QuantumScape Corporation (QS) Q2 2026 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to Quantum's Cape's Second Quarter 2026 Earnings Conference Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Sam Kamara, Onebscape's Senior Director, Investor Relations. You may begin, sir.

Thank you, operator. Good afternoon, and thank you to everyone for joining QuantumScape's Second Quarter 2026 Earnings Call. To supplement today's discussion, please go to our Investor Relations website at IR Danske. -- to you, our shareholder letter. Before we begin, I want to call your attention to the safe harbor provision for forward-looking statements that is posted on our website as part of our quarterly update. Forward-looking statements generally relate to future events future technology progress or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, -- actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. There are factors that may cause actual results to differ materially from the content of our forward-looking statements for the reason that we said in our shareholder letter, both 10-K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Quantums Gate's CEO, Dr. Siva Sivaram, and our CFO, Kevin Edrick. With that, I'd like to turn the call over to Simba.

Thank you, sir. I'd like to start by discussing our automotive commercialization progress. This quarter, we announced a partnership with Honda. This is a multiyear agreement aimed at advancing our solid-state lithium metal battery technology for automotive and other applications in the Honda product portfolio. Honda is renowned for their engineering excellence and product quality and has made significant investments in scaling up solid-state battery manufacturing capabilities. This partnership results from 1 of the most rigorous assessments of our technology to date. Our ceramic separator and the anode free lithium metal architecture enables QS to provide solutions to unlock the full potential of solid gain batteries. With Honda's diverse product portfolio, this collaboration allows us an additional pathway to expand into new high-value markets. We recently updated our ongoing collaboration and licensing arrangement with Volkswagen and Powerco. With a set of milestones and payments focused on automotive sales development large format cells and our future technology road map. We are also working with 2 other top 10 automotive OEM customers under existing joint development agreements. We continue to strengthen our relationships with automakers in North America, Europe and Japan. And on this front, we have shipped sales to an additional automotive OEM customer. We also see broad-based interest in our technology across a variety of applications beyond electric vehicles, including AI data centers and other advanced applications such as aerospace and defense. We believe that all these end markets can be served by our fundamental technology stack, but each customer can benefit from an individually tailored go-to-market approach. In order to serve our diverse and growing customer base, we are establishing 3 business verticals. QS EV for electric vehicles, QS DC for AI data centers and QSAS for advanced solutions for applications, including aerospace and defense. QSB is working with auto OEMs around the world, including Volkswagen and Handan. QBC is engaged with ODMs to design solutions based on QSC 5 technology for the fast-moving AI data center market. And QSAS has shipped to a major American defense prime and is engaged with global players across the aerospace and defense industries. Next, an update on the Eagle line our highly automated pilot cell production line in San Jose, California. The Eagle line serves several purposes, greater sale volumes allow us to meet customer demand for samples. Higher throughput accelerates the process development cycle, and automated equipment serves as a proving ground for scaling up production. Demonstrating scalable production of a unique technology on a first-of-a-kind automated line is a significant challenge. And assets, it is 1 of our 4 key annual goals. Applying our systematic methodical and iterative approach, we have made significant operational progress with the Eagle line. Core duals are showing up 10 greater than 90% Key metrics of productivity are hitting our targets, and we are currently ramping sample volumes and shipping sales to customers. As we continue to improve process stability and control, we aim to further double sell output in the second half of 2026 and anticipate customer sample shipments accelerating across all 3 verticals. We are orchestrating a network of partners within the QS technology ecosystem with the aim of scaling up sell production. As part of this effort, we are working closely with established battery equipment vendor to lay the groundwork for future factories. We also continue to collaborate with our ecosystem partners at Murata Manufacturing and Corning, working towards high-volume ceramic separator production using our Cobra process. Next, 2 updates on our technology. First, we have received consistent customer feedback that in addition to the combination of energy density and power capability, the safety profile of our technology is highly valued. Competing next-generation approaches such as silicon, our lithium metal anodes with liquid electrolytes can post serious safety hazards. In contrast, -- our proprietary ceramic separator is nonflammable and noncombustible, which enables an improved safety profile relative to lithiumion cells. Thanks to the increased sell output from the Eagle line, we are able to connect large-scale safety testing across a broad range of commercially relevant tests, including nail penetration, external short circuit and thermal stability testing up to 300 degrees Celsius, whereas conventional lithium-ion testing staff at 200 degrees. We are pleased to report that larger scale testing continues to show that QSC is a significantly safer cell design compared to both conventional and next-generation lithium-ion cells. We have also seen customer interest for our technology in cell form factors that are larger than the QLC 5. One benefit of larger format cells is improved packing efficiency which can result in higher cell-level energy density. In response to this customer interest, we have demonstrated that our COBRA process can produce larger area separators for higher capacity cell designs which shows the flexibility and scalability of our ceramic separated technology to meet customer requirements. Lastly, I want to take a step back and look at the big picture. QS was founded with the mission to revolutionize NRE storage. Today, it's becoming clear just how consequent all that mission is. Transportation, AI and defense are simultaneously undergoing fundamental transformations. Electric vehicles are reshaping the global automotive market. Drones and unmanned systems are rerating the rules of different strategies. And AI is unlocking new capabilities where every business and person on the planet. These extraordinary developments all have 1 thing in common. They all need better batteries. We are positioning our organization to take advantage of these technology transformation. QSBC is working to capitalize on exciting high-value opportunities in the AI data center market. And QSAS is engaging in customers in high-value aerospace and defense applications. With QS, we are advancing automotive commercialization with our 4 top 10 OEM customers, including the newly announced Honda partnership. The Eagle line is ramping up to enable increased customer shipments in the second half of the year, and we are investing in future technology road map with larger format cells and more in the pipeline. There is much work still to do. But our team has a talent and tenacity to overcome challenges as the industry later technology to make the most of these transformational opportunities. Thank you for your support. And we look forward to sharing more updates in the months ahead. With that, I'll turn things over to Kevin for a word on our financial outlook.

