Xos, Inc. (XOS) Q4 2025 Earnings Call Transcript
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Overview
The earnings call summary highlights strong product development and market strategy, with significant growth expected in hubs and powertrains. Management's focus on expanding into new markets and leveraging engineering experience is promising. The Q&A section reveals positive sentiment towards these developments, despite some uncertainties. The company's efforts to improve gross margins and generate cash from working capital further support a positive outlook. Although specific guidance was not provided, the overall sentiment remains optimistic, suggesting a positive stock price movement in the short term.
Key Financial Performance
Revenue (Full Year 2025) $46 million on 328 units delivered, compared to $56 million on 297 units in 2024. The decline in revenue was due to a shift in product mix, driven largely by strip chassis products and powertrains, resulting in a lower average selling price.
GAAP Gross Margin (Full Year 2025) 5.9% ($2.7 million), compared to 7.1% ($4 million) in 2024. The decline was due to product mix, including low-margin strip chassis units under the UPS order, inventory write-downs, and tariff impacts.
Operating Loss (Full Year 2025) $33.1 million, narrowed by 28% from $45.9 million in 2024. This improvement reflects cost discipline and operational efficiency.
Adjusted EBITDA Loss (Full Year 2025) $23.5 million, improved by 33% from $34.8 million in 2024, driven by cost discipline and operational efficiency.
Free Cash Flow (Full Year 2025) $5.4 million positive, compared to negative $49.1 million in 2024. This $54 million improvement was driven by strong collections, inventory management, and cost discipline.
Revenue (Q4 2025) $5.2 million on 34 units, compared to $16.5 million on 130 units in Q3 2025 and $11.5 million on 51 units in Q4 2024. The decline was due to seasonality and a shift in focus to powertrain and hub production.
GAAP Gross Margin (Q4 2025) Loss of $2.6 million, driven by inventory reserves, write-offs, and warranty reserve updates. Non-GAAP gross margin was a profit of $0.3 million (5.2%).
Operating Expenses (Full Year 2025) $35.8 million, reduced by 28% from $49.8 million in 2024, reflecting structural cost reductions and disciplined management.
Operating Expenses (Q4 2025) $7.1 million, reduced by 25% from Q3 2025 and 35% from Q4 2024, benefiting from nonrecurring favorable adjustments and continued cost discipline.
Accounts Receivable (End of 2025) $6 million, down from $26.9 million at the end of 2024, driven by strong collections of approximately $66 million.
Inventory (End of 2025) $25 million, down from $36.6 million at the end of 2024, reflecting strategic inventory management and alignment with production needs.
Cash and Cash Equivalents (End of 2025) $14 million, up from $11 million at the end of 2024, driven by improved collections, inventory management, and strategic actions.
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Operating Highlights
StepVan: Continued to drive substantial revenue and expanded into higher-margin categories.
Powertrain Systems: Delivered 15 powertrain systems to Blue Bird Corporation in Q4 and received nearly 100 additional orders since Q2.
Xos Hub: Deployed hubs to utilities, fleet operators, and industrial users. Preparing for 2026 hub update with three size configurations (210 to 630-kilowatt hours).
Fleet Commitments: Secured orders for the largest production program in company history at over 200 units, with customers like UPS and FedEx ISPs.
Blue Bird Collaboration: Engagement with Blue Bird dealers and districts is expected to translate to a robust pipeline over the next 1 to 3 years.
Production Efficiency: Reduced labor hours per vehicle and built at a rate of 3 units per day at certain points.
Cost Management: Achieved a 28% reduction in operating expenses and maintained positive gross margins despite tariff impacts.
Supply Chain Optimization: Implemented shared risk supplier agreements, dual sourcing, and geographic diversification to reduce dependency risks.
Convertible Note Restructuring: Amended repayment structure with Aljomaih Automotive Company, extending maturity to February 2028.
Market Positioning: Positioned Xos as an energy company with the Xos Hub, addressing grid constraints and expanding the total addressable market.
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Risk or Challenges
Access to Capital: Xos faces challenges in accessing capital when needed, which could impact its ability to continue as a going concern and implement business plans.
Supply Chain Disruptions: Potential disruptions in the supply chain, including tariff changes, trade policies, and shortages of key industrial inputs, could adversely affect operations.
