Earnings call transcript: SES AI Q3 2025 sees revenue surge, stock climbs

SES AI Corp (NASDAQ:SES) reported a significant revenue increase for the third quarter of 2025, surpassing analysts’ expectations and leading to a notable rise in its stock price. The company reported a 102% sequential revenue growth to $7.1 million, outperforming the forecasted $4.5 million. Despite a net loss of $20.9 million, or $0.06 per share, investors reacted positively, with the stock climbing 7.21% to close at $2.08, reflecting optimism about the company’s future prospects.

Key Takeaways

• SES AI reported a 102% quarterly increase in revenue, reaching $7.1 million.
• The company’s stock rose by 7.21% following the earnings announcement.
• SES AI launched new products and entered a joint venture to enhance its market position.
• The company expects substantial revenue growth in 2026, potentially doubling or tripling 2025 figures.

Company Performance

SES AI’s performance in Q3 2025 marked a significant turnaround, with revenue more than doubling from the previous quarter. The acquisition of UZ Energy contributed to 45% of the quarterly revenue, highlighting the company’s strategic expansion efforts. SES AI is positioning itself strongly in the $300 billion global Energy Storage System (ESS) market, along with new ventures in drone and electric vehicle battery sectors.

Financial Highlights

• Revenue: $7.1 million, a 102% increase from Q2 2025.
• Earnings per share: -$0.06, compared to the forecasted -$0.04.
• Gross Margin: 51%, with 78% from service revenue and 15% from product revenue.
• Cash Position: $214 million.
• Share Repurchase: 1.3 million Class A shares for $1.6 million.

Earnings vs. Forecast

SES AI exceeded revenue expectations by 57.78%, reporting $7.1 million against a forecast of $4.5 million. While the EPS of -$0.06 missed the forecasted -$0.04, the substantial revenue beat overshadowed this minor miss, driving positive investor sentiment.

Market Reaction

Following the earnings release, SES AI’s stock rose by 7.21% to $2.08. This movement reflects investor confidence in SES AI’s growth strategy and market positioning, despite the company’s net loss. Trading volume was robust, suggesting strong interest from the market.

Outlook & Guidance

SES AI projects significant growth in 2026, with expectations to double or triple 2025’s revenue. The company aims to expand its Molecular Universe platform and capitalize on its joint venture with Hyzen New Energy Materials. It anticipates UZ Energy’s revenue to grow to $15-$20 million, underscoring its commitment to scaling operations in the ESS market.

Executive Commentary

CEO Qichao Hu emphasized the transformative impact of the Molecular Universe platform, stating, "Just as AI for science is completely changing other industries, Molecular Universe is now transforming all battery chemistries across all applications." CFO Jing Nealis highlighted growth prospects, saying, "We see a tremendous opportunity to grow the UZ Energy business from approximately $10 million-$15 million in projected full year 2025 revenue to a much larger growth in the coming years."

Risks and Challenges

• Market Competition: Intense competition in the ESS and battery markets could pressure margins.
• Supply Chain: Potential disruptions in the supply chain may impact production and delivery timelines.
• Economic Conditions: Macroeconomic factors, such as inflation, could affect consumer demand and operational costs.

Q&A

During the earnings call, analysts inquired about the details of the Molecular Universe tiers and the strategic implications of the joint venture with Hyzen. Executives provided insights into UZ Energy’s market positioning and clarified the company’s liquidity and growth strategy, reinforcing confidence in SES AI’s future trajectory.

Full transcript - SES AI Corp (SES) Q3 2025:

Jing Nealis, Chief Financial Officer, SES AI: Thank you for your patience, everyone. The SES AI third quarter 2025 earnings release and call will begin in a few minutes’ time. In the meantime, you can register questions by pressing star followed by one on your telephone keypad. Hello and welcome to the SES AI third quarter 2025 earnings release and call. My name is Carla, and I will be coordinating your call today. During the presentation, you can register to ask questions by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand you over to the Chief Legal Officer, Kyle Pilkington. To begin, please go ahead when you’re ready.

