Executive Summary / Key Takeaways

• Strategic Pivot to Asset Ownership: Energy Vault is undergoing a transformative shift, moving from a traditional build-and-transfer model to developing, owning, and operating energy storage assets through its new "Asset Vault" subsidiary. This strategy aims to generate predictable, high-margin recurring revenue streams, significantly enhancing long-term shareholder value.
• Substantial Funding Secured: The launch of Asset Vault is backed by an exclusive agreement for a $300 million preferred equity investment, which is non-dilutive to common shareholders. This capital is expected to enable over $1 billion in project financing and capital expenditures, targeting an initial 1.5 gigawatts of projects.
• Path to $100M Annual EBITDA: With key projects like Cross Trails (Texas), Calistoga (California), and Stoney Creek (Australia) already operational or in advanced stages, Energy Vault projects its owned asset portfolio to generate approximately $100 million in annual recurring project EBITDA within the next three to four years, underpinned by long-term offtake agreements.
• Technological Edge and Diversification: Energy Vault leverages a diverse technology portfolio, including its highly efficient gravity energy storage (Rudong achieving 80-85% round-trip efficiency), innovative green hydrogen hybrid systems, and advanced AI-driven software. This technological differentiation, coupled with geographic expansion, provides a competitive moat and mitigates market volatility.
• Improved Financial Discipline and Outlook: Despite historical losses and a transitional 2024, the company demonstrates improved financial discipline with reduced operating expenses and positive operating cash flow in H1 2025. The 2025 revenue guidance of $200 million to $250 million reflects the strategic shift and lithium-ion price dynamics, with significant cash inflows from project financings and tax credit monetization expected to bolster liquidity.

The Dawn of a New Energy Era: Energy Vault's Strategic Reimagining

The global energy landscape is undergoing an unprecedented transformation, driven by surging electricity demand from data centers and artificial intelligence, coupled with an accelerating transition to intermittent renewable sources like solar and wind. This confluence creates an urgent need for robust, reliable, and cost-effective energy storage solutions to ensure grid resiliency and stability. The U.S. Department of Energy forecasts substantial growth in domestic electricity demand, while the Australian Energy Market Operator anticipates a staggering 1500% increase in energy storage capacity by 2050. It is within this dynamic and demanding environment that Energy Vault Holdings, Inc. (NYSE:NRGV), a company founded in 2017, is strategically repositioning itself.

Energy Vault's foundational strength lies in its diverse technology portfolio, encompassing proprietary gravity, battery (B-Vault, B-Nest), and green hydrogen (H-Vault) energy storage hardware. These are seamlessly integrated and managed by its technology-agnostic Vault-OS Energy Management System (EMS) software platform. This comprehensive approach allows Energy Vault to offer turnkey solutions to utilities, independent power producers, and large industrial energy users, addressing a wide spectrum of energy storage needs.

A pivotal element of Energy Vault's differentiation is its gravity energy storage technology. The Rudong gravity system in China, a 25 MW, 100 MWh deployment, has demonstrated an impressive 80-85% round-trip efficiency based on initial data. This performance is notably significant, representing one of the highest round-trip efficiency measures in long-duration energy storage globally, surpassing other mechanical and thermodynamic processes. The company's gravity technology is also evolving with innovations like the slope-based EVy and modular pumped hydro EV0 systems, which offer flexibility for diverse landscapes and applications. This technology's ability to be customized locally, allowing regions like China and South Africa to source components and build systems entirely domestically, further enhances its competitive appeal by optimizing for local cost and performance.

Beyond gravity, Energy Vault is at the forefront of green hydrogen hybrid solutions. Its Calistoga Resiliency Center (CRC) in California stands as the world's largest hybrid green hydrogen energy storage system and the first ultra-long duration hybrid green hydrogen energy storage microgrid. This system, serving PG&E, showcases the company's capability to integrate multiple technologies for complex grid challenges, providing multi-day sustainable storage. The company's software suite, including Vault-OS EMS, Vault-Bidder (utilizing machine learning for market bidding), and Vault-Manager (for asset management and predictive analytics), acts as a critical "wrapper" around its hardware. This software expertise ensures optimal performance, safety, and economic dispatching across diverse energy storage mediums and generation assets. Energy Vault is also actively pursuing innovations in ultra-high energy density solutions, integrating structural engineering and material science expertise with battery storage to address space-constrained applications, particularly relevant for the burgeoning data center market. These technological advancements, recognized by Time Magazine as one of the best inventions in 2024, form the bedrock of Energy Vault's competitive moat, enabling it to offer flexible, high-performance, and sustainable solutions that command better margins and address critical market needs.

The Strategic Pivot: Asset Vault and the Path to Recurring EBITDA

In May 2024, Energy Vault unveiled a bold, multi-year strategic transition: to develop, own, and operate energy storage assets, moving beyond its traditional build-and-transfer or licensing models. This "build, own, and operate" (BOO) strategy, now formalized under the "Asset Vault" subsidiary, aims to capture more reliable, predictable, and highly profitable recurring revenue streams. This approach is designed to complement the existing Energy Storage Solutions (ESS) business, with Asset Vault contracting Energy Vault for product design, construction, commissioning, and long-term service agreements, thereby generating additional cash flow and liquidity for the parent company.

