MVST

Thank you for standing by. This is the conference operator. Welcome to the Microvast first quarter 2026 earnings call. As a reminder, all participants are on a listen-only mode, and the conference is being recorded. I would now like to turn the conference over to Microvast investor relations. Please go ahead.

Thank you, operator, and thank you everyone for joining our update today. This is Rodney Worthen, Chief Financial Officer of Microvast, and with me on today's call is Mr. Yang Wu, Founder, Chairman, and Chief Executive Officer of Microvast. Mr. Wu will start off with a high-level overview of the first quarter results before providing some operational and business updates. I will then discuss our financials in more detail before handing it back to Mr. Wu to wrap up with our outlook, some closing remarks, and to answer a few questions. Ahead of this call, Microvast issued its first quarter earnings press release, which can be found on the investor relations section of our website, ir.microvast.com. We have also posted a slide presentation to accompany management's prepared remarks for today's call. As a reminder, please note that this call may include forward-looking statements.

These statements are based on current expectations and assumptions and should not be relied upon as representative of use for subsequent dates. We undertake no obligation to revise or release the results of any revision to these forward-looking statements due to new information or future events. Actual results may differ materially from expectations due to a variety of risks and uncertainties.

For more information on material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. We may also discuss non-GAAP financial measures during this call. These measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. These non-GAAP measures have been reconciled to their most comparable GAAP metrics in the tables included at the end of our press release and the slide presentation.

After the conclusion of this call, a webcast replay will be available on the investor relations section of Microvast's website. I will turn the call over to Mr. Wu to kick things off.

Hello, everyone, and welcome. Thank you for joining us today. As always, I want to start by remind you of our core mission. Founded in Texas in 2006, Microvast has grown into a global leader in advanced battery technologies. With over 890 patents granted or pending and our electrified solutions successfully deployed worldwide, we are proud to contribute to the global energy transition, building a more sustainable future, one battery at a time. Innovation is core to our operations and always on display at Microvast, and I'm excited to announce our next-generation 290 amp hour LFP-based battery packs as high-performance modular battery solutions designed for a wide range of commercial and heavy-duty industry applications. We expect to integrate these new packs into the CAF electric powertrain solution.

Microvast is on a mission to lower the barrier to entry for electric school bus platforms in the U.S. and reduce reliance on subsidies. We aim to deliver cleaner, quieter, affordable, and more comfortable transportation for the next generation, as we know that our kids today are the future. I will go into more detail about how we plan to transform the domestic school bus industry on the upcoming slides. Let's first take a brief look at the quarterly overview. Please join me on slide four. Our first quarter revenue was $60.6 million, reflecting a unique set of challenges which created year-over-year dip that we believe to be temporary. Our focus remains on bridging on capacity from Phase 3.2 as production timelines align with customer demand and expect this capacity to contribute to a continued revenue ramp through 2026.

Our gross profit margin was 31.6%. Total gross profit decreases due to lower volumes. Margins remain resilient. This demonstrate effective cost management and ability to maintain premium positioning despite fluctuation in our top-line revenue. We expect some continued pressure from a Phase 3.2 ramp-up costs and current raw material price increases aim to maintain a strong margin profile. Let's turn to slide five for an operational update on our Huzhou Phase 3.2 expansion.

I am pleased to report that our Huzhou 3.2 expansion continues to progress well. The trial production for our 55 amp hour cell has been completed on the electrode section, the assembly and formation equipment is currently undergoing material-based commissioning. The two images on the left display the electrode section in operation, while the two on the right show trial cells during assembly.

We expect SOP in 2026, as this expansion is a critical component of our growth strategy. Phase 3.2 is expected to add up to 2 GWh of annual production capacity and anticipated to be modular across our LBC platform. Move to slide six. I'm tremendously excited to finally announce our 290 amp hour LFP battery pack and a CAF electric powertrain. This product and end market has been one of my dreams since very beginning of founding Microvast, and I cannot wait for it to hit the road. CAF is not just a battery system.

