Innventure, Inc.(INV)Q2 2026 法說會逐字稿

Good afternoon, and welcome to Innventure's Second Quarter 2026 Earnings Conference Call. As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Kyle Nagarkar, Investor Relations. Please go ahead.

Thank you, Mariana, and good afternoon, everyone. Welcome to Innventure's Second Quarter 2026 Earnings Call. With me today are Gregory Haskell, Chief Executive Officer; David Yablunosky, Chief Financial Officer; Dr. William Grieco, our incoming Chief Executive Officer; and John Hewitt, Chief Executive Officer of Accelsius. Earlier today, we issued a press release announcing our financial results, which is available on our Investor Relations website, along with the supplemental slide presentation. As referenced on Slide 6, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available on our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs and expectations concerning future events impacting the company.

These forward-looking statements involve a number of uncertainties and risks, including, but not limited to, those described in our earnings release, Form 10-Q for the period ended June 30, 2026, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially from those expressed or implied in our forward-looking statements. With that, I'll turn the call over to Gregory Haskell.

Thank you, Kyle. Good afternoon, everyone, and thanks for joining us. We're going to run today's call a little differently by focusing the majority of our time on Accelsius. You'll hear from four executives today. Dave will take you through the financials, then I'll say a brief word about the leadership transition we announced in June, followed by William Grieco to share what to expect under his new leadership. And finally, John Hewitt, who took over as CEO of Accelsius in July, will walk you through where the business is headed and where the industry is headed with it. Let me give you the headline for Accelsius before we get into it. First, we believe the market is now debating when two-phase will be adopted, not if. Second, allocation of GPUs and memory, difficulties accessing power and two-phase enabled servers are impacting smaller early adopters. That has consequences for near-term revenue expectations, which Dave will address directly in his remarks.

But here's the more important point. We believe those same forces have made the long-term picture for two-phase cooling better, not worse. John will walk you through exactly what changed and why. Before Dave addresses the numbers, let me give a quick update on AeroFlexx and Refinity. At AeroFlexx, the commercial pipeline continues to build and is now close to $35 million, up 9% since last quarter. The company's global reach continues to expand with new partnerships in Latin America and Europe. In addition, following the May 11 announcement of the co-manufacturing partnership with Packaging Himalayas, AeroFlexx filling equipment has been installed and is operational at the Italian facility with product qualification underway. At Refinity, engineering design on the 10-kiloton demonstration plant is on track for delivery of a plan by the end of this year. You'll hear William Grieco come back to that in a few minutes. Now let me pass it to Dave to take us through the financials.

Thanks, Gregory. Good afternoon, everyone. Consolidated revenue for the second quarter was $1.0 million. That compares to $0.5 million in the second quarter of last year and $1.4 million in the first quarter of this year. Of the $1.0 million, Accelsius contributed $0.9 million or 96% of the total. Net loss for the quarter was $34.9 million compared to $27.8 million in the first quarter. Adjusted EBITDA was a loss of $22.6 million versus $18.4 million in Q1. General and administrative expenses were $14.5 million, down 22% compared to the second quarter of 2025. We ended the quarter with $46.5 million of cash and restricted cash. That compares to $60.4 million at the end of Q1, which also included $5.0 million of restricted cash. Year-to-date, we used $59.5 million of cash in operating activities and generated $41.6 million from financing activities. During the quarter, we took several steps to strengthen our balance sheet and manage our capital efficiently.

We raised approximately $13.0 million through draws on our standby equity purchase agreement at an average price of $6.21. We also continued to reduce debt, including the full repayment of our convertible debentures earlier this year. Shifting now to our outlook. We previously expected Accelsius to exit this year near cash flow breakeven at an annualized revenue run rate of roughly $100.0 million. We now expect the timing for Accelsius to breakeven to extend beyond this year. The primary driver for the change is market dynamics, not a change in our conviction around the technology or the market opportunity. Smaller early adopters are facing constraints around power availability, GPU access and site allocations. Those resources continue to be concentrated among the largest hyperscalers. I'd like to now directly address our DarkNX purchase order, given they too are not immune to these dynamics.

