Energy Vault Holdings Q3 2026 Earnings Call Transcript
Energy Vault Holdings (NYSE:NRGV) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Energy Vault Holdings reported sequential and year-over-year growth in contract backlog, with a 15% sequential increase providing strong visibility into future revenue.
The company revised its 2026 revenue guidance to $290-310 million, expecting the fourth quarter to be its largest ever at approximately $250 million.
Energy Vault Holdings introduced 2027 guidance, projecting revenue to more than double to $600-700 million and achieving its first full year of positive EBITDA at $40-50 million.
Key operational highlights include the completion of the Goshi acquisition, adding 2.3 gigawatts of U.S. battery storage projects, and progress in major projects like Stoney Creek in Australia.
The company emphasized its strong cash position, ending the quarter with $236 million, and reduced corporate-level recourse debt by $12 million.
Strategic initiatives include expanding its portfolio with build-and-transfer AI compute infrastructure solutions and leveraging software for integrated power solutions.
Management expressed confidence in executing on its growth plans despite market volatility, highlighting disciplined capital management and plans to minimize equity funding needs.
Full Transcript
OPERATOR
Greetings and welcome to Energy Vault Holdings’ third quarter 2026 earnings call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press Star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Energy Vault Holdings CFO Nitin Dahiya. Thank you.
You may begin.
Nitin Dahiya (Chief Financial Officer)
Thank you, operator, and good afternoon to everyone joining us today. Welcome to Energy Vault Holdings’ 3Q 2026 financial results conference call. Our earnings release and investor presentation are available on the investor relations section of our website. Before we begin, I want to remind everyone that today’s discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may vary materially from those expressed or implied by these statements. Please refer to our most recent SEC filings together with the safe harbor language in today’s earnings release and the presentation for a discussion of the factors that could cause actual results to differ. We undertake no obligation to update these statements except as required by law.
That out of the way, sorry. Actually, I also want—we also will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in our earnings materials. I also want to remind everyone again that we have posted an investor presentation to the website. We will be referring to specific slides as we go through the deck, so it may be helpful for you to download it. Joining me today is Robert Piconi, our Chairman and Chief Executive Officer. Robert will begin with the strategic and operational updates, and I will then take you through the quarter, our balance sheet, and updated outlook. Rob, over to you.
Robert Piconi (Chief Executive Officer)
Great, thank you, and I’d like to welcome everyone to our Q3 earnings broadcast. We are going to follow the presentation as Nitin just outlined, as we did before. I’m going to start by highlighting three critical areas as an executive summary, and then we’ll go through a few specifics before turning it back to Nitin. I want to start with some highlights around our execution this year and how that’s driving our profitability and cash flow; talk about how we’ve expanded our portfolio as well as our new build-and-transfer AI compute infrastructure solutions; and then focus a bit on the balance sheet strength to start. If you’ve seen and reviewed our third quarter performance, quarter in line with expectations, and I’d say a quarter much like the two before it. We had double-digit contract backlog growth on a sequential basis and multiples year over year.
Double-digit revenue, strong gross margins, and strong cash generation. In particular, our seventh straight quarter of increasing cash—60% sequentially, roughly, and almost 3x year over year. A lot of that is being driven by our integrated business model, which is a real unique strength of our operating model as a company. Our build and transfer supports our near-term revenue and cash generation with accretive gross margins, while we’re investing in our build, own and operate infrastructure to build recurring revenue and earnings as our assets come online, delivering gross margins like these.
For those of you that follow the space, in the EPC world at 2–3x the market is something that’s not only helping us with accretive cash as we’re building and transferring over solutions, but we’re leveraging that strength and that experience operationally to be very capital efficient with how we’re building the projects that we’re going to own and operate over time. We saw again increases in our backlog of about 15% sequentially. That gives us strong visibility into revenue for the remainder of 2026 and also into 2027, which we’re excited to share with you for the first time at this stage what that revenue range is going to look like while supporting then our long-term profitable growth. Turning to our recent revenue guidance, we revised our guidance up to the 290 to 310 million range, which is the top half of the previous range we had set.
This is being driven by the expected timing of our contracted deliveries and milestones. As we sit here in the quarter with seven weeks left, we feel very good about that narrowing to the top end of the range, and this will also be our largest quarter ever in our history as a company at around 250 million. With that visibility that comes on the back of this strong growth in the backlog, we’re also introducing 2027 guidance, with revenue expected to more than double year over year to 600 to 700 million and EBITDA of 40 to 50 million—our first full year of positive EBITDA.
Another milestone. It is the next step in translating our growing backlog and execution capabilities into profitable growth. Clearly the focus is right in front of us on this quarter and this large ramp we have, maintaining those healthy margins and converting these deliveries into cash. We’re also moving our own portfolio forward with multiple projects in stages of financial close and financing. Stoney Creek is an example. Also in Australia, just recently secured formal grid interconnection approval and is progressing toward the final investment decision. That’s a very large project—our largest project in Australia at 1 gigawatt-hour.
