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SES AI (SES) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 11, 2026

Source: earnings call transcript

Executive summary

SES AI Q2 FY26 — Strong Revenue Growth and Strategic Milestones in ESS and Drones

SES AI delivered strong Q2 FY26 results, driven by over 40% year-over-year revenue growth and improved gross margins, while reaffirming full-year guidance. The company achieved significant commercial milestones in its ESS and drone segments, including key certifications and production ramp-ups, alongside advancements in its AI-for-materials platform, Molecular Universe. Despite a widening net loss, management expects narrowing losses in the second half due to anticipated revenue pickup and continued cost reductions.

Highlights

5

  • Q2 revenue grew by over 40% year-over-year to $5.1 million.

  • GAAP gross margin improved from 18.1% in Q1 FY26 to 22.6% in Q2 FY26.

  • Selected by Sol-Ark as a certified battery partner, significantly accelerating UZ's residential battery growth in the U.S.

  • Korea plant capacity for NDAA-compliant cells scaling from 200,000 to 1 million cells per year, with orders secured well into 2028.

  • Molecular Universe 3.0 released, with first Search-in-a-Box order shipped and materials entering pilot commercial deployment.

Concerns

3

  • GAAP net loss widened to $17.8 million, or $0.05 loss per share, from $12.1 million in Q1 FY26.

  • Non-GAAP net loss widened to $13.1 million, or $0.04 loss per share, from $11.1 million in Q1 FY26, primarily due to lower revenue and a bad debt provision.

  • Adjusted EBITDA loss increased to $14.6 million from $12.8 million in Q1 FY26.

Guidance & targets

CategoryTargetConfidence
Full-year revenue
$30 million to $35 million
high materiality
High
Net loss
narrow in the second half of the year
medium materiality
Medium
Operating expenses
sustain the expense reduction of more than 20% year-over-year
medium materiality
High
NDAA-compliant cell production
start producing at 1 million cells a year full speed
high materiality
High
Revenue contributions from NDAA-compliant cells
start in a meaningful way in Q4 this year and really start to take off first half next year
high materiality
Medium
Molecular Universe MU-4.0 release
release MU-4.0 later this year
medium materiality
High

Orderbook & backlog

NDAA-compliant drone cells orders well into 2028 Q2 FY26

Additional capacity (doubling/tripling Korea or Southeast Asia) could bring 2028 pipeline to 2027.

Product announcements

ProductTypeDetails
Molecular Universe MU-3.0launch
Molecular Universe MU-4.0roadmap

Deals & partnerships

Sol-Ark Certification of UZ's low voltage residential batteries for Sol-Ark's hybrid inverter systems.

Sol-Ark is a leading U.S.-based FCC authorized inverter producer. This certification reduces competition for SES AI from 20 to 3 players.

Doroni Framework agreement for designing and developing the complete battery pack for their H1-X eVTOL.

Doroni H1-X is a 2-seater eVTOL.

One of the world's largest battery manufacturers Shipped first Search-in-a-Box order for Molecular Universe.

This is for the Molecular Universe product, a module of the agentic workflow platform.

Capital programs

Korea-based NDAA-compliant cell production scale-up ramping
Spent to date: most of that has already been spent
Start: Q3 FY26

Benefit:From 200,000 cells/year to 1 million cells/year

Scaling up production from 200,000 cells a year to 1 million cells a year in about 1 month, expecting full speed production starting Q4. Initial CapEx for the plant was spent during JDA with GM.

Risks & headwinds

Bad debt provision Q2 FY26

Primary reason for sequential increase in operating expenses.

Mitigation:Related to a legacy EV service contract, implying a one-time event.

Market underestimation of Molecular Universe Near-term (next 3-5 years for full impact)

I do think a lot of investors are underestimating Molecular Universe, especially purely through the lens of near-term monetization.

Mitigation:Continued product development (MU-4.0), commercialization efforts, and demonstrating long-term value.

