Energy Vault Holdings, Inc. (NRGV) Q4 2025 Earnings Report, Transcript and Summary

Greetings, and welcome to the Energy Vault's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Michael Beer, Chief Financial Officer. Please go ahead, sir.

Thank you. Hello, and welcome to Energy Vault's Fourth Quarter and Full Year 2025 Financial Results Conference Call. As a reminder, Energy Vault's earnings press release and presentation are available now on our Investor website, and we'll be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations portion of our website. This call is now being recorded. If you object in any way, please disconnect now. And please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from actual future events or results due to a variety of factors. Please refer to our most recent 10-K or 10-Q filing for a list of those factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert.

Thank you, Michael, and thank you to everybody for joining the call today. We're very excited to again be talking to you about our results from not only last quarter but for the full year 2025. I'd also like to call out here upfront that we've included a slightly more robust investor presentation for this earnings call. I encourage everyone on the call, if you can, to go ahead and download that and view that. We will be referring to pages of the presentation during these remarks for the earnings. So we will refer to those. Please, if you can download that presentation, and you'll be able to see some of the things that are live with some graphs that might be a little bit easier to understand. Our press release has been out, and I'd like to just get right into the numbers at the high level and then put these numbers into context a bit and some of our objectives we targeted for 2025. I think one of the first things to talk about is the contract backlog where we had significant increases, sequentially up 42% quarter-over-quarter. But I think importantly, if you look at the last 4 to 5 quarters, up 4 to 5x over where we started as we began our transition of the strategy to Asset Vault. Very significant. I think it does represent why we shifted and moved from just delivering technology and delivering projects to owning and operating them over time. And I think from an investor perspective, it's an important metric to keep an eye on. That's the metric that I think is going to guide all of our future ability to be a little more predictable and with the recurring long-term revenue streams that are very high margin. Jumping to revenue. I think a very strong finish to the year in Q4, a very large quarter for us, over $150 million for the quarter and a little over $200 million for the year, quite significant in that. We actually finished within our original revenue guidance. That's before the tariffs and before some of the volatility that, of course, we've experienced this year. I'll talk about that in just a minute. From a gross profit perspective, also finished quite strong, delivered $48 million. A lot of that on the revenue we saw in the quarter, of course, and the year, then overall, over $200 million, about 8x the prior year. But importantly, look at the unit economics. So the gross margin improving from 13.4% last year to 23.6% this year. Again, I'll get into more of what's behind those numbers in just a minute. And finally, and I know this was a little bit of a surprise, we finished with that strength with a positive adjusted EBITDA. That adjusted EBITDA was essentially the result of the revenue performance, but also the strong unit economic performance and the gross margins and also by managing our operating expense. Again, I'll add some more color around that as I get into some of the details here. I think importantly, we also are highlighting now and you'll continue to see us highlight our contracted megawatts. So that's a very important number that you want to watch as we continue to execute the Asset Vault strategy. Essentially, the larger that number grows, all of those numbers on those megawatts will be backed by long-term contracts. So that will enable us to achieve annual and recurring and predictable revenue streams, again, at much higher margins than the traditional EPC, or the integration business. And that's an important number to watch where we've taken that number now up to 540 megawatts. That also now includes some of our AI digital infrastructure wins that we'll also talk about today and something if you look at that mix over time, and if you look at Page 13 that we'll refer to in a minute, you'll see what the implications of that, both in terms of this year, with that contracted megawatts getting up to 540 and some thoughts on as we evolve the company, what that might look like in 2030. As we entered the year and just going those -- through some of those results, which had a very difficult start, I think that's probably one of the most difficult years we've had that I would equate to something like the COVID year we had, where we had something that took place that was an existential threat potentially to the company with what happened with the tariffs and just the uncertainty in the market, the front half of the year. We had a few goals as we entered the year coming off, I think one of the biggest questions investors had was around liquidity and our