Earnings call transcript: ITM Power posts FY 2026 EPS beat as losses narrow

ITM Power reported FY 2026 revenue of GBP 43.6 million, up 68% year on year, while gross loss narrowed to GBP 6.1 million from GBP 23.7 million and adjusted EBITDA loss improved to GBP 20.2 million from GBP 33 million. Adjusted EPS of -$0.0208 beat the -$0.033 forecast, while revenue of $27.18 million matched expectations; shares nevertheless fell 1.64% in pre-market trading to $90.44. For FY 2027, management guided to revenue of GBP 50 million–GBP 60 million, an adjusted EBITDA loss of GBP 17 million–GBP 20 million, and year-end cash of GBP 170 million–GBP 180 million; 83% of the backlog was profitable at year-end, up from 60% a year earlier.

Analysis

The investable signal is improving contract quality, not the headline EPS beat. If the reported backlog profitability translates into delivered gross margin, ITM can gradually earn a higher-quality equipment multiple; however, the EBITDA improvement partly reflects provision releases after better legacy-project cost visibility, so it is not yet evidence of repeatable operating leverage. Track realized margins on new NEPTUNE/Poseidon work separately from accounting progress recognition.

FY27 guidance also deserves a denominator check: £50–60m revenue against £43.6m implies roughly 15–38% growth, not the approximately 60% cited elsewhere in the article. A larger share of percentage-of-completion revenue may smooth reported sales, but it does not eliminate project execution, collection, or working-capital risk. Flat backlog alongside larger, slower-to-FID opportunities makes order intake increasingly lumpy; delays in UK support or customer financing could therefore weaken revenue visibility without immediately appearing in the backlog.

The 150 MW Hydropulse opportunity is strategic optionality, not yet a bankable earnings catalyst. Its build phase could consume cash before operations, and financing terms, customer commitment, and power/offtake arrangements will determine whether recurring revenue is worth the capital and balance-sheet exposure. Near term, the cash cushion reduces funding urgency; over 6–18 months, utilization and cash conversion matter more than announced capacity. Large reference projects may help credible European suppliers compete for industrial-scale work, but management’s claims about technology advantage and market consolidation are not independently validated here. A delayed FID, worsening delivered margins, or cash falling below FY27 guidance would falsify the improving-turnaround thesis.

Key Decisions for Investors

• No earnings-chase trade: treat the result as a modest quality-of-backlog positive, not proof that ITM has reached sustainable profitability. Reassess after the next update on gross margin and cash conversion.
• Keep ITM on a conditional long watchlist; add only if new profitable-contract deliveries produce positive gross margin without further legacy provision releases. Falsifier: delivered margins disappoint or adjusted EBITDA loss stops narrowing.
• Treat Hydropulse as a catalyst alert, not a valuation assumption. Require a binding customer contract and disclosed project-finance structure before assigning material value; reassess if FID slips beyond the stated 2027 target or financing requires substantial balance-sheet funding.
• Monitor UK hydrogen-funding awards and conversion of supplier selections into firm orders over the next 1–3 months. Delays would pressure order visibility; larger European FIDs would support the structural case.