KULR Technology Group, Inc. (AMEX:KULR) Q4 2024 Earnings Call Transcript

KULR Technology Group, Inc. (AMEX:KULR) Q4 2024 Earnings Call Transcript March 27, 2025

KULR Technology Group, Inc. reports earnings inline with expectations. Reported EPS is $-0.02 EPS, expectations were $-0.02.

Operator: Good afternoon, and thank you for joining us for the KULR Technology Group Fourth Quarter and Full-Year 2024 Earnings Call. Joining me on the call today will be Michael Mo, the Chief Executive Officer of the company; as well as Shawn Canter, the Chief Financial Officer of the company. I am Stuart Smith, and I will be your moderator for the call today. After we receive opening statements from both Michael and Sean, we will dive into a question-and-answer portion of the call, which will be the answering of questions submitted by you via e-mail and social media. But before we begin the call, please listen to the following safe harbor statement. This call contains certain forward-looking statements based on the company’s current expectations, forecasts and assumptions that involve risks and uncertainties.

Forward-looking statements made on this call are based on information available to the company as of the date hereof. The company’s actual results may differ materially from those stated or implied in such forward-looking statements due to risks and uncertainties associated with KULR Technology Group’s business, which include the risk factors disclosed in their Form 10-K filed with the Securities and Exchange Commission on April 12, 2024, as may be amended or supplemented by other reports KULR files with the Securities and Exchange Commission from time to time. Forward-looking statements include statements regarding their expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as anticipate, believe, could, estimate, expect, intend, may, should and would or similar words.

All forecasts provided by management on this call are based on information that is available at this time and management expects that internal projections and expectations may change over time. In addition, the forecasts are entirely based on management’s best estimate of their future financial performance given their current contracts, current backlog of opportunities and conversations with new and existing customers about their products and services. KULR Technology Group assumes no obligation to update the information included on this call, whether as a result of new information, future events or otherwise. With that, I will now turn the call over to Michael Mo, CEO of KULR Technology Group. Michael, the call is yours.

Michael Mo: Thank you, Stuart. This is Michael Mo. Thanks, everyone, for joining us today. KULR closed out 2024 with a record quarter in Q4. Revenue increased to $3.37 million, up 44% from Q4 2023, while our operating loss decreased by 29% year-over-year. Gross margin was 64% in Q4 2024, compared to 29% in the same quarter 2023. Product sales customers increased 35% to 53 in 2024, compared to 39 in 2023. Service revenue customers increased 100% to 34 in 2024 from 17 in 2023. By the end of 2024, KULR had approximately $30 million in cash and $20 million in Bitcoin Holdings. As of March 26, 2025, we have over $80 million in cash in Bitcoin Holdings and no debt. KULR is in its strongest financial position ever with a rock solid balance sheet and 2025 will be a transformational year for us.

Energy consumption and thermal management are the key bottlenecks for artificial intelligence, AI infrastructure and applications. At KULR, we will leverage our energy management expertise to serve multiple fast-growing markets in space exploration, robotics, physical AI at the edge and AI infrastructure platforms. We expect to lease double our revenue in 2025 as we grow our energy management business and expand into new applications. To accommodate our growth, we’re expanding our Webster Texas headquarter. We have signed a lease for over 13,000 square feet of additional office space next door to our current facility, making the total size to over 31,000 square feet of manufacturing and office space. Our headquarter facility has received AS9100 certification, which is a significant milestone reflecting KULR’s dedication to producing the highest quality products within the aerospace and defense industries.

Q&A Session

The AS9100 is the globally recognized quality management standard for organizations that design, develop and provide aerospace demand and aviation products and services. We’re now well positioned as the one-stop shop total solution provider to design, test, manufacture and certified battery products of the highest quality in the United States. As you all know, we’ve been investing in our KULR ONE battery platform. We’re now reaping the benefits of that investment. For our KULR ONE Space product, we now have multiple customer engagements to design their 20793 compliant batteries. We’re going through 20793 certification process now with NASA for one of our customers. We have KULR ONE Space reference platform for 100, 200 and 400-watt hour batteries.

