Ideal Power (IPWR) Q4 2025 Earnings Transcript

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DATE

Tuesday, March 10, 2026, at 10 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — David Somo
• Chief Financial Officer — Tim Burns
• Vice President, Business Development and Corporate Communications — Jeff Christensen

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TAKEAWAYS

• Strategic Cooperation Agreement -- Announced a multiyear agreement with Lazen to co-develop and globally sell B-TRAN enabled circuit protection products targeting markets including AI data centers, energy storage, grid applications, and EV infrastructure.
• Letter of Intent in Asia -- Signed a letter of intent with a leading Asian power module manufacturer to develop a family of B-TRAN based modules for their customers already using IGBT and silicon carbide modules.
• Stellantis Engagement -- Completed the first of five deliverables under a Stellantis purchase order for EV products, with the remaining four expected by mid-2026 and all deliverables under Ideal Power's control.
• Patent Portfolio -- Holds 100 issued B-TRAN patents (48 international), with 78 patents pending, and uses proprietary wafer processes treated as trade secrets.
• Sales Funnel -- Identified nearly $200 million in potential sales opportunities and is expanding global sales resources by hiring leaders in Asia and Europe, with additional field application support planned.
• Capital Structure and Liquidity -- Raised $12.6 million in net proceeds from a public offering and private placement in February 2026; reported $6.1 million in cash at year-end, not including the new capital, and no debt outstanding.
• Cash Burn -- Q4 2025 cash burn of $2.2 million, below company guidance of $2.5 million–$2.7 million; full year cash burn was $9.6 million, also under the guided $10 million target.
• Cash Burn Outlook -- Expects Q1 2026 cash burn of $2.6 million–$2.8 million and full year 2026 cash burn of approximately $10.5 million, up from $9.6 million in 2025, with increases attributed to hiring and sales expansion.
• Revenue Status -- No revenue recognized in 2025; initial customer orders are expected to be small and tied to OEM qualification cycles for B-TRAN based products.
• Operating Expenses -- Q4 2025 operating expenses were $1.9 million versus $2.8 million in Q4 2024, due to lower stock-based compensation and personnel costs; anticipated Q1 2026 stock-based compensation to increase significantly then taper in Q2.
• Net Loss -- Reported $1.9 million net loss in Q4 2025 compared to $2.6 million in Q4 2024; full year 2025 net loss was $10.6 million against $10.4 million in 2024.
• Share Count -- At December 2025: 8,537,387 shares outstanding and 10,565,023 fully diluted; after February 2026 capital raise: 12,089,289 shares outstanding, 2,238,040 prefunded warrants, and 1,486,955 stock options/units for 15,814,384 fully diluted shares.
• Product Readiness -- First-generation B-TRAN devices meet target market needs, requiring no further modification for prioritized applications.
• Automotive Reliability Testing -- Automotive qualification testing for B-TRAN devices is expected to complete by summer 2026.

SUMMARY

Ideal Power (NASDAQ:IPWR) reported that it has initiated multiple strategic partnerships and expanded its global sales funnel, focusing on commercialization of its proprietary B-TRAN technology. The company’s capital position strengthened with the recent $12.6 million financing, maintaining a clean capital structure and no debt, while prudent expense management kept both quarterly and full-year 2025 cash burn below guidance. Management communicated that no product-level modifications are required to address initial customer applications, with current engineering resources dedicated to supporting client-specific development efforts.

• Management stated the Q1 2026 increase in projected cash burn is "primarily due to planned 2026 hiring, including expanding the direct sales team."
• Ideal Power holds patents across major global markets, with strict protective measures on proprietary manufacturing processes and legal safeguards to reduce infringement risk.
• The initial commercial focus is on design-ins and small orders for reference products in circuit protection, energy storage, and data center applications, with future scaling dependent on customer product qualification and adoption cycles.
• The company indicated openness to licensing B-TRAN technology where multisourcing is required by large multinational customers, though current agreements emphasize direct supply relationships.

INDUSTRY GLOSSARY

• B-TRAN: Company-developed bi-directional bipolar junction transistor solid-state switch technology for power conversion and protection applications.
• NRE (Non-Recurring Engineering): Custom, one-time engineering work or product development paid for by a customer, separate from recurring sales.
• IGBT: Insulated Gate Bipolar Transistor, a conventional power semiconductor device, often referenced as a benchmark in this sector.
• Prefunded Warrant: An equity instrument similar to a common share but not included in shares outstanding until exercised; considered a common stock equivalent for EPS calculations.

