Q4 2025 SES AI Corp Earnings Call

March 4, 2026

Operator: Good afternoon. Thank you for attending today's SES AI Q4 and full year 2025 earnings results call. My name is Tamia, I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to your host, Kyle Pilkington, Chief Legal Officer.

Speaker #1: Good afternoon. Thank you for attending today's SES AI Fourth Quarter and Full Year 2025 Earnings Results call. My name is Tamia, and I will be your moderator for today's call.

Speaker #1: All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #1: I would now like to pass the conference over to your host, Kyle Pilkington, Chief Legal Officer.

Speaker #2: Hello, everyone, and welcome to our conference call covering our fourth quarter and full year 2025 results. Joining me today are Qichao Hu, founder and chief executive officer, and Jing Nealis, chief financial officer.

Kyle Pilkington: Hello, everyone, welcome to our conference call covering our Q4 and full year 2025 results. Joining me today are Qichao Hu, Founder and Chief Executive Officer, and Jing Nealis, Chief Financial Officer. We issued our shareholder letter just after 4:00AM today, which provides a business update as well as our financial results. You'll find a press release with a link to our shareholder letter in today's conference call webcast in the investor relations section of our website at ses.ai. Before we get started, this is a reminder that the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. These statements are based on our predictions and expectations as of today. Such statements involve certain risks, assumptions and uncertainties which may cause our actual or future results and performance to be materially different from those expressed or implied in these statements.

Speaker #2: We issued our shareholder letter just after 4:00 PM today, which provides a business update as well as our financial results. You'll find a press release with a link to our shareholder letter and today's conference call webcast in the Investor Relations section of our website, at sesai.

Speaker #2: Before we get started, this is a reminder that the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation.

Speaker #2: These statements are based on our predictions and expectations as of today. Such statements involve certain risks, assumptions, and uncertainties, which may cause our actual or future results and performance to be materially different from those expressed or implied in these statements.

Kyle Pilkington: These statements are based on our predictions and expectations as of today. Such statements involve certain risks, assumptions and uncertainties which may cause our actual or future results and performance to be materially different from those expressed or implied in these statements.

Speaker #2: The risks and uncertainties that could cause our results to differ materially from our current expectations include but are not limited to those detailed in our latest earnings release and in our SEC filings.

Kyle Pilkington: The risks and uncertainties that could cause our results to differ materially from our current expectations include, but are not limited to, those detailed in our latest earnings release and in our SEC filings. On this call, we are introducing non-GAAP financial measures as a supplement to our GAAP results. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful. These non-GAAP measures should not be considered in isolation or as a substitute for any GAAP measure, and our definitions may differ from those used by other companies reporting similarly titled measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our latest earnings release. With that, I'll pass it over to Qichao.

Speaker #2: On this call, we are introducing non-GAAP financial measures as a supplement to our GAAP results. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles but are intended to illustrate alternative measures of the company's operating performance that may be useful.

Speaker #2: These non-GAAP measures should not be considered in isolation or as a substitute for any GAAP measure, and our definitions may differ from those used by other companies reporting similarly titled measures.

Speaker #2: Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our latest earnings release. With that, I'll pass it over to Qichao.

Speaker #3: Thanks, Kyle. Thanks, everyone, for joining today. We had an exciting 2025 with full-year revenue of $21 million compared to a little over $2 million for 2024.

Qichao Hu: Thanks, Kyle. Thanks, everyone, for joining today. We had an exciting 2025 with full year revenue of $21 million compared to a little over $2 million for 2024. Jing will walk through our financials and the outlook shortly. This tremendous growth was due to the final contributions from our services agreements with Honda and Hyundai as we completed our EV development work with them. We also had three and a half months of revenue from the acquisition of UZ Energy for our energy storage ESS business. While we are pleased to report full year revenue in the range of our previously issued guidance, it's a milestone we reached and the year-over-year growth we are expecting from full year contributions in our three revenue generating business units and for recognizing potential value in the Molecular Universe that has us really excited.

Speaker #3: Jing will walk through our

Speaker #1: Financials and the outlook . Shortly . This tremendous growth was due to the final contributions from our services agreements with Honda and Hyundai .

Speaker #1: As we completed our EV development work with them . We also had three and a half months of revenue from the acquisition of US energy for our energy storage business While we are pleased to report full year revenue in the range of our previously issued guidance as a milestone , be reached and the year over year growth , we are expecting from full year contributions in our three revenue generating business units and for recognizing potential value in the molecular universe that has us real excited .

Speaker #1: I'm very proud that we made more progress in the past year than the previous ten plus years combined . This development of the molecular universe has sped things up for us .

Qichao Hu: I'm very proud that we made more progress in the past year than the previous 10-plus years combined. This development of the Molecular Universe has sped things up for us. SES continues to be well-positioned to solve the issues of battery development and safety requirements. With the Molecular Universe, our own in-house AI for science company, we have been able to help customers overcome standard timelines in the adoption of new technology. We also have a front seat to see how energy transition needs are requiring more integration of AI software and hardware, along with precise battery health monitoring. As we described before, SES has three revenue generating business units, ESS, drones, and materials. ESS, which is the largest market for batteries, is bigger than EVs and bigger than drones. At Battery World 2024, we announced our entry into the ESS market.

Speaker #1: SCS continues to be well positioned to solve the issues of battery development and safety requirements . With the molecular universe . Our own in-house AI for science company , we have been able to help customers overcome standard timelines in the adoption of new technology .

Speaker #1: We also have a front seat to see how energy transition needs are , requiring more integration of AI , software and hardware , along with precise battery health monitoring .

Speaker #1: As we described before , SCS has three revenue generating business units iOS , drones and materials . SS , the largest market for batteries , is bigger than EVs and bigger than drones and Battery World 2024 .

Speaker #1: We announced our entry into the U.S. market , and through our acquisition of energy , we are now serving customers across the globe from Australia to Europe to the Middle East .

Qichao Hu: Through our acquisition of UZ Energy, we are now serving customers across the globe, from Australia to Europe to the Middle East, and now we are entering the North American market. The ESS business is our largest near-term revenue driver. UZ Energy is a leader in commercial and industrial ESS and has sold almost a gigawatt-hours of hardware to customers ranging from residential, to C&I, to grid. We are now able to collect the large amount of historical ESS LFP graphite data, for all future UZ products, we plan to incorporate our Predict feature from Molecular Universe into a small box to achieve near zero drift state of charge, SOC degradation, health, safety, and other SoS algorithms and automated non-disruptive recalibration, which helps improve UZ's ability to predict battery health and reduce maintenance costs for customers. Energy storage systems are financial assets.

Speaker #1: And now we are entering the North American market The U.S. business is our largest near-term revenue driver use . The energy as a leader in commercial and industrial use , and has sold almost a gigawatt hours of hardware to customers ranging from residential to CNI to grid .

Speaker #1: We are now able to collect a large amount of historical SS , LFT , graphite data and then for all future use products , we plan to incorporate our predict future from molecular universe into a small box to achieve near zero drift .

Speaker #1: State of charge SOC degradation . Health , safety and other Sox algorithms and automated non-disruptive recalibration , which helps improve users ability to predict battery health and reduce maintenance costs for customers Energy storage systems are financial assets .

Speaker #1: The value to our customers depends on delivering consistent and long-term performance. Historically, we supplied only the hardware to customers, mostly PP and graphite.

Qichao Hu: The value to our customers depends on delivering consistent and long-term performance. Historically, UZ supplied only the hardware to customers, mostly LFP and graphite lithium-ion cells. Since we acquired UZ, SES has the opportunity to provide an operating system to the hardware and sell customers a complete package to meet their ESS needs. We're seeing some early traction with UZ sales efforts. As they were able to sign a multi-year $20 million contract with a major distributor recently at the Intersolar Conference. Drones are the next business unit I want to highlight. The drones market requires high energy density and high power density batteries to achieve longer flight time and greater payload. This is where our lithium metal and high silicon carbon lithium-ion batteries really shine.