Kyle Pilkington, Chief Legal Officer, SES AI: Hello, everyone, and welcome to our conference call covering our third quarter 2025 results. Joining me today are Chichao Hu, Founder and Chief Executive Officer, and Jing Nealis, Chief Financial Officer. We issued our shareholder letter just after 4:00 P.M. today, which provides a business update as well as our financial results. You’ll find a press release with a link to our shareholder letter and today’s conference call webcast in the Investor Relations section of our website at ses.ai. Before we get started, this is a reminder that the discussion today may contain forward-looking information or forward-looking statements within the meaning of applicable securities legislation. These statements are based on our predictions and expectations as of today. Such statements involve certain risks, assumptions, and uncertainties which may cause our actual or future results and performance to be materially different from those expressed or implied in these statements.

The risks and uncertainties that could cause our results to differ materially from our current expectations include, but are not limited to, those detailed in our latest earnings release and in our SEC filings. This afternoon, we will review our business as well as results for the quarter. With that, I’ll pass it over to Qichao.

Qichao Hu, Founder and Chief Executive Officer, SES AI: Thanks, Kyle. Thanks, everyone, for joining today. We had a record third quarter with more than $7 million in revenue. That’s more than 100% growth over the second quarter. Our all-in-on AI strategy is working remarkably. Today, I want to highlight some of the successes we’ve seen with this strategy and what it means for the future. We reached a major milestone this quarter that we expect to have far-reaching consequences across the revenue machine we described in detail during our last call. That milestone was the release of our latest version of Molecular Universe, MU 1.0. MU 1.0 is a powerful and complete end-to-end AI for science workflow that includes five features. Ask an agentic LLM with access to what we believe is the world’s largest database of battery-relevant literature.

Search and formulate what we believe are the world’s largest databases of battery-relevant molecule and formulation-level properties enabled by GPU-accelerated quantum mechanics computation and machine learning-accelerated property prediction. Design and predict chemistry-specific and chemistry-agnostic machine learning models, respectively, that can accurately predict battery state of health and end-of-life. Due to the popularity of the enterprise tier, we also launched three sub-tiers within enterprise to provide greater value to more enterprise users. In addition to cloud-based Molecular Universe, we expect to launch on-premise Molecular Universe, providing greater data security to more enterprise users. This new on-premise capability, which we will be describing in more detail in the coming months, addresses specific security and privacy needs of the world’s largest battery makers that should unlock a greater share of our addressable market.

We are incorporating MU 1.0’s ask, design, and predict into our ESS products deployed by UZ around the world to collect data for on-site model training. This unprecedented ability for safety and health prediction, combined with reduced maintenance costs, truly helps differentiate our products and attract new customers. Since we completed the acquisition of UZ Energy in mid-September, our ESS revenue has been growing and is already responsible for approximately 45% of our third quarter revenue. We’re very excited about the revenue potential of deploying Molecular Universe to enhance our ESS products. MU 1.0’s ask, search, and formulate are also helping our users identify several new electrolyte materials that we are commercializing. These include. One, improved low-temperature rate performance of lithium iron phosphate lithium-ion cells for ESS applications. Two, improved cycle life for 12% silicon lithium-ion cells for EV application.

Three, improved cycle life for lithium metal and 100% silicon lithium-ion for drones and UAM applications, and many more. To supply these materials discovered by Molecular Universe to our customers, we entered into a joint venture agreement with Hyzen New Energy Materials, a leading electrolyte manufacturer with 150,000 tons of annual capacity, to contract manufacture these materials. We stay CapEx light, laying the groundwork for exciting revenue growth in the coming quarters. Another revenue opportunity we expect to grow in 2026 and beyond is in drones. A dependable supply chain of high-energy density pouch cells is extremely rare and critical to the development of the American drones industry. To better address this burgeoning market, we are leveraging our Chungju, South Korea, cell factory, incorporating the latest materials discovered from Molecular Universe to meet customer demands.