Thank you, Siva. GAAP operating expenses and GAAP net loss in Q2 were $106.1 million and $98.2 million, respectively. Adjusted EBITDA loss was $64.2 million in Q2, in line with expectations. For full year 2026, we reiterate our adjusted EBITDA loss guidance of between $250 million and $275 million. A table reconciling GAAP net loss and adjusted EBITDA is available in the financial statement at the end of our shareholder learn. Capital expenditures in the second quarter were $4.6 million. Q2 CapEx was primarily composed of investment into our technology road map and associated facility spend. For full year 2026, we lowered our guidance for CapEx to be between $27 million and $37 million reflecting capital discipline and cost savings on specific capital projects. We set a public goal for customer billings in 2026 to exceed customer billings in 2025. As of today, we have achieved this goal. Customer billings in Q2 were $10.8 million. Total customer billings through Q2 '26 are $21.8 million, exceeding fiscal year 2025 customer billings of $19.5 million. Customer billings as a metric represents the total value of all the invoices issued by QuantumScape to our customers and partners in the period regardless of accounting treatment. As a reminder, customer billings may vary from quarter-to-quarter due to fluctuations in activity as we progress through various phases of engagement. This operational metric is not a substitute for revenue under U.S. GAAP. We ended Q2 with $859 million in liquidity and will remain prudent with our strong balance sheet going forward. As always, we encourage investors to read more on our financial information business outlook and risk factors in our quarterly and annual SEC filings on our Investor options website.

Thanks, Kevin. We will begin today's Q&A portion with a few questions we received from investors that I believe would interest investors. Five, we are now halfway through 2026. What proof point should investors evaluate to know if quantitate is striking to our annual goal?