It is a potential total solution to electrify a market that included nearly half millon conventional school buses in the U.S. We would not just be handing OEMs a cell and pack, we would be handing them a plug-and-play electrical powertrain that includes our high voltage LFP packs, traction drivetrain, and importantly, our proprietary nitrogen generation and storage system. This nitrogen purging system aims to substantially reduce the risk of thermal propagation, addressing the number one safety concern school boards and parents have today. For specific drivetrain components, we plan to partner with mature and high volume suppliers to source and develop this integrated solution. From a business perspective, we expect our CAF powertrain solution will be a market disruptor in a segment that has consistent recession-proof demand. Currently, electrical school bus can cost more than $350,000, forcing school districts to rely on lottery-based grants.

By streamlining the powertrain integration as a total solution, we plan to leverage domestic LFP manufacturing in Clarksville and aim to eliminate this hurdle. Our powertrain solution is targeting total cost of ownership parity with diesel buses for of under 10 years without accounting for any government subsidies or for potential reduction in overhead and personnel required to maintain diesel counterparts. Our new battery pack will be the centerpiece of our presentation at the School Transportation News EXPO, or STN, in July 2026. The American school routes need to be electrified, we believe Microvast CAF solution is going to make it possible. As we move to slide seven, it is important to understand the environment of OEM and school districts are operating in. On the left, you can see school district demand.

School boards are facing intense pressure to reduce negative environmental impacts and reduce costs by replacing an aging diesel fleet that is becoming increasingly expensive to maintain. However, despite this strong interest in providing a cleaner, quieter, affordable, and more comfortable transportation for our next generation, the transition has been largely stalled by five key deployment barriers that have made large-scale electrification nearly impossible for the average district. The primary barrier is cost. As it stands today, electric school bus remain materially more expensive than diesel alternatives. This upfront price gap is the primary barrier to entry. The second and third barriers are the infrastructure and the utility hurdles. Districts aren't just buying a vehicle. They are suddenly tasked with become electrical engineers.

Between site-specific wiring, charging infrastructure, and the long lead time for utility upgrades, the complexity of getting ready for the bus often exceeds the complexity of the bus itself. The fourth barrier is funding uncertainty. The current market is trapped into a grant cycle mentality. Funding often involves shifting eligibility and complex reimbursement cycles create a stop-and-go purchasing behavior that prevent long-term fleet planning. The final barrier is the reliability of the fleet. Operationally, districts are concerned about winter range, HVAC loads, and the long-term health of the battery.

They need to know that the bus will show up at 6:00 A.M. regardless of the temperature. When these deployment hurdles aren't addressed, we see the consequence on the right, delayed or higher cost deployments. We see missed funding windows, fewer buses on the road, and a slower realization of benefits for the students and the community.

As you can see by the tagline at the bottom of slide, we believe that the winning solution must reduce the total deployment cost, simplify the charging infrastructure, and above all, improve the operational confidence. The Microvast CAF electrical powertrain solution is being built specifically to address those hurdles. By working to develop an integrated powertrain that is safer, cheaper, and easier for OEM to integrate and deploy, we are aiming to remove the friction and accelerate the mission. I will turn the call over to Rodney Worthen to discuss our financials.

Thank you, Mr. Wu. Please join me on slide nine. Our revenue for the quarter was $60.6 million, a decrease of $55.9 million or 48% compared to the same period in 2025. The decrease was primarily driven by a reduction in sales volume from approximately 536 MWhs in the prior year period to approximately 274 MWh for the same period in 2026, which will be detailed shortly. Our gross profit for the first quarter was $19.2 million, with a gross margin of 31.6% compared to 36.9% in Q1 2025. The decrease was primarily due to lower production utilization, which reduced fixed cost absorption and raw materials and energy price increases resulting from supply chain disruptions.

However, even with these reduced sales volumes in the quarter, our margin position held strong, demonstrating the value of our technology. The gross margin profile remains subject to external pressures, including inflationary trends in raw material pricing and the elevated logistics and freight expenses resulting from the ongoing global supply chain disruptions and geopolitical conflicts. The implementation of new tariff frameworks has also increased the cost of goods sold. While we continue to implement cost mitigation strategies, these macroeconomic factors, combined with the Phase-out of regional subsidies for electric vehicle adoption, have contributed to a challenging environment for the near-term profitability across the battery manufacturing sector. Operating expenses decreased to $27.1 million for the quarter, compared to $29.2 million in 2025, a 7.1% decrease year-over-year.

