SES AI Earnings Call: Fast Growth, Cautious Outlook

SES AI Corporation Class A ((SES)) has held its Q4 earnings call. Read on for the main highlights of the call.

SES AI Corporation’s latest earnings call delivered a cautiously upbeat message, blending sharp operational progress with lingering execution risks. Management highlighted nearly tenfold revenue growth, expanding margins for the full year, and tighter cost control, but also warned that much of 2025’s revenue was one‑time service work and that key EV battery commercialization plans remain on ice.

Strong Revenue Acceleration in 2025

SES AI reported 2025 revenue of $21.0 million, up from just over $2 million in 2024, marking nearly tenfold growth and signaling growing commercial traction. Fourth‑quarter revenue reached $4.6 million, a 124% year‑over‑year increase, underscoring momentum even as some shipments slipped into early 2026.

Service-Driven Gross Margins at Elevated Levels

Full‑year GAAP gross margin came in at 53.8%, with non‑GAAP gross margin at 55.7%, unusually high for a company still in ramp‑up mode. Management stressed that these margins were boosted by high‑margin service revenue in 2025 and are unlikely to be sustained as the mix shifts toward more hardware sales.

Operating Expenses Pulled Back Sharply

Cost discipline was a central theme, with Q4 2025 GAAP operating expenses dropping 40% year over year to $18.2 million and non‑GAAP operating expenses falling 44% to $13.5 million. For the full year, GAAP operating expenses declined 15% to $93.9 million and non‑GAAP operating expenses slid 11% to $73.0 million, reflecting a leaner operating model.

Loss Profile Improving but Still Significant

Adjusted EBITDA loss narrowed to $13.8 million in Q4 2025, a 40% improvement from the prior year period, and to $52.6 million for the full year, a 23% improvement. GAAP net loss shrank to $73 million, or $0.22 per share, from $100.2 million, or $0.31 per share, showing progress but leaving SES firmly in loss‑making territory.

Liquidity Cushion Supports 2026 Strategy

SES ended 2025 with $200 million in liquidity, landing at the top end of prior guidance and giving the company a substantial buffer for its 2026 plans. Management emphasized that this capital base supports a capex‑light approach and provides flexibility to fund growth initiatives and manufacturing conversions without heavy new spending.

UZ Energy Acquisition Delivers Early Wins

The acquisition of UZ Energy added roughly three and a half months of revenue to 2025 results and broadened SES’s energy storage footprint. UZ has already secured a multiyear $20 million contract with a major distributor and has nearly a gigawatt‑hour of historical shipments, giving SES an immediate commercial beachhead.

Molecular Universe Shows Promising Early Traction

The Molecular Universe platform, SES’s AI‑driven materials discovery engine, has identified six electrolyte and material breakthroughs now being tested by more than 40 customers. Management sees MU as both a growing SaaS revenue stream and a potentially valuable standalone IP and data asset, though monetization is still in its early days.

2026 Outlook Points to Continued Top-Line Growth

For 2026, SES guided revenue to a range of $30 million to $35 million, implying about 43% to 67% growth versus 2025 despite the loss of one‑time service revenue. The company expects a consolidated gross margin of around 15%, with energy storage leading revenue, drones improving as volumes scale, and materials contributing with mid‑teens margins.

Capex-Light Execution and Cash Management

In 2025, SES used $58.4 million in cash for operations, spent $3.3 million on the UZ acquisition, invested $2.9 million in capital expenditures, and returned $1.6 million via share repurchases. Looking ahead, capex is projected to stay in the single‑digit millions, focused mainly on converting the Korea facility and assessing contract manufacturing options to support scaling.

NDAA-Compliant Manufacturing as a Strategic Asset

The company’s Chungju, South Korea facility has been NDAA‑compliant since 2021, positioning SES to supply sensitive drone customers requiring compliant cells. SES is preparing this site for NDAA‑compliant drone cell production and is simultaneously exploring additional capacity in Southeast Asia to support larger future drone programs.

One-Time Services Inflate 2025 Revenue Base

A key caveat to SES’s 2025 performance is the $13.6 million in service revenue, largely from non‑recurring development agreements with Honda and Hyundai. Management was explicit that these services are not expected to repeat in 2026, meaning investors should treat 2025’s top line as partly one‑off and focus on underlying product growth.

Logistics Delays Shift Revenue Into Early 2026

Shipping and logistics constraints at the end of 2025 delayed deliveries and pushed about $1.5 million of expected revenue into the first quarter of 2026. While this timing issue pressured the reported Q4 numbers, management framed it as a short‑term headwind rather than a sign of demand weakness.

EV Battery Commercialization Put on Pause

Plans to move next‑generation lithium‑metal EV batteries into C‑sample and mass production have been put on hold due to softer OEM investment and a broader macro slowdown in EV spending. Auto manufacturers are currently favoring lower‑cost LFP graphite solutions, leaving SES’s EV program in a holding pattern and shifting focus to other end markets.

Quarterly Margins Exposed to Product Mix Swings

Despite strong full‑year margins, Q4 2025 GAAP gross margin slipped to just 11.3%, with non‑GAAP at 11.7%, as lower‑margin energy storage system sales made up a bigger slice of the mix. Management highlighted that this underlines the volatility investors should expect in quarterly margins as the blend of ESS, drones, and materials revenue fluctuates.

Persistent Losses and Cash Burn Remain a Concern

Even with notable improvement, SES remains deeply unprofitable, with a full‑year adjusted EBITDA loss of $52.6 million and a GAAP net loss of $73 million in 2025. Operations consumed $58.4 million in cash during the year, underscoring the need for continued discipline and successful commercialization to bridge the path toward break‑even.

Manufacturing Scale Still in Early Stages

Current pilot capacity remains modest, with the Boston line producing fewer than 100,000 cells per year and the Korea line still limited and awaiting conversion for drone output. Management acknowledged that serving large drone customers at scale will require additional NDAA‑compliant capacity, including the planned Southeast Asia expansion and possible partnerships.

Adoption Hurdles for AI-Driven Materials Discovery

While Molecular Universe has generated several promising breakthroughs, SES noted that AI‑for‑science adoption in the battery and materials sectors is still nascent and requires time and proof points. Customers are cautiously validating results, and management conceded that the timing and scale of broader MU monetization remain uncertain.

GAAP Results Volatile Due to Noncash Items

The company cautioned that GAAP net income will likely remain volatile quarter to quarter because of noncash, mark‑to‑market movements in sponsor earnout liabilities. Management encouraged investors to focus on underlying operating metrics and adjusted figures to better gauge progress.

Forward Guidance Balances Growth and Discipline

SES’s 2026 guidance suggests a deliberate push for growth while keeping spending in check and protecting its liquidity. With revenue projected at $30 million to $35 million, gross margins around 15%, operating expenses down about 15%, and capex in the single‑digit millions, the company aims to expand its ESS, drone, and materials businesses without stretching its $200 million cash cushion.

The earnings call painted a picture of a company moving in the right direction but still with plenty to prove, particularly on recurring revenue and scaling manufacturing. SES AI’s broad progress in revenue growth, cost control, and new platforms like Molecular Universe is encouraging, yet investors will be watching closely in 2026 to see if that promise translates into sustainable, hardware‑led growth and a clearer path toward profitability.