Goal #1 is to demonstrate scalable production with the Eagle line. Taking a unique technology on a highly automated process from the ceramic separator to the unit cell to the fully assembled QSC price that meets customer requirements is a significant challenge. We are making strong operational progress and remain on track. Goal #2 is to advance automotive commercialization with QS EB. We are working with 4 of the top 10 global automakers, including our new deal with Honda. Adding another paying customer is a big step forward in our commercialization efforts. We also updated the Powerco collaboration and licensing arrangement with milestones for automotive cell development, and we shift sales to an additional automotive OEM in this past quarter. Goal 3 is to enter into new high-value markets. We are very excited about the progress we are making in these new business verticals. We have appointed talented leaders to run QSBC and QSS. QSBC is engaging with audience and data center architects to provide solutions for this fast-growing market. QSS has shipped QLC 5 cells to a major American defense prime and we are engaged with global customers in aerospace, defense and other advanced applications. Goal 4 is to go beyond QSC 5 with our future technology road map. This quarter, we showed larger format separated from COBRA, which enables higher energy density sales. We have also shown new safety data this quarter, with thermal stability, external short cert and nail penetration results that are particularly outstanding compared to competitors. We are committed to sharing more on our technology road map later in this year. We're making the progress Site discussed toward our technical and commercial goals while remaining disciplined stewards of capital, we have reiterated adjusted EBITDA guidance and total customer billings for 2026 are already higher than last year ever. We are now organized into 3 business verticals -- what is our approach to serving automotive and nonautomotive markets. We see broad-based demand for better batteries across the board, AI data centers aerospace, consumer electronics, medical devices, defense and many other applications. We believe they're all capable of being served by the QS technology platform. the benefits of energy density, power, safety, U.S. supply chain and workforce all resonate with our customers. For the QSEV vertical, our automotive customers all have development pilot lines for batteries and high-volume manufacturing capabilities. For QSBC and QSS customers, this may not be the case. They are fast moving the number of customers is largest, go-to-market have different channels. We may involve ODMs and product integration looks different with more opportunities for value creation. These new verticals increased the size of the market, strengthen the fundamental technology platform and benefit the QS ecosystem, which adds value to our customers across all verticals.

See, what should investors take away from the recent updates to the VW and Powercor relationship? And how do they reflect the progress being made towards commercialization.

And the relationship with VW Powerco continues to be strong, and the 2 teams are working closely together on site here in San Rule. The overall objectives of the collaborations are unchanged. Industrialize the U.S. technology and transfer the technology to Volkswagen PowerCo for automotive commercialization. Over the past 2 years, we have continued to update and revise the scope of work as we progress this relationship. The updated scope of work includes milestones related to larger form factor cells as well as technology elements from QuantumScape's advanced product road map, and we look forward to sharing more on that soon.

From a financial perspective, customer billings under the 2025 VW PowerCo collaboration agreement represent a cost share for QS expenses incurred under the agreed scope of work. Under the new scope of work, we've signed payments to deliverables aligned to our product road map. Additionally, we eliminated Moto E related milestones, given that the organizers put that race series on hiatus. As a result, even though the total possible payments under the agreement have reduced from approximately $131 million to approximately $75 million, we now project significantly reduced expenses for the project. We forecast a net neutral financial impact in terms of cash when compared to the 2025 scope work. I'd refer investors to the 8-K on file for more information.

Okay. Thanks so much, Kevin. We are now ready to begin the live portion of today's call. Operator, please open up the line for questions. .

[Operator Instructions] Our first question for today comes from the line of Gabriel Gonzalez from UBS.

So firstly, on the updated PowerCo agreement. The updated milestone framework appears to have shifted away from execution-oriented targets like battery cell delivery and validation over the next 2 years towards cell development and technology-related objectives. So -- can you just help us understand the reasoning behind that change? And should we view the absence of the earlier milestones as a change in expectations regarding the timing or achievability?

The Volkswagen Powerco agreements, we have bid in every year. We have done that 3 years in a row. As the relationship progresses, we updated based on the milestones yet to come, and we have done that consistently. The relationship is very strong, and our objectives remain the same. This reflects that we will be paid based on the milestones that we both have agreed that we need to achieve, which are aligned with our technology road map. For instance, the largest pharma, the future technology milestones that we need to get, et cetera. There is not anything philosophically different about the objectives of the joint program.