General and administrative expenses for the three months decreased by $1.2 million or 8.3% compared to the prior year period. This reduction in G&A expenses was primarily due to $2.2 million decrease of allowance for credit loss due to improved credit management and $1 million decrease of employee costs, which was partially offset by a $1.5 million increase in professional service fees. Research and development expenses for the threemonths increased by $0.6 million or 6.8% compared to the same period in 2025. The increase in R&D expenses was primarily due to the expansion of our domestic R&D presence in the U.S. Selling and marketing expenses for the three months decreased by $1.5 million or 21.4% compared to the same period in 2025.

This reduction in sales expense was primarily due to $1.3 million of decreased service fees. We reported a GAAP net profit of $48.2 million in the quarter. After adjusting for non-cash expenses, such as stock-based compensation of $1 million and fair value changes of our warrant liability and convertible loan of $63.8 million, we recorded an adjusted net loss of $14.6 million compared to an adjusted net profit of $19.3 million last year. Year-to-date, our adjusted EBITDA was negative $5.5 million compared to an adjusted EBITDA of $28.5 million in the prior year period. Reconciliations of these non-GAAP metrics to the most comparable GAAP metrics are included in the tables at the end of this presentation and our earnings press release.

In addition, as discussed in our Q1 2026 10-Q, we have recently shifted our priorities and resources towards certain new and upcoming commercial vehicle opportunities, such as our 290 amp hour LFP pack and the integrated CAF powertrain solution, while we remain poised to increase activity in All-Solid-State in the future. Please turn to slide 10, where we'll review our revenue by region. During the three months, the company observed a moderation in global electric vehicle demand growth, primarily driven by the expiration of government incentive programs and shifting regulatory frameworks in key regions. Our revenue and delivery schedules were also impacted by broader macroeconomic headwinds, including geopolitical instability and evolving tariff structures, which contributed to market volatility and have influenced customer procurement cycles. To discuss each region briefly.

The decrease in U.S. sales versus the prior year period was due to our largest customer bringing product into 2025 as a result of uncertainty around tariff outcomes. Europe declined year-over-year, primarily due to OEM delayed rollout of platforms and production ramp-ups. The region accounted for 71% of our quarterly revenue, up from 52% last year. APAC revenue declined 66% year-over-year, primarily due to shifting regulatory and geopolitical dynamics impacting the Korean and Indian markets, and a demand shift towards lower cost products in India. Now turning to slide 11, we'll walk through our cash flow performance for Q1. Net cash used in our operating activities was $22.8 million, a decrease of $30 million compared to $7.2 million generated by operating activities in the same period of 2025.

This decrease was primarily due to a $36.6 million reduction in net income after adjusting for non-cash items, which was partially offset by a net $6.6 million improvement in net operating assets and liabilities. Net cash used in investing activities was $2.8 million, compared to $2.3 million in the prior year period. This cash outflow primarily consisted of capital expenditures related to the expansion of our Phase 3.2 manufacturing facility and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities. Net cash generated by financing activities was $29.3 million, an increase of $19.8 million compared to $9.5 million in the same period of 2025.

The increase was primarily due to $23.5 million increase in proceeds from bank borrowings and partially offset by $7.7 million increase in repayments of bank borrowings. Overall, after accounting for foreign exchange adjustment of $1 million, we had an increase in cash of $4.8 million. This resulted in a total cash equivalents and restricted cash of $174 million at quarter's end. Now I'll hand the call back over to Mr. Wu to go over our outlook.

Thank you. Please turn to slide 13. As we move through the first half of 2026, we are executing on the strategic outlook we established at the start of the year, which remains consistent. Our focus remains centered on three primary objectives: accelerating our path to profitability, scaling with margin integrity, and driving high value market capture. The first pillar of our strategy is a disciplined transition to a cash flow positive state. We are working towards this goal by optimizing our R&D to production cycle and tightening operational execution across our global footprint. By streamlining the bridge between innovation and manufacturing, we are reducing the time to the market for our latest technologies. Secondly, we are scaling with margin integrity.

As we expand our battery manufacturing capacity to meet growing market demand, our objective is to maintain a strong gross margin profile. We seek to achieve this through manufacturing excellence and by ensuring that our expansion does not come at the expense of operational efficiencies. Finally, we look to drive high value market capture.

