Q2 FY2026
Filed Aug 11, 2026Q2 revenue was $5.1 million and SES reaffirmed full-year 2026 revenue guidance of $30 million to $35 million.
Revenue was higher than the second quarter of 2025 and gross margin improved sequentially, but revenue declined from the first quarter, losses widened sequentially, and the company expects full-year consolidated gross margin of approximately 15%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenueother | $5.1 million | – | more than 40% |
| Gross marginGAAP | 22.6% | – | – |
| Operating expensesGAAP | $20.3 million | – | down 26% |
| Net lossGAAP | $17.8 million | – | – |
| Loss per shareGAAP | $0.05 loss per share | – | – |
| Net lossnon-GAAP | $13.1 million | – | – |
| Loss per sharenon-GAAP | $0.04 loss per share | – | – |
| Adjusted EBITDAnon-GAAP | a loss of $14.6 million | – | – |
| Cash, cash equivalents, and short-term investmentsother | approximately $163 million | – | – |
Full-year 2026 outlook
- Revenue$30 million to $35 million
- Gross marginapproximately 15%
- NoteThe company expects its net loss to narrow in the second half of the year.
- NoteThe company expects to complete the scale-up of Korea-based, NDAA-compliant cell production from 200,000 cells a year to 1 million cells a year in about one month.
- NoteThe company expects to start producing at full capacity of 1 million cells a year starting in Q4 this year.
- NoteThe company expects revenue from NDAA-compliant cells produced on its Korea line to begin contributing meaningfully in Q4 this year and to accelerate further in the first half of next year.
- NoteThe company remains focused on converting its Molecular Universe pipeline into its first commercial supply agreement in the second half of the year.
- NoteThe company expects to release MU-4.0 later this year.
What drove it
- Revenue contribution occurred across all product lines for the first time: ESS, drone battery cells, materials, and Molecular Universe.
- Gross-margin improvement was primarily driven by ESS products, a higher mix of international sales, and continued pricing discipline.
- The sequential increase in operating expenses was primarily due to a bad-debt provision related to a legacy EV service contract.
- The sequential increase in GAAP net loss was primarily driven by a non-cash change in the fair value of sponsor earn-out liabilities.
- The sequential widening in non-GAAP net loss was primarily due to lower revenue in the second quarter and the bad-debt provision.
- Sol-Ark certified subsidiary UZ Energy's low-voltage residential batteries for closed-loop compatibility with its hybrid inverters.
- SES sold a Search-in-a-Box module to one of the largest battery makers in the world, and stated that materials discovered by Molecular Universe have entered early-stage commercial pilot deployment.
Concerns
- Second-quarter revenue of $5.1 million was below first-quarter revenue of $6.7 million.
- GAAP net loss widened to $17.8 million from $12.1 million in the first quarter of 2026.
- Non-GAAP net loss widened to $13.1 million from $11.1 million in the first quarter of 2026.
- Adjusted EBITDA loss widened to $14.6 million from $12.8 million in the first quarter of 2026.
- GAAP operating expenses increased to $20.3 million from $19.1 million in the first quarter of 2026.
- The company expects full-year consolidated gross margin of approximately 15%, compared with second-quarter GAAP gross margin of 22.6%.
- Drone-cell revenue is expected to begin contributing meaningfully in Q4 this year, leaving current commercial progress dependent on execution of the production scale-up and customer qualification pipeline.
What to watch
- Execution of the Korea production scale-up to 1 million NDAA-compliant cells a year and the start of full-capacity production in Q4 this year.
- Whether NDAA-compliant cell revenue begins contributing meaningfully in Q4 this year and accelerates in the first half of next year.
- Revenue growth from ESS and Edge Box distribution following UZ Energy's closed-loop compatibility certification with Sol-Ark.
- Conversion of Molecular Universe customers that have progressed through second-phase materials testing into the company's first commercial supply agreement in the second half of the year.
- Progress toward the reaffirmed full-year 2026 revenue guidance of $30 million to $35 million.
