Earnings call transcript: Ideal Power Q2 2025 shows stock surge

Ideal Power Inc (NASDAQ:IPWR) reported its Q2 2025 earnings on August 14, revealing a net loss of $3 million, slightly higher than the $2.7 million loss from the previous year. Despite this, the company’s stock price increased significantly by 23.59% in pre-market trading, reaching $3.91. The company’s innovative strides in solid-state circuit breaker technology and strategic partnerships have captured investor interest, suggesting optimism for future growth. According to InvestingPro data, the company’s overall financial health score is rated as WEAK, with particularly concerning metrics in profitability and price momentum.

Key Takeaways

• Ideal Power’s stock surged 23.59% following the earnings announcement.
• The company reported a Q2 cash burn of $2.5 million, up from $2.2 million in 2024.
• Strategic partnerships and technology advancements in solid-state circuit breakers are key growth drivers.
• Ideal Power maintains a strong liquidity position with $11.1 million in cash and no debt.

Company Performance

Ideal Power’s performance in Q2 2025 reflects both challenges and opportunities. The company experienced a higher cash burn compared to the previous year, with InvestingPro analysis showing concerning cash burn rates and negative EBITDA of -$11.02 million in the last twelve months. While the company maintains a strong current ratio of 20.26 and minimal debt, its gross profit margins remain significantly negative at -189%. The focus on innovation and strategic partnerships, particularly in Asia, positions Ideal Power to capitalize on growing demand for advanced power semiconductor solutions.

Financial Highlights

• Revenue: Not explicitly disclosed for Q2 2025.
• Net loss: $3 million, compared to $2.7 million in Q2 2024.
• Cash and cash equivalents: $11.1 million as of June 30, 2025.
• Projected full-year 2025 cash burn: Just over $10 million.

Market Reaction

Ideal Power’s stock price rose by 23.59% to $3.91 in pre-market trading, reflecting strong investor confidence in the company’s strategic direction and technological advancements. This movement contrasts with its 52-week low of $3.77, indicating a positive shift in market sentiment. However, InvestingPro data reveals the stock has declined by over 41% in the past six months and 53% over the last year. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value. Subscribers can access 16 additional ProTips and comprehensive valuation metrics for IPWR through the Pro Research Report.

Outlook & Guidance

The company anticipates a revenue ramp in the solid-state circuit breaker market and expects purchase orders from Stellantis for multiple EV applications. Ideal Power is targeting completion of automotive qualification and foresees potential revenue growth from initial design wins in the industrial sector.

Executive Commentary

CEO Dan Burdaugh emphasized the rapid adoption of new technologies in Asia, highlighting the region’s strategic importance. CFO Tim Burrows noted the competitive edge of B-TRAN technology, stating, "At scale, a single B-TRAN should be at about a 10 or 20% premium to a single IGBT."

Risks and Challenges

• Continued cash burn could impact long-term financial stability.
• Competitive pressures from traditional IGBT and silicon carbide technologies.
• Potential delays in automotive qualification processes.
• Market adoption rates for new technologies remain uncertain.
• Macroeconomic factors could affect global semiconductor demand.

Q&A

During the earnings call, analysts inquired about the Stellantis opportunity and the automotive qualification process. Management addressed these queries by detailing the technology’s differentiation and potential markets outside the United States, reinforcing the company’s strategic focus and growth potential. Analyst consensus from InvestingPro indicates a HOLD rating, with revenue expected to decline this year. The company’s market capitalization stands at $40.57 million, reflecting its position as a niche player in the semiconductor industry.

Full transcript - Ideal Power Inc (IPWR) Q2 2025:

Kelly, Conference Operator: Good morning, ladies and gentlemen, and welcome to the Ideal Power Second Quarter twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. At the end of management’s remarks, there will be a question and answer session. Investors can submit their questions anytime within the meeting webcast by typing them into the Q and A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line.

As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Jeff Christensen, Investor Relations, Ideal Power: Thank you, Kelly, and good morning, everyone. Thank you for joining the Ideal Power’s second quarter twenty twenty five results conference call. With me on the call are Dan Burdaugh, President and Chief Executive Officer and Tim Burrows, Chief Financial Officer. Ideal Power’s second quarter twenty twenty five financial results press release is available on the company’s website at idealpower.com. Before we begin, I’d like to remind everyone that statements made on the call and webcast, including those regarding future financial results and company prospects, are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call.

Please refer to the company’s SEC filings for a list of associated risks. We would also refer you to the company’s website for more supporting company information. Now I’d like to turn the call over to Ideal Power’s President and CEO, Dan Bernard. Dan?

Dan Burdaugh, President and CEO, Ideal Power: Thank you, Jeff. I appreciate everyone joining us today. I’m eager to share an update on our progress since the start of the second quarter. I’ll begin with the key highlights since the beginning of the second quarter and discuss the most significant developments with additional context to highlight their significance. Afterwards, I’ll turn things over to Tim to discuss our financial results.

We look forward to your questions after our prepared remarks. First, we shipped updated solid state circuit breaker prototypes to our first design win customer. These updated prototypes incorporate additional capabilities into the device driver that were requested by the customer to further differentiate their product offering. The customer is completing their prototype testing and will soon begin gathering feedback on this new product from their targeted end customers ahead of the product launch of their first V TRAN enabled solid state circuit breaker product planned for later this year. Second, we entered into a collaboration with a fourth global tier one automotive supplier.

