Ceres Power 2025: First Royalties Land as Revenue Steps Back and Strategy Sharpens
Ceres Power has delivered a mixed but important set of final results. Top line fell as expected after a heavy year of technology-transfer income in 2024, but 2025 brought the company’s first ever royalties – the start of the high-margin revenue stream the licensing model is built for. Partnerships in China, South Korea, Taiwan, Japan and India made visible strides, while a business transformation aims to trim costs by 20% in 2026.
If you are new to the story: Ceres licenses solid oxide technology – SOFCs for power generation and SOECs for green hydrogen – to big manufacturers. Rather than building factories itself, it earns fees for engineering, technology transfer and, crucially, royalties as partners sell products. That royalty switch just clicked on.
Headline numbers investors should know
| Metric | 2025 | 2024 | Why it matters |
|---|---|---|---|
| Revenue | £32.6 million | £51.9 million | Down 37% due to timing of licence and engineering revenues in 2024. |
| Gross profit (margin) | £22.7 million (70%) | £40.2 million (77%) | Margins remain strong for an IP-led model. |
| Adjusted EBITDA loss | £32.5 million | £22.3 million | Higher loss as the revenue mix normalised. |
| Operating loss | £47.6 million | £31.3 million | Includes £3.4 million exceptional costs. |
| Net cash used in operating activities | £20.1 million | £35.9 million | Cash burn reduced materially. |
| Cash and short-term investments | £83.3 million | £102.5 million | Solid liquidity to fund commercial phase. |
| Royalty income | £0.11 million | Not disclosed | First royalties from Doosan production – a key inflection. |
| Contracted 2026 revenue (before new business) | ~£45 million | n/a | Improved visibility into growth year. |
What moved the P&L in 2025
Revenue mix normalises, margins hold up
Revenue fell to £32.6 million as 2024 had large up-front technology transfer recognitions with Delta and DENSO that did not repeat. Even so, gross margin stayed a healthy 70%, underscoring the attractiveness of the licensing model when paired with disciplined delivery.
Crucially, Ceres recognised its first royalties – £110,000 – as Doosan began mass manufacturing of fuel cell stacks at a 50MW facility in South Korea. Royalties are usage-based fees paid by partners and should scale as partners ramp volumes. Licence revenues from the new Weichai agreement are set to start being recognised in H1 2026.
Costs, exceptions and operational discipline
Operating costs fell to £70.1 million (R&D £48.6 million, administrative £14.2 million, commercial £7.3 million) as the company pivoted from an R&D-first footing. Exceptional operating costs of £3.4 million covered a supplier dispute settlement (£1.4 million) and an obligation from a contract termination (£2.0 million). The investment in associate RFC Power was impaired by £2.2 million to £nil before Ceres acquired the remainder in August 2025.
The business transformation – fewer, more focused teams – is expected to deliver around 20% operating cost savings in 2026. Average headcount fell to 462 (2024: 546) with year-end employees at 353.
Cash remains a strength
Cash and short-term investments ended at £83.3 million, with total cash outflow reduced to £19.2 million and operating cash outflow down to £20.1 million. Working capital helped: contract liabilities rose to £23.3 million from £10.7 million, reflecting cash received ahead of revenue recognition – a healthy sign of demand and delivery pipeline.
Commercial milestones: Asia leads the charge
- China – Weichai signed a manufacturing licence for SOFC cells and stacks targeting AI data centres, commercial buildings and industrial applications.
- South Korea – Doosan started factory production of SOFCs and stacks based on Ceres designs, generating first royalties.
- Taiwan – Delta purchased land and factory facilities for approximately NT$6.95 billion (£170 million), with part of the site expected to focus on large-scale hydrogen energy solutions. Delta targets initial pilot production by end-2026.
- Japan – DENSO and JERA began testing Japan’s first SOEC demonstrator at a JERA thermal power station. The project is valued at 46 billion yen (c.£220 million) with government subsidies of up to 35 billion yen (c.£165 million).
- India – A Shell 1MW SOEC demonstrator produced hydrogen at 37kWh/kg from a plant capable of around 600kg per day, underlining class-leading efficiency.
These milestones directly support Ceres’ “asset-light” model: partners build capacity, Ceres supplies technology and earns fees and royalties. The near-term growth focus is clear – resilient, high-efficiency power for data centres and distributed power – with SOEC opportunities expected to build later in the decade.
Why the first royalties matter
Royalty income is the most scalable and highest-margin part of Ceres’ model. Engineering services and technology transfer are lumpy by nature; royalties can compound as multiple partners ramp production across regions. Doosan’s line is the first, with Weichai and Delta preparing manufacturing capacity that could broaden the base.
For context-seekers: SOFC stands for solid oxide fuel cell – a high-efficiency device that turns fuel into electricity and heat with low local emissions. SOEC is the electrolysis sister technology that uses electricity and heat to make hydrogen at high efficiency. Ceres’ latest “dual-purpose” stack design can be configured for power or hydrogen, allowing partners to address both markets from the same platform and factory – a strategic differentiator.
2026 outlook: better revenue visibility and tighter costs
The company starts 2026 with approximately £45 million of contracted group revenue before any new business, improved partner momentum and a cost base slated to fall by about 20%. Licence revenue from Weichai begins recognition in H1 2026. Management highlights growing demand from AI-enabled data centres and broader distributed power markets, alongside a more measured near-term backdrop for large-scale hydrogen projects.
Risks remain: the company is loss-making, relies on partners’ factory ramps, and notes macro uncertainty including the war in Iran. But the shift to commercial execution, stronger contracted revenue and the first royalties suggest the strategy is moving from blueprint to build-out.
My take: a credible commercial step, with eyes on execution
Positives I like
- First royalties – small in 2025, but strategically huge as proof the model works.
- Contracted 2026 revenue of ~£45 million – a solid base over 2025’s £32.6 million.
- Cost discipline – operating costs down and a clear 2026 savings target.
- Partner momentum across Asia – Weichai, Doosan and Delta each advancing capacity.
- Strong gross margin of 70% and cash and investments of £83.3 million.
Watch items
- Losses widened – Adjusted EBITDA loss of £32.5 million and operating loss of £47.6 million.
- Exceptional costs and the associate impairment underline that transitions are rarely tidy.
- Hydrogen project FIDs remain slow industry-wide; royalty scaling depends on partner ramps.
Net-net, 2025 reads like a necessary bridge year: lower revenue after 2024’s big tech-transfer receipts, but with the critical switch to royalty income now flipped. If partners keep to their manufacturing timelines and Ceres hits its cost targets, 2026 should look more commercial, less lumpy – exactly what long-term holders want to see.
