Fluence Energy Inc
For the period ended Dec 31, 2024. Filed Feb 10, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 10, 2025
FLNC$5.27+3.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001868941-24-000059
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-10.
0001868941-25-000015
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 200 previous paragraphs and 186 current paragraphs.
87 unchanged; 60 reworded; 37 added; 50 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Key Factors, Trends, and Uncertainties Affecting our Performance
Current report
Industry Outlook
Current report
The utility-scale battery storage industry as a whole is witnessing unprecedented growth, fueled by global transitions toward renewable energy, heightened focus on grid resilience, and supportive regulatory frameworks. Deployment of renewable energy resources has accelerated over the last decade. Industry-wide, the push for decarbonization is creating increasing demand for grid-scale energy storage, which is critical to enabling the integration of variable renewable energy sources, reducing the intermittency and volatility of renewable energy generation, and meeting ambitious net-zero targets. BloombergNEF estimates that the global utility scale market, excluding China, will add approximately 2,529 GWh between 2024 and 2035.
Current report
Increased Electricity Demand
Current report
According to a publication from the Office of Policy of the U.S. Department of Energy in August 2024, electricity demand is forecasted to grow substantially in the United States over the next decade. We are seeing similar trends of increasing electricity demand in other countries, including in those in which we operate. We believe that such increase in electricity demand is helping to, and will continue to help to, increase demand for energy storage solutions globally, including for our energy storage solutions. Electricity demand, and in turn related energy storage demand, is being driven and we believe will continue to be driven, primarily by new data centers, artificial intelligence, new manufacturing facilities, and sector-wide electrification.
Current report
Adoption of energy storage solutions, services, and digital application offerings by our customers is also dependent on applicable government regulation, legislation, and policies. Governments across the globe have announced, implemented, and continue to consider implementation of various policies, regulation, and legislation to support the transition from fossil fuels to low-carbon forms of energy, including through the development and deployment of energy storage. For example, in August 2022, the United States passed the Inflation Reduction Act of 2022 (the “IRA”), which includes a number of incentives that support the adoption of energy storage solutions and services. Such government policies, regulations, legislation, and programs are becoming increasingly instrumental in stimulating adoption of energy storage solutions across different markets through a variety of methods, including by providing financial support and incentives, facilitating grid integration, supporting research and development, and establishing favorable regulatory regimes. To the extent that any existing government incentives are reduced, eliminated or are permitted to expire, including as a result of the recent change in the U.S. presidential administration, there may be adverse effects on customer demand and our business. Refer to the “Government Regulation and Compliance” section and Part I, Item 1A. “Risk Factors” in our 2024 Annual Report for further details and specific discussion of risks relating to the potential impact to our business from reduction, elimination, and expiration of government incentives.
Current report
In addition, recent U.S. tariff policy changes under the prior and current U.S. presidential administration and current uncertainty relating to potential changes to U.S. tariff policy that may arise under the current U.S. presidential administration may impact our business and results of operations. Changes to U.S. tariff policy may adversely impact our supply chain as well as our supply chain strategies, both domestically and internationally, which may then have an adverse impact on our results of operations and business. See Part I, Item 1A. “Risk Factors” in our 2024 Annual Report for further discussion on risks related to tariffs and potential changes.
Current report
•cost of ownership;
Current report
•price of energy storage solutions, services, and digital application offerings;
Current report
Many components and parts of our integrated energy storage solutions are sourced from suppliers and stakeholders from all over the world and are reliant on various raw materials including, steel, aluminum, copper, nickel, iron phosphate, graphite, manganese, lithium carbonate, lithium hydroxide, and cobalt. Although we do not rely on any single supplier for the majority of our key components, certain components are still sourced from a limited number of stakeholders. Due to the specialized and unique nature of the products being purchased, the opportunity cost of changing suppliers is high, and substitution is often time-consuming. Fluence may also be forced into terms that are less advantageous, including on pricing. Volatility in our supply chain may have impacts to our order intake and cause corresponding volatility in our results of operations. Fluence continues to explore opportunities to diversify its supply base to mitigate the ever changing regulatory, environmental, social, and geographic conditions. In addition, while our U.S. centric regionalization strategy is progressing, a large portion of our current suppliers are situated outside of the United States. This continues to expose Fluence to changes in international trade regulations, taxes, tariffs, and/or quotas, and there is uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations, and tariffs with the recent change in U.S. presidential administration. For more information about the potential risks relating to our supply chain and exposure to international pressures, see Part I, Item 1A. “Risk Factors” in our 2024 Annual Report.
Current report
Permits and Approvals
Current report
Each of our installations or customer installations must be designed, constructed, and operated in compliance with applicable international, federal, state, and local laws, regulations, codes, standards, and guidelines. To install and operate energy storage products and solutions on our platform, we, our customers, or our partners, as may be applicable, are required to obtain and maintain applicable permits and approvals from the relevant governmental or regulatory authorities having jurisdiction to install energy storage products and solutions and to interconnect the products with the local electrical utility. We often cannot predict whether or when all permits required for a given customer’s project will be granted or whether the conditions associated with the permits will be achievable. Furthermore, unforeseen delays in the review and permitting process has and could in the future delay the timing of the delivery and/or installation of our energy storage products and could therefore adversely affect our revenue and operating results. See Part I, Item 1A. “Risk Factors” in our 2024 Annual Report for further discussion on risks related to permits and approvals.
Current report
We derive the majority of our revenue from selling battery-based energy storage solutions. Generally, we must design the project, as each energy storage solution is customized depending on a customer’s energy needs, procure the major equipment, obtain manufacturing slots from our contract manufacturers, coordinate the logistics, and assemble the solution prior to delivery and installation at our customer project sites. The Company recognizes revenue over time for our energy storage solutions as we transfer control of our product to the customer.
Current report
Our revenue from selling battery-based energy storage solutions is affected by volume fulfilled, which is dependent on customer schedules and demand, changes in price, which is primarily dependent on the cost of lithium-ion energy storage hardware, and mix of products and solutions purchased by our customers.
Current report
Net Loss
Current report
Total revenue decreased by $177.2 million, or 49%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The decrease in total revenue for the three months ended December 31, 2024 was mainly attributable to a decrease in revenue from our battery-based energy storage products and solutions which was primarily driven by decreased volumes of Gridstack cubes fulfilled due to timing based upon customer schedules and due to the pronounced backend nature of expected revenue for the fiscal year 2025 compared to the revenue distribution seen in fiscal year 2024.
Current report
Cost of goods and services decreased by $162.0 million, or 49%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The decrease in cost of goods and services for the three months ended December 31, 2024 was mainly attributable to the decreased volumes of Gridstack cubes fulfilled due to timing based upon customer schedules.
Current report
Gross profit decreased by $15.2 million, or 42%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The decrease in gross profit for the three months ended December 31, 2024 was primarily due to decreased volumes of Gridstack cubes fulfilled due to timing based upon customer schedules, while gross profit margin remained relatively consistent.
Current report
Research and development expenses increased by $1.8 million, or 11%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase in research and development expenses for the three months ended December 31, 2024 was primarily attributable to an increase in expenditures for materials and supplies related to our forthcoming U.S. battery module manufacturing.
Current report
General and administrative expenses were relatively flat for the three months ended December 31, 2024, compared to the three months ended December 31, 2023.
Current report
Depreciation and amortization were relatively flat for the three months ended December 31, 2024, compared to the three months ended December 31, 2023.
