KULR Technology Group Q1 2026 Earnings Call - Gross Margins Jump to 29% as Battery Production Scales

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Good afternoon, everyone. Thank you for joining. On our last earnings call, we told you 2026 will be measured by product revenue growth, gross margin improvement, and cost discipline. Q1 showed progress against each of these priorities. Total revenue grew 98% year-over-year to $4.8 million compared to $2.4 million in Q1 2025. Product sales grew 84% year-over-year to $2.1 million. Overall blended gross margin was approximately 29%, up from 8% of Q1 2025. Product sales gross margin was 26%. Total loss from operations decreased approximately 22% year-over-year. As we move from platform development into production scaling, we signed a new lease for additional 25,000 sq ft of manufacturing space to support new battery production lines and high volume customer programs.

We remain in solid financial position with approximately $19 million in cash as of today and approximately 1,085 Bitcoin in our treasury. We’re committing all of our financial resources to our battery business and not acquiring any Bitcoin with cash. The only Bitcoin acquisition is through our existing BTC mining contracts. One quarter does not make a turnaround, but Q1 is evidence that the vision and discipline we commit to for 2026 is starting to translate into measurable results. KULR is beginning to scale its battery business with better cost discipline and improve operating leverage. The core objective of 2026 is straightforward. Scale the KULR ONE platform to build more batteries, sell more batteries while converting customer traction into margin-accretive revenue. Let me start with KULR ONE Air.

Before walking through the program updates, I want to remind everyone why KULR ONE Air is positioned the way it is. On our last earnings call, I explained that the high growth markets KULR serves, autonomous platforms, direct energy systems, and digital infrastructure share one common technical constraint, power density. Drones, robots, and other autonomous systems do not need batteries that simply store energy. They need batteries that can deliver power at 5 to 20 times the discharge rate of a standard battery, sustain that output through repeated high demand cycles, and manage heat generated without failure. That’s the engineering problem KULR ONE was built to solve, and it’s the reason why our platform is gaining traction we’re able to walk through. Power is the wedge. Every program update that follows is downstream from the core advantage.

KULR ONE Air continues to gain strong traction with U.S. and NDAA-compliant drone manufacturers. Our S3P lift battery is seeing broad adoption. In this quarter, we expanded to lift pack family with additional configurations designed specifically for long duration flight applications. We’ve also advanced the KULR ONE Air power class for agriculture and heavy lifting applications. On the BMS side, we’re on track with a customer for 6S, 12S, and 18S battery management systems targeting large UAV platforms. These are high volume, high demand applications, and KULR is well positioned to serve them. We’ve also completed design of mil-spec EMI-resistant BMS for drone-based defense applications. Customer development activities is increasing across defense, aerospace, space, and unmanned systems. We’re seeing especially strong growth in our UAS battery programs. Existing customers are launching new drone models that require entirely new battery systems.

We have also expanded the platform’s reach into 2 important directions, into humanoid robots, where we are now engaged with 2 customers, and into large class 2 and class 3 drones. Working with a broad base of battery cell providers in cylindrical, pouch, and prismatic format is central to building out the KULR ONE ecosystem. The same platform architecture paired with the best available cell technology is what gives KULR ONE a roadmap that extends well beyond current production configurations. KULR ONE Air is now actively exploring configurations with NDAA-compliant solid state and lithium metal battery cell providers capable of exceeding 380 watt hour per kilogram. I’m very excited about these developments. The same engineering discipline build the architecture first, then bring the best cell technology to it, is what defines our work in space in Triton, which I’ll cover next.

On the space side of our operation, I wanna start with the point that we made in our last earnings call. KULR ONE Space is not just a product line, it’s the program that sets the performance standard for the entire KULR ONE portfolio. Space operates in an environment where battery failure is not recoverable. Every performance requirement met in a spacecraft, propagation resistance, thermal stability under extreme conditions, certification under scrutiny raises the engineering baseline that KULR ONE Air, MAX, and our maritime platforms inherit. Customers in defense drone, electric aviation, and AI data center programs are buying integrated architecture that has already been qualified in the most demanding operating environments.

