Q2 2026 Innventure Inc Earnings Call

August 13, 2026

Speaker #1: Good afternoon, and welcome to Inventure's second quarter 2026 earnings conference call. All participants will be in listen-only mode until the question-and-answer session begins. If you'd like to ask a question, you may raise your hand at any time by clicking on the Raise Hand button, which can be found on the black bar at the bottom of your screen.

Operator: Good afternoon, and welcome to Innventure's Q2 2026 earnings conference call. All participants will be in listen-only mode until the question and answer session begins. If you'd like to ask a question, you may raise your hand at any time by clicking on the raise hand button, which can be found on the black bar at the bottom of your screen. As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Kyle Negarkar, Investor Relations. Please go ahead.

Operator: Good afternoon, and welcome to Innventure's Q2 2026 earnings conference call. All participants will be in listen-only mode until the question-and-answer session begins. If you'd like to ask a question, you may raise your hand at any time by clicking on the raise hand button, which can be found on the black bar at the bottom of your screen. As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Kyle Nagarkar, Investor Relations. Please go ahead.

Speaker #1: As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Kyle Nagarkar, Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thanks, Mariana. And good afternoon, everyone. Welcome to Innventure's second quarter 2026 earnings call. With me today are Bill Haskell, Chief Executive Officer; Dave Yablonowski, Chief Financial Officer; Dr. Bill Greco, our incoming Chief Executive Officer; and John Hewitt, Chief Executive Officer of Excelsius.

Kyle Negarkar: Thanks, Mariana, and good afternoon, everyone. Welcome to Innventure's Q2 2026 earnings call. With me today are Bill Haskell, Chief Executive Officer, Dave Yablunosky, Chief Financial Officer, Dr. Bill Grieco, our incoming Chief Executive Officer, and John Hewitt, Chief Executive Officer of Accelsius. Earlier today, we issued a press release announcing our financial results, which is available on our investor relations website, along with the supplemental slide presentation. As referenced on slide 6, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available on our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

Kyle Nagarkar: Thanks, Mariana, and good afternoon, everyone. Welcome to Innventure's Q2 2026 earnings call. With me today are Bill Haskell, Chief Executive Officer, Dave Yablunosky, Chief Financial Officer, Dr. Bill Grieco, our incoming Chief Executive Officer, and John Hewitt, Chief Executive Officer of Accelsius. Earlier today, we issued a press release announcing our financial results, which is available on our investor relations website, along with the supplemental slide presentation. As referenced on slide six, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available on our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

Speaker #2: Earlier today, we issued a press release announcing our financial results, which is available on our Investor Relations website along with the supplemental slide presentation.

Speaker #2: As referenced on slide 6, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures, and a reconciliation of the differences between GAAP and non-GAAP financial measures, are available in our earnings release and supplemental slide presentation on our website.

Speaker #2: In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

Speaker #2: These forward-looking statements involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, Form 10-Q for the period ended June 30, 2026, and other filings with the SEC.

Kyle Negarkar: These forward-looking statements involve a number of uncertainties and risks, including but not limited to those described in our earnings release Form 10-Q for the period ended 30 June 2026, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. With that, I'll turn the call over to Bill Haskell.

Kyle Nagarkar: These forward-looking statements involve a number of uncertainties and risks, including but not limited to those described in our earnings release Form 10-Q for the period ended 30 June 2026, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. With that, I'll turn the call over to Bill Haskell.

Speaker #2: The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. With that, I'll turn the call over to Bill Haskell.

Speaker #3: Thank you, Kyle. Good afternoon, everyone, and thanks for joining us. We're going to run today's call a little differently by focusing the majority of our time on Excelsius.

Bill Haskell: Thank you, Kyle. Good afternoon, everyone, and thanks for joining us. We're going to run today's call a little differently by focusing a majority of our time on Accelsius. You'll hear from four executives today. Dave will take you through the financials. Then I'll say a brief word about the leadership transition we announced in June, followed by Bill Grieco to share what to expect under his new leadership. Finally, John Hewitt, who took over as CEO of Accelsius in July, will walk you through where the business is headed and where the industry is headed with it. Let me give you the headline for Accelsius before we get into it. First, we believe the market is now debating when two-phase will be adopted, not if. Second, allocation of GPUs and memory, difficulties accessing power, and two-phase enabled servers are impacting smaller early adopters.

Speaker #3: You'll hear from 4 executives today. Dave will take you through the financials, then I'll say a brief word about the leadership transition we announced in June, followed by Bill Greco to share what to expect under his new leadership.

Speaker #3: And finally, John Hewitt, who took over as CEO of Excelsius in July, will walk you through where their business is headed, and where the industry is headed with it.

Speaker #3: Let me give you the headline for Excelsius before we get into it. First, we believe the market is now debating when to phase will be adopted, not if.

Speaker #3: Second, allocation of GPUs and memory difficulty is accessing power and two-phase enabled servers are impacting smaller earlier adopters. That has consequences for near-term revenue expectations, which Dave will address directly in his remarks.

Bill Haskell: That has consequences for near-term revenue expectations, which Dave will address directly in his remarks. Here is the more important point. We believe those same forces have made the long-term picture for two-phase cooling better, not worse. John will walk you through exactly what changed and why. Before Dave addresses the numbers, let me give quick updates on AeroFlexx and Refinity. At AeroFlexx, the commercial pipeline continues to build and is now close to $35 million, up 9% since last quarter. The company's global reach continues to expand with new partnerships in Latin America and Europe. In addition, following the 11 May announcement of the co-manufacturing partnership with Pacte GMLase, AeroFlexx filling equipment has been installed and is operational at the Italian facility with product qualification underway. At Refinity, engineering design on the 10-kiloton demonstration plant is on track for delivery of a plan by the end of this year.

Speaker #3: But here's the more important point: we believe those same forces have made the long-term picture for two-phase cooling better, not worse. John will walk you through exactly what changed and why.

Speaker #3: Before Dave addresses the numbers, let me give a quick update on Airflex and Refinity. At Aeroflex, the commercial pipeline continues to build and is now close to 35 million dollars, up 9% since last quarter.

Speaker #3: The company's global reach continues to expand with new partnerships in Latin America and Europe. In addition, following the May 11 announcement of the co-manufacturing partnership with Pact GMOAs, Aeroflex filling equipment has been installed and is operational at the Italian facility, with product qualification underway.

Bill Haskell: In addition, following the 11 May announcement of the co-manufacturing partnership with Pacte GMLase, AeroFlexx filling equipment has been installed and is operational at the Italian facility with product qualification underway. At Refinity, engineering design on the 10-kiloton demonstration plant is on track for delivery of a plan by the end of this year. You will hear Bill Grieco come back to that in a few minutes. Now, let me pass it to Dave to take us through the financials.

Speaker #3: At Refinity, engineering design on the 10-kiloton demonstration plant is on track for delivery of a plan by the end of this year. You'll hear Bill Greco come back to that in a few minutes.

Bill Haskell: You will hear Bill Grieco come back to that in a few minutes. Now, let me pass it to Dave to take us through the financials.

Speaker #3: Now, let me pass it to Dave to take us through the financials.

Speaker #4: Thanks, Bill. Good afternoon, everyone. Consolidated revenue for the second quarter was $1 million. That compares to 0.5 million in the second quarter of last year, and $1.4 million in the first quarter of this year.

Dave Yablunosky: Thanks, Bill. Good afternoon, everyone. Consolidated revenue for Q2 was $1 million. That compares to $0.5 million in Q2 of last year and $1.4 million in Q1 of this year. Of the $1 million, Accelsius contributed $0.9 million or 96% of the total. Net loss for the quarter was $34.9 million, compared to $27.8 million in Q1. Adjusted EBITDA was a loss of $22.6 million versus $18.4 million in Q1. General and administrative expenses were $14.5 million, down 22% compared to Q2 2025. We ended the quarter with $46.5 million of cash and restricted cash. That compares to $60.4 million at the end of Q1, which also includes $5 million of restricted cash. Year to date, we used $59.5 million of cash in operating activities and generated $41.6 million from financing activities.

Speaker #4: Of the $1 million, Excelsius contributed 0.9 million or 96% of the total. Net loss for the quarter was $34.9 million, compared to $27.8 million in the first quarter.

Speaker #4: Adjusted EBITDA was a loss of $22.6 million, versus $18.4 million in Q1. General and administrative expenses were $14.5 million, down 22% compared to the second quarter of 2025.

Speaker #4: We ended the quarter with $46.5 million of cash and restricted cash. That compares to $60.4 million at the end of Q1. Which also includes $5 million of restricted cash.

Speaker #4: Year-to-date, we used $59.5 million of cash in operating activities and generated $41.6 million from financing activities. During the quarter, we took several steps to strengthen our balance sheet and manage our capital efficiently.

