PLUG POWER INC

Previous wording

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks discussed in the section titled “Risk Factors” included under Part I, Item 1A, in our 2023 Form 10-K and supplemented by Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and Part II, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from these contained in any forward-looking statements. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. These forward-looking statements speak only as of the date on which the statements were made. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q.

Current wording

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks discussed in the section titled “Risk Factors” included under Part I, Item 1A, in our 2023 Form 10-K and supplemented by Part II, Item 1A of the Quarterly Report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024 and Part II, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from these contained in any forward-looking statements. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. These forward-looking statements speak only as of the date on which the statements were made. Except as may be required by applicable law, we do not undertake or intend to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q.

Previous wording

On August 24, 2022, the Company issued to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of Amazon, a warrant (the “2022 Amazon Warrant”) to acquire up to 16,000,000 shares (the “2022 Amazon Warrant Shares”) of the Company’s common stock, par value $.01 per share (the “common stock”), subject to certain vesting events described below under “Common Stock Transactions – Amazon Transaction Agreement in 2022”.

Current wording

On August 24, 2022, the Company issued to Amazon.com NV Investment Holdings LLC, a wholly owned subsidiary of Amazon, a warrant (the “2022 Amazon Warrant”) to acquire up to 16,000,000 shares of the Company’s common stock (the “2022 Amazon Warrant Shares”), subject to certain vesting events described below under “Common Stock Transactions – Amazon Transaction Agreement in 2022”.

Previous wording

In 2017, in separate transactions, the Company issued a warrant to each of Amazon.com NV Investment Holdings LLC and Walmart to purchase up to 55,286,696 shares of the Company’s common stock, subject to certain vesting events described below under “Common Stock Transactions – Amazon Transaction Agreement in 2017” and “Common Stock Transactions – Walmart Transaction Agreement”. The Company recorded a portion of the estimated fair value of the warrants as a reduction of revenue based upon the projected number of shares of common stock expected to vest under the warrants, the proportion of purchases by Amazon, Walmart and their affiliates within the period relative to the aggregate purchase levels required for vesting of the respective warrants, and the then-current fair value of the warrants.

Current wording

In 2017, the Company issued a warrant to Walmart (the “Walmart Warrant”) to purchase up to 55,286,696 shares of the Company’s common stock (the “Walmart Shares”), subject to certain vesting events described below under “Common Stock Transactions – Walmart Transaction Agreement”. The Company recorded a portion of the estimated fair value of the warrants as a reduction of revenue based upon the projected number of shares of common stock expected to vest under the warrants, the proportion of purchases by Walmart and their affiliates within the period relative to the aggregate purchase levels required for vesting of the respective warrants, and the fair value of the warrants.

Previous wording

The amount of provision for the Amazon and Walmart Warrants recorded as a reduction of revenue during the three and six months ended June 30, 2024 and 2023, respectively, is shown in the table below (in thousands):

Current wording

The amount of provision for the Amazon and Walmart Warrants recorded as a (reduction)/increase to revenue during the three and nine months ended September 30, 2024 and 2023, respectively, is shown in the table below (in thousands):

Previous wording

Net revenue, cost of revenue, gross profit/(loss) and gross margin/(loss) for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Current wording

Net revenue, cost of revenue, gross profit/(loss) and gross margin/(loss) for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Previous wording

Revenue – sales of equipment, related infrastructure and other. Revenue from sales of equipment, related infrastructure and other represents sales of our GenDrive units, GenSure stationary backup power units, cryogenic stationary and on road storage, hydrogen liquefaction systems, electrolyzers and hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Revenue from sales of equipment, related infrastructure and other for the three months ended June 30, 2024 decreased $139.5 million, or 64.5%, to $76.8 million from $216.3 million for the three months ended June 30, 2023. The decrease in revenue from sales of hydrogen infrastructure of $45.4 million was due to five hydrogen site installations for the three months ended June 30, 2024 compared to 17 for the three months ended June 30, 2023. Additionally, revenue from sales of cryogenic storage equipment and liquefiers decreased $38.7 million for the three months ended June 30, 2024 primarily due to fewer projects and a slower rate of progress on existing projects as they near completion compared to the three months ended June 30, 2023. The decrease in revenue related to sales of fuel cell systems of $59.0 million was due primarily to a decrease in volume of GenDrive units sold, with 725 units sold for the three months ended June 30, 2024 compared to 2,680 units sold for the three months ended June 30, 2023. Additionally, there was a decrease in revenue of $4.4 million related to decreased sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Partially offsetting these decreases, revenue from sales of electrolyzers increased $8.1 million, primarily due to a large-scale electrolyzer project with revenue recognized over time during the three months ended June 30, 2024.

