Earnings call transcript: Bloom Energy’s Q1 2025 beats EPS expectations

Bloom Energy Corp, with a market capitalization of $4.2 billion, reported its first positive Q1 non-GAAP EPS of $0.03, surpassing the forecasted loss of $0.07. Revenue reached $326 million, a 39% year-over-year increase, marking a record for the company. Despite these strong results, the stock fell by 3.23% in aftermarket trading, closing at $18.30. According to InvestingPro, the stock has shown significant volatility with a beta of 3.28, making it more than three times as volatile as the broader market. InvestingPro offers 14 additional investment tips for Bloom Energy, including insights on profitability trends and valuation metrics.

Key Takeaways

• Bloom Energy achieved its first-ever positive Q1 non-GAAP EPS.
• Revenue surged 39% year-over-year to $326 million, setting a new record.
• The stock declined 3.23% in aftermarket trading despite positive earnings.
• The company anticipates strong revenue growth in the second half of 2025.
• Tariff impacts could affect future gross margins by up to 100 basis points.

Company Performance

Bloom Energy demonstrated robust performance in Q1 2025, with significant improvements across key financial metrics. The company reported a 39% increase in revenue compared to Q1 2024, driven by advancements in product offerings and operational efficiencies. This growth positions Bloom Energy strongly within the on-site power generation sector, where demand is rising due to expanding electricity needs and investments in AI data centers.

Financial Highlights

• Revenue: $326 million, up 39% year-over-year
• Earnings per share: $0.03, compared to a forecasted -$0.07
• Gross margin: 28.7%, an increase of over 1,000 basis points from Q1 2024
• Operating income: $13.2 million, a significant turnaround from -$30.7 million in Q1 2024
• EBITDA: $25.2 million, compared to -$18.2 million in Q1 2024

Earnings vs. Forecast

Bloom Energy’s Q1 2025 results exceeded expectations, with an EPS of $0.03 against a forecasted -$0.07. This $0.10 surprise is noteworthy, especially as it marks the company’s first positive Q1 EPS. The revenue of $326 million also surpassed the forecast of $294.57 million, reflecting a strong performance.

Market Reaction

Despite the positive earnings report, Bloom Energy’s stock declined by 3.23% in aftermarket trading, closing at $18.30. This movement contrasts with the company’s strong financial performance and may reflect broader market trends or investor concerns over future challenges, such as potential tariff impacts on margins. According to InvestingPro analysis, analyst price targets range from $10 to $35, suggesting significant potential upside from current levels. The stock is currently trading above its InvestingPro Fair Value, indicating potential overvaluation. For more insights on overvalued stocks, visit our Most Overvalued Stocks list.

Outlook & Guidance

For 2025, Bloom Energy projects revenue between $1.65 billion and $1.85 billion, with a non-GAAP gross margin of approximately 29% and operating income around $150 million. The company expects the majority of its revenue to be realized in the latter half of the year, indicating confidence in continued growth despite potential tariff challenges.

Executive Commentary

KR Sreedhar, CEO of Bloom Energy, emphasized the company’s competitive edge in on-site power generation, stating, "The sale on on-site power being necessary, that briefcase is closed." He also highlighted the strategic importance of their technology improvements and cost reductions, which are crucial for maintaining their market position.

Risks and Challenges

• Tariff impacts could affect gross margins by up to 100 basis points.
• High expectations for the second half of 2025 may pressure the company to deliver strong results.
• Broader market conditions and investor sentiment could continue to influence stock performance.
• Supply chain resilience remains a critical focus amid global uncertainties.
• Expanding international markets presents both opportunities and challenges in navigating regulatory environments.

Q&A

During the earnings call, analysts inquired about Bloom Energy’s strategy to mitigate tariff impacts and its confidence in the data center and industrial power generation markets. The company expressed strong confidence in its ability to navigate these challenges and emphasized ongoing international expansion efforts.

Full transcript - Bloom Energy Corp (BE) Q1 2025:

Conference Operator: and welcome to the Bloom Energy First Quarter twenty twenty five Financial Results Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. Thank you. Now I would like to hand the call over to Michael Cherny, Vice President, Investor Relations.

Michael, you may begin.

Michael Cherny, Vice President, Investor Relations, Bloom Energy: Thank you, and good afternoon, everybody. Thank you for joining us for Bloom Energy’s first quarter twenty twenty five earnings call. To supplement this conference call, we furnished our first quarter twenty twenty five earnings press release with the SEC on Form eight ks and have posted it along with supplemental financial information that we will reference throughout this call to our Investor Relations website. During this conference call, both in our prepared remarks and in answers to your questions, we may make forward looking statements that represent our expectations regarding future events and our future financial performance. These include statements about the company’s business results, products, new markets, strategy, financial position, liquidity and full year outlook for 2025.

These statements are predictions based upon our expectations, estimates and assumptions. However, as these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties as discussed in detail in our documents filed with the SEC, including our most recently filed Forms 10 ks and 10 Q. We assume no obligation to revise any forward looking statements made on today’s call. During this call and in our first quarter twenty twenty five earnings press release, we refer to GAAP and non GAAP financial measures. The non GAAP financial measures are not prepared in accordance with U.

S. Generally accepted accounting principles and are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non GAAP financial measures is included in our first quarter twenty twenty five earnings press release available on our Investor Relations website. Joining me on the call today are KR Sreedhar, Founder, Chairman and Chief Executive Officer and Dan Varenboll, our CFO. KR will begin with an overview of our progress, and then Dan will review financial highlights for the quarter.