We also completed the Goshi acquisition that was announced just last quarter, which added a portfolio of 2.3 gigawatts of U.S. battery storage development projects, including 350 megawatts that are ready to build, which also followed our Japanese portfolio acquisition earlier this year. This is critical, as scale, as we know in energy, is such an important factor for profitability, for cash, to have credibility in some of the largest customers in the world.
And we are building and aggressively building that scale now, both organically and inorganically. I’ll also mention that our AI infrastructure solutions have developed in a tremendous way following the 1.25 gigawatt announcement of the hybrid generation and storage solutions that we’re leading with our software. Our opportunity is to solve this problem and this power constraint through these integrated generation, storage, and our software solutions that are playing a very important role in load balancing and giving a single-pane-of-glass visibility to our customers.
We continue to see strong growth and momentum here in customer engagement, and it is also important, especially given the macro backdrop, that these solutions are behind the meter, meaning they do not touch the grid. So we don’t have a lot of the issues with deploying these solutions that otherwise would impact current grid demand and current power availability. We are leveraging that capability. We are doing this in a way that also seeks to minimize some of the generation or gas generation emissions in favor of some of the battery storage, and are also exploring some new solutions to address the water consumption in this space.
We are focused on maintaining the strong balance sheet to support our growth. And while this is the last summary point, it’s obviously fundamental and really foundational to how we are executing and maintaining strong capital discipline. First, we ended the quarter with 236 million of total cash. That’s about 60% growth on a quarter-by-quarter basis, 3x year over year. As I said before, our seventh straight quarter of increasing cash, and in this environment, in this market volatility, obviously a very strong sign in building our balance sheet.
We also reduced our corporate-level recourse debt by 12 million in the quarter. We believe that our focus on disciplined execution, operating cash, and the financing pools will allow us to progress toward profitability with very limited equity funding needs. We will remain selective about which projects we advance, how they are financed, and the returns that they create for shareholders. I’ll now move through some of the supporting pages, finishing there, and highlight just a few items before turning it back to Nitin. Moving to page four, you can see some of the milestones that are behind some of the progress I just went through—from some of the portfolio expansions and generation equipment financing, fundamental today as we’re bringing power solutions to the market. As well, we’ve advanced other projects across the world which have included the announcement related to the Italian project and its designation in Sardinia as a preeminent project of national importance.
In addition, as I mentioned, the Stoney Creek approvals that have just recently been achieved. Those things will now accelerate our move to construction in what remains a very important region of the world in Australia. Each of these advance the development and delivery work that supports our long-term business evolution. Turning to page five, I’d say the quarter overall that Nitin will cover was in line with our expectations—again, much like the first two quarters before it—and really setting us up for the strong execution now in the remaining seven weeks of this quarter and delivering one of our largest quarters here to date. Nitin will be covering these details in just a little bit. On page six, you can see that we maintain a healthy mix of build-and-transfer and build, own and operate backlog and shows the evolution of that backlog over time.
I think fundamental to this is this shift into also large bookings related to the next 12 to 15 months. That obviously provides a lot of accretive cash to the business given our strong gross margins that we just discussed. And also, if you look at this quarter and then moving into the end of the year, we continue to expect to build that contract backlog. Approximately 35 to 40% of that 2.3 billion backlog is expected to convert, as I mentioned, in the next 12 to 15 months, and we estimate that that backlog could approach almost 3 billion as we look at exiting the year and the next time that we’ll be getting together at our Q4 earnings.
Obviously strong progress here. I think it’s a great indication for investors in looking at that growth and even having the backlog growth outpace what is, albeit, very large revenue growth—that gives a good indication of strong, sustainable future cash flows for the company. Turning to page seven, a few items here in our build-and-transfer backlog stands at about 825 million, with the majority of that, as I said, to convert over the next 12 to 15 months. That provides us tremendous visibility. I’d say as a company we’re in the best position we’ve ever been at this point in the year.
And looking at next year, with the coverage that the backlog is going to have on the revenue range that I mentioned here at the top, we’d also say that a good chunk of the backlog is growing related to some of the near-term solutions around prime power and the behind-the-meter solutions that I mentioned a little bit earlier, and that we continue to explore other opportunities to grow those solutions. These solutions are modular, averaging about 250 megawatt.
They include gas and batteries together, but very importantly our software platform playing a critical role managing both of the assets to optimize those assets and to load balance those assets into the demand needs that are volatile. Turning to page eight, just to highlight a bit on our build, own and operate backlog here. Approximately 1.5 billion now across the broader controlled portfolio. We estimate a potential annual run-rate EBITDA of over 200 million as we look to exit 2028 as projects progress to commercial operation. And I’ll note that that’s in addition to the build-and-transfer and our prime power solutions EBITDA that we generate through our standard-course business as well.
Obviously having that build, own and operate revenue and that backlog that’s going to be 10 to 15 years in duration plus gives us a lot of confidence in the future, gives us a lot of visibility. That visibility into cash flow will help us optimize our capital structure and how we look to invest and grow and scale the company both organically and inorganically. Turning to page nine, we expect a sizable operating portfolio over the next year and a half. Calistoga and Cross Trails, of course, continue to proceed. However, we have many other projects in the U.S. that are within the project financing timelines now. We have other projects in Australia that I mentioned—Stoney Creek that’s cleared a lot of the regulatory approvals now, and it’s moving into the financing phase. Snider AI is targeting 1H27, Stoney Creek the second half of 2028, and coming online with financing in process for both.
