, improving, and maintaining the infrastructure and integrating with third-party applications. In addition, the company will need to appropriately scale the internal business systems and the services organization, including customer support, to serve the growing customer base, and to improve the IT and financial infrastructure, operating and administrative systems, and the ability to effectively manage headcount, capital and processes, including by reducing costs and inefficiencies. Any failure of, or delay in, these efforts could result in impaired system performance and reduced customer satisfaction, which would negatively impact the revenue growth and the reputation. The company may not be successful in developing or implementing these technologies. In addition, it takes a significant amount of time to plan, develop, and test improvements to the technologies and infrastructure, and the company may not be able to accurately forecast demand or predict the results that will be realized from such improvements. In some circumstances, the company may also determine to scale the technology through the acquisition of complementary businesses and technologies rather than through internal development, which may divert management’s time and resources. To the extent that the company does not effectively scale the operations to meet the needs of the growing customer base and to maintain performance as the customers expand their use of the services, the company will not be able to grow as quickly as the company anticipates, the customers may reduce or terminate use of the platform and the company will be unable to compete as effectively and the business, operating results, financial condition, and prospects will be adversely affected. The company continually works to upgrade and enhance the platform, solutions, and services in response to customer demand and to keep up with technological changes. Part of this process entails cycling out outdated components of the infrastructure and replacing them with the latest technology available. This requires the company to make certain estimates with respect to the useful life of the components of the infrastructure and to maximize the value of the components of the infrastructure, including the GPUs, to the fullest extent possible. The company cannot guarantee that the estimates will be accurate or that the attempts at maximizing value will be successful. Any changes to the significant assumptions underlying the estimates or to the estimates of the components’ useful lives, or any inability to redeploy components of the existing infrastructure to extend past their contracted life could significantly affect the business, operating results, financial condition, and prospects. The platform must also integrate with a variety of network, hardware, storage, and software technologies, and the company needs to continuously modify and enhance the capabilities of the platform to adapt to changes and innovation in these technologies. If the customers widely adopt new technologies, the company may need to redesign parts of the platform to work with those new technologies. These development efforts may require significant engineering, marketing, and sales resources, all of which would affect the business, operating results, financial condition, and prospects. Any failure of the infrastructure’s capabilities to operate effectively with future technologies and software platforms could reduce the demand for the platform. If the company is unable to respond to these changes in a cost-effective manner, the platform may become less marketable and less competitive or obsolete, and the business may be harmed. In addition, the company must also continue to effectively manage the capital expenditures by maintaining and expanding the data center capacity, servers and equipment, grow in geographies where the company currently has limited or no presence, and ensure that the performance, features, and reliability of the services and the customer service remain competitive in a rapidly changing technological environment. If the company fails to manage the growth, the quality of the platform may suffer, which could negatively affect the brand and reputation and harm the ability to retain and attract customers and employees. The broader adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain. Failure by the customers to continue to use the CoreWeave Cloud Platform to support AI use cases in their systems, or the company's ability to keep up with evolving AI technology requirements and regulatory frameworks, could have a material adverse effect on the business, operating results, financial condition, and prospects. As part of the growth strategy, the company seeks to attract and acquire customers requiring high-performance computing, such as AI, machine learning, and automated decision-making technologies, including proprietary AI algorithms and models (collectively, “AI Technologies”). AI has been developing at a rapid pace, and continues to evolve and change. As demand continues for AI services, AI providers, including the customers, have sought increased compute capacity to enable advancements in their AI models and service the demands of end users. The company cannot predict whether additional computing power will continue to be required to develop larger, more powerful AI models, or if the practical limits of AI technology will plateau in the future regardless of available compute capacity. Further, there have been recent advancements in AI technology, including open-source AI models, that may lead to compute and other efficiencies that may impact the demand for AI services, including the platform, solutions, and services, which may adversely impact the revenue and profitability. In the event that existing scaling laws do not continue to apply as they have in the past, demand by the customers for compute resources, including the solutions and services, may not continue to increase over time, or may decrease if overall demand for AI is impacted by a lack of further technological development. If the company is unable to keep up with the changing AI landscape or in developing services to meet the customers’ evolving AI needs, or if the AI landscape does not develop to the extent the company or the customers expect, the business, operating results, financial condition, and prospects may be adversely impacted. Additionally, the company may incur significant costs and experience significant delays in developing new solutions and services or enhancing the current platform to adapt to the changing AI landscape, and may not achieve a return on investment or capitalize on the opportunities presented by demand for AI solutions. Moreover, while AI adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain. Further, market acceptance, understanding, and valuation of solutions and services that incorporate AI Technologies are uncertain and the perceived value of AI Technologies used and/or provided by the customers could be inaccurate. If AI is not broadly adopted by enterprises to the extent the company expects, or if new use cases do not arise, then the opportunity may be smaller than the company expects. Further, if the consumer perception and perceived value of AI Technologies is inaccurate this could have a material adverse effect on the customers, which in turn could have a material adverse effect on the business, operating results, financial condition, and prospects. Concerns relating to the responsible use by the customers of new and evolving technologies, such as AI, which are supported by the platform, may result in collateral reputational harm to the company. AI may pose emerging ethical issues and if the platform enables customer solutions that draw controversy due to their perceived or actual impact on society, the company may experience brand or reputational harm, competitive harm, or legal liability. Furthermore, the rapid pace of innovation in the field of AI has led to developing and evolving regulatory frameworks globally, which are expected to become increasingly complex as AI continues to evolve. Regulators and lawmakers around the world have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. Regulations related to AI Technologies have been introduced in the United States at the federal level and are also enacted and advancing at the state level. Additional regulations may impact the customers’ ability to develop, use and commercialize AI Technologies, which would impact demand for the platform, solutions, and services and may affect the business, operating results, financial condition, and prospects. AI and related industries, including cloud services, are under increasing scrutiny from regulators due to their concerns about market concentration, anti-competitive practices, and the pace of partnerships and acquisitions involving generative AI startups. As the industry continues to grow, transactions and business conduct will likely continue to draw scrutiny from regulators. The customers may become subject to further AI regulations, including any restrictions on the total consumption of compute technology, which could cause a delay or impediment to the commercialization of AI technology and could lead to a decrease in demand for the customers’ AI infrastructure, and may adversely affect the business, operating results, financial condition, and prospects. The operations require substantial capital expenditures, and the company will require additional capital to fund the business and support the growth, and any inability to generate or obtain such capital on acceptable terms, if at all, or to lower the total cost of capital, may adversely affect the business, operating results, financial condition, and prospects. The company requires substantial capital expenditures to support the growth and respond to business challenges. The company has made significant financial investments in the business, and the company intends to continue to make such investments in the future, including expenditures to procure components for, maintain, upgrade, and enhance the platform, including costs related to obtaining third-party chips and leasing and maintaining, enhancing, and expanding the data centers. While the company has historically been able to fund capital expenditures from cash generated from operations, equity and debt financings, and borrowings under the term loan facilities, factors outside of the control, including those described in the “Risk Factors” section, and particularly those under “—Risks Related to Indebtedness,” could materially reduce the cash available from operations, impede the ability to raise additional capital, or significantly increase the capital expenditure requirements, which may result in the inability to fund the necessary level of capital expenditures to maintain and expand the operations. This could adversely affect the business, operating results, financial condition, and prospects. Additional financing may not be available on terms favorable to the company, if at all. If adequate financing is not available on acceptable terms, the company may be unable to invest in future growth opportunities, which could harm the business, operating results, financial condition, and prospects. If the company raises additional funds through equity or convertible debt issuances, the existing stockholders may suffer significant dilution and these securities could have rights, preferences, and privileges that are superior to those of holders of the Class A common stock. If the company obtains additional funds through debt financing, the company may not be able to obtain such financing on terms favorable to the company. Further, the current global macroeconomic environment could make it more difficult to raise additional capital on favorable terms, if at all. Such terms may involve restrictive covenants making it difficult to engage in capital raising activities and pursue business opportunities, including potential acquisitions. The trading prices of recently-public companies have been highly volatile as a result of multiple factors including, the conflicts in the Middle East and Ukraine and tensions between China and Taiwan, inflation, interest rate volatility, domestic and foreign regulatory uncertainty, changes in trade policies, including the imposition of tariffs, trade controls and other trade barriers, actual or perceived instability in the banking system, and market downturns, which may reduce the ability to access capital on favorable terms or at all. In addition, a recession, depression, or other sustained adverse market event could adversely affect the business and the value of the Class A common stock. If the company is unable to obtain adequate financing or financing on terms satisfactory to the company when the company requires it, the ability to continue to support the business growth and to respond to business challenges could be significantly impaired and the business may be adversely affected, requiring the company to delay, reduce, or eliminate some or all of the operations. Even if the company is able to raise such capital, the company cannot guarantee that the company will deploy it in such a fashion that allows the company to achieve better operating results or grow the business. Moreover, in order to fund investments in the infrastructure, the company has pioneered and scaled innovative financing structures that have enabled the company to grow the business through timely and flexible access to capital. While the company expects the cost of capital to continue declining as the company benefits from economies of scale and access new forms of financing, including asset-backed securitizations and rated parent-level debt, the ability to lower the cost of capital depends upon a number of factors, many of which are beyond the control, including broader macroeconomic conditions. If the company is unable to continue lowering the cost of capital, the ability to effectively compete, especially with larger competitors that have greater financial and other resources, as well as the operating results, financial condition, and business, may be adversely impacted. The operating results may fluctuate significantly, which could make the future results difficult to predict and could cause the operating results to fall below expectations. The operating results have varied significantly from period to period in the past, and the company expects that the operating results will continue to vary significantly in the future such that period-to-period comparisons of the operating results may not be meaningful. In addition, in future periods, the company may experience fluctuations in remaining performance obligations, given the nature of the committed contract business, the size of those contracts, and period-to-period variation in new business signed and revenue recognized from existing contracts. This could adversely affect the business, operating results, financial condition, and prospects. Accordingly, the financial results in any one quarter should not be relied upon as indicative of future performance. Fluctuations in quarterly results may negatively impact the trading price of the Class A common stock. The quarterly financial results may fluctuate as a result of a number of factors, many of which are outside of the control and may be difficult to predict, including, without limitation: the amount and timing of operating costs and capital expenditures related to the expansion of the business, any power outages, shortages, supply chain issues, capacity constraints, or significant increases in the cost of securing power, general global macroeconomic and political conditions, both domestically and in the foreign markets that could impact some or all regions where the company operates, including global economic slowdowns, domestic and foreign regulatory uncertainty, changes in trade policies, including the imposition of tariffs, trade controls and other trade barriers, actual or perceived global banking and finance related issues, increased risk of inflation, potential uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, interest rate volatility, supply chain disruptions, labor shortages, increases in energy costs and potential global recession, the impact of natural or man-made global events on the business, including wars and other armed conflict, such as the conflicts in the Middle East and Ukraine and tensions between China and Taiwan, changes in the legal or regulatory environment, including developments in regulations relating to AI and machine learning, the ability to attract new and retain existing customers, increase sales of the platform, or sell additional solutions and services to existing customers, the budgeting cycles, seasonal buying patterns, and purchasing practices of customers, the timing and length of the sales cycles, changes in customer requirements or market needs, changes in the growth rate of the cloud infrastructure market generally, the timing and success of new solution and service introductions by the company or the competitors or any other competitive developments, including consolidation among the customers or competitors, any disruption in the strategic relationships, the ability to successfully expand the business domestically and internationally, equity or debt financings and the capital markets environment, including interest rate changes, the ability to reduce the cost of capital over time, decisions by organizations to purchase specialized AI cloud infrastructure from larger, more established vendors, the ability to successfully and timely deliver the solutions and services to customers under the committed contracts, including due to data center lead times, the ability to successfully and timely deploy launches of additional data centers, the timing and success of the integration of new infrastructure, including new GPU generations, into the platform, changes in the pricing policies or those of the competitors, insolvency or credit difficulties confronting the customers, including bankruptcy or liquidation, due to individual, macroeconomic, and regulatory factors, including those specifically impacting early-stage AI ventures, affecting their ability to purchase or pay for the platform, significant security breaches of, technical difficulties with, or interruptions to, the use of the platform or other cybersecurity incidents, extraordinary expenses such as litigation or other dispute-related settlement payments or outcomes, taxes, regulatory fines or penalties, the timing of revenue recognition and revenue deferrals, future accounting pronouncements or changes in the accounting policies or practices, negative media coverage or publicity, and increases or decreases in the expenses caused by fluctuations in foreign currency exchange rates. Any of the above factors, individually or in the aggregate, could result in significant fluctuations in the financial condition, cash flows, and other operating results from period to period. The company faces intense competition and could lose market share to the competitors, which would adversely affect the business, operating results, financial condition, and prospects. The market for AI cloud infrastructure and software is intensely competitive and is rapidly evolving, characterized by changes in technology, customer requirements, industry standards, regulatory developments, and frequent introductions of new or improved solutions and services. Key competitors that offer general purpose cloud computing as part of a broader, diversified product portfolio include Amazon (AWS), Google (Google Cloud Platform), IBM, Microsoft (Azure), and Oracle, a number of which are also the current customers. The company also competes with smaller cloud service providers focused on AI, including Crusoe and Lambda. The company expects to continue to face intense competition from current competitors, including as the competitors complete strategic acquisitions or form cooperative relationships and/or customer requirements evolve, as well as from new entrants into the market. If the company is unable to anticipate or react to these challenges, the competitive position could weaken, and the company would experience a decline in revenue or reduced revenue growth, and loss of market share that could adversely affect the business, operating results, financial condition, and prospects. The ability to compete effectively depends upon numerous factors, many of which are beyond the control, including, but not limited to: changes in customer or market needs, requirements, and preferences and the ability to fulfill those needs, requirements, and preferences, the ability to expand and augment the platform, including through infrastructure and new technologies, or increase sales of the platform, any power outages, shortages, supply chain issues, capacity constraints, or significant increases in the cost of securing power, the ability to attract, train, retain, and motivate talented employees, the ability to retain existing customers and increase sales to existing customers, as well as attract and retain new customers, the budgeting cycles, seasonal buying patterns, and purchasing practices of the customers, including any slowdown in technology spending due to U.S. and general global macroeconomic conditions, price competition, stagnation in the adoption rate or changes in the growth rate of AI and AI cloud infrastructure sectors, including due to emerging AI technologies, which may lead to further compute efficiencies, the timing and success of new solution and service introductions by the company or the competitors, including new competing technologies that may displace cloud infrastructure, or any other change in the competitive landscape of the industry, including consolidation among the competitors or customers and strategic partnerships entered into by and between the competitors, changes in the mix of solution and services sold, including changes in the average contracted usage of the platform, the ability to successfully and continuously expand the business domestically and internationally, the ability to secure necessary funding, deferral of orders from customers in anticipation of new or enhanced solutions and services announced by the company or the competitors, significant security breaches or, technical difficulties with, or interruptions to the use of the platform, including data security, the timing and costs related to the development or acquisition of technologies or businesses or entry into strategic partnerships, the ability to execute, complete, or efficiently integrate any acquisitions that the company may undertake, increased expenses, unforeseen liabilities, or write-downs and any impact on the operating results from any acquisitions the company consummates, the ability to increase the size and productivity of the sales teams, decisions by potential customers to purchase cloud infrastructure and associated services from larger, more established technology companies, insolvency or credit difficulties confronting the customers, which could increase due to U.S. and global macroeconomic issues and which would adversely affect the customers’ ability to purchase or pay for the platform in a timely manner or at all, the cost and potential outcomes of litigation, regulatory investigations or actions, or other proceedings, which could have a material adverse effect on the business, operating results, financial condition, and prospects, future accounting pronouncements or changes in the accounting policies, increases or decreases in the expenses caused by fluctuations in foreign currency exchange rates, the ability to comply with applicable domestic and international regulations and laws and to obtain the necessary licenses to conduct the business, general global macroeconomic and political conditions, both domestically and in the foreign markets that could impact some or all regions where the company operates, including global economic slowdowns, domestic and foreign regulatory uncertainty, changes in trade policies, including the imposition of tariffs, trade controls and other trade barriers, actual or perceived global banking and finance related issues, increased risk of inflation, potential uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, interest rate volatility, supply chain disruptions, labor shortages, and potential global recession, and the impact of natural or man-made global events on the business, including outbreaks of contagious diseases or pandemics and wars and other armed conflicts, such as the conflicts in the Middle East and Ukraine and the tensions between China and Taiwan. Many of the competitors have greater financial, technical, marketing, sales, and other resources, greater name recognition, longer operating histories, and a larger base of customers than the company does. The competitors may be able to devote greater resources to the development, promotion, and sale of their solutions and services than the company can, and they may offer lower pricing than the company does or bundle certain competing solutions and services at lower prices. The competitors may also have greater resources for research and development of new technologies, customer support, and to pursue acquisitions, and they have other financial, technical, or other resource advantages. The larger competitors have substantially broader and more diverse solution and service offerings and more mature distribution and go-to-market strategies, which allows them to leverage their existing customer relationships and any distributor relationships to gain business in a manner that discourages potential customers from purchasing the platform. Further, the current and future competitors may include the customers and suppliers, if any of these customers or suppliers were to cease purchasing services from the company or supplying the company with components as a result, the business, operating results, financial condition, and prospects could be adversely affected. Conditions in the market could change rapidly and significantly as a result of technological advancements, including but not limited to increased advancements and proliferation in the use of AI and machine learning, partnerships between or acquisitions by the competitors, or continuing market consolidation, including consolidation of potential or existing customers with the competitors. Some of the competitors have recently made or could make acquisitions of businesses or have established cooperative relationships that may allow them to offer more directly competitive and comprehensive solutions and services than were previously offered and adapt more quickly to new technologies and customer needs. These competitive pressures in the market or the failure to compete effectively may result in price reductions, fewer orders, reduced revenue and operating margin, increased net losses, and loss of market share. Even if there is significant demand for specialized AI cloud infrastructure like the company's, if the competitors include functionality that is, or is perceived to be, equivalent to or better than the company's in legacy solutions and services that are already generally accepted as necessary components of an organization’s operational architecture, the company may have difficulty increasing the market penetration of the platform. Furthermore, even if the functionality offered by other cloud infrastructure providers is different and more limited than the functionality of the platform, organizations may elect to accept such limited functionality in lieu of purchasing the solutions and services. If the company is unable to compete successfully, or if competing successfully requires the company to take aggressive action with respect to pricing or other actions, the business, operating results, financial condition, and prospects would be adversely affected. A network or data security incident against the company, or the third-party providers, whether actual, alleged, or perceived, could harm the reputation, create liability and regulatory exposure, and adversely impact the business, operating results, financial condition, and prospects. Companies are subject to an increasing number, and wide variety, of attacks on their networks on an ongoing basis. Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, ransomware, account takeover, business email compromise, employee fraud or bad actors, theft or misuse, denial of service attacks, misconfigurations, bugs, or other vulnerabilities in commercial software that is integrated into the (or the suppliers’ or service providers’) IT systems, and sophisticated nation-state sponsored actors engage in cyber intrusions and attacks that create risks for the infrastructure and the data, including personal information, which it hosts and transmits. State-supported and geopolitical-related cyberattacks may rise in connection with regional geopolitical conflicts such as the conflicts in the Middle East and Ukraine and tensions between China and Taiwan. Moreover, the ongoing war in Ukraine and associated activities in Russia as well as in the Middle East, have increased the risk of cyberattacks on various types of infrastructure and operations. Additionally, bad actors are beginning to utilize AI-based tools to execute attacks, creating unprecedented cybersecurity challenges. The company may be a valuable target for cyberattacks given the critical data which the company hosts and transmits. Although the company has implemented security measures designed to prevent such attacks, including a review of the third-party providers’ measures, the company cannot guarantee that such measures will operate effectively to protect the and the third-party providers’ infrastructure, systems, networks, and physical facilities from breach due to the actions of outside parties or human error, malfeasance, insider threats, system errors or vulnerabilities, insufficient cybersecurity controls, a combination of the foregoing, or otherwise, and as a result, an unauthorized party may obtain access to the, the third-party providers’ or the customers’ systems, networks, or data. The techniques used to obtain unauthorized access to systems or sabotage systems, or disable or degrade services, change frequently and are often unrecognizable until launched against a target, and therefore the company may be unable to anticipate these techniques and implement adequate preventative measures. The servers may be vulnerable to computer viruses or physical or electronic break-ins that the security measures may not detect. Protecting the own assets has become more expensive and these costs may increase as the threat landscape increases, including as a result of use by bad actors of AI. The company may face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or threats. These risks are exacerbated by developments in generative AI. A breach in the or the third-party providers’ data security or an attack against the platform could and have impacted the infrastructure and systems, creating system disruptions or slowdowns and providing access to malicious parties to information hosted and transmitted by the infrastructure, resulting in data, including the data of the customers, being publicly disclosed, misused, altered, lost, or stolen, which could subject the company to liability and reputational harm and adversely affect the financial condition. While to date no incidents have had a material impact on the operations or financial results, the company cannot guarantee that material incidents will not occur in the future. If compromised, the own systems could be used to facilitate or magnify an attack. Further, the increase in remote work by companies and individuals in recent years has generally increased the attack surface available to bad actors for exploitation, and as such, the risk of a cybersecurity incident potentially occurring has increased. Finally, the company has acquired and expects to continue to acquire companies with cybersecurity vulnerabilities or unsophisticated security measures, which exposes the company to significant cybersecurity, operational and financial risks. Any actual, alleged, or perceived security breach in the third-party providers’ or partners’ systems or networks, or any other actual, alleged or perceived data security breach that the company or the third-party providers or partners suffer, could result in damage to the reputation, negative publicity, loss of customers and sales, loss of competitive advantages over the competitors, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations and enforcement actions, fines and penalties, costly litigation (including class actions), and other liability. The company would also be exposed to a risk of loss or litigation and potential liability under laws, regulations, and contracts that protect the privacy and security of personal information. For a description of the privacy and security laws, regulations and other industry requirements to which the business is subject, see the risk factor below “—The company is subject to laws, regulations, and industry requirements related to data privacy, data protection and information security, and user protection across different markets where the company conducts its business and such laws, regulations, and industry requirements are constantly evolving and changing. Any actual or perceived failure to comply with such laws, regulations, and industry requirements, or the privacy policies, could harm the business.” Due to concerns about data security and integrity, a growing number of legislative and regulatory bodies have adopted breach notification and other requirements in the event that information subject to such laws is accessed by unauthorized persons and additional regulations regarding security of such data are possible. The company may need to notify governmental authorities and affected individuals with respect to such incidents. For example, laws in the European Union, the United Kingdom, and the United States may require businesses to provide notice to individuals whose personal information has been disclosed as a result of a data security breach. Complying with such numerous and complex regulations in the event of a data security breach can be expensive and difficult, and failure to comply with these regulations could subject the company to regulatory scrutiny and additional liability. In addition, certain of the customer agreements, as well as privacy laws, may require the company to promptly report security incidents involving the systems or those of the third-party partners that compromise the security, confidentiality, or integrity of certain processed customer data. Regardless of the contractual protections, these mandatory disclosures could be costly, result in litigation, harm the reputation, erode customer trust, and require significant resources to mitigate issues stemming from actual or perceived security breaches. Although the company maintains cybersecurity insurance, there can be no guarantee that any or all costs or losses incurred will be partially or fully recouped from such insurance or that applicable insurance in the future will be available on economically reasonable terms or at all. The company may also incur significant financial and operational costs to investigate, remediate, eliminate, and put in place additional tools and devices designed to prevent actual or perceived security breaches and other security incidents, as well as costs to comply with any notification obligations resulting from any security incidents. Any of these negative outcomes could adversely affect the market perception of infrastructure and customer and investor confidence in the company, and would adversely affect the business, operating results, financial condition, and prospects. Further, from time to time, government entities (including law enforcement bodies) may in the future seek the company's assistance with obtaining access to the customers’ data. Although the company strives to protect the privacy of the customers, the company may be required from time to time to provide access to customer data to government entities. In light of the privacy commitments, although the company may legally challenge law enforcement requests to provide access to the systems or other customer content, the company may nevertheless face complaints that the company has provided information improperly to law enforcement or in response to non-meritorious third-party complaints. The company may experience adverse political, business, and reputational consequences, to the extent that the company does not provide assistance to or comply with requests from government entities in the manner requested or challenge those requests publicly or in court or provide, or are perceived as providing, assistance to government entities that exceeds the legal obligations. Any such disclosure could significantly and adversely impact the business and reputation. The company has a history of generating net losses as a result of the substantial investments the company has made to grow the business and develop the platform, anticipate increases in the operating expenses in the future, and may not achieve or, if achieved, sustain profitability. If the company cannot achieve and, if achieved, sustain profitability, the business, operating results, financial condition, and prospects will be adversely affected. The company incurred net losses of $315 million and $129 million for the three months ended March 31, 2025 and 2024, respectively, and the company may not achieve or, if achieved, sustain profitability in the future. As of March 31, 2025, the company had an accumulated deficit of $1.8 billion. While the company has historically experienced significant growth in revenue over the last two years, the company cannot predict whether the company will maintain this level of growth or when the company will achieve profitability. The company also expects the operating expenses to increase in the future, including the general and administrative expenses as a result of increased costs associated with operating as a public company and as the company continues to invest for the future growth, including expanding the research and development function to drive further development of the platform, continuing to invest in the technology infrastructure underlying the platform and data center expansion, expanding the sales and marketing activities, developing the functionality to expand into adjacent markets, and reaching customers in new geographic locations and new verticals, which will negatively affect the operating results if the total revenue does not increase. The operating efficiencies may decrease as the company scales, and the revenue growth may slow as the company grows. The revenue could also decline for a number of other reasons, including reduced demand for the offerings, increased competition, a decrease in the growth or reduction in size of the overall market, or if the company cannot capitalize on growth opportunities, including acquisitions and through new and enhanced solutions and services. Furthermore, to the extent the anticipated cash payback period is longer than the company expects, or if the company fails to maintain or increase the revenue to offset increases in the operating expenses or manage the costs as the company invests in the business, including if the company does not maintain or improve the operating efficiencies, the company may not achieve or sustain profitability, and if the company cannot achieve and sustain profitability, the business, operating results, financial condition, and prospects will be adversely affected. The company makes substantial investments in the technology and infrastructure and unsuccessful investments could materially adversely affect the business, operating results, financial condition, and prospects. The industry in which the company competes is characterized by rapid technological change, changes in customer requirements, frequent new product and service introductions and enhancements, short product cycles, and evolving industry standards. In order to remain competitive, the company has made, and expects to continue to make, significant investments in the technology and infrastructure. For the three months ended March 31, 2025 and 2024, technology and infrastructure expenses were $561 million and $93 million, respectively. If the company fails to further develop the platform or develop new and enhanced solutions, services, and technologies, if the company focuses on technologies that do not become widely adopted, or if new competitive technologies or industry standards that the company does not support become widely accepted, demand for the solutions and services may be reduced. Increased investments in technology and infrastructure or unsuccessful improvement efforts could cause the cost structure to fall out of alignment with demand for the solutions and services, which would have a negative impact on the business, operating results, financial condition, and prospects. The platform is complex and performance problems or defects associated with the platform may adversely affect the business, operating results, financial condition, and prospects. It may become increasingly difficult to maintain and improve the platform performance, especially during peak demand spikes and as the customer base grows and the platform becomes more complex. If the platform is unavailable or if the customers are unable to access the platform within a reasonable amount of time or at all, the company could experience a loss of customers, lost or delayed market acceptance of the platform, delays in payment to the company by customers or issuance of credits to impacted customers, injury to the reputation and brand, warranty and legal claims against the company, significant cost of remedying these problems, and the diversion of the resources. For example, in the past, the company has experienced, and may in the future experience, insufficient power to service a customer’s project and has been required to provide service credits to that customer due to resulting performance issues. In addition, to the extent that the company does not effectively address capacity constraints, upgrade the systems as needed, and continually develop the technology and network architecture to accommodate actual and anticipated changes in technology, the business, operating results, financial condition, and prospects, as well as the reputation, may be adversely affected. Further, the hardware and software technology underlying the platform is inherently complex and may contain material defects or errors, particularly when new solutions and services are first introduced or when new features or capabilities are released. The company has from time to time found defects or errors in the platform, and new defects or errors may be detected in the future by the company or the customers. The company cannot ensure that the platform, including any new solutions and services that the company releases, will not contain defects. Any real or perceived errors, failures, vulnerabilities, or bugs in the platform could result in negative publicity or lead to data security, access, retention, or other performance issues, all of which could harm the business. The company also relies on third-party suppliers for the most significant components of the equipment the company uses to operate the infrastructure. These third-party suppliers may also experience defects or errors in the products that the company utilizes in the platform, which would impact the platform and may result in performance problems or service interruptions. The costs incurred in correcting any such defects or errors, including those in third-party components, may be substantial and could harm the business. Moreover, the harm to the reputation and legal liability related to such defects or errors may be substantial and could similarly harm the business. In addition, most of the customer agreements and terms of service contain service level commitments. If the company is unable to meet the stated service level commitments due to performance problems or defects, the company may be contractually obligated to provide the affected customers with service credits or refunds, which could significantly affect the revenue in the periods in which any issues occur and the credits or refunds are applied. As a result of degradation of service and interruptions to the platform, the company has provided, and may continue to provide, service credits and/or refunds to certain of the affected customers with whom the company had service level commitments. The company could also face customer terminations with refunds of prepaid amounts, which could significantly affect both the current and future revenues. Any service level failures could harm the business. Any failure of the IT systems or those of one or more of the IT service providers, business partners, vendors, suppliers, or other third-party service providers, or any other failure by such third parties to provide services to the company may negatively impact the relationships with customers and harm the business. The business depends on various IT systems and outsourced IT services. The company relies on third-party IT service providers, business partners, vendors, and suppliers to provide critical IT systems, corporate infrastructure, and other services and are, by necessity, dependent on them to adequately address cybersecurity threats to, and other vulnerabilities, defects, or deficiencies of or in their own systems. This includes infrastructure such as electronic communications, finance, marketing, and recruiting platforms and services such as IT network development and network monitoring, and third-party data center hosting of the systems for the internal and customer use. The company does not own or control the operation of the third-party facilities or equipment used to provide such services. The third-party vendors and service providers have no obligation to renew their agreements with the company on commercially reasonable terms or at all. If the company is unable to renew these agreements on commercially reasonable terms, including with respect to service levels and cost, or at all, the company may be required to transition to a new provider, and the company may incur significant costs and possible service interruption in connection with doing so. In addition, such service providers could decide to close their facilities or change or suspend their service offerings without adequate notice to the company. Moreover, any financial difficulties, such as bankruptcy, faced by such vendors, the nature and extent of which are difficult to predict, may harm the business. Since the company cannot easily switch vendors without making other business trade-offs, any disruption with respect to the current providers would impact the operations and the business may be harmed. Furthermore, the disaster recovery systems and those of such third parties may not function as intended or may fail to adequately protect the business information in the event of a significant business interruption, Any termination, failure, or other disruption of any of such systems or services of the third-party IT providers, business partners, vendors, and suppliers could lead to operating inefficiencies or disruptions, which could harm the business, operating results, financial condition, and prospects. The company has a limited operating history at the current scale, which makes it difficult to evaluate the current business and prospects and increases the risks associated with investment in the Class A common stock. The company has a relatively short history operating the business at the current scale and has grown rapidly during that time. The company was founded in September 2017 and launched the CoreWeave Cloud Platform in 2020. Moreover, prior to 2022, the company had limited revenue, most of which was derived from the crypto mining offerings, which the company has discontinued. The limited operating history, including the limited history of selling the cloud infrastructure offering, the dynamic and rapidly evolving market in which the company sells the platform, and the concentration of the revenue from a limited number of customers, as well as numerous other factors beyond the control, may make it difficult to evaluate the current business, prospects and other trends. The company has encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly changing industries and sectors, such as the risks and uncertainties described herein. Any predictions about the future revenue and expenses may not be as accurate as they would be if the company had a longer operating history or operated in a more predictable or established market. If the assumptions regarding these risks and uncertainties are incorrect or change due to fluctuations in the markets, any material reduction in AI or machine learning spending, changes in demand for specialized AI cloud infrastructure, or otherwise, or if the company does not address these risks successfully, the operating and financial results could differ materially from the expectations and the business, operating results, financial condition, and prospects could be adversely affected. The company cannot ensure that the company will be successful in addressing these and other challenges the company may face in the future. The risks associated with having a limited operating history may be exacerbated by current macroeconomic and geopolitical conditions discussed herein. The company has a limited history selling access to the platform under the current business model and is continuing to scale the operations and evolve the go-to-market strategy, which may make it difficult to evaluate the business and prospects and increase the risks associated with an investment in the Class A common stock. The