We have our own battery management system, BMS for both terrestrial and space applications that are radiation tolerant. We’re entering production stage for both our KULR ONE Space and Guardian customers in 2025. In addition to KULR ONE Space and Guardian products, we’re seeing growing demand for battery pack design and manufacturing services from U.S. companies developing drones and robotics. Defense tech and warehouse automation are two areas of particular interest. The new generation of capacity companies are focused on innovating rapidly and delivering cost-effective systems to the battlefield. BOM costs and performance are more important than ever. And KULR is focused on delivering cost-effective solutions for these companies by leveraging our supply chain and advanced technology portfolio across multiple projects.

Robots for warehouse operations is another rapidly growing area, and these solutions are all battery operated. Safety is paramount in these applications and KULR is able to offer companies in this space a range of solutions to improve safety profile and performance for their battery packs. NVIDIA’s CEO, Jensen Huang, has highlighted the emergence of physical AI, AI systems capable of understanding, interacting with the physical world as a significant rapidly growing market opportunity. He has referred to this sector is a multitrillion dollar opportunity, particularly emphasizing the potential in robotics and autonomous machines. At KULR, our exposure to this market began through our battery customer interactions. But we quickly realized that this is a massive market opportunity that we must participate in with more than just batteries.

We’ll announce our strategic partnership to enter the robotics and physical AI market in the next few weeks. We announced on Tuesday that we now have 668 Bitcoins, which is more than two-third way towards our near-term goal of 1,000 Bitcoins. I get asked a lot about how we start the volatility in Bitcoin. Michael Saylor said the best, “volatility is by talent.” In this agent AI where things are transforming at a crazy rate overnight, so one may call it the DeepSeek moment. We better get used to volatility. I believe that to survive and to thrive in this new era of AI, KULR needs to build a culture that embraces volatility so they can reduce the rig — so it can reduce the risk of our own DeepSeek moments. Sequence treasury strategy serves two objectives for us.

One, we believe that Bitcoin is a long-term store value that beats inflation and gains in value; number two, it’s a training ground for building dynamic corporate culture and execution cadence that positions KULR to succeed in the new AI era. We’re doubling down our commitment to BTC with BTC mining. We’re actively exploring partnership opportunities. As we roll out our AI products and energy management technology applied to AI data centers, we expect to apply due to BTC mining as well to reduce energy costs. Cathie Wood has predicted Bitcoin to reach $1.5 million by 2030. Michael Saylor is projecting Bitcoin to reach $20 trillion in market capitalization within the next four to eight years from the $2 trillion market cap right now. I hope they’re both right.

Speaking of Cathie Wood, I would like to wrap up my portion of the presentation with her big ideas for 2025, AI, robotics, energy storage and blockchain Bitcoin. These ideas are not isolated. Their convergence accelerates innovation, leading to potential growth or exponential growth to profound social impact that are fundamentally and structurally changing our financial systems. At KULR, although we’re a small company with limited resources, but we view this convergence as a generation opportunity for us to participate in, because we are all at the very early stage of AI, and we have not even yet started the physical AI and the robotics stage yet. There will be many DeepSeek moments to come, and we want to be ready to take advantage of those moments.

We’ll focus on applications where we can add our expertise and the existing business is disrupted by AI, and we can pivot to these businesses that could be accretive to KULR quickly. To give some context around our thinking and strategy, I’d like to share with you a couple of data points. In a recent interview at the Tokyo University in Japan, Sam Altman, CEO of OpenAI, predicted that OpenAI software programming AI agent will be the Top 1 program in the world by the end of 2025. SoftBank’s CEO, Masayoshi Son, expects AI intelligence to advance 1,000 times every technology cycle, which lasts about two to three years. At that rate, we can expect AI intelligence to be 1 million times more intelligent than what they are today by the end of this decade.

As these predictions become realities over the coming months and years, every company in the world will become an AI and software company. KULR needs to get there as fast as possible. Now before I hand the call over to Shawn, I let encourage you to check out our new website at www.kulr.ai. It’s a fresh new look to showcase all of our products and services. Thank you very much. Next, Shawn, will discuss financial details.