Current wording

Revenue – sales of equipment, related infrastructure and other. Revenue from sales of equipment, related infrastructure and other represents sales of our GenDrive units, GenSure stationary backup power units, cryogenic stationary and on road storage, hydrogen liquefaction systems, electrolyzers and hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Revenue from sales of equipment, related infrastructure and other for the three months ended September 30, 2024 decreased $38.0 million, or 26.2%, to $107.1 million from $145.1 million for the three months ended September 30, 2023. Primarily contributing to the decrease in revenue was a decrease in sales of hydrogen infrastructure, sales of cryogenic equipment and liquefiers and sales of fuel cell systems, partially offset by an increase in sales of electrolyzers. The decrease in revenue from sales of hydrogen infrastructure of $26.4 million was due to three hydrogen site installations for the three months ended September 30, 2024 compared to ten for the three months ended September 30, 2023. Additionally, revenue from sales of cryogenic equipment and liquefiers decreased $13.4 million for the three months ended September 30, 2024 primarily due to product mix with respect to cryogenic equipment and fewer projects and a slower rate of progress on existing liquefier projects as they near completion compared to the three months ended September 30, 2023. The decrease in revenue related to sales of fuel cell systems of $29.5 million was due primarily to a decrease in volume of GenDrive units sold, with 522 units sold for the three months ended September 30, 2024 compared to 1,452 units sold for the three months ended September 30, 2023. Also, the pace of development of the

Previous wording

Revenue from sales of equipment, related infrastructure and other for the six months ended June 30, 2024 decreased $253.3 million, or 63.6%, to $145.1 million from $398.4 million for the six months ended June 30, 2023. The revenue related to sales of electrolyzers decreased $30.6 million, primarily due to a decrease in 1MW electrolyzer stack sales during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease in sales of hydrogen infrastructure revenue of $82.0 million was due to a decrease in volume with eight hydrogen site installations for the six months ended June 30, 2024 compared to 31 for the six months ended June 30, 2023. Additionally, revenue from sales of cryogenic storage equipment and liquefiers decreased $63.9 million for the six months ended June 30, 2024 primarily due to fewer projects and a slower rate of progress on existing projects as they near completion compared to the six months ended June 30, 2023. The decrease in revenue related to sales of fuel cell systems of $68.9 million was primarily due to a decrease in volume of GenDrive units sold, with 2,023 units sold for the six months ended June 30, 2024 compared to 3,715 units sold for the six months ended June 30, 2023. Additionally, there was a decrease in revenue of $8.0 million related to decreased sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments.

Current wording

Revenue from sales of equipment, related infrastructure and other for the nine months ended September 30, 2024 decreased $291.3 million, or 53.6%, to $252.2 million from $543.5 million for the nine months ended September 30, 2023. Primarily contributing to the decrease in revenue was a decrease in sales of hydrogen infrastructure, sales of cryogenic equipment and liquefiers and sales of fuel cell systems, partially offset by an increase in sales of electrolyzers. The decrease in sales of hydrogen infrastructure revenue of $108.3 million was due to a decrease in volume with 11 hydrogen site installations for the nine months ended September 30, 2024 compared to 41 for the nine months ended September 30, 2023. Additionally, revenue from sales of cryogenic equipment and liquefiers decreased $77.2 million for the nine months ended September 30, 2024 primarily due to product mix with respect to cryogenic equipment, fewer projects and a slower rate of progress on existing liquefier projects as they near completion compared to the nine months ended September 30, 2023. The decrease in revenue related to sales of fuel cell systems of $98.4 million was primarily due to a decrease in volume of GenDrive units sold, with 2,545 units sold for the nine months ended September 30, 2024 compared to 5,167 units sold for the nine months ended September 30, 2023. Additionally, there was a decrease in revenue of $7.9 million related to decreased sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Furthermore, there was an increase in the provision for common stock warrants recorded as a reduction of revenue to $3.4 million for the nine months ended September 30, 2024 compared to a provision of $1.9 million for the nine months ended September 30, 2023. Also, the pace of development of the hydrogen economy has been slower than anticipated and has impacted hydrogen equipment deployments. Partially offsetting the decrease in revenue was an increase in revenue from sales of electrolyzers of $0.3 million primarily due to an increase in electrolyzer systems for which revenue was recognized discussed above offset by a decrease in electrolyzer stack sales during the first half of 2024.

Previous wording

Revenue – services performed on fuel cell systems and related infrastructure. Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. Revenue from services performed on fuel cell systems and related infrastructure for the three months ended June 30, 2024 increased $4.3 million, or 49.8%, to $13.0 million from $8.7 million for the three months ended June 30, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service, with the number of GenDrive units under maintenance contracts during the three months ended June 30, 2024 of 21,940 compared to 20,019 for the three months ended June 30, 2023, coupled with an increase in service rates negotiated with certain customers.

Current wording

Revenue – services performed on fuel cell systems and related infrastructure. Revenue from services performed on fuel cell systems and related infrastructure represents revenue earned on our service and maintenance contracts and sales of spare parts. Revenue from services performed on fuel cell systems and related infrastructure for the three months ended September 30, 2024 increased $4.8 million, or 51.6%, to $14.1 million from $9.3 million for the three months ended September 30, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service, with the number of GenDrive units under maintenance contracts during the three months ended September 30, 2024 of 22,235 compared to 20,417 for the three months ended September 30, 2023, coupled with an increase in contract rates negotiated with certain customers.

Previous wording

Revenue from services performed on fuel cell systems and related infrastructure for the six months ended June 30, 2024 increased $8.3 million, or 46.4%, to $26.1 million from $17.8 million for the six months ended June 30, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as discussed above, coupled with an increase in service rates negotiated with certain customers.

Current wording

Revenue from services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2024 increased $13.1 million, or 48.3%, to $40.2 million from $27.1 million for the nine months ended September 30, 2023. The increase in revenue from services performed on fuel cell systems and related infrastructure was primarily related to the increase in number of units in service during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as discussed above, coupled with an increase in contract rates negotiated with certain customers.

