Earnings call transcript: Eos Energy's Q3 2025 results show significant losses

Eos Energy Enterprises Inc. reported a substantial net loss for the third quarter of 2025, largely due to non-cash fair value adjustments, as disclosed in their recent earnings call. Despite doubling its revenue from the previous quarter to $30.5 million, the company missed revenue forecasts and recorded a negative earnings per share (EPS) of $4.91, far below the expected $0.24 loss. Following these results, Eos Energy's stock saw a significant rise in premarket trading, increasing by 6.19% to $15.78. According to InvestingPro data, Eos Energy has demonstrated remarkable revenue growth of 128.49% over the last twelve months, though the company remains unprofitable with an EBITDA of -$201.35 million.

Key Takeaways

• Eos Energy's Q3 revenue doubled from the previous quarter to $30.5 million.
• The company reported a net loss of $641.1 million, driven by non-cash adjustments.
• EPS missed forecasts by a wide margin, with a reported loss of $4.91 per share.
• Stock price rose 6.19% in premarket trading, reaching $15.78.
• Eos Energy targets $150-$160 million in annual revenue.

Company Performance

Eos Energy's Q3 performance highlighted significant growth in revenue, doubling its Q2 figures. However, this growth was overshadowed by a substantial net loss, primarily due to non-cash fair value adjustments. The company ended the quarter with $126.8 million in cash, maintaining a strong liquidity position despite the financial setbacks. Eos Energy's innovative Z3 energy storage system, which offers higher energy density and efficiency, continues to position the company as a competitive player in the energy storage market.

Financial Highlights

• Revenue: $30.5 million, up from Q2 2025.
• Net loss: $641.1 million, primarily due to non-cash adjustments.
• EPS: -$4.91, missing the forecasted -$0.24.
• Cash reserves: $126.8 million.

Earnings vs. Forecast

Eos Energy's actual EPS of -$4.91 was significantly below the forecasted -$0.24, marking a surprise of 1,945.83%. Revenue also fell short of expectations, with an actual figure of $30.5 million compared to the forecasted $39.62 million, resulting in a revenue surprise of -23.02%.

Market Reaction

Despite the disappointing earnings results, Eos Energy's stock rose by 6.19% in premarket trading, reaching $15.78. This increase suggests that investors remain optimistic about the company's future prospects, possibly driven by its innovative product offerings and strategic positioning in the growing energy storage market.

Outlook & Guidance

Looking ahead, Eos Energy anticipates achieving a positive contribution margin in the fourth quarter and a positive gross margin by Q1 2026. The company is targeting consistent revenue growth and plans to increase its manufacturing capacity significantly. Revenue projections for FY2025 and FY2026 are set at $145.87 million and $449.1 million, respectively, indicating strong growth expectations.

Executive Commentary

CEO Joe Mastrangelo emphasized the company's innovative approach and market potential, stating, "We are a team that is wired to win," and highlighting the immediate need for energy storage solutions. He also addressed recent short report allegations, dismissing them as without merit.

Risks and Challenges

• Significant net loss and reliance on non-cash adjustments.
• Potential supply chain disruptions impacting production.
• Market competition from established energy storage providers.
• Economic uncertainties affecting capital availability.
• Execution risks related to scaling manufacturing capacity.

Q&A

During the earnings call, analysts inquired about the performance and market potential of Eos Energy's technology, as well as the company's financing and scaling strategies. The management addressed concerns, reiterating their confidence in the company's growth trajectory and dismissing recent negative reports as unfounded.

Full transcript - Eos Energy Enterprises Inc (EOSE) Q3 2025:

John Mayhev, COO, Eos Energy: Welcome to the Eos Energy third quarter 2025 earnings conference call. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the Q&A session. If you'd like to ask a question by that time, please press star one on your telephone keypad. Thank you. Now, I would like to turn the call over to Liz Higley, Vice President of Investor Relations. You may begin.

Liz Higley, Vice President of Investor Relations, Eos Energy: Good morning, everyone, and welcome to Eos's third quarter 2025 conference call. Today, I'm joined by Eos CEO Joe Mastrangelo, COO John Mayhev, and CCO and interim CFO Nathan Kroeker. This call, including Q&A, may include forward-looking statements, including but not limited to current expectations with respect to future results and outlooks for our company. Should any of these risks materialize, or should our assumptions prove to be incorrect, our actual results may differ materially from our expectation or those implied by these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to are described in our SEC filings. Forward-looking statements represent our beliefs and assumptions.

Only as of the day such statements are made, we undertake no obligation to update these statements made during this call to reflect events or circumstances after today, or to reflect new information or the occurrence of unanticipated events except as required by law. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to US GAAP financial information, is provided in the press release. Non-GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies. This conference call will be available for replay via webcast through Eos's Investor Relations website at investors.eose.com.

Joe, John, and Nathan will walk you through our business outlook and financial results before we proceed to Q&A. With that, I'll now turn the call over to Eos CEO Joe Mastrangelo.

