ESS Tech Q3 2025: Contradictions Emerge on Project Scaling, Cash Burn, Revenue Guidance, Contracts, and Capital Raise Strategies

Date of Call: None provided

Financials Results

• Revenue: $200,000, down from $2.4M in Q2 (sequential decline)
• EPS: $0.73 loss per share (net loss $10.4M)

Business Commentary:

• Transition to Energy Base Platform:
• ESS reported revenue of $200,000 for Q3 2025, down from $2.4 million in Q2 2025.
• The decline is attributed to the ongoing transition from Energy Warehouse and Energy Center deliveries to the Energy Base platform, which is the company's focus for future commercial activity.

• Capital Raise and Financial Position:
• The company raised $40 million in financing with Yorkville Advisors and launched a $75 million at-the-market equity program.

• These capital raises have strengthened the company's financial position, providing flexibility for execution and ensuring a solid runway for future growth.

• Customer Relationships and Project Pipeline:

• ESS has secured partnerships with leading utilities and Tier 1 customers, including Salt River Project, Portland General Electric, and Sacramento Municipal Utility District.
• The strong commercial pipeline, with 100% of active opportunities centered on the Energy Base platform, is driven by the increasing recognition of the need for long-duration energy storage in the market.

• Manufacturing and Product Development:
• ESS is focused on operational discipline and scaling manufacturing capabilities to support the delivery and validation of the Energy Base system.
• The concentration on productization and supply chain readiness is aimed at ensuring the timely delivery and successful execution of customer projects.

Sentiment Analysis:

Overall Tone: Neutral

• Management highlighted a commercial milestone (50 MWh Energy Base pilot with SRP) and recent financings ($40M Yorkville financing, $75M ATM) while reporting limited cash on hand ($3.5M at quarter end; later ~ $30M post-close), framing progress but acknowledging ongoing execution and liquidity focus.

Q&A:

• Question from Justin Clare (ROTH Capital Partners): Could you talk about the scale of projects you're pursuing with the Energy Base, target durations for customers, and which technologies you're most frequently competing against in RFPs?
  Response: Energy Base targets 10-hour systems (50 MWh SRP pilot) with opportunities scaling to 100–200 MW and a 16-hour target by 2029; competing in long-duration RFPs and, in storage-agnostic bids, against lithium and other storage technologies.

• Question from Justin Clare (ROTH Capital Partners): For the RFPs you're pursuing, what types of customers are issuing them — utilities, IPPs, data centers, or behind-the-meter?
  Response: RFPs are primarily issued by utilities or IPPs on behalf of utilities; data center engagements are handled via bilateral discussions rather than behind-the-meter RFPs.

• Question from Justin Clare (ROTH Capital Partners): Can you discuss the use of proceeds from recent capital raises, current runway/liquidity and how you're thinking about liquidity going forward?
  Response: Post-close the company has roughly $30M cash on hand, an additional $10M undrawn from Yorkville, and a $75M ATM for flexible capital access, with proceeds focused on manufacturing readiness, SRP delivery and selective execution while managing runway.

Contradiction Point 1

Project Durations and Scaling

It involves the company's strategy for project durations, which is crucial for understanding their growth trajectory and operational planning.

What is the scale and duration expectations for the Energy Base product? What technologies are you most frequently competing against? - Justin Clare (ROTH Capital Partners)

20251114-2025 Q3: The strategy over the next couple of years involves delivering projects similar in size to SRP's 50-megawatt-hour project but with significant follow-on opportunities. - Kelly Goodman(CEO)

Could you provide details on the scale of your Energy Base projects and the typical durations customers are seeking? What technologies are you most commonly competing against in recent RFPs? - Justin Clare (ROTH Capital Partners, LLC, Research Division)

2025Q3: Our strategy over the next couple of years is to deliver projects similar in size to SRP, which is a 50-megawatt-hour project but projects that have a significant follow-on opportunity in the next couple of years. We're targeting projects of 100-megawatt or 200-megawatt opportunities. - Kelly Goodman(CEO)

Contradiction Point 2

Cash Burn and Liquidity Strategy

It involves differing statements about the company's approach to managing cash burn and extending the runway, which are crucial for financial stability and investor confidence.

How will the company use the proceeds from capital raised and address liquidity needs? - Justin Clare (ROTH Capital Partners)

20251114-2025 Q3: Currently, ESS has roughly $30 million in cash on hand and can draw an additional $10 million from Yorkville's promissory note. With the new ATM program, the company feels it has significant flexibility to manage liquidity on its terms as needed. - Kate Suhadolnik(CFO)

What is the outlook for cash burn in Q3 and Q4, and what levers do you have to extend the runway? - Justin Clare (ROTH Capital Partners)

2025Q2: ESS aims to continue cash burn reductions by rightsizing the business, cost reductions, and vendors' extended payment terms. They are pursuing a broader capital raise and intend to maintain a disciplined approach to costs. - Kate Suhadolnik(CFO)

Contradiction Point 3

Revenue Guidance and Projections

It highlights differences in the company's communication about revenue expectations and guidance, which are critical for investor projections and expectations.

What types of customers are issuing RFPs? - Justin Clare (ROTH Capital Partners)

20251114-2025 Q3: ESS is not providing revenue guidance for the latter half of the year but expects to close contracts that will provide more clarity on future revenue runway. Updates will be provided in upcoming calls. - Kate Suhadolnik(CFO)

How will Q3 and Q4 revenue growth during the Energy Base transition compare to the first half of the year? - Justin Clare (ROTH Capital Partners)

2025Q2: ESS is not providing revenue guidance for the latter half of the year but expects to close contracts that will provide more clarity on future revenue runway. Updates will be provided in upcoming calls. - Kate Suhadolnik(CFO)

Contradiction Point 4

Contracts and Sales Conversions

It involves differing statements about the company's progress in converting proposals into contracts, which directly impacts revenue and sales projections.

What is the typical scale and duration of customer projects for the Energy Base product, and which technologies are you most commonly competing against? - Justin Clare (ROTH Capital Partners)

20251114-2025 Q3: The strategy over the next couple of years involves delivering projects similar in size to SRP's 50-megawatt-hour project but with significant follow-on opportunities. - Kelly Goodman(CEO)

Have you seen traction with the Energy Base proposals, and when to expect meaningful feedback? - Justin Clare (ROTH Capital Partners)

2025Q2: ESS has already converted one proposal into a sale, with more expected to be converted to backlog in the second half of the year. - Kelly Goodman(CEO)

Contradiction Point 5

Capital Raise and Liquidity

It highlights differing perspectives on the company's capital raise strategy and liquidity management, which are crucial for financial stability and investor confidence.

How will the capital raised be used and what are the company’s liquidity needs? - Justin Clare (ROTH Capital Partners)

20251114-2025 Q3: With the new ATM program, the company feels it has significant flexibility to manage liquidity on its terms as needed. - Kate Suhadolnik(FINANCIAL)

What is the outlook for Q2 sales and is second-half growth dependent on a successful capital raise? - Justin Clare (ROTH Capital Partners)

2025Q1: Ramping production and orders will depend on accessing additional capital. - Tony Rabb(CFO)