Fluence Energy, Inc.

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 for the period ended March 31, 2025 (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, Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal period ended December 31, 2024 (the “First Quarter 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,” “commit,” “target,” “contemplate,” 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 for the period ended June 30, 2025 (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,” “commit,” “target,” “contemplate,” and similar expressions to identify forward-looking statements.

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 in Part I, Item 1A. “Risk Factors” within our 2024 Annual Report, Part II, Item 1A. “Risk Factors” in our First Quarter 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

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 2,660 GWh between 2024 and 2035.

Current wording

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 estimated in its 1H 2025 Energy Storage Market Outlook published on April 30, 2025 that the global utility scale market, excluding China, will add approximately 2,660 GWh between 2024 and 2035.

Previous 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.

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. Moreover, as discussed below, to the extent our imports of lithium-ion batteries are significantly impacted by tariffs or trade policy or other legislation or regulation, this could have an adverse impact on our business and results of operations.

Previous 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 have and intend in the future 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 our business with 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. For instance, the Company is ramping up use of domestic manufacturing facilities in Arizona, Texas, Tennessee, and Utah, as well as our domestic inverter supplier in South Carolina for our customers and projects in the United States. 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. Economic uncertainties, supply chain disruptions, geo-political conflicts, government regulations and incentives, trade environment, including tariff policy, and other factors could result in fluctuations in demand for and deployment of renewable energy resources and may materially increase inventory costs and costs of goods and services, 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 and Part II, Item 1A. “Risk Factors” in this 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 have and intend in the future 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 our business with 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. For instance, the Company continues to ramp up use of domestic manufacturing facilities in Arizona, Texas, Tennessee, and Utah, as well as our domestic inverter supplier in South Carolina for our customers and projects in the United States. However, there is no guarantee that the deployment of renewable energy will occur as we expect or at the rate estimated by BloombergNEF or that such renewable energy will rely on lithium-ion battery technology for energy storage. Economic uncertainties, supply chain disruptions, geo-political conflicts, government regulations and incentives, trade environment, including tariff policy, and other factors could result in fluctuations in demand for and deployment of renewable energy resources and may materially increase inventory costs and costs of goods and services, 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 and Part II, Item 1A. “Risk Factors” in this Report for further discussion on these risks.

Previous wording

Current economic conditions affecting our industry and the global markets more generally, including ambiguity around interest rates, softening labor markets, fluctuations in currency exchange rates, and recent government and policy changes implemented in the United States, including rapid changes in announced tariff policy, have created uncertainty in the global economy, a level of volatility in the capital markets and recessionary pressures, which have, and which may in the future have, adverse impacts on our business and may also adversely impact our future results of operations. If a prolonged economic downturn or recession develops from these conditions, it could also result in further adverse impacts to our business and results of operations in the future. We will continue to evaluate the evolving economic environment to take action to mitigate the impact on our business, consolidated results of operations, and financial condition. See Part I, Item 1A. “Risk Factors” in our 2024 Annual Report for further discussion on risks relating to macroeconomic uncertainty and market conditions and Part II, Item 1A. “Risk Factors” in this Report for further discussion on risks related to changes in the trade environment and related impact on general economic uncertainty.

Current wording

Current economic conditions affecting our industry and the global markets more generally, including ambiguity around interest rates, softening labor markets, fluctuations in currency exchange rates, and recent government and policy changes implemented in the United States, the enactment of the IRA and OBBBA (both as defined below) and rapid changes in announced tariff policy, have created uncertainty in the global economy, a level of volatility in the capital markets and recessionary pressures, which have had, and which may in the future have, adverse impacts on our business and our results of operations. If a downturn in our industry or a prolonged economic downturn or recession develops from market uncertainty, it could also result in further adverse impacts to our business and results of operations in the future. We will continue to evaluate the evolving economic environment to take action to mitigate the impact on our business, consolidated results of operations, and financial condition. See Part I, Item 1A. “Risk Factors” in our 2024 Annual Report for further discussion on risks relating to macroeconomic uncertainty and market conditions and Part II, Item 1A. “Risk Factors” in this Report for further discussion on risks related to changes in the trade environment and related impact on general economic uncertainty.

