Q2 2026 Microvast Holdings Inc Earnings Call

August 10, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the Microvast second quarter 2026 earnings call. As a reminder, all participants are in listen-only mode, and this conference is being recorded.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Microvast Second Quarter 2026 Earnings Call. As a reminder, all participants are on a listen-only mode, and this conference is being recorded. I would like to turn the conference over to the Microvast Investor Relations. Please go ahead.

Speaker #1: I would like to turn the conference over to Microvast Investor Relations. Please go ahead.

Speaker #2: Thank you, operator, and thank you, everyone, for joining our update today. This is Rodney Worthen, Chief Financial Officer of Microvast. With me on today's call is Mr. Yang Wu, founder, chairman, and chief executive officer of Microvast.

Rodney Worthen: Thank you, operator, and thank you, everyone, for joining our update today. This is Rodney Worthen, Chief Financial Officer of Microvast. With me on today's call is Mr. Yang Wu, Founder, Chairman, and Chief Executive Officer of Microvast. I will start off with a review of the second quarter results before handing it to Mr. Wu to provide some operational and business updates. Ahead of this call, Microvast issued its second quarter earnings press release, which can be found on the investor relations section of our website, ir.microvast.com. We have also posted a slide presentation to accompany management's prepared remarks for today's call. As a reminder, please note this call may include forward-looking statements. These statements are based on current expectations and assumptions and should not be relied upon as representative of our views for subsequent dates.

Speaker #2: I will start off with a review of the second quarter results, before handing it to Mr. Wu to provide some operational and business updates.

Speaker #2: Ahead of this call, Microvast issued its second quarter earnings press release, which can be found on the Investor Relations section of our website, ir.microvast.com.

Speaker #2: We have also posted a slide presentation to accompany management's prepared remarks for today's call. As a reminder, please note that this call may include forward-looking statements.

Speaker #2: These statements are based on current expectations and assumptions and should not be relied upon as representative of our views for subsequent dates. We undertake no obligation to revise or release the results of any revision to these forward-looking statements due to new information or future events.

Rodney Worthen: We undertake no obligation to revise or release the results of any revision to these forward-looking statements due to new information or future events. Actual results may differ materially from expectations due to a variety of risks and uncertainties. For more information on material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. We may also discuss non-GAAP financial measures during this call. These measures should be considered in addition to, and not as a substitute for, or in isolation from, GAAP results. These non-GAAP measures have been reconciled to their most directly comparable GAAP metrics in the tables included at the end of our earnings press release and the slide presentation. After the conclusion of this call, a webcast replay will be available on the investor relations section of Microvast's website.

Speaker #2: Actual results may differ materially from expectations due to a variety of risks and uncertainties. For more information on material risks and other important factors that could affect our financial results, please refer to our filings with the SEC.

Speaker #2: We may also discuss non-get financial measures during this call. These measures should be considered in addition to and not as a substitute for or in isolation from gap results.

Speaker #2: These non-get measures have been reconciled to the most directly, comparable gap metrics in the tables included at the end of our earnings press release and this slide presentation.

Speaker #2: After the conclusion of this call, a webcast replay will be available on the Investor Relations section of Microvast's website. Please join me on slide 3, which details the results for the second quarter over the past several years.

Rodney Worthen: Please join me on slide three, which details results for the second quarter over the past several years. Our revenue for the quarter was $87.3 million, a decrease of $4.1 million or 4.5% compared to the same period in 2025. The decrease was primarily driven by a $2.7 million tariff refund issued to a customer, which was recorded as a reduction to our revenue in the current period. Gross profit for the second quarter was $25.8 million, with a gross margin of 29.5%, compared to 34.7% in Q2 2025. The decrease in gross margin was primarily due to higher raw material prices and lower production utilization, which reduced fixed cost absorption, slightly offset by recognition of the tariff refunds. Turn to slide four to view our P&L for the quarter and year to date.

