FLNC earnings call summary

Prepared Highlights

• Q2 2026 revenue of $465M, up 8% YoY (CFO). Of this, ~$80M pushed into Q3 due to customs issue in Vietnam and loading equipment shortage in Spain; both resolved (CFO).
• Adjusted gross profit of $51M, adjusted gross margin of 11.1%, within full-year guidance of 11%–13% (CFO). Rolling 12-month adjusted gross margin at 12.4%, marking two full years of double-digit returns (CFO).
• Adjusted EBITDA of -$9M, an improvement of $21M vs. Q2 2025 (CFO). Improvement driven by higher gross margin, lower operating costs, and a $6M gain from unwinding FX derivatives (CFO).
• Record backlog of $5.6B at quarter-end; expected to grow further (CEO).
• Year-to-date order intake of ~$2B, double the amount through same period last year (CEO). Over $600M of additional orders signed in Q3 to date (CEO). Expect full-year FY2026 order intake to significantly exceed FY2025 (CEO).
• Liquidity of ~$900M at March 31, including ~$430M total cash (CFO). Invested $220M in inventory in Q2; expect ~$100M additional inventory investment in Q3 (CFO). Liquidity expected to return to $900M levels by fiscal year-end (CFO).
• Data center pipeline increased by over 30% since prior call, including from two major hyperscalers (CEO). Master supply agreements signed with both hyperscalers; initial order expected from one within Q3 (CEO).
• Smartstack: first unit reached substantial completion and commenced commercial operations (CEO). Capable of feeding more than 500 MWh per acre; >98% reliability (CEO).
• U.S. domestic supply: Production continues in Smyrna, Tennessee, qualifying for tax credits under the Big Beautiful Bill Act (CEO). Signed new multi-year supply agreement with new owner (Fixed Energy / Lombard Capital) (CEO). Additional domestic cell supply agreement announced for FY2027 (CEO).
• Official guidance reaffirmed for FY2026: revenue $3.2B–$3.6B (midpoint $3.4B), ARR ~$180M (from $148M in FY2025), adjusted EBITDA $40M–$60M (CEO/CFO). 70% of revenue expected in second half; ~30% of 2H in Q3, remainder in Q4 (CFO).

Management Quotes

• "Order activity is accelerating versus fiscal '25. As of today, we signed approximately $2 billion of orders this year, which is double the amount signed through the same period last year." — CEO
• "Second quarter adjusted gross margin was 11.1% which is within our full year expectation of 11% to 13%, a meaningful improvement versus Q1 and more reflective of the disciplined execution we delivered historically." — CEO
• "Since our February call, we executed master supply agreements with 2 major hyperscalers. ... In 1 case, the customers process began with 26 different best vendors, and Fluence was the first to complete all qualifications to sign a global MSA." — CEO
• "We expect data center projects to make an increasing contribution to order intake during the fourth quarter of this year, building on the initial order we expect in the next few weeks." — CEO
• "We are reaffirming our guidance ranges for revenue, ARR and adjusted EBITDA reflecting our strong visibility into the year and continued momentum we see across our business." — CFO

Prepared Metrics

Q&A Batch (1-5 of 11)

Q1 — George Gianarikas

• Topic: Competitive landscape and hyperscaler MSA wins
• Key points:
  • CATL and BYD vertical integration has not changed market intensity; FLNC attracted 50% of new sales from new customers.
  • For the 2 hyperscaler MSAs, there were 26 players in one case; majority did not make it.
  • FLNC’s differentiators: deep knowledge, experience managing fast response systems in Europe, lab infrastructure, and ability to prove capability quickly.
• Mgmt stance: Bullish – confident that vertical integration is not a challenge and that FLNC’s capabilities keep it ahead.

Q2 — Julien Dumoulin-Smith

• Topic: Hyperscaler product deployment and liquidity rebuild
• Key points:
  • Hyperscalers’ main need is quality of power to manage data center fluctuations; FLNC proved this with advanced controls.
  • Domestic content was not a requirement from hyperscalers, but they are considering it as a branding opportunity.
  • Ahmed Pasha: inventory will be built in Q3 for $2.5B revenue in H2; liquidity will return to $900M by fiscal year-end.
  • Julian Marquez: hyperscaler MSAs are very selective – “they all fit in my hand, and have fingers left.”
• Mgmt stance: Bullish – MSAs position FLNC to capture significant demand; liquidity rebuild is consistent with guidance.

Q3 — Brian Lee

• Topic: Hyperscaler MSA quantification and gross margin outlook
• Key points:
  • Majority of FLNC’s pipeline is behind the 2 MSAs; current pipeline is 12 GW.
  • No financial numbers provided for MSAs yet; expects to offer more metrics by Q4.
  • Deployment timeline: faster than normal conversion from pipeline to orders and orders to revenue, especially for hyperscalers.
  • Gross margin: Q2 was 11%; full-year guidance reaffirmed at 11%–13%, goal of ~12% for the year.
• Mgmt stance: Bullish – expects faster conversion and higher gross margins in H2.

