Q2 2025 Innventure Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to the Innventure second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you need to press star one-one on your telephone. You then hear an unrelated message advising your hand is raised. To withdraw your question, please press star one-one again. Please advise that today's call is being recorded. I will now like to hand it over to your first speaker today, Lucas Harper, Chief Investment Officer. Please go ahead.

Speaker #2: Good day, and thank you for joining us. Welcome to the Innventure second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode.

Speaker #2: After the speakers' presentation, we'll open up for questions. To ask a question during the session, you need to press *11 on your telephone, you then hit an unmuted message advising your hand is raised.

Speaker #2: To withdraw your question, please press *11 again. Please advise that today's call is being recorded and will be handed over to your first speaker today, Lucas Harper, Chief Investment Officer.

Speaker #2: Please go ahead.

Lucas Harper: Thanks, operator. Thank you all for joining us for Innventure's Q2 2025 earnings call. My name is Lucas Harper, Innventure's Chief Investment Officer. Joining me from the company are Bill Haskell, Chief Executive Officer, and David Yablunosky, Chief Financial Officer. Earlier today, we issued a press release announcing our financial results, which is available on our investor relations website, along with a supplemental slide presentation. As referenced on slide 5, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

Lucas Harper: Thanks, Operator, and thank you all for joining us for Innventure's second quarter 2025 earnings call. My name is Lucas Harper, Innventure's Chief Investment Officer, and joining me from the company are Bill Haskell, Chief Executive Officer, and Dave Yablonowski, Chief Financial Officer. Earlier today, we issued a press release announcing our financial results, which is available on our Investor Relations website along with a supplemental slide presentation. As referenced on slide five, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

Speaker #3: Thanks, operator, and thank you all for joining us for Inventure's second quarter 2025 earnings call. My name is Lucas Harper, Inventure's Chief Investment Officer, and joining me from the company are Bill Haskell, Chief Executive Officer, and Dave Jablonowski, Chief Financial Officer.

Speaker #3: Earlier today, we issued a press release announcing our financial results, which is available on our investor relations website along with a supplemental slide presentation.

Speaker #3: As referenced on slide five, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and supplemental slide presentation on our website.

Speaker #3: In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

Lucas Harper: These forward-looking statements involve a number of uncertainties and risks, including but not limited to those described in our earnings release, Form 10-Q for the period ending June 30, 2025, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. And now I'd like to hand the call over to Bill.

Lucas Harper: These forward-looking statements involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, Form 10-Q for the period ending 30 June 2025, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. Now I'd like to hand the call over to Bill.

Speaker #3: These forward-looking statements involve a number of uncertainties and risks, including but not limited to those described in our earnings release, Form 10-Q for the period ending June 30, 2025, and other filings with the SEC.

Speaker #3: The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. And now, I'd like to hand the call over to Bill.

Bill Haskell: Thanks, Lucas. Thanks to everyone joining us today. Last quarter, we invited Dino Foderaro, Accelsius's Chief Revenue Officer, to call for a deep dive into Accelsius technology differentiators, market opportunity, and customer engagement. We heard great feedback from investors and analysts on the value of this spotlight. Today we are pleased to have Josh Claman, CEO of Accelsius, on with us to speak about the exciting recent developments at the company and the incredible opportunity that lies ahead. Before passing to Josh, let me just reiterate that market momentum for Accelsius continues to accelerate. We anticipate an inflection in commercial bookings before the end of 2025. Josh's commentary will provide real-world context for why we remain confident in our ability to deliver on that goal. With that, I'd like to turn the call over to Josh. Josh?

Bill Haskell: Thanks, Lucas, and thanks to everyone joining us today. Last quarter, we invited Dino Foderaro, Excelsius's Chief Revenue Officer, to call for a deep dive into Excelsius' technology differentiators, market opportunity, and customer engagement. We heard great feedback from investors and analysts on the value of this spotlight. So today, we are pleased to have Josh Klaiman, CEO of Excelsius, on with us to speak about the exciting recent developments at the company and the incredible opportunity that lies ahead. Before passing to Josh, let me just reiterate that market momentum for Excelsius continues to accelerate, and we anticipate an inflection in commercial bookings before the end of 2025. Josh's commentary will provide real-world context for why we remain confident in our ability to deliver on that goal. With that, I'd like to turn the call over to Josh. Josh?

Speaker #4: Thanks, Lucas, and thanks to everyone joining us today. Last quarter, we invited Dino Fodorarou, Excelsius's Chief Revenue Officer, to call for a deep dive into Excelsius' technology differentiators, market opportunity, and customer engagement.

Speaker #4: We heard great feedback from investors and analysts on the value of this spotlight, so today we are pleased to have Josh Clayman, CEO of Excelsius, on with us.

Speaker #4: To speak about the exciting recent developments at the company, and the incredible opportunity that lies ahead. Before passing to Josh, let me just reiterate that Mark LeMond for Excelsius continues to accelerate and we anticipate an inflection in commercial bookings before the end of 2025.

Speaker #4: Josh's commentary will provide real-world context for why we remain confident in our ability to deliver on that goal. With that, I'd like to turn the call over to Josh.

Speaker #4: Josh?

Josh Claman: Thanks, Bill. I'm excited to be here today. As Bill mentioned, Accelsius continues to make tangible progress and gain traction in the market. I'm incredibly proud of my entire team for what they have accomplished to date, and we are very excited for the future. You've heard Innventure speak in the past about the size and rapid growth of the data center liquid cooling market, which is only accelerating as the adoption of AI continues to proliferate the market. In a recent analysis of the market by UBS, 100% of the roughly 128 IT organizations surveyed intend to deploy AI workloads, with 14% having deployed AI workloads in some capacity already. The power demands these workloads place on current data center infrastructure are simply too high for traditional air cooling.

Josh Klaiman: Thanks, Bill. I'm excited to be here today. As Bill mentioned, Excelsius continues to make tangible progress and gain traction in the market. I'm incredibly proud of my entire team for what they have accomplished to date, and we are very excited for the future. You've heard Innventure speak in the past about the size and rapid growth of the data center liquid cooling market, which is only accelerating as the adoption of AI continues to proliferate the market. In a recent analysis of the market by UBS, 100% of the roughly 128 IT organizations surveyed intend to deploy AI workloads, with 14% having deployed AI workloads in some capacity already. The power demands these workloads place on current data center infrastructure are simply too high for traditional air cooling. And consensus is building in the industry that single-phase water solutions will also rapidly become insufficient for many compute-intensive applications.

Speaker #5: Thanks, Bill. I'm excited to be here today. As Bill mentioned, Excelsius continues to make tangible progress and gain traction in the market. I'm incredibly proud of my entire team for what they have accomplished to date and we are very excited for the future.

Speaker #5: You've heard Inventure speak in the past about the size and rapid growth of the data center liquid cooling market, which is only accelerating as the adoption of AI continues to proliferate the market.

Speaker #5: In a recent analysis of the market by UBS, 100% of the roughly 128 IT organizations surveyed intend to deploy AI workloads. With 14% having deployed AI workloads in some capacity already, the power demands these workloads place on current data center infrastructure are simply too high for traditional air cooling.

Josh Claman: Consensus is building in the industry that single-phase water solutions will also rapidly become insufficient for many compute-intensive applications. It is important to note that the average order size for these workloads is still less than $5 million, which demonstrates we are still in the proof of concept stage. The bottom line is that the opportunity is still ahead of us, and the direction of the market is very clearly pointed to the need for advanced cooling solutions. With a differentiated market-leading technology, Accelsius has positioned itself at the forefront of what we believe is an inevitable two-phase direct-to-chip liquid cooling adoption cycle. Against this attractive backdrop, Accelsius has been making great strides. Before getting into the details, it is important to remind you all that Accelsius was founded in 2022 and has only been in the market for less than 1 year.

Speaker #5: And consensus is building in the industry that single-phase water solutions will also rapidly become insufficient for many compute-intensive applications. It is important to note that the average order size for these workloads is still less than $5 million.

Josh Klaiman: It is important to note that the average order size for these workloads is still less than $5 million, which demonstrates we are still in the proof-of-concept stage. The bottom line is that the opportunity is still ahead of us, and the direction of the market is very clearly pointed in the need for advanced cooling solutions. With a differentiated market-leading technology, Excelsius has positioned itself at the forefront of what we believe is an inevitable two-phase directed chip liquid cooling adoption cycle. Against this attractive backdrop, Excelsius has been making great strides. Before we get into the details, it is important to remind you all that Excelsius was founded in 2022 and has only been in the market for less than one year. The third quarter of 2024 was our first quarter of revenue generation.

Speaker #5: Which demonstrates we are still in the proof of concept stage. The bottom line is that the opportunity is still ahead of us and the direction of the market is very clearly pointed in the need for advanced cooling solutions.

Speaker #5: With a differentiated market-leading technology, Excelsius has positioned itself at the forefront of what we believe is an inevitable two-phase direct-to-chip liquid cooling adoption cycle.

Speaker #5: Against this attractive backdrop, Excelsius has been making great strides. Before getting into the details, it is important to remind you all that Excelsius was founded in 2022 and has only been in the market for less than one year.

Josh Claman: The Q3 2024 was our first quarter of revenue generation, and to be where we are today, less than 10 months later, is truly impressive. Let's dive into several key milestones. As we've stated previously, Accelsius is focused on building relationships with 4 key groups: hyperscalers and multinational OEMs, global resellers, colocation providers, and AI as a service or neocloud providers. We continue to make strides with each of these constituents. As of Q2, we engaged with our first hyperscaler for a proof of concept system. The system is currently being manufactured, and we expect to deliver it by the end of Q3. From there, it will go through the evaluation process, which we expect to take 6 months.