Shawn Canter: Thank you, Mike. Let’s cover some key highlights now for both the fourth quarter and the full year 2024. Topics worth noting include revenue, a record revenue quarter and record revenue year for KULR. Gross margin. Gross margin was up 100%, fourth quarter 2024 over fourth quarter 2023. Operating expenses were down. We continued the trend of expanding our paying customer base and reduced our customer concentration. KULR’s balance sheet is strong. We have a meaningful net cash position with no material debt obligations. Our cash and Bitcoin Holdings are worth over $80 million as of the close on March 25. We established our Bitcoin treasury position in 2024 and now own 667. Let’s start with our income statement. In the fourth quarter, KULR set a new revenue record.

Revenue was approximately $3.4 million, and this is about 44% higher than the same period last year and 6% higher than the third quarter of 2024, which was then itself another revenue record quarter. In 2024, KULR delivered $10.7 million of revenue, another revenue record for KULR. This was up 9% from 2023, which was itself also a revenue record year. In 2024, product revenue was approximately $3.6 million, down 47% year-over-year and service revenue was approximately $4.4 million in 2024, up 51% from the same period last year. In 2024, KULR signed its first two revenue-generating license agreements and recorded $2.7 million in revenue. We are excited about this business model and hope to be able to announce similar type deals in the coming quarters.

Gross margin for the fourth quarter was 64% versus 29% in the same period last year. For the full year 2024, gross margin was 51% versus 37% in 2023, a 37% increase year-over-year. 2024 versus 2023 full year R&D expenses were down 34%, and SG&A was down 16%. 2024 earnings per share improved 55% over 2023. Now let’s spend a moment on customers. In 2024, KULR had 71 paying customers, up from 53 in 2023. Paying product customers were up 36% from 39 in 2023 to 53 in 2024. Service customers were up 100% to 34 in 2024. In addition to expanding our customer base, we are reducing our paying customer concentration. Now a few points on our balance sheet. Compared to the end of 2023, our balance sheet has improved materially. At the end of 2024, our cash balance sheet was $30 million — our cash on hand was $30 million.

Our current accounts receivable was $2.6 million, and we held $20 million in Bitcoin. Total assets were $63 million at 12/31/2024 versus $11 million at the end of 2023, up 479% and we had no material financial debts. Total liabilities were down 58% to $5.5 million. Before moving on, as a reminder, we currently hold about 667 Bitcoin. KULR has decided to early adopt the new FASB rule for marking to market our Bitcoin Holdings. So you’ll see on our 2024 income statement, a line item called “Change in fair value of digital assets.” At the end of 2024, this line item was a $719,000 charge. This is a noncash item. It just reflects the change in value from the purchase date to the mark date, in this case, 12/31/2024. It does not reflect that we sold any Bitcoin.

Going forward, our Bitcoin holdings will be marked on a monthly basis. Back to you, Stuart.

A – Stuart Smith: Thank you, Shawn. Well, let’s jump right into the questions now. And this first question is for you, Michael, here it goes. I saw the news on Thursday, March 12, about the deal with Space Agency or Space Agency to provide M35a batteries. How prevalent do you think space travel becomes over the next 10 years, will there be applications on earth as well?

Michael Mo: Yes. Thanks, Stuart. Yes, space travel will definitely become more affordable and prevalent over the next 10-years. But we believe that the bigger market opportunity is privatized space exploration with new satellite equipment into space that they’re all going to require batteries to power them. And also as the volumes go up, the cost will go down. As that happens, we expect some of these more higher-end technology to be available for applications on earth.

Stuart Smith: All right. Excellent. Next question is for you, Shawn, there it is, are there plans to diversify crypto or buy more?

Shawn Canter: Thanks, Stuart. Sure. As we’ve indicated before several times, from a crypto point of view, we are focused on our BTC or Bitcoin treasury program.

Stuart Smith: Okay, thank you for that. Here’s the next question, and it’s for you again, Michael. There is a rumor circulating on Twitter AKA X that KULR is providing materials to Rocket Lab Archimedes engine, specifically a carbon composite material to be used in a rocket called Neutron. One, can KULR please confirm or deny that they are providing any materials to Rocket Lab. Two, if they are providing any materials to Rocket Lab, can KULR confirm or deny if the materials provided would be sufficient for the two companies to announce a partnership. And three, if the partnership will be announced, can KULR please give details of any further opportunities that may arise from working together with Rocket Lab and how much money KULR expects to realize from the partnership and how often they would be providing materials. I’m pretty sure he slipped about seven questions in there, Michael. I’ll leave it to you.