Full Conference Call Transcript

David Somo: Designed to accelerate commercialization and deliver increased value to our shareholders and our customers. Now that we have set out a clear path, our focus is on disciplined execution. I will not repeat what I shared on our business update webcast call. Instead, I will discuss our progress since the start of the fourth quarter. Afterwards, I will turn things over to Tim to discuss our financial results. We look forward to your questions after our remarks. First, we announced a multiyear strategic cooperation agreement with Lazen for the design, development, and worldwide sales of a portfolio of B-TRAN enabled circuit protection products. Think solid-state circuit breakers, battery disconnect units, and EV contactors.

Their first B-TRAN enabled solid-state circuit breaker is expected to target AI data centers customers. Other potential products include solid-state circuit breakers for the intelligent grid, renewable energy and energy storage systems, and EV charging infrastructure, along with contactors and battery disconnect units for EVs. For those of you not familiar with Lazen, they are a publicly traded leading circuit protection solutions provider and systems integrator in Asia that is becoming increasingly focused on expanding into the North American and European. Second, we signed a letter of intent with a leading power module manufacturer in Asia to develop and offer a family of B-TRAN based power modules for sale to their customers.

This customer already provides a portfolio of IGBT and silicon carbide modules. They see compelling value in B-TRAN and are interested in developing differentiated and customized B-TRAN enabled solutions due to its inherent competitive advantages in a variety of end use applications. Third, we continue to advance our relationship with Stellantis, including executing on our existing purchase order for custom development and packaged B-TRAN devices for EV applications. We completed the first of five deliverables under this PO in 2025. We expect to complete the remaining four deliverables by mid-2026. That includes the delivery of custom packaged B-TRAN devices and reference design kits for testing and evaluation in EV applications.

We also remain engaged with Stellantis on a potential development program for EV contactors. Our B-TRAN patent estate continues to grow. Currently, we have 100 issued B-TRAN patents with 48 of those issued outside of the United States. Our patent coverage spans North America, China, Taiwan, Japan, South Korea, India, and Europe, all representing our high-priority patent coverage geographies. As a result of our continued innovation, our list of pending B-TRAN patents is now at 78. To safeguard our intellectual property further, we treat the proven double-sided wafer process flow we developed to make our devices as a trade secret and do not disclose the identity of, and work under strict confidentiality with, our wafer fabrication partners.

So even if a competitor studied our patents, they would not have the know-how to fabricate the device. In addition, to minimize the potential for infringement, we exclusively work with foundries and packaging houses in countries that have a history of respecting intellectual property rights. I want to close by detailing the strategic priorities for the company. First, continuing to add new opportunities to the sales funnel. We have a good start today with nearly $200,000,000 potential sales opportunities identified and need to continuously expand the sales funnel with new engagements and opportunities.

Our opportunities are global, and we added a sales leader in Asia late last year and expect to add a sales leader in Europe and a field applications manager in Asia in the near term to support the global commercialization of B-TRAN. Drive initial revenue ramp by converting sales opportunities in the funnel to design-ins and custom development agreements on the earliest possible schedule. It is not just about expanding our sales funnel. It is even more important that we execute and advance qualified opportunities through the funnel to production orders and revenue.

Secure production orders with Lazen for their first B-TRAN enabled solid-state circuit breaker product and expand our strategic cooperation with Lazen to include solutions to address additional markets and applications. Complete the remaining deliverables under the Stellantis purchase order and continue to advance opportunities for EV contactors and battery disconnect units with Stellantis and other global automakers and tier one suppliers. Continue exploring strategic investment opportunities with global market leaders. We are engaged with a small number of global market leaders on potential strategic investments. Strategic investors are typically motivated by two factors. First, new and innovative technologies that best solve customer solutions challenges related to market shifts.

For example, the transition from AC to 800-volt DC data center power distribution systems. Second, providing additional resources and development support to guide and accelerate the commercialization of new technologies that are of significant interest to their business. These investments take time. They offer significant validation and alignment of interest with customers. I will now turn the call over to Tim Burns for the financial results.

Tim Burns: Thank you, David, and good morning, everyone. I will begin by summarizing our recent capital raise. We raised $12,600,000 in estimated net proceeds from a public offering and concurrent private placement that closed on February 25. The offering included common stock and prefunded warrants. Prefunded warrants are common stock equivalents included in the company's weighted average shares outstanding for EPS calculations but not included in shares outstanding as they do not have voting rights until exercised. For those of you unfamiliar with prefunded warrants, they are not what you think of when you have to add warrant coverage to a deal.