Speaker #5: The third quarter of 2024 was our first quarter of revenue generation. To be where we are today, less than 10 months later, is truly impressive.

Josh Klaiman: And to be where we are today, less than 10 months later, is truly impressive. So let's dive into several key milestones. As we've stated previously, Excelsius is focused on building relationships with four key groups: hyperscalers and multinational OEMs, global resellers, colocation providers, and AI as a service or NeoCloud providers. We continue to make strides with each of these constituents. As of the second quarter, we engaged with our first hyperscaler for a proof-of-concept system. The system is currently being manufactured, and we expect to deliver it by the end of Q3. From there, it will go through the evaluation process, which we expect to take six months. We are also in discussions with two other hyperscalers at the moment and are confident in our ability to advance to proof of concept with them as well.

Speaker #5: So, let's dive into several key milestones. As we've stated previously, Excelsius is focused on building relationships with four key groups: hyperscalers and multinational OEMs.

Speaker #5: Global resellers, co-location providers, and AI-as-a-service or NeoCloud providers. We continue to make strides with each of these constituents. As of the second quarter, we engaged with our first hyperscaler for a proof of concept system.

Speaker #5: The system is currently being manufactured, and we expect to deliver it by the end of Q3. From there, it will go through the evaluation process, which we expect to take six months.

Josh Claman: We are also in discussions with two other hyperscalers at the moment and are confident in our ability to advance to proof of concept with them as well. We began taking our first orders from our OEM partner, one of the largest in the data center sector. We expect this order volume to begin to ramp during Q3 and continue to ramp with demand throughout 2025. We also announced an exciting engagement with Equinix, which is just the latest deployment among several other key colocation players. As with many colocation operators, Equinix is increasingly required to become a thought leader in cooling and power architectures. We have grown our contracted go-to-market partner network to 21, an increase of over 100% since the beginning of 2025. This network includes industry players such as Park Place, Avnet, Computacenter, and more.

Speaker #5: We are also in discussions with two other hyperscalers at the moment and are confident in our ability to advance to proof of concept with them as well.

Josh Klaiman: We began taking our first orders from our OEM partner, one of the largest in the data center sector. We expect this order volume to begin to ramp during the third quarter and continue to ramp with demand throughout 2025. We also announced an exciting engagement with Equinix, which is just the latest deployment among several other key colocation players. As with many colocation operators, Equinix is increasingly required to become a thought leader in cooling and power architectures. We have grown our contracted go-to-market partner network to 21, an increase of over 100% since the beginning of 2025. This network includes industry players such as Parkplace, Avnet, Computer Center, and more. Finally, we plan to open a demonstration point in the Bay Area with our contract manufacturing partner before the end of the year.

Speaker #5: We began taking our first orders from our OEM partner, one of the largest in the data center sector. We expect this order volume to begin to ramp during the third quarter and continue to ramp with demand throughout 2025.

Speaker #5: We also announced an exciting engagement with Equinix. Which is just the latest deployment among several other key co-location players. As with many co-location operators, Equinix has increasingly required to become a thought leader in cooling and power architectures.

Speaker #5: We have grown our contracted go-to-market partner network to 21, an increase of over 100% since the beginning of 2025. This network includes industry players such as Park Place, Avnet, Computer Center, and more.

Josh Claman: We plan to open a demonstration point in the Bay Area with our contract manufacturing partner before the end of the year. Our as-yet undisclosed CM ODM partner is one of the key suppliers to multiple hyperscalers and is capable of ramping this demand as proof of concepts convert to production opportunities. Accelsius has engaged with dozens of key players across the data center ecosystem, and we have quickly built an impressive reputation. Which is driven by our differentiated technology and our data-driven approach. Scaled industry players are witnessing the technology platform in the field, and results have been undeniable. Jacobs, a leading data center-focused MEP firm, just completed a study comparing our technology side by side with single-phase water and found an operating cost improvement over water of 28% to 40%, depending on the exact assumption set around infrastructure deployed.

Speaker #5: Finally, we plan to open a demonstration point in the Bay Area with our contract manufacturing partner before the end of the year. Our as-yet undisclosed CM ODM partner is one of the key suppliers to multiple hyperscalers.

Josh Klaiman: Our as yet undisclosed CMODM partner is one of the key suppliers to multiple hyperscalers and is capable of ramping this demand as proof of concepts convert to production opportunities. As you can see, Excelsius has engaged with dozens of key players across the data center ecosystem, and we have quickly built an impressive reputation, which is driven by our differentiated technology and our data-driven approach. The industry players are witnessing the technology platform in the field, and results have been undeniable. JFIPS Engineering, a leading data center-focused MVP firm, just completed a study comparing our technology side by side with single-phase water and found an operating cost improvement over water of 28% to 40% depending on the exact assumption set around infrastructure deployed. Our performance has been impressive. However, the technology is still new, and sell cycles for these relationships can sometimes span several quarters.

Speaker #5: And is capable of ramping this demand as proof of concepts convert to production opportunities. As you can see, Excelsius has engaged with dozens of key players across the data center ecosystem, and we have quickly built an impressive reputation.

Speaker #5: Which has driven by our differentiated technology and our data-driven approach. Scaled industry players are witnessing the technology platform in the field and results have been undeniable.

Speaker #5: Today's engineering, a leading data center-focused MEP firm, just completed a study comparing our technology side-by-side with single-phase water. And found an operating cost improvement over water of 28% to 40%, depending on the exact assumptions set around infrastructure deployed.

Josh Claman: Our performance has been impressive. The technology is still new, and cell cycles for these relationships can sometimes span several quarters. Because of the compelling nature of the Accelsius technology, we anticipate the sales cycle will shorten significantly as the technology gains traction in the field at scale. Early signs of this traction are highly encouraging, evidenced by a continued upward trend in leading indicators of demand, namely qualified marketing leads. When we spoke to you during Q1, marketing leads had exploded close to 4 times since the start of the year. While it is still too early to give specific revenue expectations, our pipeline continues to grow, with 3 times gross coverage of bookings as compared to the plan for the remainder of 2025, and over 6 times coverage of our bookings plan for 2026.

Speaker #5: Our performance has been impressive, however, the technology is still new and sales cycles for these relationships can sometimes span several quarters. Because of the compelling nature of the Excelsius technology, we anticipate the sales cycle will shorten significantly as the technology gains traction in the field at scale.

Josh Klaiman: Because of the compelling nature of the Excelsius technology, we anticipate the sell cycle will shorten significantly as the technology gains traction in the field at scale. Early signs of this traction are highly encouraging, evidenced by a continued upward trend in leading indicators of demand, namely qualified marketing leads. When we spoke to you during the first quarter, marketing leads had exploded close to four times since the start of the year. While it is still too early to give specific revenue expectations, our pipeline continues to grow, with three times gross coverage in bookings as compared to the plan for the remainder of 2025 and over six times coverage of our bookings plan for 2026. We are also excited to start to see a transition of our pipeline from 100% proof of concept engagements to date to 75% production engagements through 2026.

Speaker #5: Early signs of this traction are highly encouraging. Evidenced by continued upward trend in leading indicators of demand, namely qualified marketing leads. When we spoke to you during the first quarter, marketing leads had exploded close to four times since the start of the year.

Speaker #5: While it is still too early to give specific revenue expectations, our pipeline continues to grow. With three times gross coverage of bookings compared to the plan for the remainder of 2025, and over six times coverage of our bookings planned for 2026.

Josh Claman: We are also excited to start to see a transition of our pipeline from 100% proof of concept engagements to date to 75% production engagements through 2026. I'll make one final point on the pipeline to frame the rapid pace of momentum we are experiencing. Our Q2 bookings were greater than all bookings going to market before that, and our best estimate for Q3 is that bookings will be a multiple of the Q2 level, rather. You can see that the sales momentum is real, and I'll close with information regarding an exciting addition we made to our team to institutionalize our sales process going forward. We are exceptionally proud of the team we have brought together. The latest illustration of this is our recent hire of Eric Brown as Vice President of Global Sales.

Speaker #5: We are also excited to start to see a transition of our pipeline from 100% proof of concept engagements to date, to 75% production engagements through 2026.

Josh Klaiman: And I'll make one final point on the pipeline to frame the rapid pace of momentum we are experiencing. Our Q2 bookings were greater than all bookings going to market before that, and our best estimate for Q3 is that bookings will be a multiple of the Q2 level, rather. You can see that the sales momentum is real, and I'll close with information regarding an exciting addition we made to our team to institutionalize our sales process going forward. We are exceptionally proud of the team we have brought together. The latest illustration of this is our recently hired Eric Brown as Vice President of Global Sales. Eric is a seasoned leader who joined us after over 23 years at Dell and seven years at AMD. I worked with Eric during my time at Dell, and we couldn't be more excited to have him on board.

Speaker #5: And I'll make one final point on the pipeline to frame the rapid pace of momentum we are experiencing. Our Q2 bookings were greater than all bookings going to market before that, and our best estimate for Q3 is that bookings will be a multiple of the Q3 level of the Q2 level, rather.

Speaker #5: You can see that the sales momentum is real, and I'll close with information regarding an exciting addition we made to our team to institutionalize our sales process going forward.

Speaker #5: We are exceptionally proud of the team we have brought together. The latest illustration of this is our recent hire, Eric Brown, as Vice President of Global Sales.

