Executive Summary / Key Takeaways

• The Only NRC-Approved SMR Is a Regulatory Fortress, Not a Business Model: NuScale's 2025 approval for its uprated 77 MWe design creates a multi-year lead over competitors, but regulatory approval alone doesn't generate revenue. The company must now convert this moat into signed contracts before its cash reserves deplete.

• Cash Burn Accelerates Just as the Market Arrives: NuScale burned $199.9 million in quarterly free cash flow while making a $495 million milestone payment to exclusive partner ENTRA1. This creates a "valley of death" where execution must be perfect despite having only 3-4 quarters of runway at current burn rates, even with $753.8 million in liquidity.

• ENTRA1 Partnership Is Both Catalyst and Handcuff: The exclusive global commercialization agreement accelerates deployment but forces NuScale to fund project milestones without direct control. The TVA agreement for up to 6 GW represents the largest SMR program in U.S. history, yet NuScale's revenue remains tied to engineering fees, not module sales.

• AI Data Center Demand Creates a 100 GW Market by 2040: The U.S. Department of Energy forecasts data centers will consume 12% of national electricity by 2028, driving unprecedented demand for baseload carbon-free power. NuScale's 77 MWe modules are sized perfectly for this market, but competitors are racing to catch up.

• Execution Risk Is the Only Metric That Matters: With "hard contracts" promised by year-end 2025 and first power delivery targeted for 2030, the investment thesis hinges entirely on NuScale's ability to convert memoranda of understanding into binding purchase agreements while managing its dwindling share authorization and partner dependencies.

Setting the Scene: A Technology Provider in Search of a Business Model

NuScale Power Corporation, founded in 2007 and headquartered in Portland, Oregon, began with exclusive rights to a small modular reactor design from Oregon State University. This academic origin story explains the company's current positioning: it excels at regulatory science but struggles with commercial execution. The business model is straightforward in concept yet unproven in practice. NuScale acts as a technology provider, selling NuScale Power Modules (NPMs) to ENTRA1 Energy, its exclusive global commercialization partner, which then develops, finances, and operates the power plants. Revenue today comes from engineering and licensing fees; the long-term goal is profitable module sales and lifecycle services.

The industry structure has shifted dramatically in NuScale's favor. A December 2024 Department of Energy report forecasts that data centers may triple their energy use in three years, potentially consuming 12% of U.S. electricity by 2028. Meta (META) alone announced plans to procure up to 4 gigawatts of new nuclear capacity. This creates a "phenomenal" market opportunity, with demand for 100 gigawatts of nuclear power expected by 2040 among America and its allies. Unlike traditional nuclear plants that take decades to build, SMRs promise factory-built modules that can be deployed in 12-module configurations for 924 MWe of baseload power. The question isn't market size—it's whether NuScale can capture it before competitors close the regulatory gap.

NuScale's competitive position rests on a single fact: it remains the only SMR technology provider to obtain design approval from the U.S. Nuclear Regulatory Commission. The NRC issued its Standard Design Approval for the 50 MWe module in September 2020, certified the design in January 2023, and approved the uprated 77 MWe version in May 2025. This regulatory trifecta provides a multi-year lead. Competitors like GE Vernova (GEV)'s BWRX-300, Oklo (OKLO)'s Aurora, and BWXT (BWXT)'s BANR remain in demonstration phases, requiring at least four years of operation before commercial approval. No other advanced reactor design has even submitted a standard design approval application. This moat is real, but moats don't generate cash flow—customers do.

Technology, Products, and Strategic Differentiation: The 77 MWe Module and the ENTRA1 Handcuff

NuScale's core technology is the 77 MWe NuScale Power Module, a light water reactor that uses conventional fuel (less than 5% enriched) rather than the high-assay low-enriched uranium required by Generation IV designs. This matters because there is currently no commercial HALEU supply chain, making NuScale's fuel readily available and cost-predictable. The module architecture is the only one with NRC approval, in the manufacturing stage, and offers flexibility to serve multiple energy applications within a single plant. Doosan, NuScale's manufacturing partner, currently has capacity to produce 20 modules per year and is looking to expand as needed.

