Fluence Energy (NASDAQ: FLNC), a leader in energy storage solutions, has reported a strong financial performance for the fourth quarter of 2024, marking its first profitable full year since inception. The company announced record revenue of $2.7 billion, a significant 22% growth from the previous year, alongside a 12.6% gross margin and $78 million in adjusted EBITDA. The company's strategic initiatives, including a focus on U.S. domestic content strategy and the production of its first U.S.-made battery modules, have positioned it favorably in the market.
Key Takeaways
- Fluence Energy achieved a record revenue of $2.7 billion in Q4 2024, up 22% from 2023.
- The company recorded its first full-year profit and a 12.6% gross margin.
- Free cash flow for the quarter stood at $72 million, with $518 million in cash reserves.
- Annual recurring revenue increased by 80% to $800 million.
- The backlog and pipeline expanded significantly, indicating strong future growth potential.
Company Outlook
- Fluence Energy anticipates a 50% revenue growth in fiscal 2025, projecting around $4 billion.
- The company expects to maintain a growth trajectory with a 30%+ growth projected for fiscal 2026.
Bearish Highlights
- The company is preparing for potential tariff increases on Chinese batteries, which may impact costs.
Bullish Highlights
- Strategic focus on U.S. domestic content has led to the production of U.S.-made battery modules.
- Secured battery cell production lines in Tennessee and upgraded to superior 530 amp-hour cells.
- Strong international expansion, with Europe and Asia now accounting for 40% of the business.
Misses
- There were no significant misses reported in the earnings call.
Q&A Highlights
- CEO Julian Nobreda emphasized the company's record revenue and gross margin.
- Nobreda also highlighted the competitive advantage gained through establishing a U.S. supply chain.
- CFO Ahmed Pasha expressed confidence in achieving future financial thresholds.
In the backdrop of global electricity demand expected to rise by 15-20% in the next decade and renewable energy projected to reach 50% of global electricity production by 2030, Fluence Energy's market outlook appears robust. The decline in lithium carbonate prices by 50% is poised to reduce battery storage system costs, further enhancing the company's competitive position.
Fluence Energy's strategic initiatives, such as its domestic content strategy and the production of battery modules in Utah, have been pivotal in its financial success. With a growing backlog and pipeline, the company is well-positioned to capitalize on the increasing demand for energy storage solutions. The company's financial health, marked by a strong cash position and substantial free cash flow, suggests a solid foundation for sustained growth.
Full transcript - Fluence Energy Inc (NASDAQ:FLNC) Q4 2024:
Conference Call Operator: Good day, and welcome to Fluence Energy's 4th Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call may be recorded.
I would now like to turn the call over to Lex May, Vice President of Investor Relations. Please go ahead.
Lex May, Vice President of Investor Relations, Fluence Energy: Thank you. Good morning, and welcome to Fluence Energy's Q4 2024 Earnings Conference Call. A copy of our earnings presentation, press release and supplementary metric sheet covering financial results along with supporting statements and schedules, including reconciliations and disclosures regarding non GAAP financial measures are posted on the Investor Relations section of our website atfluenceenergy.com. Joining me this morning on our call are Julian Nobreda, our President and Chief Executive Officer Ahmed Pasha, our Chief Financial Officer and Rebecca Bole, our Chief Products Officer. During the course of this call, Fluent (NASDAQ:FLNT)'s management may make certain forward looking statements regarding various matters relating to our business and company that are not historical facts.
Such statements are based upon the current expectations and certain assumptions and are, therefore, subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward looking statements and for more information regarding certain risks and uncertainties that could impact our future results. You are cautioned to not place undue reliance on these forward looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward looking statements for new information.
This call will also reference non GAAP measures that we view as important in assessing the performance of our business. A reconciliation of these non GAAP measures to the most comparable GAAP measure is available in our earnings materials on the company's Investor Relations website. Following our prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak on this call, please limit yourself to one initial question and one follow-up. Thank you very much.
I'll now turn the call over to Julian.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, Lex. I would like to stand a warm welcome to our investors, analysts and employees who are participating on today's call. I will review our Q4 and full year results briefly and then provide an update on our business and the strong growth prospects we continue to see. Ahmed will then go into more detail on our financial results and outlook. Beginning on Slide 4, we delivered strong financial performance.
More specifically, we reported a profit for fiscal year 2024, our first ever on a full year basis and generated free cash flow. These results demonstrate that we can generate strong profitable growth at scale. We also met or exceeded our outlook in all key metrics. More specifically, we generated a record of approximately $2,700,000,000 in revenue with a 12.6% gross margin, earned $78,000,000 of adjusted EBITDA, which is almost $140,000,000 higher than fiscal year 2023, an $18,000,000 better than the midpoint of our expectations. 2nd, we made good progress in demonstrating the value of our services and digital businesses as we achieve our goal of increasing our annual recurring revenue by 80% to 800,000,000 dollars We continue to make strides in our digital software and it is getting acknowledged by the market.
Earlier this month, Fluence was named the top integrator on the GuideHouse Insight Leaderboard for energy storage software. The recognition highlights our exceptional technological development and strong partner relationships. 3rd, to support our future growth, we continue to add to our backlog with another strong quarter of more than $1,000,000,000 of order intake. Our backlogs have grown this year by 55% to $4,500,000,000 providing strong visibility to future revenue. And finally, to our proactive approach to margin expansion and working capital management, we generated $72,000,000 of free cash flow for the year and ended the quarter with $518,000,000 of cash.
Turning to Slide 5. I would like to provide an overview of the market growth of Energy Storage, which continues to surpass expectations and why we do not expect the growth to decline in light of the recent changes in the U. S. Government administration. 1st, a long period of stagnation, we're seeing electricity demand growth globally, which is driven by rapid economic development, the growing deployment of data centers and the electrification of sectors such as transportation, commercial building and selective industrial processes.
