Energy Vault Holdings, Inc. 2026 Q2 Earnings Call

Good afternoon, everyone, for joining us today, and welcome to Energy Vault's second quarter 2026 financial results call. Our earnings release and investor presentation are available on the investor relations section of our website, and we will refer to the presentation throughout today's call. Before we begin, I want to remind everyone that today's discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may vary materially from those expressed or implied by these statements. Please refer to our most recent SEC filings and the safe harbor language in today's earnings materials for a discussion of the factors that could cause actual results to differ. We undertake no obligation to update these statements except as required by law. We will also discuss certain non-GAAP financial measures. Reconciliation to the most directly comparable GAAP measures are included in our earnings materials.

On a personal note, this is my first earnings call as Chief Financial Officer of Energy Vault. The combination of our differentiated power infrastructure platform, growing contracted asset base, strong execution, and disciplined approach to capital creates a compelling opportunity to build long-term shareholder value. I am excited to join the team at this important inflection point in Energy Vault's journey. Joining me today is Robert Piconi, our Chairman and Chief Executive Officer. Robert will take us through the strategic and operational update, and then I will take you through the quarter liquidity backlog and our increased full-year guidance. Robert, over to you. Great, Nitin.

Thank you, and I would like to welcome everyone to our Q2 earnings call. Also up front, Nitin, a pleasure to have you here. We are all very excited. Nitin just joined us just last month, and excited for the contributions here and at this very important phase in our company's growth profile. Welcome, Nitin. I also want to remind everyone that we have posted an investor deck out to the investor website. It would be helpful, I think, for those following through, if you would like to follow through that. I will be referring to some of those charts as we go through and before turning it back to Nitin on the results. Hopefully, everyone has had a chance to take a brief read of our earnings announcement. As I think the results reflect, I would say two main things up front.

I think number one, the execution of our strategy. If you have been following us, that execution means delivering for customers. That shows up in revenue, it shows up in profitable revenue and gross margins, and it shows up in the quality of the availability of the power solutions we provide. Secondly, I would say it also reflects a commercial execution in capturing the demand being driven by AI compute infrastructure. This is something we have talked about strategically, if you go back the last 6 to 12 months, about positioning our company with our grid expertise, with our strong execution capabilities with customers. That is not just here in the U.S., but that is globally, as we have demonstrated.

Very excited to see not only that begin to show up in the results this quarter, but as we will talk about in our improved outlook, both for this year and for next. The strategy we have been describing is now in full translation mode into some of the results we have just seen. That means stronger growth, higher margins, increasing cash, a substantially larger backlog, and importantly, greater visibility into both near-term revenue and long-term recurring earnings. If you turn to chart 3, which is the first page of the deck, three main messages there before I jump into some of the numbers. First, I think the 2026 and 2027 outlook has strengthened materially, as you have seen in the backlog. The backlog increased by about $650 million to roughly $2 billion.

That is a strong 40% increase just quarter-over-quarter, let alone more than doubling that on a year-over-year basis. What we see there is expectation also to convert that revenue over the next 12 to 18 months at attractive margins for about 40% of that backlog. This gives us substantial and greater visibility into the delivery ramp ahead of us, and that is both, I would say, this year and into a very strong Q4 we are going to have, just as we did last year. But also as we look at 2027. Second, we are converting the AI data center and high compute platforms demand into real contracted wins. We have talked about the Crusoe win that was mentioned about 6 months ago as we began to enter the module data center space.

In addition, we recently announced a 1.25 gigawatt agreement, which is our largest contract in the history of the company, to support an integrated power generation and storage solution for hyperscale data centers. Again, all of these efforts have given us substantially greater visibility into the delivery ramp ahead of us now. Third, we have strengthened the capital formation and the project financing capabilities now of the company. We have mentioned Nitin Dahad's appointment here as our new CFO joining from BlackRock, where he had built a strong career, also in the energy infrastructure in addition to other sectors. Also, I will mention Cory Magnuson's appointment as President of Asset Vault in Q2. All of these things, adding the deep capital markets, the structured finance, the IPP and project finance expertise at exactly the point where the scale of opportunity is accelerating.