Joe Mastrangelo, CEO, Eos Energy: Thanks, Liz. Welcome, everyone, to our third quarter earnings meeting. I'd like to start off on our classic page, our operating highlights. I really want to talk about, you know, Nathan and John will dive into the numbers here a little bit, but I want to spend a moment on the commercial pipeline and the orders booking and the recent announcements that we made to just talk about the team that's been at work here. You know, Nathan moved over to be our Chief Commercial Officer back in the spring, and you're starting to see the results of both him and Justin Vagnazzi, who's been here for almost two years. You're seeing the pipeline going up. You're seeing MOUs and getting on the same side of the table with the customer, transferring into orders, and you're seeing those orders go into backlog and then ultimately out the door shipping.

At the same time that we've won a couple of orders here after the quarter closed, we signed a very important strategic agreement with Talon Energy that I'll talk about a little bit further, how we're thinking about this on a subsequent page in the deck. Around revenue, look, John's been here with us for 60 days, and he's going to go through the details of what he found and what he's done in those first 60 days. We've had a team on the field here for the last year: Jason Gregs, Josh Payne, Jessica Troiano, have been doing a fantastic job helping us position the supply chain, help us position costs to get to profitability, and really position us to scale this business. You've seen our best quarter to date on revenue in the history of the company.

It's a phenomenal performance by the team in the third quarter. John will talk about how we started off fourth quarter, which really leads us to reiterate guidance, which I'll talk about at the end of the presentation. On the cash side, you saw that we hit our last cash milestone around customer cash. Again, this is attributable to the two hats that Nathan wears, being the Chief Commercial Officer, you know, working on both the order side and the project side, along with being the CFO. You know, we brought in $43 million of customer cash here already in the fourth quarter. The business is becoming more stable and being positioned to scale as we move forward. It's an exciting time to think about what the future holds.

I want to move to the next page to talk about some of the announcements that we made a few weeks ago. Look, I know when we talk about our new building, people are going to ask, "Why now? Why didn't you do this to begin with?" I just want to take a moment to talk about where we were and how we wound up where we are. We started off in Turtle Creek in 2019. We took a building that was very low cost, and we expanded into a footprint with our landlord. That footprint, as we expanded, is not optimized. This new building gives us an optimized footprint to build a world-class factory, to take cycle times down, to drive costs down, and to get this product where it should be as a market leader, both on performance and cost.

I'm excited about what we're going to be doing in our new factory as we get into next year and how John's positioning us to expand capacity to meet demand. On our new software hub in downtown Pittsburgh, it's an honor for us to be part of the revitalization of downtown Pittsburgh. It's an honor for us to be sitting here and thinking about coming to Pittsburgh because we knew we could build things and now tapping into the brainpower and the ecosystem to make how we're building things even smarter. Being able to recruit, you know, when you look at the work we've done and Michelle Doskowski coming in as our Chief People Officer last year, you know, when you look at our company, our turnover rates are in line with high-growth startup companies.

We've brought in a lot of talent to make this company better over the last 24 months and particularly in the last 12 months. I'm excited to be moving into the new building. You can see a rendering of what the building will look like. We're not taking the whole building. We're taking three floors, but it will be branded as an Eos building. We look forward to the day where all of our shareholders will be able to watch a Pirates game or a Steelers game and see that Eos logo in the skyline. It's very, very humbling to think about where we've come from, but it's also very exciting to think about where we're going. If we go to the next page, I want to talk about the market itself.

I want to take a second here to talk about what we're trying to do as a country and as an industry and ultimately globally to truly scale into the power requirements that we need to future growth and future economic growth around the world. We're in the third energy supercycle of my career. What I'm hoping for in this energy supercycle is not that we just do the same things we've always done of adding capacity in big chunks and then looking to see if we've met demand. I think we can do this smarter. I think energy storage makes this expansion even better. I've said this before. Our systems don't care if you put a brown electron in from traditional power generation or a green electron in from renewables. They take electrons and store them for when they're needed. How do you—what does that mean?

Let me just talk about—put for a second, go back to my old life before Eos and talk about traditional power generation. Traditional power generation, it's installed for peaks. You build capacity for a peak once a year that may happen. The capacity factors of how that generation works are in the 33-65% range. That means the assets are sitting idle more than they're probably actually running. What does energy storage do? For every 5% that you can increase the capacity factor of a gas turbine, of a steam-fired coal plant, of a nuclear facility, or pumped hydro storage, every 5% increase in capacity factor is like powering 50 million homes. What does that mean? Let me put that in context. That's powering for one year. California, Texas, New York, Pennsylvania, and Illinois. We need power.

We need energy storage, and we need energy storage now. That is what we are positioning this company to deliver. At the same time, if you look at renewables, and let's say you say, "Oh, renewables, inefficient. They have intermittencies." Just take the installed base of the renewables we have now. Do not add anything to it. Let's imagine that we do not add any more wind or solar to the power infrastructure. Just putting energy storage systems on that existing installed base. What does curtailment mean? Curtailment means that the wind is blowing or the sun is shining, and there is no demand for those electrons. Adding energy storage at those points in time, you can add 10 gigawatt hours of BESS and power 750,000 homes for a year. That would be like powering Philadelphia for the year. Do not add any additional capacity. Put energy storage alongside of it.