This strategic pivot is already yielding significant results. In August 2025, Energy Vault announced an exclusive agreement for a $300 million preferred equity investment to fund Asset Vault. This crucial capital injection, which is non-dilutive to common shareholders, is expected to enable over $1 billion in capital expenditures and project financing. It targets an initial 1.5 gigawatts of projects in mid- to later-stage development across the U.S., Australia, and Europe, while also funding earlier-stage development of a total 3 gigawatt pipeline. Management projects that the next wave of projects coming online within the next two to three years will generate over $100 million in annual EBITDA cash streams, which will be both predictable and recurring.

Key projects under this new strategy are rapidly progressing:

• Cross Trails BESS (Texas): This 57 MW, two-hour battery energy storage system commenced commercial operations in May 2025, marking the first fully executed asset under the "Own & Operate" strategy. It contributed $0.4 million in tolling revenue in Q2 2025 and secured an $18 million project financing in July 2025.
• Calistoga Resiliency Center (California): The CRC, the world's largest hybrid green hydrogen energy storage system, achieved mechanical completion and began soft commissioning in Q3 2024. It received CPUC approval for CAISO market participation in July 2025 and successfully closed $28 million in project financing in April 2025, including the sale of an Investment Tax Credit (ITC).
• Stoney Creek BESS (Australia): The acquisition of this 125 MW / 1 GWh project in New South Wales was completed in August 2025. Supported by a 14-year offtake agreement, construction is slated for Q1 2026, with completion expected in 2027. This project alone is anticipated to generate roughly $20 million in annual recurring EBITDA once operational.

Combined, the Calistoga and Cross Trails projects are expected to generate nearly $10 million in recurring annual EBITDA. With Stoney Creek, these first three projects are projected to deliver approximately $30 million in annual recurring project EBITDA over the next 15 years. The broader pipeline of seven identified projects is expected to collectively achieve approximately $100 million in recurring annual EBITDA once in service. This strategic shift towards asset ownership, with expected project EBITDA margins in the 70% to 85% range and unlevered double-digit IRRs, represents a significant enhancement to Energy Vault's long-term financial profile.

Financial Performance and Operational Momentum

For the second quarter of 2025, revenue increased by 126% year-over-year to $8.51 million, and for the six months ended June 30, 2025, revenue rose 48% year-over-year to $17.05 million. This growth was primarily driven by a ramp-up in EPC project activity, the recognition of $2.6 million in nonrefundable deposits from a cancelled EEQ contract, and $0.4 million in tolling revenue from the newly operational Cross Trails BESS. A significant contributor to the six-month revenue increase was a $3.2 million boost from the IP licensing agreement signed with SPML Infra in India in Q1 2025. This 10-year, 30+ GWh agreement for B-Vault battery hardware and software architecture provides upfront licensing fees and long-term recurring royalty streams, strategically expanding Energy Vault's presence in a high-growth market.

Gross profit saw substantial improvement, increasing by $1.5 million in Q2 2025 to $2.52 million, with the gross profit margin rising to 29.6% from 27.8% in the prior year quarter. For the six months, gross profit reached $7.39 million, yielding a robust 43.4% margin, significantly up from 27.0% in the comparable 2024 period. This margin expansion is largely attributable to the higher-margin IP licensing revenue, which carries no associated cost of revenue, and reduced warranty expenses.

Operating expenses demonstrated a mixed but disciplined trend. Sales and marketing expenses decreased by $1.7 million in Q2 2025 due to cost-control measures and lower headcount. Similarly, research and development expenses declined by $2.9 million, reflecting reduced headcount and engineering costs. However, general and administrative expenses increased by $3.3 million, primarily due to expanded headcount and higher legal and professional fees. The company has targeted further reductions, aiming to lower quarterly adjusted operating expenses by 15-25% to a run rate of $12 million to $14 million from Q1 2025 levels.

Despite an accumulated deficit of $439.9 million as of June 30, 2025, and a net loss of $56.1 million for the six months, Energy Vault's liquidity position is strengthening. Cash provided by operating activities for the six months ended June 30, 2025, was $12.6 million, a significant improvement from $11.8 million cash used in the prior year period. This positive shift was driven by higher upfront customer collections and reduced outflows for accounts payable and accrued liabilities. The company ended Q2 2025 with $58.1 million in cash, up 23% sequentially, and anticipates $60 million to $75 million in total cash by the end of Q3 2025. This includes $18 million from the Cross Trails project financing completed in July 2025 and an estimated $27 million in net ITC proceeds expected in September 2025 from the sale of tax credits across its owned projects. Management believes these funds, along with proceeds from equity purchase agreements, will be sufficient to cover operating activities for at least the next twelve months.

Competitive Landscape and Strategic Positioning

The energy storage market is intensely competitive, with established players and new entrants vying for market share. Energy Vault faces direct competition from companies like Fluence Energy (FLNC), Tesla (TSLA), and AES Corporation (AES), as well as indirect competition from electrical construction service providers like MYR Group Inc. (MYRG) that facilitate rival deployments.

