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DATE
Wednesday, Nov. 5, 2025 at 5 p.m. ET
CALL PARTICIPANTS
Chief Executive Officer — Qichao Hu
Chief Financial Officer — Jing Liu Nealis
Vice President, Investor Relations — Kyle Pilkington
Operator
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TAKEAWAYS
Revenue -- $7.1 million in revenue for Q3 2025, representing 102% sequential growth from Q2 2025.
Revenue Mix -- Approximately 55% of Q3 2025 revenue came from services (automotive OEMs, AI-enhanced battery material development for EVs) and while 45% was from product sales (UC Energy energy storage system sales).
Gross Margin -- 51%, driven by a 78% margin on service revenue and a 15% margin on product revenue in Q3 2025; future margins expected to fluctuate as revenue mix changes.
GAAP Net Loss -- $20.9 million, or negative $0.06 per share in the third quarter, with sequential improvement from $22.7 million, or negative $0.07 per share, in Q2 2025.
Shares Outstanding -- 365 million Class A and B shares as of September 30, reduced by 1.3 million following a share repurchase in Q3 2025.
Share Repurchase -- 1.3 million Class A shares were bought and canceled at a total investment of $1.6 million, or roughly $1.20 per share, in Q3 2025.
Liquidity -- $214 million in cash at the end of Q3 2025, with expected year-end liquidity of $195 million to $200 million for 2025, after the UC acquisition and share buybacks.
Cash Used in Operations -- Cash used in operations totaled $14.3 million in the third quarter, with the current liquidity deemed sufficient to fund anticipated growth.
Revenue Guidance (Full Year 2025) -- Updated to $20 million to $25 million for the full year 2025, incorporating contributions from UC Energy.
UC Energy Acquisition -- Closed in September; contributed approximately 45% of revenue in Q3 2025 and is projected at $10 million to $15 million full-year 2025 revenue.
Molecular Universe MU 1.0 Launch -- First end-to-end AI for science workflow released, with enterprise, cloud, and planned on-premise offerings to address enterprise data security needs.
Enterprise Tier Segmentation -- Three sub-tiers launched to address different organizational needs; enterprise three and joint development tiers include on-premise deployments.
Molecular Universe Customer Trials -- Number of enterprise users nearing 40, with medium- and large-scale companies involved in trials and on-premise evaluations.
Hyzon JV Agreement -- Formed joint venture with Hyzen New Energy Materials (150,000 tons/year capacity), with SES AI Corporation holding a 90% controlling interest to contract manufacture new electrolyte formulations discovered by Molecular Universe.
Drones and Robotics Market Entry -- Leveraging the Chengdu, South Korea facility to meet growing demand for high-energy pouch cells in the American drone industry, with initial contracts secured for non-China production.
EV Segment Update -- Completed B sample line site acceptance test with one auto OEM, with commercial supply and cell production partnership expected to begin in 2026.
ESS Product Differentiation -- Integration of MU 1.0 features (“Ask,” “Design,” and “Predict”) into UC Energy’s ESS packs, offering predictive maintenance and localized data training.
Positive Gross Margin Model -- Management stated, “All of our revenue sources come in on day one with positive gross margin.”
CapEx-Light Business Model -- Focus remains on a capital-expenditure-light approach, with contract manufacturing and joint ventures rather than heavy internal manufacturing investment.
SUMMARY
Management attributed record revenue and over 100% sequential growth in Q3 2025 to the combined impact of the UC Energy acquisition and the deployment of the Molecular Universe platform. The launch of MU 1.0 provided SES AI Corporation with a competitive SaaS and materials discovery platform, accelerating innovation and creating multiple new revenue pathways. Enterprise customer engagement reached new highs, with nearly 40 companies trialing the platform as of Q3 2025, while demand for on-premise solutions increased among large battery makers due to security requirements. The newly formed Hyzen joint venture not only enhances SES AI Corporation’s CapEx-light approach but is already producing new, proprietary electrolyte formulations for commercial sale. Integration of Molecular Universe’s predictive features into ESS products has improved customer satisfaction by enabling localized, on-site data training and predictive maintenance.
