Operator
Good day and thank you for standing by. Welcome to the Adventure Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press Star 11 on your telephone. You will then hear automated messages when your hand is raised. To withdraw your question, please press Star 11 again. Please advise that today's conference has been recorded. I would like to hand the conference over to your first speaker today, Lucas Harper, Chief Investment Officer. Please go ahead.
Thanks, Operator, and thank you all for joining us for InVenture's fourth quarter 2025 earnings call. My name is Lucas Harper, InVenture's Chief Investment Officer, and joining me from the company are Roland Nostrup, Chief Growth Officer, Bill Haskell, Chief Executive Officer, and Dave Yavlanowski, Chief Financial Officer. Earlier today, we issued a press release announcing our financial results, which are available on our investor relations website along with the supplemental slide presentation. As reference 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 in our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that 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-K for the period ending December 31, 2025, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially for those expressed or implied in our forward-looking statements. And now I'd like to turn the call over to Roland Ostrup.
Thank you, Lucas, and thank you to everyone joining us today. I'm Roland Ostrup, Chief Growth Officer. Before I begin, I want to note that this April, we will host an InVenture CEO call featuring deep-dive commentary from Excelsior CEO Josh Klayman, Aeroflex CEO Andy Meyer, and Refinity CEO Bill Grieco. There will be more details to follow, and I strongly encourage our shareholders to tune in. Now, let me start by saying something plainly. This is the earnings call we have been building toward. Not because of a single milestone, not because of a single announcement, but because for the first time in Inventures history, every part of this platform is firing at the same time, and the results are undeniable. There is a difference between a company that tells you it is going to do something and a company that has done it. There's a difference between a thesis and a proof, and what we are presenting to you today is proof. This is not one milestone. It is not one announcement we are dressing up for you. Let me give you the headline, and then I'll give you the proof. The headline is this. Inventure has crossed the threshold from potential to performance, and the proof is in third-party validation, commercial bookings at scale, operational expansion. Execution milestones delivered across our family of operating companies simultaneously. What you are seeing in the fourth quarter of 2025 and the opening months of 2026 is not incremental progress. It is a decisive, across-the-board inflection in the trajectory of this company. This is what an industrial growth platform looks like when it starts to run, and it is what differentiates in venture from single-asset or venture-style stories. Since inception, we have deployed approximately $160 million of balance sheet capital into our operating companies. That capital has generated roughly $860 million in net asset value, including approximately $460 million distributed directly to shareholders through PureCycle. That track record matters, but what matters more is what is happening now. the platform is beginning its transition from being capital-funded to being commercially self-funding. And the evidence is clear. In the first quarter of 2026 alone, our operating companies generated more than $50 million in new bookings in a single quarter. That is a commercial inflection point by any measure and a powerful leading indicator of forward revenue and enterprise value creation across our operating companies the momentum is unmistakable excelsius is scaling with the speed and urgency the ai infrastructure build out demands backed by institutional validation from johnson controls and legrand and a growing pipeline of commercial deployments aeroflex has entered prestige beauty one of the most demanding markets in the world and expanded global manufacturing capacity to meet accelerating demand. Rafinity moved from formation to pilot scale validation in just over a year, demonstrating the speed, repeatability, and discipline of the InVenture model. Three companies, three proof points all at once. This is not a coincidence. This is architecture. The architecture of a platform business delivering on its promise. And this momentum underpins our expectation of reaching consolidated cash flow positivity in 2028, driven by Excelsis expecting to achieve cash flow positivity this year. Each operating company is now directly raising capital, reducing the need for Inventure's balance sheet and fundamentally changing the financial character of this business, exactly on schedule. role. Our model has always been well-defined. I know there are investors on this call who have been patient. I know there are investors who have been waiting for us to stop talking about what we are going to do and start showing what we have done. We appreciate your patience. I want you to hear me clearly now. The waiting is over. The results are here. They are accelerating and the best chapters of the InVenture story are the ones we are writing right now.
