ITM Power Earnings Call: Record Revenue, Risks Remain

ITM Power ((GB:ITM)) has held its Q2 earnings call. Read on for the main highlights of the call.

ITM Power Balances Record Revenue with Persistent Losses in Latest Earnings Call

ITM Power’s latest earnings call struck a cautiously optimistic tone, highlighting record half-year revenues, improving margins and strong demand for its electrolysers, set against ongoing losses, legacy unprofitable contracts and “bumpy” cash flows. Management stressed disciplined cash use, better-quality backlog and meaningful progress in manufacturing and technology, while acknowledging that timing of customer investment decisions and full path to profitability remain key uncertainties for investors.

Record Half-Year Revenue Marks Commercial Breakthrough

ITM Power reported revenue of £18.0m for the first half of FY26, the highest six‑month figure in the company’s history and already covering about half of full‑year guidance. The performance was driven primarily by equipment sales of £15.5m, complemented by £2.5m from engineering, spares and services. For a business that has long been more promise than delivery, the surge in recognised revenue underlines that large-scale electrolysis projects are now moving from concept to execution, giving investors a clearer line of sight on commercial traction.

Gross Loss Narrows and EBITDA Trend Improves

Profitability remains negative, but the trajectory is improving. ITM cut its gross loss to £6.5m in H1 from £10.2m a year earlier, a roughly 36% improvement, reflecting better contract economics and execution. Management reiterated guidance for a full‑year EBITDA loss of £27m–£29m, implying an improvement of about £4m year‑on‑year. While still firmly loss‑making, the company is demonstrating operating leverage as volumes rise and cost discipline takes hold, a key milestone for a growth‑stage industrial technology player.

Solid Cash Cushion and Tight Capital Discipline

The company closed the period with a robust cash balance of £197.8m, down only £9.2m over 12 months, a modest 4.4% decline given the scale‑up underway. Management guided to year‑end cash of £170m–£175m, flagging higher outflows in the second half as project milestones are met. Importantly, the team emphasized close alignment of cash receipts and payments around contractual milestones, signaling a strong focus on liquidity management. For investors, the sizeable cash pile provides a runway to execute on growth plans without immediate pressure for fresh capital, though the rising H2 burn bears monitoring.

Backlog Grows with Marked Improvement in Quality

ITM reported a fully contracted order backlog of £152m, with no remaining starting conditions, giving the company a multi‑year revenue base. Notably, the quality of this backlog is improving: profitable contracts now account for 71%, up from 60% in April 2025. This shift toward better‑margin work is central to the investment case, as it suggests future revenues will translate more efficiently into gross profit once legacy projects roll off.

ALPHA 50 and NEPTUNE V Gain Market Traction

On the product side, ITM is starting to scale beyond one‑off projects. The company launched its ALPHA 50 platform in October 2025—a 50 MW, full‑scope plant with a list price of €50m—and reported strong early interest. Meanwhile, its NEPTUNE V product remains in high demand. A key sign of customer confidence came from utility RWE, which reserved 150 MW of NEPTUNE capacity following successful deliveries at the Lingen site. Together, these products show ITM developing a standardised portfolio attractive to repeat, blue‑chip buyers.

Execution on Lingen and New Wins Underscore Project Capability

Project execution is a critical credibility test in heavy engineering, and ITM’s performance at Lingen stands out. The company delivered the 100 MW Lingen 1 project on time, shipping 50 TRIDENT skids and 150 stacks, and reported that construction of Lingen 2 is progressing with 40% of stacks already installed. Beyond Lingen, ITM secured the 12.5 MW Octopus North Fleet contract and has been selected for two German grid balancing projects totaling 710 MW after the period. These wins highlight growing capability in both delivery and commercial positioning within key European power and industrial markets.

Manufacturing Automation Drives Throughput and Scale

ITM is investing heavily in manufacturing to support larger volumes at lower cost. The NEPTUNE V assembly line is now in full operation, and the company has installed and validated a new autostacker robot for stack assembly, giving it capacity to produce more than 2 GW of stacks per year. End‑of‑line testing times for electrolysers have been cut in half, further lifting throughput. These advances suggest ITM is transitioning from bespoke project manufacturing toward more repeatable, industrialised production, potentially underpinning future margin improvement.

CHRONOS Roadmap Targets Big Cost and Efficiency Gains

Beyond current products, ITM’s CHRONOS next‑generation stack remains a key strategic lever. The company is targeting around a 40% cost reduction versus its TRIDENT stack, a 10% efficiency improvement, and more than a 50% reduction in part count, footprint and weight, with a single CHRONOS stack rated at 2 MW (up to 2.5 MW). The design also aims for up to 90% component recyclability. Management said development is progressing to plan and has been validated technically, but deliberately avoided giving a launch date, balancing investor interest in cost-down potential against the risk of freezing demand for current products.