The strategic differentiation extends beyond the reactor design to the partnership structure. On August 27, 2025, NuScale and ENTRA1 executed a Partnership Milestones Agreement (PMA) that makes NuScale the key supplier for future ENTRA1 energy projects. This agreement includes a negotiated maximum sale price for NPMs and milestone payments that NuScale must fund. In September 2025, ENTRA1 announced an agreement with the Tennessee Valley Authority to deploy up to 6 gigawatts of new nuclear capacity using NuScale technology, triggering the first milestone payment of $495 million for 72 modules. This project represents the largest SMR deployment program in U.S. history.

Why does this partnership structure matter? It accelerates commercialization by providing ENTRA1 with capital to achieve key milestones, unlock financing, and speed construction. Management frames these payments as a "catalyst" that will become "self-funded" as projects advance. However, it also creates a dependency where NuScale's cash is used to finance its customer's development. If ENTRA1 fails to convert the TVA agreement into binding purchase power agreements, NuScale has paid $495 million with no guaranteed return. The PMA includes a 5% annual escalator on new milestone payments, increasing the all-in cost per project from $600 per kilowatt to potentially $1,200 per kilowatt by 2040. This structure aligns incentives but concentrates risk.

The manufacturing strategy reflects this partnership dependency. NuScale has invested in long-lead materials for 12 NPMs, with Doosan originally slated to produce 6 reactor vessels and a recent placement for 6 more. This demonstrates confidence in the customer pipeline but also represents inventory risk. As CEO John Hopkins noted, "If you haven't ordered long lead items—we started this process a few years ago... if we're going to adhere to a 2030 COD, that's what we've been working with our supply chain to ensure." The bet is that these materials will be claimed by the first customer contract, but until that contract is signed, they represent cash tied up in speculative inventory.

Financial Performance: Explosive Growth from a Microscopic Base

NuScale's financial results tell a story of explosive growth that remains economically insignificant. For the three months ended September 30, 2025, revenue increased 5,328% year-over-year to $8.0 million, while nine-month revenue grew 1,173% to $28.4 million. This growth is entirely driven by engineering and licensing services supporting the RoPower project in Romania. The RoPower project is nearing completion of the FEED Phase 2 contract with Fluor (FLR), and the Romanian government continues to pay its bills. However, the final investment decision has been delayed from late 2025 to mid-to-late 2026 or early 2027, pushing the first potential module sale further into the future.

The revenue composition reveals the business model's immaturity. Power Plant and NPM Related Services generated $8.0 million in Q3, while Energy Exploration Centers contributed just $176,000. The E2 centers, which use computer modeling and SMR control room simulators to train nuclear talent, expanded to 11 locations globally, but they remain a rounding error financially. The company reports as one segment because module sales—the eventual core business—have not yet begun. This creates a valuation paradox: investors are paying for a manufacturing and services business that doesn't yet exist.

Operating expenses tell a more concerning story. General and administrative expenses increased by $502.2 million in Q3 2025, driven primarily by the $495 million PMA milestone payment. For the nine months ended September 30, 2025, GA expenses increased $511.8 million compared to the prior year. This single payment consumed more than the company's entire cash position from the previous quarter. Research and development expenses decreased by $1.1 million in Q3 and $5.5 million year-to-date as personnel transitioned from R&D to commercial projects, but this cost reduction is dwarfed by the PMA payment. The net result is an operating margin of -526.84% and a return on equity of -297.54%.

Liquidity provides temporary comfort. As of September 30, 2025, overall liquidity increased to $753.8 million from $489.9 million at June 30, 2025, driven by the sale of 13.2 million Class A shares through an aftermarket program that generated $475.2 million in gross proceeds.