As an example, the U. S. Electricity demand is projected to rise 15% to 20% in the next decade, and we're seeing similar trends in other countries. 2nd, renewal energy has been the fastest growing source of power generation for a significant time already. Current growth projections will put renewals at about 50% of global electricity production in 2,030.
This rapid adoption reflects the attractive levelized cost of renewable energy and the faster deployment time for renewable energy as compared to gas and nuclear. For most markets, renewable energy paired with BEST (NYSE:BEST) is the fastest and most economical way to meet electricity needs. 3rd, the energy storage industry has been benefiting from declining lithium carbonate prices, which declined by almost 50% year over year. The lower input cost has reduced the cost of battery storage system by 40%. This more favorable price levels have resulted in 140% increase over the last 12 months in our volume of orders from existing and new customers as their projects became more attractive.
Turning to Slide 6. Customer demand for energy storage is reflected in our current backlog of 4,500,000,000 dollars the highest level in our history. It is important to note that during the last 2 years, we have experienced the highest interest rate in 3 decades. And despite that, our backlog has doubled since 2022. This higher volume sets a good foundation for future growth in our recurring services and digital businesses.
Turning to Slide 7. The strong growth prospects for Energy Storage are also reflected in our pipeline. As a reminder, our pipeline is a rolling 24 month view, thus giving us confidence in our ability to continue our growth trajectory. I am pleased to share that we have increased our pipeline by $500,000,000 from the end of last quarter to approximately $21,000,000,000 currently. This is particularly impressive considering that during the quarter, we converted $1,200,000,000 into backlog.
To provide more perspective, our pipeline has increased 60% from this time last year, which reflects significant growth prospects for energy storage globally. We continue to see a very robust international market, which will further diversify our geographic mix in the coming year. Nearly half of our $21,000,000,000 pipeline is in the U. S. Market and the rest in the international market with Germany, Australia, Canada and Chile representing the bulk of it.
Turning to Slide 8. Speed and innovation are key elements of our strategy for growth. To that point, we have been the 1st to bring innovation to the U. S. By offering domestic content battery technology to the U.
S. Storage market and to establish a robust U. S. Supply chain. Even before the Inflation Reduction Act or IRA, we recognized the need for a U.
S.-based supply chain and begun localizing our operations to reduce reliance on Chinese imports. As shown on Slide 8, this U. S. Supply chain is essential to delivering our domestic content offering. Today, we can offer 100% non Chinese product supported by 6 U.
S. Production facilities owned and operated by our supply chain partners, 5 of which are located in states that were won by President Trump and benefit from the IRA manufacturing incentives. Development of this domestic supply chain has created thousands of associated jobs and strengthened our commitment to the U. S. Energy security.
Even though we believe that a full repeal of the IRA is unlikely, we have positioned Fluence to be successful both under the current regime or under a new regime defined by higher tariffs. I'm pleased to announce that in September, we begun producing our 1st U. S.-made battery modules at our Utah facility. This model production line is equipped with cutting edge robotics and automation technology, enhancing both our production efficiency and product quality. Additionally, this month we received our UL nineteen seventy three certification at the module level, signifying that our modules meet the highest standards for safety, performance and quality.
This certification is a significant milestone, reinforcing our commitment to delivering the reliable top tier energy storage products. Moving to Slide 9. As you may recall, in the summer of 2023, we reached an agreement with ASC to secure 2 dedicated battery cell production lines at their facility in Tennessee. This U. S.-based cell production provides us with a distinct competitive advantage, allowing us to offer American made products to our customers, a unique capability among our peers.
The first line started producing its initial battery cells as part of the commissioning process and is expected to begin ramping up production at the end of the year. As battery sales are produced, they will be transported to our dedicated contract manufacturing facility in Utah. Here, we will produce our U. S.-made battery modules and integrate them with other components to create finished products ready for deployment at customer sites. We anticipate a gradual ramp up in module production over the coming quarters as we scale this capability, which is a key step in fulfilling our commitment to our robust localized supply chain.
We have recently made the strategic decision to upgrade the 2nd cell production line to manufacture the 5 30 amp hour cells instead of the 305 amp hour cells. By taking the strategic step to invest in manufacturing the 530 cell, we will be among the first to bring this technology to the U. S. Market, which provides superior density, resulting in slower degradation and longer battery life, thus providing significant value to our customers. Furthermore, these enhancements double our U.
S. Sale manufacturing capacity, which enables us to meet our entire near term volume expectations in the United States with qualified domestic content products. Additionally, it secures our exclusivity for a potential third line to support our long term growth objectives. Finally, I would like to discuss the impacts of any potential increase in tariff on Chinese batteries. Today imported battery pay a duty of 7.5 percent and this is set to increase to 25% in 2026.
If the tariff is raised even further or ahead of the current schedule, it could cause some short term disruptions in the market, while the markets digest the new price. However, we have taken proactive measures to mitigate the potential impact on our U. S. Products that are planning to utilize foreign sales in 2025, which include bringing these foreign sales into the country sooner than planned. We have also secured contracts with cell manufacturers that provides a cost sharing of tariff increases, thus further mitigating our risk.
Our view is that in the long run, higher tariffs should benefit U. S.-based storage providers such as Fluence, giving us a competitive edge over other players that lack domestic manufacturing capabilities. I am confident that in a high tariff scenario, our domestic content strategy will be able to deliver significant value to our customers and shareholders. Thus, we remain steadfast in our ability to grow and thrive in this new political environment regardless of tariff policy. We solidified our business model for potential policy shift, and we believe we are best positioned to capture the growing demand for resilient, cost effective energy storage solutions.