With that let me pass the call to bill haskell to walk through each operating company and provide the specifics behind this acceleration thanks roland i want to start with excelsius and i want to start with something i think people in this market is still under appreciating the world has decided it wants artificial intelligence not eventually now every major technology company every sovereign Well Fund, every hydroscale on the planet is in a race to build computer infrastructure at a scale that has no historical precedent. And here's the part that most people have not yet fully internalized. You cannot run that infrastructure without solving the thermal problem. You cannot. The chips that power AI generate heat at densities that make traditional air cooling physically insufficient. This is not an engineering preference. It is simply thermodynamics. That is the market Excelsius is scaling into. And Excelsius is not scaling into it theoretically. It is scaling into it with over 50 million in contracted backlog secured in the first quarter of 2026 alone. All tied with Greenfield next generation data center development anchored by an initial order for the first deployment by Dark NX, a vertically integrated and funded AI data center developer with a healthy tenant pipeline and the ability to deliver liquid cooling ready capacity by accelerated time. Now I want to be honest with you about something because I think honesty on earnings calls is more valuable than cheerleading. Data center construction is experiencing real global supply chain constraints. Power distribution equipment, switch gear, memory, and long lead mechanical systems. These constraints can affect the timing of delivery and revenue recognition even when customer man and purchase orders are firmly in hand so while we expect to recognize the majority of the contracted backlog as resident this year the exact cadence is difficult to forecast with precision our expectation today is that revenue will be heavily back in weighted in 2026. but i want to be very clear about what that means and what it does not mean It does not mean demand is uncertain. It does not mean our technology is unproven. It means the physical world has supply chains, and supply chains have constraints. The important signal is not the quarter-to-quarter timing. It is the bookings. It is the customer commitments. It is the scale of demand we are now seeing. Those are the leading indicators of long-term value creation, and those indicators are unambiguous. based on our current trajectory excelsius is on a path to exit 2026 cash flow break even defined by cash from operations this implies a december 2026 annual revenue run rate of approximately 100 million dollars and importantly we believe excelsius's cash on hand is sufficient for the company to reach this cash flow positive threshold think about what that means a company that just a short time ago was still in the early field of employment is now approaching self-funded commercial scale. Let me contextualize this further because the market is telling you something important that you should be paying attention to. The recent acquisitions of Google IT and Void at roughly eight to nine times revenue and nearly 30 times forward EBITDA make it unmistakable that the industry is moving decisively toward direct-to-chip liquid cooling and here is the critical distinction both cool ip and void remain single phase today excelsius is already commercially deployed in the two-phase architecture that the market is converging toward two-phase cooling is not an incremental improvement of a single phase it is a fundamental architectural advantage because of the phase change that occurs It removes far more heat with far less energy, enabling rack densities and thermal performance that single-phase water systems simply cannot reach. Industry analyses consistently show that direct-to-chip cooling is one of the fastest-growing segments of the data center thermal market, with forecasts ranging from low double digits to mid-30 percent compound annual growth rates over the next decade. The earliest adopters are exactly where we are seeing our strongest attraction today. Greenfield, high-performance computing, and AI-focused data centers where air cooling cannot keep up with the heat flux of modern GPUs and accelerators. But here is what I want investors to understand about the size of the opportunity. The first wave is already here. New builds, HPC, AI infrastructure. But the second wave, and this is potentially even larger, is legacy data centers. Even in facilities where air cooling is technically adequate today, operators are recognizing that two-phase cooling unlocks higher rack densities, greater compute per square foot, and significant energy savings. It allows them to densify instead of expand, to deploy more compute power without new construction, to reduce the energy overhead of air-based cooling. We believe that the necessity of two-phase cooling for HPC and AI workloads, combined with the compelling economics for non-HPC environments, will cause direct-to-chip two-phase cooling to become the dominant architecture for both new and retrofit data centers over the next three to five years. Excelsior is now widely recognized as a leader in direct-to-chip two-phase cooling, in a position reinforced by our strategic investors, Johnson, his roles, and LeGrand. Their involvement is not passive. It is a strong validation of both our technology and our commercial readiness, like two of the most respected names in global building system and data center infrastructure. In December 2025, Excelsior closed the second trance of a $65 million Series B investment led by Johnson Controls-Olegrand valuing the company at approximately $665 million post-money. I want to emphasize this. That valuation was set by two global industrial companies deploying their own capital, not by adventure, not by internal Excelsior's financial models, but by external institutional investors with deep domain expertise writing real checks. That is the kind of validation that is very difficult to dismiss. Let me turn to Aeroflex, which operates in a completely different market, but demonstrates the invention model just as clearly. There is a problem in packaging that almost everyone acknowledges, but almost no one has solved. The world produces enormous amount of single-use rigid plastic packaging. Everyone agrees it is wasteful. Everyone agrees the supply chains are inefficient. And yet, the alternatives have historically forced a tradeoff. You could have sustainability, or you could have performance and consumer appeal, but you cannot have both. Aeroflex changed that equation. Founded in 2018 around liquid packaging technology sourced from Procter & Gamble, Aeroflex is an integrated packaging and filling platform that improves the consumer experience, simplifies supply chains reduces virgin plastic usage and enhances e-commerce economics. Its differentiation comes from delivering all of this value simultaneously. The current side recyclable package uses up to 85 percent less virgin plastic than rigid bottles, a flat pack format that enables up to 10 times greater shipping efficiency, lower total cost of ownership by consolidating the supply chain, and consumer testing that consistently shows a clear preference versus traditional packaging.
This is not a tradeoff. This is a better product.
