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DATE
Thursday, Nov. 12, 2026
CALL PARTICIPANTS
- Director of Investor Relations - Jennifer Ly
- Founder and Chief Executive Officer - Andrew Karos
- Chief Financial Officer - Erik Guckel
- Chief Operating Officer - Harry Georgakopoulos
TAKEAWAYS
- Revenue -- $39.9 million in the third quarter, representing a 496% increase from $6.7 million in the prior year period.
- Total Contract Value (TCV) -- $2.7 billion, an increase of $800 million since the second quarter of 2026 reflecting new signed agreements.
- Net Loss -- $14.1 million or $0.17 per share, compared to $17.2 million or $0.58 per share in the prior year quarter.
- Operating Cash Flow -- $65.6 million, driven by a $54.4 million net increase in customer deposits and a $39.4 million increase in payables.
- Unrestricted Cash -- $157 million at the end of the quarter, including $88.2 million in proceeds from warrant exercises.
- Adjusted EBITDA -- $18 million for the third quarter and $32.5 million for the first nine months of the year.
- Lease Adjusted EBITDA -- $27.4 million, representing a 68.6% margin after adding back $9.4 million in colocation lease expenses.
- Project Financing -- $600 million in nondilutive project-based financing secured year to date to fund cluster deployments.
- Customer Prepayments -- $482 million due in connection with upcoming project deployments, providing non-dilutive funding for growth.
- Data Center Footprint -- Expanding from six to nine active U.S. sites over the next six months to support growing demand.
- Colocation Power Capacity -- 40 megawatts expected to be deployed by the end of 2026 across Washington, Minnesota, Illinois, Texas, and other states.
- Accessible Capacity -- 253 megawatts secured to support project ramps through 2027 and 2028.
- Hardware Procurement -- $330 million in purchase orders already accepted by partners as part of a $4 billion to $5 billion strategic procurement plan for 2027.
- Finance Lease Payments -- $109.8 million in principal payments for graphics processing unit (GPU) leases made during the third quarter.
- Total Assets -- $1.05 billion at the end of the third quarter, crossing the $1 billion mark for the first time.
- Project Launch Timing -- 26% of the current $2.7 billion TCV is expected to be live by the end of Nov. 2026.
- Exit ARR Potential -- $435 million estimated exit annual recurring revenue (ARR) for year-end 2026 had one project not been delayed.
- Fully Deployed ARR -- Approximately $750 million estimated top-line run rate once the existing $2.7 billion TCV is fully operational.
- On-Demand Revenue -- Approximately 10% of total revenue derived from short-term contracts, which command pricing 2 to 2.5 times higher than long-term reservations.
- Customer Concentration -- No singular customer contract representing more than 23% of the total portfolio.
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RISKS
- Karos stated, "you really can't power things when rain is occurring," noting that 17 days of rainfall in Illinois delayed project handoffs.
- Karos warned that municipal requests can impact timelines, stating that a decision to "adhere to some of the city request" in Georgia shifted a project start from the fourth quarter of 2026 to the first quarter of 2027.
- Guckel cautioned investors regarding cash flow metrics, stating, "Because working capital drove the majority of Q3 operating cash flow, I would encourage you not to simply annualize it."
SUMMARY
Boost Run, Inc. (NASDAQ:BRUN) reported a substantial increase in its total contract value to $2.7 billion, with management focusing on a nondilutive financing model to fund infrastructure expansion. The company stated that it requires upfront customer prepayments ranging from 30% to 40% of project costs to reduce the need for parent-level equity dilution. Management noted that it is expanding its data center footprint to nine sites to support demand for high-performance computing and artificial intelligence workloads. The company reported that it has already secured 253 megawatts of power capacity to accommodate projected growth through 2028.
- Karos explained the strategy for debt repayment, stating, "100% of the project financing is fully repaid before the underlying customer contract expires."
- The company is moving toward longer-tenor agreements, currently negotiating four-year and five-year contracts with potential expansion to six years.
- Management stated that every project is underwritten based on initial noncancelable contracts rather than hardware residual value to mitigate technology transition risks.
- A Georgia data center project delay shifted $13 million in monthly recurring revenue from the fourth quarter of 2026 to the first quarter of 2027.
- Management reported that its on-demand platform provides higher margins and pricing flexibility compared to its long-term anchor contracts with AI research labs.
- The company reported that its $1.44 billion purchase agreement with Dell is fully committed against current customer demand.
INDUSTRY GLOSSARY
- TCV (Total Contract Value): The total value of all signed customer contracts over their entire duration.
- ARR (Annual Recurring Revenue): A metric that projects the annual value of recurring revenue based on current contract status.