Also through our acquisitions that I noted, we have other projects that will be beginning and/or in process of doing project financing on, and just very excited to get these projects to market over the next 12, 24, and 36 months as we continue to serve the growing and very near-term demand in the AI compute infrastructure sector. Turning to page 10, we have an additional 1 gigawatt of controlled megawatts that are within our purview right now to develop and bring through the development cycle and through the various project financing phases. This is energy storage as a service solutions, our powered land, and our powered shell solutions. We will advance these projects based on offtake quality, financing availability, and balance sheet efficiency.
The breadth of the portfolio gives us choices about where we deploy capital, and we believe we’re going to be hitting over 200 million, as I mentioned before, of run-rate EBITDA as we’re exiting 2028 based on the current business opportunities that we’re executing, while maintaining of course the adequate liquidity and limiting the need for equity. Again, that’s in addition to what we will be accreting from our build-and-transfer business and serving some of the AI compute demand.
Turning to page 11, page 11 here really highlights the different types of projects and different drivers and the considerations for each. Just to note that we’re building our best execution and financing experience as well here along the way and pursuing the behind-the-meter storage opportunities with the data center customers that have this immediate power demand where they have to wait on longer-term grid solutions, while continuing to work on our projects under development—for example, in New Mexico that we’ve mentioned—and other projects in the powered land and powered shell area.
On page 12, we expect 2026 revenue, as we said before, in the 290 to 310 million range. The GAAP gross margins we’re expecting for 2026 now we’re narrowing in the 20 to 22% after the raise from the last quarter that we got together. The revenue range is in the top half of our previous guidance, as I stated here at the beginning, with the guidance underpinned by all the deliveries that we’re in process of executing now. We obviously have tremendous visibility now, being seven weeks from the quarter, and have very high confidence in hitting this top end of the range.
From a cash perspective, we’re expecting to end the year somewhere in the 170 to 200 million range, dependent on opportunities and other projects that we might close or contracts we might close where deposits will come in. And I think importantly, we expect a further reduction in our corporate-level recourse debt versus the third quarter. Turning to page 13, as I said, for the first time we’re introducing our 2027 guidance based on our contract visibility and that tremendous growth in the backlog. We’re currently projecting a range of 600 to 700 million at this point with positive EBITDA of 40 to 50 million. The priority here is to convert and continue to convert that backlog and continue to grow that backlog as we increase in scale with the disciplined execution that you’re coming to expect from us and disciplined capital deployment.
I think page 14 sums up a lot of the areas of focus we’ve had here over the last three years, and then looking at 2027—really, if you had to stand at any point in time and look back three years, that is not a bad trend to stand back and take a look at—tremendous growth, I think, here across the board. Whether you look at our revenue, I think very good to see the backlog growing at a multiple of that revenue growth. I think that bodes well as we look at both the long-term build, own and operate.
But as you saw in how we have segmented the backlog, there’s a good chunk of that backlog that is going to be converting here in the next nine, 12, and 15 months to give that confidence and gave us the confidence to do the projection that we gave for 2027. You also continue to see strong gross margins here. Obviously those gross margins are a function of a lot of our supply chain management that’s done—how we execute, how we deliver on time to customers, and at the budgets or below the budgets that we set.
I’m going to jump and skip over page 14, which you can read about some of the momentum on the commercial pipeline, and jumping now to page 16 on our final strategic execution and focus, just to wrap before turning it over to Nitin. Our priorities: I think as you’ve heard both in how we’ve executed this year, as we’re looking at Q4, we’re going to execute on that revenue ramp. Strong visibility from where we sit today to do that. That’s number one.
We’re going to turn this time to power demand into bankable contracts. And that’s going to be both for our build-and-transfer solutions and as the hybrid integrated energy generation and energy storage contracts will do. But that’s also for our build, own and operate projects in the powered land and powered shell area. Third, we’re going to advance the project milestones and the financings associated with them as we’ve done this year already in three other prior projects, and have many of them underway in the U.S. and Australia, and just beginning project financing discussions in Japan.
And fourth, and fundamentally, I think especially in a market where it is our assumption we will continue to see volatility—we’ll continue to see, I think, a macro and a geopolitical environment that will remain uncertain—we remain very disciplined in how we look at the balance sheet and how we’ve looked at raising financing. As the largest shareholder, I think I have the liberty to say that minimizing or eliminating any type of dilutive transaction is top of mind.
I know that’s top of mind for all of you as investors on the call. Fundamentally, we have a very strong now set of capital pools in place to support our growth and, importantly, a very strong and accretive gross margin business on our EPC business that’s going to be converting here over the next 12, 15 months and beyond as we continue to build that order book. Fundamentally, from a solution perspective, as I said earlier, I’ve never felt better about how we’re positioned as a company—the generation, the storage, our software platform and its differentiation that it’s enabling—and owning and operating assets over time. Fundamentally, I’ll leave you with this thought: that at the end of the day, and having worked across many industries in my career and many companies, number one, never been more excited, I think, for what the future is going to hold for us here.