Dave Yablunosky: During the quarter, we took several steps to strengthen our balance sheet and manage our capital efficiently. We raised approximately $13 million through draws on our standby equity purchase agreement at an average price of $6.21. We also continued to reduce debt, including the full repayment of our convertible debentures earlier this year. Shifting now to our outlook. We previously expected Accelsius to exit this year near cash flow breakeven at an annualized revenue run rate of roughly $100 million. We now expect the timing for Accelsius to break even to extend beyond this year. The primary driver for the change is market dynamics, not a change in our conviction around the technology or the market opportunity. Smaller early adopters are facing constraints around power availability, GPU access, and site allocations. Those resources continue to be concentrated among the largest hyperscalers.

Speaker #4: We raised approximately $13 million through draws on our standby equity purchase agreement. At an average price of $6.21. We also continued to reduce debt, including the full repayment of our convertible debentures earlier this year.

Speaker #4: Shifting now to our outlook, we previously expected Excelsius to exit this year near cash flow break-even. At an annualized revenue run rate, of roughly $100 million, we now expect the timing for Excelsius to break even to extend beyond this year.

Speaker #4: The primary driver for the change is market dynamics, not a change in our conviction around the technology or the market opportunity. Smaller early adopters are facing constraints around power availability, GPU access, and site allocations.

Speaker #4: Those resources continue to be concentrated among the largest hyperscalers. I'd like to now directly address our DarkNX purchase, which is immune to these dynamics. The purchase order referenced a development site that DarkNX had previously identified.

Dave Yablunosky: I'd like to now directly address our DarkNX purchase order, given they too are not immune to these dynamics. The purchase order referenced a development site that DarkNX had previously identified. DarkNX recently informed Accelsius that this site is no longer available and that it's working towards developing alternate sites. Accelsius has removed the DarkNX project from its 2026 forecast, pending identification of an alternate deployment location and satisfaction of other conditions. This single customer setback does not change the fact that Accelsius remains at the front edge of market adoption. But until that adoption is established, order bookings and revenues are going to be lumpy and hard to predict. Due to these structural constraints, which limit early adopter deployments, we are suspending our revenue targets. We intend to reinstate forward-looking targets once those constraints ease or we achieve the foundational KPIs that drive broad industry adoption.

Speaker #4: DarkNX recently informed Excelsius that this site is no longer available and that it is working towards developing alternate sites. Excelsius has removed the DarkNX project from its 2026 forecast, pending identification of an alternate deployment location and satisfaction of other conditions.

Speaker #4: This single customer setback does not change the fact that Excelsius remains at the front edge of market adoption. But until that adoption is established, order bookings and revenues are going to be lumpy and hard to predict.

Speaker #4: Due to these structural constraints, which limit early adopter deployments, we are suspending our revenue targets. We intend to reinstate forward-looking targets once those constraints ease or we achieve the foundational KPIs that drive broad industry adoption.

Speaker #4: Here's what we are committing to instead: we will report on the key milestones best representative of our progress towards market adoption. Which John will detail in his section.

Dave Yablunosky: Here's what we are committing to instead. We will report on the key milestones best representative of our progress towards market adoption, which John will detail in his section. At the parent level, due to the revised timeline for Accelsius to achieve positive cash flow, we are no longer targeting consolidated positive cash flow for Innventure in 2028. We will revisit that expected timing when we have greater visibility into the pace of Accelsius adoption and revenue generation. Taking a step back, let me revisit our capital strategy in the context of this revised outlook. First, it reinforces the need to be disciplined about where capital is raised and how we protect shareholder ownership. Second, we expect to be opportunistic in how we fund the business from here, as revenue delays naturally precipitate a need for capital.

Speaker #4: At the parent level, due to the revised timeline for Excelsius to achieve positive cash flow, we are no longer targeting consolidated positive cash flow for inventure in 2028.

Speaker #4: We will revisit that expected timing when we have greater visibility into the pace of Excelsius adoption and revenue generation. Taking a step back, let me revisit our capital strategy in the context of this revised outlook.

Speaker #4: First, it reinforces the need to be disciplined about where capital is raised and how we protect shareholder ownership. Second, we expect to be opportunistic in how we fund the business from here as revenue delays naturally precipitate a need for capital.

Speaker #4: Our intent is to finance Aeroflex and Refinity increasingly at the operating company level, which limits the amount of capital we need to raise at Innventure and helps minimize dilution for Innventure shareholders.

Dave Yablunosky: Our intent is to finance AeroFlexx and Refinity increasingly at the operating company level, which limits the amount of capital we need to raise at Innventure and helps minimize dilution for Innventure shareholders. At the same time, given the extended timeline for Accelsius to reach positive cash flow, we recognize there will be a need for additional capital at Innventure. When we raise capital, we intend to do it thoughtfully, opportunistically, and with a goal of preserving Innventure's pro rata exposure to Accelsius. With that, I'll pass it back to Bill Haskell.

Speaker #4: At the same time, given the extended timeline for Excelsius to reach positive cash flow, we recognize there will be a need for additional capital at inventure.

Speaker #4: When we raise capital, we intend to do it thoughtfully, opportunistically, and with a goal of preserving investors' pro-rata exposure to Excelsius. With that, I'll pass it back to Bill Haskell.

Speaker #5: Thanks, Dave. Before I introduce our next two speakers, a brief personal note. As we announced on June 30, our retire and CEO of Inventure on October 1, after almost six years leading the company, and more than four decades in the industry, this was a planned succession and I'll be working closely with Bill Greco through the transition.

Bill Haskell: Thanks, Dave. Before I introduce our next two speakers, a brief personal note. As we announced on 30 June, I'll retire as CEO of Innventure on 1 October, after almost six years leading the company in more than four decades in the industry. This was a planned succession, and I'll be working closely with Bill Grieco through the transition. I'm confident in the handoff because Bill is not an outside hire learning about the company. He helped build it and had previously served as Innventure's Chief Technology Officer. For the past year and a half, he has been the founding CEO of Refinity. He took that business from a blank sheet of paper to the doorstep of commercial demonstration. Before Innventure, he built and led innovation and new business creation at various large organizations and holds a PhD in chemical engineering from MIT.

Speaker #5: I'm confident in the handoff because Bill is not an outside hire learning about the company. He helped build it and had previously served as Inventure's Chief Technology Officer.

Speaker #5: For the past year and a half, he has been the founding CEO of Refinity, and he took that business from a blank sheet of paper to the doorstep of commercial demonstration.

Bill Haskell: He took that business from a blank sheet of paper to the doorstep of commercial demonstration. Before Innventure, he built and led innovation and new business creation at various large organizations and holds a PhD in chemical engineering from MIT. Finally, he has served on the boards of both Refinity and Accelsius, so he knows every one of our businesses from the inside and is the right leader for Innventure's next phase. Bill, over to you.

Speaker #5: Before Inventure, he built and led innovation and new business creation at various large organizations and holds a PhD in chemical engineering from MIT. Finally, he has served on the boards of both Refinity and Excelsius so he knows every one of our businesses from the inside and is the right leader for Inventure's next phase.

Bill Haskell: Finally, he has served on the boards of both Refinity and Accelsius, so he knows every one of our businesses from the inside and is the right leader for Innventure's next phase. Bill, over to you.

Speaker #5: Bill, over to you.

Speaker #2: Thank you, Bill, for the introduction and for your six years of leadership that got Inventure to this point. I'm honored and I'm excited to take the baton.

Bill Grieco: Thank you, Bill, for the introduction and for your six years of leadership that got Innventure to this point. I am honored and I am excited to take the baton. Let me start with what will not change. Innventure's company building philosophy is the same under me as it was under Bill. We build operating companies around breakthrough technologies in partnership with multinational corporations, and we run those companies to win in their respective markets. We provide the initial funding and ongoing back office support to allow the operating companies to focus on efficient operations and to meet their commercialization objectives. That is our value proposition, and it is why many of you have invested in us. In the past, we tried to communicate in a way that is more typical of established public companies, especially in regard to providing revenue targets.

Speaker #2: Let me start with what will not change. Inventure's company-building philosophy is the same under me as it was under Bill. We build operating companies around breakthrough technologies in partnership with multinational corporations and we run those companies to win in their respective markets.

Speaker #2: We provide the initial funding and ongoing back office support to allow the operating companies to focus on efficient operations and to meet their commercialization objectives.

Speaker #2: That's our value proposition, and it's why many of you have invested in us. In the past, we tried to communicate in a way that's more typical of established public companies, especially in regard to providing revenue targets.

Speaker #2: For businesses like ours, innovative technology businesses addressing markets that are still forming, predicting revenue quarter by quarter is difficult, if not impossible. As a result, revenue targets are not the most useful yardstick at this stage.

Bill Grieco: For businesses like ours, innovative technology businesses addressing markets that are still forming, predicting revenue quarter by quarter is difficult, if not impossible. As a result, revenue targets are not the most useful yardstick at this stage. Revenue guidance will become more appropriate in the future as these companies mature. But in the growth phase, the better measure of progress is whether we are setting the right milestones, whether we are achieving them, and whether we are building towards the inflection points that can create significant long-term value. This framework speaks to how we will evolve our operating discipline. I am an engineer by training and an operator by career. I believe management teams earn credibility one milestone at a time. We set a milestone, we meet it or exceed it, then we do it again. That is how we have run Refinity.

