Fluence Energy, Inc.

Fluence operates in the utility-scale battery storage industry, which is experiencing significant growth driven by the global transition towards renewable energy, increased focus on grid resilience, declining lithium-ion battery prices, rising electricity demand, and supportive regulatory frameworks ¹. The company's addressable market for energy storage solutions is comprised of the annual spend associated with manufacturing, delivery, and installation of new systems, with BloombergNEF estimating global utility-scale market additions of approximately 3,201 GWh between 2024 and 2035, excluding China ². The services market is driven by growth in installed energy storage solutions globally, encompassing recurring annual service spend across the entire fleet ³. The digital applications sector is driven by the growth in installed energy storage solutions and renewable assets, comprising the total global installed fleet ⁴.

Fluence's core business model revolves around generating revenue from energy storage products and solutions, recurring operational and maintenance (O&M) services, and digital applications for energy storage and other power assets ⁵. The company sells configurable energy storage solutions with integrated hardware, software, and digital intelligence to a diverse customer base including utilities, independent power producers (IPPs), developers, conglomerates, and commercial and industrial (C&I) customers ⁶. Revenue recognition for energy storage solutions occurs over time using the percentage of completion method, based on actual costs incurred as a percentage of total estimated contract costs ⁷. Services revenue is recurring, tied to long-term service contracts, while digital application revenue is generated from Software-as-a-Service (SaaS) products ⁸.

Fluence offers several energy storage solutions. Gridstack Pro® is designed for large-scale front-of-the-meter applications, sold to IPPs, developers, utilities, and other generators, and is designed to improve density and system performance with 2- and 4-hour product configurations ⁹. Gridstack® is also for front-of-the-meter applications, built for demanding uses like flexible peaking capacity, frequency regulation, and renewable integration ¹⁰. Ultrastack® is designed for critical distribution and transmission network requirements, including stringent availability, uptime, IT security, and advanced controls applications ¹¹. Smartstack™, announced in fiscal year 2025, features a split architecture design with embedded intelligence and higher energy density ¹². All solutions include Fluence OS, a proprietary energy management system enabling direct operation or integration with external ISO and EMS signals, providing real-time information and critical grid services ¹³. The Fluence-designed Battery Packs are used in Gridstack Pro 2000 solutions, with domestic production initiated in Utah in September 2024, incorporating battery cells manufactured in Tennessee for the U.S. domestic content offering ¹⁴.

For the fiscal year ended September 30, 2025, total revenue was $2,262,830 thousand ¹⁵, a decrease of 16.1% from $2,698,562 thousand in the prior fiscal year ¹⁶. Cost of goods and services decreased by $390,437 thousand, or 16.6%, to $1,967,045 thousand ¹⁷. Gross profit was $295,785 thousand ¹⁸, representing a gross profit margin of 13.1% ¹⁹. Operating expenses included research and development of $86,217 thousand ²⁰, sales and marketing of $79,489 thousand ²¹, general and administrative expenses of $163,068 thousand ²², and depreciation and amortization of $13,348 thousand ²³. The company reported a net loss of $67,989 thousand ²⁴, resulting in a diluted EPS of -$0.37 ²⁵. Net cash used in operating activities was $145,538 thousand ²⁶, and net cash used in investing activities was $29,799 thousand ²⁷. Cash and cash equivalents at September 30, 2025, were $614,917 thousand ²⁸. Total debt, including the 2030 Convertible Senior Notes, was approximately $400.0 million ²⁹.

Comparing fiscal year 2025 to fiscal year 2024, total revenue decreased by $435.7 million, or 16.1% ³⁰, primarily due to a $475.7 million decrease in revenue from energy storage solutions ³¹. This was driven by lower average price per GWh of newer Gridstack Pro solutions as lithium-ion battery costs declined, while total volume of solutions projects fulfilled remained relatively consistent year over year ³². This decrease was partially offset by a $39.1 million increase in services revenue ³³. Gross profit decreased by $45.3 million, or 13.3% ³⁴, but gross profit margin improved from 12.6% to 13.1% ³⁵ due to improved operational efficiencies on legacy Gridstack solutions projects. Research and development expenses increased by $20.0 million, or 30.2% ³⁶, and sales and marketing expenses increased by $15.6 million, or 24.5% ³⁷. General and administrative expenses decreased by $9.9 million, or 5.7% ³⁸. The company shifted from a net income of $30,367 thousand in fiscal year 2024 to a net loss of $67,989 thousand in fiscal year 2025 ³⁹.

