SES AI Corporation

Good afternoon. Thank you for attending today's SES, AI, fourth quarter and full year 2025 earnings results call. My name is Tamia and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to your host, Kyle Filkington, Chief Legal Officer.

Hello, everyone. and welcome to our conference call covering our fourth quarter in full year 2025 results. Joining me today are Qi Chaohu, Founder and Chief Executive Officer, and Jing Mielis, Chief Financial Officer. We issued our shareholder letter just after 4 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 scs.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. On this call, we are introducing non-GAAP financial measures as a supplement to our GAAP results. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful. These non-GAAP measures should not be considered in isolation or as a substitute for any GAAP measure, and our definitions may differ from those used by other companies reporting similarly titled measures. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our latest earnings release. With that, I'll pass it over to Chi Chau.

Thanks, Kyle. Thanks, everyone, for joining today. We had an exciting 2025 with four-year revenue of $21 million compared to a little over $2 million for 2024. Jim will walk through our financials and the outlook shortly. This tremendous growth was due to the final contributions from our services agreements with Honda and Hyundai as we completed our EV development work with them. We also had three and a half months of revenue from the acquisition of UZ Energy for our energy storage ESS business. While we are pleased to report four-year revenue in the range of our previously issued guidance, it's a milestone we reached and the year-over-year growth we are expecting from four-year contributions in our three revenue generating business units and for recognizing potential value in the molecular universe that has us really excited. I'm very proud that we made more progress in the past year than the previous 10 plus years combined. This development of the molecular universe has sped things up for us. SCS continues to be well positioned to solve the issues of battery development and safety requirements. With the molecular universe, our own in-house AI for science company, we have been able to help customers overcome standard timelines in the adoption of new technology. We also have a front C2C How energy transition needs are requiring more integration of AI software and hardware along with precise battery health monitoring. As we described before, SCS has three revenue generating business units, ESS, drones, and materials. ESS, which is the largest market for batteries, is bigger than EVs and bigger than drones. At Battery World 2024, we announced our entry into the ESS market. And through our acquisition of UZ Energy, we are now serving customers across the globe, from Australia to Europe to the Middle East, and now we are entering the North American market. The ESS business is our largest near-term revenue driver. UZ Energy is a leader in commercial and industrial ESS and has sold almost a gigawatt hours of hardware to customers ranging from residential to CNI to grid. We are now able to collect a large amount of historical ESS LFP graphite data. And then for all future UZ products, we plan to incorporate our PREDICT feature from Molecular Universe into a small box to achieve near zero drift state of charge SOC degradation, health, safety, and other SOX algorithms and automated non-disruptive recalibration. which helps improve UZ's ability to predict battery health and reduce maintenance costs for customers. Energy source systems are financial assets. The value to our customers depends on delivering consistent and long-term performance. Historically, UZ supplied only the hardware to customers, mostly LFP and graphite lithium ion cells. Now, since we acquired UZ, SCS has the opportunity to provide an operating system to the hardware and sell customers a complete package to meet their USS needs. We're seeing some early traction with UZ's sales efforts as they were able to sign a multi-year $20 million contract with a major distributor recently at the InterSolar Conference. Drones are the next business unit I want to highlight. The drones market requires high energy density and high power density batteries to achieve longer flight time and greater payload. This is where our lithium metal and high silicon carbon lithium ion batteries really shine. The U.S. defense drones market in particular is where we see the most consequential near-term opportunity and where we are devoting most of our attention and investments. It's worth spending a moment on why the drone market is a natural fit for deploying our lithium metal anodes and proprietary electrolytes. One, a drone battery needs double the energy density of conventional lithium ion. Ultimately, you need at least 400 watts per kg to be state of the art and a realistic roadmap to your 500 watts per kg to win. In other words, range and payload matter. Drone batteries need a high C rate and power for the drone to maneuver and accelerate. We've solved for this. Third, drone batteries need to be manufactured at scale. We've demonstrated this in our EVB sample developments. Fourth, drone batteries need abundant and inexpensive materials, and the military demands that the supply chain to be National Defense Authorization Act or NDAA compliant. We recently announced we expect to convert our EV B sample line in Chungju, South Korea facility to manufacture NDA compliant cells for drones. This is the same facility that we've developed and built the world's first 100 amp power largest lithium metal cell back in 2021. And this facility has been NDA compliant since 2021. To meet the drone demand, we plan to convert our lines from EV pouch 100 amp power cells to 10 amp power pod cells. In this line, we're also planning to deploy our AI for safety and AI for manufacturing to ensure quality and cost effectiveness. In addition to our career facility, we're also exploring even larger NDA compliant and more versatile cell form factor manufacturing capacities in Southeast Asia. We'll have more to update on our NDA compliant manufacturing capacity and locations later this year. Our third revenue generating business unit is materials. Both SCS and our molecular universe users have also been discovering new electrical materials for other applications that we don't build cells for currently. Last fall, we announced a JV with Hyzen to leverage their 150,000 ton annual global capacity to produce these materials at a commercial scale. to supply to other battery manufacturers for consumer electronics and ESS. At this time, we are anticipating that the Heisen JV will only produce materials for molecular universe discoveries. Through the molecular universe, we discovered six breakthroughs that are currently being tested by over 40 customers. These breakthroughs, which will be the basis of the revenue we expect from this business in 2026, include One, better cycle life and storage for EV applications. Two, better cycle life and power density for drones. Three, better low temperature cycle life and power density for heavy duty trucking. Four, better cycle life and longer life for consumer electronics. Five, better cycle life and low temperature performance for ESS and EVs. And six, better cycle life and storage for consumer electronics. We also have a pipeline of new breakthroughs that are being tested by customers, which we expect will provide further potential revenue for this business. Last but not least is what we have been referring to as our own AI for Science company. That is, of course, Molecular Universe. I want to be clear on how we view the MU's role in this company. While its staff's revenue continues to build momentum and is expected to make a small contribution in 2026, Its biggest contribution is the inherent value of this business on its own and the IP that drives competitive advantage in the ESS drone and materials business. Molecular Universe has the potential to become a modern day encyclopedia with battery being its volume one. It provides extremely valuable scientific data and intuition to AI for science models. Over the course of a year, we will continue to explore how we can best demonstrate or unlock MU's value. In terms of demonstrating that value, I will point to our recent investor presentation. In that presentation, we noted there are several AI for Science companies that are either pre-revenue or have less revenue than the MU that have already packed valuations exceeding $1 billion through private capital raises. These are the closest comps to the molecular universe, so we're keeping an eye on how well these transactions have performed. So we're really excited about the long-term value of molecular universe as a platform, not just for batteries, but all science, as well as the near-term revenue growth from drones, materials, and ESS operating systems. Our priorities for 2026 and beyond are One, leverage the new business unit leadership and structure to execute on the ESS and drone sale opportunities ahead of us. We've brought on industry veterans to lead these efforts as well as hardware and software integration sale. Second, execute on the conversion of our NDA compliant line in Korea from EV sales to drone sales and line up additional capacity in Southeast Asia that is also NDA compliant. Third, continue the growth of using energy's existing hardware business in Australia, Middle East, and Europe and begin expansion into the US. Fourth, deliver on existing novel electrolytes discovered by the molecular universe in the materials business and expand our pipeline. Fifth, leverage EMU's material discovery capabilities to accelerate new product development and fix continue to focus on our CapEx light business model in ESS, sales, and materials to offset the projected R&D spend in the molecular universe. Before I turn it over to Jun, 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 Jun for financial updates.