Josh Claman: Eric is a seasoned leader who joined us after over 23 years at Dell and 7 years at AMD. I worked with Eric during my time at Dell, and we couldn't be more excited to have him on board. Eric brings decades of experience managing multi-billion-dollar sales engines that will prove invaluable as Accelsius continues its exciting trajectory. Thanks again for having me on the call today, and I'll pass it back to Bill.

Speaker #5: Eric is a seasoned leader who joined us after over 23 years at Dell and seven years at AMD. I worked with Eric during my time at Dell, and we couldn't be more excited to have him on board.

Josh Klaiman: Eric brings decades of experience managing multi-billion dollar sales engines that will prove invaluable as Excelsius continues its exciting trajectory. Thanks again for having me on the call today, and I'll pass it back to Bill.

Speaker #5: Eric brings decades of experience managing multi-billion dollar sales engines through a proof invaluable as Excelsius continues its exciting trajectory. Thanks again for having me on the call today, and I'll pass it back to Bill.

Bill Haskell: Thanks, Josh. As we've said in previous quarters, the momentum at Accelsius is real and the excitement around the opportunity is palpable. We believe the company is equipped with a market-leading technology that positions it at the forefront of a seismic shift to two-phase direct-to-chip liquid cooling adoption. We also feel strongly that Accelsius's ability to attract top talent like Eric Brown is a testament to the work they are doing and how well-established the company has become in such a short period of time. Innventure is proud of the progress the company is making with major players in the data center ecosystem, and we believe the value of Accelsius and Innventure's operating model as a whole are markedly underappreciated by the Street.

Bill Haskell: Thanks, Josh. As we said in previous quarters, the momentum at Excelsius is real, and the excitement around the opportunity is palpable. We believe the company is equipped with a market-leading technology that positions it at the forefront of a seismic shift to two-phase directed chip liquid cooling adoption. We also feel strongly that Excelsius' ability to attract top talent like Eric Brown is a testament to the work they are doing and how well-established the company has become in such a short period of time. Innventure is proud of the progress the company is making with major players in the data center ecosystem, and we believe the value of Excelsius and Innventure's operating model as a whole is markedly underappreciated by the street.

Speaker #4: Thanks, Josh. As we said in previous quarters, the momentum at Excelsius is real, and the excitement around the opportunity is palpable. We believe the company is equipped with a market-leading technology that positions it at the forefront of a seismic shift to two-phase direct-to-chip liquid cooling adoption.

Speaker #4: We also feel strongly that Excelsius's ability to attract top talent like Eric Brown is a testament to the work they are doing and how well-established the company has become in such a short period of time.

Speaker #4: The venture is proud of the progress the company is making with major players in the data center ecosystem, and we believe the value of Excelsius and Inventure's operating model as a whole are markedly underappreciated by the street.

Bill Haskell: Given the breadth of the opportunity and the level of excitement at Excelsius, it's easy for the market to overlook what Innventure really is, which we believe would be a mistake. So before passing the call to Dave, I'd like to reiterate that Innventure is foundationally an engine to create market-changing companies like Excelsius. In the context of our conglomerate model, the success we've had to date is real, and the value creation is compelling. While we focus today's call on Excelsius, which we believe represents the most immediate value creation opportunity, Innventure has started three other companies that are doing incredibly exciting things in their own right and offer proof points of our ability to deliver value for shareholders. First is PureCycle, which Innventure founded from scratch in 2015 and took public in 2021. Today, PureCycle trades at a market cap of greater than $2.3 billion.

Bill Haskell: Given the breadth of the opportunity and the level of excitement at Accelsius, it's easy for the market to overlook what Innventure really is, which we believe would be a mistake. Before passing the call to Dave, I'd like to reiterate that Innventure is foundationally an engine to create market-changing companies like Accelsius. In the context of our conglomerate model, the success we've had to date is real, and the value creation is compelling. While we focus today's call on Accelsius, which we believe represents the most immediate value creation opportunity, Innventure has started three other companies that are doing incredibly exciting things in their own right and offer proof points of our ability to deliver value for shareholders. First is PureCycle, which Innventure founded from scratch in 2015 and took public in 2021.

Speaker #4: Given the breadth of the opportunity and the level of excitement at Excelsius, it's easy for the market to overlook what Inventure really is. Which we believe would be a mistake.

Speaker #4: So before passing the call to Dave, I'd like to reiterate that Inventure is foundationally an engine to create market-changing companies like Excelsius. In the context of our conglomerate model, the success we've had to date is real and the value creation is compelling.

Speaker #4: While we focus today's call on Excelsius, which we believe represents the most immediate value creation opportunity, Inventure has started three other companies that are doing incredibly exciting things in their own right, and offer proof points of our ability to deliver value for shareholders.

Speaker #4: For us, it's Pure Cycle, which Inventure founded from scratch in 2015 and took public in 2021. Today, Pure Cycle trades at a market cap of greater than $2.3 billion.

Bill Haskell: Today, PureCycle trades at a market cap of greater than $2.3 billion. While Innventure no longer holds an economic interest in the company, it offers a tangible proof point about the value creation opportunity offered by our model. Second is AeroFlexx, founded in February 2018 in collaboration with Procter & Gamble, which is gaining significant traction in the $400 billion packaging market. As of the end of Q2, the company achieved four consecutive quarters of revenue recognition, highlighting its growing customer base and unique ability to serve the sustainable packaging market. At the end of May, the company received critical guidance recognition for recyclability from the Association of Plastic Recyclers, or APR, for its proprietary mono-material AeroFlexx pack.

Bill Haskell: While Innventure no longer holds an economic interest in the company, it offers a tangible proof point about the value creation opportunity offered by our model. Second is Aeroflex, founded in February 2018 in collaboration with Procter & Gamble, which is gaining significant traction in the $400 billion packaging market. As of the end of the second quarter, the company achieved four consecutive quarters of revenue recognition, highlighting its growing customer base and unique ability to serve the sustainable packaging market. At the end of May, the company received critical guidance recognition for recyclability from the Association of Plastic Recyclers, or APR, for its proprietary monomaterial Aeroflex Pack. This recognition is one of the most widely accepted benchmarks for evaluating plastic packaging and provides independent validation and credibility that the Aeroflex Pack is designed for recyclability.

Speaker #4: While Inventure no longer holds an economic interest in the company, it offers a tangible proof point about the value creation opportunity offered by our model.

Speaker #4: Second is Aeroflex, founded in February 2018 in collaboration with Procter & Gamble. Which is gaining significant traction in the $400 billion packaging market. As of the end of the second quarter, the company achieved four consecutive quarters of revenue recognition, highlighting its growing customer base and unique ability to serve the sustainable packaging market.

Speaker #4: At the end of May, the company received critical guidance recognition for recyclability from the Association of Plastic Recyclers, or APR, for its proprietary monomaterial Aeroflex pack.

Bill Haskell: This recognition is one of the most widely accepted benchmarks for evaluating plastic packaging and provides independent validation and credibility that the AeroFlexx pack is designed for recyclability. This is a significant milestone and we believe a precursor to unlocking meaningful sales opportunities. We've successfully re-engaged with a handful of notable CPG companies that require APR approval, and we are experiencing increased engagement and a materially larger revenue opportunity. The company also took steps in Q2 to further strengthen its IP position and competitive advantage by adding new patents to its growing portfolio. At the beginning of June, the company was awarded two patents that present a plastic package suitable for curbside recycling, where all plastic bottles are accepted.

Speaker #4: This recognition is one of the most widely accepted benchmarks for evaluating plastic packaging and provides independent validation and credibility that the Aeroflex pack is designed for recyclability.

Bill Haskell: This is a significant milestone, and we believe a precursor to unlocking meaningful sales opportunities. We've successfully re-engaged with a handful of notable CPG companies that require APR approval, and we are experiencing increased engagement in a materially larger revenue opportunity. The company also took steps in the second quarter to further strengthen its IP position and competitive advantage by adding new patents to its growing portfolio. At the beginning of June, the company was awarded two patents that present a flexible plastic package suitable for curbside recycling, where all plastic bottles are accepted. The patents align with industry standards used to assess the compatibility of polyethylene-based films and flexible packaging innovations. This achievement demonstrates Aeroflex's unwavering commitment to providing a sustainable and differentiated liquid packaging solution to the marketplace. Third is Refinity, which we launched in December of 2024 in collaboration with Dow.

Speaker #4: This is a significant milestone, and we believe our precursor to unlocking meaningful sales opportunities. We've successfully re-engaged with a handful of notable CPG companies, that require APR approval, and we are experiencing increased engagement in the materially larger revenue opportunity.

Speaker #4: The company also took steps in the second quarter to further strengthen its IP position in competitive advantage by adding new patents to its growing portfolio.

Speaker #4: As I beginning of June, the company was awarded two patents that present a flexible package plastic package suitable for curbside recycling, where all plastic bottles are accepted.

Bill Haskell: The patents align with industry standards used to assess the compatibility of polyethylene-based films and flexible packaging innovations. This achievement demonstrates AeroFlexx's unwavering commitment to providing a sustainable and differentiated liquid packaging solution to the marketplace. Third is Refinity, which we launched in December 2024 in collaboration with Dow. During our earnings call earlier this year, we outlined three strategic initiatives for Refinity in 2025, and we are happy to report the company is executing against each of these three milestones. The first was engaging an engineering procurement and construction partner for the first plant design, which was completed during Q2. Second was to demonstrate viability of fluidized bed conversion of mixed plastic waste to liquid olefins at pilot scale within VTT's plant, which is on track with preliminary results leading to better quality and higher yield than originally modeled.