During fiscal year 2025, Fluence announced the Smartstack™ platform, a new energy storage solution with a split architecture design, embedded intelligence, and higher energy density ⁴⁰. The company initiated domestic production of Fluence-designed Battery Packs at a contract manufacturer's facility in Utah in September 2024, incorporating battery cells manufactured in Tennessee for its U.S. domestic content offering ⁴¹. A second contract manufacturer in Arizona commissioned their new facility in 2025 and began scaling production, though they encountered delays and inefficiencies in scaling due to labor availability and training lead times ⁴². In December 2024, the company issued $400.0 million aggregate principal amount of 2.25% convertible senior notes due 2030 ⁴³. On August 8, 2025, Fluence entered into a new $150.0 million supply chain financing arrangement ⁴⁴.

Management's discussion indicates that the company expects its Free Cash Flow to fluctuate in future periods as it invests in its business to support plans for growth ⁴⁵. The company believes its existing cash and cash equivalents, proceeds from its IPO, cash flows from operations, and proceeds from the issuance of the 2030 Convertible Senior Notes, in addition to supply chain financing arrangements and availability under its 2024 Revolver, will be sufficient to meet expense and capital requirements for at least the next 12 months following the filing of this Annual Report ⁴⁶.

Fluence's growth strategy includes leveraging its global scale, product development, and market share position to transform the way the world is powered for a more sustainable future ⁴⁷. The company targets new customers as the number of IPPs, utilities, and other key energy customers buying battery energy storage solutions continues to grow substantially worldwide, driven by rising electricity demand from data centers and AI, and as traditional renewable and thermal developers add energy storage to their portfolios ⁴⁸. Fluence intends to continue to grow its customer base through new product launches and is focused on expanding its business with standardized offerings optimized for each sales channel, moving towards an organizational structure designed to support specific customer types, improving logistics, and enhancing market focus ⁴⁹. The company believes that continued expansion and emphasis on domestic content under the IRA, as modified by the OBBBA, will provide Fluence with a competitive advantage ⁵⁰.

The company expects its aggregate costs to increase in the foreseeable future as it continues to invest in increasing its customer base, expanding operations, investing in research and development of products and solutions, and operating as a public company ⁵¹. R&D expenses are expected to generally increase in future periods to support growth and achieve technology and product roadmap goals ⁵². The company is actively working with its contract manufacturers to implement advanced manufacturing technologies, including automation, digital quality control systems, and integrated planning platforms, to improve throughput, consistency, and traceability ⁵³. Fluence is also enhancing its oversight and governance frameworks for contract manufacturing to support compliance with quality standards, regulatory obligations, and sustainability goals, including supplier audits, expanded data-sharing protocols, and collaborative risk management practices ⁵⁴.

Fluence's planned capital allocation includes continued investment in research and development activities to achieve technology and product roadmap goals ⁵⁵. The company issued $400.0 million aggregate principal amount of 2.25% convertible senior notes due 2030, with net proceeds of $389.4 million ⁵⁶. In connection with these notes, the company paid $29.0 million for capped call transactions ⁵⁷ and $10.6 million in debt issuance costs ⁵⁸. The 2024 Revolver provides for an initial aggregate principal amount of up to $500.0 million ⁵⁹, with $194.4 million in letters of credit outstanding and $305.6 million remaining availability as of September 30, 2025 ⁶⁰. The company does not anticipate paying any regular cash dividends on its Class A common stock in the foreseeable future, intending to retain all available funds and future earnings to fund business development and growth ⁶¹.