Michael Mo: Thanks, Stuart. Yes, I’m glad that this investor really did a lot of homework on both KULR and Rocket Lab sounds like, but I really can’t comment on the rumors that we have not officially announced, that we have any relationship with. So I’m just going to leave it to that.

Stuart Smith: Understood. So the next question, Shawn, is for you. Why is such a large portion of cash being invested into Bitcoin? And could this money be better allocated to focus on the growth of the KULR brand at this clear pivotal time for the company. Also, I would like to know what the company plans to do with their Bitcoin reserve if the company comes on financial hardship. More than that, would they rather dilute investors or sell a portion of the Bitcoin Holdings?

Shawn Canter: Thanks, Stuart. Good topic. Our treasury strategy is to retain liquidity and significant cash at reserves, in addition to building our BTC treasury position, as I’ve said before, given the economic context in today’s world and the fundamentals of Bitcoin, and what I mean by that is sort of the growing demand across several dimensions, individuals, institutions, state organizations, government bodies and the fixed supply of Bitcoin, that they’ll only be $21 million ever created, we consider BTC a good store value over time. And therefore, a positive for KULR shareholders. We consider our liquidity and our cash on hand to fund operations as we go through our internal decision-making processes. All of our decisions get analyzed through a lens of what we think is in the overall best interest of the KULR shareholder base.

And decisions around cash management and our BTC treasury program are no different than that. So our strategy is to be a long-term holder of BTC, Bitcoin, and we do not see a scenario today that would cause us to change that strategy.

Stuart Smith: Okay. Shawn, let’s stay on this topic and let’s stay with you. Here’s the question. Why invest in Bitcoin and not invest in your company? I would imagine you need to improve product and facilities create revenue.

Shawn Canter: Sure. Excellent question. We don’t really see the two — we don’t see that we have to make a decision between the two, though, that we have to make a choice between the two today. We’re investing in our company. And we consider our BTC treasury program, a very valuable asset to KULR and its shareholders. We’re also investing in our people, our facilities and our product development.

Stuart Smith: Excellent. All right. Next question. This is for you, Michael. During the last earnings call, you were asked if KULR could deliver/produce if any large battery contract was awarded. You said, yes, and that KULR had a partner that was also ready to go if that big volume contract came along. What do you consider to be a “Big Contract?” What is the name of the company partner you mentioned you would be ready to help take on the production of a big contract?

Michael Mo: Yes. I mean we do have a number of customers with contracts over $1 million, and we do have customers ready on production. As I talked earlier, we have expanded our facility in Webster, Texas to over 31,000 square feet. And so now we’re actually ready to take on some of these bigger contracts. And I think that in our new facility, we need — we can manufacture thousands of batteries per year without blink of an eye. So yes, we’re ready for these big contracts.

Stuart Smith: All right. Well, during the last two earnings calls, you’ve mentioned that revenues were down in part because KULR’s biggest customer not resigned a contract/agreement. However, you said they were expected to do so in 2024. Did that transpire?

Michael Mo: Yes. In 2024, that particular customer did not order any products, but we were still able to make up the difference with new customers and finish the year on a record quarter. So as you’ve seen in the general battery market in the United States, it’s been a very challenging time for a lot of people, a lot of our customers. So we won’t make any prediction right now on when and how much this customer will order for 2025. But without any forecast from this one particular customer, we still expect our revenue to at least double in 2025.

Stuart Smith: Okay. Here’s another question on a different topic, though. This is for you, Michael. Has KULR considered pursuing a service contract providing a service technician on every U.S. military airbase with helicopters to utilize KULR XERO Vibe?

Michael Mo: That’s a great idea, but it’s really up to the U.S. military to grant such contracts. So, so far, we haven’t received any indication of such contract or arrangement is welcomed by the U.S. military at this moment.

Stuart Smith: Okay. So Michael, next question, are there any data centers that have a KULR product at this time?

Michael Mo: Yes. So our Japanese license customer is testing the KULR XERO VIBE product. I believe some of the engagement is for data center customers.

Stuart Smith: Okay. Michael, this is about the sales team. How big is KULR sales team? And do you contract third-party sales agents as well?