After our prepared remarks, we will have time to take your questions. I will now turn the call over to KR.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Good afternoon, and thank you for joining us today. Bloom had an excellent quarter. In fact, the best first quarter in our twenty four year history. You’re seeing strong disciplined execution across the entire company from sales to service, technology, and manufacturing operations. I want to thank the incredible team at Bloom for their dedication to serving our customers and building on the success of last year.

We are off to a good start for the year, and we are very excited to continue building on that success throughout 2025. We know the current economic environment affects various businesses differently. Here is the dynamic we are seeing at Bloom. The world needs a lot of power and demand for electricity will continue to expand at a rate that cannot be met solely by traditional sources of supply and methods of delivery. We don’t see that changing anytime soon.

This reality means that major users of power have accepted on-site generation as a necessity. Here is how that realization impacts Bloom’s major customer segments. First, AI data centers. We have seen no slowdown in this sector. Just last week, I was at a gathering of business leaders, including some of the largest cloud service providers.

What I heard loud and clear was that they remain committed to investing in data center capacity growth and the necessary power needs that come with it. Even down the road, should there be a slowdown in the pace of investing, The total gigawatt gap is so large that it will not have a meaningful impact on Bloom’s growth in this market. This is an investment super cycle and short term economic issues will not adversely impact the megatrend. The robustness in this sector is clearly validated by the customer activity we are experiencing. The second segment is our commercial and industrial business, which I’m breaking down into two buckets.

First, we see robust activity in large load advanced manufacturing operations, AI related hardware, and semiconductor chips, as well as essential services like hospitals and health care for whom power is mission critical. We don’t see any slowdown here. Reassuring and growth in The US industrial base is continuing. Their need for electricity has not diminished and their operations cannot afford to pause. The second bucket of commercial and industrial customers are the consumer facing businesses such as retail.

They may see a stretch out of decision making cycles until the economic scenario is clear. We are keeping a close eye on this segment and are staying close to our customers. Our third customer segment is in the international arena. Our Korea business remains strong and the rest of international is growing off a small base. Our fuel cells provide reliable, scalable, high density baseload power making them an ideal power choice in many industrialized nations.

This international expansion continues to progress well. When you put the three segments together, the diversification of our customer base both in terms of sector and geography is a key strength that gives us the flexibility to soften the impact of exogenous factors that make us more resilient. Based on the bottoms up, customer by customer forecast in these three segments, we remain confident in our previously provided 2025 revenue guidance. Tariffs are probably another topic everybody wants to hear about today. The main takeaway is that the strength of our supply chain in combination with the relentless execution of our product cost reduction goals will greatly mitigate the impact of tariffs on Bloom.

We have been developing, diversifying, and fortifying our supply base for years to mitigate the impacts of any particular country or supplier. We have two manufacturing and assembly facilities, and they are both located in The United States. Our products are proudly made in America. Yes. We do import materials and components from abroad, but not from China.

The majority of our material spend is in custom made components unique to us, which give us control over pricing and sourcing. We have excellent long standing partners and are jointly invested in each other’s success. If the current tariff structure continues throughout the year, we expect to see up to a 100 basis point impact on our gross margin for the year. Cost reduction is in our DNA and we will work extra hard to mitigate the adverse impact through innovations and efficiency improvements. As of now, we remain committed to our margin and profit guidance for 2025.

As we look ahead, we are excited about the super cycle in electricity infrastructure growth. The ongoing momentum will be driven by growing demand for on-site power generation and Bloom Energy is at the forefront of this revolution. The opportunity for Bloom is immense and we are focused on growing the business. We have the resilience to navigate through short term challenges and execute on strengthening market leadership in the long term. Before I turn it over to Dan to go through the numbers, I want to thank him for his service to Bloom over the past year.

Dan will be exiting the company on May 1, and we have started a search for a permanent CFO. In the interim, Marchek Pusenski, Bloom’s chief accounting officer for the last four years, will assume the role of acting principal financial officer. Bloom has a strong leadership team and capable finance organization, and we will continue to perform without missing a beat. I’ll turn it over to Dan for now, and I look forward to answering your questions.

Dan Varenboll, Chief Financial Officer, Bloom Energy: Thank you, KR, and good afternoon, everyone. KR gives some great detail about how we view the current economic environment and, more importantly, how excited we are about future growth potential. Bloom’s product capability enhancements over the past few years have dramatically improved our value proposition to customers, and our relentless focus on cost production and profitable growth has left Bloom in a very healthy financial position. Turning to our excellent first quarter. Execution was and remains strong.

We saw record revenue for a first quarter, our first ever positive Q1 non GAAP EPS and our fifth consecutive quarter of service profitability. As a reminder, I’ll focus my discussion on non GAAP adjusted cost and profitability metrics. For a reconciliation of GAAP to non GAAP, please see our press release and the supplemental deck on our website. Revenue for the quarter was $326,000,000 up 39% year over year. We’ve talked before about how this is a project based business with quarterly variability, and that continues.