Speaker #4: The patents align with industry standards used to assess the compatibility of polyethylene-based films and flexible packaging innovations. This achievement demonstrates Aeroflex's unwavering commitment to providing a sustainable and differentiated liquid packaging solution to the marketplace.

Speaker #4: Third is Refinity, which we launched in December of 2024 in collaboration with Dow. During our earnings call earlier this year, we outlined three strategic initiatives for Refinity in 2025, and we are happy to report the company is executing against each of these three milestones.

Bill Haskell: During our earnings call earlier this year, we outlined three strategic initiatives for Refinity in 2025, and we are happy to report the company is executing against each of these three milestones. The first was engaging an engineering, procurement, and construction partner for the first plant design, which was completed during the second quarter. The second was to demonstrate viability of fluid bed conversion of mixed plastic waste to liquid olefins at pilot scale within VPT's plant, which is on track with preliminary results leading to better quality and higher yield than originally modeled. Finally, third was securing initial site selection and feedstock sourcing for the first plant, which we are on track to accomplish during 2025. As you can see, Innventure's operating model has produced tangible and compelling value creation opportunities over the last decade, and we believe we are just getting started.

Speaker #4: The first was engaging an engineering procurement and construction partner for the first plant design, which was completed during the second quarter. Second was to demonstrate viability of fluid bed conversion of mixed plastic waste to liquid olefins at pilot scale within VTT's plant.

Speaker #4: Which is on track with preliminary results leading to better quality and higher yield than originally modeled. Finally, third was securing initial site selection and feedstock sourcing for the first plant, which we are on track to accomplish during 2025.

Bill Haskell: Finally, third was securing initial site selection and feedstock sourcing for the first plant, which we are on track to accomplish during 2025. As you can see, Innventure's operating model has produced tangible and compelling value creation opportunities over the last decade, and we believe we are just getting started. We have a robust pipeline of high quality technology opportunities with several MNCs that could represent future Innventure operating companies. We'd remind everyone that we only launch companies that we believe can achieve at least $1 billion in enterprise value. The exciting progress across our current family of companies is real and observable evidence of Innventure's value creation engine at work, and we believe the future is extremely bright. With that, I'll turn the call over to David to cover our financials. David?

Speaker #4: As you can see, Inventure's operating model has produced tangible and compelling value creation opportunities over the last decade, and we believe we are just getting started.

Bill Haskell: We have a robust pipeline of high-quality technology opportunities with several MNCs that could represent future Innventure operating companies. We'd remind everyone that we only launch companies that we believe can achieve at least a $1 billion in enterprise value. The exciting progress across our current family of companies is real and observable evidence of Innventure's value creation engine at work, and we believe the future is extremely bright. With that, I'll turn the call over to Dave to cover our financials. Dave?

Speaker #4: We have a robust pipeline of high-quality technology opportunities with several MNCs, that could represent future Inventure operating companies. We'd remind everyone that we only launch companies that we believe can achieve at least a $1 billion in enterprise value.

Speaker #4: The exciting progress across our current family of companies is real and observable evidence of Inventure's value creation engine at work, and we believe the future is extremely bright.

Speaker #4: With that, I'll turn the call over to Dave to cover our financials. Dave?

David Yablunosky: Thanks, Bill, and good afternoon, everyone. Innventure's Q2 revenue was $0.5 million representing $0.3 million of revenue at Accelsius and $0.2 million of fees we collected from our management of the Innventure ESG fund. As with the prior quarter, the Q2 result was in line with our expectations and consistent with our view that we expect most sales orders, bookings, and early-stage revenue to be weighted to the H2 of the year. As Josh highlighted in his remarks, the size and rapid growth of the data center liquid cooling market is accelerating as the adoption of AI continues to proliferate the market. The company has positioned itself at the forefront of what we believe is an inevitable two-phase direct-to-chip liquid cooling adoption cycle with Accelsius's differentiated market-leading technology.

Dave Yablonowski: Thanks, Bill, and good afternoon, everyone. Innventure's second quarter revenue was $0.5 million, representing $0.3 million of revenue at Excelsius and $0.2 million of fees we collected from our management of the Inventus ESG Fund. As with the prior quarter, the second quarter result was in line with our expectations and consistent with our view that we expect most sales orders, bookings, and early-stage revenue to be weighted to the second half of the year. As Josh highlighted in his remarks, the size and rapid growth of the data center liquid cooling market is accelerating as the adoption of AI continues to proliferate the market. The company has positioned itself at the forefront of what we believe is an inevitable two-phase directed chip liquid cooling adoption cycle with Excelsius's differentiated market-leading technology. G&A expenses were approximately $18.6 million for the quarter, an improvement from $19.7 million in the prior quarter.

Speaker #6: Thanks, Bill, and good afternoon, everyone. Inventure's second quarter revenue was $0.5 million, representing $0.3 million of revenue from Excelsius and $0.2 million of fees we collected from our management of the Inventus ESG Fund.

Speaker #6: As with the prior quarter, the second quarter result was in line with our expectations and consistent with our view that we expect most sales orders, bookings, and early-stage revenue to be weighted to the second half of the year.

Speaker #6: As Josh highlighted in his remarks, the size and rapid growth of the data center liquid cooling market is accelerating as the adoption of AI continues to proliferate the market.

Speaker #6: The company is positioned itself at the forefront of what we believe is an inevitable two-phase direct-to-chip liquid cooling adoption cycle with Excelsius's differentiated market-leading technology.

David Yablunosky: G&A expenses were approximately $18.6 million for the quarter, an improvement from $19.7 million in the prior quarter. This number has four primary components: non-cash equity-based comp of approximately $9.4 million, accounting, audit, and legal professional service fees of approximately $4.4 million, $3.9 million for payroll expense, benefits, and other operating expenses, primarily driven by growth at Accelsius, and $0.9 million of non-cash amortization related to our intangible assets and equipment depreciation expense. It is important to point out we continue to use outside professional services to keep our long-term fixed costs and headcount low. We do, however, expect to bring in-house a large portion of this activity at an expected lower cost as we build our internal processes and capabilities that meet our public company compliance requirements.

Speaker #6: G&A expenses were approximately $18.6 million for the quarter, an improvement from $19.7 million in the prior quarter. This number has four primary components: non-cash equity-based compensation of approximately $9.4 million; accounting, audit, and legal professional service fees of approximately $4.4 million; and $3.9 million for payroll expenses, benefits, and other operating expenses, primarily driven by growth at Excelsius.

Dave Yablonowski: This number has four primary components: non-cash equity-based comp of approximately $9.4 million, accounting, audit, and legal professional service fees of approximately $4.4 million, $3.9 million for payroll expense, benefits, and other operating expenses, primarily driven by growth at Excelsius, and $0.9 million of non-cash amortization related to our intangible assets and equipment depreciation expense. It's important to point out we continue to use outside professional services to keep our long-term fixed cost and headcount low. We do, however, expect to bring in-house a large portion of this activity at an expected lower cost as we build our internal processes and capabilities that meet our public company compliance requirements. Moving down the income statement, we booked $113 million non-cash goodwill adjustment, driven by the write-down of goodwill on the balance sheet.

Speaker #6: And $0.9 million of non-cash amortization related to our intangible assets and equipment depreciation expense. It's important to point out that we continue to use outside professional services to keep our long-term fixed costs and headcount low.

Speaker #6: We do, however, expect to bring in-house a large portion of this activity at an expected lower cost, as we build our internal processes and capabilities that meet our public company compliance requirements.

David Yablunosky: Moving down the income statement, we booked a $113 million non-cash goodwill adjustment driven by the write-down of goodwill on the balance sheet. This was a result of a variety of macro factors that affected business investments in the quarter. Again, this was non-cash. In the non-operating section of the income statement, we booked a favorable non-cash adjustment of approximately $7.2 million related to the change in fair value of our warrant and earn-out liabilities. EBITDA for the quarter was a loss of approximately $135 million. After adjusting for certain items, adjusted EBITDA was a loss of $16.2 million, an improvement from a loss of $21.8 million in Q1. Moving to the balance sheet.

Speaker #6: Moving down the income statement, we booked $113 million non-cash goodwill adjustment, driven by the write-down of goodwill on the balance sheet. This was a result of a variety of macro factors that affected business investments in the quarter.

Dave Yablonowski: This was a result of a variety of macro factors that affected business investments in the quarter, but again, this was non-cash. In the non-operating section of the income statement, we booked a favorable non-cash adjustment of approximately $7.2 million related to the change in fair value of our warrants and earnout liabilities. EBITDA for the quarter was a loss of approximately $135 million. After adjusting for certain items, adjusted EBITDA was a loss of $16.2 million, an improvement from a loss of $21.8 million in the first quarter. Moving to the balance sheet. As previously disclosed, in the second quarter, pursuant to our securities purchase agreement with Yorkville Advisors, in two separate tranches, we issued convertible debentures for an aggregate amount of $30 million. In connection with these issuances, we received net proceeds of $18 million on April 14th and $9 million on May 15th.

Speaker #6: But again, this was non-cash. In the non-operating section of the income statement, we booked a favorable non-cash adjustment of approximately $7.2 million related to the change in fair value of our warrant and earn-out liabilities.

Speaker #6: EBITDA for the quarter was a loss of approximately $135 million. After adjusting for certain items, adjusted EBITDA was a loss of $16.2 million, an improvement from a loss of $21.8 million in the first quarter.

Speaker #6: Moving to the balance sheet, as previously disclosed, in the second quarter, pursuant to our securities purchase agreement with Yorkville Advisors, in two separate tranches, we issued convertible dividends for an aggregate amount of $30 million.

