Q3 2025 Energy Vault Holdings Inc Earnings Call

Speaker #1: Greetings. Welcome to Energy earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, Vault's third quarter 2025 please press star zero on your telephone keypad.

Speaker #1: Please note this conference is being recorded. I will now turn the conference over to Michael Beer, Chief Financial Officer. Thank you, sir. You may begin.

Speaker #2: Thank you. Hello and welcome to Energy Vault's third quarter 2025 financial results conference call. As a reminder, Energy Vault's earnings press release and presentation are available now on our Investor website, which will be referring to during this call.

Speaker #2: This call is now being recorded. If you object in any way, please disconnect. A replay of this call will be available later today on the Investor Relations portion of our website.

Speaker #2: Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results.

Speaker #2: Due to a variety of factors, please refer to our most recent 10-K or 10-Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement.

Speaker #2: We undertake no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information.

Speaker #2: Please refer to the Safe Harbor disclaimer in non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Speaker #2: Joining me on this call today is Robert Piconi, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert.

Speaker #3: Great. Thank you, Michael. And good morning, evening, and afternoon to everybody that's joining this call. Our third quarter of 2025 was one of the most pivotal in Energy Vault's history.

Speaker #3: The quarter marked the formal launch of our Asset Vault platform, solid execution across our global project base, and the establishment of the financial foundation that will fuel our next phase of profitable growth.

Speaker #3: It was less than 18 months ago we outlined a bold strategy to execute a plan involving developing, building, owning, and operating energy storage assets over time, constructed at financially privileged or attractive points of grid interconnection to achieve top quartile investment returns.

Speaker #3: In that time, we have also built, commissioned, and now are operating for the first time the two initial projects in Texas and California. With the revenue included, and all the Q3 results, also for the first time, and while initially built using our balance sheet cash, we followed with two consecutive project financings closed in the last six months as we continue to put cash back on our balance sheet with now three consecutive quarters of growing cash.

Speaker #3: And as you will hear from Michael and saw in our Investor presentation, a large increase in cash also expected for our fourth and final quarter this year.

Speaker #3: You'll recall at our last earnings, we announced the framework of the new non-dilutive preferred equity platform to fund and put into operation an initial $1.5 gigawatt of energy storage IPP projects unleashing over $1.1 billion in capital.

As you saw, the contract backlog remains near 1 billion dollars for us to execute upon in the years to come, which is more than doubled.

from this time last year, in 2024,

The ram started as expected with 33 million, a substantial increase on both the year-over-year and sequential quarter basis.

And expecting an even larger job.

We also delivered strong unit economics with gross margins of 27% in the quarter. Bringing our year to date gross margins to almost 33%

We continue to find ways to optimize our Opex and be as efficient as we can as we push to a full year profitability.

And another good story on our cash creation. As we have every quarter this year, we can continue to grow our cash balance and return cash to the balance sheet through the project financing completed and with the first phase of the asset, Vault platform just coming online.

Nobody here that we are still expecting. Now, I know that 30 to 40 million in investment tax credits as well to return to our balance sheet. This quarter in Q4, hence the expected jump in our cash to 75 to 100 million range as we close a year setting ourselves up well for 2026.

And for us at energy volts or results, of course, Encompass more than just the financial side but also the results in the impact we strive to make, as a company reflecting, how we do our business and the sustainability of our solutions to enable prosperity for all humankind in a resilient way.

I'm very proud to share today that we have continued to advance our leadership in sustainability with S&P Global's latest release of their ESG scores.

Energy Vault continued along its Improvement, path every year placing again in the top 98th percentile.

Of all companies reviewed by Ed, simply gobble.

While critically maintaining its leadership as the number 1 company in the energy storage segment.

This speaks to the culture and the execution philosophy that we have as a company, which really comes down to our purpose of what we seek to fulfill and the impact we are making and will continue to make in our global communities.

I want to send out a special thanks to Edward Johnson and Michael Van parys, as well for their specific leadership within energy, Vault, to make this happen. But also their humility, which reflects our humility as an organization to realize that we have much more work to do here.

