10-Q: NuScale Power Narrows Losses, Boosts Revenue

NuScale Power Corporation reported significantly increased revenue and reduced net losses for the first half of 2025, driven by commercialization efforts and key regulatory approvals, despite ongoing cash burn and internal control weaknesses.

Summary

• Revenue for the six months ended June 30, 2025, increased significantly to $21.4 million, up from $2.3 million in the same period of 2024.
• Net loss for the six months ended June 30, 2025, narrowed to $68.0 million, a substantial improvement from a net loss of $122.5 million in the prior year period.
• Loss per Class A Common Stock decreased to $0.24 for the six months ended June 30, 2025, compared to $0.52 in the prior year.
• The U.S. Nuclear Regulatory Commission (NRC) finalized its review and approved the Standard Design Approval (SDA) for NuScale's 77 megawatt-per-module (MWe) NuScale Power Module (NPM) design in May 2025.
• Cash and cash equivalents stood at $297.7 million as of June 30, 2025, with total assets at $606.5 million.
• The company continues its transition from an R&D-based company to a commercial company, which included a 28% workforce reduction in January 2024.
• NuScale utilized its At-The-Market (ATM) Program, issuing 4,548,127 shares of Class A common stock for net proceeds of $99.8 million during the first half of 2025.

Sentiment

Score: 6

Explanation: The company demonstrated substantial financial improvement with significantly increased revenue and reduced net losses, coupled with the critical Standard Design Approval from the NRC. This marks a positive shift towards commercialization. However, ongoing cash consumption, a disclosed material weakness in internal controls, and the looming need for further capital raises due to limited authorized shares present notable challenges and risks.

Positives

• Significant increase in revenue to $21.4 million for the six months ended June 30, 2025, from $2.3 million in the prior year, primarily from engineering and licensing services.
• Net loss substantially narrowed to $68.0 million for the six months ended June 30, 2025, compared to $122.5 million in the same period of 2024.
• Loss per share of Class A Common Stock improved to $0.24 for the six months ended June 30, 2025, from $0.52 in the prior year.
• The U.S. Nuclear Regulatory Commission (NRC) approved the Standard Design Approval (SDA) for NuScale's 77 MWe NPM design in May 2025, a critical regulatory milestone for commercialization.
• Cash used in operating activities decreased to $56.1 million for the six months ended June 30, 2025, from $69.5 million in the prior year, indicating improved operational efficiency.
• Interest income significantly increased to $10.7 million for the six months ended June 30, 2025, from $3.3 million in the prior year, reflecting a stronger cash position and investment strategy.
• All outstanding warrants were either redeemed or exercised by the second half of 2024, eliminating the change in fair value of warrant liabilities as a negative impact on the income statement for 2025.
• Multiple shareholder class action lawsuits (Sigman v. NuScale Power Corp., et al. and Ryckewaert v. NuScale Power Corp., et al.) were dismissed with prejudice on July 1, 2025.
• A class action lawsuit regarding the corporate opportunity waiver (Tucker v. NuScale Power Corporation, et al.) was voluntarily dismissed after the company amended its Certificate of Incorporation.
• Another shareholder lawsuit (Doug Hoelscher et. al. v. John L. Hopkins, et. al.) was voluntarily dismissed on August 6, 2025.

Negatives

• Continued net loss of $68.0 million for the six months ended June 30, 2025, indicating the company is still pre-profitability.
• General and administrative expenses increased to $45.8 million for the six months ended June 30, 2025, from $36.2 million in the prior year, due to higher strategic business development costs and legal/accounting fees.
• Cash and cash equivalents decreased to $297.7 million as of June 30, 2025, from $401.6 million at December 31, 2024, reflecting ongoing cash burn.
• Significant cash used in investing activities, $152.2 million for the six months ended June 30, 2025, primarily for purchasing short-term and longer-term investments.
• Sponsored cost share decreased significantly to $84,000 for the six months ended June 30, 2025, from $5.8 million in the prior year, due to reaching the cost share cap with DOE and USTDA.
• Identified a material weakness in the design, implementation, and documentation of information technology general controls (ITGC) and internal controls across key financial reporting processes, due to insufficient personnel and technical support.
• The company has a limited number of authorized Class A common stock shares remaining (approximately 21 million as of June 30, 2025), which could negatively impact future capital raising efforts through the ATM program.
• The Long-Lead Material (LLM) Agreement with CFPP LLC has been suspended, and wind-down procedures have begun, with the ultimate disposition of LLM to be negotiated.