Got it. Okay. And Kevin, you mentioned a neutral impact to cash flow, the lower expenses for the project offsetting the lower cash inflow. But is there any impact to the $130 million royalty prepayment from PowerCo? And if not, what's the progress update there? And should we expect those funds to come in this year or next year?

Great question, Gabe. You're correct that the $130 million prepay is unchanged here and is released by technical milestones and alignment on the form factor. And there, as we've laid out in the letter, we've made nice progress, as we've outlined with the Eagle line and also with the demonstration of those larger separators coming off of our COBRA line. .

And our next question comes from the line of Ethan McKelly from TD Cowen.

So a super quick question. So you guys highlighted QSA, the shipments of the QS5 cells in the quarter. I guess, can you help us understand maybe some of the nuance around that shipment? Was it just natural ramp cadence associated with the Eagle line -- is there any kind of the deferral of milestones that might have freed up some incremental capacity that allowed those shipments? Just trying to get a better understanding, I guess, of maybe how that ramp is kind of progressing on yields, line time, cycle times and any improvements or color you can provide at least on that AI model update for the reliability improvements that may have contributed there as well?

Justin, great question. So the answer is yes. The Eagle line, obviously, is improving in productivity -- as you would expect, taking a brand-new technology, a very unique technology into a new highly automated line and getting the product out to meet customer demand is a difficult challenge. . And we've been doing very good progress on the Eagle line through the last 3 months since we installed a line in February. And this allows us the increased volume allows us to -- there are 3 major benefits out of this. A, clearly, it gives us more samples to ship to customers, be the higher volume allows us to learn rapidly; and three, the even line itself serves as the basis for the technology transfer for the higher volume lines later on with our customers. So this naturally allowed us to be able to ship this out of the Eagle line for a customer demand in the U.S. defense frank.

Super helpful. And then maybe on QSDC while we're on the topic, like how far away do you kind of envision the initial shipments of samples into that vertical? Obviously, there's been progress in the quarter. Just trying to get an understanding of maybe the time line as to when samples start hitting them and how quickly the conversion rate might be relative to the AF side of the business now?

Yes, SDC, as you all observed, is a very fast-moving business. And the demands are going up rapidly, and there are significant players involved. We are working closely with data center architects and ODMs that supply to these architects. We are working closely to develop designs that can be delivered to these ODMs to integrate. And it also allows us to do higher value in our integration in the product. So this is all coming together very rapidly. We have a new General Manager for the business. Share is getting ramped up on this very, very rapidly.

Perfect. And then if I could sneak 1 final 1 in before jumping into more mechanic wise. On the Q2 billings of the $10.8 million, how much of that was power because I guess just trying to square up maybe the 75% in context of, I believe it was 20% as of the end of Q1. Just trying to figure out the incremental to see how much is left at least on that milestone update that you guys provided from a payment perspective.

Yes. Thank you for the question. So they're certainly part of the mix. We don't as practice break out the billings into finer detail. I would mention that as part of our annual goals. We have a number of customer-facing ones. One is advanced automotive collaboration. The update to VW today. You have the Honda relationship. Further success there means advancing those relationships and adding more and also the letter goes into detail with making progress in other customer segments, including the AI data center and the advanced solution spaces. So the goal is to advance those relationships as well and you get a broader and broader portfolio customer activity across that metric. One other brief plug on the Eagle line, we did put out a video today between our COO, Luca and his VP of Automation Hardware talking about the importance of the line and what it meant to bring it up. And also in the quarter, to the extent there's interest in the data center piece, we do have that new GM talking about the data center piece, the segment that we're targeting and some early details on go to market.

[Operator Instructions] Our next question comes from the line of Leo Zack from HSBC.

I just wanted to touch a little bit on the new verticals. Do you have any plans to expand the business into other different verticals. I'm thinking about consumer and how the technology you're developing its flow into it, but I'm just wondering if the new business verticals like data centers and pace will be your main focus along with automotive? Or are you open to exploring other opportunities?

