Earnings call transcript: ESS Tech Q3 2025 highlights revenue drop, stock dips

ESS Tech Inc., a company specializing in long-duration energy storage solutions, reported a significant drop in revenue for the third quarter of 2025, with figures falling to $200,000 from $2.4 million in the previous quarter. The company also recorded a net loss of $10.4 million, or $0.73 per share. Following the earnings announcement, ESS Tech's stock price showed a slight decrease, closing at $4.40, down 3.41% from the previous day. However, aftermarket trading saw a minor uptick, with shares rising by 1.14% to $4.45.

Key Takeaways

• ESS Tech's Q3 revenue plummeted to $200,000 from $2.4 million in Q2.
• The company reported a net loss of $10.4 million, equating to $0.73 per share.
• Stock price decreased by 3.41% after the earnings release but rose slightly in aftermarket trading.
• ESS Tech launched a $75 million at-the-market equity program to bolster finances.
• The company is focusing on developing a 16-hour battery by 2029.

Company Performance

ESS Tech's performance in Q3 2025 was marked by a sharp decline in revenue, which highlights ongoing challenges in scaling its operations. The company is navigating a competitive landscape where the demand for long-duration energy storage is growing. Despite these headwinds, ESS Tech is positioning itself as a leader in sustainable and non-flammable energy storage solutions, differentiating itself from competitors with its IronFlow battery platform.

Financial Highlights

• Revenue: $200,000, down from $2.4 million in Q2 2025.
• Net Loss: $10.4 million, or $0.73 per share.
• Operating Expenses: Consistent at $5.1 million.
• Cash and Equivalents: $3.5 million, excluding $30 million Yorkville financing.

Outlook & Guidance

Looking ahead, ESS Tech has set ambitious goals for the next 18 months, focusing on delivering customer commitments and operational discipline. The company plans to scale its project capabilities from 5 to 50 MWh, with potential follow-on projects reaching 100 to 200 MWh. ESS Tech also aims to introduce a 16-hour battery by 2029, which could significantly enhance its competitive edge in the market.

Executive Commentary

"Our IronFlow battery platform delivers safe, sustainable, non-flammable storage capable of 10 or more hours of discharge," said Kelly Goodman, Interim CEO of ESS Tech. "We are executing with customers who understand that long-duration storage is essential to a decarbonized and resilient grid." Interim CFO Kate Suhadolnik added, "We have greater visibility, improved efficiency, and growing customer momentum."

Risks and Challenges

• Supply Chain Readiness: Ensuring the supply chain is prepared for 2026 delivery remains a critical challenge.
• Market Competition: The shift towards longer-duration energy storage solutions increases competitive pressure.
• Financial Sustainability: Maintaining financial health amid ongoing losses and the need for additional financing.
• Execution Risks: Successfully scaling operations and meeting customer commitments are key to future growth.

Q&A

During the Q&A session, Justin Clare from Roth Capital Partners inquired about ESS Tech's focus on utility and Independent Power Producer (IPP) requests for proposals (RFPs), as well as the scales and durations of Energy Base projects. The discussion also touched on competitive technologies, comparing lithium-ion to long-duration solutions, and reviewed the company's capital raising and liquidity strategy.

Full transcript - ESS Tech Inc (GWH) Q3 2025:

Conference Operator: I'd like to turn the conference over to Mary Horn. Please proceed.

Mary Horn, Investor Relations, ESS: Welcome to ESS's third quarter of fiscal year 2025 financial results conference call. Joining me on the call today from ESS are Kelly Goodman, Interim CEO, and Kate Suhadolnik, Interim CFO. Following management's prepared remarks, we will hold a Q&A session. Earlier today, ESS released financial results for the third quarter of 2025. The earnings release is available in the Investor Relations section of the company's website. As a reminder, the information presented today will include forward-looking statements, including without limitation, statements about our growth prospects, partnerships, Energy Base product, financial performance, capital raising, including under our ATM program, and strategy for 2025 and beyond, and the impact of regulatory and legislative developments. The forward-looking statements are also subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call.

In particular, those described in our risk factors set forth in more detail in our most recent periodic filings filed with the Securities and Exchange Commission, as well as the current uncertainty and unpredictability in our business, challenges with raising capital, issues with our partnerships, the markets, the economy, the current geopolitical situation, and the development and launch of the Energy Base. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call today are based on assumptions and beliefs as of the date hereof, and we disclaim any obligation to update any forward-looking statements except as required by law. During the call, we will also present certain financial information on a non-GAAP basis.

Management believes that non-GAAP financial measures taken in conjunction with US GAAP financial measures provide useful information for both management and investors by excluding certain items that are not indicative of our core operating results. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Reconciliations between US GAAP and non-GAAP results are presented within our earnings release. With that, I will turn the call over to Kelly.