Previous wording

Revenue – power purchase agreements. Revenue from Power Purchase Agreements (“PPAs”) represents payments received from customers for power generated through the provision of equipment and service. Revenue from PPAs for the three months ended June 30, 2024 increased $3.5 million, or 22.0%, to $19.7 million from $16.1 million for the three months ended June 30, 2023. The increase in revenue was a result of an increase in the number of units and customer sites party to these agreements. There were 31,850 GenDrive units under PPA arrangements during the three months ended June 30, 2024 compared to 30,702 during the three months ended June 30, 2023. In addition, there were 146 hydrogen sites under PPA arrangements during the three months ended June 30, 2024 compared to 129 during the three months ended June 30, 2023. Furthermore, both pricing rates and mix of units to new customer sites were favorable in the second quarter of 2024 compared to the second quarter of 2023. Partially offsetting the increase in revenue was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $1.7 million for the three months ended June 30, 2024 compared to a negative provision of $0.8 million for the three months ended June 30, 2023.

Current wording

Revenue – power purchase agreements. Revenue from Power Purchase Agreements (“PPAs”) represents payments received from customers for power generated through the provision of equipment and service. Revenue from PPAs for the three months ended September 30, 2024 increased $0.4 million, or 2.0%, to $20.5 million from $20.1 million for the three months ended September 30, 2023. The increase in revenue was a result of an increase in the number of units and customer sites party to these agreements as well as an increase in pricing rates, partially offset by an increase in the provision for common stock warrants. There were 31,715 GenDrive units under PPA arrangements as of September 30, 2024 compared to 31,484 as of September 30, 2023. In addition, there were 154 hydrogen sites under PPA arrangements as of September 30, 2024 compared to 138 as of September 30, 2023. Furthermore, pricing rates were favorable in the third quarter of 2024 compared to the third quarter of 2023. Offsetting the increase in revenue was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $1.6 million for the three months ended September 30, 2024 compared to a negative provision of $1.8 million for the three months ended September 30, 2023.

Previous wording

Revenue from PPAs for the six months ended June 30, 2024 increased $13.9 million, or 57.8%, to $38.0 million from $24.1 million for the six months ended June 30, 2023. The increase in revenue was a result of an increase in the number of units and customer sites party to these agreements, as discussed above, as well as more favorable pricing rates and mix of units to new customer sites during the first half of 2024 compared to the first half of 2023. Finally, there was a decrease in the provision for common stock warrants recorded as a reduction of revenue, which decreased to $2.8 million for the six months ended June 30, 2024 compared to $6.4 million for the six months ended June 30, 2023.

Current wording

Revenue from PPAs for the nine months ended September 30, 2024 increased $14.3 million, or 32.4%, to $58.4 million from $44.1 million for the nine months ended September 30, 2023. The increase in revenue was a result of an increase in the number of units and customer sites party to these agreements, as discussed above, as well as more favorable pricing rates during the first three quarters of 2024 compared to the first three quarters of 2023. Finally, the provision for common stock warrants recorded as a reduction of revenue was relatively flat, decreasing to $4.4 million for the nine months ended September 30, 2024 compared to $4.6 million for the nine months ended September 30, 2023.

Previous wording

ended June 30, 2024 increased $12.0 million, or 67.2%, to $29.9 million from $17.9 million for the three months ended June 30, 2023. The increase in revenue was primarily due to an increase in the number of sites with fuel contracts, with 257 sites receiving fuel delivery as of June 30, 2024 compared to 229 sites as of June 30, 2023. Furthermore, favorable fuel rates were negotiated with certain customers in the second quarter of 2024. Partially offsetting the increase in revenue was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $2.9 million for the three months ended June 30, 2024 compared to a negative provision of $0.1 million for the three months ended June 30, 2023.

Current wording

Revenue – fuel delivered to customers and related equipment. Revenue associated with fuel and related equipment delivered to customers represents the sale of hydrogen that has been purchased by the Company from a third party or generated at our hydrogen production plant. Revenue associated with fuel delivered to customers for the three months ended September 30, 2024 increased $10.4 million, or 53.6%, to $29.8 million from $19.4 million for the three months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of sites with fuel contracts, with 260 sites receiving fuel delivery as of September 30, 2024 compared to 237 sites as of September 30, 2023. Furthermore, increased fuel prices were negotiated with certain customers during the second quarter of 2024. Partially offsetting the increase in revenue was an increase in the provision for common stock warrants recorded as a reduction of revenue, which increased to $3.2 million for the three months ended September 30, 2024 compared to a negative provision of $0.8 million for the three months ended September 30, 2023.

Previous wording

Revenue associated with fuel delivered to customers for the six months ended June 30, 2024 increased $20.2 million, or 71.9%, to $48.2 million from $28.0 million for the six months ended June 30, 2023. The increase in revenue was primarily due to an increase in the number of sites with fuel contracts. Furthermore, favorable fuel rates were negotiated with certain customers in the first half of 2024. Finally, there was a decrease in the provision for common stock warrants recorded as a reduction of revenue, which decreased to $3.6 million for the six months ended June 30, 2024 compared to $6.1 million for the six months ended June 30, 2023.

Current wording

Revenue associated with fuel delivered to customers for the nine months ended September 30, 2024 increased $30.6 million, or 64.6%, to $78.0 million from $47.4 million for the nine months ended September 30, 2023. The increase in revenue was primarily due to an increase in the number of sites with fuel contracts. Furthermore, increased fuel prices were negotiated with certain customers in the second quarter of 2024. Partially offsetting the decrease, there was an increase in the provision for common stock warrants recorded as a reduction of revenue to $6.9 million for the nine months ended September 30, 2024 compared to $5.3 million for the nine months ended September 30, 2023.

