0001628280-25-039643
SEC filingRevenue grew 9.2% YoY to $91.3M, driven by volume; gross margin expanded to 34.7% on mix and utilization.
For the three months ended June 30, 2025, Microvast reported revenue of $91.3 million, a 9.2% increase year-over-year from $83.7 million. This growth was driven by a 36.4% increase in sales volume to 411.5 MWh, partially offset by a decline in average selling prices. Gross profit rose 16.7% to $31.7 million, with gross margin expanding to 34.7% from 32.5% in the prior year. The margin improvement was attributed to higher production utilization, which enhanced fixed cost absorption, and a favorable product mix with a growing share of higher-margin battery solutions.
Operating expenses decreased significantly, from $126.7 million to $16.5 million, primarily due to a $86.7 million reduction in impairment losses on long-lived assets. General and administrative expenses fell 83.0% to $4.0 million, driven by lower share-based compensation and favorable foreign exchange effects. Research and development expenses declined 23.6% to $7.7 million, and selling and marketing expenses decreased 31.9% to $3.4 million. As a result, the company swung to an operating profit of $16.2 million from a loss of $98.7 million in the prior year.
Net loss was $106.1 million, compared to $101.6 million in Q2 2024, primarily due to a $121.5 million non-cash loss from changes in fair value of warrant and convertible loan, largely related to the convertible loan.
Revenue by geography showed mixed trends. Asia & Pacific revenue grew 33.7% to $47.7 million, representing 52% of total revenue, driven by a 440% surge in Other Asia & Pacific countries to $12.8 million. Europe revenue declined 16.8% to $38.9 million, falling to 43% of total revenue from 55% in the prior year. U.S. revenue more than tripled to $4.8 million, though it remained a small portion of the total at 5%. Customer concentration shifted, with Customer A dropping from 41% to 18% of revenue, while Customer B emerged at 15%.
Management highlighted a $320.0 million order backlog, with the majority expected to be fulfilled in 2025 and 2026. The company is expanding capacity with a second 2 GWh production line in Huzhou, China, expected to be installed by year-end, and plans to pivot its Clarksville, Tennessee facility to LFP cell production, though progress remains contingent on securing additional financing. The company achieved positive operating cash flow of $44.3 million in the first half of 2025 and concluded it is probable that its plans will alleviate substantial doubt about its ability to continue as a going concern. Management expects continued positive operating cash flow, supported by the backlog and favorable product mix, and is exploring further capital-raising opportunities to ensure financial flexibility.
As of June 30, 2025, Microvast held $99.7 million in cash and cash equivalents, with total current assets of $434.6 million. The company reported shareholders' equity of $356.1 million, a decrease from $387.9 million at year-end 2024, driven by a net loss of $44.3 million in the first half of 2025. Inventory stood at $141.7 million, slightly down from $143.3 million. The company faces substantial doubt about its ability to continue as a going concern, with $83.2 million in short-term bank borrowings and a convertible loan of $181.5 million due within 12 months. However, management believes it can refinance and generate sufficient operating cash flow.
Microvast has significant purchase commitments totaling $49.8 million primarily related to inventory, and capital commitments of $10.2 million for construction and equipment, with $7.9 million due within the next year. The company also has a convertible loan with Mr. Yang Wu, with an outstanding fair value of $181.5 million as of June 30, 2025. The loan carries a conversion feature and recorded a $78.2 million fair value loss in H1 2025. Additionally, the company has $41.7 million in bonds payable to Huzhou Saiyuan, with a revised maturity in January 2027.
Microvast did not repurchase shares or pay dividends during the period. The company's capital allocation focused on debt management: it borrowed $59.6 million in new bank loans and repaid $57.6 million, resulting in a net debt increase of $2.0 million. Capital expenditures were $5.2 million in the first half, primarily for manufacturing capacity expansion. The company also recorded a gain on debt restructuring of $0.8 million.
Microvast operates as a single reportable segment: lithium-ion battery technologies. For the six months ended June 30, 2025, total revenues were $207.8 million, up 25.9% from $165.0 million in the prior year. Geographically, Europe contributed the largest share at $98.9 million (47.6%), followed by China at $78.9 million (38.0%), other Asia-Pacific at $18.7 million (9.0%), and the U.S. at $11.2 million (5.4%). The geographic mix highlights growth in China and the U.S., while Europe saw an increase in absolute terms but a slight decrease in share.
Operating cash flow (CFO) of $44.3 million for the six months ended June 30, 2025, represents a significant improvement from $2.1 million in the prior-year period, despite a net loss of $44.3 million. The primary driver was a large non-cash change in fair value of warrant liability and convertible loan ($78.4 million), along with depreciation ($16.1 million) and product warranty accruals ($8.5 million). Working capital was a net use of cash, with notes receivable increasing $14.0 million and accrued expenses declining $16.8 million, partially offset by inventory reductions of $7.1 million.
Capital expenditures (capex) were $5.2 million, down from $13.2 million in the prior period, indicating reduced investment intensity. Free cash flow (not explicitly stated) would be positive given CFO of $44.3 million and capex of $5.2 million. No share repurchases or dividends were paid. Financing activities were a net use of $6.8 million, primarily from net debt repayments and deferred capex payments.
Overall, cash generation improved markedly, driven by non-cash adjustments and lower capex, though working capital swings remain a source of volatility.