Q1 was better than implied by the commentary we provided on our late February call driven by timing of customer projects. Gross margin was 28.7%, more than 1,000 basis points higher than the 17.5% gross margin in Q1 of twenty twenty four, attributable to our product mix and level loaded manufacturing. As expected, we took advantage of our balance sheet and our confidence and visibility into customer demand to build inventory and level load our factory. Our operating income was a positive $13,200,000 as opposed to the $30,700,000 deficit in Q1 last year. EBITDA was $25,200,000 versus a negative $18,200,000 in Q1 of ’twenty four, while EPS was $0.03 per share versus the loss of $0.17 per share a year ago.

Again, these are all non GAAP numbers. Turning to the full year, we are reiterating our 2025 guidance. As a reminder, we expect 2025 revenue of 1,650,000,000.00 to $1,850,000,000 non GAAP gross margin of approximately 29% and non GAAP operating income of approximately $150,000,000 We also expect positive cash flow from operations around the same levels as we saw in 2024, and we also expect CapEx to be around the same levels as 2024. Of course, we will maintain our strong fiscal discipline to flex our business as needed. As we discussed on our last call, consistent with historical patterns, we continue to expect the majority of our revenue in the second half of the year with a roughly forty-sixty first halfsecond half split.

I mentioned our services business as a highlight for the quarter as it was profitable for the fifth consecutive quarter. This is a critical part of our business and the long tail in our backlog. Service performance over the past year is dramatically better than we saw in prior years, and we expect this trend to continue. Technology improvement, scale and AI assisted execution will drive continued improvement in service profitability. To conclude, we delivered record Q1 revenue and continue to execute in a strong commercial environment.

I am excited about the future opportunities for Bloom. And even as I leave the organization, I have full confidence in the finance team, and I wish all of Bloom’s employees the utmost success. Operator, we are now happy to take questions.

Conference Operator: We will now begin the question and answer session.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: And

Conference Operator: your first question comes from the line of Andrew Percoco with Morgan Stanley. Andrew, please go ahead.

Andrew Percoco, Analyst, Morgan Stanley: Great. Thanks so much. Good evening, guys. Congrats on a strong start to the year. And Dan, unfortunate to see you go, but wish

Conference Operator: you the best of

Andrew Percoco, Analyst, Morgan Stanley: luck. Multipart question here, but just maybe to start out with the guidance. KR, it sounds like you’re not really seeing any change in demand, particularly from data centers. But just curious, more on a granular level, if you’re seeing any impact on timing of that pipeline conversion. I guess I’m thinking about some of the projects that may have been commissioned in 2025 that might get commissioned in 2026 because of supply chain issues, policy uncertainty.

So I’m just curious if you’ve seen any shift to the right in those types of conversations. And then second part of the guidance question is around margins. You mentioned 100 basis point margin impact from tariffs, but you reiterated the gross margin guidance. So just to be clear, are you not including tariffs in the reiterated guide? If you could just maybe clarify that.

And then, Dan, just to end it with you, can you provide any more information or context around your decision to leave here? I’m just pretty quick turnaround, so anything that you can provide there would be helpful. Thank you.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Hello, Andrew. Thank you for that series of questions. And I’ll start and then pass it on to Dan afterwards. So let me start with the simple question first on margins. So we had guided for the year at 29%.

And we said, because of all the reasons that I said in my script, but let me reiterate very simply, we’re not dependent on China. We have a multi country strategy, but predominantly, we are a US manufacturer with our two factories here in The US, made in America products. For all those reasons, we can mitigate the impact of tariffs if they continue the way it is today to the hundred basis points. However, I’m still reiterating the 29% because as you know, over fifteen years, cost reduction is in our DNA. We have a culture of pushing ourselves hard and finding ways to optimize and reduce cost.

So we are going to take this externality and make it a challenge to find that hundred basis points and other activities we do and speed it up and not use tariffs as an excuse to not meet our guidance. This is our culture of being able to get to that point. We’re not gonna pass it on to customers. We are not going to take it on ourselves. We’re going to find ways to solve it.

So net net, we would still reiterate the 29% guidance. So that’s the first answer. Hopefully, that’s clear. Now on your question on where the macros are with respect to guidance, you’re asking the right question. We have to book, build, ship, and recognize revenue, for the for a portion of our second half revenue in order to meet the guidance.

Now if we didn’t have confidence in that entire process, including the bookings, and also timing, because timing means revenue recognition, we wouldn’t be making this. So very strong confidence based on everything that we see. And let me explain couple things here. The big shift, Andrew, that’s happened in our business, and I think it’s worth taking the two extra minutes to explain this to you, It is no longer do we see our customers, whether it is data centers or large factories, asking if on-site power is needed. That debate is over.

The grid can only do so much in the short term, and without on-site power, people are not gonna have power. That is no longer a question to us. Then it becomes a question of, are we a viable on-site power solution for people? That’s what we built the company for. We have a record of doing this more so than any other technology.

However, the easy button is to go to combustion turbines and, you know, combustion reciprocating engines because they’ve been around a lot longer than we have. Not too many people know us. However, the people that know us are expanding with us, and every time that we succeed, people are wanting our solutions. We can compete both economically and from a technical performance and from an environmental perspective. It’s a check, check, check.

So we are super excited about the cycle, extreme confidence in being able to meet those demands. And those certain projects shift in the, you know, in the short term, maybe they will. But the amount of projects that get executed is plenty and enough given where we are for us to be able to meet the guidance. That’s how we see it. I’ll pass it on to Dan now to answer the question.