This concludes my prepared remarks. I will now turn the call over to Ahmed.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: Thank you, Julian, and good morning, everyone. Today, I will review our Q4 and full year 2024 financial results and our outlook for fiscal 2025. Overall, as Julian mentioned, we are pleased with our financial performance, which reflects significant improvement across all dimensions of our business. We achieved strong growth in both revenue and profitability, while continuing to invest in maintaining our leadership position and delivering substantial value to our customers and investors. So let me begin by summarizing my thoughts on the Q4.
Turning to Slide 11. We generated our highest ever quarterly revenue of $1,200,000,000 which was approximately 82% higher than the same quarter last year and 154% improvement from Q3. Furthermore, we generated $159,000,000 of adjusted gross profit, representing a gross profit margin of approximately 13%. This was our 5th consecutive quarter of double digit gross profit margin. The result for the Q4 reflect our laser focus on project execution, which has enabled us to achieve project milestones on time and on budget.
After operating expenses, we generated a record $87,000,000 of adjusted EBITDA in the 4th quarter. Turning to Slide 12. Now I would like to take a moment to discuss our full year performance for fiscal 2024. We delivered approximately $2,700,000,000 of revenue, representing 22% growth from fiscal 2023. We continue to build on our strong presence in the Americas and also saw revenue accelerate in Europe and Asia.
With growth across the world, Europe and Asia now represent 40% of our business versus 30% in the last 2 years. In terms of gross profit margin, we exceeded our goal by a percentage point yielding an adjusted gross profit margin of 12.9%. These strong results helped us to deliver $78,000,000 in adjusted EBITDA, which is well in excess of our guidance range of $55,000,000 to $65,000,000 This outperformance is largely driven by our strong execution that enabled us to come in under budget on select projects as we benefited from key initiatives that leverage our scale and improve structural cost. In fact, as you can see on Slide 13, over time we have steadily increased our gross profit margin, which had been negative until 2022. This continued improvement demonstrates our focused approach to better drive quality, cost and execution productivity across the value chain.
Turning to Slide 14, I would like to highlight that in fiscal 2024, we generated positive free cash flow for the first time as a public company. More specifically, we delivered $72,000,000 of free cash flow versus negative $115,000,000 last year. This was largely driven by significantly improved profitability as we saw a $140,000,000 positive swing in adjusted EBITDA versus last year. Given the capital light nature of our business model, growth in free cash flow should track growth in EBITDA, excluding any changes in working capital. Free cash flow will be an important source of funding for the long term growth of our business.
Turning to Slide 15, we are initiating revenue guidance for fiscal 2025 with a midpoint of $4,000,000,000 This is in line with our prior expectations and represents 50% growth from fiscal 2024. We feel confident about our ability to achieve this target, which is primarily driven by 3 factors. 1st, approximately 2 third of our 2025 revenue is currently in our backlog, consistent with where we were at this point last year. 2nd, we are in advanced and exclusive negotiations on a number of projects totaling $1,500,000,000 in value. And 3rd, we have an increasing number of opportunities illustrated by our growing pipeline of projects across the world, as Julian mentioned.
For fiscal 2025, we expect an adjusted gross profit margin of between 10% 15%. As a result, we expect to deliver an adjusted EBITDA midpoint of $180,000,000 And for ARR, we continue to see traction in our platform and expect to end the fiscal year with 140 $5,000,000 of ARR. Additionally, from a timing perspective and consistent with last year, we expect fiscal 2025 revenue to be back end loaded with approximately 20% of annual revenue in the first half and the remaining 80% in the second half of fiscal year. Due to relatively flat nature of our fixed cost versus our quarterly revenue profile, we expect adjusted EBITDA to be negative in the first half of the year, consistent with last year. Finally, looking ahead to fiscal 2026, we continue to expect strong growth as Julian discussed.
Using our fiscal 2025 revenue guidance midpoint of $4,000,000,000 as a base, we expect our growth to be in line with energy storage market as a whole or approximately 30% plus annually for fiscal 2026 and beyond. Turning to Slide 16 with an update on our liquidity. As you can see, we finished the year with $963,000,000 in total liquidity, roughly half of which is cash on hand and the rest is availability in our credit facilities. Our liquidity reflects improving profitability and our new revolver we signed earlier this year, which further enhances our solid liquidity profile and financial flexibility. Turning to Slide 17, in terms of our 2025 liquidity outlook, we see the need for approximately $300,000,000 of additional working capital to support the significant future growth that we are projecting.
This is split roughly evenly between 1st, working capital required to support substantial growth in revenue in 2025 and beyond and second, working capital needed to invest in our domestic manufacturing capability to enable 100 percent of our U. S. Demand to qualify for domestic contact. To fund this opportunity, we have several options available to us, including our existing cash, which will be augmented by future free cash flow, borrowing capacity under our revolver and balance sheet capacity for either debt or debt like securities as we currently have no debt. Overall, we believe that we have flexibility with respect to funding that will enable us to capitalize on enormous opportunity in this business, cementing ourselves as a global leader in battery storage.
As we consider these funding options and the timing, we will be guided by our commitment to maintain strong liquidity and optimal capital structure. In summary, we are pleased with our current year performance and entering fiscal 2025 with momentum. With backlog and development pipeline at record levels, we are well positioned to deliver continued profitable top line. With that, let me turn the call back to Julian for his closing remarks.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, Amit. Turning to Slide 18 and in conclusion, I want to emphasize the key takeaway from this quarter's results.
Rebecca Bole, Chief Products Officer, Fluence Energy: First,
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: 1st, our Q4 performance demonstrates our ability to deliver profitable growth. This was an important test for us as we generated 45% of our fiscal year revenue in the final quarter of the year. 2nd, U. S. Demand for battery storage is not going to be impacted by the change in political environment.
We're seeing real load growth for the first time in decades and renewables plus storage is one of the fastest and most economic ways to serve this load. 3rd, we have a clear competitive advantage as we have established a U. S. Supply chain that will enable us to meet U. S.