But number two, we have one of the best teams in the industry to pull off what not only we’ve been doing but to continue to scale and grow this company. We don’t limit our thinking in that sense. Our people are very focused on delivery and execution for our customers. We’re very focused on protecting our cash, on building our balance sheet flexibility, and focus on scale. Hopefully you’ve got a sense of that in the first three quarters of this year, and we’ll continue to see that now in delivering our largest quarter to date as a company in our history.
With that, Nitin, I’ll turn it back over to you.
Nitin Dahiya (Chief Financial Officer)
Thanks, Rob. I will now cover the third quarter results and financial position briefly before turning it back to Rob. Next, turn to page 18. Backlog reached 2.3 billion as of November 10, up about 147% year over year. The strong and growing backlog is a key driver of the financial outlook that Rob described. Our revenue for the quarter was 13.1 million, down 61% year over year, but this reflected the previously expected timing of shipments and project milestones.
As we mentioned last quarter, the majority of our back-half revenue is going to come in the fourth quarter. Adjusted gross margin, which adds back non-cash D&A and we think is a better comparable metric, improved 50 points year over year to 81% this quarter. We got a 4.3 million benefit from tariffs, and excluding the tariff impact, adjusted gross profit, sorry, was still a very healthy 48%, about 17 points higher year over year. We ended the quarter with 236 million of total cash, which includes restricted cash of 55, an increase of 88 million sequentially and 174 million year over year.
Let’s turn to page 19 for some more income statement details. As I mentioned, 3Q revenue came in at 13.1 million in line with expectations. Year to date, revenue was up 4% year over year to 52 million. Third quarter GAAP gross profit was 9.3 million, representing a gross profit margin of 71%. Adjusted gross profit was 10.6 million and adjusted gross margin of 81%. Both measures include the 4.3 million tariff refund we mentioned. Excluding that, GAAP gross margin would have been 37.9% and adjusted gross margin 48%.
Now, the refund had a significant impact on the quarter’s reported percentages, and given the small revenue number, our full-year GAAP gross margin guidance remains in the 20 to 22% range. Adjusted operating expenses this quarter were 25.2 million, an increase of 9 million from the prior year. As we scale revenue, maintaining operating expense discipline is an important part of delivering the adjusted EBITDA that we expect to deliver in 2027. That said, operating expenses did increase this quarter, and that is primarily driven by project development expenses and legal expenses associated with scaling the owned and operated platforms, as well as higher bonus accruals. We expect to see the benefit of this higher operating expenses over the next 12 months in contract activity. As such, we are fairly focused on managing controllable opex while investing in the business where warranted. We expect the pace of increase in operating expenses to slow next year because we’ve seen a lot of that increase this year in front of the revenue increase.
Adjusted EBITDA for the quarter was a loss of 14.7 million compared to a 6 million loss a year ago. Again, that reflects lower revenue and higher opex, offset by higher gross profit. GAAP net loss was 28.2 million, or $0.17 per share. Adjusted net loss was $0.14 per share. Now turning to Slide 20, I’ll quickly touch on our capital stack. This is a new slide that we added this time, just given our capital structure is fairly complicated and it combines project-level non-recourse debt and preferred capital and corporate-level recourse debt. And looking at just our total debt can sometimes give an incorrect impression of our balance sheet obligations. Therefore, we have laid it out in the presentation to make it easier to follow.
Corporate-level recourse debt declined by 12 million sequentially to 221 million. Non-recourse debt increased, primarily reflecting the engine financing that we did backing our purchase of reciprocating engines and the dev vault financing associated with the Goshi assets. We are using financing at the asset level as much as possible to support the growth of our owned portfolio, and we expect this to grow as we execute more projects. With this, I’ll hand it back to Rob for a few closing remarks before we take questions.
Rob, over to you.
Robert Piconi (Chief Executive Officer)
Okay, thank you, Nitin. Look, just to wrap here, I feel, as I said, I think very good about the quarter, how it set us up now for Q4 for the ramp that we’re delivering. I think the backlog growth on the commercial side and the teams and the opportunities we see in critical markets continue to be quite positive. I think we’ve also built our balance sheet, as you see from the cash growth, and also continuing to build a lot of our financing partners in a way to ensure we’re going to have the capital required to continue to build this business.
I think the visibility for the first time having on 2027 now projecting our revenue growth at over 2x what we’re finishing this year, obviously a lot of confidence there in that strong gross margins will continue based on how we’ve managed both the supply chain and how we’re managing the commercial activity. But in addition, our first full year of positive EBITDA, which is another important milestone and I know one the investors and we’re all very focused on as a company.
With that, what I’ll say is as we look forward now, we do expect, as I mentioned earlier, that we’re going to continue to have volatile markets both on the macro side, as I mentioned, on the geopolitical side, a lot of things that we are prepared. We have the balance sheet to deal with that volatility while continuing to grow and, most importantly, execute for our customers. All of our customers that we’re building relationships with and have built over time are all seeking us out as we look at the solutions that can be deployed with a lot of credibility, with a lot of predictability given our past performance.