Previous wording

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 wording

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 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.

Previous wording

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 incentives that support the adoption of energy storage solutions, including the “technology neutral” Investment Tax Credit (ITC) and Production Tax Credit (PTC) for projects placed in service after calendar year 2024 and changes to the non-“technology neutral” ITC and PTC for projects that started construction prior to the end of calendar year 2024 and are placed in service after calendar year 2022. The ITC is available for investments in a qualified storage facility, a qualified renewable energy and storage facility, or a qualified renewable energy facility, and the PTC is available for investments in a qualified renewable energy and storage facility or a qualified renewable energy facility. Prevailing wage and apprenticeship requirements apply to receive the full ITC and PTC value, and the credit value can be further increased if the project also qualifies for the domestic content bonus credit, the energy communities bonus credit, or the low-income bonus credit (although only projects less than 5 megawatts alternating current are eligible for the low-income bonus). The IRA also includes a manufacturing production tax credit for specific renewable energy and battery storage related products and components manufactured in the U.S. We believe we are well positioned to capture the benefits of the manufacturing production tax credit with our battery module manufacturing at our U.S. contract manufacturing facility, our supply agreement for U.S. manufactured battery cells, and our supply agreement for U.S. manufactured inverters. In addition, we believe our complete U.S. supply chain of modules, cells, inverters, battery pack, enclosures, battery management systems and thermal management systems positions us well to benefit from the domestic content bonus credit under the IRA.

Current wording

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 included incentives that supported the adoption of energy storage solutions, including a new “technology neutral” Section 48E investment tax credit (the “ITC”) and Section 45Y production tax credit (the “PTC”), changes to the previous Section 48 non-“technology neutral” investment tax credit and Section 45 production tax credit, and a new Section 45X advanced manufacturing production tax credit (the “AMPC”). On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law, which significantly modified certain provisions of the IRA, including those related to energy storage. The OBBBA supports energy storage in the United States, as the bill includes long-term continued availability of the ITC for energy storage projects and the AMPC for cells, modules, and inverters in energy storage systems. Certain tax credits, notably including the ITC for storage, will begin to phase down for projects beginning construction after 2033. The prevailing wage and apprenticeship requirements enacted under the IRA continue to apply under the OBBBA in order for the project owner to receive the full ITC value, and the credit value can be further increased if the project owner also qualifies for a domestic content bonus credit and energy communities bonus credit. The OBBBA amended the provisions of the domestic content bonus credit for the ITC such that the project owner now must achieve higher minimum domestic content thresholds. In addition, the OBBBA amended the ITC and AMPC such that there are new foreign entity of concern (“FEOC”) requirements to qualify for such tax credits and are intended to deny tax credits to projects that are owned or controlled by certain foreign entities, including Chinese entities, or that source components from or make payments to such entities.

Previous wording

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 modified, reduced, eliminated, or are permitted to expire or there is determination of inapplicability of such government incentives or regulations relating to or mandating or encouraging use of renewable energy and/or energy storage, including the IRA, there may be adverse effects on customer demand and our business. Refer to the “Government Regulation and Compliance” section in our 2024 Annual Report and Part II, Item 1A. “Risk Factors” in this Report for further details on the IRA and other significant government regulations affecting our business and specific discussion of risks to our business from the modification, reduction, elimination, and expiration of government incentives and regulations relating to or mandating or encouraging use of renewable energy and/or energy storage.

