Ses Ai Corp’s Ev Battery Delays, Ess Revenue Shift, and Mu Monetization Contradictions Highlight Strategic Uncertainty

Date of Call: Mar 4, 2026

Financials Results

• Revenue: Q4: $4.6M, up 124% YOY. Full Year: $21M, up tenfold YOY.
• EPS: Q4 GAAP: -$0.05 per share. Q4 non-GAAP: -$0.04 per share. Full Year GAAP: -$0.22 per share. Full Year non-GAAP: -$0.16 per share.
• Gross Margin: Q4 GAAP: 11.3%. Q4 non-GAAP: 11.7%. Full Year GAAP: 53.8%. Full Year non-GAAP: 55.7%.

Guidance:

• Full year 2026 revenue expected to be $30M to $35M, representing 43% to 67% growth over 2025.
• Consolidated gross margin expected around 15%, with room to improve.
• Operating expenses expected to decrease approximately 15% from 2025 levels.
• CapEx expected to remain in the single-digit million range.
• ESS expected to contribute around 65% of 2026 revenue, with drones and materials more weighted to the second half.

Business Commentary:

Revenue Growth and Business Segments:

• SES AI reported full year revenue of $21 million for 2025, compared to over $2 million in 2024, representing a significant growth.
• The revenue increase was driven by contributions from services agreements with Honda and Hyundai, and the acquisition of US Energy, which added 3.5 months of revenue from their energy storage ESS business.

ESS Business and Market Expansion:

• The ESS segment is anticipated to contribute the largest portion of revenue in 2026, around 65% of the $30-$35 million guidance range.
• Growth in this segment is fueled by the integration of AI software for battery health monitoring and the expansion into the North American market following a successful acquisition.

Drone Market and Supply Chain:

• The drone business is expected to see significant growth, particularly in the US defense market, with a focus on high power density batteries.
• This growth is supported by SES AI's strategy to convert existing lines to manufacture NDAA-compliant cells for drones, leveraging their existing NDA-compliant facility since 2021.

Molecular Universe and AI Science:

• The Molecular Universe platform has led to the discovery of six new battery material breakthroughs, showing significant acceleration in material discovery timelines.
• The platform's ability to provide scientific data and intuition is viewed as a key asset, with potential to unlock substantial value for the company.

Cost Management and Operational Efficiency:

• Operating expenses decreased by 40% year-over-year in Q4 on a non-GAAP basis, reflecting disciplined cost management.
• The company attributes this efficiency to strategic investments in their business model and the use of AI science capabilities to enhance product development.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'This tremendous growth' and 'We made more progress in the past year than the previous 10-plus years combined.' CFO noted 'We believe 2026 will be the year in which the full architect of our multi-revenue stream platform comes together and began to deliver. We are well capitalized, financially disciplined and positioned to execute on that vision.'

Q&A:

• Question from Derek Soderberg (Cantor Fitzgerald): On the final contribution from the Honda and Hyundai development work. Just was wondering what sort of next for that program?... when are you going to commercialize that for EVs?
  Response: The C sample for EVs is on hold as automakers are not investing in mass production of next-gen tech. Focus is now on selling materials and converting lines for drone production.

• Question from Derek Soderberg (Cantor Fitzgerald): Got it. And then just quickly, what was the onetime service amount? Can you quantify that impact to fiscal '25?
  Response: Service revenue for 2025 was $13.6M, primarily from Honda and Hyundai service agreements.

• Question from Derek Soderberg (Cantor Fitzgerald): Got it. So for '26, you don't expect any of that to sort of recur... Can you help us kind of quantify how each of those contribute to the guidance range?
  Response: ESS is expected to contribute about 65% of 2026 revenue, with drones and materials making up the remainder and ramping in the second half.

• Question from Yan Dong (Deutsche Bank): Just curious, if we look out to maybe like the next 2 to 3 years, if we just look at the different business areas... which one has maybe the potential for the largest growth.
  Response: ESS and drones are expected to grow very rapidly, especially ESS with the addition of software for energy trading, and drones benefit from NDA-compliant supply chain advantages.

• Question from Yan Dong (Deutsche Bank): And then separately, for molecular universe... Could you share currently what might be the largest bottleneck for adoption from these customers?
  Response: The primary bottleneck is that AI for science in materials discovery is new, but the platform has demonstrated rapid discovery (six materials in ~9-12 months) and aims to accelerate the rate of discovery.

• Question from Yan Dong (Deutsche Bank): And then I wanted to ask the question about OpEx in 2026... Can you maybe just understand the reason for that...
  Response: The OpEx reduction is due to disciplined spending, cost efficiencies from the molecular universe platform, and a focus on cash spending for product R&D while SG&A growth is not linear to revenue.

• Question from Unknown Analyst (Oppenheimer): Can you talk a little bit about the drone market and the volume of customers you're working with and how mature those relationships are.
  Response: Focus is on top customers ordering single-digit millions to over $10M annually. Testing engagement started last year, and line conversion is in the final stages for NDA-compliant drone cells.

• Question from Unknown Analyst (Oppenheimer): And then obviously, you had some really meaningful success at the molecule level... I'm curious about your ability to leverage some of that know-how into pack level design.
  Response: The company is starting to add pack and system-level design features based on customer requests, and is integrating molecular universe predictions into edge boxes for ESS.