But in addition, having the balance sheet continue to strengthen as we look at larger and more accretive opportunities as a business. With that, operator, we’ll go ahead and conclude here and turn it over to you for questions.
OPERATOR
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. The first question is from Justin Claire from Ross Capital Partners.
Please go ahead.
Justin Claire (Analyst at Ross Capital Partners)
Hey, good afternoon. Thanks for taking our question here. Wanted to start out on the outlook into 2027 here. So you provided the guidance, 600 to 700 million. Just wondering if you could help us understand the revenue mix between build-and-transfer projects versus asset vaults. And then just curious, within the build-and-transfer, how much of the expected revenue is associated with that 1.2 gigawatt integrated power agreement that you had signed previously.
Robert Piconi (Chief Executive Officer)
Great, Justin. Thanks. Look, to the first question. As we look at next year and the mix of the business that we’re going to have, a lot of that mix—and you asked specifically about the BOO and BAT. So in 2027, we’re still going to have the two projects operating that we have this year, Calistoga and Cross Trails, and then we will be getting into Q4, potentially bringing online one more U.S. project. But primarily, a lot of the projects that we’re building here will be coming online in 2028.
And that’s why we have so much strong visibility into 2027 right now, because a lot of that revenue will be the build-and-transfer revenue that we’ve already contracted. It’s already booked, and so we have a lot of confidence in that number. The supply chain discussions have happened and we’ve lined things up. So that’s in terms of the mix of the project. And that one contract that we announced—you asked about the size and how important that’s going to be next year. It will be an important part of the revenue. It’s not going to be, you know, something that would go over half of our revenue, but it will be an important part of our revenue. And what’s very interesting about it is we’re also expecting this next year to be the first year where we should have quarters that should be a little smoother in terms of shape, and at those revenue levels, obviously managing that, managing cash and as we look at delivery, I think will be quite welcomed.
But in any event, I think that’s how we’re looking for next year.
Justin Claire (Analyst at Ross Capital Partners)
Got it. Okay, that’s really helpful detail. Then on one of the slides here, you had mentioned growing the backlog potentially to 3 billion by the end of the year here, so pretty meaningful increase potentially. And just wondering the level of visibility you have. Is that coming from line of sight to build-and-transfer projects, or is that from growing the asset vault portfolio? And then just curious if that 3 billion would be net of the meaningful revenue that you’re anticipating recognizing in Q4 here.
Robert Piconi (Chief Executive Officer)
Yeah, to the first question, it’s a pretty balanced mix in terms of driving that backlog growth and that booking growth. I mean, the opportunities, I think there, as we mentioned, various project financings in Australia and the U.S. on projects. So we’re going to see a lot of strength there that’ll drive that backlog, and remember those will be, you know, 10- to 15-year type of backlog streams. But we also see a lot of demand and opportunity continuing on our energy storage solutions on the build-and-transfer side.
And a lot of that’s driven off of near-term demand in and around solutions that can basically operate off-grid, microgrids, behind-the-meter solutions to support some of the near-term power needs. So it’s actually a mix of both and a lot of strength across both segments.
Justin Claire (Analyst at Ross Capital Partners)
Got it. Okay. And then just one more—curious, since you signed the large 1.25 gigawatt strategic agreement, how’s the pipeline for other opportunities for integrated power solutions evolving since that point in time?
Robert Piconi (Chief Executive Officer)
It’s growing and it’s active. I’d say it’s a very interesting segment, Justin, because it has a lot of advantages in speed because it’s not relying on grid power, which obviously is in high demand and especially with the focus on—which is, I think, been in the market for six to eight months. But I think even with the recent governmental changes that have just happened, I think the need not to really touch grid power relative to that demand and keep pricing where it is.
Looking at the solutions that are behind the meter, that are off-grid, that have other benefits to the communities, we’re seeing a lot of interest in that, and in particular what’s interesting is the role our software is playing in that. Our software not only manages our batteries, but it manages the coexistence of generation tech, whether that be fossil or renewable, and our batteries together. And in doing so, we can optimize how that power is delivered to try to increase the sustainable aspects—meaning to reduce emissions from, for example, some of the gas generation side.
But as well, it gives that visibility in dealing with some of the load if we’re powering AI compute infrastructure. Between the training and the inference models, there’s a lot of different volatility that has to be managed and, you know, we’re required to deliver five-nines quality in that case in uptime. So it’s something our software is playing a very important role managing any type of hardware, and the customers in particular really appreciate that.
Justin Claire (Analyst at Ross Capital Partners)
Okay, great, thank you. I’ll pass it on.
OPERATOR
The next question is from Derek Soderbergh from Cantor Fitzgerald. Please go ahead.
Derek Soderbergh (Analyst at Cantor Fitzgerald)
Yeah, hey guys, thanks for taking the questions. Just wanted to kind of get your thoughts on growth in ’27. You guys continue to sort of execute on projects, both live projects, and you’re growing the backlog. What do you think the market’s missing here? You guys, again, just seems to me, continue to execute. Just maybe kind of get your high-level thoughts on what maybe the market might be missing with you guys and the story here.