Q4 — Dylan Nassano

• Topic: Data center pipeline and Q2 revenue miss
• Key points:
  • Pipeline grew 30% from last quarter; hyperscalers are roughly 12 GW; leads are 3x pipeline.
  • The 6 GWh threshold on Slide 6 refers to long-duration storage projects (≥6 hours), not a pipeline target.
  • Q2 revenue was lower due to $80M shipping delay; no other seasonality or disruptions.
  • Ahmed Pasha: 1/3 of revenue expected in H1, rest in H2; no quarterly guidance provided.
• Mgmt stance: Neutral – revenue miss explained by shipping delay; reaffirms full-year numbers.

Q5 — Joseph Osha

• Topic: Product configuration for hyperscalers (duration)
• Key points:
  • Hyperscalers focus on power quality; Julian Marquez did not specify shorter duration (e.g., 1–2 hours vs. 4 hours) in the response.
  • No specific duration numbers were provided in the exchange.
• Mgmt stance: Neutral – no explicit confirmation or denial of shorter duration configurations.

Q&A Batch (6-10 of 11)

Q6 — Julian Jose Marquez

• Topic: Data center battery duration and inverter requirements
• Key points:
  • Company does not provide systems smaller than 2 hours duration; data center durations tend to be shorter than that.
  • Technology can stack business models (quality of power, interconnection backup, voltage support).
  • For a second point, response time is "significantly shorter than 100 milliseconds" (proprietary number not provided).
  • Capability depends on inverter; company works with inverter companies and has done this in Europe for many years.
• Mgmt stance: Neutral — factual description of product capabilities and inverter dependency, no directional guidance.

Q7 — Jonathan Windham

• Topic: U.S. storage capacity outlook and operating expense leverage
• Key points:
  • U.S. market growing significantly; company has domestic ASE capacity, additional supplier capacity, and is looking at more capacity for 2028 onward.
  • Capacity is "multigigacapacity" (specific numbers not provided); can also import equipment but prefers domestic content solution.
  • Operating costs as % of revenue are a function of top-line growth; costs are "very, very stable" and expected to grow at less than half the rate of revenue growth.
  • Last year revenue did not grow, so operating cost % was higher than planned.
• Mgmt stance: Bullish — sees operating leverage as revenue grows; cost discipline is a key focus.

Q8 — Ameet Thakkar

• Topic: ASP fluctuations and data center pipeline composition
• Key points:
  • ASPs move up/down quarter-over-quarter based on sales mix; company does not read much into it.
  • Planning assumption is that ASPs will continue coming down; demand increases at a rate much bigger than revenue reduction from lower ASPs.
  • 12 gigawatt pipeline is all data center related; "great majority" of that comes from the two MSAs signed.
• Mgmt stance: Neutral — ASPs not a big driver of financial results; pipeline composition clarified.

Q9 — David Arcaro

• Topic: Additional MSA opportunities and new customer profile
• Key points:
  • Company is looking at other MSA opportunities; the two signed are the most urgent needs.
  • Cannot give timing for additional opportunities; hyperscalers signed are "in a hurry" and "ahead of the market."
  • 50% of new customers are within core segments (utilities and developers) but were not contacted in the past; global effort includes U.S. and outside U.S.
• Mgmt stance: Bullish — working with all hyperscalers; new customer growth driven by VP of Growth's business development.

Q10 — Ben Kallo

• Topic: Data center pricing/margins and international margin comparison
• Key points:
  • Data center margins are in line with company guidance of 10% to 15%.
  • Margins vary by market: U.S. is "a little bit on the high side," U.K. on the lower side; 10%–15% range works for all markets.
  • Batteries are a commodity; LFP is used (no NMC); brand/supplier not relevant to hyperscalers.
  • Product roadmap includes high C-rate batteries for inside data centers, but "not any time soon."
• Mgmt stance: Neutral — margins within guided range; no special battery requirements; high C-rate batteries are exploratory.

Q&A Batch (11-11 of 11)

Q11 — Moses Sutton

• Topic: 数据中心储能配比规则及MSA排他性
• Key points:
  • 管理层表示目前“为时过早”无法给出每吉瓦数据中心所需电池容量的经验法则（rule of thumb）。
  • 公司拥有12吉瓦的数据中心储能管道，目标是在未来12个月内将其中很大一部分转化为订单。
  • 对于已赢得的MSA，公司是“极少数玩家之一”，但过程是竞争性的，目前并非直接指定（directed）。
• Mgmt stance: 中性偏谨慎；对储能配比规则拒绝给出具体指引，强调行业仍在发展中；对MSA排他性承认竞争激烈，未确认独家地位。