Current report
Interest income, net decreased by $1.3 million, or 63%, in the three months ended December 31, 2024, compared to the three months ended December 31, 2023, primarily attributable to the interest expense of $0.6 million recognized for the 2030 Convertible Senior Notes (as defined below) and a decrease in interest income of $0.5 million related to cash deposits and investments.
Current report
Income Tax Benefit
Current report
Net Loss
Current report
2030 Convertible Senior Notes
Current report
In December 2024, the Company issued $400.0 million aggregate principal amount of 2.25% convertible senior notes due 2030 (the “2030 Convertible Senior Notes”). The 2030 Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of December 12, 2024, between the Company and UMB Bank, National Association, as trustee (the “Indenture”). The net proceeds from the issuance of the 2030 Convertible Senior Notes were $389.0 million, net of $11.0 million of debt issuance costs.
Current report
The 2030 Convertible Senior Notes are senior unsecured obligations of the Company and accrue interest at a rate of 2.25% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2025. The 2030 Convertible Senior Notes will mature on June 15, 2030, unless earlier converted, redeemed or repurchased. The 2030 Convertible Senior Notes are convertible at the option of holders at any time from, and including March 15, 2030 until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2030 Convertible Senior Notes have an initial conversion rate of 46.8472 shares of the Company’s Class A common stock, par value $0.00001 per share (“Class A common stock”) per $1,000 principal amount, equivalent to an initial conversion price of approximately $21.35 per share of the Company’s Class A common stock. The conversion rate is subject to customary adjustments upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. If a “make-whole fundamental change” (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time.
Current report
Prior to the close of business on the business day immediately preceding March 15, 2030, holders of the 2030 Convertible Senior Notes will have the right to convert their 2030 Convertible Senior Notes only upon satisfaction of one or more of the following conditions:
Current report
(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on March 31, 2025, if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (the “measurement period”) if the trading price per $1,000 principal amount of the 2030 Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s Class A common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events, as set forth in the Indenture; or (4) if the Company calls any or all the 2030 Convertible Senior Notes for redemption, but only with respect to such 2030 Convertible Senior Notes called for redemption. On or after March 15, 2030, holders may convert their 2030 Convertible Senior Notes at any time until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s Class A common stock or a combination of both, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture.
Current report
The 2030 Convertible Senior Notes will be redeemable, in whole or in part (subject to the partial redemption limitation described in the Indenture), at the Company’s option at any time, and from time to time, on or after December 20, 2027 and on or before the 50th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2030 Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, but only if (i) the 2030 Convertible Senior Notes are “freely tradable” (as defined in the Indenture), and all accrued and unpaid additional interest, if any, has been paid in full, as of the date the Company sends the related redemption notice; and (ii) the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the redemption notice for such redemption; and (2) the trading day immediately before the date the Company sends such redemption notice. In addition, calling any note for redemption will constitute a make-whole fundamental change with respect to that 2030 Convertible Senior Note, in which case the conversion rate applicable to the conversion of that 2030 Convertible Senior Note will be increased in certain circumstances if it is converted after it is called for redemption.
Current report
No sinking fund is required to be provided for the 2030 Convertible Senior Notes. If a “fundamental change” (as defined in the Indenture) occurs prior to the maturity date of the 2030 Convertible Senior Notes, holders may require the Company to repurchase all or a portion of their 2030 Convertible Senior Notes at a cash repurchase price equal to 100% of the principal amount of the 2030 Convertible Senior Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the “fundamental change repurchase date” (as defined in the Indenture).
Current report
The 2030 Convertible Senior Notes (i) rank equal in right of payment with the Company’s senior unsecured indebtedness, (ii) rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated to the 2030 Convertible Senior Notes and (iii) are effectively subordinated to the Company’s existing and future secured indebtedness, including its guarantee of the 2024 Revolver (as defined in this Report), to the extent of the value of the collateral securing that indebtedness. In addition, because none of the Company’s subsidiaries guarantee the 2030 Convertible Senior Notes, the 2030 Convertible Senior Notes are and will be, as applicable, structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries, including Fluence Energy, LLC.
Current report
In connection with the 2030 Convertible Senior Notes, the Company purchased capped calls with certain financial institutions pursuant to capped call confirmations (collectively the “Capped Calls”). The premiums paid for the purchases of the Called Calls were $29.0 million. The Capped Calls have an initial strike price of approximately $21.35 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2030 Convertible Senior Notes. The Capped Calls have an initial cap price of $28.74 per share, subject to certain adjustments substantially similar to those applicable to the corresponding 2030 Convertible Senior Notes. The Capped Calls cover, subject to anti-dilution adjustments, approximately 18.7 million shares of the Company’s Class A common stock. The Capped Calls are generally expected to offset the potential dilution to the Company’s Class A common stock upon any conversion of the relevant 2030 Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap. The Capped Calls are separate transactions, and not part of the terms of the 2030 Convertible Senior Notes. As the Capped Calls qualify for a scope exception from derivative accounting for instruments that are both indexed to the issuer’s own stock and classified in stockholders’ equity, the Capped Calls are not accounted for as derivatives and the premiums paid for the purchases of the Capped Calls were recorded as a reduction to the additional paid-in capital.
Current report
As of the time of our entry into Amendment No. 3 to the ABL Credit Agreement (as discussed below), there were no outstanding borrowings under the ABL Facility or letters of credit outstanding.
Current report
2024 Revolver
Current report
Net cash flows used in investing activities were $2.6 million for thethree months ended December 31, 2023, which were due to purchases of property and equipment of $1.5 million and capital expenditures on software of $1.1 million.
Current report
Net cash flows provided by financing activities were $360.8 million for the three months ended December 31, 2024, which were primarily related to the proceeds received from the issuance of the 2030 Convertible Senior Notes of $400.0 million, partially offset by (i) premiums paid for the purchases of the Capped Calls of $29.0 million and (ii) payments for the debt issuance costs related to the 2030 Convertible Senior Notes of $10.0 million.
Removed paragraphs (50)
Previous report
Segments
Previous report
Siemens Industry Redemption
Previous report
The Company elected to settle the Siemens Redemption through the issuance of 58,586,695 shares of the Company’s Class A common stock (the “Shares”). The Siemens Redemption settled on July 7, 2022. Siemens Industry, Inc. effected an internal transfer of its interest in the Shares to Siemens AG at the time of Siemens Redemption and as of June 30, 2022, Siemens AG became the beneficial owner of 58,586,695 shares of Class A common stock. The Siemens Redemption increased the beneficial ownership interest of the Company in Fluence Energy, LLC to 66.08% as of June 30, 2022. The impact of the change in ownership interest did not result in a change in control. The Siemens Redemption has been accounted for as an equity transaction and the carrying amount of non-controlling interest has been adjusted.
Previous report
Secondary Offering and AES Redemption
Previous report
On December 8, 2023, AES Grid Stability, Siemens Pension Pension-Trust e.V. (“Siemens Pension Trust”), Qatar Holding LLC (“QHL” and together with AES Grid Stability and Siemens Pension Trust in such context, the “Selling Stockholders”) sold an aggregate of 18,000,000 shares of Class A common stock in an underwritten public offering (the “Offering”). Fluence did not sell any of its shares in the Offering and the Company did not receive any of the proceeds from the Offering. Pursuant to the terms of the Company’s Registration Rights Agreement, dated as of November 1, 2021, by and among the Company and the Original Equity Owners (as defined therein), the Company paid $0.7 million in certain expenses of the Selling Stockholders related to the Offering, while the Selling Stockholders paid all applicable underwriting discounts and commissions.