ability to not only put the cash on the balance sheet to manage our business, but as well to fund the large projects we were anticipating with our Asset Vault strategy. And that's one of the things I think I put that first here that we feel very, very good about. It's essentially, if you think about an air, water, food analogy, you obviously need air to breathe here, and that cash was fundamental. I think that started with us getting the project financings done on the 2 projects that we were investing in off of our balance sheet and hence us drawing down cash at the end of 2024 as we enter 2025. So got those executed in a volatile environment. In addition, had the closure of our $300 million preferred equity fund, non-dilutive to shareholders. I think that was a major event that closed in October. To answer the question of Energy Vault, how are you going to fund the large projects you anticipate? This 1.5 gigawatt of projects that you want to own and operate, how is that going to be funded? That $300 million enables $1 billion to $1.2 billion of total CapEx for us to go ahead and build those projects. So I think that was a very important milestone that achieved, and I think that helped us with some of the finish with the increase in the stock price toward the end of the year. And then finally, and very recently, us executing the convertible was another, I think, important step in us not only putting more cash on the balance sheet, putting it on the balance sheet in as non-dilutive a way as possible, but also enabling us to immediately retire much higher cost debt debentures that were on the balance sheet and within our capital structure. That will also help avoid potential future dilution in the market, and Michael is going to talk a little bit more about that. I think the end result on that, I think, shows up in what we're talking about today, which is finishing at over $100 million as we did at the end of the quarter in Q4. But I think importantly, taking a look at the guidance that, again, Michael will cover, we're guiding now $150 million to $200 million of cash for our end of the year for 2026. That should give investors a lot of confidence that we not only have the liquidity and cash today to execute, but that we are going to continue to be growing that cash this year and into the future. I think the second thing I'd put into context here on these results is this transition and the execution of the strategy we outlined in May 2024 with our Asset Vault model. This was a pretty big shift in shifting from being what started as more of a technology company or -- and then an integration company, all, I guess, the public corollary would be Fluence, and shifting that into instead of delivering and turning over the megawatts, doing that, but also owning and operating them, which entails a lot of project financing, obviously, a little more CapEx as we're managing and not a small shift, I think, for the company to make and feel very, very good on how we've executed that. That's going to show up in a few ways in the results that I just talked through. And one of them is just the contracted megawatts. I mentioned moving from 65 megawatts, which were the first 2 projects that we did get project financing in the last year to where we stand today at 540 megawatts. And those are megawatts that are already contracted. Some of them are in operation already. The rest of them are in construction. Just tremendous progress just in the last 12 months alone. And then essentially, as you look at the portfolio we have that we're delivering those megawatts around, that's our core storage, stand-alone storage IPP business, which we've come to know as Asset Vault, but also now includes about 100 megawatts associated with the AI Digital Infrastructure segment. And that you're going to hear us refer to as Powered Shell, so all of the agreement we announced with Crusoe, but as well as Powered Land. And we'll be talking more about those 2 segments within the AI Digital Infrastructure as we go forward. Where did that show up in the P&L? Essentially, on the EBITDA side, we're accelerating what we had talked about before, which was $150 million roughly for Asset Vault. With just this 540 megawatt now contracted, we're looking at delivering $130 million to $150 million over the next 18 to 36 months. You'll recall that we had targeted about 1.5 gigawatts to be able to deliver that $150 million before. Now we're at 540 megawatts with a little broader portfolio and segmentation that's going to be accelerating that delivery. The other line item that this shows up in very clearly in the execution of the strategy is associated with that contract backlog number. Again, that's one of the main reasons we really shifted this. We've got now long-term contracts anywhere from 8 years to up to 15-year contracts. That gives us a lot of visibility. It's predictable, it's recurring, they're high-margin streams, and they're long term. So those, I think, are the 2 main areas. There's a very interesting page, you'll look at on Page 13 as well of the deck that outlines where we are today with that 540 megawatt and the range of EBITDA over the next 18 to 36 months that we're going to be delivering with it. But in addition, we also project out to 2030 and where we expect to be with the number of megawatts and what