Dan Varenboll, Chief Financial Officer, Bloom Energy: Yes. Thanks, Andrew. So listen, I’ll just say that I think the opportunity ahead for Bloom is fantastic. I think there’s a huge commercial opportunity for all of the reasons that Kara discussed, for all the reasons that we’ve talked about previously. Nothing more to add for myself personally at the moment, but you’ll hear more from me, I’m sure.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: And

Conference Operator: your next question comes from the line of Manav Gupta with UBS. Manav, please go ahead.

Manav Gupta, Analyst, UBS: Just wanted to thank Dan upfront. You came in and you were very helpful right away. You brought transparency. So thank you for all the help. My question here is, as you are trying to scale up, Shri, there are two ways you’re doing it.

One, obviously, you are directly working with data centers. But the other which we kind of liked last year was you’re building this partnership with utilities. So can you help us understand which will be the bigger driver of your product deployment 2025 and 2026? Will it be you directly going to these customers? Or will it be a combination of that and working with AEP or maybe even more utilities to place more product into service?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Manu, thank you so much for that question. So here’s what I can tell you very simply. Right? The grid is what is constrained. The grid is what is challenged.

Utilities are a business that manage their customers. In many cases, the utilities have both the willingness and the ability from a regulatory perspective to procure our products and supply it to their customers. That always will be our preferred choice and it will be the customer’s preferred choice because they can continue to procure their power from whoever they got it all along except through a different means of generation right on-site. So for that reason, we are working with multiple utilities and with AEP. We are very bullish on that partnership and where that’s gonna go.

But we’re also working with several other utilities as we speak right now, both electric utilities and gas utilities. And then they materialize and then we are allowed to speak about that by them. Those are the two conditions for us to announce anything. Sometimes we book things and we can’t speak about it because the customer tells us not to. Sometimes, it takes a little while to get there, but we are very confident we’re gonna get there within the timeline.

So it’s that combination, but definitely we are working with them. In certain other cases, because of regulatory reasons or because of the customer’s wish, they want to procure their systems directly and procure the power from us. In that case, we work with the utility to get the fuel from them and supply to the customer. We are agnostic and we like both models. In terms of small retail, there most often the utility doesn’t want to get involved and would rather have us supply it directly to the customers.

But for the large loads, I think partnering with the utility is a very smart option. Hopefully, that answers your question.

Manav Gupta, Analyst, UBS: Thank you, sir.

Conference Operator: And your next question comes from the line of Nishant Eilani with Jefferies. Nishant, please go ahead.

Andrew Percoco, Analyst, Morgan Stanley: Hi, thanks for taking

Nishant Eilani, Analyst, Jefferies: my question. Dan, it was nice working with you, and hopefully, we can up see you again. Maybe on the first question, guys, margins for repowering came a little strong. How are you going to think about that going forward? And then my second question is on tariffs, the 100 basis points that you talked about.

What’s the sensitivity to that if, let’s say, the ninety day pause is over and maybe revert back to higher tariffs?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Look, in the in the estimation and everything that we have given you, we have based it on the best current understanding with the tariffs remaining the way they are and balancing it as a portfolio against all the countries that we deal with and everything that’s going on. So we stand by those numbers. We wouldn’t likely reiterate that guidance if we didn’t have strength in our conviction. So it’s a strong conviction that we can represent it. But how we do it is internal to us, but the what we will deliver is what I can state with conviction to you.

So so that’s, you know, that’s the key part that I want you to understand in in terms of where our where our guidance is. And then the other question you’re at was on Repowering. Mean Yes. Repowering.

Amit Takkar, Analyst, BMO Capital Markets: John, in my script, I just

Dan Varenboll, Chief Financial Officer, Bloom Energy: said mix did have an impact in on Q1 gross margin. Obviously, we won’t comment more specifically on mix. Repowerings are part of our business. There’s some quarters there will be some, some quarters there won’t be any, but it is an ongoing part of our business. And we do try to give you some color around that as we think about our guidance for the full year.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: And and understand this is part of the reason why Dan had explained how our metrics were changing in in the last two scripts. Know, not every installation, not every customer stuff is the same. There is so much complexity associated with load following, islanded, microgrids. And so we take all that into consideration, by deal, line by line as we project through the margins. And, again, when we reiterate the guidance, we take that pretty seriously and it’s through that extensive with this analysis we are giving you those numbers.

So, yes, your point is well taken. We appreciate it, but we stand by the numbers we gave

Conference Operator: you. Your next question comes from the line of Colin Rusch with Oppenheimer. Colin, please go ahead.

Colin Rusch, Analyst, Oppenheimer: As you look at some of the STACK technology and your ability to multi source critical materials as well as evolve the chemistries, can

Jordan Levy, Analyst, Choice Securities: you talk a little

Colin Rusch, Analyst, Oppenheimer: bit about the resilience in the supply chain around some of those critical materials as the trade war starts to heat up a little bit and we kinda go through some waves around what what’s getting shipped between The US and China?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: That again, a very good question. What you need to understand is none of our critical materials come from contested supply chains or war zones, and there is no China supply chain for us. K? So and with respect to our you know, we you know, I spoke in my script about commercial off the shelf. It’s a small portion of our buy, Custom made parts for us where we have developed vendors for the last fifteen years is what we depend on.