Economic and Geopolitical Uncertainties: Economic downturns, trade policies, and geopolitical tensions, such as the war in Iran, pose risks to the company's operations and financial performance.
Tariff Impacts: Frequent tariff changes have created cost headwinds, impacting margins and requiring strategic stockpiling and cost restructuring.
Product Mix and Margins: A shift in product mix, particularly towards low-margin products like strip chassis units, has compressed margins and affected revenue.
Customer Schedule Variability: Variability in customer schedules and ongoing supplier constraints have created challenges in maintaining production efficiency and supply continuity.
Grid Constraints: Grid constraints in North America are a significant friction point for fleet electrification, potentially limiting the adoption of Xos' products.
Inventory Write-downs: Inventory write-downs due to shifts in commercialization strategy have negatively impacted financial performance.
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Guidance & Outlook
Revenue Guidance for 2026: Anticipated revenue to fall within the range of $40 million to $50 million.
Unit Deliveries for 2026: Expected unit deliveries to be within the range of 350 and 500.
Non-GAAP Operating Loss for 2026: Projected to be in the range of $11.9 million to $13.3 million.
Expansion of Xos Hub Product Line: In 2026, Xos plans to expand its Hub product line with three size configurations ranging from 210 to 630-kilowatt hours, offering greater power resilience, energy cost optimization, and advanced load balancing capabilities.
Growth in Powertrain Business: Xos expects continued growth in its powertrain business with Blue Bird, supported by nearly 100 additional orders received since Q2 2025 and a robust pipeline anticipated to convert over the next 1 to 3 years.
Market Opportunities in Fleet Electrification: Xos plans to address grid constraints in North American fleet electrification through its Hub platform, which is positioned as a mobile energy platform for industrial users requiring temporary power, peak shaving, and resilience.
Focus on Scaling Production: Xos aims to scale efficient production across its core product lines, including trucks, powertrains, and the Hub platform, to meet increased demand in 2026 and beyond.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about the opportunities for the new hub products announced for development in 2026, especially for customers outside of typical EV charging?
A:The new hub products are designed to address various use cases such as high-throughput power discharge for autonomous car fleets, remote power for utilities, disaster preparedness, and off-grid applications. The new variants include smaller energy storage capacities for light-duty fleets, a flagship 420-kilowatt hour version with 30-40% more capacity than the previous model, and a 630-kilowatt hour configuration for medium and heavy-duty trucks. These products aim to expand into new markets like construction and agriculture.
Q:How might exploring new designs for powertrain products expand the opportunity set as you ramp up that business unit?
A:The company is leveraging its 10 years of engineering experience to develop new powertrain configurations, including Type C and Type D school buses. The focus is on commonizing platforms to improve reliability, service performance, and cost competitiveness, aiming for parity with diesel. New variants are expected to enter production by Q4, with continued development in subsequent years.
Q:Are you going to file your K today?
A:The 10-K is planned to be filed on Monday, not today.
Q:Can you provide details on the revenue mix for the fourth quarter and expectations for 2026?
A:Details of the unit mix will be disclosed in the 10-K. For 2025, the majority of units were StepVans and hubs, with powertrains making up the remainder. In Q4, powertrains and hubs drove significant volumes. For 2026, the company expects high double-digit to triple-digit growth in hubs and powertrains, with StepVans also growing but at a slower rate.
Q:Will there be a pronounced improvement in gross margin due to the mix of higher-margin products?
A:The hub is the strongest gross margin product, while powertrains and StepVans have comparable margins due to engineering investments. The company anticipates achieving target margin ranges for 2026 pricing, factoring in tariff impacts. Transparency with customers on tariff costs has helped manage pricing strategies.
Q:Can you provide an update on the UPS 200-unit program?
A:The vast majority of the 200 units have shipped, with only a few remaining to be delivered this quarter. Most units are already operating in states like California, Texas, Pennsylvania, New York, and New Jersey.
Q:What is the status of the Blue Bird powertrain orders and future expectations?
A:The company shipped 15 powertrains to Blue Bird this quarter and 10 last quarter, with an additional order of 100 units since Q2. The business is expected to grow double or triple digits this year. School buses are ideal for electrification due to their short routes and V2G capability, which is critical for funding.
Q:Does the two-way charging capability impact the lifespan of the battery infrastructure?