As of the fourth quarter, Aeroflex has delivered six consecutive quarters of revenue across pet care, baby care, personal care, household products, and industrial applications. And what is notable today is that Aeroflex is transitioning from early market validation to large-scale adoption and volume production of units. During the first quarter of 2026, Aeroflex announced a global partnership with Aveda, part of the Estee Lauder companies. Aveda is the first global prestige brand to adopt Aeroflex's refill packaging format with select products expected to debut in early 2027. Let me tell you why that matters beyond the headline. it prestige beauty is one of the most demanding markets in the world the brain standards the performance requirements the aesthetic expectations these are extraordinarily high when aveda backed by estate lauder chooses our platform that is a statement about the maturity and credibility of our technology aveda is one of four anchor customer relationships that now underpin AeroFlex's commercial momentum across distinct end markets. The other anchors include a multinational consumer packaged goods company with a signed multi-brand multimillion unit agreement, a major producer of industrial fluids and packaging services where commercialization is advancing through both equipment and pack sales with the first purchase order already received and production beginning next month, a large beverage and food service partnership that would make Aeroplex's entry into food and beverage the largest portion of its addressable market. Taken together, these four anchor customers valet the platform across premium beauty, household and personal care, industrial applications, and food and beverage, and each has the potential to support line extensions, geographic expansion, and follow-on programs as Aeroflex becomes more deeply integrated into long-term packaging strategies. Aeroflex's near-term commercial pipeline stands at just under $30 million, including an approximately one-third in final negotiations. We are not providing guidance on the timing of revenue conversion, but the realization of these opportunities is incorporated into our assumptions for Aeroflex to reach cash flow positivity in 2028. The company's opportunity set is broader and more diversified than at any point in its history. TerraFlex is also in the process of launching a direct capital raise at the operating company level, targeting strategic investors that also serve as commercial partners. As our operating companies mature, they are increasingly able to raise capital independently, reducing the need for parent-level funding. That is the model working exactly as designed. Let me turn to Refinity, and I'll tell you candidly, this may be the most compelling industrial opportunity we have ever launched. Here is the problem. The world produces hundreds of millions of tons of plastic waste every year. A meaningful portion of that waste has no viable recycling pathway today. It goes to landfills, it goes to incinerators, it goes into the environment. At the same time, petrochemical companies are spending enormous sums buying fossil feedstocks, ethylene and naphtha, to produce ethylene and propylene, two hydrocarbons that represent a $350 billion global market and are essential to producing polyethylene, polypropylene, and a wide range of specialty materials. Affinity connects those two problems. It takes the portion of plastic waste stream that today has no viable recycling pathway and converts it into high-value chemical building blocks, ethylene and propylene, that petrochemical companies are already buying. The substitution alone creates a compelling economic incentive and ability to hedge against fossil price swings while meeting circularity commitments. Across the value chain, circular materials come in a 30% to 50% price premium, with the highest premiums closest to the consumer. This is not a sustainability story that requires you to ignore economics. This is a sustainability story where the economics are the reason it works. Profinity's primary commercialization strategy is built around integration, co-locating plants directly at petrochemical sites, such as a Dow steam cracker. This eliminates transportation costs, It's directly into existing infrastructure, reduces CapEx for both Refinity and its customers, and accelerates adoption by fitting seamlessly into the way these companies already run their assets. Beyond its core ethylene and propylene focus, Refinity sees significant opportunities in producing customized circular hydrocarbon products, including specialty high-value lubricants and sustainable aviation fuel, or SAF. One of our independent directors is a C-Squid executive in the aviation industry, and we have come to appreciate that SAS has become one of the most critical pathways for aviation to meet its net-zero commitments, with demand going far faster than supply and U.S. production expected to scale dramatically over the next few decades. Profinity recently licensed technology from a U.S. national lab for catalytic conversion of its mixed ethylene and propylene product to SAS SAF, and SAF precursor liquids, and intends to demonstrate this conversion process later this year. The SAF market alone is growing at 30 to 50 percent annually, and is anticipated to reach $40 billion by 2034. The ability to disrupt a $350 billion commodity market while also accessing high-growth specialty sectors like lubricants and SAF underscores just how significant the total addressable market is for Affinity. now here's the process you get your attention rafinity was formed in december 2024 less than one year later the team produced its first metric ton of circular product from real world mixed plastic waste yields typically above 60 to 70 percent with minimal char that compares to about 25 conversion for competing technologies for a technology of this complexity, that speed is exceptional. Since then, Rafinity has filed multiple patents on its duo zone reactor design, expanded its IP portfolio with licenses from a U.S. university and a national lab, and advanced engineering toward a 10 kiloton per year demonstration plant targeted for completion in 2028. A commercial scale plant of around 150 kilotons per year is planned for early next decade, aligned with the chemical industry's expected return to growth. Raffinity is hitting KPIs ahead of schedule. It is solving a real cost problem for petrochemical customers, and it is positioning itself to scale just as the industry reenters the growth phase. This is the InVenture model. Rapid formation, accelerated validation, and a disciplined progression toward commercialization in a massive market with structural economic drivers. Before Dave gets into the financials, I want to leave investors with three clear takeaways. First, the Invention Model works. PureCycle proved it, and Excelsius is validating it again at a faster pace. This is not theoretical. It has been demonstrated twice. Second, we are not dependent on a single operating company. We now have three businesses executing simultaneously, each with independent third-party validation. That is diversification with conviction, not diversification as a hedge. And third, I think this is the one the market has been slowest to absorb. The platform is transitioning structurally from capital consuming to increasingly self-funding. Operating companies are raising their own capital. They are converting commercial traction into revenue. The architecture of this business is changing, and it's changing exactly the way we expected it would. I want to say something about valuation, because I think it needs to be said plainly. We believe our current share price does not fully reflect the value of Inventor shares. The $665 million third-party valuation of Excelsior was set by institutional investors deploying their own capital, adding two strategic investors to the cap table, and securing more than $50 million in contracted backlogs. We believe the value of Excelsis alone has materially increased, and that does not include the value of Aeroflex or Affinity. We're not going to complain about the market, but we are going to stay fast. And the facts suggest that there is a significant gap between where our shares strayed and what this platform was worth. Our focus remains on execution. We believe that if we continue to execute, value will ultimately be recognized, and we intend to continue executing. When we look across our family of operating companies today, our confidence in the investors' path to consolidated cash flow positivity in 2028 is grounded in execution, not aspiration. Excelsior is scaling into production deployments in a market where liquid cooling is becoming mandatory with third-party institutional validation and a clear line of sight towards self-funded growth. Aeroflex has moved beyond pilot programs into repeat revenue, anchor customers, and global manufacturing scale, while transitioning to direct capital formation at the operating company level. And Refinity has rapidly validated its core technology, established a clear commercialization roadmap, and has begun the process of funding its next stays independently. Taken together, these developments reflect a platform that is structurally maturing, with operating companies increasingly funding their own growth, corporate capital requirements declining, and commercial activity translating into revenue. This is exactly how the invention model is designed to work, and it underpins our confidence in the enterprise's long-term financial trajectory. With that, I'll turn the call over to Dave to walk through the financials.
