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Fluence Energy Inc (NASDAQ:FLNC) revealed a significant reduction in its fiscal year 2025 guidance during its Q2 FY2025 earnings presentation on May 8, 2025, primarily due to uncertainties surrounding US tariffs on Chinese batteries. The energy storage solutions provider is now implementing targeted actions to mitigate these headwinds while leveraging its domestic manufacturing strategy as a long-term competitive advantage.
Executive Summary
Fluence reported Q2 FY2025 revenue of $432 million, down from $623 million in the same quarter last year. The company posted an adjusted EBITDA of -$30 million and a GAAP net loss of -$42 million. Despite these challenges, Fluence maintained a strong backlog of approximately $4.9 billion and a robust pipeline of around $22 billion.
As shown in the following quarterly performance summary:
The company’s adjusted gross profit margin remained relatively stable at 10.4% compared to 10.6% in Q2 FY2024, but operating expenses increased from $74 million to $84 million year-over-year. This combination of factors, along with tariff-related uncertainties, has led to a significant downward revision in the company’s full-year guidance.
Tariff Impact and Strategic Response
The most significant factor affecting Fluence’s outlook is the substantial tariffs on Chinese batteries, which are expected to reach 155.9% in calendar year 2025 and 173.4% in 2026. These tariffs have created economic uncertainty for US projects, leading Fluence to mutually agree with customers to pause certain contracts.
The tariff breakdown is illustrated in the following slide:
In response to these challenges, Fluence is accelerating its domestic content strategy. The company has established six production facilities across the United States, creating over 1,500 jobs. This integrated supply chain includes manufacturing operations for enclosures, modules, chillers, cells, inverters, and communication equipment.
As shown in the company’s domestic manufacturing footprint:
"We believe our domestic content strategy gives us a long-term advantage in the US market," stated Julian Nebreda, President & CEO of Fluence, according to the presentation. The company expects that current tariff levels are unsustainable and anticipates an eventual US-China trade deal to ease these tariffs.
Financial Outlook Revision
Due to the tariff situation, Fluence has significantly lowered its FY2025 guidance. Revenue expectations have been reduced from $3,100-$3,700 million to $2,600-$2,800 million, while adjusted EBITDA guidance has been cut from $70-$100 million to just $0-$20 million.
The updated guidance is detailed in the following slide:
The company explained the factors behind its revised EBITDA guidance, including an $80 million impact from reduced revenue, a $20 million incremental tariff impact, partially offset by $25 million in operational cost reductions.
As illustrated in this breakdown of EBITDA impacts:
Despite these challenges, Fluence emphasized that approximately 95% of its updated FY2025 revenue guidance is already covered by backlog and year-to-date recognized revenue. The company anticipates a 10-12% adjusted gross profit margin for FY2025, with revenue in the second half of the fiscal year expected to be weighted toward Q4 (approximately 65% in Q4 vs. 35% in Q3).
Market Position and Long-term Strategy
Fluence maintains that the fundamentals of the battery energy storage systems (BESS) market remain strong, with projected cumulative US energy storage capacity growing at a CAGR of approximately 30% from 2024 to 2030. The company also highlighted that BESS offers lower costs compared to traditional gas-fired generators, with a 4-hour BESS costing $8-10 per kW/month versus $14-18 for simple cycle gas plants.
The company’s backlog and pipeline remain robust, providing a foundation for future growth once tariff uncertainties are resolved:
Fluence is also advancing its product innovation with Smartstack technology, which offers improved safety, cost, and density benefits. The company has secured its first contract for Smartstack with FY26 delivery.
Liquidity Position
A key strength for Fluence during this challenging period is its strong liquidity position. As of March 31, 2025, the company had total liquidity of $1,142 million, including $610 million in cash and $532 million in availability under working capital facilities.
The company’s liquidity position is detailed here:
This substantial liquidity provides Fluence with financial flexibility to navigate the current tariff environment and continue executing its strategic initiatives, including its domestic manufacturing ramp-up.
Key Takeaways
Fluence emphasized four key takeaways from its presentation:
1. Recent tariffs have caused significant economic uncertainty, leading to the mutual agreement with customers to pause certain projects.
2. The company expects to capitalize on its rapid innovation strategy cemented by its domestic content approach.
3. The approximately $4.9 billion backlog combined with the new Smartstack product provides a solid foundation for future growth.
4. More than $1 billion in liquidity will help navigate the current environment and execute on strategic priorities.
While Fluence faces significant near-term headwinds from tariff uncertainties, its domestic manufacturing strategy, strong backlog, and robust liquidity position may provide a competitive advantage once the current trade tensions are resolved. However, investors should note that the stock has reacted negatively to the guidance cut, with after-hours trading showing a 17.29% decline to $3.73 following the earnings presentation.
Full presentation:
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