that range of EBITDA would look like out there. You'll see we have that at $1.5 billion plus. Just as we've gone from our 50 or 65 megawatts to the 540 here in the last 12 months, you can imagine that it's not a stretch for us to look at getting over 3 gigawatts here by 2030. So very excited about our positioning right now to be able to go ahead and achieve that and wanted to frame what we're targeting internally here as a company as we look at the different markets we're pursuing. I think the third area that is a strength of the company and has resulted in the strategy as an integrated storage IPP is around our execution capability. And this really gets to our ability to drive time to power. And this is everything from designing the systems, constructing them, commissioning them and then managing those assets over time. We've developed very quickly a reputation in the market for executing well. Every one of our customers that we've delivered projects to can be spoken to and I think would really assert that one of the strengths that they've seen from us is our ability to do what we say, to execute at budget at the schedule required and do it with the high quality and achieving the availability of the power in the market. That's obviously going to show up in revenue, and we were the only energy storage company in the market to actually hit our original revenue range despite what happened with the tariffs. We had some very difficult discussions internally on holding on to those numbers to be able to get there. And not surprisingly, with the team we've got at Energy Vault here, that the entire market had to deal with the tariff issues. The way we executed and still maintained and achieved our original guidance is a tribute to the people, their fortitude, their courage, the strength they had through a very difficult environment, also with the volatility in the stock price, and I recognize them here. To execute at the unit economics that were delivered, so growing essentially by 10 points from 13% to 23%, the gross margins, not a small thing. It shows focus on our customers, the supply chain, the efficiency. And this is versus comps for this type of business in integration and doing that EPC work, the comps in the market are between 5% to 12%. So the fact that we're at about 2x the market in this space is significant and I think worth noting. We managed our OpEx well and efficiently. We did take a reduction in June last year as there was a lot of uncertainty in the market. So we're not afraid to adapt to what we see in the market. I think that's also been a strength of the company. And then ultimately, that reflected and resulted in us delivering a positive EBITDA contribution of almost $10 million in the quarter. As I said, this area of the execution capability really comes down to our people, their focus on customers, their focus on our mission as a company, and that's never been a doubt in my mind or those of our customers. I think the fourth area here, the shift to Asset Vault was very, very key as a model, shifting that and taking that own and operate model and applying that now to this fourth area of the AI Digital Infrastructure. We've talked about the contract with Crusoe and working on the Powered Shell. You're going to begin to hear more about our efforts in and around Powered Land and how that's going to manifest itself. Pages 7 and 8 of the deck do call out some of the details of the announcement that we made with Crusoe and also the announcements with Peak Energy. I will reference that, that the 25 megawatts noted with Crusoe is significant. I know those megawatts, when you think about data centers, may seem like smaller numbers. But when you actually look at some of the graphs we've used of the EBITDA per megawatt per year, it's quite significant because those numbers for the Powered Shells are between $1.5 million and $2 million per megawatt. So you can imagine when you just do that math, even at 25, it is a significant and will be a significant contributor to our EBITDA and our profitability. And then finally, not a small and not lastly for any reason, but our sustainability efforts. I know in these days and the desire for sort of power of any kind, and I'd say almost at any price, we maintain, consistent with our mission as a company and our vision of the company, our focus on sustainability. And that was reflected again with improvement from S&P Global, who does their CSA, their corporate sustainability assessments every year. We finished in the top 2% and again, also as the top energy storage company, as far as sustainability goes, very proud of the team's efforts here and continuing with our mission and now moving into a segment, in the AI Data Infrastructure segment, where I think those attributes are going to become more and more important as we make that shift and deliver that growth. I think, back to the financial performance, and before turning it back to Michael, if you look at Slide 4, operationally, and if you look at all the different metrics, they're starting with the backlog growth, but the delivery of the revenue, getting to the gross margin, I think, which is best-in-class in our market, just, I think, a very good performance that bodes well for how we're going to be executing in 2026 now and for the next 12, 24 and 36 months. I would