Make our energy infrastructure more efficient and make it available to consumers and industries when it's required. When you think about what all that trials and tribulations and variants and how things work on the upfront generation side, that has an impact on how we deliver the electrons to the end user. We have a lot of congestion on our grid. Congestion, think of it as a traffic jam. Energy storage on both ends of that traffic jam, on the source and the use, allows you to decongest and reduce costs in the overall system. Take what we have, make it more efficient, make it lower cost, deliver the electrons when they're needed, and generate those electrons as efficiently as they possibly can. Now, we're talking about this supercycle being driven by AI and the build-out of hyperscalers.

Yes, they're creating new demand in the system, but at the same time, we have to deliver that demand in a cost-effective way so that consumers do not see their energy prices go up. The way you do that is with energy storage. What's our value proposition as Eos? I'm going to talk about Eos. We need all types of energy storage, but let me specifically talk about what we bring as Eos. If you go with a traditional cube solution that we've been putting out in the market, with one acre, you can deliver 100 megawatt hours of cubes. If you take that same one acre and do an in-building solution because of the way our architecture of our product and how it operates, you can deliver a gigawatt hour in one acre. That's four times what is out in the market today.

That's being able to take bulk storage available today, bring it to the market, get that running, and get what we have operating more efficiently and deliver more electrons when they're needed so we can win the race of AI. At the same time, our round-trip efficiency—I'm going to show you data on the next page—our round-trip efficiency is in the mid-80% to the low 90%, but that's across a very wide operating range. There's no other technology that can deliver that type of performance over that wide of an operating range. Not only do you have to sit there and say, "Do a 12-hour continuous cycle or a 16-hour continuous cycle," you want to do a 4-hour cycle and a 5-hour cycle later in the day. Our technology will do that and deliver that same round-trip efficiency independent of what the ambient temperature is.

We have a wide operating range, ability to go across multiple temperatures, and we can respond to fluctuations in demand. Think about this: five milliseconds. I can't even—that's faster than snapping your fingers. If demand changes or excess capacity comes on, our system responds five times faster than what the grid requires. It's leading in the industry in that area. At the same time, our system will run for 25 years, and you don't need to add extra capacity in there because we have very low degradation. Then our auxiliary loads. A lot of the times when you hear things about high round-trip efficiency of other technologies, they don't tell you about the power they need to keep them cool or to keep them safe. We use 1-2%.

When we talk our high 80s to low 90s, low 90 round-trip efficiency, we're talking about that in the terms of including the aux loads. That's a net number that goes to the—to onto the grid. They're non-flammable. I've talked about this before and talk about this again—yes, if you overcharge our battery more than 200%, you run the risk of the electrolyte heating up and having steam come out of the battery. That steam is non-toxic. We tested it as this has happened. It happens. It's happened. It's a safety feature of our battery. It's what makes it non-flammable. We've been able to operate through those incidents, basically replace batteries, keep the system in place, and start operating again. Now, let's go to the next page and talk about operations. D3 Field Performance as of the end of October.

This is really, really encouraging. Francis Richie and the team in Edison, these guys have been with Eos for nearly 10 years. They've developed a product that is a killer product out in the marketplace. I'm proud to see these initial results of how we're operating. If you look at the bottom left-hand side, you can see the average performance of the four sites that are operating. If you look at the right-hand side, you can see the top performance of how they're operating. What I'd like to point out to you is look at that wide temperature range. Normally, like if you're an engineer and you're a technologist listening to this, you know thermodynamics. It gets extreme temperatures. Performance usually drops off. Look at our performance against those fluctuations in temperature. It's relatively flat. More to come on the performance of this product.

We are very encouraged about what we're seeing and feel like this product meets all the demands I talked about on the prior page. Now, let's go to my last page here before I turn it over to John. Our improved operating performance. Look, you see the performance and the increase in revenue quarter over quarter over quarter. This is all about taking production bottlenecks out, eliminating single points of failure in manufacturing, bringing someone in with John's experience. It's only going to make this better with time. We were able to double our revenue number from second quarter into third quarter. Going into fourth quarter, we feel really confident on what we're seeing in the first 40 days of the quarter as far as how we're going to be able to execute for the rest of this year and going forward.

On the right-hand side, what's most important for everyone here on the phone is our ability to generate returns on that volume. If you look at those lines, those lines are rapidly approaching break-even and ultimately profitability. What's most important is you see the gap between our gross margin and our adjusted EBITDA margin closing. That's because we've always talked about the ability to scale this business on a low-cost base and deliver profitability. I'm excited about where we are. We still have a lot of work left to do. We have a great product. There's going to be more to come. We're really excited. John and Nathan will walk through both operations, commercial, and financial. This was a really good quarter delivered by a team that's wired to win and wants to be the best in the industry.

With that, I'll turn it over to John to walk through operations. Thanks, Joe. Good morning, everyone. Really excited to be here today to talk to you about Eos. It's been just over 60 days since I joined Eos. As an operations leader, there's truly no better time to join a company than when it is set up for large-scale growth. Before diving into what the team has accomplished and what we're focused on going forward, I just want to briefly introduce myself. I bring more than 35 years of experience leading large-scale, high-quality, efficient, and cost-effective operations around the world. I've worked for organizations that are recognized for world-class execution, and I not only know what world-class looks like, I have also built and led teams to deliver it.

