SES AI Corp Q1 FY2025 earnings call

• Qichao Hu: SES AI achieved Q1 revenue record of $5.8 million. Announced battery materials discovery software and service platform, launching Molecular Universe demonstration on April 29. First EV: booked revenue from two OEMs for developing AI-enhanced batteries, on track to complete Bsample, deployed AI for Science capability for electrolyte development. UAM, drones, robotics: received positive response for AI-enhanced 2170 cylindrical cell, pouch cells for drones and UAM from converted EV lines. - Jing Nealis: Q1 revenue $5.8 million, strong gross margin of 79% due to asset lite business model. GAAP operating expenses $27.8 million, cash from operations $22.8 million, capital expenditures $0.9 million, liquidity $240 million with no debt. Expecting exit 2025 with over $200 million in liquidity, focusing on planned execution for long-term growth.

In the first quarter, SES AI achieved a new revenue record of $5.8 million. The revenue was primarily driven by contracts with automotive OEM customers for developing AI-enhanced lithium metal and lithium ion batteries for EV applications. The Molecular Universe platform is a new development. The revenue contribution from EV contracts and the Molecular Universe platform isn't specified in absolute terms beyond the $5.8 million total, but the EV segment saw revenue from contracts with two OEM partners for developing AI-enhanced batteries, and the Molecular Universe is a new service platform.

• Q1 revenue was $5.8 million. Full-year 2025 revenue guidance is $15 million to $25 million. Expecting a transformational year, with Molecular Universe launching on April 29. Planning to exit 2025 with over $200 million in liquidity.

• Risks include those detailed in the latest earnings release and SEC filings, such as uncertainties related to market adoption, competition, regulatory changes, etc.

Q: Can you remind us of what cell type, the chemistry, and the capacity of your SK facility? And what is your strategy there to maximize the value of that facility?

A: The Chungju facility has two lines, including an Asample line converted to large pouch cells and smaller UAM cells. It can add additional equipment to accommodate cylindrical and prismatic cells.

Q: Some of your competitors are pursuing a similar strategy using excess Chinese capacity for 2170 cells and with silicon. Can you remind us of the performance benefits from SES's 2170s with your improved electrolyte? And how you compare it to others?

A: Most 2170 cells today have 5.5 or less mPOWER with less than 30% silicon. Our Ashilite electrolyte works well with high content silicon, enabling stable performance and no gas for 2170 that can achieve more than 6.5 mPOWERs and even 7 mPOWERs.

Q: What types of customers are you engaged with outside of your two main partners for the Molecular Universe AI?

A: More than a dozen early access users including major battery companies (Tier 1s and Tier 2s), car companies, chemical and electrical companies are engaged.

Q: Rationale for the authorization of the share buyback and tease on the pricing structure for the molecular platform?

A: Jing Nealis: Share repurchase program is an efficient capital allocation tool, potential use won't impact liquidity runway. Qichao Hu: Molecular Universe has five Tiers, including pure software (subscription per user per month) and software plus servers (one-time fee for on-prem install setup and recurring subtraction to tool, plus royalty for hiding molecules).

Q: Cadence of the revenue through the year, success measurement of Molecular Universe, and gross margin outlook?

A: Jing Nealis: Don't provide quarterly cadence but on track to achieve 2025 guidance. Qichao Hu: Success measured by revenue from Molecular Universe. Jing Nealis: Margin mix of services and products, with software and services having over 80% margin, products 20%-30%, expecting mix around 60% margin.