Fluence Energy, Inc. Q2 FY2025 earnings call

• Julian Nebreda noted that Fluence delivered $432 million in revenue in Q2, with double-digit adjusted gross profit margin and $110 million in ARR. Backlog was $4.9 billion, including $1.9 billion scheduled for delivery in fiscal year. • Market landscape shifted due to new tariffs, leading to pause in some U.S. contract executions. • Demand for energy storage is increasing globally, with U.S. electricity demand projected to grow 11% through 2030. • Smartstack technology launched, with positive feedback from customers, and first contract signed. • Domestic content strategy in place, with six partner facilities in U.S. supply chain, and ability to offer up to 100% non-Chinese U.S. products. • Ahmed Pasha discussed Q2 financial results, strong liquidity with over $610 million in cash and over $1.1 billion total liquidity, and revised guidance for 2025.

In the second quarter, Fluence Energy generated $432 million in revenue. Year-to-date revenue was approximately $618 million. Adjusted gross profit margin was approximately 10.4% for the quarter. Annual recurring revenue (ARR) increased to $110 million. The backlog ended the quarter at approximately $4.9 billion, including $200 million of contracts added during the quarter. The pipeline exceeded $22 billion as of quarter end, with roughly half from markets outside the U.S.

• Revised revenue guidance midpoint is $2.7 billion, with $700 million of revenue previously expected for 2025 pushed to later periods due to tariff uncertainty. • Adjusted EBITDA guidance midpoint is $10 million, with approximately $100 million of tariff-related headwinds. • Reaffirmed ARR guidance at $145 million. • Guidance is largely derisked as 100% of required cells are in the U.S. and 95% of the midpoint is supported by backlog plus revenue recognized to date.

• Substantial economic uncertainty due to recently imposed U.S. tariffs, impacting near-term customer decision making and project execution. • Uncertainty regarding trade negotiations with China and its impact on tariff levels and market stability. • Impact of tariff uncertainty on U.S. and international order intake, leading to lower volume in the quarter.

Q: Brian Lee from Goldman Sachs asked about the ASC ramp, including capacity and revenue implications.

A: Julian Nebreda explained that each line at ASC has capacity between 3 and 3.5 gigawatt hours, and mixing domestically produced and imported batteries allows for 12 gigawatt hours annualized run rate. Ahmed Pasha added that mixing provides domestic content benefit.

Q: George Gianarikas from Canaccord asked about AESC ownership structure and competitive landscape.

A: Julian Nebreda stated they have a plan to address potential FEOC restrictions and that Fluence is ahead in developing a domestic supply chain, with Smartstack giving competitive edge.

Q: Dylan Nassano from Wolfe Research asked about global alternative cell supply and Australia projects.

A: Julian Nebreda said global cell production is mostly from China, and Australia projects are progressing with two expected to be signed in Q3 and one in Q4.

Q: Christine Cho from Barclays asked about domestic content mixing and customer options.

A: Julian Nebreda explained that Fluence creates value through BMS and integration, not just batteries, and mixing is beneficial due to tariff uncertainty.

Q: Ameet Thakkar from BMO Capital Markets asked about $700 million paused contracts and cash flow.

A: Julian Nebreda discussed sharing risk with customers and Ahmed Pasha explained cash flow and inventory related to working capital needs.

Q: Andrew Percoco from Morgan Stanley asked about domestic content strategy and first quarter bookings.

A: Julian Nebreda explained tariff uncertainty impacts booking decisions and international markets are not significantly affected by U.S. tariff issues.

Q: Hannah Velasquez from Jefferies asked about working capital and free cash flow.

A: Ahmed Pasha discussed working capital needs and expectation of free cash flow positive next year.

Q: Kashy Harrison from Piper Sandler asked about breakeven tariff level and guidance coverage.

A: Julian Nebreda and Ahmed Pasha discussed competitive pricing in various tariff scenarios and guidance coverage including international and U.S. projects.

Q: Noah from Truist Securities asked about international projects and backlog tariff risk.

A: Julian Nebreda said no delays in international projects and explained supply chain for international shipments, and that tariff risk is managed through aligned customer interests.