My experience has taught me how to drive operational excellence, building systems that are efficient, repeatable, and cost-effective at scale. Those lessons translate directly into what we're doing here at Eos. What's impressed me most about Eos is the simplicity and scalability of the product: a single product SKU and a highly automated manufacturing process tailored around it. The team has done the hard work, proving the process, tightening the supply chain, and hitting cycle time milestones that demonstrate this technology can scale. As we move into the next phase of growth, my focus is on driving consistency and repeatability, creating a global playbook that allows us to replicate this model wherever our customers need long-duration energy storage. We see meaningful opportunities to take cost out of every aspect of the product, not just materials, but labor efficiency and overhead, as Joe has discussed many times on prior calls.

Through process optimization, automation, layout design, and lean principles, we'll be able to increase revenue per head, sq ft, and CapEx. Before I get into what's next, I want to acknowledge the environment I walked into. The foundation of any company is its people, and it's clear that what we have at Eos is a team that's hungry to win. I inherited an operations team that's intelligent, experienced, and driven to take care of their employees, delight their customers, and deliver for their shareholders: a culture of teamwork, winning the day, and continuous improvement; a design team that has built an exceptional product and continues to work closely with the operations to enhance quality, efficiency, and cost. Let's take a look at what the team's accomplished in the two months I have been here, focusing on five key areas: safety, quality, cost, output, and capacity expansion.

Safety is our top priority. We reduced safety incidents by 84% from Q2 to Q3, and year to date, are 41% better than industry average. In September, we did four times the production volumes that we did in August with zero lost-time safety incidents. My goal is clear. I'm entrusted to keep our people safe and send them home to their families each and every day. Quality. We have made significant progress and decreased battery defects by 45% from Q2 to Q3. Bipolars account for about 70% of the total battery defects, and with a complete cutover from manual to 100% automated bipolar production at the beginning of Q4, we expect to drive that down by another 63%. With cost, we have a single product to focus on. What does that mean? I'll give you a couple of examples. One, we have five buyers.

The activity level and costs have not changed whether we buy for one line, 10 lines, or 50 lines. The organization is already scaled in all key areas for growth. Two, our supply base consists of nine key suppliers making up 80% of our bill of material. To date, we have never done a large buy-and-buy with our suppliers because of uncertainty around capacity installation and production ramp. We are now in the position to do so. We hosted these suppliers in Turtle Creek a few weeks ago where we reviewed our capacity forecast and opportunity pipeline. As they ramp their production, they will have the ability to get more efficient and realize cost absorption. With that as the backdrop, we expect to achieve further cost out in sync with their volume increases. With this and other cost initiatives, we expect to exit Q1 gross margin positive.

Moving to production output, we're now positioned to deliver a significant step change in Q4. In Q3, our automated battery line operated at 15% capacity utilization of its full two-gigawatt potential, limited by subassembly bipolar equipment availability. In Q4, we expect to shift three times the volume we did in Q3. We'll accomplish this by increasing capacity utilization by 167%, ramping additional shifts along with having all eight bipolar cells in full production. My team is laser-focused on hitting the output to achieve our revenue guidance, and we're set up to do just that. In October alone, we've already shipped 179% more cubes than we did in the first month of Q3. In just the first four days of November, the team has already shipped 83% of August total volume. Let me say that again.

What took us a month to accomplish just three months ago will now take us only six days. Now, looking ahead, our next big step comes with the new building and the installation of line two expected in spring of 2026. What excites me here is how we'll be able to utilize the layout and the opportunities we have to be even more efficient. The space is designed for single-piece flow, enabling lower costs and higher throughput. Let me give you an example of what I mean by this. Today, we're moving products across three floors and two buildings, and from start to finish, which translates to materials traveling 2.1 mi. There's significant material handling costs associated with this. In the new building, we expect this cost to decrease by 86% as we will have a one-floor single-piece flow in our end-to-end operation.

This not only improves costs but gives us the ability to increase throughput. You've heard us talk about having a battery come off the line every 10 seconds. What we're focusing on now is reducing that time even further. With changes to line two design, we should be able to further reduce cycle time. Once validated, we will then go back and retrofit line one. We will continue to implement enhancements to the automation equipment to reduce cycle time. Finally, we're preparing to scale by diversifying our operations supply base. With multiple partners in place, we're positioned to have our suppliers build a line every 90 days if needed. That flexibility gives us the ability to stay ahead of demand and deliver for our customers when I get the green light from Nathan.

With that, I want to thank everyone for their time, and I'll let Nathan talk through the commercial highlights. Thanks, John. It's been great working with you and having you as part of the Eos team. Look, I've been looking forward to being on the call with you today and sharing what's been going on commercially. It's been an exciting few weeks since John has joined us, and you can feel the momentum building across the organization. Let's start with the commercial front, where we've made significant progress since we last updated you. Just last week, we announced our first purchase order with Frontier Power, a 228 megawatt-hour deal supporting several long-duration storage demonstrations across multiple markets. This first order is the initial movement of Frontier MOU volumes from pipeline into backlog. This PO is very strategic as it is for deployments ahead of Frontier's U.K. cap and floor projects.

