Fluence Energy Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 29, 2023

Key Takeaways

  • Fluence reported Q4 revenue of $673 M, a 52% YoY increase, and achieved $20 M adjusted EBITDA, exceeding expectations and marking the first profitable quarter.
  • The company guided fiscal 2024 revenue of $2.7–3.3 B, adjusted EBITDA of $50–80 M, and annual recurring revenue (ARR) of $80 M, targeting 35–40% top-line growth into fiscal 2025.
  • Signed backlog remained at $2.9 B with new orders of ~$737 M, while total pipeline grew 50% YoY to $13 B, supporting strong demand visibility.
  • Launched the GridStack Pro hardware and OS7 operating system with U.S.-made battery cells, positioning Fluence to qualify for Inflation Reduction Act domestic content bonuses.
  • Secured a new $400 M asset-backed lending facility with reduced borrowing costs, replacing the prior $200 M revolver to enhance liquidity and working-capital flexibility.
AI Generated. May Contain Errors.
Earnings Conference Call
Fluence Energy Q4 2023
00:00 / 00:00

There are 15 speakers on the call.

Operator

Good day, and thank you for standing by. Welcome to Fluence Energy Incorporated's 4th Quarter 2023 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. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to Lexington May, Vice President, Investor Relations. Please go ahead.

Speaker 1

Thank you. Good morning, and welcome to Fluence Energy's 4th quarter 2023 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 on this morning's call are Julian Nobreda, our President and Chief Executive Officer Manoush Yal, our Chief Financial Officer Rebecca Bole, our Chief Products Officer and Amed Pasha, our incoming Chief Financial Officer. During the course of this call, Fluent's management may make certain forward looking statements regarding various matters related to our business and company that are not historical facts.

Speaker 1

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.

Speaker 1

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 Also note That while Ahmed is participating on today's call, he is not going to be participating in the Q and A session and thus please direct your questions to the other members of the team. Thank you very much.

Speaker 1

I'll now turn the call over to Julian.

Speaker 2

Thank you, Lex. I would like to turn my warm welcome to our investors, This morning, I will provide a brief update on our business and then review our progress and our strategic objectives. Following my remarks, Manu will discuss our financial performance for the Q4 and then I will discuss our outlook for fiscal 2024. Before we begin our discussion on the 4th quarter results, I'd like to spend a few moments addressing the announcement we made a few weeks ago. Manu has decided to step down as CFO of Fluence.

Speaker 2

He has done a remarkable turnaround job here. And as a result, he caught the attention of others. He received an offer he could not refuse and more importantly, one that we could not match. As such, he will be leaving effective December 31st to be considered for another company in a different industry. On behalf of the Board, I would like to send a To send a sincere thank you to Manu for the value he helped create at Fluent the past 15 months.

Speaker 2

Additionally, I would like to send a warm welcome to Ahmed Pasha, Our incoming CFO, Ahmed will officially assume this role on January 1, thus ensuring a sufficient transition period. Ahmed comes to us from AES, where he had a 30 year career, most recently serving as the CFO of the Utility Business Unit. I personally have worked with Ahmed for many years, and I am excited to continue that at Fluent. Now I would like to turn the call over to Ahmed to make a few remarks.

Speaker 3

Thank you, Julian, and good morning, everyone. I am excited to be joining Fluence at a time when energy transition is achieving critical momentum, which presents so much opportunity for the company and for Energy Storage in general. As some of you may know, I have had some experience working with Fluence during my tenure at AES, including during the IPO process and more currently As CFO of the U. S. Utilities business, Spire, Fluence is playing a critical role in helping to transform our energy mix.

Speaker 3

Since the announcement about 2 weeks ago, I have had the opportunity to meet with some members of Fluent's team And I'm very impressed with their experience and commitment to enabling the global energy transition. I look forward to working with them and helping Fluence to achieve its ambitious growth and profitability goals, I would like to express my appreciation to Manu for his invaluable contributions to Fluence, particularly The strong foundation he has established to position us for continued success in the future. In the near term, I will be getting up to speed on things, but I expect to meet with many of our investors and analysts in the coming months. I look forward to hearing their views and sharing how we plan to achieve our key financial and strategic objectives. With that, I will turn the call back to Julian.