Speaker #2: Revenue guidance will become more appropriate in the future as these companies mature, but in the growth phase, the better measure of progress is whether we're setting the right milestones, whether we're achieving them, and whether we're building towards the inflection points that can create significant long-term value.

Speaker #2: This framework speaks to how we will evolve our operating discipline. I'm an engineer by training and an operator by career. I believe management teams earn credibility one milestone at a time.

Speaker #2: We set a milestone, we meet it or exceed it, then we do it again. That's how we've run Refinity. We operate with a lean organization focused on achieving our objectives on time and on budget.

Bill Grieco: We operate with a lean organization focused on achieving our objectives on time and on budget. For example, we shared that we would be scaling up our process for extended duration runs by summer of this year, and our team is doing that now. We told you that the engineering design for our 10-kiloton commercial demonstration plant would be complete in the fall, and it is on track for delivery by the end of the year. I expect Innventure and its operating companies to be run the same way. Now let me speak to our capital allocation policy, which remains unchanged. The capital allocation framework we announced in April still stands. Capital above a parent reserve is intended to be distributed to shareholders. Innventure will remain committed to maximizing shareholder value. We do that through smart deployment of capital with every dollar aimed where it serves our shareholders best.

Speaker #2: For example, we shared that we would be scaling up our process for extended duration runs by summer of this year and our team is doing that now.

Speaker #2: We told you that the engineering design for our 10 kiloton commercial demonstration plant would be complete in the fall and it's on track for delivery by the end of the year.

Speaker #2: I expect Innventure and its operating companies to be run the same way. Now, let me speak to our capital allocation policy, which remains unchanged.

Speaker #2: The capital allocation framework we announced in April still stands. Capital above a parent reserve is intended to be distributed to shareholders. Inventure will remain committed to maximizing shareholder value.

Speaker #2: We do that through smart deployment of capital, with every dollar aimed where it serves our shareholders best. One more thing about how I intend to communicate with the market.

Bill Grieco: One more thing about how I intend to communicate with the market. I believe in showing results, not promising them, and I believe we owe the market clarity about what we're seeing. That's what today's call is, giving you a better look into what our companies, particularly Accelsius, are seeing and telling you what we're doing about it. Now, let me tell you why I'm so enthusiastic about Accelsius. I sit on its board, and I've been involved since we started the company, and I've never been more excited about this opportunity. It's rare in a career to watch a technology this differentiated meet a market this large at the moment the market needs it. Accelsius's $65 million Series B round led by Johnson Controls with Legrand participating, tells you what sophisticated industrial players think of the technology.

Speaker #2: I believe in showing results, not promising them. And I believe we owe the market clarity about what we're seeing. That's what today's call is.

Speaker #2: Giving you a better look into what our companies—particularly Excelsius—are seeing and telling you what we're doing about it. Now, let me tell you why I'm so enthusiastic about Excelsius.

Speaker #2: I sit on its board and I've been involved since we started the company. And I've never been more excited about this opportunity. It's rare in a career to watch a technology this differentiated, meet a market this large, at the moment the market needs it.

Speaker #2: Excelsius is a $65 million Series B round, led by Johnson Controls, with Legrand participating. That tells you what sophisticated industrial players think of the technology.

Speaker #2: Like me, John Hewitt has been involved with Excelsius from the beginning as a founding board member. So he stepped into the CEO role with a deep understanding of the company, the technology, and the market opportunity.

Bill Grieco: Like me, John Hewitt has been involved with Accelsius from the beginning as a founding board member. He stepped into the CEO role with a deep understanding of the company, the technology, and the market opportunity. Since taking over early last month, he's worked with the Accelsius team to review and refine the commercialization strategy, which he recently reviewed with the board. That is exactly the kind of work he's well-suited to lead. John previously ran the Americas for Vertiv, a multi-billion-dollar business at the center of the AI data center build-out. He was most recently CEO of Robertshaw, a global design, engineering, and manufacturing company with more than 6,000 employees. And earlier in his career, he held senior roles at TE Connectivity, Motorola, and Baker Hughes. Josh Claman built Accelsius into what it is today, and he remains fully engaged as executive chairman.

Speaker #2: Since taking over early last month, he's worked with the Excelsius team to review and refine the commercialization strategy, which he recently reviewed with the board.

Speaker #2: That is exactly the kind of work he's well suited to lead. John previously ran the Americas for Vertiv, a multibillion-dollar business at the center of the AI data center build-out.

Speaker #2: He was most recently CEO of Robert Shaw, a global design, engineering, and manufacturing company with more than 6,000 employees and earlier in his career, he held senior roles at TE Connectivity, Motorola, and Baker Hughes.

Bill Grieco: He was most recently CEO of Robertshaw, a global design, engineering, and manufacturing company with more than 6,000 employees. And earlier in his career, he held senior roles at TE Connectivity, Motorola, and Baker Hughes. Josh Claman built Accelsius into what it is today, and he remains fully engaged as executive chairman. John has joined him to help scale it. I'm more bullish than ever on Accelsius and on two-phase direct-to-chip cooling. John will now walk you through the business, the strategy, and the magnitude of the opportunity ahead. John, welcome. The floor is yours.

Speaker #2: Josh Clayman built Excelsius into what it is today and he remains fully engaged as executive chairman. John has joined him to help scale it.

Bill Grieco: John has joined him to help scale it. I'm more bullish than ever on Accelsius and on two-phase direct-to-chip cooling. John will now walk you through the business, the strategy, and the magnitude of the opportunity ahead. John, welcome. The floor is yours.

Speaker #2: I'm more bullish than ever on Excelsius and on two-phase direct-to-chip cooling. And John will now walk you through the business, the strategy, and the magnitude of the opportunity ahead.

Speaker #2: John, welcome. The floor is yours.

Speaker #3: Thanks, Bill. Good afternoon, everyone. Bill just gave you my resume so I won't read it back to you. But let me tell you why I took this job and then I'll spend my time where it belongs on the business and the industry.

John Hewitt: Thanks, Bill. Good afternoon, everyone. Bill just gave you my resume, so I won't read it back to you. But let me tell you why I took this job, and then I'll spend my time where it belongs, on the business and the industry. At Vertiv, I had about the best vantage point in the industry to watch what AI compute is doing to the thermal limits of the data center. I saw every cooling technology in the market, what worked, what scaled, and what hit walls. I joined the Accelsius board four years ago because I concluded that two-phase direct-to-chip cooling would ultimately be the answer for the most demanding AI and high-performance workloads. I took this job because I believe it ultimately is arriving faster than most people expected.

Speaker #3: At Vertiv, I had about the best vantage point in the industry to watch what AI compute is doing to the thermal limits of the data center.

Speaker #3: I saw every cooling technology in the market, what worked, what scaled, and what hit walls. I joined the Excelsius board four years ago because I concluded that two-phase direct-to-chip cooling would ultimately be the answer for the most demanding AI and high-performance workloads.

Speaker #3: I took this job because I believe that ultimately is arriving faster than most people expected. You maybe get one or two opportunities like this in a career.

John Hewitt: You maybe get one or two opportunities like this in a career, and I am excited to be here. One more thing before I move on. As Executive Chairman, Josh Claman remains actively engaged in this company. We have been great partners for the last four years, and I am excited to continue working with him in a different capacity. Four years ago, Accelsius was founded on a conviction that physics would drive the industry to liquid cooling, and that two-phase would earn a meaningful portion of that market. At that time, we did not think it would become so widely understood that two-phase will be required. The market did not just make room for us. It is coming toward us, and that has made us aim higher. We are no longer planning like a scrappy startup, vying for single-digit market share over the next 10 years.

Speaker #3: And I am excited to be here. One more thing before I move on: As Executive Chairman, Josh Clayman remains actively engaged in this company.

Speaker #3: We've been great partners for the last four years, and I am excited to continue working with him in a different capacity. Four years ago, Excelsius was founded on the conviction that physics would drive the industry to liquid cooling, and that two-phase would earn a meaningful portion of that market.

Speaker #3: At that time, we didn't think it would become so widely understood that two-phase would be required. The market didn't just make room for us.

Speaker #3: It's coming toward us. And that's made us aim higher. We are no longer planning like a scrappy startup, vying for single-digit market share over the next 10 years.

Speaker #3: We believe we can hold a much more significant share and this call is about how we plan to do that by building our product thoughtfully alongside key ecosystem players holding the attention of the companies that define the AI sector and focusing where the expected return is greatest.

