Eos Energy Q3 Revenue Jumps 171% as Margin Deficits Narrow

Eos Energy Enterprises reported a sharp increase in third-quarter revenue and narrower margin deficits as higher shipment volumes and manufacturing efficiencies helped offset continued losses. The zinc-based battery storage provider expects 2026 revenue of $300 million to $325 million, implying another sequential increase in the fourth quarter, while forecasting that adjusted gross margin will remain negative.

Revenue for the quarter ended Sept. 30 rose 171% from a year earlier to $82.7 million and increased 20% from the second quarter. Eos shipped about 390 megawatt-hours during the period, with cube shipments up 216% year over year and cube output rising 23% sequentially.

The GAAP gross loss widened to $44.2 million from $33.9 million a year earlier, but gross margin improved to negative 53% from negative 111%. On a non-GAAP basis, the adjusted gross loss was $36.8 million, compared with $30.4 million in the prior-year quarter, while adjusted gross margin improved by 55 percentage points to negative 44%.

Adjusted EBITDA was a loss of $63.8 million, wider than the $52.7 million loss recorded a year earlier but narrower than the second quarter’s $71.4 million loss. Adjusted EBITDA margin improved to negative 77% from negative 173% a year earlier and negative 104% in the preceding quarter. Eos attributed the sequential margin movement to volume leverage and operational improvements, partly offset by pricing.

The company recorded net income attributable to shareholders of $125 million, compared with a $641.4 million loss in the third quarter of 2025. The GAAP result included substantial noncash fair-value movements; Eos’s adjusted EBITDA reconciliation deducted a $220.5 million change in the fair value of derivatives.

Operating expenses were $35.1 million, up 29% year over year and essentially unchanged sequentially. Total cash, including restricted cash, was $344.1 million at quarter-end, up 171% from a year earlier but down 5% from $364.1 million at the end of the second quarter.

Manufacturing costs decline as output rises

Eos reported sequential reductions across several production cost categories. Material cost per cube fell 9% as the company exited higher-cost legacy purchase orders and introduced lower-cost materials. Direct labor cost per cube declined 17% as output increased with flat labor, while manufacturing overhead per cube decreased 8% on higher throughput and improved fixed-cost absorption.

At the Thorn Hill facility, battery output per shift was 20% higher than at Turtle Creek, according to the presentation. Line 2 was achieving faster cycle times than Line 1, and its ramp was progressing as planned. Eos said the manufacturing changes produced a 23% volume improvement and a 10% reduction in cost per cube.

The company is consolidating Line 1 operations at Thorn Hill. Its plan calls for Line 1 operations at Turtle Creek to cease in late October, followed by disassembly, relocation, upgrades and site acceptance testing at Thorn Hill by the end of the first quarter. Eos expects production capacity to reach 2 gigawatt-hours by the end of 2026, though the timing and execution of the relocation remain subject to operational risks.

Backlog reaches $765 million

Backlog stood at $765 million, representing approximately 3.2 GWh and an increase of 19% from a year earlier. About 60% was tied to standalone storage, while roughly 53% involved systems with durations of eight hours or more. The presentation also identified about 31% as data-center related and approximately 43% as connected to FPUSA.

Third-quarter orders came from six customers, including four new and two repeat customers. Eos highlighted a 10-MW/100-MWh solar-plus-storage project in West Virginia involving FPUSA as a recent strategic win. Because FPUSA-related business includes related-party and project-financing considerations, the timing and ultimate revenue contribution remain uncertain.

Eos also reported 6.9 GWh of cumulative discharged energy across its Z3 fleet, with approximately 4 million cycles and average round-trip efficiency of about 79% across systems using and not using DawnOS. In a dynamic-load test, the system completed 147 consecutive cycles with 81% round-trip efficiency and no additional detected temperature increase, according to the presentation.

Fourth-quarter margins expected to remain negative

For full-year 2026, management expects revenue of $300 million to $325 million, compared with $114.2 million in 2025. The forecast implies fourth-quarter revenue of $92 million to $117 million.

Eos expects fourth-quarter adjusted gross margin of negative 25% to negative 20%, with product adjusted gross margin between negative 15% and negative 10%. Full-year adjusted gross margin is projected at negative 37% to negative 35%. The company cited higher average selling prices from backlog, material bundle purchases, greater labor utilization and Thorn Hill efficiencies as fourth-quarter drivers, while Turtle Creek overhead remains a factor.

The outlook depends on Eos’s ability to convert backlog into revenue, scale manufacturing, control costs and complete the Line 1 consolidation without significant production or delivery disruptions. Other risks identified by the company include customer project financing, the availability of tax credits and Department of Energy funding, supply-chain and trade-policy changes, debt and liquidity requirements, and the development and financing of FPUSA, MN8 Energy, Google and other customer projects.