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SES AI Corp (SES)·Q4 2024 Earnings Summary

Executive Summary

  • SES AI recorded first-ever revenue of $2.04M in Q4 2024 with a 63% gross margin, marking the transition from pre-revenue to commercialization; GAAP operating expenses were $30.4M and diluted EPS was -$0.11 .
  • Management initiated FY 2025 revenue guidance of $15–$25M and expects total cash usage (operations + capex) of $70–$80M; liquidity runway guided into 2H 2028 supported by $262.5M in cash and short-term investments at year-end 2024 .
  • Strategic pivot “All-in on AI” broadened SES from Li‑Metal EV cells to AI-enhanced Li‑ion 2170 cells (humanoid robotics, drones) and BESS; 2025 revenue expected to be driven largely by BESS (AISPEX MOU up to 100 MWh and ~$45M pipeline) .
  • Prior quarters showed disciplined spend and growing data/AI capabilities: liquidity $294.7M in Q2 and $274M in Q3; R&D scaled for Molecular Universe and Avatar safety models, setting up Q4 revenue and 2025 guidance .

What Went Well and What Went Wrong

What Went Well

  • First commercial revenue with strong gross margin: $2.04M revenue and 63% gross margin in Q4, driven by OEM AI-for-Science contracts and initial deliveries for SoftBank HAPS and Data Blanket drones .
  • Strategic expansion beyond EV into humanoid robotics/drones via AI-enhanced 2170 cylindrical Li‑ion cell; NVIDIA-enabled Molecular Universe accelerated electrolyte discovery from “>8,000 years” to months .
  • BESS entry with AISPEX MOU (up to 100 MWh and ~$45M pipeline), plus conservative and first-time FY25 guidance ($15–$25M revenue) indicating improved revenue visibility .
  • Quote: “All in on AI is not only critical, but is the future.” – Qichao Hu (CEO) .

What Went Wrong

  • GAAP net loss widened in Q4 to -$34.5M, including a -$8.6M fair value change in Sponsor Earn-Out liabilities; operating expenses rose to $30.4M with R&D $20.9M .
  • Consensus estimates comparison was unavailable due to S&P Global request limits, limiting beat/miss analysis for EPS/revenue [GetEstimates error].
  • BESS MOU is non-binding and market is fragmented; management acknowledged initial focus on medium-sized, behind-the-meter segments to gain data and credibility before larger deployments .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$0.00 (pre-revenue; first revenue occurs in Q4) $0.00 (pre-revenue; first revenue occurs in Q4) $2.04
Gross Profit ($USD Millions)N/A (no revenue) N/A (no revenue) $1.29
Gross Margin (%)N/A N/A 63%
R&D Expense ($USD Millions)$15.06 $24.44 $20.88
G&A Expense ($USD Millions)$9.57 $9.78 $9.54
Total OpEx ($USD Millions)$24.63 $34.22 $30.42
Operating Income ($USD Millions)-$24.63 -$34.22 -$29.13
Interest Income ($USD Millions)$4.00 $3.67 $3.21
Earn-Out FV Change ($USD Millions)$1.41 gain $1.00 gain -$8.59 loss
Net Income ($USD Millions)-$19.90 -$30.19 -$34.55
Diluted EPS ($USD)-$0.06 -$0.09 -$0.11
Cash Used in Operations ($USD Millions)$22.10 $22.70 $12.30
Capital Expenditures ($USD Millions)$3.70 $1.50 $0.20
Liquidity (Cash + ST Investments, $USD Millions)$294.70 $274.00 $262.50

KPIs and Operating Context:

  • First revenue sources: AI-enhanced Li‑Metal/Li‑ion work for auto OEMs, initial deliveries to SoftBank (HAPS) and Data Blanket (drones) .
  • FY 2024 total cash usage (operations + capex): $78.3M vs prior guidance $80–$95M (below low end) .
  • Year-end 2024 liquidity: $262.5M; no debt outstanding per prelim release .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025None$15–$25Initiated
Total Cash Usage (Ops + Capex, $USD Millions)FY 2025None$70–$80Initiated
Liquidity RunwayMulti-year“well into 2028” (Q3) “into 2H 2028” (Q4) Maintained/clarified
FY Cash Usage (Ops + Capex, $USD Millions)FY 2024$80–$95 (Q3) Actual $78.3Lower than guided
Revenue Mix CommentaryFY 2025NoneMajority from BESS; remainder EV, drones/robotics Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI strategy scope (Manufacturing, Safety, Science)Introduced “All-in on AI”; detailed three AI pillars and monetization pathways Validated with 95–100% prediction accuracy targets; AI for Manufacturing installed on UAM lines Reinforced as core model; mix of software + hardware; subscription envisioned Expanding commercialization
EV progress (B-samples, safety)Hyundai B-sample line build by Q4; EV SOP targeted 2026 100Ah Li‑Metal cell passed GB38031 EV safety standard; milestone toward C‑samples EV continues; OEM AI-for-Science contracts totaling up to $10M Advancing validation
UAM/drones commercializationConverting A‑sample lines to UAM; early agreements and testing UAM lines passed SAT; SoftBank supply agreement; modules tailored for UAM Initial drone deliveries (Data Blanket) in Dec 2024; plan to shift mfg closer to U.S. From pilot to deliveries
2170 Li‑ion cylindrical cell (humanoid robotics)Not yet unveiledNot yet unveiledUnveiled AI-enhanced 2170; electrolyte discovered via Molecular Universe; addresses gassing/low-temp issues New product vertical
BESS entry (Avatar)AI for Safety foundation described; monetization outlined AI for Safety integrated with Manufacturing for 100% prediction accuracy AISPEX MOU up to 100 MWh/~$45M pipeline; “BESS market 10x larger than auto” Major new revenue driver
Revenue visibility/guidanceNo 2025 guide; focus on cash discipline FY 2024 cash usage guide lowered to $80–$95M First guidance: FY25 $15–$25M revenue; $70–$80M cash usage Improved visibility
Regional/manufacturingKorea/Shanghai line conversions to UAM Shanghai/Chungju UAM lines RTU; EV B-sample line at OEM site CM primarily in Asia; plan to move production closer to U.S. for drone customers Aligning to customer sensitivities
Data/AI training scale15,000 Li‑Metal cells training; crowdsource GPUs Achieved 95–100% prediction accuracy benchmarks NVIDIA collaboration accelerated mapping from “8,000 years” to months; expanded dataset Accelerating model quality

Management Commentary

  • “We are no longer a pre-revenue company and look forward to continuing on our commercialization path by growing revenue in 2025 and beyond.” – Qichao Hu (CEO) .
  • “This revenue comes with a 63% gross margin, demonstrating the strong value proposition of our technology and All-in on AI strategy.” – Jing Nealis (CFO) .
  • “Commercialization of AI for Safety has also opened a market for Battery Energy Storage Systems that we believe is 10 times larger than automotive.” – Qichao Hu (CEO) .
  • “Our discovery of an AI-enhanced molecule enabled us to unveil a new 2170 cylindrical cell … opening humanoid robotics and Li‑ion EV applications.” – Qichao Hu (CEO) .
  • “With our capex-light business model, we now expect to maintain adequate liquidity into the second half of 2028.” – Jing Nealis (CFO) .

Q&A Highlights

  • Business model mix and margins: Q4 gross margin 63% was a mix of AI services and cell sales; future margins will depend on volume and application mix; aim for high-margin CM and software layering over time .
  • Revenue mix 2025: Management expects the bulk of FY25 revenue from BESS, with remainder from EV and drones/robotics; providing full-stack (cells, pack, BMS) solutions for BESS .
  • Subscription model: Plan to offer annual subscriptions to Molecular Universe maps/models and Avatar; hardware used as a “hook” to sell software .
  • Manufacturing geography: Currently CM mainly in Asia; drone customers prefer U.S.-based manufacturing; SES plans phased shift to U.S. .
  • IP and competitive moat: Electrolyte molecules can be copied; SES focuses on speed and proprietary AI maps/models that competitors cannot easily replicate .

Estimates Context

  • Wall Street consensus estimates (S&P Global) were unavailable at the time of this analysis due to request limits. As a result, beat/miss vs consensus for Q4 2024 EPS and revenue cannot be determined at this time [GetEstimates error].
  • Implication: Sell-side models likely need to incorporate SES’s first revenue ($2.04M with 63% GM in Q4) and initial FY25 revenue range ($15–$25M), plus the BESS-heavy mix and capex-light approach highlighted in guidance .

Key Takeaways for Investors

  • SES crossed the commercialization threshold with first revenue and strong gross margin; a meaningful narrative shift for the stock from R&D to revenue-generating operations .
  • The pivot to “All-in on AI” broadens TAM and accelerates monetization via software and materials across EV, robotics/drones, and BESS; 2170 Li‑ion product opens near-term non-EV opportunities .
  • 2025 revenue guidance ($15–$25M) and BESS focus (AISPEX pipeline) suggest early revenue scaling driven by Avatar-enabled safety/manufacturing; watch for conversion of MOU to firm orders and deployment milestones .
  • Cash discipline remains credible: FY24 cash usage came in below guidance ($78.3M); liquidity of ~$262.5M supports runway into 2H 2028 under a capex-light model .
  • Risks: Q4 net loss widened; earn-out fair value volatility; fragmented BESS market; execution required to shift manufacturing to U.S. for sensitive accounts .
  • Trading lens: Near-term catalysts include BESS project progression, additional OEM contracts for AI-for-Science, and subscription software traction; stock sensitivity likely tied to evidence of order conversion and revenue cadence vs guide .
  • Medium-term thesis: If SES can scale high-margin AI and materials revenue while leveraging CM for hardware, the blended margin structure could improve; monitoring segment mix (BESS vs EV vs drones/robotics) will be critical for model accuracy .