Fluence Energy primarily offers battery-centric solutions, often providing faster deployment in certain applications. Energy Vault differentiates with its gravity-based technology, which offers superior longevity and environmental sustainability, potentially leading to lower operational maintenance costs and higher gross margins over the long term. While Fluence may have broader ecosystem integrations, Energy Vault's specialized focus on durable, long-duration storage positions it strongly in niche markets.

Tesla, with its vertically integrated battery storage products and rapid innovation cycles, presents a formidable competitor. Energy Vault's gravity systems offer a distinct advantage in energy density for specific long-duration needs and durability for grid applications, contrasting with Tesla's battery-focused approach. Energy Vault's modular scalability and focus on value-added software and services, rather than competing on commodity battery pricing, allows it to carve out a unique market position.

AES Corporation, an energy infrastructure giant, leverages global reach and project financing expertise. Energy Vault's proprietary gravity technology provides a differentiator in reliability, particularly for extreme conditions, and potentially offers greater system longevity compared to AES's more traditional battery systems. While AES benefits from scale and distribution, Energy Vault's specialized focus and adaptable solutions allow for strategic penetration in specific market segments.

Energy Vault's competitive advantages, or moats, are rooted in its proprietary gravity-based technology, which offers enhanced durability and reduced environmental impact, potentially translating into stronger customer loyalty and recurring revenue from long-term contracts. The Rudong system's 80-85% round-trip efficiency is a testament to this technological superiority. Furthermore, its advanced software platform and expertise in integrating diverse storage technologies enable optimized performance and economic dispatching, providing a crucial value-add. The company's strategic pivot to the BOO model allows it to capture higher-margin recurring revenue, insulating it from the lumpiness of traditional EPC contracts and the volatility of commodity battery prices.

However, Energy Vault faces vulnerabilities. As an emerging technology player, it may incur higher development costs and face scale limitations compared to larger, more established rivals. The rapid decline in lithium-ion battery prices, while beneficial for project economics, has impacted its recognized revenue figures. Furthermore, U.S.-China tariff disputes, which imposed a cumulative import tariff burden of approximately 155.9% on Chinese-sourced lithium-ion batteries, have caused project delays and cancellations. Energy Vault is actively exploring alternative sourcing options and leveraging its geographic diversification, with 90% of its current backlog not impacted by U.S. tariffs, particularly its strong presence in Australia. The company's ability to adapt, as evidenced by its response to a supplier bankruptcy in 2024 and its continuous cost optimization initiatives, is critical to overcoming these challenges.

Outlook and Forward Momentum

Energy Vault's outlook for 2025 is anchored by its strategic shift and a robust pipeline of projects. The company has reaffirmed its full-year 2025 revenue guidance of $200 million to $250 million. This range reflects the impact of the strategic decision to retain ownership of projects like Stoney Creek, converting immediate EPC revenue into long-term, high-margin EBITDA streams, and the significant price erosion in lithium-ion battery technologies. Despite these factors, management expects margin expansion in 2025, driven by its optimized supply chain and aggressive pricing from suppliers.

The launch of Asset Vault, backed by the $300 million preferred equity investment, is a game-changer, providing the capital needed to accelerate the execution of its owned asset portfolio. This investment is expected to enable over $1 billion in CapEx and project financing, targeting an initial 1.5 gigawatts of projects. The company's goal of achieving $100 million in annual recurring project EBITDA within the next three to four years from its owned assets signals a clear path to sustained profitability and enhanced earnings visibility.

Recent contract wins, including a 75 MW/300 MWh BESS deal with Consumers Energy, an additional 100 MW/200 MWh BESS agreement with Jupiter Power, and a global strategic partnership with Astor Enerji for 2 GWh of BESS deployments, underscore the continued demand for Energy Vault's solutions. The temporary 90-day pause in U.S.-China tariffs also presents a potential upside, allowing for the reignition of discussions for U.S. battery deliveries that were previously stalled. Energy Vault's disciplined approach to cost management, aiming for a 15-25% reduction in quarterly adjusted operating expenses, further supports its path to profitability.

Conclusion

Energy Vault Holdings, Inc. is executing a profound strategic transformation, pivoting towards a build, own, and operate model that promises to unlock predictable, high-margin recurring revenue streams. This shift, epitomized by the launch of Asset Vault and its substantial preferred equity funding, positions the company to capitalize on the surging global demand for energy storage. By leveraging its differentiated gravity, hybrid hydrogen, and advanced software technologies, Energy Vault is not merely participating in the energy transition but is actively shaping its future with innovative, high-efficiency solutions.

While challenges such as market competition, tariff uncertainties, and the inherent capital intensity of asset ownership persist, Energy Vault's robust backlog, geographic diversification, and demonstrated execution capabilities provide a strong foundation. The clear path to $100 million in annual recurring project EBITDA, supported by long-term contracts and strategic project financings, underscores a compelling investment thesis. Energy Vault's commitment to technological leadership and disciplined growth suggests a future where it plays a critical role in global grid resiliency, delivering sustained value for its shareholders.