- MRR (Monthly Recurring Revenue): The amount of predictable revenue a company expects to receive every month.
- GPU (Graphics Processing Unit): Specialized hardware used to accelerate the intensive calculations required for artificial intelligence and high-performance computing.
- HPC (High-Performance Computing): The use of supercomputers and parallel processing techniques for solving complex computational problems.
- Kubernetes: An open-source system for automating the deployment, scaling, and management of containerized applications.
- NVIDIA Blackwell / Vera Rubin: Specific generations of high-performance hardware architectures developed by NVIDIA for data center use.
Full Conference Call Transcript
Operator: Good day, and thank you for standing by. Welcome to Boost Run's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. I would now like to hand it over to your first speaker today, Jenny Ly, Director of Investor Relations.
Jennifer Ly: Thank you, operator, and good morning, everyone. Welcome to Boost Run's Third Quarter 2026 Earnings Conference Call. Joining me on the call today are our Founder and Chief Executive Officer, Andrew Karos, and our Chief Financial Officer, Erik Guckel. Our Chief Operating Officer, Harry Georgakopoulos, is also with us and will be available during the Q&A session. Before we begin, I'd like to remind you that today's discussion will include forward-looking statements within the meaning of the federal securities laws, including statements regarding our expected future financial performance, annual recurring revenue, contracted revenue backlog, the timing of project deployments, data center capacity, hardware procurement, financing and customer prepayments, net cash flow margin and capital expenditure levels.
These statements are based on our current expectations and are subject to risks and uncertainties. Actual results may differ materially from those contemplated by these statements. The factors that could cause results to differ are described in our filings with the SEC, including the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended September 30, 2026, from our most recent Form 10-Q. We undertake no obligation to update these statements, except as required by law. We will also discuss certain non-GAAP financial measures and key operating metrics, including ARR, or annual recurring revenue, run rate revenue, net cash flow margin and our total contract value or TCV CapEx ratio.
These measures should not be considered in isolation or as a substitute for the most directly comparable measures prepared in accordance with GAAP and may not be comparable to similarly titled measures used by other companies. A reconciliation of each historical non-GAAP measure to the most directly comparable GAAP measure is included in the appendix in today's investor presentation. A copy of the earnings release and investor presentation release can be found on our IR website at investors.boostrun.com. Please note that this call is being recorded and will be available for replay via our IR website. And with that, it is my pleasure to turn the call over to our Founder and CEO, Andrew Karos. Andrew?
Andrew Karos: Thank you, Jenny, and good morning, everyone. Thank you for joining us for our third quarter 2026 earnings call. Today, we want to accomplish several things. First, I will review our third quarter performance and what we have achieved since September 30, 2026. Second, I want to spend some time talking about our business and financial model and why we believe it is the right model for positioning us to create long-term shareholder value. Third, I will talk about how our contracted colocation footprint continues to grow and how our access to equipment and financing continues to improve alongside it. Fourth, I will lay out the funding principles behind our financial model.
Lastly, Erik will further elaborate into how cash flows in and out of our contracts from start date to finish and why it's important for shareholders to understand both cash and GAAP accounting in evaluating our business before moving into our Q3 results. For the third quarter, revenue reached $39.9 million, up approximately 496% year-over-year from $6.7 million in Q3 2025 and up 27% from the $31.1 million we generated in Q2. We continue to bring new projects live into 2027. Recently, in Q4 2026, we brought 2 additional projects live with a combined TCV of approximately $455 million and an estimated $9.5 million in monthly reoccurring revenue.
Due to a data center delay preventing a project from going live in Q4, our exit ARR would have been approximately $435 million. The reason for this delay has now been resolved. In addition, by the end of the year, we will be receiving approximately $155 million in cash related to completion payments on projects. As a reminder, our $2.7 billion in TCV is either live in current deployment or fully contracted and scheduled for deployment in 2027. For further clarity, this means signed contracts scheduled to go live, purchase orders submitted and accepted by OEMs, data center space and power contracted and progressing, nondilutive financing term sheets with multiple parties. Operating cash flow in the quarter was $65.6 million.
We exited the quarter with $157 million in unrestricted cash. Year-to-date, we have secured approximately $600 million in nondilutive project-based financing, and we have approximately $482 million of customer prepayments due in connection with upcoming project deployments, providing further non-dilutive funding for our growth. In the quarter, we eliminated any warrant overhang, leveraging our ability to exercise the warrants, which resulted in an additional $131.5 million in cash for Boost Run. Next, I'd like to turn to our business and financial model. As we sit here today, our long-term TCV has now surpassed $2.7 billion.