We are deploying our newest innovation into high barrier segments where our competitive advantages are most pronounced, specifically in heavy industries and transit. We believe this will allow us to accelerate revenue growth while focusing on most profitable opportunities. Operationally, the primary catalyst for the 2026 expansion continues to be our Huzhou Phase 3.2. We are currently in a ramp-up Phase for SOP, with serial production expect to follow later this year. This facility is essential for providing the capacity required to meet the demand for our next generation cell technologies.

In the U.S., we are advancing with the ramp up of our pack line assembly operation in Clarksville, Tennessee. This targeted investment in our Clarksville facility is to establish a pack assembly line, expanding our domestic capabilities and supporting anticipated customer demand. Resumption of full-scale battery plant construction activities at this site remains contingent upon securing additional financing and strategic partnerships.

In addition to the CAF powertrain solution, our R&D team also continue to make progress on future products and platforms sought by customers. Those next generation products are centered to our ability to develop and maintain high margin market opportunities and diversify our customer base into stable, high value sectors. To summarize, through Q1 has presented its challenges globally, it also reinforces our commitment to our core goals. We are navigating the current macro environment with a disciplined approach that aims to prioritize long-term value for shareholders.

Thank you for your continued support. We look forward to sharing further updates on our operational milestones in the months ahead. Now we will go over a few of investor questions we have received.

My first question here. There's been a lot of activity surrounding the company's expansion efforts. Could you provide additional color on your manufacturing capacity?

Our current global operational capacity remains centered on our existing facility in Huzhou, which support our diverse cell chemistry portfolio and produce cells, module, and packs. Between our primary Huzhou lines, which produce 48 amp hour, 53.5 amp hour, 55 amp hour, and 120 amp hour. Phase 3.1, which is in serial production, and Phase 3.2, which is in ramping up. There is approximately 4 GWh of production capacity, with our legacy lines contributing as needed for lower volume products and service needs in different formats. Towards the end of 2025, we also made a targeted investment in our Clarksville facility to establish a pack assembly line. Additionally, we have pilot lines utilized for prototyping and testing, and our German facility produce VDA modules.

Historically, our capacity has been weighted toward our high power and multipurpose cell technologies to serve our core transit and industry customers. With the transition into 2026, we are increasingly pivoting our Huzhou allocation toward next generation cell production.

With the Huzhou Phase 3.2 expansion identified as your primary operational catalyst, could you provide a status update on the transition from trial to serial production? What are the final milestones required for full-scale deployment, and are we on track for the 2026 ramp-up timeline?

Huzhou Phase 3.2 is our most significant operational milestone for the year. We have successfully completed the initial installation and are currently in the process of SOP ramp-up. The milestones required for full-scale series production involve the final calibration of assembly line and the completion of the internal quality validation for the high volume output. We remain on track to move from trial production to full serial production in 2026, which will significantly expand our capacity for next generation cell technologies.

As you absorb the planned costs associated with the Huzhou Phase 3.2 ramp-up, how should we model gross margins? Are there efficiencies from 2025 that act as a primary hedge against these expansion costs? Protecting our gross margins is a top priority as we continue to scale, with the Huzhou Phase 3.2 ramp-up naturally introduces some planned absorption costs, and we are offsetting these through operational efficiencies that we did establish in 2025.

Our primary hedge is focusing on high barrier to entry segments and maintaining the disciplined approach with our R&D to production cycles. Though there is some near-term global turbulence, we do expect to maintain a strong margin profile even as we bring that new capacity online. Next question, how should we view the cadence for 2026?

The Q1 revenue reflects a unique set of timing challenges. In the U.S., we saw the pull forward of deliveries into late 2025 due to the tariff uncertainty, which did create a year-over-year dip that we believe to be temporary. In APAC, specifically India, the market has pivoted toward lower cost solutions. Our strategy is not to race to the bottom on price, but to stay disciplined in our premium positioning where our technology's life cycle value is highest. We are focused on capitalizing on the electric mobility applications, including our 290 amp hour packs and the CAF powertrain, and the new capacity from Huzhou Phase 3.2 to offset these regional headwinds.

As we anticipate production timelines for our next generation cells to align with customer demand in the second half of the year, we do expect to see a normalized delivery schedule and a steady ramp-up. Operator, I'll hand it back over to you.

First quarter 2026 earnings call.

Thank you for standing by. This is the conference operator. Welcome to Microvast's full year 2025 earnings call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. I would now like to turn the conference over to Microvast Investor Relations. Please go ahead.

