Energy Vault Holdings, Inc.

Greetings. Welcome to Energy Vault's third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Michael Beer, Chief Financial Officer. Thank you, sir. You may begin.

Thank you. Hello and welcome to Energy Vault's third quarter 2025 financial results conference call. As a reminder, Energy Vault's earnings press release and presentation are available now on our investor website, which we'll be referring to during this call. This call is now being recorded. If you object in any way, please disconnect. A replay of this call will be available later today on the investor relations portion of our website. Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates that may differ materially from the actual future events or results due to a variety of factors. Please refer to our most recent 10-K or 10-Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. Joining me on this call today is Robert Picone, our chairman and chief executive officer.

At this time, I'd like to hand the call over to Robert. Great. Thank you, Michael.

And good morning and evening and afternoon to everybody that's joining this call. Our third quarter of 2025 was one of the most pivotal in Energy Vault's history. The quarter marked the formal launch of our asset vault platform, solid execution across our global project base, and the establishment of the financial foundation that will fuel our next phase of profitable growth. It was less than 18 months ago we outlined a bold strategy to execute a plan involving developing, building, owning, and operating energy storage assets over time. constructed at financially privileged or attractive points of grid interconnection to achieve top quartile investment returns. In that time, we have also built, commissioned, and now are operating for the first time the two initial projects in Texas and California, with the revenue included in all the Q3 results also for the first time. And while initially built using our balance sheet cash, we followed with two consecutive project financings closed in the last six months as we continue to put cash back on our balance sheet with now three consecutive quarters of growing cash. And as you will hear from Michael and saw in our investor presentation, a large increase in cash also expected for our fourth and final quarter this year. You'll recall at our last earnings, we announced the framework of the new non-dilutive preferred equity platform to fund and put into operation an initial 1.5 gigawatt of energy storage IPP projects, unleashing over 1.1 billion in capital. We formally announced the close of the 300 million transactions just last month with Orion Infrastructure. In the spirit of moving with speed and velocity, which are becoming table stakes now for success in this industry, we immediately put that capital to work last month with the purchase of a 150-megawatt interconnect site outside of Houston, Texas from Savion, a U.S. division of Shell. Coupled with the 125-megawatt site at Stony Creek in Australia, already closed earlier this year, with the long-term energy service 14-year contract with the New South Wales government. That now brings our project total to 4 and 340 megawatt operating or in construction, which will be delivering a little over 40 million in recurring annual EBITDA for these initial projects as all come online in the next 12 to 24 months. When I was in Australia last week, I shared for the first time as well at our investor and analyst day are deepening collaboration with the team at Crusoe, Crusoe the AI factory company. Chase, Cully, and the team there with their focus on energy first are innovating and redefining what it means to move with the speed and velocity that I referenced earlier in vertically integrating to deliver the largest AI data centers in the world in timeframes previously thought impossible, as the initial Stargate project in Abilene shows alone. I think an example for all of us for what is now becoming a requirement to be successful in this industry. In a similar fashion, Energy Vault is vertically integrating and originating now, designing, building, and now owning and operating energy storage assets over longer timeframes. A synergistic endeavor with the same relentless focus on execution and now with greater speed and efficiency of getting capital deployed with the new Asset Vault platform. While these larger projects will take some time to be built and come online in the next 12 to 24 months, and then with the subsequent 