Nel Q2 2025 slides reveal 48% revenue drop, bets on next-generation hydrogen technology

Nel ASA reported a challenging Q2 2025, with revenue down 48% to NOK 174 million and an increased EBITDA loss of NOK 86 million, alongside a 74% drop in order intake and a 40% reduction in backlog, primarily due to continued delays in hydrogen project final investment decisions. Despite a substantial cash position of NOK 1.9 billion, the company is implementing cost reductions and aggressively investing in next-generation alkaline and PEM electrolyzer technologies, aiming for significant CAPEX and OPEX reductions and commercialization by 2026. Nel anticipates the extended US 45V tax credit will catalyze market growth, positioning itself for future expansion through innovation and strategic partnerships amidst current headwinds.

Analysis

Nel ASA's second-quarter 2025 results reveal a significant deterioration in its financial performance amidst a challenging hydrogen market. Revenue fell 48% year-over-year to NOK 174 million, while order intake plummeted 74%, leading to a 40% contraction in the order backlog to NOK 1,249 million. This downturn was primarily driven by a 70% revenue collapse in the Alkaline division, attributed to persistent delays in final investment decisions (FIDs) on major projects. In response, Nel has implemented aggressive cost-cutting, including reducing its workforce from 430 to 361 full-time equivalents. Despite the widened EBITDA loss of NOK 86 million, the company maintains a substantial cash position of NOK 1,928 million. The forward-looking strategy is heavily reliant on technological innovation, with Nel developing next-generation alkaline and PEM electrolyzers that promise dramatic reductions in CAPEX (up to 70% for PEM stacks) and OPEX. The company's roadmap includes critical milestones such as a prototype validation and a gigawatt-scale production FID in Q3 2025, with commercial product launches targeted for 2026. Regulatory clarity, particularly the extension of the US 45V hydrogen tax credit, is viewed as a key potential catalyst for market recovery, but the investment case remains a balance between severe current headwinds and a high-potential, technology-led turnaround.

Key Decisions for Investors

• Investors should closely monitor Nel's cash burn rate against its NOK 1.9 billion reserve, as the company's ability to fund its ambitious next-generation technology roadmap through the current market trough is critical for its long-term viability.
• Given the 74% drop in order intake linked to project delays, look for signs of market recovery, specifically an acceleration in final investment decisions (FIDs) and tangible project commitments spurred by the extended US 45V tax credit, as these are the primary catalysts for revenue and backlog recovery.
• The investment thesis is heavily weighted towards future technology, so upcoming milestones in Q3 2025, such as the prototype validation and gigawatt-scale production FID for the new pressurized alkaline system, represent crucial validation points that could significantly de-risk the company's forward-looking strategy.