Speaker #1: Lithium ion cells Now , since we acquired us , SCS has the opportunity to provide an operating system to the hardware and sell customers a complete package to meet their USS needs We are seeing some early traction with these sales efforts as they were able to sign a multi-year , $20 million contract with a major distributor recently .

Speaker #1: At the Intersolar conference Drones are the next business unit I want to highlight the drones market requires high energy density and high power density batteries to achieve longer flight time and greater payload .

Speaker #1: This is where our lithium metal and high silicon carbon lithium ion batteries really shine . The US defense Drones market in particular , is what we see the most consequential near-term opportunity and where we are devoting most of our attention and investment is worth spending a moment on why the drone market is a natural fit for deploying our lithium metal anodes and proprietary electrolyte .

Qichao Hu: The US defense drones market in particular, is where we see the most consequential near-term opportunity and where we are devoting most of our attention and investment. It is worth spending a moment on why the drone market is a natural fit for deploying our lithium metal anodes and proprietary electrolytes. One, a drone battery needs double the energy density of conventional lithium-ion. Ultimately, you need at least 400 W/kg to be state-of-the-art and a realistic roadmap to 500 W/kg to win. In other words, range and payload matter. Drone batteries need a high C-rate and power for the drone to maneuver and accelerate. We have solved for this. Third, drone batteries need to be manufactured at scale. We have demonstrated this in our EV B-sample developments.

Speaker #1: Won a drone battery needs double the energy density of conventional lithium ion Ultimately , you need at least 400W/kg to be state of the art and a realistic roadmap to a 500 to win .

Speaker #1: In other words , range and payload matter . Gun batteries need a high C rate and power for the drone to maneuver and accelerate .

Speaker #1: We saw for this third drone batteries need to be manufactured at scale . We've done this in our Evb sample development . Fourth , drone batteries need abundant and inexpensive materials , and the military demands that the supply chain to be national Defense Authorization Act , or NDAA compliant .

Qichao Hu: Fourth, drone batteries need abundant and inexpensive materials. The military demands that the supply chain to be National Defense Authorization Act, or NDAA compliant. We recently announced we expect to convert our EV B-sample line in Chungju, South Korea facility to manufacture NDAA-compliant cells for drones. This is the same facility that we've developed and built the world's first 100 amp-hour largest lithium metal cell back in 2021. This facility has been NDAA-compliant since 2021. To meet the drone demand, we plan to convert our lines from EV pouch 100 amp-hour cells to 10 amp-hour pouch cells. In this line, we're also planning to deploy our AI for safety and AI for manufacturing to ensure quality and cost effectiveness.

Speaker #1: We recently announced we expect to convert power Evb sample line in Chungju , South Korea . Facility to manufacture NDA compliant cells for drones .

Speaker #1: This is the same facility that we developed and built The world's first 100 power largest lithium metal cell back in 2021 . And this facility has been NDA compliant since 2021 .

Speaker #1: To meet the drone demand , we plan to convert our lines from . EV 100 power cells to ten powered cells . In this line .

Speaker #1: We're also planning to deploy our AI for and AI for manufacturing to ensure quality and cost effectiveness . In addition to our career facility , we also exploring even larger NDA compliant and more versatile cell form factor manufacturing capacities in Southeast Asia .

Qichao Hu: In addition to our Korea facility, we're also exploring even larger NDAA compliant and more versatile cell form factor manufacturing capacities in Southeast Asia. We'll have more to update on our NDAA compliant manufacturing capacity and locations later this year. Our third revenue-generating business unit is materials. Both SES and our Molecular Universe users have also been discovering new electrolyte materials for other applications that we don't build cells for currently. Last fall, we announced a JV with Hycen to leverage their 150,000 tons annual global capacity to produce these materials at a commercial scale to supply to other battery manufacturers for consumer electronics and ESS. At this time, we are anticipating that the Hycen JV will only produce materials for Molecular Universe discoveries. Through the Molecular Universe, we discovered 6 breakthroughs that are currently being tested by over 40 customers.

Speaker #1: We'll have more to update on our NDA compliant manufacturing capacity and locations later this year Our third revenue generating business unit is Materials .

Speaker #1: Both CES and our multiple universe users have also been discovering new electrical materials for other applications that we don't build cells for . Currently Last fall , we announced a JV with Hizon to leverage their 150 thousand ton annual global capacity to produce these materials at a commercial scale to supply to other battery manufacturers for consumer electronics .

Speaker #1: And yes, at this time, we are anticipating that the JV will only produce materials for molecular discoveries through the molecular universe.

Qichao Hu: At this time, we are anticipating that the Hycen JV will only produce materials for Molecular Universe discoveries. Through the Molecular Universe, we discovered 6 breakthroughs that are currently being tested by over 40 customers.

Speaker #1: We discover six breakthroughs that are currently being tested by over 40 customers . These breakthroughs , which will be the basis of the revenue we expect this business in 2026 , include one better Cyclized in stores for easy applications to better Cyclized and power density for drones .

Qichao Hu: These breakthroughs, which will be the basis of the revenue we expect from this business in 2026, include: 1, better cyclize and storage for EV applications. 2, better cyclize and power density for drones. 3, better low-temperature cyclize and power density for heavy-duty trucking. 4, better cyclize and longer life for consumer electronics. 5th, better cyclize and low-temperature performance for ESS and EVs. 6th, better cyclize and storage for consumer electronics. We also have a pipeline of new breakthroughs that are being tested by customers, which we expect will provide further potential revenue for this business. Now, last but not least, is what we have been referring to as our own AI for science company. That is, of course, Molecular Universe. I want to be clear on how we view the MU's role in this company.

Speaker #1: Three better low temperature cycle life and power density for heavy duty trucking or better cyclized and longer life for consumer electronics . Fifth , better class and low temperature performance for S and EVs and six Cyclized in storage for consumer electronics .

Speaker #1: We also have a pipeline of new breakthroughs that are being tested by customers, which we expect will provide further potential revenue for this business. Now, last but not least, is what we have been referring to as our own AI for science company.

Speaker #1: That is , of course , molecular universe . I want to be clear on how we view the end user role in this company While its SaaS revenue continues to build momentum and is expected to make a small contribution in 2026 , its biggest contribution is the inherent value of this business on its own .

Qichao Hu: While its SaaS revenue continues to build momentum and is expected to make a small contribution in 2026, its biggest contribution is the inherent value of this business on its own and the IP that drives competitive advantage in the ESS, drone, and materials business. Molecular Universe has the potential to become a modern-day encyclopedia, with battery being its volume one. It provides extremely valuable scientific data and intuition to AI for science models. Over the course of the year, we will continue to explore how we can best demonstrate or unlock MU's value. In terms of demonstrating that value, I will point to our recent investor presentation. In that presentation, we noted there are several AI for science companies that are either pre-revenue or have less revenue than the MU, that have already passed valuations exceeding $1 billion through private capital raises.

Speaker #1: And the IP that drives competitive advantage in the U.S. drone and materials business. Molecular universe has the potential to become a modern-day encyclopedia, with battery being its volume one.

Speaker #1: It provides extremely valuable scientific data and intuition to AI for science models . Over the course of the year , we will continue to explore how we can best demonstrate or unlock and use value in terms of demonstrating that value .

Speaker #1: I will point to our recent investor presentation in that presentation , we noted there are several AI for science companies that are either pre-revenue or have less revenue than the Mu that have already passed valuations exceeding $1 billion through private capital raises .