10 to 15-year-plus revenue streams, a reminder that it is Energy Vault that will be building these projects. So when we talk about the $1.1 billion in CapEx that the $300 million preferred enables, that CapEx will be funding into Energy Vault to build and commission these projects. which results in another $100 to $150 million in cash flow back to the parent company in the form of project margins, long-term service agreements, among other cost and profit recoveries. I realize it's been a little longer time given how busy it's been the last 60 days and since we last spoke at the quarterly earnings, but I do want to jump right in here to our quarterly results. But as you get a sense, there's been just a lot going on that we've been executing as a company on a series of fronts and really proud of the team at Energy Vault and all of our partners, as well as the support of our board of directors that all supported in making this happen. Michael's going to be covering the results in more detail. I would like to cover some of the top of the waves here on the results as we entered into the second half of our year and began to deliver the expected revenue ramp and what was a strong and expected performance for the quarter. Also a reminder for everyone, there is a publicly available investor presentation that's on the website that you can download, and we would be referring to some of the charts that are in that presentation. As you saw, the contract backlog remains near $1 billion for us to execute upon in the years to come, which has more than doubled this year and about four times what it was from this time last year in 2024. The ramp started as expected with $33 million, a substantial increase on both the year-over-year and sequential quarter basis, and expecting an even larger jump of about $150 million or thereabouts in Q4 with the deliveries in Australia and the U.S. That $33 million also includes some of the first recurring contributions now from our two energy storage IPP projects in Texas and California. We also delivered strong unit economics. with gross margins of 27% in the quarter, bringing our year-to-date gross margins to almost 33%. This reflects strong management of our project deliveries, of our supply chain, and just general execution competencies, which is one of the most critical core strengths of the company. We saw the EBITDA loss narrow to only 6 million for the quarter, noteworthy on only 33 million of revenue. We continue to find ways to optimize our OpEx and be as efficient as we can as we push to a full year profitability. And another good story on our cash creation, as we have every quarter this year, we continue to grow our cash balance and return cash to the balance sheet through the project financings completed and with the first phase of the Asset Vault platform just coming online. Noteworthy here that we are still expecting now another $30 to $40 million in investment tax credits, as well to return to our balance sheet this quarter in Q4, hence the expected jump in our cash to $75 to $100 million range as we close the year, setting ourselves up well for 2026. And for us at Energy Vault, our results, of course, encompass more than just the financial side, but also the results and the impact we strive to make as a company, reflecting how we do our business and the sustainability of our solutions to enable prosperity for all humankind in a resilient way. I'm very proud to share today that we've continued to advance our leadership and sustainability with S&P Global's latest release of their ESG scores. Energy Vault continued along its improvement path year over year, placing again in the top 98th percentile of all companies reviewed by As Simply Global, while critically maintaining its leadership as the number one company in the energy storage segment. This speaks to the culture and the execution philosophy that we have as a company that really comes down to our purpose of what we seek to fulfill and the impact we are making and will continue to make in our global communities. I want to send out a special thanks to Edward Johnson and Michael Van Paris as well for their specific leadership within Energy Vault to make this happen, but also their humility, which reflects our humility as an organization to realize that we have much more work to do here. The insatiable demand for power we see now will make this focus even more critical if we want to have a shot at improving the quality of life on Earth for decades to come.