Current wording

Government policies, regulations, legislation, and programs are 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 modified, reduced, eliminated, or are permitted to expire or there is the potential of such modifications, reductions, eliminations or expirations, or there is determination of inapplicability of such government incentives or regulations relating to or mandating or encouraging use of renewable energy and/or energy storage, there have been and there may in future be adverse effects on customer demand and our business. Refer to the “Government Regulation and Compliance” section in our 2024 Annual Report and Part II, Item 1A. “Risk Factors” in this Report for further details on the IRA, the OBBBA, and other significant government regulations affecting our business and specific discussion of risks to our business from the modification, reduction, elimination, and expiration of government incentives and regulations or potential of such modification, reduction, elimination, and expiration of governmental incentives and regulations relating to or mandating or encouraging use of renewable energy and/or energy storage.

Previous wording

In May 2024, the Biden administration announced a significant shift in the tariff framework for the energy storage industry. Under this new structure, the Section 301 tariff rate on lithium-ion non-EV batteries imported from China will increase from the current 7.5% to 25%, effective January 1, 2026. This change specifically targeted "batteries" as defined by U.S. Customs and Border Protection, encompassing battery energy storage systems, modules, and certain types of cells. Under the May 2024 structure announced by the Biden administration, the Section 301 tariff rate on battery "parts"–including separators, electrolytes, cans, and electrodes remains at its current 25% level. In April 2025, the Trump administration enacted additional tariffs on nearly all types of imports (including those used in our energy storage solutions) from countries around the world, including high tariffs on Chinese imports, which may increase, decrease, or change with little to no advanced notice. These recent tariff policy changes and current uncertainty relating to U.S. trade policy and the corresponding response from other foreign countries are impacting and may in the future impact the energy storage market, demand for our energy storage solutions by customers, and our business as well as those of our customers, partners, and suppliers and may in the future impact our results of operations. As of the filing date of this Report, covered imports from China relevant to our energy storage systems will be subject to the 125% China-specific “reciprocal tariff,” plus the current China-specific 20% “fentanyl-related tariff”, plus the 3.4% base tariff on all countries, plus the applicable Section 301 tariff. The Company has exposure from the imposition of these new tariffs, as the Company imports components, including battery cells from China, into the United States for customers and projects in the United States. We have experienced paused and delayed customer contracting activity in response to the recent tariff-related uncertainty, including as a result of the mutual agreement by the Company with certain customers in the United States to (i) defer entry into new energy storage solutions contracts and (ii) pause active, currently signed contracts that are under project execution. This impact to customer contracting behavior from the uncertain trade environment may in turn impact our revenue, business, operating metrics, and results of operations in the future. See Part II, Item 1A. “Risk Factors” in this Report for further discussion on risks related to changes in the trade environment.

Current wording

In May 2024, the Biden administration announced a significant shift in the tariff framework for the energy storage industry. Under this structure, the Section 301 tariff rate on lithium-ion non-EV batteries imported from China will increase from the current 7.5% to 25%, effective January 1, 2026. This change specifically targeted "batteries" as defined by U.S. Customs and Border Protection, encompassing battery energy storage systems, modules, and certain types of cells. Under the May 2024 structure announced by the Biden administration, the Section 301 tariff rate on battery "parts"–including separators, electrolytes, cans, and electrodes remains at its current 25% level. In April 2025, the Trump administration enacted additional tariffs on nearly all types of imports (including those used in our energy storage solutions) from countries around the world, including high tariffs on Chinese imports. Some of these additional tariffs have been modified further since they were imposed in April 2025. For example, in May 14, 2025, the United States and China agreed to reduce the reciprocal tariff rates between the countries, with the U.S. dropping the reciprocal tariff rate for Chinese imports to 10%, while maintaining the existing 20% fentanyl tariff on Chinese goods. As of the filing date of this Report, covered imports from China relevant to our energy storage systems are subject to the current 10% China-specific “reciprocal tariff,” plus the current China-specific 20% “fentanyl-related tariff”, plus the 3.4% base tariff on all countries, plus the applicable Section 301 tariff. Tariffs that have been imposed by the United States government against other countries have and may in the future increase, decrease, or change with little to no advanced notice. The recent tariff policy changes and continued uncertainty relating to U.S. trade policy and the corresponding response from other foreign countries have impacted and may in the future impact the energy storage market, demand for our energy storage solutions by customers, our business, and results of operations as well as those of our customers, partners, and suppliers. The Company has exposure from the imposition of these new tariffs and from the tariff uncertainty in the global markets, as the Company imports components from overseas, including battery cells from China, into the United States for customers and projects in the United States. We have experienced paused and delayed customer contracting activity in response to the tariff-related uncertainty, including as a result of the mutual agreement by the Company with certain customers in the United States to (i) defer entry into new energy storage solutions contracts and (ii) pause active, currently signed contracts under project execution and we may see further impacts to customer contracting activity if there continues to be uncertainty relating to tariffs. This impact to customer contracting behavior from the uncertain trade environment has imp…

