Earnings call transcript: Co2 Capsol AS reports Q2 2025 revenue growth, shares dip

Co2 Capsol AS (market cap: 56.29M USD) reported a 14% year-over-year increase in revenue for Q2 2025, totaling 41 million Norwegian Kroners. Despite this growth, the company’s stock price fell by 2.71% following the announcement, closing at 8.84 NOK. According to InvestingPro analysis, the company’s overall financial health score is currently rated as WEAK, with a score of 1.07 out of 5. The decline in stock price may be attributed to the softer quarterly revenue of 16 million NOK compared to Q1, as well as operating expenses that reached 37.5 million NOK. Co2 Capsol AS is targeting breakeven by 2026, with a cash position of 67.5 million NOK, up from 58.5 million.

Key Takeaways

• Revenue grew 14% year-over-year, reaching 41 million NOK.
• Stock price decreased by 2.71% after earnings release.
• Operating expenses were high at 37.5 million NOK.
• Cash reserves increased to 67.5 million NOK.
• The company is aiming for breakeven by 2026.

Company Performance

Co2 Capsol AS demonstrated robust year-over-year revenue growth in Q2 2025, driven by advancements in carbon capture technology. However, the quarter’s revenue was lower than Q1, reflecting potential seasonal or project timing issues. The company remains optimistic about its long-term prospects, aiming for a significant market share in the carbon capture sector.

Financial Highlights

• Revenue: 41 million NOK, up 14% YoY
• Quarterly revenue: 16 million NOK, softer than Q1
• Operating expenses: 37.5 million NOK
• Cash position: 67.5 million NOK, up from 58.5 million NOK

Market Reaction

Following the earnings report, Co2 Capsol AS’s stock price fell by 2.71%, closing at 8.84 NOK. The stock has experienced significant pressure this year, with a YTD return of -19.64% according to InvestingPro data. While analyst targets range from 1.48 USD to 1.98 USD, this decline contrasts with the company’s 52-week range, which has seen highs of 13.9 NOK and lows of 7.3 NOK. The market’s reaction might be influenced by the softer quarterly revenue and high operating expenses, despite the company’s positive cash flow developments.

Outlook & Guidance

Co2 Capsol AS is projecting significant growth in the carbon capture market, with plans to capture a 5-10% global market share. The company is exploring recurring revenue streams starting in 2028 and aims to double its value capture through strategic initiatives. It is also positioning itself for project delivery and operations support to drive future growth.

Executive Commentary

CEO Wendy Lam emphasized the company’s competitive edge, stating, "We are building a leading global carbon capture technology company." She highlighted the cost advantages of Co2 Capsol’s solutions, saying, "Our ability to deliver carbon capture at lower cost than others gives us a competitive edge." Jakob, SVP Investment Strategy, added, "We see a path to do even more, to making carbon capture easier to buy for our customers."

Risks and Challenges

• High operating expenses could impact profitability.
• Market volatility may affect stock performance.
• Achieving breakeven by 2026 requires careful financial management.
• Dependence on favorable regulatory environments and incentives.
• Competition in the carbon capture sector remains intense.

Q&A

During the earnings call, analysts questioned the reasons behind the softer Q2 revenue. The company addressed these concerns by highlighting ongoing negotiations for multiple projects and confirmed a positive outlook for the US market. Additionally, explanations were provided for project timing variations, which are expected to normalize in future quarters.

Full transcript - Co2 Capsol AS (CAPSL) Q2 2025:

Jakob, SVP Investment Strategy, Capsule Technologies: Good day, everyone, and welcome to Capsule Technologies investor update for q two twenty twenty five. My name is Jakob and I serve as SVP investment strategy at Capsule. I am joined today by our CEO, Wendy Lam, and our CFO, Inger Berg. Wendy will start by taking us through our q two highlights and Capsule’s five strategic pillars for growth and value creation. Inger will then take us through the financials, and I will conclude with a section on how we are looking at strategic growth for the future.

Please note that this presentation is being recorded and will be published on our website. We will be taking questions at the end, and you can submit your questions anytime during the presentation or send them to irinvestorweb dot no. At the current state of the market, political buy in is essential for carbon capture projects to mature. Through our capital goal units, we enable our customers to engage in stakeholder management. This includes their respective communities, investors, working with permitting, and on the political front.