Speaker 2

Thank you, Ahmed. Beginning on Slide 4 with the key highlights. I'm pleased to report that in the quarter we recognized $673,000,000 of revenue. We continue to experience Strong demand for our products and services with new orders totaling approximately $737,000,000 Highlighted by our solution business contracted 2.1 gigawatt hours, our services business added 1.6 gigawatt hours and our digital business adding 1.8 gigawatts of new contract. Furthermore, our signed contract backlogs as of September 30 remained at $2,900,000,000 due to acceleration of select projects ahead of schedule.

Speaker 2

Turning to adjusted EBITDA, we delivered approximately $20,000,000 for the quarter. This is a tremendous milestone as we achieved this level ahead of schedule. As you recall, we expected to be close to adjusted EBITDA breakeven for the 4th quarter. However, we were able to accelerate select projects that resulted in high revenue and margins for the quarter. One of the areas we're concentrated on is our organizational speed, especially reducing our project cycle times.

Speaker 2

We see a lot of value in reducing our cycle times from the roughly 18 months to closer to 12 months. We believe it will take us at least 2 years to reduce cycle times down to 12 months. This quarter results at a perfect example of what Speed can do to bring increased value to both our customers and our shareholders. Lastly, our services and digital businesses, which together represent our recurring revenue stream continue to Our deployed service attachment rate, which is based on our cumulative active service contracts relative to our deployed storage, remains about 90%. As we have noted previously, we typically see a lag between signing solution contracts and entering into a service contract, which is why we believe that cumulative attachment rate is important to monitor.

Speaker 2

Turning to our digital business. We had a very strong quarter and as we were able to contract 1.8 gigawatts. More importantly, our digital assets under management increased by more than a gigawatt and the total number reached 15.5 gigawatts as of September 30. Turning to Slide 5, I'd like to highlight some of our accomplishments of the past fiscal year. As you may recall, a year ago, we embarked on the transformation of our business.

Speaker 2

I'm pleased to report that we delivered on our commitments to the market. We grew our annual revenue by 85% and achieved our 1st profitable quarter. Importantly, We exceeded our regional annual revenue guidance by more than $600,000,000 thanks to improved execution, easing supply change and project timeline acceleration. We burned through almost all our legacy lower margin backlog And we diversify our supply chain, including securing U. S.-made battery cells with ASC.

Speaker 2

With the rollout of Fluence 7, we have integrated Inspira into our hardware solutions on a go forward basis, So that now every new store solution sale has disparate a bundle input. We built out our India Technology Center and we published our inaugural sustainability report, a successful year that sets the tone for the years to come. Turning to Slide 6, I would like to discuss progress on our 5 strategic objectives. As you recall, at this time last year, we laid out 5 strategic objectives that will guide our actions and markets that our investors could monitor and measure the company performance against. As we generated our 1st profitable quarter, I'm pleased to say the first phase of our transformation is complete.

Speaker 2

The second phase is just getting started, which will continue the theme of profitable growth, now measured through the growth of our nominal adjusted EBITDA and annual First, on delivering profitable growth. I'm pleased to report that we exceeded our fiscal year 2020 guidance for both revenue and adjusted gross profit. Today, we're initiating guidance for fiscal 2024. We expect total revenue for fiscal 2024 to be between 2 point $7,000,000,000 $3,300,000,000 In line with our commitment from our last call, we are initiating guidance for adjusted EBITDA for fiscal 2024 to be between $50,000,000 $80,000,000 2nd, we will continue to develop products and solutions that our customer need. As such, I'm pleased to report that in October, we launched Greek stat pro, our larger enclosure provider and higher density, Faster installation, enhanced performance and industry leading safety.