Speaker #1: These are the closest comps to the molecular universe . So we are keeping an eye on how well these transactions have performed . So we're really excited about the long term value of molecular universe as a platform , not just for batteries , but all science as well as the near-term revenue growth from drones , materials and SS operating systems .

Qichao Hu: These are the closest comps to the Molecular Universe, so we are keeping an eye on how well these transactions have performed. We're really excited about the long-term value of Molecular Universe as a platform, not just for batteries, but all science, as well as the near-term revenue growth from drones, materials, and ESS operating systems. Our priorities for 2026 and beyond are: one, leverage the new business unit leadership and structure to execute on the ESS and drone cell opportunities ahead of us. We've brought on industry veterans to lead these efforts as well as hardware and software integration itself. Second, execute on the conversion of our NDAA-compliant line in Korea from EV cells to drone cells and line up additional capacity in Southeast Asia that is also NDAA compliant.

Speaker #1: Our priorities for 2026 and beyond are one . Leverage the new business unit leadership and structure to execute on the USS and drone cell opportunities ahead of us .

Speaker #1: We've brought on industry veterans to lead these efforts , as well as hardware and software integration . Still , second , execute on the conversion of our NDA compliant line in Korea from EV sales to drone sales and line up additional capacity in Southeast Asia .

Speaker #1: That is also NDA compliant . Third continued the growth of USD energies , existing hardware business in Australia , Middle East and Europe , and begin expansion into the US both deliver on existing novel electrolytes , discover biomolecular universe in the materials business and expand our pipeline .

Qichao Hu: Third, continue the growth of UZ Energy's existing hardware business in Australia, Middle East, and Europe, and begin expansion into the US. Fourth, deliver on existing novel electrolytes discovered by the Molecular Universe in the materials business and expand our pipeline. Fifth, leverage MU's material discovery capabilities to accelerate new product development. Sixth, continue to focus on our CapEx-light business model in ESS cells and materials to offset the projected R&D spend in the Molecular Universe. Before I turn it over to June, I want to express my gratitude for our teams who are working super hard to make all of this happen. Thanks to all of you for being on this journey with us. Now here's June for financial updates.

Speaker #1: Fifth, leverage Muse material discovery capabilities to accelerate new product development, and continue to focus on our CapEx-light business model in the U.S.

Speaker #1: cells and materials to offset the projected R&D spend in the molecular universe . Before I turn it over to Jim , I want to express my gratitude for our teams who are working super hard make all of this happen .

Speaker #1: And thanks to all of you for being on this journey with us . And now here's Jim for financial updates

Speaker #2: Thank you I will discuss our financial performance for the fourth quarter and full year of 2025 . And provide context on how we're deploying our capital to support FCS AI's long term growth and the strategies outlined earlier Revenue for the fourth quarter of 2025 was 4.6 million , representing a 2.6 million , or 124% increase year over year .

Jing Nealis: Thank you. I will discuss our financial performance for Q4 and full year of 2025 and provide context on how we're deploying our capital to support SES AI's long-term growth and the strategies Qichao outlined earlier. Revenue for Q4 2025 was $4.6 million, representing a $2.6 million or 124% increase year-over-year. Full year revenue came in at $21 million, in line with our guidance, but impacted primarily by logistics constraints that delayed shipments at the end of the year, resulting in approximately $1.5 million of revenue being pushed out to Q1 2026.

Speaker #2: Full year revenue came in at 21 million , in line with our guidance , but impacted primarily by logistics constraints that delayed shipments at the end of the year , resulting in approximately 1.5 million of revenue being pushed out to the first quarter of 2026 .

Speaker #2: As noted earlier , revenue for full year 2025 was within our previously issued guidance range of 20 million to 25 million and was up nearly ten fold from the prior year , a year in which we first achieved revenue generation Our Q4 gross margin on a GAAP basis was 11.3% , driven by the higher mix of SS product sales in the quarter , which carries a lower margin profile relative to our service revenue .

Jing Nealis: As Qichao noted earlier, revenue for full year 2025 was within our previously issued guidance range of $20 million to $25 million and was up nearly tenfold from the prior year, a year in which we first achieved revenue generation. Our Q4 growth margin on a GAAP basis was 11.3%, driven by the higher mix of ESS product sales in the quarter, which carries a lower margin profile relative to our service revenue. On a non-GAAP basis, which excludes stock-based compensation as well as depreciation and amortization allocated to positive revenue, our Q4 non-GAAP growth margin was 11.7%. For full year 2025, our GAAP and non-GAAP growth margin was 53.8% and 55.7%, respectively. As we have noted previously, we expect growth margin to vary from quarter to quarter as our revenue mix across products, SaaS, and services evolve.

Speaker #2: On a non-GAAP basis , which excludes stock based compensation as well as depreciation and amortization allocated to cost of revenue , our Q4 non-GAAP gross margin was 11.7% for full year 2025 .

Speaker #2: Our GAAP and non-GAAP gross margin was 53.8% and 55.7% , respectively As we have noted previously , we expect gross margin to vary from quarter to quarter as our revenue mix across products , SaaS and services evolves We expect the gross margins on our product revenue to improve as we scale , volume and optimize the cost structure through our CapEx light business model and JV partnerships Turning to operating expenses Our GAAP operating expenses for the fourth quarter of 2025 were 18.2 million , compared to 30.4 million for the same period prior year , a 40% decrease year over year .

Jing Nealis: We expect the growth margins on our product revenue to improve as we scale volume and optimize the cost structure through our CapEx light business model and JV partnerships. Turning to operating expenses. Our GAAP operating expenses for Q4 2025 were $18.2 million, compared to $30.4 million for the same period prior year, a 40% decrease year-over-year. On a non-GAAP basis, which excludes stock-based compensation as well as depreciation and amortization, Q4 operating expenses were $13.5 million, compared to $24.2 million for the same period prior year, a 44% decrease. For full year 2025, our GAAP operating expenses were $93.9 million, compared to $110.5 million in 2024, a 15% decrease.

Speaker #2: On a non-GAAP basis , which excludes stock based compensation as well as depreciation and amortization . Fourth quarter operating expenses were 13.5 million , compared to 24.2 million for the same period prior year , a 44% decrease .

Speaker #2: For full year 2025 , our GAAP operating expenses were 93.9 million , compared to 110.5 million in 2020 . For a 15% decrease .

Speaker #2: On a non-GAAP basis , full year operating expenses were 73 million versus 82.3 million in 2020 . Four , a 11% decrease . The year over year improvement in operating expenses on both GAAP and non-GAAP basis reflects the progress we have made in optimizing our cost structure while continuing to invest strategically in molecular universe platform and our commercial growth initiatives .

Jing Nealis: On a non-GAAP basis, full year operating expenses were $73 million versus $82.3 million in 2024, an 11% decrease. The year-over-year improvement in operating expenses on both GAAP and non-GAAP basis reflects the progress we have made in optimizing our cost structure while continuing to invest strategically in Molecular Universe platform and our commercial growth initiatives. Adjusted EBITDA for the Q4 of 2025 was a loss of $13.8 million, compared to a loss of $23.2 million in the Q4 of 2024, representing a 40% improvement. For the full year of 2025, adjusted EBITDA was a loss of $62.6 million, compared to a loss of $81.5 million in the full year of 2024, a 23% improvement year-over-year.

Speaker #2: Adjusted EBITDA for the fourth quarter of 2025 was a loss of 13.8 million , compared to a loss of 23.2 million in the fourth quarter of 2020 .

Speaker #2: For representing a 40% improvement for the full year 2025 , adjusted EBITDA was a loss of 62.6 million compared to a loss of 81.5 million in the full year 2020 .

