Fluence Energy Q3 FY2025 slides: Strong margins despite production challenges

Introduction & Market Context

Fluence Energy Inc (NASDAQ:FLNC) presented its third quarter fiscal year 2025 earnings on August 12, 2025, highlighting strong margins despite production challenges in its U.S. facilities. The energy storage solutions provider reported positive momentum in global markets, particularly benefiting from recent regulatory developments that favor domestic production.

The company’s presentation comes amid growing adoption of battery storage systems, with Fluence noting that in June, batteries supplied 26% of California’s evening-peak demand, surpassing gas generation for the first time. This market shift is supported by data showing battery storage is now more cost-effective than new natural gas generation.

Quarterly Performance Highlights

Fluence reported Q3 FY2025 revenue of $603 million, representing 1.8 GWh of Energy Storage Solutions delivered. While this figure marks a 25% increase from the $483 million reported in Q3 FY2024, it fell approximately $100 million below the company’s internal plan due to slower production ramp at new U.S. module and enclosure facilities, which operated about 15% below expectations.

Despite these production challenges, the company delivered strong profitability with adjusted EBITDA of $27 million, compared to $16 million in the same period last year. GAAP net income reached $7 million, a significant improvement from $1 million in Q3 FY2024.

As shown in the following financial performance summary:

The company’s gross profit margin showed some compression year-over-year, with GAAP gross profit margin at 14.8% compared to 17.2% in Q3 FY2024, and adjusted gross profit margin at 15.4% versus 17.5% in the prior year. However, Fluence emphasized that the current quarter’s margins were driven by strong execution and higher contributions from Europe and Asia.

Strategic Initiatives & Regulatory Tailwinds

A significant focus of Fluence’s presentation was the recently passed One Big Beautiful Bill Act (OBBBA), which the company views as highly favorable for its domestic content strategy. The legislation extends the Section 48E Investment Tax Credit ( ITC (NSE:ITC)) for storage through 2034, providing long-term security for the industry while limiting Chinese competition through Foreign Entity of Concern (FEOC) restrictions.

The following chart illustrates how the ITC structure supports Fluence’s strategy:

Fluence highlighted its established U.S. supply chain as a competitive advantage, with six production facilities creating over 1,500 jobs across the country. The company noted it is working with domestic suppliers to ensure compliance with OBBBA requirements by the end of the calendar year.

The company’s integrated domestic content supply chain spans multiple states:

Julian Nebreda, President & CEO, emphasized that the company expects its "domestic suppliers to achieve compliance with OBBBA requirements, including non-FEOC and domestic content thresholds, by end of the calendar year."

Financial Analysis & Guidance

Fluence maintains a strong liquidity position with $460 million in cash as of June 30, 2025, and $443 million available under credit facilities, bringing total liquidity to $903 million. With an additional $150 million supply chain facility signed on August 8, the pro-forma total liquidity reaches $1.053 billion.

The company’s liquidity position is illustrated in the following chart:

The company’s backlog stands at approximately $4.9 billion as of June 30, 2025, with an additional $1.1 billion added since that date. The pipeline remains robust at $23.5 billion, distributed across Americas (47%), EMEA (28%), and APAC (25%).

This strong backlog and pipeline provide visibility into future revenue:

For FY2025 guidance, Fluence is maintaining its revenue range of $2.6-$2.8 billion but now expects to be at the bottom end primarily due to the slower U.S. production ramp. The company is maintaining its Adjusted EBITDA guidance of $0-$20 million, largely due to strong Q3 margins coupled with cost reductions.

The full guidance update is shown below:

Forward-Looking Statements

Looking ahead, Fluence highlighted several positive developments that support its growth trajectory. The company secured two Australia contracts totaling approximately $700 million, including the largest project in its history. All previously paused U.S. contracts have been reactivated following tariff and regulatory clarity.

The company also emphasized emerging opportunities in the data center market, noting an additional $8.5 billion total addressable market from behind-the-meter applications. Fluence believes battery storage systems can help data centers smooth power fluctuations, particularly during AI/chip activity surges.

Fluence noted that $2.5 billion of FY2026 revenue is now secured in backlog, providing strong visibility into next year’s performance. The company’s executive summary highlighted the key metrics driving its positive outlook:

As Fluence navigates production challenges in its U.S. facilities, the company appears well-positioned to capitalize on favorable regulatory developments and growing demand for energy storage solutions globally. With strong margins, robust backlog, and improving clarity on tariffs and domestic content requirements, the company maintains a cautiously optimistic outlook despite revising revenue expectations to the lower end of its guidance range.

Full presentation:

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