How are energy investors positioned?
Introduction & Market Context
ESS Tech Inc. (NYSE:GWH) released its second quarter 2025 earnings presentation on August 14, showcasing substantial revenue growth and reduced losses compared to the same period last year. The long-duration energy storage company’s stock closed at $1.69 on the day of the announcement, with a 1.18% gain in regular trading and a 4.73% rise in aftermarket trading.
The company is positioning itself in the rapidly growing energy storage market, particularly targeting data centers and grid operators facing increasing electricity demands driven by artificial intelligence and other power-intensive applications. ESS Tech’s iron flow battery technology aims to differentiate itself from lithium-ion alternatives through longer duration capabilities, enhanced safety, and improved sustainability.
Quarterly Performance Highlights
ESS Tech reported significant financial improvements in Q2 2025 compared to the same quarter last year. Revenue surged to $2.4 million, a 578% increase from $0.3 million in Q2 2024. This represents substantial sequential growth from the $600,000 reported in Q1 2025.
The company also made progress in reducing losses across key metrics. Gross loss improved by 37% to $5.1 million (from $11.4 million), while operating expenses decreased by 45% to $6.5 million (from $11.7 million). Net loss to common stockholders was cut in half to $11.1 million, and adjusted EBITDA improved by 59% to negative $7.8 million.
As shown in the following financial results summary:
The company highlighted its significant reduction in operating cash burn rate, which has decreased by approximately 80% on a monthly basis, demonstrating management’s focus on operational efficiency and cost control.
New Product Strategy
A central element of ESS Tech’s presentation was the launch of its new product, "The Energy Base," which is powered by the company’s Iron Core technology. The Energy Base represents a shift from container-based solutions to a more flexible, scalable architecture that can be configured for various applications.
The company explained that the Energy Base utilizes modular powertrains called the Iron Core, engineered for gigawatt-hour storage capacity and capable of providing up to 22 hours of energy storage. This extended duration capability positions ESS to deliver what it calls "green baseload power" at a reduced cost per kilowatt-hour.
The following image illustrates the key features of the new Energy Base product:
ESS Tech is emphasizing three core advantages with this new product: the elimination of container constraints, flexible configuration options, and virtually unlimited scalability. The company’s product strategy involves manufacturing core technology in-house while sourcing balance-of-system components from preferred vendors to optimize costs and quality.
Strategic Partnerships
ESS Tech highlighted its partnership with Honeywell as a key strategic relationship to accelerate the development and scaling of the Energy Base product. Honeywell serves as both an investor and customer, with the companies exploring product collaboration through a Joint Development Agreement.
The partnership leverages Honeywell’s expertise in fluid systems and modular engineering to optimize ESS designs for quality, cost-efficiency, and scale. The collaboration also provides procurement leverage and testing capabilities that could accelerate market adoption.
As shown in the partnership overview:
Data Center Market Opportunity
The presentation emphasized the growing opportunity in the data center market, where power disruptions represent the leading cause of outages. ESS Tech cited data showing that power disruptions account for 54% of impactful data center outages, presenting a significant market opportunity for energy storage solutions.
The company highlighted the rapidly expanding electricity demand from data centers, AI applications, and cryptocurrency operations, projecting growth from approximately 460 TWh to potentially over 1,000 TWh by 2026 in high-case scenarios.
The following chart illustrates the growing electricity demand that ESS Tech aims to address:
ESS Tech is positioning its Energy Base product as a solution for data centers seeking to enhance grid power capacity and resilience. The company claims its iron flow battery technology offers advantages in safety, scalability, sustainability, and cost-effectiveness compared to lithium-ion alternatives.
The competitive positioning against lithium-ion batteries is illustrated in this comparison:
Manufacturing Expansion
To support its growth strategy, ESS Tech is expanding its manufacturing capacity at its Wilsonville facility. The company is commissioning a second automated battery manufacturing line ("Line 2"), which it says will improve capital efficiency and shift manufacturing toward higher-margin components.
The presentation outlined the production capacity expansion and associated benefits:
This manufacturing expansion aligns with the company’s efforts to reduce costs and improve operational efficiency, supporting the transition to its new Energy Base product line.
Financial Position and Outlook
Despite the improved operating metrics, ESS Tech’s cash position has declined significantly, from $12.8 million at the beginning of the year to just $0.8 million as of June 30, 2025. To address this critical cash position, the company secured up to $31 million in new capital in July through a combination of immediate cash inflows and a $25 million Standby Equity Purchase Agreement (SEPA).
The following slide details the company’s cash position and financing update:
The financing announcement comes at a crucial time for ESS Tech, as its cash burn has been substantial despite operational improvements. The company will need to continue balancing growth investments with cash conservation as it works toward profitability.
While ESS Tech did not provide specific forward guidance in the presentation materials, the significant revenue growth in Q2 2025 suggests progress toward the revenue ramp-up in the second half of 2025 that was mentioned in previous communications. The company’s focus on the data center market and new product offerings appears central to its growth strategy moving forward.
Full presentation:
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