SES AI Corporation (SES) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights significant improvements in financial metrics, including reduced losses and improved cash utilization. The company showcases optimism with strong guidance for 2026, especially in ESS and drones. The Q&A section reveals some concerns, such as delays in EV projects, but overall sentiment remains positive due to strategic focus on high-growth areas like ESS and drones, and the potential of the Molecular Universe platform. The positive guidance and financial improvements suggest a likely positive stock price movement in the short term.
Key Financial Performance
Full Year Revenue 2025 $21 million, compared to a little over $2 million for 2024, representing nearly tenfold growth. This growth was driven by contributions from services agreements with Honda and Hyundai and 3.5 months of revenue from the acquisition of UZ Energy for the ESS business.
Fourth Quarter Revenue 2025 $4.6 million, representing a $2.6 million or 124% increase year-over-year. Growth was impacted by logistics constraints that delayed shipments, pushing approximately $1.5 million of revenue to Q1 2026.
Q4 GAAP Gross Margin 2025 11.3%, driven by a higher mix of ESS product sales, which carry a lower margin profile relative to service revenue.
Full Year GAAP Gross Margin 2025 53.8%, with non-GAAP gross margin at 55.7%. Margins are expected to vary as revenue mix evolves.
Q4 GAAP Operating Expenses 2025 $18.2 million, a 40% decrease year-over-year, reflecting cost optimization efforts.
Full Year GAAP Operating Expenses 2025 $93.9 million, a 15% decrease year-over-year, reflecting progress in cost structure optimization.
Adjusted EBITDA Q4 2025 Loss of $13.8 million, a 40% improvement compared to a loss of $23.2 million in Q4 2024.
Adjusted EBITDA Full Year 2025 Loss of $52.6 million, a 23% improvement compared to a loss of $81.5 million in 2024.
GAAP Net Loss Q4 2025 $17 million or $0.05 loss per share, an improvement from $34.5 million or $0.11 loss per share in Q4 2024.
GAAP Net Loss Full Year 2025 $73 million or $0.22 loss per share, an improvement from $100.2 million or $0.31 loss per share in 2024.
Non-GAAP Net Loss Q4 2025 $11.8 million or $0.04 loss per share, an improvement from $19.9 million or $0.06 loss per share in Q4 2024.
Non-GAAP Net Loss Full Year 2025 $53.2 million or $0.16 loss per share, an improvement from $66.4 million or $0.21 loss per share in 2024.
Cash Utilized for Operations Full Year 2025 $58.4 million, reflecting improved cash utilization consistent with adjusted EBITDA progress.
Liquidity Position End of 2025 $200 million, at the top end of the previously communicated range of $195 million to $200 million.
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Operating Highlights
Revenue growth: Full year revenue of $21 million in 2025, up from $2 million in 2024, driven by services agreements with Honda and Hyundai and acquisition of UZ Energy.
Molecular Universe: Development of the Molecular Universe platform to accelerate battery technology adoption and improve battery health monitoring.
ESS business: Entry into the ESS market through UZ Energy acquisition, serving global customers and integrating AI features for battery health prediction.
Drone batteries: Focus on high energy and power density batteries for drones, with plans to convert South Korea facility for drone battery production.
Materials business: Joint venture with Hisun to produce electrolyte materials for various applications, leveraging Molecular Universe discoveries.
ESS market expansion: Expansion into North America, in addition to existing markets in Australia, Europe, and the Middle East.
Drone market: Targeting U.S. defense drones market with high-performance batteries.
Cost optimization: Reduced operating expenses by 15% year-over-year in 2025, with further reductions planned for 2026.
Revenue diversification: Three revenue-generating units: ESS, drones, and materials, with ESS as the largest near-term driver.
CapEx-light model: Maintaining a CapEx-light business model to optimize cost structure.
AI integration: Leveraging AI for safety, manufacturing, and battery health monitoring.
NDAA compliance: Converting South Korea facility to produce NDAA-compliant drone batteries and exploring additional capacity in Southeast Asia.