On the left hand side, we have a picture from Holzim site in Dothenhausen, where one of our capsule go units is currently in operation. Last week, Walker, seen in the picture, who is the environmental minister of the region, visited Holzim and our capsule go with the ambition of building infrastructure to help limit emissions. Following the visit, Holzim has exercised an option to extend the demonstration campaign by one month, indicating to us that they appreciate what we deliver and that we are strong contributors in their path towards decarbonization. The picture on the right hand side is from Schwenk’s Brocini site, where one of our other CapsuleGo units are demonstrating our capabilities. Later this week, they are hosting an open day to showcase innovative solutions for carbon capture.

Several politicians are attending, and Capsol will be present as the only technology provider on the panel. Again, a a strong signal for us in a very exciting project. With that, I’ll hand over to Wendy.

Wendy Lam, CEO, Capsule Technologies: Good day, everyone, and welcome to our q two twenty twenty five update. And thank you, Jakob, for kicking us off. This is a graphical representation we have shown before. It is a very good overview of the carbon capture value chain and where we fit into it. It also happens to come from our flagship project at Stockholm Exergy, one of the largest carbon removal projects with VEX or Bioenergy with CCS.

On the left hand side, you find the point of emissions represented by the biomass facility, which produces heat and electricity for the city of Stockholm from burning forest ry waste. The flue gas with c o two from this process will be directed into the carbon capture facility. This is where you find capsules licensed end of pipe solution. Once separated, the c o two is compressed to liquid form at a purity above 99% and pumped onto ships taking it to Northern Lights on the West Coast Of Norway where it is injected into rock formations for permanent storage deep under the seabed. Northern Lights provides c o two transport and storage in a JV between Equinor, Shell, and Total Energies.

In this large value chain, we represent a small but critical component. We enable carbon capture with a safe solvent and inherent heat recovery that enables industry leading energy efficiency. Our solution is a stand alone unit, making it retrofit friendly and cost efficient for hard to abate emitters. Next, a view on the market. With Capsule’s value proposition, we see a very attractive growth path based on various market outlook scenarios.

There are varying estimates of how much c o two capture capacity will be operational by 2050. Some of these estimates are based on net zero targets, others based on announced pledges, and others based on more conservative views such as from DNV. What we are very certain of is that carbon capture is a must have solution for any decarbonization target, and Capsule has much to gain with this under even the most conservative scenario. CCUS is needed to prevent c o two from being added to the atmosphere or to remove it. For example, in the cement sector, it has been said that CCUS will be applied to all operational plans before 2050 to address more than 40% of scope one and two emissions.

These are emissions that cannot be dealt with by improving efficiency, changes in materials, and decarbonization of electricity. We are also seeing positive momentum for projects with continued high expectations of ETS pricing in Europe, growing demand on the voluntary market for carbon removal, and green price premiums. The US market also remains a high focus for us with 45 q credits staying in place under the IRA. Overall, Capsule can see a path to four to 6% total market share and more based on today’s business model. Considering a conservative view of the market and our pipeline, we have a licensing revenue potential of 3,000,000,000 between 2025 and 2035.

This is about the same as the potential revenue in our current mature project pipeline. Now on to q two highlights. We have closed the quarter with some exciting developments. Firstly, our pipeline grew by 73% from the same period last year, now standing at 22,600,000 tons of annual capture capacity. We also announced our first engineering study in the lime industry, displaying the versatile applicability of our technology while opening a new segment for future growth.

Secondly, we are seeing four projects that are approaching FEED by year end 2025. In several cases, customers are expected to make early FEED commitments to qualify for public funding, constituting a soft FID. Outcomes depend on final technology sec selection and on Capsule being appointed as technology partner, which would lay the foundation for an attractive pipeline of high value PDP work going into 2026. We are also advancing in negotiations for additional Capsule Go campaigns for the remainder of 2025 and the 2026. Thirdly, we are progressing dialogues with current and prospective partners through our engagement with Pareto Securities.

We also strengthened our liquidity position by securing an additional green loan facility from DNB at the end of the second quarter. Today, we are pleased to share what we view to be the five strategic pillars for growth and value creation at Capsule. It starts with our technology and the position of cost leadership it provides us. Building on the technology, we are targeting high value verticals where we are gaining as a preferred provider of carbon capture technology. Then as we work closely with our customers through our capital efficient and scalable business model, we gain access to revenues at multiple project stages.