The purchase order referenced a development site that DarkNX had previously identified. DarkNX recently informed Accelsius that this site is no longer available and that it's working towards developing alternate sites. Accelsius has removed the DarkNX project from its 2026 forecast, pending identification of an alternate deployment location and satisfaction of other conditions. This single customer setback does not change the fact that Accelsius remains at the front edge of market adoption. But until that adoption is established, order bookings and revenues are going to be lumpy and hard to predict. Due to these structural constraints, which limit early adopter deployments, we are suspending our revenue targets. We intend to reinstate forward-looking targets once those constraints ease or we achieve the foundational KPIs that drive broad industry adoption. Here's what we are committing to instead.

We will report on the key milestones best representative of our progress towards market adoption, which John will detail in his section. At the parent level, due to the revised timeline for Accelsius to achieve positive cash flow, we are no longer targeting consolidated positive cash flow for Innventure in 2028. We will revisit that expected timing when we have greater visibility into the pace of Accelsius adoption and revenue generation. Taking a step back, let me revisit our capital strategy in the context of this revised outlook. First, it reinforces the need to be disciplined about where capital is raised and how we protect shareholder ownership. Second, we expect to be opportunistic in how we fund the business from here as revenue delays naturally precipitate a need for capital. Our intent is to finance AeroFlexx and Refinity increasingly at the operating company level, which limits the amount of capital we need to raise at Innventure and helps minimize dilution for Innventure shareholders.

At the same time, given the extended timeline for Accelsius to reach positive cash flow, we recognize there will be a need for additional capital at Innventure. When we raise capital, we intend to do it thoughtfully, opportunistically and with a goal of preserving Innventure's pro rata exposure to Accelsius. With that, I'll pass it back to Gregory.

Thanks, Dave. Before I introduce our next two speakers, a brief personal note. As we announced on June 30, I'll retire as CEO of Innventure on October 1 after almost six years leading the company and more than four decades in the industry. This was a planned succession, and I'll be working closely with William Grieco through the transition. I'm confident in the handoff because William is not an outside hire learning about the company. He helped build it and had previously served as Innventure's Chief Technology Officer. For the past one and a half years, he has been the founding CEO of Refinity, and he took that business from a blank sheet of paper to the doorstep of commercial demonstration. Before Innventure, he built and led innovation and new business creation at various large organizations and holds a PhD in chemical engineering from MIT. Finally, he has served on the Boards of both Refinity and Accelsius. So he knows every one of our businesses from the inside and is the right leader for Innventure's next phase. William, over to you.

Thank you, Gregory, for the introduction and for your six years of leadership that got Innventure to this point. I'm honored and excited to take the baton. Let me start with what will not change. Innventure's company-building philosophy is the same under me as it was under Gregory. We build operating companies around breakthrough technologies in partnership with multinational corporations, and we run those companies to win in their respective markets. We provide the initial funding and ongoing back-office support to allow the operating companies to focus on efficient operations and to meet their commercialization objectives. That's our value proposition, and it's why many of you have invested in us. In the past, we tried to communicate in a way that's more typical of established public companies, especially in regard to providing revenue targets. For businesses like ours, innovative technology businesses addressing markets that are still forming, predicting revenue quarter-by-quarter is difficult, if not impossible.

As a result, revenue targets are not the most useful yardstick at this stage. Revenue guidance will become more appropriate in the future as these companies mature. But in the growth phase, the better measure of progress is whether we're setting the right milestones, whether we're achieving them and whether we're building towards the inflection points that can create significant long-term value. This framework speaks to how we will evolve our operating discipline. I'm an engineer by training and an operator by career. I believe management teams earn credibility one milestone at a time. We set a milestone, we meet it or exceed it, then we do it again. That's how we've run Refinity. We operate with a lean organization focused on achieving our objectives on time and on budget. For example, we shared that we would be scaling up our process for extended duration runs by summer of this year, and our team is doing that now.

