SES AI (SES) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Full year revenue for 2025 was $21 million, a significant increase from just over $2 million in 2024, marking nearly a tenfold growth year-over-year [5][19] - Q4 2025 revenue was $4.6 million, representing a 124% increase year-over-year [18] - GAAP net loss for Q4 2025 was $17 million, or $0.05 loss per share, an improvement from a net loss of $34.5 million in Q4 2024 [23][24] - Full year 2025 GAAP net loss was $73 million, or $0.22 loss per share, compared to a net loss of $100.2 million in 2024 [24][25] - Adjusted EBITDA for Q4 2025 was a loss of $13.8 million, a 40% improvement from a loss of $23.2 million in Q4 2024 [22] - Full year 2025 Adjusted EBITDA was a loss of $62.6 million, a 23% improvement year-over-year [23] Business Line Data and Key Metrics Changes - The company operates three revenue-generating business units: Energy Storage Systems (ESS), drones, and materials [7][16] - ESS is the largest market for batteries, expected to be the primary revenue driver, contributing approximately 65% of the 2026 revenue guidance [8][45] - The drone business is anticipated to have growth margins north of 20% as volumes increase [28] - The materials business, through a joint venture with Hyzon, is expected to carry a margin profile in the 10%-20% range [28] Market Data and Key Metrics Changes - The ESS market is described as fragmented, with the company aiming to provide a stable operating system for commercial and industrial applications [75] - The drone market is under pressure to comply with NDA requirements, with the company focusing on larger customers for significant orders [62] - The company is entering the North American market for ESS, expanding its global reach [8] Company Strategy and Development Direction - The company aims to leverage its new business unit leadership to execute on ESS and drone cell opportunities [16] - There is a focus on converting production lines for NDAA-compliant drone cells and expanding manufacturing capacity in Southeast Asia [11][16] - The company is committed to a CapEx-light business model to maintain financial discipline while investing in growth initiatives [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the EV market is slowing down, impacting the next steps for OEM relationships with Honda and Hyundai [33] - The company is optimistic about the growth potential in ESS and drones, particularly with the integration of AI for battery health monitoring [52][54] - For 2026, the company expects revenue to be in the range of $30 million-$35 million, representing approximately 43%-67% growth over 2025 [27] Other Important Information - The company exited 2025 with a strong liquidity position of $200 million, providing a solid runway for growth initiatives [26][31] - The Molecular Universe platform is expected to drive significant long-term value and competitive advantage across the business units [15][80] Q&A Session Summary Question: What’s next for the Honda and Hyundai program? - The next step was to move from B-sample to C-sample, but the market for mass production of next-gen technology is currently on hold due to a slowdown in the EV market [33] Question: Can you quantify the one-time service amount for fiscal 25? - Service revenue for 2025 was $13.6 million, primarily from the Honda and Hyundai service agreement [35] Question: How do you expect revenue to break down by segment for 2026? - Approximately 65% of the $30 million-$35 million guidance will come from ESS, with drones and materials contributing more in the second half of the year [45][46] Question: What is the growth profile for ESS, drones, and materials over the next few years? - ESS and drones are expected to grow rapidly, with significant revenue potential, while the Molecular Universe is also making progress in attracting large battery companies [52][54] Question: How is the company managing operating expenses while aiming for growth? - The reduction in operating expenses is due to disciplined spending and efficiencies created by the Molecular Universe platform [57][59]