Financial Data and Key Metrics Changes - The company reported approximately $432 million in revenue for Q2 2025, exceeding expectations due to faster project milestone achievements [9][30] - Adjusted gross profit was $45 million, resulting in an adjusted gross profit margin of approximately 10.4%, marking the seventh consecutive quarter of double-digit margins [30] - Annual recurring revenue (ARR) increased to $110 million, with a revised guidance for ARR of $145 million [9][32] Business Line Data and Key Metrics Changes - The backlog at the end of the quarter was approximately $4.9 billion, including $200 million in contracts added during the quarter [9][20] - The company anticipates a strong ramp-up in order volume, particularly in Australia, as it enters the second half of the fiscal year [9][10] Market Data and Key Metrics Changes - The U.S. electricity demand is projected to grow by 11% through 2030, indicating a significant increase in annual energy storage capacity [14] - Battery storage capacity in Australia is expected to reach 51 gigawatt hours by February 2030, up from 7 gigawatt hours in 2024 [15] Company Strategy and Development Direction - The company is focused on its SmartStack technology and U.S. domestic content strategy to create value for stakeholders [21][22] - The domestic content strategy aims to meet local manufacturing requirements under the Inflation Reduction Act (IRA), providing tariff incentives and creating jobs [25][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth prospects for energy storage despite current tariff-related uncertainties [11][39] - The company believes that the high tariff levels on Chinese imports are unlikely to be sustainable and expects a return to normalized contracting activity in the U.S. market [12][39] Other Important Information - The company ended the quarter with over $1 billion in liquidity, including $610 million in cash, providing a strong financial foundation [10][32] - The revised guidance for fiscal 2025 reflects a lower revenue expectation due to tariff impacts, with a midpoint guidance of $2.7 billion [34][36] Q&A Session Summary Question: Clarification on AESC ramp and capacity - Management clarified that the Tennessee facility has two lines, each with a capacity of 3 to 3.5 gigawatt hours, allowing for a combined annualized run rate of 12 gigawatt hours through a mix of domestic and imported batteries [45][48] Question: Mix of contracts in pause state - Approximately half of the $700 million in paused contracts were already in backlog, while the other half were under advanced negotiations [97][98] Question: Domestic content strategy and customer willingness - Management indicated that customers are hesitant to commit to fully domestic offerings due to uncertainty around future tariff negotiations with China [109][111] Question: Competitive landscape and tariff impacts - The competitive landscape remains intense, with management noting that uncertainty has made it difficult to gauge competition levels [70][71] Question: Global alternative cell supply situation - Management acknowledged that while there is some production outside of China, the majority of cell production still comes from China, making diversification challenging [76][78]

Financial Data and Key Metrics Changes - The company reported approximately $432 million in revenue for Q2 2025, exceeding expectations due to earlier-than-expected project milestone deliveries [7][28] - Adjusted gross profit was $45 million, resulting in an adjusted gross profit margin of approximately 10.4%, marking the seventh consecutive quarter of double-digit margins [28] - The annual recurring revenue (ARR) increased to $110 million, with a revised guidance for ARR set at $145 million [7][30] Business Line Data and Key Metrics Changes - The backlog at the end of the quarter was approximately $4.9 billion, including $200 million in contracts added during the quarter [7][18] - The company anticipates a strong ramp-up in order volume, particularly in Australia, as it enters the second half of the fiscal year [7][10] Market Data and Key Metrics Changes - The U.S. electricity demand is projected to grow by 11% through 2030, indicating a significant increase in annual energy storage capacity [12] - Battery storage in Australia is expected to reach 51 gigawatt hours by February 2030, up from 7 gigawatt hours in 2024 [13] - The company expects 278 gigawatt hours of capacity additions in the U.S. through 2030, highlighting the growing significance of battery storage [14] Company Strategy and Development Direction - The company is focused on its SmartStack technology and U.S. domestic content strategy to create value for stakeholders [19][20] - The domestic content strategy aims to meet local manufacturing requirements under the Inflation Reduction Act (IRA), providing tariff incentives and creating jobs [23][25] - The company is optimistic about the long-term growth prospects for energy storage despite current tariff challenges [11][35] Management's Comments on Operating Environment and Future Outlook - Management noted that the recent U.S. tariffs have introduced substantial economic uncertainty, impacting customer decision-making and project execution [36] - The company believes the current high tariff levels on Chinese imports are unlikely to be sustainable and expects a return to more normalized contracting activity [9][10] - Management remains confident in the long-term positioning of the company and its ability to navigate current challenges [37] Other Important Information - The company ended the quarter with over $1 billion in liquidity, including $610 million in cash, providing a strong financial foundation [8][30] - The company has paused execution of some U.S. contracts due to tariff uncertainties, but does not expect material cancellations [31][32] Q&A Session Summary Question: Clarification on AESC ramp and capacity - The company clarified that each production line has a capacity of 3 to 3.5 gigawatt hours, and by mixing domestic and imported batteries, they can achieve an annualized run rate of 12 gigawatt hours [44][46] Question: Impact of tariffs on pricing and margins - Management indicated that the uncertainty around tariffs makes it difficult to set stable pricing, but they believe they can remain competitive even with high tariffs [55][56] Question: Ownership structure and political concerns - The company has a plan in place to address potential future restrictions on ownership related to IRA benefits [65][66] Question: Competitive landscape and Chinese vendors - Management noted that competition is currently in a wait-and-see mode due to tariff uncertainties, but they believe their domestic production strategy positions them well [68][69] Question: Status of delayed projects in Australia - The company expects to sign two delayed projects in the current quarter and one in the fourth quarter, indicating progress in project execution [76] Question: Future bookings and domestic content strategy - Management explained that while a fully domestic offering would be attractive, customers are hesitant due to uncertainty about future tariff negotiations with China [103][106]