say from the strategic evolution of the company and stepping back, it's really important to reflect on the bigger picture of what's happened with us in the last 12 months in particular. I think we have been viewed as more of a technology provider and also as an integrator in the market. I think with our migration now and acceleration into owning and operating megawatts. And with these results and that growth in that backlog, I think there's, I think, a great corollary now as we're making this shift and now delivering these megawatts and building the projects while concurrently turning over projects to customers that led to a lot of the revenue that you saw delivered. If you go through the deck, you're going to see on Pages 5 and 6, some descriptions of 2 projects that have been wins since we last spoke on the earnings of both SOSA, which is in Texas and also in Australia, a win with our developer there around another Long-Term Energy Service Agreement. Those are 14-year agreements. They were with the government in New South Wales. Again, very significant. Those do go into our backlog as we sign those offtake agreements and fully consistent with our strategy. Slide 7, you're going to see some detail around the Crusoe partnership. Very excited working with Chase and Kelly and the team there at Crusoe and helping them and supporting them in their Spark strategy, in particular, in the modular data center space. Slide 8 talks a little bit about what we announced with Peak Energy, which is a broad global partnership, but also very importantly, a co-development of their sodium ion technology for batteries optimized for supporting and firming up power for the modular data center and broadly for the data center market. I think just to tie some things together then and in closing and as we look beyond, I think as you've come to know Energy Vault and as we progress the company, a few things really haven't changed with us. As you've seen, I think we've shown a tremendous resiliency as a company and ability, I think, to adapt to what's been a very dynamic market, absolutely. We've got a very innovative DNA and a fabric in the company that really permeates everything we do, from the daily activities to a lot of the activities we do that are a little more forward-looking and inform us, and just simply how we listen to customers and how we deliver for our customers. I think we're maintaining still a very entrepreneurial culture in the company while continuing to put in place the processes that are going to enable us to scale and scale very quickly. And one thing that certainly has been a part of our DNA from the beginning and continues to show up in the numbers and the results is our conviction around how we execute and our passion really to execute well. That's in delivering to our teammates and our employees. That's delivering to our customers. It's delivering for our shareholders, which, as you've seen in the results, very excited about not only the delivery from what we achieved in 2025, but really that as a stepping stone to what we believe is going to be a very bright, bright future on the company. It's relentless internally on that delivery. It's a great internal competition we almost have with ourselves, but always with a framework of continuous improvement. We always have sessions where we sit back and evaluate not as much as what went well, but what are the things we need to fix. That's everything from operational, that's processes, that's how we interact with each other as colleagues. So I think just to wrap it up, I feel very good, I think, about our positioning now as we're going to be going forward. We're targeted on the right segments, targeted on the right growth segments, the profitable ones, I think, is a vertically integrated infrastructure platform. It is something unique that as we're seeing in the results, we believe we can leverage. And that's integrated from not only being a traditional storage IPP where we're owning and operating assets, but we're leveraging as a competitive weapon, our internal capability, to also design those projects, to deliver them, commission them very quickly and efficiently and then manage those assets over time. We're still making significant investments, and our most significant investments in R&D are in our software platform, our energy management system. I think that's fundamental, enables us to manage the coexistence of not only generation technologies, whether that be fossil or renewable, but as well as various storage technologies and something that's an important enabler for us to be agnostic as we look at defining and developing and proposing the best technical solutions for customers. I think as you've seen from the announcements, we are accelerating our growth as well through partnerships. And with some of the most innovative and fast-moving companies in the world. We mentioned Crusoe. We mentioned Peak Energy. You'll be hearing more about other customers and partners as we do that. And I'd say, finally, all underpinned by the capital position that we've been able to build over this last 12 months and feel very good that, that's going to continue to enable us to invest in the right segments and at the right pace. So with that, let me turn it over to Michael to go through some of the details of the results. Michael?