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Previous wording

•certain government initiatives and tax credits;

Current wording

•ability to take advantage of certain government initiatives and tax credits, including those related to the IRA and OBBBA;

Previous wording

The competitive landscape for battery energy storage varies across different geographies, countries, grid services, and customer segments. As the global demand for energy storage products and solutions continues to rise, so does the influx of new and potential entrants into the energy storage sector. Our key competitors currently include, but are not limited to, Tesla, Inc., Wartsila, Powin Energy Corporation, Sungrow, and Contemporary Amperex Technology Co., Limited. However, we believe we distinguish ourselves from competitors by our adeptness in identifying and addressing customer needs with tailor-made products, services, and use cases. We believe we maintain a competitive edge through our performance and value creation, evidenced by attributes such as low total cost of ownership, long-term reliability, diverse service options, and streamlined sales and delivery proce sses.

Current wording

The competitive landscape for battery energy storage varies across different geographies, countries, grid services, and customer segments. As the global demand for energy storage products and solutions continues to rise, so does the influx of new and potential entrants into the energy storage sector. Our key competitors currently include, but are not limited to, Tesla, Inc., Wartsila, Sungrow, and Contemporary Amperex Technology Co., Limited. However, we believe we distinguish ourselves from competitors by our adeptness in identifying and addressing customer needs with tailor-made products, services, and use cases. We believe we maintain a competitive edge through our performance and value creation, evidenced by attributes such as low total cost of ownership, long-term reliability, diverse service options, and streamlined sales and delivery proce sses.

Previous wording

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 has accepted and may in the future also accept terms that are less advantageous, including on pricing. Volatility in our supply chain has in the past impacted and may in the future impact demand from customers and in turn, our order intake and cause corresponding volatility in our results of operations. We have also taken steps to diversify our supply chain and continue to explore opportunities to diversify our supply base to mitigate the ever changing regulatory, environmental, social, and geographic conditions as well as the impact from trade policy, including tariffs. The Company faces exposure from the imposition of the recently enacted tariffs by the Trump administration, as the Company current imports certain components, including battery cells from China, into the United States for customers and projects in the United States. The Company is ramping up use of domestic manufacturing facilities in Arizona, Texas, Tennessee, and Utah, as well as our domestic inverter supplier in South Carolina. However, while our U.S. centric regionalization strategy is progressing, a large portion of our current suppliers are situated outside of the United States and there is currently uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, and government regulations. Changes to tariffs and trade policy have impacted our supply chain in the past and may impact our supply chain in the future 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. 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 and Part II, Item 1A. “Risk Factors” in this Report for further discussion on risks related to changes in the trade environment.

Current wording

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, and as a result, Fluence has accepted and may in the future also accept terms that are less advantageous, including on pricing. Volatility in our supply chain has in the past impacted and may in the future impact demand from customers and in turn, our order intake and cause corresponding volatility in our results of operations. We have taken steps to diversify our supply chain and continue to explore opportunities to diversify our supply base to mitigate the ever changing regulatory, environmental, social, and geographic conditions as well as the impact from trade policy, including tariffs. As discussed above, we face exposure from the imposition of the tariffs enacted by the Trump administration, as the Company current imports certain components, including battery cells from China, into the United States for customers and projects in the United States. The Company is continuing to ramp up use of domestic manufacturing facilities in Arizona, Texas, Tennessee, and Utah, as well as our domestic inverter supplier in South Carolina. Our product development, manufacturing, and testing protocols are complex and require significant technological and production process expertise. Any manufacturing delay or disruption from our contract manufacturers or any of our suppliers may cause a delay or disruption in our ability to meet commitments to our customers and has and may in the future impact our business and results of operations.