They are geographically very diverse. And we have learned and we have actually first hand battle tested this strategy of resilience. Bloom never had a part shortage and never shut down a factory once or or slowed down an order during the entire time of COVID. So we have actually battle tested this for another for another scenario. So we feel very strongly that not only will will we maintain that now, but we will be able to keep that kind of a discipline as we scale the company many times over.

So we built the supply chain not just for today, but for for the very large scale that we want to grow to very fast. So extremely confident and huge shout out to our supply chain team and to our chief operations officer Satish Chituri who leads this effort.

Colin Rusch, Analyst, Oppenheimer: Thanks so much. And can you just give us an update on customer traction outside of The U. S. And outside of Korea? There’s been a lot of activity in and around end market in Europe as well as some places like Australia.

Just curious how your sales efforts are going in both those geographies.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Sure. So we are focused predominantly right now on a couple countries in the EU and, you know, and and a couple countries in Asia. That’s so that’s how we think about expansion and we build a base. You know, this is outside of US and Korea. Right?

So if you think of Europe, we are targeting right now Italy, Germany, and The UK. And if you look at Asia, we are really targeting Taiwan in a major way because the entire AI supply chain, the amount of growth that’s happening in Taiwan in the face of them in the face of their grid not being able to grow fast enough and deliver power and rising cost of power out there, and then and then depending quite significantly on natural gas as their source of, you know, like energy, all that fits very well for us. So we are, like, targeting on those. And again, we will see in the next two years, you will see these markets take off and grow. We are strategic.

And so we don’t take a short term approach to this. We take a rifle approach to our international growth. Thank you.

Conference Operator: And the next question comes from the line of Jordan Levy with Choice Securities. Jordan, please go ahead.

Jordan Levy, Analyst, Choice Securities: Hi, all. It’s Henry on for Jordan here. Firstly, congrats on the strong quarter, and thank you, Dan, for your work over the last year. Just looking at the domestic C and I side of the business, can you just talk to maybe provide some more color on the power demand in terms of there and how that’s translating into orders?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Yeah. On the on the commercial industrial side, I think what we are seeing right now is most customers coming and talking to us are asking us for islanded power. Okay? That’s a big shift. Interconnection times, even for a few megawatts in most of the regions that we operate in, seem to be very long and our customers are seeking islanded power.

There, it should be very obvious to you that being in a manufacturing environment, sometimes the factory shuts down or operates at very, very low load during a weekend period depending on what they do. Some don’t, some do. So the ability to load follow becomes very important. Unlike in the past when Bloom only offered baseload power, we now are able to offer islanded power. And here is the beauty of it.

You say this many times, but not everybody may understand. So let me use your question to tell all of you on the call that we don’t require batteries to operate a micro grid to follow our load. That is a huge advantage right now given supply chain challenges with batteries, tariff challenges with batteries, and all that. So not only do we not need an interconnection, we don’t need batteries, and we can load follow for customers. So that is taking a big traction.

So now let me focus on you know, I broke it down for you for into two sectors. Let’s focus on the large load factories. Here are the numbers. Right? All of 2 thousands and 2,000 tens, the average over those twenty years of construction related spending related to manufacturing facilities was roughly $85,000,000,000 a year.

$85,000,000,000 a year. That number in ’23 and ’24 and we expect it to continue in ’25 is close to $250,000,000,000 a year, three times that expansion. And these factories are more automated, more roboticized with AI coming in, which means the amount of power per square foot goes up enormously. We see this as a huge growth area. This 250,000,000,000 that was invested in ’23 and ’24 that’s already invested, those factories are not gonna be mothballed.

They have to be powered up. They will go on. There could be a few slips in terms of cycles. It it comes from the chip act, you know, chip sack. It comes from the infrastructure act.

It comes from, abundance of cheaper, know, energy that customers have today. It comes from shortening the supply chain. All these things are driving that. It’s very strong for us. Now the other side of our c and I business, think of retail.

You know that we do big box stores, other people. These are consumer facing businesses. They are going to stretch out their decision making cycle in this time of economic uncertainty until they fully understand where it falls. But understand it’s a small part of our business and we have enough diversification. That’s how we think about the whole business.

Hopefully, that color helps.

Jordan Levy, Analyst, Choice Securities: No. That’s that’s very helpful.

Michael Cherny, Vice President, Investor Relations, Bloom Energy0: And then just just

Jordan Levy, Analyst, Choice Securities: a quick follow-up for me. Looking at the the margin trajectory during the rest of the year, with the, you know, the strong first quarter and the reiterated guide, looks like gross margins will actually be relatively flat, maybe see a little bit of upside during the remainder of the year. I guess just how should we think about that trajectory? And is there any incremental upside from the guidance at this point?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: No. Again, what I said is what I meant in the script. We are just reiterating guidance at this point in time. And, again, look, we are going to have to do a lot of things, very innovatively, and we are confident we will do it to make up for any of these tariff issues. And, you know, I’m sure you’re not on too many calls with too many companies that, are saying that in spite of the tariffs, they’re not, you know, downward realizing their margins.

Thank you. And I’ll I’ll say, you

Dan Varenboll, Chief Financial Officer, Bloom Energy: know, just to go back to my prepared remarks, remember what I what I said in the commentary that, you know, our mix as well as the level loading, those were both positive impacts on our Q1 gross margin. Obviously, just to reiterate that ability to level of the factory given the strong balance sheet, given the visibility that we believe it to have. We’ve made that comment on last quarter’s earnings call that, we thought that, you wouldn’t see this sort of more extreme peaks and valleys that you saw in gross margin that we saw last year. So this is a little it is relatively consistent with I think that.