John Hewitt: We believe we can hold a much more significant share, and this call is about how we plan to do that by building our product thoughtfully alongside key ecosystem players, holding the attention of the companies that define the AI sector, and focusing where the expected return is greatest. What instills that conviction in us? We believe important things outside our control are breaking our way. Physics favors two-phase. Every AI generation runs hotter. The industry has discovered what servicing single-phase actually costs. There is another force accelerating all of this. Data center developments are experiencing significant pushback from communities being asked to host these facilities over water and power usage concerns. Two-phase changes the energy profile of a data center. In greenfield designs, it can lower cooling-driven energy use by a third.

Speaker #3: So, what instills that conviction in us? We believe important things outside our control are breaking our way. Physics favors two-phase. Every AI generation runs hotter.

Speaker #3: And the industry has discovered what servicing, single-phase, actually costs. There's another force accelerating all of this. Data center developments are experiencing significant pushback from communities being asked to host these facilities over water and power usage concerns.

Speaker #3: Two-phase changes the energy profile of a data center, and Greenfield designs it can lower cooling-driven energy use by a third. At a moment when 700 billion in planned 2026 data center capex is colliding with 130 billion in blocked and delayed projects, and New York is just enacted the first statewide moratorium, that isn't a nice to have.

John Hewitt: At a moment when USD 700 billion in planned 2026 data center CapEx is colliding with USD 130 billion in blocked and delayed projects, and New York has just enacted the first statewide moratorium, that is not a nice-to-have. It is how the industry earns the right to keep building. We believe the question is no longer if, only when. We cannot control when, but we do control how we execute and where we focus. Over the last few years, we have been pursuing two goals simultaneously. The first was building the foundation for a great company, one that could gain a meaningful share of the liquid cooling spend and one that can deliver a highly differentiated product reliably and at scale. The liquid cooling market is forecasted to exceed USD 30 billion in 2030, of which USD 9 billion is expected to be two-phase.

Speaker #3: It's how the industry earns the right to keep building. We believe the question is no longer if, only when. We can't control when, but we do control how we execute and where we focus.

Speaker #3: Over the last few years, we've been pursuing two goals simultaneously. The first was building the foundation for a great company. One that could gain a meaningful share of the liquid cooling spend and one that can deliver a highly differentiated product reliably and at scale.

Speaker #3: The liquid cooling market is forecasted to exceed $30 billion in 2030, of which $9 billion is expected to be two-phase. For context, today there are no mass-scale two-phase direct-to-chip deployments in the United States.

John Hewitt: For context, today, there are no mass scale two-phase direct-to-chip deployments in the United States. I am proud of the work the team has done to lay the foundation, but the next year is critical, and we will talk about that. The second was delivering at-scale revenue from a hard tech company inside of five years. Not just any hard tech. This is an advanced technology, one few companies have ever solved, designed to protect GPUs, the asset whose demand far exceeds supply and easily among the most valuable line items on any AI company's balance sheet. For context, one B300 GPU runs over USD 50,000. An eight-way server built on them runs USD 400,000 to USD 500,000. A loaded rack of those servers can run between USD 3.5 and USD 4.5 million.

Speaker #3: I'm proud of the work the team has done to lay the foundation, but the next year is critical, and we'll talk about that. The second was delivering at-scale revenue from a hard tech company inside of five years.

Speaker #3: And not just any hard tech. This is an advanced technology, one few companies have ever solved, designed to protect GPUs. The asset whose demand far exceeds supply and easily among the most valuable line items on any AI company's balance sheet.

Speaker #3: For context, one B300 GPU runs over 50,000 dollars. An eight-way server built on them runs 400 to 500 thousand dollars. And a loaded rack of those servers can run between three and a half and four and a half million.

Speaker #3: When we benchmarked ourselves against successful hard tech companies in the cooling space, very few had any commercial revenue in year four. Against the relevant comparisons, we're tracking ahead of the pace.

John Hewitt: When we benchmarked ourselves against successful hard tech companies in the cooling space, very few had any commercial revenue in year 4. Against the relevant comparisons, we are tracking ahead of the pace. The problem was never the pace. It was the yardstick we measured against. We expected Accelsius to travel the normal tech adoption curve, with smaller early adopter companies as our main revenue source for a few years. Then we learned something about the AI market. Adopting this technology requires GPU allocations, access to power, and the scale to influence server designs, and those are precisely the things smaller companies can't get. This is exactly what we saw happen with the DarkNX deal Dave spoke about earlier. Our analysis and the feedback we are receiving indicates that the market structure is sidelining many of the customers who would normally take the first risk.

Speaker #3: The problem was never the pace; it was the yardstick we measured against. We expected Excelsius to travel the normal tech adoption curve, with smaller early-adopter companies as our main revenue source for a few years.

Speaker #3: Then we learned something about the AI market. Adopting this technology requires GPU allocations, access to power, and the scale to influence server designs—and those are precisely the things smaller companies can't get.

Speaker #3: This is exactly what we saw happen with the DarkNX deal Dave spoke about earlier. Our analysis and the feedback we are receiving indicates that the market structure is sidelining many of the customers who would normally take the first risk.

Speaker #3: As a result, in this market, there are very few early adopters. Here's why that's good news. The relationships we are now focusing on are the companies that dominate this market, companies worth hundreds of billions.

John Hewitt: As a result, in this market, there are very few early adopters. Here's why that's good news. The relationships we are now focusing on are the companies that dominate this market, companies worth hundreds of billions. They haven't just noticed us, they're showing deep and promising interest, active proof of concepts with several key hyperscalers, and impressing results that are driving next steps. Make note of this because I'll come back to it. For these companies, benchmarked data-backed proof of superior performance is what drives adoption. We just delivered a major proof point. Now, these companies move slower than early adopters would have, but I want to be clear about why. We believe it's a product of how a good business makes major decisions. They have shareholders, countless customers, and established procurement and build cycles.

Speaker #3: And they haven't just noticed us; they're showing deep and promising interest—active proof of concepts with several key hyperscalers and impressive results that are driving next steps.

Speaker #3: And make note of this, because I'll come back to it. For these companies, benchmarked, data-backed proof of superior performance is what drives adoption. We just delivered a major proof point.

Speaker #3: Now, these companies move slower—be clear about why. We believe it's a product of how a good business makes major decisions. They have shareholders, countless customers, and established procurement and build cycles.

Speaker #3: They evaluate in a mature way. Deliberate studies between engineering teams, starting with single-loop cold plate level tests, then proof of concepts, then operating impact analyses, and then a dedicated haul deployment.

John Hewitt: They evaluate in a mature way, deliberate studies between engineering teams, starting with single-loop cold plates level tests, then proof of concepts, then operating impact analyses, and then a dedicated hall deployment. Ultimately, you're built into their IT procurement plan and into their data center roadmap. Some iterations run over multiple quarters, and we are in various stages of progress with many of them. So the trade we ended up with is this. Instead of seeking quick revenue from small companies that aren't likely to scale, we're focusing instead on the technology leaders, and we are deep in the evaluation cycles with some of the largest companies in this industry. Our earliest customers are also our largest possible customers. We believe that this isn't a phase, but that GPU allocation and power scarcity, among other factors, define AI infrastructure, and they aren't easing.

Speaker #3: Ultimately, you’re built into their IT procurement plan and into their data center roadmap. Some iterations run over multiple quarters, and we are in various stages of progress with many of them.

Speaker #3: So the trade we ended up with is this: instead of seeking quick revenue from small companies that aren't likely to scale, we're focusing instead on the technology leaders.

Speaker #3: And we are deep in the evaluation cycles with some of the largest companies in this industry. Our earliest customers are also our largest possible customers.

Speaker #3: We believe that this isn't a phase, but that GPU allocation and power scarcity among other factors define AI infrastructure and they aren't easing. When I stepped into this role last month, we did a detailed review of the Excelsius commercialization strategy and made major updates.

John Hewitt: When I stepped into this role last month, we did a detailed review of the Accelsius commercialization strategy and made major updates. Substantially, all of our partnership and market adoption work now focuses on four customer segments, chip manufacturers, server OEMs, server ODMs, and hyperscalers. Our goal is to have chip manufacturers reference our solution, OEMs and ODMs design for it, and the end customers incorporate those requirements into their IT and infrastructure designs. When those players move, the market moves. Remember, almost all the data center footprint deployed or in process today uses either air or single-phase liquid cooling. Until two-phase adoption crosses the line, bookings and revenue are going to be lumpy and hard to predict. As Dave said, we will not guide until we see that adoption. We believe bookings and revenue are lagging indicators in this market.

Speaker #3: Substantially, all of our partnership and market adoption work now focuses on four customer segments: chip manufacturers, server OEMs, server ODMs, and hyperscalers. Our goal is to have chip manufacturers reference our solution, OEMs and ODMs design for it, and end customers incorporate those requirements into their IT and infrastructure designs.

Speaker #3: And when those players move, the market moves. Remember, almost all the data center footprint deployed or in process today uses either air or single-phase liquid cooling.

Speaker #3: Until two-phase adoption crosses the line, bookings and revenue are going to be lumpy and hard to predict. So as Dave said, we will not guide until we see that adoption.