Management projected that ESS revenue could at least double between 2025 and 2026
The company’s updated guidance raised the full-year 2025 revenue outlook to a range of $20 million to $25 million, specifically noting UC Energy’s contributions.
“the cash balance is no longer to fund runway,” said Jing Liu Nealis, signaling confidence in the business model’s self-sustaining growth prospects.
Plans to offer on-premise deployments of Molecular Universe may unlock access to larger battery manufacturers concerned with data privacy.
Commercial supply of materials to OEMs and increased activity in the drone sector could meaningfully diversify revenues in 2026.
INDUSTRY GLOSSARY
MU 1.0: SES AI Corporation’s end-to-end AI-driven science workflow platform, designed to accelerate materials discovery and development for battery applications.
ESS: Energy Storage System; systems designed to store electrical energy for commercial, industrial, or utility-scale applications.
BMS: Battery Management System; integrated hardware and software responsible for monitoring, protecting, and optimizing battery performance.
B sample line: An intermediate stage in automotive battery development involving prototype validation prior to commercial production.
CapEx-light: A business strategy that emphasizes limited capital investment in internal manufacturing assets, preferring partners and contract manufacturing to limit fixed costs.
Full Conference Call Transcript
Qichao Hu: 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 model queue and formulation-level properties, enabled by GPU-accelerated quantum mechanics computation and machine learning-accelerated property prediction; and Design and Predict, chemistry-specific and chemistry-agnostic machine learning models respectively that can accurately predict better 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, Ask, Design, and Predict into our ESS products deployed by UC 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 UC 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 we are commercializing. These include improved low-temperature rate performance of lithium iron phosphate lithium-ion cells for ESS applications, improved cycle life for 12% silicon lithium-ion cells for EV applications, and 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. So 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 power cells is extremely rare and critical to the development of the American drones industry. To better address this burgeoning market, we are leveraging our Chengdu, 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 test this summer with one auto OEM. As a result, in 2026, we expect to start commercial supply of electrical 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 know that we wanted to break into the ESS market in a big way. Now we've done so with the acquisition of UC 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-pronged 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. And thanks to all of you for being on this journey with us. And now here's Jing Liu Nealis for financial updates.
Jing Liu Nealis: Thank you.
Operator: I will discuss our financial performance for 2025 and provide some context on how we are deploying our capital to support SES AI Corporation's long-term growth and the all-in AI strategy Qichao Hu 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 lithium-ion battery materials for EV applications and product revenue primarily from UC Energy's energy storage system sales. For the full year 2025, we're updating our revenue guidance to $20 million to $25 million due to UC'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 UC Energy now part of SES AI Corporation, 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 $1.2 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 UC acquisition in September and recognized some UC revenue during the third quarter.
We see a tremendous opportunity to grow the UC energy business from approximately $10 million to $15 million in projected full-year 2025 revenue to much larger growth in the coming years as we execute our go-to-market strategy that Qichao Hu 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 UC'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. But 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. We're 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 Corporation. Thank you. Now I will turn the call back to the operator to begin the question and answer session. When preparing to ask your question, please ensure your devices are muted locally.
We will make a quick pause here for the questions to be registered. And our first question comes from the line of Derek John Soderberg with Cantor Fitzgerald.
Derek John Soderberg: 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 AI Corporation? And then what type of battery will this electrolyte enable?
Qichao Hu: Hey, Derek. Yeah. So good question. And actually, the Hyzen JV came at the request of some of the Molecular Universe enterprise users. So Molecular Universe, since we launched this earlier this year, has been growing really fast. And then we had almost every major battery company and battery materials company in the world trialing this. And then so 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. Don't you just make these and then sell these to us? Because they currently buy electrolytes from companies.
So it's a quite mature business model. So we said, okay. Yeah. We're happy to sell these materials to you. These are new formulations that they cannot buy anywhere else. And then so we formed this joint venture. It's a CapEx JV we control. We control 90% of the JV, and then we contract manufacture this company called Hyzen to produce this formulation. Then we sell that formulation to the cell makers. And then some of the applications, so in the call, I listed three, and then, actually, all three are being produced. So the most popular one is the new formulation to improve low-temperature performance of LFP for ESS batteries.
