ERock, Inc. (NYSE: EROC) (“ERock” or the “Company”), a leading provider of utility-grade onsite power solutions, today reported financial and operating results for the second quarter ended June 30, 2026, highlighted by record contracted backlog, accelerating demand from AI infrastructure customers, expanded manufacturing capacity and the initiation of full-year 2026 guidance.
Business Highlights
- Contracted Power System Sales Backlog increased to approximately $1.7 billion, up 10x year-over-year, driven primarily by accelerating demand from AI data center customers.
- Executed a 470 MW equipment purchase order with Anthropic, further validating ERock’s position as a leading provider of utility-grade onsite power solutions for AI infrastructure and extending production commitments into 2028.
- Began assembly operations at Hyperion facility. The Houston manufacturing expansion significantly increases ERock’s capacity to support contracted customer deliveries.
- Commenced construction of the 366 MW El Paso Electric generation facility, supporting Meta’s data center campus.
- Successfully completed an initial public offering of approximately 27.9 million shares of Class A common stock on June 11, 2026, raising approximately $400 million in gross proceeds to the Company.
- Ended the quarter with strong liquidity, including $626.6 million of unrestricted cash, no outstanding debt and an undrawn $250 million credit facility as of June 30, 2026.
Management Commentary
“The second quarter marked another important milestone for ERock. We secured a 470 MW equipment purchase order from Anthropic, increasing our Contracted Power System Sales Backlog to approximately $1.7 billion and extending our production commitments into 2028. We believe AI infrastructure is fundamentally reshaping power markets, and the need for rapid, utility-grade power continues to accelerate,” said John Carrington, Chief Executive Officer of ERock. “To meet that demand, we began assembly operations at our Hyperion manufacturing facility, significantly expanding our production capacity as we execute against record contracted orders. We also commenced construction of the 366 MW El Paso Electric project supporting Meta’s data center campus, demonstrating our ability to deliver increasingly large-scale power infrastructure. Our focus remains on safe execution, on-time delivery, disciplined manufacturing expansion and converting our growing backlog into sustained revenue and earnings growth.”
Ian Blakely, Chief Financial Officer of ERock, added, “We believe that our second quarter results position us for a meaningful acceleration in the second half of 2026. We expect significantly higher generator deliveries and installations as we execute on multiple large customer projects, which is anticipated to drive substantial growth in revenue and Adjusted EBITDA. Following our IPO, we ended the quarter with $626.6 million of unrestricted cash, no outstanding debt and an undrawn $250 million credit facility. Combined with our expanded manufacturing footprint and record contracted backlog, we believe we are well positioned to execute on the substantial demand we see across AI infrastructure, utilities and other critical power markets.”
Outlook
The Company is introducing the following full-year 2026 guidance.
- Revenue: $435 million to $465 million
- Adjusted EBITDA*: $3 million to $9 million
At the midpoint, the revenue outlook represents approximately 2.5x year-over-year growth.
* Non-GAAP measure. See reconciliations in the section titled “Non-GAAP Financial Measures” below.
Summary of Key Financial Metrics
|
|
|
Three Months Ended |
|
|||||||||
|
(dollars in thousands) |
|
Q2 2026 |
|
|
Q1 2026 |
|
|
Q2 2025 |
|
|||
|
Power system sales revenues |
|
$ |
26,514 |
|
|
$ |
15,922 |
|
|
$ |
57,396 |
|
|
Ongoing services revenues |
|
|
13,364 |
|
|
|
15,814 |
|
|
|
11,062 |
|
|
Total revenues |
|
|
39,878 |
|
|
|
31,736 |
|
|
|
68,458 |
|
|
Total cost of revenues, excluding depreciation and amortization |
|
|
31,138 |
|
|
|
25,243 |
|
|
|
52,426 |
|
|
Depreciation and amortization expense |
|
|
1,308 |
|
|
|
1,301 |
|
|
|
808 |
|
|
Gross Profit |
|
$ |
7,432 |
|
|
$ |
5,192 |
|
|
$ |
15,224 |
|
|
Gross Margin |
|
|
18.6 |
% |
|
|
16.4 |
% |
|
|
22.2 |
% |
|
Adjusted Gross Profit* |
|
$ |
7,432 |
|
|
$ |
5,192 |
|
|
$ |
15,100 |
|
|
Adjusted Gross Margin* |
|
|
22.2 |
% |
|
|
20.7 |
% |
|
|
23.6 |
% |
|
Adjusted EBITDA* |
|
$ |
(13,982 |
) |
|
$ |
(12,417 |
) |
|
$ |
3,581 |
|
|
Adjusted EBITDA Margin* |
|
|
(35.1 |
%) |
|
|
(39.1 |
%) |
|
|
5.2 |
% |
|
Net Loss |
|
$ |
(67,719 |
) |
|
$ |
(17,212 |
) |
|
$ |
(7,985 |
) |
* Non-GAAP measure. See reconciliations in the section titled “Non-GAAP Financial Measures” below.