Robert Piconi (Chief Executive Officer)
Sure, yeah, I’ll take a first shot at that and then I’ll invite Nitin who has just joined, it’s been here a quarter now, so he comes from the outside, comes from BlackRock. So I’m sure he’ll have some perspectives here in a minute too. But I think one thing that’s clear, Derek, in this market is it is a show-me market. And I think as we’ve executed, I think the last six to eight quarters, growing cash every quarter, strengthening the balance sheet, doing what we say.
I think that the operational gross margins that we’re delivering, especially on the EPC side, they’re 2 to 3x what the market’s doing. If you look at some of the people in the storage integration space that are struggling. So I think while all of that is good and I think well received and I think that’s supported by some of the customer contract wins, I’ll note our largest contract win ever, between 5 and 600 million that we had noticed. But at the end of the day, I think from an investor perspective, especially as we get into a year where we’ve got 75% of the year we’re delivering in one quarter, I think investors want to see that happen.
I’ll remind investors that we did it last year the same. So we are very good at execution and at focus and at minimizing the noise, let’s say in focusing on delivery. So I think we’ve demonstrated that. But obviously on the eve here of delivering our largest quarter and about 75 to 80% of our year in one quarter, I think that’s just influencing a little bit what otherwise investors might be just lining up. If you look at what we’ve just guided and reiterated here, not only for this year, I mean we’re seven weeks away, but also guiding at a 2x plus revenue next year, strong visibility as we mentioned on that, I mean that’s going to be primarily build and transfer, that stuff that we’ve already booked. Right. So it’s, I’d say, from my perspective, it is a market, given the volatility and things at a macro level that we continue to see, I’d say week to week.
I think it’s just that people do want to see that execution. And I think with what investors are hearing today, I hope they see, and not only from where we’ve come out of the quarter, from a balance sheet perspective. So with that just growing that cash balance, what we’ve put on the board also in terms of bookings growth and continuing to build that, and now sitting here with just less than two months in the quarter and guiding to that upper half of the range, I think hopefully that’s going to build confidence and will continue to bring investors into the story.
But I’ll turn it over to Nitin. We may have a perspective here as well.
Nitin Dahiya (Chief Financial Officer)
Thank you, Rob. I think you covered it quite well. We are under-owned from a shareholder perspective. Right. So that is something that is a function of where our market cap is and again, as Rob mentioned, some of the seasonality or the lumpiness of our business, but as a business, we are at an inflection point and both from a scale perspective and from a profitability perspective. And I think I would like to think that that will actually entice a lot more interest.
We are also trying to provide more clarity to make us easier to follow. We have two businesses which again, the amount of disclosure we have on them hopefully makes it easier to follow and also gives people comfort on our visibility that we have and our confidence we have on the numbers. But ultimately I think we want to execute to the best of our ability and there are certain controllables that we have and I think we can do well in those. And you know, the markets can be somewhat irrational, but we can’t control them.
Robert Piconi (Chief Executive Officer)
Derek, I’ll add one more thing because I think it’s important. I speak to a lot of our investors, not only our top five to seven groups that make up over half of our total shareholder base, but I speak to a lot of the groups that have come in in the last year to the story from time to time. And you know, what’s interesting is, and hopefully we’ve been pretty clear about that on this call, is I think with the growth we’ve had, with the size of the projects that we’re talking about doing and that are in process, investors are wondering how are you going to do this without some massive dilutive equity offering?
Right. So I think that’s. And as we continue to post the numbers and build cash and acquire portfolios. I think the Goshi acquisition, I talked to investors and people not having visibility, it’s disclosed now, it’s in the Q. But we closed that acquisition in cash and in Q3. So it was, that 237 million is after we acquired that company. So I think investors, with the growth we have, the increase in the backlog, may be a little worried, and I think they express this, that is there some large, you know, I mean and as I think we’ve been very clear here, we’ve got not only the project financings that we continue to do, we’ve got increasing cash there. As you see on the balance sheet, we’d already announced a 300 prep fund. We’ve only used, you know, only about 35 to 40 million of that.
So we have, if you think about that prep fund, that enables a multiple of three to four in terms of getting the debt and the ITC in terms of capex. So think about that as 1 to 1.2 billion of capex that enables. So I think really that’s really the last item I would say that potentially may be having people wait on the sidelines, but I cannot be any more clear than what I’ve just said. And again I’m the largest shareholder in the company so I think I should have a little leeway here to opine on this a bit.
But I think we continue to be, I think, extremely undervalued as a company despite the transparency that we’re providing and despite how we’re executing.
Derek Soderbergh (Analyst at Cantor Fitzgerald)
Got it. Well, really, really appreciate the detail there. And as my follow-up, I’ve actually been hopping around calls here tonight, so apologies if this has been asked. Just trying to get a better understanding of how you’re getting to the adjusted EBITDA numbers for next year. Obviously a lot of growth. Curious if you can talk about kind of opex, how that’s going to grow with revenue and maybe if you could just talk a bit about gross margin as well and how that kind of gets you to the EBITDA guidance for 27.
Robert Piconi (Chief Executive Officer)
Nitin. Do you want to go ahead and take that?