company has a limited history selling access to the AI infrastructure and proprietary managed software and application services through the CoreWeave Cloud Platform under the current business model and the company is continuing to scale the operations and evolve the go-to-market strategy. The company currently sells access to the platform either through committed contracts, which are take-or-pay, or on-demand, which are pay-as-you-go. For the three months ended March 31, 2025 and 2024, committed contracts accounted for over 98% and 94% of the revenue, respectively. There is no guarantee that in the future customers will continue to be willing to enter into, and that the industry will continue to support, a take-or-pay model, and any move towards a pay-as-you-go model will impact the ability to forecast the expected cash flows and operating results, impact the margins, and affect the business, operating results, financial condition, and prospects. Moreover, the committed contracts typically include a prepayment from the customers prior to them receiving any of the services. As of December 31, 2024, and 2025, the weighted-average prepayment across all the active contracts was 15% to 25% of the TCV. The level of prepayments the company receives from customers may fluctuate over time as the company continues to scale the operations and evolve the go-to-market strategy, customer base, and the use cases for the platform. Moreover, any changes in the timing or level of customer payments, including prepayments, would impact the cash flows. Furthermore, scaling the operations and evolving the go-to-market strategy may take more time and require more effort to implement than anticipated and may have results that are difficult to predict which could result in decreased revenue from the customers. The business and pricing models have not been fully proven, and the company has only a limited operating history with the current business and pricing models to evaluate the business and prospects, which subjects the company to a number of uncertainties, including the ability to plan for and model future growth. Moreover, the historical revenue growth should not be considered indicative of the future performance. If the company is unable to attract new customers, retain existing customers, and/or expand sales of the platform, solutions, and services to such customers, the company may not achieve the growth the company expects, which would adversely affect the business, operating results, financial condition, and prospects. In order to grow the business, the company must continue to attract new customers in a cost-effective manner and enable these customers to realize the benefits associated with the platform. The company may experience difficulties demonstrating to customers the value of the platform and any new solutions and services that the company offers. As the company develops and introduces new solutions and services and adds new and upgraded components of the platform (such as next-generation NVIDIA GPUs), the company faces the risk that customers may not value or be willing to adopt these newer offerings, and may forgo adopting one or more newer generations of the existing offerings. Regardless of the improved features or superior performance of the newer offerings, customers may be unwilling to adopt the platform due to design or pricing constraints, among other reasons. Even if customers choose to adopt the platform or new solutions and services that the company develops, they may be slow to do so. Because of the extensive time and resources that the company invests in research and development, if the company is unable to sell new solutions and services, the revenue may decline and the business, operating results, financial condition, and prospects could be negatively affected. Historically, the company has used an internal sales team that is focused on responding to inbound inquiries, outbound prospecting targeting specific customers, expanding sales of the platform to existing customers, and expanding the revenue in specific markets to drive revenue growth. If the sales team is not successful at growing the customer base, the future growth will be impacted. In addition, the company must persuade potential customers that the platform offers significant advantages over those of the competitors. As the market matures, the solutions and services evolve, and competitors introduce lower cost and/or differentiated solutions or services that are perceived to compete with the platform, the ability to maintain or expand sales of the platform, solutions, and services could be impaired. Even if the company does attract new customers, the cost of new customer acquisition, implementation of the platform, and ongoing customer support may prove higher than anticipated, thereby adversely impacting the profitability. Other factors, many of which are out of the control, may now or in the future impact the ability to retain existing customers, attract new customers, and expand sales of the platform, solutions, and services to such customers in a cost-effective manner, including: potential customers’ commitments to existing solutions or services or greater familiarity or comfort with other solutions or services, the ability to secure sufficient power for the platform and solutions, decreased spending on specialized AI cloud infrastructure or AI or machine learning development generally, deteriorating general economic and geopolitical conditions, future governmental regulation, which could adversely impact growth of the AI sector, negative media, industry, or financial analyst commentary regarding the platform, AI, and the identities and activities of some of the customers, the ability to expand, retain, and motivate the sales, customer success, cloud operations, and marketing personnel, the ability to obtain or maintain industry security certifications for the platform, the perceived risk, commencement, or outcome of litigation, and increased expenses associated with being a public company. Some of the customer contracts are on-demand and based on the terms of service, which do not require the customers to commit to a specific contractual period, and which permit the customer to terminate their contracts or decrease usage of the services with limited notice. Any service terminations could cause the operating results to fluctuate from quarter to quarter. The customer retention may decline or fluctuate as a result of a number of factors, including the customers’ satisfaction with the security, performance, and reliability of the platform, the prices and usage plans, the customers’ AI development and use and related budgetary restrictions, the perception that competitive solutions and services provide better or less expensive options, negative public perception of the company or the customers, and deteriorating general economic conditions. The future financial performance also depends in part on the ability to expand sales of the platform to customers located outside of the United States and the current, and any further, expansion of the international operations exposes the company to risks that could have a material adverse effect on the business, operating results, financial condition, and prospects. The company generates a small portion of the revenue outside of the United States, and conducts the business activities in various foreign countries, where the company has limited experience, where the challenges of conducting the business can be significantly different from those the company has faced in more developed markets and where business practices may create internal control risks including: slower than anticipated demand for AI and machine learning solutions offered by existing and potential customers outside the United States and slower than anticipated adoption of specialized AI cloud-based infrastructures by international businesses, fluctuations in foreign currency exchange rates, which could add volatility to the operating results, limitations within the debt agreements that may restrict the ability to make investments in the foreign subsidiaries, new, or changes in, regulatory requirements, including with respect to AI, tariffs, export and import restrictions, restrictions on foreign investments, sanctions, and other trade barriers or protection measures, exposure to numerous, increasing, stringent (particularly in the European Union), and potentially inconsistent laws and regulations relating to privacy, data protection, and information security, costs of localizing the platform, lack of acceptance of localized solutions and services, the need to make significant investments in people, solutions, and infrastructure, typically well in advance of revenue generation, challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits, and compliance programs, difficulties in maintaining the corporate culture with a dispersed and distant workforce, treatment of revenue from international sources, evolving domestic and international tax environments, and other potential tax issues, including with respect to the corporate operating structure and intercompany arrangements, different or weaker protection of the intellectual property, including increased risk of theft of the proprietary technology and other intellectual property, economic weakness or currency-related disparities or crises, compliance with multiple, conflicting, ambiguous or evolving governmental laws and regulations, including employment, tax, data privacy, anti-corruption, import/export, antitrust, data transfer, storage and protection, and industry-specific laws and regulations, including regulations related to AI, generally longer payment cycles and greater difficulty in collecting accounts receivable, the ability to adapt to sales practices and customer requirements in different cultures, the lack of reference customers and other marketing assets in regional markets that are new or developing for the company, as well as other adaptations in the market generation efforts that the company may be slow to identify and implement, dependence on certain third parties, including third-party data center facility providers, natural disasters, acts of war, terrorism, or pandemics, including the armed conflicts in the Middle East and Ukraine and tensions between China and Taiwan, actual or perceived instability in the global banking system, cybersecurity incidents, corporate espionage, and political instability and security risks in the countries where the company is doing business and changes in the public perception of governments in the countries where the company operates or plans to operate. The sales cycles can be long and unpredictable, and the sales efforts require considerable time and expense. The go-to-market approach currently focuses on a top-down sales model to drive demand and pipeline from the large AI labs and AI enterprises. Sales to such customers involve longer and more unpredictable sales cycles. Customers often view the purchase of the platform as a significant strategic decision and, as a result, frequently require considerable time to evaluate, test, and qualify the platform prior to entering into or expanding a relationship with the company. Large enterprises in particular, often undertake a significant evaluation process that further lengthens the sales cycle. The direct sales team develops relationships with the customers, and works on account penetration, account coordination, sales, and overall market development. The company spends substantial time and resources on the sales efforts without any assurance that the efforts will produce a sale. Cloud infrastructure capacity purchases are frequently subject to budget constraints, multiple approvals, and unanticipated administrative, processing, and other delays. As a result, it is difficult to predict whether and when a sale will be completed. The failure of the efforts to secure sales after investing resources in a lengthy sales process would adversely affect the business, operating results, financial condition, and prospects. The sales prices of the offerings may decrease, which may reduce the margins and adversely affect the business, operating results, financial condition, and prospects. The company has limited experience with respect to determining the optimal prices for the platform. As the market for cloud infrastructure and AI and machine learning solutions mature, or as new competitors introduce new infrastructure solutions or services that are similar to or compete with the company's, the company may be unable to effectively optimize the prices through increases or decreases or attract new customers at the offered prices or based on the same pricing model as the company has used historically. Further, competition continues to increase in the market segments in which the company participates, and the company expects competition to further increase in the future, thereby leading to increased pricing pressures. Larger competitors with more diverse offerings may reduce the price of any offerings that compete with the company's or may bundle them with other solutions and services. This could lead customers to demand greater price concessions or additional functionality at the same price levels. As a result, in the future the company may be required to reduce the prices or provide more features and services without corresponding increases in price, which would adversely affect the business, operating results, financial condition, and prospects. Existing and future acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt the business, dilute stockholder value, and adversely affect the business, operating results, financial condition, and prospects. As part of the business strategy, the company has in the past and expects to continue to make investments in and/or acquire complementary companies, services, products, technologies, or talent. The company has also invested, including in the form of providing computing services, in certain privately held companies, and the company may not realize a return on these investments. All of the acquisitions and venture investments are subject to a risk of partial or total loss of investment capital. The ability as an organization to acquire and integrate other companies, services, or technologies in a successful manner is not guaranteed. In the future, the company may not be able to find suitable acquisition candidates, and the company may not be able to complete such acquisitions on favorable terms, if at all. The due diligence efforts may fail to identify all of the challenges, problems, liabilities, or other shortcomings involved in an acquisition. Further, current and future changes to the U.S. and foreign regulatory approval process and requirements related to acquisitions may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent the transaction or jeopardize, delay or reduce the anticipated benefits of the transaction, and impede the execution of the business strategy. If the company does complete acquisitions, the company may not ultimately strengthen the competitive position or ability to achieve the business objectives, and any acquisitions the company announces or completes could be viewed negatively by the customers or investors. In addition, if the company is unsuccessful at integrating existing and future acquisitions, or the technologies and personnel associated with such acquisitions, into the company, the business, operating results, financing condition, and prospects of the combined company could be adversely affected. For example, in February 2025, the company entered into a definitive agreement to acquire Weights & Biases, an AI developer platform. The transaction, which was subject to customary closing conditions, including regulatory approvals, closed in May 2025. There can be no assurance that the company will be successful in the efforts to integrate Weights & Biases, its employees, and its products and services, into the platform. Any integration process may require significant time and resources, and the company may not be able to manage the process successfully. The company may not successfully evaluate or utilize the acquired technology or personnel, or accurately forecast the financial impact of an acquisition transaction, causing unanticipated write-offs or accounting (including goodwill) charges. Additionally, integrations could take longer than expected, or if the company moves too quickly in trying to integrate an acquisition, the company may fail to achieve the desired efficiencies. The company has, and may in the future have, to pay cash, incur debt, issue equity securities or provide computing services, to pay for any such acquisition, each of which could adversely affect the financial condition and the market price of the Class A common stock. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to the stockholders, which, depending on the size of the acquisition, may be significant. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede the ability to manage the operations. Furthermore, the ability to make acquisitions and finance acquisitions through the sale of equity or issuance of debt is limited by certain restrictions contained in the debt agreements. Additional risks the company may face in connection with acquisitions include: diversion of management’s time and focus from operating the business to addressing acquisition integration challenges, the inability to coordinate research and development and sales and marketing functions, the inability to integrate solution and service offerings, retention of key employees from the acquired company, changes in relationships with strategic partners or the loss of any key customers or partners as a result of acquisitions or strategic positioning resulting from the acquisition, cultural challenges associated with integrating employees from the acquired company into the organization, integration of the acquired company’s accounting, customer relationship management, management information, human resources, and other administrative systems, the need to implement or improve controls, procedures, and policies at a business that prior to the acquisition may have lacked sufficiently effective controls, procedures, and policies, unexpected security risks or higher than expected costs to improve the security posture of the acquired company, additional legal, regulatory, or compliance requirements, financial reporting, revenue recognition, or other financial or control deficiencies of the acquired company that the company does not adequately address and that cause the reported results to be incorrect, liability for activities of the acquired company before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities, failing to achieve the expected benefits of the acquisition or investment, and litigation or other claims in connection with the acquired company, including claims from or against terminated employees, customers, current and former stockholders, or other third parties. The company's failure to address these risks or other problems encountered in connection with acquisitions and investments could cause the company to fail to realize the anticipated benefits of these acquisitions or investments, cause the company to incur unanticipated liabilities, and harm the business generally. The company's estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which the company competes achieve the forecasted growth, the business could fail to grow at similar rates, if at all. The estimates of market opportunity and forecasts of market growth may prove to be inaccurate. Market opportunity estimates and growth forecasts, including those the company has generated itself, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including the risks described herein. Even if the markets in which the company competes achieve the forecasted growth, the business could fail to grow at similar rates, if at all. Further, if AI is not broadly adopted by enterprises to the extent the company expects, or if new use cases do not arise, then the opportunity may be smaller than the company expects. The variables that go into the calculation of the company's market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable customers covered by the company's market opportunity estimates will purchase the platform at all or generate any particular level of revenue for the company. Any expansion in the markets in which the company operates depends on a number of factors, including the cost, performance, and perceived value associated with the platform and those of the competitors. Even if the markets in which the company competes meet the size estimates and growth forecast, the business could fail to grow at similar rates, if at all. The company's growth is subject to many factors, including the success in implementing the business strategy, which is subject to many risks and uncertainties. Accordingly, the forecasts for market growth should not be taken as indicative of the company's future growth. The company has in the past, and may in the future, enter into collaborations or strategic alliances with third parties. If the company is unsuccessful in establishing or maintaining strategic relationships with these third parties or if these third parties fail to deliver certain operational services, the business, operating results, financial condition, and prospects could be adversely affected. The company has in the past, and may in the future, enter into collaborations or strategic alliances with third parties in connection with the development, operation, and enhancements to the platform and the provision of the solutions and services. Identifying strategic relationships with third parties, and negotiating and documenting relationships with them, may be time-consuming and complex and may distract management. Moreover, the company may be delayed, or may not be successful, in achieving the objectives that the company anticipates as a result of such strategic relationships. In evaluating counterparties in connection with collaborations or strategic alliances, the company considers a wide range of economic, legal, and regulatory criteria depending on the nature of such relationship, including the counterparties’ reputation, operating results, and financial condition, operational ability to satisfy the company's and the customers’ needs in a timely manner, efficiency and reliability of systems, certifications costs to the company or to the customers, and licensure and compliance status. Despite this evaluation, third parties may still not meet the company's or the customers’ needs which may adversely affect the ability to deliver solutions and services to customers and may adversely impact the business, operating results, financial condition, and prospects. Counterparties to any strategic relationship may have economic or business interests or goals that are, or that may become, inconsistent with the company's business interests or goals, and may subject the company to additional risks to the extent such third party becomes the subject of negative publicity, faces its own litigation or regulatory challenges, or faces other adverse circumstances. Conflicts may arise with the strategic partners, such as the interpretation of significant terms under any agreement, which may result in litigation or arbitration which would increase the expenses and divert the attention of the management. If the company is unsuccessful in establishing or maintaining strategic relationships with third parties, the ability to compete or to grow the revenue could be impaired and the business, operating results, financial condition, and prospects could be adversely affected. The anticipated benefits of potential joint ventures may not be fully realized or take longer to realize than expected. In addition, the company's joint venture investments could expose the company to risks and liabilities in connection with the formation of the new joint ventures, the operation of such joint ventures without sole decision-making authority, and the company's reliance on joint venture partners who may have economic and business interests that are inconsistent with the company's business interests. The company may enter into joint ventures in the future, including to develop and operate data centers. Certain sites that are intended to be utilized in joint ventures require investment for development. The success of these joint ventures will also depend, in part, on the successful development of the data center sites, and the company may not realize all of the anticipated benefits. Such development may be more difficult, time-consuming, or costly than expected and could result in increased costs, decreases in the amount of expected revenues, and diversion of management’s time and energy, which could materially impact the business, operating results, financial condition, and prospects. Additionally, if it is determined these sites are