|
(dollars in thousands) |
|
Q2 2026 |
|
|
Q1 2026 |
|
|
Q2 2025 |
|
|||
|
Contracted Power System Sales Backlog |
|
~$1.7bn |
|
|
~$1.3bn |
|
|
~$0.2bn |
|
|||
|
Annualized Recurring Service Revenue |
|
$ |
23,601 |
|
|
$ |
22,879 |
|
|
$ |
20,047 |
|
|
Installed Base (MW) |
|
|
1,104 |
|
|
|
1,059 |
|
|
|
979 |
|
Conference Call
ERock will host a conference call to discuss its second quarter 2026 business, operational and financial highlights at 8:30 a.m. ET (7:30 a.m. CT) on August 12, 2026.
The conference call will be accessible via a live webcast on a listen-only basis on ERock’s investor relations (“IR”) site at https://ir.erock.com/. The call can also be accessed by dialing (877) 407-8829, or for international callers +1 (201) 493-6724, and referencing ERock.
A replay will be available shortly after the call and can be accessed by dialing (877) 660-6853, or for international callers +1 (201) 612-7415 (passcode: 17361839). An archive of the webcast will be available shortly after the call on the Company’s IR site.
About ERock
ERock (NYSE: EROC) is enabling energy for a new era. ERock delivers onsite utility-grade power that gets customers up and running quickly, while supporting long-term grid development. ERock’s proprietary natural gas generators help critical facilities address grid constraints, interconnection delays, and outage risks while accelerating speed-to-power for new and expanding operations. Trusted by data centers, utilities, manufacturers, healthcare systems and government organizations, ERock engineers for rapid deployment, long-duration reliability, low local emissions, and scalable performance to meet the evolving energy demands of today and tomorrow. For more information, visit www.erock.com.
Forward-Looking Statements
This news release (and oral statements made regarding the subjects of this release) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (each a “forward-looking statement”). Forward-looking statements include those that express a belief, expectation or intention about us and our industry, as well as those that are not statements of historical fact. These forward-looking statements may be accompanied by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “will,” “should,” “could,” “would,” “likely,” “future,” “budget,” “pursue,” “target,” “seek,” “objective” or similar expressions that are predictions of or indicate future events or trends that do not relate to historical matters, although not all forward-looking statements contain such identifying words. Forward-looking statements include information regarding our future plans and goals, as well as our expectations with respect to: our business strategy and future growth prospects; our industry; our future profitability, cash flows and liquidity; our financial strategy, budget, projections and operating results; the amount, nature and timing of our capital expenditures and the impact of such expenditures on our performance; the availability and terms of capital; the market for distributed power generation; competition and government regulations; and general economic conditions.
These forward-looking statements speak only as of the date of this news release, or such other date as specified herein. Forward-looking statements are not assurances of future performance and involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties include, but are not limited to, the following: expectations regarding demand for distributed energy generation and acceptance of our power system solutions across end markets; estimates and assumptions regarding market opportunity, growth forecasts and revenue expectations; our history of losses and ability to achieve and sustain profitability; the realization of revenue from contracted backlog and services arrangements, including customer payment risk; risks associated with project development, construction, installation, utility interconnection, fuel supply, cost overruns and delays; reliance on a limited number of customers and the loss of, or adverse developments affecting, major customers; competition from larger competitors and alternative technologies; operational and safety risks, including the adequacy of insurance and indemnification arrangements; geographic concentration of operations, including regulatory, market and weather-related risks in Texas and California; customer financing constraints and the significant upfront cost of our power systems; our ability to scale manufacturing and assembly capacity in a timely and cost-effective manner; disruptions at assembly facilities and dependence on third-party suppliers and supply chains; the impact of tariffs, trade restrictions and other cost pressures; compliance with applicable laws, regulations and permitting requirements; protection of intellectual property, including risks of infringement claims; internal control, financial reporting and public company compliance risks; cybersecurity, IT and data security risks; conflicts of interest and risks related to Energy Impact Partners LP; risks related to our corporate structure; and other risks and uncertainties inherent in our business.
