SES AI Corporation

Q1 2026 Earnings Call — April 23, 2026

Analyst Derek Soderberg (Cancer Fitzgerald): Yeah hey everyone thanks for taking the questions and Jing it's been a pleasure working with you on this one so just on the evaluation and qualification tests can you talk about the typical timeline how long might it take to transition those into firm purchase orders?

Executive Name (Title): Hey Derek are you referring to drones qualification or electrolyte Which one?

Analyst Derek Soderberg (Cancer Fitzgerald): Drones.

Executive Name (Title): Drones. Qualification typically one to two quarters. And then we've started those last year. So most of the qualifications actually have been completed. And now it's just making those in our career facility and have the customers come in and then do the supply chain audit, making sure all the cattle powder, the animal powder, the processing actually take place in Korea.

Analyst Derek Soderberg (Cancer Fitzgerald): Got it. That's helpful. And then on the on-premise solution, I think you said you're going to have some contribution this year. Is there any chance you can quantify that all for us?

Executive Name (Title): Probably in the next quarter. And then so this last quarter, we did have one, one of the largest battery companies that actually signed up to the Molecular Universe search in a box. So only one of the six features. And then we have a few more in the pipeline that are interested in formula in a box, predict in a box, and also other features of the tool.

Analyst Derek Soderberg (Cancer Fitzgerald): Got it. And then one final one for me on the drones again. What's sort of the split between defense and commercial interest? Can you maybe break that out for us at all? Thanks.

Executive Name (Title): It's mostly defense, even though almost all the customers come to us will say it's dual use. Like the same drones could be used for defense, police, commercial. In reality, the customers that come in, so we focus a lot on customers that want NDA compliance, and then only the customers that actually want to get defense contracts would really push for NDA compliance. So we don't have a specific breakdown between defense and non-defense, but because also the customers don't tell us that, but we know it's actually predominantly defense.

Analyst Winnie Dong (Deutsche Bank): Hi, thanks so much for taking my question. And Jane, thank you so much. And it was a great pleasure working with you. My first question is on the multi-year distribution agreement with ATG ePower. I was wondering if you can help us understand the relationship if this is like a wholesale relationship and of the 20 million order over three years like what kind of you know shipment cadence we should be thinking about?

Executive Name (Title): It's similar to what just mentioned it it's a wholesale distribution and then they help us bundle the uzu products with solar and then distribute that to their customers.

Analyst Winnie Dong (Deutsche Bank): Got it. So essentially, once you ship it to them, you will be able to book revenue. That's how the setup is?

Executive Name (Title): In terms of revenue recognition, the timing, Jean, is that correct?

Executive Name (Title): Yeah. Yes. So it's based on shipment. Yes. Once we ship it, based on the Incoterm, we will be able to recognize that product revenue. That's correct.

Analyst Winnie Dong (Deutsche Bank): Gotcha. Okay. And then on UZ, you know, you've achieved close to 7 million, I think somewhere spilled over from 4Q. What is like the typical seasonality of this business? I understand that maybe it can be a little difficult since you're spreading across all different regions, but like, holistically, is there a seasonality that we should be looking at for this business?

Executive Name (Title): Jun, you want to address that?

Executive Name (Title): Maybe I can. Yeah, maybe I can address. I think overall the energy storage business globally have some sort of seasonality depending on the region. And Q2, Q3 usually are higher than Q4. But it also depends on the local incentives available. Like Australia, everybody is trying to secure something to be installed before the incentives go away. And in Europe, there are a lot of incentives going on before it goes away. So there are certainly safe seasons based on the region. However, because UZ sells to many regions globally is not tied to a particular place. So I think for this year, at least we see growth quarter over quarter with some seasonality, but I wouldn't put a lot of emphasize on that. But Q2, Q3 are probably higher.

Analyst Winnie Dong (Deutsche Bank): Got it. And then maybe just a follow up. I guess within the 30 to 35 million, what is baked in in terms of contribution from materials and some of the other efforts that you guys have in place? What's the breakdown?

