SES AI Corp (SES) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2025. SES AI Corp is a developer and manufacturer of AI-enhanced Lithium-Metal (Li-Metal) and Lithium-ion batteries for electric vehicles (EVs), urban air mobility (UAM), and energy storage. The company operates in a single segment and has transitioned from A-Sample to B-Sample battery development with OEM partners including Hyundai and Honda. Principal revenue-generating operations commenced in October 2024.
Key Financial Metrics (Six Months Ended June 30, 2025)
| Metric | Value (in thousands) |
|---|---|
| Revenue | $9,320 |
| Cost of Revenue | $2,163 |
| Gross Profit | $7,157 |
| Gross Margin | 76.8% |
| Operating Expenses | $53,437 |
| Net Loss | $(35,083) |
| Cash and Cash Equivalents | $11,757 |
| Short-Term Investments | $217,123 |
| Total Liquidity | $228,880 |
| Net Cash Used in Operating Activities | $(33,654) |
Material Changes vs. Prior Period
- Revenue Growth: The company generated $9.3 million in revenue for the six months ended June 30, 2025, compared to $0 in the same period in 2024. Revenue is derived primarily from service contracts with OEMs.
- Operating Loss: Operating loss remained relatively stable at $(46.3) million for the six months ended June 30, 2025, compared to $(45.9) million in the prior year period.
- R&D Expenses: Research and development expenses increased 47.6% to $39.6 million, driven by an $8.5 million increase in AI infrastructure costs (GPUs) and $8.0 million in lab equipment purchases. This was partially offset by a $4.1 million decrease in personnel costs.
- G&A Expenses: General and administrative expenses decreased 27.4% to $13.8 million, primarily due to reductions in personnel costs and stock-based compensation.
- Investment Activity: Net cash used in investing activities was $83.2 million, primarily due to net purchases of short-term investments ($81.5 million), compared to net proceeds of $0.5 million in the prior year.
Guidance, Outlook, and Risks
- Liquidity Outlook: Management believes current cash and marketable securities ($228.9 million) are sufficient to fund operations for at least 12 months. No shares were sold under the at-the-market equity offering program during the quarter.
- Subsequent Events: On July 25, 2025, the company agreed to acquire Shenzhen UZ Energy Co., Ltd. for approximately $25.5 million, expected to close in Q3 2025. Additionally, the "One Big Beautiful Bill Act" (OBBBA) was enacted on July 4, 2025, terminating certain EV tax credits; the financial impact is being evaluated.
- Internal Controls: The company disclosed a material weakness in internal controls related to the valuation of Sponsor Earn-Out liabilities. Remediation efforts are underway.
- Listing Status: The company previously received notice of non-compliance with NYSE listing standards due to low stock price but regained compliance in July 2025.
- Risks: Key risks include the unproven nature of Li-Metal technology in commercial EVs, reliance on government incentives (which are facing changes under the OBBBA), and potential trade tariffs affecting supply chains.
Investor Verification Checklist
- Revenue Sustainability: Verify the nature of the $9.3 million revenue (service vs. product) and the duration of remaining performance obligations ($3.7 million expected within 12 months).
- Burn Rate: Confirm the trajectory of operating cash burn ($33.7 million in six months) against the $228.9 million liquidity runway.
- Acquisition Impact: Assess the financial and operational implications of the pending $25.5 million acquisition of UZ Energy.
- Regulatory Changes: Monitor the impact of the OBBBA on EV demand and the company's specific government grant obligations in Korea.
- Internal Controls: Track the remediation progress of the material weakness regarding Sponsor Earn-Out liability valuation.