We shipped them packaged devices, a reference design and driver to enable them to evaluate B TRAN, and our understanding is that they plan to launch a formal solid state EV contactor program within the next few months. Third, one of our distributors introduced our products to a fourth global automaker and the automaker’s preferred tier one supplier. They ordered numerous packaged B TRAN devices, SIMCOOL power modules, solid state circuit breaker reference design boards and drivers. The customer will evaluate B TRAN as part of their innovative solid state EV contactor design implementation. The same distributor also introduced our products to a fifth automotive OEM for a potential EV contactor program.

We’re now collaborating with a total of five automakers, including four of the top 10 global automakers. Fourth, Stellantis formally informed us that they are issuing a purchase order to us for custom development and package devices targeting multiple EV applications, broadening our collaboration with one of the world’s largest automakers prior to the launch of the EV contactor program. Fifth, we added a partnership with Chime Electronic Corp to distribute Ideal Power’s products to their existing and prospective customers throughout Asia, alongside their own product portfolio. Asia is the world’s largest market for power electronics, and Asian companies typically adopt new technologies faster than their European and US counterparts. They started introducing B TRAN to their customer base.

Sixth, we shipped solid state circuit breaker reference designs to several large companies currently evaluating our technology for solid state circuit breakers or EV contactor applications. This includes two previously announced Forbes Global 500 power management market leaders, as well as our fourth and fifth global tier one automotive suppliers that we added in late June. And seventh, we successfully completed the third party automotive prequalification and reliability testing of B TRAN devices with zero failures. We expect to complete full third party automotive qualification and reliability testing later this year. Let’s briefly turn to what we’ve repeatedly been hearing and seeing from current and prospective customers.

There’s a growing interest in our B TRAN technology, both for industrial and automotive applications, particularly for circuit protection applications such as solid state circuit breakers, transfer switches, and EV contactors, where ultra low conduction losses are enabling for the applications. For these applications, we’re typically competing against silicon carbide devices, and the consistent message we are hearing from prospective customers at the cost and conduction losses of solid state solutions using silicon carbide are too high. A recent example of this is our first design win customer. This customer is one of the largest circuit protection equipment manufacturers in Asia, targeting data centers, industrial and utility markets, and renewable energy applications. This customer sent us their 20 amp unidirectional silicon carbide breaker prototypes that did not meet their cost and performance requirements.

We reworked them and sent them back a 63 amp bidirectional B TRAN breaker with a 60% reduction in losses compared to the silicon carbide prototypes. Obviously, this is a significant performance improvement with much higher power density, while achieving lower total losses using silicon devices that are at a lower price point than silicon carbide devices. Since then, we provide the customer with updated prototype breakers incorporating additional capability they requested be put into the device drivers to accommodate some innovative ideas on the capabilities they want to add to their breaker product. The customer is testing the updated prototypes now, and they’ll be soliciting feedback from their customers on these prototypes in the near term, with a particular focus on data center customers. Following this feedback cycle, they plan to move forward with a product launch of their first B TRAN enabled solid state circuit breaker this year, and we’re excited to collaborate with this customer in launching additional B TRAN enabled breakers across various power ratings in the future.

As we previously mentioned, and based on this first design win customer’s projections, the initial product from this customer could translate to several $100,000 of revenue for Ideal Power in its first year of sales, with the opportunity to exceed millions of dollars of revenue for us in the second year of sales. Importantly, this is just the beginning. Its initial product this initial product is anticipated to be the first of several products from this customer that will incorporate V TRAN into solid state circuit breakers. This customer provides a variety of circuit breaker products across various power ratings, It’s expected that they could add a full family of solid state circuit breakers at ratings similar to their current family of electromechanical breakers. Importantly, our development agreement with this customer does not constrain us in any way from working with other companies interested in our technology for solid state circuit breaker solutions.

In fact, the work that we’ve done with this customer can be leveraged to benefit current and future customers aiming to bring solid state circuit breaker products to market. Due to the increased customer engagement from Asia and the magnitude of the opportunity for the region for industrial applications beyond our first design win customer, we’re in the process of adding a sales director and field applications engineer for the region. We’re seeing increased interest in VTran for circuit breakers and static transfer switches for data centers. In both circuit breakers and transfer switches, a smaller solid state solution would replace bulky, slower acting electromechanical solutions. Solid state circuit breakers and data centers protect against faults and offer the same advantages as solid state circuit breakers and utility and other industrial applications.

Transfer switches for data centers are used to minimize or eliminate server downtime by quickly switching the power source to backup power when needed. Transfer switches are critical as data centers strive for better than five nines or better than 99.999% uptime. It’s also important to note that waste heat is a critical issue for data centers, and the B enabled switchgear, like circuit breakers and transfer switches, have ultra low conduction losses and generate significantly less waste heat relative to competing solid state solutions. We’re excited that our B TRAN is an enabler for customers seeking solutions for solid state switchgear and data centers. Moving on to another exciting market for B TRAN, electric and hybrid electric vehicles, including EV contactors.

For those of you unfamiliar with EV contactors, a contactor can be thought of similarly to a solid state circuit breaker for an electric vehicle. It isolates the battery from electrical subsystems during both fault conditions and planned maintenance for improved safety. Traditional electromechanical contactors aren’t fast enough and do not offer programmability or diagnostic capabilities. Also, auto OEMs need a solution that is very fast acting to protect the batteries and the systems connected to the battery to prevent a runaway event, injury or other damage. The Lantus and multiple other global automakers, as well as numerous tier one automotive suppliers, are already looking at V TRAN for solid state EV contactor applications.