Thanks, Bill, and good afternoon, everyone. I'll walk through our fourth quarter in full year results, but let me begin with the most important thing I can tell you. The financial profile of this company is changing, not gradually, structurally, and the numbers I'm about to give you are evidence of that change. 2025 was an important proof point year for Asselcius. Revenue increased from $0.3 million in 2024 to $1.6 million in 2025, driven by successful proof-of-concept deployments with early customers. At the consolidated level, Inventors 2025 revenue was $2.1 million, up from $1.2 million in 2024. Fees from our management of the Inventus ESG fund, along with intercompany eliminations, were $0.5 million compared to $0.9 million in 2024. But the real step change happened in the first quarter of 2026. Ascelcius generated more than $50 million in contracted backlog. These are production volume orders, not pilots, not trials. This provides strong visibility into meaningful revenue scaling in 2026. And as Bill mentioned, we expect the Celsius to exit December 2026 with positive operating cash flow, implying an annual revenue run rate of approximately $100 million. We also expect revenue to be heavily weighted to the back end of this year. General and administrative expense. Before I get into the specifics, I want to explain something about how our cost structure has evolved. because it gives important context we have included a slide in our earnings presentation that illustrates this in granular detail historically prior to the operating companies reaching commercialization in venture funded essentially all gna costs from the topco level personnel expense special services operating expenses all centralized all flowing through Inventure's Consolidated P&L. That's now changing. While cost of the Celsius and affinity will continue to flow through the Consolidated Financials, a growing portion of the total operating expenses will be funded directly within those businesses rather than by Inventure. At the TopCo level, our focus is increasingly on a lean corporate cost structure, funding only what's required to operate InVenture TopCo. Now let me give you the numbers, because they're significant. G&A has decreased sequentially every quarter since InVenture went public. Consolidated G&A declined from $29.7 million in the fourth quarter 24 to $11.5 million in the fourth quarter 25, a 61 percent reduction. That reflects disciplined cost management across InVenture, Acelcius, and Refinity, as well as the tapering of non-cash expenses associated with our public listing. Professional services shows the same trajectory, three and a half million in the fourth quarter 25, down 42 percent from their peak of 6.1 million in the first quarter 25, as we brought key functions in-house at lower cost. At the parent company level, InVenture's fourth quarter 25 cash G&A expenses were $5.7 million, down over 55% from $12.9 million in the fourth quarter of last year. That's not noise. That's a structural change in how this business operates. Looking ahead to 2026, we expect the Venture TopCo G&A to follow a trend similar to the last three quarters of 2025. A few income statement highlights. Excluding the $347 million non-cash goodwill adjustment and other minor non-cash items, adjusted EBITDA for 2025 was a loss of $78.8 million. As we look forward, the combination of a significant contracted backlog, our expectation that a Celsius will reach a revenue run rate of approximately $100 million and exit 2026 cash flow positive gives us confidence that there will be a substantial improvement in the reported adjusted EBITDA in 2026. Moving to cash and liquidity, on a consolidated basis, we ended 2025 with $65.4 million of cash, restricted cash, and cash equivalents, up from $11.1 million at the end of 2024. Additionally, in January 2026, we strengthened our balance sheet with a $40 million registered direct offering as InVenture became shelf eligible. Shelf eligibility is an important milestone. It gives us efficient access to public market capital on substantially better terms than what was available previously. Just as importantly, we repaid the entire remaining $5.6 million balance on our convertible ventures, which simplifies our capital structure. Let me walk through why we believe our cost of capital will improve significantly going forward. One, we believe a Celsius is now effectively fully funded and entering rapid commercial scaling with the over 50 million in contracted backlog. Two, fourth quarter 25 G&A is down 61 percent on fourth quarter 24, with further efficiencies expected as we take advantage of productivity improvements. Three, shelf eligibility, which reduces reliance on higher cost financing alternatives. As our operating companies, particularly at Celsius, begin generating cash, we expect this to further extend our cash runway and move and venture towards a self-funding Evergreen model. While it is too early to discuss the details of the ongoing capital needs for affinity and AeroFlex, the disciplined cost actions I discussed earlier gives us visibility into InVenture's needs. At the InVenture level, we estimate 2026 capital needs to be materially less as our operating companies become self-funded. This reflects a leaner parent company structure as expenses continue to shift to the operating companies. On the balance sheet, by way of explanation, our $28.7 million in investments represents our $19.5 million equity method investment in Aeroflex and $9.2 million in Aeroflex debt securities. And following the Goodwill write-downs earlier this year, $323 million of Goodwill still remains on our balance On the cash flow statement, you can see many of the non-cash items that appear in our income The cash use and investing activities primarily reflect funding to Aeroflex and capital expenditures at the Celsius. Let me close with this. There are companies that talk about inflection forms, and then there are companies that cross InVenture is crossing one right now. rapid commercialization, a dramatically improved cost structure, efficient access to capital, operating companies that are beginning to fund their own growth. These are not just aspirations we are sharing with you, they are facts supported by every number I just walked you through. We believe this combination positions us to scale with far greater capital efficiency and to create meaningful long-term value for our shareholders. And I want every investor on this call to understand, we are not slowing down. We are accelerating. With that, we'll open the call for questions.