Demand through domestic sources of production. And 4th, our strategy of rapid innovation allows us to meet our growing customer needs with solutions that are resilient to a changing world, provide our customers with a secure route to value and the profit returns our shareholders say. With that, I would like to open up the call for questions.
Conference Call Operator: Thank you. Our first question comes from George Giannakoulis with Canaccord Genuity. Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Good morning, George. How are you?
George Giannakoulis, Analyst, Canaccord Genuity: Doing great. Good morning, everyone. Thank you for taking my questions. Maybe just to start off with your guidance for fiscal 2025 and your backlog coverage. Given all the changes in Washington and the back end loaded nature of your revenue guidance, can you just sort of discuss how cancelable or solid your backlog is just to give some sort of confidence that you can reach this twentyeighty split going into next year?
Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, George. So as we said, we have roughly 2 thirds of our revenue midpoint guidance in our backlog already. And we are roughly we have around $1,500,000,000 in contracts that were in late stages of negotiations or we are selected by the customer for the contract. That roughly the EUR 1,500,000,000 more than half will be revenue that will be covered in 2020 that will convert into revenue into 2025. So we feel very confident of our midpoint guidance range.
We have some wood to chop. There's some more contracts that we need to sign, but we feel very good with where we are today. In terms of our backlog, as you know, we make we take a very, very strict view of our backlog situation. And we really look at in order to have things considered into our backlog, there need to be things that are signed and that there is that we believe we can that there is a real commitment from our customers to take those projects on time and deliver. So they're binding deals.
So we feel very confident that we have seen very little to none. We have seen delays, as you know, as we have talked last year, but we have not seen real cancellations of projects on the backlog once we signed it, essentially because we take a very, very strict view. As I always said, there are contracts we have signed that are still subject to certain conditions that are in pipeline. They're not in backlog because they're not at the stage where they can be considered at that point. So we feel very confident about the 66% coverage in our backlog.
The contracts were in late stage of negotiation, we've been selected that will represent around $1,500,000,000 of backlog or around $800,000,000 of revenue for the year for 20 25. Percent. And then a small portion we need to cover, we believe we will be able to cover from now to March of next year.
George Giannakoulis, Analyst, Canaccord Genuity: Thank you. Maybe as a follow-up, just to ask about your market share. Can you help us discern what's happening in your bake offs, particularly as it relates maybe to Tesla (NASDAQ:TSLA) or Vartsila? How comfortable do you feel that you're maintaining your market share levels in the deals that you're winning or losing? Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Good. Very, very good point. We work in front of the meter outside of China, which is a lot of some of our players do behind the meter and C and I and some of our competitors and some of our competitors do work in China. So it's we have to kind of build our own view of what the time we are. But with our view of time, we see our market share sustaining.
It moves up and down a little bit, but generally sustaining over time. We have a very competitive offering, and Tesla is clearly a very important competitor. Some of the Chinese have become very, very aggressive as of late. But generally, we feel that we have a competitive offering that wins and we've been able to keep our market share. Having said that, we more and more and we try to highlight this in our presentation, in our prepared remarks, innovation is a driver of value here, being ahead of the market.
And what we have done in the U. S. And some things we're working on to really keep the market being ahead of the market, that's a way we're going to win at the end of the day, having an innovative product, having a resilient supply chain that can deliver value to our customers as we work. So it's a competitive industry. As I tell my team all the time, I love competition as long as I'm winning.
So I love it. It's great to be in a place that you're required to constantly be thinking what to do, how to do it better and to find a route to win it. We've been very successful. We are committed to keep being continue in this range in this position.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, George.
Conference Call Operator: Thank you. Our next question comes from Brian Lee with Goldman Sachs and Company. Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Hey, Brian. Good morning. How are you?
Brian Lee, Analyst, Goldman Sachs: Hey, Lillian. Good morning. I'm doing well. Thanks for taking the questions. I wanted to maybe follow-up on George's question just on the revenue guidance you have.
The parameters you're providing are helpful, right, this kind of 2 thirds backlog coverage, the late stage negotiations. But I just want to kind of rewind a little bit. If you think about this time last year, you had a $3,000,000,000 revenue midpoint, some stuff didn't really play out the way you wanted in the back half of the year. So you're coming in a little bit about 10% shy of what you thought the midpoint was going to be for fiscal 2024. You're using the same kind of parameters to set the midpoint it seems like for 2025.
So can you maybe just walk us through maybe one, what happened in 2024 to make you miss the initial revenue midpoint that you're expecting coming into the year? Why is that not going to repeat in 2025? And are there any parameters in 2025 that look on a year on year basis better than 2024 where even with the same backlog coverage coming into the year, you feel even more confident about hitting the midpoint this year versus maybe not having been able to do so last year?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Great. Good question. Thanks. So we are similar coverage than we had the last 2 years. So both in 2023 and 2024, it hasn't changed, roughly 2 thirds by the beginning of the year.
I think the difference this year is the fact that we have EUR 1,500,000,000 of contracts in late stages of negotiation where we have been selected, which give us very, very clear line of sight to meeting our numbers. So that's how I'll tell you if I were to compare last year to this year. Last year so that's the main difference, I think, from where we are. And we have clearly a route a very clear route to reaching our mid time with our midpoint with projects and customers we're working on that where we have not been selected yet or where we have still competing somehow. But we believe we did normally a normal hit rate, which should be able to get to our midpoint comfortably.
So that's what I will say where we are today. I think that way you could, but last year, as you know, what we had was a project that got delayed due to certain issues. And it could happen again, but I if you ask me where I am today, looking at the backlog, looking at the projects that we have, we're in late stages in late stage and looking at the our route to meet in the midpoint. I feel very comfortable meeting the midpoint.
Brian Lee, Analyst, Goldman Sachs: Okay. That's helpful. And then maybe just quick follow ups. The 1,500,000,000 in late stage, can you give us some sense of the mix breakdown? Is that mostly U.
