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    GWH
    Earnings call· Jun 2026(Q2 FY26)

    ESS Tech Q2 FY26 earnings call GWH

    Aug 11, 2026 Source

    Executive summary

    ESS Tech Q2 FY26 — Strategic Shift to Sodium-Ion and Proposed Business Combination

    ESS Tech is undergoing a strategic pivot, accelerating its focus on sodium-ion battery technology with the new Bridge system, targeting data centers and critical infrastructure. This shift is supported by significant commercial interest and a proposed business combination aimed at achieving scale and speed to market. The company is also intensely focused on cost discipline and liquidity management amidst a challenging financial quarter.

    Highlights

    5

    • Identified early-stage sodium-ion opportunities approaching $1 billion.

    • Signed LOI with Juniper Energy for 500 megawatt hours or more of sodium-ion systems by 2032, anchored by a 10 MW/80 MWh project.

    • Signed LOI with Alsym Energy for 8.5 gigawatt hours of U.S.-made sodium-ion cells.

    • Operating expenses declined 12% to $14.5 million in H1 FY26.

    • Net cash used in operating activities declined 27% to $22.4 million in H1 FY26.

    Concerns

    6

    • Revenue for Q2 FY26 was $73,000, a significant decrease from $2.4 million in the prior year period.

    • Gross loss increased to $7.4 million in Q2 FY26 compared to $5.1 million a year ago.

    • Net loss for Q2 FY26 was $15.6 million, up from $11.1 million in the prior year period.

    • Unrestricted cash and cash equivalents declined to $10.8 million at Q2 FY26 end from $22 million combined at December 31, 2025.

    • Cash, cash equivalents, and short-term investments were $5.6 million as of July 31, 2026.

    • Substantial doubt exists regarding the company's ability to continue as a going concern.

    Guidance & targets

    4
    CategoryTargetConfidence
    Business Combination Definitive Agreement
    By end of September
    high materiality
    Medium
    Business Combination Close
    Before year-end
    high materiality
    Medium
    First Full-Scale Bridge System Operational
    Toward the end of 2026
    medium materiality
    High
    Juniper Energy Project Commercial Operation
    2027
    medium materiality
    Medium

    Operational metrics

    26
    Revenue
    $73,000down from $2.4 million YoY
    Q2 FY26

    Reflects significantly fewer equipment deliveries as legacy contracts wind down.

    Cost of revenue
    $7.5 millionflat YoY
    Q2 FY26

    Dominated by fixed manufacturing overhead and underutilized capacity, not representative of unit economics.

    Gross loss
    $7.4 millioncompared with $5.1 million a year ago
    Q2 FY26

    Result of low revenue and fixed costs.

    Operating expenses
    $7.7 millionincreased 19% YoY
    Q2 FY26

    Driven by G&A and R&D increases, partially offset by S&M reduction.

    Operating expenses
    $14.5 milliondeclined 12% YoY
    H1 FY26

    Reflects cost discipline despite increased investment in product development.

    General and administrative expense increase
    $1.2 million
    Q2 FY26

    Primarily driven by legal expense associated with contingent liability accruals.

    Research and development expense increase
    $800,000rose 55%
    Q2 FY26

    Driven by personnel-related investment for Bridge platform and expanded technology portfolio.

    Sales and marketing expense reduction
    $700,000declined 57% YoY
    Q2 FY26

    Due to lower personnel costs, reduced outside services, and lower marketing/trade show spending.

    Loss from operations
    $15.1 millioncompared with $11.6 million in the prior year period
    Q2 FY26

    Increased due to higher operating expenses and gross loss.

    Net loss
    $15.6 millioncompared with $11.1 million in the prior year period
    Q2 FY26

    Increased in dollar terms.

    Net loss per share
    $0.46compared with $0.90 per share in the prior year period
    Q2 FY26

    Improved 49% due to larger weighted average share count.

    Net loss per share
    $1.00improved 58%
    H1 FY26

    Reflects overall improvement in loss per share year-to-date.

    Adjusted EBITDA loss
    $7.9 millioncompared with a $7.8 million loss a year ago
    Q2 FY26

    Reconciliation from GAAP net loss.