Risks

• Ability to obtain additional equity financing or other sources of funding is crucial for sustaining operations until commercialization and securing customers.
• The limited number of authorized Class A common stock shares remaining (approx. 21 million as of June 30, 2025) restricts the company's ability to raise capital through its ATM program without stockholder approval for an increase, which can be time-consuming and is not assured.
• Heavy reliance on relationships with ENTRA1 (exclusive global strategic partner) and Fluor (largest stockholder), whose interests may diverge from NuScale's, and who may not be easily replaced if relationships terminate.
• Non-circumvention restrictions with ENTRA1 could subject the company to significant damages if the Strategic Alliance Agreement is materially breached.
• Changes in U.S. trade policy, including the imposition of tariffs, could increase costs for overseas-manufactured long-lead components and impact product competitiveness.
• The U.S. Department of Energy (DOE) has the right to demand repayment of fees invoiced for NPMs 2-12 if NuScale fails to initiate commercial operation of NPM 1, leading to a $32.323 million Long-lead material liability.
• The identified material weakness in internal control over financial reporting requires significant investment in resources, time, and expense for remediation, with no current estimate of total costs.

Future Outlook

The company expects to continue prudently managing expenses and cash reserves, recognizing the need to secure additional customer commitments to support long-term operations. It believes current cash resources are sufficient to cover R&D activities and operating cash needs for the next twelve months and beyond, but acknowledges that additional funds may be required as it has not yet completed the development of a commercial product and has minimal revenue to date. The impact of 'The One Big Beautiful Bill Act' (OBBBA) on the company's taxes is currently being quantified.

Management Comments

• Our mission is to provide scalable advanced nuclear technology to produce electricity, heat and clean water to improve the quality of life for people around the world.
• We are changing the power that changes the world by creating an energy source that is smarter, cleaner, safer and cost competitive.
• We believe that based on our current level of operating expenses and currently available cash resources, we will have sufficient funds available to cover R&D activities and operating cash needs for the next twelve months and beyond.
• Management plans to prudently manage its expenses and cash reserves into the future, recognizing the need to secure additional customer commitments to support long-term operations.

Industry Context

NuScale operates in the rapidly evolving small modular reactor (SMR) and advanced nuclear technology sector, aiming to provide carbon-free energy solutions. The approval of its Standard Design Approval (SDA) by the NRC is a significant step, allowing customers to expedite licensing for NuScale SMR-based power plants in the U.S. This positions NuScale as a leader in the commercialization of SMR technology, a segment gaining increasing global interest for its potential to offer flexible, scalable, and safer nuclear power compared to traditional large-scale facilities. The company's strategic partnerships, particularly with ENTRA1 for global commercialization and Fluor for engineering services, are crucial in navigating this nascent market. The new tax legislation (OBBBA) could also impact clean energy tax incentives, potentially affecting the broader industry.

Comparison to Industry Standards

• The company's progress in obtaining the Standard Design Approval (SDA) from the NRC for its 77 MWe NPM design positions it ahead of many competitors in the SMR space, as this approval allows for expedited construction and operating licensing in the U.S. This is a significant competitive advantage compared to other SMR developers still in earlier stages of regulatory review.
• NuScale's focus on a modular, scalable electric Light Water Reactor nuclear power plant contrasts with larger, traditional gigawatt-sized nuclear facilities, offering a potentially reduced cost and enhanced flexibility, aligning with a growing industry trend towards smaller, more adaptable energy solutions.
• The company's strategic partnership model, particularly with ENTRA1 for exclusive global commercialization and Fluor for engineering, procurement, and construction (EPC) services, is a common approach in capital-intensive, long-development-cycle industries like nuclear power, leveraging established players' expertise and networks. For example, similar partnerships are seen with companies like TerraPower (Bill Gates-backed, developing Natrium reactor) and GE Hitachi Nuclear Energy (BWRX-300 SMR), which also rely on strong industry collaborations for development and deployment.
• The ongoing net losses and negative operating cash flows are typical for a company in the pre-commercialization phase of a capital-intensive, long-development-cycle technology like SMRs. Companies developing new energy technologies often require significant upfront investment and government support before achieving profitability, similar to early-stage renewable energy or advanced battery companies.

