Fluence Energy (FLNC) Q3 2024 earnings summary

Executive summary

• Q3 FY2024 revenue reached $483.3 million, surpassing expectations by 20%, with adjusted gross margin of 17.5% and adjusted EBITDA of $15.6 million, marking a return to profitability and four consecutive quarters of double-digit margins.

• Achieved record $1.3 billion in new contracts, raising backlog to $4.5 billion and pipeline to $20.4 billion, both up over 50% year-over-year.

• Annual recurring revenue (ARR) from services and digital business reached $80 million, with guidance raised to ~$100 million by year-end.

• Free cash flow for the first nine months was $64.3 million, with cash and equivalents at $513 million and total liquidity over $1 billion after upsizing the credit facility.

• Net income for the quarter was $1.1 million, reversing a $35 million loss in the prior year quarter.

Financial highlights

• Q3 revenue was $483.3 million, down 10% year-over-year, but 20% above guidance due to early project completions.

• Adjusted gross profit was $85 million (17.5% margin); GAAP gross margin reached 17.2%.

• Adjusted EBITDA for Q3 was $15.6 million, up from a loss of $27.5 million in the prior year quarter.

• Free cash flow for the first nine months was $64.3 million; cash and equivalents at quarter-end were $513 million.

• Operating expenses (excluding stock comp) were $73 million in Q3, 15.1% of revenue.

Outlook and guidance

• FY2024 revenue guidance narrowed to $2.7–$2.8 billion, with most shortfall shifting to FY2025 due to project delays and customer postponements.

• FY2024 adjusted gross margin expected at the upper end of 10%-12%; adjusted EBITDA guidance $55–$65 million.

• FY2025 revenue growth outlook reaffirmed at 35%-40% over original FY2024 guidance midpoint of $3 billion.

• ARR guidance raised to ~$100 million by end of FY2024.

• 100% of Q4 revenue is covered by backlog; 46% of required Q4 deliveries already shipped or in transit.