With that, I'd like to turn it over to Michael Beer, our CFO.

Thanks, Rob.

Turning to Q3 2025 results on slides three and four in the attached presentation. We delivered Q3 revenue of $33.3 million compared to $1.2 million a year ago, representing a 27x increase year-over-year, driven by strong execution on Australia projects and the initial contribution from the asset vault assets. Q3-25 gap gross profit of $9 million improved nearly 18 times versus the prior year, driven by increased revenue and favorable business mix, resulting in a Q3-2025 gross margin of 27% and 32.6% year-to-date. Two, three adjusted operating expenses were $16.2 million flat quarter over quarter, but up modestly versus last quarter as ongoing cost reduction initiatives were generally offset by startup costs and development expense related to asset vault and growth in Australia. Q3 adjusted EBITDA, excluding stock-based compensation and other one-time items outlined on slide 11 of the earnings presentation, improved to a loss of $6 million from a loss of $14.7 million in the prior year-ago quarter, driven by higher revenue and gross profit. Regarding cash and project financing, cash as of September 30, 2025, was $61.9 million, up 7% sequentially and in line with our previous guidance. The company completed a securities purchase agreement for up to $75 million, of which $30 million has been drawn to date. Following the quarter, we closed a $300 million preferred equity agreement with OIC for the launch of the own and operate business called Asset Vault, which we'll discuss in a moment. Along with the large sequential increase in revenue and customer receivables anticipated during the fourth quarter, we also expect to receive $40 million of investment tax credit proceeds, which we've committed to those projects now placed in service. As it relates to the latest backlog in developed pipeline, as reflected on slide five, the company currently maintains a revenue backlog of $920 million, up 112% year to date, offset in part by the $50 million in recognized revenue this year, including the initial contribution from Calistoga and CrossTrails projects now included in Asset Vault. The backlogging increase reflects new projects with Consumers Energy, a long-term service agreement with an existing customer, and long-term offtake agreements in the U.S. and Australia. As highlighted in the press release, the company also recently acquired the 150 megawatt, 300 megawatt hour SOSA project in Texas as part of the asset vault portfolio, and entered into an agreement with EU Green for a 400 megawatt hour project in Albania, subject to final Albanian legislative approval, both of which we expect to be included in backlog once finalized and key milestones are completed. Our total developed pipeline for advanced projects, third party, and those within Asset Vault is around $2.1 billion, or roughly 8.7 gigawatt hours. Turning to our business outlook. Reflecting the timing of U.S. battery deliveries associated with the consumer's energy projects and other project timelines in Australia, we are estimating full year 2025 revenue of $200 to $250 million within the prior guidance range. We are estimating full-year 2025 gross margin of between 14% and 16%, in line with our historical averages. From a cash and project financing perspective, we are estimating $75 to $100 million in total cash at the end of this year, unchanged versus previous guidance. We are now scaling up development activity and support services for AssetVault, with both Calistoga Resiliency Center and CrossTrails now in service, We expect these assets to contribute annualized adjusted EBITDA on a standalone basis of $10 million. As Rob had mentioned, on October 29th, management held its second investor and analyst date to provide additional detail around the recently launched asset vault business. Energy Vault's fully-owned subsidiary focused on global development, construction, ownership, and operation of energy storage assets. We also discussed strategic growth plans as the company leverages asset vaults to build and manage an expanding portfolio of contracted and operational storage projects. That presentation and replay are available on our website. With the backing of the $300 million preferred equity investment from OIC, Asset Vault creates a vertically integrated ecosystem that captures value across the entire energy storage lifecycle. That platform combines Energy Vault's proven operational expertise with long-term asset ownership to generate predictable, recurring, and high-margin cash flows. With the launch of Asset Vault, Energy Vault is positioned to accelerate deployment of 1.5 gigawatts in attractive priority markets and upper-tier IRR projects as part of Fund 1. And that Fund 1 is expected to contribute roughly $40 million in recurring adjusted EBITDA by year-end 2027 from the four maiden projects, including the recently announced SOSA project and the Stony Creek project in Australia, both of which are in the process of commencing their respective project financing processes. and to achieve $100 to $150 million in recurring adjusted EBITDA by year-end 2029 from attractive projects yet to be disclosed across high-growth markets in the U.S., Australia, and Europe. The project portfolio is prioritized with a clear monetization strategy, supported by long-term offtake agreements with bankable partners and or attractive merchant markets. We're currently expecting our merchant exposure to be around 25%. Further, by leveraging EnergyVault's existing EPC integration capabilities, as well as a host of other services we provide today to our third-party customers, we can unlock notable synergies across the business, including larger volume commitments with suppliers, et cetera, adding incremental cash flows and liquidity to the parent company. Case in point, as Rob had mentioned, assuming a mid-teens average historical gross margin on a billion-dollar-plus of CapEx for internally developed projects Energy Vault should generate additional cash flows that more than cover the associated equity investment.

With that, I'll hand it back over to Rob. Thank you, Michael. I think we were going to open it up for some questions now.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. One moment while we poll for questions. Our first question is from Noel Parks with Tui Brothers. Please proceed.

Hi. Good afternoon. You know, just... Hi. One item I noticed in the P&L is it looks like R&D expense actually declines sequentially a bit, and I was just curious if you had any updated thoughts on some of the structure changes, just what the

know how the expense lines uh might be affected as well if there's more capitalization going on going forward or something sure i'm happy to take this one i would say the confluence of a handful of things as you know we've been tightening the belt from a cost perspective really over the last year so so this is the reflection of some of those activities Furthermore, the company was in a different phase following the IPO and in around that time where we were investing heavily in R&D. And at this stage, we're looking to harvest the benefits of some of those earlier investments. And so a little less focus around R&D and more around certain activities such as asset vault and so forth. Great. Thanks.

And I guess I'm thinking a little bit bigger picture here. As, you know, we've had a fair amount of macro uncertainty in the quarter and in the months before that. And, you know, things like the shutdown certainly haven't improved the clarity of where many things in the marketplace are heading. So I'm just wondering if sort of your pace of discussions on the customer acquisition biz dev side I just wondered if, you know, you could kind of characterize customers feeling a sense of urgency and sort of pressing on unabated or whether there's been some, you know, some more hesitation introduced and thinking especially maybe as you're doing with utilities at times. So I just wondered what that pace has been like since the summer. Sure.

Yeah, thanks.