    Net cash used in operating activities
    $22.4 milliondeclined 27% YoY
    H1 FY26

    Represents an $8.2 million improvement, demonstrating cost discipline.

    Unrestricted cash and cash equivalents
    $10.8 millioncompared with $14.5 million cash and $7.6 million short-term investments ($22 million combined) at Dec 31, 2025
    Q2 FY26 end

    Reflects declining liquidity.

    Cash, cash equivalents, and short-term investments
    $5.6 million
    July 31, 2026

    Updated liquidity position subsequent to quarter end.

    Total liquid assets
    $11.0 millioncompared with $22.2 million at year-end 2025
    Q2 FY26 end

    Includes accounts receivable and inventory.

    Net cash provided by financing activities
    $12.9 million
    H1 FY26

    Includes proceeds from offerings and other arrangements, offset by repayments.

    Net proceeds from January registered direct offering
    $13.6 million
    H1 FY26

    Part of financing activities.

    Proceeds from other financing arrangements
    $9.2 million
    H1 FY26

    Part of financing activities.

    Proceeds from at-the-market program
    $4.9 million
    H1 FY26

    Part of financing activities.

    Repayments on financing obligations
    $14.8 million
    H1 FY26

    Offsetting financing proceeds.

    Yorkville note repayment
    $37 millionof original $40 million principal outstanding
    to date

    Deleveraging priority.

    Asset abandonment
    $4.3 million
    H1 FY26

    Reflects footprint rationalization working through the P&L.

    Data center power demand growth
    double
    by 2030

    Expected growth in U.S. data center power demand.

    Battery storage capacity in data centers
    20 to 25 gigawatts
    by end of the decade

    Industry estimates for potential deployment.

    Industry KPIs

    5
    MetricValueDetails
    Orders bookings growthapproaching $1 billionUSD
    Gigawatts under contract8.5 gigawatt hoursGWh
    M a acquisition contributionapproximately $515 millionUSD
    Backlog by segment end market500 megawatt hours or moreMWh
    Data center exposure pipelinedouble by 2030%

    Orderbook & backlog

    2
    Early-stage sodium-ion opportunitiesapproaching $1 billionQ2 FY26

    Unconverted at time of recording; early stage.

    Sodium-ion battery systems (Juniper Energy LOI)500 megawatt hours or moreQ2 FY26

    Deployment by 2032; anchored by a planned 10 MW/80 MWh project for a major California utility, targeted for commercial operation in 2027.

    Product announcements

    1
    ProductTypeDetails
    Bridgelaunch

    Deals & partnerships

    3
    Alsym EnergyLetter of Intent for supply of U.S.-made sodium-ion cells.8.5 gigawatt hours

    Agreement to add 8.5 GWh of U.S.-made sodium-ion cells to ESS' portfolio, extending non-lithium platform into short- and medium-duration applications.

    Juniper Energy LLCLetter of Intent for deployment of sodium-ion battery systems.500 megawatt hours or moreby 2032

    LOI for deployment of 500 MWh or more of sodium-ion battery systems by 2032. This represents a clear validation of market interest translating into tangible customer commitments.

    Private company in the energy sectorNon-binding Letter of Intent for a proposed business combination.approximately $515 million

    The proposed partner is commercially active in the energy sector with an established operating platform and proven commercial execution. The combination aims to pair ESS' platform and market position with revenue-generating operations for compelling strategic and financial benefits. Subject to due diligence, negotiation, and approvals. Definitive agreement expected by end of September.

    Risks & headwinds

    4
    Liquidity and Going Concernnear-term

    $5.6 million in cash, cash equivalents, and short-term investments as of July 31, 2026

    Mitigation: Actively pursuing additional financing alternatives, including the proposed business combination; continuing to manage spending carefully.

    Business Combination UncertaintyQ3-Q4 FY26

    Non-binding letter of intent; subject to due diligence, negotiation, execution of definitive agreements, and required approvals.

    Mitigation: Working towards a definitive agreement by end of September and close before year-end; management is not slowing down on sodium-ion platform development in the interim.

    Revenue DeclineQ2 FY26

    Q2 FY26 revenue of $73,000 compared with $2.4 million in prior year period

    Mitigation: Transitioning from legacy contracts and investing in new Bridge and Energy Base platforms with greater near-term revenue potential.