Revenue Recognition Shift Improves Visibility

As ITM’s project mix evolves, so does its accounting. The company has begun using percentage‑of‑completion revenue recognition for nonstandard NEPTUNE, POSEIDON and ALPHA projects, moving away from purely point‑in‑time recognition. Currently, about 85% of the order book is still recognised on completion and 15% under POC. In H1, this translated into £13.9m of point‑in‑time legacy revenue and £1.6m of POC revenue. Over time, the shift should smooth revenue and improve the predictability of reported numbers, which is beneficial for investors tracking growth and profitability trends.

Commercial Momentum and a Diversifying Customer Base

ITM continues to build commercial momentum, reporting multiple equipment and engineering awards, including contracts with grid operator Westnetz and a Spanish cement customer. Repeat business from major names such as RWE and Uniper reinforces the company’s position as a credible supplier in the emerging green hydrogen ecosystem. Management also highlighted an increasing share of industrial customers in the sales pipeline, which could broaden revenue beyond power‑sector projects and help diversify demand across applications and geographies.

Persistent Losses and Lack of Profitability Timeline

Despite the operational progress, ITM remains firmly in the red. The H1 gross loss of £6.5m and guided full‑year EBITDA loss of £27m–£29m underline that scale and cost improvements have yet to translate into breakeven. Crucially, management did not provide a timeline for achieving sustained positive EBITDA beyond the current year’s loss guidance. For investors, this absence of a clear profitability horizon remains a key risk, keeping the stock in the high‑growth, high‑uncertainty category.

Legacy Contracts Weigh on Near-Term Margins

A significant drag on profitability comes from legacy unprofitable contracts that are fully provided for and do not contribute to margin. These projects still represent 29% of the backlog and are expected to be recognised over roughly the next 18 months. As these run off, the mix will shift further toward profitable contracts, but in the near term they continue to obscure underlying margin progress and delay clearer visibility on steady‑state economics.

Cash Outflows and “Bumpy” Cash Flow Profile

While the balance sheet is currently strong, cash flows are uneven. Management warned of higher cash outflows in H2 and guided to year‑end cash of £170m–£175m, explicitly assuming no new contract signings in the cash forecast. Cash movements are described as “bumpy,” driven by milestone‑based receipts and payments typical of EPC‑style projects. This introduces some volatility into working capital and may cause short‑term swings in reported cash, an important consideration for investors assessing funding risk.

FID Delays and Timing Uncertainty for Orders

ITM’s growth remains partly dependent on customers reaching final investment decisions on large projects. For instance, the MorGen Energy POSEIDON contract still awaits FID, and management acknowledged that some FIDs are moving more slowly than hoped. These delays can push out the timing of order conversion, revenue recognition and cash inflows, adding uncertainty to near‑term growth trajectories even as long‑term demand signals remain strong.

Book-to-Bill and Working Capital Volatility

The company’s book‑to‑bill ratio, based on the current order book and full‑year guidance, is around 4x, down from roughly 5.5x at the prior year‑end. While still healthy, the decline suggests slightly less near‑term cover than previously. At the same time, trade and other receivables rose about 35% and trade payables 19% since April, which management framed as normal EPC milestone timing. Nonetheless, these shifts underscore increased working capital volatility, a factor that can amplify the inherent lumpiness of project‑based businesses.

Program Timing and Automation Risks Remain

There are also operational and strategic timing risks. By keeping the CHRONOS launch date deliberately open‑ended, ITM avoids cannibalising demand for TRIDENT, but investors are left guessing when the targeted 40% cost savings and efficiency gains will begin to drive margins. Meanwhile, the new autostacker robot marks a major leap in automation, but reliance on a single high‑capacity asset introduces operational risk until it is fully proven in sustained high‑volume production. The company maintains redundancy via existing manual processes, yet any significant disruption could affect throughput and delivery timetables.

Guidance Underlines Rapid Growth and Ongoing Losses

For the year ending 30 April 2026, ITM reiterated revenue guidance of £35m–£40m, implying around 400% growth versus two years ago and roughly 600% versus three years ago, underscoring how quickly the business is scaling. EBITDA loss is expected to improve to £27m–£29m, and year‑end cash to land between £170m and £175m, after capex of £6.9m in H1 and continued investment in manufacturing and technology. Management also signalled a continued migration towards overtime revenue recognition for POSEIDON, ALPHA and non‑standard NEPTUNE projects. The guidance reflects confidence in execution on the existing backlog while building in caution around FID timing and new contract signings.

In sum, ITM Power’s earnings call painted a picture of a company moving decisively from pilot scale to industrial scale, with record revenues, better backlog quality, stronger manufacturing capabilities and a promising technology roadmap. Yet the journey to profitability is unfinished, with legacy contracts, project timing and cash‑flow volatility still clouding the near term. For investors, the story remains one of high growth and improving fundamentals, tempered by execution and timing risks that will need to be navigated carefully over the next 18 months.