Speaker #2: Our revenue for the quarter was $87.3 million, a decrease of 4.1 million or 4.5 percent compared to the same period in 2025. The decrease was primarily driven by a 2.7 million tariff refund issued to a customer which was recorded as a reduction to our revenue in the current period.

Speaker #2: Gross profit for the second quarter was $25.8 million, where the gross margin of $29.5 percent compared to $34.7 percent in Q2 2025. The decrease in gross margin was primarily due to higher raw material prices and lower production utilization, which reduced fixed cost absorption slightly offset by recognition of the tariff refunds.

Speaker #2: Turn to slide 4 to view our P&L for the quarter and year-to-date. Let's jump to the operating expenses, which increased to $27.5 million for the quarter compared to $23.7 million in 2025, a 16.1 percent increase year over year.

Rodney Worthen: Let's jump to the operating expenses, which increased to $27.5 million for the quarter compared to $23.7 million in 2025, a 16.1% increase year over year. General and administrative expenses for the three months increased by $2.7 million or 24.2% compared to the same period in 2025. This increase was primarily due to a $2.6 million increase in legal and other professional service fees. Research and development expenses for the second quarter increased by $1.1 million or 14.8% compared to the same period in 2025. The increase is primarily due to an increase in labor costs as we expanded our investment in new product development. Selling and marketing expenses for the three months increased by $1.3 million or 38.5% compared to the same period in 2025.

Speaker #2: General administrative expenses for the three months increased by $2.7 million, or $24.2 percent, compared to the same period in 2025. This increase was primarily due to $2.6 million increase in legal and other professional service fees.

Speaker #2: Research and development expenses for the second quarter increased by $1.1 million, or $14.8 percent, compared to the same period in 2025. The increase was primarily due to the increase in labor costs as we expanded our investment in new product development.

Speaker #2: Selling and marketing expenses for the three months increased by $1.3 million, or 38.5%, compared to the same period in 2025. This increase was primarily due to a $1.5 million increase in service fees associated with customer retention initiatives, partially offset by a decrease in personnel costs.

Rodney Worthen: This increase is primarily due to a $1.5 million increase in service fees associated with customer retention initiatives, partially offset by a decrease in personnel costs. We reported a GAAP net loss of $12 million in the quarter. After adjusting for non-cash expenses such as stock-based compensation expense of $0.8 million and fair value changes of our warrant liability and convertible loan of $5.8 million, we reported an adjusted net loss of $5.3 million, compared to an adjusted net profit of $16.3 million last year. Non-GAAP adjusted EBITDA was $3.6 million in Q2 2026, compared to non-GAAP adjusted EBITDA of $25.9 million in Q2 2025. For the six-month period, revenue decreased by $60 million, or 28.8%, compared to the same period in 2025.

Speaker #2: We reported a gap net loss of $12 million in the quarter. After adjusting for non-cash expenses, such as stock-based compensation expense of $0.8 million and fair value changes of our warrant liability and convertible loan of $5.8 million, we reported an adjusted net loss of $5.3 million compared to an adjusted net profit of $16.3 million last year.

Speaker #2: Non-GAAP adjusted EBITDA was $3.6 million in Q2 2026, compared to non-GAAP adjusted EBITDA of $25.9 million in Q2 2025. For the six-month period, revenue decreased by $60 million, or 28.8 percent, compared to the same period in 2025.

Speaker #2: The decrease was primarily driven by a 24.3 percent reduction in sales volumes from approximately 947 megawatt-hours in 2025 to approximately 717 megawatt-hours for the same period in 2026, and a $2.7 million tariff refund issued to a customer, which was recorded as a reduction to our revenue in the current period.