Thanks, Rob. Turning to Q3 2025 results on slides 3 and 4 in the just-attached presentation. Uh, we delivered Q3 revenue of $33.3 million compared to $1.2 million a year ago, representing a 27x increase year-over-year driven by strong execution on Australian projects and the initial contribution from the asset fault assets.

Q3 2525 Gap. Growth profit of 9 million improved, nearly 18 times versus the prior year driven by increased revenue and favorable business. Mix resulting in a Q3 2025 gross margin of 27% and 32.6% year to date.

Q3 adjusted operating expenses were 16.2 million flat quarter over quarter. But up modestly versus last quarter as ongoing cost reduction. Initiatives were generally offset by startup costs and development, expense related to asset Vault and growth in Australia.

Q3 adjusted ibida. Excluding stock-based compensation. And other 1-time items outlined on slide, 11 of the earnings presentation. Improved to a loss of $6 million, from a loss of 14.7 million in the. In the prior year ago, quarter driven by higher revenue and gross profit.

Regarding cash and project financing cash as of September 30th 2025 with 61.9 million up 7% sequentially and in line with our previous guidance.

The company completed a Securities purchase agreement for up to 75 million of which 30 million has been drawn today.

The quarter, we close the million dollar, preferred Equity agreement with OIC for the launch of the own and operate business called asset vault, which we'll discuss in a moment.

Along with the large sequential increase in revenue and customer receivables anticipated during the fourth quarter, we also expect to receive $40 million of investment tax credit proceeds, which we've committed to those projects now placed in service.

As it relates to the latest backlog in developed pipeline, as reflected on slide 5, the company currently maintains a revenue. Backlog of 900220 million up 112% year to date offset in part by the fifty million dollars in recognized Revenue this year, including the initial contribution from Callisto and cross Trails projects. Now included in asset vault.

The backlogging increased, reflecting new projects with consumers and energies. This includes a long-term service agreement with an existing customer and long-term offtake agreements in the U.S. and Australia.

As highlighted in the press release. The company also recently acquired the 150 megawatt, 300 megawatt hour, Sosa project in Texas as part of the asset ball portfolio entered in and entered into an agreement with EU green for a 400 megawatt Hour project in Albania subject, to final Albanian legislative approval. Both of which we expect to be included in backlog once finalized and key Milestones are completed.

Our total developed pipeline for advanced projects, third-party and those within asset bolt is around 2.1 billion dollars or roughly 8.7 gigawatt hours.

Turning to our business Outlook.

Reflecting on the reflecting, the timing of us, battery deliveries associated with Consumers Energy projects, and other project timelines in Australia, we are estimating full year 2025 revenue of $200 to $250 million, within the prior guidance range. We are estimating full year 2025 gross margin of between 14% and 16%, in line with our historical averages.

From a caching project financing perspective, we are estimating $75 million to $100 million in total cash at the end of this year. This amount is unchanged versus previous guidance.

We are now scaling up development activity and support services for asset vaults with both, Callisto resiliency Center and cross Trails. Now in service, we expect these assets to contribute annualized, adjusted Ava on a standalone basis of 10 million.

As Robin mentioned on October 29th, management held its second investor and analyst day to provide additional detail around the recently launched Asset Vault business. Energy Vault is a fully owned subsidiary focused on the global development, construction, ownership, and operation of energy storage assets.

We also discussed strategic growth plans as the company, leverages asset bolt to build and manage and expanding portfolio of contracted and operational storage projects.

That presentation and replay are available on our website.

With the backing of the $300 million, preferred Equity investment from OIC asset. Vault creates a vertically, integrated ecosystem that captures value across the entire energy storage life, cycle at platform, combines energy vaults, proven operational expertise with long-term asset ownership to generate predictable, recurring and high margin cash flows.

The launch of Assault Energy Vault is positioned to accelerate deployment of 1.5 gigawatts in attractive, priority markets and upper-tier IRR projects as part of Fund 1.