With that, our geographical reach is expanding, also through incoming requests following the Stockholm Exergy FID, which is an important ingredient in our growth journey. These first four pillars culminate in our global ambitions of five to 10% market share, which we believe to be the right ambitions for Capsule, given our position and standing in the market. Let me elaborate on each pillar. On pillar one, the costs associated with carbon capture are a crucial factor for emitters in projects being progressed or not. Hence, our ability to deliver carbon capture at lower cost than others gives us a competitive edge that is the starting point for Capsule’s value creation potential.

HPC solvents combined with our patented system of heat recovery allows us to operate without the need for external heat providing unmatched cost efficiency. In the example on the left, we show the cost advantage of choosing Capsule’s technology over incumbent solutions using aMines. We have the potential to deliver carbon capture at 20 to 60% lower cost, making projects more economical for FID. The comparison is taken here on the total project cost published for the whole value chain including capture, transport, and storage for Northsem in Breivik and Oersted’s Kalimburg project in Denmark. The project costs shown here include not only the pure capture CapEx and OpEx, but also the cost for compression, liquefaction, and other local infrastructure.

These examples are in Europe. However, we also see similar advantages for projects in The US where there are significantly lower transport and storage costs. The case for using Capsule is strong. We see that the savings over one year can exceed the full capsule license cost, and cost reduction potential continues with future solvent optimization. In addition to this cost advantage, our solution is designed as a stand alone unit making retrofit easier, requiring less downtime than many alternatives.

The next pillar is the high value verticals we are targeting. We are building a position as a preferred provider in cement and biomass energy and energy from waste, where most of our mature project pipeline can be found. Both verticals appreciate the attractive economics of our solution. And for some, the safe solvent makes a very compelling case as these facilities can be typically found in residential areas where only the safest option will be good enough for regulators and public acceptance. For cement, our easy integration and stand alone unit makes a compelling case for minimizing downtime combined with our performance on high concentration c o two flue gas and no need for additional steam.

As can be seen on the slide, 17,100,000 tons of our mature pipeline comes from cement, biomass, and energy from waste who are seen as the early movers in carbon capture. As mentioned on the highlight slide, we are seeing four projects that are progressing towards FEED by the 2025. These projects are from these two verticals. FEED is the final yet sometimes lengthy stage before FID. We are seeing that in several cases, customers are expected to make commitments during FEED to qualify for public funding, constituting a soft FID.

If these projects move forward with Capsule, we will engage in high value PDP engineering work in 2026, impacting revenues and positioning for FID. Gas turbines often in relation to data centers are also emerging as an interesting vertical. Capsule GT is attractive to customers as it can generate additional electricity, hence, delivering an attractive levelized cost of electricity. This is a field we are very excited about. In emerging industries, we continue to get pull from various hard to abate sectors.

Post quarter, we announced a feasibility study in which our first project is going to take place in the Lyme industry. We’ve also been selected to present a technical paper at the International Lyme Association Conference this year. This is an exciting breakthrough. Next, our business model is scalable. It offers exposure to revenues at various stages of a CCUS project.

This figure shows the revenue potential of these stages. As we progress through the projects, the value increases. With our mature pipeline of almost 23,000,000 tons of capture capacity per year, we are building the potential for the future. Although there will be different dynamics in each project, we work diligently to extract as much value as possible early on before getting to the FID stage. As stated earlier in the presentation, we also have four projects maturing towards FEED and PDP towards the end of this year.

We have a very exciting period in front of us when moving into 2026. The next pillar is our geographical expansion. EU growth is driven by policies tailwinds, and the vast majority of our mature pipeline comes from Europe. However, North America continues to be an attractive market due to the availability and cost efficiency of transport and storage infrastructure. The tax credits available for carbon capture projects under the IRA also remain, and in some use cases, they get even better.

This combined with state level mandates in a growing carbon removal market, we remain positive about the potential in The US. In q one, we added the first two projects in The US to our mature pipeline and added another in q two. Two of these are GT projects with attractive economics for the customer. With our established position in Europe and growing momentum in The US, we are building the foundation to become a global leader in this space. At Capsule, we are building a leading global carbon capture technology company.

