Prepared remarks
Good day, everyone, and welcome to today’s Oklo Q3 ‘24 Financial Results and Webcast. Today’s call is being recorded. I would now like to turn the call over to Sam Doane. Please go ahead. Thank you, operator. Good day, everyone, and welcome to Oklo’s 2024 third quarter company update and earnings call. Joining us today are Jake Dewitte, Oklo’s Co-Founder and Chief Executive Officer; and Craig Bealmear, Chief Financial Officer. Oklo’s Q3 earnings were announced after market close today. You can find the shareholder letter and supplemental slides on the Investor Relations page of our website. The information discussed during the course of our remarks and the subsequent Q&A session includes forward-looking statements, which reflect our current views of existing trends and are not subject to a variety of risks, assumptions, estimates, uncertainties, and other factors that could cause actual results to differ materially from such statements.
You are urged to carefully read the forward-looking statements language in our shareholder letter and supplemental slides. You can find a discussion of our risk factors, which could potentially contribute to such differences in our most recent filings with the SEC. Oklo assumes no obligation to update these statements, whether as a result of new information, future events, or otherwise, except as required by law. I’ll now turn the time over to Jake Dewitte, Oklo’s Co-Founder and Chief Executive Officer. Jake?
Thanks, Sam, and thank you all for joining us today. We’re excited to share our quarterly update and provide some insights into the progress Oklo has made over the last quarter. Oklo was born largely out of the view that there is a significant opportunity for advanced nuclear technology. What we observed was an industry that had radically stagnated and there was a massive need to rethink how a company could approach taking new nuclear technologies to market. Oklo has started to take advantage of this opportunity and deliver our mission to provide clean, reliable, and affordable energy on a global scale. The last quarter has seen big tech make substantial and comprehensive commitments to nuclear as their technology of choice to reliably and affordably power their AI ambitions. The deals with existing nuclear facilities between Amazon and Talen, and Microsoft and Constellation demonstrate the desire to have access to reliable power.
These deals have played an important role in establishing a price for baseload low-carbon electricity, expected to be at or above $100 per megawatt hour, which supports our discussions with our current and future customers. The small reactor deals announced by Google and Kairos and Amazon and X-energy also demonstrate that big tech is willing to take long-term bets on new nuclear technologies to power their future operations. Oklo signed a similar strategic partnership agreement with Equinix earlier this year for 500 megawatts of power. Equinix also made a $25 million prepayment to the company for power. We believe that the Equinix deal and other small reactor deals serve as a useful road map for how Oklo intends to partner with data center customers in the future. Oklo is differentiated from many of its conventional and advanced nuclear competitors because our business model is to build, own, and operate our powerhouses and provide customers with what they want; reliable, low-carbon electrons.
This graphic from the Department of Energy’s Advanced Nuclear Liftoff report demonstrates the challenges of bringing large nuclear projects to market. Large projects with multibillion-dollar price tags require risk and cost sharing across multiple stakeholders and customers who don’t want to necessarily take those risks. Reactor technology companies sell their partially complete reactor designs and require others to complete the design for them as well as fund and construct those assets. Oklo’s technology is small and scalable, allowing us to build, own, and operate the plants in a sequenced manner that is expected to reduce risk to all stakeholders. This value proposition resonates strongly with current and prospective customers. It’s important to note that this graphic doesn’t mean that Oklo will be doing everything itself. The company is building relationships with key strategic partners across our value chain so that we can bring our product to market.
Our deal with Siemens Energy is a good example of what our value chain partnerships can look like. The nuclear sector continues to receive strong support from all levels of government. This third quarter saw the nuclear fuel sector receive significant funding to construct the infrastructure required to supply High-Assay Low-Enriched Uranium, or HALEU, and an increased pledge at COP29 with 31 countries setting targets to triple nuclear energy capacity by 2050. Our strategy is centered on three key pillars that we believe position us to change the way nuclear power is delivered to customers. We take a different approach across the business model, the size of the plant, and technology because we see these as key ways to unlock a huge amount of the potential nuclear has to offer. On the business model front, our model is designed to make it easy for customers to buy clean power at scale. We couple that with the small reactor size that allows us to achieve greater capital efficiency as a company and to match customer demand incrementally while offering resilient and redundant power solutions to our customers.