Previous wording

*Cost of revenue – sales of equipment, related infrastructure and other.*Cost of revenue from sales of equipment, related infrastructure and other includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our fuel cells such as GenDrive units and GenSure stationary back-up power units, cryogenic stationary and on road storage, and electrolyzers, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Cost of revenue from sales of equipment, related infrastructure and other for the three months ended June 30, 2024 decreased $57.5 million, or 30.7%, to $129.9 million from $187.4 million for the three months ended June 30, 2023. The cost of revenue related to sales of hydrogen infrastructure decreased $24.2 million due to the decrease in the number of hydrogen site installations, with five hydrogen site installations for the three months ended June 30, 2024 compared to 17 for the three months ended June 30, 2023. The decrease in cost of revenue related to sales of cryogenic storage equipment and liquefiers of $29.6 million for the three months ended June 30, 2024 is primarily due to fewer projects and a slower rate of progress on existing projects as they near completion compared to the three months ended June 30, 2023. Cost of revenue related to sales of fuel cell systems decreased by $25.6 million primarily due to a decrease in volume of GenDrive units sold, with 725 units sold for the three months ended June 30, 2024 compared to 2,680 units sold for the three months ended June 30, 2023. Additionally, there was a decrease in cost of revenue of $3.7 million related to a decrease in sales of engineered equipment from the Frames acquisition, for which sales are not expected to continue beyond current commitments. Partially offsetting these decreases was an increase in cost of revenue related to sales of electrolyzer stacks and systems of $25.6 million, which was primarily due to a large-scale electrolyzer project with revenue recognized over time during the three months ended June 30, 2024. Gross loss generated from sales of equipment, related infrastructure and other was (69.2%) for the three months ended June 30, 2024 compared to a gross margin of 13.4% for the three months ended June 30, 2023. The decrease from gross margin to gross loss was primarily due to customer mix, lower margins on new product offerings, inventory valuation adjustments and decline in volume which impacted leveraging of labor and overhead in the second quarter of 2024.

Current wording

*Cost of revenue – sales of equipment, related infrastructure and other.*Cost of revenue from sales of equipment, related infrastructure and other includes direct materials, labor costs, and allocated overhead costs related to the manufacture of our fuel cells such as GenDrive units and GenSure stationary back-up power units, cryogenic stationary and on road storage, and electrolyzers, as well as hydrogen fueling infrastructure referred to at the site level as hydrogen installations. Cost of revenue from sales of equipment, related infrastructure and other for the three months ended September 30, 2024 decreased $9.1 million, or 5.7%, to $149.9 million from $159.0 million for the three months ended September 30, 2023. Primarily contributing to the decrease in cost of revenue was a decrease in sales of hydrogen infrastructure, sales of cryogenic equipment and liquefiers, sales of fuel cell systems and inventory valuation adjustments, partially offset by an increase in sales of electrolyzers.

Previous wording

electrolyzer project with revenue recognized over time during the six months ended June 30, 2024. Gross loss generated from sales of equipment, related infrastructure and other was (82.7%) for the six months ended June 30, 2024 compared to a gross margin of 13.2% for the six months ended June 30, 2023. The decrease from gross margin to gross loss was primarily due to customer mix, lower margins on new product offerings, inventory valuation adjustments and decline in volume which impacted leveraging of labor and overhead in the first half of 2024.

Current wording

Gross loss generated from sales of equipment, related infrastructure and other was (64.5%) for the nine months ended September 30, 2024 compared to a gross margin of 7.1% for the nine months ended September 30, 2023. The decrease from gross margin to gross loss was primarily due to the inventory valuation adjustments described above, customer mix, lower margins on new product offerings and decline in volume which impacted leveraging of labor and overhead in the first three quarters of 2024.

Previous wording

Cost of revenue – services performed on fuel cell systems and related infrastructure. Cost of revenue from services performed on fuel cell systems and related infrastructure includes the labor, material costs and allocated overhead costs incurred for our product service and hydrogen site maintenance contracts and spare parts. Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended June 30, 2024 decreased $9.7 million, or 41.4%, to $13.7 million from $23.4 million for the three months ended June 30, 2023. The decrease in cost of revenue was primarily due to an increase in the release of the loss accrual. Gross loss decreased to (5.3%) for the three months ended June 30, 2024 compared to gross loss of (169.5%) for the three months ended June 30, 2023. The decrease in gross loss was primarily due to an increase in negotiated contract rates discussed above, as well as an increase in the release of the loss accrual during the three months ended June 30, 2024.

Current wording

Cost of revenue – services performed on fuel cell systems and related infrastructure. Cost of revenue from services performed on fuel cell systems and related infrastructure includes the labor, material costs and allocated overhead costs incurred for our product service and hydrogen site maintenance contracts and spare parts. Cost of revenue from services performed on fuel cell systems and related infrastructure for the three months ended September 30, 2024 decreased $8.8 million, or 49.2%, to $9.1 million from $17.9 million for the three months ended September 30, 2023. The decrease in cost of revenue was primarily due to an increase in the release of the loss accrual, with a release of $13.9 million during the three months ended September 30, 2024 compared to a release of $6.5 million during the three months ended September 30, 2023. Included in cost of revenue related to services performed on fuel cell systems and related infrastructure were inventory valuation adjustments of $0.1 million for the three months ended September 30, 2024 compared to $0.2 million for the three months ended September 30, 2023. Gross margin increased to 35.8% for the three months ended September 30, 2024 compared to gross loss of (92.9%) for the three months ended September 30, 2023. The increase in gross margin was primarily due to an increase in negotiated contract rates discussed above, as well as an increase in the release of the loss accrual during the three months ended September 30, 2024.