Speaker #3: We believe bookings and revenue are lagging indicators in this market. The milestones we will report are the ones we view as leading indicators.

John Hewitt: The milestones we will report are the ones we view as the leading indicators. As I mentioned earlier, the next year is critical. We are actively engaged in advancing progress around major milestones, and the four we are focused on now are as follows. One, chip maker engagement leading to reference designs. Inclusion in a silicon vendor's partner ecosystem would be the strongest validation this market offers. It would put us in front of every customer designing around that silicon. Two, server OEM and ODM relationships expanding into co-development initiatives. This would be the first step toward factory integration and server warranty coverage, key enablers to market adoption. Number three, moving beyond proof of concept to an executed Statement of Work with a leading hyperscaler, one that scopes the Power Usage Effectiveness and operational impacts of two-phase in their data centers.

Speaker #3: As I mentioned earlier, the next year is critical. We are actively engaged in advancing progress around major milestones, and the four we are focused on now are as follows.

Speaker #3: One, chip maker engagement leading to reference designs. Inclusion in a silicon vendor's partner ecosystem would be the strongest validation this market offers. It would put us in front of every customer designing around that silicon.

Speaker #3: Two, server OEM and ODM relationships expanding into co-development initiatives. This would be the first step toward factory integration and server warranty coverage, key enablers to market adoption.

Speaker #3: Number three, moving beyond proof of concept to an executed statement of work with a leading hyperscaler, one that scopes the power usage effectiveness and operational impacts of two-phase in their data centers.

Speaker #3: That's the difference between being evaluated and being planned for. And, four, continuing to deliver benchmark data and deployment with leading thermal labs. Given the industry's strongest thermal minds, this is the proof needed for adoption.

John Hewitt: That's the difference between being evaluated and being planned for. Four, continuing to deliver benchmark data and deployment with leading thermal labs, giving the industry's strongest thermal minds the proof needed to adopt. Hitting these four milestones is how we'll measure progress and how you'll know we're creating meaningful company value. Given the decision-making timeline within large organizations that I spoke about earlier, we don't anticipate having material updates every quarter. That said, each one of these milestones already has its own work stream underway, most with significant progress, and we look forward to updating you on further progress when warranted. To that end, let me update you on one huge milestone just achieved. As I said earlier, for mature customers, data-backed proof is everything, and we just completed a major study.

Speaker #3: Hitting these four milestones is how we'll measure progress and how you'll know we're creating meaningful company value. Given the decision-making timeline within large organizations that I spoke about earlier, we don't anticipate having material updates every quarter.

Speaker #3: That said, each one of these milestones already has its own workstream underway, most with significant progress, and we look forward to updating you on further progress when warranted.

Speaker #3: And to that end, let me update you on one huge milestone we just achieved. As I said earlier, for a mature customer, data-backed proof is everything.

Speaker #3: And we just completed a major study. In July, we published the most important technical validation in the company's history. I want to walk you through it because the numbers deserve more than just a headline.

John Hewitt: In July, we published the most important technical validation in the company's history, and I want to walk you through it because the numbers deserve more than a headline. An independent third-party systems integrator took a commercially available Dell PowerEdge XE9680L, an eight-way NVIDIA B200 server drawing roughly 10 kilowatts, and benchmarked it with its factory-installed single-phase cooling. Then they retrofitted the same server with our NeuCool cold plates and ran it again. Same server, same GPUs, same simulated workloads, roughly 40,000 operating points. The only thing that changed was the cooling. The results, NeuCool ran the GPUs 9 to 14 degrees Celsius cooler at the system level, using roughly one-third the coolant flow at the chip. At 50 degrees Celsius facility water, the single-phase system pushed the B200 past its 84 degrees Celsius throttle point, the temperature where the GPU slows itself down to survive.

Speaker #3: An independent third-party systems integrator took a commercially available Dell PowerEdge XC96 ADL and 8-way NVIDIA B200 server drawing roughly 10 kilowatts and benchmarked it with its factory-installed single-phase cooling.

Speaker #3: Then they retrofitted the same server with our new, cool cold plates and ran it again. Same server, same GPUs, same simulated workloads—roughly 40,000 operating points.

Speaker #3: The only thing that changed was the cooling. The results? The new cooling ran the GPUs 9 to 14 degrees centigrade cooler at the system level.

Speaker #3: Using roughly one-third of the coolant flow at the chip. At 50°C facility water, the single-phase system pushed the B200 past its 84°C throttle point.

Speaker #3: The temperature where the GPU slows itself down to survive—ours held 9 degrees Celsius of headroom below it. Same server, same chips, different outcome.

John Hewitt: Ours held 9 degrees Celsius of headroom below it. Same server, same chips, different outcome. Here's what we believe those degrees are worth. NVIDIA has pointed the entire industry toward warmer facility water as a key lever for AI factory efficiency, and their current single-phase designs top out around 45 degrees Celsius. Our headroom means the performance single-phase delivers at 45 degrees Celsius, we deliver at up to 54 degrees Celsius and beyond. At those temperatures, chillers convert from a necessity into a contingency in most of the world for most of the year. That's the energy story that I opened with. This is how the industry earns the right to keep going. For an operator, the energy savings isn't really about the utility bill. Every data center lives inside a fixed power envelope.

Speaker #3: Now, here's what we believe those degrees are worth. NVIDIA has pointed the entire industry toward warmer facility water as a key lever for AI factory efficiency.

Speaker #3: And their current single-phase designs top out around 45 degrees Celsius. Our headroom means that the performance single-phase delivers at 45°C, we deliver at up to 54°C and beyond.

Speaker #3: At those temperatures, chillers convert from a necessity into a contingency in most of the world for most of the year. That's the energy story that I opened with.

Speaker #3: This is how the industry earns the right to keep building. But for an operator, the energy savings aren't really about the utility bill. Every data center lives inside a fixed power envelope.

Speaker #3: Whatever the grid gives you, that's your budget. And every watt spent on cooling is a watt not spent on compute. Cut the cooling load, and two things happen.

John Hewitt: Whatever the grid gives you, that's your budget, and every watt spent on cooling is a watt not spent on compute. Cut the cooling load and two things happen. You make the most of the power you were allocated, and you redirect those savings into the only thing that generates revenue, which is more GPUs doing more work. Based on the Jacobs reference design, two-phase enables, on average, 5% more GPUs inside the same power envelope. At the scale of a gigawatt campus, 5% more revenue-generating compute from the same grid connection is an enormous number. This is why I say the benchmark validates the strategy, not just the product. Remember what I told you to hold on to. The behemoths are evaluating us, and the evaluations are going well. This test is what going well looks like.

Speaker #3: You make the most of the power you are allocated, and you redirect those savings into the only thing that generates revenue, which is more GPUs doing more work.

Speaker #3: Based on the Jacobs reference design, two-phase enables, on average, 5% more GPUs inside the same power envelope. At the scale of a gigawatt campus, 5% more revenue-generating compute from the same grid connection is an enormous number.

Speaker #3: This is why I say the benchmark validates the strategy, not just the product. Remember what I told you to hold onto. The behemoths are evaluating us, and the evaluations are going well.

Speaker #3: This test is what 'going well' looks like. The companies that can adopt this technology have gigawatts to consider, and PhD teams who will take a claim like ours apart line by line.

John Hewitt: The companies that can adopt this technology have gigawatts to consider and PhD teams who will take a claim like ours apart line by line. This test was built for that audience. Widely available hardware run by a third party at the warm water conditions their own roadmaps require. We didn't hand them a marketing claim, we handed them a data set. The full white paper, Warm-Water Ready, is on our site, and I'd encourage you to read it the way our customers are reading it. So back to that question of when. We can't answer it definitively, but I can give you two data points. First, the chips. IDTechEx, after interviewing chip makers, cold plates suppliers, and integrators across the value chain, identified 1,500 to 2,000 watts per package as the point where single-phase begins to struggle. The B300 shipping today is already at 1,400.

Speaker #3: This test was built for that audience: widely available hardware, run by a third party, at the warm water conditions their own road wraps require.

Speaker #3: We didn't hand them a marketing claim. We handed them a data set. The full white paper, warm-water-ready, is on our site. And I'd encourage you to read it the way our customers are reading it.

Speaker #3: So back to that question of when. We can't answer it definitively, but I can give you two data points. First, the chips. IDTechEx, after interviewing chip makers, cold plate suppliers, and integrators across the value chain, identified 1,500 to 2,000 watts per package as the point where single-phase begins to struggle.

Speaker #3: The B300 shipping today is already at 1,400. Every generation on NVIDIA's public roadmap goes higher. Second, the racks. Beyond heat removal at the chip, single-phase stays competitive only by pushing more and more water.