These and other important factors that could affect our operating results and performance are described under the caption “Risk Factors” in our prospectus (the “Prospectus”) (File No. 333-295965), dated June 9, 2026, filed on June 10, 2026 with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the “Securities Act”), under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 (the “Quarterly Report”) and elsewhere within the Quarterly Report. Should one or more of the risks or uncertainties described above or in the Quarterly Report occur, or should underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statements. All such forward-looking statements in this news release are expressly qualified in their entirety by this cautionary statement. We disclaim any obligation to update these statements unless required by law, and we caution you not to place undue reliance on them.
Condensed Consolidated Statements of Operations (Unaudited)
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
(in thousands, except share and per share amounts) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
Power system sales product revenues |
|
$ |
16,163 |
|
|
$ |
43,319 |
|
|
$ |
21,320 |
|
|
$ |
49,391 |
|
|
Power system sales installation services revenues |
|
|
10,351 |
|
|
|
14,077 |
|
|
|
21,116 |
|
|
|
22,037 |
|
|
Power system sales revenues |
|
|
26,514 |
|
|
|
57,396 |
|
|
|
42,436 |
|
|
|
71,428 |
|
|
Ongoing services revenues |
|
|
13,364 |
|
|
|
11,062 |
|
|
|
29,178 |
|
|
|
21,138 |
|
|
Total revenues |
|
|
39,878 |
|
|
|
68,458 |
|
|
|
71,614 |
|
|
|
92,566 |
|
|
Cost of power system sales product revenues, excluding depreciation and amortization |
|
|
12,112 |
|
|
|
34,360 |
|
|
|
15,892 |
|
|
|
39,788 |
|
|
Cost of power system sales installation services revenues, excluding depreciation and amortization |
|
|
8,058 |
|
|
|
8,446 |
|
|
|
16,288 |
|
|
|
14,295 |
|
|
Cost of power system sales revenues, excluding depreciation and amortization |
|
|
20,170 |
|
|
|
42,806 |
|
|
|
32,180 |
|
|
|
54,083 |
|
|
Cost of ongoing services revenues, excluding depreciation and amortization |
|
|
10,968 |
|
|
|
9,620 |
|
|
|
24,201 |
|
|
|
18,756 |
|
|
Total cost of revenues, excluding depreciation and amortization |
|
|
31,138 |
|
|
|
52,426 |
|
|
|
56,381 |
|
|
|
72,839 |
|
|
General and administrative expenses |
|
|
27,280 |
|
|
|
15,726 |
|
|
|
48,223 |
|
|
|
32,592 |
|
|
Depreciation and amortization expense |
|
|
1,308 |
|
|
|
808 |
|
|
|
2,609 |
|
|
|
1,864 |
|
|
Loss from operations |
|
|
(19,848 |
) |
|
|
(502 |
) |
|
|
(35,599 |
) |
|
|
(14,729 |
) |
|
Interest (expense) income |
|
|
(2,392 |
) |
|
|
7,681 |
|
|
|
(3,844 |
) |
|
|
5,703 |
|
|
Loss on debt extinguishment |
|
|
(48,774 |
) |
|
|
(15,244 |
) |
|
|
(48,774 |
) |
|
|
(15,244 |
) |
|
Other income, net |
|
|
2,921 |
|
|
|
91 |
|
|
|
3,473 |
|
|
|
376 |
|
|
Loss before income taxes |
|
|
(68,093 |
) |
|
|
(7,974 |
) |
|
|
(84,744 |
) |
|
|
(23,894 |
) |
|
Income tax (expense) benefit |
|
|
374 |
|
|
|
(11 |
) |
|
|
(187 |
) |
|
|
(28 |
) |
|
Net loss |
|
|
(67,719 |
) |
|
|
(7,985 |
) |
|
|
(84,931 |
) |
|
|
(23,922 |
) |
|
Deemed dividend related to Series A preferred units |
|
|
(657 |
) |
|
|
(770 |
) |
|
|
(1,473 |
) |
|
|
(1,525 |
) |
|
Net loss attributable to common units |
|
$ |
(68,376 |
) |
|
$ |
(8,755 |
) |
|
$ |
(86,404 |
) |
|
$ |
(25,447 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss applicable to pre-IPO period |