Conference Operator: Your next question comes from the line of Chris Tendrino with RBC Capital Markets. Chris, please go ahead.

Andrew Percoco, Analyst, Morgan Stanley: Yes. Thank you. And maybe just to start and follow-up on that prior commentary around the tariffs. Could you maybe just provide a bit more detail on where you think there’s opportunities to save and sort of what types of things you’re looking at? Thanks.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: So when you when you look at our you know, we have always in the last fifteen years, there’s a weekly operational review that I sit in where all my direct reports are in. And we review at any point in time. There are probably hundred cost reduction projects that go on in the company. And we review them routinely on a weekly basis, and every quarter at least once these projects will get reviewed depending on their criticality. And it’s a portfolio approach for us.

And it’s never a straight line. There’ll be a few projects that come in ahead. There’ll be a few projects that fall behind. There’ll be unexpected things that happen in in, like, commodity prices, other things. And we manage these things very effectively.

And it is that discipline that has allowed us to continue to keep reducing cost time after time. So they are technology improvements. They are simplification in building the products. They are yield improvements. They are factory improvements.

They are efficiencies we gain from the learning curve, not just in our factories, but with our supply chain partners. We go help them with those learning curves. So because it’s really hard to single out any one thing. It is just part of our DNA. And, you know, for fifteen years to get double digit cost reductions almost every single year as an industry of one.

Right? This is really at the core of what we do every single day. And, starting at my level, we everybody in the company is focused on this.

Dan Varenboll, Chief Financial Officer, Bloom Energy: And then just recall that everything that Kara just talked about that we focus on benefits product and it also benefits service. Right? So all of that at scale, those technology cut ins, those continuous improvement programs benefit both product and service with a very long tail.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: That’s a very good point, Dan.

Michael Cherny, Vice President, Investor Relations, Bloom Energy: Got it. Thanks.

Andrew Percoco, Analyst, Morgan Stanley: And then maybe shifting gears a little bit here. On the utility regulatory environment, I know there’s the FERC co location decision there. You all or AEP is waiting on the PUC approval process. I guess maybe more broadly, is this maybe sort of a bottleneck or holding back deal flow near term as your customers look for those decisions? Or how is that kind of playing out in your eyes?

Thanks.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Very good question again. Look, you can I know that many of you have been talking to AEP regarding this, and, you know, you’re you’re getting directly from them? It is better for them to answer from their their point of view, you know, where things are. They feel very confident that the projects that they already signed up are going to go through and not have any issues. And going forward, they have a very robust pipeline of customers that they’re talking to and are confident that, that what they believe and the reason they chose us is we have a superior technology with a superior value that they can make many more of these transactions.

And they have pathways very clearly to be able to satisfy those customers. So that’s that’s AP, and they’ll be more than happy to answer more questions questions on that from that perspective. Now from the customer side, what do they see? I think our large customers are very, very sophisticated when it comes to power and electricity buy. They clearly understand that any arrangement that they can make that does not impact the local rate payer is not only a nice thing to do, but a necessary thing to do if they want to locate their new data centers in a new neighborhood.

And our solution becomes extremely useful. For the regulators and the policy makers, it’s very clear to them if they didn’t if they do not allow a structure where without affecting the rate payer, they can also provide electricity to these big data centers. Those data centers are not gonna be located in their neighborhood, and they’re gonna lose economic development. So the interests are all aligned out here. Our customers see it that way.

These are these are temporary blips in any transition that goes on where the technology and the market is always slightly ahead of regulators. Regulators are catching up.

Conference Operator: And your next question comes from the line of Chris Jones with Wolfe Research. Chris, please go ahead. KR, Dan, good luck on your future endeavors. I

Michael Cherny, Vice President, Investor Relations, Bloom Energy1: wanted to

Conference Operator: just ask, what’s the size of the backlog at the end of Q1? Can you help frame the typical size within that backlog?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: You know, we only hear backlog comments once a year. That is that is our policy, we don’t change that. We clearly I think I’ve said this implicitly couple times and explicitly once is that when we give when we reiterate our guidance on the year, it means that we are very confident about the strong commercial pipeline that we have and and our confidence in being able to convert that. So you should take that as a as a positive signal, but in terms of numbers and commentary, it’s once a year. Thank you.

Conference Operator: Alright. Thank you. And then maybe just based on current conversations, do you see the next potential deal coming from a utility or perhaps an end user?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Hopefully both. Okay.

Colin Rusch, Analyst, Oppenheimer: All right. Thanks.

Conference Operator: And your next question comes from the line of Amit Takkar with BMO Capital Markets. Amit, please go ahead.

Amit Takkar, Analyst, BMO Capital Markets: Hi. Thanks for taking my questions. And Dan, just

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: want to echo everybody else’s sentiments and kind

Amit Takkar, Analyst, BMO Capital Markets: of wish you all the best. Thanks for all the patience over the last year. You guys have done you’ve been very clear kind of your lack of exposure to, I guess, kind of Chinese or disputed supply chains. Your prior disclosures did used to highlight the use of scandium in your fuel cell ink and coatings. I was just wondering if you could kind of share with us where are you sourcing that if it’s not from China, given kind of the large percentage of that?