Kelly Goodman, Interim CEO, ESS: Thank you, Mary, and good afternoon, everyone. Before we dive into the quarterly results, I want to take a moment to reaffirm who we are as a company and the value we deliver. ESS is a technology leader in long-duration energy storage. Our IronFlow battery platform delivers safe, sustainable, non-flammable storage capable of 10 or more hours of discharge. Built with abundant US-sourced materials, iron, salt, and water, our systems are designed to cycle over 20,000 times without capacity fade. That combination of durability, safety, and sustainability positions ESS to meet a critical market need as data centers expand, electrification accelerates, and utilities seek reliable, clean power at scale. Short duration and lithium-ion technologies simply cannot fill that gap cost-effectively or sustainably. We have built strong relationships with tier-one customers, including SB Energy, Honeywell, Portland General Electric, Sacramento Municipal Utility District, and most recently, Salt River Project.

These partnerships validate our technology and highlight its readiness for real-world deployment, giving ESS a strong foundation as we move from development into execution. The third quarter was an important continuation of the strategic plan we have been executing throughout 2025. We advanced key customer programs, strengthened our capital position, and laid the foundation for the delivery of our first Energy Base system. Most notably, we announced a 50 MWh Energy Base pilot project with Salt River Project, or SRP, one of the nation's leading utilities and a recognized innovator in long-duration storage. This project represents the first commercial-scale deployment of our next-generation Energy Base platform and is a powerful validation of our technology and our team. Shortly after the SRP announcement, we completed a $40 million financing with Yorkville Advisors.

That transaction reinforced our balance sheet and gave us the flexibility to move forward with confidence as we prepare for manufacturing and delivery in the next 18 months. Since closing that transaction, we have already repaid $15 million of the original $30 million drawn to date. For additional capital to support execution, we are launching a $75 million at-the-market equity program with a syndicate including Yorkville, BMO, Canaccord, Needham, and Steeple. This is intended to provide efficient access to capital to support growth and execution as needed. As I step back and look at where we are, the progress this year has been clear and deliberate. We started 2025 with a focus on strengthening our leadership team and tightening our cost base. From there, we aligned our organization around the Energy Base, a product designed and manufactured in America to meet the growing need for 10-plus hours storage.

Today, we are executing with customers who understand that long-duration storage is essential to a decarbonized and resilient grid. We are particularly encouraged by the strength of our commercial pipeline. Since launching the Energy Base earlier this year, 100% of our active opportunities are centered on this platform, with RFP activity and proposal volume continuing to increase. These engagements are larger in scale, longer in duration, and more strategically aligned with the needs of major utilities, data center developers, and industrial customers. Looking forward, our focus over the next 18 months is on execution, building, delivering, and validating performance in the field. We are continuing to drive operational discipline, scale manufacturing capability, and demonstrate to customers that our technology delivers safe, sustainable, long-duration energy storage at competitive cost.

Finally, I am pleased to share that we plan to host an Investor Day in early 2026, where we will provide an in-depth look at our progress, the Energy Base program, and our roadmap into 2026 and beyond. With that, I will turn it over to Kate for the financial update.

Kate Suhadolnik, Interim CFO, ESS: Thank you, Kelly, and good afternoon, everyone. Unless otherwise noted, all figures I'll reference are on a non-GAAP basis, and reconciliations can be found in our earnings release. For the third quarter of 2025, we reported revenue of $200,000 compared to $2.4 million in the second quarter. The year-to-date trend reflects our ongoing transition from Energy Warehouse and Energy Center deliveries to the Energy Base platform, which will become the foundation of our commercial activity going forward. GAAP cost of revenues totaled $4.9 million, while operating expenses were $5.1 million, consistent with our commitment to disciplined cost control. Net loss for the quarter was $10.4 million, or $0.73 per share. We ended the quarter with cash, cash equivalents, and short-term investments of $3.5 million, which, as a reminder, does not include the $30 million of proceeds from the Yorkville financing, which closed after quarter-end.

These funds provide a solid runway to continue advancing manufacturing readiness and support early project execution. As Kelly noted, we are launching a $75 million at-the-market program, which we view as an additional tool, not a requirement for accessing capital. With the funding we secured earlier this quarter, we have the flexibility to time any use of the ATM strategically based on market conditions and our progress toward key milestones. Together with continued cost control, this positions us to execute from a position of strength. Operationally, we continue to focus our resources on productization of the Energy Base, vendor optimization, and supply chain readiness for 2026 delivery. At the same time, we remain highly selective in spending, aligning every dollar to programs that directly support execution, delivery, or validation in the field. In summary, Q3 was another step forward in strengthening our financial and operational foundation.