With that as context, I’m pleased to report that KULR ONE Space was selected by several additional LEO and GEO missions this quarter. This continues the validation that the platform and the trust our customers are placing in us for mission-critical applications. Our XLT and Reach series batteries remain active deployment across multiple satellite programs in both LEO and GEO. Recent investments in our BMS are enabling higher radiation tolerance and improved current carrying capabilities, both critical for expanded space missions. I also wanna give you a brief update on our KULR ONE Triton, our maritime battery family. Triton extends the same engineering principle I just described, the architecture first, safety first standards developed for space into autonomous surface and subsea systems.

We’re developing and testing Triton in partnership with several OEMs, bringing aerospace-grade and Navy 9310 reliability standards to a market where battery failure underwater carries similar non-recoverable consequences. Consistent with the cell partnership theme I covered earlier, we’re currently testing Triton across multiple chemistries, solid state, nickel metal hydride, and small format lithium-ion, to identify the optimal configuration for next generation autonomous maritime vehicles. It’s an exciting and fast-growing market, KULR’s building the right foundation to compete in it. Moving to our data center platform. On our last earnings call, we described the shift underway in the industry. As AI workloads grow and hardware becomes more power intensive, battery backup is moving out of the dedicated UPS room into computing rack itself. A battery operating next to the processor it protects must meet higher safety standards, handle higher voltage, and responds faster than conventional backup systems.

This is the opportunity for KULR ONE MAX is built for. This quarter, KULR attend the Open Compute Project EMEA Summit, where we met with major data center OEMs. Our focus was to license our PPR and thermal management IP for data center BBU applications. The data center market is enormous, and KULR’s PPR architecture and thermal expertise give us a technology edge that OEMs want access to. We’ll continue to advance the design and optimization of our KULR ONE MAX, our 48 volt high power PPR BBU platform. Progress this quarter includes advances in power conversion efficiency, continued development of our custom distributed BMS, and PPR testing for higher energy 2170 cells. We’re targeting edge, AI data center, and telecom infrastructure with this platform. Speaking of telecom infrastructure market, we observed the shift underway in telecom industry.

5G rollouts and rising uptime requirements are pushing operators away from legacy lead acid systems towards lithium ion. At the same time, operators are looking to move battery backup assets off the balance sheet entirely, shifting CapEx from non-recurring revenue assets into lower cost OpEx models with clear total cost of ownership advantages. KULR’s position in this market is unique. We’re demonstrating to operators that we have a proven, safe, and reliable option to contract the mission-critical DC power as a full service and never have to buy a battery again. Our platform pairs the KULR ONE battery architecture with operational and financial structure operators need to make that transition. On execution this quarter, we delivered production battery pack against our existing supply commitments, and we remain on track with the manufacturing consolidation milestones we outlined on our last earnings call.

Beyond those committed programs, we now have over half a dozen engagements with telecom service providers on KULR ONE battery-as-a-service, a clear sign that the market opportunity that we described in March is materialized. I’d like to address the board changes we announced on April 28th. We appointed 2 new directors, Ben Frank from Microsoft and Mr. Mike Kimel, and at the same time streamlined the board to 3 members, 2 of whom are independent. The smaller, more focused board is itself part of the operating principle message. It reduces SG&A and ensures that every director seat directly contributes to expertise that we need to scale. These 2 appointments are not generic board additions. Each one was able to fill a specific gap that becomes critical as KULR moves from platform development into platform monetization.

Mr. Frank is the Director of Workforce AI Solutions Engineering at Microsoft, where he leads engineering teams supporting large enterprise customers deploying AI platforms within Microsoft’s Energy and Resource organization. Microsoft is one of the best technology companies in the world that won its markets by building an ecosystem platform and then opening that platform to broad range of partners, customers, and developers. That’s the playbook KULR is running with KULR ONE. The KULR ONE ecosystem is built as follows: Opening the architecture to multiple cell chemistry partners across cylindrical, pouch, and prismatic formats. Build the battery management software electronics to increase customer stickiness to the KULR ONE platform. Pursuing IP license for AI data center BBU applications, and expand the customer base in defense, aerospace, maritime, and humanoid robotics.

