ZincFive reinvesting gross profit into scale

This shows ZincFive is still in the hard middle stage of hardware scale up, where each extra dollar of gross profit is being reinvested to win qualifications, ship more systems, and lower future unit costs. Gross margin improved from negative 14.2% to 9.5% in the first half of 2026, but the company still posted a $26.3M operating loss as it kept spending on product work and go to market expansion tied to large data center programs and OEM channels.1 2 3 4

• In this market, commercialization spend is not just sales payroll. It includes getting batteries qualified inside UPS architectures, supporting long customer testing cycles, and working through gatekeepers like ABB and Vertiv that can both distribute ZincFive and limit its pricing power by offering substitute battery options.1 3 5
• The operating loss persisted even as demand strengthened. Contracted backlog rose from $81.2M at December 31, 2025 to $126.5M at June 30, 2026, and management guided to $90M to $105M of 2026 revenue, which means the near term constraint is turning booked projects into delivered systems, not proving buyer interest.2 3 4
• That pattern is normal for battery and power equipment companies selling into mission critical sites. Buyers are purchasing a full protected power setup, not a commodity battery, so vendors have to spend ahead on engineering, field support, and manufacturing readiness before scale can spread those costs over enough shipped megawatts.1 6 7

The next phase is operating leverage from volume. If ZincFive converts backlog into shipments and keeps lifting gross margin through manufacturing scale, product development and commercialization should become a smaller share of revenue, which is the path from a qualified niche battery vendor to a durable data center power supplier.2 3 4