ESS Tech, Inc. (GWH) | The Buildout — AI Infrastructure
The Verdict
ESS Tech designs and builds long-duration energy storage. Its flagship Energy Base is an iron-flow battery framed for 10- to over 20-hour applications, and its newer Bridge product is a sodium-ion battery for 2- to 16-hour jobs aimed at data centers, critical infrastructure and utilities. The AI connection runs through Bridge: management argues that GPU clusters swing tens of megawatts in seconds, that this micro-cycling wears out lithium chemistries quickly, and that Bridge's non-flammable chemistry and lack of HVAC or liquid cooling turn battery selection into a siting and permitting question more than a cost question. ESS integrates cells it buys rather than manufacturing them.
| Market Cap | — |
| Revenue (TTM) | −$1M |
| Revenue Growth | −119.0% |
| Net Cash | $8M |
| Earnings Beats | 1 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Bridge addresses a specific data-center electrical problem: management says GPU clusters swing tens of megawatts in a matter of seconds and that micro-cycling degrades lithium chemistries quickly.
- Two anchor letters of intent: Juniper Energy for 500 MWh or more of sodium-ion systems by 2032, and Alsym Energy for 8.5 GWh of U.S.-made sodium-ion cells.
- A $9.9 million Air Force contract, awarded through Concurrent Technologies Corporation and AFRL, for a long-duration storage system at Clear Space Force Station, Alaska — large relative to $1.6 million of FY2025 revenue.
- Cost work and deleveraging already delivered: H1 2026 operating cash burn of $22.4 million, down 27% year over year, and $37 million of the $40 million Yorkville note principal repaid.
- Domestic-content positioning: U.S.-made cells described by management as free of FEOC concerns, free of tariffs and foreign entity restrictions, and eligible for tax credits the 10-Q expects to have a positive impact on future gross margins.
What We’re Watching
- A definitive business-combination agreement is targeted by end-September 2026 and a close before year-end 2026; existing ESS holders would own approximately 5% to 10% of the combined company.
- Liquidity: cash, equivalents and short-term investments of roughly $5.6 million at July 31, 2026, down from $10.8 million unrestricted at June 30, with a going-concern disclosure and two NYSE delisting notices (2026-06-15 and 2026-07-01).
- Bridge milestones: a first full-scale unit operating in-house toward end-2026 and a first customer-available system in Q4 2026, with unit economics still undisclosed.
- The Juniper, Alsym and business-combination letters of intent are all non-binding and terminable at any time; the Alsym relationship is described as both an LOI and a 'definitive supply agreement' on the same call.
The record shows a company in transition rather than a business with a settled trend: revenue has fallen to a stub, liquidity sits under a going-concern disclosure, and two NYSE delisting notices are outstanding, while management added a second technology platform and two large non-binding letters of intent. The ~$1 billion pipeline exists only as early-stage opportunities, so the case rests on converting letters of intent into bookings during 2027–2028. The open question is whether the definitive business-combination agreement lands by end-September and closes before year-end — and whether either event cures the going-concern and listing problems.
Earnings
ESS reported Q2 2026 revenue of $73,000, down from $2.4 million a year earlier, as the company wound down legacy contracts while developing its next products. Cost of revenue was $7.5 million, essentially flat in both periods, producing a gross loss of $7.4 million and a net loss of $15.6 million. Adjusted EBITDA loss was $7.9 million, roughly flat against a $7.8 million loss a year earlier. The CFO said the cost-of-revenue line is dominated by fixed manufacturing overhead and underutilized capacity at Wilsonville and is not a read on Bridge's expected margin structure.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $0M | $0M | $2M | −95.8% |
| Gross margin | -10760.9% | -5498.4% | -216.3% | -1054460bps |
| EBITDA | −$14M | −$11M | −$10M | +44.0% |
| EPS | $-0.46 | $-0.54 | $-0.90 | −48.9% |
| Adjusted EBITDA | -$7.9M | n/a | -$7.8M | roughly flat |
Our Form 10-Q includes expanded disclosure regarding liquidity and the existence of substantial doubt about our ability to continue as a going concern, and we encourage investors to review that discussion in full.— Kate Suhadolnik, CFO, 2026-08-11
Management tone: Management's tone shifted between the March and August 2026 calls. In March the CEO described contracted work as 'signed agreements with sophisticated counterparties'; by August the ~$1 billion pipeline was hedged three separate times as 'early stage and unconverted' and 'not yet to bookings and not contracted revenue.' The strategic register moved from a single iron-flow platform to a portfolio of 'two complementary platforms,' and from a self-funding narrative toward an explicit transaction narrative. The CFO delivered the going-concern language plainly and pushed back on reading the current cost of revenue as unit economics.