The prefunded warrants were effectively paid for except for the par value of a fraction of a cent at closing, rather than a sweetener added on top of common stock for little or no additional consideration. We are excited that the financing was led by the company's largest existing institutional, with participation from Ideal Power Inc. insiders, including our CEO. The offering strengthened our balance sheet. Post offering, we still have a clean capital structure and no debt. Our fourth quarter 2025 cash burn was $2,200,000 compared to $2,600,000 in 2025 and $2,700,000 in 2025. Our Q4 cash burn was well below our guidance of $2,500,000 to $2,700,000.

Our full year 2025 cash burn was $9,600,000 compared to $9,200,000 in full year 2024. Our full year 2025 cash burn was below our guidance of approximately $10,000,000. We continue to manage expenses prudently and aggressively. We expect first quarter 2026 cash burn to increase to approximately $2,600,000 to $2,800,000, with a full year 2026 cash burn of approximately $10,500,000, with the year-over-year increase primarily due to planned 2026 hiring, including expanding the direct sales team as David had mentioned. This compares to a 2025 cash burn of $9,600,000. Cash and cash equivalents totaled $6,100,000 as of 12/31/2025, which does not include the $12,600,000 of estimated net proceeds from our recent capital raise. We did not record revenue in 2025.

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 B-TRAN based products. Operating expenses were $1,900,000 in the fourth quarter 2025 compared to $2,800,000 in 2024, driven primarily by lower stock-based compensation expense and personnel costs. The lower stock-based compensation included the forfeiture and modification of certain equity awards in connection with the retirement and transition services agreement the company entered into with our prior CEO.

Due to the accounting rules around equity award modifications, the company expects significantly higher stock-based compensation in the first quarter, tapering off in the second quarter. We continue to expect some quarter-to-quarter variability in operating expenses, particularly our research and development spending, due to the timing of semiconductor fabrication runs, product development, other research and development activities, as well as hiring. The timing of equity grants and related noncash stock-based compensation expense recognition will also cause variability in our quarterly operating expenses. Net loss in 2025 was $1,900,000 compared to $2,600,000 in 2024. Net loss in full year 2025 was $10,600,000 compared to $10,400,000 in full year 2024.

At December 2025, we had 8,537,387 shares outstanding, and our fully diluted share count was 10,565,023 shares. Upon closing of our recent capital raise, as detailed in the final prospectus supplement we filed with the SEC on February 25, we had 12,089,289 shares outstanding, 2,238,040 prefunded warrants outstanding, and 1,486,955 stock options and stock units outstanding, for a fully diluted share count of 15,814,384 shares. We will now open for questions. Operator?

Operator: Thank you. 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. For analysts to ask questions on the phone line, please press 1 on your telephone keypad. Please hold while we poll for questions. Your first question for today is from Casey Ryan with WestPark Capital.

Casey Ryan: Hey. Good morning, gentlemen. This is a good segue as we exit 2025 and look forward to 2026. Tim, thanks for the breakdown on the operating expense line. I think that was going to be my first question. You talked about R&D being tied to production, you know, sort of delivering samples to customers. What is the view on SG&A? And I am just, you know, thinking up from Q4, but maybe, you know, looking back, typically, it has been, you know, $300,000 kind of has been the number. Is that a good range to think about for 2026? Or will that also vary quite a bit? Year over year. Okay. Terrific. That is very helpful.

And then, you know, I feel like the opportunities with Lazen sound exciting and encouraging for sure. Can you tell us a little bit about if where they use your product, will that typically be new builds and new products, or is there actually sort of a retrofit and maybe, like, upgrade and repair kind of opportunity given that it is a better solution than what might already be in the field in some locations. Okay.

And then, just to the extent that you know the process, do you think data centers, when we talk about the transition to the power systems, are those also, like, greenfield, meaning it is a whole new building, or is it possible that an existing data center could be fully retrofitted? And so it would be new from the standpoint of how it operates inside its four walls. But maybe its location might not be new. Okay. Terrific. Terrific. And then I was trying to jot this down, but you mentioned in 2026, you guys have, I think, four or five milestones with Stellantis that you are, you know, planning on achieving, which is terrific.

I am just curious if you could qualify the nature of those. Like, are those, you know, tasks and accomplishments that the Ideal Power Inc. team can drive, or in some cases, you, you know, are gated because they are dependent on some process over at Stellantis? I am just wondering how much is in your control, sort of just in terms of we need to execute A, B, C, D. Yes. That is terrific, Tim. Thank you. Listen. I think between, you know, today and the update last week, I think we have a good sense of what is possible for 2026. So thanks for the terrific update.

And we will look forward to the rest of the year making progress. Thank you.

Tim Burns: Yes. On a cash basis, it will not vary. Right? So the only thing that could cause variation really is stock-based compensation expense. But we are expecting actually to keep G&A relatively flat. It may be up low single digits in terms of percent, but our goal is to keep G&A flat.