Michael Mo: Yes. We are growing our sales team, sales and marketing team together. Yes, we do have third-party sales agents for our safe case and other products. We’ve just added a new VP of Business Development, Jeong Song. He was at EaglePicher and ENOVIX, and he’s helping developing new battery customers. Josh Sung also just joined us as VP of AI and robotics. Josh started his career at Qualcomm, where he developed the CDMA footprint for Southeast Asian markets, and has a lot of experience in IoT as well as AI software. So — and our whole team is about 10 people.

Stuart Smith: Okay. Another question for you then, Michael. What has the partnership or collaboration with the United States Postal Service produced?

Michael Mo: Yes. We are working on final approval for a couple of very large size safe case configurations. I believe it’s over 3-kilowatt hours to have UPS permits. Once that’s granted, then we have the power tools and EV customers where we’re going to ship their recycled batteries on the UPS network.

Stuart Smith: All right. Very good. Let’s change gears and talk to you again, Shawn, with another question. How much revenue in Q4 came from licensing deals?

Shawn Canter: Sure. So in the fourth quarter 2024, KULR generated $1.7 million in revenue from licensing. And while we’re on the topic for the full year 2024, we generated $2.7 million from licensing.

Stuart Smith: All right, Shawn. Michael, here’s another question. What new products or customers are pursuing — is KULR pursuing to utilize its TRS to potentially gain new business.

Michael Mo: Yes. Well, TRS will be utilized across all of our products for the KULR ONE battery for space, for DoD, for the robotics. So it’s across all of our new battery initiatives.

Stuart Smith: Okay. Another question for you here, Michael. Can you provide an update on coolers current and future endeavors with private space stations, particularly with Axiom Station and Star Lab. Given your partnerships with Axiom Space and Voyager space, what growth opportunities do private space stations present for the company?

Michael Mo: Yes. We can’t comment on individual customer activities, but we feel very strongly the KULR ONE Space platform is gaining traction with private space companies, especially with the 20793 certification. And in also our off-the-shelf products off the shelf — the customizable KULR ONE Space platforms, the 100-watt hour, 200, the 400-watt configurations. These are very competitive products for satellites and other private space missions.

Stuart Smith: Okay. Shawn, let’s talk to you. Here’s another question. The January 25, 2024 lease amendment extended the San Diego facility lease at 4863 Shawline Street to November 30, 2025, known as the first renewal. What are KULR’s plans for its California operations after the state? Does management anticipate extending this lease again?

Shawn Canter: Thanks, Stuart. Sure. As you know, we have moved our official headquarters to our Texas — Webster, Texas facility. Our California activity continues to be an important part of our company, whether we stay in this particular facility in California long term or identify a different facility for our California-based activities, is simply an optimized operating decision that we will make based on the long-term best interest of KULR, its customers and its shareholders. And once that decision is made, and it’s appropriate to share it, we’ll certainly share that with everyone.

Stuart Smith: All right. Very good. Michael, on March 2025 announcement, stated the KULR ONE space battery incorporating the Molicel M35A cells, except for completion this month followed by NASA Safety Board review. Can you share the key progress made in March towards this completion?

Michael Mo: Yes. We are going through the NASA JSC-20793 certification testing right now. I believe the customer will be ready for NASA mission in 2025.

Stuart Smith: Okay, Michael. The next question is for you. With Archer Aviation and Vertical Aerospace disclosing their use of the Molicel battery cells what opportunities exist for KULR to integrate its patented thermal runway Shield as a thermal management solution in their aircraft given coolers partnership with Molicel to enhance battery safety.

Michael Mo: Great question. Molicel is very well respected in the industry. So you see industry leaders like Archer and Vertical use them. We have a very close relationship with Moli. We have done FTRC and IZM testing on the M35A cells. And also there are new power cells, such P50E and they have actually a new version, more powerful cell coming as well. So we’ve gained a lot of knowledge about that. And we’re building our KULR ONE Air reference platform with Molicel for electric aviation and draw markets. So TRS will be play an integral role for that, and we’re looking forward to really leverage that relationship and grow business for both us and Moli.

Stuart Smith: Okay. The next question is also for you, Michael. A September 2024 announcement stated that KULR completed its initial engagement with the U.S. Army under the expanded $2.4 million battery contract focusing on silicone and node lithium-ion battery prototypes with plans for KULR ONE Guardian battery production in 2025. Can you provide an update on the progress of this project since Q3 2024, including any developments in testing, production time lines or expanded applications for the Army.