Previous report
In conjunction with the Offering, AES Grid Stability exercised its redemption right pursuant to the terms of the LLC Agreement with respect to 7,087,500 LLC Interests held by AES Grid Stability, together with the corresponding cancellation of an equivalent number of shares of Class B-1 common stock of Fluence Energy, Inc. (the “AES Redemption”). The Company elected to settle the AES Redemption through the issuance of 7,087,500 shares of the Company’s Class A common stock. The AES Redemption settled on December 8, 2023, the closing date of the Offering. All of the 7,087,500 shares issued to AES Grid Stability in connection with the AES Redemption were sold in the Offering. The AES Redemption increased the beneficial ownership interest of the Company in Fluence Energy, LLC to 71.12% as of December 8, 2023. The impact of the change in ownership interest did not result in a change in control. The AES Redemption has been accounted for as an equity transaction and the carrying amount of non-controlling interest has been adjusted.
Previous report
Negotiations with our Largest Battery Module Vendor
Previous report
In December 2021, we entered negotiations with our largest battery module vendor to amend our battery supply agreement. As part of the discussions, the vendor sought to renegotiate the price we were to pay for battery modules purchased in calendar year 2022, as well as those expected to be purchased during the remainder of calendar year 2022 and calendar year 2023. As part of these negotiations, we also discussed settlement of contractual claims by Fluence to the vendor. These negotiations continued throughout calendar year 2022. On December 15, 2022, we finalized an agreement with the vendor, amending the supply agreement and resolving our claims. The approxim ately $19.5 million settlement for our claims was recognized as a reduction of “costs of goods and services” for the nine months ended June 30, 2023.
Previous report
Key Factors and Trends Affecting our Performance
Previous report
Lithium-ion Battery Cost
Previous report
Although we do not rely on any single supplier for the majority of our key components, including our batteries and inverters, we do obtain certain key components from a limited number of suppliers. If one or more suppliers were unable to satisfy our requirements for particular key components, we could experience a disruption to our operations and delays in completing our projects as alternative suppliers are identified and qualified, and new supply arrangements are entered into. Moreover, if one of our suppliers is unable to satisfy our requirements and we turn to another supplier, such replacement supply arrangements may be on less advantageous terms for us and result in higher costs to the Company. In addition, a number of our suppliers are situated outside of the United States, which exposes us to changes in international trade regulations, taxes, tariffs, and/or quotas. As of the date of this Report, we believe that we have adequate access to our key components to meet the needs of our operations. See Part I, Item IA. “Risk Factors” of the 2023 Annual Report for further discussion on supply chain risks for our business.
Previous report
Increasing Deployment of Renewable Energy
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Seasonality
Previous report
Through fiscal year 2021, we experienced variability in the timing of our order intake, with higher volumes of orders coming the second half of our fiscal year. However, in fiscal years 2022 and 2023, order intake was relatively consistent across each quarter. In fiscal year 2024, we currently expect to see a higher amount of our order intake in the second half of the fiscal year. The variability in our order intake in the most recent quarters has been primarily driven due to the ambiguity regarding the timing of the proposed domestic content guidelines being released by the US Department of the Treasury, which occurred in May of 2024. As a result, we continue to expect our order intake to be higher in the second half of the fiscal year 2024. The timing of our order intake can be difficult to predict, and could result in significant variation among fiscal quarters.
Previous report
Governments across the globe have announced and implemented various policies, regulation and legislation to support the transition from fossil fuels to low-carbon forms of energy and to support and accelerate adoption of clean and/or reliable distributed generation technologies. Although we generally are not regulated as a utility, federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our product and services. The operation of our business and our customers’ use of our products and services are impacted by these various government actions. For example, in August 2022, the United States passed the Inflation Reduction Act of 2022 (the “IRA”), which consists of several renewable energy and energy storage related provisions, including an investment tax credit for standalone energy storage and incentives for grid modernization. These include incentives for domestic battery cell manufacturing, battery module manufacturing and its components, and various upstream applications as well as incentives for energy project owners utilizing battery energy storage systems that include certain U.S. manufactured products and/or product components.
Previous report
We believe we are well positioned to benefit from incentives contained in the IRA and that its enactment is favorable to our business and future operations with our forthcoming battery module manufacturing facility in Utah and our supply agreement for U.S. manufactured battery cells. However, we have not yet seen the full impact IRA-related incentives may have on our business, operations and financial performance and cannot guarantee we will realize all, or any, of the anticipated benefits of IRA-related incentives. We are continuing to evaluate the overall impact and applicability of the IRA to our business and expected results of operations going forward.
Previous report
Our revenue is affected by changes in the price, volume, and mix of products and services purchased by our customers, which is driven by the demand for our products, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products. The Company recognizes revenue over time for our energy storage products and solutions as we transfer control of our product to the customer. This transfer of control to the customer is supported by clauses in the contracts that provide enforceable rights to payment of the transaction price associated with work performed to date for products that do not have an alternative use to the Company and/or as the project is built and control transfers depending on the contract terms.
Previous report
Net Income (Loss)
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(a) Interest income, net for the three and nine months ended June 30, 2023 have been recast to conform with current period presentation as described in “Footnote 2 - Summary of Significant Accounting Policies and Estimates, Reclassifications.”
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(b) Includes incentive awards that will be settled in shares and incentive awards that will be settled in cash.
Previous report
(a) Includes incentive awards that will be settled in shares and incentive awards that will be settled in cash.
Previous report
(c) Amount for the three and nine months ended June 30, 2023 included $0.1 million and $0.4 million, respectively in severance costs related to the restructuring plan from November 2022.
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Total revenue decreased by $53.0 million, or 10%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in total revenue for the three months ended June 30, 2024 was mainly attributable to a decrease in revenue from our battery-based energy storage products and solutions by $57.7 million, partially offset by an increase in services revenue of $4.7 million. The decrease in revenue from our battery-based energy storage products and solutions was primarily driven by decreased volumes of Gen6 solutions delivered in the current period due to timing based upon customer schedules partially offset by a period over period increase in changes in transaction prices of $7.1 million, from performance obligations substantially satisfied in previous periods. The increase in services revenue is primarily driven by additional battery-based energy storage products and solutions being deployed and transitioned to assets under management.
Previous report
Total revenue decreased by $74.6 million, or 5%, for the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The decrease in total revenue for the nine months ended June 30, 2024 was mainly attributable to a decrease in revenue related of our battery-based energy storage products and solutions by $86.0 million, partially offset by an increase in services revenue of $11.5 million. The decrease in revenue from our battery-based energy storage products and solutions was primarily driven by (i) decreased volumes of Gen6 solutions delivered in the current period due to timing based upon customer schedules, (ii) a period over period decrease in changes in transaction prices of $9.9 million, from performance obligations substantially satisfied in previous periods, and (iii) a decrease in revenue from consulting services provided to AES of $8.4 million. The increase in services revenue is primarily driven by additional battery-based energy storage products and solutions being deployed and transitioned to assets under management.
Previous report
Cost of goods and services decreased by $114.3 million, or 22%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in cost of goods and services for the three months ended June 30, 2024 was mainly attributable to (i) the decrease of volume of Gen6 solutions delivered due to timing based upon customer schedules, and (ii) net improvement of gross margins on the portfolio of newer Gen6 solutions projects delivered during the current period due to operational efficiencies, partially offset by an increase in services cost due to additional battery-based energy storage products and solutions being deployed and transitioned to assets under management.