Rishad to hear from you. Thank you. Yes, is the answer to that question. We have clearly separated our QS EV, and we have clearly separated our QSBC, which is the data center business. The Advanced Solutions business explores all of the other opportunities, including aerospace, defense, medical devices and consumer electronics and other interesting areas. We do see substantive opportunities for the QS technology platform in many of these, particularly the SC5 form factor. The existing product can be shipped into many of these products. So we are actively exploring these opportunities as well.

Okay. And just another follow-up. You have noted in the remarks that data centers are transitioning to 800-volt designs that are similar to EV architectures. So just given that there's urgent constrained or power constraint actually that the hyperscalers are facing today. Could that mean that QSC could potentially reach higher volume commonization faster than serious because of this very intent or a strong demand in the market, which is required some complex vehicle integration? Is that mature?

Visa, I do understand the question. The fact that the data center market has a lot of need, especially from energy to power high-quality power delivery is 1 of their biggest bottlenecks and we, with our high energy and power density and particularly safety is a great fit for this market means that there is a lot of opportunity here. . So this is the reason we have stood up 3 verticals so that we can put the focus on each of these verticals without sacrificing our go-to-market focus on each of these. We will be giving data center with this 80 world transition coming up, all the attention to make sure we capture that market as quickly as possible.

And last, if you recall, expanding into high-value markets in 1 of our 4 annual goals or any operating plan includes investments into go-to-market and commercialization capability, notably in sales, product management and engineering. The hiring is going well, and we did reiterate our adjusted EBITDA guidance on this call.

And our next question comes from the line of John Sager from Evercore.

Wanted to get some additional clarity on the PowerCo agreement. So my understanding is be under the old agreement, you had up to $130 million that would be billed through Q2 of 2027. Under this new agreement, it's $75 million through Q2 of 2028. So if were to say like roughly $41 million remaining through Q2 '28, is that correct? Sorry, $34 million remaining through Q2 of '28 because you build around $40 million so far, I think.

Yes. We -- you have the up 2 correct. We haven't clearly kind of broken out which portion of that from PowerCo is over time. But I would just reiterate that you have the basics right, the F2 changed. The forecast expenses also went down and we see a neutral cash impact when related to the 2025 scope work. That's correct, John.

And then on the timing of Power Co. I think the last understanding is that they had said started production begin -- are you still on track there? And what are the next like milestones that we'll kind of hear about as it relates to this partnership so that we can track like your progress towards that 2029 date?

So John, all of our work goes through the Eagle line. The Eagle line progress is what determines how quickly we can transfer the technology to arc to take it up there. and we are seeing great progress here. Eagle line got installed and released in February. And from February to now, we have integrated all the pieces of the Eagle line and now making sure they are up time is high. The productivity is good and now continue to work on process stability and process control. These are the kind of things that allow us to increase the volume of output, which we plan to double in the second half of the year, that allows us the confidence to work with to Volkswagen and Power Cote transfer.

And is 2029 still the target?

4 That is correct. We have not announced any change from our original plans. .

Okay. And on the 2 new business lines, if I could ask 1 more, -- what is the focus for those business lines this year? Are you more focused on driving customer demand and JDAs -- or are you looking to sort of build out the ecosystem, meaning that like the first step is kind of you need to sign some more -- sign a battery manufacturing partner? .

Yes. John, so these 2 new businesses as we are starting up, the big advantage is that they use the power of the QSC 5 platform. The QSC 5 platform with its no compromise performance across all aspects is the foundation on which they are built. Our immediate next focus is on go to market. We are reinforcing the good market personnel strategies to make sure we are able to service these customers as rapidly as possible. You are right immediately afterwards, we should be focused on getting volumes out to them.

Okay. So first step customers, second step find a partner to do the actual manufacturer.

Yes. And John, if you recall, in the summer 2025 amendment to the Power collaboration agreement, we expanded capacity of that license up to 85 gigawatt hours -- and that incremental 5 gigawatt hours was permitted by BW PowerCo to go outside of the automotive market. So PowerCo is certainly 1 channel. In the fullness of time, we are engaged with multiple different customers in that Comsat Advanced Solutions channel. The Eagle line is a very powerful capability to do customer sampling. But in the fullness of time, we absolutely, we'll need to add capacity.