no longer desirable for the joint ventures, the company would need to adapt such sites for other purposes. The success of any joint ventures will depend, in part, on the successful relationship between the company and the joint venture partners. A failure to successfully partner, or a failure to realize the company's expectations for the joint ventures, including any contemplated exit strategy from a joint venture, could materially impact the business, operating results, financial condition, and prospects. These joint ventures could also be negatively impacted by inflation, supply chain issues, an inability to obtain financing on favorable terms or at all, an inability to fill the data center sites with customers as planned, and development and construction delays. Further, in the future, the company may co-invest with other third parties through partnerships, joint ventures, or other entities in the future. These joint ventures could result in the company's acquisition of non-controlling interests in, or shared responsibility for, managing the affairs of a property or portfolio of properties, partnership, joint venture, or other entity. The company may be subject to additional risks, including: the company may not have the right to exercise sole decision-making authority regarding the properties, partnership, joint venture, or other entity, if the partners become bankrupt or fail to fund their share of required capital contributions, the company may choose to or be required to contribute such capital, the company's partners may have economic, tax, or other business interests or goals which are inconsistent with the company's business interests or goals, and may be in a position to take actions contrary to the company's interests or objectives, the company's joint venture partners may take actions that are not within the company's control, which could require the company to dispose of the joint venture asset or purchase the partner’s interests or assets at an above-market price, the company's joint venture partners may take actions unrelated to the company's business agreement but which reflect poorly on the company because of the joint venture relationship, disputes between the company and the partners may result in litigation or arbitration that would increase the expenses and prevent the company's management from focusing their time and effort on the day-to-day business, the company may in certain circumstances be liable for the actions of the third-party partners or guarantee all or a portion of the joint venture’s liabilities, which may require the company to pay an amount greater than its investment in the joint venture, the company may need to change the structure of an established joint venture or create new complex structures to meet the company's business needs or the needs of the partners which could prove challenging, and a joint venture partner’s decision to exit the joint venture may not be at an opportune time for the company or in the company's business interests. Each of these factors may result in returns on these investments being less than the company expects or in losses, and business, operating results, financial condition, and prospects may be adversely affected. Future acquisitions could include real property and subject the company to the general risks associated with the ownership of real property. The company currently leases all of the data centers and office locations. However, the company could in the future make acquisitions that include real property, which would most likely be one or more data centers. As a result of any such acquisition, the company would directly own real property and become subject to the general risks associated with the ownership of real property, including: changes in governmental laws and regulations, including the Americans with Disabilities Act and zoning ordinances, and the related costs of compliance, increased upfront costs of purchasing real property, the ongoing need for repair, maintenance and capital improvements, natural disasters, including earthquakes and floods, and acts of war or terrorism, general liability, property and casualty losses, some of which may be uninsured, liabilities for clean-up of undisclosed environmental contamination, and liabilities incurred in the ordinary course of business. If negative publicity arises with respect to the company, the employees, the third-party suppliers, service providers, or the partners, the business, operating results, financial condition, and prospects could be adversely affected, regardless of whether the negative publicity is true. Negative publicity about the company or the platform, solutions, or services, even if inaccurate or untrue, could adversely affect the reputation and the confidence in the platform, solutions, or services, which could harm the business, operating results, financial condition, and prospects. Harm to the reputation can also arise from many other sources, including employee misconduct, which the company has experienced in the past, and misconduct by the partners, consultants, suppliers, and outsourced service providers. Additionally, negative publicity with respect to the partners or service providers could also affect the business, operating results, financial condition, and prospects to the extent that the company relies on these partners or if the customers or prospective customers associate the company with these partners. The company's ability to maintain customer satisfaction depends in part on the quality of the customer support and cloud operations services. The company's failure to maintain high-quality customer support and cloud operations services could have an adverse effect on the business, operating results, financial condition, and prospects. The company believes that the successful use of the platform requires a high level of support and engagement for many of the customers. In order to deliver appropriate customer support and engagement, the company must successfully assist the customers in deploying and continuing to use the platform, resolve performance issues, address interoperability challenges with the customers’ existing IT infrastructure, and respond to security threats and cyber-attacks and performance and reliability problems that may arise from time to time. Increased demand for customer support and cloud operations services, without corresponding increases in revenue, could increase the costs and adversely affect the business, operating results, financial condition, and prospects. Furthermore, there can be no assurance that the company will be able to hire sufficient support personnel as and when needed, particularly if the sales exceed the company's internal forecasts. The company expects to increase the number of the customers, and that growth may put additional pressure on the customer support and cloud operations services teams. The customer support and cloud operations services teams may need additional personnel to respond to customer demand. The company may be unable to respond quickly enough to accommodate short-term increases in customer demand for services. To the extent that the company is unsuccessful in hiring, training, and retaining adequate support resources, the ability to provide high-quality and timely support to the customers will be negatively impacted, and the customers’ satisfaction and their purchase of the infrastructure could be adversely affected. In addition, as the company continues to grow the operations and expand outside of the United States, the company needs to be able to provide efficient services that meet the customers’ needs globally at scale, and the customer support and cloud operations services teams may face additional challenges, including those associated with operating the platforms and delivering support, training, and documentation in languages other than English and providing services across expanded time-zones. If the company is unable to provide efficient customer support services globally at scale, the ability to grow the operations may be harmed, and the company may need to hire additional services personnel which could increase the expenses, and negatively impact the business, financial condition, operating results, and prospects. Risks Related to People The company relies on the management team and other key employees and will need additional personnel to grow the business, and the loss of one or more key employees or the company's inability to attract and retain qualified personnel, including members of the board of directors, could harm the business. The future success is dependent, in part, on the ability to hire, integrate, train, manage, retain, and motivate the members of the management team and other key employees throughout the organization as well as members of the board of directors. The loss of key personnel, particularly Michael Intrator, the Chief Executive Officer, President, and Chairman of the board of directors, Brian Venturo, the Chief Strategy Officer, and Brannin McBee, the Chief Development Officer (collectively, the "Co-Founders"), as well as certain of the key marketing, sales, finance, support, network development, people team, or technology personnel, could disrupt the operations and have an adverse effect on the ability to grow the business. Competition for highly skilled personnel is intense, especially in the New York City, San Francisco Bay, and Seattle areas where the company has a substantial presence and need for highly skilled personnel, and the company may not be successful in hiring or retaining qualified personnel to fulfill the current or future needs. More generally, the technology industry, and the cloud infrastructure industry more specifically, is also subject to substantial and continuous competition for engineers with high levels of experience in designing, developing, and managing infrastructure and related services. Moreover, the industry in which the company operates generally experiences high employee attrition. The company has, from time to time, experienced, and expects to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. For example, in recent years, recruiting, hiring, and retaining employees with expertise in the AI computing industry has become increasingly difficult as the demand for AI computing infrastructure has increased as a result of the increase in AI and machine learning development, deployment, and demand. The company may be required to provide more training to the personnel than the company currently anticipates. Further, labor is subject to external factors that are beyond the control, including the company's highly competitive market for skilled workers and leaders, cost inflation, overall macroeconomics, and workforce participation rates. Should the competitors recruit the employees, the level of expertise and ability to execute the business plan would be negatively impacted. Additionally, many of the key personnel are, or will soon be, vested in a substantial number of shares of the common stock, restricted stock units (“RSUs”), or stock options. Employees may be more likely to terminate their employment with the company if the shares they own or the shares underlying their vested RSUs or options have significantly appreciated in value relative to the original purchase prices of the shares, exercise price of the options, or grant date values of the RSUs, or, conversely, if the exercise price of the options that they hold are significantly above the trading price of the Class A common stock. Moreover, many of the companies with which the company competes for experienced personnel have greater resources than the company has. The competitors also may be successful in recruiting and hiring members of the management team, sales team, or other key employees, and it may be difficult for the company to find suitable replacements on a timely basis, on competitive terms, or at all. The company has in the past, and may in the future, be subject to allegations that employees the company hires have been improperly solicited, or that they have divulged proprietary or other confidential information or that their former employers own such employees’ inventions or other work product, or that they have been hired in violation of non-compete provisions or non-solicitation provisions. In addition, job candidates and existing employees often consider the value of the equity awards and other compensation they receive in connection with their employment. If the perceived value of the compensatory package declines or is subject to significant value fluctuations, it may adversely affect the ability to attract and retain highly skilled employees. The company may also change the composition of the compensatory package to employees, including the amount or ratio of cash and equity compensation. Any increases to the amount of cash compensation will increase the cash expenditures, which may impact the business, operating results, financial condition, and prospects. Further, the competitors may be successful in recruiting and hiring members of the management team or other key employees as well as directors, and it may be difficult for the company to find suitable replacements on a timely basis, on competitive terms, or at all. In recent years, the increased availability of hybrid or remote working arrangements has expanded the pool of companies that can compete for the employees and employment candidates. The company has entered into offer letters with certain of the key employees, however these agreements are on an “at-will” basis, meaning they are able to terminate their employment with the company at any time and the company does not have employment agreements with all of the key employees. If the company fails to attract new personnel or fail to retain and motivate the current personnel, the business and future growth prospects would be severely harmed. The company believes that the corporate culture has contributed to the success, and if the company cannot maintain this culture as the company grows, the company could lose the innovation, creativity, and teamwork fostered by the culture, and the business may be harmed. The company believes that the corporate culture has been, and will continue to be, a key contributor to the success. If the company does not continue to maintain the corporate culture, which includes the focus on the customers, as the company grows and evolves, including as the company continues to grow in headcount, it could harm the ability to foster the drive, innovation, inclusion, creativity, and teamwork that the company believes is important to support the growth. As the company implements more complex organizational structures, the company may find it increasingly difficult to maintain the beneficial aspects of the corporate culture, which could negatively impact the future success. Risks Related to Intellectual Property Failure to obtain, maintain, protect, or enforce the intellectual property and proprietary rights could enable others to copy or use aspects of the platform without compensating the company, which could harm the brand, business, operating results, financial condition, and prospects. The company relies on a combination of trademark, copyright, trade secret, patent, unfair competition, and other related laws in the United States and internationally, as well as confidentiality agreements and contractual provisions with the customers, third-party manufacturing partners, joint venture partners, employees, and consultants to protect the technology and intellectual property rights. Despite the efforts to protect the proprietary rights, unauthorized parties may attempt to copy aspects of the platform or obtain and use information that the company regards as proprietary. In particular, the company is unable to predict or assure that: the intellectual property rights will not lapse or be invalidated, circumvented, challenged, or, in the case of third-party intellectual property rights licensed to the company, be licensed to others, the intellectual property rights will provide competitive advantages to the company, rights previously granted by third parties to intellectual property licensed or assigned to the company, including portfolio cross-licenses, will not hamper the ability to assert the intellectual property rights or hinder the settlement of currently pending or future disputes, any of the pending or future trademark or patent applications will be issued or have the coverage originally sought, the company will be able to enforce the intellectual property rights in certain jurisdictions where competition is intense or where legal protection may be weak, or the company has sufficient intellectual property rights to protect the solutions and services or the business. The company customarily enters into confidentiality or license agreements with the employees, consultants, vendors, and customers, and makes significant efforts to limit access to and distribution of the proprietary information. However, such agreements may not be enforceable in full or in part in all jurisdictions and any breach could negatively affect the business and the remedy for such breach may be limited. The contractual provisions that the company enters into may not prevent unauthorized use or disclosure of the proprietary technology or intellectual property rights and may not provide an adequate remedy in the event of unauthorized use or disclosure of the proprietary technology or intellectual property rights. Lastly, the measures the company employs to limit the access and distribution of the proprietary information may not prevent unauthorized use or disclosure of the proprietary technology or intellectual property. As such, the company cannot guarantee that the steps taken by the company will prevent infringement, violation, or misappropriation of the technology. The company pursues the registration of the trademarks, service marks, patents, and domain names in the United States and in certain foreign jurisdictions. These processes are expensive and may not be successful in all jurisdictions or for every such application, and the company may not pursue such protections in all jurisdictions that may be relevant, for all the goods or services or in every class of goods and services in which the company operates. As such, policing unauthorized use of the technology or platform is difficult. Additionally, the company may not be able to obtain, maintain, protect, exploit, defend, or enforce the intellectual property rights in every foreign jurisdiction in which the company operates. For example, effective trade secret protection may not be available in every country in which the platform is available or where the company has employees or independent contractors. The loss of trade secret protection could make it easier for third parties to compete with the platform by copying functionality. Any changes in, or unexpected interpretations of, the trade secret and employment laws in any country in which the company operates may compromise the ability to enforce the trade secret and intellectual property rights. In addition, the company believes that the protection of the trademark rights is an important factor in product recognition, protecting the brand and maintaining goodwill and if the company does not adequately protect the rights in trademarks from infringement, any goodwill that the company has developed in those trademarks could be lost or impaired, which could harm the brand and the business. The legal systems of certain countries do not favor the enforcement of trademarks trade secrets, and other intellectual property and proprietary protection, which could make it difficult for the company to stop the infringement, misappropriation, dilution, or other violation of the intellectual property or marketing of competing platforms, solutions, or services in violation of the intellectual property rights generally. Any changes in, or unexpected interpretations of, intellectual property laws may compromise the ability to enforce the intellectual property rights. If the company fails to maintain, protect and enhance the intellectual property rights, the business, operating results, financial condition, and prospects may be harmed. In addition, defending the intellectual property rights through litigation might entail significant expense. Such litigation could result in substantial costs and diversion of resources and could negatively affect the business, operating results, financial condition, and prospects. If the company is unable to protect the proprietary rights, the company could find itself at a competitive disadvantage to others who need not incur the additional expense, time, and effort required to create the platform and other innovative offerings that have enabled the company to be successful to date. Moreover, the company may need to expend additional resources to defend the intellectual property rights in foreign countries, and the company's inability to do so could impair the business or adversely affect the international expansion. Third parties may claim that the platform infringes, misappropriates, or otherwise violates their intellectual property rights, and such claims could be time-consuming or costly to defend or settle, result in the loss of significant rights, or harm the relationships with the customers or reputation in the industry. Third parties have claimed and may, in the future, claim, that the current or future offerings infringe their intellectual property rights, and such claims may result in legal claims against the company, the third-party partners, and the customers. These claims may be time consuming, costly to defend or settle, damage the brand and reputation, harm the customer relationships, and create liability for the company. The company generally agrees in the customer and partner contracts to indemnify customers for these types of claims. To the extent that any claim arises as a result of third-party technology the company has licensed for use in the platform, the company may be unable to recover from the appropriate third party any expenses or other liabilities that the company incurs. Companies in the cloud infrastructure and technology industries, including some of the current and potential competitors, may own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. In addition, many of these companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Furthermore, patent holding companies, non-practicing entities, and other adverse patent owners that are not deterred by the company's existing intellectual property protections have sought and may, in the future, seek to assert patent claims against the company. From time to time, third parties, including certain of these leading companies, have invited the company to license their patents and may, in the future, assert patent, copyright, trademark, or other intellectual property rights against the company, the third-party partners, or the customers. The company may in the future receive notices that claim the company has misappropriated, misused, or infringed other parties’ intellectual property rights, and, to the extent the company gains greater market visibility, the company faces a higher risk of being the subject of intellectual property infringement claims. There may be third-party intellectual property rights that cover significant aspects of the technologies or business methods and assets. In the event that the company engages software engineers or other personnel who were previously engaged by competitors or other third parties, the company may be subject to claims that those personnel inadvertently or deliberately incorporate proprietary technology of third parties into the platform or have improperly used or disclosed trade secrets or other proprietary information. The company may also in the future be subject to claims by the third-party manufacturing partners, employees, or contractors asserting an ownership right in the company's intellectual property as a result of the work they performed on the company's behalf. In addition, the company may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent the ability to develop, market, and support potential offerings and platform enhancements, which could severely harm the business. Any intellectual property claims, with or without merit, could be very time-consuming, could be expensive to settle or litigate, and could divert the management’s attention and other resources. These claims could also subject the company to significant liability for damages, potentially including treble damages if the company is found to have willfully infringed patents or copyrights, and may require the company to indemnify the customers for liabilities they incur as a result of such claims. These claims could also result in the company being required to stop using technology found to be in violation of a third party’s rights. The company might be required to seek a license for the intellectual property, which may not be available on reasonable terms or at all. Even if a license were available, the company could be required to pay significant royalties, which would increase the operating expenses. Alternatively, the company could be required to develop alternative non-infringing technology, which could require significant time, effort, and expense, and may affect the performance or features of the platform. If the company cannot license or develop alternative non-infringing substitutes for any infringing technology used in any aspect of the business, the company would be forced to limit or stop sales of the platform and may be unable to compete effectively. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of the Class A common stock. Any of these results would adversely affect the business, operating results, financial condition, and prospects. The company licenses technology from third parties for the development of the solutions, and the company's inability to maintain those licenses could harm the business. The company currently incorporates, and will in the future incorporate, technology that the company licenses from third parties, including software, into the offerings. If the company is unable to continue to use or license these technologies on reasonable terms, or if these technologies become unreliable, unavailable, or fail to operate properly, the company may not be able to secure adequate alternatives in a timely manner or at all, and the ability to offer the solutions and remain competitive in the market would be harmed. Further, licensing technologies from third parties exposes the company to increased risk of being the subject of intellectual property infringement and vulnerabilities due to, among other things, the lower level of visibility into the development process with respect to such technology and the care taken to safeguard against risks. The company cannot be certain that the licensors do not or will not infringe on the intellectual property rights of third parties or that the licensors have or will have sufficient rights to the licensed intellectual property in all jurisdictions in which the company may sell the platform. Some of the agreements with the licensors may be terminated by them for convenience, or otherwise provide for a limited term. If the company is unable to continue to license technology because of intellectual property infringement claims brought by third parties against the licensors or against the company, or if the company is unable to continue the license agreements or enter into new licenses on commercially reasonable terms, the ability to develop and sell the platform containing or dependent on that technology would be limited, and the business, including the financial condition, cash flows, and operating results could be harmed. Additionally, if the company is unable to license technology from third parties, the company may be forced to acquire or develop alternative technology, which the company may be unable to do in a commercially feasible manner, or at all, and may require the company to use alternative technology of lower quality or performance standards. This could limit or delay the ability to offer new or competitive offerings and increase the costs. Some of the technology incorporates “open-source” software, and failure to comply with the terms of the underlying open-source software licenses could adversely affect the business, results of operations, financial condition, and prospects. The company uses open-source software in the solutions and services and may continue to use open-source software in the future. Certain open-source licenses contain requirements that the company make available source code for modifications or derivative works the company creates. If the company combines the proprietary software with open-source software in a certain manner, the company could, under certain open-source licenses, be required to release the source code of the proprietary software to the public on unfavorable terms or at no cost. Any actual or claimed requirement to disclose the proprietary source code or pay damages for breach of contract may allow the competitors to create similar products with lower development effort and time and, ultimately, could result in a loss of sales for the company. The use and distribution of open-source software may entail greater risks than the use of third-party commercial software, as open-source licensors generally do not provide support, warranties, indemnification or other contractual protections regarding infringement claims or the quality of the code, which they are not typically required to maintain and update, and they can change the license terms on which they offer the open-source software. Although the company believes that the company has complied with the obligations under the applicable licenses for open-source software, it is possible that the company may not be aware of all instances where open-source software has been incorporated into the proprietary software or used in connection with the solutions or the corresponding obligations under open-source. The company takes steps to monitor the use of open-source software in an effort both to comply with the terms of the applicable open-source licenses and to avoid subjecting the platform to conditions the company does not intend, but there are risks associated with use of open-source software that cannot be eliminated and could negatively affect the business. The company relies on multiple software programmers to design the proprietary software and, while the company takes steps to vet software before it is incorporated into the proprietary software and monitor the software incorporated into the proprietary software, the company cannot be certain that the programmers have not incorporated open-source software into the proprietary software that the company intends to maintain as confidential or that they will not do so in the future. In addition, the wide availability of source code used in the offerings could expose the company to security vulnerabilities. Such use, under certain circumstances, could materially adversely affect the business, operating results, financial condition, and prospects, as well as the reputation, including if the company is required to take remedial action that may divert resources away from the development efforts. On occasion, companies that use open-source software have faced claims challenging their use of open-source software or compliance with open-source license terms. There is evolving legal precedent for interpreting the terms of certain open-source licenses, including the determination of which works are subject to the terms of such licenses. The terms of many open-source licenses have not been interpreted by U.S. courts, and there is a risk that these licenses could be construed in ways that could impose unanticipated conditions or restrictions on the ability to commercialize any offerings incorporating such software. Moreover, the company cannot ensure that the processes for controlling the use of open-source software in the platform will be effective. From time to time, the company may face claims from third parties asserting ownership of, or demanding release of, the open-source software or derivative works that the company developed using such software (which could include the proprietary source code), or otherwise seeking to enforce the terms of the applicable open-source license. These claims, regardless of validity, could result in time consuming and costly litigation, divert management’s time and attention away from developing the business, expose the company to customer indemnity claims, or force the company to disclose source code. Litigation could be costly for the company to defend, result in paying damages, entering into unfavorable licenses, have a negative effect on the business, operating results, financial condition, and prospects, or cause delays by requiring the company to devote additional research and development resources to change the solution. Risks Related to Legal and Regulatory Matters The company is subject to laws and regulations, including governmental export and import controls, sanctions, and anti-corruption laws, that could impair the ability to compete in the markets and subject the company to liability if the company is not in full compliance with applicable laws. The company is subject to laws and regulations, including governmental export and import controls, that could subject the company to liability or impair the ability to compete in the markets. The platform and related technology are subject to U.S. export controls, including the U.S. Department of Commerce’s Export Administration Regulations (also known as “EAR”), and the company and the employees, representatives, contractors, agents, intermediaries, and other third parties are also subject to various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control and other U.S. government agencies. Changes to sanctions and export or import restrictions in the jurisdictions in which the company operates could further impact the ability to do business in certain parts of the world and to do business with certain persons and entities, which could adversely affect the business, operating results, financial condition, and prospects. In particular, the company is continuing to monitor recent and forthcoming developments in export controls with respect to the semiconductor industry and their impact on the sourcing of equipment for the computing infrastructure. In addition, the company is monitoring the January 29, 2024 proposed rule from the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”), which if implemented as proposed, would impose requirements on Infrastructure-as-a-Service providers and their foreign resellers to verify the identity and beneficial ownership of foreign person customers and to perform related reporting to BIS, as well as provide BIS authority to restrict certain Infrastructure-as-a-Service transactions with foreign persons. While the company has implemented certain procedures to facilitate compliance with applicable laws and regulations, the company cannot ensure that these procedures are fully effective or that the company, or third parties who the company does not control, have complied with all laws or regulations in this regard. Failure by the employees, representatives, contractors, partners, agents, intermediaries, or other third parties to comply with applicable laws and regulations also could have negative consequences to the company, including reputational harm, government investigations, loss of export privileges and penalties. Changes in the platform, and changes in or promulgation of new export and import regulations, may create delays in the introduction of the platform into international markets, prevent the customers with international operations from deploying the platform globally or, in some cases, prevent the export or import of the platform to certain countries, governments, or persons altogether. Any change in export or import regulations, economic sanctions, or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons, or technologies targeted by such regulations, could result in decreased sales of the platform, solutions, and services, or in the company's decreased ability to export or sell the platform, to existing or potential customers with international operations. Any decreased sales of the platform, solutions, and services or limitation on the ability to export or sell the platform would adversely affect the business, operating results, financial condition, and prospects. The company is also subject to the United States Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the United Kingdom Bribery Act 2010 (the “Bribery Act”), and other anti-corruption, sanctions, anti-bribery, anti-money laundering, and similar laws in the United States and other countries in which the company conducts activities. Anti-corruption and anti-bribery laws, which have been enforced aggressively and are interpreted broadly, prohibit companies and their employees, agents, intermediaries, and other third parties from promising, authorizing, making, or offering improper payments or other benefits to government officials and others in the public, and in certain cases, private sector. The company leverages third parties, including intermediaries and agents, to conduct the business in the United States and abroad, to sell the platform. The company and these third parties may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and the company may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, the employees, representatives, contractors, partners, agents, intermediaries, and other third parties, even if the company does not explicitly authorize such activities. The company cannot ensure that the policies and procedures to address compliance with FCPA, the Bribery Act, and other anti-corruption, sanctions, anti-bribery, anti-money laundering, and similar laws, will be effective, or that all of the employees, representatives, contractors, partners, agents, intermediaries, or other third parties have not taken, or will not take actions, in violation of the policies and applicable law, for which the company may be ultimately held responsible. As the company increases the international sales and business, the risks under these laws may increase. Noncompliance with these laws could subject the company to investigations, severe criminal or civil sanctions, settlements, prosecution, loss of export privileges, suspension or debarment from U.S. government contracts, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions and jail time for responsible employees and managers. If any governmental sanctions are imposed, or if the company does not prevail in any possible civil or criminal litigation, the business, operating results, financial condition, and prospects could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm the business, operating results, financial condition, and prospects. The company may become involved in litigation that may adversely affect the company. From time to time, the company may be subject to claims, suits, and other proceedings. Regardless of the outcome, legal proceedings can have an adverse impact on the company because of legal costs and diversion of management attention and resources, and could cause the company to incur significant expenses or liability, adversely affect the brand recognition, or require the company to change the business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect the business, operating results, financial condition, and prospects. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines, and penalties that would adversely affect the business, financial condition, operating results, or cash flows in a particular period. These proceedings could also result in reputational harm, sanctions, consent decrees, or orders requiring a change in the business practices. Because of the potential risks, expenses, and uncertainties of litigation, the company may, from time to time, settle disputes, even where the company has meritorious claims or defenses, by agreeing to settlement agreements. Because litigation is inherently unpredictable, the company cannot ensure that the results of any of these actions will not have a material adverse effect on the business, operating results, financial condition, and prospects. Any of these consequences could adversely affect the business, operating results, financial condition, and prospects. The company is subject to laws, regulations, and industry requirements related to data privacy, data protection and information security, and user protection across different markets where the company conducts its business and such laws, regulations, and industry requirements are constantly evolving and changing. Any actual or perceived failure to comply with such laws, regulations, and industry requirements, or the privacy policies, could harm the business. Various local, state, federal, and international laws, directives, and regulations apply to the collection, use, retention, protection, disclosure, transfer, and processing of personal information. These data protection and privacy laws and regulations are subject to uncertainty and continue to evolve in ways that could adversely impact the business. These laws have a substantial impact on the operations both in the United States and internationally and compliance with new and existing laws may result in significant costs due to implementation of new processes, which could ultimately hinder the ability to grow the business by extracting value from the data assets. In the United States, state and federal lawmakers and regulatory authorities have increased their attention on the collection and use of user data. For example, in California, the California Consumer Privacy Act of 2018 (as amended, the “CCPA”) requires companies that hit certain broad revenue or data processing related thresholds to, among other things, provide new disclosures to California users, and affords such users new privacy rights such as the ability to opt-out of certain processing of personal information and expanded rights to access and require deletion of their personal information stored or maintained by such companies, opt out of certain personal information sharing, and receive detailed information about how their personal information is collected, used, and shared. The CCPA provides for civil penalties for violations, as well as a private right of action for security breaches that may increase security breach litigation. In addition, other states have enacted laws that contain obligations similar to the CCPA that have taken effect or will take effect in coming years and many others continue to propose similar laws, or are considering proposing similar laws. The company cannot fully predict the impact of recently proposed or enacted laws or regulations on the business or operations, but compliance may require the company to modify the data processing practices and policies incurring costs and expense. Further, to the extent multiple state-level laws are introduced with inconsistent or conflicting standards, it may require costly and difficult efforts to achieve compliance with such laws. The company's failure or perceived failure to comply with state or federal privacy laws or regulations passed in the future could have a material adverse effect on the business, including how the company uses personal information, the business, operating results, financial condition, and prospects and could expose the company to regulatory investigations or possible fines. Additionally, many foreign countries and governmental bodies, including the European Union, United Kingdom, Canada, and other jurisdictions in which the company operates or conducts the business, have laws and regulations concerning the collection, use, processing, storage, and deletion of personal data obtained from their residents or by businesses operating within their jurisdiction. These laws and regulations often are more restrictive than those in the United States. Such laws and regulations may require companies to implement new privacy and security policies, permit individuals to access, correct, and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, require that certain types of data be retained on local servers within these jurisdictions, and, in some cases, obtain individuals’ affirmative opt-in consent to collect and use personal information for certain purposes. The increased focus on data sovereignty and data localization requirements around the world could also impact the business model with respect to the storage, management, and transfer of data. The company is subject to the European Union’s General Data Protection Regulation and the United Kingdom’s General Data Protection Regulation (collectively, the “GDPR”), which comprehensively regulate the use of personal data, including cross-border transfers of personal data out of the European Economic Area (“EEA”) and the U.K. The GDPR imposes stringent privacy and data protection requirements, and could increase the risk of non-compliance and the costs of providing the services in a compliant manner. A breach of the GDPR could result in regulatory investigations, reputational damage, fines and sanctions, orders to cease or change the processing of the data, enforcement notices, or assessment notices (for a compulsory audit). For example, if regulators assert that the company has failed to comply with the GDPR, the company may be subject to fines. Since the company is subject to the supervision of relevant data protection authorities under multiple legal regimes (including separately in both the E.U. and the U.K.), the company could be fined under those regimes independently in respect of the same breach. The company may also face civil claims including representative actions and other class action type litigation (where individuals have suffered harm), potentially amounting to significant compensation or damages liabilities, as well as associated costs, diversion of internal resources, and reputational harm. The GDPR prohibits transfers of personal data from the EEA or U.K. to countries not formally deemed adequate by the European Commission or the U.K. Information Commission Office, respectively, including the United States, unless a particular compliance mechanism (and, if necessary, certain safeguards) is implemented. The mechanisms that the company and many other companies, including the customers, rely upon for European and U.K. data transfers (for example, Standard Contractual Clauses or the E.U.-U.S. Data Privacy Framework) are the subject of legal challenge, regulatory interpretation, and judicial decisions by the Court of Justice of the European Union. The suitability of Standard Contractual Clauses for data transfer in some scenarios has recently been the subject of legal challenge, and while the United States and the European Union reached agreement on the E.U.