Speaker 2

In conjunction with the launch of GreekStar Pro, We also launched Fluence 7, the latest Fluence operating system, designed with enhanced capabilities and fully integrated with the new Fluence battery management system, which I will touch on more in a few minutes. Sir, I'm pleased to report that we have secured all our battery needs for fiscal 2024 and 2025. 4, We will use Fluence Digital as a competitive differentiator and a margin driver. I'm pleased to report that we are initiating guidance For our annual recurring revenue from our combined service and digital businesses, we expect to generate around 80,000,000 dollars of ARR by the end of fiscal 2024. And finally, our fiscal objective, which is to work better.

Speaker 2

I'm proud to say that just recently we have launched a new $400,000,000 asset backed lending facility or ABL. This credit facility is secured by our U. S. Inventory, and we expect it will provide us increased flexibility. More importantly, we believe that the ABL facility provides us additional tools to manage our working capital as we continue to grow.

Speaker 2

Turning to Slide 7. Demand for Energy Storage continues to accelerate. In fact, Our pipeline now sits at $13,000,000,000 which is an increase of approximately $600,000,000 from the 3rd quarter and a 50% increase compared to this time last year. Additionally, as I mentioned, with our backlog remain consistent at $2,900,000,000 even after recognizing almost $675,000,000 during the quarter. Importantly, we had several contracts that were signed just subsequent to quarter end amounting to approximately $400,000,000 which provides us with strong visibility to achieving our 2024 revenue guidance.

Speaker 2

This is the 8th consecutive quarter we added more backlog than revenue recognized, further illustrating the growing demand for any storage. Based on the conversations we're having with our customers and potential customers, we're expecting to see top line year over year revenue growth From fiscal 2024 to fiscal 2025 of approximately 35% to 40%, showcasing the robust market for utility energy storage. Turning to Slide 8. As I mentioned earlier, we launched our Greek Stack Pro and OS7 in fiscal year 2024. These product launches are something our stakeholders should expect periodically for launch as we continue to innovate and identify new ways to serve Our customer needs.

Speaker 2

When you look specifically at our GRIGSTAC Pro solution, this is a much larger product that integrates 6 battery racks and is designed for the largest and most complex utility scale projects globally. GrecStack Pro will offer our customers a denser product with leading safety measures, faster deployment, 1st class reliability and the flexible modular design that defines our product offering. More importantly for the U. S. Market, The Fluent battery pack will be available in U.

Speaker 2

S. Manufactured battery cells and modules. This position Greek stat pro as one of the first and historic solutions to qualify for the 10% investment tax credit domestic content bonus under the Inflation Reduction Act. In conjunction with GridStack Pro, we launched OS7, the next generation of our operating system. This iteration is meant to handle bigger and more complex projects and can reliably control more than 1 gigawatt hour system and is fully integrated with the Fluent Battery Management System.

Speaker 2

This software also provides a foundation for future enhancements to the architecture and enables component commoditization just as DC to DC converters. It provides new tools targeted to reduce our commissioning times, which as I mentioned earlier, is a key area for the company. And importantly, OS7 comes standard with an Inspira platform already preloaded. This is an important feature I expect to provide all our product deployments with basic needs payer access for a certain amount of time, after which customers will be required to sign a longer term contract if they wish to continue using the APN platform for the Best facility of which to upgrade to additional fixtures. Turning to Slide 9.

Speaker 2

I'm pleased to say that earlier this week, we secured a new $400,000,000 ABL facility. This provides us with an additional tool to help manage our working capital. The new ABL facility features a lower cost of Capital relative to our legacy revolving credit facility by approximately 50 basis points and is secured by a U. S. Inventory balance and is expected to provide us with more flexibility.

Speaker 2

As our U. S. Inventory balance increases, so does our borrowing capacity. This ABL facility replaces our smaller $200,000,000 revolving credit facility that require cash collateralization. As we enter fiscal year 2024, we believe we have a very strong balance and an ample working capital facility necessary to scale our platform and achieve our 2024 guidance.