Management Guidance
ESS gives no numerical revenue, EPS or EBITDA guidance; the structured guidance field is empty and no financial guide has been raised, cut, withdrawn or reinstated. Guidance is expressed as product, project and transaction milestones: a first full-scale Bridge operating in-house toward end-2026, a first customer-available system in Q4 2026, a Juniper full commercial agreement 'in the coming months,' a definitive business-combination agreement by end-September 2026 and a close before year-end 2026. On revenue timing, the CEO said he would 'expect 2027 and 2028 when you see most of those revenues to come in.' A prior-call promise of an investor day in early 2026 was not reaffirmed.
Trajectory
Revenue has fallen to a stub and the code-computed signal reads it as decelerating. Q2 FY2026 revenue was $0.1 million, level with Q1 FY2026, after a Q4 FY2025 quarter in which revenue was negative — the 10-K ties a net reduction to a December 2025 settlement in which ESS paid an unnamed Customer A, a -$1.557 million swing against +$2.804 million the prior period. Cost of revenue has stayed near $7.5 million a quarter against almost no deliveries, so gross loss is about $7.4 million and gross margin is deeply negative; the CFO says that line is dominated by fixed overhead at an underutilized Wilsonville plant and is not representative of Bridge's expected margin structure. Net loss was $15.6 million in Q2 FY2026 and free cash flow was -$9.4 million. Revenue is guided to 2027–2028 before any meaningful turn.
The Model
The model projects FY+1 revenue of $0.45 million with EBITDA of -$41 million (-10,150%), and FY+2 revenue of $25.0 million with EBITDA of -$27 million (-108.35%). The near term is anchored on a near-zero revenue transition year; the FY+2 step-up assumes the sodium-ion and iron-flow ramps begin producing deliveries. Model dispersion is wide — a 44% FY+1 revenue spread and a 32% FY+2 revenue spread (min $24 million, median $25 million, max $32 million) — so the FY+2 figure carries real uncertainty and EBITDA stays negative in both years.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2M | $0M | $25M |
| YoY Growth | — | −71.9% | +5455.6% |
| EBITDA | −$50M | −$41M | −$27M |
| EBITDA Margin | -3118.8% | -10150.0% | -108.3% |
Projections are the median of 4 independent model runs.
ESS gives no numerical revenue, EPS or EBITDA guidance; the structured guidance field is empty and no financial guide has been raised, cut, withdrawn or reinstated. Guidance is expressed as product, project and transaction milestones: a first full-scale Bridge operating in-house toward end-2026, a first customer-available system in Q4 2026, a Juniper full commercial agreement 'in the coming months,' a definitive business-combination agreement by end-September 2026 and a close before year-end 2026. On revenue timing, the CEO said he would 'expect 2027 and 2028 when you see most of those revenues to come in.' A prior-call promise of an investor day in early 2026 was not reaffirmed.
What Could Go Right — and Wrong
- Juniper's letter of intent converts to a full commercial agreement, keeping the 10 MW / 80 MWh California utility project on track for 2027 commercial operation.
- The first full-scale Bridge operates in-house by end-2026 and a customer-available system ships in Q4 2026, opening the path to first sodium-ion revenue.
- Any part of the ~$1 billion early-stage sodium-ion pipeline converts to bookings or contracted revenue — the threshold management itself named as the proof point.
- The Alsym relationship becomes a genuine definitive supply agreement with a disclosed plant, schedule and source capacity for the 8.5 GWh of sodium-ion cells.
- The proposed business combination closes with a revenue-generating partner, curing the going-concern and listing problems and funding the two product ramps.
- The Juniper, Alsym or business-combination letters of intent lapse — each is non-binding and can be terminated at any time.
- A definitive combination agreement does not land by end-September 2026 or the deal fails to close by year-end, leaving ESS dependent on new financing against roughly $5.6 million of cash.
- A third NYSE delisting notice or a failure to cure, cutting off access to public markets that the financing path depends on.
- Bridge development slips past end-2026 and Q4 2026, pushing first revenue and the margin test further right — the visible pattern has been timelines moving right.
- A highly dilutive financing, or a combination that leaves existing holders with only approximately 5% to 10% of the combined company.