Executive Name (Title): Yeah. I think we expect this year to come predominantly from ESS and then rest split between drones and materials.

Analyst Dave Storms (StoneGate): Thank you for taking my questions. I wanted to start maybe with ESS and your mention of the hardware offering Edgebox. I was hoping you could maybe spend a little time speaking about how that plays into the sales cycle and maybe what some of the benefits of it are.

Executive Name (Title): Can you ask the last part of the question again, the sales cycle and then the part after that?

Analyst Dave Storms (StoneGate): Yeah, just maybe some of the benefits of adding Edgebox to your offering and maybe helping the sales cycle.

Executive Name (Title): Yeah. So the hardware is pretty competitive and it's basically you purchase sales and you integrate those into a container. And then the industry, the accuracy, the error is typically 7% or even as high as 10%. So not so accurate. And then as a result of that, for example, if your project only needs 10 kilowatts, you will buy 14 kilowatt hours to basically allow for that error. So by having this edge box, this edge box does two things. One is it can very accurately tell the state of charge, the state of health, safety, energy, power, basically what we call SLX. And then there's six of them. And it can give a really accurate estimation of that. So instead of the error being 7%, 10%, now we're talking about 3% or even less. And then the other benefit, is that it's instead of on the cloud, which a lot of customers don't like, it's totally secure. It's in a box that we actually put on premise. So you also have data security. So the main benefit of that is now that instead of buying more capacity to allow for the inaccurate estimation, you can buy less so the customers can save costs.

And for some of the customers that want to participate in virtual power plant, basically electricity trading and then sell electricity back to the grid. And because you have a more accurate estimation than your peers, you can bid in a more competitive price. And also you can when you make the decision of whether or not to participate in that trade off versus sacrificing the battery health you can have a more accurate affirmation of that trade-off.

Analyst Dave Storms (StoneGate): Understood. Very helpful. Thank you. And then maybe just turn to materials. It was mentioned that there's several companies completing their second phase. Maybe just pause around timing through this next step, this third phase, you know, as they advance towards commercial scale supply discussions.

Executive Name (Title): So typically, it's a... two to three rounds of testing each round about one quarter so we took about six to nine months of testing and towards the end of the last round of testing then the customer will go through what's called commercial qualification basically they would check for the plant and also check for all the toxicity the special chemical permits needed for any special materials inside this formulation and then making sure it's compliant to all the necessary local environmental toxicity chemical regulation. And then, so overall, the testing six to nine months, and then another quarter for the commercial qualification. But again, we started a lot of this last year. So now we are, with all of these customers, we are towards the end of second round of qualifications.

Analyst Dave Storms (StoneGate): Understood. And maybe just one more quick modeling one for me. You reiterated 15% expense reduction throughout the year. Should we expect that to kind of go on a linear glide path throughout the year? Or maybe just any thoughts around the cadence of those expense reductions?

Executive Name (Title): Jim, you want to take that?

Executive Name (Title): Yeah, I'll take that. So we are taking a lot of actions to further reduce our operating expenses starting from Q1. So you should be able to see the full quarter impact starting from Q3. There will be a little bit of a reduction in Q2, but not full quarter. But starting Q3, the full quarter impact should be coming in. So then Q4 may be slightly lower than Q3.

Analyst Dave Storms (StoneGate): Understood. Thank you for all the commentary.

Analyst Sean Milligan (Needham): Hey, thank you for taking the questions. In terms of the 1 million units that you're targeting for the drone cell business, can you talk to what that potentially represents from a revenue standpoint? And then the second question is, you've mentioned that you've been testing cells or qualifying cells with potential customers there. Is there any context you can give us to the pipeline and maybe kind of sizing of initial orders that you would expect to see?

