Q3 2024 Earnings Summary
- Strong customer pipeline with signed agreements totaling 2.1 GW, including new letters of intent with two major data center providers for up to 750 MW of power, indicating robust demand for Oklo's advanced nuclear solutions.
- Strategic acquisition of Atomic Alchemy allows Oklo to enter the $55 billion radioisotope market by 2026, generating valuable co-products from their fuel recycling process and enhancing economic returns for shareholders.
- Oklo's reactor sizes (15 MW and 50 MW) are well-suited for data center applications, offering flexibility to match customer demand incrementally and reducing single shaft risk by deploying multiple units, positioning Oklo to effectively meet the growing power needs of data centers.
- Delayed Revenue Generation and Execution Risk: Oklo's first operational plant is not expected to begin initial operations until late 2027 , meaning the company will not generate significant revenue until that time. This extended timeline introduces significant execution risk and potential delays in technology deployment and regulatory approvals.
- Lack of Firm Contracts and Revenue Uncertainty: Despite announcing letters of intent with customers totaling 2.1 gigawatts , Oklo has not yet converted these into binding power purchase agreements (PPAs). The company's focus on building partnerships rather than rushing into PPAs may delay revenue generation and indicates potential challenges in securing firm contracts.
- Higher Unit Costs and Margin Pressure: Oklo admits that by not building their own manufacturing facilities, their unit costs are probably going to be a bit higher. This reliance on external suppliers may impact competitiveness and margins, and the company may face supply chain constraints and less control over manufacturing quality and timelines.
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Atomic Alchemy Acquisition
Q: What's the potential of the Atomic Alchemy business?
A: Oklo sees significant opportunities in the radioisotope market through the acquisition of Atomic Alchemy. This market includes isotopes with pricing in the billions of dollars per gram, offering high-margin revenue streams. Oklo plans to leverage Atomic Alchemy's capabilities to monetize co-products from fuel recycling and accelerate growth in medical and industrial isotopes. -
Fuel Recycling and Margins
Q: Will fuel recycling boost margins for Atomic Alchemy?
A: Oklo's ability to recycle nuclear waste at low cost provides margin uplift for Atomic Alchemy's radioisotope applications. By extracting valuable isotopes during recycling, Oklo can create additional revenue streams and reduce fuel costs by over 90%. This synergy enhances both companies' profitability and positions Oklo for long-term growth. -
Funding for Recycling Business
Q: Will Atomic help finance recycling efforts?
A: Oklo views recycling as a catalyst for growth and margin enhancement but not essential for current operations. The Atomic Alchemy acquisition could aid in securing low-risk project financing for recycling infrastructure. Future fundraising may be considered to support recycling, leveraging the added value from co-product sales and fuel cost reductions. -
Customer Interest and PPAs
Q: Has tech giants' interest increased customer demand?
A: Announcements from tech giants like Microsoft and Google have accelerated customer interest in Oklo's reactors. Oklo's partnership with Equinix for 500 megawatts, including a $25 million prepayment, set the market pace. However, Oklo is focused on building strategic partnerships rather than rushing into PPAs, aiming for pricing of $100 or more per megawatt hour. -
Reactor Size Plans
Q: Plans to expand reactor size to 100+ MW?
A: Oklo sees strategic advantages in its 50-megawatt reactors, which match well with data center modular build-outs. While larger reactors over 100 megawatts present challenges and may become more expensive due to bespoke engineering costs, Oklo considers scaling up as part of its roadmap. -
First Plant Timeline
Q: When will the first plant operate?
A: Oklo is targeting initial operations of its first plant in late 2027 [Sam]. The timeline is not solely dependent on legislative changes but may benefit from regulatory modernization efforts [Sam]. -
Licensing Process
Q: Can reactor approvals be faster?
A: Subsequent reactor applications could be approved in as little as 7 months, thanks to the NRC's streamlined process for referencing previous licenses. Oklo anticipates submitting multiple applications in parallel, accelerating deployment without waiting for the first approval. -
Project Economics and Tax Credits
Q: Do project economics assume ITC/PTC?
A: Oklo's project models do not include assumptions for Investment Tax Credits (ITC) or Production Tax Credits (PTC). Any benefits from tax credits are viewed as upside. Levelized cost of energy metrics range from $90 to $40 per megawatt hour, with the lower end reflecting ITC benefits. -
Idaho Plant Construction
Q: When will construction start in Idaho?
A: Oklo anticipates breaking ground on its Idaho plant as soon as 2026. The site is well-characterized, reducing risks associated with site-specific issues like earthquakes and water accessibility. -
Competitive Moat
Q: How is Oklo protecting against competitors?
A: Oklo's competitive moat includes its unique business model of selling power rather than reactors, strategic partnerships with companies like Siemens, and leveraging existing supply chains for faster deployment [Sam]. Oklo's focus on mature technology and capital efficiency positions it strongly in the nuclear-powered AI market [Sam]. -
SMR Competitive Landscape
Q: Are customers confused by many SMR offerings?
A: While some customers may find the variety of SMR options bewildering, many are becoming savvy and understand the differences. Oklo differentiates itself through early market entry, regulatory progress, secured fuel supply, and a focus on making it easy for customers to buy its power solutions. -
Partnership Opportunities
Q: Opportunities with biotech and pharma firms?
A: Oklo sees potential for partnerships in biotech, pharmaceuticals, and semiconductors by leveraging Atomic Alchemy's capabilities. The ability to produce medical isotopes and engage in neutron transmutation doping for semiconductors opens doors for collaboration in these industries. -
Political Landscape Impact
Q: How does politics affect nuclear opportunities?
A: Oklo sees bipartisan support for nuclear energy continuing, regardless of administration changes. Regulatory modernization is expected to enable faster new nuclear deployments, and any legislative modifications may further support nuclear initiatives. -
Fast Neutron Technology Concerns
Q: Any customer concerns about fast reactors?
A: Oklo has not encountered customer concerns regarding its fast neutron reactor technology. Fast reactors offer safety benefits, higher fuel efficiency, and are capable of recycling fuel, making them a superior solution without increased proliferation risks.