In terms of potential revenues from EV, we completed B-sample line site acceptance tests this summer with one auto OEM. As a result, in 2026, we expect to start commercial supply of electrolyte materials and partner with them for cell production. Overall, it’s hard for us to comprehend a more consequential period than what we have experienced over the past two quarters, particularly as it relates to delivering on the goals we outlined coming into this year. For instance, we noted we wanted to break into the ESS market in a big way. Now we’ve done so with the acquisition of UZ Energy, and the acquisition has already delivered significant revenue in 2025. We launched three versions of Molecular Universe this year. The discoveries made by us and our customers so far have accelerated our push into materials to supply them through the Hyzen JV.

We’ll have more to share on our fourth quarter call about how we expect 2026 to shape up for us, but we expect success for us will look like a hardware-software integrated platform with multi-prong and multi-revenue streams. As Molecular Universe, a complete AI for science workflow SaaS platform, accelerates innovation across all battery chemistries, we are working with our JV partners to provide a dependable hardware supply chain for the cells developed from Molecular Universe. Just as AI for science is completely changing other industries, Molecular Universe is now transforming all battery chemistries across all applications. We are excited about the revenue growth potential brought by Molecular Universe and will continue to assemble the best talent, data, and compute resources needed to build AI for science for energy transition.

Lastly, I want to express my gratitude for our teams who are working super hard to make all of this happen. Thank you to all of you for being on this journey with us. Now, here’s Jing for financial updates.

Jing Nealis, Chief Financial Officer, SES AI: Thank you. I will discuss our financial performance for the third quarter of 2025 and provide some context on how we are deploying our capital to support SES AI’s long-term growth and then the all-in on AI strategy Chichao mentioned earlier. Revenue for the third quarter was $7.1 million, representing a $3.6 million, or 102% increase from the previous quarter. Our Q3 revenue was approximately a 55-45 split between our service revenue from our automotive OEM customers to develop AI-enhanced lithium metal and lithium-ion battery materials for EV applications and product revenue primarily from UZ Energy’s energy storage system sales. For the full year 2025, we’re updating our revenue guidance to $20 million-$25 million due to UZ’s contribution going forward. Gross margin was 51% for the third quarter, which is a combination of 78% gross margin from the service revenue and 15% gross margin from the product revenue.

As a reminder, with UZ Energy now part of SES AI, we expect gross margin variation from quarter to quarter as our service and product revenue mix will fluctuate. Our GAAP net loss for the third quarter was $20.9 million, or negative $0.06 per share. In Q2 2025, our GAAP net loss was $22.7 million, or negative $0.07 per share. As of September 30, we had 365 million Class A and Class B shares outstanding, which were down 1.3 million from the previous quarter, mainly due to the share repurchase we executed during the third quarter. In the third quarter, we repurchased and canceled 1.3 million Class A shares for a total investment of $1.6 million, or roughly $1.20 per share. We utilized $14.3 million in cash for operations in the third quarter. We exited the third quarter with a strong liquidity position of $214 million.

As mentioned, we closed the UZ acquisition in September and recognized some UZ revenue during the third quarter. We see a tremendous opportunity to grow the UZ Energy business from approximately $10 million-$15 million in projected full year 2025 revenue to a much larger growth in the coming years as we execute our go-to-market strategy that Qichao outlined to make market share gains in the $300 billion global ESS market. When we report Q4 earnings, we expect to provide a more definitive outlook on how we see the full year 2026 revenue growth shaping up from UZ’s growth in ESS, SaaS subscription use, contributions from Hyzen JV, and potential for the start of commercial production of electrolytes and/or battery cells from automotive OEMs, drones, and robotics.

The potential growth of these revenue streams, which all have different margin profiles, will be much larger than what we have experienced in 2025. The growth isn’t linear from quarter to quarter, and the margin may vary quarter to quarter as well. Looking ahead, we remain focused on executing our strategy, continuing to grow our top line while remaining financially disciplined. With substantial liquidity, we are well positioned for sustainable growth and long-term success. We appreciate your continued support and confidence in SES AI. Thank you. Now I will turn the call back to the operator.

Call Operator: In the question and answer session, if you’d like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. We will make a quick pause here for the questions to be registered. Our first question comes from the line of Derek Soderbergh with Contour Asset Management.