They, along with others in the industry, appear to have uniformly decided that electromechanical contactor is not the right solution for electric vehicles due to the slow speed of electromechanical devices and the need for enhanced safety programmability and diagnostic capabilities. The application of B TRAN and EVs is exemplified by our expected purchase order from Stellantis, encompassing custom development and package devices aimed at multiple EV applications. The order has been approved by Stellantis internally and we expect to receive their purchase order in the near term. The primary deliverables under this order are a non traditional double sided custom semiconductor package design, numerous B TRAN dies in this custom package, and related drive circuitry. The custom package is required by the unique thermal management design Stellantis intends to adopt for its next generation electric vehicle platforms.

The combination of B TRAN and Stellantis’ thermal management design allows for commonality of parts in multiple locations within its EV, including the drivetrain, contactors, and other high power EV applications and across its EV platforms. This new order is intended to form the basis for a common power semiconductor and packaging design for both the drivetrain and contactor programs. The order will represent significant and continued progress to Lantus as they implement their EV strategy. As this order will enable multiple uses of VTran and Stellantus’ EV platforms, we’re excited about our broadening collaboration and the customer validation of the benefits VTran can provide to high power EV applications. We remain actively engaged with Stellantis, meeting regularly with them and their program partners on both the planned EV contactor and current drivetrain inverter programs and collaborating with them on automotive qualification and related requirements.

Turning to other automotive customers, we added our fourth and fifth global tier one automotive suppliers to our roster of engagements. For the fourth global tier one automotive supplier, we’re engaged with their engineering teams from both The US and Asia. They have B TRAN devices in their lab, and we’ll be evaluating B TRAN in the near term. Our understanding is that they expect to launch a formal solid state EV contactor program within the next few months. For the fifth global tier one supplier, we’ve begun shipping the numerous package B TRAN devices, SIMCOL power modules, solid state circuit breaker reference design boards, and drivers to go evaluate for an innovative solid state EV contactor design.

Both these Tier one suppliers serve several top 10 global automotive OEMs. Moving on to the macroeconomic level, investors have asked about tariffs and evolving trade policies. While the tariff situation is very fluid, we continue to expect minimal impact on our operations from tariffs in place today. Importantly, power semiconductors are exempt from many tariff locations currently in effect, or in some cases, are

Tim Burrows, Chief Financial Officer, Ideal Power: capped at a low tariff rate.

Dan Burdaugh, President and CEO, Ideal Power: This limits the potential impact on us. Although the situation remains dynamic, as evidenced by recent tariff adjustments with China, we’re well positioned to mitigate the impact of future changes in tariffs and trade policies and other supply chain risks. Our asset light outsource business model, leveraging the large investment already made in silicon wafer processing and packaging, enables flexibility. Additionally, our dual sourcing approach in different geographic regions strengthens our supply chain resilience and optionality with wafer fabrication and packaging in different parts of the world. Importantly, our supply chain strategy is entirely independent of China, further insulating us from regional geopolitical and trade uncertainties and any potential trade conflicts between The US and China.

Looking briefly at innovation, we intend to increase the power rating of our product later this year and updated data sheets will be issued accordingly. We’ve been conservative in how we’ve rated our technology, which customers have told us they appreciate as we’re introducing a new technology to their markets and applications. As we get more and more testing hours and go through reliability testing, including third party automotive prequalification testing, we’re finding that we have more than ample margin in our design to increase the power rating of our products. Higher product ratings will allow customers to design their products to perform at higher ratings with the same number of devices, or to hold their product ratings constant, but potentially utilize fewer B TRAN devices in their application, either of which make their product even more competitive in the marketplace. The work to complete the testing and release new data sheets for the uprated products is in progress and on track.

As I mentioned earlier, we successfully completed the third party automotive prequalification and reliability testing of B TRAN discrete die last month, achieving zero die failures. Test results indicate that double sided cooled packaging utilized for B TRAN devices is much more robust than semiconductor packages utilizing wire bonding, as wire bonding is a common point of failure in semiconductor packaging. For example, to meet automotive qualification standards, packaged devices must withstand 15,000 power cycles without failure. Our devices recently passed 50,000 power cycles without any failures. In addition, the pre qualification allowed us to identify and implement packaging improvements to optimize the design for easier assembly for high volume manufacturing and to reduce cost.

The production of multiple wafer runs required for high volume automotive qualification testing is nearing completion. The gating item for completing the device packaging is the tooling or the encapsulation of the packaged devices, which has been ordered, and our packaging supplier is expecting its delivery in the next few weeks. We previously mentioned orders this year are not dependent on the successful completion of automotive qualification. However, achieving third party automotive qualification would provide additional confidence to industrial customers regarding B TRAN’s long term reliability. It also provides evidence of reliability under conditions, including extremes of humidity and temperature that surpass those needed for industrial applications.

And since engineers tend to be conservative when adopting new technologies, automotive qualification would potentially speed up the rollout of V TRAN based products by early adopters in our initial target industrial markets. Our V TRAN patent in the state continues to grow. Currently, have 96 issued V TRAN patents with 47 of those issued outside of The United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India, and Europe, all representing our high priority patent coverage geographies. As a result of our continued innovation, our list of pending V TRAN patents is now at 74.

