Mixed Q3 for Fluence: revenue and guidance down but orders and profits up

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Battery energy storage system (BESS) integrator Fluence had a mixed third financial quarter, with a revenue fall and a narrowing down of its full-year guidance, but a record quarterly intake and increased profit margins.

The company’s financial year runs to 30 September, making the three months to 30 June its Q3, and revenues in the period fell 10% year-on-year to US$483.3 million.

Fluence said the revenue fall was down to the ‘timing of product deliveries’, the same reason it gave for a revenue fall in its Q2 (January-March). The same happened with numerous other system integrators, and most sources have said this is largely down to delays in getting BESS projects online in the US due to supply chain and grid infrastructure completion issues.

The trend appears to have affected its full-year performance too, with the company narrowing down – though not reduce the bottom end of – its revenue guidance. It is revising its full-year forecast to US$2.7-2.8 billion from US$2.7-3.3 billion previously, and its adjusted EBITDA to US$55-65 million from US$50-80 million previously.

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However, the company’s profit margins improved in the quarter, with its GAAP gross profit margin more than quadrupling to 17.2%, a net income of US$1.1 million versus a US$35 million loss the previous year and adjusted EBITDA of US$15.6 million versus negative US$27.5 million a year prior. It also saw its quarterly order intake more than double year-on-year to US$1.3 billion leaving it with a backlog of US$4.5 billion, a record.

Fluence is one of the world’s largest BESS providers globally by projects deployed and contracted and also has a strong digital offering, which will have brought its annual recurring revenues (ARR) to US$100 million by the end of the financial year.

The firm also revealed recently that it will provide 2.2GWh of BESS to asset owner Excelsior for US projects that will qualify for domestic content investment tax credit (ITC) incentives under the Inflation Reduction Act (IRA).

In its Q3 presentation, it explained that using using cells and modules that are manufactured in the US will enable it to ‘easily’ meet the domestic content thresholds required for BESS. The threshold starts at 40% for 2025, and US-made cells comprise 38% and modules (packaging) comprises 3.3%, pushing it over the line. A thermal management system is 4.9%, battery management system (BMS) 5.2% and production of the overall battery pack is another 21%.

It said it expects deliveries of US-made cells from supplier AESC to start in December 2024, ramping up over the course of 2025. It’s not clear if that is the same supplier for the Excelsior deal, which it didn’t name but said would be from a factory in Tennessee, while AESC’s announced gigafactory is in neighbouring Kentucky.

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