Molecular Universe monetization: Exploring ways to unlock the value of the Molecular Universe platform as a standalone business.
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Risk or Challenges
Logistics Constraints: Delayed shipments at the end of 2025 resulted in approximately $1.5 million of revenue being pushed to the first quarter of 2026, impacting financial performance.
ESS Hardware Margins: The ESS hardware business, which represents the largest share of revenue, operates at a low gross margin of around 15%, potentially limiting profitability.
Drone Manufacturing Transition: The conversion of the South Korea facility from EV cells to NDAA-compliant drone cells involves capital expenditures and operational risks, including potential delays or cost overruns.
Supply Chain Compliance: Drone batteries require compliance with the National Defense Authorization Act (NDAA), which may limit supply chain flexibility and increase costs.
Revenue Dependency on ESS: The ESS business is the largest near-term revenue driver, creating dependency on its performance and market conditions.
Economic Uncertainties: Economic conditions and logistics constraints could impact revenue growth and operational efficiency.
Cost Structure Optimization: While operating expenses have decreased, further reductions may be challenging without impacting strategic investments, particularly in the Molecular Universe platform.
Market Competition: The company faces competitive pressures in the ESS, drone, and materials markets, which could impact market share and pricing.
Regulatory and Compliance Risks: Compliance with various regulations, including NDAA for drones, adds complexity and potential risks to operations.
CapEx-Light Model Limitations: The CapEx-light model may limit the company's ability to scale rapidly or respond to unexpected demand surges.
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Guidance & Outlook
Revenue Growth: For full year 2026, revenue is expected to be in the range of $30 million to $35 million, representing approximately 43% to 67% growth over full year 2025 revenue.
ESS Business: The ESS hardware business, expected to represent the largest share of revenue in 2026, is projected to operate at around 15% gross margin. The company plans to expand margins over time by bundling hardware and software and increasing the operating system attach rate.
Drone Sales Business: The drone sales business is expected to achieve gross margins north of 20% as volumes build through the year. The company plans to convert its South Korea facility to manufacture NDAA-compliant cells for drones and is exploring additional manufacturing capacities in Southeast Asia.
Materials Business: The materials business, which will sell electrolyte materials through a joint venture with Hisun, is expected to carry a margin profile in the 10% to 20% range.
Consolidated Gross Margin: On a blended basis, consolidated gross margin is expected to be around 15%, with potential for improvement year-over-year as the business scales.
Operating Expenses: Operating expenses for full year 2026 are expected to decrease by approximately 15% from 2025 levels. The company plans to continue investing in the Molecular Universe platform while maintaining financial discipline.
Capital Expenditures: Capital expenditures for 2026 are expected to remain in the single-digit million range, primarily directed towards converting the South Korea facility for drone cells and evaluating contract manufacturing capacities in Southeast Asia.
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Shareholder Return Plan
Share repurchases: The company returned $1.6 million to shareholders through share repurchases during 2025.
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Key Q&A
Q:What is the next step for the Honda and Hyundai development program?
A:The next step was to go from B sample to C sample, but the C sample is on hold due to the slowing EV market. The company is focusing on selling materials developed and converting production lines for drones and applying AI safety analytics software for the ESS market.
Q:What was the one-time service revenue amount for fiscal 2025?
A:The one-time service revenue for fiscal 2025 was $13.6 million, primarily driven by the Honda and Hyundai service agreement.
Q:What is the revenue guidance breakdown for 2026 by segment?
A:For 2026, around 65% of the revenue guidance (range of $30 to $35 million) is expected to come from ESS, with the remaining portion from drones and materials. Drones and materials revenue is expected to be more second-half loaded.
Q:What is the growth profile of different business areas over the next 2-3 years?
A:ESS and drones are expected to grow rapidly, especially ESS due to the addition of the predict feature for energy trading. The molecular universe is also progressing, with new materials being developed at an accelerated rate.
Q:What is the reason for reduced OpEx in 2026 compared to 2025?