John Hewitt: Every generation on NVIDIA's public roadmap goes higher. Second, the racks. Beyond heat removal at the chip, single-phase stays competitive only by pushing more and more water. As industry analysts have pointed out, at extreme rack densities, the pipe sizing and physical volume required becomes constraints of their own. So whether the limit arrives through the chip's heat or the rack's density, the limits exist, and every generation moves us closer to them. That's the moment we're preparing for, and the four milestones I laid out are how we will measure progress. Accelsius is positioned to scale when that time comes, and our deployments to date tell the story of an evolving company. Our earliest shipments were demo systems, an in-rack CDU with a load sled or two, built to show nucleation, the boiling physics at the heart of two-phase, and to build awareness.

Speaker #3: As industry analysts have pointed out, at extreme rack densities, the pipe sizing and physical volume required becomes constraints of their own. So whether the limit arrives through the chip's heat or the racks density, the limits exist in every generation moves us closer to them.

Speaker #3: That's the moment we're preparing for. And the four milestones I laid out are how we will measure progress. Excelsius is positioned to scale when that time comes.

Speaker #3: And our deployments to date tell the story of an evolving company. Our earliest shipments were demo systems and in-rack CDUs with a load letter, built to show nucleation—the boiling physics at the heart of two-phase—and to build awareness.

Speaker #3: Then we matured to shipping thermal simulation racks, packed with load sleds that simulate real AI workloads, letting users test our cooling improvements and observe the physics for themselves.

John Hewitt: Then we matured to shipping thermal simulation racks packed with load sleds that simulate real AI workloads, letting users test our cooling and prove the physics for themselves. Today's deployments are different. They're built around specific servers, specific chips, specific hyperscale computing solutions. Our customers are no longer testing whether two-phase works. They're testing how well it works with their equipment. I'm proud to be leading Accelsius through this moment. We believe that we have proven the technology. Now it is time for us to prove our reliability, then to scale it with maturity and commercial discipline. That's exactly what we're doing. I'm glad to be here, and I look forward to your questions. Bill, back to you.

Speaker #3: Today's deployments are different. They're built around specific servers, specific chips, and specific hyperscale computing solutions. Our customers are no longer testing whether two-phase works—they're testing how well it works with their equipment.

Speaker #3: I'm proud to be leading Excelsius through this moment. We believe that we have proven the technology. Now, it is time for us to prove our reliability.

Speaker #3: Then, to scale it with maturity and commercial discipline. That's exactly what we're doing. I'm glad to be here, and I look forward to your questions.

Speaker #3: Bill, back to you.

Speaker #1: Thank you, John. Let me sum up briefly. We were candid with you today about what we're learning about Excelsius. And we told you exactly how we report progress from here.

Bill Haskell: Thank you, John. Let me sum up briefly. We were candid with you today about what we are learning about Accelsius, and we told you exactly how we will report progress from here. The leadership of this company, at Innventure and at Accelsius, is stronger than it has ever been. We are more bullish on the Accelsius opportunity than we have ever been. Operator, let us open the line for questions.

Speaker #1: The leadership of this company at Inventure and at Excelsius is stronger than it has ever been. We had a more bullish on the Excelsius opportunity than we have ever been.

Speaker #1: Operator, let's open the line for questions.

Speaker #2: Thank you. As a reminder, if you would like to ask a question, please click on the raise hand button, which can be found on the block bar at the bottom of your screen.

Operator: Thank you. As a reminder, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question comes from Aashi Shah with Sidoti & Company. Your line is open. Please unmute and ask your question.

Speaker #2: When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called.

Speaker #2: Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question comes from Ashi Shah with Sedodian Co.

Speaker #2: Your line is open. Please unmute and ask your question.

Speaker #3: Thank you for taking my question. Previously, you mentioned about $50 million of Excelsius bookings. How much of that is associated with DarkNX, and with the original DarkNX site no longer moving forward?

Aashi Shah: Thank you for taking my question. Previously, you have mentioned about $50 million of Accelsius bookings. How much of that is associated with DarkNX, and with the original DarkNX site no longer moving forward, are those bookings still intact, or do they automatically transfer to the new site, or would you need a new agreement?

Speaker #3: Are those bookings still intact or do they automatically transfer to the new site? Or would you need a new agreement?

Speaker #1: John, do you want to field that question for us?

Bill Haskell: John, do you want to field that question for us?

Speaker #4: Sure. Thank you, Bill. We don't normally disclose specific dollar amounts with respect to individual customers. But what I can tell you—and thank you for the question, by the way—

John Hewitt: Sure. Thank you, Bill. We do not normally disclose specific dollar amounts with respect to individual customers. What I can tell you, and thank you for the question, by the way, what I can tell you is we expect that order to transfer to a new site. The reason that we de-booked the order, as Dave mentioned earlier, is it is going to take them time to find a new site, to get the appropriate allocations, et cetera, and because of that, timing is uncertain.

Speaker #4: What I can tell you is we expect that order to transfer to a new site. The reason that we debook the order, as Dave mentioned earlier, is it's going to take them time to find a new site to get the appropriate allocations, etc.

Speaker #4: And because of that timing is uncertain.

Speaker #3: Right. But if you can just give us a little more context on what happened with the original site—was it related to power availability, financing, GPU availability, or was it something else?

Aashi Shah: Right. But if you can just give us a little more context on what happened with the original site. Was it related to power availability, financing, GPU availability, or was it something else?

Speaker #4: They lost the site, and our understanding is it had to do with the power envelope.

John Hewitt: They lost the site, and our understanding is it had to do with the power envelope.

Speaker #3: Okay. And you've identified and executed hyperscaler SOW as a key milestone. How advanced are those discussions today? And once you secure one, what does the timeline typically look like from there to commercial development and deployment, and revenue?

Aashi Shah: Okay. You have identified and executed hyperscaler SOW as a key milestone. How advanced are those discussions today? Once you secure one, what does the timeline typically look like from there to commercial deployment and revenue?

Speaker #4: That's a great question. So we have a number of hyperscale conversations that are in various stages, and I hope to be able to report to you soon that we've crossed that particular milestone.

John Hewitt: It's a great question. We have a number of hyperscale conversations that are in various stages, and I hope to be able to report to you soon that we've crossed that particular milestone. But I'll leave it this way, there are very active conversations happening even as we speak. With respect to the timeline, each one of the hyperscalers has their own timeline. But in general, they will go from early Statement of Work where the technology is validated. They will then do a proof of concept deployment, sometimes as big as a row in an existing data center. From there, you're designed into the data center reference design. They're effectively their blueprint. Then volume production, volume deployment happens.

Speaker #4: But I'll leave it this way: there are very active conversations happening, even as we speak. With respect to the timeline, each one of the hyperscalers has their own timeline.

Speaker #4: But in general, they will go from an early statement of work where the technology is validated. They will then do a proof of concept deployment, sometimes as big as a row in an existing data center.

Speaker #4: And then from there, you're designed into the data center reference design. They're effectively their blueprint. And then volume production, volume deployment happens. That cycle, depending on the hyperscaler, can run between two and three years.

John Hewitt: That cycle, depending on hyperscaler, can run between 2 and 3 years, and we are in various stages with many of them as we work down that path.

Speaker #4: And we're in various stages with many of them as we work down that path.

Speaker #3: Right. And so, again, we've been looking at 2027 as the meaningful commercialization year for Excelsius. But now, it's too soon for that—and too early for any visibility into 2027.

Aashi Shah: Right. Again, we've been looking at 2027 as the meaningful commercialization year for Accelsius, but now it's too soon for that and too early for any visibility into 2027. Is that right?

Speaker #3: Is that right?

Speaker #4: I think it is too soon for visibility into 2027 from a specific revenue and bookings perspective. What we are heavily focused on now are those four milestones that we walked through just a few minutes ago.

John Hewitt: I think it is too soon for visibility into 2027 from a specific revenue and bookings perspective. What we are heavily focused on now is those 4 milestones that we walked through just a few minutes ago.

Speaker #3: All right. Thank you. I'll jump back in the queue.

Aashi Shah: All right. Thank you. I will come back to you.

Speaker #4: Thank you.

John Hewitt: Thank you.

Speaker #2: Our next question comes from Nehal Chokshy with Northland. Your line is open. Please unmute and ask your question.

Operator: Our next question comes from Nehal Chokshi with Northland. Your line is open. Please unmute and ask your question.

Speaker #5: Can you hear me?

Nehal Chokshi: Can you hear me?

Speaker #1: Yes, we can, Nehal.

Bill Haskell: Yes, we can, Nehal.

Speaker #5: All right. Great.

Nehal Chokshi: All right, great.

Speaker #1: Good afternoon.

Bill Haskell: Afternoon.

Speaker #5: Okay. So, slide 13 has a stat of the third-party validation. When did this third-party simulator start to work on this testing?

Nehal Chokshi: Okay. Slide 13 has the stat of the third-party validation. When did this third-party integrator start to work on this testing?

Speaker #1: Is this, uh, which chart is 13? I don't have it in front of me, Nehal.

Bill Haskell: Which chart is 13? I do not have it in front of me, Nehal. Is that the chart showing the adoption?

Speaker #5: Oh, it's the one that was.