To safeguard our intellectual property further, we treat the proven double sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of and work under strict confidentiality with our wafer fabrication partners. So even if a competitor studied our patents, they wouldn’t have the know how to fabricate the device. In summary, we’re excited about the expected purchase order from Stellantis, which targets multiple EV applications and will precede the new EV contactor program with Stellantis. Our first design win customer is completing their solid state circuit breaker prototype testing in advance of their planned B TRAN enabled product launch later this year. We anticipate that following their initial product rollout, this OEM will broaden its product lineup to include a variety of B TRAN enabled solid state circuit breakers across multiple power ratings, which could lead to significant revenue growth for us.

We’ve used solid state switchgear for data centers and other industrial facilities and grid infrastructure, including solid state circuit breakers from this first design win customer as our path to significant revenue growth and profitability. Additionally, we’re now collaborating with our fourth and fifth global tier one automotive suppliers and additional top 10 global automakers as the automotive industry is seeking low loss, solid state solutions for EV contactors. Looking forward, we’re confident we’ll deliver against all our milestones for 2025. This year, in addition to the current program with Stellantis, we’re expecting a second development program with them, additional design wins and or custom development agreements for circuit protection applications with global companies, the start of our revenue ramp, an increase in the power rating of our products, and the completion of third party automotive qualification. Now I’d like to hand the call over to Tim Burns to review our financials.

Tim?

Tim Burrows, Chief Financial Officer, Ideal Power: Thank you, Dan, and good morning, everyone. Our second quarter twenty twenty five cash burn from operating and investing activities was $2,500,000 up from $2,200,000 in the 2024 and up from $2,100,000 in the 2024. Our Q2 cash burn was at the lower end of our guidance of 2,500,000.0 to $2,700,000 Our cash burn from operating and investing activities for the 2025 was $4,600,000 up from $4,200,000 in the 2024. We continue to manage expenses prudently and aggressively. We expect third quarter twenty twenty five cash burn to increase to approximately $2,700,000 to $2,900,000 with a full year 2025 cash burn just over $10,000,000 with the increase primarily due to the hiring of additional sales and engineering personnel.

This compares to a 2024 cash burn of $9,200,000 excluding the benefit of warrant proceeds. Cash, cash equivalents totaled $11,100,000 at 06/30/2025. We have no debt and a clean capital structure. We recorded modest revenue for the 2025 as customers continue to evaluate our technology. While initial orders from large companies evaluating our products for potential inclusion in their OEM products will be small, we expect order sizes to increase as customers start to prototype their OEM products and progress through their design cycles and roll out B TRAN based products.

Looking at the balance of 2025, we expect to see the start of our sales ramp with revenue from product development activities, the launch of the first B TRAN enabled breaker by our first design win customer and other product sales. Operating expenses were $3,100,000 in the 2025 compared to $2,900,000 in the 2024 with the increase due to higher wafer fabrication and engineering personnel costs. We expect both research and development and sales and marketing spending to increase modestly in the coming quarters due to recent and future hiring and costs associated with our development and commercialization efforts. We also continue to expect some quarter to quarter variability in operating expenses, particularly our research and development spending due to the timing of semiconductor fabrication runs, product development, other research and development activities, and hiring. The timing of equity grants and related stock based compensation expense recognition will also cause variability in our quarterly operating expenses.

Net loss in the 2025 was $3,000,000 compared to $2,700,000 in the 2024. Considering our asset light business model, no debt, and modest planned cash burn, we have sufficient liquidity on our balance sheet to fund operations through at least mid-twenty twenty six. We’ll potentially see several sources of funds over the next year, such as product sales, development agreements and other commercial agreements with upfront payments. Additionally, we’re exploring strategic relationships with our well capitalized and large global partners, with these opportunities strengthening as we further advance these customer relationships. As a publicly traded company, we also have access to the capital markets if necessary, providing us with additional financial flexibility.

At the June, we had 8,498,014 shares outstanding, 945,318 options and stock units outstanding, 653,827 pre funded warrants outstanding, and 342,240 warrants outstanding. At 06/30/2025, our fully diluted share count was 10,439,399 shares. The 342,240 warrants outstanding at 06/30/2025 expired unexercised earlier this month, so there are no warrants remaining in our fully diluted share count. At this time, I’d like to open up the call for questions. Operator?

Kelly, Conference Operator: Certainly. At this time, we are conducting the question and answer session. Investors can submit their questions within the meeting webcast by typing them into the QA button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one to enter the queue.

Please hold just a moment while we poll for questions. You have a question coming from Casey Ryan with Westpark Capital. Please pose your question. Your line is live.

Casey Ryan, Analyst, Westpark Capital: Thank you. Good morning, gentlemen. This is an exciting update. Hey, I did it did spur some questions, particularly around Solantis. I think how do we think about the opportunity with them?

I think you’re mentioning platform, which is helpful, but to sort of boil it down for us in the public, I think Stellantis has 16 brands but you mentioned it’s maybe for an EV vehicle but what’s the right way to think about your exposure? Like could you be exposed to all 16 brands? Are you exposed to all EVs within the 16 brands? Or is there some other way to sort of simplify what what the opportunity there is?

Dan Burdaugh, President and CEO, Ideal Power: Yeah. I mean, our understanding from discussions with them is they want commonality across their their brands and their EV platform. So you would see us in multiple brands that people would recognize. There will be some brands, like Maserati, where they will probably go with higher cost solutions like silicon carbide, where cost is not an issue and people aren’t worried so much about range because it’s a different application. But they really want to have a common EV platform since they’ve got to continue to support their combustion vehicles.