That means we're getting systems in the ground early and showing the market what our technology can do ahead of the cap and floor projects as we continue to support Frontier on their submissions. To put the cap and floor program in perspective, there were a total of 177 projects submitted by various developers, but only 77 advanced to round two. Every single one of the 16 projects that Frontier submitted using our technology moved forward. That means Eos is represented in over 20% of the projects that made it to round two. We have nearly 11 gigawatt-hours in the second phase, more than double what was anticipated when we signed the MOU with Frontier earlier this year. That's a powerful endorsement of our technology and our ability to deliver at scale.

Just to remind everyone, under cap and floor rules, projects must deliver at least eight hours of discharge, which plays directly to our strengths in long-duration storage. We recently announced the 750 megawatt-hour supply contract, or MSA, with M8 Energy, one of the largest independent renewable energy operators in the US. We began our relationship with M8 in 2023. Earlier this year, we announced an MOU where our two companies were working together to develop an opportunity pipeline. That MOU has now transitioned from pipeline into backlog as an order for 750 megawatt-hours. This illustrates how our commercial process works. The first couple of 10-hour projects are expected to total 200 megawatt-hours and uniquely pair solar with long-duration storage in support of hyperscaler offtake requirements.

This is a strong signal that the market is shifting and that customers want not just long-duration storage, but an American-made solution to power data centers and industrial operations. Zooming out for a moment, our commercial pipeline continues to grow as we ended the quarter at $22.6 billion, a net increase of 21% quarter over quarter, representing about 91 gigawatt-hours of potential projects. No surprise here, data centers are the fastest-growing part of the pipeline, now making up 22% of the volume. Perhaps even more encouraging, 64% of our pipeline volume is now at six hours or more in duration, validating what we've been saying: the world needs longer-duration solutions. Geographically, we're beginning to see a significant increase in activity in PJM and New York ISO, along with the existing growth we've previously highlighted in SPP and MISO.

For example, the NYSERDA bulk storage RFP, which is similar to the U.K. cap and floor mechanism, requires that 20% of the procurement be eight-hour systems and 20% be in Zone J, which includes Manhattan. This is exciting for us as this aligns exceptionally well with our technology and our ability to be deployed in populated areas. With the rising demand from data centers and electrification, customers are focused on speed to power, high-density energy delivery, and de-risking supply chains with US-made technology, all areas where Eos is uniquely positioned to deliver. Finally, on backlog, we ended the quarter at $644 million with 2.5 gigawatt-hours of storage, not including nearly one gigawatt-hour in new orders that we've booked since the end of the quarter. This is down slightly quarter over quarter as we continue converting backlog into revenue on shipments.

During the quarter, we delivered over $30 million in revenue while adding an initial order for behind-the-meter storage for a large client in Germany. While Q3 may appear slower on paper, Q4 is already off to a strong start with more than $220 million in new orders booked and significant forward momentum on several large pipeline opportunities. We've built strong partnerships with leaders like Frontier and M8, and we continue working on additional opportunities to support the large and growing hyperscaler demand for reliable power. Moving to our financials, we again delivered record quarterly revenue as production volumes continued to ramp, with gross margins improving sequentially for the past four quarters. We're really encouraged by our progress and remain confident in our ability to scale, now that subassembly automation is nearing completion and delivering increased manufacturing capacity and quality, as John highlighted earlier.

Revenue for the quarter was $30.5 million, double what we reported in Q2, supported by shipments to five different customers. To put that in perspective, we nearly doubled our 2024 revenue in the third quarter, showing how quickly production is accelerating in Turtle Creek as our automation efforts take hold. Average selling price was also higher and more in line with our expectations going forward. You'll recall that in Q2, 50% of our production volume was delivered to a single strategic customer at a lower ASP, which was a drag on revenue for that quarter. I'd like to highlight that, as Joe mentioned earlier, this system has begun cycling and running in the field at some of the highest RTEs we've ever seen.

Gross loss for the quarter was $33.9 million, just slightly more than last quarter, as revenue doubled on increased volume, driving a 92-point improvement in gross margin and demonstrating the scalability of our operations as we ran. We're continuing to see steady quarter-over-quarter margin improvements and remain on track to reach positive contribution margin in the fourth quarter and positive gross margin as we exit the first quarter of 2026, as John previously said. Building on the improvements in gross margin, operating expenses for the quarter totaled $27.3 million, an improvement of $5.6 million from Q2, and 4% better than prior year. 20% of this quarter's OpEx reflects non-cash items such as stock-based compensation. We ended the quarter with a net loss of $641.1 million, which was primarily driven by non-cash fair value adjustments of approximately $569 million related to warrants and derivatives on our balance sheet.

To be clear, this is not an operating loss. The adjustments are largely driven by a 122% increase in our stock price quarter over quarter and the corresponding mark-to-market revaluation. These stock price fluctuations can and will continue to drive volatility below the line, but they have no impact on our operating results or our cash position. Adjusted EBITDA loss was $52.7 million compared to $51.6 million in Q2. Importantly, net margin improved by 166 basis points, reinforcing that the efficiency gains we're achieving in production are scaling across the business. The continued increase in production volumes that both John and Joe talked about should be moving us to positive contribution margins in the fourth quarter. After that important milestone, we'll start closing the gap on EBITDA margins and continue moving toward profitability.