Operator
Thank you. At this time, we'll conduct the question and answer session. As a reminder to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced to withdraw your question please press star one one again please stand by while we compile the q a roster and our first question comes from the line of chip moore of ross capital partners your line is now open hey good evening everybody uh congrats on pivoting to this new phase here appreciate that chip yeah i appreciate that chip yeah hey um so maybe if i could start on excelsius you know the the 50 million plus
in contracted orders here in Q1. It sounds like Dark NX is a significant chunk of that, but maybe you can talk about the types of customers in there, other customers, and what you're seeing there, and then pipeline as well.
Yeah, sure. So I would say this, Chip, we have literally hundreds of people in the pipeline, or customers in the pipeline that are all kind of moving forward through. I mean, the beginning of that is starting to drip through, as you can see. So, it's fairly chunky right now, but I think what you'll see going forward is we'll have, you know, a larger framework of customers. I mean, we have delivered to dozens of customers to date, so, you know, I think what you're going to see is many more, you know, groups of purchase orders fall with increasing numbers as they go forward. It's a tricky marketplace, as I think we all know, just because of, again, some of the supply chain issues that have been talked about on this call and people are seeing in the marketplace. And so that affects some of the timing of various both purchase orders and the prospective deliveries of those. And while I'm not predicting that we'll have any, you know, material delays in delivery, it's not something within our control. I mean, ultimately, these are things that will be determined by the pace of the build-out of the various data centers and our customers' sort of supply chain constraints. So that's kind of where we stand at the moment. But we'll have a broader and broader, more diversified pipeline of contracts as we go forward, is my belief.
Yeah, that's helpful, Bill, and makes a lot of sense. Obviously, a lot of things out of your control, like many. And I guess for the deliveries, you know, to dozens of potential customers, would you describe that more sort of piloting phase? And how long do you think people want to have a look at the technology before they get fully comfortable?
Yeah. Well, so last year, virtually all of our deliveries were kind of one-off pilots where people were just evaluating the technology. I think we've moved past that for most all of the customers that are in the pipeline at this stage. So, you know, the way I would frame it is this. If we were sitting here a year ago, you know, our average proposal outstanding was probably worth a couple hundred thousand dollars, and now, not virtually, not every one, but most of the purchase orders are either, you know, seven, eight, or even nine figures in terms of scale. I would say, you know, most are probably in the eight-figure range. So, that just shows you a significant transition from evaluation units to real commercial production orders.
Yeah, definitely. That's helpful. And maybe just one more on Excelsior's for me, to your point on cadence being tougher to predict near-term and some of these things that you control. but it sounds like you have reasonable visibility into, you know, maybe 25 million-ish of revenue in Q4 if, you know, something out of your control doesn't get held up. Is that the right way to think about it based on?
Yeah, like you say, that's the kind of runway we indicated that would make the company cash generative. And, you know, I think Josh came out a couple months ago and said that was our expectation that we would reach cash flow positivity by year end, and that is still our belief.
Yeah. Okay. And just one more before I hop back in queue, AeroFlex, a lot of momentum, VEDA, obviously announcement recently, but now you're talking about a $30 million pipeline and some of that getting close. Just a little more detail there. And I think I heard you say that you might be looking to do do a raise with some strategics there, just any more color you can provide. Thanks.
Yeah, there's, I would say this, now that we've gotten to the point where we've proven out the technology and proven out the recyclability of the AeroFlex package, and it's gone through its own evaluation unit phase, just as we did in Excelsius, now we're starting to see, again, same thing, commercial-sized proposals that have been asked for. And so Aveda is really a framework deal that we think can be quite significant. I don't have a number scale yet of what that can grow to, but they're a very large luxury brand within Estee Lauder, as you may know. And, you know, what we believe, based on conversations we've had with lots and lots of customers, is that But they'll start with a product, you know, one SKU, I'll call it, that they'll go out and run, and assuming that's successful, they will, you know, kind of broaden the reach of that packaging solution to other brands within the same platform. So again, Evade is one, but they're a big one. And as we mentioned, it's a very challenging customer in the sense that, again, the bar is very high across the board because aesthetics is very important and so they want unique shapes and you know different kinds of packaging labeling that that is more difficult than say industrial where you look you know doing putting lubricants and you know bar and chain oil which is an opportunity for us and other other things of that kind of yeah no that's great the one last one for me before i hop back in queue um you know like probably more for dave but uh you know the the transparency around G&A and some of the expenses.