Speaker 2

Shifting to Slide 10, we're introducing guidance for Annual recurring revenue, ARR. For our combined digital and business enterprises, our objective is to reach approximately $80,000,000 in ARR by the conclusion of fiscal year 2024, implying a notable increase of 40% from the preceding year. This target is well supported by a robust service attachment rate exceeding 90% and a full 100% attachment rate for Nispera Moving forward, additionally, our strategic efforts are concentrated on advancing our MOSAIC offerings, Currently operational in the 3 markets Australia, Caixo and ERCOT. It's essential to note that we're in the process of refining this platform with substantial contributions not anticipated before 2025 as previously communicated. In conclusion, I'm pleased with the achievements The Q4, although we're mindful there is still work to be done, we will look to continue this momentum as we progress into our new fiscal year.

Speaker 2

I will now turn the call over to Manu.

Speaker 4

Thank you, Julian. I will begin by reviewing our financial performance for the Q4, And then I will pass it back to Julian to discuss our guidance for fiscal year 2024. Please turn to Slide 12. Our 4th quarter revenue was $673,000,000 an increase of 52% from the prior year same period and 25% above the 3rd quarter. We continue to execute well as we were able to accelerate some of our legacy backlog Previously anticipated for fiscal year 2024, resulting in higher than expected revenue for the 4th quarter.

Speaker 4

We continue to expect a small portion of our legacy contracts will be recognized in the Q1 of 2024. Looking at our adjusted gross profit for the quarter, we generated approximately $78,000,000 or approximately 11.6% in line with the commitment discussed on our Q3 call and reflects an increase from our Q3 margins of approximately 4.4%. More importantly, this is an increase from the previous fiscal year of 2.8%. I'm pleased to say We have demonstrated cost discipline as our operating expenses excluding stock comp as a percentage of revenue continued to decline and ended up around 9% for the quarter. From a year over year comparison, our 2023 OpEx percentage of revenue, Excluding stock compensation came in around 10%, which is below our 2022 results of around 15%, further illustrating our cost discipline.

Speaker 4

As a result of our strong execution in the 4th quarter, We were able to generate $20,000,000 of adjusted EBITDA. And as Julian mentioned, this signals The first phase of our transformation is complete. As we have now become profitable, our focus will shift to growing our nominal adjusted EBITDA and ARR, which we will discuss further. Turning to our cash balance. I'm pleased to report We ended the Q4 with $463,000,000 of total cash, including short term investments and restricted cash.

Speaker 4

This represents an increase of more than $45,000,000 from the 3rd quarter. As Julian mentioned, we secured a new $400,000,000 ABL facility. This facility replaces our existing Revolving credit facility upsizes the amount of available borrow and should enable us to better manage the peak to trough elements of our working capital. When you look at our total cash balance combined with our new ABL facility and supply chain financing, we have ample liquidity putting us in an excellent shape to capitalize on the massive time in front of us. Please turn to Slide 13.

Speaker 4

From a cash standpoint, we increased our total cash position by 11% relative to the 3rd quarter. For 2024, we will continue to invest in technology, resulting in an expected use of cash of approximately $85,000,000 From a recurring CapEx assumption, a good run rate is between $20,000,000 $25,000,000 as this is the level we expect In a steady state environment without large non reckoning investment items such as the technology, IT and systems investments we expect to make in fiscal 2024. As Julian will expand, we expect to generate around $65,000,000 of adjusted EBITDA in fiscal 2024 and we expect to see approximately $65,000,000 to $70,000,000 Change in operating cash due to increase in working capital requirements and includes our deposits for our U. S. Manufactured battery cells from AESC.

Speaker 4

As we mentioned on our last call, our U. S. Battery cell supply agreement with AESC called for a down payment of $150,000,000 to reserve this capacity, which will be paid in installments over fiscal year 2024 and fiscal year 2025 and will be funded by liquidity and customer deposits for these batteries. The first $35,000,000 will be paid in Q1 of fiscal year 2024 and another $35,000,000 will be paid in the Q2 of fiscal year 2024. As Julian and I have mentioned earlier, We have a strong balance sheet entering 2024 and have ample cash and facilities to support our 2024 guide and investments that will support multiyear industry growth.