They don’t want to have multiple iterations for every brand of what their new EV products are going to look like. So it gives us a pretty broad opportunity across a broad range of of midsize vehicles and for new brands.

Casey Ryan, Analyst, Westpark Capital: Okay. So so terrific. So it’s certainly fair for us to think it it may be multiple brands, maybe not all 16, but certainly more than one. And then Oh, it’s it’s multiple vehicles possibly.

Dan Burdaugh, President and CEO, Ideal Power: They they clearly plan on it being multiple brands. They’ve made that very clear to us. And part of this work that they’re, they’ve told us that we’re getting a purchase order for is to also start to drive some commonality even within the EV. Originally, the drivetrain and EV contactor programs were very separate. Paths.

And this work is to actually converge on the semiconductor and packaging design prior to getting the contactor program awarded, because they really want to have that same solution in both of those parts of the vehicle. So it gives us commonality in what we are gonna provide for multiple applications within the EV.

Casey Ryan, Analyst, Westpark Capital: That’s really terrific. I think in the past we’ve talked about the contactors potentially being in the hundreds of dollars of content per vehicle. If you were in the like total vehicle across all these opportunities, I mean, would that number sort of move higher to sort of you know, closer to 4 figures or would it still be in the hundreds but possibly higher than the contactors alone, I guess?

Tim Burrows, Chief Financial Officer, Ideal Power: Yeah. So we estimate the total power semiconductor content in the EV about $1,100 The biggest part of that actually is the drivetrain inverter itself. EV contactor to maybe $300 of that of that content. So it’s most of the content. The other content you’re looking at is things like the onboard charger, which may use Mazor power devices or MOSFETs.

But for us, it’s really the drivetrain inverter. I think I heard on semi at one point say that they had about $750 of content in a drivetrain inverter for power semiconductors. So I’ve heard that number out there, but it’s several $100 certainly for the inverter.

Casey Ryan, Analyst, Westpark Capital: Okay. Terrific. Terrific. One thing that that we’ve talked about, you know, and, like, I think moving to commercial revenue is a very exciting thing for the 2025. But I’m curious in terms of your design win opportunities and how they come to you, how would you classify those in terms of volume of opportunities?

Just as we’re curious about all the applications of your technology, would you say that known design win opportunities for you sort of number in like the like tens because we’re sort of talking about automotive people primarily? Or are they potentially in the hundreds or thousands in terms of where you guys could be consumed or sort of considered as a upgrade solution?

Tim Burrows, Chief Financial Officer, Ideal Power: Could you clarify that a little bit, Casey, on

Casey Ryan, Analyst, Westpark Capital: We’re yeah. Well well, no. I’m just saying how many design opportunities are you guys seeing out there in the marketplace separate from what you’ve talked about already to sort of what’s on your sales pipeline board essentially? Like Okay. How how big is that funnel is what I’m sort of curious about.

Dan Burdaugh, President and CEO, Ideal Power: Yeah. Mean, it continues to grow. Mean, if you look at the automotive side, it’s more discreet because there are just less players there. So there’s five global auto OEMs, four of which are in the top 10, and five tier one suppliers.

Jeff Christensen, Investor Relations, Ideal Power: Now, if

Dan Burdaugh, President and CEO, Ideal Power: we look at the industrial side, there’s many, many more because there are a lot of companies that we are working with that are interested in solid state circuit breakers. They range in size from very large companies that people would recognize of, and I’m not saying these are them by name, but they would be companies like Siemens or an Eaton or Schneider to some mid sized companies that are also looking to try and find a way to take market share from the big folks. Our earlier design wins are clearly gonna be on the industrial side. We’ll get funded programs through the tier ones and the automotive companies since their design cycles are longer. But you know, a lot of our effort right now is really focusing on the, the industrial applications where we’ll have our first wins.

Casey Ryan, Analyst, Westpark Capital: Yeah. Okay. Alright. Terrific. That’s helpful.

And then you mentioned silicon carbide and the cost issue. I’m just curious technically and how you guys feel about this. Would customers prefer silicon carbide cost not being an issue? Or is that not always the case and not that silicon carbide will ever get the cost parity with your solution, but I’m just curious how customers think about that.

Dan Burdaugh, President and CEO, Ideal Power: I’ll use our first design win customer as the example. The breaker that they sent us that was silicon carbide, cost was a problem, but the biggest issue was it got too hot. It wouldn’t meet the standards, even at 20 amp unidirectional applications. So we were actually to give them breakers back that had three times the power density. They were 63 amp breakers that we sent them back, and they were bidirectional, which is what they need, particularly on DC applications.

The temperature rise in them meets the codes and standards. So heat is the big problem because the conduction losses are high in silicon carbide.

Casey Ryan, Analyst, Westpark Capital: Okay. Great. That’s eliminating. And then kind of the last question. You guys also mentioned in the script, data center opportunities.

Can your products be integrated into a environment, say, a a data center as, a hybrid solution? Like like, can some of your products be consumed, but also be in a mixed environment with older technology as well?

Dan Burdaugh, President and CEO, Ideal Power: Yeah, what we’re seeing is they’re prioritizing where there’s really a need for speed that impacts the quality of the power on the data center. So speed of transfer switches, speed of breakers. Don’t expect that a given data center is going to swap out every breaker all at once. They’ll do that in kind of a staged fashion. So you’ll just have one part of the data center that will perform at a different level and have different diagnostic capabilities than what it may have been built with five, ten years ago.