As we look holistically at our goals and how we will capture long term value, it all starts with our technology. Being able to deliver carbon capture at significantly lower cost than the competition puts us in an outstanding position to build strong customer relationships. Second, we are taking the advantage in our technology and putting it to use in high value verticals and establishing ourselves as a preferred provider across various key industries. Within industries like cement, the customers we are working with have the potential in their portfolios far beyond the sites we are initially engaged in. Third, on our business model, looking across the project life cycle, we identify revenue potential far exceeding that of the license fee.

Granted, the recurring revenues are far out on the time horizon, but we are actively engaged with customers to position us for being by their side throughout the project. Fourth, our technology leadership and wide fit across industries will be our lever for geographical expansion in combination with Capsule GT, which is arguably an even stronger offering outside Europe than EOP. Finally, by leveraging the initial four strategic levers, we will continue to broaden our leadership across the customer journey through strategic partnerships. Our ability to do so and the reason we will be successful all starts with our technology and the attractive business case it represents for our customers. I now pass to Ingeberg, our CFO, who will take us through our financial highlights.

Inger Berg, CFO, Capsule Technologies: Thank you, Wendy. In the 2025, we delivered revenues of 41,000,000 Norwegian kroners, which is a 14% increase compared to the same period last year. Q2 came in at about 16,000,000, somewhat softer than q one, primarily due to the timing of capsule world deployments and client decision making. On the cost side, operating expenses came in at 37,500,000.0 NOK, slightly lower compared to q one, with other operating costs reduced by 40% quarter on quarter. Importantly, with a typical license revenue of between 50 and a 115,000,000 Norwegian kroners per project, just one final investment decision is sufficient for us to reach breakeven.

Four projects representing more than 3,000,000 tons of annual c o two capture are progressing towards the FEED phase in the 2025. These will generate higher value engineering work going forward as they also bring the project closer to investment decision. Turning to liquidity. By the end of Q2, our cash position increased to NOK67.5 million, up from DKK58.5 million in the previous quarter. The increase was due to securing a DKK30.8 million green loan facility with DNB in Q2.

Note that the loan was disbursed in the July and hence was not on our reported balance sheet end of Q2. The underlying cash burn in the quarter was up from Q1 at about 22,000,000 Again, this was mainly a result of delayed client decision and temporary underutilization of the Capsule Go capacity. However, we are already seeing a strong pickup with multiple Capsule Go campaigns currently under negotiation for signing in the 2025. These are expected to drive near term revenues. Looking ahead, revenues from more comprehensive high value engineering work are expected to ramp up by the 2025.

With these drivers in place, we maintain a path to breakeven during 2026. On that note, I give the word to Jakob, who will talk about our strategic initiatives.

Jakob, SVP Investment Strategy, Capsule Technologies: Thanks, Inge, for the financial highlights. I would now like to elaborate on our strategic thinking. I’m fairly new at CapSol, but I see every day how our technology is making its mark on the industry. We have high performing, cost leading capture technology that has been FID ed and considered bankable. Our capital light licensing model has allowed us to grow quickly, achieving milestone after milestone.

However, we see a path to do even more, to making carbon capture easier to buy for our customers. We can do this by providing a broader platform for CCUS project support, helping our customers connect to financing options, and linking capture through to storage or utilization. The end game is to leverage our position as a leading technology provider in helping projects get quicker to FID. We can do this focusing on the CCUS project journey from the customer’s perspective. We’re already helping our customers determine the feasibility of CCUS and technology decision making through our engineering and demonstration.

This is supported by our technology partners. Beyond this, though, we can help our customers connect through the value chain to figure out how to transport and store or utilize c o two. We can help them engage stakeholders, whether it is the government, the community, or investors. And with our safe solvent support environmental permitting. As projects progress, they also need to ensure a robust business case.

This is where finding the right funding, CDR buyers, investors, and maximizing revenue generating opportunities will be important. Lastly, we see a greater role we can play in project delivery and operations. We’re already working at the frontline with customers in all of these areas, and along the journey, you see the partners we’re doing it with. Naturally, we are being prompted to do more. So what does it look like for Capsule to make CCUS easier to buy for our customers?

We see a number of initiatives across the three objectives of reducing the cost of carbon capture further, accelerate project execution, and becoming a full cycle project enabler. The key enablers to pursue this will include things from r and d and joint industry programs to stronger partnerships across the customer journey that we just described, all directed at increasing the win rates, expanding the value capture per project, and accelerate scaling. We identify attractive returns in potentially pursuing such initiatives while evaluating how they could be realized. We do believe that strategic initiatives and partnerships along the customer journey is the key to winning in this space, and it’s built on the foundation of our technology. The licensing model has enabled scalability and capital light growth.