And that fund 1 is expected to contribute. Roughly, $40 million in recurring, adjusted Ava by year, end 2027 from the 4, Maiden projects, including the recently announced Sosa project and the Stony Creek project in Australia, both of which are in the process of commencing their respective project financing processes.

And to achieve 100 to 150 million in recurring, adjusted Ava by year. End 2029 from attractive projects yet to be disclosed across high growth markets in the US, Australia and Europe.

The project portfolio is prioritized with a clear monetization strategy supported by long-term off-take agreements with bankable partners and/or attractive merchant markets. We're currently expecting our merchant exposure to be around 25%.

Further by leveraging energy, Vault, existing EPC integration capabilities, as well as a host of other services. We provide today to our third party customers. We can unlock notable synergies across the business, including larger volume commitments with suppliers Etc. Adding incremental, cash flows and liquidity to the parent company case in point, as Robin mentioned. Assuming a mid teens average historical gross margin on a billion dollar plus of capex for internally developed projects, energy balls should generate additional cash flows. That more than cover the associated Equity investment.

With that, I'll hand it back over to Rob.

Thank you, Michael. Uh, I think we were going to open it up for some questions now.

Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2. If you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keys. We ask that you please limit to 1 question and 1. Follow-up question.

1 moment while we pull for questions.

Our first question is from null parks with 2 brothers. Please proceed.

Hi, uh, good afternoon. Um, you know, just, uh, um, hi, uh, 1 item, I noticed in the, um, in the p&l is it looks like, um, R&D expense actually, declines sequentially a bit. And, um, I was just curious if you had any updated thoughts on, you know, with some of the

Structure changes. Um, just what the, you know, how the expense lines might be affected as well, if there's more capitalization going on going forward or something.

Sure. Um, happy to take this 1. Uh, I would say it's a Confluence of a handful of things. As you know, we've been tightening the belt from a cost uh, perspective, uh, really over the last year. Uh, so so this is the uh, reflection of of some of those activities. Furthermore, you know, the company was in a different phase, uh, you know, following the IPO and in, around that time where we were investing heavily

R&D. And at this stage, we're looking to harvest uh the benefits of of some of those earlier Investments. And so a little less uh a little less Focus around R&D and and more around, um, certain activities such as asset bald and so forth.

Great. Thanks. And, um, I guess I'm thinking a little bit, uh, uh, bigger picture. Um,

As, uh, you know, we've had a fair amount of macro uncertainty in the quarter and in the months before that.

and um,

Uh, you know, things like the the shutdown certainly haven't improved the the clarity of um where many things in the marketplace are heading. So, um, I'm just wondering if, uh, sort of your, your pace of discussions on, on the customer acquisition is Dev side. Um, I just wondered if

You know, you could kind of characterize. Um,

Uh, customers feeling a sense of urgency and sort of pressing on, on a beta or, or whether there's been some, uh, you know, some more hesitation introduced and thinking, especially maybe if you're doing with utilities, um, at times. So uh, just wondered what that pace has been like since the summer

Yeah, thanks. No, it's Rob here. I'll comment, and then I'm sure Michael will want to add a comment or two as well.

look this year, for sure, if anything has been, uh, quite volatile and dynamic between the, the Tariff side of the equation, which obviously impacts a lot of the battery shipments that were coming from China and then, and then up to, and, including the most recent

Shutdown and and recent changes in ups and downs on tariffs. So we we've had to manage through that as have our customers and it's required uh a lot more turns with customers in terms of um the deal structures and trying to deal with it. So I think that that's definitely caused some delays. Um interestingly on the asset Vault side meaning on the origination of the deals are looking at attractive assets, it is a buyer's market. From what we see. I mean, we have opportunities getting thrown our way daily, um, looking at uh, sites that have uh, interconnects and and projects. So, I think from a, um,

From a, an asset Vault perspective. We're seeing a pretty target-rich environment and just obviously being careful on on the ones that, um, do make our list, we have a fairly formal and in-depth way that we evaluate these projects, um, but, but generally, I'd say, um, from a, a US market perspective. Um, you know, we have had a lot of stop and starts across

Off the board and I think noteworthy, we're we're holding our guidance. Um, I think we're 1 of a few, uh, companies in our space that are holding their guidance because of deliveries, that we have underway and and a lot to do next quarters, you know, but that's what I share with you Michael. Do you have any I think to add to that?