|
|
(52,836 |
) |
|
|
|
|
|
(70,048 |
) |
|
|
|
||
|
Net loss attributable to noncontrolling interest |
|
|
(11,900 |
) |
|
|
|
|
|
(11,900 |
) |
|
|
|
||
|
Net loss attributable to ERock, Inc. |
|
$ |
(2,983 |
) |
|
|
|
|
$ |
(2,983 |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
(0.06 |
) |
|
|
|
|
$ |
(0.06 |
) |
|
|
|
||
|
Diluted |
|
$ |
(0.06 |
) |
|
|
|
|
$ |
(0.06 |
) |
|
|
|
||
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
|
48,174,023 |
|
|
|
|
|
|
48,174,023 |
|
|
|
|
||
|
Diluted |
|
|
48,174,023 |
|
|
|
|
|
|
48,174,023 |
|
|
|
|
||
Condensed Consolidated Balance Sheets (Unaudited)
|
|
|
June 30, |
|
|
December 31, |
|
||
|
(in thousands, except unit and share value amounts) |
|
2026 |
|
|
2025 |
|
||
|
Assets |
|
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
626,636 |
|
|
$ |
108,097 |
|
|
Accounts receivable, net |
|
|
101,790 |
|
|
|
33,762 |
|
|
Inventory |
|
|
106,059 |
|
|
|
43,681 |
|
|
Contract assets |
|
|
10,195 |
|
|
|
15,964 |
|
|
Prepaid expenses |
|
|
22,611 |
|
|
|
8,799 |
|
|
Other current assets |
|
|
14,697 |
|
|
|
6,567 |
|
|
Total current assets |
|
|
881,988 |
|
|
|
216,870 |
|
|
Property and equipment, net |
|
|
34,135 |
|
|
|
27,545 |
|
|
Right-of-use assets, net |
|
|
23,975 |
|
|
|
10,832 |
|
|
Restricted Cash |
|
|
34,225 |
|
|
|
— |
|
|
Other noncurrent assets |
|
|
3,683 |
|
|
|
2,649 |
|
|
Total assets |
|
$ |
978,006 |
|
|
$ |
257,896 |
|
|
Liabilities and Equity |
|
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
|
||
|
Accounts payable |
|
$ |
46,904 |
|
|
$ |
16,549 |
|
|
Accrued liabilities and other payables |
|
|
23,391 |
|
|
|
26,235 |
|
|
Contract liabilities |
|
|
528,405 |
|
|
|
170,025 |
|
|
Operating lease liabilities |
|
|
4,896 |
|
|
|
3,343 |
|
|
Deferred income |
|
|
16,722 |
|
|
|
24,598 |
|
|
Other current liabilities |
|
|
491 |
|
|
|
344 |
|
|
Total current liabilities |
|
|
620,809 |
|
|
|
241,094 |
|
|
Notes payable |
|
|
— |
|
|
|
59,984 |
|
|
Noncurrent lease liabilities |
|
|
24,875 |
|
|
|
8,019 |
|
|
Noncurrent deferred income |
|
|
75,558 |
|
|
|
10,819 |
|
|
Other noncurrent liabilities |
|
|
192 |
|
|
|
3,407 |
|
|
Total liabilities |
|
$ |
721,434 |
|
|
$ |
323,323 |
|
|
Commitments and contingencies (Note 17) |
|
|
|
|
|
|
||
|
Mezzanine equity: |
|
|
|
|
|
|
||
|
Series A preferred units 163,975 units authorized, issued and outstanding at December 31, 2025) |
|
|
— |
|
|
|
46,690 |
|
|
Total mezzanine equity |
|
|
— |
|
|
|
46,690 |
|
|
Members’ equity: |
|
|
|
|
|
|
||
|
Common units, 216,002 units issued and outstanding at December 31, 2025 |
|
|
— |
|
|
|
(112,155 |
) |
|
Total members’ equity |
|
|
— |
|
|
|
(112,155 |
) |
|
Stockholders’ equity: |
|
|
|
|
|
|
||
|
Class A common stock, $0.01 par value; 800,000,000 shares authorized, 48,174,023 shares issued and outstanding at June 30, 2026 |
|
|
482 |
|
|
|
— |
|
|
Class B common stock, $0.01 par value; 350,000,000 shares authorized, 171,226,057 shares issued and outstanding at June 30, 2026 |
|
|
1,712 |
|
|
|
— |
|
|
Additional paid-in capital |
|
|
62,467 |
|
|
|
— |
|
|
Accumulated deficit |
|
|
(15,432 |
) |
|
|
— |
|
|
Noncontrolling interest |
|
|
207,343 |
|
|
|
38 |
|
|
Total stockholders’ equity |
|
|
256,572 |
|
|
|
38 |
|
|
Total liabilities and equity |
|
$ |
978,006 |
|
|
$ |
257,896 |
|
Condensed Consolidated Statement of Cash Flows (Unaudited)
|
|
|