    Increased Gross LossQ2 FY26

    Gross loss of $7.4 million in Q2 FY26 compared with $5.1 million a year ago

    Mitigation: Cost of revenue dominated by fixed manufacturing overhead and underutilized capacity; streamlining Wilsonville operations and modular Bridge approach carries lower fixed capacity intensity.

    What to watch in Q3 FY26

    5

    Business Combination Definitive Agreement

    By end of September
    CurrentNon-binding LOI signed
    TargetDefinitive agreement signed

    Why it matters

    This transaction is described as potentially transformational and critical for the company's strategic reset and financial stability.

    We expect to announce a definitive agreement by the end of September and are targeting a close before year-end, but this is subject to significant additional work, including completion of the diligence process, negotiation, execution of a definitive transaction document and required approvals.

    Q&A highlights

    8

    What is the timeline for the business combination, and will ESS be self-funded until then?

    Management expects a definitive agreement by the end of September and a close before year-end. ESS anticipates being self-funded in the near future due to reduced expenses and cash burn.

    “So the time line as it sits right now, the way we're looking at it is that we expect to reach a definitive agreement with the counterparty by the end of September and then close potentially on the final transaction toward the end of the year. So that's what we're working with right now. We're going through that entire process. And in terms of the funding side, we expect that in the near future, we'll be self-funded for the time being.”

    asked by Alex Hantman · answered by Drew Buckley

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Pivot to Sodium-Ion

    ESS is expanding its focus into sodium-ion batteries with its new Bridge system, complementing its existing iron flow Energy Base platform. This strategic shift is a direct response to strong customer interest in data centers, critical infrastructure, and utilities, driven by accelerating CapEx, power constraints, and the increasing imperative for energy storage in AI infrastructure. The company aims to leverage its non-lithium technology to address these growing market needs.

    02

    Bridge Product Introduction and Advantages

    The new Bridge system is a 1.2 MWh AC modular sodium-ion battery designed for short- to medium-duration applications (2-16 hours) with a 20-year design life. Its key advantages include non-flammable chemistry with no thermal runaway risk, simplified installation due to no complex HVAC or liquid cooling, and rapid deployment as a plug-and-play AC block. The wide operating temperature range makes it particularly well-suited for AI data centers, where it can handle power spikes without the degradation seen in lithium chemistries.

    03

    Commercial Momentum and Partnerships

    ESS has identified early-stage sodium-ion opportunities approaching $1 billion, reflecting significant market demand. A non-binding Letter of Intent (LOI) with Juniper Energy covers the deployment of 500 MWh or more of sodium-ion systems by 2032, starting with a 10 MW/80 MWh project for a California utility targeted for 2027. Additionally, an LOI with Alsym Energy secures 8.5 GWh of U.S.-made sodium-ion cells, enabling a fully U.S. manufactured system free of foreign entity concerns and eligible for tax credits.

    04

    Proposed Business Combination

    The company announced a non-binding LOI for a proposed business combination with a private energy sector company. This transaction implies an expected combined enterprise value of approximately $515 million, with ESS stockholders receiving an allocation at a premium to its market capitalization at the time of definitive agreement signing. The combination aims to merge ESS' technology and manufacturing base with an established operating platform to achieve greater scale and speed to market, with a definitive agreement targeted by September and close by year-end.

    05

    Cost Discipline and Liquidity Management

    ESS streamlined its Wilsonville operations to reduce expenses and cash burn, reallocating capital towards sodium-ion solutions. Operating expenses declined 12% to $14.5 million and net cash used in operating activities decreased 27% to $22.4 million in H1 FY26. The company repaid $37 million of its $40 million promissory note with Yorkville. Despite these efforts, liquidity remains a critical concern, with $5.6 million in cash as of July 31, 2026, and active pursuit of additional financing alternatives.

    06

    Bridge Development Milestones

    Progress on the Bridge system is advancing rapidly, with the first sodium-ion module fully built and undergoing charge and discharge testing in-house. This marks a significant step from design to product realization. The market rollout of Bridge has already begun, and ESS targets having its first full-scale Bridge system operating in-house toward the end of 2026, demonstrating tangible progress in product development.

    AI-generated summary of the company’s earnings call. Not investment advice.