We told you that the engineering design for our 10-kiloton commercial demonstration plant would be complete in the fall, and it's on track for delivery by the end of the year. I expect Innventure and its operating companies to be run the same way. Now let me speak to our capital allocation policy, which remains unchanged. The capital allocation framework we announced in April still stands. Capital above a parent reserve is intended to be distributed to shareholders. Innventure will remain committed to maximizing shareholder value. We do that through smart deployment of capital with every dollar aimed where it serves our shareholders best. One more thing about how I intend to communicate with the market. I believe in showing results, not promising them. And I believe we owe the market clarity about what we're seeing. That's what today's call is: giving you a better look into what our companies, particularly Accelsius, are seeing and telling you what we're doing about it.

Now let me tell you why I'm so enthusiastic about Accelsius. I sit on its Board, and I've been involved since we started the company, and I've never been more excited about this opportunity. It's rare in a career to watch a technology this differentiated meet a market this large at the moment the market needs it. Accelsius' $65 million Series B round led by Johnson Controls with Legrand participating tells you what sophisticated industrial players think of the technology. Like me, John Hewitt has been involved with Accelsius from the beginning as a founding Board member. So he stepped into the CEO role with a deep understanding of the company, the technology and the market opportunity. Since taking over early last month, he's worked with the Accelsius team to review and refine the commercialization strategy, which he recently reviewed with the Board. That is exactly the kind of work he's well suited to lead.

John previously ran the Americas for Vertiv, a multibillion-dollar business at the center of the AI data center build-out. He was most recently CEO of Robertshaw, a global design, engineering and manufacturing company with more than 6,000 employees. And earlier in his career, he held senior roles at TE Connectivity, Motorola and Baker Hughes. Josh Claman built Accelsius into what it is today, and he remains fully engaged as Executive Chairman. John has joined him to help scale it. I'm more bullish than ever on Accelsius and on two-phase direct-to-chip cooling. And John will now walk you through the business, the strategy and the magnitude of the opportunity ahead. John, welcome. The floor is yours.

Thanks, William. Good afternoon, everyone. William just gave you my resume, so I won't read it back to you. Let me tell you why I took this job, and then I'll spend my time where it belongs on the business and the industry. At Vertiv, I had about the best vantage point in the industry to watch what AI compute is doing to the thermal limits of the data center. I saw every cooling technology in the market, what worked, what scaled and what hit walls. I joined the Accelsius Board four years ago because I concluded that two-phase direct-to-chip cooling would ultimately be the answer for the most demanding AI and high-performance workloads. I took this job because I believe that ultimately is arriving faster than most people expected. You maybe get one or two opportunities like this in a career, and I am excited to be here. One more thing before I move on. As Executive Chairman, Josh Claman remains actively engaged in this company.

We have been great partners for the last four years, and I am excited to continue working with him in a different capacity. Four years ago, Accelsius was founded on a conviction that physics would drive the industry to liquid cooling and that two-phase would earn a portion of that market. At that time, we didn't think it would become so widely understood that two-phase would be required. The market didn't just make room for us. It's coming toward us, and that's made us aim higher. We are no longer planning like a scrappy start-up buying for single-digit market share over the next 10 years. We believe we can hold a much more significant share, and this calls for how we plan to do that by building our product thoughtfully alongside key ecosystem players, holding the attention of the companies that define the AI sector and focusing where the expected return is greatest. So what instills that conviction in us?

We believe important things outside our control are breaking our way. Physics favors two-phase. Every AI generation runs hotter, and the industry has discovered what servicing single-phase actually costs. There's another force accelerating all this. Data center developments are experiencing significant pushback from communities being asked to host these facilities over water and power usage concerns. Two-phase changes the energy profile of a data center. In greenfield designs, it can lower cooling-driven energy use by one third. At a moment when $700 billion in planned 2026 data center CapEx is colliding with $130 billion in blocked and delayed projects, and New York has just enacted the first statewide moratorium, that isn't a nice to have. It's how the industry earns the right to keep building. We believe the question is no longer if, only when. We can't control when, but we do control how we execute and where we focus.

