Plug Power Inc. 2026 Q2 Earnings Call

Welcome to the 2026 second quarter earnings call. This call will include forward-looking statements. These forward-looking statements contain projections of future results of operations or of our financial position or other forward-looking information. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We believe that it is important to communicate our future expectations to investors. However, investors are cautioned not to unduly rely on forward-looking statements, and such statements should not be read or understood as a guarantee of future performance or results.

Such statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those discussed as a result of various factors, including, but not limited to, risks and uncertainties discussed under Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ending December 31st, 2025. Our quarterly reports on Form 10-Q for the quarter ending March 31st, 2026, as well as other reports we file from time to time with the SEC. These forward-looking statements speak only of the day that the statements are made, and we do not undertake or intend to update any forward-looking statements after this call or as a result of new information. At this point, I would like to turn the call over to Plug's CEO, Jose Luis Crespo.

Good afternoon, everyone, and thank you for joining our second earnings call of 2026. Also thank you for your continued confidence in the Plug team. Q2 was a strong step forward and is giving us real conviction about the rest of the year. We are executing, our numbers are moving in the right direction across the board, and today we're raising our full-year revenue growth guidance as a result. Paul will walk through the financial details in a moment, but let me start with why we are excited. Revenue was $178.3 million in the second quarter, up approximately 9% sequentially from the first quarter. This is continued proof that our commercial engine is accelerating. Gross margin improved to approximately break even. It was about negative 0.9%, compared to a negative 30.7% a year ago and a negative 13% just last quarter.

That's a meaningful step in a single quarter, and it's the direct result of the operational discipline we have built into Project Quantum Leap, which is our restructuring program, combined with improving service margins and better plant utilization in hydrogen production. Just as important, our break-even revenue thresholds keep on coming down, which puts positive EBITDAs in the fourth quarter squarely within reach. Operating expenses declined approximately 50% year-over-year to $62 million. Again, a direct reflection of the discipline we have driven through Project Quantum Leap and our continued asset monetization efforts. On the cash side, net cash usage improved to $61 million this quarter, a reduction in cash usage of about 58% compared to the first quarter. Our cash burn is coming down, and the trend line matters enormously as we head towards profitability.

Our priorities for 2026 are clear, and they haven't changed: discipline execution, profitable growth, and continued improvement in cash utilization and operating leverage. What has changed is our confidence in how the year plays out. On our last call, we guided full-year revenue growth of 13%-15%. Based on our first half results and the visibility we now have into the second half, we are raising that guidance today to 15%-16% for the full year. Our business has historically been second half-weighted, with the fourth quarter benefiting from year-end deployment cycles. Everything we are seeing tells us that pattern is expected to hold again this year with even more strength behind it. Material handling continues to be a genuine bright spot, and the growth story here just keeps on building.

We deployed 1,666 GenDrive units in the quarter, more than double the 739 units we deployed in the second quarter of last year. Service revenue grew 82% year-over-year to $29.8 million, with service margin of 27%. As improving reliability lets our technicians cover more units and drive real overhead leverage. We're not just growing. We're building a durable, recurrent revenue base. Two of our largest material handling customers are planning to refresh more than 20,000 GenDrive units over the next three years. This is a multi-year revenue opportunity sitting right in front of us, and it's exactly the kind of embedded growth that gives us confidence well beyond this year. Our electrolyzer business continues to build real commercial momentum. We announced the FID of the 30-megawatt Barrow Green Hydrogen project for Carlton Power in the U.K.

This is part of the 55 megawatts we were awarded in November of 2025, and we expect the additional 25 megawatts to reach FID in 2026. In Q2, we were also selected for the 275-megawatt FID on the Hy2gen current project in Quebec. On July 7, we announced that Plug secured a 50-megawatt Giner ELX electrolyzer order following the final investment decision from Orica's Hunter Valley Hydrogen Hub in Australia, and this is the largest renewable hydrogen project to reach FID in Australia. As an update on the business, our 100-megawatt project with Galp in Portugal and our 25-megawatt project with Iberdrola and BP in Spain continue progressing positively on the commissioning. I also want to flag something bigger on the horizon here, because I think it is an important part of the electrolyzer story for the next several years.

Europe continues to advance the conversion of the Renewable Energy Directive 3, it is called RED III, into a national law across E.U. member states. Spain is the latest country to release a draft framework establishing an 11% renewable fuels of non-biological origin, which is the RFNBOs, by 2040. This is backed by a specified non-compliance penalty and a system of tradable carbon reduction certificates. Based on our preliminary internal analysis, we believe Spain's framework alone could drive approximately 10 gigawatts of electrolyzer demand by 2030. In addition, the European Commission approved a EUR 780 million Dutch subsidy scheme targeting 400 megawatts of electrolyzers capacity with an option plan for early 2027. The European Commission plans on launching a fourth hydrogen auction in December of 2026 with a budget of up to EUR 500 million.

This is the kind of regulatory tailwind that turns a strong pipeline into a durable, multi-year growth runway, and we like our position to capture it. Turning to hydrogen. Our fuel business delivered approximately 15% revenue growth year-over-year to $39.5 million. This is driven by continued growth in hydrogen consumption across our expanding customer base. Fuel gross margin improved to negative 48%, from negative 91% a year ago, on improvement in plant utilization, production efficiency, and network optimization across our production facilities in Georgia, Tennessee, and Louisiana. We still have work to do here, obviously, but the trajectory is decisively in our favor, and we expect that progress to continue through the second half of the year. We ended the period with $161.9 million of unrestricted cash, with net cash usage improving to $61 million for the quarter, down approximately 58% sequentially.

We are also executing on our asset monetization programs, and as an update to the Stream transaction we announced on July 13th, where we indicated approximately $80 million of expected near-term liquidity, we have already received $47 million. This is a step forward of our initiative to unlock more than $275 million through this asset monetization and non-dilutive financing, and we expect to keep delivering on this initiative in the coming quarters. Put simply, this was a good quarter, and it sets up an even better second half. Revenue is growing, margins are approaching breakeven, operating expenses are down 50%, cash burn is falling, and we are raising our full-year guidance to 15%-16% growth. We remain on track to deliver positive EBITDAs in the fourth quarter, a milestone that marks a real turning point for the company.

We are building Plug into the profitable, cash generative, hydrogen leader we set out to become. We have work to do, but Q2 is more evidence that we are getting there. With that, I will turn the call over to Paul for a more detailed review of the quarter, including our liquidity position and financial outlook.

Thank you. Paul? Thank you, Jose Luis, and good afternoon, everyone.

Building on Jose Luis's comments, I want to leave you with three key takeaways from the quarter. First, the margin transformation is real, and it is compounding. We exited Q2 at essentially breakeven gross margin, roughly a 30-point improvement from a year ago. Second, our cost discipline is showing up everywhere it should, including improved margins and reduced OpEx, which yields reduced cash use. Third, we believe we have the capital and the levers in place to execute the balance of the year. This stems from current cash balances, continued improvements in margins, reduced CapEx and the ongoing asset monetization efforts. Diving into the details of the quarter, as Jose outlined, net revenue for the quarter was approximately $178 million, which was up 9% sequentially, bringing the first half to $342 million, up 11% year-over-year.