Speaker #2: For a 23% improvement year over year . We believe this growth reflects the positive operating leverage beginning to emerge in our business as revenue scales , as well as our sustained focus on financial discipline and cost management across the organization Our GAAP net loss for the fourth quarter was 17 million , or $0.05 loss per share , excluding stock based compensation , depreciation and amortization Changes in fair value of sponsor Earnout liabilities and including interest income are non-GAAP net loss for the fourth quarter was 11.8 million , or $0.04 loss per share This is an improvement over 2024 .

Jing Nealis: We believe this growth reflects the positive operating leverage beginning to emerge in our business as revenue scales as well as our sustained focus on financial discipline and cost management across the organization. Our GAAP net loss for Q4 was $17 million or $0.05 loss per share. Excluding stock-based compensation, depreciation and amortization, changes in fair value of sponsor earnout liabilities, and including interest income, our non-GAAP net loss for Q4 was $11.8 million or $0.04 loss per share. This is a improvement over 2024 Q4's GAAP net loss of $34.5 million or $0.11 loss per share, and non-GAAP net loss of $19.9 million or $0.06 loss per share.

Speaker #2: Fourth quarter net loss of 34.5 million , or $0.11 loss per share and non-GAAP net loss of 19.9 million , or $0.06 loss per share for the full year 2025 .

Jing Nealis: For the full year 2025, our GAAP net loss was $73 million or $0.22 loss per share, compared to a GAAP net loss of $100.2 million or $0.31 loss per share in 2024. On a non-GAAP basis, full year net loss was $53.2 million, or $0.16 loss per share, compared to a net loss of $66.4 million, or $0.21 loss per share in 2024. The year-over-year improvement on both GAAP and non-GAAP basis reflects the progress we're making in scaling revenue and managing our cost structure as we advance customer engagements, develop the Molecular Universe platform, and position the business for growth in 2026. A detailed reconciliation of GAAP net loss to Adjusted EBITDA and non-GAAP net loss per share is included in the financial tables at the end of the shareholder letter.

Speaker #2: Our GAAP net loss was 73 million , or $0.22 loss per share , compared to a GAAP net loss of 100.2 million , or $0.31 loss per share , in 2020 .

Speaker #2: For . On a non-GAAP basis , full year net loss was 53.2 million , or $0.16 loss per share , compared to a net loss of 66.4 million , or $0.21 loss per share , in 2020 .

Speaker #2: For the year over year improvement on both GAAP and non-GAAP basis reflects the progress we are making in scaling revenue and managing our cost structure as we advance customer engagement , develop the molecular universe platform , and position the business for growth in 2026 .

Speaker #2: A detailed reconciliation of GAAP net loss to adjusted EBITDA and non-GAAP net loss per share is included in the financial tables at the end of the shareholder letter .

Speaker #2: I want to highlight that our GAAP net loss in any given quarter can be meaningfully impacted by non-cash mark-to-market movements in the fair value of our sponsor and earnout liabilities, which are required to be remeasured each reporting period under GAAP.

Jing Nealis: I want to highlight that our GAAP net loss in any given quarter can be meaningfully impacted by non-cash mark-to-market movements in the fair value of our sponsor earnout liabilities, which are required to be remeasured each reporting period under GAAP. We believe excluding them provides a clearer picture of the progress we're making in the business. This is one of the reasons we're introducing adjusted EBITDA beginning this quarter. We utilized $10.4 million in cash for operations during Q4 and $58.4 million for the full year 2025. We deployed $3.3 million on the UV acquisition, $2.9 million on CapEx, and returned $1.6 million to shareholders through share repurchases during 2025.

Speaker #2: These non-cash gains or losses are not reflective of our underlying operating performance , and we believe excluding them provides a clearer picture of the progress we are making in the business .

Speaker #2: This is one of the reasons we're Adjusted EBITDA beginning this quarter We utilized $10.4 million in cash for operations during the and $58.4 million for the full year 2025 .

Speaker #2: We deployed $3.3 million on the used acquisition and 2.9 million on CapEx , and returned 1.6 million to shareholders through share repurchases during 2025 .

Speaker #2: This improvement in cash utilization is consistent with the adjusted EBITDA progress I noted earlier . And reflects the financial discipline we have maintained as we scale the business we exited 2025 with a strong liquidity position of 200 million coming in at the top end of our previously communicated expectation of ending the year between 195 million and 200 million .

Jing Nealis: This improvement in cash utilization is consistent with the Adjusted EBITDA progress I noted earlier and reflects the financial discipline we have maintained as we scale the business. We exited 2025 with a strong liquidity position of $200 million, coming in at the top end of our previously communicated expectation of ending the year between $195 million and $200 million. Our CapEx-light business model remains a core financial discipline. We are confident our current liquidity provides a strong runway to fund operations and execute on our 2026 growth initiatives. For full year 2026, we expect revenue to be in the range of $30 million to $35 million, representing approximately 43% to 67% growth over full year 2025 revenue. As Qichao Hu noted earlier, our full year 2025 revenue included one-time contribution from OEM services contracts.

Speaker #2: Our CapEx-light business model remains a core financial discipline, and we are confident our current liquidity provides a strong runway to fund operations and execute on our 2026 growth initiatives for full year 2026.

Speaker #2: We expect revenue to be in the range of 30 million to 35 million , representing a 43% to 67% growth over full year 2025 revenue .

Speaker #2: As noted earlier , our full year 2025 revenue included one time contributions from OEM services contracts . If we compare the growth expected from the three businesses on an Apple to Apple basis , the revenue growth rate is even higher on the margin front , our three businesses carry different profiles and the mix may shift as we scale our SS hardware business , which will represent the largest share of revenue in 2026 , is expected to operate at around 15% gross margin .

Jing Nealis: If we compare the growth expected from the three businesses on an apple-to-apple basis, the revenue growth rate is even higher. On the margin front, our three businesses carry different profiles, and the mix may shift as we scale. Our ESS hardware business, which will represent the largest share of revenue in 2026, is expected to operate at around 15% growth margin. As we layer in the hardware-software bundle and grow the operating system attach rate, we see a potential path to expanding margins in that business over time. Our drone cells business is earlier in this commercial ramp, but we expect growth margins north of 20% as volumes build through the year.

Speaker #2: As we layer in the hardware, software bundle, and grow the operating system tax rate, we see a potential path to expanding margins in that business over time.

Speaker #2: Our drone sales business is earlier in this commercial ramp, but we expect gross margins north of 20% as volumes build through the year.

Speaker #2: Our materials business , which will sell electrolyte materials through a joint venture with Hyzon , is also a product business . And we expect it to carry a margin profile in the 10% to 20% range on a blended basis .

Jing Nealis: Our materials business, which will sell electrolyte materials through a joint venture with Hyphen, is also a product business. We expect it to carry a margin profile in the 10% to 20% range. On a blended basis, we expect consolidated growth margin to be around 15%, with room to improve year-over-year as we scale. On operating expenses, for full year 2026, we expect approximately 15% further reduction from the 2025 level. This reflects our continued investments in the Molecular Universe platform. While we are committed to financial discipline, we believe this level of investment is appropriate given the long-term value we're building and the early commercial traction we're seeing from MU-driven material discoveries.

Speaker #2: We expect consolidated gross margin to be around 15%, with room to improve year over year as we scale on operating expenses. For the full year 2026, we expect approximately a 15% further reduction from the 2025 level.

Speaker #2: This reflects our continued investment in the molecular universe . Platform . While we are committed to financial discipline , we believe this level of investment is appropriate given the long term value we're building and the early commercial traction we're seeing from Moo driven material discoveries .

Speaker #2: We're not anticipating meaningful growth in operating expenses beyond this level , and we'll continue to evaluate opportunities to improve operating leverage as revenue scales and to accelerate the monetization of the new platform on capital expenditures .