That matters because the next phase of growth is not simply about winning more projects. It is about financing the right projects efficiently, protecting our returns, bringing those assets online predictably and at the quality levels we have done to date, and converting that execution into cash flow and long-term shareholder value. If you turn to chart 4, we will jump into just some of the numbers at a high level. Nitin Dahad will be covering them in more detail in a minute. I think you will look at numbers we refer to immediately on the number of megawatts. We have discussed the 1.1 gigawatt over the last three months, is the last time we were together in May. That is important because those gigawatts are under our control. Some of them are operating, some of them are under construction, and some of them are now in a ready to build state.

That 1.1 gigawatt is what is translating, and I will share out a chart and a few more charts here to look at the timeframes that they will be coming online. That will be translating into the $180 million of the recurring annualized EBITDA, which has been fundamental for our strategy the last two years. Importantly, as you shift to the right, the backlog, and we will spend more time, and we have a few charts here where we are actually going to share the composition of that backlog between what is the long-term recurring versus what is our more near term revenue conversion opportunities. That has increased now to $2 billion, a large increase, quarter-over-quarter, doubling on a year-over-year basis, as you see, and gives us a lot of visibility. On the revenue side, we have doubled the revenue on a year-over-year basis.

Again, reflection of strong execution of the backlog we built last year and projects both in the U.S. and Australia. I think one of the most impressive performances as we looked at Q2 was our gross margin. Gross margin is fundamental because those are the dollars and the cash that get generated from the revenue to cover the operating expense as you go forward. The fact that we have improved that both on a quarter-over-quarter basis and on a year-over-year basis, from an adjusted gross profit up to 38.6%. The reason we talk about adjusted gross profit, because it is the cash gross profit that does not include some of the non-cash depreciation elements associated with our build, own, and operate portfolio. Even the GAAP gross profit, even growing to 31% this quarter. Again, just a strong result.

What that means is we are executing well. We are executing well in the field to avoid any issues that can come up when you are building large energy projects, and doing it in a manner with high quality and with high safety. I think ultimately here, this has to show up in cash and increasing our cash. I think if you look at what we have done the last six quarters now, so this is our sixth straight quarter of increasing cash. I think a great reflection of the focus, and some of the discipline of the company to ensure that we are building that cash book. We are improving the balance sheet as we have a lot of attractive investments that we would like to invest in. It was a 26% increase on a quarter-over-quarter basis and more than 150% on a year-over-year basis.

I'd like to turn now to the backlog. If you turn to charts 5 and 6, we've provided a little more detail here to give people some color into not only the existing backlog, but even as that's going to evolve into the end of the year. As well as on chart 6, we have broken down that backlog and characterized it between our build and transfer and our build and operate. Slide 6, I think, is particularly important because it provides a more detailed composition, showing how that 40% of that backlog is the build and transfer that supports more near-term revenue conversion and cash generation, while about 60% is the build, own, and operate component creates that long-term recurring revenue and earnings visibility. Standing at $2 billion today, that's roughly three times where it stood at the end of 2024.

But more important is that composition, where we have about 60% of it tied to that long-term recurring revenue from our owned and operate assets, while 40% now, which has grown since last quarter, is supporting that near-term project delivery and revenue conversion over this next 12 to 18 months. I'd say that's exactly what we wanted to see while we're making this transition by building and transferring and operating some of these assets on the build, own, and operate strategy. That means we give up revenue as we do that, and that's where we wanted to see good conversion on our build and transfer business to continue to build that revenue and cash growth as we did that. That's exactly what we're delivering and showing you today. Together, they give us a much more balanced, more predictable, and ultimately a much more valuable earnings model.