David Somo: Yes. I will take that one, Casey. Lazen has a portfolio of what are the older style mechanical breakers, and those are deployed in a variety of different applications. They are developing their solid-state circuit breaker portfolio now and building that out. And that is where we have the opportunity to participate in a portfolio of products from them, starting with areas like solid-state circuit breakers and static transfer switches that can go into their first target for them in data centers. And then also renewable energy, battery energy storage systems, and grid applications.

So that is likely to be the first end markets for their portfolio of the solid-state circuit breakers they are developing where we have an opportunity to participate with them with B-TRAN. Yes. Interesting question because primarily, we are focused on new greenfield buildouts, but I also think there are some opportunities for brownfield, particularly as you have data centers stood up that are either 400-volt single-phase AC, three-phase AC. And if they are going to adopt the new NVIDIA platforms with the drive, the power distribution systems to 800-volt, then there is a need to replace the infrastructure across the data center. So I think those are possible.

Certainly, greenfield is all new opportunity, and there will likely also be some brownfield.

Tim Burns: Yes. So overall, there were five deliverables. One of them we completed late last year, so there are four remaining deliverables. Under that PO, it is custom development work. So it is custom packaging for the device. So there are two variants of packaging that they want us to deliver, as well as just some reference design kits so that they can evaluate the technology further in the applications that they are looking at. So those are the four deliverables. They are completely within our control, and we expect to complete those by mid-2026. Thanks. Appreciate it, Casey. Thank you.

Operator: I will now turn the call back to Jeff Christensen to read questions submitted through the webcast.

Jeff Christensen: Thank you, Holly. And I wanted to mention that the business update webcast call is available. The link to it is available on our investor relations web page. I encourage you to watch it. Our first question, gentlemen, is: What product development work is still required by Ideal Power Inc. to match the product line with customer needs?

David Somo: Our current B-TRAN product, first-gen product, that we have today and have been widely sampling to customers, meets the target applications that we have prioritized for accelerating our commercialization. So that includes areas like solid-state circuit breakers, static transfer switches, EV contactors. Really no further modifications required at a device level. Where we are spending our time with customers now is really on their specific product development where we are working with them to incorporate B-TRAN, from optimizing drivers in the power supply circuitry to thermal solutions to fit into their enclosures and so forth, working with our device.

So, really, the products are set for initial applications that we have targeted, and it is more working with the customer through their product development now.

Jeff Christensen: Next submitted question: What are the main hurdles to cross to get to sizable orders?

David Somo: First and foremost, we need to work with customers to complete their product development and qualifications. Once they have that design complete and they have got their package for things like solid-state circuit breakers that they can deliver to their customers, then it is really on our customers to go win the business at their end customers. So getting to those sizable orders requires getting through the product development qualification with our customers, then going to their customers, introducing the products as part of their sales process, and then having the customers adopt those systems and start to scale out builds.

Jeff Christensen: On the possible strategic partners, what do these partners need to see in order to make a decision?

David Somo: Part of this is they will need to evaluate and confirm that B-TRAN advantages, you know, best solve the design challenges that they are seeing in systems requirements. So as they consider how to best meet some of the needs of end customers with the systems they are developing, they want to confirm that B-TRAN best provides the advantages to solve some of the challenges that they have. That then can move them forward with the strategic partner engagements.

Jeff Christensen: We have had several submitted questions, and we encourage you to click that ask a question button. Are there opportunities for NRE revenue in 2026?

David Somo: Short answer is yes on that one. As we work across many different customers and have discussions with them where there are opportunities for some custom development, similar to what we have done with Stellantis or other customers who may want something either a bit different or want additional engineering support on the development of their products, that would present NRE revenue opportunities for us. Thanks. What Ideal Power Inc. solutions will drive the earliest revenue? Here again, if I look at it from a product perspective, it will be things like solid-state circuit breakers and static transfer switches that are used in markets that adopt new technologies faster.

So the data center, battery energy storage systems, and grid applications is where we see the first opportunities and earliest revenue potential for B-TRAN based products.

Jeff Christensen: Please comment on your plans to expand the sales funnel.

David Somo: Well, two approaches here. The first is, you heard during the prepared remarks, we are expanding and investing in our own sales resources here. So late last year, we added a sales leader in Asia. We now are adding an applications engineering manager there so that is able to sit in the lab with customers to help them accelerate their product development and new customers evaluate B-TRAN for their potential product. The second area is really leaning into our distributor network. We are putting new tools in place that can help them sell B-TRAN and some programs that will incentivize them to go out and get design-ins and design wins and customer evaluations with our products.