And our next question comes from the line of Mark Delaney from Goldman Sachs.

You've got Auchan for Mark Delaney. And on billings, nice to see the progress there with 2026 billings already exceeding 2025. Can you discuss the outlook for overall customer billings in the second half of the year maybe relative to the first half?

So thank you. We have made kind of steady progress. Last quarter, we added ecosystem partners for the first time. And as you mentioned, we have exceeded the 2025 levels in 2026, now that we're at 21 $28 million. In addition to VW Powerco, as highlighted in this letter, we added Honda, an amazing top 10 OEM partner with strength in engineering, both within automotive and a broader set of product offerings at the end of a quite extensive kind of diligence and selection process. So we going to keep making nice progress there. As I referred to earlier, you should expect kind of customer billings to be a metric that has some variability into it. The things that we control would be to advance their relationships individually and to continue to add additional automotive partners as well as to start to add partners from these new spaces and to increasingly turn it into a portfolio.

And 1 more for me. On the sort of nonautomotive markets, SDC and QSS and again, nice to see the progress there. Can you discuss some of the time lines you're seeing from customers and production volumes that prospective customers are requesting? And how closely do these specifications align with your more traditional automotive road map? .

Good question. Now going back to the prior questions to finish your thought. Kevin was talking about Honda, adding netheraying customer that we can disclose is actually a big deal that helps us rounding out that portfolio. Now back on to QS DC and QSS. The automotive specifications are very well known. Each of the others have their own unique spec needs. For instance, safety is across the board very, very, very important to all of them. Esprit in a data center right next to very high-value GPUs, safety is extremely critical. -- power, especially in the case of data center is discharge power that is needed. In the case of the data center again, low temperature operation is not important, but higher temperate operation is important. In the case of military applications that we are looking at, not losing capacity while being able to discharge substantive power is an important characteristic. These are what we credit on the QSC platform that it is a no compromise platform that is able to supply power without losing capacity, et cetera. So you can see that these new businesses, new verticals are complementary and they play off of the basic capabilities of the platform.

[Operator Instructions] And our next question comes from the line of Winnie Dong from Deutsche Bank.

First 1 to Honda. I was wondering if you can sort of describe the next steps to securing a deal like Parc for Honda. -- any sort of high-level time lines you have been on internally?

4 Thank you, Vinnie. As you know, Honda is renowned for their engineering expertise. They have spent a lot of money on Tata battery development entity. They have a large pilot facility. They came in and did an incredibly deep evaluation of the technology and saw the synergies, how their core investments can be leveraged with our architecture. The ceramic is common the Japanese ecosystem that exists that we have spent so much in creating, they all go together with the ceramic, the separator and the lithium metal anode free architecture. They clearly see that this is the way for them to enhance their solid state portfolio across all of their products. So immediate job is to move this joint development into the next level of development and move it along the same template that we have developed with Poco Volkswagen. So we can move very quickly across their product portfolio.

Got it. And then on the QSDC and QS, I was wondering if you can perhaps talk about some specific milestones that you guys have in mind for those 2 business lines. For instance, would it be like still shipping sales to the data center customers or some form of partnership or any sort of announcement that we expect to see this year or perhaps into next year?

5 So Vinny, yes, you will see announcements from us on both of these, and that will give you a time line. But on a general sense, I can use QS DC as an example. The 800 world transition is in front of us. The megawatt rack also is just ahead of us. These all are going to be deployed in data centers towards the end of 2028, which means we need to be ahead of that with respect to developing an integrated product and delivering it to them. So you can see natural deadlines developing when these transitions are happening in the marketplace.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Steve for any further remarks.

Thank you, operator. I'd like to recognize the entire QS team for their execution and to thank our shareholders for their continued support. We look forward to updating you on our progress in the months ahead. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.