Casey Ryan, Analyst, Westpark Capital: Okay, good. So there’s like ample opportunity in like existing markets and not just in like greenfield built essentially.

Dan Burdaugh, President and CEO, Ideal Power: That’s what

Casey Ryan, Analyst, Westpark Capital: Correct. I was curious Yeah. Mean, for data centers,

Dan Burdaugh, President and CEO, Ideal Power: the big issue for them is electricity is the biggest operating cost. So while they want to have faster assing solutions to enable them to maximize their uptime, waste heat that comes from some of the solutions that are out there that are silicon carbide based doesn’t help them, because it raises their electricity usage, which works against their business model. So I think there’s a great opportunity for us as people look to modernize the data centers to actually replace things that are existing as well as be in the new builds.

Casey Ryan, Analyst, Westpark Capital: Yeah. Okay. Terrific. Well, that’s another great market for your technology. I think that’s it for me.

But look, this is a very exciting update. I think we’re getting to sort of a important demarcation line as you get closer to commercial revenue. Thank you for the update. Thank you for taking my questions.

Jeff Christensen, Investor Relations, Ideal Power: Thanks, Casey. Thanks, Casey.

Kelly, Conference Operator: I would now like to turn the floor over to Jeff Christensen to take any questions from the webcast. Jeff?

Jeff Christensen, Investor Relations, Ideal Power: Thank you, Kelly. Our first question is a lot of that was submitted by investors is a lot of semiconductor specialists agree that the technology is is excellent, and it’s a game changer for niche, solid state circuit breakers, EV hybrid applications, and more. What are the challenge to closing sales? Are there any technical challenges? And are there one or two issues the company needs to overcome?

Or are issues more individual for each company?

Dan Burdaugh, President and CEO, Ideal Power: There haven’t really been any technical challenges. The biggest issue really is just the education process. You think about things like silicon carbide MOSFETs, they’ve been around for twenty five years. So engineers learned about them in school, they’ve worked with them previously. Our technology is new.

So you’ve got to get the engineering community through that education process. You’ve got to get devices in their hands, get them in the lab working with them, get comfortable with them. It’s also part of why we do things like present papers at the Applied Power Electronics Conference every year. We’ve got an article coming out in the IEEE magazine this year to really help discontinue that education to the technical community to get them through that learning process so they’re comfortable adopting a new technology.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. Our next submitted question is, what is Ideal Power doing to drive sales ramp and increase product awareness?

Tim Burrows, Chief Financial Officer, Ideal Power: Yeah. So for us, we’re taking really several paths to market. We have our own internal sales team. We have distributor relationships. We have sales reps.

We have a new partnership with Time A, where they’ll actually be selling our products alongside their own. We’re also continuing to increase awareness in the technical community. Dan had mentioned there’s going to be an article about B TRAN and solid state circuit breaker applications in the next issue of IEEE magazine. We also actively attend trade shows. We’ve been to APEC and PCIM earlier this year.

We’ll be at the upcoming ECCE Conference in Philadelphia. And we also recently launched a global solid state circuit breaker campaign that incorporates the test results that Dan had mentioned related to our first design win that show that V TRAN significantly outperforms silicon carbide MOSFETs in breakers. So this advantage really carries over other solid state switchgear applications like EV contactors, another application we’re targeting. So we’re really taking a multipronged approach in terms of getting B TRAN into the trade press and also just really increase awareness.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. The next submitted question is I’m I’m new to Ideal Power. In simple terms, what is an IGBT? And what are the advantages of Ideal Power’s B TRAN compared to an IGBT?

Dan Burdaugh, President and CEO, Ideal Power: Okay. An IGBT, it’s unidirectional semiconductor device. It functions as an electronic switch that controls the flow of energy for various applications. IGBTs are used for high voltage, high current applications like power converters for electric vehicles or EV charging or energy storage and renewable energy, industrial motor drives, and other industrial and utility applications. IGBTs are a big market, it’s about a $10,000,000,000 market today with a lot of growth expected over the coming decades just due to the increasing electrification of society.

The primary advantage of B TRAN over an IGBT is that B TRAN offers improved performance and bidirectionality. And bidirectional is increasingly important as we use batteries more and more because you need to control the flow of energy during charging and discharging of the battery. So you see solar coupled with energy storage, you see electric vehicles, you see EV charging with backup batteries for buffer capability. So in terms of performance, VTran has significantly lower conduction losses, and it’s more efficient. So it produces less heat than IGBTs.

That allows OEM products to be smaller and more efficient, because the size of a lot of power electronics like a power converter are driven by the need to dissipate waste heat. So it really comes down to being able to provide a high level performance. And the big issue really for a lot of these bidirectional applications is anytime you’re using an IGBT, you need four devices to make a bidirectional switch. You need pairs of IGBTs and diodes to control the flow in either direction. So there’s more parts that will fail, there’s more cost, and there’s significantly higher loss, about five times the higher conduction loss for bidirectional switch using conventional things like IGBTs.

So you end up with a more efficient solution using VTran, and one that can actually be lower cost because it’s a lower cost bidirectional switch and lower lifetime cost for the OEMs.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. The next question is, when will Igo Power get to cash flow breakeven?

