Ocean Power Technologies, Inc. Fireside chat

Good morning, and welcome to this WTR Fireside Chat. I'm Peter Gastreich, Managing Director of Energy Transition and Sustainable Investing at Water Tower Research. I'm very delighted to be joined today by Dr. Philipp Stratmann, who is President and Chief Executive Officer of Ocean Power Technologies, New York Stock Exchange, American ticker OPTT. Philipp, thanks a lot for joining us today. It's always great to have you on our Fireside chats, and it seems like it's a really good timing. You've just completed a very strong finish to your 2026 and just kicking off fiscal 2027.

Welcome. Thanks, Peter. It's good to be on.

Before we begin, I'd like to point out that the company's safe harbor statements can be found on the investor tab of its website at oceanpowertechnologies.com. Please also note that this Fireside chat may not be reproduced or transcribed without prior written consent from Water Tower Research. This conversation is also being recorded, so you can access it again in the future and share it with others. Investor questions are also encouraged, so please enter them in the chat box and we'll make sure those questions are delivered to Philipp and his team. With those housekeeping notes out of the way, let's get started. Philipp, with our Fireside chats, we always expect to have a few investors who will be new to the story.

With that in mind, it'd be great if you could kind of provide a high-level overview of the company, the technologies, the platform, and your strategy.

Yeah, absolutely. OPT provides the operational infrastructure layer for autonomous maritime operations. We do that through two main product lines, our autonomous vehicles, essentially maritime drones, and our PowerBuoys. The PowerBuoys are self-recharging, using a combination of solar, wind, and or wave. Our maritime drones utilize electric and gas-powered engines in order to roam around and collaborate with each other, with the buoys, and with other players in the ecosystem. Because this is a rapidly proliferating industry segment that has been growing very, very quickly. We also utilize our systems to provide AI-enabled software solutions, which we've got under our umbrella that we call Merrows, which you can essentially think of as an operating system that allows you to tap into a whole range of sensor feeds, data collection tools, and enables seamless communications over the horizon back to your shore station.

Think about it as forward deployed systems that enable you to communicate with assets and operate assets that are required for true ocean operations.

Thanks, Philipp. That's a great overview. You recently hosted the Q4 2026 results call, right? In that, I recall that you said that 2026 was really a defining year for you, and I would agree with that. You've had a flurry of announcements that you said amount to really a big story when we kind of piece all that together. With that in mind, it'd be great if you could share your perspective with investors on what's changed inside the business over that past year that makes this shift in your company real now, rather than aspirational, and how does that kind of set you up for fiscal 2027?

Yes. If you look at our information from fiscal 2026, it's really been about building out that operational capability. Designing networks of buoys, building buoys, deploying buoys, designing and deploying multiple maritime drones that are operating at any one given time. Building out inventory, building out the fleet size, building out the team that is needed to develop and deploy these assets out in the ocean for our customers. I think that's really what we spend a lot of our time focusing on. I think it's always important, and we just looked at OPT's business model, this is not software as a service. Every time we are working with a customer to bring systems out there, these systems have to be built, they have to be deployed, they have to be installed, they have to be operated.

That requires us to build out the team and the capabilities and the capacity to go and fulfill customer needs as and when they arise. We also build record backlog and continue to grow our qualified pipeline. Being able to now focus more on conversion of that pipeline into backlog and then backlog into revenues. That's sort of the foundation we laid during fiscal 2026, to have the right people in place so we can continue scaling the business and actually deliver when orders come in.

I think a great example is the recent order that we had from Stevens Institute of Technology, where we announced the fact that we got a purchase order, and within the space of, I think it was either five or six weeks, we were able to then bring that maritime drone and get it into their hands so that they can start using it. I think that is that kind of speed that we're looking for taking forward into fiscal 2027.

When I look at my result notes over the last year or so, more often than not, I've got backlog sitting in the headline because I just think it's such an important indicator for your company, and it's just been continued to move up. Your backlog finished the year at a record $19.8 million, and that was up 58% year-on-year. That's very meaningful if you consider that's more than five times what your revenue was last year. At the same time, the revenue itself, it did come down last year, so those things can look maybe contradictory to someone who's looking at your business for the first time. How should investors think about those two things? The revenue last year kind of eased back, but your backlog is surging.

I think it's about building out the opportunity set to deliver into. As I mentioned at the beginning, the industry is proliferating and growing rapidly. You see that through us capturing some of that demand in our backlog. Equally, we're then working on converting that backlog into revenues. The conversion of that, unless it is a straight sale, is oftentimes also dependent on the various customer spending cycles and not just the spending cycles, but also the customer's operational cycles. If it's an oil and gas customer and they want to do survey work, they need to do that survey work in advance of when their next drilling or pipeline lay season starts.

Therefore, you will sometimes see us capturing backlog, but then the revenue conversion will be staggered as to when the operational need has arrived for them to actually go and do the job that they contracted us for in the backlog. Similar in government spend cycles. A government will allocate budget to do certain projects, and then it is a case of timing on our side going, "Okay, when does government get the permits in hand? When are we therefore able to install when we go offshore?" Also, when do we have all the assets available that are needed to fulfill a contract? It is a capital-intensive industry, and therefore we will use generated backlog in order to help us then do the procurement to help continue building out the fleet.

I think that is why you sometimes will see that kind of, I want to say apparent disconnect between backlog and revenue, but the backlog is contracted purchase orders which will convert to revenues. It is just not going to operate on the same cycle that, say, like an enterprise SaaS business would operate under.