Previous wording

Cost of revenue from services performed on fuel cell systems and related infrastructure for the six months ended June 30, 2024 decreased $9.0 million, or 25.2%, to $26.7 million from $35.7 million for the six months ended June 30, 2023. The decrease in cost of revenue was primarily due to an increase in the release of the loss accrual. Gross loss decreased to (2.4%) for the six months ended June 30, 2024 compared to gross loss of (100.4%) for the six months ended June 30, 2023. The decrease in gross loss was primarily due to an increase in negotiated contract rates discussed above, as well as an increase in the release of the loss accrual during the six months ended June 30, 2024.

Current wording

Cost of revenue from services performed on fuel cell systems and related infrastructure for the nine months ended September 30, 2024 decreased $17.8 million, or 33.2%, to $35.8 million from $53.6 million for the nine months ended September 30, 2023. The decrease in cost of revenue was primarily due to an increase in the release of the loss accrual, with a release of $38.8 million during the nine months ended September 30, 2024 compared to a release of $19.9 million during the nine months ended September 30, 2023. Included in cost of revenue related to services performed on fuel cell systems and related infrastructure were inventory valuation adjustments of $0.2 million for the nine months ended September 30, 2024 compared to $0.4 million for the nine months ended September 30, 2023. Gross margin increased to 11.0% for the nine months ended September 30, 2024 compared to gross loss of (97.8%) for the nine months ended September 30, 2023. The increase in gross margin was primarily due to an increase in negotiated contract rates discussed above, as well as an increase in the release of the loss accrual during the nine months ended September 30, 2024.

Previous wording

Cost of revenue – provision for loss contracts related to service. The Company also recorded a provision for loss contracts related to service of $16.5 million for the three months ended June 30, 2024 compared to $7.3 million for the three months ended June 30, 2023. The Company increased the provision due to continued cost and inflationary increases of labor, parts and related overhead coupled with the timing of the remaining period of service required, partially offset by an increase in negotiated contract rates with certain customers. Accordingly, the Company increased its estimated projected costs to service fuel cell systems and related infrastructure.

Current wording

Cost of revenue – provision for loss contracts related to service. The Company also recorded a provision for loss contracts related to service of $6.0 million for the three months ended September 30, 2024 compared to $41.6 million for the three months ended September 30, 2023. The Company decreased the provision primarily due to relatively flat costs of labor, parts and related overhead coupled with an increase in negotiated contract rates with certain customers.

Previous wording

The Company recorded a provision for loss contracts related to service of $32.2 million for the six months ended June 30, 2024 compared to $14.2 million for the six months ended June 30, 2023. The Company increased the provision due to continued cost and inflationary increases of labor, parts and related overhead coupled with the timing of the remaining period of service required, partially offset by an increase in negotiated contract rates with certain customers. Accordingly, the Company increased its estimated projected costs to service fuel cell systems and related infrastructure.

Current wording

The Company recorded a provision for loss contracts related to service of $38.3 million for the nine months ended September 30, 2024 compared to $55.8 million for the nine months ended September 30, 2023. The Company decreased the provision primarily due to relatively flat costs of labor, parts and related overhead coupled with an increase in negotiated contract rates with certain customers.

Previous wording

Cost of revenue – power purchase agreements. Cost of revenue from PPAs includes depreciation of assets utilized and service costs to fulfill PPA obligations and interest costs associated with certain financial institutions for leased equipment. Cost of revenue from PPAs for the three months ended June 30, 2024 increased $0.3 million, or 0.6%, to $54.3 million from $54.0 million for the three months ended June 30, 2023. The increase in cost was primarily a result of an increase in units and sites under PPA contracts, partially offset by a decrease in scrap events during the three months ended June 30, 2024. There were 31,850 GenDrive units under PPA arrangements during the three months ended June 30, 2024 compared to 30,702 during the three months ended June 30, 2023. In addition, there were 146 hydrogen sites under PPA arrangements during the three months ended June 30, 2024 compared to 129 during the three months ended June 30, 2023. Gross loss decreased to (176.1%) for the three months ended June 30, 2024 compared to (234.6%) for the three months ended June 30, 2023. The decrease in gross loss was primarily due to improved pricing and mix of units and a reduction of scrap events, partially offset by an increase in provision for common stock warrants.

Current wording

Cost of revenue – power purchase agreements. Cost of revenue from PPAs includes depreciation of assets utilized and service costs to fulfill PPA obligations and interest costs associated with certain financial institutions for leased equipment. Cost of revenue from PPAs for the three months ended September 30, 2024 decreased $5.2 million, or 9.1%,

Previous wording

Cost of revenue from PPAs for the six months ended June 30, 2024 increased $8.7 million, or 8.7%, to $109.5 million from $100.8 million for the six months ended June 30, 2023. The increase in cost was primarily a result of an increase in units and sites under PPA contracts, partially offset by a decrease in scrap events during the three months ended June 30, 2024. Gross loss decreased to (188.4%) for the six months ended June 30, 2024 compared to (318.8%) for the six

Current wording

Cost of revenue from PPAs for the nine months ended September 30, 2024 increased $3.5 million, or 2.2%, to $161.3 million from $157.8 million for the nine months ended September 30, 2023. The increase in cost was primarily a result of an increase in units and sites under PPA contracts. Gross loss decreased to (176.1%) for the nine months ended September 30, 2024 compared to (257.5%) for the nine months ended September 30, 2023. The decrease in gross loss was primarily due to improved pricing which began in the first quarter of 2024.