I really appreciate that and the slide in there. You know, I guess the question would be, is there much more low-hanging fruit there? And do you think G&A continues to come down? And, you know, how much more optimization do you think you could see there?
Well, hi, Chip. Thanks for the question. And certainly, we're always focused on G&A. We're always looking at ways to be more efficient, more effective, get more done with less. So while I don't want to give forward guidance on where I think that money's going to be, I can assure you, I can assure you it's on our radar. And we're always looking at ways to operate more efficiency. But we're pretty proud of the five consecutive quarters since we went public. So that's how I'd answer that.
Yeah, I would just amplify that a little bit, Chip, in the following way. I mean, if you, we talked about when we went public that we needed to be, say, public company ready, kind of out of the chute, and we've relied very heavily upon, you know, outside vendors to help, and now we've brought a lot of that functionality in-house. But, so we've weaned ourselves off, you know, some of those outside services, which are quite expensive, but that wasn't all realized by the end of December. There was, you know, still some carryover, so that continues to reduce, you know, which is where I think you'll see some improvements in our cost structure going forward.
Operator
Thank you for the next question. Our next question, Chris on line of Naha Jokshi of North End Capital Marks.
I think that was a well-said narrative on the transition of InVenture and proof points that the VC, unique VC model is working. So well done there. um there are some uh questions though that i think need to be asked um so i got a bunch and let me just go through them real quickly um the cogs to revenue ratio continues to inch up i understand that we're still in basically pilot phase but at what point in time why is it continuing to NSHOP, and at what point in time do you expect that to, you know, start to get normalized?
Yeah, so I would say we're building some things to inventory based on, you know, projected orders, Nahal, which is—so the cost of goods is ahead of delivery, right? So I think that's a—the primary—primary issue, right? Where we have customers that we know what they're going to want in terms of product mix, and, you know, so we've developed some inventory, which, of course, all that cost of business is in, but the revenue is yet to be realized in certain areas.
Yeah, I'll jump in, and that's accurate, right? There is a fixed cost element to COGS as well, so you've got to keep that into account. It's not all variable.
But certainly later this year, that should even out, you know, as we start delivering at scale, you'll see all of that really flesh out.
Okay. I mean, when I look at the COGS relative to revenue, I mean, it's roughly scaling, but it's increasing a little bit, right? It's not like a massive increase. So it almost looks like the variable cost structure is close to 100%, if I was just to look at it with a pure analytical lens of COGS to revenue ratio. So can you help me understand like what percent of these COGS is actually fixed versus variable then?
Do you have an answer to that one, Dave? I don't know. I mean, I do. It gets into the margins and the cost structure in Celsius. We probably don't want to go into too many details on there. But we're amortizing intangible assets, right? So for the R&D development to place and the other things that are attributable to cost of goods sold, that amortization is going through. It's fixed. It doesn't vary with each unit produced. And the second thing is there's a shift in Celsius, right, to the higher capacity cooling units, to the different MR250s and demands by the customer. So that generated a little bit more cost than just doing straight math on units and per unit cost. So, those would be the two things I'd point you to.
But it's a very nice margin business. I'm not going to give you the, you know, projected margin at this stage. You know, later as we, as revenues get to scale, I think, you know, we'll be able to share more in terms of that. But the margins are attractive margins in this business, in my view, on a comparative basis to, you know, kind of other vendors out there.
Okay. And then, you know, so the fixed cost element within these COGS, that has been going up each quarter then? Is that correct?
Well, well, again, I mean, I think the fixed portion is fixed. I just think there's a lot of different things happening as we're scaling, as we're getting customer orders, and costs are getting booked to COGS. And again, I think as we scale, then you start to see a more normalized, where you could say, hey, for every unit it produced, this is, you know, the cost per union. It'll start to make more sense. When you're at numbers at this level, I think you have to be careful drawing those kind of conclusions.
And we opened a brand new manufacturing facility, too. I don't know if you're aware of that now, but we've opened another, I think it's 25,000 square foot facility, you know, there in Austin in addition to the where we had before. So, we've just materially increased our manufacturing footprint. So, there are obviously some costs associated with that.
Okay. Okay. Still going on this line here. Inventory was down to about $5 million QVQ on less than $2 million of revenue recognition in a quarter. Can you help me understand that there?
Yeah, I can answer that. Again, as we transition to different products, you know, there was some inventory write downs, and that's flowing through COGS as well. So there was a little bit of obsolescence, a little bit of manufacturing costs, some more heads allocated to cost of goods sold. It's all kind of related, but that's why you saw a drop in inventory.