Derek Soderbergh, Analyst, Contour Asset Management: Yeah, hey, thanks for taking the questions. On the Hyzen JV, can you talk about how that opportunity came about? Was the company paying for Molecular Universe access, or was this sort of an internal project at SES? What type of battery will this electrolyte enable?

Qichao Hu, Founder and Chief Executive Officer, SES AI: Hey, Derek. Really good question. Actually, the Hyzen JV came as a request by some of the Molecular Universe enterprise users. Molecular Universe, since we launched this earlier this year, has been growing really fast. We had almost every major battery company and battery materials company in the world trialing this. In addition to the SaaS platform, both on the cloud and also on-premise, several of the battery companies that are using the Molecular Universe enterprise tier also asked us, "Okay, we found these materials, these formulations, these molecules through Molecular Universe. Why do you not just make these and then sell these to us?" Because they currently buy electrolytes from companies. It is a quite mature business model. We said, "Okay, yeah. We are happy to sell these materials to you.

These are new formulations that they cannot buy anywhere else. We formed this joint venture. It is a CapEx JV. We control it. We control 90% of the JV. We contract manufacture this company called Hyzen to produce this formulation. We sell that formulation to the cell makers. Some of the applications, in the call, I listed three. Actually, all three are being produced. The most popular one is a new formulation to improve low-temperature performance of LFP for ESS batteries. A lot of these LFP batteries for ESS, when they are deployed in Northern Europe, these cold places, they do not work so well when it is at low temperature. Another one is for cell phone applications. It is a high-voltage electrolyte for LCO cells. Another is a.

12% silicon lithium-ion cells for EV applications, also to improve the cycle life. These three, we are requested by the user, the cell maker, to actually supply these materials at commercial scale to them. These were discovered through the Molecular Universe platform.

Derek Soderbergh, Analyst, Contour Asset Management: Got it. That’s helpful. I guess just to that point, I guess I wasn’t imagining a JV coming out of this first, the Molecular Universe. Can you just talk about how you expect the monetization of that business to sort of play out over the next year? Beyond sort of JVs, do you expect Molecular Universe to grow sort of as a traditional SaaS business where every quarter you sort of add additional seats, or do you expect there to be sort of like a stair-step up on revenue as you sign kind of larger agreements? How do you sort of see the monetization of MU playing out sort of over the next year? How should we think about it?

Qichao Hu, Founder and Chief Executive Officer, SES AI: Yeah. MU is a mix of SaaS platform and materials. The SaaS platform, we laid out the different tier pricing on the website, molecularuniverse.com. We have the individual tiers, and the number of individual tiers is growing. We also have the enterprise tiers. These are the major battery companies, material companies, and chemical companies. A lot of these companies prefer on-premise. We also sell them this Molecular Universe in a box on-premise solution. We charge them a monthly subscription, and we also sell this computer that we actually deploy on-site and also servers on top of that. I think the SaaS platform, we do expect to see a growing number of seats per month and also per quarter.

Material supply, because a lot of these companies eventually want us to supply the materials. The revenue coming from the Molecular Universe discovered materials is actually going to be much higher than the SaaS revenue.

Derek Soderbergh, Analyst, Contour Asset Management: Got it. That’s helpful. Just one final one for me, just a broad update on Molecular Universe. I think in the past, you said you’ve got two dozen or so companies in trial testing. Can you just give us an update on maybe where that is? I think in the past, you have mentioned there are other potential large or medium-sized battery OEMs as part of that group. Where are you at with some of those players in negotiations, and when do you expect maybe a medium or large-sized OEM to sign on to MU through a joint development? Thanks.

Qichao Hu, Founder and Chief Executive Officer, SES AI: Yeah. The number now is getting close to 40 enterprise. They’ve gone through MU.5 trial, MU 1.0 trial, which is the latest version. They’ve gone through the initial cloud-based trial. Now we are planning for on-premise deployment because a lot of these medium-sized, especially the larger-sized enterprises, they can do the cloud trial, but then eventually they will need this on-premise actual. To actually deploy this. This is why we’re moving towards this Molecular Universe in a box on-premise solution.