A:Two-way charging (V2G) has a lower discharge rate compared to fast charging, resulting in less intense battery use. The impact on lifespan is factored into long-term warranties, supported by the use of lithium-ion phosphate battery packs for extended life cycles.
Q:Is there an ability to retrofit the installed base with two-way charging capability?
A:For later-generation vehicles, retrofitting with V2G capability is technically feasible but has not been determined as a significant enough opportunity to pursue commercially.
Q:Are Blue Bird or its dealers interested in the hub product?
A:Blue Bird and its dealers have shown interest in the hub product. The company is building relationships with Blue Bird's dealer network to introduce the hub to school bus fleets, which often lack adequate power infrastructure.
Q:Will the new hub variants be available in April as planned?
A:Yes, the first 400-kilowatt hour variant has already shipped this quarter, and all subsequent units will be the new options.
Q:Can you generate more cash from working capital in 2026?
A:The company aims to optimize inventory turnover, build to order, and focus on faster delivery of completed assemblies like hubs and powertrains. While the ATM facility may be utilized selectively, the company is also working on reducing expenses and improving processes to generate cash.
Q:What progress has been made in positioning the hub for power and resiliency markets?
A:The company is focusing on power reliability and resiliency for industrial power users, addressing competition for power from data centers and other large consumers. The hub aims to provide solutions for industrial users needing reliable power in the current grid environment.
Q:Are there other customers for powertrains besides Blue Bird?
A:There are a few other customers, but the diversity is not as high as in the vehicles business. The company is working on diversifying and attracting new customers, particularly in off-highway segments.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on the revenue mix for 2026, stating only that hubs and powertrains are expected to grow significantly. They also did not provide a clear answer on whether retrofitting the installed base with two-way charging capability would be pursued commercially, citing technical feasibility but no decision on commercialization.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Blue Bird
Dakota
StepVan
Xos vehicle
action
base
commercialization
commitment
configuration kilowatt
continuity
down
energy
engineering supply
foundation
group
history
hub production
impact
improvement cash
kilowatt hour
kit variant
lease
loss item
mandate
manufacturing capability
material cost
model
momentum
powertrain kit
powertrains
product mix
production line
shift
strength
strip chassis
write
XOS Transcript
Xos, Inc. (XOS) Q4 2025 Earnings Call Transcript
Positive3-26
The earnings call summary highlights strong product development and market strategy, with significant growth expected in hubs and powertrains. Management's focus on expanding into new markets and leveraging engineering experience is promising. The Q&A section reveals positive sentiment towards these developments, despite some uncertainties. The company's efforts to improve gross margins and generate cash from working capital further support a positive outlook. Although specific guidance was not provided, the overall sentiment remains optimistic, suggesting a positive stock price movement in the short term.
Xos, Inc. (XOS) Q3 2025 Earnings Call Transcript
Positive11-13
The earnings call highlights improved financial performance, with reduced operating losses and positive free cash flow. The company is addressing tariff impacts and expects margin improvements in 2026. The Q&A section reveals growth opportunities in the Hub platform and chassis deliveries, despite some uncertainties in delivery guidance. Analysts' sentiment is generally positive, with a focus on strategic partnerships and market expansion. The reaffirmed revenue guidance and positive developments in cash flow suggest a positive stock price movement, likely between 2% to 8%.
Xos, Inc. (XOS) Q2 2025 Earnings Conference Call Transcript
Unknown8-13
Despite positive financial performance with increased revenue and unit deliveries, challenges such as tariff costs, supply chain disruptions, and dependency on a few large customers pose significant risks. The decline in gross margins and reliance on capital raising strategies add to the uncertainty. The Q&A section reveals management's reluctance to provide specific guidance, which raises concerns. Overall, the mixed signals result in a neutral sentiment, anticipating limited stock price movement.
Xos, Inc. (NASDAQ:XOS) Q1 2025 Earnings Call Transcript
Unknown5-16
The earnings call summary reveals several concerns: a significant revenue drop, an EPS miss, supply chain and tariff issues, rising interest rates, and competition. Despite some positive aspects like improved cash management and operational efficiency, the lack of a share repurchase program and unclear guidance on key products further dampen sentiment. The Q&A section highlights potential but uncertain market development, with management providing vague responses. The reaffirmed guidance and positive non-GAAP gross margin are insufficient to offset these negative factors, leading to a predicted negative stock price movement.
XOS Report
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