Fluence Energy(FLNC)2024-02-08 20:14Financial Data and Key Metrics Changes - The company reported revenue of 38 million, resulting in an adjusted gross margin of about 10.5%, compared to 4.2% in Q1 2023 [24] - Adjusted EBITDA for the quarter was negative 26 million in Q1 2023 [24][42] - The signed contract backlog increased by 3.7 billion, the highest level in the company's history [18][21] - The pipeline also grew by 13.4 billion, supporting growth goals for 2024 and beyond [18] Business Line Data and Key Metrics Changes - The solution business contracted 2.7 gigawatt hours, the services business added 2.3 gigawatt hours, and the digital business added 400 megawatt hours of new contracts [18] - The service and digital businesses, which represent recurring revenue streams, ended the quarter with 3.3 gigawatts of service assets under management [19] - The annual recurring revenue (ARR) from combined services and digital was approximately 80 million by the end of fiscal year 2024 [19] Market Data and Key Metrics Changes - Lithium carbonate prices have declined over 80% over the past 12 months, leading to decreased battery prices and improved customer economics [21] - The company has secured multiyear guaranteed battery capacity from suppliers, covering needs for fiscal 2024 and 2025 [29] Company Strategy and Development Direction - The company aims to begin battery module manufacturing in the summer of 2024, which will meet U.S. domestic content requirements [20][30] - A diverse supply chain strategy is in place, utilizing five battery suppliers across multiple geographies to mitigate disruptions [29] - The company is focused on leveraging digital solutions as a competitive differentiator and margin driver, with strong customer retention [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal 2024 guidance of revenue between 3.3 billion, with 80% of the midpoint covered by backlog [25][27] - The company anticipates continued strong revenue growth in fiscal 2025 of approximately 35% to 40% from fiscal 2024, supported by a robust pipeline [28] - Management highlighted the importance of the Inflation Reduction Act (IRA) in boosting demand for energy storage, with potential tax credits for customers [39][40] Other Important Information - The company became an official signatory member of the UN Global Compact, emphasizing its commitment to sustainability [22] - The Diablo Project in California is performing well despite ongoing legal proceedings related to a contract claim [32] Q&A Session Summary Question: Can you help us understand the geographic profile of the $1.1 billion in orders? - The geographic profile is in line with previous statements, with two-thirds in the U.S. and one-third internationally, at double-digit margins [66] Question: How should we think about gross margin for the rest of the year? - The company is confident in maintaining gross margins within the 10% to 12% range for the full year, with expectations for improvement as revenue scales [91] Question: What is the status of domestic content contracts? - The company has not signed any domestic content contracts yet, but they are in late-stage negotiations, with expectations for revenue from these projects in 2025 [64] Question: How does the company manage freight adjustments related to shipping routes? - All contracts include freight adjustments, ensuring no impact on margins from shipping disruptions [88] Question: What is the company's outlook on order seasonality? - The company does not provide explicit guidance on seasonality but has not observed significant cancellations in their backlog [95][97]