A lot of these LFP batteries for ESS are deployed in Northern Europe, these cold places, they don't work so well when it's at a low temperature. Another one is for cell phone applications. So it's a high voltage electrolyte for LCL cells. And then another is a 12% silicon lithium-ion cells for EV applications, also to improve the cycle. So these three were requested by the user, the cell maker, to actually supply these materials at commercial scale to them. And this was discovered through the Molecular Universe platform.
Derek John Soderberg: Got it. That's helpful. And I guess just to that point, 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 software as a service 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: Yeah. It's not so MU is a mix of SaaS platform and materials. And then so the SaaS platform, and then we laid out the different tier pricing on the website molecular-universe.com. And so we have the individual tiers, and then the number of individual tiers is growing. And then also we have the enterprise tiers. These are the major battery companies and then the material companies and the chemical companies. And a lot of these companies prefer on-premise. So we also sell them this Molecular Universe in a box on-premise solution. So we charge them monthly subscription, and also we sell this computer. We actually deploy and also, servers on top of them.
I think the SaaS platform does expect to see a growing number of seats per month and also per quarter. And then the material supply. Because a lot of these companies eventually want us to supply the materials. But the revenue coming from the Molecular Universe discovery materials is actually going to be much higher than the SaaS revenue.
Derek John Soderberg: Got it. That's helpful. And then just one final one for me, just a broad update on Molecular Universe. I think in the past you said you've got like two dozen or so companies in trial testing. Can you just give us an update on maybe where that is? And I think in the past, you've mentioned, you know, there are other potential large or medium-sized battery OEMs, you know, as part of that group. Where are you at with, you know, some of those players in negotiations? When do you expect maybe a medium or large-sized OEM to sign on to MU through a joint development? Thanks.
Qichao Hu: Yes. So the number now is getting close to 40. Enterprise and then they've gone through MU 2.5 trial, MU 1.0 trial, which is the latest version. And it's gone through the initial cloud-based trial. And then 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 the box on-premise solution.
Derek John Soderberg: Got it. Appreciate it.
Operator: Thanks, Derek.
Qichao Hu: Thank you.
Operator: So just as a reminder, if you would like to ask a question, the next question comes from Winnie Dong with Deutsche Bank.
Winnie Dong: Hi. Thanks so much for taking my question. I just wanted to follow up with that last question that was asked. You talked about, you know, launching three sub-tiers within the enterprise subscription. I was wondering if you can maybe just elaborate on that. What are the customers looking for? Then if you can just maybe just remind us of the other subscription option that's also bringing you this recurring revenue opportunity. Thank you.
Qichao Hu: Yeah, Winnie. So the enterprise one, two, three, basically, they differ in terms of size of market 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. And the enterprise two is a postdoc level, and the enterprise three is a senior scientist level. And then, for example, enterprise one, when they answer a question, they'll answer a question typically in less than three minutes. And the enterprise two postdoc level answers a question in about five minutes.
Enterprise three will answer a question in more than thirty minutes, but the depth and the quality and the new discoveries are much deeper. So a lot of the enterprise ones are medium-sized companies. Also some startups. And then the larger companies. And then so for enterprise one and two, we offer only cloud. And then 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. And then in addition to these tiers, we can also do the joint development tier with the larger customers. That's where so now the cloud version, Molecular Universe, is trained only on SES AI Corporation's internal data.
But then for the joint development, we will actually put our Molecular Universe in the box encrypted and then also organize the user's data, the cell maker's data, and then after I train all Molecular Universe in a box. And then we're helping them do something that they have always wanted to do, but they've never had the resource and then never had the capability to do that.
Winnie Dong: Got it. That's very detailed. Thank you so much. And then so this quarter, you saw some very meaningful revenue contribution from UC Energy. I was just curious if you can just maybe take a step back and help us sort of get reengaged with the background of this company, where the markets are, what you think, you know, the growth could be from this business. And then maybe more broadly speaking, as you look out to the different revenue streams, so, you know, UC Energy, Molecular Universe, you have the relationships with OEM partners for electrolyte productions.