Rodney Worthen: The decrease was primarily driven by a 24.3% reduction in sales volumes from approximately 947 megawatt hours in 2025 to approximately 717 megawatt hours for the same period in 2026, and a $2.7 million tariff refund issued to a customer, which was recorded as a reduction to our revenue in the current period. Gross profit margin was 30.4% for the six months compared to 36% in 2025. Decrease in gross margin was primarily due to higher raw material prices and lower production utilization, which reduced our fixed cost absorption, slightly offset by recognition of the tariff refunds. Operating expenses increased to $54.6 million for the year-to-date period, compared to $52.9 million in 2025, a 3.3% increase year over year. General and administrative expenses for the six months increased by $1.5 million, or 6%, compared to the same period in 2025.

Speaker #2: Gross profit margin was 30.4 percent for the six months, compared to 36 percent in 2025. The decrease in gross margin was primarily due to higher raw material prices and lower production utilization, which reduced our fixed cost absorption, slightly offset by recognition of the tariff refunds.

Speaker #2: Operating expenses increased to $54.6 million for the year-to-date period compared to $52.9 million in 2025, a 3.3 percent increase year over year. General and administrative expenses for the six months increased by $1.5 million, or 6 percent, compared to the same period in 2025.

Speaker #2: This increase was primarily due to a 4 million increase in legal and other professional service fees partially offset by a 3.1 million decrease in allowance for credit loss due to improved credit measurement.

Rodney Worthen: This increase is primarily due to a $4 million increase in legal and other professional service fees, partially offset by a $3.1 million decrease in allowance for credit loss due to improved credit management. Research and development expenses for the six months increased by $1.7 million, or 10.7%, compared to the same period in 2025. The increase was primarily due to a $1.4 million increase in labor costs as we expand our investment in new product development. Selling and marketing expenses for the six months decreased by $138,000, which was stable compared to the same period in 2025. We reported a GAAP net profit of $36.2 million for the six-month period. For the six months, non-GAAP adjusted net loss was $19.9 million, compared to non-GAAP adjusted net profit of $35.6 million in the prior year period.

Speaker #2: Research and development expenses for the six months increased by $1.7 million, or 10.7 percent, compared to the same period in 2025. The increase was primarily due to a 1.4 million increase in labor costs as we expanded our investment in new product development.

Speaker #2: Selling and marketing expenses for the six months decreased by $138,000, which was stable compared to the same period in 2025. We reported a GAAP net profit of $36.2 million for the six-month period.

Speaker #2: For the six months, non-GAAP adjusted net loss was $19.9 million, compared to non-GAAP adjusted net profit of $35.6 million in the prior year period.

Speaker #2: Non-gap adjusted EBITDA of negative $1.9 million in the six-month period compared to non-gap adjusted EBITDA of $54.4 million in the prior year. Reconciliations to these non-gap metrics was most comparable gap metrics are included in the table at the end of this presentation in our earnings press release.

Rodney Worthen: Non-GAAP adjusted EBITDA of -1.9 million in the six-month period, compared to non-GAAP adjusted EBITDA of 54.4 million in the prior year. Reconciliations to these non-GAAP metrics to the most comparable GAAP metrics are included in the table at the end of this presentation in our earnings press release. Please turn to slide five where we will review our revenue by region. US sales decreased year-over-year, primarily driven by both a $2.7 million tariff refund issued to a US customer, recorded as a reduction to our revenue in the current period, and by our largest customer bringing product into 2025 due to uncertainty around the tariff outcomes. Before the revenue reduction of the tariff refund, a total of $0.9 million and $1.2 million in revenue was realized for the three and six-month periods, respectively. European sales increased 35% in the quarter compared to prior year period.

Speaker #2: Please turn to slide 5 where we review our revenue by region. US sales decreased year over year, primarily driven by both a 2.7 million tariff refund issued to a US customer recorded as a reduction to our revenue in the current period, and by our largest customer bringing product into 2025 due to uncertainty around the tariff outcomes.

Speaker #2: Before the revenue reduction of the tariff refunds, a total of 0.9 million and 1.2 million revenue was realized for the three and six-month periods respectively.

Speaker #2: European sales increased 35 percent in the quarter compared to the prior year period. The region accounted for 61 percent of quarterly revenue, up from 43 percent last year.

