Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fluence Energy Inc (FLNC, Financial) reported strong financial performance with $483 million in revenue and a 17.5% adjusted gross margin for Q3 2024.
- The company achieved a record backlog of $4.5 billion, indicating strong demand and future revenue potential.
- Fluence Energy Inc (FLNC) reached $80 million in annual recurring revenue for its services and digital business, ahead of schedule.
- The company generated $64 million in free cash flow for the first nine months of the fiscal year, ending the quarter with $513 million in cash.
- Fluence Energy Inc (FLNC) has a robust $20 billion pipeline, reflecting a 65% increase from the previous year, showcasing strong growth prospects in energy storage globally.
Negative Points
- The company lowered its full-year 2024 revenue guidance by $250 million due to project delays and customer postponements.
- Fluence Energy Inc (FLNC) is under investigation by the SEC regarding certain matters, including revenue recognition policies, following a short seller report.
- The company faces potential challenges from increased competition in the international market, particularly in Europe and the UK.
- There are regulatory hurdles in the US for using batteries in transmission applications, which could impact future growth in this area.
- Fluence Energy Inc (FLNC) anticipates continued price reductions in the market, which could pressure margins despite their confidence in maintaining a 10% to 15% gross margin.
Q & A Highlights
Q: Over 60% of your revenues this quarter were from international markets, which coincided with high ASPs and margins. Can you provide more color on the geographic breakdown and how it correlates with margins?
A: Julian Nebreda, CEO: Our international markets tend to have more EPCs and broader solutions, leading to higher ASPs. Currently, our backlog is about two-thirds US and one-third international, which contributes to the variability in margins and ASPs.
Q: How much of your current US backlog requires US cells, and how have customer conversations evolved since the Section 301 update?
A: Julian Nebreda, CEO: Interest in US cells has increased significantly. While I can't disclose specific pricing, I can say that the costs are competitive and attractive, even with the additional costs of US production.
Q: With the updated guidance, did anything shift out of your prior 2025 outlook?
A: Julian Nebreda, CEO: We are working on the 2025 budget and will provide more details in our next earnings call. We can confirm a 35% to 40% growth from our original target.
Q: Can you discuss the scope of the board investigation related to the short seller report?
A: Julian Nebreda, CEO: An independent law firm and forensic accountants reviewed all allegations and found them to be without merit. We have a clean bill of health from this investigation.
Q: How do you feel about the capacity from AESC for domestic content, and have pricing conversations shifted?
A: Julian Nebreda, CEO: We have ample capacity with AESC to meet demand, and our agreement includes firm pricing. We are confident in our first-mover advantage in domestic content.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