Executive Name (Title): Sure. So the 1 million is still not the full capacity that Korea factory could go up to much higher. All that investment we made for EV and then turned out we accidentally built one of the largest drone pouch cell manufacturing factories outside of China. So we have a lot of customers that want NDA compliant cells come to us. And the market price for NDA-compliant cells, obviously, depending on the specific cell format, ranges between $25 to $35 as the market price. So if a million units, it's about $25 to $35 million. That's just a million. And then we could, again, go to much higher if needed. And then in terms of the qualification process. Again, we did, we started most of the testing last year. So now we're doing, so the performance and the product testing have been completed. And then now a lot of that is actually supply chain audit and qualification.

Analyst Sean Milligan (Needham): Okay. Is there any way to talk about the pipeline, like the number, so if you look at the revenue guidance this year, I think you said some of that comes from the drone business, but it's obviously could be a much bigger piece of business. I'm just trying to understand how the pipeline looks, like number of customers that you're testing with, any kind of stats that can help us kind of gain some sense of potential momentum.

Executive Name (Title): So we have a pipeline of a few dozen customers. And again, we focus on customers that want NDA compliant sales. And then really, so we actually had some shipment recently. So we expect revenue in Q2 for the NDA compliant sales and then start to pick up Q3 and then Q4. And then really, next year, 2027, is going to be a full year when we actually have the ability to deliver a full year of these NDA compliant cells.

Analyst: Thank you.

Executive Name (Title): There appear to be no further questions

at this time.

Ladies and gentlemen, this concludes the SES AI first quarter 2026 earnings call. Thank you all for joining. You may now disconnect.

Q4 2025 Earnings Call — March 4, 2026

Derek Soderbergh (Kantor Fitzgerald): On the final contribution from the Honda and Hyundai development work, just was wondering, you know, what's sort of next for that program? You've sort of proven manufacturability recently. Obviously, your technology is sort of game-changing for the EV market. You know, what's next for that, those relationships, Honda and Hyundai, when are you going to commercialize that for EVs?

Executive Name (Title): In terms of next step, previously the next step was to go from B sample to C sample, and I think now, I mean, there's no surprise that the EV market is slowing down, and almost no automaker is investing in next-gen battery technology. No one's investing in mass-scale production of next-gen technology, which is C sample, which is what we were trying to get to next. So we hit all the technical milestones, but the C sample is on hold. In terms of next steps with the OEMs, we are focusing on selling materials, selling materials that we have developed, the electrical materials. We are focusing on that. In terms of the full blown metal sample, then we'll see when the market returns. But the technology is there. This is why we've been focusing on converting the lines for drone production and also applying the AI for safety, the battery analytics software that we developed for EV for ESS markets. So in terms of next steps for the OEMs, we're focusing on material supplies and then also converting the line for drone applications and using the safety analytics software for ESS.

Derek Soderbergh (Kantor Fitzgerald): Just quickly, what was the one-time service amount? Can you quantify that impact to fiscal 25?

Seema (Title): For 2025, the service revenue was $13.6 million. Those are primarily driven by the Honda and Hyundai service agreement. So that's the one-time service agreement we were talking about.

Derek Soderbergh (Kantor Fitzgerald): So for 26, you don't expect any of that to sort of recur just, you know, given what Kijal just explained?

Executive Name (Title): Correct. Guidance is really just ESS drones and materials.

Paul Cecala (CA OSDS): I was wondering if you could sort of break that down for us or help us, you know, try to understand by segment, you know, yes, drones materials. Can you help us kind of quantify how each of those contribute to the other guidance range and then on any help sort of modeling kind of the first half or second half?

Executive Name (Title): I can take that. For 2026 guidance, given it's the first year we're giving guidance, including all three business units, we wanted to be more conservative to start the year. As far as breaking down the revenue sources, ESS is going to still be a large portion of our revenue, so of that 30 to 35, the range I would say probably around 65% will come from ESS at least. The remaining portion will be drones and materials. For those two, we're expecting it to be more second half of the year loaded given we're still in the renting and business development stage. So those two are going to be more towards second half of the year. So, but percentage-wise, around 65 from ESS and the remaining for those two.