Over the last few years, we've been pursuing two goals simultaneously. The first was building the foundation for a great company, one that could gain a meaningful share of the liquid cooling spend and one that can deliver a highly differentiated product reliably and at scale. The liquid cooling market is forecast to exceed $30 billion in 2030, of which $9 billion is expected to be two-phase. For context, today, there are no mass scale two-phase direct-to-chip deployments in the United States. I'm proud of the work the team has done to lay the foundation, but the next year is critical, and we'll talk about that. The second was delivering at-scale revenue from a hard tech company inside of five years and not just any hard tech. This is an advanced technology few companies have ever solved, designed to protect GPUs, the asset whose demand far exceeds supply and easily among the most valuable line items on any AI company's balance sheet.

For context, one B300 GPU runs over $50,000 and an eight-way server built on them runs $400,000 to $500,000 and a loaded rack of those servers can run between $3.5 million and $4.5 million. When we benchmarked ourselves against successful hard tech companies in the cooling space, very few had any commercial revenue in year four. Against the relevant comparisons, we're tracking ahead of the pace. The problem was never the pace. It was the yardstick we measured against. We expected Accelsius to travel the normal tech adoption curve with smaller early adopter companies as our main revenue source for a few years. Then we learned something about the AI market. Adopting this technology requires GPU allocations, access to power and the scale to influence server designs, and those are precisely the things smaller companies can't get. This is exactly what we saw happen with the DarkNX deal Dave spoke about earlier.

Our analysis and the feedback we are receiving indicates that the market structure is sidelining many of the customers who would normally take the first risk. As a result, in this market, there are very few early adopters. Here's why that's good news. The relationships we are now focusing on are the companies that dominate this market, companies worth hundreds of billions. And they haven't just noticed us. They're showing deep and promising interest, active proof of concepts with several key hyperscalers and impressive results that are driving next steps. And make note of this because I'll come back to it. For these companies, benchmarked data-backed proof of superior performance is what drives adoption. We just delivered a major proof point. Now these companies move slower than early adopters would have, but I want to be clear about why. We believe it's a product of how a good business makes major decisions.

They have shareholders, countless customers and established procurement and build cycles. They evaluate in a mature way, with deliberate studies between engineering teams, starting with single-loop cold plate level tests, then proof of concepts, then operating impact analysis and then a dedicated haul deployment. Ultimately, they're built into their IT procurement plan and into their data center roadmap. Some iterations run over multiple quarters, and we are in various stages of progress with many of them. So the trade we ended up with is this. Instead of seeking quick revenue from small companies that aren't likely to scale, we're focusing instead on the technology leaders, and we are deep in the evaluation cycles with some of the largest companies in this industry. Our earliest customers are also our largest possible customers. We believe that this isn't a phase, but the GPU allocation and power scarcity, among other factors, define AI infrastructure, and they aren't easing.

When I stepped into this role last month, we did a detailed review of the Accelsius commercialization strategy and made major updates. Substantially all of our partnership and market adoption work now focuses on four customer segments: chip manufacturers, server OEMs, server ODMs and hyperscalers. Our goal is to have chip manufacturers reference our solution, OEMs and ODMs design for it and end customers incorporate those requirements into their IT and infrastructure designs. And when those players move, the market moves. Remember, almost all the data center footprint deployed or in process today uses either air or single-phase liquid cooling. Until two-phase adoption crosses the line, bookings and revenue are going to be lumpy and hard to predict. So as Dave said, we will not guide until we see that adoption. We believe bookings and revenue are lagging indicators in this market. The milestones we will report are the ones we view as the leading indicators.

As I mentioned earlier, the next year is critical. We are actively engaged in advancing progress around major milestones and the four we are focused on now are as follows: one, chip maker engagement leading to reference designs. Inclusion in a silicon vendor's partner ecosystem would be the strongest validation this market offers. It would put us in front of every customer designing around that silicon. Two, server OEM and ODM relationships expanding into co-development initiatives. This would be the first step toward factory integration and server warranty coverage, key enablers to market adoption. Number three, moving beyond proof of concept to an executed statement of work with a leading hyperscaler, one that scopes the power usage effectiveness and operational impacts of two-phase in their data centers. That's the difference between being evaluated and being planned for. And four, continuing to deliver benchmark data and deployment with leading thermal labs, giving the industry's strongest thermal minds the proof needed to adopt.