Derek Soderbergh, Analyst, Contour Asset Management: Got it. Appreciate it.

Qichao Hu, Founder and Chief Executive Officer, SES AI: Thanks, Derek.

Call Operator: Thank you. Just as a reminder, if you’d like to ask a question, it’s star one on your telephone keypad. The next question comes from Winnie Dong with Deutsche Bank.

Winnie Dong, Analyst, Deutsche Bank: Hi. Thanks so much for taking my question. I just wanted to follow up on that last question that was asked. You talked about launching three sub-tiers within the enterprise description. I was wondering if you can maybe just elaborate on that. What are they sort of looking for? What are your customers looking for? And then if you can just maybe just remind us of the other subscription options that’s also bringing you this recurring revenue opportunity. Thank you.

Qichao Hu, Founder and Chief Executive Officer, SES AI: Yeah, Winnie. The enterprise one, two, three, basically they differ in terms of size of multi-database, the depth of the models used, and also the knowledge and the know-how the models are trained on. For example, enterprise one, we see that as like a PhD student level. The enterprise two is like a postdoc level. The enterprise three is a senior scientist level. For example, enterprise one, when they answer a question, they’ll answer a question typically in less than three minutes. The enterprise two postdoc level answers a question in about five minutes. Enterprise three will answer a question in more than 30 minutes. The depth and the quality and the new discoveries are much deeper. A lot of the enterprise ones are medium-sized companies and also some startups, and then the larger companies.

For enterprise one and two, we offer only cloud. For enterprise three and even higher tiers joint development, we offer a combination of cloud and also on-premise, which most of the larger companies want. In addition to these tiers, we can also do the joint development tier with the larger customers. That is where, for now, the cloud version of Molecular Universe is trained only on SES internal data. For the joint development, we will actually put our Molecular Universe in a box encrypted and also organize the users’ data, the cell makers’ data, and then have that trained on Molecular Universe in a box. We are helping them do something that they have always wanted to do, but they have never had the resource and never had the capability to do that.

Winnie Dong, Analyst, Deutsche Bank: Got it. That is very detailed. Thank you so much. This quarter, you saw some very meaningful revenue contribution from UZ Energy. I was just curious if you can maybe take a step back and help us sort of re-engage with the background of this company, where the markets are, what you think the growth could be from this business. Maybe more broadly speaking, as you look out to the different revenue streams, UZ Energy, Molecular Universe, you have the relationships with OEM partners for electrolyte productions. Just maybe give us a sense of which channel you are most optimistic about as you head out to grow in the next two to three years. Thank you.

Qichao Hu, Founder and Chief Executive Officer, SES AI: Yeah. UZ Energy is an energy storage company and they serve mainly the behind-the-meter commercial and industrial applications. Before we acquired UZ, we actually used to supply this database machine learning model to UZ to help improve the accuracy of their BMS, battery management system, in terms of predicting battery health and end of life. Since we acquired them, now we are adding more of these machine learning-based models, which is the predict feature in Molecular Universe MU 1.0. We are adding that into their BMS. When we sell these, when UZ deploys these packs to customers around the world, a lot of the customers, for example, in Norway or Northern Europe, complain that the packs, especially in winter, are just not so accurate and the BMSs just stop working.

By adding this predict, we can actually, each UZ pack is a box, is a Molecular Universe in a box. We can gather data, train the predict feature of Molecular Universe locally in the box, and then make predictions about these issues before the customers can actually find out about the issues. Since we’ve added this predict, the amount of customer calls, their complaints actually dropped. We plan to continue to do that. This application is actually really exciting. Think of each ESS pack as a Molecular Universe in a box. We collect the data, we do local training, and we make predictions on the safety. I think that’s a really exciting connection. We get data and we get revenue. In terms of the overall growth of revenue of the different businesses.