Thanks, Rob. Turning to our Q4 and full year 2025 results on Slides 15 through 18. We delivered Q4 revenue of $153.3 million compared to $33.5 million in the prior year quarter, reflecting strong project execution in both Australia with ACEN and the U.S. with Consumers Energy, along with initial contribution from our Asset Vault portfolio, including projects in Calistoga and Cross Trails. For the full year 2025, revenue was $203.7 million, representing over 340% growth year-over-year and coming within our previously issued guidance range. This growth was primarily driven by the ramp in energy storage solutions in Australia and the U.S. as well as commencement of operations from first assets within the Asset Vault portfolio. Q4 GAAP gross profit of $31.6 million compared to $2.6 million in the prior year quarter, resulting in Q4 gross margin of 20.6% versus 7.8% in the prior year period. For the full year, GAAP gross profit reached $48 million, improving nearly eightfold versus the prior year, with gross margin of 23.6%, up 10 percentage points compared to 13.4% last year, reflecting both increased revenue scale and more favorable business mix. Q4 adjusted EBITDA turned positive to $9.8 million compared to a loss of $13.4 million in the prior year quarter, driven by strong revenue ramp and improved gross profit contribution. For the full year, adjusted EBITDA improved to a loss of $21.2 million compared to a loss of $58 million in 2024, representing a significant year-over-year improvement as the business continues to scale. Adjusted net income also turned positive in the fourth quarter at $3.7 million compared to a loss of $25 million in the prior year period, reflecting the strong operational leverage achieved in the quarter. Cash positioning and financing. Total cash as of December 31, 2025, was $103.4 million, up more than threefold versus the prior year and up 67% sequentially from Q3, coming in above our previously issued guidance range. Subsequent to year-end, we further strengthened the balance sheet through several strategic financing initiatives. In February 2026, the company completed a $150 million convertible senior notes offering, upsized from $125 million, with a portion of the proceeds used to repay $45 million in higher cost principal debt. This transaction enhances our liquidity and financial flexibility as we continue executing on our growth strategy. We also implemented a capped call, resulting in an implied conversion price of $8.12 per share. As previously discussed at the company's Investor and Analyst Day last fall, we closed a $300 million preferred equity agreement with OIC to support the launch and expansion of our Asset Vault own and operate platform, which we'll discuss further in a moment. Latest backlog and developed pipeline as detailed on Slide 19. As of December 31, 2025, the company reported a revenue backlog of $1.3 billion, representing 3x growth versus the prior year and 42% sequential growth versus the end of the third quarter. This increase reflects continued commercial momentum across several areas of the business as well as additional contracted projects and services across our global storage portfolio. On the development side, we continue to expand the Asset Vault portfolio, including the acquisition of the 150-megawatt SOSA battery storage project in Texas, which represents the fourth project in the Asset Vault platform. and Energy Vault's Australian development partner, Bridge Energy, was awarded the 14-year Long-Term Energy Service Agreement by Australian services for the EBOR battery project in New South Wales. The 100-megawatt, 870-megawatt hour project is expected to provide 8 hours of dispatchable capacity and is expected to commence operations in 2028, subject to obtaining necessary contractual and regulatory approvals. Energy Vault holds an exclusive option to acquire and construct the project, which will utilize our proprietary B-VAULT technology and EMS and will be owned and operated within the company's Asset Vault platform. In addition to ongoing project deployments in Switzerland, we recently announced an agreement in the EU with EU Green Energy to deploy up to 1.8 gigawatt hours of battery storage over the next 4 years, including a 400-megawatt hour project in Albania, subject to final legislative approval. From a developed pipeline perspective, which we now view on a megawatt basis versus megawatt hour, we are now actively progressing opportunities valued at more than $3 billion associated with 1.8 gigawatts of capacity. Taken together, our advanced development pipeline and contracted backlog provides strong visibility into the next phase of growth for the company. Turning now to Asset Vault, our strategic own and operate platform. Asset Vault is designed to create a vertically integrated ecosystem that captures value across the entire energy storage life cycle. With the backing of the $300 million pref equity from OIC, Asset Vault positions the company to accelerate the deployment of more than 1.5 gigawatts of storage capacity across priority markets, including the United States, Australia and Europe. We've already placed the first 2 projects, Calistoga and Cross Trails into service. And on a stand-alone basis, these assets are expected to generate $10 million in annualized adjusted EBITDA. Looking forward, the Asset Vault Fund 1 is expected to contribute roughly $60 million in recurring asset -- recurring adjusted EBITDA once the currently identified projects reach operation, with the potential to scale to $100 million to $150 million in recurring adjusted EBITDA by year-end 2029 as additional projects are developed and brought online. Importantly, this platform enables us to generate predictable, recurring and high-margin infrastructure cash flows while also unlocking meaningful synergies with our EPC integration business and supplier relationships. We are expecting to complete project financing for the 150-megawatt SOSA project during the second quarter of 2026 and the 125-megawatt 8-hour Stoney Creek project in the second half of 2026. We estimate $75 million to $100 million in full year 2026 internal project integration work to be completed, which is expected to yield a 15% cash margin along with the capitalization of associated labor. Please note, this contribution will not appear in either consolidated GAAP revenue or gross margin given the consolidation of majority-owned projects, but it is expected to generate positive cash flow in excess of Energy Vault's equity investment. Turning to our outlook. For full year 2026, we're estimating revenue in the range of $225 million to $300 million, representing roughly 30% growth at the midpoint compared to 2025. This outlook reflects the timing of U.S. battery deliveries, third-party project time lines, full year contribution from operating assets within Asset Vault and the initial contribution from our modular AI data center initiatives. From a profitability standpoint, we expect full year 2026 gross margin in the range of 15% to 25%, which compares to the 23.6% reported in full year 2025. From a liquidity perspective, we are targeting total cash of $150 million to $200 million by the end of 2026, supported by the recent convertible notes, the project level financing, expected ITC proceeds of approximately $40 million, customer receivables and ongoing project execution work. With that, I'll hand the call back over to Rob.