Rodney Worthen: The region accounted for 61% of quarterly revenue, up from 43% last year. Year to date sales are down 3%, impacted by customer platform rollout delays in the previous quarter. APAC sales declined 23% in the quarter compared to the prior year period, with year to date sales down 45%. The reduced sales performance in APAC is primarily due to shifting regulatory and geopolitical dynamics, and a demand shift towards lower cost products in India. Now turning to slide six, we will walk through our cash flow performance for the year. Net cash used in our operating activities was $33.3 million for the six months ending 30 June 2026, a decrease of $77.6 million compared to $44.3 million generated by operating activities in the same period in 2025.

Speaker #2: Year-to-date sales were down 3 percent, impacted by customer platform rollout delays in the previous quarter. APAC sales declined 23 percent in the quarter compared to the prior year period, with year-to-date sales down 45 percent.

Speaker #2: The reduced sales performance in APAC is primarily due to shifting regulatory and geopolitical dynamics and a demand shift towards lower cost products in India.

Speaker #2: Now turning to slide 6, we'll walk through our cash flow performance for the year. Net cash used in our operating activities was $33.3 million for the six months ending June 30, 2026, a decrease of 77.6 million compared to $44.3 million generated by operating activities in the same period in 2025.

Speaker #2: This change was primarily due to $60.6 million reduction in net income after adjusting for non-cash items and a $17 million net change in operating assets and liabilities, which changes in our operating assets and liabilities were primarily driven by a decreases in.

Rodney Worthen: This change was primarily due to $60.6 million reduction in net income after adjusting for non-cash items and a $17 million net change in operating assets and liabilities. The changes in our operating assets and liabilities were primarily driven by decreases in accounts and notes payable and an increase in inventory balances, partially offset by a decrease in accounts receivable due to improved credit management. Net cash used in investing activities was $3.3 million for the six months ending 30 June 2026, compared to $5.1 million in the same period of 2025. This cash outflow primarily consisted of the purchase of our office building in the US and capital expenditures related to the expansion of our Huzhou Phase 3.2 manufacturing facility, partially offset by the proceeds from the sale of our held-for-sale asset.

Speaker #2: Notes payable and an increase in inventory balances, partially offset by a decrease in accounts payable due to improved credit management. Net cash used in investing activities was $3.3 million for the six months ended June 30, 2026, compared to $5.1 million in the same period of 2025.

Speaker #2: This cash outflow primarily consisted of the purchase of our office building in the US and capital expenditures related to the expansion of our Hujo Phase 3.2 manufacturing facility, partially offset by the proceeds from the sale of our held-for-sale assets.

Speaker #2: Net cash generated by financing activities was $8.2 million for the six months, an increase of $15 million compared to $6.8 million used in the same period of 2025.

Rodney Worthen: Net cash generated by financing activities was $8.2 million for the six months, an increase of $15 million compared to $6.8 million used in the same period of 2025. The increase primarily due to $9.8 million increase in proceeds from bank borrowings, $7.4 million decrease in deferred payment related to purchases of property, plant, and equipment. The majority of them were settled during Q1 2026. This was partially offset by a $4.6 million increase in repayments of bank borrowings. After accounting for foreign exchange adjustment of $2.3 million, our cash decreased by $26.2 million, and we ended the quarter with cash equivalents, and restricted cash of $143.1 million. Now I will hand it over to Mr. Wu to go over some operational and business updates.

Speaker #2: The increase was primarily due to a $9.8 million increase in proceeds from bank borrowings and a $7.4 million decrease in deferred payment related to the purchase of property, plant, and equipment, with the majority of them settled during the first quarter of 2026.

Speaker #2: This was partially offset by a $4.6 million increase in repayments of bank borrowings. After accounting for a foreign exchange adjustment of $2.3 million, our cash decreased by $26.2 million, and we ended the quarter with cash, cash equivalents, and restricted cash of $143.1 million.