Previous wording

Cost of revenue – fuel delivered to customers and related equipment. Cost of revenue from fuel delivered to customers and related equipment represents the purchase of hydrogen from suppliers and internally produced hydrogen that is ultimately sold to customers. Cost of revenue from fuel delivered to customers for the three months ended June 30, 2024 decreased $6.1 million, or 9.5%, to $58.3 million from $64.5 million for the three months ended June 30, 2023. The decrease was primarily due to lower costs of purchased fuel, an increase in fuel internally produced by the Company, which is inherently lower in cost, as well as a recognition of the clean hydrogen production tax credit (“PTC”). Gross loss decreased to (95.1%) during the three months ended June 30, 2024 compared to (260.5%) during the three months ended June 30, 2023. The decrease in gross loss was primarily due to favorable fuel rates negotiated with certain customers, lower costs of purchased fuel, an increase in fuel internally produced by the Company and recognition of the PTC.

Current wording

Cost of revenue – fuel delivered to customers and related equipment. Cost of revenue from fuel delivered to customers and related equipment represents the purchase of hydrogen from suppliers and internally produced hydrogen that is ultimately sold to customers. Cost of revenue from fuel delivered to customers for the three months ended September 30, 2024 decreased $3.5 million, or 5.9%, to $55.5 million from $59.0 million for the three months ended September 30, 2023. The decrease was primarily due to lower costs of purchased fuel, an increase in fuel internally produced by the Company, which is inherently lower in cost, as well as a recognition of the clean hydrogen production tax credit (“PTC”) of $1.6 million. Included in cost of revenue related to fuel delivered to customers and related equipment were inventory valuation adjustments of $0.4 million for the three months ended September 30, 2024 compared to $2.0 million for the three months ended September 30, 2023. Gross loss decreased to (86.4%) during the three months ended September 30, 2024 compared to (204.6%) during the three months ended September 30, 2023. The decrease in gross loss was primarily due to favorable fuel rates negotiated with certain customers, lower costs of purchased fuel, an increase in fuel internally produced by the Company, the decrease in inventory valuation adjustments described above and recognition of the PTC.

Previous wording

Cost of revenue from fuel delivered to customers for the six months ended June 30, 2024 decreased $2.1 million, or 1.7%, to $116.9 million from $119.0 million for the six months ended June 30, 2023. The decrease was primarily due to lower costs of purchased fuel, an increase in fuel internally produced by the Company, which is inherently lower in cost, as well as a recognition of the PTC. Gross loss decreased to (142.6%) during the six months ended June 30, 2024 compared to (324.5%) during the six months ended June 30, 2023. The decrease in gross loss was primarily due to favorable fuel rates negotiated with certain customers, lower costs of purchased fuel, an increase in fuel internally produced by the Company and recognition of the PTC.

Current wording

Cost of revenue from fuel delivered to customers for the nine months ended September 30, 2024 decreased $5.6 million, or 3.1%, to $172.4 million from $178.0 million for the nine months ended September 30, 2023. The decrease was primarily due to lower costs of purchased fuel, an increase in fuel internally produced by the Company, which is inherently lower in cost, as well as a recognition of the PTC of $2.9 million. Included in cost of revenue related to fuel delivered to customers and related equipment were inventory valuation adjustments of $3.1 million for the three months ended September 30, 2024 compared to $5.3 million for the three months ended September 30, 2023. Gross loss decreased to (121.2%) during the nine months ended September 30, 2024 compared to (275.5%) during the nine months ended September 30, 2023. The decrease in gross loss was primarily due to favorable fuel rates negotiated with certain customers, lower costs of purchased fuel, an increase in fuel internally produced by the Company, the decrease in inventory valuation adjustments described above and recognition of the PTC.

Previous wording

Research and development expense. Research and development expenses include: materials to build development and prototype units, cash and non-cash compensation and benefits for the engineering and related staff, expenses for contract engineers, fees paid to consultants for services provided, materials and supplies consumed, facility related costs such as computer and network services, and other general overhead costs associated with our research and development activities. Research and development expense for the three months ended June 30, 2024 decreased $10.3 million, or 35.2%, to $18.9 million from $29.3 million for the three months ended June 30, 2023. The decrease was primarily related to headcount reductions.

Current wording

Research and development. Research and development expenses include: materials to build development and prototype units, cash and non-cash stock compensation and benefits for the engineering and related staff, expenses for contract engineers, fees paid to consultants for services provided, materials and supplies consumed, facility related costs such as computer and network services, and other general overhead costs associated with our research and development activities. Research and development expense for the three months ended September 30, 2024 decreased $8.0 million, or 28.9%, to $19.7 million from $27.7 million for the three months ended September 30, 2023. The decrease was primarily related to headcount reductions.