Six Months Ended June 30, |
|
|||||
|
(in thousands) |
|
2026 |
|
|
2025 |
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
||
|
Net loss |
|
$ |
(84,931 |
) |
|
$ |
(23,922 |
) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
||
|
Depreciation and amortization expense |
|
|
2,609 |
|
|
|
1,864 |
|
|
Amortization of deferred financing costs |
|
|
2,386 |
|
|
|
2,858 |
|
|
Amortization of operating lease ROU asset |
|
|
2,332 |
|
|
|
1,609 |
|
|
Loss on debt extinguishment |
|
|
48,774 |
|
|
|
15,244 |
|
|
Amortization of sales commissions and fees |
|
|
589 |
|
|
|
74 |
|
|
Paid-in-kind interest expense |
|
|
2,431 |
|
|
|
3,454 |
|
|
Interest paid on long term debt |
|
|
(3,531 |
) |
|
|
— |
|
|
Stock-based compensation |
|
|
3,738 |
|
|
|
2,569 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
|
Accounts receivable, net |
|
|
(64,028 |
) |
|
|
6,120 |
|
|
Inventory |
|
|
(62,378 |
) |
|
|
27,231 |
|
|
Contract assets |
|
|
5,769 |
|
|
|
417 |
|
|
Prepaid expenses |
|
|
(13,812 |
) |
|
|
900 |
|
|
Other current assets |
|
|
(8,718 |
) |
|
|
(4,958 |
) |
|
Other noncurrent assets |
|
|
(2,506 |
) |
|
|
6,990 |
|
|
Accounts payable |
|
|
29,998 |
|
|
|
(15,123 |
) |
|
Accrued liabilities and other payables |
|
|
(9,675 |
) |
|
|
(10,841 |
) |
|
Contract liabilities |
|
|
358,380 |
|
|
|
7,404 |
|
|
Operating lease liabilities |
|
|
(1,065 |
) |
|
|
(1,594 |
) |
|
Other noncurrent liabilities |
|
|
62,577 |
|
|
|
(19,861 |
) |
|
Net cash provided by operating activities |
|
|
268,939 |
|
|
|
436 |
|
|
Cash flows from investing activities |
|
|
|
|
|
|
||
|
Capital expenditures |
|
|
(8,835 |
) |
|
|
(2,411 |
) |
|
Net cash used in investing activities |
|
|
(8,835 |
) |
|
|
(2,411 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
|
||
|
Proceeds received from initial public offering, net of underwriter and offering costs |
|
|
554,000 |
|
|
|
— |
|
|
Repurchases of Class B Units from pre-IPO owners |
|
|
(156,861 |
) |
|
|
— |
|
|
Repurchases of Class A common stock from pre-IPO owners |
|
|
(27,806 |
) |
|
|
— |
|
|
Other costs related to initial public offering |
|
|
(225 |
) |
|
|
— |
|
|
Cash paid for fractional shares in connection with warrant conversion |
|
|
(32 |
) |
|
|
— |
|
|
Proceeds from notes payable |
|
|
— |
|
|
|
25,000 |
|
|
Payments of notes payable |
|
|
(74,657 |
) |
|
|
(25,771 |
) |
|
Payments of deferred financing costs |
|
|
(1,759 |
) |
|
|
(420 |
) |
|
Net cash provided by (used in) financing activities |
|
|
292,660 |
|
|
|
(1,191 |
) |
|
Net change in cash and cash equivalents |
|
|
552,764 |
|
|
|
(3,167 |
) |
|
Cash, cash equivalents and restricted cash |
|
|
|
|
|
|
||
|
Beginning of period |
|
|
108,097 |
|
|
|
21,913 |
|
|
End of period |
|
$ |
660,861 |
|
|
$ |
18,746 |
|
|
Supplemental disclosures of cash flow information |
|
|
|
|
|
|
||
|
Interest paid |
|
$ |
4,678 |
|
|
$ |
3,611 |
|
|
Supplemental noncash financing and investing activities |
|
|
|
|
|
|
||
|
Conversion of convertible notes into common units |
|
$ |
36,266 |
|
|
$ |
— |
|
|
Accrued capital expenditures |
|
|
549 |
|
|
|
315 |
|
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit and Adjusted Gross Margin are financial measures that are not prepared in accordance with GAAP. Each of these non-GAAP financial measures should be read in conjunction with the most directly comparable financial measure calculated and presented in accordance with GAAP.