Previous report
Cost of goods and services decreased by $193.5 million, or 13%, for the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The decrease in cost of goods and services for the nine months ended June 30, 2024 was primarily attributable to (i) the decrease of volume of Gen6 solutions delivered due to timing based upon customer schedules, (ii) net improvement of gross margins on portfolio of newer Gen6 solutions projects delivered during the current period due to operational efficiencies, and (iii) a decrease in warranty expense for the period of $11.2 million due mostly to a change in estimate that occurred in the prior period but did not reoccur in the current period. These decreases in costs of goods and services were partially offset by (i) the favorable impact of a settlement of contractual claims with our largest battery module vendor of $19.5 million recognized in December 2022 and (ii) an increase in services cost due to additional battery-based energy storage products and solutions being deployed and transitioned to assets under management.
Previous report
Gross profit increased by $61.2 million, or 281%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in gross profit for the three months ended June 30, 2024 was primarily due (i) to net improvement of gross margins on the portfolio of newer Gen6 solutions projects delivered in the current period due to operational efficiencies as described above in “Costs of goods and services” and (ii) increases in revenue due to changes in transactions prices from performance obligations substantially satisfied in previous periods described above in “Total revenue.”
Previous report
Gross profit increased by $118.9 million, or 184%, for the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The increase in gross profit for the nine months ended June 30, 2024 was primarily due to (i) net improvement of gross margins on the portfolio of newer Gen6 solutions projects in the current period due to operational efficiencies and (ii) a decrease in warranty expense as described above in “Costs of goods and services.” These increases in gross profit were partially offset by (i) decreases in revenue due to changes in transaction prices from performance obligations substantially satisfied in previous periods described above in “Total revenue”, (ii) the favorable impact in the prior period of a settlement of contractual claims with our largest battery module vendor described above in “Costs of goods and services”, and (iii) a decrease in gross profit from consulting services provided to AES of $6.8 million when compared to the prior period.
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Research and development expenses increased by $5.1 million, or 51%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in research and development expenses for the three months ended June 30, 2024 was primarily attributable to a $4.7 million reduction in internal software development costs capitalized related to development of our technology products when compared to the prior period.
Previous report
Research and development expenses decreased by $3.8 million, or 7%, for thenine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The decrease in research and development expenses for the nine months ended June 30, 2024 was primarily attributable to (i) a $6.6 million reduction in salaries and personnel-related costs, including stock-based compensation, due to relocation of certain R&D activities to lower cost locations, (ii) a reduction of consulting services of $2.9 million, and (iii) a reduction of severance costs of $1.6 million. This decrease was partially offset by (i) a $4.3 million increase in information technology cost allocations to support our growth and (ii) an increase in expenditures for materials and supplies of $3.3 million related to R&D activities for our forthcoming battery module manufacturing.
Previous report
Sales and marketing expenses increased by $12.0 million, or 41%, for the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The increase in sales and marketing expenses for the nine months ended June 30, 2024 was primarily attributable to (i) a $4.2 million increase in information technology cost allocations to support our growth, (ii) a $3.0 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount, and (iii) a $1.5 million factoring discount on sale of accounts receivable recorded in the current period.
Previous report
General and administrative expenses increased by $7.0 million, or 18%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in general and administrative expenses for the three months ended June 30, 2024 was primarily attributable to (i) an increase in salaries and personnel-related costs, including stock-based compensation, of $11.3 million due to higher headcount and (ii) a $3.4 million increase in information technology licenses and consulting services related to implementation of new systems to support our growth. These increases were partially offset by (i) a $4.7 million increase in information technology cost allocations to other departments which reduces general and administrative costs and (ii) the capitalization of an additional $3.5 million in internal software development costs related to implementation of new systems.
Previous report
General and administrative expenses increased by $25.7 million, or 25%, for the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The increase in general and administrative expenses for the nine months ended June 30, 2024 was primarily attributable to (i) an increase in salaries and personnel-related expenses, including stock-based compensation, of $30.4 million due to higher headcount and (ii) a $12.1 million increase in information technology licenses and consulting services related to implementation of new systems to support our growth. These increases were partially offset by (i) a $12.7 million increase in information technology cost allocations to other departments which reduces general and administrative costs and (ii) the capitalization of an additional $7.2 million in internal software development costs related to implementation of new systems.
Previous report
Depreciation and amortization increased by$1.4 million, or 60%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily attributable to a $1.2 million cumulative adjustment in depreciation resulting from changing the useful life of IT equipment from five years to three years.
Previous report
Depreciation and amortization increased by $1.2 million, or 17% in the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023, primarily attributable to a $1.2 million cumulative adjustment in depreciation resulting from changing the useful life of IT equipment from five years to three years.
Previous report
Interest income, net was relatively flat in the three months ended June 30, 2024, compared to the three months ended June 30, 2023.
Previous report
Interest income, net was relatively flat in thenine months ended June 30, 2024, compared to thenine months ended June 30, 2023.
Previous report
Other income, net decreased by $8.5 million, or 95%, for thenine months ended June 30, 2024, compared to thenine months ended June 30, 2023. The decrease in other income, net for the nine months ended June 30, 2024 was primarily attributable to (i) a decrease in favorable foreign currency exchange adjustments for monetary assets and liabilities of $8.8 million and (ii) gains that did not reoccur in the current period on changes in fair value of short-term investments of $1.3 million, (iii) partially offset by the factoring income of $1.5 million related to the Master Receivables Purchase Agreement dated February 27, 2024 (the “MRPA”) recorded in the current period.
Previous report
Income Tax Expense (Benefit)
Previous report
Income tax expense increased by $3.4 million, or 165%, for the nine months ended June 30, 2024, compared to the nine months ended June 30, 2023. The increase in income tax expense for the nine months ended June 30, 2024 was primarily attributable to an increase in pre-tax income in foreign tax jurisdictions without historical losses.
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Previous wording
The following analysis provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Fluence and should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q (this “Report”) and in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, filed with the Securities and Exchange Commission (the “SEC”) on November 29, 2023 (the “2023 Annual Report”). In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed in Part I, Item 1A. “Risk Factors” of the 2023 Annual Report and Part II, Item 1A. “Risk Factors” and the section titled “Cautionary Statement Regarding Forward-Looking Information” included elsewhere in this Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “will,” “would,” and similar expressions to identify forward-looking statements.
Current wording
The following analysis provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Fluence and should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q (this “Report”) and in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 29, 2024 (the “2024 Annual Report”). In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition, and prospects based on current expectations that involve risks, uncertainties, and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed in Part I, Item 1A. “Risk Factors” of the 2024 Annual Report and Part II, Item 1A. “Risk Factors” and the section titled “Cautionary Statement Regarding Forward-Looking Information” included elsewhere in this Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “will,” “would,” commits,” and similar expressions to identify forward-looking statements.
Previous wording
Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2023” and “fiscal year 2024” refer to the twelve months ended September 30, 2023 and ending September 30, 2024, respectively.
Current wording
Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2022,” “fiscal year 2023,” “fiscal year 2024,” and “fiscal year 2025” refer to the twelve months ended September 30, 2022, September 30, 2023, September 30, 2024 and ending September 30, 2025, respectively.
Previous wording
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and those in Part I, Item 1A. “Risk Factors” in our 2023 Annual Report and Part II, Item 1A. “Risk Factors” in this Report.
Current wording
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” within our 2024 Annual Report and Part II, Item 1A. “Risk Factors” in this Report.