And then I guess the second question for us or follow-up question is, I was wondering if you could kind of level set us on the kind of the megawatts you’ve got deployed at the end of last year and kind of where you are at

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: today? Thanks. So let me address the you know, like, let me address the it’s kind of your question first, and I’ll have Dan explain why we change metrics and how we change metrics right after that. So the first thing for you to know is, you know, like, number one, we are not dependent on China First time here. I can I can state that very clearly?

Okay? Number one. Number two, we get this from multiple geographies and multiple continents. Number three, knowing that we would be the world’s largest consumer. The you know, this was in 02/1978 when when we were barely shipping units.

To today when we actually are the largest consumer of that material, we have complete confidence that we have that supply to grow as fast as we need to for the foreseeable future from multiple sources. We don’t reveal those sources methods. That’s part of our IP. Thank you.

Dan Varenboll, Chief Financial Officer, Bloom Energy: Yes. And just as a reminder, we stopped talking about megawatts shipped in specific periods because it’s we feel like number one, it’s not how we run the business, And we feel like it’s less useful information because every megawatt is not the same. Cost and price depends on configuration, whether it’s sort of base load only interconnected, whether it’s islanded micro grid with AI data center load following capabilities. So we feel like it’s much less useful information. It’s not really apples to apples.

We did give a little color in my script again around mix supporting gross margin a little bit in Q1. So we’ll expect to hear more color on that megawatt information. Just it’s not how we think about the business. We think about the overall economics of each individual deal and the portfolio of deals that we have as we manage the overall business.

Conference Operator: And your next question comes from the line of Sherif Almagrabi with BTIG. Sherif, please go ahead. Hey, good afternoon.

Michael Cherny, Vice President, Investor Relations, Bloom Energy2: Thanks for taking my questions. One of the advantages of Energy Services is that they can tap the existing gas network. You’ve talked about this earlier on the call. But for larger agreements with utilities like the one you signed with AEP, is there a new gas grid infrastructure that needs

Amit Takkar, Analyst, BMO Capital Markets: to be put in place? And, you know, if you

Michael Cherny, Vice President, Investor Relations, Bloom Energy2: can characterize the timing around that.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: Very good question. Look, I think the main trunks and where the gas flows, there is plenty of flow, but the secondary trunks that go from the high pressure lines to the medium pressure lines is where it depends on where the location is. So it is very location specific, and there’s not a single single answer to that question. You can be thinking anywhere from a couple months to six to, you know, like, nine months depending on where that where that location is in order to be able to get that level of gas. And, you know, if you think about how that flows though, Sheriff, it’s by the time a customer decides like a large data center that they want to install something and facilitate it, It takes that amount of time for them to facilitate it.

So as long as they understand that that power is needed for them and they place the orders and they are building that data center, this should not be the long pole in the tent. And that is typically what we have seen so far in in in terms of the data centers and how they go. And, you know, and it’s very telling. Right? It’s it’s it’s very telling that people are getting tuned to this.

You know, the large data center operators know this. But if it is not explicit, I thought, yeah, in the GTC keynote, Jensen Huang from Nvidia on on March 18 made a beautiful statement. It’s been something like, your revenues are power limited. He was talking to his customers. Your revenues are power limited.

You could figure out what your revenues will be based on the power you have to work with. Okay? So this so when they procure the chips, they know it has to get crystallized, and that’s where it’s gonna go. So gas is available. Is it available in the specific location where the data center is?

That extension of gas pipeline. In certain geographies, I think it took took longer to permit. My guess would be again, this is my guess, given the understanding of the need to win the AI race and given the current administration’s propensity to make sure they make this happen. And again, let me quote, you know, secretary of energy, Chris Wright. Right?

He said this is the Manhattan project of our time. If that’s the case, I think these gas lines are gonna come much faster than their services are gonna get built.

Michael Cherny, Vice President, Investor Relations, Bloom Energy2: That that’s really great color. Thanks. So second question, there’s a there’s a con aggregate contract announced at the beginning of the month. It’s not the biggest, but it’s interesting because of its duration. Can you remind us how long energy servers typically last?

And to the extent that you can, maybe some specifics about why they were willing to commit to fifteen years?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: So very good question. We have a lot of contracts. The range is being anywhere from five years to twenty years. Lot of our South Korea contracts are twenty years. Many of our PPAs that we do are fifteen or twenty years.

So what happens in that cycle though is most of our equipment have operating lifetime as certified by independent engineers to be much longer than that, but the fuel cell itself gets replaced. And that is the hot box of the field replacement units that we talked about, and we recycle all those parts and put them back on. Today, an average life of those units hover somewhere in the five year range. So in the ConAgra contract, what will happen is their service pricing will allow us to keep replacing these units, assuming that the five year is the number we’re talking about in the fifteen year contract, two times to the life of that contract to be able to fulfill the entire contract while the rest of the system will continue to operate. And the good news about this, right, five years from now when they get the next hot box, it’ll be the latest and greatest technology of that time, which will even be better than what we put out today.

Conference Operator: And your next question comes from the line of Noel Parks with Tuohy Brothers. Noel, please go ahead.

Michael Cherny, Vice President, Investor Relations, Bloom Energy1: Hi, good afternoon. I heard you mention earlier that the alternative to a buoy solution, the easy button alternative would be combined cycle gas turbine. And I was sort of surprised because I don’t think of those as sort of playing in the with the same customers or projects that you would be just on the lead time to for the ordering of those turbines. So are are those realistic competition for for your projects, your time to power projects?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: No. No. Very good question. Thank you for asking me to clarify that. When I said combustion turbines, I should have been very clear.