- Operating-expense reductions and the company's expectation for net loss to narrow in the second half of the year.
Balance sheet and cash flow
- Cash, cash equivalents, and short-term investments were approximately $163 million at the end of the second quarter.
- The company described its business model as CapEx-light and stated that current liquidity provides runway to fund operations and execute on 2026 growth initiatives.
- The company stated that liquidity provides flexibility to pursue inorganic growth opportunities, including M&A, while maintaining financial discipline.
Analysis
SES reported $5.1 million of second-quarter revenue, compared with $6.7 million in the first quarter of 2026 and $3.5 million in the second quarter of 2025. The company described revenue growth of more than 40% compared with the second quarter of last year and said all four product lines contributed to revenue for the first time: ESS, drone battery cells, materials, and Molecular Universe. The sequential revenue decline, however, was a stated contributor to the widening non-GAAP net loss.
Profitability showed a mixed pattern. GAAP gross margin improved to 22.6% from 18.1% in the first quarter, with ESS product mix, a higher mix of international sales, and pricing discipline cited as the drivers. At the same time, GAAP operating expenses increased to $20.3 million from $19.1 million because of a bad-debt provision related to a legacy EV service contract. The company said operating expenses were down 26% year over year and remains confident it can sustain an operating-expense reduction of more than 20% year over year.
Losses widened sequentially. GAAP net loss was $17.8 million, or a $0.05 loss per share, versus $12.1 million, or a $0.04 loss per share, in the first quarter, primarily because of a non-cash change in the fair value of sponsor earn-out liabilities. Non-GAAP net loss was $13.1 million, or a $0.04 loss per share, compared with $11.1 million, or a $0.03 loss per share. Adjusted EBITDA loss was $14.6 million compared with $12.8 million. SES expects net loss to narrow in the second half through a revenue pickup and continued operating-expense reductions.
Commercial execution is centered on scaling ESS, drone cells, and Molecular Universe. In ESS, UZ Energy received Sol-Ark compatibility certification and SES cited its prior $20 million, three-year agreement with ATG Epower, now US Energy Distributors. For drones, SES expects to scale its Korea facility from 200,000 cells a year to 1 million cells a year in about one month, reach full capacity in Q4 this year, and begin meaningful revenue contribution from these cells in Q4. In Molecular Universe, SES sold a Search-in-a-Box module and said roughly half a dozen customers have progressed through second-phase testing, with a first commercial supply agreement targeted for the second half of the year.
SES reaffirmed full-year 2026 revenue guidance of $30 million to $35 million and continues to expect consolidated gross margin of approximately 15%. The stated annual gross-margin outlook is lower than second-quarter GAAP gross margin of 22.6%, while management cited room for improvement as it scales and adds higher-margin revenue streams. Liquidity was approximately $163 million in cash, cash equivalents, and short-term investments at quarter end, which the company said supports operations, 2026 growth initiatives, and potential inorganic growth opportunities.
Not in the filing
stated, not guessed- Period-end date.
- Individual revenue figures for ESS, drone battery cells, materials, and Molecular Universe.
- Segment gross margins, operating income, and segment profitability.
- GAAP operating income or loss.
- GAAP and non-GAAP income-tax expense, tax rate, and effective tax rate.
- Cash flow from operations.
- Free cash flow.
- Capital expenditures.
- Debt balance.
- Share repurchases, dividend payments, and other capital-return amounts.
- Prior-year gross margin.
- Prior-year GAAP net loss, GAAP loss per share, non-GAAP net loss, non-GAAP loss per share, and adjusted EBITDA.
- Quantified quarter-over-quarter percentage changes for revenue, gross margin, operating expenses, net loss, loss per share, non-GAAP net loss, non-GAAP loss per share, and adjusted EBITDA.
- Quantified full-year 2026 operating-expense guidance.
- Full-year 2026 tax-rate guidance.
- Previous-quarter outlook needed to assess actual results versus prior guidance.
- Named-executive quotes.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.