-U.S. Data Privacy Framework (and similar agreements were reached with respect to the U.K.), there are legal challenges to that data transfer mechanism as well. The company expects the legal complexity and uncertainty regarding international personal data transfers to continue, and as the regulatory guidance and enforcement landscape in relation to data transfers continues to develop, the company could suffer additional costs, complaints, and/or regulatory investigations or fines; the company may have to stop using certain tools and vendors and make other operational changes; the company may have to implement alternative data transfer mechanisms under the GDPR and/or take additional compliance and operational measures; and/or it could otherwise affect the manner which the company provides the services, and could adversely affect the business, operating results, financial condition, and prospects. The company is also subject to evolving U.S., E.U., and U.K. privacy laws governing cookies, tracking technologies, and e-marketing. In the United States, plaintiffs are increasingly making use of existing laws such as the California Invasion of Privacy Act to litigate use of tracking technologies. In the European Union, regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem. In the European Union, informed consent, including a prohibition on pre-checked consents and a requirement to ensure separate consents for each cookie, is required for the placement of a non-essential cookie or similar technologies on a user’s device and for direct electronic marketing. As regulators start to enforce the strict approach in recent guidance, this could lead to substantial costs, require significant systems changes, limit the effectiveness of the marketing activities, divert the attention of the technology personnel, negatively impact the efforts to understand users, adversely affect the margins, increase costs, and subject the company to additional liabilities. There is a risk that as the company expands, the company may assume liabilities for breaches experienced by the companies the company acquires. Additionally, there are potentially inconsistent world-wide government regulations pertaining to data protection and privacy. Despite the efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection, and information security, it is possible that the practices, offerings, or platform could fail, or be alleged to fail to meet applicable requirements. For instance, there are changes in the regulatory landscape relating to new and evolving technologies, such as generative AI. Changes to existing regulations, their interpretation or implementation, or new regulations could impede any potential use or development of AI Technologies, which could impair the competitive position and result in an adverse effect on the business, operating results, financial condition, and prospects. The company's failure, or the failure by the third-party providers or partners, to comply with applicable laws or regulations and to prevent unauthorized access to, or use or release of personal information, or the perception that any of the foregoing types of failure has occurred, even if unfounded, could subject the company to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, severe criminal, or civil sanctions, damage the reputation, or result in fines or proceedings by governmental agencies and private claims and litigation, any of which could adversely affect the business, operating results, financial condition, and prospects. The business is subject to a wide range of laws and regulations, and the company's failure to comply with those laws and regulations could harm the business. The business is subject to regulation by various federal, state, local, and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety and environmental laws, including those related to energy usage and energy efficiency requirements, privacy and data protection laws, AI, financial services laws, anti-bribery laws, sanctions, national security, import and export controls, anti-boycott, federal securities laws, and tax laws and regulations. For example, 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. The company 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. In certain foreign jurisdictions, these regulatory requirements may be more stringent than those in the United States. These laws and regulations are subject to change over time and thus the company must continue to monitor and dedicate resources to ensure continued compliance. In particular, the global AI regulatory environment continues to evolve as regulators and lawmakers have started proposing and adopting, or are currently considering, regulations and guidance specifically on the use of AI. Non-compliance with applicable regulations or requirements could subject the company to investigations, sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions and jail time for responsible employees and managers. If any governmental sanctions are imposed, or if the company does not prevail in any possible civil or criminal litigation, the business, operating results, financial condition, and prospects could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could harm the business, operating results, financial condition, and prospects. The company may become involved in litigation that may adversely affect the company. From time to time, the company may be subject to claims, suits, and other proceedings. Regardless of the outcome, legal proceedings can have an adverse impact on the company because of legal costs and diversion of management attention and resources, and could cause the company to incur significant expenses or liability, adversely affect the brand recognition, or require the company to change the business practices. The expense of litigation and the timing of this expense from period to period are difficult to estimate, subject to change, and could adversely affect the business, operating results, financial condition, and prospects. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines, and penalties that would adversely affect the business, financial condition, operating results, or cash flows in a particular period. These proceedings could also result in reputational harm, sanctions, consent decrees, or orders requiring a change in the business practices. Because of the potential risks, expenses, and uncertainties of litigation, the company may, from time to time, settle disputes, even where the company has meritorious claims or defenses, by agreeing to settlement agreements. Because litigation is inherently unpredictable, the company cannot ensure that the results of any of these actions will not have a material adverse effect on the business, operating results, financial condition, and prospects. Any of these consequences could adversely affect the business, operating results, financial condition, and prospects. Risks Related to Financial and Accounting Matters The company has identified material weaknesses in the internal control over financial reporting. If the remediation of such material weaknesses is not effective, or if the company experiences additional material weaknesses in the future or otherwise fails to develop and maintain effective internal control over financial reporting, the ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired. The company is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), and the rules and regulations of the applicable listing standards of the Nasdaq Stock Market LLC ("Nasdaq"). The company expects that the requirements of these rules and regulations will continue to increase the legal, accounting, and financial compliance costs, make some activities more difficult, time-consuming, and costly, and place significant strain on the personnel, systems, and resources. The Sarbanes-Oxley Act requires, among other things, that the company maintain effective disclosure controls and procedures, and internal control, over financial reporting. The company is continuing to develop and refine the disclosure controls, internal control over financial reporting, and other procedures that are designed to ensure information required to be disclosed by the company in the financial statements and in the reports that the company will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and information required to be disclosed in reports under the Exchange Act is accumulated and communicated to the principal executive and financial officers. In order to maintain and improve the effectiveness of the internal controls and procedures, the company has expended, and anticipates that the company will continue to expend, significant resources, including accounting-related costs and significant management oversight. The company is required to maintain internal control over financial reporting and to evaluate and determine the effectiveness of the internal control over financial reporting. Beginning with the annual report on Form 10-K for the year ending December 31, 2026, the company will be required to provide a management report on internal control over financial reporting, and the company also expects the independent registered public accounting firm will be required to formally attest to the effectiveness of the internal control over financial reporting. Neither the company nor the independent registered public accounting firm were required to, and therefore did not, perform an evaluation of the internal control over financial reporting as of or for any period included in the financial statements, nor any period subsequent in accordance with the provisions of the Sarbanes-Oxley Act. However, while preparing the financial statements that are included in the Prospectus, the company identified material weaknesses in the internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified pertained to the lack of effectively designed, implemented, and maintained IT general controls over applications that support the financial reporting processes, insufficient segregation of duties across financially relevant functions, and lack of sufficient number of qualified personnel within the accounting, finance, and operations functions who possessed an appropriate level of expertise to provide reasonable assurance that transactions were being appropriately recorded and disclosed. The company has concluded that these material weaknesses existed because the company did not have the necessary business processes, systems, personnel, and related internal controls. As of March 31, 2025, management had completed the following remedial actions to help address these material weaknesses: consulted with experts on technical accounting matters, internal controls, and in the preparation of the financial statements, performed a risk assessment over the organization and IT systems used as part of financial reporting and business processes, including the various layers of technology, and hired additional accounting, finance, and operations resources, including critical leadership roles with public company and internal control experience responsible for designing, implementing, and monitoring the internal controls, including the Chief Accounting Officer, Chief Operating Officer, and Chief Information Officer. While management has made improvements to the control environment and business processes to support and scale with the growing operations, the identified material weaknesses remain un-remediated. The company expects that the remediation efforts will continue to take place in 2025 and 2026, and include the following: designing, developing, and deploying an enhanced IT General Controls (“ITGC”) framework, including the implementation of a number of systems, processes and tools to enable the effectiveness and consistent execution of these controls, continuing to implement ITGCs to manage access and program changes within the IT environment and to support the evaluation, monitoring, and ongoing effectiveness of key applications and key reports, continuing to implement processes and controls to better manage and monitor the segregation of duties risks, including enhancing the usage of technology and tools for segregation of duties within the Company's systems, applications and tools, and continuing to expand the resources with the appropriate level of expertise within the accounting, finance, and operations functions; to implement, monitor, and maintain business processes and ITGCs. The company may not be able to fully remediate these material weaknesses until these steps have been completed and the internal controls have been operating effectively for a sufficient period of time. This evaluation process, including testing the effectiveness of the remediation efforts, is expected to extend into 2026. Additionally, as stated above, the company has not performed an evaluation of the internal control over financial reporting; accordingly, the company cannot ensure that the company has identified all, or that the company will not in the future have additional, material weaknesses. Further, to the extent the company acquires other businesses, the acquired company may not have a sufficiently robust system of internal controls and the company may uncover new deficiencies. Material weaknesses may still exist when the company reports on the effectiveness of the internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act, beginning with the annual report on Form 10-K for the year ending December 31, 2026. The process of designing and implementing internal control over financial reporting required to comply with the disclosure and attestation requirements of Section 404 of the Sarbanes-Oxley Act will be time consuming and costly. If during the evaluation and testing process the company identifies additional material weaknesses in the internal control over financial reporting or determines that existing material weaknesses have not been remediated, the management will be unable to assert that the internal control over financial reporting is effective. Even if the management concludes that the internal control over financial reporting is effective, the independent registered public accounting firm may conclude that there are material weaknesses with respect to the internal control over financial reporting. If the company is unable to assert that the internal control over financial reporting is effective, or when required in the future, if the independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the financial reports, the market price of the stock could be adversely affected and the company could become subject to litigation or investigations by the stock exchange on which the securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Further, as a public company, significant resources and management oversight are required. As a result, management’s attention may be diverted from other business concerns, which could harm the business, operating results, financial condition, and prospects. The company incurs significant costs and management resources as a result of operating as a public company. As a public company, the company will incur significant legal, accounting, compliance, and other expenses that the company did not incur as a private company. The management and other personnel dedicate a substantial amount of time and incur significant expense in connection with compliance initiatives. For example, in connection with the IPO, the company adopted additional internal controls and disclosure controls and procedures, retained a transfer agent, and adopted an insider trading policy. As a public company, the company bears all of the internal and external costs of preparing and distributing periodic public reports in compliance with the obligations under the U.S. securities laws. In addition, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, and the related rules and regulations implemented by the SEC have increased legal and financial compliance costs and will make some compliance activities more time-consuming. The company has invested, and will continue to invest, resources to comply with evolving laws, regulations, and standards, and this investment has resulted, and will continue to result, in increased general and administrative expenses and may divert management’s time and attention from the other business activities. If the efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against the company, and the business may be harmed. In connection with the IPO, the company increased the directors’ and officers’ insurance coverage, which increased the insurance-related cost. In the future, it may be more expensive or more difficult for the company to obtain director and officer liability insurance, and the company may be required to accept reduced coverage or incur substantially higher costs to obtain and maintain the same or similar coverage. These factors would also make it more difficult for the company to attract and retain qualified members of the board of directors, particularly to serve on the audit committee and compensation committee, and qualified executive officers. The company may be required to repurchase a significant number of the outstanding shares of Class A common stock for cash upon the exercise of certain holders’ “put” rights, which would affect the financial condition and the ability to operate the business, as well as divert the cash flow from operations for such repurchases. 29,874,066 shares of the Class A common stock were issued to holders of the Series C convertible preferred stock upon conversion thereof in connection with the IPO (the “Put Shares”) are subject to a right to be “put” to the company (the “Put Right”) on the first trading day immediately after March 31, 2027, which is the second anniversary of the closing of the IPO (the “Public Sale Date”). Upon exercise of the Put Right, holders of the Put Shares would be entitled to receive from the company an amount in cash equal to the original issue price per share of the Series C convertible preferred stock, which was $38.95 (the “Series C OIP”), representing an aggregate payment of $1.2 billion. The Put Right will automatically terminate (on a share by share basis) on the date on which (i) such share is assigned, sold or transferred publicly or (ii) the Class A common stock has a 20 day volume-weighted average price in any consecutive 30 trading day period of at least 175% of the Series C OIP at any point on or prior to the Public Sale Date during which Coatue Management, L.L.C. is not subject to a contractual lock-up agreement (clauses (i) and (ii) collectively, an “Exercise Termination Event”). If (i) there is a sale of the Company prior to the Public Sale Date and (ii) there has not yet occurred an Exercise Termination Event, the Class A common stockholders still holding Put Shares shall be entitled in such sale transaction to receive the greater of (x) the consideration received per share the holders of the Class A common stock are entitled to receive in such sale transaction and (y) an amount in cash equal to the Series C OIP per share. The company may not have enough available cash at the time the company is required to repurchase the Put Shares, and the company may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity or debt capital on terms that may be onerous or highly dilutive in order to make these repurchases. Further, any payments of cash used to repurchase the Put Shares will divert the cash flow from the business operations and could impact the business initiatives. Any significant repurchase of the Put Shares would adversely affect the business, operating results, financial condition, and prospects. The company could be subject to additional tax liabilities and United States federal and global income tax reform could adversely affect the company. The company is subject to U.S. federal, state, and local income taxes, sales, and other taxes in the United States and income taxes, withholding taxes, transaction taxes and other taxes in numerous foreign jurisdictions. Significant judgment is required in evaluating the tax positions and the worldwide provision for income taxes. During the ordinary course of business, there are many activities and transactions for which the ultimate tax determination is uncertain. In addition, the future income tax obligations could be adversely affected by changes in, or interpretations of, tax laws in the United States or in other jurisdictions in which the company operates. For example, the United States tax law legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 significantly reformed the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), reducing U.S. federal tax rates, making sweeping changes to rules governing international business operations, and imposing significant additional limitations on tax benefits, including the deductibility of interest and the use of net operating loss (“NOL”) carryforwards. Effective for taxable years beginning on or after January 1, 2022, the Tax Cuts and Jobs Act also required capitalization of research and certain software development expenses and amortization of such expenses over a period of five years if incurred in the United States and fifteen years if incurred outside the United States. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law. The IRA contains certain tax measures, including a corporate alternative minimum tax of 15% on some large corporations and an excise tax of 1% on certain corporate stock buy-backs taking place after December 31, 2022. In addition, the Organization for Economic Cooperation and Development (“OECD”) Inclusive Framework of 137 jurisdictions have joined a two-pillar plan to reform international taxation rules. The first pillar is focused on the allocation of taxing rights between countries for in-scope multinational enterprises that sell goods and services into countries with little or no local physical presence and is intended to apply to multinational enterprises with global turnover above €20 billion. The second pillar is focused on developing a global minimum tax rate of at least 15% applicable to in-scope multinational enterprises and is intended to apply to multinational enterprises with annual consolidated group revenue in excess of €750 million. The company is still evaluating the impact of the OECD pillar one and pillar two rules as they continue to be refined by the OECD and implemented by various national governments. However, it is possible that the OECD pillar one and pillar two rules, as implemented by various national governments, could adversely affect the effective tax rate or result in higher cash tax liabilities. Due to the expanding scale of the international business activities, these types of changes to the taxation of the activities could impact the tax treatment of the foreign earnings, increase the worldwide effective tax rate, increase the amount of taxes imposed on the business, and harm the financial position. Such changes may also apply retroactively to the historical operations and result in taxes greater than the amounts estimated and recorded in the financial statements. The company's ability to use the net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2024, the company had aggregate U.S. federal and state NOL carryforwards of $3.6 billion and $61 million, respectively, which may be available to offset future taxable income for U.S. income tax purposes. As of December 31, 2024, the company had $3.6 billion in federal NOL carryforwards, almost all of which can be carried forward indefinitely. As of December 31, 2024, the company had state NOL carryforwards of $61 million, of which $30 million can be carried forward indefinitely. If the NOL carryforwards are not utilized, $31 million will expire in varying amounts between the years 2032 and 2044. As of December 31, 2024, the company had foreign NOL carryforwards of $5 million that can be carried forward indefinitely. Realization of these net operating loss and research and development credit carryforwards depends on the future taxable income, and there is a risk that certain of the existing carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect the business, operating results, financial condition, and prospects. In addition, under Sections 382 and 383 of the Internal Revenue Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% cumulative change (by value) in ownership by “5 percent shareholders” over a rolling three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes, such as research and development credits, to offset its post-change income or taxes may be limited. The company has experienced, and may in the future experience, ownership changes as a result of shifts in the stock ownership. As a result, if the company earns net taxable income, the ability to use the pre-change U.S. NOL carryforwards and other tax attributes to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to the company. In addition, the company may undergo additional ownership changes in the future, including as a result of the offering, which could further limit the ability to use the NOLs and other pre-change tax attributes. Similar provisions of state tax law may also apply to limit the use of accumulated state tax NOLs. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase the state income tax liabilities. As a result of the foregoing, even if the company attains profitability, the company may be unable to use all or a material portion of the net operating losses and other tax attributes, which could adversely affect the future cash flows. The company could be required to collect additional sales, use, value added, digital services, or other similar taxes or be subject to other liabilities with respect to past or future sales, that may increase the costs the customers would have to pay for the solutions and adversely affect the business, operating results, financial condition, and prospects. The company does not collect sales and use, value added, or similar taxes in all jurisdictions in which the company has sales because the company has determined in consultation with the advisors that the sales in certain jurisdictions are not subject to such taxes. Sales and use, value added, and similar tax laws and rates vary greatly by jurisdiction and the application of such laws is subject to uncertainty. Jurisdictions in which the company does not collect such taxes may assert that such taxes apply to the sales and seek to impose incremental or new sales, use, value added, digital services, or assert other tax collection obligations on the company, which could result in tax assessments, penalties, and interest, to the company or the customers for past sales, and the company may be required to collect such taxes in the future. If the company is unsuccessful in collecting such taxes from the customers, the company could be held liable for such costs, which may adversely affect the operating results. Further, an increasing number of U.S. states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. A successful assertion by one or more U.S. states requiring the company to collect taxes where the company presently do not do so, or to collect more taxes in a jurisdiction in which the company currently collects such taxes, could result in substantial liabilities, including taxes on past sales, as well as interest and penalties. Furthermore, certain jurisdictions, such as the U.K., France, and Canada, have enacted a digital services tax, which is generally a tax on gross revenue generated from users or customers located in those jurisdictions, and other jurisdictions are considering enacting similar laws. A successful assertion by a U.S. state or local government or a foreign jurisdiction that the company should have been or should be collecting additional sales, use, value added, digital services, or other similar taxes could, among other things, result in substantial tax payments, create significant administrative burdens for the company, discourage potential customers from using the platform due to the incremental cost of any such sales or other related taxes, or otherwise harm the business. The corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and the company could be obligated to pay additional taxes, which would harm the business, operating results, financial condition, and prospects. The company is expanding the international operations and staff to support the business and growth in international markets. The company generally conducts the international operations through wholly-owned subsidiaries and is or may be required to report the taxable income in various jurisdictions worldwide based upon the business operations in those jurisdictions. The corporate structure and associated transfer pricing policies contemplate future growth in international markets, and consider the functions, risks, and assets of the various entities involved in intercompany transactions. Furthermore, increases in tax rates, new or revised tax laws, and new interpretations of existing tax laws (which may have retroactive effect) and policies by tax authorities and courts in various jurisdictions, could result in an increase in the overall tax obligations which could adversely affect the business. The intercompany relationships and intercompany transactions are subject to complex transfer pricing rules administered by tax authorities in various jurisdictions in which the company operates with potentially divergent tax laws. The amount of taxes the company pays in different jurisdictions will depend on the application of the tax laws of the various jurisdictions, including the United States, to the intercompany transactions, international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws (which may have retroactive effect) and policies by tax authorities and courts in various jurisdictions, and the ability to operate the business in a manner consistent with the corporate structure and intercompany arrangements. It is not uncommon for tax authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner which the arm’s length standard is applied for transfer pricing purposes, the transfer pricing and charges for intercompany services and other intercompany transactions, or with respect to the valuation of the intellectual property and the manner which the intellectual property is utilized within the group. If tax authorities in any of the jurisdictions in which the company conducts the international operations were to successfully challenge the transfer pricing, the company could be required to reallocate part or all of the income to reflect transfer pricing adjustments, which could result in an increased tax liability for the company. In such circumstances, if the country from where the income was reallocated did not agree to the reallocation, the company could become subject to tax on the same income in both countries, resulting in double taxation. Furthermore, the relevant tax authorities may disagree with the company's determinations as to the income and expenses attributable to specific jurisdictions. The company believes that the tax and financial accounting positions are reasonable and the tax reserves are adequate to cover any potential liability. The company also believes that the assumptions, judgments, and estimates are reasonable and that the transfer pricing for these intercompany transactions are on arm’s-length terms. However, the relevant tax authorities may disagree with the tax positions, including any assumptions, judgments, or estimates used for these transfer pricing matters and intercompany transactions. If any of these tax authorities determine that the transfer pricing for these intercompany transactions do not meet arm’s-length criteria, and were successful in challenging the positions, the company could be required to pay additional taxes, interest, and penalties related thereto, which could be in excess of any reserves established therefore, and which could result in higher effective tax rates, reduced cash flows, and lower overall profitability of the operations. The financial statements could fail to reflect adequate reserves to cover such a contingency. The company may be audited in various jurisdictions, including in jurisdictions in which the company is not currently filing, and such jurisdictions may assess new or additional taxes, sales taxes, and value added taxes against the company. Although the company believes the tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from the historical tax provisions and accruals, which could have an adverse effect on the operating results or cash flows in the period or periods for which a determination is made. If the estimates or judgments relating to the critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, the operating results could be adversely affected. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The company bases the estimates on historical experience and on various other assumptions that the company believes to be reasonable under the circumstances, as discussed in the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates .” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing the condensed consolidated financial statements include but are not limited to those related to the identification of performance obligations in revenue recognition, the valuation of stock-based awards, the valuation of derivatives and warrants, and accounting for leases, property and equipment, income taxes and variable interest entities. The operating results may be adversely affected if the assumptions change or if actual circumstances differ from those in the assumptions, which could cause the operating results to fall below the expectations of industry or financial analysts and investors, resulting in a potential decline in the market price of the Class A common stock. Additionally, the company regularly monitors the compliance with applicable financial reporting standards and review new pronouncements and drafts thereof that are relevant to the company. As a result of new standards, changes to existing standards, and changes in their interpretation, the company might be required to change the accounting policies, alter the operational policies, and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or the company may be required to restate the published financial statements. For example, SEC proposals on climate-related disclosures may require the company to update the accounting or operational policies, processes, or systems to reflect new or amended financial reporting standards. Such changes to existing standards or changes in their interpretation may have an adverse effect on the reputation, business, financial condition, and profit, or cause an adverse deviation from the revenue and operating profit target, which may adversely affect the financial results. The company is exposed to fluctuations in currency exchange rates, which could negatively affect the business, operating results, financial condition, and prospects. The sales contracts are primarily denominated in U.S. dollars, and therefore a majority of the revenue is not subject to foreign currency risk. However, strengthening of the U.S. dollar increases the real cost of the platform to the customers outside of the United States, which could lead to delays in the purchase of the platform and the lengthening of the sales cycle. If the U.S. dollar continues to strengthen, this could adversely affect the business, operating results, financial condition, and prospects. In addition, increased international sales in the future, including through continued international expansion, could result in foreign currency denominated sales, which would increase the foreign currency risk. The operating expenses incurred outside the United States and denominated in foreign currencies are increasing and are subject to fluctuations due to changes in foreign currency exchange rates. These expenses are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates. The company does not currently hedge against the risks associated with currency fluctuations but may do so, or use other derivative instruments, in the future. Risks Related to Indebtedness The substantial indebtedness could materially adversely affect the financial condition, the ability to raise additional capital to fund the operations, the ability to operate the business, the ability to react to changes in the economy or the industry, the ability to meet the obligations under the outstanding indebtedness and could divert the cash flow from operations for debt payments, and the company may still incur substantially more indebtedness in the future. The company has a substantial amount of debt, which requires significant interest and principal payments. As of March 31, 2025, the total indebtedness was $8.8 billion and the company had $4.1 billion of undrawn availability under the Revolving Credit Facility and DDTL 2.0 Facility (each as defined below). In July 2023, CoreWeave Compute Acquisition Co. II, LLC, the direct, wholly owned subsidiary, entered into a delayed draw term loan facility (as amended, the “DDTL 1.0 Facility”) providing for up to $2.3 billion in delayed draw term loans. In May 2024, CoreWeave Compute Acquisition Co. IV, LLC, the direct, wholly owned subsidiary, entered into a delayed draw term loan facility (as amended, the “DDTL 2.0 Facility”) providing for up to $7.6 billion in delayed draw terms loans. All obligations under the DDTL 1.0 Facility and the DDTL 2.0 Facility are unconditionally guaranteed by the company. In May 2025, the company amended the revolving credit facility to provide for a $1.5 billion revolving credit facility (as amended, the “Revolving Credit Facility,” and, together with the DDTL Facilities, the “Credit Facilities”). Between February and March 2025, the company entered into various agreements with an OEM and obtained financing for certain equipment with an aggregate notional balance of $1.5 billion as of March 31, 2025 and, in May 2025, entered into an amendment to an existing agreement with an OEM for financing for certain equipment with an aggregate notional value of approximately $3.5 billion. In addition to the substantial debt, the company leases all of the data centers and certain equipment under lease agreements, some of which are accounted for as operating leases. As of March 31, 2025, the company recorded operating lease liabilities of $3.1 billion, which represents the obligation to make lease payments under those lease arrangements. Subject to the limits contained in the credit agreements that govern the Credit Facilities, the company may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If the company does so, the risks related to the high level of debt could increase. Specifically, the high level of debt could have important consequences, including the following: it may be difficult for the company to satisfy the obligations, including debt service requirements under the outstanding debt, the ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, or other general corporate purposes may be impaired, a substantial portion of cash flow from operations are required to be dedicated to the payment of principal and interest on the indebtedness, therefore reducing the ability to use the cash flow to fund the operations, capital expenditures, future business opportunities, and other purposes, the company could be more vulnerable to economic downturns and adverse industry conditions and the flexibility to plan for, or react to, changes in the business or industry is more limited, the ability to capitalize on business opportunities and to react to competitive pressures, as compared to the competitors, may be compromised due to the high level of debt and the restrictive covenants in the credit agreements that govern the Credit Facilities, the ability to borrow additional funds or to refinance debt may be limited, and it may cause potential or existing customers to not contract with the company due to concerns over the ability to meet the financial obligations under such contracts. The ability to make scheduled payments on and to refinance the indebtedness depends on and is subject to the financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors, all of which are beyond the control, including the availability of financing in the international banking and capital markets. The company cannot ensure that the business will generate sufficient cash flow from operations or that future borrowings will be available to the company in an amount sufficient to enable the company to service the debt, to refinance the debt or to fund the other liquidity needs. For the three months ended March 31, 2025, the cash flows dedicated for debt service requirements totaled $460 million, which includes principal payments of $271 million and interest payments of $189 million, inclusive of $47 million related to capitalized interest. For the three months ended March 31, 2025, the net cash provided by operating activities was $61 million, which includes interest paid, net of capitalized amounts, of $142 million. As such, the cash flows from operating activities, before giving effect to the payment of interest, net of capitalized amounts, was $203 million. For the three months ended March 31, 2025, approximately 226% of the net cash provided by operating activities, before giving effect to the payment of interest, net of capitalized amounts, was dedicated to debt service, both principal and interest. If the cash flows and capital resources are insufficient to fund the debt service obligations, the company could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance the indebtedness. Further, any refinancing or restructuring of the indebtedness could be at higher interest rates, may cause the company to incur debt extinguishment costs, and may require the company to comply with more onerous covenants that could further restrict the business operations. Moreover, in the event of a default, the holders of the indebtedness could elect to declare such indebtedness be due and payable and/or elect to exercise other rights, such as the lenders under the Revolving Credit Facility terminating their commitments thereunder and ceasing to make further loans or the lenders under the DDTL 1.0 Facility and DDTL 2.0 Facility instituting foreclosure proceedings against their collateral, any of which could materially adversely affect the business, operating results, financial condition, and prospects. Additionally, financing through debt has historically been an important source of additional capital for the company, and the company intends to continue to use debt as a source of financing in the future. As such, the company and the subsidiaries are able to incur additional debt and may be able to incur substantial additional debt in the future, subject to the restrictions contained in the debt instruments, some of which may be secured debt. The existing debt agreements restrict the ability to incur additional indebtedness, including secured indebtedness, but if those restrictions are waived, or the facilities mature or are repaid, the company may not be subject to such restrictions under the terms of any subsequent indebtedness. Furthermore, all of the debt under the Credit Facilities bears interest at variable rates. If interest rates associated with the floating rate debt (e.g., SOFR) increase, the debt service obligations on the Credit Facilities would increase even though the amount borrowed remained the same, and the net income and cash flows, including cash available for servicing the indebtedness, would correspondingly decrease. In addition, an increase in such interest rates could adversely affect the future ability to obtain financing or materially increase the cost of any additional financing. In addition, the company has issued letters of credit in favor of several of the third-party data center providers as a requirement to enter into leases for these facilities. These letters of credit are cash collateralized, these funds are reflected as restricted cash on the condensed consolidated balance sheet, and the company is limited in the ability to use these funds for the business operations. Certain of the debt agreements impose significant operating and financial restrictions on the company and the subsidiaries, which may prevent the company from capitalizing on business opportunities. The credit agreements that govern the Credit Facilities, as well as the related parent guarantees, impose significant operating and financial restrictions on the company. These restrictions will limit the ability and/or the ability of the subsidiaries to, among other things: incur or guarantee additional debt or issue disqualified stock or preferred stock, pay dividends and make other distributions on, or redeem or repurchase, capital stock, make certain investments or acquisitions, incur certain liens, enter into transactions with affiliates, merge or consolidate, enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to the lenders, prepay, redeem or repurchase any subordinated indebtedness or enter into amendments to certain subordinated indebtedness in a manner materially adverse to the lenders, designate restricted subsidiaries as unrestricted subsidiaries, and transfer or sell assets. In addition, the company is required to maintain specified financial covenant ratios and satisfy other financial condition tests under the credit agreements governing the Credit Facilities. As a result of these restrictions, the company is limited as to how the company conducts the business, and the company may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness the company may incur could include similar or more restrictive covenants. The company cannot ensure that the company will be able to maintain compliance with these covenants in the future and, if the company fails to do so, that the company will be able to obtain waivers from the lenders and/or amend the covenants. The company's failure to comply with the restrictive or financial covenants described above as well as the terms of any future indebtedness the company may incur could result in an event of default, which, if not cured or waived, could result in the company being required to repay these borrowings before their due date. If the company is forced to refinance these borrowings on less favorable terms or is unable to refinance these borrowings, the business, operating results, financial condition, and prospects could be materially adversely affected. Risks Related to Ownership of the Class A Common Stock The market price of the Class A common stock may be volatile, and the investor could lose all or part of the investment. The company cannot predict the prices at which the Class A common stock will continue to trade. The market price of the Class A common stock depends on a number of factors, including those described in the “Risk Factors” section, many of which are beyond the control and may not be related to the operating performance. In addition, the limited public float of the Class A common stock will tend to increase the volatility of the trading price of the Class A common stock. These fluctuations could cause the investor to lose all or part of the investment in the Class A common stock. Factors that could cause fluctuations in the market price of the Class A common stock include, but are not limited to, the following: actual or anticipated changes or fluctuations in the operating results, the incurrence of any additional indebtedness or any fluctuations in interest rates impacting the existing indebtedness, the exercise by the former holders of the Series C convertible preferred stock of the Put Right, the ability to produce timely and accurate financial statements, the financial projections the company may provide to the public, any changes in these projections, or the failure to meet these projections, announcements by the company or the competitors of new offerings or new or terminated significant contracts, commercial relationships, acquisitions, or capital commitments, industry or financial analyst or investor reaction to the press releases, other public announcements and filings with the SEC, rumors and market speculation involving the company or other companies in the industry, price and volume fluctuations in the overall stock market from time to time, the overall performance of the stock market or technology companies, the expiration of market standoff or contractual lock up agreements and sales of shares of the Class A common stock by the company or the stockholders, failure of industry or financial analysts to maintain coverage of the company, changes in financial estimates by any analysts who follow the company or the failure to meet these estimates or the expectations of investors, actual or anticipated developments in the business or the competitors’ businesses or the competitive landscape generally, litigation or other proceedings involving the company, the industry or both, or investigations by regulators into the operations or those of the competitors, developments or disputes concerning the intellectual property rights or the solutions, or third-party proprietary rights, new laws or regulations or new interpretations of existing laws or regulations applicable to the business, any major changes in the management or the board of directors, the global political, economic, and macroeconomic climate, including but not limited to, actual or perceived instability in the banking industry, potential uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto, domestic and foreign regulatory uncertainty, changes in trade policies, including the imposition of tariffs, trade controls and other trade barriers, labor shortages, supply chain disruptions, potential recession, inflation, and rising interest rates, other events or factors, including those resulting from war, armed conflict, including the conflicts in the Middle East and Ukraine and tensions between China and Taiwan, incidents of terrorism, or responses to these events, and cybersecurity incidents. In addition, the stock market in general, and the market for technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies, particularly during the current period of global macroeconomic and geopolitical uncertainty. These economic, political, regulatory, and market conditions have and may continue to negatively impact the market price of the Class A common stock, regardless of the actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market prices of a particular company’s securities, securities class action litigation has often been instituted against that company. Securities litigation, if instituted against the company, could result in substantial costs and divert the management’s attention and resources from the business. This could have an adverse effect on the business, operating results, financial condition, and prospects. Sales of substantial amounts of the Class A common stock in the public markets, or the perception that they might occur, could cause the market price of the Class A common stock to decline. Sales of a substantial number of shares of the Class A common stock into the public market, including shares of the Class A common stock held by the affiliates, and particularly sales by the directors, executive officers, and principal stockholders, or the perception that these sales might occur, could cause the market price of the Class A common stock to decline. All of the shares of Class A common stock sold in the IPO will be freely tradable without restrictions or further registration under the Securities Act, except that any shares held by the affiliates would only be able to be sold in compliance with Rule 144 and any applicable lock-up agreements described below. In connection with the IPO, all of the directors and executive officers, the selling stockholders, and certain other holders agreed, subject to certain exceptions, that without the prior written consent of Morgan Stanley & Co. LLC (“Morgan Stanley”), on behalf of the underwriters of the IPO, and Magnetar Financial LLC (“Magnetar”), they will not, in accordance with the terms of such agreements during the period ending on the close of trading on the second trading day after the date that the company publicly announce earnings for the three months ended June 30, 2025 (such period, the “Lock-up Period”): (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of the common stock and securities directly or indirectly convertible into or exchangeable or exercisable for the common stock; (2) enter into any swap, hedging transaction, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock, whether any such transaction described above is to be settled by delivery of the common stock or such other securities, in cash or otherwise; (3) publicly disclose the intention to take any of the actions restricted