Thank you, operator, and thank you everyone for joining our update today. This is Rodney Worthen, Chief Financial Officer of Microvast. With me on today's call is Yang Wu, Founder, Chairman, and Chief Executive Officer of Microvast. Yang Wu will start off with a high-level overview of our 2025 results before providing some operational and business updates. I will then discuss our financials in more detail before handing it back to Yang Wu to wrap up with our outlook for 2026 and closing remarks. Ahead of this call, Microvast issued its 2025 full year earnings press release, which can be found on the investor relations section of our website, ir.microvast.com. We have also posted a slide presentation to accompany management's prepared remarks for today's call. As a reminder, please note that this call may include forward-looking statements.

These statements are based on current expectations and assumptions and should not be relied upon as representative of views for subsequent dates. We undertake no obligation to revise or release the results of any revision to these forward-looking statements due to new information or future events. Actual results may differ materially from expectations due to a variety of risks and uncertainties. For more information on material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. We may also discuss non-GAAP financial measures during this call. These measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. These non-GAAP measures have been reconciled to their most comparable GAAP metrics in the tables included at the end of our press release and our slide presentation.

After the conclusion of this call, a webcast replay will be available on the investor relations section of Microvast website. Now, I will turn the call over to Yang Wu to kick things off.

Hello, everyone, and welcome. Thank you for joining us today. As always, I want to start by reminding you of our core mission. Founded in Texas in 2006, Microvast has grown into a global leader in advanced battery technologies, with over 890 patents granted or pending and our electrified solutions successfully deployed worldwide. We are proud to be a driving force in the global energy transition, building a more sustainable future, one battery at a time. We are excited about our upcoming product launches. The 55Ah cell combines the high power performance of our 48Ah cell with the high energy output of our 53.5Ah cell, converging into a very exciting platform. We are also launching our next generation LTO cell, which provides high power output and also fast charging capability.

It's particularly well-suited for rail and tram, specialty vehicles, high torque applications, and AGVs. Join me on slide four, and I will provide a brief overview of our 2025 results. We are thrilled to achieve another year of record annual revenue of $427.5 million, representing a 12.6% year-over-year increase. While we navigated a shifting landscape, we delivered an annual gross margin of 28.6%. This change was primarily attributable to an inventory impairment charge, which negatively impacted our gross margin by 7.6 percentage point. Our GAAP net loss for the year was $29.2 million. On a non-GAAP basis, we achieved an adjusted net profit of $13 million. In 2025, we recorded a non-GAAP adjusted EBITDA of $44.7 million.

This demonstrates that we are not only able to grow our top line, but also that we are making the necessary adjustments to leverage our operations as we continue to scale. While our full year revenue landed just below guidance due to evolving regulatory shifts in Korean market and a customer platform ramp-up delays, our underlying fundamentals remained strong. We delivered 25% revenue growth at an industry-leading gross margin, demonstrating the high value our customers place on Microvast technology. The momentum in EMEA is encouraging as we continue into 2026, particularly as the previous vehicle platform delays in the region begin to reach SOP. In APAC, while we navigated the regulatory environment in Korea, we are focused on a long-term view of our Huzhou Phase 3.2 expansion, which is expected to bring additional capacity online in 2026.

We anticipate achieving serial production after the ramp-up period. Our focus on efficiency and profitability is a long-term commitment. The growth we have seen from 2022 through 2025, where our revenue has more than doubled, our GAAP gross profit has gone up approximately 13x, and we achieved positive adjusted EBITDA, is a testament to the increasing market demand for our high-performance products. We believe this trajectory continues to validate our ability to successfully commercialize our innovative technology and operate effectively in a maturing industry. Let's turn to slide five for an operational update on our Huzhou 3.2 expansion. I'm pleased to report that our Huzhou phase 3.2 project is progressing well. With clean rooms and the utility equipment already in operation, pilot production for our 55Ah cell has begun on the electrode section assembly and formation, and no-load tests have started.