Turning to the balance sheet, we ended the third quarter with $126.8 million in total cash. A couple of things on cash post-quarter close. First, you heard Joe talk about the customer receipts we received in October. Second, we just completed another sale of our production tax credits, monetizing $11.8 million of 45X credits that were generated in the first few quarters of this year. Consistent with prior transactions, we realized $0.90 on the dollar on this sale. Lastly, we've seen an increasing number of exercises in both our public and private warrants as all warrants are now in the money. The last day to trade these public warrants is November 17. Just as importantly, we've completed the final Cerberus milestone tied to customer cash receipts under our term loan.

This means that we've achieved all 16 milestones with no additional equity, preferred stock, or warrants being issued to Cerberus. I want to thank all of the Eos employees for making this happen. With that, I want to thank everyone for joining us this morning, and I'll now turn it over to Joe before heading into Q&A. Thanks, Nathan. Before we move into Q&A, I'd like to reiterate guidance to the low end of our range. Nathan and the commercial team have positioned us with the backlog that allows us to deliver. You've heard from John and the impact he's making on improving our operations performance that are keeping us on track to earn between $150 million and $160 million in revenue for the total year. I also feel compelled to make a few comments about the short report that was issued about Eos last week.

When the report surfaced last Thursday, I was in a meeting in New York with the CEO of a large independent power producer, the North American CEO of a large energy storage operator, and the CEO of one of Eos's largest financial investors. We were discussing a strategy to meet America's accelerating power demands with a mix of generating technologies combined with Eos Z3 systems. While I was finishing up the meeting, our team quickly mobilized to review what was being said about our company. We take these issues very seriously and immediately engaged our outside SEC counsel and our external auditors in this review. We are certain that the allegations in this short report are without any merit.

Short reports are a fact of life these days, but the silver lining is that I am humbled by the support we received over the prior week, from the Department of Energy to the California Energy Commission to the Edison Fire Department, our customers, large institutional investors, and our vast retail investor base. I'm proud to say that I work at Eos. We're a team of 750 people who are building a great company, and collectively, we own 11% of the company's equity. When I got back to Turtle Creek, I found a galvanized team with a singular focus to finish what we started and prove that great and innovative products can still be designed and manufactured in the United States. We are a team that is wired to win. With that, let's start by taking a few questions submitted online. I'll turn it over to Liz. Thanks.

Thanks, Joe. Moving to a few of the questions we've received online, with the first question being, can you provide an update on the timeline around Factory 2 outside Pennsylvania and if Project Amaze will need to be completed before Factory 2 lines go live? Thanks for the question. As we discussed earlier in my opening remarks, we now have building partners and automation partners that can deliver a line every 90 days. This work can all be done simultaneously going forward. Thanks, John. Next question. As the company navigates the capital-intensive scale-up phase, how are you balancing the need for fresh funding with imperatives to avoid excessive shareholder dilution, and what milestones might unlock access to lower-cost capital? Thanks, Liz. As you just heard John say, we're positioned to add manufacturing capacity to meet this growing demand.

We're in an energy supercycle, and it's my job to deliver the orders and the capital to support this growth. I'm committed to doing this in the most cost-effective way possible for the company. All right. Thanks, Nathan. I think the next one here is for Joe. What is the long-term vision, and how do you plan to surpass or match the competition? Thanks, Liz. Look, I mean, you heard John talk about positioning us to be able to add capacity in a 90-day rhythm. That's great when you're talking about being in an energy supercycle. Nathan's out there with his two hats, winning the orders to fill the factory and securing the capital to drive growth. I'm just excited about the product that the team has delivered.

I mean, we've got some things that we're working on that we're really excited about that will position this to be the energy storage product to help meet the needs of this energy supercycle. We've got some work to do to continue to close the gap on profitability, and I feel really good about the playbook the team has to be able to do that. At the same time, we've got to make this the easiest technology to work with out in the field. That's why we're investing in a software hub here in Pittsburgh. I think when you think about what we want to do is take a great technology, build it quickly, and operate it easily out in the field. That's the simple strategy of this company and what everybody is executing on.

With that, we'll turn it back over to the operator and see if there's any questions from our sell-side analysts. Thanks. Thank you. We will now begin the question-and-answer session. At this time, I would like to remind everyone that in order to ask a question, press Star, then the number one on your telephone keypad. Your first question comes from the line of Julian DeMoulin-Smith with Jefferies. Please go ahead. Hey, good morning, team. Thank you guys very much for the time. Nicely done, I got to say. Thanks, Joe. Maybe just kick—absolutely. Nice to chat with you guys.