Michael, thank you. We'll wrap up here now and open for questions. Before I do, I think it's important just to note that we, as a company, are and have, I think, from a positioning perspective, feel very good about where we are with liquidity, with the portfolio we have to deliver, and I think most importantly, the team we have at Energy Vault to go ahead and deliver and execute well, as you've just seen from the results. I'll call your attention again to Page 13. If you look at that, you'll get a sense of some of the new segments that we're pursuing there and not only evolving as we have from our stand-alone storage into the Powered Land and the Powered Shell area and what we're targeting as a company. And there's a lot of other information in the deck about the results that I encourage you to look through. With that, operator, we'll turn it back to you for questions.

[Operator Instructions] And our first question will come from Noel Parks with Tuohy Brothers.

A lot of really great information in the update. And one thing that you mentioned that a good portion of R&D will be going to software, the technology platform side. And I just wonder if you could talk a little bit about the evolution of both sort of market demands for and also your own development of the overall EMS platform, sort of like what's ahead for that?

Yes. Sure. We, as you know, made significant investments back starting in 2021, late 2020, 2021, as we were approaching the market and looking at, one, ensuring we had a capability to basically leverage the best technology in the market at the right economics to deliver for customers. And we've always taken that approach. And to do that, we wanted to have a software platform that would allow us to essentially choose that best of best. And I think a lot of the projects, and I'll use Calistoga as an example, where we had a software platform to take green hydrogen fuel cells, combine them with lithium ion and deliver what's the largest microgrid operating that backs up for 2 days, an entire city. In this case, it's Calistoga. So there was a fundamental emphasis for us to be able to have that flexibility. There's a lot of capabilities that were developed in the software, initially looking at how we both operate and monitor the battery energy storage systems and really any of the energy storage systems we were developing across different technologies. And that's very important as you get into, in particular, as you're turning battery systems over, and you're monitoring them from a safety perspective, temperature, you're monitoring the humidity levels, for example, and different things and environmental characteristics to ensure a safe operation. So I think some of those things and getting into more predictive analytics and to get in front of failure modes very early on. So there's a lot of early work in the software that was more operational focused. And then, Noel, we also developed capabilities over the last 2 years to essentially move up the stack. When I say that, that means getting into broader asset management as we were going to be managing more and more portfolios, but also now owning and operating them. So that got us up into, for example, our Vault-Bidder platform or having an ability to utilize AI to manage how we're going to charge and discharge at optimum times in the market as we're owning and operating these systems ourselves. So I would say, I think the level of investment we've made here, as I'd say, is a little over and above what a normal storage IPP would do because of the nature of the fact that we're building these and operating them and monitoring them over time, but also providing new tools that get into how we're going to optimize economics and provide economic dispatching, for example, of the systems.

Great. And I was wondering and thinking particularly about maybe fuel cells as components of microgrids. I'm just wondering what you're seeing in the marketplace with -- for data center environments, the sort of load following piece of implementation of that functionality to support the sort of particular power needs of, for example, AI facilities. Anything you had on that piece of the puzzle would be great.