We believe presenting these non-GAAP financial measures provides useful information because they highlight trends in our underlying operating performance, facilitate consistent comparisons of our core results over time and across peers, and reflect how our management evaluates our business. We also use these non-GAAP financial measures internally for strategic planning, budgeting, forecasting, performance measurement and resource allocation. We believe that providing investors with access to these measures allows for greater transparency and facilitates comparisons to our historical operating results.
These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the most directly comparable financial measure prepared in accordance with GAAP. In addition, other companies, including companies in our industry, may define these non-GAAP financial measures differently, which may limit their usefulness as comparative measures.
Adjusted EBITDA and Adjusted EBITDA Margin to GAAP Net Loss and Net Loss Margin Reconciliation
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures. Net loss is the GAAP measure most directly comparable to Adjusted EBITDA, and net loss margin is the GAAP measure most directly comparable to Adjusted EBITDA Margin. We define Adjusted EBITDA as net loss before net interest expense; depreciation and amortization expense; income tax expense; stock-based compensation; and other items management deems non-operational or not reflective of ongoing core operations (e.g. changes in fair value of warrant unit liabilities, professional fees associated with debt and equity transactions, legal settlements). We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total revenues.
Adjusted EBITDA and Adjusted EBITDA Margin are utilized by our management and other users of our unaudited condensed consolidated financial statements such as investors, commercial banks, research analysts and others, to assess our operating performance. Management believes these measures are useful because they each allow us to compare our operating performance on a consistent basis across periods. Management also believes Adjusted EBITDA is a useful indicator of our operating performance and Adjusted EBITDA Margin is useful because it provides insight on profitability.
We have not provided a GAAP reconciliation for forward-looking full-year Adjusted EBITDA as a result of the uncertainty regarding, and the potential variability of, reconciling items such as forward-looking stock-based compensation expense and income tax expense. Accordingly, a reconciliation of this non-GAAP guidance metric to its corresponding GAAP equivalent is not available without unreasonable effort. However, it is important to note that material changes to reconciling items could have a significant effect on future GAAP results and, as such, we also believe that any reconciliations provided would imply a degree of precision that could be confusing or misleading to investors.