S? Is that all international? And then on the gross margin guidance, the $10,000,000 to $15,000,000 I mean, you ended up doing 100 basis points better than the 10 to 12 from last year. Why you're not a tighter range? What's the better precision from last year versus this year where it's a wider range?
Thanks guys.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: I will let Amit answer that point.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: So I think the mix is roughly half of that is in the U. S. And half is in Asia, the mix of $1,500,000,000
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: And the range you said.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: And the range for
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: You mentioned the range was wide.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: Yes. I think the range for the 10%, I think if you look at our last year guidance, there was about 10% from the midpoint, plus minus and this year is pretty much the same, 10% plus minus from the midpoint.
Brian Lee, Analyst, Goldman Sachs: No, I was talking more about the last year you had a 200 basis point range on gross margins. This year you're kind of sticking to the 10% to 15% wider range even with the difference last year.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: That's right.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: That's right. That's right. That's right. And this year, we earned 13% and on midpoint, I think we are giving 10% to 15%, which is consistent with what we gave last time for 25%. And frankly, as we are working on it, I think we still have to sign more contracts.
That's why we thought it makes sense to stick to what we gave the guidance for 25% in the past. But as we move progress in the subsequent quarters, we will update you where we stand. But hopefully, we can improve it. But at this point, we thought it makes sense to just stick to 10% to 15%. But this is something that frankly is our key focus to continue to improve our performance as you have seen in the last several quarters.
So that is something that is on the top of our priority list to continue to improve and that will help improve the bottom line.
Brian Lee, Analyst, Goldman Sachs: Okay. Makes sense, guys. Appreciate it. Thanks.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, Brian.
Conference Call Operator: Thank you. Our next question comes from Dylan Massaro with Wolfe Research. Your line is open.
Dylan Massaro, Analyst, Wolfe Research: Hey, good morning everyone.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Good morning, Dylan. How are you?
Dylan Massaro, Analyst, Wolfe Research: Doing well. So I just want to, I guess, check-in on the confidence
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: level of
Dylan Massaro, Analyst, Wolfe Research: the $21,000,000,000 in the pipeline, just given kind of the deflationary pricing environment that we're in. Are you feeling good about kind of those assumptions that underlie that pipeline figure?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Yes. That pipeline is essentially constantly being adjusted for pricing changes. So I won't tell you that 100% it is today, but generally 95% should reflect current prices. So it reflects where we see prices today, it's reflected in the total value of the pipeline.
Dylan Massaro, Analyst, Wolfe Research: Got it. Thanks. And then on the upgrade to the 5 30 amp hour cells, it sounds like that's a higher value product. So is it fair to say this would be accretive to overall gross margins?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Well, it's difficult to tell you today whether how much gross margin we can capture out of it. I will say that it will be within the 10% to 15%. But if you know, the most recent technology in batteries and we have made the decision to bring the most state of the art technology to the U. S. I think that we want something that we want to prove is that you can build these things in the U.
S, you can manufacture this in the U. S. With the same quality, with the same precision, with the same capabilities as any other market in the world. That's kind of what we're trying to do. We have the people, we have the energy, we have the capabilities, the infrastructure.
It can be done here as good as you can do it anywhere else. So that's essentially the point of bringing that technology. Whether it brings gross margin, we'll see over time. Today, I'll say it's within the 10% to 15%.
Dylan Massaro, Analyst, Wolfe Research: Great. That's it for me. Thank you.
Conference Call Operator: Thank you. Our next question comes from Amit Thacker with BMO Capital Markets. Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Hi, good morning.
Amit Thacker, Analyst, BMO Capital Markets: Thank you. Thanks for taking my question. I just wanted to kind of rewind back to, I guess, love kind of the update you all gave to 2025 last quarter. I think you had kind of talked about a 35% to 40% revenue growth rate off of the original $3,000,000,000 kind of midpoint. The low end of the guidance range for revenues $3,600,000,000 is a little bit light of that or what that would imply.
I know you mentioned you are not really seeing much in the way of project cancellations. I was just going to kind of speak to kind of like, are you having some projects that kind of slipped from last quarter to this quarter's update into fiscal year 2026 or any color around that? Thank you.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: I don't think Amit, this is Amit. I don't think there is anything you need to read too much into. I think if last quarter we if you recall, we our midpoint was $2,750,000,000 and but we said that we continue to expect growth from the $3,000,000,000 midpoint 35% to 40%. And we are landing it pretty much at the same place for the guidance we gave you. And frankly, I mean, as we discussed, I mean, based on what we have signed and what we have exclusive deals that we are working on, we feel pretty good that we can achieve that threshold.
So our range is now 3.6% to 4.4%. And I think midpoint with 4%, I think this is pretty much at the same place that we discussed last time. So feel pretty good. Obviously, we as Julian mentioned, we have to work to chop. But at the same time, I think the pipeline and exclusivity we have on the deals, we feel pretty good that we can achieve that threshold.
Amit Thacker, Analyst, BMO Capital Markets: Okay. And just one quick follow-up. You mentioned kind of a like a $300,000,000 kind of working capital investment for the year. You're going to be EBITDA positive by the side and please sell this year. Any view on what we should kind of assume for kind of a cash conversion off of your kind of your adjusted EBITDA?
And is that $300,000,000 working capital investment, is that kind of your peak need or is that kind of the average investment over the year?
Ahmed Pasha, Chief Financial Officer, Fluence Energy: That is something that we need for this year, I think, up front, as I discussed, I mean, for to securize our U. S. Domestic content strategy, I think, to implement on that plus the working capital needs for revenues growing roughly 50%. So cash conversion question, yes, I think cash is we are expecting $180,000,000 I think our free cash flow will be positive before working capital needs because we have as we discussed revenue is back end loaded. So I think net net cash flow will be positive before working capital, but the cash will be coming in mostly at the back end.
Amit Thacker, Analyst, BMO Capital Markets: Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, Amit.
