Innventure, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thanks, Marianna, and good afternoon, everyone.

Welcome to Innventure's second quarter 2026 earnings call. With me today are Bill Haskell, Chief Executive Officer, Dave Yablunosky, Chief Financial Officer, Dr. Bill Grieco, our incoming Chief Executive Officer, and John Hewitt, Chief Executive Officer of Accelsius. Earlier today, we issued a press release announcing our financial results, which is available on our investor relations website, along with the supplemental slide presentation. As referenced on slide 6, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available on our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company.

These forward-looking statements involve a number of uncertainties and risks, including, but not limited to those described in our earnings release form, 10-Q for the period ended June 30, 2026, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. With that, I'll turn the call over to Bill Haskell.

Thank you, Kyle. Good afternoon, everyone, and thanks for joining us. We're going to run today's call a little differently by focusing a majority of our time on Accelsius. You'll hear from four executives today. Dave will take you through the financials. Then I'll say a brief word about the leadership transition we announced in June. Followed by Bill Grieco to share what to expect under his new leadership. Finally, John Hewitt, who took over as CEO of Accelsius in July, will walk you through where the business is headed and where the industry is headed with it. Let me give you the headline for Accelsius before we get into it. First, we believe the market is now debating when two-phase will be adopted, not if. Second, allocation of GPUs and memory, difficulties accessing power and two-phase enabled servers are impacting smaller early adopters.

That has consequences for near-term revenue expectations, which Dave will address directly in his remarks. Here's the more important point. We believe those same forces have made the long-term picture for two-phase cooling better, not worse. John will walk you through exactly what changed and why. Before Dave addresses the numbers, let me give quick updates on AeroFlexx and Refinity. At AeroFlexx, the commercial pipeline continues to build and is now close to $35 million, up 9% since last quarter. The company's global reach continues to expand with new partnerships in Latin America and Europe. In addition, following the May 11th announcement of the co-manufacturing partnership with Packaging Himalayas, AeroFlexx filling equipment has been installed and is operational at the Italian facility with product qualification underway. At Refinity, engineering design on the 10-kiloton demonstration plant is on track for delivery of a plan by the end of this year.

You'll hear Bill Grieco come back to that in a few minutes. Now, let me pass it to Dave to take us through the finances.

Thanks, Bill. Good afternoon, everyone. Consolidated revenue for the second quarter was $1 million. That compares to $0.5 million in the second quarter of last year and $1.4 million in the first quarter of this year. Of the $1 million, Accelsius contributed $0.9 million or 96% of the total. Net loss for the quarter was $34.9 million, compared to $27.8 million in the first quarter. Adjusted EBITDA was a loss of $22.6 million versus $18.4 million in Q1. General and administrative expenses were $14.5 million, down 22% compared to the second quarter of 2025. We ended the quarter with $46.5 million of cash and restricted cash. That compares to $60.4 million at the end of Q1, which also includes $5 million of restricted cash. Year to date, we used $59.5 million of cash in operating activities and generated $41.6 million from financing activities.

During the quarter, we took several steps to strengthen our balance sheet and manage our capital efficiently. We raised approximately $13 million through draws on our standby equity purchase agreement at an average price of $6.21. We also continued to reduce debt, including the full repayment of our convertible debentures earlier this year. Shifting now to our outlook. We previously expected Accelsius to exit this year near cash flow breakeven at an annualized revenue run rate of roughly $100 million. We now expect the timing for Accelsius to break even to extend beyond this year. The primary driver for the change is market dynamics, not a change in our conviction around the technology or the market opportunity. Smaller early adopters are facing constraints around power availability, GPU access, and site allocations. Those resources continue to be concentrated among the largest hyperscalers.

I'd like to now directly address our DarkNX purchase order, given they too are not immune to these dynamics. The purchase order referenced a development site that DarkNX had previously identified. DarkNX recently informed Accelsius that this site is no longer available, and that it's working towards developing alternate sites. Accelsius has removed the DarkNX project from its 2026 forecast, pending identification of an alternate deployment location and satisfaction of other conditions. This single customer setback does not change the fact that Accelsius remains at the front edge of market adoption. But until that adoption is established, order bookings and revenues are going to be lumpy and hard to predict. Due to these structural constraints which limit early adopter deployments, we are suspending our revenue targets. We intend to reinstate forward-looking targets once those constraints ease or we achieve the foundational KPIs that drive broad industry adoption.

Here's what we are committing to instead. We will report on the key milestones best representative of our progress towards market adoption, which John will detail in his section. At the parent level, due to the revised timeline for Accelsius to achieve positive cash flow, we are no longer targeting consolidated positive cash flow for Innventure in 2028. We will revisit that expected timing when we have greater visibility into the pace of Accelsius adoption and revenue generation. Taking a step back, let me revisit our capital strategy in the context of this revised outlook. First, it reinforces the need to be disciplined about where capital is raised and how we protect shareholder ownership. Second, we expect to be opportunistic in how we fund the business from here, as revenue delays naturally precipitate a need for capital.

Our intent is to finance AeroFlexx and Refinity increasingly at the operating company level, which limits the amount of capital we need to raise at Innventure and helps minimize dilution for Innventure shareholders. At the same time, given the extended timeline for Accelsius to reach positive cash flow, we recognize there will be a need for additional capital at Innventure. When we raise capital, we intend to do it thoughtfully, opportunistically, and with a goal of preserving Innventure's pro rata exposure to Accelsius. With that, I'll pass it back to Bill Haskell.

Thanks, Dave. Before I introduce our next two speakers, a brief personal note. As we announced on June 30, I'll retire as CEO of Innventure on October 1, after almost six years leading the company and more than four decades in the industry. This was a planned succession, and I'll be working closely with Bill Grieco through the transition. I'm confident in the handoff because Bill is not an outside hire learning about the company. He helped build it and had previously served as Innventure's Chief Technology Officer. For the past year and a half, he has been the founding CEO of Refinity, and he took that business from a blank sheet of paper to the doorstep of commercial demonstration. Before Innventure, he built and led innovation and new business creation at various large organizations and holds a PhD in chemical engineering from MIT.

Finally, he has served on the boards of both Rafinity and Accelsius, so he knows every one of our businesses from the inside and is the right leader for Innventure's next phase.