Speaker #2: Now I'll hand it over to Mr. Wu to go over some operational and business updates.

Speaker #1: Hello, everyone. Thank you for joining us today. Please turn to slide 8 for a quick operational update on our Huzhou Phase 3.2 expansion.

Yang Wu: Hello, everyone. Thank you for joining us today. Please join me on slide 8 for a quick operational update on our Huzhou Phase 3.2 expansion. Installation and commissioning of the production equipment is completed. With production capacity ramping up, we expect the SOP in 2026. Phase 3.2 is expected to add up to 2 gigawatt hour of annual production capacity, and anticipated to be modular across our large battery cell platform. Next, I'd like to go over some of our latest updates in research and development. Please join me on slide 9. We have reached the next milestone with our development stage series connected bipolar cell architecture. Under laboratory test condition, we have successfully scaled to a 17-layer monolithic stack that delivers approximately 72 volts with zero liquid electrolyte. In extended testing, this prototype demonstrated durability, retaining approximately 88.5% of its capacity after 200 cycles at 0.33 C.

Speaker #1: Installation and commissioning of the production equipment is completed, with production capacity ramping up. We expect the SOP in 2026 and the Phase 3.2 is expected to add up to 2 gigawatt-hour of annual production capacity.

Speaker #1: And anticipated to be modular across our large battery cell platform. Next, I'd like to go over some of our latest updates in research and development.

Speaker #1: Please join me on slide 9. We have reached the next milestone, with our development stage series connected bipolar cell architecture. Under laboratory test condition, we have successfully scaled to a 17-layer monolithic stack that delivers approximately 72 volts with zero liquid electrolyte.

Speaker #1: In extended testing, this prototype demonstrated durability, retaining approximately 88.5% of its capacity after 200 cycles at 0.33C. Cross-sectional SEM imaging confirms a uniform multilayer construction, validating the stability of our high-voltage solid-state platform.

Yang Wu: Cross-sectional SEM imaging confirms a uniform multilayer construction, validating the stability of our high-voltage solid-state platform. By delivering 72 volts, this architecture is primarily focused on robotics. Our design has the potential to eliminate heavy interconnects and electronics typically required to drive high-torque robotic motors. Eliminating liquid electrolyte has the potential to provide better thermal safety for human-robot environments, while the compact monolithic design is intended to allow seamless integration into space-constrained robotic frame limbs and autonomous mobile platforms. Slide 10 displays the safety is a core differentiator of our solid-state program. In controlled hot box testing up to 200 degrees Celsius, our prototype cell exhibited exceptional thermal stability, with no ignition or smoke observed throughout the test. Even following a high-temperature internal short event, post-test disassembly showed the internal electrode structure remained largely intact, demonstrating the significant safety potential of eliminating liquid electrolytes.

Speaker #1: By delivering 72 volts, this architecture is primarily focused on robotics. Our design has the potential to eliminate the heavy interconnects and electronics typically required to drive high-torque robotic motors.

Speaker #1: Eliminating liquid electrolyte has the potential to provide better thermal safety for human-robot environments. While the compact monolithic design is intended to allow seamless integration into space-constrained robotic frames and autonomous mobile platforms, slide 10 displays that safety is a core differentiator of our solid-state program.

Speaker #1: In controlled hotbox testing up to 200 degrees Celsius, our prototype cell exhibited exceptional thermal stability. With no ignition or smoke observed throughout the test, even following a high-temperature internal short event, post-test disassembly showed the internal electrode structure remained largely intact.

Speaker #1: Demonstrating the significant safety potential of eliminating liquid electrolytes. And finally, on slide 11, we are seeking to expand our long-term technology platform by exploring ultra-high-capacity chemistries, including an all-solid-state silicon-sulfur cell pairing a sulfur-cathode with a silicon anode.