Conference Call Operator: Thank you. Our next question comes from Christine Cho with Barclays (LON:BARC). Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Good morning, Christine. Good morning. How are you?
Christine Cho, Analyst, Barclays: Good morning. Good. How are you?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Great.
Christine Cho, Analyst, Barclays: So I just have one question. You mentioned bringing in foreign sales sooner into the U. S. I'm sorry if I missed this, but is this included in your $300,000,000 working capital needs? And then if you could also give us maybe certain sort of idea or a ballpark percentage of how many of your U.
S. Conversations are actually interested in domestic sales? And have you noticed any changes since the election?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Yes. I mean, yes, the $300,000,000 include the acceleration of some importing some batteries ahead of it. In terms we see very, very strong demand for the domestic content offering, very, very strong demand. We see that I will say that maybe out of selection, but the people that we're working with, the customers are working are looking for this and see our offering against other peers who are offering their what they offer as domestic content and they see our offering as providing more security and more optionality in terms of doing this. So very, very strong demand.
It hasn't really changed since the election, to tell you that will significantly, I will say, or at least not something that these are long these are big projects that take time. I think we have seen either a major, major movement since the election. Before the elections, we did see us it was clear that Trump was going to win people saw a little bit more traffic, but after the election, I don't think anything has significantly changed.
Christine Cho, Analyst, Barclays: Great. Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you, Christine.
Conference Call Operator: Thank you. Our next question comes from John Wyndham with UBS. Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Hey, good morning, John.
Lex May, Vice President of Investor Relations, Fluence Energy0: Hey, good morning, Julian. How are you? I guess, I'm doing good. Before I get to the question, I'll say congratulations. It's been a little bit over 2 years, and I think Slide 13 really shows the story of what you've been able to do with Fluence with improving gross margins consistently over time.
So congratulations for that.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you very much. Yes,
Lex May, Vice President of Investor Relations, Fluence Energy0: no problem. It's been a fun story to follow. My question is on the existing contracts that you have, how would if tariffs were applied, who bears the risk of that? Is it the customer, the battery manufacturer you? Does it vary on contract?
Just a little bit of color on that would be very helpful. Thanks.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: I'll tell you so it varies. There are some where we have some deals with suppliers where we share some of the rigs. We'll have some deals with customers, which are some of the rigs. When you looked at our current backlog, roughly 10% of the total backlog is subject to tariff or Chinese tariff that where we will have to manage it, the Chinese tariffs or the U. S.
Backlog of our total backlog of 4.5%, which U. S. Represents 1.6%, yes, around 1.6%, 10% of that is subject to we're taking the risk on tariff. And you didn't ask, but just to be clear, that this quarter was announced yesterday or what, the tweet that President Trump said, yes, so the 10%, that will be completely material in our case. We will manage it if that were to happen.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: In some cases, we have arrangements with our counterparties to pass through increase in tariff. So I think net net, it's not material what we saw yesterday. I think given that only $150,000,000 or so of our backlog has that exposure and with 10%, I think we have flexibility to pass on to our customers. So we don't think this is
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: And accelerate
Dylan Massaro, Analyst, Wolfe Research: batteries. Yes. And then we
Ahmed Pasha, Chief Financial Officer, Fluence Energy: can accelerate the batteries. I think that in fact reduces it further. So we feel pretty good that we can manage it.
Lex May, Vice President of Investor Relations, Fluence Energy1: Perfect. Thank you.
Brian Lee, Analyst, Goldman Sachs: Thank you.
Conference Call Operator: Thank you. Our next question comes from Andrew Percoco with Morgan Stanley (NYSE:MS). Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Hey, Andrew. Good morning.
Lex May, Vice President of Investor Relations, Fluence Energy2: Hey, William. Good morning. Thanks for taking the questions. I guess I wanted to come back to the seasonality point for 2025. I think over the last few years, it's been roughly a forty-sixty split first half, second half.
Just want any more information you can provide on what's driving the shift to the second half of the year in 2025 more specifically? Is it project related? Is it any more any additional color you can give there? Just any confidence around that second half number just given how significant it is?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: I will tell you this. I mean, there's nothing structural in the market that drives this. So we have looked in detail what's driving it in our case. If you looked at some of our competitors, their peaks are in some other quarters, all around, to be sincere, but generally. So there's nothing structural in the market.
So it's probably most likely a function of our internal incentives to our sales teams and our implementation teams, and we're putting corrections to address this. However, the corrections will take some time to take effect. So we do believe that it's something that hopefully we will be you will be able to see improvements over time as there are not real restrictions in the market that will tell you why it's not the way where the company needs to run. So that will be my view. We feel confident that we can do it.
We did it this quarter. We will be able to do it next year. We don't see any problems with that. Our supply chains work very well. Our teams are very, very good at this, but it's clearly not necessarily a good state.
So we want to address it and we're working on it.
Lex May, Vice President of Investor Relations, Fluence Energy2: Okay, understood. That's helpful. And then maybe just on the bookings point, obviously, very strong Q4 for you guys. Can you just maybe comment on around what you're seeing from customers since the election in terms of their bookings activity or just the sentiment from customers in terms of how eager they are to sign incremental orders with you guys? Are they kind of in wait and see mode until the new administration finishes their transition time?
Just kind of curious of the state of the customer post election.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Yes. I mean, as you know, we are roughly half international, so that hasn't really been affected by the U. S. Uncertainty. In the U.
S, I will tell you today, I mean, we're a month or not even a month from the elections that it hasn't really been I don't think it has been a major change. Questions that you get from time to time from customers or how would you manage this? How do you manage that? And what are we doing? And we can answer them.
So we see our projects progressing in the U. S. Progressing normally.
Lex May, Vice President of Investor Relations, Fluence Energy2: Great. Thank you. I'll take the rest offline.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Great. Thanks. Thanks, Andrew.
