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SES AI Corp (SES)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $7.118M, up 102% QoQ; gross margin 51%; GAAP net loss $(20.920)M or $(0.06) EPS. Management highlighted a 55%/45% service vs product revenue mix and strong liquidity of $214M at quarter end .
  • Guidance raised: FY2025 revenue range updated to $20–$25M (up from $15–$25M previously), driven by UZ Energy contribution; management expects margins to vary with mix .
  • Strategic catalysts: MU-1.0 (on-prem capability), UZ Energy acquisition (ESS scale-up), and a 90%-owned JV term sheet with Hisun to commercially supply Molecular Universe–discovered electrolyte materials; share repurchases of 1,340,656 shares for $1.6M ($1.20/sh) .
  • 2026 setup: B-sample acceptance test completed with an auto OEM; management expects revenue streams across ESS, MU SaaS, Hisun JV materials, and drones/robotics to expand materially in 2026, albeit non-linear quarter-to-quarter .

What Went Well and What Went Wrong

What Went Well

  • Revenue and mix: “Revenue for the third quarter was $7.1 million, representing a $3.6 million, or 102%, increase from the previous quarter,” with ~55% service and ~45% product (UZ ESS) .
  • Product-market fit: MU-1.0 launched with enterprise sub-tiers and planned on‑premise deployments; CEO emphasized it as a complete AI4Science workflow accelerating discovery from “years to just tens of minutes” .
  • Strategic execution: Closed UZ Energy acquisition; announced JV with Hisun to contract manufacture MU‑discovered electrolytes, staying capex‑light and creating recurring revenue .

What Went Wrong

  • Margin compression vs Q2: Gross margin fell to 51% from 74% in Q2 due to increased product mix (service margin 78% vs product margin 15%); management flagged quarterly variability with mix .
  • Continued GAAP losses and higher operating cash burn: Q3 GAAP net loss $(20.920)M vs $(22.7)M in Q2; cash used in operations increased to $14.3M vs $10.8M in Q2 .
  • Estimates unavailable: S&P Global Wall Street consensus for Q3 2025 revenue/EPS was unavailable, limiting beat/miss context. Values from S&P Global were attempted but not returned.

Financial Results

Income Statement Snapshot

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$0.000 $3.500 $7.118
Gross Margin %—74% 51%
GAAP Net Loss ($USD Millions)$(30.186) $(22.700) $(20.920)
Diluted EPS ($)$(0.09) $(0.07) $(0.06)

Notes:

  • QoQ revenue growth +102% per management commentary .
  • YoY revenue N/M (Q3 2024 revenue was $0) .

Revenue Mix and Margins (Q3 2025)

MetricQ3 2025
Service Revenue (% of total)55%
Product Revenue (% of total)45%
Service Gross Margin %78%
Product Gross Margin %15%

Operational KPIs

KPIQ2 2025Q3 2025
Cash Used in Operations ($USD Millions)$10.8 $14.3
Quarter-End Liquidity ($USD Millions)$229 $214
Share Repurchases (Shares / $USD / Avg Price)0 / $0 / — 1,340,656 / $1.6 / ~$1.20
Shares Outstanding (Class A+B, as of period end)—365M
Cash And Equivalents ($USD Millions)—$35.274
Short-term Investments ($USD Millions)—$178.736

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$15M – $25M $20M – $25M Raised low end
Year-end LiquidityFY 2025“Exit 2025 with above $200M” $195M – $200M (management expectation) Refined slightly lower
Gross MarginFY 2025No numeric guidanceExpect variability by mix (service vs product) Maintained qualitative

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/technology initiatives (Molecular Universe)MU-0 launch; >12 early access users; pricing tiers preview MU-1.0 launched; enterprise sub-tiers and on-prem; ~40 enterprise trials Accelerating adoption and feature depth
ESS strategy & UZ integrationAgreement to acquire UZ; ESS as “physical AI” integration point Closed UZ; ~45% of Q3 revenue from ESS product; MU “Predict” embedded in BMS Rapid commercialization and data flywheel
Materials JV (Hisun)Not announced90% SES-owned JV term sheet; capex-light commercial supply of MU-discovered electrolytes New recurring revenue channel
EV programsB-sample progression with OEMs B-sample line site acceptance test completed; expect 2026 commercial supply of electrolyte materials Advancing toward commercialization
Drones/robotics supply chainEmphasis on Korea facility; US customers prefer non-China cells Converting Chungju line to standard 10Ah pouch cells; capacity rare outside China Strengthening non-China supply chain
Margins and cash disciplineHigh service margins (Q1: ~79%); strong liquidity GM 51% on mix; liquidity $214M; exit 2025 liquidity view $195–$200M Margin variability, liquidity managed
Capital allocation$30M buyback authorization Repurchased 1.34M shares for $1.6M in Q3 Active repurchases