Tim Burrows, Chief Financial Officer, Ideal Power: Yeah. So for us, it really depends on product and customer mix. Obviously, pace of adoption is going to influence that. But what it really comes down to is it only takes a few key design wins for us to get to cash flow breakeven. We’re engaged with large global companies that are evaluating our technology for their applications.

In landing even a single design win can generate millions or even in excess of $10,000,000 in revenue annually for ideal power. So it just comes down to, again, which design wins happen at what time and just really the pace of adoption. But it will not take us much to get there. We can do it with just solid state circuit breakers. Obviously, we’ll have contributions from development programs around electric vehicles, but it’s really the industrial markets will get us there.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. So I’ll ask the next question. It’s about the auto qualification. So I’m gonna combine some questions that were asked by a couple different people. But what what can you repeat and clarify?

Can you repeat and clarify results on automotive testing? What does prequalification mean? And how are you able to make modifications during the testing?

Dan Burdaugh, President and CEO, Ideal Power: Oh, sure. Good question. When you go through automotive qualification, you have to submit many package devices from multiple wafer runs. So it can’t just be you’ve cherry picked the best devices from a particular run. You have to show that you’ve got commonality performance across several wafer runs, and many devices from each of those runs.

So what is a good practice is to actually take devices and take them through those test cycles before you actually do all the runs for official qualification. You can do it with a smaller number of devices. It helps you find out are there any issues with your packaging design that can’t withstand maybe humidity or temperature. Because auto qualification testing is fairly expensive, and it takes many, many, many, many devices, hundreds or a couple thousand devices to get through it all. So it’s really, prequalification is to make sure, are there any design issues you need to be aware of for the devices, or are there any areas with the packaging?

And the one thing that we saw that we want to improve was the devices that we’ve had packaged so far have not had tooling for encapsulation. And we think that would be a thing that would make the package even more robust. So we did some things that actually also will help us with a design that will be better suited for, on the packaging side, for high volume production in terms of making it easier to assemble. So prequalification just gives you that early look into any issues you might have, so that before you run all the wafers and do all the packaging for the hundreds of devices that go into testing, you’ve already addressed those issues, and you know you can pass with a good degree of confidence.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. And another question regarding the qualification is, the process as we move to finalize that qualification, including the prequalification, any comment you can make about the inflow from other industrial automotive customers that were previously hesitant to jump into the new technology?

Tim Burrows, Chief Financial Officer, Ideal Power: Yes, I think overall, the more test data that you have and that you can share with customers, the easier it is to get them to adopt the technology. So obviously, we’ve generated a lot of test data through our works with Stellantis to date. It’s similar here with our first design win customer. We have some really great data now we can share for solid state circuit breaker applications. We had no die failures through pre qualification.

We can share that data with industrial customers. So we think all of these things will help adoption. Then when you get to actual auto qualification, I mean, that should certainly help because the automotive standards are much more stringent than industrial standards. You have extremes of humidity and temperature you just don’t have in the industrial test. So all of those things should act to really help with adoption.

Dan Burdaugh, President and CEO, Ideal Power: And just one comment on that. Part of why we did this is to generate some of this data, because when you do have a new technology, there is a, I won’t say reluctance, but customers are conservative. And people that understand IGBTs, for example, understand that the most common reason that IGBTs fail is a fail of the wire bonding that’s used to bond the die to the package. Since we don’t use wire bonding, we have a different approach in terms of how our package comes together. We wanted to generate the data that showed that not only do we pass the 15,000 power cycles needed to meet auto qualification, we kept running them.

And to be able to go to those customers and say, not only did we pass that criteria, we’ve passed 50,000 power cycles without a failure. It really helps with the technical, customers that you’re working with to be comfortable that the device is actually ready for adoption for their application.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. There are many submitted questions from investors, and thanks for that. Please click on Ask question in this conference call online webcast portal to submit your question. The next question is that was submitted is you’ve definitely shown a lot of commercial progress. The stock price seems to be lagging the progress you made.

What do you think the Street is under appreciating or overlooking at this point?

Tim Burrows, Chief Financial Officer, Ideal Power: Yes, I would say given the macro trends that are out there, things like renewable energy, EV adoption, proliferation of data centers, They’re really driving the increasing use of power semiconductors. So we think we’re commercializing our technology at a great time. We certainly have near term opportunities to secure agreements with multiple large global companies beyond just our first design win customer in Stellantis. We bring a solution in silicon to provide significant performance advantages over conventional technologies. It’s enabling for applications like solid state circuit breakers and EV contactors.

So while we’re not going to sit here and speculate on why the Street is not valuing really valuing the enormous opportunity ahead of us, we would expect that to change as we continue to announce some of these design wins, some more custom development agreements, We start showing revenue here in the coming quarters. So for us, we can’t focus on what our specific stock price is on a given day or what the market is what’s in favor or not with the market. It’s really focusing on executing and getting those commercial announcements out, and we expect then it’ll take care of itself.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. The next submitted question is, which market do you see that will contribute the most to the company’s initial revenue ramp?

Dan Burdaugh, President and CEO, Ideal Power: It’s clearly going to be the solid state circuit breaker market. We’ve got so many companies that are engaged with us now. We’ve got the first design win with a customer. We know that they’ve got other plans for other products. And fortunately, the design cycles on industrial products are significantly shorter than what you see for getting through the long design cycles on the automotive side.