Previous wording

Research and development expense for the six months ended June 30, 2024 decreased $11.5 million, or 20.6%, to $44.2 million from $55.8 million for the six months ended June 30, 2023. The decrease was primarily related to a decrease in component materials as well as headcount reductions.

Current wording

Research and development expense for the nine months ended September 30, 2024 decreased $19.5 million, or 23.4%, to $63.9 million from $83.4 million for the nine months ended September 30, 2023. The decrease was primarily related to headcount reductions as well as a decrease in component materials which are used for testing, prototypes and proof of concept.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses include cash and non-cash compensation, benefits, amortization of intangible assets and related costs in support of our general corporate functions, including general management, finance and accounting, human resources, selling and marketing, information technology and legal services. Selling, general and administrative expenses for the three months ended June 30, 2024 decreased $16.0 million, or 15.8%, to $85.1 million from $101.2 million for the three months ended June 30, 2023. The decrease was primarily due a decrease in stock compensation, as certain performance awards nearing the end of their vesting period.

Current wording

including general management, finance and accounting, human resources, selling and marketing, information technology and legal services. Selling, general and administrative expenses for the three months ended September 30, 2024 decreased $13.9 million, or 13.2%, to $91.6 million from $105.5 million for the three months ended September 30, 2023. The decrease was primarily due to a decrease in stock compensation as certain market-condition awards near the end of their vesting period as well as stock compensation forfeitures.

Previous wording

Selling, general and administrative expenses for the six months ended June 30, 2024 decreased $42.1 million, or 20.5%, to $163.1 million from $205.2 million for the six months ended June 30, 2023. The decrease was primarily due to a decrease in stock compensation expense, of which $17.2 million is related to stock compensation forfeitures resulting from the Restructuring Plan announced in February 2024, as well as certain performance awards nearing the end of their vesting period.

Current wording

Selling, general and administrative expenses for the nine months ended September 30, 2024 decreased $55.9 million, or 18.0%, to $254.7 million from $310.6 million for the nine months ended September 30, 2023. The decrease was primarily due to a decrease in stock compensation expense related to stock compensation forfeitures resulting from the Restructuring Plan announced in February 2024 as well as certain market-condition awards nearing the end of their vesting period.

Previous wording

Restructuring. Expenses related to the Restructuring Plan for the three months ended June 30, 2024 was $1.6 million. The increase was due to severance and benefits related to the Restructuring Plan the Company announced in February 2024.

Current wording

Restructuring. Expenses related to the Restructuring Plan for the three months ended September 30, 2024 was $0.5 million. The increase was due to severance and benefits related to the Restructuring Plan the Company announced in February 2024.

Previous wording

Expenses related to the Restructuring Plan for the six months ended June 30, 2024 was $7.6 million. The increase was due to severance and benefits related to the Restructuring Plan the Company announced in February 2024.

Current wording

Expenses related to the Restructuring Plan for the nine months ended September 30, 2024 was $8.2 million. The increase was due to severance and benefits related to the Restructuring Plan the Company announced in February 2024.

Previous wording

Impairment. Impairment for the three months ended June 30, 2024 decreased $6.0 million, or 60.6%, to $3.9 million from $10.0 million for the three months ended June 30, 2023. The decrease was primarily related to the Company recording a lower impairment charge on long-lived assets during the three months ended June 30, 2024, partially offset by a $3.0 million impairment charge to a non-marketable equity security.

Current wording

Impairment. Impairment for the three months ended September 30, 2024 increased $3.5 million, or 500.0%, to $4.2 million from $0.7 million for the three months ended September 30, 2023. The increase was primarily related to the Company recording a higher impairment charge on long-lived assets due to the cancellation of certain projects during the three months ended September 30, 2024.

Previous wording

Impairment for the six months ended June 30, 2024 decreased $6.8 million, or 61.9%, to $4.2 million from $11.1 million for the six months ended June 30, 2023. The decrease was primarily related to the Company recording a lower impairment charge on long-lived assets during the six months ended June 30, 2024, partially offset by a $3.0 million impairment charge to a non-marketable equity security.

Current wording

Impairment for the nine months ended September 30, 2024 decreased $3.3 million, or 28.2%, to $8.4 million from $11.7 million for the nine months ended September 30, 2023. The decrease was primarily related to the Company recording a lower impairment charge on long-lived assets during the nine months ended September 30, 2024, and due to the cancellation of a specific contract during the nine months ended September 30, 2023.

Previous wording

*Change in fair value of contingent consideration.*The change in fair value of contingent consideration is related to earnouts for the Joule Processing LLC (“Joule”) and Frames Holding B.V. (“Frames”)acquisitions. The change in fair value of contingent consideration for the three months ended June 30, 2024 and 2023 was $3.8 million and $15.3 million, respectively. The decrease was primarily due to the Giner ELX, Inc. (“Giner”)and Universal Hydrogen Group Inc. (“UHG”) earn-outs that were still outstanding during the three months ended June 30, 2023 but subsequently settled during the three months ended June 30, 2024. In addition, the fair value of contingent consideration for Joule’s earn-out increased significantly during the three months ended June 30, 2023 due to increased probabilities of achievement.