Conference Call Operator: Thank you. Our next question comes from Mark Strouse with JPMorgan. Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Hey, good morning, Mark.
Dylan Massaro, Analyst, Wolfe Research: Hey, Julien. It's Drew on for Mark. Thanks very much for taking the questions. First one, just on what you're seeing for 2026 and the 30% target, I mean, is that based off of conversations you're having with customers or is that more of just 3rd party market outlooks? And then in that 30%, how much do you think there's a chance where you start really taking some share in the U.
S. Given your first to market here with the U. S. Sales?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Our view of 26 is based out of our pipeline. So we have a very strong pipeline. We see still projects coming in this quarter even though our pipeline grew only by $500,000,000 in reality $500,000,000 on top of converting $1,200,000,000 and it's tough on top of adjusting the pipeline for pricing. So we feel very, very confident that we can meet the 30% growth that we were seeing it already in our pipeline. So that's what how we come up with our guidance for 2020 or our view for 2026 today.
Dylan Massaro, Analyst, Wolfe Research: Okay. And then just on a different topic here, I mean really, really big numbers in the digital orders or hitting backlog and then also in the pipeline as well. Can you just talk about some of the traction you're seeing in digital business right now and maybe what changed quarter over quarter?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Those $100,000,000 includes both digital and services. And digital is roughly 75% in services, 25% is digital, just to give you a sense of where we are. Both are doing very, very well. Our digital business, we have we continue what we announced a couple of years back. We are relaunching Mosaic with a new system that allows us to enter into new markets much faster.
So we are we enter in ERCOT. We now have a MISO project and we're now going into Japan. We're probably so that's great. It's working very well. And with our NISPERA product, what we have done is continue investing in it, but we have created a lot of value, a lot of value in integrating into our service organization.
So we're not only offering to our customers, but we are also creating value to our service organization. So at the end of the day, we see this business as a conjunction. And finally, we are making good progress with very, very good customers. We've signed a few deals with Masdar. We are moving forward with them and we've been very happy.
Once you get these customers see the value that we can bring to the table, we see that movement really move forward. So very happy with it. Today, it's still not material to our numbers or not the materiality we want from this business, but we do are very, very confident that it will be material very soon and that the strategy we're putting together is going on the right direction.
Dylan Massaro, Analyst, Wolfe Research: Great. Thanks again, Julian.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thank you.
Conference Call Operator: Thank you. Our next question comes from Kashy Harrison. Your line is open with Piper Sandler.
Dylan Massaro, Analyst, Wolfe Research: Hey, Kashy.
Lex May, Vice President of Investor Relations, Fluence Energy1: Hey, how's it going? Good morning and thank you for taking the questions actually. So, Julian, I want to go back to the late stage negotiations, dollars 1,500,000,000 with 800,000,000 dollars that would ship in fiscal 2025. Can you give us what those equivalent numbers those figures would have been entering the prior year? Or are you saying that there just wasn't
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: a significant amount in
Lex May, Vice President of Investor Relations, Fluence Energy1: late stage negotiations at this time, last year?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Contract that were in late stages were significantly smaller than what we have this year. So we are this is
Ahmed Pasha, Chief Financial Officer, Fluence Energy: Particularly, I think if you look at, as I mentioned, roughly half of that is in Asia. I don't think we have that at all at that time.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Yes. So that's significant. This is a much from that point of view, we're in a much better position than we were last year.
Lex May, Vice President of Investor Relations, Fluence Energy1: Got it. I appreciate the additional color there. And then just
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: my final question is on the gross
Lex May, Vice President of Investor Relations, Fluence Energy1: margin range of 10% to 15 is on the gross margin range of 10% to 15%. Can you just help us think through some factors that would push you towards the high end of guidance or the lower end of guidance?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Our gross margin is a combination of execution, delivering things and commissioning and putting into reaching substantial completion and final completion at a lower cost point. That's what drives it. And that's what we what we've been driving it this year. And I think our ability to get to our the higher side of our range will depend very much on that. I think is a challenge for 2025 that I think is important for you to understand, we have new products that are coming on with the GSP 2000, the GSP 5000.
And we and so the combination of revenue for next year is going to be a little bit different. So we decided to go with a conservative a more conservative view on where we're going to end. But we are committed to doing this and we have done a great I think our team has done a great job at testing our new products in our labs and putting them through all the things that could happen. So we believe we will be able to do very, very well. But the reality is that there will be new products coming out in 2025 that will make it slightly more challenging.
Lex May, Vice President of Investor Relations, Fluence Energy1: Got it. Thank you. Appreciate it.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: Thank you.
Conference Call Operator: Thank you. Our next question comes from Chris Dendronos with RBC Capital Markets. Your line is open.
Lex May, Vice President of Investor Relations, Fluence Energy3: Yes, good morning. Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Hi, Chris. Good morning.
Lex May, Vice President of Investor Relations, Fluence Energy1: Good morning.
Lex May, Vice President of Investor Relations, Fluence Energy3: I wanted to kind of ask about pricing and you kind of highlighted some of the price trends and the change in lithium pricing has brought down the average selling prices. I guess with where you sit today and thinking about some of the competitors out there, the CATLs and the LGs that are going direct to the consumer, I guess how much price competition are you seeing in terms of prices continue to move lower? Obviously, you guys highlighted a pretty solid backlog here, so you're able to compete. But just trying to get a sense of where price sits today and how that competitive environment is kind of shaping up for 2025?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Very good question. I mean, we will see a very competitive market. As I said, the Chinese being more active recently, you mentioned too.
Amit Thacker, Analyst, BMO Capital Markets: What is
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: the big change? And I think that puts us in a very competitive point. As the price of the CapEx part has come down, the relative value on the other parts, the EPC part, the commissioning, the logistics, the ability to provide reliability to meet the needs of customers faster has become more relevant. And if you're right, the Chinese might have some competitive advantage in some the CapEx option, maybe, We meet it today, but they clearly don't have it on the other one. So that's how we win.