Jing Nealis: We're not anticipating meaningful growth in operating expenses beyond this level and will continue to evaluate opportunities to improve operating leverage as revenue scales and to accelerate the monetization of the MU platform. On capital expenditures, we continue to operate a CapEx-light model as a core financial discipline. For 2026, we expect CapEx to remain in the single-digit millions, primarily directed toward the conversion of South Korea facility from EV cells to NDAA-compliant drone cells, as well as the evaluation of contract manufacturing capacities in Southeast Asia. We entered 2026 with $200 million in liquidity, and we are well-funded to scale and grow, giving us the financial flexibility to execute on the opportunities ahead of us.

Speaker #2: We continue to operate a CapEx lite model as a core financial discipline for 2026 . We expect CapEx to remain in the single digit millions , primarily directed toward the conversion of South Korea facility from EV sales to NDAA compliant drone sales , as well as the evaluation of contract manufacturing capacities in Southeast Asia .

Speaker #2: We entered 2026 with 200 million in liquidity , and we are well funded to scale and grow , giving us the financial flexibility to execute on the opportunities ahead of us .

Speaker #2: We believe 2026 will be the year in which the full architect of our multi revenue stream platform comes together and begins to deliver where well capitalized financially disciplined and positioned to execute on that vision .

Jing Nealis: We believe 2026 will be the year in which the full architect of our multi-revenue stream platform comes together and begins to deliver. We are well capitalized, financially disciplined, and positioned to execute on that vision. We appreciate your continued support and confidence in SES AI. Thank you. Now I will turn the call back to the operator.

Speaker #2: We appreciate your continued support and confidence in CSI. Thank you. Now, I will turn the call back to the operator.

Speaker #3: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. The first question comes from Derek Soderberg with Cantor Fitzgerald. You may proceed.

Speaker #3: If for any reason at all you would like to remove that question , please press star followed by two . Again , to ask a question , please press star one .

Speaker #3: The first question comes from Derek Soderberg with Cantor Fitzgerald . You may proceed

Speaker #4: Yeah , thanks for taking my questions . On the final contribution from the Honda and Hyundai development work just was wondering , you know , what sort of next for for that program .

Derek Soderberg: Yeah, thanks for taking my questions. On the final contribution from the Honda and Hyundai development work, just was wondering, you know, what's sort of next for that program? You've sort of proven manufacturability recently. Obviously, your technology is sort of game changing for the EV market. You know, what's next for that, those relationships, Honda and Hyundai? When are you gonna commercialize that for EVs?

Speaker #4: You sort of proven manufacturability recently . Obviously your technology is sort of game changing for the EV market . You know , what's next for that ?

Speaker #4: Those relationships—Honda and Hyundai. When are you going to commercialize that for EVs?

Speaker #1: Yeah . Are Derek . So in terms of next step previously the next step was to go from December to see sample . And I think now I mean there's no surprise that the EV market is slowing down .

Qichao Hu: Yeah, Derek, in terms of next step, previously the next step was to go from B-sample to C-sample. I mean, there's no surprise that the EV market is slowing down and almost no automaker is investing in next gen battery technology. I don't mean like early stage battery technology in terms of A-sample and B-samples, but no one's investing in mass scale production of next gen technology, which is C-sample, which is what we were trying to get to next. We hit all the technical milestones, but the C-sample is on hold. In terms of next step with the OEMs, we are focusing on selling materials that we have developed, the electrolyte materials.

Speaker #1: And almost no other automaker is investing in next gen battery technology . And I don't mean like early stage battery technology in terms of A and B samples , but no one's investing in mass scale production of next gen technology , which is C sample , which is what we were trying to get to next .

Speaker #1: So , so we hit all the technical milestones , but the C sample is on hold . And then and then . So in terms of next step with the OEMs , we are focusing on selling materials , selling materials that we have developed .

Speaker #1: The electrical materials we are focusing on that. And then, in terms of the full-blown lithium metal C sample, then we'll see when the market returns.

Qichao Hu: We are focusing on that. In terms of the full-blown lithium metal C-sample, we'll see when the market returns. The technology is there and this is why we've been focusing on converting the lines for drones production and also applying the AI for safety, the battery analytics software that we developed for EV for ESS markets. In terms of next steps for the OEMs, we're focusing on material supplies and also converting the line for drones applications and using the safety analytics software for ESS.

Speaker #1: But the technology is there . And this is why we've been focusing on converting the lines for for drones production . And also applying the the AI for safety .

Speaker #1: The battery analytics software that we developed for EV for S markets. So, but yeah, in terms of next steps for the OEMs, we're focusing on material supplies.

Speaker #1: And then also converting the line for drones applications and using the safety analytics software for—for s.

Speaker #4: Got it . And then just quickly , what was the one time service amount . Can you quantify that impact to fiscal 25 .

Derek Soderberg: Got it. Then just quickly, what was the one-time service amount? Can you quantify that impact to fiscal 25?

Speaker #1: C, when do you want to take that?

Qichao Hu: Xinyun, you wanna take that?

Speaker #2: I yeah . So for 2025 the service revenue was 13.6 million . Those are primarily driven by the Honda and Hyundai service agreement .

Jing Nealis: I, yeah. For 2025, the service revenue was $13.6 million. Those are primarily driven by the Honda and Hyundai service agreement. That's the one time service agreement we were talking about.

Speaker #2: So that's the the one time service agreement . We were talking about .

Speaker #4: Got it. So for '26, you don't expect any of that to sort of recur, just given what Qichao Hu just explained?

Derek Soderberg: Got it. For 26, you don't expect any of that to sort of recur just, you know, given what Qichao just explained.

Speaker #4: Correct . The guidance is really just s drones and materials . And I was wondering if you could sort of break that down for us or help us try to understand by segment S drones , materials , can you help us kind of quantify how each of those contribute to the the guidance range ?

Jing Nealis: Correct.

Derek Soderberg: You know, guidance is...

Jing Nealis: Correct. Yeah.

Derek Soderberg: Is really just ESS, drones, and materials. I was wondering if you could sort of break that down for us or help us, you know, try to understand by segment, you know, ESS, drones, materials. Can you help us kinda quantify how each of those contribute to the guidance range? Then, any help sort of modeling kinda the first half or second half, you know, what portion of revenue in the first half, second half, anything like that would be helpful.

Speaker #4: And then any help sort of modeling kind of the first half or second half , you know what portion of revenue in the first half , second half , anything like that would be helpful

Speaker #2: I can take that . So yeah , for for yeah , for 2026 guidance given is the first year we're giving guidance including all three business units .

Jing Nealis: I can take that.

Derek Soderberg: Go ahead.

Qichao Hu: Go ahead.

Jing Nealis: yeah, for.

Derek Soderberg: Yeah.

Jing Nealis: Yeah, for 2026 guidance, given it's the first year we're giving guidance including all three business units. First of all, we wanted to be more conservative to start the year. As far as breaking down the revenue sources, ESS gonna still be a large portion of our revenue. Of that 30 to 35 guidance, the range, I would say probably around 65% will come from ESS, at least. The remaining portion will be drones and materials. For those two, we're expecting it to be more second half of the year loaded, given we're still in the ramping and business development stage. Those two are gonna be more towards second half of the year.

Speaker #2: So, first of all, we wanted to be more conservative to start the year as far as breaking down the revenue sources. S is going to still be a large portion of our revenue.

Speaker #2: So, of that 30 to 35 guidance, the range, I would say probably around 65% will come from S leased. And then the remaining portion will be drones and materials.

Speaker #2: And then for those two , we're expecting it to be more second half of the year loaded . Given we're still in the ramping .

Speaker #2: And business development stage . So so those two are going to be more towards the second half of the year . So but but percentage wise , around 65 from S and the remaining for those two .

