SES AI Corp Q4 FY2025 earnings call

2025 had $21M revenue vs ~$2M in 2024, growth due to Honda/Hyundai services and UZ Energy acquisition. ESS business: entered ESS market via UZ Energy, can provide operating system to hardware, signed $20M contract. Drones business: need high energy density batteries, plan to convert Korea facility to make NDA compliant cells for drones. Materials business: JV with Hyzen, molecular universe has six breakthroughs. Molecular universe's value as AI for science platform, potential to be modern encyclopedia. Priorities for 2026: leverage business unit leadership, convert Korea line for drones, expand ESS hardware business, deliver on materials discoveries, leverage molecular universe for product dev.

Fourth quarter 2025 revenue was $4.6 million, a $2.6 million or 124% year-over-year increase. Full year 2025 revenue was $21 million, in line with guidance but impacted by logistics constraints with ~$1.5 million pushed to Q1 2026. ESS is the largest near-term revenue driver; acquired UZ Energy serves global markets, signed a multi-year $20 million contract at InterSolar Conference. Drones market requires high energy density/battery; U.S. defense drones is near-term opportunity. Materials business has JV with Hyzen, molecular universe discovered six breakthroughs being tested by over 40 customers.

2026 full-year revenue expected $30M - $35M, ~43%-67% growth over 2025. ESS expected ~15% growth margin, drones north of 20% margin as volumes build, materials 10%-20% margin. Consolidated growth margin ~15% with room to improve. 2026 operating expenses expected ~15% further reduction from 2025 level, continue investing in molecular universe platform. Capex in 2026 to remain in single-digit millions, directed toward converting Korea facilities and evaluating SE Asia contract manufacturing.

Discussion of risks including those detailed in latest earnings release and SEC filings, such as forward-looking information risks, non-cash mark-to-market movement in fair value of sponsor earn-out liabilities impacting net loss.

Q: On final contribution from Honda and Hyundai development work, what's next?

A: EV market slowing, seed sample on hold, focusing on material supplies, converting line for drone applications and using safety analytics software for ESS.

Q: What was the one-time service amount impact to fiscal 25?

A: 2025 service revenue $13.6M from Honda and Hyundai service agreement.

Q: Growth profile of business areas in next 2-3 years?

A: ESS and drones to grow rapidly, ESS with added predict feature for energy trading, drones on NDA compliance and new drones dominance program.

Q: Bottleneck for molecular universe adoption?

A: Newness as AI for science not widely used in materials/batteries, but making progress with six materials discovered in 9 months to a year.

Q: OPEX in 2026?

A: Partially from disciplined spending, MU as internal tool creating efficiency, focused spending on product dev and SG&A not linear to revenue growth.

Q: Drone market customers and relationships?

A: Focus on larger customers with single-digit millions to over $10M a year, testing engagement started last year, converting lines for NDA compliant cells.

Q: Leveraging molecule know-how to PAC-level and system integration?

A: Adding features for PAC and system level design, adding molecular universe predict into systems for cell and system level, working on requests from automakers for design and predict features.

Q: Auto OEM JVs status?

A: EV market slow, OEMs not investing in mass-scale production of next-gen technology, focus on material supplies now.

Q: ESS market value add?

A: Provide operating system for fragmented ESS market, edge box enhanced virtual power plant with accurate battery health estimation for energy trading.