The tables below present a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to net loss and net loss margin:
|
|
|
Three Months Ended |
|
|
|
|
|
|
||||||
|
|
|
June 30, |
|
|
Change |
|||||||||
|
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|||
|
Net loss |
|
$ |
(67,719 |
) |
|
$ |
(7,985 |
) |
|
$ |
(59,734 |
) |
|
748.1% |
|
Interest expense (income) |
|
|
(471 |
) |
|
|
(7,708 |
) |
|
|
7,237 |
|
|
(93.9%) |
|
Depreciation and amortization expense |
|
|
1,308 |
|
|
|
808 |
|
|
|
500 |
|
|
61.9% |
|
Loss on debt extinguishment |
|
|
48,774 |
|
|
|
15,244 |
|
|
|
33,530 |
|
|
220.0% |
|
Income tax expense (benefit) |
|
|
(374 |
) |
|
|
11 |
|
|
|
(385 |
) |
|
(3500.0%) |
|
Stock-based compensation |
|
|
2,512 |
|
|
|
1,082 |
|
|
|
1,430 |
|
|
132.2% |
|
Non-recurring professional fees (1) |
|
|
1,988 |
|
|
|
2,129 |
|
|
|
(141 |
) |
|
(6.6%) |
|
Adjusted EBITDA |
|
$ |
(13,982 |
) |
|
$ |
3,581 |
|
|
$ |
(17,563 |
) |
|
(490.4%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total revenues |
|
$ |
39,878 |
|
|
$ |
68,458 |
|
|
$ |
(28,580 |
) |
|
(41.7%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net loss margin |
|
|
(169.8 |
)% |
|
|
(11.7 |
)% |
|
|
|
|
(158.2%) |
|
|
Adjusted EBITDA Margin |
|
|
(35.1 |
)% |
|
|
5.2 |
% |
|
|
|
|
(40.3%) |
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
||||||
|
|
|
June 30, |
|
|
Change |
|||||||||
|
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|||
|
Net loss |
|
$ |
(84,931 |
) |
|
$ |
(23,922 |
) |
|
$ |
(61,009 |
) |
|
255.0% |
|
Interest expense (income) |
|
|
487 |
|
|
|
(5,869 |
) |
|
|
6,356 |
|
|
(108.3%) |
|
Depreciation and amortization expense |
|
|
2,609 |
|
|
|
1,864 |
|
|
|
745 |
|
|
40.0% |
|
Loss on debt extinguishment |
|
|
48,774 |
|
|
|
15,244 |
|
|
|
33,530 |
|
|
220.0% |
|
Income tax expense |
|
|
187 |
|
|
|
28 |
|
|
|
159 |
|
|
567.9% |
|
Stock-based compensation |
|
|
3,738 |
|
|
|
2,569 |
|
|
|
1,169 |
|
|
45.5% |
|
Non-recurring professional fees (1) |
|
|
2,245 |
|
|
|
2,611 |
|
|
|
(366 |
) |
|
(14.0%) |
|
Adjusted EBITDA |
|
$ |
(26,891 |
) |
|
$ |
(7,475 |
) |
|
$ |
(19,416 |
) |
|
259.7% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total revenues |
|
$ |
71,614 |
|
|
$ |
92,566 |
|
|
$ |
(20,952 |
) |
|
(22.6%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net loss margin |
|
|
(118.6 |
)% |
|
|
(25.8 |
)% |
|
|
|
|
(92.8%) |
|
|
Adjusted EBITDA Margin |
|
|
(37.5 |
)% |
|
|
(8.1 |
)% |
|
|
|
|
(29.5%) |
|
|
(1) |
Professional fees represent (i) consulting, legal, accounting, and other expenses in connection with the evaluation of and/or execution of non-recurring capital markets transactions in 2026 and 2025, (ii) certain consulting, legal, and corporate expenses in connection with debt modifications that occurred in April 2025, and (iii) certain non-recurring placement fees associated with key hires in 2026 and 2025. |
Adjusted Gross Profit and Adjusted Gross Margin to GAAP Gross Profit and Gross Margin Reconciliation
Adjusted Gross Profit and Adjusted Gross Margin are non-GAAP financial measures. GAAP gross profit is the GAAP measure most directly comparable to Adjusted Gross Profit, and GAAP Gross Margin is the GAAP measure most directly comparable to Adjusted Gross Margin. We define Adjusted Gross Profit as GAAP gross profit, adjusted to exclude reimbursable variable revenues and costs. We define Adjusted Gross Margin as Adjusted Gross Profit divided by total revenues less reimbursable variable revenues. Reimbursable variable revenues and costs represent certain revenues and expenses where we serve as the principal in transactions and control the use and timing of the products and services that are being utilized. These costs represent our primary obligation and are recovered from customers at cost without markup pursuant to the terms of our contracts. While reimbursable variable costs are excluded because they have immaterial net margin impact, they do represent real cash flows and contractual obligations that affect our working capital and liquidity.
We present Adjusted Gross Profit and Adjusted Gross Margin because we believe these measures provide management and investors with a more meaningful view of the underlying economics and profitability of our core operations. Because reimbursable variable revenues and costs are recorded on a gross basis under GAAP and, by design, offset one another with no material contribution to profit, their inclusion in GAAP revenues and cost of revenues can cause reported gross margin percentages to fluctuate significantly depending on the frequency of underlying activities which can be driven by unpredictable changes in market conditions. By excluding these revenues, Adjusted Gross Margin reflects the margin we earn on the goods and services where we bear economic risk, exercise pricing judgment, and generate value for our customers.