Regarding our regulatory and permitting progress, we are targeting to submit our combined license application for the Idaho project next year with several follow-on applications within a year’s time frame. To streamline the licensing process, we are front-loading NRC review through extensive pre-application work, aiming for a review timeline of about 24 months once submitted. The ADVANCE Act presents significant cost and time advantages for permitting, and we are actively engaged with the NRC to optimize our timeline and maximize benefits as the act takes effect. As mentioned, we anticipate a 24-month review timeline with the NRC to get approval for our first site. During the application review period, we will also advance site preparation and likely initiate some construction activities in parallel. We expect to bring our first reactor online in late 2027. We believe that our business model and licensing strategy leverage a streamlined regulatory approach to achieve a combined license, allowing us to secure all necessary approvals to build and operate a commercial plant in one step.
Unlike some others in the space and our peers who pursue separate construction and operating permits or design certifications and later combined license applications, we go directly to a combined license. This strategy simplifies the process and accelerates our ability to deploy plants quickly and effectively.
Thank you, Jake. Similar to statements we made last quarter, we have seen a sizable increase in customer interest since the consummation of the business combination in May of this year, with all of which is leading to an increasing customer pipeline. Oklo is continuing to move forward with additional letters of intent with customers, including new non-binding letters of intent with two major data center providers for up to 750 megawatts of power. Due to commercial reasons in this instance, both counterparties consider our stage of activity to be commercially sensitive and hence, have requested we withhold their names until a future point in time. As a reminder, at the time of the announcement of our merger with AltC, we noted that we had over 700 megawatts of business that have been signed through a combination of memorandum of understanding and letters of intent. Since that time, we’ve made new announcements in the data center market sector with Equinix and Prometheus Hyperscale, as well as an announcement with Diamondback Energy in the oil and gas sector. With the two LOIs I mentioned earlier, this takes our total level of signed agreements to 2.1 gigawatts.
Thank you for that, Craig. We are very excited to announce that with the support of our Board of Directors, we have decided to fully incorporate Atomic Alchemy into Oklo via an acquisition. The two companies have a long history together. Back in 2018, when Atomic Alchemy was founded, I provided due diligence support to venture capitalists to help them understand the potential for radioisotopes. We stayed in close touch with Atomic Alchemy over the years and formed a strategic partnership that we announced earlier this year focused on supporting technology and market sector advancements. Through our work, we have realized that there are massive synergies between our technologies and overall business approach and believe we can achieve more traction on market and technical advancements if Atomic Alchemy were part of Oklo. Radioisotopes are radioactive elements. They are vital materials with growing applications in cancer treatment, diagnostic imaging, space exploration, industrial processes, and even advanced semiconductor manufacturing and fabrication.
However, the U.S. lacks a robust supply chain to support these critical resources. Atomic Alchemy has developed proprietary reactor technologies and isotope production technologies to produce radioisotopes that can utilize unique nuclides sourced from nuclear fuel recycling processes for fast reactors and existing used nuclear materials. Oklo’s fast fission technology can generate electricity using recycled fuel, which can also produce valuable co-products such as radioisotopes.
Atomic Alchemy will create significant value for Oklo’s shareholders by enhancing the value of our technologies and serving as an attractive stand-alone radioisotope business. We view this as an extremely attractive bolt-on acquisition at the right valuation, which will provide a unique enabler and springboard to enter the radioisotope business, which will be a co-product of our fuel recycling process. Acquisition highlights include complementary technology, radioisotope technologies that can significantly enhance the economics of nuclear fuel fabrication and recycling through co-product sales of high-margin radioisotopes.
Regarding all the feedback we’ve gathered from our customers, there is clear and growing demand for nuclear energy, especially when the customers understand the potential economic benefits dealing with various supply chain vulnerabilities. With this acquisition, we aim to integrate radioisotope production into our fuel recycling process, creating a complementary revenue stream and strengthening the U.S. radioisotope supply chain.
Moving on to Slide 20. There have been several multibillion-dollar transactions in the biotech sector related to radiopharmaceuticals, demonstrating market demand for radioisotopes, which is the primary input to radiopharmaceuticals. Atomic Alchemy and Oklo intend to become a premier supplier to this sector as other radioisotope production facilities reach the end of their useful life, resulting in reduced supply. Atomic Alchemy has achieved significant design, engineering, licensing, and permitting milestones towards the initial deployment of its VIPR reactor facility. This approval is a key regulatory step in deploying our fuel fabrication facility and advancing our goal to use recovered nuclear material to fuel the first commercial Aurora powerhouse. With this milestone, we’re one step closer to realizing our fuel fabrication capabilities.