Corporate Governance

Legal Proceedings

• Sigman v. NuScale Power Corp., et al. and Ryckewaert v. NuScale Power Corp., et al.: Consolidated shareholder class action lawsuits alleging materially false and/or misleading statements and failure to disclose material adverse facts about the company's business, operations, and customer agreements. Dismissed with prejudice on July 1, 2025.
• Tucker v. NuScale Power Corporation, et al.: A purported class action lawsuit filed on December 10, 2024, in Delaware Chancery Court, alleging the corporate opportunity waiver provision in the Certificate of Incorporation was overbroad and impermissibly waived fiduciary duties. Voluntarily dismissed after the company amended its Certificate of Incorporation, with the company agreeing to pay plaintiff's counsel $85,000.
• Doug Hoelscher et. al. v. John L. Hopkins, et. al.: A purported shareholder lawsuit filed on May 14, 2025, in the U.S. District Court for the District of Oregon, alleging materially false and/or misleading statements and failure to disclose material adverse facts about the company's business and customer agreements. Voluntarily dismissed on August 6, 2025.

Related Party Transactions

• NuScale earned revenue of $7.431 million from Fluor for the three months ended June 30, 2025, and $14.700 million for the six months ended June 30, 2025.
• Fluor accounted for 92% of total revenue for the three months ended June 30, 2025, and 69% for the six months ended June 30, 2025.
• Fluor owed the company $2.676 million in accounts and other receivables as of June 30, 2025.
• On July 31, 2025, NuScale and Fluor entered into an Exchange and Lock-up Agreement, increasing the maximum exchange limit for Fluor's Class B units of NuScale LLC for Class A common stock to 15,000,000 shares, subject to lock-up and trading restrictions.

Stakeholder Impact

• Shareholders: Improved financial performance (reduced losses, increased revenue) and key regulatory approval (SDA) are positive. Resolution of multiple lawsuits reduces legal overhang. However, ongoing cash burn, the need for future capital raises, and the material weakness in internal controls could impact investor confidence and share value. The limited authorized shares for capital raises could lead to dilution if new shares are issued.
• Employees: The workforce reduction of 28% in January 2024 indicates restructuring impact. The company plans to hire additional qualified personnel for internal control remediation, potentially creating new opportunities. Equity-based compensation continues.
• Customers: The NRC's SDA approval significantly benefits potential customers by expediting the licensing process for NuScale SMR-based power plants in the U.S. The ongoing work with RoPower Nuclear S.A. in Romania demonstrates continued customer engagement.
• Suppliers/Partners: The suspension of the Long-Lead Material (LLM) Agreement with CFPP LLC and the negotiation of its disposition could impact related suppliers. Continued reliance on strategic partners like ENTRA1 and Fluor is highlighted, indicating their importance to the company's commercialization strategy.
• Creditors: The company has no debt as of June 30, 2025, which is a positive for creditors. The $5.1 million restricted cash collateral for a letter of credit related to the Release Agreement with CFPP LLC provides security.

Next Steps

• Secure additional customer commitments to support long-term operations.
• Prudently manage expenses and cash reserves.
• Complete the transfer of all rights, title, and interest in the Long-Lead Material (LLM) and execute the payment of the LLM liability with DOE and CFPP LLC.
• Quantify the impact of 'The One Big Beautiful Bill Act' (OBBBA) on the company's taxes.
• Remediate the identified material weakness in internal control over financial reporting by hiring additional qualified personnel, engaging expert SOX consultants, conducting trainings, and designing/implementing additional ITGCs.

Key Dates

Recommendation

While NuScale Power has shown significant progress with a substantial increase in revenue, a notable reduction in net losses, and the crucial Standard Design Approval from the NRC, several factors warrant a 'hold' recommendation. The company is still in a pre-commercialization phase, incurring significant operating losses and cash burn. The disclosed material weakness in internal controls over financial reporting is a serious concern that requires substantial remediation efforts and costs. Furthermore, the limited number of authorized Class A common shares remaining for capital raises could hinder future funding without shareholder approval, potentially leading to dilution. The heavy reliance on key strategic partners also presents a concentration risk. Investors should monitor the successful remediation of internal controls, the securing of additional customer commitments, and the company's long-term funding strategy before considering a stronger position.

Keywords

Small Modular Reactor (SMR), Nuclear Power, NuScale Power Module (NPM), Energy Technology, Regulatory Approval, SEC Filing, Financial Results, Corporate Governance, Risk Management, Capital Markets