Sure. We're looking at and developing a lot of different technologies to optimize how, for example, data centers are dealing with the inference models and how they're dealing with some of the spiking and the volatility. And hence, for example, what we announced with Peak Energy and their new sodium-ion battery and looking at a more optimized battery performance system to support not only what you would consider as sort of standard backup for data center, but as well the data center at the edge and the modular data centers. So we're looking at that optimization. And by the way, that doesn't exclude, for example, stand-alone microgrids or utilizing, for example, fuel cells potentially as sort of island or essentially off-grid type of backup systems. So we're looking at a few different models of technology and even some trials with some customers. And hence, you've seen 1 or 2 announcements from us around looking at that and those technologies. I'd say fundamentally, that firming between looking at combining, for example, a renewable asset, that's intermittent like solar with a storage asset, and some level of potentially some fossil and other generation, let's call it, technology. I think we're right in the middle of all of these different hybrid systems. And it will be different, I think the technology that's going to be applied based on where it resides in the network, meaning at the edge or supporting some of the larger data centers.

Great. And just the last one for me. I wonder if you could -- given the gross margin for the year coming in near the high end of the guidance, I wonder if you could just sort of tease out a little bit that margin improvement and maybe just how it came in at the high end as opposed to being a little bit narrower.

Yes, sure. Happy to. It's definitely something we're very focused on, and it really gets down to those unit economics. And for us, as we deliver the projects, and if you look at the nature of the revenue that was delivered, a lot of that recognized revenue is coming from us building and turning over these systems. So we're building them, commissioning them and turning them over. So one is we have, I think, a very strong confidence in how we deliver projects and ensure that we can be very cost effective and shrink time lines and deliver an accelerated schedules on site. We do that through, for example, building digital twins before we even get to a site. So we model the site before we come on site that gets us in front of any issues and ensures we're not going to have any layout issues or issues with construction and design. So I think the effort we spend, one, in designing the systems and planning before we even get to the site, I think that's one. I think the speed at which therefore, we're able to shrink the actual time from mechanical completion, to when you have the site up fully visible through cold and hot commissioning. We do that in really at lightning speed. I think we're one of the best in the industry at shrinking that time line as our customers would attest. So that saves a lot of cost and time on site. That obviously shows up in gross margin. So all of this lower cost and efficiency will show up in gross margin. And then the third thing I'd say is how we've managed the supply chain. And the team, and this is all under Akshay Ladwa, who runs essentially all of our execution as well as the battery design and the software area of the company as our Chief Operating Officer. The work done to ensure we have flexible partners, especially as we've had to deal with the FEOC and some of the tariff areas this year, that was fundamental. So we didn't have to take any massive hits that would have, of course, hit that gross margin. And I think, Noel, the results are pretty clear. You can compare us, I think, given the revenue we're recognizing now, to the only other pure play, I think, public is Fluence out there, and they -- I know they had a difficult quarter last quarter, at about 5% gross margin, but they're still averaging somewhere in around 12%, 13% from the prior 4 quarters before the last one. So we're really achieving something in this space about 2x the market for what includes a big EPC component, which I know is typically something that's a little tougher road as far as managing your cost goes. But I think it's -- for those reasons I mentioned, those 3 reasons, I think it's really become a strength for us.