Our customer base spans some of the AI ecosystem's most compute-intensive participants, including frontier AI research labs, foundational model developers, sovereign and enterprise AI, generative AI platforms, AI inference and application providers and GPU cloud and marketplace operators. Beyond the AI sector, we also serve enterprise quantitative trading and financial service and life science, reflecting growing demand for large-scale accelerated computing across industries. As of today, we expect to have approximately 26% of our $ 2.7 billion TCV live by the end of November 2026. We continue to negotiate additional contract agreements with new customers.
Our established projects will be supported by $482 million in prepayments alongside nondilutive project level financing with tenors equal to or shorter than customer contract duration. Each project adds positive incremental cash flow starting with month 1 on being fully deployed. Our customer agreements continue to execute with longer tenors and our $1.44 billion purchase agreement with Dell is fully committed and contracted against customer demand. Of the $4 billion to $5 billion in strategic hardware procurement, we've outlined for 2027, about $330 million in purchase orders have already been submitted and accepted by our primary OEM partners. Now I'll turn it to our contracted colocation footprint and how our access to data center capacity continues to expand.
We plan to expand from 6 active U.S. data center sites to 9 sites over the next 6 months in the states of Washington, Minnesota, Illinois, Texas, North Carolina, Georgia and Oklahoma. We expect our deployed colocation power capacity to reach approximately 40 megawatts by the end of 2026. And through our expanded partnerships, we have already secured 253 megawatts of total accessible capacity to support our 2027 and 2028 ramp. And because we lock in long-term colocation leases ranging from 3 to 12 years in advance, we believe we are largely insulated from spot colocation inflation in a tight U.S. data center market. We continue to evaluate and act on strategic capacity on an opportunistic basis.
Next, I want to discuss the key funding principles behind our financial model, including how we structure each project to mitigate risk. First, mandatory customer prepayments. We require a substantial upfront cash prepayment at contract signing for 100% of our multiyear customer contracts. Across our portfolio, customer prepayments range between 30% and 40% of total project cost. Second, nondilutive project-based financing. The remaining total project cost is funded through non-dilutive project level equipment financing or senior secured project term loans backed directly by the contracted take-or-pay cash flows of those specific customer deployments. This requires minimal to 0 parent company equity dilution. Third, 100% of project financing is repaid before the customer agreement expires.
This is the most critical risk mitigant in our model today. We structure our project financing and equipment leases so that 100% of the project financing is fully repaid before the underlying customer contract expires. In the current financing environment, concerns have risen about debt tenure is often far exceeding contract length, which then exposes the debt holder to return based on residual value or contract renewal at better terms. As former institutional risk managers, we designed our financing structure to mitigate tail risk, specifically to mitigate residual value and refinancing risk. First, we are not dependent on GPU residual value.
Investors often ask what happens to the resale value of a GPU after years as NVIDIA transitions from Hopper to Blackwell to Vera Rubin. At Boost Run, we underwrite every single project to the initial noncancelable contract, not to a residual hardware value because 100% of our project financing is structured to pay down inside the contract term. Our capital is expected to be returned and our base return on equity is designed to be locked in before the initial contract ends. Every dollar a GPU earns after its project debt is retired is earned on a fully paid off debt-free asset. Second, we have no dilutive debt, warrant overhang or refinancing cliffs.
Some industry participants have taken on billions of dollars in high-yield corporate debt with bullet maturities that require constant capital markets refinancing. Our financing is project-specific and paid down every month out of our contracted customer cash flows. Third, we have deliberate portfolio diversification and on-demand margin optimization. We have intentionally constructed a portfolio that is diversified by contracted duration and by client. Currently, no singular customer contract represents more than 23% of our total portfolio. Alongside our 3- to 5-year anchor contracts with Frontier AI Labs, [indiscernible] AI entities and enterprise inference leaders, we also allocate a portion of our self-funded capacity to our proprietary Boost Run on-demand platform.
Today, more than 10% of our revenue comes from short-term on-demand contracts, which commands pricing 2 to 2.5x higher than longer-term reservations and carry higher margins. In summary, we believe that our funding approach mitigates many of the risk costs associated with some of the more traditional AI infrastructure business models. That allows us to focus on building a strong base of long-term customers, securing project level funding, building and deploying AI clusters efficiently, managing them continuously and developing tools and software that improve usability, security and flexibility for our customers.
With that, I will turn the call over to our CFO, Erik, to walk through our third quarter financial results and dive more deeply into how our backlog converts into GAAP revenue and cash flow. Erik?
Erik Guckel: Thank you, Andrew, and good morning, everyone. Because we're scaling quickly and following a rigorous capital deployment model, I'd like to discuss how our earnings should be interpreted to be a sound measure of our business. After our second quarter transaction, Q3 represented our first clean operating quarter without the overlay of significant adjustments and onetime items. I'll provide some comments on the headline results first and then dig into a bit more detail on operating cash flow and customer prepayments, which are central to how our model works.