Hitting these four milestones is how we'll measure progress and how you'll know we're creating meaningful company value. Given the decision-making timeline within large organizations that I spoke about earlier, we don't anticipate having material updates every quarter. That said, each one of these milestones already has its own work stream underway, most with significant progress, and we look forward to updating you on further progress when warranted. And to that end, let me update you on one huge milestone just achieved. As I said earlier, for mature customers, data-backed proof is everything, and we just completed a major study. In July, we published the most important technical validation in the company's history, and I want to walk you through it because the numbers deserve more than a headline. An independent third-party systems integrator took a commercially available Dell PowerEdge XE9680L and an eight-way NVIDIA B200 server drawing roughly 10 kilowatts and benchmarked it with its factory-installed single-phase cooling.

Then they retrofitted the same server with our new cold plates and ran it again. Same server, same GPUs, same simulated workloads, roughly 40,000 operating points. The only thing that changed was the cooling. The results: our solution ran the GPUs 9 to 14 degrees centigrade cooler at the system level, using roughly one third of the coolant flow at the chip. At 50 degrees C facility water, the single-phase system pushed the B200 past its 84 degrees C throttle point, the temperature where the GPU slows itself down to survive. Ours held 9 degrees C of headroom below it, same server, same chips, different outcome. Now here's what we believe those degrees are worth. NVIDIA has pointed the entire industry toward warmer facility water as a key lever for AI factory efficiency, and their current single-phase designs top out around 45 degrees C. Our headroom means the performance single phase delivers at 45 degrees C, we deliver up to 54 degrees C and beyond.

At those temperatures, chillers convert from a necessity into a contingency in most of the world for most of the year. That's the energy story that I opened with. This is how the industry earns the right to keep building. But for an operator, the energy savings isn't really about the utility bill. Every data center lives inside a fixed power envelope. Whatever the grid gives you, that's your budget, and every watt spent on cooling is a watt not spent on compute. Cut the cooling load and two things happen. You make the most of the power you were allocated and you redirect those savings into the only thing that generates revenue, which is more GPUs doing more work. Based on the Jacobs reference design, two-phase enables on average 5% more GPUs inside the same power envelope. At the scale of a gigawatt campus, 5% more revenue-generating compute from the same grid connection is an enormous number.

This is why I say the benchmark validates the strategy, not just the product. Remember what I told you to hold on to: the behemoths are evaluating us and the evaluations are going well. This test is what going well looks like. The companies that can adopt this technology have gigawatts to consider and PhD teams who will take a claim like ours apart line by line. This test was built for that audience, widely available hardware run by a third party at the warm water conditions their own roadmaps require. We didn't hand them a marketing claim. We handed them a data set. The full white paper, 'Warm Water Ready,' is on our site, and I'd encourage you to read it the way our customers are reading it. So back to that question of when. We can't answer it definitively, but I can give you two data points. First, the chips. IDTechEx, after interviewing chip makers, cold plate suppliers and integrators across the value chain, identified 1,500 to 2,000 watts per package as the point where single phase begins to struggle.

The B300 shipping today is already at 1,400. Every generation on NVIDIA's public roadmap goes higher. Second, the racks. Beyond heat removal at the chip, single phase stays competitive only by pushing more and more water. As industry analysts have pointed out, at extreme rack densities, the pipe sizing and physical volume required becomes constraints of their own. So whether the limit arrives through the chip's heat or rack density, the limits exist and every generation moves us closer to them. That's the moment we're preparing for, and the four milestones I laid out are how we will measure progress. Accelsius is positioned to scale when that time comes, and our deployments to date tell the story of an evolving company. Our earliest shipments were demo systems, an in-rack CDU with a load sled or two, built to show nucleation, the boiling physics at the heart of two-phase and to build awareness.

Then we matured to shipping thermal simulation racks, packed with load sleds that simulate real AI workloads, letting users test our cooling and prove the physics for themselves. Today's deployments are different. They're built around specific servers, specific chips, specific hyperscale computing solutions. Our customers are no longer testing whether two-phase works. They're testing how well it works with their equipment. I'm proud to be leading Accelsius through this moment. We believe that we have proven the technology. Now it is time for us to prove our reliability, then to scale it with maturity and commercial discipline. That's exactly what we're doing. I'm glad to be here, and I look forward to your questions. William, back to you.