by clause (1) or (2) above; or (4) make any demand for, or exercise any right with respect to, the registration of any shares of the common stock or any security convertible into or exercisable or exchangeable for the common stock. Furthermore, additional holders of the Class A common stock are subject to market standoff provisions, pursuant to which such holders agreed to not lend, offer, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of the Class A common stock or any securities convertible into or exercisable or exchangeable for the Class A common stock, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such Class A common stock during the Lock-up Period. The forms and specific restrictive provisions within these market standoff provisions vary among security holders. For example, although some of these market standoff agreements do not specifically restrict hedging transactions and others may be subject to different interpretations between the company and security holders as to whether they restrict hedging, the insider trading policy prohibits hedging by all of the current directors, officers, employees, contractors, and consultants. Sales, short sales, or hedging transactions involving the equity securities, whether or not the company believes them to be prohibited, could adversely affect the price of the Class A common stock. As a result of the foregoing, substantially all of the outstanding Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for the Class A common stock are subject to a lock-up agreement or market standoff provisions during the Lock-up Period. The company has agreed to enforce all such market standoff restrictions on behalf of the underwriters and not to amend or waive any such market standoff provisions during the Lock-up Period without the prior written consent of Morgan Stanley, on behalf of the underwriters, and Magnetar, provided that the company may release shares from such restrictions to the extent such shares would be entitled to release under the form of lock-up agreement with the underwriters entered into by the directors and executive officers, the selling stockholders, and certain other record holders of the securities as described herein. Certain of the security holders that are not bound by market standoff restrictions or lock-up agreements could enter into transactions with respect to those shares of the Class A common stock that negatively impact the stock price. In addition, a security holder who is neither subject to market standoff restrictions with the company nor a lock-up agreement with the underwriters may be able to sell, short sell, transfer, pledge, or otherwise dispose of or attempt to sell, short sell, transfer, hedge, pledge, or otherwise dispose of their equity interests at any time, subject to the insider trading policy, as applicable, and applicable securities laws. In addition, pursuant to certain exceptions to the lock-up agreements and market standoff agreements, certain shares of the Class A common stock are eligible for sale in the open market during the Lock-up Period in sell-to-cover transactions in order to satisfy tax withholding obligations. Furthermore, subject to certain conditions, at the close of trading of the second trading day after the date that the company publicly announce earnings for the three months ended March 31, 2025 (the “Initial Post-Offering Earnings Release Date”), if the closing price per share of the Class A common stock on Nasdaq for any five trading days out of the ten consecutive trading day period including at least one day occurring after the Initial Post-Offering Earnings Release Date is at least 25% greater than the public offering price of the Class A common stock, certain shares of Class A common stock held by the current employees and service providers (excluding the Co-Founders and directors) will be immediately available for sale in the public market. When the Lock-up Period expires, the company and the security holders that are subject to a lock-up agreement or market stand-off agreement will be able to sell the shares in the public market. In addition, Morgan Stanley may release all or some portion of the shares subject to lock-up agreements prior to the expiration of the Lock-up Period, subject to the prior written consent of Magnetar. Sales of a substantial number of such shares upon expiration of the lock-up and market stand-off agreements, or the perception that such sales may occur, or early release of these agreements, could cause the market price to fall or make it more difficult for the investor to sell the Class A common stock at a time and price that the investor deems appropriate. Following the expiration of the market standoff and lock-up agreements referred to above, pursuant to the third amended and restated investors’ rights agreement, dated May 16, 2024, certain holders of the Class A common stock can require the company to file registration statements for the public resale of the Class A common stock issuable upon conversion of such shares or to include such shares in registration statements that the company may file for the company or other stockholders. The company may also issue the shares of common stock or securities convertible into shares of the common stock from time to time in connection with a financing, acquisition, investment, or otherwise. Any further issuance could result in substantial dilution to the existing stockholders and cause the market price of the Class A common stock to decline. The multi-class structure of the common stock has the effect of concentrating voting power with the Co-Founders, which will limit the ability to influence the outcome of important transactions, including a change in control. The Class B common stock has ten votes per share, the Class A common stock has one vote per share, and the Class C common stock has no votes per share. As of March 31, 2025, the Co-Founders collectively hold all of the issued and outstanding shares of the Class B common stock. Because of the ten-to-one voting ratio between the Class B common stock and Class A common stock, the Co-Founders collectively continue to control a significant percentage of the combined voting power of the common stock, which voting power may increase over time upon the exercise or settlement and exchange of equity awards held by the Co-Founders pursuant to their equity exchange rights which provide each Co-Founder with the right (but not obligation) to require the company to exchange, for shares of the Class B common stock, any shares of the Class A common stock received by him upon the exercise or settlement of equity awards for shares of the Class A common stock granted prior to September 2024. Therefore, the Co-Founders, individually or together, will be able to significantly influence matters submitted to the stockholders for approval, including the election of directors, amendments of the organizational documents and any merger, consolidation, sale of all or substantially all of the assets, or other major corporate transactions. The Co-Founders, individually or together, may have interests that differ from the investor's and may vote in a way with which the investor disagrees and which may be adverse to the investor's interests. This concentrated control may have the effect of delaying, preventing, or deterring a change in control of the company, could deprive the stockholders of an opportunity to receive a premium for their capital stock as part of a sale of the company, and might ultimately affect the market price of the Class A common stock. Future transfers by the holders of Class B common stock will generally result in those shares converting into shares of Class A common stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes. In addition, future issuances of the Class C common stock may further concentrate the voting power of the Co-Founders by prolonging the duration of their control and/or by giving them an opportunity to achieve liquidity without diminishing their voting power. If the company is unable to effectively manage these risks, the business, operating results, financial condition, and prospects could be adversely affected. The multi-class structure of the common stock may adversely affect the trading market for the Class A common stock. The company cannot predict whether the multi-class structure will, over time, result in a lower or more volatile market price of the Class A common stock, adverse publicity, or other adverse consequences. Certain stock index providers exclude or limit the ability of companies with multi-class share structures from being added to certain of their indices. In addition, several stockholder advisory firms and large institutional investors oppose the use of multiple class structures. As a result, the multi-class structure of the common stock may make the company ineligible for inclusion in certain indices and may discourage such indices from selecting the company for inclusion, notwithstanding the automatic termination provision, may cause stockholder advisory firms to publish negative commentary about the corporate governance practices or otherwise seek to cause the company to change the capital structure, and may result in large institutional investors not purchasing shares of the Class A common stock. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, any exclusion from certain stock indices could result in less demand for the Class A common stock. Any actions or publications by stockholder advisory firms or institutional investors critical of the corporate governance practices or capital structure could also adversely affect the value of the Class A common stock. If financial analysts issue inaccurate or unfavorable research regarding, or do not or cease to cover, the Class A common stock, the stock price and trading volume could decline. The trading market for the Class A common stock is influenced by the research and reports that financial analysts publish about the company, the business, the market and the competitors. The company does not control these analysts or the content and opinions included in their reports. As a new public company, the analysts who publish information about the Class A common stock will have had relatively little experience with the business, which could affect their ability to accurately forecast the results and make it more likely that the company fails to meet their estimates. If any of the analysts who cover the company issues an inaccurate or unfavorable opinion regarding the stock price, the stock price would likely decline. In addition, the stock prices of many companies in the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly announced by the companies or the expectations of analysts. If the financial results fail to meet, or significantly exceed, the announced guidance, if any, or the expectations of analysts or public investors, analysts could downgrade the Class A common stock or publish unfavorable research about the company. If one or more of these analysts cease coverage of the Class A common stock or fail to publish reports on the company regularly, the visibility in the financial markets could decrease, which in turn could cause the stock price or trading volume to decline. The company does not intend to pay dividends in the foreseeable future. As a result, the ability to achieve a return on the investment will depend on appreciation in the price of the Class A common stock. The company currently intends to retain all available funds and any future earnings for use in the operation of the business and do not anticipate paying any dividends on the capital stock in the foreseeable future. Additionally, the ability to pay dividends or make distributions is limited by certain restrictions contained in the Credit Facilities. Any future determination to declare dividends will be made at the discretion of the board of directors and will depend on the financial condition, operating results, capital requirements, general business conditions, restrictions in the debt instruments and other factors that the board of directors may deem relevant. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. Provisions in the charter documents and under Delaware law could make an acquisition of the company, which may be beneficial to the stockholders, more difficult and may limit attempts by the stockholders to replace or remove the current management and members of the board of directors. Provisions in the amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a merger, acquisition or other change of control of the company that the stockholders may consider favorable. In addition, because the board of directors is responsible for appointing the members of the management team, these provisions may frustrate or prevent any attempts by the stockholders to replace or remove the current management by making it more difficult for stockholders to replace members of the board of directors. The company is exposed to market risk in the ordinary course of its business. Market risk represents the risk of loss that may impact the financial position due to adverse changes in financial market prices and rates. The market risk exposure is primarily the result of fluctuations in interest rates. Interest Rate Risk As of March 31, 2025, the company had cash and cash equivalents and marketable securities of $1.3 billion. In addition, the company had $1.2 billion of restricted cash and cash equivalents and marketable securities consisting of bank deposits related to collateralized loan facilities and letters of credit. The cash, cash equivalents, and marketable securities are held for working capital purposes. The company does not enter into investments for trading or speculative purposes. The exposure to market risk for changes in interest rates relates primarily to the DDTL 1.0 Facility, DDTL 2.0 Facility, 2024 Term Loan Facility, and Revolving Credit Facility (described above), which bear floating interest rates, and a rising interest rate environment may increase the amount of interest paid on these loans. For the three months ended March 31, 2025, each 100-basis point increase or decrease in interest rates would have increased or decreased the interest expense related to these facilities by approximately $18 million. Foreign Currency Risk The company transacts business globally in multiple currencies. The international revenue, as well as costs and expenses denominated in foreign currencies, expose the company to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. The company is exposed to foreign currency risks related to the revenue and operating expenses denominated in currencies other than the U.S. dollar, including the British pound, Euro and Swedish krona. Accordingly, changes in exchange rates may negatively affect the future revenue and other operating results as expressed in U.S. dollars. The company has experienced and will continue to experience fluctuations in the net income (loss) as a result of transaction gains or losses related to remeasurement of the asset and liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. The company does not currently hedge against the risks associated with currency fluctuations but may do so, or use other derivative instruments, in the future. It is difficult to predict the impact hedging activities would have on the results of operations. Inflation Risk The company does not believe that inflation has had a material effect on the business, financial condition or results of operations, other than its impact on the general economy, which includes labor costs. Nonetheless, if the costs, in particular personnel-related costs, continue to become subject to significant inflationary pressures, the company may not be able to fully offset such higher costs through price increases. The inability or failure to do so could harm the business, financial condition and results of operations. The company is subject to various risks and uncertainties, including those related to growth management, supplier limitations, power availability, data center provider performance, customer concentration, platform enhancement, AI technology adoption, capital expenditures, operating results fluctuations, competition, indebtedness, stock price volatility, and ownership structure. The company's recent growth may not be indicative of future growth, and the ability to effectively manage future growth is critical to the business, operating results, financial condition, and prospects. The company's limited number of suppliers for significant components of the equipment used to build and operate the platform exposes the company to various risks, including asymmetry between component availability and contractual performance obligations, shifts in market-leading technologies, reduced control over production costs, limited ability to control aspects of the quality, performance, quantity, and cost of the infrastructure or of its components, potential for binding price or purchase commitments with suppliers at higher than market rates, reliance on suppliers to keep up with technological advancements, consolidation among suppliers, labor and political unrest at facilities, geopolitical disputes disrupting supply chains, business, legal compliance, litigation, and financial concerns affecting suppliers or their ability to manufacture and ship components, impacts on the supply chain from adverse public health developments, and disruptions due to natural disasters. The company's business would be harmed if the company were not able to access sufficient power or by increased costs to procure power, prolonged power outages, shortages, or capacity constraints. The company depends on being able to secure power in a cost-effective manner, and any inability to secure sufficient power or any power outages, shortages, supply chain issues, capacity constraints, or significant increases in the cost of securing power could have an adverse effect on the business, operating results, financial condition, and prospects. The company's data center providers may fail to meet the requirements of the business, or the data center facilities may experience damage, interruption, or a security breach, negatively impacting the ability to provide access to the infrastructure and maintain the performance of the network. The company leases space in or otherwise licenses use of third-party data centers located in the United States, Europe, and the United Kingdom, and the business is reliant on these data center facilities. Given that the company leases or licenses use of this data center space, the company does not control the operation of these third-party facilities. Consequently, the company could be subject to service disruptions as well as failures to provide adequate support for reasons that are outside of the direct control. The data center facilities and network infrastructure are vulnerable to damage or interruption from a variety of sources, including earthquakes, floods, fires, power loss, system failures, computer and other cybersecurity vulnerabilities, physical or electronic break-ins, human error, malfeasance or interference, as well as terrorist acts and other catastrophic events. The company and the data center facilities the company leases space in or licenses use of have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of factors, including availability or sufficiency of power, infrastructure changes, and capacity constraints, occasionally due to an overwhelming number of customers accessing the infrastructure simultaneously. The data center facilities the company leases space in or licenses use of may also be subject to cybersecurity attacks, including supply chain attacks, due to the actions of outside parties or human error, malfeasance, insider threats, system errors or vulnerabilities, insufficient cybersecurity controls, a combination of these, or otherwise, which may cause service outages and otherwise impact the ability to provide the solutions and services. While the company reviews the security measures of the third-party data centers, the company cannot ensure that these measures will be sufficient to prevent a cybersecurity attack or to protect the continued operation of the platform in the event of a cybersecurity attack, and any impact to the solutions and services may also impact the business, operating results, financial condition, and prospects. Data center facilities housing the 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. In addition, while the company has 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 the company with certain data, equipment, and utilities information required to run the business. Furthermore, the company may require the data centers the company leases to have certain highly specific attributes in order to effectively run the business. The state-of-the-art data centers may also require networking equipment, high-speed interconnects, enhanced access to power, and liquid cooling infrastructure. In some cases, these third-party data centers are required to undergo extensive retrofitting and improvement efforts, including to incorporate novel developments in the industry, which are time-consuming, expensive, and less efficient than if the company were to lease from spaces already designed for the operations, and which may not ultimately be successful in meeting all of the requirements. If third parties fail to successfully deliver on such performance requirements, the ability to maintain the performance of the network would be negatively impacted. Other factors, many of which are beyond the control, that can affect the delivery, performance, and availability of the platform include the development, maintenance, and functioning of the infrastructure of the internet as a whole, the performance and availability of third-party telecommunications services with the necessary speed, data capacity, and security for providing reliable internet access and services, the success or failure of the redundancy systems, the success or failure of the disaster recovery and business continuity plans, decisions by the owners and operators of the data center facilities where the infrastructure is installed or by global telecommunications service provider partners who provide the company with network bandwidth to terminate the contracts, discontinue services to the company, shut down operations or facilities, increase prices, change service levels, limit bandwidth, declare bankruptcy, breach their contracts with the company, or prioritize the traffic of other parties, the ability to enter into data center agreements and leases according to the business needs and on terms and with counterparties acceptable to the company, and changing sentiment by government regulators relating to data center development, including in response to public concerns regarding environmental impact and development, which may result in restrictive government regulation or otherwise impact the future construction of additional data centers. In addition, many of the leases the company has entered into for third-party data centers have multi-year terms and fixed capacity. If the company does not accurately anticipate the data center capacity required by the customers, including if they use less or more of the infrastructure than expected, the company would incur additional costs due to leasing more capacity than is used and paid for by the customers or, alternatively, in seeking additional data center capacity to fulfill unexpected demand on terms that may not be economically reasonable or acceptable to the company, if the company is able to lease additional capacity at all. The company may also need to seek additional data center capacity in the event any leases with third parties are terminated or not renewed, which the company may be unable to do on reasonable terms or at all. The occurrence of any of these factors, or the inability to efficiently and cost-effectively fix such errors or other problems that may be identified, could damage the reputation, negatively impact the relationship with the customers, or otherwise materially harm the business, operating results, financial condition, and prospects. In the future, the company may develop its own data centers, rather than relying on third parties and, because of the limited experience in this area, the company could experience unforeseen difficulties. For example, any potential expansion of the data center infrastructure would be complex, and unanticipated delays in the completion of those projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of the quality of the 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 the company has started to fully utilize the underlying equipment, that could further degrade the platform or increase the costs. A substantial portion of the revenue is driven by a limited number of the customers, and the loss of, or a significant reduction in, spend from one or a few of the top customers would adversely