[Operator Instructions] We'll go next to Sid Rajeev with Fundamental Research.

Congratulations on the results. And yes, I love the new deck, highlighting both your short-term and long-term vision. My question is regarding your project financing, if I may. How much are you planning for both SOSA and Stoney Creek? Maybe some color on the CapEx for both?

Yes, sure. As we highlighted in the deck, we're expecting somewhere on the order of $125 million to $150 million in total project cost for the SOSA project. In the U.S., based on past experience, not unreasonable to assume sort of, let's call it, 40% type leverage on the project from a project financing perspective. And then remember, here in the U.S., we would anticipate a 40% gross ITC. So hopefully, that helps with some of the modeling. In terms of Stoney Creek, which that project financing is really envisioned to be sort of a second half event. We kicked it off some of the preliminary parts of that process. This project, I believe it was quoted as a AUD 350 million construction cost. And because of the 14-year long-term offtake agreement that we have with the New South Wales government, we're expecting to have a project leverage sort of in excess of 50%. And so we're going to market here soon. But having executed 2 of these over the last 12 months, we feel like we've got a pretty good handle on what that's going to look like. Unfortunately, in Australia, you don't get the benefit of investment tax credits, but it is a very attractive project from an economics perspective.

Got it. Now I know you don't provide segmented revenue, but any color how much of the 2025 revenue and your projected 2026 revenue come from third-party deployments, EPC and Asset Vault?

Well, with Asset Vault, while we don't report these separately, we have stated that on an annualized basis, Calistoga and Cross Trails, the only 2 operational assets within Asset Vault, are envisioned to do upwards of $10 million of recurring EBITDA, and these are very high margins. So you should kind of assume something slightly higher than that from a recurring revenue perspective. So again, very high margin, and this portfolio is just starting to ramp.

Yes. Sid, it's Rob here. I think just to add to what Michael said, it's a -- if you think about that in the context on $203 million, and we had those assets up and running basically the second half of the year, so right, only half the year, so it was a very small portion of the revenue in 2025. And yet those contributions as we go forward as those revenues now, in particular, not as much this year, but as we get into '27 and '28, when the revenue is going to come off of those long-term service agreements, and they're going to be coming in, in the 70% to 80% gross margin range, you're going to begin to see a real shift on that gross margin line as these assets that we've contracted, that 540 megawatt now that's either contracted or in construction, as those things come online, you're going to see a good shift in the mix, let's say, on the gross margin side.

But for the 2026, do you see -- are you expecting increased revenue from third-party deployments, flat? Or any guidance you can give there?

Yes. The total revenue guidance of $225 million to $300 million is obviously an increase and the majority of which would come from third-party projects.

Okay. Finally, last question. The contract backlog, $1.3 billion, it doesn't include the latest fifth project, right, the one you recently signed after December?

That does include the fifth project. There is still upside associated with the fourth project based on where we are with the offtake and the project financing on that project.

This now concludes our question-and-answer session. I would like to turn the floor back over to Robert Piconi for closing comments.

Okay. Thank you, operator. Again, I want to thank everybody for joining. A special thanks to our employees that persevered through, I think, what was a very volatile year for sure and one that we're very excited now to look at how we're going to build this platform and continue to have another growth year here, as Michael referenced, in 2026 and looking forward to sharing a lot more details around those things and some new things we're working on in the quarters to come. Thank you very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.