Opportunities that we mentioned, UZ this year. Revenue, we expect to pull about $15 million-$20 million. I think next year, ESS, we can at least double that. This is one area. Another is drones. This year, we’re getting our initial contracts. Also, a lot of the drones customers in the US really want cells made outside of China. We are making these cells in our Chungju, South Korea facility. Actually, the amount of capacity for pouch cells for drones outside of China is super rare. It’s hard to find pouch cells capacity outside of China. We have that. We expect drones to also grow in a big way for us next year. Then EV. For example, the joint development we had with Hyundai Motor Company and also Honda. We are using Molecular Universe to discover these new electrolytes.

Once we identify these electrolytes, our plan is to use the Hyzen JV to contra-manufacture this and then supply. I think next year, revenue-wise, total, we should be able to at least double, if not triple, what we did this year because of all these opportunities that are enabled by this Molecular Universe platform.

Winnie Dong, Analyst, Deutsche Bank: That’s very helpful. Thank you.

Call Operator: Just as another reminder, it’s star one on your telephone keypad to ask your question. As we have no further audio questions, I will hand back over to Kyle for the other questions.

Derek Soderbergh, Analyst, Contour Asset Management: Thank you. As in past quarters, we have received some written questions from investors. Time permitting, we’ll go through a selection of those questions which have not yet been addressed on the call. The first question that we have relates to liquidity and whether management has a view on where liquidity is expected to be at the end of 2025 and will kind of scaling up Molecular Universe or the UZ Energy integration impact the cash burn or CapEx plans.

Winnie Dong, Analyst, Deutsche Bank: I can cover that.

Derek Soderbergh, Analyst, Contour Asset Management: Jen, you want to?

Winnie Dong, Analyst, Deutsche Bank: Yeah. Yeah, I’ll take that. Our liquidity balance is very strong. Given that we closed the UZ acquisition, also we did some stock repurchase based on our program, we still expect to exit the year with somewhere between $195 million-$200 million of liquidity. The other thing I wanted to probably emphasize is we’re laser-focused on funding growth. Our liquidity balance is sufficient to kind of grow our revenue from different streams that Chichao just mentioned, whether it’s ESS, drones, or materials, or SaaS from MU. The cash balance is no longer to fund runway. We have a CapEx-light business model. The UZ acquisition is helping us to grow revenue with positive gross margin. All of our revenue sources come in on day one with a positive gross margin. It’s not a CapEx-heavy business.

Our liquidity balance will be sufficient to fund the growth going forward.

Derek Soderbergh, Analyst, Contour Asset Management: Great. The next question relates to Molecular Universe. And it goes, "MU 1.0 is impressive. Can you share the roadmap for MU for 2026 and what other features have been requested?

Qichao Hu, Founder and Chief Executive Officer, SES AI: Yeah. For now, MU 1.0 has been mainly focused on electrolyte materials. We have been requested to expand that to cover electrode, process optimization, and also cell design and manufacturing optimization. Another big request from some of the major battery companies is that they want their own Molecular Universe, which is quite exciting because a lot of these battery companies want to expand. They want to build factories overseas in different continents, and they need a battery bible, so to speak, basically put all their know-hows, training this model into a portable Molecular Universe. That is going to be a really exciting project that we are going to be working on with these battery companies.

Derek Soderbergh, Analyst, Contour Asset Management: Excellent. I think we have time for one more. The last question is, if you could provide an update on the status on 2170 and LMA pouch cells for robotics, drones, and UAM, are you seeing good prospects for sales, or do you see a need for scale-up before promoting these more heavily?

Qichao Hu, Founder and Chief Executive Officer, SES AI: Yeah. The pouch cells, especially for drones, we’re seeing a very interesting convergence and standardization of the format in the drones industry around this 10 amp-hour pouch cells. That is quite exciting. We are converting our Chungju line, which we built both the EV line as well as the UAM line. We’re converting that capacity to make this pouch cell. So far, the capacity that we have meets the needs, but we’re also seeing fast-growing demand, especially since it’s produced in Korea. We do see a quite exciting growth in this market.

Derek Soderbergh, Analyst, Contour Asset Management: Great. With that, I’ll pass it back to the operator for closing remarks.

Call Operator: Thank you, everyone. This concludes today’s call. Thank you for joining. You may now disconnect. Have a great rest of your day.

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