Ideal Power Reports Q2 2026 Results: Full Earnings Call Transcript

On Thursday, Ideal Power (NASDAQ: IPWR ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

S. hyperscaler evaluation. The company secured a long-term supply agreement with a high-volume wafer foundry, ensuring future production capacity and cost structure to support targeted gross margins. 3 million at the end of Q2 2026.

6 million due to higher stock-based compensation and personnel costs, with expected further increases as the sales and engineering teams expand. The company's sales funnel has grown to over $400 million in potential revenue opportunities, with a focus on converting these into design wins and production orders. Management expressed confidence in B-TRAN's unique capabilities for solid-state circuit protection and emphasized the strategic focus on AI data centers, energy infrastructure, and EV applications. 5 million.

Full Transcript Jenny, Operator Good morning, ladies and gentlemen, and welcome to Ideal Power's second quarter 2026 results conference call. At this time, all participants are in a listen-only mode. At the end of management's remarks, there will be a question-and-answer session. Investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen.

Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one on your phone keypad. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christiansen.

Please go ahead. Jeff Christiansen Thank you, Jenny, and good morning, everyone. Thank you for joining Ideal Power's second quarter 2026 results conference call. On the call with me are David Somo, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer.

com. Before we begin, I'd like to remind everyone that a number of statements on this call are forward-looking statements. All statements on this call that are not based on historical fact are forward-looking statements. While management has based any forward-looking statements on its current expectations, the information on which such expectations were based may change.

These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside the company's control, that could cause actual results to materially differ from such statements. Please refer to the company's SEC filings for some of the associated risks, uncertainties, and other factors. We would also refer you to Ideal Power's website for more supporting company information. Now I'd like to turn the call over to Ideal Power's President and Chief Executive Officer, David.

Daniel Brdar, Chief Executive Officer Thank you, Jeff. And thank you to everyone joining us today. I'll begin with an update on our commercial progress from the start of the second quarter, then Tim will review our financial results and after our remarks we look forward to your questions. Let me start with our lead Asia customer.

We're finalizing our low-current solid state circuit breaker, or SSCB, prototype development for shipment to the customer later this month for their internal testing. B-TRAN-enabled SSCB prototypes are expected to be available from this customer for their 800 volt AI data center and energy grid customers in the fourth quarter of 2026, with initial low-volume orders to support the prototype builds also expected in the fourth quarter.

Beyond that initial project and in order of priority, we are engaged with this customer on two additional projects, one for a medium-current SSCB designed for 800 volt DC data centers, energy storage applications, EV charging and industrial microgrids, and a second for a low-current SSCB for smart industrial buildings. Technical discussions on the medium-current SSCB are already underway. S. hyperscaler in its development for the Nvidia Rubin Ultra in 800 volt DC data center power system.

We're targeting prototype delivery at the end of the fourth quarter of 2026. This prototype is also planned to be offered to additional hyperscalers and other AI data center operators adopting the Nvidia Rubin Ultra power architecture or comparable 800 volt DC AI data center power distribution systems for evaluation. The Ideal Power team will be attending the Open Compute Project Global Summit in October together with our industry partner to introduce this intelligent SSCB prototype concept to AI data center and infrastructure providers for their consideration.

Third, we delivered a second set of Gen 2 B-TRAN custom package samples and development kits to Stellantis for their evaluation. We are working closely with the customer on a detailed analysis of their solid state contactor system-level specification to optimize the solution and align the remaining deliverables under the purchase order. While this has impacted the timing of our expected completions of deliverables under the PO, it has not delayed or otherwise impacted our expectations regarding the EV contactor opportunity with Stellantis. The deliverables we've completed support the next project milestone scheduled for the fourth quarter of 2026.

We will work to promptly complete future deliverables as they are agreed with the customer to support subsequent project milestones. Fourth, we achieved an important operational milestone. We entered into a long-term supply agreement with a high-volume wafer foundry in Asia, not China, and achieved functional first silicon after initiating discussions with them in the first quarter of this year. This is an automotive-qualified fab that has built more than 1 billion power semiconductors.

This foundry has the capacity to support high-volume industrial and automotive customers at a cost structure we believe supports our targeted gross margins at scale. Fifth, we're seeing accelerating demand to support 800 volt DC architectures from a growing number of potential customers, including leading global electromechanical breaker manufacturers now seeking SSCB solutions. I've been asked how we are helping customers speed up adoption and would like to take a moment to explain the progress we're making. We introduced a new SSCB Reference Design Kit, or RDK, to assist customers with evaluating our technology and accelerate the development of their own SSCB products.

This is critical to adoption, as companies that have traditionally supplied electromechanical breakers may not have internal expertise with solid state solutions or may not have started developing SSCB products. With the rollout of 800 volt AI data center power architectures expected to start in the second half of next year, these companies need a close-to-market-ready solution to enable timely product introductions. We are already seeing traction, as one of our distribution partners has placed its first stocking order for these SSCB RDKs for delivery in the coming weeks and multiple customers have requested access to our new RDKs.

Sixth, after recently adding a Europe-based sales director, our team met with more than 20 potential customers at PCIM in Germany. Our European sales efforts have already led to early engagements with a European-based global automaker and Tier 1 automotive suppliers. We recently met with one of these global Tier 1's pre-production and production teams, as we are finding significant interest in solid state EV contactor and battery disconnect unit solutions.

We also have a new engagement with a European-based circuit protection company interested in a broad set of applications including solid state breakers for data centers and energy storage as well as battery disconnect units for EVs. S. and European markets on an aggressive timeline. Seventh, our newly formed advisory board now includes its first member, Dr.

