Energy Vault Holdings, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; compared with FY2022. This is an annual filing, and the provided text does not give standalone fourth-quarter results.
Business context
Energy Vault develops utility-scale battery (B-Vault), gravity (G-Vault), and hybrid/green-hydrogen (H-Vault) storage systems, plus energy-management software. It delivers projects through engineering, procurement and construction or engineered-equipment models. FY2023 activity centered on battery projects: two B-Vault systems were completed and one was under construction at year-end, all sold to customers. A company-owned gravity demonstration system was under construction in Texas, as was a company-owned hybrid system supported by a 10.5-year tolling arrangement.
Financial and operating metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $341.5 million | $145.9 million |
| Cost of revenue | $324.0 million | $86.6 million |
| Gross profit / margin | $17.5 million / 5.1% | $59.3 million / 40.6% |
| Operating loss | $106.7 million | $63.1 million |
| Net loss | $98.4 million; $0.69 per share | $78.3 million; $0.64 per share |
| Adjusted EBITDA (non-GAAP) | $(62.1) million | $(11.4) million |
| Cash used in operating activities | $92.7 million | $23.3 million |
| Cash, cash equivalents and restricted cash | $145.6 million | $286.2 million |
| Total assets / total liabilities | $340.8 million / $117.0 million | $416.7 million / $129.0 million |
Revenue was primarily from building and transferring energy-storage products ($339.9 million); IP licensing contributed $0.7 million. Revenue from three customers represented 64%, 22%, and 13% of FY2023 revenue. Year-end accounts receivable was also concentrated: one customer represented 92%.
Bookings were $205.8 million and 400 MWh in FY2023, versus $540.1 million and 1,635 MWh in FY2022. Backlog/remaining performance obligations were $144.2 million at year-end; management expected about 16% to be recognized in the following 12 months, with timing subject to delays or cancellation.
Material changes and liquidity
- Revenue increased $195.7 million, but gross profit fell $41.8 million and gross margin declined to 5.1%. Management attributed FY2022’s higher margin largely to $58.5 million of IP licensing revenue with no associated cost of revenue; FY2023 revenue was overwhelmingly project construction and transfer.
- Operating loss widened by $43.7 million. Sales and marketing and G&A expenses increased, while R&D expense decreased amid cost controls and personnel reductions.
- Operating cash use rose to $92.7 million. Management cited project-related growth in contract assets and a $44.5 million decline in contract liabilities, reflecting project progress and milestone-billing timing. Investing cash use was $42.5 million, including $30.4 million of property and equipment spending and a $6.0 million KORE investment.
- Unrestricted cash was $109.9 million at year-end; restricted cash was $35.6 million, primarily collateral for letters of credit. By the filing date, $34.6 million of restricted cash had been released. Management stated cash and cash equivalents on hand as of the filing date were expected to fund operations for at least 12 months, excluding possible warrant proceeds.
- Reported debt was limited: $0.4 million of insurance-premium financing remained outstanding at year-end. Lease liabilities were $1.9 million in total present value. The company also had $57.4 million of letters of credit and $91.5 million of performance and payment bonds outstanding.
Outlook, commentary and risks
The filing gives no formal revenue, profit, or cash-flow guidance. Management expects continued investment and losses and says future performance depends on commercial-scale deployment, customer adoption, cost reduction, financing availability, and timely project execution. It expects energy-storage demand to benefit from renewable-energy growth and incentives, including the U.S. Inflation Reduction Act, but said the incentives’ effects on its business were not yet established.
- Execution risks include lengthy sales and installation cycles, construction delays and cost overruns, permitting and grid interconnection, supplier availability, customer financing, and potential order cancellations. The company says typical installation periods may be 18–36 months for gravity systems and 9–18 months for battery systems.
- Technology and product risks are significant given limited operating history: the company reported two operational BESSs and no fully deployed EVx gravity system. Performance, warranty, safety, and cost assumptions may not prove accurate.
- Revenue and cash generation are exposed to high customer concentration and uncertain collection of certain extended-term licensing payments. The company reported $97.1 million of anticipated future cash inflows from licensing agreements with extended payment terms, while disclosing collection uncertainty for some agreements and no revenue recognized where collectability was uncertain.
- A $20 million South Africa gravity-technology and VaultOS license signed in December 2023 provides for annual installments over 10 years plus 5% royalties on local gross revenue. No FY2023 revenue was recognized; recognition was expected to begin in the first half of 2024. The filing also describes a $25 million refundable contribution to a customer for its first GESS, recoverable at substantial completion subject to potential liquidated damages.
- FY2023 included $43.1 million of stock-based compensation. Management reported that a material weakness in controls over licensing-revenue recognition, disclosed in 2022, was remediated by December 31, 2023; management concluded internal control over financial reporting was effective. The auditor issued an unqualified opinion on the financial statements but did not attest to internal-control effectiveness.
- The filing identifies potential dilution from equity awards and warrants, international and currency exposure, evolving regulation and incentives, and competition. It reports no legal proceedings expected to have a material adverse effect.
Important facts for investors to verify
- Project-level gross margins, cost-to-complete estimates, warranty exposure, and whether FY2023’s low gross margin improves as projects progress.
- Conversion of bookings and the $144.2 million backlog into revenue and cash, including customer cancellation rights and the timing of the expected 16% near-term recognition.
- Customer credit quality, collection of contract assets and extended-term licensing receivables, and recovery of the $25 million refundable contribution.
- Cash runway after restricted-cash releases, continuing operating cash burn, and any need for additional financing or equity issuance.
- Construction, commissioning, performance, and customer acceptance milestones for the Texas gravity demonstration, the Calistoga hybrid project, and contracted battery projects.
- Execution of the South Africa license, including the first expected revenue recognition, installment collections, and any future royalty revenue.