Thank you, John. Let me sum up briefly. We were candid with you today about what we're learning about Accelsius, and we told you exactly how we will report progress from here. The leadership of this company at Innventure and at Accelsius is stronger than it has ever been. We are more bullish on the Accelsius opportunity than we have ever been. Operator, let's open the line for questions.

Our first question comes from Aashi Shah with Sidoti & Co.

And previously, you've mentioned about $50 million of Accelsius bookings. How much of that is associated with DarkNX? And with the original DarkNX site no longer moving forward, are those bookings still intact, or do they automatically transfer to the new site, or would you need a new agreement?

John, do you want to field that question for us?

Sure. Thank you, Aashi. We don't normally disclose specific dollar amounts with respect to individual customers. But what I can tell you is we expect that order to transfer to a new site. The reason that we debooked the order, as Dave mentioned earlier, is it's going to take them time to find a new site to get the appropriate allocations, et cetera. And because of that, timing is uncertain.

Right. But if you can just give us a little more context on what happened with the original site. Was it related to power availability, financing, GPU availability, or was it something else?

They lost the site and our understanding of it had to do with the power envelope.

Okay. And you've identified an executed hyperscaler Statement of Work as a key milestone. How advanced are those discussions today? And once you secure one, what does the timeline typically look like from there to commercial deployment and revenue?

It's a great question. We have a number of hyperscaler conversations that are in various stages. I hope to be able to report to you soon that we've crossed that particular milestone. But I'll leave it this way: there are very active conversations happening even as we speak. With respect to the timeline, each one of the hyperscalers has their own timeline. In general, they will go from an early statement of work where the technology is validated. They will then do a proof-of-concept deployment, sometimes as big as a row in an existing data center. And then from there, it's designed into the data center reference design. That blueprint leads to volume production deployment. That cycle, depending on the hyperscaler, can run between two and three years, and we are in various stages with many of them as we work down that path.

Right. And so again, we've been looking at 2027 as the meaningful commercialization year for Accelsius, but now it's too soon for that, and too early for any visibility into 2027. Is that right?

I think it is too soon for visibility into 2027 from a specific revenue and bookings perspective. What we are heavily focused on now are the four milestones that we walked through just a few minutes ago.

Our next question comes from Nehal Chokshi with Northland.

Okay. So Slide 13 has the status of the third-party validation. When did this third-party system integrator start to work on this testing?

Which chart is 13? I don't have it in front of me, Nehal.

It's the one that talks about the third-party integrator validation results of the system being able to operate the GPUs 14 degrees lower.

John, do you want to field that?

Yes. I don't know the specific date, but I think it was about 60 days or so ago. They completed it at the end of July, and we announced it right after that.

Okay. And in this slide, you referenced a Jacobs reference design. What is that? And is it fair to assume that Jacobs is actually the third-party integrator?

No, Jacobs is separate. About a year or a year and a half ago, we did work with Jacobs evaluating the benefits at the overall data center level, thinking about what happens to the cooling infrastructure and the broader building power envelope and how that could get deployed. That's the Jacobs engineering study we're referring to. That's a completely different proof point than the third-party integrator validation.

Okay. Can you give us a sense as to who are the type of customers that this third-party integrator serves?

I want to be careful about the word integrator, but this particular third party serves many of the Neocloud and enterprise customers.

Great. Okay. Hyperscaler statement of work and chip maker engagement as key milestones. Arguably, to a certain extent, both of these are the same because hyperscalers are becoming chip makers as well. Is that not true?

It's a great question. Each hyperscaler has its own strategy. Depending on the hyperscaler, some have used up to our estimates 50% or so custom chips and the other half is a mix of off-the-shelf chips from one of the major suppliers. There are other hyperscalers where the mix is much lower. So there are probably three to four major chip makers that we have to engage with, and each engagement leads you to a different part of the market. Each hyperscaler also has its own server ODM or OEM strategy. We've got to knit those pieces together, and that's why these milestones are so critical, particularly chip maker engagement, server ODM and OEM relationships, and hyperscaler engagement, because all three of those pieces must work in concert.