No, it's Rob here. I'll comment and then I'm sure Michael may want to add a comment or two as well. Look, this year, for sure, if anything, has been quite volatile and dynamic between the tariff side of the equation, which obviously impacts a lot of the battery shipments that were coming from China and then up to and including the most recent shutdown and recent changes and ups and downs on tariffs. So we've had to manage through that, as have our customers, and it's required a lot more terms with customers in terms of the deal structures and trying to deal with it. So I think that that's definitely caused some delays. Interestingly, on the asset bulk side, meaning on the origination of the deals, we're looking at attractive assets. It is a buyer's market from what we see. I mean, we have opportunities getting thrown our way daily, looking at sites that have interconnects and projects. So I think from an asset vault perspective, we're seeing a pretty target-rich environment and just obviously being careful on the ones that do make our list. We have a fairly formal and in-depth way that we evaluate these projects. But generally, I'd say from a U.S. market perspective, You know, we have had a lot of stop and starts across the board, and I think noteworthy, we're holding our guidance. I think we're one of a few companies in our space that are holding their guidance because of deliveries that we have underway and a lot to do next quarter, you know, but that's what I share with you. Michael, do you have anything to add to that?

Yeah, and we pride ourselves in, you know, having a nice diverse footprint and also being very agile. So, you know, earlier this year during Carrifgate, I think on the earnings call we had commented that only about 10% of our backlog was really subject to some of the volatility around U.S. tariff rates. So, you know, trying to prepare and protect ourselves against some of these shocks. You know, the other thing is just being agile. Over the last five years plus, we've seen a 90% decline in, you know, in battery prices, right, at the cell level. And so being able to participate in the most attractive parts of the value stack, choosing to own and operate assets rather than simply being a third-party service provider has set us up exceptionally well.

Great. Thanks a lot. Thanks, Noel.

As a reminder, it is star 1 on your telephone keypad if you would like to ask a question. Our next question is from Sid Rajeev with Fundamental Research Corp. Please proceed.

Hi. Just to confirm, the current backlog does not include the recently announced projects in Albania, right? Also, any plans to add these projects to Asset Vault in the future?

That's right. So the $920 million backlog today does not include either the SOSA project or the project that we'd announced with EU Green. The SOSA project is part of Asset Vault and will contribute to a lot of those recurring EBITDA numbers that we had guided previously.

One would expect those to be added to backlog, yes.

No, to Asset Vault.

They'll be added to the backlog for the broader company, and it'll also be part of Asset Vault.

That's correct.

Okay. Just one more. The development pipeline showed a massive increase from 5.9 to 8.7 gigawatt-hour. $300 million added. Which projects specifically were added to this?

We've not disclosed the specific projects.

These are what we internally classify as stage four or stage five opportunities, where we've either been shortlisted or awarded opportunities. And obviously, as we curate the pipeline around Asset Vault, there certainly are, there's been some ins and outs, and that is likely reflected in that change.

Okay, thank you, and congrats on the Q3 results.

As a reminder, to Star 1 on your telephone keypad, if you would like to ask a question, we will just pause for a brief moment to see if there's any final questions. With no further questions, I would like to turn the conference back over to Robert for closing remarks.

Thank you, operator.

Look, I... I'm happy to be talking about this quarter now. The last six days in particular have been quite transformational for us in terms of executing on what we said we were going to do, in particular with getting the asset vault platform in place. I think that was significant. But in addition, and not to lose sight of the execution capabilities of this company and keeping our eye on the ball despite all of the various transactions that are going on around us between the project financings, between what it takes to get all the investment tax credits all organized and administered, just delivery of product around the world. I think what's going on in Australia right now is one of our larger projects, which Australia represented, you know, more than half of our revenue this quarter and will continue to play a large part, I think, in the next quarter. Getting there and delivering product toward our first what's called an R2, which in Australia is your first grid interconnected project. That for us is the ASIN project. They're a large customer, a large partner of ours. We're delivering a few projects for them right now. And Q4 and into next year will play an important role in that for our future and the growth in the Australia market. I just want to thank all of our employees first. Our days start and end with all of you. And thank you, everybody, for your focus and dedication through what remains a pretty volatile time. A lot of things going on around us that we do not control. However, we do have to plan and continue to plan for that as a company and ensure we have all the levers available to us. to ensure we can respond and react and adapt as needed in the market while just staying focused on our strategy, which really starts with serving our customers. We feel really good about that. We've announced a few new projects, new collaborations, some things focused on the new AI infrastructure that's getting built out and excited about how those developments are going to proceed and impact our company as well. I also want to thank our board of directors who in the last quarter all participated in buying stock in the company during the non-blackout period, as well as some of the management and myself. Hopefully it's not lost on you all, the investors who are listening in, but also the employees that you've got management buying in to the future of the company because our faith and confidence in the prospects. And again, that really starts with the people of EnergyVault. So thanks to all of you. And operator, thank you for your support today.

Thank you. This will conclude today's conference. You may disconnect at this time. And thank you for your participation.