Paul Cecala (CA OSDS): Got it. That's helpful. I'll pass it on. Thank you.

Winnie Dong (Deutsche Bank): Just curious, if we look out to maybe like the next two to three years, if we just look at the different business areas, you know, ESS, strong materials, and also you have the molecular universe as well. How would you characterize like the growth profile of each of these areas in the next, you know, two to three years? Which one has maybe the potential for the largest growth, if there's a way to think about it?

Executive Name (Title): On the first one, from a size of revenue and product perspective, ESS and drones, we expect these two to grow very rapidly, especially on ESS. After we acquired UZ, we're not just selling the hardware anymore. Now we're adding this predict feature on top. This is really exciting because now we're turning a regular UPS battery pack into an asset that the asset owners can use for energy trading. On the demand side, you have conventional VPP software, but on the supply side, no other VPP software can have as accurate and advanced monitoring of the battery health, battery safety, battery degradation, and all the parameters than ours. So we have a really precise estimation of the state of health of the battery so that gives you an advantage. It's almost like we say this in energy trading. It's almost like having Warren Buffett at your fingertip when it comes to energy trading, if you know that level of precise health of your battery. So we are really excited about this Edgebox enhanced virtual power plant, especially with this tool that we can add on top of UZ's hardware. So that's ESS. Drones, it's all about supply chain.

It's all about being NDA compliant and then supplying to US and allied drones. With the new drones dominance program, we've had this line in Korea, and it's been NDA compliant since 2021. We built this line for GM. It was 100-amp-hour lithium metal cells. Now we're converting that to 10-amp-hour cells for drones. We have an advantage because we have this asset. It's been NDA compliant since 2021, and then that market is also growing very rapidly, especially under the new drones dominance program. I think these two are the most exciting from a size of revenue growth.

Winnie Dong (Deutsche Bank): And then separately for molecular universe, I know you've been talking about, you know, different tiers of revenue from larger corporations and smaller ones. Could you share like currently what might be the largest bottleneck for adoption from these customers?

Executive Name (Title): In terms of the molecular universe, we are making very exciting progress, and we're getting some of the largest battery companies and car companies to sign on to this platform, and we expect to make some announcements in the coming months. I think in terms of bottleneck, I think it's just new. For example, AF Science has been using drug discovery a lot, not so much in materials, not so much in chemicals, and not so much in batteries. So it's just new. But finally, as we said, we used that platform, and then we demonstrated that we could actually indeed use that and develop six new materials. I mean, previously, it was like, it would take you a few years to discover one material, and then we've discovered six materials in just over about nine months, nine months to a year. And then later we'll add more features to it. Hopefully we can get to 60 materials per month and per week. So that acceleration of a rate of discovery, that's something we're quite excited about.

Winnie Dong (Deutsche Bank): Got it. Thank you for the detailed response. And then I wanted to ask the question about OPEX in 2026. It seems that you're characterizing a spending level that is, you know, lowered in 2025 and that is going to likely sustain at this 2026 level on a go forward basis. Can we maybe just understand the reason for that?

Executive Name (Title): So I think the 2026 reduction partially is coming from just being disciplined on spending cash on OPEX in general. We've been reducing GNA and also R&D expenses year over year. If you go back to 2023, 2024, 2025, year over year, we're managing our costs very efficiently. The MU as an internal tool for AI for science is creating a lot of efficiency. As part of growth into these three businesses, we're more focused as far as spending cash on product development related to R&D. There will be growth as far as spending wise on the SG&A side like sales and marketing, but it's not linear to the revenue growth. Overall together, including R&D and SG&A, we forecast this year to be lower than last year and then sustain at least for the foreseeable future.

Winnie Dong (Deutsche Bank): Got it. That's helpful. Thank you.