This expansion is a critical component of our growth strategy, as phase 3.2 is expected to add up to 2 GWh of annual production capacity and anticipated to be modular across our LBC platform. Please turn to slide six for a look at how our technology translates into market-leading applications. Whether our customers need maximum energy for long-haul duty cycles or ultra-high power for rapid charging, Microvast has a high-performance solution. On the left, our HpCO 55 Ah cell is a workhorse for high energy needs. It is purpose-built for segments where range and longevity are key, from city buses and heavy-duty trucks to maritime vessels. It delivers an energy density required to keep those fleets running longer between charges. On the right, our LpTO 37 Ah cell leads in ultra-fast charging and high power performance combined with long cycle life.

This is the ideal solution for rail and tram systems, AGVs, and high-torque robotics. These are environments where power must be delivered instantly and recharged rapidly to maintain 24/7 operations. By offering this specialized duality, we show that Microvast isn't just a battery supplier, but a strategic partner capable of electrifying the most demanding industry and commercial segments globally. On slide seven, let's look at the progress in our all-solid-state battery milestones. Building upon our Q3 updates, we are entering an exciting new phase of development focused on high-voltage bipolar integration. As shown in figure one, our 12-layer monolithic stack has now surpassed 200 cycles while maintaining a 99.97% coulombic efficiency. This indicates minimal energy loss and validates the durability of full solid-state design. Even more significant is our new milestone, a 72-volt monolithic stack.

By using a proprietary internal series-connected bipolar architecture, we have achieved our highest stable voltage density to date. As illustrated in Figure two, voltage capacity profile, this stack has successfully completed 100 cycles. The cross-section analysis in Figure three confirms a uniform layer construction, which is essential for long-term power stability. By eliminating liquid electrolytes and external wiring, this architecture reduces weight and system complexity, making it ideal for direct integration into next-generation robotics and high-power systems. This milestone shows the potential to scale our high-voltage all-solid-state platform, one that maintains structural integrity under stress. Now I will turn this call over to Ronnie to discuss our 2025 financials.

Thank you, Yang Wu. Please join me on slide nine. We are pleased to report that Microvast achieved record annual revenue in 2025, reaching $427.5 million, a 12.6% increase compared to the $379.8 million in 2024. This growth was primarily due to a year-over-year increase in our sales volume, approximately 16.5% or 266 megawatt hours. While our fourth quarter revenue of $96.4 million was impacted by evolving regulatory changes in South Korea and customer platform ramp-up delays in EMEA, our full year performance highlights the transformation in our margin profile and business expansion. Full year gross profit reached $122.1 million. This resulted in full year gross margin of 28.6% compared to 31.5% in 2024.

This change was primarily attributable to $32.5 million in inventory impairment charge related to specialized ESS components, which negatively impacted our gross margin by 7.6 percentage points. Excluding the impact of this specific non-cash charge, the underlying gross margin performance reflected a more favorable product mix and improved manufacturing efficiencies across our battery solution portfolio. Full year operating expenses were $118.3 million compared to $238.3 million in 2024. General and administrative expenses for the year decreased by $23.7 million or 29% compared to 2024. The decline was primarily driven by $17.4 million reduction in share-based compensation expenses, or SBC, and a favorable $8.6 million impact from foreign exchange rate fluctuations related to the euro and RMB.

Research and development expenses for the year decreased by $7 million or 16.9% compared to 2024. This reduction in R&D expense was primarily driven by a $5.5 million decrease in SBC. Selling and marketing expenses for the year remained relatively flat compared to 2024, but overall decreased by $0.4 million or 1.7%. In 2025, we recorded an operating profit of $6.98 million and a GAAP net loss of $29.2 million. This is compared to an operating loss of $116.1 million and a net loss of $195.5 million in 2024.

After adjusting for SBC of $3.1 million and fair value changes of our warrant liability and convertible loan of $39.1 million, we achieved a non-GAAP adjusted net profit of $13 million for the full year 2025. This is compared to non-GAAP adjusted net loss of $84.6 million in 2024. For 2025, we achieved non-GAAP adjusted EBITDA of $44.7 million, compared to non-GAAP adjusted EBITDA of -$44.8 million in 2024, which shows an improvement in our operational performance year-over-year. Reconciliation of these non-GAAP metrics to the most comparable GAAP metrics are included at the tables of this presentation in our earnings press release. Please turn to slide 10, where we will review our revenue by region.