Speaker 4

We also expect to generate free cash flow in fiscal year 2025. Before I turn the call back to Julian, I would express like to express my appreciation to the Fluent Support management team, employees and shareholders for their trust. Serving as the CFO of Fluence has been one of the highlights of my career. If I were to participate in the energy transition space today, this would be my preferred spot. I take comfort in knowing Fluence He's in an excellent position from a balance sheet perspective as I pass the baton to Ahmad, who will take Fluence into the next chapter.

Speaker 4

With that, I will turn the call back to Huli.

Speaker 2

Thank you, Manu. Turning to Slide 14, as we previously discussed, We're initiating guidance for fiscal 2024 of revenue between $2,700,000,000 $3,300,000,000 We expect our fiscal 2024 adjusted EBITDA to be between $50,000,000 $80,000,000 and we are targeting Our ARR to be around $80,000,000 by the end of the fiscal 2024. I'd like to point out that our revenue guidance represents an increase of $300,000,000 when compared to our prior fiscal year 2020 3 guidance midpoint plus our implied revenue growth of 35% to 40%. We now expect a fiscal 2024 revenue split of 30% in the first half and 70% in the second half, which is an improvement to what we previously communicated to the market. As a result of this, we do expect Our Q1 to produce negative adjusted EBITDA due to lower revenue and the execution of the remaining legacy contracts.

Speaker 2

From a margin perspective, we expect fiscal 2024 adjusted gross margins to be between 10% 12%, which is an improvement from the fiscal 2023 adjusted gross margin of nearly 7%. From a cash standpoint, we currently expect to use approximately $85,000,000 of cash in fiscal 2024, mostly funding non recurring incremental investments in systems and IT infrastructure necessary to support our continued growth. When looking out to 2025, we expect 35 to 40% year over year top line revenue growth. Additionally, we expect to begin generating Free cash flow in fiscal 2025. Turning to Slide 15, we established ourselves as the preferred choice for utility scale storage solution.

Speaker 2

Our competitive advantage is fortified by being able to offer our customers a full breadth of features including Bankability Scale and Supply Change Management Power Electronic Engineering and Innovation Digital Software Services Safety and Cybersecurity. While some of our competitors may focus on only a couple of these elements, We often win because we aim to excel in all and provide them universally to our customers. This is corroborated by the 2023 S&P Global Battery and Storage Systems Integrator Report, which ranked the top 10 integrators globally based on installed And contracted capacity, I'm pleased to say that Fluids was ranked number 1 both globally and in the U. S. In conclusion, I want to emphasize the key takeaways from this quarter results.

Speaker 2

Firstly, we had a robust financial performance, contributing to our record breaking annual revenue. Attaining profitability for the first time is a significant milestone, and we aim to capitalize on this achievement in fiscal 2024. 2nd, we proactively secure our future by solidifying our battery supply for fiscal years 2024 2025, thus ensuring our ability to meet our growing demand. Finally, the introduction of our new $400,000,000 ABO facility provides us an additional tool to continue capturing the robust growth of the utilities' health. As a reminder, while Ahmed is participating on today's call, he will not be answering any questions.

Speaker 2

This concludes my prepared remarks. Operator, we're now ready to take questions.

Operator

Thank you. Please wait for your name to be announced. Again, we ask that you please limit yourself to one question and one follow-up until all have had a chance to ask a question, After which, we will answer any additional questions from you as time permits. Please stand by while we compile the Q and A roster. One moment for our first question please.

Operator

Question comes from the line of George Giancarregas With Canaccord Genuity, your line is now open.

Speaker 2

Hey, good morning, George. Good morning. How are you?

Speaker 5

Thank you for Doing great. How are you? Thanks for taking my question.

Speaker 3

So maybe just to start, a

Speaker 5

lot has been made of The interest rate environment having an impact on project timing in the general renewable space and economics, Your results sort of speak for themselves, but what impact, if any, are you seeing on your business from the change in interest rates? Thank you.

Speaker 2

Great. Thanks, George. I mean, as we have talked in the past, we We're with the top tier developers in the U. S. Where this is where this happens.