For the third quarter and 9-month results, revenue in the third quarter was $39.9 million, up 496% from $6.7 million in Q3 2025, and up 28% sequentially from $31.1 million in Q2. For the 9 months, revenue was $82 million, up 325% from $19.3 million, driven by new GPU cluster deployments going live. The net loss in Q3 was $14.1 million or roughly $0.17 per share compared with $17.2 million or $0.58 per share a year ago and included a $9.7 million income tax benefit. For the 9 months, the net loss was $93.3 million or $1.78 per share.
That figure includes a onetime noncash income tax provision of $55.7 million recorded in the second quarter when we converted from an LLC to a C-Corp, partially offset by the Q3 benefit. Adjusted EBITDA was $18 million in Q3 and $32.5 million for the 9 months. The difference between adjusted EBITDA and net loss is largely noncash, including $34.8 million of depreciation and amortization in Q3. We also present lease adjusted EBITDA, which adds back colocation lease expense. Colocation lease cost was $9.4 million in Q3 and $24.6 million for the 9 months compared with $3.8 million in the prior 9-month period, reflecting our expansion to additional data center sites.
Lease adjusted EBITDA was $27.4 million in Q3 or 68.6% of revenue and $57.1 million for the 9 months or 69.7% of revenue. We present this measure to help investors compare us with companies that own their own data centers. The colocation is a recurring cash cost of our business and should be considered alongside our other measures. Reconciliations of each non-GAAP measure to the most directly comparable GAAP measure are in our earnings release and investor presentation. We completed our warrant redemption on August 20. Approximately 11.4 million warrants were exercised for cash at $11.50 per share, generating $131.5 million of proceeds for the 9 months, $43.4 million in Q2 and $88.2 million in Q3.
We now have no warrants outstanding, approximately 84.2 million shares outstanding across Class A and Class B, no additional preferred stock and no parent level bank or bond debt. With new projects deploying, total assets crossed the $1 billion mark at $1.05 billion by the end of Q3. In operating cash flow, net cash provided by operating activities was $65.6 million in the third quarter and $172.6 million for the 9 months compared with $8.6 million in the prior 9-month period. Here is how the quarter builds. Given our large depreciation and amortization, we are reporting a net loss of $14.1 million. Net noncash items added back $34.5 million, led by depreciation and amortization.
Changes in working capital contributed $45.2 million. The largest drivers were $54.4 million net increase in customer deposits and a $39.4 million increase in payables, partly offset by $27.5 million of increase in accounts receivable and $9.5 million of operating lease prepayments. Because working capital drove the majority of Q3 operating cash flow, I would encourage you not to simply annualize it. Operating cash flow also does not include the principal portion for our GPU finance lease payments, which are reported in financing activities and were $109.8 million in Q3 and $212.5 million for the 9 months. We look at operating cash flow together with these payments. In customer prepayments, customer prepayments are a defining feature of our model.
Customers pay a substantial portion of contract value upfront. We record that cash as customer deposits on our balance sheet and recognize it as revenue on a straight-line basis over the contract term. Customer deposits are treated as a liability, not debt, and the cash is already in hand. Total customer deposits were $182.8 million at September 30, consisting of $45.8 million current and $137 million noncurrent. That compares with $128.4 million at June 30 and $15.4 million at year-end 2025. The net increase was $54.4 million in Q3 and $167.4 million for the 9 months, and those are the amounts reflected in operating cash flow. As Andrew noted, we expect additional prepayments ahead of our upcoming deployments.
The timing of those collections will cause operating cash flow to vary from quarter-to-quarter, but will support project deployments and primarily cover our deployment costs and down payments on financing activities. For liquidity and capital structure, we ended the quarter with $170 million of total cash, up from $133.2 million at June 30. The total consists of $157 million of unrestricted cash and $13 million of restricted cash supporting our data center standby letter of credit. In Q3, operating cash flow of $65.6 million and $88.2 million of warrant exercise proceeds covered $109.8 million of finance lease principal payments and $6.4 million of investing outflows and total cash increased by $36.9 million.
For the outlook, before I close, a few forward-looking points, keeping in mind the cautions Jenny reviewed at the start of the call. As mentioned by Andrew, had we not had any project shifts, we would have realized approximately $435 million of ARR by year-end 2026. We fully deployed 2 projects in Q3 and Q4, and we expect multiple deployments in 2027, converting all current TCV to revenues while adding additional new agreements to our diversified portfolio. As projects deployed through Q3 and Q4 reach full billing, we expect revenue to grow significantly in Q4, creating monthly recurring revenue into 2027 through the multiyear customer term.