Management explicitly flagged that current uncertainty related to changes imposed by the OBBBA may cause customers to delay contracting decisions or delay or cancel existing projects as they navigate such uncertainty, which could have a material negative effect on the business and results of operations ⁶². The full impact of the modifications to tax credits and Prohibited Foreign Entity (PFE) restrictions in the OBBBA, its accompanying guidance, and potential changes in law cannot be known with certainty, and the company may not recognize the full extent of anticipated benefits ⁶³. The company also faces exposure from new tariffs and tariff uncertainty in global markets, as it imports components from overseas, including battery cells from China, into the United States ⁶⁴. This uncertainty has impacted and may in the future impact customer contracting activity, revenue, business, operating metrics, and results of operations ⁶⁵. There are ongoing investigations into additional tariffs on specific imports and trade practices, such as Chinese graphite active anode material (AAM), which could result in tariffs and/or more restrictive trade duties and restrictions on components for energy storage solutions ⁶⁶. The preliminary countervailing (CV) determination assigned an 11.58% CV tariff ⁶⁷, and the preliminary antidumping (AD) determination assigned a "separate" AD tariff of 93.5% to certain entities and an adverse AD tariff of 102.72% to all other entities ⁶⁸. The final determination is likely to be delayed by approximately 30 to 60 days due to a U.S. government shutdown in 2025 ⁶⁹.

The company faces material risks including the elimination or expiration of government incentives or regulations regarding renewable energy, changes in the global trade environment such as new tariffs (e.g., Section 301 tariff rate on lithium-ion non-EV batteries from China increasing from 7.5% to 25% effective January 1, 2026 ⁷⁰, and preliminary AD/CV tariffs on Chinese graphite AAM at 11.58% CV and 93.5% or 102.72% AD rates ⁷¹), and fluctuations in order intake and results of operations across fiscal periods. Customer concentration is a risk, with the two largest customers representing approximately 41% of fiscal year 2025 revenues ⁷², and related parties, primarily AES and its affiliates, accounting for approximately 24% of annual revenue ⁷³. Operational risks include delays, disruptions, and quality control problems in manufacturing operations, particularly with third-party manufacturers, and risks associated with engineering, construction, utility interconnection, commissioning, and installation of energy storage products. Supplier concentration and limited supplier capacity for key components like batteries, enclosures, and inverters also pose risks. As a global company, Fluence is exposed to international political, social, or economic instability, including geopolitical tensions, and public health threats. The company's reliance on third-party contractors for installations may lead to quality issues or delays. Defects, errors, vulnerabilities, and bugs in products and technology, including Fluence-designed Battery Packs, could lead to reputational damage and legal claims. Severe weather events and the effects of climate change are unpredictable and may disrupt operations. The company's growth strategy through acquisitions carries integration risks. Financial risks include the ability to obtain letters of credit or surety bonds, and the potential for increased expenses impacting profitability. Macroeconomic uncertainty, including high interest rates, inflation, and trade restrictions, can reduce customer demand. Changes in tax laws or regulations, such as those under the IRA and OBBBA, and existing electric utility industry policies and regulations, may present barriers or increase costs. Non-compliance with data privacy and security laws, including GDPR and CCPA, could result in fines or reputational harm. The use of AI technologies introduces operational and reputational risks, including intellectual property challenges and security vulnerabilities. Legal proceedings, regulatory disputes, and governmental investigations, such as the ongoing SEC investigation into financial reporting practices, revenue recognition, internal controls, capitalization of internal-use software costs, and related-party service contracts, could incur significant expenses and divert management attention ⁷⁴.

Management's message to shareholders emphasizes the company's position as a global market leader delivering intelligent energy storage and optimization software, aiming to create a more resilient grid and unlock the full potential of renewable portfolios. They highlight the significant growth in the utility-scale battery storage industry, fueled by the global transition toward renewable energy, heightened focus on grid resilience, declining lithium-ion battery prices, increased electricity demand, and supportive regulatory frameworks. Management explicitly states that the company believes its existing cash and cash equivalents, proceeds from its IPO, cash flows from operations, and proceeds from the issuance of the 2030 Convertible Senior Notes, in addition to its supply chain financing arrangements, and availability under its 2024 Revolver, will be sufficient to meet its expense and capital requirements for at least the next 12 months following the filing of this Annual Report ⁴⁶. Strategic priorities include leveraging global scale, product development, and market share to transform global power for a sustainable future, expanding the customer base through new product launches and standardized offerings, and optimizing manufacturing footprint and supply chain resilience to meet increasing global demand and comply with domestic content incentives under the IRA and OBBBA.