Speaker 2

And when you look to them, they don't really see any problems raising capital, accessing capital Or putting the projects together. So we have not seen any delays due to cost of capital or access to capital in general. And I will tell you even more in our case, because as you all know, our product costs have come down with battery prices coming down significantly this year. In a way, when you look do the math between what our costs our lower costs with compared with the higher the 100 basis points generally The prices have gone the cost of money have gone up during the year. It's essentially a wash or maybe actually You actually can do even better returns than what you do in the past.

Speaker 2

So we haven't seen any real effect of today. In our customer segment, We do get the same information you get from other parties who would tend not to work with, where they have had some problems raising money or Raising money at competitive rates, well, but we haven't seen it in our group. We segmented with a top tier group and that top tier group Essentially, I have no problem of accessing capital.

Speaker 5

Thanks. Maybe if I can ask one follow-up. Yes. Very recently, one of your competitors, Bartilla, announced that they're exploring strategic alternatives for their Energy Storage Business, what any thoughts on that and any impact that it could have on your strategy going forward? Thank you.

Speaker 2

What I can tell you, I was surprised by it because the prior quarter they say that this was going to be their growth engine. This quarter they say that it's difficult to know. We've been trying to understand where they come from. I prefer not to speculate at this stage. But I was surprised that this is a market that is offering tremendous growth.

Speaker 2

It's a tremendous opportunity to create value for shareholders to play in the new energy space. So Why are they revising their view on the market? I have no idea. But I've been reading the investors' call and the rationale, at least it wasn't clear to me, but we will continue looking at it. We're on the other side of that spectrum, doubling down on this.

Speaker 2

This is a once in a life opportunity. It doesn't get any better than what this market offers today. Thank you. Thank you, George.

Operator

One moment for our next question please. Our next question comes from the line of Brian Lee with Goldman Sachs. Your line is now open.

Speaker 6

Hey, good morning. Thanks.

Speaker 2

Good morning.

Speaker 6

Hi. Good morning. Thanks for taking the questions. I'm well. How are you guys?

Speaker 6

First off, Manu, congrats and best of luck on your new role. And Ahmed, looking forward to working with you more closely going forward. Couple of questions I had was I guess appreciate the ARR breakout, dollars 80,000,000 end of this year At the end of the fiscal year, a 40% growth, it seems like versus last year's number. If I look at your bookings though in services and digital, it's growing a lot faster. So Can you give us a sense of I know there's a little bit of a delay, but as we think about your initial 25 revenue guidance consolidated, like how Fast, can you grow that ARR balance off of the 80?

Speaker 6

When I kind of look at your bookings volume Growing at a much faster rate across services and digital. And then also what sort of the margins implied In that ARR balance, I suppose it's I would presume it's pretty high, but can you give us a sense of what the range is?

Speaker 2

I mean, on the growth rate, I do think that our view is that our ARR to grow at a higher rate than our solution basis, no? Just the way it works. And the concept is very simple. We will We have Naspersa and Mosaic and our services business. Our services business, 90% of our growth rate of our Solvay, Nispera roughly around $100,000,000 and then Mosek is on top of that.

Speaker 2

So not on top of that, we'll be but we can add to it. So I do think that we will see that growth being ahead of it. So that's conceptually where we are. And you can we're growing 40% compared to what the 35% to 40% that we have said from last year. In terms of margins, the margins differ.

Speaker 2

No, I think that for our Our digital business, they are more on the around 70%, while our service business is between 20% 30%, depending on the type of service that The all that we agree. So the combined there's not a combined margin, but you should think about it this way. And then in terms of the today, I think that the grade or the majority of any services, What I'll see the I mean, our view is that digital will grow at a higher rate than our services business that you'll see Digital becoming a much more relevant part of our ARR as we move forward. So that's kind of the you should think about all of this.

Speaker 6

That's great. Yes, and I appreciate that color. That's super helpful. Second question from me and I'll pass it on is looking at that kind of preliminary fiscal 'twenty five revenue guidance, dollars 35,000,000 to $40,000,000 That's quite robust. It puts you in kind of the $4,000,000,000 top line range, assuming you kind of get to the midpoint.