Our $182.8 million of customer deposits will be recognized as revenue over the contract terms, and we expect that balance to grow as upcoming deployments approach full handover to the customer. On funding, we expect to fund upcoming deployments primarily with customer prepayments and nondilutive project level financing structured so that project debt is fully repaid before each underlying customer contract expires. It is noted that finance lease principal payments will rise as our deployed fleet grows, and we plan our liquidity around those payments together with operating cash flow and customer prepayments in a disciplined and structured manner.
In our supplemental materials, we have provided a slide that describes a typical project and how that project is structured and financed. At the project level, we continue to maintain solid cash flows for each, structuring contract pricing with prepayments and covering principal and interest, colocation and overhead with room to spare. We target minimum cash cover that facilitates both business operations and financings, and we look forward to updating you on how our deployed projects and portfolio are tracking against that target as they mature. With that, I'll turn the call back over to Andrew for closing remarks.
Andrew Karos: I'd like to conclude with a few closing points. First, with over $2.7 billion in TCV, approximately $600 million of nondilutive project financing closed year-to-date, approximately $482 million of customer prepayments due on upcoming projects, $157 million of unrestricted cash, no warrant overhang and a clear path to going live on our full $2.7 billion TCV in 2027. We have the team, capacity, OEM supply chain and capital to deliver long-term value to our shareholders. Second, we have elected to take a different approach with our business and financial model compared to others in our space.
We believe our approach meaningfully improves customer outcomes, reduces risk and costs, generates higher returns on invested capital and cash flow margins and will create additive value for our shareholders. To our customers, our financing partners, NVIDIA, Dell, our other OEM partners, our colocation partners and the entire Boost Run team, thank you for your relentless execution. I would now like to turn it back over to the operator.
Operator: [Operator Instructions] Our first question comes from George Sutton of Craig-Hallum Capital Group.
George Sutton: I wondered if you could walk through the project shifts that you discussed at the top of the call in terms of just give us a good sense of what changed in Q3, what has changed in Q4 from your perspective?
Andrew Karos: Sure. Thanks, George. Diving directly into your question. So from Q3 project shift, as noted, Erik, we did $39.9 million of revenue. And then in Q3, we pushed one project to Q1, and that was approximately $13 million of monthly recurring revenue that got pushed forward. As you can see, approximately $144 million to $150 million of ARR right there. And then also, George, we recently just handed off 2 projects. So you can see when you hit instances like this where Boost Run we're in parabolic growth mode, shifting anything even by a week can trigger something to fall in a different quarter.
Perfect example, 2 contracts we handed off that was over the past 5 weeks that didn't fall within the quarter. That's going to be adding an additional $10 million of monthly recurring revenue as well.
George Sutton: So I wondered if you could just give us a bigger picture on kind of deals that you're working on, what the floor level size you would contemplate in terms of deals and just maybe a sense of the size of the things that you're looking at. And then you also mentioned term sheets for nondilutive financing. I wondered if you can give us an update there.
Andrew Karos: Sure. Let's unpack the questions. The first one on deal sizes. Well, I can give you specifics around this that are signed take-or-pay contracts, another half dozen are literally ranging from TCV from $190 million all the way up to $626 million. We have other additional contracts that we're working through to get confirmed. And then from the size of GPUs, the smallest we're basically dealing right now, George, per cluster and say, B300s, GB300s walking into Rubins is approximately 2,000 GPUs and then going up to 5,000 plus, which will eventually be going well north of 10,000-plus GPUs per cluster.
George Sutton: And I'd ask on the term sheet, just a broader sense of the financing market, but you have been able to access these project level financing. Is that the plan that you see going forward?
Andrew Karos: Yes. So in regards to term sheets current and future, as noted, we have over $600 million of nondilutive financing already closed. So we're pleased to say we've successfully deployed a number of projects within this business model. And then on a go-forward basis, we're already reviewing term sheets that we have in front of us that are able to be executed. But we have literally half a dozen projects. And the term sheet financing typically runs in parallel of go-live and buildup that can be anywhere from 4 to 6 weeks in advance. And we are -- what I can say is very pleased with where we're at to continue our nondilutive financing business model.
Operator: Our next question comes from Ben Sommers of U.S. Bancorp BTIG.
Benjamin Sommers: So first, I kind of wanted to ask on the ramp to the potential 253 megawatts of accessible capacity. Is there any permitting that needs to be done there? And just kind of how do you think about that side of the equation when you think about scaling to 2027 and 2028?