Jing Nealis: Percentage wise, around 65% from ESS and the remaining for those two.

Speaker #4: Got it. That's helpful. I'll pass it on.

Derek Soderberg: Got it. That's helpful. I'll pass it on.

Speaker #2: Thank you .

Jing Nealis: Thank you.

Speaker #3: Thank you . The following comes from Winnie Dong with Deutsche Bank . You may proceed .

Operator: Thank you. The following comes from Winnie Dong with Deutsche Bank. You may proceed.

Speaker #5: Hi . Thank you for taking my question . Just curious if we look out to maybe like the next 2 to 3 years , if we just look at the different business areas , you know , raw materials and also you have the molecular universe as well , how would you characterize the growth profile of each of these areas in the next 2 to 3 years ?

Winnie Dong: Hi. Thank you for taking my question. Just curious, as we look out to maybe like the next two to three years, if we just look at the different business areas, you know, ESS, drone materials, and also you have the Molecular Universe as well, how would you characterize like the growth profile of each of these areas in the next, you know, two to three years? Which one Maybe the potential for the largest growth, if there's a way to think about it? Separately for Molecular Universe, I know you've been talking about, you know, different tiers of revenue from larger corporations and smaller ones. Could you share like currently what might be the largest bottleneck for adoption from these customers? I have a follow-up. Thanks.

Speaker #5: Which one has maybe the potential for the largest growth ? If there's a way to think about it and then separately for molecular universe , I know you've been talking about , you know , different tiers of revenue from larger corporations and smaller ones .

Speaker #5: Could you share currently what might be the largest bottleneck for adoption from these customers ? And then I have a follow up . Thanks

Speaker #1: Yeah . On the first one from a size of revenue and the product perspective , yes . And drones , we expect these two to grow very rapidly , especially on U.S.

Qichao Hu: Yeah. On the first one, from a size of revenue, and a product perspective, ESS and drones, we expect these two to grow very rapidly, especially on ESS. With, after we acquire UZ, we're not just selling the hardware anymore. Now we're adding this Predict feature on top. That's really exciting because now we're turning a regular UPS battery pack into an asset that the asset owners can use for energy trading. It's like supply and demand. On the demand side, you have conventional VPP software, but on the supply side, no other VPP software can have as accurate and advanced monitoring of the battery health, battery safety, battery degradation and all the parameters than ours.

Speaker #1: with after we acquired us . We're not just selling the hardware anymore . Now we're adding this this , this predict feature on top .

Speaker #1: So that's really exciting because now we're turning a regular UPS battery pack into an asset that the asset owners can use for energy trading .

Speaker #1: So it's like supply and demand . And on the demand side you have conventional software . But on the supply side , no other software can have as accurate and and advanced monitoring of the battery health , battery safety , battery degradation and all the parameters .

Speaker #1: Then then ours . So we have a really precise estimation of of the the state of health of the battery , so that that gives you an advantage .

Qichao Hu: We have a really precise estimation of the state of health of the battery. That gives you an advantage. It's almost like we say this in energy trading, it's almost like having Warren Buffett at your fingertip when it comes to your energy trading, if you know that level of precise health of your battery. That we are really excited about this Edge Box enhanced virtual power plant, especially with this tool that we can add on top of UZ's hardware. That's ESS. Drones. Drones is all about supply chain. It's all about being NDAA compliant and supplying to US and allies, drones.

Speaker #1: It's almost like we say this in energy trading. It's almost like having Warren Buffett at your fingertips when it comes to energy trading.

Speaker #1: If you know that level of precise health of your battery so that we're really excited about this edge box , enhanced virtual power plant , especially with this , this tool that that we can add on top of use , these hardware .

Speaker #1: So that's . Yes . And then drones . So drones , it's all about supply chain . It's all about being NDA compliant .

Speaker #1: And then supplying to us, and allied drones. And then also with the new Drones Dominance Program. We've had this line in Korea, and it's been NDA compliant since 2021.

Qichao Hu: Also with the new Drone Dominance Program, we've had this line in Korea, and it's been NDA compliant since 2021. We built this line for GM. It was 100 amp hour lithium metal cells. Now we're converting that to 10 amp hour cells for drones. We have an advantage because we have this asset. It's been NDA compliant since 2021. That market is also growing very rapidly, especially under the new Drone Dominance Program. I think these two are the most exciting from a size of revenue growth. As Ju mentioned earlier, the bulk of the revenue from this year, 2026, we expect will come from these two areas.

Speaker #1: We built this line for GM . It was 100 power 30 cells . Then we're converting that to ten amp power cells for the drones .

Speaker #1: So we have an advantage because we have this asset. It's been compliant since 2021. And then that market is also growing very rapidly, especially under the new Drones Dominance program.

Speaker #1: So I think these two are the most exciting from a size of revenue growth . And then and as you mentioned earlier , the bulk of the revenue from this year 2026 , we expect will come from these two areas in terms of molecular universe , we are making very exciting progress and we're getting some of the largest battery companies and car companies to sign on to this .

Qichao Hu: In terms of Molecular Universe, we are making very exciting progress, and we're getting some of the largest battery companies and car companies to sign on to this platform. We expect to make some announcements in the coming months. I think in terms of bottleneck, it's just new. For example, AI for Science has been used in drug discovery a lot. Not so much in materials, not so much in chemicals, and not so much in batteries. It's just new. Finally, as we said, we use that platform, and then we demonstrate that we could actually indeed use that and develop six new materials.

Speaker #1: This platform . And we expect to make some announcements in the coming months . I think in terms of bottleneck , I think just it's just new .

Speaker #1: For example , AI for science has been used in drug discovery a lot . Not so much in materials , not so much in chemicals , and not so much in in batteries .

Speaker #1: So it's just new . But finally , as we said , we we use that platform and we demonstrate that that we could actually indeed use that .

Speaker #1: And develop six new materials . I mean , previously it was like it would take you a few years to , to discover one material .

Qichao Hu: I mean, previously it was like it would take you a few years to discover one material, and then we've discovered six materials in just over about nine months to a year. Later we'll add more features to it, and hopefully we can get you six new materials per month and per week. That acceleration of a rate of discovery, that's something we're quite excited about.

Speaker #1: And then we've discovered six materials in just over about nine months , nine months to a year . And then later we'll add more features to it .

Speaker #1: And hopefully we can get you six new materials per month and per week. So that acceleration of rate of discovery, that's something we're quite excited about.

Speaker #5: Got it . Thank you for the detail response . And then I wanted to ask the question about OpEx in 2026 . It seems that you're characterizing a spending level that is , lower than 2025 .

Winnie Dong: Got it. Thank you for the detail, response. Then I wanted to ask the question about OpEx in 2026. It seems like you're characterizing a spending level that is, you know, lower than 2025, and that is going to likely sustain at this 2026 level on a go-forward basis. Can we maybe just understand the reason for that? You know, if you're looking to grow, you know, these different areas of the business, you know, what is it that you've done that, I guess, allows you to, you know, not have to spend further to grow the business? Thanks.

Speaker #5: And that is going to likely sustain at this 2026 level and go forward basis . Can we can we maybe just understand the the reason for that ?

Speaker #5: If you're looking to grow these different areas of the business , you know , what is it that you've done that I guess allows you to not have to spend further to , to grow the business ?

Speaker #5: Thanks

Speaker #2: I can I can address that . So I think the 2026 reduction partially is coming from just being disciplined on spending cash on OpEx in general , we have been reducing G&A and also R&D expenses year over year .