Just maybe give us a sense of, you know, which channel you're most optimistic about as you head out to grow in the next, you know, two to three years? Thank you.
Qichao Hu: Yep. So UC Energy is an energy storage company, and they serve mainly the behind-the-meter commercial and industrial applications. And before we acquired UC, we actually used to supply this database machine learning model to UC to help improve the accuracy of their BMS. Management system, in terms of predicting battery health and then end of life. And then, 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. So we sell these when UC deploys these packs to customers around the world.
A lot of the customers, for example, in Norway or Northern Europe, they complain that the packs, especially in winter, are just not so accurate, and the BMS just stops working. So by adding this predict, we can actually, so each UC pack is a box, is a Molecular Universe in the box. And then 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. And then so since we've added this predict, the amount of customer calls, their complaints actually dropped. And then we plan to continue to do that. So this application is actually really exciting.
So think of each ESS pack as a Molecular Universe in a box. And then we collect the data, we do local training, and we make predictions on the safety. And then I think that's a really exciting connection. So we get data, and we get revenue. In terms of the overall growth of revenue, of the different business opportunities that we mentioned. UC, this year, revenue, we expect to pull about $15 million to $20 million. And I think next year, ESS, we can at least double that. So this is one area. Another is drones. Drones. This year, we are getting our initial contracts.
And also, a lot of the drones customers in the US really want cells made outside of China. So we are making these cells in our Chengdu, South Korea facility. Actually, the amount of capacity for pouch cells for drones outside China is, like, super rare. It's hard to find pouch cells capacity outside of China. We have them. So we expect drones to also grow in a big way for us next year. And then UC and so, for example, the joint development we had with Hyundai Motors, and also Honda, we are using Molecular Universe to discover these new electrolytes.
And then once we identify these electrolytes, then our plan is to use the Hyzen JV to contract manufacture this and then supply. So 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: That's very helpful. Thank you.
Operator: And as we have no further audio questions, I will hand back over to Kyle Pilkington for the other questions.
Kyle Pilkington: Thank you. As in past quarters, we have received some written questions from investors. And time permitting, we'll go through a selection of those questions, which have not yet been addressed on the call. So 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, sort of the UC Energy integration, impact the cash burn or CapEx plans?
Jing Liu Nealis: I can cover that. So you want So our yeah. Yeah. I'll take that. So our liquidity balance is very strong. And given that we closed the UC acquisition, also did some stock repurchase based on our program. We still expect to exit the year with somewhere between $195 million to $200 million of liquidity. And then the other thing I wanted to probably emphasize is laser-focused on funding growth. So our liquidity balance is sufficient to grow our revenue from different streams that you just mentioned. Whether it's ESS from the materials or SaaS from MU. So the cash balance is no longer to fund runway, we have a CapEx light business model.
So the UC acquisition is helping us to grow revenue with positive gross margin. All of our revenue sources come in on day one with positive gross margin. So it's not a CapEx heavy business. So our liquidity balance will be sufficient to fund the growth going forward.
Kyle Pilkington: 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: Yeah. So for now, MU 1.0 has been mainly focused on electrolyte materials. And then we've been requested to expand that to cover electrode process optimization and also cell design and manufacturing optimization. And then another big request from some of the major battery companies, 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, train this model into a portable Molecular Universe. So that is going to be a really exciting project that we'll be working on with these battery companies.
Kyle Pilkington: Excellent. And I think we have time for one more. So 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: Yes. So 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 power cells. And then so that's quite exciting. And then we are converting our Chengdu line, which we built both the EV line as well as the UAM line. We're converting that capacity to make this power cell. And then 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. So we do see quite exciting growth in this market.
Kyle Pilkington: Great. With that, I'll pass it back to the operator for closing remarks.
Operator: Thank you, everyone. This concludes today's call. Thank you for joining. You may now disconnect. Have a great rest of your day.