In the last year, it feels like the world has moved from 'why nuclear' to 'why not nuclear' to 'nuclear now.' We believe the points I noted leave Oklo well-positioned for the world of nuclear now. With that, I would like to thank you for your time. Craig and I will now open up the call for questions.
Questions and answers
We’ll take our first question from Ryan Pfingst with B. Riley. Please go ahead.
Hey, guys. Thanks for taking my questions. I guess for my first one, have the announcements from the tech giants recently led to an increased customer interest in Oklo, and is it maybe accelerating certain customer discussions? And when might we see the first contract conversion from an LOI to PPAs?
Yes. Thank you. It’s a great question. I think it has accelerated. We’ve seen a steady pace of acceleration for some time. We kind of set the market here with the announcement with the partnership we have with Equinix for 500 megawatts that included their $25 million prepayment back in the spring, and we’ve seen just progression continue. There’s just this pace of increase happening, and a rate of increase there. What’s changing is getting more recognition that power is one of the biggest bottlenecks in data center deployment, especially what we’re offering in terms of business model and sizing flexibility that opens up significant capabilities for data center development as they think about scale. There’s a lot of eye-popping numbers about power demand, and we’re seeing it supported by semiconductor producers as kind of a leading indicator. It’s just an exciting time to be frank.
After securing data center customers, our goal is to optimize commercial term quality over speed. We aim to ensure the right partnerships are in place for long-lasting strategic partnerships.
Could you give your high-level thoughts on how the changing political landscape might affect nuclear and Oklo’s opportunities specifically?
Yes. It’s been clear there’s bipartisan support for nuclear. The focus on regulatory modernization going forward is enabling for more and faster new nuclear. Additionally, there might be evolutions as seen in different support mechanisms, particularly with the Inflation Reduction Act. The key is to recognize these benefits for nuclear.
Thanks, guys. I will turn it back.
Thank you, and we will next take our question from Vikram Bagri with Citi. Please go ahead.
Can you talk about the response from hyperscalers regarding the size of reactors and if you have plans to increase the size to 100 megawatts and higher?
Yes, the size is an interesting strategic advantage. Data centers are increasingly looking for modular build-outs, matching the 50-megawatt size which drives growth here. We have opportunities for larger sizes above 100 megawatts as we continue to progress. We see that the construction dynamic allows us to reduce single-shaft risk and gives our deployment strategy a lot of flexibility to adjust to customer needs over time.
How big do you feel this radioisotope business could be, and what do you expect from Atomic Alchemy’s contributions?
The radioisotope market is a national strategic priority seeing significant demand. Given geopolitical factors, we are well-positioned to tap into this. Our relationship with Atomic Alchemy enhances our capabilities for producing and supplying radioisotopes.
Atomic Alchemy has capabilities that create stand-alone revenue opportunities related to radioisotopes and their near-term production capabilities in support of our customers.
Will Oklo’s ability to recycle nuclear waste provide margin uplift for Atomic Alchemy?
Yes, recycling provides multiple product streams and revenue opportunities. Our ability to separate valuable radioisotopes from the recycling process will create additional revenue streams.
Do you view each subsequent Aurora application taking the same 24 months as the first? Or could it be quicker?
I can see multiple applications in review at the same time, with significant benefits on the review timeline for subsequent applications potentially down to just 7 months based on our combined licensing strategy.
What’s the timeline for groundbreaking on Idaho?
We anticipate breaking ground in 2026 for the Idaho plant, with opportunities for parallel development and construction, especially since it’s on well-characterized DOE land.
Are there citing issues for earthquakes, water, accessibility in the sites you’re looking at?
The sites are well-characterized, and while we have to address regulatory protocols, we find our position excellent for addressing site preparation and construction readiness.
Are customers getting confused by the sheer number of new entrants in the SMR space?
I think there’s some confusion at times. However, customers are becoming savvy. We offer competitive advantages based on regulatory progress, existing fuel sources, and our unique business model. We are the only non-light water nuclear company with significant regulatory traction and real partnerships with governments and commercial entities, which positions us well. Our mission is clear: a combination of strong technology and unique economics means we are positioned for success. We aim to efficiently provide reliable, clean nuclear energy.
Thank you. And now I would like to turn the call back over to Jake for any closing remarks.
Thank you all for joining us today and appreciate the attention and engagement. It’s an exciting time in nuclear with all the recent activity. We believe our market position will let us meet the opportunity for clean, affordable energy. Thank you again, and we'll keep you updated next quarter.
Thank you, and ladies and gentlemen, that does conclude today’s program. We thank you for your participation. You may now disconnect.