Andrew Karos: Yes. Thanks for the question. In regards to permitting, what I can tell you on half a dozen plus take-or-pay contracts that we'll be bringing in production from now throughout '27 and then high probability of many more. We do not have any permitting data center for electric. Everything is powered. So at the current time, we are not engaged in any friction on that. And a lot of that comes from the best way I think I can articulate is on grid power, and we're not going through or entering into things that can be delayed by permitting or zoning or whatnot. So with our process and procedure internally, we check box before we go into something.
Benjamin Sommers: Super helpful. And then just as you think about kind of the mix moving forward between term contracts and on-demand, I think you mentioned around like 10% is currently like the spot market. Kind of what do you think is the ideal mix as you continue to onboard more of the contracted backlog?
Andrew Karos: Yes. I'm glad you asked that. With the platform and automation and API and accessibility directly to compute through Boost Run platform, it makes it -- I don't want to say simple, but much more accessible for end users to access compute on demand. And then when you look at the distribution of our revenue, we think that will continue to grow, but the on-demand aspect, but I want to point something out that is extremely important. Why is there a lot of on-demand shortages?
You cannot walk into your bank and say, I would like to finance a $1 billion transaction because I have this great idea, and I don't know what my recurring revenue is going to be and I want it on demand. So you see a lot of compute is not really available on a short term. That's one of the reasons. And two, the unpredictability of the future cash flow on that, that could disappear at any given point. So what we're doing is taking a risk management approach towards this.
But I also want to point out that when you get into duration of contracts and you get into amortization, we are extremely pleased where Boost Run is on accelerating any paydown of debt on our first large batch of compute when we started, we're almost tenfold on that. So you can see how quickly that can be additive revenue.
Operator: And our next question is from Nehal Chokshi of Northland Capital Markets.
Nehal Chokshi: Yes. You already covered this in the first question, but I do want to get more detail. What are the actual sources of the project delays? I guess the first one you said it was a $13 million MRR deal that got us from 3Q '26 to 1Q '27. Can you actually detail the source of that project?
Andrew Karos: Yes. Are you asking for the cause of that?
Nehal Chokshi: Yes, please.
Andrew Karos: Yes, correct. That was one of our Georgia projects, and that was through City Council. What we did is consulted with the data center operator who are very pleased with just their balance sheet perspective. The decision was made to adhere to some of the city request. This is already post-permitting. And what that did is that paused work progression, and that was the setback, but very pleased to say that is now a closed case and not even an issue outstanding at the current time.
Nehal Chokshi: Okay. And then...
Andrew Karos: It provided the needed information.
Nehal Chokshi: Yes. Understood. Understood in the past. And why is that delayed to 1Q '27 from 4Q '26?
Andrew Karos: You repeat the question, please?
Nehal Chokshi: Given the resolution that you already have in hand, why is that project start delayed to 1Q '27 as opposed to 4Q '26?
Andrew Karos: The scale and magnitude of it. So when you get into GAAP accounting and handoff and revenue recognition, there's a lot of moving parts. So in this situation, this is in excess of 5, 6 over 7,000 GPU handoffs. So it's a continuation. That's what I'm saying in simple terms, handing off from day 1, so when being in full production cannot be just the sample set snapshot in 1 week.
Nehal Chokshi: I see. The first GPUs are to be handed off within 4Q or starting in 1Q ' 27 of that particular project?
Andrew Karos: We're going to start handing off in Q4 here.
Nehal Chokshi: Got it. Great. And then those other 2 projects, which was just basically a 1- or 2-week delay, presumably, this is inconsequential, but could you just detail what were the sources of those delays as well?
Andrew Karos: Sure. On that, as it sounds, you really can't power things when rain is occurring. We literally got hit with back to back for 17 days. It's actually less than that, and that was in Illinois. But that, again, with powering, there's no permitting issues, no delays. And one thing I think that's important when we're looking at these things, when you have someone like Boost Run who's in parabolic growth mode and you're bringing on projects and going from monthly recurring revenue from 10 to 20 to 30 to 40 to 50, full deployment substantially more of monthly recurring revenue.
You can clearly see the impact if anything even shifts by 2 weeks or from December 28 to Jan 1 based on how people are calculating an ARR or quarterly revenue. So I think that's a great example with it's to be specific, $12.7 million of monthly recurring revenue, you can see that push that's approximately $144 million to $152 million of ARR. So the key point I want to make is if there's a data center delay or something being shipped 2, 3 weeks late, that is a total different topic or subject than a data center not being energized or someone not being able to obtain financing or they can't get hardware from the OEM.
So I want to be very, very clear on those 2 distinctive differences that we're not incurring the latter that I just mentioned.
Operator: [Operator Instructions] Our next question comes from Alex Arnold of Odeon Capital.