Speaker 6

Can you it sounded, Huynh, like you were mostly

Speaker 2

Brian, I lost you. We're losing you a little bit. I You mentioned that you were talking about the 25 robust growth and then somehow you got can you repeat that?

Speaker 6

Yes, hopefully maybe that's clear. Sorry, I turned off the Bluetooth. It's I'm just wondering what beyond customer conversations do you have, any MSAs, Say contracted backlog, like what else are you able to sort of key off on to get comfortable with the 35% to 40% Additional growth into fiscal 2025. And then when you talk about batteries being secured for 2025, I mean, I would assume that is matching up to that revenue growth potential you're looking at. Is it Fixed pricing or is it indexed?

Speaker 6

Are you subject to any kind of cost volatility on the battery side? Just having locked Maybe could you remind us where you are on the pricing side of things as well? Thank you.

Speaker 2

Yes. So on the growth, Clearly, I think that the vast evidence of our growth capabilities comes out of our pipeline. So We looked at our pipeline for this last quarter. We grew our pipeline by $600,000,000 roughly on top of Converting $7.35 to backlog. So in reality, we added $1,300,000,000 into the pipeline this quarter.

Speaker 2

And that's where I'll give the honor view and on top of that, something that we don't disclose, we have lead, Projects that we're working on with customers that we do not believe today we can consider at 50% chance of happening within the next 2 years. When we looked at our leads, when we're talking to our customers, when what we're doing gives us a good we feel very confident that we can do a 35% to 40 So that's essentially where it is. In terms of on that this number compared to our prices, we build our Planning based on our current view of prices or on costs. So as long as prices Stay within what we think where we are today generally, which is kind of what we think is going to stay for the foreseeable future, I think we should be fine. Well, what we have also seen, just to be clear, that if prices will continue Come down.

Speaker 2

I think that generally what we see is that the volumes increase. So we don't feel that necessarily the 35% to 40 And today, we don't believe that the 35% to 40% growth will be affected by cost coming down or battery cost coming down so much That we won't be able to meet it because of that. Because at the end of the day, what happens, a lot of more projects, Let's say our 50% more of our pipeline projects convert into a reality because they are easier to meet the economics of the customer. So I think that's the our view on that one. Your second point sorry, Alina.

Speaker 2

You had a second point?

Speaker 6

Yes, you covered most of it. I guess my question around cost was whether or not I guess you have margin risk Either up or down based on the security of supply in 25 on volumes, like how long are in the U. S. Cost?

Speaker 2

We continue to be our strategy is not to take battery price cost risks. So we transfer to our customer that. And that and our view has always been with the RMI. So our view has always been as the Prices of lithium come down, it goes to our customers. If it were to go up, our customers will pay a higher number.

Speaker 2

And we don't want to become a commodities. There are much better players. There are much better ways of betting on the commodity movements than our stocks. So We continue with a strategy that hasn't changed. We feel very, very confident on our 10% to 15% margin.

Speaker 2

So I don't think that that will be affected in any way.

Speaker 4

And Brian, the margins have held up, right? The battery prices are materially different today than they were a year back. Not only

Speaker 2

how often they have gone up.

Speaker 4

They've gone up, right? So

Speaker 2

I think the lower battery prices At an opportunity, no, not at risk. Clearly, we have organized ourselves in a way that it will not be it does not affect or Changes affect our margin, but they are generally we see them as an opportunity.

Speaker 6

I appreciate that. That's what I would say. Thank you, guys.

Operator

Thank you. One moment for our next question please. Our next question comes from Andrew Plucoco with Morgan Stanley. Your line is now open.

Speaker 7

Good morning. How are you? Well, thanks for taking the question. I guess just to Come back to Brian's question, I just want to make sure I understand this correctly. For the 2025 battery supply, Have you locked in the pricing with your suppliers on that?