David Yablunosky: As previously disclosed, in the second quarter, pursuant to our securities purchase agreement with Yorkville Advisors, in 2 separate tranches, we issued convertible debentures for an aggregate amount of $30 million. In connection with these issuances, we received net proceeds of $18 million on 14 April and $9 million on 15 May. This added $27 million of cash to our balance sheet. Six point five million of related party and other term convertible notes was raised into Q2. These amounts are reflected in the increase in financing activities on our cash flow statement. These 2 actions illustrate our active management of cash and both improve our capital position. Other notable items on our balance sheet. We ended the quarter with $12 million of cash, restricted cash, and cash equivalents, up from $11.1 million at the end of last year. Inventory.

Speaker #6: In connection with these issuances, we received net proceeds of $18 million on April 14 and $9 million on May 15. This added $27 million of cash.

Dave Yablonowski: This added $27 million of cash to our balance sheet. Additionally, $6.5 million of related party and other term convertible notes was raised in the second quarter. These amounts are reflected in the increase in financing activities on our cash flow statement. These two actions illustrate our active management of cash and both improve our capital position. Other notable items on our balance sheet. We ended the quarter with $12 million of cash, restricted cash, and cash equivalents, up from $11.1 million at the end of last year. Inventory. As we take customer deposits and book new customer orders at Excelsius, inventory is beginning to grow. The second quarter ended with $6.6 million of inventory on hand, up from $5.2 million in the prior quarter. We're acting sensibly with our cash, optimizing the need to keep inventory on hand to meet customer orders while preserving cash on our balance sheet.

Speaker #6: To our balance sheet, additionally, $6.5 million of related party and other term convertible notes was raised into the second quarter. These amounts are reflected in the increase in financing activities on our cash flow statement.

Speaker #6: These two actions illustrate our active management of cash and both improve our capital position. Other notable items on our balance sheet: we ended the quarter with $12 million of cash, restricted cash, and cash equivalents.

Speaker #6: Up from $11.1 million at the end of last year, inventory is beginning to grow as we take customer deposits and book new customer orders at Excelsius.

David Yablunosky: As we take customer deposits and book new customer orders at Accelsius, inventory is beginning to grow. The second quarter ended with $6.6 million of inventory on hand, up from $5.2 million in the prior quarter. We're acting sensibly with our cash, optimizing the need to keep inventory on hand to meet customer orders while preserving cash on our balance sheet. Investments. The $32.4 million on our balance sheet represents our $22.9 million equity method investment in AeroFlexx. A $9 million investment in debt securities in AeroFlexx and our half a million equity investment in the ESG Fund. Intangible assets. This represents developed technology and other intangible assets at Accelsius. These assets amortize at different intervals, primarily over the next eight to 15 years. Onto the cash flow statement.

Speaker #6: The second quarter ended with $6.6 million of inventory on hand. Up from $5.2 million in the prior quarter. We're acting sensibly with our cash.

Speaker #6: Optimizing the need to keep inventory on hand to meet customer orders while preserving cash on our balance sheet. Investments, the $32.4 million on our balance sheet represents our $22.9 million equity method investment in Aeroflex.

Dave Yablonowski: Investments. The $32.4 million on our balance sheet represents our $22.9 million equity method investment in Aeroflex, a $9 million investment in debt securities in Aeroflex, and our half a million equity investment in the ESG Fund. Intangible assets. This represents developed technology and other intangible assets at Excelsius. These assets amortize at different intervals, primarily over the next 8 to 15 years. Onto the cash flow statement. In the cash from operating activity section, you can see many of the non-cash items I mentioned earlier. The cash used in investing activities primarily represents the funding given to Aeroflex through our existing facility comprised of debt securities. The cash provided by financing activity section includes the $27 million of cash raised through the issuance of the Yorkville convertible debentures, $6.5 million of related party and other term convertible notes.

Speaker #6: A $9 million investment in debt securities in Aeroflex. And our half a million equity investment in the ESG Fund. Intangible assets, this represents developed technology and other intangible assets at Excelsius.

Speaker #6: These assets amortize at different intervals, primarily over the next eight to fifteen years. On to the cash flow statement, in the cash from operating activity section, you can see many of the non-cash items I mentioned earlier.

David Yablunosky: In the cash from operating activities section, you can see many of the non-cash items I mentioned earlier. The cash used in investing activities primarily represents the funding given to AeroFlexx through our existing facility comprised of debt securities. The cash provided by financing activity section includes the $27 million of cash raised through the issuance of the Yorkville convertible debentures, $6.5 million of related party and other term convertible notes. It's important to say again, the Innventure team remains focused on additional capital raises at the Innventure and operating company level to meet our liquidity needs and fund what we believe are very attractive growth opportunities ahead of us, with a goal of creating substantial value for our shareholders. With that, we'll open up the call for questions.

Speaker #6: The cash used in investing activities primarily represents the funding, given to Aeroflex through our existing facility comprised of debt securities. The cash provided by financing activity section includes the $27 million of cash raised through the issuance of the Yorkville convertible dividends.

Speaker #6: Six and a half million of related party and other term convertible notes. It's important to say again, the Inventure team remains focused on additional capital raises at the Inventure and operating company level to meet our liquidity needs and fund what we believe are very attractive growth opportunities ahead of us, with a goal of creating substantial value for our shareholders.

Dave Yablonowski: It's important to say again, the Innventure team remains focused on additional capital raises at the Innventure and operating company level to meet our liquidity needs and fund what we believe are very attractive growth opportunities ahead of us, with the goal of creating substantial value for our shareholders. With that, we'll open up the call for questions.

Speaker #6: With that, we'll open up the call for questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Chip Moore from Roth Capital Partners. Your line is open.

Operator: Thank you. And as a reminder, to ask a question, you will need to press star one-one on your telephone and wait for a name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Chip Moore from Roth Capital Partners. Your line is open.

Speaker #2: Thank you. And as a reminder, to ask a question, you will need to press *11 on your telephone and wait for your turn to be announced.

Speaker #2: To withdraw your question, please press *11 again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Chip Moore from Roth Capital Partners.

Speaker #2: Your line is open.

Chip Moore: Hey, everybody. Thanks for taking the question. I wanted to ask, you know, your commentary, I guess, in the press release, you know, on looking for an inflection in revenue growth in H2, it seems like your visibility is growing there. I assume that's a function of traction at Accelsius, but maybe a little more color there. I think you talked about, you know, first orders with the OEM maybe starting to ramp, but any more color on your thoughts there?

Lucas Harper: Hey, everybody. Thanks for taking the question. I wanted to ask, you know, your commentary, I guess, in the press release, you know, it's on I'm looking for an inflection in revenue growth in the second half year. It seems like your visibility is growing there. I assume that's a function of traction at Excelsius, but maybe a little more color there. I think you talked about, you know, first orders with the OEM may be starting to ramp, but any more color on your thoughts there?

Speaker #7: Hey, everybody. Thanks for taking the question. I wanted to ask, you know, your commentary I guess in the press release, you know, on looking for an inflection in revenue growth in the second half here seems like your visibility is growing there.

Speaker #7: I assume that's a function of traction at Excelsius, but maybe a little more color there. I think you talked about, you know, first orders with the OEM maybe starting to ramp, but any more color on your thoughts there?

Bill Haskell: Hey, Chip, it's Bill. Good afternoon. Nice to touch base with you. There has been activity, and I'll let Josh amplify this in a moment. There certainly has been activity that's material. There's one thing that I would wanna share, which is there can often be a long lag between order and delivery, not because of manufacturing issues on our end, but because these systems are going into very complex environments and oftentimes customers will place orders in some cases two or three quarters in advance of when they actually want delivery. We're focusing on the bookings because I think that really will be the indicator of the growth in the business. I'm gonna flip it over to Josh now, and if he wants to amplify anything, he's welcome to.

Bill Haskell: You checked it, Bill. Good afternoon. Nice to catch up with you. So there has been activity, and I'll let Josh amplify this in a moment. There certainly has been activity. There's material. There's one thing that I would want to share, which is there can often be a long lag between order and delivery, not because of manufacturing issues on our end, but because these systems are going into very complex environments, and it oftentimes customers will place orders in some, some cases, two, three quarters in advance of when they actually want delivery. So we're focusing on the bookings because I think that really will be the the indicator of the growth in the business. But I'm going to flip it over to Josh now, and if he wants to amplify anything, he's welcome to.

Speaker #4: You chatted with Bill. Good afternoon. Nice to catch up with you. So, there has been activity, and all that Josh amplified in a moment.

Speaker #4: There certainly has been activity that's material. There's one thing that I would want to share, which is there can often be a long lag between order and delivery, not because of manufacturing issues on our end, but because these systems are going into very complex environments and oftentimes customers will place orders in some cases two, three quarters in advance of when they actually want delivery.

Speaker #4: So we're focusing on the bookings because I think that really will be the indicator of the growth in the business. But I'm going to flip it over to Josh now and if he wants to amplify anything, he's welcome to.

Josh Claman: Thanks, Bill. I think we're seeing a couple of things happen. One is that the bookings are coming in faster than they have, so we're seeing sort of an inflection point in that. I would like to remind everyone we've been in market for about 3.5 quarters, so we're new to sort of shipping product and selling product in market. I think the adoption cycle's happening about as quickly as we would expect it to. The other thing that I think you'll see a tick up in our bookings through the rest of 2025 and into 2026 is because the average order size is increasing as well.

