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ET

ESS Tech, Inc. (GWH)·Q4 2024 Earnings Summary

Executive Summary

  • ESS Tech’s Q4 2024 revenue was $2.85M and GAAP EPS was $(1.97), both materially below S&P Global consensus for the quarter ($5.59M revenue*, $(1.19) EPS*) and the company missed its prior FY24 revenue target ($6.30M actual vs $9–$11M guided in Nov) .
  • Management achieved a notable cost milestone: non-GAAP unit gross margin breakeven on the Energy Center design by Q4, with battery pack costs down ~50%; however, GAAP gross margin remains negative and is not expected to turn positive in 2025 .
  • Strategy pivot advanced: Energy Center deployments (6 units to a Florida utility in Q4) and final commissioning of the first two ECs for PGE; launch of Energy Base (non-containerized, modular, 12+ hour roadmap) targeted at data-center and grid-scale LDES .
  • Liquidity and execution are near-term swing factors: management is actively raising capital (seeking ≥$50M to unlock EXIM facility access), monetized $1.9M of 2024 PTCs at $0.92 on the dollar; NYSE market-cap deficiency notice and going-concern disclosure heighten financing urgency .

What Went Well and What Went Wrong

What Went Well

  • Achieved non-GAAP unit gross margin breakeven on the Energy Center design in Q4, “almost a year earlier than previously expected,” driven by ~50% battery pack cost reduction and broader cost-down programs (EW ~35%, EC ~26%) .
  • Product/field progress: delivered 6 Energy Centers to a Florida utility in December (8 total delivered after Q1), completed grid interconnection and final commissioning of the first two ECs for PGE; fleet has transacted ~2–2.5 GWh cumulatively .
  • Certifications/integration: EC earned UL 9540 ETL certification; passed MESA-Device and SunSpec Modbus certifications, reinforcing safety and interoperability claims .

Management quotes:

  • “We were able to achieve breakeven on our latest Energy Center design at the end of the fourth quarter of 2024, hitting our target almost a year faster than expected…we reduced our battery pack costs by nearly 50%.”
  • “Every product we produce and sell in 2025 will be profitable on a direct variable cost basis.”

What Went Wrong

  • Revenue miss versus internal target and Street: FY24 revenue $6.30M vs $9–$11M guided; Q4 revenue/EPS below S&P Global consensus due to partner funding delays and timing on Florida EC project .
  • GAAP profitability still distant: Q4 gross loss $(13.19)M; GAAP gross margin not expected to be positive in 2025 given indirect overhead at current scale .
  • Liquidity risk and listing pressure: going-concern disclosure; plan to raise ≥$50M to access EXIM; received NYSE market-cap deficiency notice, increasing execution risk until financing closes .

Financial Results

P&L snapshot (chronological: prior year, prior quarter, current quarter)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$2.80 $0.36 $2.85
Gross Profit (Loss) ($USD Millions)$(7.52) $(12.38) $(13.19)
Total Operating Expenses ($USD Millions)$11.55 $11.30 $10.31
Net Loss per Share (Basic & Diluted)$(1.39) $(1.90) $(1.97)
Adjusted EBITDA ($USD Millions)—$(18.87) $(18.24)

Actuals vs S&P Global Consensus

PeriodMetricConsensus*Actual
Q4 2024Revenue ($USD)$5,591,500*$2,850,000
Q4 2024EPS ($)$(1.1867)*$(1.97)
FY 2024Revenue ($USD)$9,027,750*$6,295,000
FY 2024EPS ($)$(6.55)*$(7.32)

Values with asterisks were retrieved from S&P Global.

Liquidity

MetricDec 31, 2023Sep 30, 2024Dec 31, 2024
Cash & Cash Equivalents ($USD Millions)$20.17 $12.82 $13.34
Short-term Investments ($USD Millions)$87.90 $42.29 $18.26
Total Cash + ST Inv. ($USD Millions)$108.07$55.11$31.60

KPIs and Operational Highlights

KPIQ4 2024 / Recent
Energy Centers delivered to Florida utility (Q4)6 units delivered in Dec 2024
PGE ECsFirst two ECs commissioned and grid-interconnected (final commissioning in Q1 after site commissioning in Q4)
Global fleet energy transactedSurpassed 2 GWh (press release); nearly 2.5 GWh (Feb update)
CertificationsUL 9540 ETL, MESA-Device, SunSpec Modbus for EC
Cost-downBattery pack ~50% reduction; EW ~35%, EC ~26%; electrolyte cost >50% lower with ~20% more energy output; scrap losses >90% lower
Non-GAAP unit economicsNon-GAAP unit GM breakeven for EC at Q4; all 2025 units expected non-GAAP GM positive
PTC monetization$1.9M of 2024 PTCs sold at $0.92/$1 in Q1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/OutcomeChange
RevenueFY 2024$9–$11M (guided Nov 13, 2024) $6.30M actual Lower/Missed
RevenueFY 2025None providedNo 2025 guidance; H1 moderate, H2 ramp commentary Maintained “no guidance”
GAAP Gross MarginFY 2025N/ANot expected to be positive in 2025 Qualitative: below prior expectations
Non-GAAP unit gross margin (EC/EW)Exit 2024 / 2025N/ABreakeven at Q4; 2025 units non-GAAP GM positive New positive milestone
Capital plan2025EXIM $50M facility signed (first tranche) Company seeks ≥$50M raise to access EXIM; ATM planned Updated financing approach