The company has no debt and believes it has sufficient cash for the next 12 months and beyond. However, the quarterly free cash flow burn of $199.9 million suggests this runway is shorter than management acknowledges. At current burn rates, the company has 3-4 quarters before requiring additional capital, which is problematic given that only 20 million authorized shares remain out of 332 million total.

Outlook, Guidance, and Execution Risk: The 2030 Deadline

Management's guidance reveals a company betting everything on near-term contract execution. The company still forecasts having "hard contracts" in place by the end of 2025, specifically with U.S.-based customers. This represents a critical inflection point. If NuScale fails to convert its pipeline of memoranda of understanding into binding purchase agreements, the investment thesis collapses. The PMA structure assumes these contracts materialize; without them, the $495 million payment becomes a sunk cost with no recovery path.

The timeline to first revenue from module sales remains distant. Management anticipates the first ENTRA1 energy plant delivering power to TVA as early as 2030, with additional plants phased in as demand grows. This six-year gap between contract signing and revenue recognition creates a working capital challenge. The company must continue funding operations, manufacturing readiness, and potential additional PMA payments while waiting for customer payments that won't arrive until plants are operational. As CFO Ramsey Hamady stated, "I don't plan our financial outlook based on anticipated commercial activities. I plan it based on a conservative scenario." This conservatism is prudent but also acknowledges the uncertainty.

Operating expenses are set to increase during the second half of 2025 as purchases of long-lead materials accelerate to enhance manufacturing and supply chain readiness. This investment is necessary to meet a 2030 delivery target but further strains cash flow. The company has already ordered materials for 12 modules, representing significant capital commitment before the first contract is signed. Management's intention to maintain approximately two years' worth of cash flow suggests they anticipate the need for additional equity raises, which will be constrained by the limited authorized share count.

The RoPower project's delay to late 2026 or early 2027 for final investment decision illustrates the execution risks inherent in nuclear projects. Even with a supportive government partner, regulatory and financing complexities push timelines. This delay pushes the first potential module sale further out, extending the cash burn period. While NuScale continues to receive engineering fees, these are insufficient to fund the company's operations and milestone payments.

Risks and Asymmetries: When the Catalyst Becomes a Drain

The Partnership Milestones Agreement represents the central risk to the investment thesis. The $495 million Milestone Contribution 1 for 72 NPMs has been paid, and Milestone Contribution 2 would be approximately $16 million per NPM upon execution of a binding purchase power agreement. While management frames these payments as "catalyst money" that will roll forward to the next project if term sheets don't materialize, this is cold comfort to shareholders watching cash leave the balance sheet. As Hamady explained, "It's not like it's money out the door, it's money gone. That bank has stayed in the system." This suggests the payments are not refundable but rather credited against future module purchases—assuming those purchases ever occur.

The share authorization limitation creates a capital markets risk. With only 20 million Class A shares remaining, NuScale has limited capacity to raise equity without a time-consuming shareholder vote to amend its Certificate of Incorporation. Given the quarterly cash burn and the potential for additional PMA payments, this constraint could force the company into less favorable financing arrangements or dilutive convertible structures. The Exchange Agreement with Fluor, allowing conversion of 110.94 million Class B units to Class A common stock, demonstrates the complexity of managing the capital structure while preserving financing flexibility.

Partner concentration risk is acute. ENTRA1 holds exclusive worldwide commercialization rights, and termination of the Strategic Alliance Agreement could subject NuScale to significant damages due to non-circumvention restrictions. If ENTRA1's relationship with TVA or other customers deteriorates, NuScale has no alternative commercialization pathway. Similarly, Fluor's 39% stake and strategic involvement create potential conflicts of interest, as evidenced by the December 2024 lawsuit regarding corporate opportunity waivers that was resolved with an amendment to the Certificate of Incorporation and a payment in August 2025.