U.S. revenue grew 173% year-over-year from $14.4 million in 2024 to $39.3 million in 2025, contributing to 9% of our total revenue mix. While the increase was primarily driven by customers bringing forward deliveries due to uncertainty on tariff outcomes, we continue to pursue and engage with new markets as we build our domestic customer pipeline. EMEA remains our strongest growth engine, with a 13% year-over-year revenue increase, growing to $211.9 million in 2025 compared to $187.7 million in 2024. This region again accounted for approximately half of our total revenue.

In Asia Pacific, revenue declined slightly from $177.7 million in 2024 to $176.3 million in 2025, a 1% year-over-year decrease. While we navigate the current regulatory landscape in South Korea, we remain focused on the long-term potential of the region via our capacity expansions. Now turning to slide 11, we'll walk through our cash flow performance for 2025. We generated a net positive operating cash flow of $75.9 million, a significant improvement compared to $2.8 million in 2024. The net loss for the year was primarily offset by $27.1 million decrease in inventory, non-cash adjustments of $33.1 million in D&A, $38.3 million impairment disposal and write-down, and $39.1 million from changes in fair value of our warrant liability and convertible loan.

This was partially offset by $54.6 million increase in net receivables and $11.1 million decrease in net liabilities and accrued expenses. Net cash used in investing activities totaled $16 million in 2025, primarily from $19.8 million in capital expenditures towards our Huzhou 3.2 expansion line and partially offset by $3.8 million in asset disposals. From financing activities, we used $2.7 million in net cash, which included $85.7 million in new bank borrowing and $28.8 million in gross proceeds from the sale of common stock, offset by $96.1 million in repayments and $18.9 million in deferred CapEx.

Finally, after recognizing $2.5 million in foreign exchange gain, we ended the year with a net increase in cash of $59.6 million, bringing our total cash equivalents, and restricted cash to $169.2 million as of year-end. Now I'll turn the call back over to Yang Wu to go over our outlook for 2026 and closing remarks.

Thank you. Please turn to slide 13. As we look ahead to 2026, we are entering a phase of a business defined by strategic agility. While we expect a continued revenue growth, our 2026 profile is being carefully assessed against a backdrop of evolving tariff structures and the shifting geopolitical dynamics. Our priorities remain clear, and we will continue to focus on high-margin deliveries. Our strategy is built on three actionable pillars, innovate, expand, and capture. We are future-focused, expanding our portfolio with specialized products and services as we strive to define the industry benchmark for performance and efficiency. We are supporting growth by synchronizing our production increases with accelerating customer demand while continuously optimizing workflows to reach a cash flow positive state. We are pursuing market share by transitioning our validated technologies from a development to full-scale deployment in high-margin segments. Ultimately, our forward strategy is clear.

Accelerate our path to profitability by optimizing R&D to production cycles and scale with margin integrity. We are aiming to strike a balanced approach with our industry-leading margins, one that maintains the operational efficiencies we fought hard for in 2025, while absorbing the planned costs associated with the ramp-up of our Huzhou phase 3.2 expansion. This expansion remains our primary operational catalyst for the year. We are on track to achieve serial production in 2026. Phase 3.2 is a critical milestone that brings online the capacity necessary to meet upcoming demand for our next generation cell technology. Looking at our global pipeline, we continue to see robust interest across EMEA, North America, and APAC. Our business development teams are focused on high barrier to entry segments, specifically heavy industrial and transit, where Microvast vertical integration and technology provide a clear competitive advantage.

Toward the end of 2025, we made a targeted investment in our Crossville facility to establish a pack assembly line, expanding our domestic capabilities and supporting anticipated customer demand. Customer deliveries are expected from the pack line in 2026 and additional updates throughout the year are anticipated. To summarize, our goals for 2026 remain set on three core objectives, achieving our production ramp-up milestones, protecting our margins despite market volatility, and diversifying our customer base into stable, high-value market. This disciplined approach is necessary for us to navigate near-term headwinds while continuing to build long-term value for our shareholders. Thank you very much, everyone, for joining us today. While 2025 presented its share of challenges, it was also a year where Microvast proved its resilience, achieving record annual revenue and a significant shift toward profitability with new products and opportunity on the horizon.

We look forward to updating you on our progress at Huzhou and our ongoing operational plans in the coming months. Operator, that concludes our prepared remarks.

This is the conference operator, and this concludes the webcast. Thank you for joining Microvast's full year 2025 earnings call. You may now disconnect.