Previous wording
Our revenue growth is directly tied to the continued adoption of energy storage products and solutions by our customers. The cost of lithium-ion energy storage hardware has declined significantly in the last decade and has resulted in a large addressable market today. The market for energy storage continues to rapidly evolve and while we believe costs will continue to decline over the long term, there is no guarantee that they will decline or decline at the rates we expect. If costs do not continue to decline long term, this could adversely affect our ability to increase our revenue or grow our business. For example, we saw price increases in 2022. During calendar year 2023, prices returned to their historical trend of declining year-over-year and we continued to see declines through the first nine months of fiscal year 2024.
Current wording
Our revenue growth is directly tied to the continued adoption of energy storage solutions by our customers. One factor that impacts this continued adoption of energy storage solutions is the cost of lithium-ion energy storage hardware. The cost of lithium-ion energy storage hardware has declined significantly in the aggregate in the last decade and has resulted in a large addressable market today. In fiscal year 2022, we saw prices for lithium-ion battery packs increase from prior years, though prices returned to their historical trend of declining year-over-year in fiscal years 2023 and 2024. The market for energy storage continues to rapidly evolve and while we believe lithium-ion battery pack costs will continue to decline over the long term, there is no guarantee that they will decline or decline at the rates we expect. If costs do not continue to decline long term and instead remain steady or increase, as seen in fiscal year 2022, this could adversely affect our ability to increase our revenue, our order intake, and grow our business.
Previous wording
Deployment of renewable energy resources has accelerated over the last decade, and solar and wind have become a low-cost energy source. BloombergNEF estimates that renewable energy is expected to represent 70% of all new global capacity installations through 2030. Energy storage is critical to reducing the intermittency and volatility of renewable energy generation. However, there is no guarantee that the deployment of renewable energy will occur at the rate estimated by BloombergNEF or that such renewable energy will rely on lithium-ion battery technology for energy storage. Inflationary pressures, supply chain disruptions, geo-political conflicts, government regulations and incentives, and other factors could result in fluctuations in demand for and deployment of renewable energy resources, adversely affecting our revenue and ability to generate profits in the future. See Part I, Item IA. “Risk Factors” of the 2023 Annual Report for further discussion on these risks.
Current wording
Our growth strategy includes leveraging our global scale, technology leadership, product development, and market share position to help transform the way we power our world for a more sustainable future. Overall, we believe Fluence is well-positioned to continue to capitalize on the utility-scale battery storage market as we continue to deliver solutions that address the complex needs of a transforming energy landscape. We intend to further develop and innovate to provide energy storage solutions and digital software offerings that aim to solve our customers’ energy challenges, and expand our services with additional value-add offerings. We are also focused on expanding standardized offerings that are optimized for each of our sales channels and continuing to move towards a more localized, regional organizational structure to better support customers and sales channels, improve logistics, and enhance market focus. However, there is no guarantee that the deployment of renewable energy will occur at the rate estimated by BloombergNEF or that such renewable energy will rely on lithium-ion battery technology for energy storage. Macroeconomic uncertainties, supply chain disruptions, geo-political conflicts, government regulations and incentives, and other factors could result in fluctuations in demand for and deployment of renewable energy resources, adversely affecting our revenue, growth, and ability to generate profits in the future. See Part I, Item 1A. “Risk Factors” in our 2024 Annual Report for further discussion on these risks.
Previous wording
The energy storage sector is highly competitive and continuously evolving. Our array of energy storage products, solutions, services, and digital applications are designed to meet the unique demands of the clean energy industry. The intricacy involved in the design and integration of these offerings underscores their technical complexity. Nevertheless, new companies enter the market and offer comparable products and services annually. We remain committed to pioneering novel use cases and exploring untapped market segments, many of which present lower levels of competition. We believe that competitive factors in the energy storage market include, but are not limited to:
Current wording
The energy storage sector is highly competitive and continuously evolving. Our energy storage products, solutions, services, and digital applications are designed to meet the unique demands of the clean energy industry. The intricacy involved in the design and integration of these offerings underscores their technical complexity. Nevertheless, new companies enter the market annually and offer products and services that compete with ours. We remain committed to pioneering novel use cases and exploring untapped market segments, many of which present lower levels of competition. We believe that competitive factors in the energy storage market include, but are not limited to:
Previous wording
•our ability to issue performance guarantees, credit support, and product warranties;
Current wording
•ability to issue performance guarantees, credit support, and product warranties;
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•density and duration of our products and solutions;
Current wording
•density and duration of products and solutions;
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•experience in the battery energy storage system market (both of the Company and key members of leadership);
Current wording
•experience in the battery energy storage system market (of the respective competitor and the leadership team);
Previous wording
In October 2023, Fluence filed a complaint in the Superior Court of California, Contra Costa County, against Diablo Energy Storage, LLC, Empire Business Park, LLC, the Bank of New York Mellon and others, seeking approximately $37.0 million in damages arising from the supply and construction of an energy storage facility for the defendants, including for the defendants’ nonpayment of contractual amounts owed. On or about November 10, 2023, Defendant Diablo Energy Storage, LLC filed a cross-complaint against Fluence, seeking a minimum of $25.0 million of alleged damages and disgorgement of all compensation received by Fluence for the project, in the amount of approximately $230.0 million. The disgorgement claim was based upon an alleged deficiency in Fluence’s contractor license. Fluence denies the allegations in the cross-complaint and intends to vigorously defend against them and to enforce our claims against the defendants. We are currently not able to estimate the impact, if any, that this litigation may have on our reputation or financial results, or on market adoption of our products.
Current wording
In October 2023, Fluence filed a complaint in the Superior Court of California, Contra Costa County, against Diablo Energy Storage, LLC, Empire Business Park, LLC, the Bank of New York Mellon and others, seeking approximately $37.0 million in damages arising from the supply and construction of an energy storage facility for the defendants, including for the defendants’ nonpayment of contractual amounts owed. On or about November 10, 2023, Defendant Diablo Energy Storage, LLC filed a cross-complaint against Fluence, seeking a minimum of $25.0 million of alleged damages and disgorgement of all compensation received by Fluence for the project, in the amount of approximately $230.0 million. The disgorgement claim was based upon an alleged deficiency in Fluence’s contractor license. Fluence denies the allegations in the cross-complaint and intends to vigorously defend against them and to enforce our claims against the defendants. We are currently not able to estimate the impact, if any, that this litigation may have on our reputation or financial results, or on market adoption of our products and solutions.
Previous wording
The following discussion describes certain line items in our condensed consolidated statements of operations and comprehensive loss.
Current wording
The following discussion describes certain line items in our condensed consolidated statements of operations.
Previous wording
We generate revenue from energy storage products and solutions, service agreements with customers to provide operational services related to battery-based energy storage products, and from digital application contracts. Fluence enters into contracts with utility companies, developers, and commercial and industrial customers. We derive the majority of our revenue from selling energy storage products and solutions. When we sell a battery-based energy storage product and solution, we enter into a contract with our customers covering the price, specifications, delivery dates and warranty for the products being purchased, among other things. The manner in which a solution is provided to a customer may vary; not all solutions may require Fluence to procure batteries on behalf of a customer. A solution may only require logistics, design, installation and/or commission services depending on customer requirements. We also generate revenue by providing consulting services to AES whereby Fluence has agreed to advise, and in some cases provide support to AES, on procurement, logistics, design, safety, and commissioning of certain of their projects.