Sanjay Parthasarathi, Chief Marketing Officer of Coherent Corporation, a key supplier for AI data center infrastructure. Sanjay brings more than 35 years of leadership across data centers, optical networking and related technology markets, aligning with our near-term revenue opportunities. His deep market expertise and industry network directly support our plans to accelerate the commercialization of our high-value, high-impact solutions. Let me spend a moment on the data center market.

When people picture the AI boom, they think graphics, chips, processors and servers. But the bottleneck is increasingly power—getting it to the data center and distributing and managing it once there. The forthcoming migration to 800 volt DC power architectures in AI data centers and the supporting energy infrastructure is a catalyst that is accelerating the demand for high-voltage power semiconductors. This is reflected in the industry's growing backlog for power semiconductors and is expected to drive rapid growth over the next several years.

SSCBs are essential in high-voltage DC systems as they enable ultra-fast fault handling for reliability. B-TRAN provides an ideal solution for solid state circuit protection with its inherent bidirectional operation, low conduction losses, microsecond fault handling and 1200 volt rated operation, providing ample safety margin for 800 volt power delivery systems. The industry is in the early stages of a secular megatrend in power semiconductors that presents an exciting growth opportunity. I'll briefly discuss our product reliability testing and qualification plans.

A simple way to think about it is that industrial and automotive qualification typically reflect the requirements of each end market. JEDEC industrial qualification supports our near-term opportunities in AI data centers, energy storage and grid infrastructure markets, while AEC-Q, or automotive qualification, is designed for automotive applications. Given the accelerating demand for power semiconductors to support AI data centers and energy infrastructure, which represent our nearest-term revenue opportunities, we are prioritizing work on industrial reliability testing and qualification.

We plan to begin the industrial qualification process during the current quarter and complete it in the fourth quarter. Automotive reliability testing and qualification will be planned to align with customer timelines. Importantly, automotive qualification is typically required for use in vehicle production but is not a gating item to advance product development for automotive opportunities including our EV contactor opportunity with Stellantis. As such, adjusting the timing of automotive qualification is not expected to affect our sales opportunities.

Our commercial progress is showing up in the size and quality of our sales funnel, which has grown to over 400 million in total revenue opportunity, up from about 300 million at our mid-May call; it's split roughly 50/50 between automotive and the combination of AI data centers and other industrial applications, and it is global. Applications are primarily SSCBs and solid state EV contactors with growing interest in solid state transformers, all of which broadly fit into the category of circuit protection. While a growing funnel is encouraging, converting it into design wins, production orders and revenue remains our top priority.

We are focused on execution and working closely with customers to complete their evaluations, product development and testing to advance projects through the funnel and into volume production orders and revenue growth. S. hyperscaler, a growing pipeline of engagements with regional and multinational customers across multiple markets, and the rollout and first stocking order for a new SSCB reference design kit designed to accelerate customer adoption. We also achieved an important operational milestone by entering into a long-term supply agreement with a high-volume automotive-qualified foundry that we expect to be a cost-effective partner for us for years to come.

Overall, the industry's transition to high-voltage DC power architectures in AI data centers and energy infrastructure is serving as a catalyst for power semiconductors and solid state circuit protection solutions, and B-TRAN enables a differentiated solution to fill that need. Our focus remains on advancing customer opportunities into volume production orders, revenue growth and long-term shareholder value creation. Now I'd like to hand the call over to Tim Burns to review our financials. Tim Burns, Chief Financial Officer Thank you, David, and good morning, everyone.

I'll begin by summarizing our recent capital raise. 7 million in net proceeds from a registered direct offering of common stock and prefunded warrants that closed on May 18th. We are excited that the financing was led by the company's largest institutional shareholders. The offering significantly strengthened our balance sheet.

3 million post offering. We still have a clean capital structure and no debt. 3 million in the first quarter of 2026. 7 million.

Even with the flexibility provided by our recent capital raise, we will continue to manage expenses prudently and aggressively. 5 million. 6 million. The higher forecasted cash burn in 2026 compared to 2025 is due primarily to the hiring of additional sales and engineering personnel.

We recorded modest revenue in the second quarter of 2026. Initial orders from the companies evaluating our products for potential inclusion in their OEM products are expected to be small, with order sizes increasing as customers progress through their design cycles, perform product qualification, and build inventory for the commercialization of their BTRAN-based products. 1 million in the second quarter of 2025. The increase was driven primarily by higher stock-based compensation expense, personnel costs, and noncash patent impairments, as we proactively rationalized our pending patent portfolio.

Our 105 issued patents were unaffected by this rationalization, and the streamlining of the portfolio lowers our future patent spend. We expect operating expenses to increase modestly in the coming quarters due to growth in our sales and engineering teams to support our commercialization efforts as well as our growing number of customer engagements. We continue to expect some quarter-to-quarter variability in operating expenses, particularly research and development spending due to the timing of semiconductor fabrication runs, product development, and other research and development activities, as well as hiring.

The timing of equity award grants and performance stock unit vestings and related noncash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses, as it has in the last two quarters. 4 million compared to $3 million in the second quarter of 2025. At the end of June we had 16,421,520 shares outstanding, 1,238,553 options and stock units outstanding, and 3,410,086 prefunded warrants outstanding. At June 30, 2026, our fully diluted share count was 21,070,159 shares.

At this time I'd like to open up the call for questions. Operator. Jenny, Operator Thank you very much. At this time we are conducting a question and answer session.

Investors can submit their questions within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star one on your phone keypad. A confirmation tone will indicate that your line is in the queue.

You may press star two if you would like to remove your question from the queue. And for participants using any speaker equipment, it might be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions. Thank you very much.

Our first question is coming from Casey Ryan of Amurex. Casey, your line is live. Casey Ryan, Analyst at Amurex Good morning, David and Tim. Thanks for the update this morning.

I wanted to ask about the hyperscaler opportunity. Are you partnered with other component makers?