Trade policy poses a supply chain risk. Changes in U.S. trade policy, including tariffs, could increase costs and delay delivery of components manufactured overseas, potentially requiring price increases or lowering margins. Doosan's manufacturing capacity in South Korea, while currently advantageous, could become a liability if geopolitical tensions disrupt supply chains. Retaliatory tariffs could also impact competitiveness in international markets.

The material weakness in internal control over financial reporting, identified in 2024, remains a governance risk. While remediation plans are underway, the weakness reflects insufficient personnel and technical expertise in information technology general controls. This is particularly concerning for a company that must navigate complex nuclear regulatory requirements and manage multi-billion-dollar project financing.

Valuation Context: Paying for a Manufacturing Business That Doesn't Exist

Trading at $21.39 per share, NuScale commands a market capitalization of $6.05 billion and an enterprise value of $5.36 billion. With trailing twelve-month revenue of just $37.05 million, the EV/Revenue multiple stands at 83.86x. This valuation assumes a manufacturing and services business that has not yet materialized. For context, profitable competitor GE Vernova trades at 4.39x EV/Revenue, while pre-revenue peers Oklo and Nano Nuclear (NNE) trade at similarly speculative multiples but without the cash burn intensity.

The balance sheet provides both comfort and concern. With $753.8 million in total liquidity and no debt, NuScale has a stronger capital position than most pre-revenue companies. However, the quarterly free cash flow burn of $199.9 million implies a runway of less than four quarters at current spending rates. Management's guidance for increased operating expenses in the second half of 2025 suggests burn rates may accelerate before revenue inflects. The company's stated intention to maintain two years of cash flow coverage appears inconsistent with current burn rates and limited share authorization.

Path to profitability requires massive revenue scale. With operating expenses running at approximately $500 million quarterly (including PMA payments) and a gross margin of 66.76%, NuScale would need to generate approximately $750 million in annual revenue just to break even on operating income. This implies selling roughly 150 modules annually at the negotiated PMA pricing—an order of magnitude increase from current production plans. The company's manufacturing capacity through Doosan is currently 20 modules per year, with plans to expand as needed. This capacity gap suggests profitability remains years away even under optimistic scenarios.

Peer comparisons highlight the speculative nature of the valuation. GE Vernova's BWRX-300, while not yet NRC-approved, benefits from an established industrial conglomerate with $36-37 billion in annual revenue and $2.5 billion in free cash flow. Oklo and Nano Nuclear, like NuScale, are pre-revenue but burn less cash and face fewer partner dependencies. BWXT, as a component supplier rather than system integrator, demonstrates profitable nuclear exposure with 10.91% operating margins. NuScale's valuation premium reflects its first-mover status, but this advantage erodes with each quarter of cash burn and delayed contract signing.

Conclusion: The Race Between Regulatory Moat and Cash Runway

NuScale Power has built a genuine regulatory fortress, becoming the only SMR technology with NRC approval for a commercially deployable 77 MWe design. This moat, combined with a market opportunity driven by AI data centers and electrification that could reach 100 gigawatts by 2040, creates a compelling long-term story. The ENTRA1 partnership and TVA agreement represent the largest SMR deployment program in U.S. history, providing a credible path to commercialization.

However, the investment thesis faces a brutal near-term reality. The company burned $199.9 million in quarterly free cash flow while making a $495 million milestone payment to its exclusive partner, leaving it with less than four quarters of runway despite $753.8 million in liquidity. The promise that PMA payments are a "catalyst" that will become "self-funded" depends entirely on NuScale's ability to convert pipeline into binding contracts by year-end 2025—a deadline that, if missed, transforms the partnership from accelerant to anchor.

The stock's valuation at 83.86x EV/Revenue prices in flawless execution and massive revenue scale that remains years away. For the thesis to play out, NuScale must simultaneously sign hard contracts, manage its dwindling share authorization, scale manufacturing through Doosan, and navigate partner dependencies—all while maintaining enough cash to reach 2030 power delivery. The regulatory moat provides time, but not much. In nuclear energy, being first is only valuable if you can afford to finish.