So that will help us fill the top of the funnel. And in fact, not in our funnel today is more than 100 different opportunities that we are vetting, and once qualified, I would expect many of those to move into the funnel. What are the company's plans to shorten the prospect sales cycle? Yes. Really, because B-TRAN is a new technology and different from conventional solutions that customers understand well, like IGBTs and silicon carbide FETs, we need to help the customers both evaluate our products for their systems and then accelerate product development where we have a different power supply or driving structure for the devices. So the first is reference design kits.

We continue to work on optimized reference design kits that serve as a very good point for customers to start their design and accelerate their product development by doing a good part of the work for them specific to the B-TRAN subsystem of their product. The second is use our applications engineering resources here within the company. As customers get into their product development and have questions, we are providing direct support to them through our engineering team with applications notes, as well as supporting them on calls, or as needed, sitting in the lab with them. And then the final area is leverage our distributors.

We work with distributors like Richardson Electronics and has significant experience in the power industry. They actually build power systems as well as sell components. And so they have a technical sales organization and field apps engineers that can help customers understand how to develop with our B-TRAN products.

Jeff Christensen: Will Lazen manufacture the product? What is your thinking on that relative to the company having talked about licensing the technology?

David Somo: I would expect Lazen and other similar customers to really be on a purchase order relationship, potentially over time, maybe a longer-term supply agreement. But that would be buying products manufactured by Ideal Power Inc. Where it may come up from a licensing perspective is as we deal with large multinational customers that typically want to ensure there is multisource or reduce the risk in their supply chain. And that is where we would be open to consider a licensing agreement if we should be unable to supply for whatever reason. It gives the customer confidence that they can have the product manufactured for them, either by themselves or somebody else.

But certainly, in that scenario where it would come about, while we are open to licensing, I would want to maintain a favorable position there and kind of first right of supply. Any update on the automotive qualification testing? What we have said is that we expect to complete the automotive reliability testing by this summer. And I believe we are on track to do that. Why is B-TRAN bidirectional such an important advantage? Here are two different scenarios I will describe. One is you think about in the context of battery energy storage systems or EVs, where you have a battery system that is both discharging and then charging again. You have to conduct current in both directions.

So that is an obvious advantage where the system has to be bidirectional. Then if you look at particularly the new 800-volt distribution systems in data centers, here you get into a situation where you never, the current does not cross zero like it does in AC-based systems. And without trying to make this too technical, what it means is when you have constant current and voltage, when fault conditions arise, current can actually be caused to flow backwards in both directions. And so you want to be able to ensure that you can identify where that is happening, be able to contain it, and be able to control how that ripples through the system.

So from that perspective, it is something they refer to as selectivity. Inside the 800-volt power distribution system, you need to have bidirectional capabilities in the circuit protection systems. What are your thoughts on the recent announcement of Stellantis sharing more electric vehicle technology with Leap Motor in China, and will that have any effect on your relationship either positive or negative? No. I think it could be a positive for Ideal Power Inc. We have for some time now worked closely with Stellantis. As Tim mentioned in his comments, we are preparing a custom package of devices for their evaluation in EV platforms, as well as working with them towards an EV contactor program.

So to the extent that they would be sharing some of that technology would open up a bigger market opportunity for us out of the same investment in the design and development of the product.

Tim Burns: And in the Stellantis program, or any other vehicle EV program, how do you think about will it be one model, multiple models of vehicles? How should investors think about that?

David Somo: The automotive companies rarely invest in a technology to build for one model. They typically want to take it across multiple models to get the economies of their investment, economies of scale there. And so our expectation would be with any of the automotive OEMs or tier ones considering our product, that if we are successful in them adopting B-TRAN, that it would play across more of their EV fleet, multiple models, as opposed to just a single model. Are there a couple of milestones that Ideal Power Inc. will achieve with the recent capital raise? Yes. I think primarily it is to expand and accelerate the commercialization of B-TRAN and our sales initiatives in support of it.

I mentioned the new hires that we are bringing on board, a sales leader in Europe and an applications manager in Asia. And then to engage and ensure we are getting our unfair share of mind at our distributors as a smaller company with design evaluation, design-in, design-win registration programs that we can fund to really have the distributors excited about selling our products. So it is focusing both our internal resources and our distributor network on accelerating B-TRAN commercialization. That concludes our question-and-answer session. I would like now to turn the call over to David for closing remarks. I just want to thank everyone who joined the call with us today and appreciate the questions.

We are committed to executing on our plan and sharing our progress as we move forward. So, operator, you may end the call.

Operator: Thank you. This concludes today's conference. All parties may disconnect, and have a great day.

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