Maybe just to kick things off here, I know you tweaked the 2025 guide here, but if you think about the quarter-over-quarter run rate and trajectory, I know you articulated this more in operational terms in your prepared remarks, but how would you think about, as you exit 2025, with that Q4 that's implied with your full-year 2025 guide, how do you think about that ramping into 2026 here and what that trajectory suggests? If you just look at the 2Q, 3Q, 4Q trajectory on top line, I'm just really curious how you think about that revenue trajectory going into 2026. And the ability for your commercial—yeah, go for it. No, thanks for the question. In my prepared remarks, I talked about—so Q3, we were at 15% capacity utilization. If we look at going forward, we'll exit Q4 running our complete asset base 24/7.

You're looking at going from a 15% capacity utilization to 90-plus from a capacity utilization standpoint. A lot of work was done in Q3, installing capacity, training our workforce, training the additional shifts, and all the costs associated with it. As you fast forward, all the ramping will be done. As we enter Q1 at the very start, we'll be at OEs higher than 90%, and we'll be fully realizing and utilizing the capacity. Thank you. Yeah, and then, Julian, on the revenue side, I mean, I'll let Nathan kind of add some comments there because that kind of falls into his two hats. Yeah, no, I mean, John did a good job of laying out what we're doing this year. I think as we look forward into 2026, we're seeing a tremendous amount of activity in our pipeline, right? Pipeline's up 21%.

22% of that now is data center activity. We talked about kind of the sales cycle and how these things mature over a period of months, even quarters. We continue to see very strong activity in the pipeline as we move forward. Good news is John's capacity expansion now can be moved in three-month increments as the orders come in. I think we're going to see new orders come in. We're going to add capacity to line up with those orders. I see consistent revenue growth over time. Yeah, and Julian, the thing I would add on the pipeline and order side, we've always been very conservative about what we do with our backlog and our orders pipeline. Nathan's got some things going on that are MOUs that we haven't been able to announce, that we haven't been able to announce names yet.

He continues to work with Justin and the entire team to get some of these hyperscalers to go from an MOU to firm projects. We really only want to talk about them when we close them and there are project names that we can talk about, like we did with Frontier. I will make one additional—Nice, you are done. Go ahead, Julian. Sorry. No, no, no, please. I will make one more point. You think about all the assets we are installing. We are learning as we go, right? First bipolar line comes in, took us several weeks to get it up and running. Six and seven that we just got up, now we are talking days. The same thing will fast forward to when we launch line two in the spring.

All those learnings, so we're able to shrink the ramp, shrink the time to get up to full capacity. Everything we're doing now, we're learning because it's—so with the data, we're going to be able to aggressively move forward much quicker than we are right now. Awesome. And guys, if I can take sort of the natural extension of that last question, how are you thinking about the ramp here, right? I mean, it's pretty phenomenal what you've just achieved in the last six months here, as you just described. How do you think about the cadence of ramping further lines? And then also related to that, how do you think about the financing side of that, right? So you've got the $43 million from Cerberus, you got the $24 million award. You've got unrestricted balance of $60 million. You've got an ability to tap DOE.

How do you think about financing that against potentially what seems like an accelerated ramp on CapEx? I do not want to put words in your mouth when I say accelerated, but I am curious on how you think about just teeing this all up and setting expectations. I think, Julian, I—look, kind of put the puzzle together there that you are laying out. We have a loan from the LPO, from the Department of Energy, that finances four lines, right? We are going to line two. What John's trying to do is, and what we have to do is reduce the cycle between starting and getting a line up and running so we start producing revenue off of that so that the capital requirements, in effect, become operational versus financial.

That being said, we're in a moment of time here where the industry and the world needs our product, and we've got to be able to ramp into that as quickly as possible. I've said many times, we don't want underutilized capacity sitting around, but we're looking at all this, and what John's put together from the different automation suppliers that he now has and breaking this up into pieces and getting everybody focused on delivering to that goal, we'll be able to get that capacity online in 90 days, which is well within the cycle time of how Nathan's selling the product. Part of it will be what we already have in place. Other things will come from operations and deposits from customers as we close orders. Then we'll look to be opportunistic, if need be, for growth capital if we have to. Awesome. Excellent.

Sorry, one last tweak here. You talk a lot about operational metrics and everything, but it seems like the latest quarter ASPs went up materially. Again, you tell me if we're reading that right. And you also flag, I think, in the queue here, a concentration with 80+% tied to a single customer. This is not the same customer as you guys have been concentrated to in the past, I presume. Can you talk to that just a little bit about the ASP dynamics and the customer maybe of late? Yeah, we talked about this a little bit last quarter as well. Q2, I think, was the anomaly because we had one strategic customer that was a drag on revenue in Q2. What we're seeing in Q3 was revenue rates reverting back to what we view as a more normal run rate.

Deliveries in the quarter, I mean, it was five individual customers. They're not all equally weighted, but I would say the customer base that we delivered to in Q3 was representative of what customer base would look like going forward. Julian, I just want to add two points on top of what Nathan just said. ASP, you could—I try not to pick individual contracts. We're managing a portfolio. Any portfolio, highs, lows, but you got to get your average where it makes sense, and the average of the portfolio is up. It's up because people are seeing the value of the technology. Now, on this strategic customer that we talked about last quarter, look, we're getting data from that system out in the field, and it's on that page that we talked about, and the data is phenomenal.