• Question from Mark Shooter (William Blair): I believe I heard you say that the auto OEM JVs are on hold. Could you clarify that a bit?
  Response: Auto OEM appetite for high energy density lithium metal batteries has shifted from mass production (C sample) to R&D/demo levels, with most OEMs switching to LFP graphite due to cost pressures.

• Question from Mark Shooter (William Blair): And then I'm seeing that the industry is... move away from lithium metal... is any of the engagement appetite with your OEM customers changed around lithium metals?
  Response: OEM engagement has shifted from mass production to R&D levels for lithium metal, as cost pressures have led most automakers to adopt LFP graphite.

• Question from Mark Shooter (William Blair): So that confused me a bit. But switching gears to the ESS market... what is the strategy for the UZ Energy acquisition?
  Response: The strategy is to provide an operating system (like an Android version) for the fragmented ESS market, enabling asset owners to use battery packs for energy trading with precise health and safety monitoring via the Edge box enhanced virtual power plant.

Contradiction Point 1

Commercialization Outlook for EV Battery Technology

Contradiction on the near-term prospects for mass-scale EV battery production, impacting the company's core EV technology timeline.

Derek Soderberg (Cantor Fitzgerald) - Derek Soderberg (Cantor Fitzgerald)

20260305-2025 Q4: The next step was to go from B sample to C sample for EVs, but the EV market is slowing down and no automakers are investing in mass-scale production of next-gen battery technology. - Qichao Hu(CEO)

Regarding the Honda and Hyundai development projects, what are the next steps in these partnerships and when do you plan to commercialize them for EVs? - Mark Shooter (William Blair)

20251106-2025 Q3: The company is now focusing on converting lines for drone applications and has not seen other OEMs committing to mass production with lithium metal chemistry. - Qichao Hu(CEO)

Contradiction Point 2

Monetization Strategy and Growth Expectations for Molecular Universe

Contradiction on the primary revenue driver for the Molecular Universe platform, shifting from a future revenue focus to a current adoption bottleneck.

Yan Dong (Deutsche Bank) - Yan Dong (Deutsche Bank)

20260305-2025 Q4: The main bottleneck for molecular universe adoption is that it is a new approach for AI-driven materials discovery... Significant progress is being made... potential to increase the rate... - Qichao Hu(CEO)

What is the largest bottleneck for adoption of Molecular Universe's different revenue tiers? - Derek Soderberg (Cantor Fitzgerald)

20251106-2025 Q3: Revenue from supplying discovered materials will be significantly higher than SaaS revenue. The platform is seeing rapid adoption, with nearly 40 enterprise users now testing MU-1.0. - Qichao Hu(CEO)

Contradiction Point 3

Engagement and Appetite from Auto OEMs

Contradiction on the level of current interest and commitment from automotive original equipment manufacturers, affecting the company's strategic focus.

Mark Shooter (William Blair) - Mark Shooter (William Blair)

20260305-2025 Q4: While there was strong interest in 2021, current OEM appetite is limited to R&D, sample, and demo car levels, not mass production (C sample). - Qichao Hu(CEO)

Has the engagement appetite with OEM customers changed regarding lithium metals due to competitors entering public markets? - Derek Soderberg (Cantor Fitzgerald)

20251106-2025 Q3: The **Hisun JV opportunity originated from requests by Molecular Universe enterprise users**. Major battery and materials companies using the platform asked SES to contract manufacture and supply the new materials/formulations discovered through MU. - Qichao Hu(CEO)

Contradiction Point 4

ESS Revenue Contribution and Growth Strategy

Guidance for 2026 revenue mix shifted from balanced growth to ESS-dominated, indicating a strategic pivot in financial expectations.

Derek Soderberg (Cantor Fitzgerald) - Derek Soderberg (Cantor Fitzgerald)

20260305-2025 Q4: For the 2026 guidance range of $30-$35 million, ESS is expected to contribute about 65% of revenue. - Jing Nealis(CFO)

Can you quantify how ESS, drones, and materials each contribute to the 2026 guidance range? - Yan Dong (Deutsche Bank)

2025Q2: The acquisition of UZ Energy provides a foothold in the fast-growing global ESS market. ... This integration also provides real-world battery data, which is crucial for enhancing the AI platform. - Qichao Hu(CEO)

Contradiction Point 5

Drone and UAM Market Ramp and Supply Chain Status

Statements on drone market readiness and supply chain progress changed from confident ramp to delayed conversion, affecting near-term revenue expectations.

What were Cantor Fitzgerald's earnings for the quarter? - Derek Soderberg (Cantor Fitzgerald)

20260305-2025 Q4: The focus with OEMs is now on selling materials developed from the molecular universe and converting lines for drone production. - Qichao Hu(CEO)

What are the next steps for the Honda and Hyundai development program, including the commercialization timeline for EVs following the recent proof of manufacturability? - Derek John Soderberg (Cantor Fitzgerald)

2025Q2: Revenue from drones and UAM has increased this year. The company is updating and certifying its Korea line to meet customer requests to move away from the current supply chain. Current capacity from the Korea line and contract manufacturers is higher than existing orders. - Qichao Hu(CEO)