Fluence Energy, Inc. Q3 FY2025 earnings call

• Signed 2 contracts in Australia worth ~$700 million, including the largest contract in company history. - Delivered first domestic content-compliant battery storage systems in the U.S. and are ramping up U.S. production despite ramp-up issues. - U.S. contracts halted due to tariffs and regulations are reactivated. - OB3 legislation supports battery storage, extending investment tax credits for stand-alone storage, restricting Chinese equipment, and tightening domestic content requirements. - Data center demand for BESS is growing, with estimated $8.5 billion demand by 2030. - Strong double-digit growth margin driven by disciplined execution, cost control, and supply chain optimization.

In Q3, Fluence Energy recorded approximately $603 million in revenue, which was below expectations due to delays in ramping up volume at the U.S. manufacturing facility. The company ended the quarter with approximately $4.9 billion in backlog, having added $1.1 billion in contracts since June 30. Adjusted gross profit margin was 15.4%, and annual recurring revenue increased to $124 million. Liquidity was over $900 million, including ~$460 million in cash. Revenue contribution breakdown wasn't explicitly detailed by product segment, but global market performance and U.S. initiatives were highlighted.

• Revenue expected to be at the low end of prior guidance range (~$2.6 billion) due to U.S. manufacturing ramp-up delays. - Reaffirm ARR of $145 million by end of fiscal 2025. - Adjusted EBITDA guidance range $0 to $20 million. - Full year 2025 adjusted gross margin between 10% and 12%. - 2026 guidance to be based on 80%-90% backlog coverage, with fiscal 2026 backlog at $2.5 billion.

• Tariff uncertainty and changes, including preliminary duties on Chinese graphite material. - Compliance with new regulations under OB3, including FEOC provisions. - Supply chain challenges in ramping up U.S. production.

Q: Brian Lee asks about Q4 margin and '26 margin outlook.

A: Julian talks about Q4 margin affected by tariffs, '26 margin in line with 10%-12% range.

Q: Brian Lee asks about FEOC restrictions and AESC.

A: Julian discusses navigating FEOC, working on supply chain compliance, no need for capital raise.

Q: Dylan Nassano asks about data centers.

A: Julian talks about emerging data center need for BESS, working on solutions but no signed contracts yet.

Q: David Arcaro asks about U.S. demand post-OBBB.

A: Julian says U.S. activity picking up, contracts moving forward.

Q: Julien Dumoulin-Smith asks about '26 backlog and FEOC.

A: Julian says will base '26 guidance on backlog, working on FEOC compliance.

Q: Justin Clare asks about gross margin and U.S. supply chain.

A: Julian says tariffs temporary, margins should return to normal.

Q: Ameet Thakkar asks about OpEx.

A: Julian says OpEx flat in '26, then grows at half revenue rate.

Q: Chris Dendrinos asks about manufacturing and pricing.

A: Julian talks about support for AESC, pricing dynamics.

Q: Dimple Gosai asks about Chinese players and tariff sensitivity.

A: Julian says domestic content offering is strong, no cancellation risk due to tariffs.