We use Adjusted Gross Profit and Adjusted Gross Margin internally to evaluate segment-level performance, assess pricing and cost trends, and benchmark our profitability against peers whose revenue recognition practices may differ with respect to reimbursable items. We believe this perspective enhances investors’ understanding of the operating leverage and margin trajectory of our business.
Adjusted Gross Profit and Adjusted Gross Margin have limitations as analytical tools. They are not substitutes for GAAP gross profit or GAAP gross margin, and our calculations may not be comparable to similarly titled measures reported by other companies because other entities may not define or calculate these measures in the same manner. In addition, while reimbursable variable costs are excluded because they have immaterial net margin impact, they do represent real cash flows and contractual obligations that affect our working capital and liquidity. Accordingly, these non-GAAP measures should be considered alongside, and not as alternatives to, the GAAP financial measures included in our unaudited condensed consolidated financial statements and consolidated financial statements.
The tables below present a reconciliation of Adjusted Gross Profit and Adjusted Gross Margin to gross profit and gross margin:
|
|
|
Three Months Ended |
|
|
|
|
|
|
||||||
|
|
|
June 30, |
|
|
Change |
|||||||||
|
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|||
|
Total revenues |
|
$ |
39,878 |
|
|
$ |
68,458 |
|
|
$ |
(28,580 |
) |
|
(41.7%) |
|
Total cost of revenues |
|
|
31,138 |
|
|
|
52,426 |
|
|
|
(21,288 |
) |
|
(40.6%) |
|
Less: depreciation and amortization expense |
|
|
1,308 |
|
|
|
808 |
|
|
|
500 |
|
|
61.9% |
|
Total gross profit |
|
$ |
7,432 |
|
|
$ |
15,224 |
|
|
$ |
(7,792 |
) |
|
(51.2%) |
|
Less: reimbursable variable revenue |
|
|
(6,380 |
) |
|
|
(4,393 |
) |
|
|
(1,987 |
) |
|
45.2% |
|
Add: reimbursable variable cost |
|
|
6,380 |
|
|
|
4,269 |
|
|
|
2,111 |
|
|
49.4% |
|
Adjusted Gross Profit |
|
$ |
7,432 |
|
|
$ |
15,100 |
|
|
$ |
(7,668 |
) |
|
(50.8%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Gross margin |
|
|
18.6 |
% |
|
|
22.2 |
% |
|
|
|
|
(3.6%) |
|
|
Adjusted Gross Margin |
|
|
22.2 |
% |
|
|
23.6 |
% |
|
|
|
|
(1.4%) |
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
||||||
|
|
|
June 30, |
|
|
Change |
|||||||||
|
(dollars in thousands) |
|
2026 |
|
|
2025 |
|
|
Amount |
|
|
% |
|||
|
Total revenues |
|
$ |
71,614 |
|
|
$ |
92,566 |
|
|
$ |
(20,952 |
) |
|
(22.6%) |
|
Total cost of revenues |
|
|
56,381 |
|
|
|
72,839 |
|
|
|
(16,458 |
) |
|
(22.6%) |
|
Less: depreciation and amortization expense |
|
|
2,609 |
|
|
|
1,864 |
|
|
|
745 |
|
|
40.0% |
|
Total gross profit |
|
$ |
12,624 |
|
|
$ |
17,863 |
|
|
$ |
(5,239 |
) |
|
(29.3%) |
|
Less: reimbursable variable revenue |
|
|
(12,987 |
) |
|
|
(8,209 |
) |
|
|
(4,778 |
) |
|
58.2% |
|
Add: reimbursable variable cost |
|
|
12,987 |
|
|
|
8,050 |
|
|
|
4,937 |
|
|
61.3% |
|
Adjusted Gross Profit |
|
$ |
12,624 |
|
|
$ |
17,704 |
|
|
$ |
(5,080 |
) |
|
(28.7%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Gross margin |
|
|
17.6 |
% |
|
|
19.3 |
% |
|
|
|
|
(1.7%) |
|
|
Adjusted Gross Margin |
|
|
21.5 |
% |
|
|
21.0 |
% |
|
|
|
|
0.5% |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20260811144024/en/
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