Josh Klaiman: Yeah, thanks, Bill. Yeah, I think we're seeing a couple of things happen. One is that the bookings are coming in faster than they have, so we're seeing sort of an inflection point in that. I would like to remind everyone, we've been in market for about three and a half quarters, so we're new to sort of shipping product and selling product in market. And so I think the adoption cycle's happening about as quickly as we would expect it to. The other thing that I think you'll see a tick up in our bookings through the rest of '25 and into '26 is because the average order size is increasing as well. And this reflects a shift from what were purely really proof of concept orders for the first couple of quarters to production orders, which are kind of by their nature larger.

Speaker #5: That sounds good. Yeah, I think we're seeing a couple of things happen. One is that the bookings are coming in faster than they have.

Speaker #5: So we're seeing sort of an inflection point in that. I would like to remind everyone, we've been in market for about three and a half quarters.

Speaker #5: So, we're new to sort of shipping product and selling product in the market. And so, I think the adoption cycles happen in about as quickly as we would expect them to.

Speaker #5: The other thing that I think you'll see a tick up in our bookings through the rest of '25 and into '26 is because the average order size is increasing as well.

Josh Claman: This reflects a shift from what were purely really proof of concept orders for the first 2 quarters to production orders, which are kind of by their nature larger. I think we're seeing all the signs we would like to see at this point in terms of adoption of two-phase direct-to-chip cooling and all the signs that would evidence gaining traction for Accelsius in the market.

Speaker #5: And this reflects a shift from what we're purely really proof of concept orders for the first couple of quarters to production orders. Which are kind of by their nature larger so I think we're seeing all the signs we would like to see at this point in terms of adoption of two-phase direct-to-chip cooling.

Josh Klaiman: So I think we're seeing all the signs we would like to see at this point in terms of adoption of two-phase directed chip cooling and all the signs that would evidence gaining traction for Excelsius in the market.

Speaker #5: And all the signs that would evidence gaining traction on for Excelsius in the market.

Lucas Harper: Yeah, that makes great sense. Appreciate the color, Josh. And I guess to your point, I think you talked about, if I heard you correctly, you know, 75% production engagements next year, right? So it sounds like you've got visibility on some of those growing order sizes. Is that fair?

Chip Moore: Yeah. That makes great sense. Appreciate the color, Josh. I guess to your point, I think you talked about, you know, 75% production engagements next year, right? It sounds like you've got visibility on some of those growing order sizes. Is that fair?

Speaker #6: Yeah, that makes great sense. I appreciate the color, Josh. And I guess to your point, I think you talked about, if I heard you correctly, you know, 75% production engagements next year, right?

Speaker #6: So it sounds like you've got visibility on some of those growing order sizes. Is that fair?

Josh Claman: That's correct. A big portion of our pipeline for 2026, and we expected and I guess hoped that this would occur, are coming off of proof of concept orders that we had this year. I think that will continue for the next 2 to 3 quarters, that we'll deploy a proof of concept order because people want to see the technology work in their environment. They're doing that with intent. They're doing that because there is a larger production rollout happening after that. I think we're starting to see that pattern kind of coalesce, which we find encouraging.

Josh Klaiman: That's correct. And a big portion of our pipeline for 2026, and we expected and I guess hoped that this would occur, are coming off of proof of concept orders that we had this year. So, and I think that will continue for the next two to three quarters that we'll deploy a proof of concept order because people want to see the technology work in their environment. And, but they're doing that with intent. They're doing that because there is a larger production rollout happening after that. And I think we're starting to see that pattern kind of coalesce, which we find we find encouraging.

Speaker #5: That's correct. And a big portion of our pipeline for 2026, and we expected, and I guess hoped that this would occur, are coming off of proof of concept orders that we had this year.

Speaker #5: So, I think that will continue for the next two to three quarters, where we'll deploy a proof of concept order because people want to see the technology work in their environment.

Speaker #5: And, but they're doing that with intent. They're doing that because there was a larger production rollout happening after that. I think we're starting to see that pattern kind of coalesce, which we find encouraging.

Bill Haskell: You might talk, Dan, about the.

Bill Haskell: You might talk, Josh, also about.

Speaker #4: You might talk, and that's all about the.

Josh Claman: Yeah, go ahead, Bill.

Lucas Harper: Yeah, go ahead, Bill.

Bill Haskell: I'll just say around the selectivity of the POCs that we have delivered that have, you know, some sort of a multiplier.

Bill Haskell: Seed activity. I'm just saying around the selectivity of the POCs that we have delivered that have, you know, some sort of a multiplier.

Speaker #5: Yeah, go ahead, Bill.

Speaker #4: You'll see the activity. I just want to mention the selectivity of the POCs that we have delivered that have some sort of a multiplier.

Josh Claman: Yeah. I mean.

Josh Klaiman: Yeah, I mean, everything to.

Chip Moore: Yeah.

Speaker #5: Yeah, I mean, yeah, and I was going to, I'm sorry, you go ahead to.

Josh Claman: I'm sorry. You go ahead, please.

Lucas Harper: Yeah, and I was going to.

Josh Klaiman: I'm sorry, you go ahead, please.

Chip Moore: No, go ahead. Sorry, Josh.

Lucas Harper: No, go ahead. Sorry, Dan.

Speaker #4: No, go ahead. Sorry, Josh.

Josh Klaiman: Yeah, I was going to say just to Bill's point, to protect our bandwidth at Excelsius, really, we've been fairly particular about where we deploy equipment because we want to make sure that when we deploy it, it does have a multiplier effect. So when we deploy a proof of concept, it's really not for someone just to play around with the equipment and become familiar. It's really because they want to test the equipment because if it does what we say it's going to do, there's a project in front of it. And that is the sort of overwhelming pattern that we're seeing as we go to market.

Josh Claman: Yeah. I was gonna say just to Bill's point, to protect our bandwidth at Accelsius, really, we've been fairly particular about where we deploy equipment because we wanna make sure that when we deploy it does have a multiplier effect. When we deploy a proof of concept, it's really not for someone just to play around with the equipment and become familiar. It's really because they wanna test the equipment, because if it does what we say it's gonna do, there's a project in front of it. That is the sort of overwhelming pattern that we're seeing as we go to market.

Speaker #5: Yeah, I was going to say, just to Bill's point, to protect our bandwidth at Excelsius, really, we've been fairly particular about where we deploy equipment.

Speaker #5: Because we want to make sure that when we deploy it, it does have a multiplier effect. So, when we deploy a proof of concept, it's really not for someone just to play around with the equipment and become familiar.

Speaker #5: It's really because they want to test the equipment, because if it does what we say it's going to do, there's a project in front of it.

Speaker #5: And that is the sort of overwhelming pattern that we're seeing as we go to market.

Chip Moore: Very helpful. Maybe just a follow-up on that point. You know, your first hyperscaler proof of concept, that's obviously a big milestone, and I understand it'll be small initially, and they'll need to trial it for a period. Can you give us a sense of scale? I mean, we all know, you know, hyperscalers are large, but would they, you know, be looking to source for multiple areas or any indication of, you know, how big something like that could be if you're successful?

Lucas Harper: Very helpful. And maybe just a follow-up on that point. You know, your first hyperscaler proof of concept, that's obviously a, I think, milestone, and I understand it'll be small initially, and they'll need to trial it for a period. But can you give us a sense of scale? I mean, we all know, you know, hyperscalers are large, but would they, you know, be looking to source from multiple areas or any indication of, you know, how big something like that could be if you're successful?

Speaker #6: Very helpful. And maybe just a follow-up on that point. You know, your first hyperscaler proof of concept, that's obviously a big milestone and I understand it'll be small initially and they'll need to trial it for a period.

Speaker #6: But can you give us a sense of scale? I mean, we all know, you know, hyperscalers are large but what would they be looking to source for multiple areas or any indication of how big something like that could be if you're successful?

Josh Claman: I'll just say, as you would expect, it would be big. We have been given a phasing plan based on that proof of concept, that if it's successful, and we've been given some time frames, if it's successful, it'll lead to X amount of CDUs and sockets being cooled. I'd rather not get into the exact detail of that. I think the way this should be sort of interpreted is that the most sophisticated players in the market, and most of the hyperscalers have very sophisticated thermal architecture teams in their businesses, are starting to get very curious and starting to wanna play with two-phase technology, two-phase direct to chip, because they know it's gonna come.

Josh Klaiman: I would just say, as you would expect, it would be big. So we have been given a phasing plan based on that proof of concept that if it's successful, and we've been given some timeframes, if it's successful, it'll lead to X amount of CPUs and sockets being cooled. I'd rather not get into the exact detail of that. But I think the way this should be sort of interpreted is that the most sophisticated players in the market, and most of the hyperscalers have very sophisticated thermal architecture teams in their businesses, are starting to be very curious and starting to want to play with two-phase technology, two-phase directed chip because they know it's going to come.

Speaker #5: I would just say, as you would expect, it would be big. So, we have been given a phasing plan based on that proof of concept.

Speaker #5: That if it's successful, and we've been given some timeframes, if it's successful, will lead to X amount of CDUs and sockets being cooled. Other than not getting into the exact detail of that, I think the way this should be interpreted is that the most sophisticated players in the market, and most of the hyperscalers, have very sophisticated thermal architecture teams in their businesses.

Speaker #5: We are starting to get very curious and want to play with two-phase technology, two-phase direct-to-chip, because we know it's going to come. We’re seeing not just this initial hyperscaler, but we’re seeing others follow suit. We expect a couple of other placements in at least one or two other hyperscalers before the end of the year.