Looking Ahead
Over the next twelve months the record points to three tests running in parallel: the business combination (definitive agreement targeted end-September 2026, close before year-end 2026), the Bridge ramp (first full-scale in-house unit end-2026, first customer-available system Q4 2026), and conversion of the ~$1 billion pipeline plus the Juniper and Alsym letters of intent into booked work. Revenue is guided to 2027–2028, so 2026 is bracketed as a near-zero-revenue transition year. Going-concern and NYSE listing questions remain unresolved in the materials, and management has pointed to additional financing alternatives alongside the proposed combination.
- End-September 2026Definitive deal agreement — Tests the final ownership split and whether it cures going concern.
- Q4 2026First customer Bridge system — First system available for customers to see; first revenue follows.
- End-2026Full-scale Bridge in-house — Tests whether the sodium-ion unit operates as targeted.
- Before year-end 2026Business combination close — Close would put ESS under a revenue-generating partner.
- 2027Juniper project COD — 10 MW / 80 MWh California utility project targeted for operation.
- December 2027SRP New Horizon delivery — 5 MW / 50 MWh project with Google as offtaker; slipped ~9 months.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6M | $2M | −$1M | -74.6% |
| Gross Margin | -1873.5% | -703.0% | — | +117,047bps |
| EBITDA | −$85M | −$50M | −$49M | +41.4% |
| EBITDA Margin | -1350.8% | -3118.8% | — | 176,796bps |
| Net Income | −$86M | −$64M | −$66M | +26.3% |
| Free Cash Flow | −$80M | −$54M | −$45M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Net Margin (TTM)5491.7%
The Company
ESS Tech designs and builds long-duration energy storage. Its flagship Energy Base is an iron-flow battery using earth-abundant materials, framed by management for 10- to over 20-hour applications, and its newer Bridge product is a sodium-ion battery for 2- to 16-hour jobs aimed at data centers, critical infrastructure and utilities. The 10-K describes one operating segment covering 'all activities related to the design, engineering, and manufacturing of the Company's long duration energy storage products.' Management positions the two platforms as complementary across short and long duration, sharing two claims: no thermal-runaway risk and a domestic platform with U.S. design, assembly, software and controls.
ESS runs from Wilsonville, Oregon, in a roughly 200,000-square-foot site holding corporate, engineering and administrative functions plus automated and semi-automated battery manufacturing lines. On the latest call management describes that plant as streamlined and underutilized, with capital reallocated toward sodium-ion and $4.3 million of asset abandonment recorded in H1 2026. The sodium-ion cells themselves are to be sourced externally — the Alsym Energy letter of intent covers 8.5 GWh of U.S.-made cells — so ESS integrates rather than manufactures its cell stack. The legacy Energy Warehouse and Energy Center products are no longer offered for sale.
Business Segments
Competitive Landscape
ESS competes in energy storage. Its 10-K lists traditional lithium-ion competitors — CATL, LG Chem, Samsung Electronics, Sungrow and Tesla — and non-lithium-ion names including EnerVenue, Invinity Energy Systems, CellCube, CMBlu Energy, Energy Dome, Energy Vault, Enerox, Eos Energy Enterprises, Form Energy, Highview Power, Hydrostor, Lockheed Martin's GridStar Flow and Malta. Management frames sodium-ion as complementary rather than substitutive: 'It's not a replacement for lithium. It can be very complementary and serve a different workload.' The source material notes that visible large data-center and utility battery awards went to incumbents, and that a direct iron-based competitor, Form Energy, already has commercial-scale deployment with Google — the same anchor customer on ESS's SRP project.
- Named in the 10-K as a traditional lithium-ion competitor; not discussed.
- CATLNamed in the 10-K as a traditional lithium-ion competitor; the wiring map also lists it as a sodium-ion competitor (inferred).
- Form EnergyNamed in the 10-K as a non-lithium-ion competitor; the source notes it has delivered a 100-hour iron-air system to Xcel for Google's ESA while Google is also an offtaker on ESS's SRP project.
- Named in the 10-K as a non-lithium-ion competitor; not discussed.
- Energy VaultNamed in the 10-K as a non-lithium-ion competitor; not discussed.
Supply Chain
ESS integrates rather than builds battery cells — buying sodium-ion cells under an Alsym Energy letter of intent for 8.5 GWh of U.S.-made supply — and assembles systems at its Wilsonville, Oregon plant. No neighbor transcript in the source set names ESS.
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