So our focus is really gonna remain driving the opportunities in the solitaire circuit breaker market to closure. Because once the first company moves forward, you’re no longer the first person to do something. So I think it kind of takes some of the pressure off some of the other customer teams to say, okay, people have already been through this evaluation, I’m not missing anything and I’m comfortable with making sure I’ve got a competing product.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. You think the next submitted question is, do you think we will be our most successful markets could be outside The United States, especially given the recent shift in the administration away from EVs?

Dan Burdaugh, President and CEO, Ideal Power: I think that’s certainly shaping up to be the case here. Asia in particular tends to adopt new technologies quicker. The first design win that we’ve got is an Asian customer. We’re seeing multiple Asian customers that we’re working with even in the tier ones that we’re working with now. EVs are, I mean, it’s a global opportunity, but I think we will see much of what we are doing on the circuit breaker side and on the EV side start to materialize and opportunities outside of The US first.

And then in general, you know, companies seem to move more slowly than what we see for a lot of the Asian companies we’re working with, which is fine. You know, it’ll just They’ll come in behind it with their own version of the products. But it’s a good insightful questionnaire. I think we will see growth first outside of The US.

Jeff Christensen, Investor Relations, Ideal Power: Okay, thank you. What is the cost of the next submitted question is, what cost are of four devices in a traditional IGBT that B TRAN replaces versus the cost of the B TRAN?

Tim Burrows, Chief Financial Officer, Ideal Power: Yeah, so at scale of B TRAN, a single B TRAN should be at about a 10 or 20% premium to a single IGBT. So if you’re looking at a bidirectional application, I mean, it’s significant cost savings because you need to include two IGBTs and also have two blocking diodes in that solution. So B TRAN is actually a much less expensive alternative in terms of first cost. And also if you look at lifetime costs, it’s also obviously going to

Casey Ryan, Analyst, Westpark Capital: help because you’re going to

Tim Burrows, Chief Financial Officer, Ideal Power: have smaller OEM products, you can have less surface area to dissipate heat, less complex thermal management systems, overall smaller OEM product designs just because there’s lower losses. So it’s really both not just a first cost advantage when you’re talking about bidirectional applications, but it’s also a lifetime cost advantage as well.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. The next submitted question is, of the companies you’re currently working with, how many of you, you know, are you continuing to have engagement with in the last six months or two and the other question, the last twelve months. So any one of those timeframes.

Tim Burrows, Chief Financial Officer, Ideal Power: Jeff, can you repeat that? It’s unclear what you’re asking there.

Jeff Christensen, Investor Relations, Ideal Power: Yeah. So of the companies that you’ve said you’re currently working you’re working with, you’ve worked with, how many are you engaged with, have you engaged with in the last six months or twelve months?

Tim Burrows, Chief Financial Officer, Ideal Power: How many them? I guess

Jeff Christensen, Investor Relations, Ideal Power: the question is, is it all of them or the question I think is, is it all of them or any of them missing now?

Tim Burrows, Chief Financial Officer, Ideal Power: No, one’s missing.

Dan Burdaugh, President and CEO, Ideal Power: Of them, particularly large companies move slowly, but all the companies that we have been engaged with, we continue to be engaged with.

Jeff Christensen, Investor Relations, Ideal Power: Okay, great. Then the next submitted question is, are recent marketing literature about a new technology called an insulated gate transistor oscillator or IGTO. Would this technology be directly competitive to VTran?

Dan Burdaugh, President and CEO, Ideal Power: You know, I I did look at that. We had our guys look at it too. There’s there’s really not much technical data available. There’s no data sheets or anything for the product. But based on our review, it looks like it’s an incremental improvement to a unidirectional IGBT.

It’s also not clear how it would apply to the overall IGBT market, Because the things that were done there will certainly create challenges to be able to reach both high voltage and high current. It’s part of why you don’t see MOSFETs used for high voltage and high current. It incorporates some of the same technology that limits where MOSFETs can go. But at the end of the day, it’s a variant of an IGBT. So you would still need four devices, pairs of this improved IGBT and diodes to make a bidirectional switch.

And as a result, the conduction losses would be much higher than what you would get using a single B TRAN.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. The next submitted question is, please update us on the future expectations with large power global management companies that you’re working with.

Tim Burrows, Chief Financial Officer, Ideal Power: So, again, I’m not I’m not sure I understand the question, but on the the companies that we’re looking at, power management market leaders, I mean, they’re really looking at things right now like solid state circuit breakers, right? So there hasn’t been a change necessarily in the last few months. I mean, it’s obviously we’re continuing to educate some of those companies. They’re evaluating our technology. They have it in the lab.

So we’re continuing to make progress, but their expectations haven’t changed. I would say the one thing maybe in that regard is we’ve had some potential customers that are a little bit surprised that silicon carbide doesn’t perform as well in that application as they may have expected it to because it’s considered a high performance product. But the reality is conduction losses are not the strength of silicon carbide MOSFET. So that’s where our technology has a significant advantage at a lower cost point than silicon carbide, because it’s not just that silicon is cheaper than silicon carbide, it’s also that we really outperform silicon carbide in that application significantly.

Jeff Christensen, Investor Relations, Ideal Power: Thank you. That concludes our question and answer session. I would now like to hand the call back over to Dan Bedard for closing remarks.

Dan Burdaugh, President and CEO, Ideal Power: I just want to thank everybody for participating in today’s call and for the really good questions. We look forward to sharing DTRAN commercial announcements before our next update call. And operator, you may end the call.

Kelly, Conference Operator: Thank you. This concludes today’s conference. All parties may disconnect, and have a great day.

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