Arthur Arnold: I guess the only thing I have left is when I look at the environment, it seems like scarcity is increasing and prepayments are growing. It's kind of a moving target. Can you translate in terms -- or give us a little more context around prepayments and how that environment is changing, but also connect the dots as to how much of the prepays on any given contract on average, when you get a prepay, how much of the CapEx, hardware CapEx is that covering?
Andrew Karos: And is that Yes. Thanks for the question. Let's hit that head on. Right now, on the go-forward projects, half a dozen plus and very pleased to say more coming in the pipeline. Right now, that is around 38% off of the CapEx number. So it's very interesting, as you mentioned, scarcity and timing, I think it's important to step back and say, what does that 38% actually mean? In layman terms is if the hardware cost $100 million to get in full production, we are collecting $38 million of cash upon handing off to the client. We then have a remaining debt structure of project finance of $62 million.
And Alex, what you're seeing right now in the market is what was popular for approximately $700 million of Wall Street financing. This actually went into investment-grade contracts. Wall Street is saying that there's a minimum of a 6-year life. And we know that due to the fact that hundreds of billions have been financed on 6-year terms with as little as 10% down. So you can see that's one structure that currently Boost Run is actually doing the opposite of. What we've elected to do is put down a substantial amount of capital of nondilutive equity passed through that prepayment.
And in a specific example on a 5-year contract, that $62 million that I mentioned earlier against that $38 million down payment, we're going to elect to pay that down in 3.5 years and that we will have operating cash flow on that project, while we're paying it down. And we will still be generating massive revenue from that contract as the debt is fully retired. And we do that with intent. And the best way I can explain this is the primary banks, the private credit markets have really taken note. We're doing something different, and we're not CapEx into the data centers.
I know that was a very long-winded question, but you kind of hit the key point of what is going on, what are you doing and why? So if you step back and someone like Boost Run is placing contracts in front of the debt market, we feel we're placing something that is not being seen a lot of times, and we know that by the feedback.
Arthur Arnold: And how would you characterize access to financing? And how has that changed over the past 3 to 6 months?
Andrew Karos: Ironically, I think the traction in our model has gained an astronomical amount of respect or praise due to the fact in the bull market, we have people asking why do we not put less down and can you stretch out your duration. With my historical experience just dealing with multibillion-dollar credit lines, risk management is seat #1. So we've continued to do that. And what we're seeing is we've had term sheets put in front of us, and we're evaluating those right now, and that's across multiple projects we're doing. And as noted earlier, the close of those term sheets typically come within 4 to 6 weeks or in parallel on...
Operator: Our next question is from Nehal Chokshi of Northland Capital Markets.
Nehal Chokshi: Andrew, you mentioned that you have some term sheets that are executable now. These are the asset-backed term sheets, correct? Can you disclose what's the value of those term sheets that are indeed executable right now?
Andrew Karos: We can't disclose that right now, but what I can tell you is we're dealing directly with primary banks and private credit, and we have things in front of us that we can sign.
Nehal Chokshi: Okay. And are you willing to look at the delayed draw term loan financing structure?
Andrew Karos: Yes, I'm extremely familiar with the DDTLs, especially recent one in the market. And then there's term Loan B. So the way Boost Run decomposes the debt markets is we look at the DDTL structures and the term loan B. And if you just walk through those, the DDTL from a qualifying criteria of inputs or DSCRs or coverage ratios, what I can say with a great degree of confidence, the way we've structured our contracts, all our ratios and covenants and coverage ratios are blowing through all the common metrics and inputs where decisions are made off of from the private and primary lenders.
Nehal Chokshi: And so this would reflect a shift from leasing then, correct?
Andrew Karos: Yes, we still have that optionality on the table and the ability to execute on that. So when you decompose the stack of, call it, the ecosystem of available dollars to be funded, you start at a primary bank level, and that's essentially par coming in or is it being syndicated. That can be even a direct lending relationship or relationship credit. And then below that sits the private credit that oftentimes the primary banks syndicate directly with the private credit, which is obviously a larger pool. And then a step below the private pool lies the leasing, call it the common 5 to 10 people who traffic in that. And we're engaged in transacting at all levels of...
Erik Guckel: Nehal, this is Erik. I just wanted to add maybe one thing to that. So for every project that we work, we are utilizing a review process to best pair the financing with the project. And in certain cases, combining projects as a portfolio and financing on that level makes far more sense. On others, it makes more sense to go project by project. So as we look forward on this, I would expect that we'll still have a component of lease financing in our portfolio, maybe for several projects a year or something like that, that we might go on a single basis.
But yes, we are looking at different structures at this point and have progressed conversations significantly on a few of them.