Speaker #1: It's the one that talks about the third-party integrator validation results of New Cool being able to operate the system in the 14-degree solar.

Nehal Chokshi: It's the one that talks about the third-party integrator validation results of NeuCool being able to operate the system at 14 degrees cooler.

Speaker #5: And so the question is, when did this third-party integrator start the work to do this validation?

Bill Haskell: The question is?

Nehal Chokshi: When did this third-party integrator start the work to do this validation?

Speaker #1: John, do you want to feel that?

Bill Haskell: John, you want to field that?

Speaker #4: Yeah, I don't know. I don't know the specific date, but I think it was about 60 days or so ago. They completed it at the end of July.

John Hewitt: Yeah. I do not know the specific date, but I think it was about 60 days or so ago. They completed it at the end of July, and we announced it right after that.

Speaker #4: And we announced it right after that.

Nehal Chokshi: Okay.

Speaker #5: Okay. And in this.

John Hewitt: Apologies.

Speaker #4: Apologies.

Speaker #5: In this slide, you referenced a Jacobs reference design. What is that? And is it fair to assume that Jacobs is actually the third-party integrator?

Nehal Chokshi: In this slide, you referenced a Jacobs reference design. What is that, and is it fair to assume that Jacobs is actually the third-party integrator?

Speaker #4: No. Jacobs is a—and there’s some information on our website with respect to that. But about a year or a year and a half ago, if memory serves, we did some work with them.

John Hewitt: No, Jacobs is a, and there is some information on our website with respect to that, but about a year or a year and a half ago, if memory serves, we did some work with them evaluating the benefits at the overall data center level, thinking about what happens to the cooling infrastructure, what happens to the broader building power envelope, and then how could that get deployed. That is the Jacobs engineering study that we are referring to. That is completely a different proof point.

Speaker #4: Evaluating the benefits at the overall data center level—thinking about what happens to the cooling infrastructure, what happens to the broader building power envelope, and then how that could get deployed.

Speaker #4: That's the Jacobs Engineering study that we're referring to. That's a completely different viewpoint.

Speaker #5: Okay. Can you give us a sense as to who are the types of customers that this third-party integrator has?

Nehal Chokshi: Okay. Can you give us a sense as to who are the type of customers that this third-party integrator has?

Speaker #4: I want to be careful about the word 'integrator,' but this particular third party would serve many of the NeoCloud and enterprise customers.

John Hewitt: I want to be careful about the word integrator. This particular third party would serve many of the neocloud and enterprise customers.

Speaker #5: Great. Okay, now, the hyperscaler statement of work and chipmaker engagement are key milestones. Arguably, to a certain extent, both of these are the same because hyperscalers are becoming chipmakers as well.

Nehal Chokshi: Great. Okay. Hyperscaler Statement of Work and chip maker engagement as key milestones. Arguably, to a certain extent, both of these are the same because hyperscalers are becoming chip makers as well. Is that not true?

Speaker #5: Is that not true?

Speaker #4: It's a great question. As we look at and analyze the market, each hyperscaler has their own strategy. Depending upon which one we're talking about, some of them have used up to, by our estimates, 50% or so custom chips.

John Hewitt: Well, it's a great question. As we look at and we analyze the market, each hyperscaler has their own strategy. Depending upon which one we're talking about, some of them use up to our estimates, 50% or so custom chips, and the other half is a mix of off-the-shelf chips from one of the major suppliers. There are other hyperscalers that the mix is much, much lower than that. I think there are probably, I'd say 3 to 4 major chip makers that we have to engage with, and each one of those engagements leads you to a little bit different part of the market. Then each hyperscaler has their own chip strategy, as you pointed out just a second ago. They also have their own server ODM or OEM strategy.

Speaker #4: And the other half is a mix of off-the-shelf chips, quote, from one of the major suppliers. There are other hyperscalers where the mix is much, much lower than that.

Speaker #4: So I think there are probably, I'd say, three to four major chipmakers that we have to engage with. And each one of those engagements leads you to a little bit different part of the market.

Speaker #4: And then each hyperscaler has their own chip strategy, as you pointed out just a second ago. They also have their own server ODM or OEM strategy.

Speaker #4: So we've got to knit together, and that's why these milestones are so critical—particularly the chipmaker engagement, the server ODM and OEM relationships, and the hyperscaler—because all three of those pieces have to almost work in concert together.

John Hewitt: We've got to knit together, and that's why these milestones are so critical, particularly the chip maker engagement, the server ODM and OEM relationships, and the hyperscaler, because all three of those pieces have to almost work in concert together.

Speaker #5: Got it. All right. My last question is that, at least from my perspective, I would say for at least a year, I have been more in the camp of 'when,' not 'if.'

Operator: Got it. All right. My last question is that, at least from my perspective, I would say for at least a year, I have been more in the camp of when, not if. I am curious from your perspective of when did you guys go from if to when, and what was the catalyst?

Nehal Chokshi: Got it. All right. My last question is that, at least from my perspective, I would say for at least a year, I have been more in the camp of when, not if. I am curious from your perspective of when did you guys go from if to when, and what was the catalyst?

Speaker #5: And so I'm curious, from your perspective, when did you guys go from 'if' to 'when'? And what was the catalyst?

Speaker #4: That's a really great question. I think we've been pretty convinced internally that it's not if, but it's when. And I think for us, that moment was relatively early on, in the first couple of years of operation, when we proved that the technology worked and we started getting really good proof points around the performance relative to single-phase cooling and air cooling.

John Hewitt: That is a really great question. I think we have been pretty convicted internally that it is not if, but it is when. I think for us, that moment was relatively early on when, in the first couple of years of operation, when we proved that the technology worked, and we started getting really good proof points around the performance relative to single-phase cooling and air cooling. Then for us, the reason that we talk about now the conviction of if versus when is it is not just us that is convicted, it is the rest of the market that is in the rest of the ecosystem.

Speaker #4: For us, the reason we talk now about the conviction of "if" versus "when" is that it's not just us that's convicted. It's also the rest of the market and the rest of the ecosystem.

Nehal Chokshi: What do you think of the rest of the ecosystem?

Speaker #4: And if you look.

Speaker #1: If I can just.

Operator: If you look, if I can just.

Operator: Go ahead. Please, Will.

Speaker #5: Yeah, please will.

Speaker #1: I was just going to say, if you look at the industry information out there, there's a lot of conviction now that virtually all of the major players are migrating, or believe they'll have to migrate, to two-phase at some point.

Bill Haskell: I was just going to say, if you look at the industry information out there is a lot of conviction now that virtually all of the major players are migrating or believe that they will have to migrate to two-phase at some point. The other big indicator too is if you look at the projection for the size of the two-phase market in 2030 of $9 billion, that is materially higher than it was even a year ago. One of the key messages here is that while it is true that some of the smaller players that would typically be early adopters cannot access the market for various reasons, the bigger players that we are engaged with are moving in sooner. The inflection point of value, we think, actually is coming at us more readily than we had initially anticipated.

Speaker #1: But the other big indicator, too, is if you look at the projection for the size of the two-phase market in 2030 of $9 billion, that's materially higher than it was even a year ago.

Speaker #1: So one of the key messages here is that while it's true that some of the smaller players, who would typically be early adopters, can't access the market for various reasons, the bigger players that we're engaged with are moving in sooner.

Speaker #1: And so, the inflection point of value, we think, actually is coming at us more readily than we had initially anticipated.

Speaker #5: Great, thank you for taking my questions.

Nehal Chokshi: Great. Thank you for taking my questions.

Speaker #4: Thank you.

John Hewitt: Thank you.

Speaker #2: Our next question comes from Chip Moore with Roth Capital Partners. Your line is open. Please unmute and ask your question.

Bill Haskell: Thanks.

Operator: Our next question comes from Chip Moore with ROTH Capital Partners. Your line is open. Please unmute and ask your question.

Speaker #4: Thanks. Thanks. Can you hear me okay? Thanks for taking the question.

Chip Moore: Thanks. Can you hear me okay? Thanks for taking my question.

Speaker #1: We can, Chip.

Bill Haskell: We can, Chip. Good afternoon.

Speaker #4: Hey, yeah, good afternoon. I wanted to follow up there, I guess, on cracking a hyperscaler. It sounds like you've got discussions that have been ongoing for a while.

Chip Moore: Hey. Yeah. Good afternoon. I wanted to follow up there, I guess, on cracking a hyperscaler. It sounds like you have discussions that have been ongoing for a while with more than one, certainly. Can you just expand on maybe those milestones, getting integrated with a server OEM? Is this something that is running concurrently? Can the hyperscaler, as the need arises, make that happen faster? Are they the real pivot point? I think in the past, right, we have talked about potential for orders in, what, the seven to nine figure range. I assume that is some of these type of entities. Just any more color. Thanks.

Speaker #4: With more than one, certainly. Can you just expand on maybe those milestones getting integrated with a server OEM? Is this something that's running concurrently?