Yang Wu: Finally, on Slide 11, we are seeking to expand our long-term technology platform by exploring ultra-high-capacity chemistries, including an all-solid-state silicon-sulfur cell pairing a sulfur cathode with a silicon anode. Early laboratory prototype achieved initial specific capacity of over 1,000 milliampere hours per gram, retaining over 90% capacity after 15 cycles. Crucially, our five-layer bipolar design utilizes simultaneous cathode expansion and anode contraction to self-compensate for volume changes during cycling, mitigating contact loss and opening new paths for high-energy density storage. As illustrated in the SEM cross-sections, during cycling, the 48-micron expansion of the cathode is closely offset by a 52-micron contraction of the anode. This internal strain neutralization maintains continuous physical contact across solid interfaces without requiring heavy external compression hardware.

Speaker #1: Early laboratory prototypes achieved an initial specific capacity of over 1,000 milliampere-hours per gram. Retaining over 90 percent capacity after 15 cycles, crucially, our five-layer bipolar design utilizes simultaneous cathode expansion and anode contraction to self-compensate for volume change during cycling.

Speaker #1: Mitigating contact loss and opening new paths for high-energy density storage. As illustrated in the SEM core sections, during cycling, the 48-micron expansion of the cathode is closely offset by a 52-micron contraction of the anode.

Speaker #1: This internal strain neutralization maintains continuous physical contact across solid interfaces, without requiring heavy external compression hardware. For targeted applications like commercial and defense drones, eliminating external pressure fixtures while maximizing gravimetric energy density can potentially translate directly into extended flight endurance.

Yang Wu: For targeted applications like commercial and defense drones, eliminating external pressure fixtures while maximizing gravimetric energy density can potentially translate directly into extended flight endurance, higher payload capacity, and a seamless integration into lightweight airframes. Stay tuned for additional developments. Please turn to Slide 12. As we transition into H2 of 2026, our strategic priorities remain clear: accelerating our path to profitability, scaling with margin discipline, and expanding in high-barrier heavy industry and transit markets. We are tightening operational execution to streamline the transition from R&D to production, protecting our gross margins, and seeking to deploy targeted innovations like our KAF electric powertrain to ensure high-margin customer commitments. Operationally, Huzhou Phase 3.2 remains our central catalyst of 2026, with equipment commissioning progressing toward serial production later this year to support next-generation cell demand.

Speaker #1: Higher payload capacity and a seamless integration into lightweight airframes. Stay tuned for additional developments. Please turn to slide 12. As we transition into the second half of 2026, our strategic priorities remain clear.

Speaker #1: Accelerating our path to profitability, scaling with margin discipline, and expanding in high-barrier, heavy-industry, and the transit markets. We are tightening operational execution to streamline the transition from R&D to production.

Speaker #1: Protecting our gross margins and seeking to deploy targeted innovations like our CAF electric powertrain to ensure high-margin customer commitments. Operationally, Huzo Phase 3.2 remains our central catalyst of 2026, with equipment commissioning progressing toward a serial production later this year, to support next-generation cell demand.

Yang Wu: Domestically, pack-line assembly in Clarksville, Tennessee remains on schedule for initial output by year-end, while full-scale battery plant construction at the site remains contingent on securing additional financing or strategic partnerships. Overall, our team continues to navigate the global macro environment, and we remain focused on executing our milestones to drive long-term shareholder value. Thank you for your continued support. We look forward to sharing further updates in the months ahead.

Speaker #1: Domestically, pipeline assembly in Claswell Tennessee remains on schedule for initial output by year-end. While full-scale battery plant construction at the site remains contingent on securing additional financing or strategic partnerships, overall, our team continues to navigate the global marco environment, and we remain focused on executing our milestones to drive long-term shareholder value.

Speaker #1: Thank you for your continued support. We look forward to sharing further updates in the months ahead.

Operator: This is the conference operator. This concludes the webcast. Thank you for joining Microvast Q2 2026 earnings call. You may now disconnect.

Q2 2026 Microvast Holdings Inc Earnings Call

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