Yeah, and I can give you some more So, you know, this market has evolved very rapidly, and, you know, our initial belief was that a, you know, sort of 70-kilowatt rack was, you know, sort of 10 times the average rack size, and that was going to be kind of where the market was headed, but it really leapfrogged over that, and, you know, so we have about 150-kilowatt on a 250-kilowatt product as well, and that's really more of the sweet spot of what the market seems to want. So, that's where the obsolescence really came in is just writing off a lot of that 70 kilowatt inventory.
Got it. That makes a lot of sense. That's very helpful. Okay, a couple other questions and I'll see the floor here. You said that Dark Index is funded. Can you give us a – it's hard to find information on this company. Can you give us a sense of where these funding sources are coming from for Dark Index?
Hey, Roland, do you want to field that one?
Sure, I can, Mayal. I mean, all I can tell you is, I mean, coincidentally, of course, I'm in Toronto, which is where they are, so I've met with them a handful of times already and gotten to know them.
I didn't go through the formal qualification. that was done by you know Excelsius themselves and I believe JCI did that as well because they're part of the chillers for that facility. All I can tell you is they are funded and they've represented to me directly that they're funded but it was formally done when they were qualified by both Excelsius and Johnson Control. A key part of that was determining that they did have funding. I don't know the source though to tell you the truth.
Okay all right and then my last question and I'll get back in the queue for the rest of my questions here but so companies are raising company capital independently which then means that InVenture will get diluted relative to these operating companies. So doesn't that also represent a change in philosophy on whether it's from the operating companies or not rather than just evidence of operating company maturation? I do agree that there's evidence of operating company maturation, but I'm also saying, hey, does it also represent a change in funding philosophy as well?
Yeah. So, let me field that one for you, Nahal. So, in the early days of InVenture, most of the companies were funded off—not off the balance sheet of InVenture, but there was subsequent funding. We had a fund that co-invested with InVenture. We had some outside investors that funded a lot of those, so we ended up with relatively small stakes in each of Pure Cycle and Aeroflex. When we evolved with a conglomerate model, our goal was to own more. But the balancing act, the tradeoff there is until we in-venture our cash-generative at the TopCo level, which we projected for 2028, you know, you'd have to take permanent dilution at the inventor level, which would affect not only the companies that we currently have, but future companies going forward. So the thought was, if these companies are in a position, they're mature enough to be able to raise capital independently, let's raise some capital for each of their reflex and affinity directly in the marketplace. And yes, we'll take some dilution there, but we save the permanent dilution at the inventor level for our shareholders in doing that and but when we're cash generative at the topical level at the venture proper level you know they would love to be able to fund as much as possible off our own balance sheet to retain full ownership so it's kind of a trade-off between you know taking care of investor positions today and taking a little bit of dilution at the upco level um you know versus you know kind of having to suffer permanent evolution for all future companies. And as we mentioned, certainly Excelsior already has the requisite capital it needs to get to a, you know, cash-generated position. So we're not funding anything more from there, and they're not raising any further capital. So it's really at the AeroFlex and Raffinity level. And AeroFlex, as you know, is not a consolidated asset. We own a minority stake in it. So, you know, we're a little less sensitive to dilution at the air flux level. And we believe now that it has done this deal with Aveda and it's seen some traction that raising the smallish amount of capital Aveda going forward is imminently doable.
Operator
Thank you. One moment for our next question. Our next question comes from the line of Ashish Shah of Sidodian Cole. Your line is not open.
Good evening. thank you for taking my question um my question is related to a celsius and the 50 million bookings in the first quarter they're all tied to the greenfield data centers when do you expect meaningful traction from brownfield deployments and that could accelerate adoption much quicker than greenfield in my assumption because they're going to the growth over there is slower and riskier when to as to when the data centers will be ready so any thoughts on when the brownfield deploy like when you start seeing traction from brownfield deployments yeah it's a tricky tricky question to answer i'll do my best actually and thanks for the question
so you know we do have customers obviously that have existing data centers and some of those you know they would like to retrofit you know at least part of their data centers with with a different technology, and, you know, but at the moment, as you know, you know, liquid, liquid-cooled data centers are a relatively small number. You know, it's, I don't know, 5% or something like that of data centers have liquid cooling today, but growing very rapidly and evidenced by, you know, a lot of the M&A activity in the, in the sector. But we are talking to customers that have many data centers, some new builds and some existing. And the nice thing about the technology is that it drops in very nicely into an existing data center because each rack is self-contained in the sense that you have a cooling solution and a CPU all contained together with one or multiple racks. So, you can replace a rat, a row, a whole facility, or any combination thereof, in a relatively straightforward way. So, I don't, it's just hard to know what the definitive answer to your question is, but I would expect some blend of that, you know, even later this year as things move forward. Just that the ones that have the most acute need are those that are nearing up specifically for HPC and AI workloads where they're, you know, firing the latest and greatest others as possible. But as we migrate to, you know, agentic computing, you know, you're going to see, I think, a big change. 2026 is really supposed to be the inflection point where we go from kind of 80 percent of the computing being for training in these large language models to 80 percent being, you know, sort of consumer-directed for generative AI, just this is what's happening. People are starting to use these various AI agents, and it's a very steep curve of adoption. I mean, it's—most everybody I know uses it every day now, and you're going to see that continuing to grow. So if they switch over from, again, these LLMs and the compute horsepower goes the other way, then it's more of a CPU game versus a GPU game. And then you're going to have clusters of large computes for CPUs, you know, in, I say, big clusters. And that will also require liquid cooling just because of the density that they want to be able to put forth in one data center. So, it's a, I mean, just in the last two years watching this market evolve, it's gone well ahead of the pace that it had anticipated. So, I think we're going to continue to see a shift. And I think that will drive more to the brownfield sites as, you know, trying to get back around to answering your question here. Because a lot of those. Well, I should probably add to that a little bit. Yeah, go ahead.