Nitin Dahiya (Chief Financial Officer)
Yes. So as I mentioned, right, opex numbers this year were somewhat higher, but we expect the pace of that to slow. So our EBITDA guidance, when you think about from a gross margin perspective, we’ve shared that our backlog should have adjusted gross margins in the 20 plus percent range and I think that still holds because a lot of that revenue is coming next year. You take out opex going slightly and I think you get to that range. And again, I think the one key element of the numbers there is we don’t want to start the business and then just pull back on opex.
But to the extent we see good opportunities to actually invest in the business, we would. But clearly we are focused on being profitable and creating returns for shareholders. So that is one. The other bit I would just, and I know that’s not your specific question, but just over time, as our build-and-operate assets come online, our EBITDA margins will naturally grow. So the next year’s EBITDA being positive, this is going to be the first full year of positive EBITDA. And again, there is operating leverage in there, meaningfully, this was just given our range, but over time we actually expect that margin to grow meaningfully.
Derek Soderbergh (Analyst at Cantor Fitzgerald)
Super helpful. Thanks, guys.
OPERATOR
The next question is from Noel Parks from Tuohy Brothers. Please go ahead.
Noel Parks (Analyst at Tuohy Brothers)
Hi, good afternoon. You know, one thing I would like to hear about is on the EMS software side of the platform. I’ve been hearing more discussion lately about EMS’s role, particularly in projects that are using CCGT alternatives like reciprocating engines, for example. And I’ve just been hearing what sounds to me like greater awareness of the role of storage and especially in these sort of, you know, data center, possibly islanded power, you know, power supply projects.
So if you have any thoughts on that, that’d be great.
Robert Piconi (Chief Executive Officer)
Yeah, thank you, Noel. I mentioned this a little bit and talked about how important software is playing. So what you’re hearing, I think, in the market is absolutely correct. And that’s what that software capability for a few reasons is what really helped enable us to win the size of the contract that we won, the 1.25 gigawatt, in a few things. On the software side, it’s not only providing a single pane of glass and operating, sort of tying into the operating systems, for example, from what we announced of Caterpillar engines. So tying into that operating system and tying that into our battery management system as well. So we tie in operationally to manage, but the real value is not only managing that but also being able to distribute that in an optimized way and balancing load, and in looking at optimizing the charging and discharge if it’s the batteries, looking at optimizing the timing of how the reciprocating engines, the RICE, as an example that you used, would come online.
In doing that with software, we can also minimize emissions when you’re looking at the integration, combination, and mix of battery energy storage and also the generation engines. So that’s also, I think, something that’s very important, very important for the communities that we’re going to operate in. But fundamentally, then at the end, fundamentally we are taking on and ensuring that we’re going to be delivering five nines of quality and uptime as we look at our customers. And to do that in an environment where you’ve got AI loads and training and inference that are very volatile in particular, so how you manage and balance that and work that back into both the generation and storage is fundamental. And you know, this is, I think, something in particular over the last six months that’s becoming more and more prominent as a decision factor.
It was definitely, the software was absolutely a decision factor, I think, in how we were selected to support, you know, one of the largest deployments of 250 megawatts modular prime power solutions across multiple sites. And what I’m really excited about, and if our software team were here to comment, what they’re excited about is what we’re going to learn in terms of the behavior of these models, depending on the sort of the geography and the demographic of where they’re deployed. There’s going to be different modular sizes as well in those deployments. So it’s really interesting how these not only projects are going to be deployed, what we’re going to learn, and they’re going to be some of the first ones that are operating in this mode, meaning behind-the-meter off the grid.
And so very excited to share as we bring these first systems up. Deliveries have started this quarter already, so that’s a contract that we’re just beginning those deliveries on this quarter that we just announced last quarter. So we’re excited about that.
OPERATOR
The next question is from Sid Ranji from Fundamental Research Corp. Please go ahead.
Sid Ranji (Analyst at Fundamental Research Corp.)
Hi. Congratulations on the progress and robust pipeline. Two questions, if I may. Do you mind sharing what the ideal timeline for Stoney Creek is? Start of construction and when really operational?
Robert Piconi (Chief Executive Officer)
Sure, yeah. We’re planning Stoney Creek, which we’ve just announced, just to reiterate what we’ve just said to some milestones in the last three months. We received development approval already, which is a critical milestone, but even perhaps more critical, what’s called the 534, which is the grid interconnection approval. So that actually we just received two weeks ago, so that just really paves the way now for us to get right into construction.
We had already announced in June that we acquired the land on that project versus a lease structure. So it gives us very good flexibility. So all of that means basically we’re in project financing mode as we speak. So actually Corey Magnuson, our president of AssetVault, is actually in Sydney right now and working on some of those things. So to answer your question is that is a project that will be coming online in 2028 and I think as we started already some of the works around the site there and now we’re going to be doing some of the detailed planning for that. We’ll be able to probably next quarter give you maybe a tighter frame within 2028.
But for sure it’s a project that will be coming online in 2028.
Sid Ranji (Analyst at Fundamental Research Corp.)
Okay. And the second one is on capital raising requirements Q4 and 2027. Any ballpark or any guidance on how much you need, how much you plan to raise, net capital raise?
Robert Piconi (Chief Executive Officer)
Sure. Nitin, do you want to comment on that?