Previous 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.

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 and that meet applicable regulatory requirements.

Previous 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.

Current wording

Gross profit and gross profit margin may vary from quarter to quarter and are primarily affected by our volume fulfilled, product prices, product costs and project performance.

Previous wording

Operating expenses consist of research and development, sales and marketing and general and administrative expenses as well as depreciation and amortization. Personnel-related expenses are the most significant component of our operating expenses and include salaries, stock-based compensation, and employee benefits. We expect to invest in additional resources to support our growth which will increase our operating expenses in the future.

Current wording

Operating expenses consist of research and development, sales and marketing and general and administrative expenses as well as depreciation and amortization. Personnel-related expenses are the most significant component of our operating expenses and include salaries, stock-based compensation, and employee benefits.

Previous wording

Other expense (income), net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities, factoring income from sale of receivables. and 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”).

Current wording

Other (income) expense, net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities, factoring income from sale of receivables. and income or 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”).

Previous wording

Net loss may vary from quarter to quarter and is primarily affected by our gross profit and operating expenses as defined above.

Current wording

Net income (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 six months ended March 31, 2025 and 2024. The table is presented in Gigawatts (GW):

Current wording

The following table presents our order intake for the three and nine months ended June 30, 2025 and 2024. The table is presented in Gigawatts (GW):

Previous wording

Assets under management for service contracts represents our long-term service contracts with customers associated with our completed energy storage system products and solutions. We start providing maintenance, monitoring, or other operational services after the storage product projects are completed. In some cases, services may be commenced for energy storage solutions prior to achievement of substantial completion. This is not limited to energy storage solutions delivered by Fluence. Assets under management for digital software represents contracts signed and active (post go live). Assets under management serves as an indicator of expected revenue from our customers and assists management in forecasting our expected financial performance.

Current wording

Assets under management for service contracts represents our long-term service contracts with customers associated with our completed energy storage system products and solutions. We start providing maintenance, monitoring, or other operational services after the storage product projects are completed. In some cases, services may be commenced for energy storage solutions prior to achievement of substantial completion. This is not limited to energy storage solutions delivered by Fluence. Assets under management for digital software represents contracts signed and active (post go live).

Previous wording

Adjusted Gross Profit is calculated using gross profit, adjusted to exclude (i) stock-based compensation expenses, (ii) amortization, and (iii) other non-recurring income or expenses. Adjusted Gross Profit Margin is calculated using Adjusted Gross Profit divided by total revenue.

Current wording

Adjusted Gross Profit is calculated using gross profit, adjusted to exclude (i) stock-based compensation expenses, (ii) depreciation and amortization, and (iii) other non-recurring income or expenses. Adjusted Gross Profit Margin is calculated using Adjusted Gross Profit divided by total revenue.

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 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.

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”)

Previous wording

(b) Amount for the three and six months ended March 31, 2025 includes $3.1 million in severance costs related to restructuring. Amount for the six months ended March 31, 2024 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.

Current wording

(b) Amount for the three months ended June 30, 2025 includes approximately $1.4 million in severance costs related to restructuring, and $1.2 million in income as a result of a reduction of our Tax Receivable Agreement liability. Amount for the three months ended June 30, 2024, includes approximately $1.0 million in severance costs related to restructuring. Amount for the nine months ended June 30, 2025 includes $4.5 million in severance costs related to restructuring and $1.2 million in income as a result of a reduction of our Tax Receivable Agreement liability. 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 (as defined below) and $0.8 million in costs related to the December 2023 underwritten public offering.