It has allowed us to build an impressive pipeline of blue chip customers at a low burn rate while markets evolve. Now we believe the strategic initiatives could enable us to double the value capture of CapSol, which deserves exploring. Further to the licensing model and potential strategic initiatives, we are positioning for recurring revenues as plans get online, potentially starting in 2028. This could include solvent optimization and services, enabling us to help the customer optimize their operations. As a concluding remark, we believe that an integrated platform could set Capsule up for extracting high margins from more projects quicker.

And with that, I’ll hand over to Wendy for the closing remarks.

Wendy Lam, CEO, Capsule Technologies: Thanks, Jakob, for highlighting how we are mapping our growth journey into the future in a carbon capture market landscape that will continue to grow. At Capsule, we are building a company like no other. As one of the very few publicly listed carbon capture technology companies in the world. We are just at the beginning. We are proud of where we are and for what is ahead.

With that, I’ll hand it back to Jakob to lead the q and a portion of the call.

Jakob, SVP Investment Strategy, Capsule Technologies: Thank you, Wendy. Now let’s look at the questions we have received. It’s as follows. And it’s best directed at Wendy, I think. Q two revenues were softer, and you are pointing to delayed client decisions.

How concerned are you that softer demand is not temporary?

Wendy Lam, CEO, Capsule Technologies: Thanks for the question. Well, we don’t see this as a structural issue. The softness that we saw in q two was related to general trade policy uncertainty. Many of our customers are very large internationals that have are dealing with many many dynamics in the trade sector. So what we are seeing already is that contractual activity, customer activity is normalizing and picking up in q three.

For example, we have over a million tons of engineering engineering and demonstration work in final negotiations as we speak. Post quarter, as was mentioned already, we have signed a new project with the lime sector, again, our first in that sector, which represents further further growth. And we’ve also signed on an additional 300,000 tons of carbon capture capacity work for a waste management company. We are also progressing additional work for a European biomass project. So the activity has definitely been picking up, and we are feeling confident about how the rest of the year looks.

Jakob, SVP Investment Strategy, Capsule Technologies: Thank you, Wendy. There’s another question. I think I’ll be best suited to respond to it. How long will projects be delayed? So it’s still early to say, and it varies from project to project.

Some are continuing at full speed, and some that had planned FID in q four twenty twenty six will slip then into 2027. To shed some light on the situation, I think an example is valuable. One of our encouraging projects is with Schwenk. In June, they announced that the first c o two was captured using our Cap Capsule Go unit. They specifically named us in the press release and used that event to reiterate their strong commitment to have a full scale carbon capture plant operational in 02/1930.

They went on to state that the FID is planned for 2027. With their dedication towards being operational in 02/1930, we had expected FID late twenty twenty six, which is now pushed into 2027. On the one side, FID is somewhat later than expected, but on the other hand, our confidence in the project is increasing. I also like to remind viewers that questions can be sent to IR@investorweb.no. So the next question, which is directed at Wendy, what is the state of the market in The US?

Wendy Lam, CEO, Capsule Technologies: Yep. Thanks for the question. It’s a question we get often. And what I can say is we are we remain very positive about The US market. Those of you paying attention to the news know that IRA 45 q tax credits for carbon capture have remained, and the White House had talked about carbon capture as a technology for the future.

So we are seeing those credits remain as well as state level incentives. And on the federal level, the use cases, for example, for EOR, enhanced oil recovery, have even gotten better. So all of that dynamic is continuing for us. We have also seen the voluntary markets picking up with buyers of carbon removals, and that has also driven some activity in the biomass sector where we are progressing with some work. And, of course, we are very excited about the gas turbine opportunity in The US where our Capsule GT solution can be used to decarbonize power generation using gas turbines on simple cycle gas turbines.

So we’re already progressing some project work on that front as well. So we remain very positive about The US and North America overall.

Jakob, SVP Investment Strategy, Capsule Technologies: Let’s see. Are there any further questions? It doesn’t seem like it. Well, if there are no further questions, I think we say thank you for listening in and contributing with your questions. And, yeah, thank you for your

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