Ideal Power Inc. Q2 FY2026 earnings call

• Commercial Product Development Progress • Finalizing low-current SSCB prototypes for a LeadAsia customer, scheduled for shipment in late August 2026 for internal testing; initial low-volume orders for prototype builds are expected in Q4 2026, for the customer's 800-volt AI data center and energy grid end customers. Two additional co-development projects (a medium-current SSCB for 800V DC applications and a low-current SSCB for smart industrial buildings) are in progress, with technical discussions underway for the medium-current variant. • Advancing co-development of a BTRAN-enabled intelligent SSCB prototype with an industry partner, planned for evaluation by a U.S. Hyperscaler for its NVIDIA Rubin Ultra 800-volt DC data center power system, with prototype delivery targeted for the end of Q4 2026. The prototype will also be offered to other hyperscalers and AI data center operators adopting 800-volt DC architectures, and the team will present the concept at the October 2026 Open Compute Project Global Summit. • Delivered a second set of Gen 2 B-TRAN custom package samples and development kits to Stellantis for evaluation, and is working closely with the customer to align specifications for the solid-state EV contactor program. While this specification alignment has shifted the timeline of deliverables under the existing purchase order, it has not impacted the overall EV contactor opportunity, with the next milestone still scheduled for Q4 2026.

• Operational & Supply Chain Milestones • Entered into a long-term supply agreement with a high-volume, automotive-qualified wafer foundry based in Asia (excluding China), and achieved functional first silicon after initiating discussions in Q1 2026. The foundry has produced over 1 billion power semiconductors, has sufficient capacity to support high-volume industrial and automotive customers, and enables a cost structure that supports the company's targeted 40%+ gross margins at scale. • Streamlined the company's patent portfolio via proactive rationalization of pending patent applications, reducing future patent spending while leaving all 105 issued patents unaffected.

• Market Expansion & Commercial Enablement • Launched a new SSCB reference design kit (RDK) to help traditional electromechanical breaker manufacturers (who often lack in-house solid-state technology expertise) evaluate Ideal Power's technology and accelerate development of their own SSCB products, to support the upcoming 800-volt AI data center product rollout starting in H2 2027. A distribution partner has already placed the first stocking order for RDKs, with multiple additional customer requests received. • Added a Europe-based sales director, and the team held meetings with over 20 potential customers at PCIM Germany, securing early engagements with a European global automaker, multiple tier-one automotive suppliers, and a European circuit protection company targeting the U.S. and European markets for data center, energy storage, and EV applications.

• Organizational & Market Strategy • Added the first member to the newly formed advisory board: Dr. Sanjay Parthasarathy, CMO of Coherent Corporation, a leading AI data center infrastructure supplier, who brings 35 years of industry experience and networks aligned with the company's near-term revenue goals. • Prioritized JEDEC industrial qualification (for AI data center, energy storage, and grid infrastructure, the company's nearest-term opportunities) which will begin in Q3 2026 and completed in Q4 2026. Automotive AECQ qualification will be aligned to customer timelines, and is not a gating requirement for ongoing product development, so adjusting its timing does not impact current sales opportunities including the Stellantis EV contactor program. • Total sales opportunity funnel grew to over $400 million, up from ~$300 million in mid-May 2026. The top company priority is converting this funnel into design wins, production orders, and revenue.

Ideal Power is an early-stage technology company focused on power semiconductor products, with no material product revenue breakdown by segment reported in Q2 2026. The company recorded only modest total revenue in the quarter. All current revenue comes from small initial customer orders for product samples, development kits, and custom development non-recurring engineering (NRE) fees as the firm continues commercialization of its B-TRAN and solid-state circuit breaker (SSCB) technologies. The company's total sales opportunity funnel is split roughly 50-50 between the automotive segment and the combined AI data center/industrial/energy infrastructure segment.

• Cash burn guidance: Q3 2026 cash burn is expected to be approximately $2.7 to $2.9 million. Full year 2026 cash burn is projected to be $10.3 to $10.5 million, up from $9.6 million in 2025, driven primarily by hiring of additional sales and engineering personnel. Q2 2026 actual cash burn was $2.5 million, which came in at the lower end of the prior guidance range of $2.5 to $2.7 million.
• Operating expenses are expected to increase modestly in coming quarters, driven by growth in sales and engineering teams to support commercialization, with expected quarter-to-quarter variability due to timing of semiconductor fabrication runs, R&D activities, hiring, and non-cash stock-based compensation expense.
• The company does not expect to change its market strategy or dramatically increase spending following the recent capital raise, and will continue to manage expenses prudently.

• All forward-looking statements regarding commercialization timelines, revenue, product adoption, and margin targets are subject to inherent risks and uncertainties, many outside of the company's control, that could cause actual results to differ materially from expectations. Key risks include customer testing and qualification outcomes, delays in product development, customer adoption timelines for 800-volt DC architectures, and supply chain volatility. Additional risks are detailed in the company's SEC filings.
• The company is pre-revenue at scale, and conversion of the sales funnel into design wins and revenue is not guaranteed, with a long commercialization timeline for power semiconductor products.

Q: On the U.S. hyperscaler SSCB opportunity, are you working with other component partners, do all hyperscalers source components similarly, and what is your engagement model? / A: Hyperscalers vary in their approach to component sourcing based on their organizational style: some work directly at the component level, while others stay at the higher system integration level. Ideal Power is partnering with an industry co-development partner to deliver a system-level intelligent circuit protection solution optimized for 800-volt DC power distribution, which makes the offering relevant to hyperscalers. The company engages across multiple levels: selling semiconductors to traditional circuit protection customers, working with system integrators, and engaging directly with hyperscalers when opportunities arise. This multi-level model aligns with the industry's rapid innovation timeline for the 800V transition. Evaluation timelines are tied to the industry's planned 800-volt DC rollout starting in H2 2027, with aggressive adoption expected through 2028.

Q: How did securing the new long-term foundry agreement advance ongoing customer sales conversations? / A: While Ideal Power already had enough capacity from existing fabs to cover the next two-plus years of development and initial ramp, the new agreement addresses long-term scaling needs, especially for high-volume automotive applications. Most importantly, the new foundry provides a cost structure that supports the company's target of 40%+ gross margins at scale. Having a contracted long-term supply agreement with an established, automotive-qualified foundry also gives customers confidence that Ideal Power can support rapid volume growth if their projects move to production.

Q: How has the Stellantis EV contactor opportunity progressed, and has it narrowed or widened since initial discussions? / A: The depth of engagement with Stellantis has increased significantly over the past several months. The teams are now working closely on system-level solution definition, optimizing B-TRAN performance for Stellantis' specific requirements, and evaluating full system considerations including packaging. Deeper technical discussions that address detailed design requirements are a positive sign of progress toward a potential production decision, and the overall opportunity has not contracted, it has advanced.

Q: Why is the new foundry agreement and successful first silicon a key milestone for the company? / A: Beyond long-term capacity support for high-volume scaling and the cost structure that enables 40%+ gross margins, the agreement provides customer confidence. Recognizing the well-established, qualified foundry gives customers assurance that Ideal Power can reliably supply product even if volumes grow quickly, which supports ongoing sales discussions.