We offer our customers a total cost of ownership that's better than what they can get from any of people. And that's how we do it and that will continue to work to deliver that. And that's how that's what's going to drive the success in this market. As I said, that is technology, it's innovation. It is looking at and really understanding the customer and helping them resolve their needs in a way that's more efficient than what the other people do.
And the Chinese clearly have an advantage of some of the more vertically integrated and they can build the things in China probably cheaper. But we they do not have an advantage in the other parts of the value chain. So we feel very, very, very confident that we're not only willing today that we will continue to win no matter how aggressive where the Chinese players
Lex May, Vice President of Investor Relations, Fluence Energy3: play. Got it. And then I guess maybe following up on the comments around playing the value chain. I mean, do you see an opportunity to maybe increase the role you play in that value chain, whether it's taking on maybe more of the EPC role or something like that in the future? Or are you kind of comfortable with where you all sit today?
Thanks.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: We do offer EPC to some of our customers with partners. And we'll continue doing that. I don't see a reason why to expand that or not expand it. When a customer needs it and we can offer them a good offer, we do it. If not, they find us another solution.
So that won't change, I think.
Lex May, Vice President of Investor Relations, Fluence Energy2: Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Great. Thank you.
Conference Call Operator: One moment for questions. Our next question comes from Julien Dumoulin Smith with Jefferies. Your line is open.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Julien, good morning.
Lex May, Vice President of Investor Relations, Fluence Energy4: Hey, this is Hannah. Good morning on for Julien.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Yes, clearly not Julien.
Lex May, Vice President of Investor Relations, Fluence Energy4: I know. I sound a little bit different.
Conference Call Operator: Now Julien is out in Europe marketing.
Lex May, Vice President of Investor Relations, Fluence Energy4: Good morning. Good morning. And congrats on the quarter. So a similar question to others asked before, but what would get you to the high end of the revenue guide versus the low end or slightly lower as we saw in full year 'twenty four. So does the low end assume some scenario mix of project delays and maybe risk to the IRA and domestic content?
And I know the focus is on the midpoint, but I'm just trying to understand what scenarios are baked into that $600,000,000 range in guidance?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Great. Good point. Good question. The driver of our ability to meet the higher range will be essentially capturing backlog, entering that's what will drive it. If we can contract the back bring the orders in, we will be on the upper side of the range and hopefully even better.
If we don't, we'll be closer to a midpoint. So that's what I will say will be the big, big driver and that's what we're working on and we are dedicating all our teams are concentrated on that because that will define say it's from here to March generally when this can happen, but so we have some time to do it, but that's our concentration.
Lex May, Vice President of Investor Relations, Fluence Energy4: And just as a quick follow-up there. Thank you. So is that am I reading this incorrectly then that there is no real adjustment to any potential delays?
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: No. When we enter into these deals, there might be delays of weeks over small delays. But generally, once we have signed the backlog there, are they putting a significant amount? The sites are ready. The delays are minor.
If there are some transform and got late to a site and it takes us a little longer to do hot commission. It seems of that sort that happened in projects, but nothing that's that I will say will be meaningful, will affect our ability to deliver our commitments substantially or materially. I think our objective, convert pipeline into backlog into orders from now to March of next year. That's what we need to do.
Lex May, Vice President of Investor Relations, Fluence Energy4: Okay. Thank you.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Thanks.
Conference Call Operator: Thank you. We have time for one final question. And that question comes from Ben Kallo with Baird. Your line is open.
Rebecca Bole, Chief Products Officer, Fluence Energy: Hey, good morning. Thanks for fitting me in.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Good morning, Ben.
Rebecca Bole, Chief Products Officer, Fluence Energy: Hi. So just 2 lots of questions have been asked, but just on the order pattern, the question around the election. Could you just talk about how much safe harboring is entering into discussions at this point? And then my second question is the talk around Chinese competition. I think there was a worry there that there would be Chinese companies coming and setting up shop in the United States.
Have you seen any of that? Or do you think that gets stopped with the election? So thank you for those.
Julian Nobreda, President and Chief Executive Officer, Fluence Energy: Yes. The Chinese competition is a global phenomenon. I'll answer that and then I will give it up to Ahmed for the first question. It's a global phenomenon. We see it globally.
I say that it's less intense than in the U. S. Than outside of the U. S. It's less intense in the U.
S. If they come to the U. S. And put a factor here, they should come be allowed to compete and maybe they'll do it. I understood that to be your question.
We believe that we compete with them irrespective of trade policy. We will compete with any markets that are completely free like Chile, like Australia, like the U. K. So if they were to come here and put a factory in the U. S.
And get the advantage of some of the and I welcome them to do it by the way because I've seen bringing technology and jobs in the U. S. Is something that we choose entice. The level of competition will be no different from the level of competition we see today in markets where we are open and we win projects all around. The first question I will Yes.
Ahmed Pasha, Chief Financial Officer, Fluence Energy: Your first question I think was on the customer behavior and I think what we have seen since the election, I think we have not frankly seen any material change. And in terms of the impact, I think Julian already talked about, I mean our backlog, U. S. Backlog where we have roughly $1,600,000,000 of U. S.
Backlog. There's very little impact of the tariff, which so net net, I don't think there's any material impact with what we have seen yesterday.
Rebecca Bole, Chief Products Officer, Fluence Energy: Okay. Thank you, guys.
Conference Call Operator: Thank you. I'd like to turn the call back over to Lex May for any closing remarks.
Lex May, Vice President of Investor Relations, Fluence Energy: Thank you for participating on today's call. If you have any questions, feel free to reach out to me. We look forward to speaking with you again when we report our Q1 results. Have a good day.
Conference Call Operator: Thank you for your participation. This does conclude the program. You may now disconnect.
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