Current wording
We generate revenue from battery-based energy storage solutions, service agreements with customers to provide operational services related to battery-based energy storage solutions, and from digital application contracts. Fluence enters into contracts with utility companies, developers, and commercial and industrial customers.
Previous wording
Our revenue growth is dependent on continued growth in the amount of battery-based energy storage products and solutions projects constructed each year and our ability to increase our share of demand in the geographic regions where we currently compete and plan to compete in the future as well as our ability to continue to develop and commercialize new and innovative products that address the changing technology and performance requirements of our customers.
Current wording
Our revenue growth is directly tied to the continued adoption of energy storage solutions by our customers and our ability to increase our share of demand in the geographic regions where we currently compete and plan to compete in the future, which is driven by the demand for our products, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products as well as our ability to continue to develop and commercialize new and innovative solutions that address the changing technology and performance requirements of our customers.
Previous wording
Cost of goods and services consists primarily of product costs, including purchased materials and supplies, as well as costs related to shipping, customer support, product warranty, and personnel. Personnel costs in cost of goods and services includes both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer.
Current wording
Cost of goods and services consists primarily of product costs, including purchased materials and supplies, as well as costs related to shipping, customer support, product warranty, and personnel. Personnel costs in cost of goods and services includes both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer. Cost of goods and services are recognized when services are performed or control of goods are transferred to the customers. Standard inventory materials that could be used interchangeably on other projects are included in cost of goods sold when they are integrated into, or restricted to, the production of a customer’s project.
Previous wording
Our product costs are affected by the underlying cost of raw materials, including steel and aluminum supply costs, including inverters, casings, fuses, and cable; technological innovation; economies of scale resulting in lower supply costs; and improvements in production processes and automation. We do not currently hedge against changes in the price of raw materials as we do not purchase raw materials; instead, we buy the components of energy storage products from our suppliers and we rely on our suppliers to hedge the underlying raw materials. We generally expect the ratio of cost of goods and services to revenue to decrease as sales volumes increase due to economies of scale, however, some of these costs, primarily personnel-related costs, are not directly affected by sales volume.
Current wording
Our product costs are affected by the underlying cost of raw materials, such as lithium-ion, and components to our solutions including inverters. Our product costs are also affected by technological innovation, economies of scale resulting in lower supply costs, and improvements in production processes and automation. We do not currently hedge against changes in the price of raw materials as we do not directly purchase raw materials; instead, we buy the components of energy storage products from our suppliers and we rely on our suppliers to hedge the underlying raw materials. We generally expect the ratio of cost of goods and services to revenue to decrease as sales volumes increase due to economies of scale, however, some of these costs, primarily personnel-related costs, are not directly affected by sales volume.
Previous wording
Gross profit and gross profit margin may vary from quarter to quarter and is primarily affected by our sales volume, product prices, product costs, product mix, customer mix, geographical mix, shipping costs, and warranty costs.
Current wording
Gross profit and gross profit margin may vary from quarter to quarter and are primarily affected by our volume fulfilled, product prices, and product costs.
Previous wording
Research and development expenses consist of personnel-related costs across our global research and development (“R&D”) centers for engineers engaged in the design and development and testing of our integrated products and technologies. Engineering competencies include data science, machine learning, software development, network and cyber security, battery systems engineering, industrial controls, UI / UX, mechanical design, power systems engineering, certification, and more. R&D expenses also support three product testing labs located across the globe, including a system-level testing facility in Pennsylvania that is used for quality assurance and the rapid iteration, testing, and launching of new Fluence energy storage technology and products. We have established an additional Hardware in the Loop testing facility, which is co-located with our technical team in Bangalore, India. We expect R&D expenses to generally increase in future periods to support our growth and as we continue to invest in R&D activities that are necessary to achieve our technology and product roadmap goals. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.
Current wording
Research and development expenses consist primarily of personnel-related costs across our global research and development (“R&D”) centers for engineers engaged in the design and development and testing of our integrated products and technologies and costs of materials and services procured for research and development projects. Engineering competencies include data science, machine learning, software development, network and cyber security, battery systems engineering, industrial controls, UI / UX, mechanical design, power systems engineering, certification, and more. R&D expenses also support three product testing labs located across the globe: a system-level testing facility in Pennsylvania that is used for quality assurance and the rapid iteration, testing, and launching of new Fluence energy storage technology and products, a testing facility located in Erlangen, Germany, and a deployment center located in Long Beach, California. We have established an additional Hardware in the Loop testing facility, which is co-located with our technical team in Bangalore, India. We expect R&D expenses to generally increase in future periods to support our growth and as we continue to invest in R&D activities that are necessary to achieve our technology and product roadmap goals. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.
Previous wording
Depreciation consists of costs associated with property, plant, and equipment (“PP&E”) and amortization of intangibles consisting of patents, licenses, and developed technology over their expected period of use. We expect that as we increase both our revenues and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation and amortization.
Current wording
Depreciation consists of costs associated with property, plant, and equipment (“PP&E”) and amortization of intangibles consisting of patents, licenses, developed technology, and capitalized software over their expected period of use. We expect that as we increase both our revenues and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation and amortization.
Previous wording
Interest income, net consists of interest income net of interest expense. Interest income consists of interest earned on cash deposits and interest on customer notes receivables. Interest expense consists primarily of interest on borrowings against notes receivable pledged as collateral, unused line fees related to the revolving credit facility (the “Revolver”) pursuant to a credit agreement, dated November 1, 2021, by and among Fluence Energy, LLC, as the borrower, Fluence Energy, Inc., as a parent guarantor, the subsidiary guarantors party thereto, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent (the “Revolving Credit Agreement”), which was terminated upon repayment in full of all obligations under the Revolver, effective November 22, 2023, and amortization of debt issuance costs. Interest income, net also consists of unused line and commitment fees related to the ABL Credit Agreement (as defined below).
Current wording
Interest income, net consists primarily of interest income net of interest expense. Interest income consists of interest earned on cash deposits and interest on customer notes receivables. Interest expense consists primarily of interest on borrowings against notes receivable pledged as collateral, unused line fees and commitment fees related to credit facilities, and amortization of debt issuance costs.
Previous wording
Other expense (income), net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities and factoring income from sale of receivables.
Current wording
Other expense (income), net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities, expense due to estimated payments to be made to related parties under the Tax Receivable Agreement, dated October 27, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC, Siemens Industry, Inc. and AES Grid Stability, LLC (the “Tax Receivable Agreement”), and factoring income from sale of receivables.
Previous wording
We are subject to U.S. federal and state income taxes with respect to our allocable share of any taxable income or loss of Fluence Energy, LLC, and are taxed at the prevailing corporate tax rates. We are also subject to foreign income taxes with respect to our foreign subsidiaries and our expectations are valuation allowances will be recorded in certain tax jurisdictions. In addition to tax expenses, we also will incur expenses related to our operations, as well as payments under the Tax Receivable Agreement, which we expect could be significant over time. We will receive a portion of any distributions made by Fluence Energy, LLC. Any cash received from such distributions from our subsidiaries will be first used by us to satisfy any tax liability and then to make payments required under the Tax Receivable Agreement.
Current wording
We are subject to U.S. federal and state income taxes with respect to our allocable share of any taxable income or loss of Fluence Energy, LLC and are taxed at the prevailing corporate tax rates. We are also subject to foreign income taxes with respect to our foreign subsidiaries and our expectations are that valuation allowances will be recorded in certain tax jurisdictions. In addition to tax expenses, we also will incur expenses related to our operations, as well as payments under the Tax Receivable Agreement, which we expect could be significant over time. We will receive a portion of any distributions made by Fluence Energy, LLC. Any cash received from such distributions from our subsidiaries will be first used by us to satisfy any tax liability and then to make payments required under the Tax Receivable Agreement.