I was talking about the micro turbines, the air derivative turbines that are in the 50 megawatt class, 30 megawatt class, not a combined cycle gas turbine. There are many many reasons why CCGT will not be a good choice for situations like this if they are not connected to the grid for them to load follow. And then if they’re not connected to the grid, remember, they have to be maintained, they have to be shut down. You cannot have a monolithic failure of one unit. So if you build two of those to back it up, all those become super expensive.

So so most of these hundred megawatt 200 megawatt solutions you’re looking at today, it is tens of micro turbines or tens of reciprocating engines that are clustered together is what that solution is. And that is the true competition. A combined cycle gas turbine at a gigawatt scale, there are very few projects. And like you correctly identified, it’ll take a very long time to put that together. And unless there is good connection, backing that up becomes a real issue.

So that’s what I meant. Hopefully, that clarifies for you. And in that, both on a cost basis, performance basis, total cost of ownership basis, reliability basis, time to power basis, and the environmental impact basis, noise, water use, air pollution, global web.

Michael Cherny, Vice President, Investor Relations, Bloom Energy1: Great. Thanks a lot. Totally clarifies it. And I’m just thinking for data center customers, for on-site expansions versus greenfield new data centers, and I’m thinking of your affidavit to deliver 100 megawatts in an acre. Is there any difference in sort of the decisiveness or the sales cycle, say, for a cloud vendor who’s pursuing one type of project versus another?

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: You know, right now that’s a very good question. I think that within months and quarters, the answer that I would give to you is going to change. Okay? That is my true belief. And let me explain to you why.

Right? As we are speaking, as we are on this call. Right? Meta is having their earnings call and what did they say out there? They’re upping their amount of infrastructure spend even from the 60,000,000,000 to a higher number.

That’s gonna that’s gonna come from the magnificent seven. Right? The the tech seven that’s building what they build. Add to that the national imperative that was announced in the White House and what they’re gonna do with Stargate and things like that. You’re looking at 600 to $700,000,000,000 worth of spend that that is being committed to for 2025.

That translates to more than 15 gigawatts of power that you’re gonna need. Right? So everybody is counting for whatever power they can get from the utility backup, things like that. And as they saturate, you’re not buying these chips at a premium to keep them in cold storage or for safety stock. You have to deploy them.

And that’s when I think the demand is going to the cycles are gonna shrink. So I I I think it’s an indirect way to answer your question saying, the decision cycles and the need for implementation cycles has to necessarily shrink if you believe that AI and the media and everybody is going to grow. Right? Those are those are two correlated statements. One cannot be right and the other one wrong.

Does that make sense?

Conference Operator: And our final question comes from the line of Maheep Mandloui with Mizuho Securities. Maheep, please go ahead.

Michael Cherny, Vice President, Investor Relations, Bloom Energy0: Hey, thanks for taking the questions. Nice to talk to you again. Just one question on the tariff impact. I presume your guidance of the 100 basis point of impact you talked about is more on the 10% tariff right now. Just curious like how to think about the impact of the just proposed tariffs go back to the levels talked about in which we’re gonna see in top here.

KR Sreedhar, Founder, Chairman and Chief Executive Officer, Bloom Energy: No. Great question. So what we have done is done a thorough detailed portfolio analysis of all our US suppliers, what we procure, how much we procure, what the what the dollar value cost is, our US manufacturing, the two plans make everything for us, you know, those don’t get impacted. Then we have taken into account what countries we procure from and what flexibility we have of moving temporarily from one place to another to optimize for where we need to go. So it is through that detailed analysis, rolling it up to material cost versus the cost, and then looking at that impact, and then totally translating it that that to gross margin.

So it’s a very detailed analysis based on which we have come up with that number, and that’s the hundred basis points. And this is not a, you know, you know, we are not taking a wild ass guess at it. It is it is really thought through process. This is what we think it will be. And again, we are working very hard to mitigate it.

That’s why as a team, we are committing to keeping our guidance. Thank you very much for that question. And looking at the clock, I just wanted, again, thank you all for joining us out here. We’re off to a great start in 2025. Our momentum is strong.

And what you need to think about as you’re thinking about Bloom today is very simple. The sale on on-site power being necessary, that briefcase is closed. Large customers completely understand they need on-site power. So unlike in the past where we had to ask what’s our value proposition vis a vis the grid. Today, the real question that you should be asking when you look are looking at Bloom is what is our value proposition when it comes to customers absolutely needing on-site power?

You shouldn’t be asking do they need on-site power. That that answer is very clear. So you you then look at all the attributes that Bloom brings and compare it against the attributes of the alternatives for on-site power. It is not solar. It is not wind, not for those sizes because you can’t transmit those electrons.

You have left the combustion engines, mature saturated technology whose costs are actually going up if you just look at it. That’s what the customers are saying. The prices have actually gone up. And we can compete against that. We can compete with a better product, more reliable, faster, quieter, cleaner.

And so that’s the way to think about Bloom. They’re super excited about what the future holds for us, and we thank you for believing in us and being with us. This is a great time to be an on-site power business. That’s all I can say. Thank you all.

Good night.

Conference Operator: Today’s call. You may now disconnect.

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