Got it. All right. My last question is that, at least from my perspective, I would say for at least a year, I have been more in the camp of when, not if. And so I'm curious from your perspective, when did you guys go from if to when, and what was the catalyst?

We've been pretty convicted internally that it's not if, but when. For us, that conviction was relatively early on when, in the first couple of years of operation, we proved that the technology worked and we started getting strong proof points around the performance relative to single-phase cooling and air cooling. The reason we emphasize now that it's when is because it's not just us that's convicted; it's the rest of the ecosystem as well.

And so what do you think of the rest of...?

If you look at the industry information out there, there's a lot of conviction now that virtually all of the major players are migrating or believe they'll have to migrate to two-phase at some point. But the other big indicator is that the projection for the size of the two-phase market in 2030 of $9 billion is materially higher than it was even a year ago. One key message here is that while some of the smaller players that would typically be early adopters can't access the market for various reasons, the bigger players that we're engaged with are moving in sooner. The inflection point of value, we think, is coming at us more readily than we had initially anticipated.

Our next question comes from Chip Moore with ROTH Capital Partners.

I want to follow up on cracking a hyperscaler. It sounds like you've got discussions ongoing with more than one. Can you expand on those milestones, getting integrated with a server OEM? Is this something that's running concurrently? Can a hyperscaler, as the need arises, make that happen faster? Are they the real pivot point? In the past, we've talked about potential for orders in the seven- to nine-figure range. I assume that's some of these types of entities. Any more color would be helpful. Thanks.

Sure.

It's a great question. There are server OEMs and server ODMs, and depending on whether you're a Neocloud or a hyperscaler, or what your strategy is, you'll deploy one of those solutions. You put your finger on the pulse: the hyperscalers or a Neocloud and end-customer demand will significantly motivate an OEM or ODM. We're doing two things. We are working with server OEMs and ODMs to build relationships and we're deep in those conversations. Depending on their internal strategy, they will either test and do some deployment and engineering work in advance of a hyperscaler asking for support, but they move much more quickly when there's a demand signal. So we have to work both in parallel for exactly that reason.

That switch could flip faster, but it's uncertain.

100%.

And then my follow-up more around cash runway and cash burn — it sounds like there will be a need at some point for capital. Talk about the potential to raise money at the company level and puts and takes.

Dave, do you want to handle that?

Sure. Chip, thanks for the question. In our consolidated statements, we had $46.5 million of cash and restricted cash at the end of the quarter. So we have cash on the balance sheet. It's not an immediate issue. We have access to multiple avenues to raise cash and we want to do it opportunistically. I said in my remarks that with the announcements today, there could be a need for additional cash raises in the second half of the year. I don't want to get into details about what those might look like, but we have cash on the balance sheet, access to the standby equity purchase agreement, and we believe we'll be fine on cash.

And the goal really is to minimize any dilution and preserve exposure for Innventure shareholders, particularly to Accelsius, which I know our shareholders are eager to participate in.

And AeroFlexx and Refinity — any updates? Probably more so AeroFlexx with some of the commercial momentum, but any ability there maybe to do something strategic or otherwise?

We did say earlier that the intent is to finance AeroFlexx and Refinity increasingly at the operating company level.

First of all, both Refinity and AeroFlexx have initiatives underway where they're raising their own capital to be self-funding. So the amount of capital we need to provide at the parent is expected to be very small for the rest of the year, and they should be self-funding thereafter. With respect to AeroFlexx, they are turning the corner. There's a growing pipeline and the players they're dealing with are getting bigger. Consumer packaged goods companies move slowly, and it's difficult to move them at the pace we'd like, but they are turning the corner. We've had several announcements in the marketplace, and there are multiple avenues we can take with respect to AeroFlexx as we evaluate the rest of this calendar year.

Our next question comes from Nehal Chokshi with Northland.

A follow-up question for John. When do you expect the Fenman architecture, the cooling architecture, to be announced?

That's a good question. I don't know. We're monitoring that very carefully.

And what's your understanding? When does the design get locked down? I think the design gets locked down well ahead of announcement times.

Correct. That's true. Sorry I could not be more helpful on that one. If you find out, let me know.

This concludes today's call. You may now disconnect.