Ben Frank brings first hand experience from inside the most successful enterprise ecosystem company of the modern era, applying directly to AI-driven industries that are core KULR end markets. Dr. Kimel has more than 30 years of experience as corporate executive, consultant, and academic, specifically focused on pricing strategies and margin performance. He holds a PhD in economics from UCLA and has previously held senior pricing positions at OmniSource, Toyo Tires, and Sears Holdings. His expertise is perfectly aligned with our 2026 mission: build and sell more batteries for product revenue growth, higher margins, and reduced costs. Dr. Kimel’s appointment is how we institutionalize that progress, bring discipline to how we price every contract, how we structure customer engagements, and how we convert revenue growth into durable profitability in addition to top line growth.

Before turning the call over, I wanna share one observation about the way the industry is headed. In recent weeks, a public traded UAV component company has agreed to acquire a U.S. drone battery manufacturer for over $50 million, adding battery capabilities to a portfolio that over the past 12 months has been assembled through separate acquisitions of drone software, motor manufacturing and distribution, alongside a $75 million strategic materials purchase. We view this as validation. The UAV and broader autonomous system supply chain is consolidating around three requirements: NDAA compliance, domestic vertical integration, and a complete component ecosystem rather than a single product. That’s exactly the pro-platform that KULR has been building organically with in-house engineering for the last few years. Let me put our position in context.

KULR already operates over 31,000 square feet of vertically integrated R&D and production facility in our headquarters in Webster, Texas. We’re adding another 25,000 square feet of manufacturing capacity in Q2. Our portfolio spans NDA-compliant battery packs, custom battery management system and electronics, thermal management IP, and platform architecture qualified across drone, space, maritime, AI data center, and telecom applications. We engineer the battery cell partnerships, the cell agnostic architecture, the BMS, and the safety system together, and we’re doing it for end markets that extend well beyond UAVs alone. When the industry is paying over $50 million for a battery pack manufacturing operation for UAV, it tells you what the market now believes domestic vertical integrated battery capabilities can be valued at.

The market will be moving and evolving towards an ecosystem platform that KULR has been investing and building for multiple end markets for many years. We’re focused on building more batteries and selling more batteries. Now back to you, Stuart.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: All right. Thank you, Michael. Let’s pivot into the investor questions that have been sent in. Here is the first question, Michael, and it is: What were the primary drivers of Q1 2026 revenue, and how should investors think about revenue visibility for the remainder of 2026?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Cost reduction is already visible in Q1 numbers. R&D expense declined 28% year over year. SG&A declined approximately 9%. Total operating loss declined 22% year over year. We’ll be continuing to be more disciplined about our cost structure while investing our growth. As I said in the prepared remarks, our appointment of Mike Kimel is aligned with that strategy. With his expertise in price, margin, and profit optimization, we’ll bring discipline to how we price every contract, how we structure customer agreements, and how we convert revenue to durable profitability in addition to top line growth. Yes. Cost reduction is already visible in the Q1 numbers. R&D expenses was down 35% year over year. SG&A declined 8% year over year.