Josh Klaiman: And so we're seeing not just this initial hyperscaler, but we're seeing others follow suit, and we expect a couple of other placements in at least one or two other hyperscalers before the end of the year. So we're really excited about this, and I think that should be an interpretation. What we're seeing in the market generally is that the most sophisticated players are coming to us in a way because they're the ones that are kind of looking around the corner and saying, well, how long can we use single-phase water or these other cooling architectures with these increasing wattages, these TDPs of chips in the next generation and the following generation? And they're seeing that they're probably going to require two-phase directed chip going forward. So I think these are the early signs of that.

Josh Claman: We're seeing not just this initial hyperscaler, but we're seeing others follow suit, and we expect a couple other placements in at least one or two other hyperscalers before the end of the year. We're really excited about this, and I think that should be the interpretation. What we're seeing in the market generally is that the most sophisticated players are coming to us in a way because they're the ones that are kind of looking around the corner and saying, Well, how long can we use single-phase water or these other cooling architectures with these increasing wattages, these TDPs of chips in the next generation and the following generation? They're seeing that they're probably gonna require two-phase direct to chip going forward. I think these are the early signs of that.

Speaker #5: So we're really excited about this, and I think that should be an interpretation. What we're seeing in the market generally is that the most sophisticated players are coming to us in a way.

Speaker #5: Because they're the ones that are kind of looking around the corner and saying, well, how long can we use single-phase water or these other cooling architectures?

Speaker #5: With these increasing wattages, these TDPs of chips in the next generation and the following generation. And they're seeing that they're probably going to require two-phase direct-to-chip going forward.

Speaker #5: So I think these are the early signs of that.

Lucas Harper: Excellent.

Chip Moore: Excellent. Dave,

Bill Haskell: Yeah, and just to scale the total issue at a macro level, you know, the four top hyperscalers have published that they're spending about $350 billion this year on data centers and data center architecture and equipment, and which is, you know, roughly a billion dollars a day. And they've projected $400 billion for next year. So they're spending significant amounts of money in anticipation of the growing demand in the whole, you know, generative AI space.

Speaker #6: Excellent.

Bill Haskell: The scale.

Speaker #5: And at a macro level,

Chip Moore: Yeah, go ahead.

Bill Haskell: At a macro level, if, you know, the four top hyperscalers, they have published that they're spending about $350 billion this year on data centers and data center architecture and equipment, which is, you know, roughly $1 billion a day, and they've projected $400 billion for next year. They're spending significant amounts of money in anticipation of the growing demand in the whole, you know, generative AI space.

Speaker #4: You know, the four hyperscalers have published that they're spending about $350 billion this year on data centers and data center architecture and equipment.

Speaker #4: And which is, you know, roughly $1 billion a day. They've projected $400 billion for next year, so they're spending significant amounts of money in anticipation of the growing demand in the whole, you know, generative AI space.

Chip Moore: For sure. It seems like those numbers go up every quarter. Any more on the manufacturing side? You know, your comfort there, given, you know, what could come down the pipe, you know, on the contract manufacturing side. I think you talked about opening something up in the Bay Area. Just any more color there.

Lucas Harper: For sure. It seems like those numbers go up every quarter. And any more on the manufacturing side, you know, your comfort there given, you know, what could come down the pipe. You know, on the contract manufacturing side, I think you talked about opening something up in the Bay Area. It's just any more color there.

Speaker #5: For sure. It seems like those numbers go up every quarter. And any more on the manufacturing side, you know, your comfort there, given you know what could come down the pipe?

Speaker #5: You know, the contract manufacturing side, I think you talked about opening something up in the Bay Area. Is there any more color there?

Josh Klaiman: Yeah, sure. Sorry. Yeah, so our manufacturing strategy, which we've really been, we've talked about and set it up from the very beginning, even before we had a product in the market, has been that we will have a core manufacturing internally. And we've just signed a lease. In fact, we've just taken hold of an expanded facility here in Austin, about 30,000 square feet. About 27,000 of that is manufacturing. And that will service us. That could actually service the entire plan for next year. But we will subsidize that with contract manufacturing because, as Bill mentioned, I think earlier, some of these engagements are sort of binary. If we get traction in some of these engagements, they're going to be massively scaled. And for that, we will rely at least partially on contract manufacturing.

Josh Claman: Yeah, sure. Sorry. Our manufacturing strategy, which we've really been talking about and setting up from the very beginning, even before we had a product in the market, has been that we will have a core of manufacturing internally. We've just signed a lease. In fact, we've just taken hold of a expanded facility here in Austin, about 30,000 square feet. About 27,000 of that is manufacturing. That will service us. That could actually service the entire plan for next year. We will subsidize that with contract manufacturing because as Bill mentioned, I think earlier, some of these engagements are sort of binary. If we get traction in some of these engagements, they're gonna be massively scaled. For that, we will rely at least partially on contract manufacturing.

Speaker #6: Yeah, sure. Sorry. Yeah, so our manufacturing strategy, which we've really been talking about and setting up from the very beginning, even before we had a product in the market, has been that we will have core manufacturing internally.

Speaker #6: And we've just signed a lease. We've, in fact, we've just taken hold of an expanded facility here in Austin. About 30,000 square feet, about 27,000 of that is manufacturing.

Speaker #6: And that will service us. That could actually service the entire plan for next year. But we will subsidize that with contract manufacturing because, as Bill mentioned earlier, some of these engagements are sort of binary.

Speaker #6: If we get traction in some of these engagements, they're going to be massively scaled. For that, we will rely at least partially on contract manufacturing.

Josh Klaiman: But we will always keep, for every product, a core of manufacturing in-house because we think, one, we don't want anyone to have too much leverage over our business. And two, it's just a good quality way to scale manufacturing, to actually do our own analysis of tack times, of do our own analysis of refining our build materials for manufacturing, you know, designing for manufacturing. So we always, we just look at best-in-class examples of that, and we think that's a good path forward. So imagine a couple of years from now, we'll probably have 25, 30% of our manufacturing in-house and the remainder with contract manufacturers.

Josh Claman: We will always keep, for every product, a core of manufacturing in-house because we think, one, we don't want anyone to have too much leverage over our business. Two, it's just a good quality way to scale manufacturing, to actually do our own analysis of takt time, do our own analysis of refining our build materials for manufacturing, you know, designing for manufacturing. We always, we just look at best-in-class examples of that and we think that's a good path forward. Imagine a couple of years from now, we'll probably have 25%, 30% of our manufacturing in-house and the remainder with contract manufacturers.

Speaker #6: But we will always keep, for every product, a core of manufacturing in-house because we think, one, we don't want anyone to have too much leverage over our business.

Speaker #6: And, too, it's just a good quality way to scale manufacturing. We can actually do our own analysis of tack times, as well as refine our build materials for manufacturing and design for manufacturing.

Speaker #6: So we always look at best-in-class examples of that, and we think that's a good path forward. So, imagine a couple of years from now, we'll probably have 25% to 30% of our manufacturing in-house.

Speaker #6: And the remainder with contract manufacturers. Got Got it. It means I could speak one last one and maybe for Dave, just on the balance sheet, right?

Chip Moore: Got it. Got it. Maybe if I could sneak one last one in, and maybe for David Yablunosky, just on the balance sheet, right? Just your comfort, you know, sort of bridge this period here, you know, before some of the commercial traction really accelerates. Thanks.

Lucas Harper: Got it. And maybe I could sneak one last one in, maybe for Dave, just on the balance sheet, right? Just your comfort, you know, sort of bridge this period here, you know, before some of the commercial traction really accelerates. Thanks.

Speaker #6: Just for your comfort, you know, to sort of bridge this period here, you know, before some of the commercial traction really accelerates. Thanks.

Bill Haskell: You say bridge the period, you mean?

Bill Haskell: You say bridge the period, you mean from a capital logistics perspective?

Speaker #4: You say "bridge the period," you mean?

Lucas Harper: Yeah, just your comfort. Yeah, or just cash needs, right? How you're thinking about access to capital and things like that.

Chip Moore: Yeah, just cash needs, right? How you're thinking about access to capital and things like that.

Speaker #6: Yeah, just yeah, or just cash needs, right? How you're thinking about access to capital and things like that.

Bill Haskell: Yeah, I have a high degree of comfort in our access to capital and our ability to put cash on the balance sheet. I'm not concerned in the least.

Bill Haskell: Yeah. I have a high degree of comfort in our access to capital and our ability to put cash on the balance sheet. I'm not concerned in the least.

Speaker #4: Yeah, I have a high degree of comfort in our access to capital and our ability to book cash on the balance sheet. I'm not concerned in the least.

Chip Moore: Perfect. All right, thanks very much.

Lucas Harper: Perfect. All right. Thanks very much.

Speaker #6: Perfect. All right, thanks very much.

Operator: Thank you. As a reminder, that's star one one for questions. Our next question will come from the line of Aashi Shah from Sidoti. Your line is open.

Operator: Thank you. And as a reminder, that's star one-one for questions, star one-one. Our next question will come from the line of Ashi Alpesh from Sadodi. Your line is open.

Speaker #2: Thank you. As a reminder, that's *11 for questions. *11. Our next question will come from the line of Ashi. Alpesh from Sudhodi, your line is open.

Aashi Shah: Congratulations on the quarter, guys. I just have one more question relating to Accelsius, and I'm trying to understand the product. Can you explain how accurately does the thermal simulation rack replicate real world AI and HPC workloads? If you can just help us with understanding, like what is the feedback you're getting from the initial proof of concept deployments that you've done in the last quarter, and what's the market response been like?

