Bloom Energy Corp Q3 FY2024 earnings call

• The energy landscape is changing rapidly, with Bloom adapting and creating change. There's positive momentum in commercial activities, including complex and large deals. • U.S. commercial and industrial sectors (healthcare, education, etc.) are strong, and Bloom's clean, reliable, cost-predictable power solution is attractive. • AI and data center market is a growth area for Bloom, with fuel cell systems tailored for data centers having attributes like millisecond-scale load response, fault-tolerant architecture, AC/DC power options, heat for GPU cooling, and sustainability. • A landmark 80-megawatt fuel cell project in South Korea with SK Eternix and KDB is a significant milestone. • Front-of-the-meter and behind-the-meter solutions are being used to meet customer needs, with load following added to offerings. • Committed to double-digit cost reductions through operational optimization, manufacturing efficiencies, and technical innovation.

In the third quarter, revenue was $330.4 million, a 17.5% decrease from Q3 2023. Product revenue increased by $7.5 million, while service revenue was flat. Non-GAAP gross margin in Q3 was 25.2%, up from Q2's 21.8%. The service business was profitable in Q3 and expected to be profitable for the full year 2024, marking the first time service has been profitable over a full year.

• Reaffirms full year guidance of revenue between $1.4 to $1.6 billion, non-GAAP gross margin of approximately 28%, and non-GAAP operating income of $75 to $100 million. • Confident in achieving full year results despite quarter-to-quarter revenue variability due to project timelines. • Emphasizes profitable growth, with focus on Q4 and 2025 results.

• Project timeline variances (pull-ins and delays) affecting quarterly revenue. • Market dynamics and regulatory changes, such as the phase-down of ITC, which could impact business. • Challenges in large project execution and financing, including securing favorable project financing for Bloom technology-based projects.

Q: Andrew Percoco from Morgan Stanley asked about 2025 guidance and data center progress.

A: KR Sridhar said the commercial pipeline in the U.S. C&I is strong, and data center negotiations are active with progress but complex deals take time.

Q: Manav Gupta from UBS asked about market diversity.

A: KR Sridhar said diversity in geography, customers, and sectors is important, with examples like U.S. utilities, Quanta, and international markets including Europe and Asia.

Q: Chris Dendrinos from RBC Capital Markets asked about Fremont capacity expansion.

A: KR Sridhar said they expanded capacity in Fremont to meet growing demand, and Dan Berenbaum added they'll expand as needed while being mindful of profitable growth.

Q: Noel Parks from Tuohy Brothers asked about partnerships with pipeline infrastructure operators.

A: KR Sridhar said they're in early conversations on potential partnerships.

Q: Dushyant Ailani from Jefferies asked about ITC expiring.

A: KR Sridhar said they've navigated policy changes before and are prepared to operate with or without ITC.

Q: Sherif Elmaghrabi from BTIG asked about energy server installation process.

A: KR Sridhar explained the installation process, including quick setup with skid-mounted units and handling of permits and connections.

Q: Ameet Thakkar from BMO Capital Markets asked about SK receivable.

A: Dan Berenbaum said they expect to collect the SK receivable before year-end.

Q: Henry Roberts from Truist Securities asked about SK long-term opportunity.

A: KR Sridhar said SK is an important trading partner and they're uniquely positioned to support their AI and industrialization needs.

Q: Martin Malloy from Johnson Rice asked about project financing for the 80-megawatt award.

A: KR Sridhar said it's a good sign due to financiers' comfort with Bloom's technology based on past performance.

Q: Chris Senyek from Wolfe Research asked about conviction in meeting full-year guidance and timing of deliveries.

A: Dan Berenbaum said they're confident in hitting full-year guidance with visibility on specific projects through year-end.

Q: David Sunderland from Baird asked about sales process adjustments.

A: KR Sridhar said large deals take time due to multi-party involvement, but technology is qualified and they expect news soon.

Q: Brett Castelli from Morningstar asked about cost reduction and future product generations.

A: KR Sridhar said they focus on cost reduction while adding features, with double-digit cost reductions expected annually.

Q: Colin Rusch from Oppenheimer asked about pricing relative to other technologies.

A: KR Sridhar said Bloom provides valuable solutions with demonstrated value across sectors and geographies.

Q: Tim Moore from Clear Street asked about SK partnership and manufacturing in Korea.

A: KR Sridhar said they have a joint venture in Korea, with benefits including localization and tariff advantages, and core technology remains proprietary.