Jing Nealis: I can address that. I think the 2026 reduction partially is coming from just being disciplined on spending cash on OpEx in general. We've been reducing G&A and also R&D expenses year-over-year. If you go back to 2023, 2024, 2025, year-over-year, we're managing our costs very efficiently. That's that part. Second, the MU as an internal tool for AI for Science is creating a lot of efficiency. Also as part of growth into these three businesses, we're more focused as far as spending cash on product development related to R&D. Then there will be growth as far as spending-wise on the SG&A side, like sales and marketing, but it's not linear to the revenue growth.

Speaker #2: If you go back to 2023 , 2024 , 2025 , year over year , we're managing our costs very efficiently . So there that's that part .

Speaker #2: And second, the Mu as an internal tool for AI for science is creating a lot of efficiencies. So, and also as part of growth into these three businesses, we're more focused as far as spending cash on product development related to R&D.

Speaker #2: And then there will be growth, as far as spending-wise, on the SG&A side, like sales and marketing. But it's not linear to the revenue growth.

Speaker #2: So overall , together , including R&D and SG&A , we we forecast this year to be lower than last year , and then sustaining , at least for the foreseeable future

Jing Nealis: So overall-

Qichao Hu: Together, including R&D and SG&A, we forecast this year to be lower than last year and then sustain at least for the foreseeable future.

Jing Nealis: Together, including R&D and SG&A, we forecast this year to be lower than last year and then sustain at least for the foreseeable future.

Speaker #5: Got it. That's helpful. Thank you.

Operator: Got it. That's helpful. Thank you. Thank you. As a quick reminder, if you'd like to ask a question, please press star one. The next question comes from Colin Rusch with Oppenheimer. You may proceed.

Winnie Dong: Got it. That's helpful. Thank you.

Operator: Thank you. As a quick reminder, if you'd like to ask a question, please press star one. The next question comes from Colin Rusch with Oppenheimer. You may proceed.

Speaker #3: Thank you . As a quick reminder , if you'd like to ask a question , please press star one . The next question comes from Colin Rusch with Oppenheimer .

Speaker #3: You may proceed .

Speaker #6: Thanks so much , guys . You know , can you talk a little bit about the drone market in the volume of customers you're working with and how mature those relationships are in terms of working through the design process and potentially being able to announce , you know , a purchase award here over the next call , several quarters

Colin Rusch: Thanks so much, guys. You know, can you talk a little bit about the drone market and the volume of customers you're working with and how mature those relationships are, you know, in terms of working through the design process and potentially being able to announce a purchase award here over the next, call it several quarters?

Speaker #1: Yeah, the drones market is really going through a lot of pressure to change supply chain with India compliance requirements. And then we are focusing on some of the top customers.

Qichao Hu: Yeah. The drones market is really going through a lot of pressure to change supply chain with NDAA compliance requirements. We are focusing on some of the top customers. For example, customers that will order in the range of single-digit millions to potentially more than $10 million a year. Yes, we are mainly focused on those larger customers. We actually started testing engagement with them last year. Last year was really when everyone tried to change the supply chain. I think if a major drones manufacturer hasn't changed the supply chain by now, I think it's almost a bit too late. A lot of the testing engagement started last year.

Speaker #1: For example , customers that will order in the range of single digit millions to potentially more than $10 million a year . Yes .

Speaker #1: So so we are mainly focused on those larger customers and we've we actually started testing , engaging with them last year . Last year was really when when everyone tried to change the supply chain .

Speaker #1: And I think if a major drones manufacturer hasn't changed the supply chain by now , I think it's almost a bit too late .

Speaker #1: So so a lot of testing , engagement started last year and then now we are we are just in the final stage of converting the the lines .

Qichao Hu: Now we are just in the final stage of converting the lines. For example, right now in Boston, we can make pilot scale less than 100,000 cells per year. In Korea, we can make about 200 to 300 cells per year. We're trying to expand that. In Southeast Asia, we're also looking to expand to several million cells per year. These are all for these are all NDAA compliant cells for drones customers.

Speaker #1: For example, right now in Boston, we can make a pilot scale that's 900,000 cells per year. In Korea, we can make about 200 to 300 cells per year.

Speaker #1: We're trying to expand that and then in Southeast Asia , we're also looking to expand to several million cells per year . These are all for for these all NDA compliant cells for drones , customers .

Speaker #6: Excellent . And then obviously you've had some some really meaningful success at the molecule level , leveraging some of the AI capabilities . I'm curious about your ability to leverage some of that , that know how into pack level design and even into system integration design and modeling out some of the duty cycles that that may be , you know , just accelerates the adoption as you look at some of the robotics and drone opportunities

Colin Rusch: Excellent. You know, obviously you've had some really meaningful success on, at the molecule level, leveraging some of the AI capabilities. I'm curious about your ability to leverage some of that know-how into pack level design and even into system integration design and modeling out some of the duty cycles that may be, you know, just to accelerate some of the adoption as you look at some of the robotics and drone opportunities.

Speaker #1: So you're saying how we can apply this to pack level and cell cell level .

Qichao Hu: you're saying how we can apply this to pack level instead of cell level?

Speaker #6: Yeah , yeah . You know , at the pack level and and even the system level design , you know , a beyond that pack level .

Colin Rusch: Yeah. You know, at the pack level and even the system level design, you know, beyond.

Qichao Hu: Yeah.

Colin Rusch: that pack level.

Speaker #1: Yeah . Yeah . We're starting to , to add that feature . We've got some requests from automakers that want to do the , the design and predict features at the park .

Qichao Hu: Yeah. Yeah, we're starting to add that feature. We've got some requests from automakers that wanna do the design and then Predict features at the pack and system level. We are adding those features. Also for energy storage, right now we are adding Molecular Universe Predict into the systems. The Predict, we put that in a small box, we call that Edge Box. That works at a cell level and also the pack and system level.

Speaker #1: And system level . So we are those features and then also for energy storage right now we are adding molecular universe predict into the systems .

Speaker #1: So the predict we put that in a in a small box . We call that edge box . And then that works at the cell level .

Speaker #1: And also the back end system level .

Speaker #6: Excellent . Thanks so much guys .

Colin Rusch: Excellent. Thanks so much, guys.

Speaker #4: Thanks .

Qichao Hu: Thanks.

Speaker #3: Thank you. Next question comes from Mark Schroeder with William Blair. You may proceed.

Operator: Thank you. Next question comes from Mark Schappel with William Blair. You may proceed.

Speaker #1: Hey . thanks for taking my questions here . I believe I heard you say that the auto OEM JVs are are on hold .

Mark Schappel: Hey, Qichao. Thanks for taking my questions here. I believe I heard you say that the auto OEM JVs are on hold. Could you clarify that a bit? I'm seeing that the industry is, especially the auto industry, is trying to move away from lithium metal. However, at the same time, I'm seeing some local competitors actually enter the public markets here with their lithium metal product. Has any of the engagement appetite with your OEM customers changed around lithium metal? How are you looking at this?

Mark Shooter [Senior Associate: Hey, Qichao. Thanks for taking my questions here. I believe I heard you say that the auto OEM JVs are on hold. Could you clarify that a bit? I'm seeing that the industry is, especially the auto industry, is trying to move away from lithium metal. However, at the same time, I'm seeing some local competitors actually enter the public markets here with their lithium metal product. Has any of the engagement appetite with your OEM customers changed around lithium metal? How are you looking at this?

Speaker #1: Could you clarify that a bit? And then, I'm seeing that the industry—especially the auto industry—is trying to move away from lithium metal.

Speaker #1: However , at the same time , I'm seeing some local competitors actually enter the public markets here with lithium metal product . So has any of the engagement appetite with OEM customers changed around lithium metal ?

Speaker #1: How are you looking at this Yeah . So I mean we were developing pure lithium metal as well as hybrid lithium metal . And silicon anode .