Yeah, because, I mean, I've had pretty long conversations about that with Excelsior and kind of the view I get, when you have the CEO call, I think it's a good time to ask that question exactly, by the way, to Josh. But, you know, right now, there's a need for Greenfields to adopt the technology. So need drives adoption there. But in the real legacy center, really what they want to see is they want to see a mature industry develop, that there's plenty of supply. And I think where you're going to see the adoption inflection point is when you see that there's a robust industry supplying more of the greenfield developments, then the brownfields will become comfortable, I think, making switchovers.
Makes sense. And another question I had was on the AVIDA partnership. Can you just give us a ballpark on what the expected annual volume is going to be for that at launch in 2027 and if this is going to be like a pilot program or is it a full commercial rollout?
Yeah, so we've been dealing with Aveda for quite a long time. I don't have the direct answer to the question. I'm not ducking that. I just don't know the answer to the question. But, you know, Aveda has big brands, big, you know, luxury brands. And, you know, the reason it's taken until 2027 before they roll out at scale is to figure out which particular product lines they're going to use in this packaging, making sure we tailor the packaging to what they want to see in the labeling and, you know, all the various things that they require. So I just don't know the answer, Ashi, but we'll be learning more over the next six months in terms of the details of what we would expect to see.
Yeah, I mean, you can look at the potential too, Ashi. I mean, there's not a lot of published data available on Aveda, but if you do any search out there, you'll find that Aveda is in the tens of millions of packages a year is what the brand is estimated to have in the marketplace. So it could be significant, but as with any brand rollout, you don't expect to get the whole thing. But it's definitely not a pilot launch. It's a global commercial launch that's targeted for 2027.
Operator
Got it. Thank you. Thank you. One moment for our next question. And our final question comes from the line of Naha Ajaxi of Northern Capital Markets. Your line is now open.
Yeah, thank you for the follow-up questions. So another part of this narrative here is improving corporate governance. And you guys did announce that you'll be, I think, uh nominating some independent board directors and some some existing uh I guess so-called insiders are going to be stepping down uh can you just say what percent is independent now and what percent do you expect to be independent once these changes are done sure so today we have five independent directors and four executive directors and what we're targeting is to go to to seven independents and two executive directors.
And, you know, so, you know, we have our AGM in June, so I would anticipate, you know, in that window of time, that we will have migrated to seven independents. That's the target.
Great. Also, can you give an update on the Excelsius pipeline? I believe a quarter ago you said it was, you know, a little bit over a billion.
Yeah. I mean, I haven't, I don't have any updated information directly. I will tell you that, you know, the pipeline has a lot of different levels to it. You know, there's, I'll call it, high conviction things in the pipeline. There's, you know, things that we think are probable. And there are things that we think are possible. And then there are, you know, new things coming in all the time. So, I don't have a comprehensive number. We can figure that out. And certainly, when we do the CEO call, that's a fair question to ask of Josh. But I just don't have the number in front of me. I just haven't seen it yet.
Got it. And then, how much does the greater than 50 million of Excelsior Spokings in 1G26 correspond to in terms of megawatts?
The 50—the greater than 50 million dollars of Excelsior Spokings in 1G26, What does that correspond to in terms of megawatts that are all cool?
Oh, that's a good question. So, yeah, I will just say this because I think we're trying to be a little bit careful about ascribing, you know, dollars per megawatt, which I think is probably where you're headed. But I will say that, you know, we've – part of that, you know, a fraction of that is a small portion of the DACA NX prospective build-out. You know, what had been announced before was 300 megawatts, and then there was another announcement saying that they had the first – they had funding for the first two phases of 65 megawatts each. That is not what the – what our bookings represent today. It's a smaller fraction of that. So, again, I think when we do the CEO call, maybe we'll provide a little bit more granularity on just how many, you know, megawatts we've been contracted to roll out, but it's, and it's going to grow. You know, it's going to grow pretty materially between now and, you know, the next couple of quarters. We've got, again, a lot of things in the pipeline that we think will close, you know, over the next couple of quarters. So, but we haven't announced that. So, we'll see if we can get clear information for that, for the call that we do with the companies.
Yeah, Neil, that was the whole point of doing a separate CEO call, was that we want to have the CEOs be able to go into greater granularity.
You know, here on the earnings call, We're really just trying to sort of paint the macro overview of where it's going and that we're having an acceleration across all companies and a dramatic decrease in G&A.
Where you can get into the technicals, I think, is going to be on the CEO call.
Okay. All right. I'll save my additional questions for them. Thank you. Thanks for the question. Thank you.
Operator
Thank you. This concludes the question and answer session. Thank you for participation in today's conference. This concludes the program. You may now disconnect.