Dave Yablonowski: Congratulations on the product, guys. I just have one more question relating to Excelsius, and I'm trying to understand the product. Can you explain how accurately does the thermal simulation replicate real-world AI and HPC workloads? And if you can just help us with understanding, like, what is the feedback you're getting from the initial proof of concept deployments that you've done in the last quarter? And what's the market response been like?

Speaker #8: Congratulations on the quarter, guys. I just have one more question relating to Excelsius. I'm trying to understand the product. Can you explain how accurately the thermal simulation replicates real-world AI and HPC workloads?

Speaker #8: And if you can just help us with understanding what is the feedback you're getting from the initial proof of concept deployments that you've done in the last quarter.

Speaker #8: And what's the market response been like?

Bill Haskell: Thanks. Thanks, Aashi. I'm gonna flip this one to Josh, but I think if you can maybe talk about kind of the product suite that we have and the simulated racks that can simulate things that don't exist yet and the implications of that would be helpful.

Bill Haskell: Thanks, Ashi. I'm going to flip this one to Josh, but I think if you can maybe talk about the kind of the product suite that we have and the simulated racks that can simulate things that don't exist yet, and the implications of that would be helpful.

Speaker #4: Thanks, Ashi. I'm going to flip this one to Josh, but I think if you can maybe talk about the kind of the product suite that we have and the simulated racks that can simulate things that don't exist yet.

Speaker #4: And the implications of that would be helpful.

Josh Claman: Sure. Absolutely. Thanks for the question. There's an issue with testing thermal loads in GPU servers, and that's primarily because GPU servers are extremely expensive. You know, a rack of IT used to maybe 3, 4 years ago, ancient history used to maybe cost $200,000 worth of servers to fill a rack within a data center. For GPU servers, it might cost $3 to 5 million. If you wanna test a thermal load, if you wanna make sure that the cooling architecture's cooling solution can cool that power density, without spending millions of dollars, you have to rely on some sort of load simulation device.

Josh Klaiman: Sure. Absolutely. Thanks for the question. So there's an issue with testing thermal loads with GPU servers, and that's primarily because GPU servers are extremely expensive. So, you know, a rack of IT used to, maybe three, four years ago, ancient history, used to maybe cost $200,000 worth of servers to fill a rack within a data center. But for GPU servers, it might cost $3 to $5 million. So if you want to test a thermal load, if you want to make sure that the cooling architecture's cooling solution can cool that power density without spending millions of dollars, you have to rely on some sort of load simulation device. And so what we've done is create what we call TTVs or thermal test vehicles, which look like a processor, essentially, same form factor, same sizing as a processor.

Speaker #5: Sure. Absolutely. Thanks for the question. So there's an issue with testing thermal loads with GPU servers, and that's primarily because GPU servers are extremely expensive.

Speaker #5: So you know, a rack of IT used to, maybe three, four years ago, ancient history, used to maybe cost $200,000 worth of servers to fill a rack within a data center.

Speaker #5: But for GPU servers, it might cost between $3 million to $5 million. So, if you want to test a thermal load, and if you want to make sure that the cooling architecture's cooling solution can handle that power density, without spending millions of dollars, you have to rely on some sort of load simulation device.

Josh Claman: What we've done is create what we call TTVs or thermal test vehicles, which look like a processor, essentially same form factor, same sizing as a processor. We put a few of these. In fact, in our latest load simulation sled, we have 6 of them, each of which can drive about 1,000 watts, so a kW each. Each load sled, which looks like a 1U server can produce the heat of a 6 kW server. You can fill a rack with those and test the solution, the cooling solution in what looks like over what looks like a sort of a GPU reference design for that rack at a fraction of the cost. By a fraction, I mean maybe one twentieth of the cost. We think this is gonna be useful.

Speaker #5: And so what we've done is create what we call TTVs, or Thermal Test Vehicles, which look like a processor, essentially. They have the same form factor and sizing as a processor.

Josh Klaiman: We put a few of these, in fact, in our latest load simulation sled, we have six of them, each of which can drive about 1,000 watts, so a kilowatt each. So each load sled, which looks like a 1U server, can produce the heat of a 6-kilowatt server. So you can fill a rack with those and test the solution, the cooling solution, in what looks like, over what looks like a sort of a GPU reference design for that rack at a fraction of the cost. By a fraction, I mean maybe 1/20 of the cost. So we think this is going to be useful. Now, we created, we developed these load simulation sleds and racks for our own product development purposes, for our own R&D. And then we productized them because we found there's a demand in the market for them.

Speaker #5: We put a few of these in fact, in our latest load simulation sled. We have six of them, each of which can drive about a thousand watts.

Speaker #5: So a kilowatt each. So each load sled, which looks like a 1U server, can produce the heat of a six kilowatt server. So you can fill a rack with those and test the solution, the cooling solution, in what looks like over what looks like a sort of a GPU reference design for that rack.

Speaker #5: At a fraction of the cost. By a fraction, I mean maybe 1/20th of the cost. So we think this is going to be useful.

Josh Claman: We created, we developed these load simulation sleds and racks for our own product development purposes, for our own R&D. We productized them because we found there's a demand in the market for them. This is gonna be, I don't know how large, it'll be a supplemental business for us, for commissioning data centers, for experimenting with different thermal loads in the real world. We are shipping these today and they have been well received. In terms of the proof of concepts that we have in the market, there is a desire to sift through some of the noise out there.

Speaker #5: Now we created and developed these load simulation sleds and racks for our own product development purposes, for our own R&D. Then we productized them because we found there was a demand in the market for them.

Josh Klaiman: So this is going to be, I don't know how large, but it'll be a supplemental business for us for commissioning data centers, for experimenting with different thermal loads in the real world. But we are shipping these today, and they have been well received. In terms of the proof of concepts that we have in the market, there is a desire to sift through some of the noise out there. Because it's a nascent market sector, there are a lot of companies that claim they can do things, they claim they can handle certain thermal capacities that they can't do. And I think it's the nature of every new market. So we've taken the approach that we want to be very data-driven.

Speaker #5: So this is going to be, I don't know how large; it'll be a supplemental business for us, or commissioning data centers for experimenting with different thermal loads in the real world.

Speaker #5: But we are shipping these today, and they have been well received. In terms of the proof of concepts that we have in the market, there is a desire to sift through some of the noise out there.

Josh Claman: Because it's a nascent market sector, there are a lot of companies that claim they can do things, they claim they can handle certain thermal capacities that they can't do. I think it's the nature of every new market. We've taken the approach that we wanna be very data-driven. We encourage people through our Kickstarter program to buy one of our racks to fill it sometimes with these load simulation sleds, sometimes with real servers, and test it and make sure that our product does what we say it's gonna do. Typically, the proof of concept is simply that. We like what you say your solution will do. We wanna see it actually work and perform the way you say it's gonna perform in the real world. As soon as it does that, we'll be ready to buy more.

Speaker #5: Because it's a nascent market sector, there are a lot of companies that claim they can do things. They claim they can handle certain thermal capacities.

Speaker #5: But they can't do it. And I think it's the nature of every new market. So we've taken the approach that we want to be very data-driven.

Josh Klaiman: We encourage people through our Kickstarter program to buy one of our racks, to fill it sometimes with these load simulation sleds, sometimes with real servers, and test it and make sure that our product does what we say it's going to do. And typically, the proof of concept is simply that. We like what you say your solution will do. We want to see it actually work and perform the way you say it's going to perform in the real world. And as soon as it does that, we'll be ready to buy more. So the initial feedback on these proof of concepts has been extremely positive thus far.

Speaker #5: We encourage people through our Kickstarter program to buy one of our racks to fill it, sometimes with these load simulation sleds, sometimes with real servers.

Speaker #5: And test it. And make sure that our product does what we say it's going to do. Typically, the proof of concept is simply that.

Speaker #5: We like what you say your solution is going to do. We want to see it actually work and perform the way you say it's going to perform in the real world.

Speaker #5: And as soon as it does that, we'll be ready to buy more. So the initial feedback on these proof of concepts has been extremely positive thus far.

Josh Claman: The initial feedback on these proof of concepts has been extremely positive thus far.

Bill Haskell: And it also allows them, Ashi, to look forward and project chips that are yet to be delivered in the marketplace, project how our technology will cool those chips, you know, a generation or two forward. So they can, you know, literally test chips that haven't been designed and expected to be much hotter than the ones that are on the market today that are being delivered.

Bill Haskell: It also allows them, Aashi, to look forward and project chips that are yet to be delivered in the marketplace, project how our technology will cool those chips, you know, a generation or two two forward. They can, you know, literally test chips that haven't been designed and projected to be much hotter than ones that are on the market today that are being delivered.

Speaker #4: And it also allows them, Ashi, to look forward and project shifts that are yet to be delivered in the marketplace. Project how our technology will cool those chips.

Speaker #4: You know, a generation or two forward. So they can literally test chips that haven't been designed and projected to be much hotter than the ones that are on the market today that are being delivered.

Aashi Shah: Great. Thank you so much. Thank you.

Dave Yablonowski: Great. Thank you so much. Thank you.

Speaker #8: Great. Thank you so much. Thank you.

Operator: Thank you. Once again, that's star one one for questions. One moment for any questions to populate. I'm currently not showing any further questions at this time. This will conclude the question and answer session for today. Thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.

Operator: Thank you. Once again, that's star one-one for questions, one-one for any questions to populate. And I'm currently not showing any further questions at this time. This will conclude the question and answer session for today. Thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.

Speaker #2: Thank you. Once again, that's *11 for questions. One moment for any questions to populate. And I'm currently not showing any further questions at this time.

Speaker #2: This will conclude the question and answer session for today. Thank you for your participation in today's conference. This concludes the program. You may now disconnect.