A:The reduction is due to disciplined spending on G&A and R&D, efficiencies created by the Molecular Universe tool, and focused spending on product development-related R&D. Growth in SG&A spending will not be linear to revenue growth.
Q:What is the status of the drone market and customer relationships?
A:The company is focusing on larger customers with potential orders ranging from single-digit millions to over $10 million annually. Testing and engagement started last year, and production capacity is being expanded in Boston, Korea, and Southeast Asia.
Q:How is AI being leveraged for pack-level and system-level design?
A:The company is adding features for pack-level and system-level design and predict features, including integrating Molecular Universe predict into energy storage systems through an edge box.
Q:What is the status of auto OEM JVs and the appetite for lithium metal batteries?
A:Auto OEM JVs are on hold due to reduced appetite for high energy density batteries at the mass production level. Most OEMs are switching to LFP graphite due to price and cost pressures.
Q:What is the strategy for the ESS market and the UZ Energy acquisition?
A:The strategy is to provide an operating system for the fragmented ESS market, enabling asset owners to use battery packs for energy trading. The edge box enhanced virtual power plant is a key offering.
Q:What is the status of the agreement with top material and NDAA compliance?
A:Top material is one of the options being explored. The Korea facility has been NDA compliant since 2021, and the company is focusing on converting it for drone battery production. Additional options in Southeast Asia are being considered.
Q:How is SES protecting its Molecular Universe data advantage?
A:SES is offering Molecular Universe to the public and has developed it into a game-changing platform for battery development in the EV space, attracting OEMs and big battery companies.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the timeline for commercializing the Honda and Hyundai development program for EVs, as well as specific details on the bottlenecks for molecular universe adoption by customers.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI science
Asia NDA
Australia
ESS drone
LFP graphite
Middle East
Mpower cell
NDA compliant
Southeast Asia
UZ Energy
breakthrough
capacity Southeast
compliant cell
consumer electronics
contribution
course
cycle life
drone battery
drone market
drone material
effort
energy
facility NDA
hardware
health
material ESS
measure
power density
sale
storage
system
unit
value
SES Transcript
SES AI Corporation (SES) Q4 2025 Earnings Call Transcript
Positive3-4
The earnings call highlights significant improvements in financial metrics, including reduced losses and improved cash utilization. The company showcases optimism with strong guidance for 2026, especially in ESS and drones. The Q&A section reveals some concerns, such as delays in EV projects, but overall sentiment remains positive due to strategic focus on high-growth areas like ESS and drones, and the potential of the Molecular Universe platform. The positive guidance and financial improvements suggest a likely positive stock price movement in the short term.
SES AI Corporation (SES) Q3 2025 Earnings Call Transcript
Positive11-6
The earnings call highlights several positive aspects: a reduction in net loss, a strong liquidity position, and share repurchases. Additionally, the Q&A reveals optimism about the growth potential of UZ Energy and Molecular Universe, with increasing trials and enterprise interest. However, management's vague response on liquidity projections is a minor concern. Overall, the positive developments in market strategy and financial health, along with optimistic guidance for UZ Energy, suggest a positive stock price movement in the short term.
SES AI Corporation (SES) Q2 2025 Earnings Call Transcript
Positive8-4
SES AI's earnings call indicates a positive outlook with record revenue, strong gross margins, and a robust liquidity position. The launch of the Molecular Universe platform and strategic acquisition of UZ Energy bolster growth prospects. Share repurchases enhance shareholder value. However, uncertainties in strategic execution and competitive pressures exist. Overall, the positive elements outweigh the risks, suggesting a positive stock price reaction.
Earnings call transcript: SES AI Q1 2025 sees stock surge on revenue beat
Positive4-25
The earnings call highlights strong financial performance with record revenue and high gross margins, a solid liquidity position, and a share buyback program, all of which are positive indicators. However, competitive pressures and regulatory issues pose risks. The Q&A session did not reveal significant negative sentiments, and the share buyback is seen as efficient capital allocation. Despite some unclear responses from management, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
SES Report
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