Qichao Hu: I mean, we were developing pure lithium metal as well as hybrid lithium metal and the silicon anode, and then we met all the technical requirements. In terms of OEM appetite for high energy density batteries, I would say back in 2021, the OEM appetite for high energy density batteries was very high. Now, that's still there, but maybe at R&D level, A-sample level, and demo car level, but not at C-sample level, which is like mass production. I'm not seeing any other OEMs that's going to mass production with a next gen chemistry. There's a lot of price pressure, cost pressure, and most OEMs are switching to just LFP graphite.

Speaker #1: And then we met all the technical requirements . It just in terms of OEM appetite for high energy density batteries , I would say back in 2021 , the OEM appetite for high energy density batteries was very high .

Speaker #1: But now and that's still there . But maybe at R&D level , a sample level and demo car level . But not at sample level , which is like mass production and and I'm not seeing any auto OEMs that's going to mass production with a next gen chemistry .

Speaker #1: There's a lot of price pressure , cost pressure and muscle . Us are switching to just graphite

Speaker #4: Yeah , okay .

Mark Schappel: Yeah. Okay. That makes a lot of sense, and that justifies what we're seeing too, so that confused me a bit. Switching gears to the ESS market, which is rapidly growing, that is a fragmented market with many different levels to it. I'm wondering, what do you see as the most value add? Where would you play? What is the strategy for the UZ Energy acquisition? What section of that energy storage market would you play in? Why are you most advantaged to that section?

Mark Shooter [Senior Associate: Yeah. Okay. That makes a lot of sense, and that justifies what we're seeing too, so that confused me a bit. Switching gears to the ESS market, which is rapidly growing, that is a fragmented market with many different levels to it. I'm wondering, what do you see as the most value add? Where would you play? What is the strategy for the UZ Energy acquisition? What section of that energy storage market would you play in? Why are you most advantaged to that section?

Speaker #7: And that makes a lot of sense . And that justifies what we're seeing too . So that confused me a bit . But switching gears to the SS market , which is rapidly growing , that is a fragmented market with many different levels to it .

Speaker #7: And I'm wondering , what do you see as the most value add ? Where would you play ? What is the strategy for the US energy acquisition and what section of that energy storage market would you play in and why are you most advantaged for that section

Speaker #1: Yeah , yeah . Exactly . The SS market is very fragmented . It's got a long tail and and and the benefit that that we bring .

Qichao Hu: Yeah. Yeah. Exactly. The ESS market is very fragmented. It's got a long tail. The benefit that we bring... The ESS market currently does not have a stable, widespread operating system, maybe except for Tesla. In the ESS, it's like Tesla and then a long tail, very fragmented. What we can provide is almost like the Android version. For commercial industrial and then for data center applications, the asset owners actually wanna use their battery packs for energy trading. They're not able to do that, and they're not able to differentiate if they use conventional virtual power plant softwares.

Speaker #1: So so the U.S. market currently does not have a stable , widespread operating system . Maybe except for , for Tesla . But but in the U.S.

Speaker #1: is like Tesla and the long tail very fragmented . So what we can provide is almost like the the Android version . And then so for commercial industrial and then for data center applications , the asset owners actually want to use their battery packs for energy trading , but they're not able to do that .

Speaker #1: And they're not able to differentiate if they use a conventional virtual power plant softwares . So what we can do is because we actually collect the data from the the battery , we we can have a very accurate estimation of of a self-charging Self-health cell safety degradation power , all these different features .

Qichao Hu: What we can do is because we actually collect the data from the battery, we can have a very accurate estimation of cell charge, cell health, cell safety, degradation, power, all these different features. What that means is when you do the trading, it's supply and demand. Demand is set by the market, by weather, by if there's any major sporting events. The supply, that's set by accurate estimation of SoX, and then that we can provide. That's where this Edge Box enhanced virtual power plant really shines. I think the value that we can provide is we can provide this operating system, this to not just use these battery packs but to multiple of this long tail, this fragmented market.

Speaker #1: So what that means is when you do the trading , it's supply and demand . Demand is set by the market , by by weather , by if there's any major sporting events .

Speaker #1: But the supply that's , that's set by accurate estimation of Sox . And then that we can provide . So that's where this this edge boxing hence virtual power plant really really shines .

Speaker #1: So I think the value that we can provide is we can provide this this operating system , this to not just use these battery packs , but to multiple of these long tail , this fragmented market

Speaker #7: Great . Thanks , Joe

Kyle Pilkington: Great. Thanks, Yujia.

Speaker #3: Thank you . There are currently no other questions queued , so I'll pass it back over to Kyle Pilkington .

Operator: Thank you. There are currently no other questions queued, so I'll pass it back over to Kyle Pilkington.

Speaker #7: Thank you

Kyle Pilkington: Thank you. As with in our past earnings calls, we offered investors the opportunity to submit questions in advance, and we'll cover a brief selection of those questions now. The first question is there a binding definitive agreement with Top Material yet, and can you generally provide some details on current NDAA compliance status?

Speaker #4: As with .

Speaker #8: In our past earnings calls , we offered investors the opportunity to submit questions in advance and we'll cover a brief selection of those questions .

Speaker #8: Now , the first question is , is there a binding definitive agreement with top material yet ? And can you generally provide some details on current NDA compliance status

Speaker #1: Gesso top material is one of the options we are exploring . And then , as I mentioned earlier , we've had this Korea facility since 2021 .

Qichao Hu: Yeah. Top Material is one of the options we are exploring. As I mentioned earlier, we've had this Korea facility since 2021. It's been NDAA compliant since 2021. We're focusing on converting this to produce drones batteries. In addition to this, to our own Korea facility, we're also looking at options in Southeast Asia, potentially offer better pricing, better value and a larger scale to customers. Again, they're all NDAA compliant. Actually, we just updated our website, now we have the updated drones battery product brochure that's on the website. The cells are NDAA compliant.

Speaker #1: It's been NDAA compliant since 2021 . And then we're focusing on converting this to produce drones , batteries , and then in addition to this , to our own facility , we're also looking at options in Southeast Asia .

Speaker #1: And then potentially offer better pricing , better value and larger scale to customers . And again , they're all NDA compliant . And and actually , we just updated our website and now we have an updated drones battery product brochure that's on the website .

Speaker #1: So, and then the cells are NDA-compliant.

Speaker #8: Great. I think we have time for one more. So the question is: with Wildcat and BMW, and Ionics and Porsche securing GDAs for AI-driven materials, how is SES protecting its Molecular Universe data advantage to ensure it doesn't lose OEM partners to these specialized private competitors?

Kyle Pilkington: Great. I think we have time for one more. The question is: With Wildcat and BMW and IONIQ and Porsche securing JDAs for AI-driven materials, how is SES protecting its Molecular Universe data advantage to ensure it doesn't lose OEM partners to these specialized private competitors?

Speaker #1: So I think we announced a . That we're offering molecular universe to the public mid last year . After these other announcements were made .

Qichao Hu: I think we announced that we're offering Molecular Universe to the public mid last year after these other announcements were made. Molecular Universe, if we look at the latest version of Molecular Universe 1.5, and we have a 2.0 coming out soon, it really is a game-changing platform for battery development in the EV space. We're seeing a lot of the OEMs and big battery companies actually using this platform.

Speaker #1: And then like universe , if we look at the latest version of Micro Universe 1.5 and we have a 2.0 coming out soon , it really is a is a game changing platform for battery development in the EV space .

Speaker #1: So we're seeing a lot of OEMs and big battery companies actually using this platform.

Speaker #8: Great, thanks. That's all we have for the investor questions. So, I'll pass it back to the operator to conclude the call.

Kyle Pilkington: Great. Thanks. That's all we have for the investor questions. I'll pass it back to the operator to conclude the call.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Q4 2025 SES AI Corp Earnings Call

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