Management Commentary

  • CEO: “The last few months have been transformative for SES AI, as we acquired UZ Energy, entered a joint venture with Hisun, and unveiled the latest version of Molecular Universe… [We] increased our 2025 year-end revenue target to $20 million to $25 million” .
  • CEO on MU-1.0: “MU 1.0 is a powerful and complete end-to-end AI for science workflow… [on-prem] capability addresses specific security and privacy needs of the world's largest battery makers” .
  • CEO on JV: “We formed this joint venture… We control 90%… We contract manufacture [with Hisun] to produce this formulation… requested by the user” .
  • CFO: “Our liquidity balance is very strong… we still expect to exit the year with somewhere between $195 million–$200 million of liquidity… all of our revenue sources come in on day one with a positive gross margin” .
  • CEO on 2026 setup: “In 2026, we expect to start commercial supply of electrolyte materials and partner… for cell production” .

Q&A Highlights

  • Hisun JV monetization and scope: Enterprise users asked SES to supply MU‑discovered materials; SES structured a 90%‑owned JV that contract manufactures formulations via Hisun, focusing initially on LFP low‑temperature ESS electrolyte, LCO high‑voltage for consumer electronics, and 12% silicon Li‑ion for EV; JV enables recurring revenue, capex‑light .
  • MU revenue model: Mix of SaaS subscriptions (cloud and on‑prem “in a box”) with monthly fees and hardware; materials revenue expected to be larger than SaaS over time .
  • MU enterprise tiers: Enterprise 1/2/3 map to increasing depth (PhD/postdoc/senior scientist) and latency; larger customers prefer on‑prem joint development with encrypted “MU in a box” trained on their proprietary data .
  • UZ business and ESS outlook: Behind‑the‑meter C&I focus; MU “Predict” reduces BMS issues and customer complaints; management sees ESS revenue at least doubling next year from ~$15–$20M in 2025 for UZ .
  • Liquidity and cash use: Exit 2025 liquidity $195–$200M; capex‑light model; all revenue streams positive gross margin day‑one .

Estimates Context

  • Wall Street consensus estimates via S&P Global for Q3 2025 (revenue, EPS, EBITDA, target price, and count of estimates) were unavailable. Values retrieved from S&P Global.
  • Without consensus, no beat/miss calculations can be provided; we attempted retrieval for Q3 2025 through Q2 2026 but received no data.

Key Takeaways for Investors

  • Near-term revenue engine: MU-1.0 services plus ESS product sales from UZ drove a 102% QoQ revenue jump; expect continued mix-driven margin variability but positive gross margins across streams .
  • Structural optionality: The Hisun JV adds a recurring, capex‑light materials supply channel for MU discoveries; drones and EV electrolyte supply provide additional commercialization paths into 2026 .
  • Execution risk: Margins compressed as product mix rose; cash used in ops increased QoQ; trajectory depends on MU enterprise conversions, JV scaling, and ESS go‑to‑market .
  • Capital flexibility: Liquidity of $214M and active buybacks provide optionality for M&A and commercialization; exit 2025 liquidity expected at $195–$200M .
  • 2026 roadmap: B‑sample acceptance, on‑prem MU deployments, drone pouch cell capacity in Korea, and JV materials commercialization position SES for outsized top‑line growth, albeit non‑linear .
  • Estimate visibility: S&P Global consensus was unavailable, suggesting limited coverage; monitor upcoming Q4 call for clearer 2026 guidance ranges and MU conversion metrics. Values retrieved from S&P Global.

Appendix: Source Highlights

  • Q3 2025 shareholder letter and 8‑K: revenue, margins, liquidity, guidance, statements of operations and cash flows .
  • Q3 2025 earnings press release: summary metrics and guidance .
  • Q3 2025 call transcript: MU‑1.0 detail, ESS mix, JV mechanics, 2026 outlook, liquidity commentary .
  • Prior quarters: Q2 2025 revenue $3.5M, GM 74%, liquidity $229M; affirmed $15–$25M FY guidance . Q1 2025 revenue $5.8M; $30M buyback authorization; exit 2025 liquidity above $200M .