Business Context and Reporting Period
Company: SES AI Corp (NYSE: SES)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: SES AI is a developer and manufacturer of AI-enhanced Lithium-Metal and Lithium-ion battery technologies for Energy Storage Systems (ESS), Urban Air Mobility (UAM), drones, and electric vehicles. The company utilizes its "Molecular Universe" AI platform for material discovery and battery management. In September 2025, the company acquired UZ Energy, a China-based ESS manufacturer, to accelerate its entry into the ESS market.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Revenue | $21.0 million | $2.0 million |
| Gross Profit | $11.3 million | $1.3 million |
| Gross Margin | 53.8% | 63.1% |
| Net Loss | $(73.0) million | $(100.2) million |
| Operating Expenses | $93.9 million | $110.5 million |
| Cash and Cash Equivalents | $29.5 million | $128.8 million |
| Short-Term Investments | $170.1 million | $133.7 million |
| Total Liquidity (Cash + Investments) | $199.6 million | $262.5 million |
| Accumulated Deficit | $(371.9) million | $(298.9) million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 929% to $21.0 million, driven primarily by a full year of service revenue from OEM contracts ($13.6 million) and product revenue from the newly acquired UZ Energy ($7.4 million).
- Cost of Revenue: Increased 1,189% to $9.7 million, reflecting the inclusion of UZ Energy product costs and full-year service contract costs.
- Operating Expenses: Decreased 15% to $93.9 million. Research and Development (R&D) expenses dropped 7.1% due to reduced headcount and lab expenses, partially offset by a $9.1 million increase in AI infrastructure costs (GPU rentals). General and Administrative (G&A) expenses fell 30% due to reduced personnel and professional service costs.
- Net Loss Improvement: Net loss narrowed by approximately $27.2 million year-over-year, aided by a $1.7 million gain on the change in fair value of Sponsor Earn-Out liabilities (compared to a $5.3 million loss in 2024) and lower operating expenses.
- Customer Concentration: Revenue concentration decreased. In 2025, the top three customers accounted for 48%, 15%, and 12% of revenue, compared to a single customer accounting for 93% in 2024.
Guidance, Outlook, and Risks
- Liquidity Outlook: Management believes current cash and marketable securities ($199.6 million) are sufficient to meet working capital and capital expenditure requirements for at least 12 months. This includes funding for the UZ Energy acquisition deferred payments, NDAA-compliant drone cell manufacturing, and Molecular Universe development.
- Strategic Initiatives:
- UZ Energy Integration: Completed in September 2025; expected to drive ESS revenue growth.
- Hisun Joint Venture: Announced in November 2025 to manufacture novel electrolyte materials at commercial scale, with supply expected in H2 2026.
- NDAA Compliance: Developing manufacturing capacity in Korea for drone cells to meet U.S. defense requirements.
- Key Risks:
- Profitability: The company expects to continue incurring losses for the foreseeable future.
- Capital Needs: Substantial additional capital may be required to fund operations, potentially through equity or debt issuance.
- Market Adoption: The UAM and AI-based scientific discovery markets are emerging; growth potential is uncertain.
- Regulatory & Geopolitical: Exposure to trade tariffs, export controls (particularly regarding China), and evolving AI regulations.
- Internal Controls: The company has a history of material weaknesses in internal controls, though it states these were remediated as of December 31, 2025.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 929% revenue increase, specifically the mix between one-time service contracts and recurring product sales from UZ Energy.
- Cash Burn Rate: Assess the $58.4 million net cash used in operating activities against the $199.6 million liquidity position to confirm the 12-month runway.
- Acquisition Integration: Monitor the integration progress of UZ Energy and the realization of deferred consideration payments (estimated $8.4 million remaining).
- AI Infrastructure Costs: Track the $9.1 million increase in GPU/AI infrastructure costs to ensure they translate into tangible product or service revenue.
- Customer Concentration: Confirm the diversification of the customer base beyond the top three clients to mitigate concentration risk.
- Stock Price Volatility: Note the significant volatility in Class A common stock (ranging from $0.27 to $10.01 since the business combination) and its impact on Sponsor Earn-Out liabilities and stock-based compensation.