Previous wording

Comparison of the three and six months ended March 31, 2025 and 2024

Current wording

Comparison of the three and nine months ended June 30, 2025 and 2024

Previous wording

Total revenue decreased by $368.7 million, or 37%, for the six months ended March 31, 2025, compared to the six months ended March 31, 2024. The decrease in total revenue for the six months ended March 31, 2025 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 solutions projects 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 wording

Total revenue increased by $119.2 million, or 25%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in total revenue for the three months ended June 30, 2025 was mainly attributable to an increase in revenue from our battery-based energy storage products and solutions which was primarily driven by increased volumes of Gridstack solutions projects fulfilled due to timing based on customer schedules and due to the pronounced backend nature of expected revenue for the fiscal year 2025 compared to the revenue distribution seen in

Previous wording

Total revenue decreased by $191.5 million, or 31%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in total revenue for the three months ended March 31, 2025 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 solutions projects 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 wording

Total revenue decreased by $249.5 million, or 17%, for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024. The decrease in total revenue for the nine months ended June 30, 2025 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 solutions projects 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

Previous wording

Cost of goods and services decreased by $331.9 million, or 37%, for the six months ended March 31, 2025, compared to the six months ended March 31, 2024. The decrease in cost of goods and services for the six months ended March 31, 2025 was mainly attributable to the decreased volumes of Gridstack solutions projects fulfilled due to timing based upon customer schedules.

Current wording

Cost of goods and services increased by $113.2 million, or 28%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in cost of goods and services for the three months ended June 30, 2025 was mainly attributable to the increased volumes of Gridstack solutions projects fulfilled due to timing based on customer schedules as discussed under“Revenue” above.

Previous wording

Cost of goods and services decreased by $169.9 million, or 30%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in cost of goods and services for the three months ended March 31, 2025 was mainly attributable to the decreased volumes of Gridstack solutions projects fulfilled due to timing based upon customer schedules.

Current wording

Cost of goods and services decreased by $218.7 million, or 17%, for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024. The decrease in cost of goods and services for the nine months ended June 30, 2025 was mainly attributable to the decreased volumes of Gridstack solutions projects fulfilled due to timing based upon customer schedules as discussed under “Revenue” above.

Previous wording

Gross profit decreased by $21.6 million, or 34%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The decrease in gross profit for the three months ended March 31, 2025 was primarily due to decreased volumes of Gridstack solutions projects fulfilled due to timing based upon customer schedules, while gross profit margin remained relatively consistent.

Current wording

Gross profit decreased by $30.7 million, or 17%, for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024. The decrease in gross profit for the nine months ended June 30, 2025 was primarily due to decreased volumes of Gridstack solutions projects fulfilled due to timing based upon customer schedules. Gross profit margin remained relatively consistent from the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024.

Previous wording

Research and development expenses increased by $4.7 million, or 27%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in research and development expenses for the three months ended March 31, 2025 was primarily attributable to a $1.4 million increase in expenditures for consulting services related to our forthcoming U.S. battery module manufacturing and a $1.5 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount to support our growth.

Current wording

Research and development expenses increased by $11.0 million, or 74%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in research and development expenses for the three months ended June 30, 2025 was primarily attributable to (i) a $8.9 million increase in expenditures for materials and supplies and consulting services related to our U.S. battery module manufacturing and Smartstack and (ii) a $1.9 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount.

Previous wording

Research and development expenses increased by $6.4 million, or 20%, for the six months ended March 31, 2025, compared to the six months ended March 31, 2024. The increase in research and development expenses for the six months ended March 31, 2025 was primarily attributable to a $2.3 million increase in expenditures for consulting services related to our forthcoming U.S. battery module manufacturing and a $2.0 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount to support our growth.

Current wording

Research and development expenses increased by $17.5 million, or 37%, for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024. The increase in research and development expenses for the nine months ended June 30, 2025 was primarily attributable to (i) a $13.3 million increase in expenditures for materials and supplies and consulting services related to our U.S. battery module manufacturing and Smartstack and (ii) a $3.9 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount.