Current wording

*Change in fair value of contingent consideration.*The change in fair value of contingent consideration is related to earnouts for the Joule Processing LLC (“Joule”) and Frames Holding B.V. (“Frames”)acquisitions. The change in fair value of contingent consideration for the three months ended September 30, 2024 and 2023 was $0.1 million and $2.2 million, respectively. The decrease was primarily due to the Giner ELX, Inc. (“Giner”)and Universal Hydrogen Group Inc. (“UHG”) earn-outs that were still outstanding during the three months ended September 30, 2023 but subsequently settled during the second quarter of 2024. In addition, the fair value of contingent consideration for Joule’s earn-out increased by $2.9 million during the three months ended September 30, 2023 due to passage of time.

Previous wording

The change in fair value of contingent consideration for the six months ended June 30, 2024 and 2023 was ($5.4) million and $24.1 million, respectively. The decrease was primarily due to changes in assumptions related to future earn-out payments due to renegotiated agreements during the first half of 2024 as well as the settlement of the UHG and Giner earn-outs.

Current wording

The change in fair value of contingent consideration for the nine months ended September 30, 2024 and 2023 was ($5.3) million and $26.3 million, respectively. The decrease was primarily due to changes in assumptions related to future earn-out payments due to renegotiated agreements during the first quarter of 2024 as well as the settlement of the UHG and Giner earn-outs.

Previous wording

Interest income. Interest income primarily consists of income generated by our investment holdings, restricted cash escrow accounts, and money market accounts. Interest income for the three months ended June 30, 2024 decreased $8.5 million compared to the three months ended June 30, 2023. The decrease during the three months ended June 30, 2024 compared to June 30, 2023 was primarily due to the maturities and sale of the Company’s available-for-sale portfolio of higher-yielding U.S. treasury securities during 2023.

Current wording

Interest income. Interest income primarily consists of income generated by our investment holdings, restricted cash escrow accounts, and money market accounts. Interest income for the three months ended September 30, 2024 decreased $3.0 million compared to the three months ended September 30, 2023. The decrease during the three months ended September 30, 2024 compared to September 30, 2023 was primarily due to the maturities and sale of the Company’s available-for-sale portfolio of higher-yielding U.S. treasury securities during 2023.

Previous wording

Interest income for the six months ended June 30, 2024 decreased $16.9 million compared to the six months ended June 30, 2023. The decrease during the six months ended June 30, 2024 compared to June 30, 2023 was primarily due to the maturities and sale of the Company’s available-for-sale portfolio of higher-yielding U.S. treasury securities during 2023.

Current wording

Interest income for the nine months ended September 30, 2024 decreased $19.9 million compared to the nine months ended September 30, 2023. The decrease during the nine months ended September 30, 2024 compared to September 30, 2023 was primarily due to the maturities and sale of the Company’s available-for-sale portfolio of higher-yielding U.S. treasury securities during 2023.

Previous wording

Interest expense. Interest expense consists of interest expense related to our long-term debt, convertible senior notes, obligations under finance leases and our finance obligations. Interest expense for the three months ended June 30, 2024 decreased $1.8 million compared to the three months ended June 30, 2023 primarily due to an increase in capitalized interest during the second quarter of 2024.

Current wording

Interest expense. Interest expense consists of interest expense related to our long-term debt, convertible senior notes, obligations under finance leases and our finance obligations. Interest expense for the three months ended September 30, 2024 decreased $2.7 million compared to the three months ended September 30, 2023 primarily due to an increase in capitalized interest during the third quarter of 2024.

Previous wording

Interest expense for the six months ended June 30, 2024 decreased $1.1 million compared to the six months ended June 30, 2023 primarily due to an increase in capitalized interest during the second quarter of 2024.

Current wording

Interest expense for the nine months ended September 30, 2024 decreased $3.7 million compared to the nine months ended September 30, 2023 primarily due to an increase in capitalized interest during the second and third quarters of 2024.

Previous wording

Other expense, net. Other expense, net primarily consists of gains and losses related to energy contracts and foreign currency. Other expense, net for the three months ended June 30, 2024 increased $4.0 million compared to the three months ended June 30, 2023. The increase was primarily due losses related to energy contracts.

Current wording

Other income/(expense), net. Other income/(expense), net primarily consists of gains and losses related to energy contracts and foreign currency. Other income/(expense), net for the three months ended September 30, 2024 increased $10.5 million compared to the three months ended September 30, 2023. The increase was primarily due to foreign currency gains as well as gains related to energy contracts.

Previous wording

Other expense, net for the six months ended June 30, 2024 increased $6.2 million compared to the six months ended June 30, 2023. The increase was primarily due to foreign currency losses as well as losses related to energy contracts.

Current wording

Other income/(expense), net for the nine months ended September 30, 2024 increased $4.3 million compared to the nine months ended September 30, 2023. The increase was primarily due to gains related to energy contracts, partially offset by overall foreign currency losses for the nine months ended September 30, 2024.

Previous wording

Change in fair value of equity securities. Change in fair value of equity securities consists of the changes in fair value for equity securities from the purchase date to the end of the period. The change in fair value of equity securities was $0 for the three months ended June 30, 2024 compared to a gain of $3.8 million for the three months ended June 30, 2023. The decrease in the change in fair value of equity securities is due to the Company selling its remaining equity securities during the fourth quarter of 2023.

Current wording

Change in fair value of equity securities. Change in fair value of equity securities consists of the changes in fair value for equity securities from the purchase date to the end of the period. The change in fair value of equity securities was $0 for the three months ended September 30, 2024 compared to a gain of $70 thousand for the three months ended September 30, 2023. The decrease in the change in fair value of equity securities is due to the Company selling its remaining equity securities during the fourth quarter of 2023.