I look at that as kind of an investment in our future where we needed to get Z3 out in the field at scale and see it operate, and it's delivering on those results. It's a mix of all things, but the overall portfolio of the order book, ASP is higher than what it was. Yeah, absolutely. I'm very curious to see some of these strategic partners in there in all the states in the coming weeks. All right, guys. Thank you very much. All the best. I'll leave it. I'll pass it over. All right. Thanks, Julian. Your next question comes from the line of Stephen Gengaro with Stifel. Please go ahead. Thank you. Good morning, everybody. Hey, Stephen. How are you? I'm good, thanks. I think two things for me. One is just to follow up on the last question.

I'm not sure how much you want to say, but you talked about sort of the average selling price kind of across the portfolio. How does that look in the backlog and the recent awards that you're booking relative to kind of what you're realizing now? Look, I mean, you can do the math on the backlog page, right? I mean, you can see. Total dollars and total gigawatt hours and how that's trended over time. And it's stayed pretty consistent over time. I mean, we're not seeing long-term—long-term, I think the revenue rates that we've realized and expect to realize going forward are going to be pretty consistent. When you get larger orders. We're working with customers and say, "Okay, what is our cost curve doing? What can we do from a large volume buy perspective?" You saw the chart we showed on page.

Eight, I think it was, where you see margins improving over time. You see net margins improving over time as we continue to scale the business. We think we're going to turn the corner here and get to positive contribution margin into this quarter, positive gross margin exiting Q1 on a path to profitable positive EBITDA after that. Steve, what I would add on top of that, look, part of my job is handing out the targets to people, and the orders that were recently closed are well within the ASP portfolio target that Nathan has as CCO. That's helpful because I couldn't do the math on the post-quarter announcement, but that's fine. Thank you. Remember the stuff that we're talking about, Steven, that's post-quarter close. That happened after the quarter, after 3Q. That will come out in 4Q. Yeah. The other one I had is.

It's around the margins, but it's around the cost side. When we think about the progression of margin and some of your bigger costs that go into making the product, how should we— What are the necessary levers that get you to gross margin positive? Is the supply chain improving? Is it the COGS coming down per unit? Is it just scale? Is there a color you can give us around how to think about the cost structure? That's the biggest—as you've been successful with the ramp and the backlog growth, that's the biggest question we get from investors pretty consistently is, what does this look like at scale from a profitability perspective? I'm curious if you could give some incremental color. Yeah. From a cost perspective, I already talked about the asset utilization. The same thing is true here is with our suppliers.

They've had to put a lot of assets in place to be able to support this ramp. As we ramp, they're ramping. They're seeing cost optimization. They're seeing cost absorption, which will translate in cost reduction from a parts situation. You kind of look at labor costs. A lot of what we're focused on right now is taking cost out and making things more efficient. I'll give you one example. We were focused on our gate. With that, we were looking at travel time, material, the way they're presented. Basically, all aspects of that operation came in on one weekend, completely changed the way we were doing that operation. The five days prior to what we did versus the five days ahead, we doubled the output. The work we're doing is not having incremental gains. It's having step function gains.

We talked about labor. You talked about utilization. Again, we'll be at 100% utilization coming out of Q4. You're going to get mass asset. Then it's about taking cycle times out. If I can—we've got a heavy automated process. If I can take 10 seconds down to 9.8 seconds, down to 9.6 seconds, and that work is absolutely doable, you keep moving it forward. The one thing I like about being here is where I came from, I had thousands of different products. The focus would shift every day. Now I have to come in every day and focus on the one product. This journey never ends. We will continue to look at all of our cost buckets and continue to put projects together. That'll close those out.

We right now, just to take the material cost out, forget cost savings and what we're asking from the vendor. We have 61 different projects that we're doing right now to take the amount of parts that we have out, to take the cost out, 61 projects. All of those projects will be closed before we execute two. That is the way I kind of think about it. Okay. Great. No, thank you for all the color. Thanks, Stephen. There are no further questions at this time. I will now turn the call back over to Joe Mastrangelo, CEO, for closing remarks. Thank you. Thanks, everyone, for listening. Look, one thing I want to talk about here in the closing is the project that Nathan and Justin closed with Frontier Power because this kind of lays out another strategic puzzle piece for us as we grow the company.

Look, we met Frontier back in January. Nathan and Justin met them at a trade show in the U.K. We developed a relationship, signed an MOU, got a project pipeline. Every week, we meet with Cerberus, and we go through where we are in cash, where we are financially, how we are doing in performance. We look at Frontier not as a transaction, but as a platform. Cerberus financed Frontier because we view this as experienced operational leadership in the industry that can help us build a platform and expand out in Europe. We are excited about how that is going to look as we move forward and really look forward to partnering with the team at Frontier. At the same time, we are looking at what John is doing operationally, and you heard a really—it is fun working with him.

It's great having him on the team and seeing what he's been able to deliver and the whole team underneath him. We just have to keep growing and keep focused and knowing that the industry needs our product. We got to continue executing, and we got to keep making this simpler and easier to do business with. We look forward to keeping everyone updated on the progress and want to thank everyone for listening today. Thanks a lot. Talk to you soon. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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