We have greater visibility, improved efficiency, and growing customer momentum, all key ingredients as we prepare for our next phase of growth. With that, I'll hand it back to Kelly for closing remarks.

Kelly Goodman, Interim CEO, ESS: Thank you, Kate. To close, ESS's priorities remain clear. One, deliver on customer commitments, starting with SRP and our early Energy Base programs. Two, execute with discipline, controlling costs, scaling responsibly, and ensuring operational excellence. Three, convert momentum into long-term growth, validating performance and building durable relationships with leading utilities and developers. We are proud of what the ESS team has achieved this year. The pieces we have put into place, technology, capital, customers, and people, are setting the stage for the next chapter of growth and value creation. Thank you for your continued support, and with that, we will open the line for questions.

Conference Operator: Thank you. At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. We'll pause for just a quick moment to compile the Q&A roster. We have a question from Justin Clare of Roth Capital Partners. Your line is now open.

Justin Clare, Analyst, Roth Capital Partners: Hi, thanks for the time. First, I wanted to start out with the Energy Base product here. I was wondering if you could just talk about the scale of the projects that you're currently pursuing with the Energy Base and what kind of durations your customers might be looking for. Also, just in recent RFPs, could you talk about the technologies that you're most frequently competing against? Is this lithium-ion potentially, or is it primarily alternative long-duration technologies that you're seeing?

Kelly Goodman, Interim CEO, ESS: Sure. Thanks, Justin. This is Kelly. To answer your questions in order, as far as scale, our strategy over the next couple of years is to deliver projects similar in size to SRP, which is a 5 megawatt, 50 megawatt-hour project, but projects that have a significant follow-on opportunity in the next couple of years. By that, I mean 100 megawatt or 200 megawatt project opportunities. As far as duration, our current Energy Base offering is a 10-hour duration. By 2029, we're targeting having a 16-hour battery. That is sort of the duration we plan to offer in the later years. As far as RFPs and technologies, I would divide those into two buckets. We're seeing more and more RFPs that are specifically targeting long duration, like SRP, and by that, I mean technologies that offer more than 10 hours.

In those RFPs, we're competing against technologies that can actually offer more than what you see in the normal four-hour space. In other RFPs that are sort of storage-agnostic, we are competing against lithium, other competitors that offer four-hour storage, but we're really pleased by what we're seeing as an emerging trend and recognition that longer duration, 10-plus hours, will be needed.

Justin Clare, Analyst, Roth Capital Partners: Got it. Okay. Appreciate that. Thanks. I guess just following up for the RFPs that you are pursuing here, can you talk about the types of customers that are issuing these? Are these utilities, IPPs, or are you participating in RFPs directly with data centers, whether it's behind-the-meter or front-of-the-meter approach?

Kelly Goodman, Interim CEO, ESS: Sure. In the RFP space, I would say the customers are either utilities or they are IPPs acting on behalf of a utility. We are not engaged in RFPs behind-the-meter, but rather for data centers and other customer hyperscalers like that, those are bilateral conversations.

Justin Clare, Analyst, Roth Capital Partners: Got it. Got it. Okay. Just on the balance sheet here, you’ve obviously raised a decent amount of capital. I’m wondering if you could just talk a little bit more about the use of proceeds for that capital in the near term, and just thinking about your liquidity needs, how much runway does that capital provide you, and how are you thinking about liquidity ahead?

Kate Suhadolnik, Interim CFO, ESS: Yeah, Justin, this is Kate. I'll take that one. Happy to give some more details as a lot has definitely changed in the last few weeks since the end of the quarter. As of today, we have roughly $30 million in cash on hand, and we still do have the ability to draw the remaining $10 million from Yorkville's promissory note at our discretion. Together with that and the new ATM program that we announced today, I think we feel we have significant flexibility to manage liquidity sort of on our terms as we need it over the coming months and quarters. Over the past 11 months, we've taken a lot of deliberate steps to streamline the company.

We're really focused now, rather than on survival, which has been kind of our focus, on execution and really driving towards delivering on the SRP project, pursuing new opportunities, and as I mentioned, just really executing on those milestones as we move forward.

Justin Clare, Analyst, Roth Capital Partners: Okay. Appreciate it. Thank you.

Conference Operator: Thank you. That seems like all the questions we have, so I'll pass it back over to the ESS team for any closing or further remarks.

Kelly Goodman, Interim CEO, ESS: Yeah, thanks for that. This is Kelly. Just wanted to say thank you. Thank you for joining. Thank you for the support, and look forward to what's ahead of us.

Conference Operator: Thank you. That'll conclude today's call. Thank you for your participation. You may now disconnect your line.

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