Speaker #4: Can the hyperscaler, as the need arises, make that happen faster? Are they the real pivot point? And I think in the past, right, we've talked about the potential for orders in the $7 million to $9 million range.

Speaker #4: So I assume that's some of these types of entities. Just any more color? Thanks. Sure, that's a great question. Sorry. Thank you, Bill. I assumed you were going to throw that one to me.

John Hewitt: Sure. That's a great question. Sorry. Thank you, Bill. I assumed you were going to throw that one to me. Apologies. Thank you for the question. There are server OEMs and server ODMs, and depending upon whether you're a neocloud or you're a hyperscaler, or your strategy is you're going to deploy one of those two solutions. You put your finger on the pulse a second ago that the hyperscalers or a neocloud, an in-customer demand will motivate a OEM or ODM very significantly. We're doing two things. We are working with the server OEM and ODM for building relationships with them. We're deep in all of those conversations, and they, depending upon their own internal strategy, will either test and do some deployment and some engineering work in advance of a hyperscaler, to your example, asking for support.

Speaker #4: Apologies. Thank you for the question. There are server OEMs and server ODMs, and depending upon whether you're a neo-cloud, you're a hyperscaler, or what your strategy is, you're going to deploy one of those two solutions.

Speaker #4: But you put your finger on the pulse a second ago, that the hyperscalers or a NeoCloud, and end-customer demand, will motivate an OEM or ODM very significantly.

Speaker #4: So, we're doing two things. We are working with the server OEMs and ODMs to build relationships with them or deepen all of those conversations.

John Hewitt: We're doing two things. We are working with the server OEM and ODM for building relationships with them. We're deep in all of those conversations, and they, depending upon their own internal strategy, will either test and do some deployment and some engineering work in advance of a hyperscaler, to your example, asking for support. They move much, much quicker when there's a demand signal as well.

Speaker #4: And they, depending upon their own internal strategy, will either test and do some deployment and some engineering work in advance of a hyperscaler, to your example, asking for support.

Speaker #4: But they move much, much quicker when there's a demand signal as well.

John Hewitt: They move much, much quicker when there's a demand signal as well.

Speaker #5: Right. Okay. So that switch could flip faster, but it's uncertain.

Chip Moore: Right. Okay. That switch could flip faster, but it's uncertain.

Speaker #4: 100%. So I have to apologize for stepping in front of you, but I have to work both of those in parallel for exactly that reason.

John Hewitt: 100%.

Chip Moore: Right. Yeah.

John Hewitt: I have to, sorry for stepping in front of you. I have to work both of those in parallel for exactly that reason.

Speaker #5: Yep, great. And then maybe just my follow-up, more so around cash runway, cash burn, right? It sounds like clearly there will be a need at some point for capital, but talk about the potential to raise money at the company level and put some takes.

Chip Moore: Yep, great. Then maybe just my follow-up, more so around cash runway, cash burn. It sounds like clearly there will be a need at some point for capital, but talk about potential to raise money at the company level and puts and takes. Thanks.

Speaker #5: Thanks.

Bill Haskell: Dave, do you want to handle that?

Speaker #1: Dave, do you want to handle that?

Speaker #4: All right. Sure. Hey, Chip. Hey, thanks for the question. In our consolidated statements there, we have $41.5 million in cash. So we have cash on the balance sheet.

Dave Yablunosky: All right, sure.

Dave Yablunosky: Hey, Chip. Hey, thanks for the question. In our consolidated statements there, we have $41.5 million in cash. We have cash on the balance sheet. It is really not an issue. We have access to multiple different avenues to raise cash. We want to do it opportunistically. I did say in my remarks that with the announcements today, there could be a need for cash to do additional cash raises in the H2 of the year. I do not want to really get into any details what those might look like, but just we have cash on the balance sheet. We have access to the standby equity purchase agreement. We will be fine on cash.

Speaker #4: It's really not an issue, and we have access to multiple different avenues to raise cash. We want to do it opportunistically. I did say in my remarks that, with the announcements today, there could be a need for cash to do additional cash raises in the second half of the year.

Speaker #4: I don't really want to get into any details about what those might look like, but just, we have cash on the balance sheet. We have access to the standby equity purchase agreement.

Speaker #4: We're good on cash. We'll be fine.

Speaker #5: Understood, Dave. Thanks.

Chip Moore: Understood, Dave. Thanks.

Bill Haskell: Yeah, the goal really obviously is to minimize any dilution we have and exposure in particular to Accelsius.

Speaker #1: And the goal really, obviously, is to minimize any dilution we have and exposure, in particular, to Celsius.

Speaker #4: Yeah.

Chip Moore: Yeah

Speaker #1: For our share, which I know are eager to participate in that.

Bill Haskell: for our shareholders, which I know are eager to participate in that.

Speaker #4: And Aeroflex and Refinity, probably more so Aeroflex with some of the commercial momentum, but any update on ability there maybe to do something strategic or otherwise?

Chip Moore: AeroFlexx and Refinity, probably more so AeroFlexx with some of the commercial momentum, but any update on ability there maybe to do something strategic or otherwise?

Speaker #4: Well, we did say at the operating cost.

Dave Yablunosky: Well, we did say, with the operating-

Bill Haskell: Yeah, so the-

Speaker #1: Yeah, go ahead. I was just going to say, first of all, both Refinity and Aeroflex have an issue, in a way, with their raising.

Dave Yablunosky: Go ahead, Bill. No, go ahead.

Bill Haskell: No, go ahead. I was just going to say, first of all, both Refinity and AeroFlexx have initiatives underway where they are raising their own capital to be self-funding. So the amount of cash that we need to participate in both of those is very small for the rest of the year, and they should be self-funding thereafter. So that is good news. I think with respect to AeroFlexx, they are turning the corner. There is a growing pipeline, and the players that they are dealing with are getting bigger. These CPG companies, as we all know, move very slowly, and it is very difficult to move them at a pace that we like. Nevertheless, they have turned the corner or are turning the corner and had quite a few announcements out in the marketplace. So I think we will see how the rest of this calendar year goes and kind of where they end the year.

Speaker #1: Their own capital to be self-funding. So, the amount of cash that we need to participate in both of those is very, very, very small for the rest of the year.

Speaker #1: And they should be self-funding thereafter, so that's good news. I think with respect to Aeroflex, they are turning the corner. There's a growing pipeline.

Bill Haskell: There is a growing pipeline, and the players that they are dealing with are getting bigger. These CPG companies, as we all know, move very slowly, and it is very difficult to move them at a pace that we like. Nevertheless, they have turned the corner or are turning the corner and had quite a few announcements out in the marketplace. So I think we will see how the rest of this calendar year goes and kind of where they end the year. But I think there are any number of avenues we can take with respect to AeroFlexx.

Speaker #1: And the players that they're dealing with are getting bigger. It's these CPG companies, as we all know, that move very, very slowly. And it's very difficult to move them at a pace that we like.

Speaker #1: Nevertheless, they've turned the corner, or are turning the corner, and have had quite a few announcements out on the marketplace. So, I think we'll see how the rest of this calendar year goes and where they end the year.

Speaker #1: But I think there are any number of avenues we can take, but there's very little flex.

Bill Haskell: But I think there are any number of avenues we can take with respect to AeroFlexx.

Speaker #4: Perfect. Thanks very much.

Chip Moore: Perfect. Thanks very much.

Speaker #1: Thanks, Chip.

Bill Haskell: Thanks, Chip.

Speaker #4: Thanks, Chip.

Dave Yablunosky: Thanks, Chip.

Speaker #2: Our next question comes from Nehal Chokshki with Northland.

Operator: Our next question comes from Nehal Chokshi with Northland.

Bill Haskell: Nehal.

Speaker #1: Nehal.

Speaker #5: Hey, follow-up question from me—and really, John actually. When do you expect the Fenman architecture, the cooling architecture, to be announced?

Nehal Chokshi: Hey. A follow-up question from me, and really John or John Ashley. When do you expect the Fenman architecture, the cooling architecture to be announced?

Speaker #4: That's a really good question. And the direct answer is, I don't know. There have been some—yeah, I don't know. We're monitoring that one very, very carefully.

John Hewitt: That is a really good question, and the direct answer is I do not know. There have been some. Yeah, I do not know. We are monitoring that one very carefully.

Speaker #5: Okay. And what's your understanding, and when does the design get locked down? Because I think the design gets locked down well ahead of the announcement times.

Nehal Chokshi: Okay. What is your understanding, and when does the design get locked down? Because I think the design gets locked down well ahead of the announcement times.

Speaker #4: Correct. I think that's true.

John Hewitt: Correct. I think that is true.

Speaker #5: Okay. All right. Thank you.

Nehal Chokshi: Okay. All right. Thank you.

Speaker #4: You're welcome. Sorry I couldn't be more helpful on that one. If you find out, let me know, would you?

John Hewitt: You are welcome. Sorry I could not be more helpful on that one. If you find out, let me know, would you?

Operator: This concludes today's call. You may now disconnect.