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Product roadmap (Energy Base)Not highlighted in Q2/Q3 releasesLaunch of non-containerized Energy Base; 12+ hour roadmap; 22-hour line of sight; modular power/capacity decoupling Expanding scope/ambition
Cost-down & manufacturingQ2: EXIM financing to expand capacity; production line scaling Battery pack ~50%↓; EW ~35%, EC ~26%; scrap >90%↓; electrolyte cost >50%↓, +20% energy Accelerating improvements
Customer deploymentsQ3: second EC installed for PGE; expect EC shipments in Q4 6 ECs delivered to Florida in Dec; PGE ECs commissioned (final) Execution progressing
Financing/liquidityQ2: closing EXIM up to $50M expected; >$74M cash+STI at Q2 end Seeking ≥$50M raise to access EXIM; ATM planned; going concern disclosure Increased urgency
Market demand/AINot emphasizedTargeting AI data center baseload LDES; bidding/shortlisted projects New focus vertical
Supply chain/domestic contentQ2: domestic manufacturing expansion; SMUD/CEC project “Over 98%” domestic BoM; tariff mitigation via domestic sourcing Reinforced
Regulatory incentives (PTC/ITC, IRA)Q2: EXIM; CEC awards Expanded PTC scope to electrode materials; monetized $1.9M at $0.92 Improved monetization
Listing statusQ3: reverse split to maintain NYSE NYSE market-cap deficiency notice; plan submitted New headwind

Management Commentary

  • “Our results did not meet expectations. We came in at $6.3 million of revenue for the year, below our guidance range of $9 million to $11 million…primarily due to the inability of one of our partners to fully secure funds” .
  • “We reduced our battery pack costs by nearly 50%…achieve breakeven on our latest Energy Center design at the end of the fourth quarter of 2024” .
  • “Every product we produce and sell in 2025 will be profitable on a direct variable cost basis…we anticipate [GAAP] gross margin positive post 2025” .
  • “We need to raise at least $50 million to be able to access [the EXIM loan]…anticipate potentially drawing on the [EXIM] facility in the second quarter” .
  • “Energy Base…enables durations beyond 8 to 10 hours…our current roadmap targets 12+ hour duration for our 2027 projects, and we have line of sight to 22 hours” .

Q&A Highlights

  • Near-term revenue cadence: no 2025 guidance; H1 revenue “moderate,” H2 scale-up primarily tied to EC production/sales .
  • GAAP margin path: despite unit-level non-GAAP breakeven, indirect overhead means GAAP gross margin not expected positive in 2025; improvement expected beyond 2025 .
  • Capital needs: targeting ≥$50M raise to access full EXIM facility; ATM filing imminent; exploring interim financing solutions .
  • Field performance: addressing operability via software and documentation; Honeywell/SoftBank EW systems operating and informing best practices .
  • OpEx outlook: run-rate slightly below 2024 but reallocating toward Energy Base execution; no large further cuts expected .

Estimates Context

  • Q4 2024 actuals missed S&P Global consensus on revenue ($2.85M vs $5.59M*) and EPS ($(1.97) vs $(1.1867)). FY 2024 also missed on revenue ($6.30M vs $9.03M) and EPS ($(7.32) vs $(6.55)*), reflecting partner funding delays and project timing .
  • With management withholding 2025 guidance and indicating a back-half-weighted ramp, consensus may need to reflect slower recognition in H1 and the timing of EC milestone completions; GAAP margin inflection likely post-2025 based on management commentary .

Values with asterisks were retrieved from S&P Global.

Key Takeaways for Investors

  • Execution pivot is real but financing-dependent: cost-downs and Energy Base unlock the longer-duration TAM, yet capital raise (≥$50M) and EXIM access are near-term catalysts/risks .
  • Unit economics improving: non-GAAP unit breakeven achieved; expect all 2025 units to be non-GAAP GM positive, aided by expanded PTC monetization, but GAAP breakeven requires scale beyond 2025 .
  • Commercial traction milestones: 6 ECs delivered in Q4; PGE ECs commissioned; watch for commissioning/revenue recognition on Florida and follow-on EC orders .
  • Strategic focus on 12–22 hour LDES (Energy Base) positions ESS for data center baseload storage and grid capacity—key differentiation vs Li-ion augmentation cycles .
  • Liquidity runway and listing compliance are swing factors; successful capital raise/EXIM draw and continued PTC monetization would de-risk operations and bolster the growth path .
  • For trading: monitor financing announcements, commissioning milestones, and any large Energy Base shortlist wins as stock catalysts. A delay or shortfall in financing remains the primary downside risk near term .

Appendix: Source Documents Used

  • Q4/FY24 8-K and press release (financial statements and highlights)
  • Q4 2024 earnings call transcript (prepared remarks and Q&A) -
  • Q3 2024 earnings press release (trend context and prior guidance) -
  • Q2 2024 earnings press release (trend context and EXIM progress) -
  • Feb 2025 press releases (leadership/strategy and fleet/certifications)