Nitin Dahiya (Chief Financial Officer)
Yeah. So we have given a cash guidance for end of the year $170 to $200 million that does not assume any incremental rate at the parent and in fact at the parent level, the corporate level recourse, that we expect actually to pay some of that down. There are obviously a number of moving pieces in terms of, you know, getting to that number in terms of managing the working capital for different projects, etc. But again we are trying to be very judicious with the use of our cash and of our balance sheet and then also when we look at projects I think capital efficiency is a very important aspect of that.
So our guidance does not assume that we’ll have, we’ll issue any, you know, raise any additional capital at the parent. At the project level of course it’s a different matter, but that is non-recourse to the parent and, you know, it doesn’t accrete to the cash.
Robert Piconi (Chief Executive Officer)
Yeah and Sid, we’re going to be taking advantage on all the US projects in particular, all the ITC and the tax equity side of the equation. Obviously that’s a great form of financing, and the standard project-level debt. So really, you know, current course and speed on that. As I mentioned, we’ve got the prep fund as well that allows us to invest and we still have quite a bit of that at our disposal.
OPERATOR
The next question is from Brian Lee from Goldman Sachs. Please go ahead.
Tyler Bissendon (Analyst at Goldman Sachs)
Hey guys, this is Tyler Bissendon for Brian. Thanks for taking our questions. I guess first, how much of your ’27 revenue guidance is covered by your backlog currently? I guess if I back out your 4Q expected revenue from the $800 million of build-and-transfer backlog, looks like it’s probably about 85% or so covered at the midpoint. Is that directionally accurate? And then just looking at the breakdown of your backlog, it does look like some of your under construction and contracted megawatt hours within your build-and-transfer business went down since last quarter.
But you also meaningfully shifted the revenue to under construction from contracted. So can you talk about some of the drivers there? And then did some of the business shift from contracted to advanced negotiations?
Robert Piconi (Chief Executive Officer)
Yeah. Do you want to, do you want to take those? I’m happy to take the first one. Or how do you want to. Go ahead.
Nitin Dahiya (Chief Financial Officer)
Let me take the first one. Yeah. So Tyler, thanks for the question. I mean, I think when you think about our revenue, I think as Rob mentioned, a majority of our revenue is going to come from the build-and-transfer side, but not all of it. So there is also some revenue on the other side. And obviously we’ve given a range in terms of our guidance. So clearly, I mean, I think you can do the math and we feel fairly confident about that range.
Robert Piconi (Chief Executive Officer)
Yeah, yeah. And I think, Tyler, to your point, I think you’re roughly right there. We’re at a time in the quarter where this year’s still not up and, you know, I tell people all the time we haven’t fired the sales team. We have a lot of commercial activity. Obviously, as you said, we have a very, very high percentage of what we’ve just guided there covered and are out working to continue to build that. And we’ll, at our Q4 earnings, which is where we typically give the guidance on the year—comes in March, typically—we’re obviously, given the visibility we have and the confidence we have, giving some of this initial guidance. But suffice to say we have quite a lot of next year covered here already.
And then I think on the—you made a comment, Tyler, too, about the change or somehow a reduction in the build-own-operate. We have a lot of things underway right now in that space on projects and we’ve mentioned a few times some project financings and things. So that’s why, as we get those things closed and booked, you’re going to see increases in our backlog at, you know, $200 to $300 million increments with each one. So there’s no, we have no real reduction at all in our build-own-operate, except that we are also building the backlog in the build-and-transfer associated with some of these hybrid generation build-and-transfer contracts.
So it’s a—as I said, if I had to go back a year and say, gosh, what would I ideally like to see? As we’re building projects that we can’t recognize revenue, obviously, until they’re fully built out and they come online, and then it’s 10- to 15-year revenue streams, I would have said, wow, it’d be great to have build-and-transfer projects that are going to accrete cash to us while we’re getting these larger projects built out. And that is exactly what’s happening and in a much, I’d say in a much larger way even than, you know, as things have evolved here, than we were thinking a year ago.
So it’s really all good.
OPERATOR
This concludes the question and answer session. I’d like to turn the floor back over to Robert Piccone for closing comments.
Robert Piconi (Chief Executive Officer)
Thank you, operator. And again, I just wanted to thank everybody for joining the call and listening in here. As I mentioned a few times, hopefully you can hear it in how I’ve articulated things. Very excited about our position now, about what we’re going to deliver this quarter, what we’re looking at next year. And again, I’ll finish with a lot of this confidence just comes from the confidence of the team that we have here at Energy Vault Holdings, their focus on the customer, on delivery. And I think with all the volatility that we’ve had to deal with in particular the last 12, 18 months, I think the focus to continue to deliver and build that balance sheet—you know, seventh quarter in a row of cash increases—and we’re going to continue with that focus.
You’ve seen some of the additional hirings that we’ve done, some senior hiring, I think, in the company focused on the financial, both project finance and a lot of the broader financial areas as we look to scale the business and, you know, I think not lost on you as well, that we’re doing that not only organically but inorganically as well. So in any event, I want to thank everybody again and our employees and the teams and turn it back to you, operator. Thank you very much.
OPERATOR
Thank you. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
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