Fluence Energy(FLNC) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company generated $187 million in revenue for Q1 2025, a decrease of 49% compared to the same quarter last year, primarily due to a back-end weighted revenue plan [42][11] - Adjusted gross margins were reported at 12.5%, marking the sixth consecutive quarter of double-digit gross profit margins [42] - Annual recurring revenue (ARR) increased to$ 106 million, up $6 million from the previous quarter, with a target of$ 145 million by the end of the fiscal year [13][47] - The company ended the quarter with over $650 million in total cash, positioning it strongly for future investments [13][51] Business Line Data and Key Metrics Changes - The backlog reached a record$ 5.1 billion, reflecting a year-over-year increase of 38% in value and more than double in terms of volume [26] - The company reported over $770 million in order intake during the quarter, contributing to the backlog growth [12] - The revenue guidance for fiscal year 2025 was revised to between$ 3.1 billion and $3.7 billion, with a midpoint of$ 3.4 billion, representing a $600 million reduction from prior guidance [14][45] Market Data and Key Metrics Changes - The U.S. battery storage market continues to show strong demand, with installations increasing by 83% year-over-year to over 45 gigawatt hours in 2024 [31] - The company noted that nearly half of its$ 21.4 billion pipeline is in the U.S. market, with significant contributions from Germany, Australia, Canada, and Chile [29] Company Strategy and Development Direction - The company is focusing on a U.S. domestic content strategy to mitigate geopolitical risks and enhance competitiveness [10][18] - A new product platform is set to launch, aimed at improving density and reducing costs for customers, expected to benefit the company starting in fiscal 2026 [20][24] - The company is committed to continuous innovation in technology to maintain its competitive edge in the market [19][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resolution of project delays in Australia, expecting to sign contracts later in the year with revenue recognition in fiscal 2026 [15][82] - The competitive landscape is intensifying, particularly from Chinese players, but the company believes its domestic content strategy will help mitigate these pressures [18][19] - The company anticipates a 30% growth in revenue for fiscal 2026, starting from the revised fiscal 2025 guidance midpoint [46][62] Other Important Information - The company has a strong liquidity position with total liquidity exceeding $1.1 billion, reflecting the issuance of$ 400 million in convertible notes [52] - The company is actively managing potential tariff impacts, with less than 15% of its backlog exposed to the recently announced tariffs on Chinese imports [34][35] Q&A Session Summary Question: Comments on 2026 revenue guidance despite project delays - Management indicated a conservative view for 2026, with a current backlog of $1.2 billion for that year, and plans to provide more clarity as the year progresses [60][62] Question: Insights on Moss Landing events - Management stated they have no direct information regarding Moss Landing and do not anticipate any liability from the events reported [64][65] Question: Margins on new bookings and Australia projects - Management noted that margins for new bookings are expected to be at the lower end of the 10% to 15% range, with a temporary margin reduction due to project mix changes [68][70] Question: Confidence in Australian contracts being signed - Management expressed confidence that two of the three delayed contracts would be signed soon, with minor issues causing the delays [78][82] Question: Impact of tariffs on margins - Management confirmed that the$ 10 million impact from tariffs is reflected in the guidance, with competitive pressures primarily affecting international margins [74][76] Question: Deferred revenue and cash flow - Management expects the deferred revenue of over $300 million to reverse within the next quarter [92][94] Question: Measures on graphite supply amid investigations - Management is accelerating graphite imports to prepare for potential duties, emphasizing that any duties would create a level playing field for domestic and imported batteries [96][99] Question: Domestic content demand and pricing - Management confirmed that domestic content margins remain within the 10% to 15% range, with no significant premium pricing observed [106][107] Question: Cost trajectory from the Utah facility - Management expressed satisfaction with the performance of the Utah facility, indicating that it is operating well and competitively [108][111] Question: Impact of government policy and trade on operations - Management reported no significant impact from recent government policy changes, with all permitting freezes reportedly lifted [115] Question: New product launch and competitive positioning - Management believes the new product will be industry-leading, allowing for higher capacity and competitive pricing, while maintaining targeted margins [119][124]