Michael Mo: Sure. We actually receive another development and testing order from the Army. We believe we’re doing cell screening testing for them to show the value of cell screening for qualified cells to find defective cells before they are built into the battery pack. And so therefore, we can build the most reliable battery pack for the Army. We will go to production with them — pilot production we’ve done in fall of 2025.

Stuart Smith: Okay. Here’s the next question, Michael. After the Japanese deal regarding cathode applications. What are your involvement in nuclear energy? Is there any upcoming project about that?

Michael Mo: Yes. The new clean energy is a long-term investment for our customers. it’s going to take some time. I actually met with Oppenheimer, the grandson of Mr. Oppenheimer, which the movie was based on. We had dinner together and we talked about his new company, Oppenheimer Energy. I learned a lot about how long it takes and how much money it takes to build a nuclear power plant, and it’s kind of mind boggling. So we’re just getting started, start engaging with these customers, but it’s going to be a long, long time for some of them to get to through fruition.

Stuart Smith: Understood. Michael, here’s the next question. You announced the first sale of your M35A battery cells. Is there only one customer so far? Did that customer just make a one-time purchase or are there ongoing sales expected?

Michael Mo: Yes. I think this question is about the M35A Golden Lot or what we call the Golden Lot cell that has on the NASA Work Instruction 37. And then we have other customers for those cells as well as we’re using those cells to build KULR ONE space batteries for customers that need to meet the JSC-20793 certification.

Stuart Smith: Okay. Michael, what is the current status of your Guardian ONE contract with the Army?

Michael Mo: This is probably similar to the previous question. We’re going through more testing, self-screening with the customer right now and targeting prototype production in fall of 2025.

Stuart Smith: All right. And another topic here for you, Michael. Has your fan customers started selling fans how far off might sales be that are larger than the minimum? Are there any other Vibe customers since then?

Michael Mo: Yes. They have not gone into volume production yet. We’re working on faster throughput on the balancing system to lower the cost. We’re also developing acoustic energy elimination technology to combine that with vibration and lamination. It actually turns out that the acoustic energy is as important to eliminate this vibration energy in server environment. So we’re working with the customer pretty hard on that. And then hopefully, later this year, we will be announcing those kind of products into the market.

Stuart Smith: All right. Excellent. Thank you for that, Michael. Shawn, as you deplete your cash is this next question, will you sell Bitcoin to support the company’s operations?

Shawn Canter: Thanks, Stuart. We believe our Bitcoin Holdings will account for meaningful shareholder value over the long term. We don’t anticipate using our BTC holdings to meet normal course working capital funding and think we’ll have available cash on hand to meet those needs.

Stuart Smith: Shawn, the final question is for you. Here we go, given the growing interest in cryptocurrency adoption, and electrification driven by policies such as the Bitcoin strategic reserve announced by President Trump. How does KULR Technology Group plan to leverage its thermal management and battery solutions to support Bitcoin mining and energy storage infrastructure in the United States. And what impact does the company expect this to have on the revenue and margins over the next 12 to 18 months?

Shawn Canter: Sure. Good question. We think the announcement of the strategic Bitcoin reserve is a strong positive for Bitcoin and therefore, for KULR and shareholders. We’re one of the largest corporate owners of Bitcoin. And we are always looking to leverage our knowledge, resources and asset base to explore potential sources of shareholder value. As you know, we’ve already signed a license for our KULR XERO Vibe cooling solutions. And as we continue to explore these opportunities, we’ll look to execute on those that drive material revenue growth and positive margin contribution.

Stuart Smith: All right. Thank you for that, Shawn. As mentioned, that was our final question, which concludes the question-and-answer portion of this call. I’d like to thank both of our guests, Shawn Canter, CFO of the company; as well as, of course, Michael Mo, the CEO of KULR Technology Group. But most of all, I know Michael and Shawn want to extend their deepest gratitude to all of you shareholders, who have tuned in and those that have submitted their questions. With that, that concludes our call, and I’ll turn the call back over to our operator, Thomas.

Operator: Thank you. This does conclude today’s conference call and webcast. You may disconnect at this time, and have a wonderful day. Thank you for your participation.