Previous wording
Net income (loss) may vary from quarter to quarter and is primarily affected by our gross profit and operating expenses as defined above.
Current wording
Net loss may vary from quarter to quarter and is primarily affected by our gross profit and operating expenses as defined above.
Previous wording
The following table presents our order intake for the three and nine months ended June 30, 2024 and 2023. The table is presented in Gigawatts (GW):
Current wording
The following table presents our order intake for the three months ended December 31, 2024 and 2023. The table is presented in Gigawatts (GW):
Previous wording
We cannot guarantee that our contracted backlog will result in actual revenue in the originally anticipated period or at all. Contracted backlog may not generate margins equal to our historical operating results. We have only recently begun to track our contracted backlog on a consistent basis as performance measures, and as a result, we do not have significant experience in determining the level of realization that we will achieve on these contracts. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control. If our contracted backlog fails to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity.
Current wording
We cannot guarantee that our contracted backlog will result in actual revenue in the originally anticipated period or at all. Contracted backlog may not generate margins equal to our historical operating results. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control. If our contracted backlog fails to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity.
Previous wording
We cannot guarantee that our pipeline will result in actual revenue in the originally anticipated period or at all. Pipeline may not generate margins equal to our historical operating results. We have only recently begun to track our pipeline on a consistent basis as performance measures, and as a result, we do not have significant experience in determining the level of realization that we will achieve on these contracts. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control. If our pipeline fails to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity.
Current wording
We cannot guarantee that our pipeline will result in actual revenue in the originally anticipated period or at all. Pipeline may not generate margins equal to our historical operating results. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control. If our pipeline fails to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity.
Previous wording
Adjusted EBITDA is calculated from the consolidated statements of operations using net income (loss) adjusted for (i) interest income, net, (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) other non-recurring income or expenses. Adjusted EBITDA may in the future also be adjusted for amounts impacting net income related to the Tax Receivable Agreement liability.
Current wording
Adjusted EBITDA is calculated from the consolidated statements of operations using net income (loss) adjusted for (i) interest income, net, (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) other non-recurring income or expenses. Adjusted EBITDA also includes amounts impacting net income related to estimated payments due to related parties pursuant to the Tax Receivable Agreement.
Previous wording
Free Cash Flow is calculated from the consolidated statements of cash flows and is defined as net cash provided by (used in) operating activities, less purchase of property and equipment made in the period. We expect our Free Cash Flow to fluctuate in future periods as we invest in our business to support our plans for growth. Limitations on the use of Free Cash Flow include (i) it should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures (for example, cash is still required to satisfy other working capital needs, including short-term investment policy, restricted cash, and intangible assets); (ii) Free Cash Flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities; and (iii) this metric does not reflect our future contractual commitments.
Current wording
Free Cash Flow is calculated from the consolidated statements of cash flows and is defined as net cash provided by (used in) operating activities, less purchase of property and equipment made in the period. We expect our Free Cash Flow to fluctuate in future periods as we invest in our business to support our plans for growth. Limitations on the use of Free Cash Flow include (i) it should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures (for example, cash is still required to satisfy other working capital needs, including short-term investment policy, restricted cash, and intangible assets); (ii) Free Cash Flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other U.S. generally accepted accounting principles (“U.S. GAAP”) financial measures, such as net cash provided by operating activities; and (iii) this metric does not reflect our future contractual commitments.
Previous wording
(c) Amount for the three months ended June 30, 2024 includes $1.0 million in severance costs related to restructuring. Amount for the three months ended June 30, 2023 included $2.0 million in severance costs and consulting fees related to the restructuring plan from November 2022. Amount for the nine months ended June 30, 2024 includes approximately $1.0 million in severance costs related to restructuring, $1.2 million of costs related to the termination of the Revolving Credit Agreement and $0.8 million in costs related to the Offering. Amount for the nine months ended June 30, 2023 included $5.4 million in severance costs and consulting fees related to the restructuring plan from November 2022.
Current wording
(b) Amount for the three months ended December 31, 2023 includes approximately $1.2 million of costs related to the termination of the Revolving Credit Agreement and $0.8 million in costs related to the secondary offering completed in December 2023.
Previous wording
Comparison of the Three and Nine Months Ended June 30, 2024 to the Three and Nine Months Ended June 30, 2023
Current wording
Comparison of the three months ended December 31, 2024 and 2023
Previous wording
Sales and marketing expenses increased by $4.7 million, or 46%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in sales and marketing expenses for the three months ended June 30, 2024 was primarily attributable to (i) a $2.1 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount and (ii) a $1.5 million increase in information technology cost allocations to support our growth.
Current wording
Sales and marketing expenses increased by $7.5 million, or 70%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase in sales and marketing expenses for the three months ended December 31, 2024 was primarily attributable to a $6.8 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount to support our growth.
Previous wording
Other expense, net increased by $1.3 million, or 177%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in other expense, net for the three months ended June 30, 2024 was primarily attributable to a $1.6 million increase in unfavorable foreign currency exchange losses for monetary assets and liabilities period over period.
Current wording
Other expense (income), net increased by $6.9 million, or 584%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase in other expense (income), net for the three months ended December 31, 2024 was primarily attributable to a $8.9 million increase in unfavorable foreign currency exchange losses on monetary assets and liabilities period over period.
Previous wording
Income tax expense increased by $5.5 million, or 421%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in income tax expense for the three months ended June 30, 2024 is primarily attributable to an increase in pre-tax income in foreign tax jurisdictions without historical losses.
Current wording
Income tax benefit increased by $0.5 million, or 39%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase in income tax benefit for the three months ended December 31, 2024 was primarily attributable to an increase in pre-tax losses in foreign tax jurisdictions with statutory tax rates higher than the U.S.
Previous wording
Net income increased by $36.1 million, or 103%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in net income for the three months ended June 30, 2024 is primarily attributable to an increase in “Gross profit” as described above. This was partially offset by (i) an increase in “Research and development expenses,” (ii) an increase in “Sales and marketing expenses” and (iii) an increase in “General and administrative expenses,” each as described above.
Current wording
Net loss increased by $31.5 million, or 123%, for the three months ended December 31, 2024, compared to the three months ended December 31, 2023. The increase in net loss for the three months ended December 31, 2024 was primarily attributable to (i) a decrease in “Gross profit,” (ii) an increase in “Sales and marketing expenses,” and (iii) an increase in “Other expense (income), net,” each as described above. This was partially offset by an increase in “Income tax benefit” as described above.
Previous wording
Since inception and through June 30, 2024, our principal sources of liquidity were the proceeds from our IPO, our cash and cash equivalents, short-term borrowings, borrowings available under the Revolver, borrowings available under the ABL Facility (as defined below), supply chain financing, capital contributions from AES Grid Stability and Siemens Industry, proceeds from short term investments, and borrowings against note receivables and proceeds from sale of accounts receivable under the MRPA.