I think we can do a lot more on that. The total operating expenses, excluding the $500,000 credit loss, declined actually 24% year over year. We will continue to be more disciplined on our cost structure while investing in our growth. As I said in the prepared remarks, our appointment of Dr. Mike Kimel is also aligned with that strategy. With his expertise in pricing, margin, and profit optimization, we’ll be bringing discipline to how we price every contract, how we structure customer engagements, and how we convert revenue growth into durable profitability in addition to top line growth.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: All right. Here’s question number 3 then. How many KULR ONE Air programs are moving from prototype or development work into production, and what does that imply for the second half of 2026 revenue visibility?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yes. Multiple KULR ONE Air programs are in transition. The S3P lift pack has been moved to broad adoption, as it’s in production now. The expanded lift family with the long duration configurations is moving from design into quantification with customers. Also on the BMS side, the 6S, 12S, and the 18S systems for large UAV platforms are on track with customers. Our mil-spec EMI resistant BMS design is complete. Two humanoid robot customers were added in Q1, and existing UAS customers are launching new drone models that require new battery systems at all times. We haven’t actually disclosed kind of a program by program count, but underneath all these activities, that’s what’s gonna drive second half of 2026 rev profile.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: All right. Speaking of drones, here’s a question about that. How is demand developing for KULR’s defense and drone battery solutions? Are defense related programs becoming a larger portion of the company’s near-term opportunity?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yes. Defense demand is definitely accelerating from what we can see. Customer development activities is increasing across the defense, aerospace, unmanned systems. The conversation we’re having with defense customers is more about volume and timeline. It’s all about execution on our side now to deliver to these customers. Defense and defense adjacent programs have really become a larger part of our near-term opportunity. Our work on the NDAA compliant battery cell partnerships, including the emergent solid state and lithium metal suppliers, is really exciting for us, and that’s gonna play a increasing role for these customers.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: What progress has KULR made with domestic battery supply? Texas-based manufacturing and NDAA compliant battery systems for government and defense adjacent customers.

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yes. We have been developing a full NDAA compliant ecosystem for the KULR ONE battery platform for a while now. From battery cell suppliers, you know, in cylindrical pouch prismatic format to solid state and lithium metal chemistry, to BMS, also to electronic systems supporting all the batteries. These are all around NDAA compliance, just like our battery pack will be all made in, you know, will all be made in Texas. That is definitely a core part of our strategy.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: Very good, Michael. The next question talks about gross margin. It says product gross margin was low single digit in 2025. What progress did KULR make in Q1 towards improving margins? When should investors expect improvement to become visible in the financials?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yeah. Q1 is an example of that our gross margin at 29% for overall blended and also product sales margin about 26%. One quarter doesn’t make it a trend or complete or complete turnaround story. That I do believe that we’re on the right track to execute our strategy for 2026.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: Is the automated production line still on schedule for the second half of 2026? What impact could it have on production capacity, labor cost, yield consistency and gross margin?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yes. The new production lines will be installed at our new 25,000 sq ft facility in Q2, and we expect that to start production in Q3 of this year. We will have capacity to produce 10,000 battery packs per month, and expect the unit economics for our batteries to go down and therefore improving margins.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: All right, well let’s talk more about those 10,000 battery packs. KULR ONE Air was highlighted as the company’s highest momentum platform with a target of approaching 10,000 battery packs per month in the second half of 2026. Are customer qualification schedules and production timelines still on track?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yes. Again, another question around KULR ONE Air and our production schedule, which I think a lot of investors really care about. Yes, we have the new facility now. The new production lines will be installed and operational in Q3. I would also say that there is a lot more going on behind the scenes than just the production lines themselves. We now have our own copper busbar laser cutter in-house, that really dramatically lowers our lead time to get these really high performance components made in-house and also lower our cost. We’re putting a UN 38.3 certification infrastructure in-house, all the equipment in-house, so that we can build, qualify, ship batteries very quickly to customers and also lower the cost.

You know, all around, we’ve been making significant investment in our infrastructure to make the best one-stop shop in the U.S. for all these high performance batteries.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: All right, Michael, here’s our final question for this call today. How should investors think about cash usage, working capital needs and capital allocation priorities for the rest of 2026?

Michael, Chief Executive Officer / Executive Leadership, KULR Technology Group: Yes. It is, for us, it’s all about building more batteries and selling more batteries. Our cash usage will be CapEx for equipment and facility that I talked about. Working capital for inventory, SG&A, which we are on path to reduce the cost on that. Also continue to invest in our people to build the best team in the industry, to deliver the best product for our customers at a very good value to them. This is how we’re gonna win.

Stuart, Investor Relations / Call Moderator, KULR Technology Group: Well, as mentioned, that was our final call or our final question for the call today, I should say. I wanna thank everyone for joining us today. More than that, I wanna thank the shareholders for their continued support and for sending in their questions throughout the quarter. Of course, our gratitude to the team at KULR Technology Group. Michael, thank you so much for your time here today. With that, we will turn the call over to the operator.

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