Nel ASA's Backlog Balloon Can't Mask the Revenue Squeeze — or the Exit Looming Upstairs

Nel ASA sees orders surge 224% but revenue drops 12%, with CEO departure and PA-Series launch adding uncertainty.

The Norwegian hydrogen equipment maker finds itself in an unusual bind: customers are signing up faster than ever, yet the money coming through the door is shrinking. Nel ASA booked 230 million Norwegian kroner in new orders during the second quarter — a 224 percent surge — while revenue fell 12 percent to 182 million kroner. The disconnect between the order intake and what actually reaches the income statement has become the defining feature of the company's current chapter.

That gap is all the more striking given the size of the cushion Nel has built. The order backlog now stands at 1.2 billion kroner, a figure that gives management breathing room even as the conversion of those bookings into billed revenue lags. But the backlog alone hasn't been enough to pull the bottom line out of the red. EBITDA landed at minus 155 million kroner for the quarter, weighed down by a 70 million kroner one-off payment tied to the settlement with Japanese partner Iwatani.

A Leadership Vacancy Adds Another Layer of Uncertainty

Just as investors are trying to gauge whether the order book will translate into actual sales, the company has dropped a personnel bombshell. CEO Håkon Volldal, who has led Nel for four years, is set to depart — though he will remain in his role until the end of 2026. For shareholders, that arrangement offers a measure of continuity in the near term, but it also raises questions about the strategic direction a successor might take. Leadership transitions rarely land at convenient moments; this one arrives while the company is trying to balance a swelling pipeline against sluggish revenue conversion.

The pattern of rising orders and delayed execution isn't new for Nel, but the impending change at the top gives it added weight. Anyone holding the stock has to weigh whether that 1.2 billion kroner backlog will be converted into revenue quickly enough to matter, or whether the lag between bookings and billing will simply persist.

The PA-Series Bet and a Capacity Push

Management's answer to that question rests largely on a new product platform. The PA-Series, a next-generation pressurized alkaline electrolyzer unveiled in May, promises a footprint 80 percent smaller than current models and capital costs running 40 to 60 percent lower. The company expects the first orders for this platform in the coming months — a promise that has yet to materialize. If it does, the economics of Nel's projects could shift meaningfully.

Alongside the product refresh, Nel is expanding its manufacturing base at Herøya. Production capacity is slated to reach 500 megawatts by the end of 2026 and one gigawatt by 2027. The build-out is backed by a 135 million euro EU grant that can cover up to 60 percent of relevant investment and operating costs. That funding decision was announced roughly three weeks ago and has done little to move the share price — a sign of how muted sentiment has become.

Profitability Thresholds Remain Out of Reach

Management has been explicit about what it will take to turn a profit: alkaline volumes in the range of several hundred megawatts per year, combined with PEM utilization of 20 to 24 percent. Those targets are nowhere near being met. They do, however, provide a clear yardstick against which future quarterly results will be judged. The strong order intake alone won't flip the loss-making situation — but it does demonstrate that demand for electrolyzers persists even in a difficult market for hydrogen projects.

The market, for now, remains skeptical. The stock trades at 0.1956 euro, roughly 46 percent below its 52-week high of 0.3655 euro reached in May. The distance from that peak underscores how much caution is already priced into the shares. A recent uptick of 0.2 percent did little to alter the broader picture of a stock grinding lower over recent months.

The next real test comes on October 21, when Nel reports its third-quarter numbers. Until then, the central question hangs in the air: can the company convert its bulging order book into actual revenue growth before the leadership handover at year-end? The comparison between order intake and revenue realization is likely to remain the dominant theme for the stock in the months ahead.