SES AI (NYSE:SES) reported sharply higher revenue in 2025, driven by the final contributions from electric-vehicle development services for Honda and Hyundai and by the initial revenue contribution from its energy storage acquisition, UZ Energy. Management also outlined a strategy centered on three revenue-generating business units—energy storage systems (ESS), drones, and materials—supported by what the company calls its “AI for science” platform, Molecular Universe.
2025 revenue increased nearly tenfold as OEM services wound down
Founder and CEO Qichao Hu said full-year 2025 revenue was $21 million, up from a little over $2 million in 2024, calling the increase a milestone tied primarily to the completion of EV development work with Honda and Hyundai. CFO Jing Nealis said service revenue in 2025 was $13.6 million, “primarily driven by the Honda and Hyundai service agreement,” and characterized it as a one-time contribution that is not expected to recur in 2026 guidance.
Margins and cost reductions improved results, while losses persisted
For the fourth quarter, SES AI reported revenue of $4.6 million, up 124% year-over-year. Nealis said fourth-quarter GAAP gross margin was 11.3% (non-GAAP: 11.7%), attributing the lower quarterly margin to a higher mix of ESS product sales, which she said carries a lower margin profile than service revenue. For the full year, GAAP gross margin was 53.8% and non-GAAP gross margin was 55.7%.
Operating expenses declined year-over-year. Fourth-quarter GAAP operating expenses were $18.2 million, down 40% from the prior year period, while non-GAAP operating expenses were $13.5 million, down 44%. For the full year, GAAP operating expenses were $93.9 million versus $110.5 million in 2024; non-GAAP operating expenses were $73.0 million versus $82.3 million.
Adjusted EBITDA losses narrowed to $(13.8) million in Q4 2025 from $(23.2) million a year earlier, and to $(62.6) million for full-year 2025 from $(81.5) million in 2024. GAAP net loss for Q4 was $17.0 million (a $0.05 loss per share), while full-year GAAP net loss was $73.0 million (a $0.22 loss per share). Nealis emphasized that GAAP net loss can be “meaningfully impacted” by non-cash changes in the fair value of sponsor earnout liabilities, which she said is one reason the company introduced Adjusted EBITDA beginning this quarter.
Capital deployment and liquidity
SES AI used $10.4 million in cash for operations during the fourth quarter and $58.4 million for the full year. Nealis said the company deployed $3.3 million for the UZ Energy acquisition, spent $2.9 million on capital expenditures, and repurchased $1.6 million of shares during 2025.
The company ended 2025 with $200 million in liquidity, which Nealis said was at the top end of management’s previously communicated $195 million to $200 million expectation. She reiterated that SES AI intends to maintain a “CapEx-light” model, with 2026 capital expenditures expected to remain in the single-digit millions, primarily for converting a South Korea facility from EV cells to NDAA-compliant drone cells and for evaluating contract manufacturing capacity in Southeast Asia.
2026 outlook: growth led by ESS, with drones and materials ramping later in the year
For 2026, Nealis guided to revenue of $30 million to $35 million, which she said represents approximately 43% to 67% growth over 2025. In response to analyst questions, management indicated ESS will remain the largest contributor. Nealis said that within the guidance range, around 65% of revenue is expected to come from ESS “at least,” with the remainder split between drones and materials. She added that drones and materials are expected to be more second-half weighted as those businesses ramp and as business development progresses.
Nealis also offered margin expectations by business line:
- ESS hardware is expected to operate at around 15% gross margin in 2026, with potential improvement over time as software attachment increases.
- Drone cells are expected to generate gross margins north of 20% as volumes build.
- Materials sold through the Hyzon joint venture are expected to have a 10% to 20% margin profile.
On a blended basis, Nealis said SES AI expects consolidated gross margin to be around 15% in 2026, with room for improvement as the company scales. She also projected that 2026 operating expenses will be approximately 15% lower than 2025, even as the company continues investing in the Molecular Universe platform, and said the company does not anticipate meaningful operating expense growth beyond that level for the foreseeable future.
Strategic update: ESS operating system, NDAA-compliant drone cells, and Molecular Universe discoveries
Hu described ESS as the company’s “largest near-term revenue driver,” citing UZ Energy’s footprint across Australia, Europe, and the Middle East, with plans to enter North America. He said UZ Energy has sold “almost a gigawatt hours” of hardware and that SES AI expects to incorporate Molecular Universe’s “Predict” functionality into an “Edge Box” intended to improve state-of-charge accuracy and battery health and safety monitoring, which management said could reduce maintenance costs and support energy trading use cases.
In drones, Hu said SES AI is focusing on the U.S. defense market and plans to convert its South Korea B-sample EV line—described as NDAA-compliant since 2021—from 100 amp-hour EV pouch cells to 10 amp-hour pouch cells for drones. Management also said it is exploring “even larger” NDAA-compliant manufacturing capacity in Southeast Asia, with more updates expected later in the year. On the question of customer traction, Hu said the company is focused on “top customers” that could order from single-digit millions to potentially more than $10 million per year, and noted that testing engagements began last year as the industry worked to change supply chains to meet NDAA requirements.
For materials, Hu pointed to a joint venture with Hyzon intended to produce electrolyte materials at commercial scale, and said the company anticipates the JV will produce materials tied to Molecular Universe discoveries. Hu said the company has identified six “breakthroughs” being tested by more than 40 customers, spanning applications across EVs, drones, heavy-duty trucking, consumer electronics, and ESS.
On the EV OEM relationships, Hu told analysts that the next step had been moving from B-sample to C-sample, but said the current EV market slowdown has led automakers to pause investment in mass-scale production of next-generation technologies. He said SES AI had hit technical milestones, but the C-sample step is “on hold,” and the company’s focus with OEMs has shifted toward supplying electrolyte materials rather than advancing full lithium-metal C-sample commercialization until “the market returns.”
About SES AI (NYSE:SES)
SES AI Corporation engages in the development and production of high-performance Lithium-metal rechargeable batteries for electric vehicles, electric vehicle take-off and landing, and other applications. The company was founded in 2012 and is headquartered in Woburn, Massachusetts.