Colin Roush (Oppenheimer): Can you talk a little bit about the drone market and the volume of customers you're working with and how mature those relationships are, you know, in terms of working through the design process and potentially being able to announce, you know, a purchase award here over the next, call it several quarters?

Executive Name (Title): The drones market is really going through a lot of pressure to change supply chain with NDA compliance requirement. We are focusing on some of the top customers, for example, customers that will order in the range of single-digit millions to potentially more than $10 million a year. We mainly focus on those larger customers. We actually started testing engagement with them last year. Last year was really when everyone tried to change the supply chain. If a major drones manufacturer hasn't changed the supply chain by now, I think it's almost a bit too late. A lot of the testing engagement started last year. Now we are just in the final stage of converting the lines. For example, right now in Boston, we can make a pilot scale less than 100,000 cells per year. In Korea, we can make about 200 to 300 cells per year. We're trying to expand that. In Southeast Asia, we're also looking to expand to several million cells per year. These are all NDA compliant cells for drones customers.

Colin Roush (Oppenheimer): And then, you know, obviously you've had some really meaningful success at the molecule level leveraging some of the AI capabilities. I'm curious about your ability to leverage some of that know-how into PAC-level design and even into system integration design and modeling out some of the duty cycles that may be just accelerated in the adoption as you look at some of the robotics and drone opportunities.

Executive Name (Title): Yeah, we're starting to add that feature. We've got some requests from automakers that want to do the design and then predict features at the PAC and system level. So we are adding those features. For energy storage, right now we are adding molecular universe predict into the systems. The predict, we put that in a small box. We call that edge box. That works at the cell level and also the back end system level.

Mark Shooter (William Blair): I believe I heard you say that the auto OEM JVs are on hold. Could you clarify that a bit?

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

Mark Shooter (William Blair): Switching gears to the ESS market, which is rapidly growing, that is a fragmented market with many different levels to it. What do you see as the most value add? Where would you play? What is the strategy for the energy acquisition?

Executive Name (Title): The ESS market is very fragmented. It's got a long tail. The benefit that we bring is that the ESS market currently does not have a stable, widespread operating system, maybe except for Tesla. In the ESS, it's like Tesla and then a long tail, very fragmented. What we can provide is almost like the Android version. For commercial industrial and then for data center applications, the asset owners actually want to use their battery packs for energy trading, but they're not able to do that, and they're not able to differentiate if they use conventional virtual power plant softwares. Because we actually collect the data from the battery, we can have a very accurate estimation of self-charge, self-health, self-safety, degradation, power, all these different features. When you do the trading, it's supply and demand. Demand is set by the market, by weather, by if there's any major sporting events. But the supply, that's set by accurate estimation of SOX, and then that we can provide. So that's where this edge box enhanced virtual power plant really shines. I think the value that we can provide is we can provide this operating system to not just use these battery packs, but to multiple of this long tail, this fragmented market.

Executive Name (Title): As with in past earnings calls, we offered investors the opportunity to submit questions in advance, and we'll cover a brief selection of those questions now.

Executive Name (Title): The first question is, is there a binding definitive agreement with top material yet, and can you generally provide some details on current NDAA compliance status?

Executive Name (Title): Top material is one of the options we are exploring. We've had this career facility since 2021. It's been NDA compliant since 2021. We are focusing on converting this to produce drones batteries. In addition to our own career facility, we're also looking at options in Southeast Asia and then potentially offer better pricing, better value, and larger scale to customers. Again, they're all NDA compliant. We just updated our website, and now we have updated drone's battery product brochure that's on the website. The cells are NDA compliant.

Executive Name (Title): I think we have time for one more. The question is, with Wildcat and BMW and Aonix and Porsche securing JDAs for AI-driven materials, how is SES protecting its molecular universe data advantage to ensure it doesn't lose OEM partners to these specialized private competitors?

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

Executive Name (Title): That's all we have for the investor questions. I'll pass it back to the operator to conclude the call. This concludes today's conference call. Thank you for your participation.