And some of these, some of these shocks. Um, you know, the other thing is just being agile over the last 5 years. Plus we've seen a 90% decline in, you know, in battery prices right at the cell level. Uh, and so I'm being able to participate in the most attractive parts of the value stack choosing to own and operate assets, rather than, uh, than simply being a third-party service provider as, as has set us up exceptionally well

Great. Thanks a lot.

Thanks, no.

As a reminder, it is star 1 on your telephone keypad. If you would like to ask a question,

Our next question is from Sid Rajiv with fundamental research Corp, please proceed.

Hi, just to confirm the current backlog. It does not include the recently announced projects in Albania, right? Also any plans to add these projects to asset walls in the future.

That's right. So the 920 million dollar backlog today, does not include either the Sousa project or the project that we did announce with EU green.

The Sousa project is part of asset vault.

And will contribute to uh, a lot of those uh, recurring ibida numbers, that we had that we had guided previously.

Okay. And those to be added to backlog. Yeah.

No to acid vault.

They'll be added to the backlog for the broader company, and it'll also be part of acetol. That's correct. Okay. Just 1 more, the development pipeline, sort of massive increase. Um, from 5.9 to 8.7 gig or an hour, 300 million added, what this project specifically were added to this

Um, we've not disclosed uh the specific projects, these are what we internally uh classify as stage 4 or Stage 5 opportunities, where we've either been shortlisted or awarded opportunities. And obviously as we curate, uh, the pipeline around asset Vault, there certainly are. Um, there's been some ins and outs and and that that is likely, um, reflected in that change.

Okay, thank you and congrats on the Q3 results.

As a reminder to Star 1 on your telephone keypad, if you would like to ask a question, we will just pause for a brief moment to see if there's any final questions.

With no further questions, I would like to turn the conference back over to Robert for closing remarks.

Thank you, operator. Um,

Look, I uh I'm happy to be uh, talking about this quarter. Now is a the last 6 days in particular have been quite transformational for us, in terms of executing on what we said, we were going to do, uh, in particular with getting the asset platform in place. I think that was significant but in addition

Uh, and not to lose sight of the execution capabilities of this company. Um, and keeping our eye on the ball, despite all of the various transactions that are going on around us, between the project financing and what it takes to get all the investment tax credits organized and administered. Um,

Just delivery of product around the world. I think the, the what's going on in Australia right now is 1 of our larger projects, which Australia represented, um, you know, more than half of our Revenue, this quarter and we'll continue to play a large part, I think, in the next quarter, um, getting there and delivering product, um, toward our first, what's called an R2, which in Australia is your first grid interconnected project that for us, is the Asen project. Um, there are a large customer a large partner of ours, uh, we're delivering

A few projects for them right now. And, uh, Q4 and into next year will play an important role in that for our future, um, and the growth in the Australia market.

I just want to thank all of our employees, first our, uh, days start and end with all of you, and thank you, everybody, for your focus and dedication through what remains uh, a pretty volatile time. A lot of things going on around us that we do not control.

Um, however, we do have to continue to plan for that as a company, and ensure we have all the levers available to us.

to ensure we can respond, react, and adapt as needed in the market while just staying focused on.

Infrastructure that's getting built out, and I'm excited about how those developments are going to proceed and impact our company as well.

I also want to thank um, our board of directors who uh, in the last quarter, all um, participated in in buying stock in the, in the company during the non-black out period, um, as well as some of the management and myself, um, hopefully it's not lost on you all the investors uh, who are listening in. But also the employees um, that you've got um, management buying in, you know, to the future of the company because our faith and confidence uh in the prospects. And again, that that really starts um, with the people of uh of energy Vault. So thanks to all of you and operator, thank you for your support today.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.