Current wording
Since inception and through December 31, 2024, our principal sources of liquidity were the proceeds from our initial public offering (“IPO”), our cash and cash equivalents from operations, short-term borrowings, borrowings available under our debt agreements, proceeds from the issuance of the 2030 Convertible Senior Notes (as defined below), supply chain financing, capital contributions from AES Grid Stability, LLC (“AES Grid Stability”) and Siemens Industry, LLC (“Siemens Industry”) and proceeds from the investment by QIA Florence Holdings, LLC, an affiliate of Qatar Holding LLC in 2021, proceeds from short term investments, borrowings against note receivables, and proceeds from sale of accounts receivable under the MRPA (as defined below).
Previous wording
We believe the proceeds received from our IPO, cash flows from operations, which includes sales of accounts receivable under the MRPA, borrowings against notes receivable and borrowings available under the 2024 Revolver (as defined below) will be sufficient to meet our expense and capital requirements for at least the next 12 months following the filing of this Report.
Current wording
We believe the proceeds received from our IPO, our existing cash and cash equivalents, cash flows from operations, which includes sales of accounts receivable under the MRPA, proceeds from the issuance of the 2030 Convertible Senior Notes, borrowings against notes receivable, and availability under our 2024 Revolver (as defined below) will be sufficient to meet our expense and capital requirements for at least the next 12 months following the filing of this Report.
Previous wording
Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of our growth initiatives and our introduction of new products, services, and digital application offerings, and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and cash requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilutions to our stockholders. The incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition.
Current wording
Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of our growth initiatives, our introduction of new products, services, and digital application offerings, and overall regulatory and economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and cash requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilutions to our stockholders. The incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition.
Previous wording
On November 1, 2021, upon the closing of our IPO, we received net proceeds of $935.8 million, after deducting underwriting discounts and offering expenses payable by the Company. The net proceeds from the IPO were used to purchase 35,650,000 newly issued LLC Interests directly from Fluence Energy, LLC at a price per unit equal to the IPO price per share of Class A common stock less the underwriting discount and estimated offering expenses payable by us. Fluence Energy, LLC used the net proceeds from the sale of LLC Interests to Fluence Energy, Inc. to repay all outstanding borrowings relating to a line of credit and promissory notes. The remainder of the proceeds has been used for working capital and other general corporate purposes.
Current wording
On November 1, 2021, upon the closing of our IPO, we received net proceeds of $935.8 million. The net proceeds from the IPO were used to purchase 35,650,000 newly issued limited liability company interests (“LLC Interests”) directly from Fluence Energy, LLC. Fluence Energy, LLC used the net proceeds from the sale of LLC Interests to Fluence Energy, Inc. to repay all outstanding borrowings relating to a line of credit and promissory notes. The remainder of the proceeds has been used and continues to be used for working capital and other general corporate purposes.
Previous wording
We have provided certain of our suppliers with access to a supply chain financing program through a third-party financing institution (the “SCF Bank”). This program allows us to seek extended payment terms with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount. Once a supplier elects to participate in the program and reaches an agreement with the SCF Bank, the supplier elects which individual invoices to sell to the SCF Bank. We then pay the SCF Bank on the invoice due date. We have no economic interest in a supplier’s decision to sell a receivable to the SCF Bank. The agreements between our suppliers and the SCF Bank are solely at their discretion and are negotiated directly between them. Our suppliers’ ability to continue using such agreements is primarily dependent upon the strength of our financial condition and guarantees issued by AES and Siemens Corporation, a subsidiary of Siemens, pursuant to the terms of the Credit Support and Reimbursement Agreement (as defined below). As of June 30, 2024, AES and Siemens Corporation, a subsidiary of Siemens, issued guarantees of $50.0 million each, for a total of$100.0 million, to SCF Bank on our behalf.
Current wording
We have provided certain of our suppliers with access to a supply chain financing program through a third-party financing institution (the “SCF Bank”). This program allows us to seek extended payment terms with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount. Once a supplier elects to participate in the program and reaches an agreement with the SCF Bank, the supplier elects which individual invoices to sell to the SCF Bank. We then pay the SCF Bank on the invoice due date. We have no economic interest in a supplier’s decision to sell a receivable to the SCF Bank. The agreements between our suppliers and the SCF Bank are solely at their discretion and are negotiated directly between them. Our suppliers’ ability to continue using such agreements is primarily dependent upon the strength of our financial condition and guarantees issued by AES and Siemens Corporation, a subsidiary of Siemens, pursuant to the terms of the Credit Support and Reimbursement Agreement (as defined below). As of December 31, 2024, AES and Siemens Corporation issued guarantees of $50.0 million each, for a total of $100.0 million, to SCF Bank on our behalf.
Previous wording
As of June 30, 2024, four suppliers were actively participating in the supply chain financing program, and we had $41.3 million of payables outstanding subject to the program. All outstanding payments owed under the program are recorded within “Accounts payable” on the condensed consolidated balance sheets.
Current wording
As of December 31, 2024, two suppliers were actively participating in the supply chain financing program, and we had $42.6 million of payables outstanding subject to the program. All outstanding payments owed under the program are recorded within “Accounts payable” on the condensed consolidated balance sheets.
Previous wording
On August 11, 2023, we filed an automatic shelf registration statement on Form S-3 with the SEC (the “Form S-3”) which became effective upon filing and will remain effective through August 11, 2026. The Form S-3 allows us to offer and sell from time-to-time Class A common stock, preferred stock, depository shares, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 135,666,665 shares of Class A common stock in one or more offerings. We would not receive any proceeds from any sale of our Class A common stock by such selling stockholders. On December 8, 2023, 18,000,000 shares of Class A common stock of the Company registered by the Form S-3 with the SEC were sold pursuant to a secondary offering conducted by certain selling stockholders. We received no proceeds in connection with this offering.
Current wording
On August 11, 2023, we filed an automatic shelf registration statement on Form S-3 with the SEC (the “Form S-3”) which became effective upon filing and will remain effective through August 11, 2026. The Form S-3 allows us to offer and sell from time-to-time Class A common stock, preferred stock, depository shares, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 135,666,665 shares of Class A common stock in one or more offerings.
Showing the first 40 of 60 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
For further discussion of the ABL Credit Agreement, refer to “Note 11 - Debt” to our consolidated financial statements included elsewhere in this Report.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The ABL Credit Agreement contained customary covenants for this type of financing, including, but not limited to, covenants that restricted our ability to incur indebtedness; incur liens; sell, transfer, or dispose of property and assets; make investments or acquisitions; pay dividends, make distributions or other restricted payments; and engage in affiliate transactions. The ABL Credit Agreement limited our ability to make certain payments, including dividends and distributions on Fluence Energy, LLC’s equity, the Company’s equity and other restricted payments. Fluence Energy, LLC and its subsidiaries were limited in their ability to pay cash dividends to, lend to, or make other investments in Fluence Energy, Inc., subject to certain exceptions. If certain payment conditions under the ABL Credit Agreement were satisfied, then additional specified transactions could have been made by the Company. Such covenants were tested on a quarterly basis and upon the occurrence of other certain restricted payments, the incurrence of indebtedness, certain dispositions, and other specified transactions. As of June 30, 2024, we were in a Covenant Relief Period and were in compliance with all such applicable covenants or maintained availability above such applicable covenant triggers.
Previous report — wording carried elsewhere
On June 30, 2022, Siemens Industry, Inc. exercised its redemption right pursuant to the terms of LLC Agreement with respect to its entire holding of 58,586,695 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of our Class B-1 common stock.
Previous report — wording carried elsewhere
On December 8, 2023, AES Grid Stability exercised its redemption right pursuant to the terms of LLC Agreement with respect to 7,087,500 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of our Class B-1 common stock.