Nehal Chokshi: Great. It would seem that the delayed draw term loans will be a better use of Boost Run's time than the project-by-project lease financing.
Andrew Karos: It really depends...
Erik Guckel: Yes, Nehal, it really depends. It depends on cost and flexibility, speed, diligence, cash trap, all sorts of things, right? There are a lot of factors that we consider on this.
Nehal Chokshi: Understood. All right. Something that you probably already answered, but I just want to make sure I understand correctly. The $2.7 billion of TCV, how much megawatts is that going to consume?
Andrew Karos: We have approximately around 40 right now in production. And then we have another energized that are filling out additional projects that will be 30. So for the total will be 70, but there's -- you're going to see variance depending if it's B200, B300, GB300 and/or Vera Rubin. And then another go ahead.
Nehal Chokshi: And then using that 1.4x TCV to CapEx ratio on Page 7 of your presentation, that implies that there's about $2 billion of PP&E that you need to support that $2.7 billion of TCV. Is that correct?
Andrew Karos: Ask the question again, please.
Nehal Chokshi: In order to support that $2.7 billion of TCV signed and using the 1.4x TCV to CapEx ratio on Page 7 of your presentation, that implies that you need about $2 billion of PP&E to support that $2.7 billion TCV that's been signed so far. Is that correct?
Andrew Karos: Yes, based on that number. But what I can tell you is our projects going live and ones that are pending going under contract, we're seeing the TCV to the project cost number go up greater than 1.4. So what happens then is that's going to impact the prepayment deposit amount, that percentage is going to increase. So our duration in contracts is we've been going into 4- and 5-year contracts. And then we feel we're going to even be stepping into 6 years. So that 1.4 reference number, we feel is going one way, and that's up.
Nehal Chokshi: Therefore, that $2 billion PP&E is probably high, right? That's essentially what you're trying to say.
Andrew Karos: Yes, you could look at it that way. Right. So you have a total project cost and CapEx amount and then minus your prepayment is going to be left with what is left for debt structure and/or use from equity from the balance sheet or what I refer to as nondilutive financing.
Operator: At this time, we do have time for an additional question. [Operator Instructions] We have a question from Alex Arnold of Odeon Capital.
Arthur Arnold: Just one quick one. Can you -- just based on the last question, can you take that $2.7 billion of TCV and translate that on a fully deployed basis into ARR roughly?
Andrew Karos: Yes. That can be done based on the $2.7 billion fully deployed, then it's a function of when we know is this is all deploying between now and into '27 here.
Arthur Arnold: All right. I just -- I guess that leads to average duration. So I'm just trying to -- I'm just looking for a rough number of when you fully deploy your current backlog, where are you going to be running on top line?
Andrew Karos: Yes, fully, fully deployed across the $2.7 billion aggregated with everything just in regard to these contracts. So that's going to put you around a $750 million number. And that's safe to say not including anything outside what is circled on take-or-pay contracts right now. We have what we call ancillary revenue, Alex, which is no longer becoming ancillary. We don't like to talk about our past or reflect on it, but what I can tell you is we have a team that is world-class in data storage and CPUs. In prior lives, we made an astronomical money, monetizing and utilizing CPUs and storage, and we're seeing that really resonate with our end users.
And that revenue base outside of just CPU revenue is starting to see substantial upticks along with our Kubernetes software offering. So our deployment of automation and additional revenue lines continues to grow.
Arthur Arnold: And I guess one other thing based on backlog. I mean, it's very early in terms of you standing up this compute, but what's the -- how should we think about that -- the upsell, like customers expanding on top of their current contracts? Is that something that you'd expect? And to what magnitude would you expect that over time?
Andrew Karos: Alex, what I can tell you is from every single project we have in and when I say every, we're being asked for more compute. So I think, one, you have a scarcity issue. But two, that goes back to who are we, what we do and how. And when you get into cutting no corners, reference architecture, going through the NVIDIA Architecture Review Board, you get a reputation of stability. And that's become a huge, huge issue. And earlier, we had a question about on term loans. What I also want to highlight here is the Boost Run team has introduced to lenders, primary banks, private credit, we're getting feedback what we're showing them has not been presented before.
And that's in a handoff process of our projects that are getting signed off for remediation and testing, which is going to have an impact on what our cost to borrow is. So when you talk about people expanding or wanting more compute, I think it's a safe assumption that our end users are pleased with performance. And at the current time, that is one of the hurdles we're going over right now is rollover to expandability a substantial client that we're in the process of negotiating.
Operator: [Operator Instructions] I'm showing no further questions at this time. This does conclude the question-and-answer session. We thank you for your participation in today's conference, and this does conclude the program. You may now disconnect.
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