Previous wording

Sales and marketing expenses increased by $5.4 million, or 34%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in sales and marketing expenses for the three months ended March 31, 2025 was primarily attributable to a $4.0 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount to support our growth.

Current wording

Sales and marketing expenses increased by $5.0 million, or 34%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in sales and marketing expenses for the three months ended June 30, 2025 was primarily attributable to (i) a $2.4 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount and (ii) a $1.2 million increase in information technology cost allocations.

Previous wording

Sales and marketing expenses increased by $12.9 million, or 49%, for the six months ended March 31, 2025, compared to the six months ended March 31, 2024. The increase in sales and marketing expenses for the six months ended March 31, 2025 was primarily attributable to a $10.7 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount to support our growth.

Current wording

Sales and marketing expenses increased by $17.9 million, or 43%, for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024. The increase in sales and marketing expenses for the nine months ended June 30, 2025 was primarily attributable to (i) a $13.1 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount and (ii) a $2.5 million increase in information technology cost allocations.

Previous wording

General and administrative expenses were relatively flat for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Current wording

Depreciation and amortization were relatively flat for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

Previous wording

Depreciation and amortization increased by $0.8 million, or 16% for the six months ended March 31, 2025, compared to the six months ended March 31, 2024, primarily attributable to increases in amortization of capitalized software.

Current wording

Depreciation and amortization increased by $0.8 million, or 9% for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024, primarily attributable to an increases in amortization of capitalized software.

Previous wording

Interest income, net decreased by $2.9 million, or 89%, in thesix months ended March 31, 2025, compared to thesix months ended March 31, 2024, primarily attributable to the interest expense of $3.3 million recognized for the 2030 Convertible Senior Notes (as defined below).

Current wording

Interest expense (income), net increased by $2.4 million in the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily attributable to the interest expense of $2.7 million recognized for the 2030 Convertible Senior Notes (as defined below).

Previous wording

Interest expense (income), net increased by $1.7 million, or 131%, in the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily attributable to the interest expense of $2.7 million recognized for the 2030 Convertible Senior Notes (as defined below), partially offset by an increase in interest income of $1.5 million related to cash deposits and investments.

Current wording

Interest expense (income), net increased by $5.3 millionin thenine months ended June 30, 2025, compared to thenine months ended June 30, 2024, primarily attributable to the interest expense of $5.9 million recognized for the 2030 Convertible Senior Notes (as defined below).

Previous wording

Other(income) expense, net increased by $1.8 million, or 820%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in other (income) expense, net for the three months ended March 31, 2025 was primarily attributable to a $3.6 million increase in favorable foreign currency exchange gains on monetary assets and liabilities period over period, partially offset by factoring income of $1.5 million related to the MRPA (as defined below) recorded in the prior period.

Current wording

Other(income) expense, net increased by $9.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in other (income) expense, net for the three months ended June 30, 2025 was attributable to a $9.1 million net increase in favorable foreign currency exchange gains on monetary assets and liabilities period over period.

Previous wording

Income tax benefit increased by $0.3 million, or 20%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in income tax benefit for the three months ended March 31, 2025 was primarily attributable to an increase in global pre-tax losses.

Current wording

Income tax expense increased by $0.3 million, or 8%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in income tax expense for the three months ended June 30, 2025 was primarily attributable to an increase in pre-tax income in foreign tax jurisdictions without historical losses.

Previous wording

Income tax benefit increased by $0.8 million, or 28%, for the six months ended March 31, 2025, compared to the six months ended March 31, 2024. The increase in income tax benefit for the six months ended March 31, 2025 was primarily attributable to an increase in global pre-tax losses.

Current wording

Income tax expense decreased by $0.5 million, or 35%, for the nine months ended June 30, 2025, compared to the nine months ended June 30, 2024. The decrease in income tax expense for the nine months ended June 30, 2025 was primarily attributable to an increase in global pre-tax losses.