What to watch in Q3 FY26

NDAA-compliant drone cell production ramp

Q4 FY26
Current 200,000 cells/year
Target 1 million cells/year full speed

Why it matters

Verifies the company's ability to meet strong demand and unlock significant revenue from drone cells, which are ordered well into 2028.

We expect to complete the scale up of our Korea-based NDAA-compliant cell production from 200,000 cells a year to 1 million cells a year in about 1 month. And we expect to start producing at 1 million cells a year full speed starting this Q4.

Find out whether SES delivers this. Inve re-checks your case every morning.

Q&A highlights

What will be the revenue mix in the second half, and what is the demand outlook for ESS, especially after the Sol-Ark certification?

H1 was majority ESS (>70%), H2 will see drones and materials pick up, but ESS will still be >50%. Sol-Ark certification reduces competition from 20 players to 3, expecting a 'hockey stick' pickup in H2 and significant growth in 2027.

“So later half of this year, we expect the hockey stick to start to pick up and then a lot more next year. I think the exact number, we don't have the exact number yet, but we're quite excited to be certified by Sol-Ark. Because now we go from competing with 20 other players to now competing with just 1. Like Enphase and Tesla.”

asked by Yan Dong · answered by Qichao Hu

2 min read 6 chapters

Detailed narrative

Commercial Momentum and Product Diversification

SES AI demonstrated commercial momentum in Q2 FY26 with revenue contribution across all product lines: ESS, drone battery cells, materials, and Molecular Universe. This diversification marks a significant shift from the previous focus on EV applications to ESS and drones, which are now driving growth. The company's strategy is centered on solving challenges in energy storage through AI for materials and building robust supply chains.

ESS Market Penetration and Strategic Partnerships

The ESS business is the largest revenue generator, making significant progress in the U.S. market. The certification by Sol-Ark, a leading U.S.-based FCC authorized inverter producer, is expected to greatly accelerate UZ's residential battery revenue growth, positioning SES AI among a select few certified providers. The appointment of Paul Diemer, ex-CTO of Flex Power, to the board further strengthens the ESS strategy, particularly for data center applications.

NDAA-Compliant Drone Cell Production Scale-Up

SES AI is rapidly scaling its Korea-based NDAA-compliant cell production from 200,000 to 1 million cells per year, expected to reach full speed by Q4 FY26. This capacity is already oversubscribed, with orders secured well into 2028, highlighting strong customer demand from American and allied drone makers. The company is actively exploring additional manufacturing capacities in Korea and Southeast Asia to meet this demand, noting that 1 million cells is insufficient for the current pipeline.

Advancements in Molecular Universe (AI for Materials)

The release of Molecular Universe 3.0, an agentic workflow platform for both sodium and lithium chemistry, marks a significant technological leap. The first 'Search-in-a-Box' order has been shipped to a major battery manufacturer, and materials discovered by MU are entering pilot commercial deployment. The upcoming MU-4.0 will feature molecule generation and integration with autonomous labs, creating a self-training flywheel for accelerated product development, which management believes is underestimated by investors.

Financial Performance and Cost Management

Q2 FY26 saw revenue growth exceeding 40% year-over-year and a GAAP gross margin improvement to 22.6%. While GAAP and non-GAAP net losses widened sequentially due to lower revenue and a bad debt provision, operating expenses were down 26% year-over-year. Management anticipates net loss to narrow in the second half of the year, driven by expected revenue growth and continued cost reduction efforts as the cost reduction program takes full effect.

Capital Allocation and M&A Strategy

The company maintains a CapEx-light business model with $163 million in cash, providing a runway for operations and 2026 growth initiatives. SES AI is actively seeking inorganic growth opportunities, particularly M&A targets with manufacturing capacities for pouch cells or prismatic LFP in Korea or Southeast Asia, and pack companies. These potential acquisitions are evaluated based on strategic fit and business/revenue accretion.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.