Nel ASA's Rheinmetall MoU Is a Prospect, Not a Purchase Order — and Q3 Numbers Lay Bare the Gap

Nel ASA has moved to widen the potential applications for its electrolyser technology, signing a non-binding memorandum of understanding with Rheinmetall on Tuesday. The two companies intend to explore decentralised production of renewable synthetic fuels, pairing Nel's electrolysis expertise with Rheinmetall's Giga-PtX concept. Defence and critical infrastructure are named as the target fields.

What the agreement is not, however, is a contract. Both partners have committed only to examining technical and commercial feasibility, and any pilot projects would require further assessment and a joint decision. The MoU signals mutual interest rather than a green light for construction. For anyone valuing Nel, that distinction carries real weight: a possible new use case for the technology and a firm customer order are two very different things.

A Quarter of Contrasts

The company's third-quarter 2026 figures, released a day earlier, make that separation plain. Revenue from customer contracts fell 63% year on year to NOK 112 million. The decline was not merely a tough comparison against a strong prior-year period — it also fell short of the NOK 202.2 million analyst consensus. Net loss widened to NOK 141 million from NOK 85 million a year earlier, while EBITDA came in at minus NOK 93 million.

Order intake told the opposite story. New orders surged 339% to NOK 253 million, lifting the total backlog to NOK 1,314 million. Bookings and revenue, though, describe different stages of the business, and a swelling order book does not cancel out a shrinking top line.

Concrete evidence of booked business arrived Tuesday, when subsidiary Nel Hydrogen US secured an order worth roughly USD 12 million from an unnamed global technology company headquartered in the United States. The scope covers multiple containerised PEM electrolysers plus associated services, with delivery expected in 2027.

PEM Carries the Load

The pivotal metric going forward is PEM revenue. That segment is already expanding even as alkaline electrolyser sales have collapsed, which means any operational stabilisation rests heavily on whether PEM can keep its momentum. PEM revenue climbed 65% year on year to NOK 89 million, and PEM order intake reached NOK 245 million.

Those figures underpin future business without yet proving that revenue will follow in coming quarters. Investors would be wise not to treat bookings as realised income — a growing backlog and a declining overall top line can coexist, and that is precisely the situation Nel finds itself in. PEM accounted for 97% of the total NOK 253 million in order intake, with the alkaline segment contributing just NOK 8 million. Any recovery is therefore unlikely to be evenly spread; PEM would have to shoulder the bulk of it.

The PEM backlog rose NOK 126 million from the previous quarter to NOK 1,116 million, part of the group's NOK 1,314 million total. Those orders support the outlook but say nothing about near-term profitability. A more convincing sign of progress would be rising PEM revenue accompanied by an improving bottom line.

Two Scenarios, One Open Question

The optimistic case builds on demand that is already visible. If Nel can gradually convert PEM orders into revenue, attention could shift from today's weak sales toward a broader business base — without requiring both segments to recover simultaneously. PEM would simply need enough dynamism to offset the alkaline slump.

The pessimistic case is just as concrete: PEM demand persists, but conversion into revenue falls short of plugging the alkaline gap, leaving the larger backlog unable to fix the ongoing earnings weakness. Nel ended the quarter with a cash balance of NOK 1,078 million. That liquidity figure alone does not indicate how long the company is funded, so the key question for shareholders remains whether losses actually shrink alongside a pickup in sales. More business without better earnings would leave the core problem untouched.

The Rheinmetall arrangement does not resolve that either. Technical and commercial feasibility, along with possible pilot projects, are still under review. Reading guaranteed revenue into an open evaluation process would mean mistaking a review for a binding order.

What Would Actually Confirm the Thesis

As long as PEM grows and orders convert into additional revenue, operational stabilisation remains a plausible scenario. Should that conversion lag expectations, the weak overall top line is likely to keep dominating assessments, and a large backlog on its own would not be enough to offset it. The next real test is a discernible improvement in both revenue and earnings. On the Rheinmetall side, a catalyst would be the feasibility study or a pilot project taking concrete shape — neither of which is settled yet and neither of which should be assumed.

For the investment case, the number of possible applications matters less than how binding the progress is. Higher PEM revenue and smaller losses would strengthen the recovery narrative. Further letters of intent unaccompanied by operational improvement would not.