Speaker 7

I'm just kind of curious if battery prices continue to fall And you've locked in your pricing for 2025. Is it going to be more difficult to sign a 10% to 15% gross margin Contract if you have a higher priced battery versus where prices go from here?

Speaker 2

I think that I'll put it this way. We are we have contracts with our suppliers that aligns with the current market world, In a world where prices are coming down. So as generally, so we're not committing to significant volumes at fixed prices that will be out of That's conceptually one side of the spectrum. No, that's very, very important. We very, very important from our point of view to have Very competitive pricing that is better at market or better and the ability the access to volumes.

Speaker 2

And I think that we had been able to design our contracts in a way that meets those goals. And in terms of margins, as I said, I see this as I don't think the lower pricing will affect our margins, our 10% to 15% margins going forward. This is more of good news, no more than negative news. And our 10 to 15, we feel very confident. That's the way we do deals.

Speaker 2

And People might argue, hey, your volumes are going to come down because now you're going to come out of a lower price. But the reality is that, as I said, A lot of more projects meet the return criteria of our investors, of our customers. So the volume more than covers any potential price reduction You might see around. So this is a growth this is a as I said earlier, You cannot dream if I looked at when I arrived, dollars 1.80 per megawatt hour prices today, Not going to say a price not to be let my competitors know, but it's a different world and it doesn't get any better.

Speaker 8

Well, maybe

Speaker 2

I'll be surprised that next year will be even better, but

Speaker 7

Understood. That's super helpful context. And then I guess my follow-up would be, As you look at your backlog or even the pipeline, what percentage of it is new renewable energy projects That are adding battery storage versus maybe a retrofit opportunity. Obviously, the IRA presents an interesting opportunity there for retrofit. So I'm just kind of curious how breaking down as you look at the pipeline and backlog.

Speaker 2

Today, I will say that if you looked at our pipeline, the ones that have more than a 50% is mostly new projects. Retrofits and things that are more in the leads part. So they are mostly in greenfield, if not essentially all today. However, we do see, as you can see, a lot of our customers are looking at talking to us at retrofits, are replacing Some coal facilities, so there are some in our pipeline or in Contract backlogs that are building it into a former coal facility, but generally they're greenfield.

Speaker 7

Understood. Thank you.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of Joseph Osha with Guggenheim Partners. Your line is now open.

Speaker 9

Hello. Congratulations on the great outcome. I've got a couple of questions. First, looking you've alluded to the gross margin, but as we look at that FY 2025 Got it. I'm wondering how we might think about operating cost absorption and what that implies roughly for the ability of the enterprise To grow EBITDA.

Speaker 9

I have a couple of other questions, but I'll start with that one.

Speaker 2

Good morning. I'll let Matt who answer this.

Speaker 4

So look, I think consistent with what you said, as we think about 2025 EBITDA profile, Gross margins are probably at the midpoint of 10% to 15% range. And then we've been very disciplined around operating expense and we expect to grow operating And said a little bit less than half of our top line growth and you saw that in 2023 and you expect to see that in 2024 and 2025. Look, we are continuing to invest in the business on the backs of growing market and $13,000,000,000 of pipeline.

Speaker 9

Okay. Could we begin to see any material benefit from 45x credits in FY 2025 given how Cell availability in the U. S. Is evolving?

Speaker 4

Yes. And the short answer is yes. But I think from a modeling perspective, I'd They'll stick within the lanes I just talked about.

Speaker 9

Okay. But to be clear, that number you've put out there does not Build in any 45x, is that correct?

Speaker 2

The way we our view on the 45x is that they will be within the range, So that we'll see that the 45x will take us outside of the range of the 10 to 15. That's the way we just think about. Remember, we are building a new line. We are putting it together. We're starting this it will require some Taking it up to more if we get to a very to get to scale and efficiency, it takes a little while.

Speaker 2

So we believe that the Florida Fire X will help us Paid for some of that learning curve.

Speaker 9

Sure. I mean, it's early days. I just wanted to clarify. So it does Sound like to the extent that those numbers do flow through the P and L in 2025, it would be additive to that range You're discussing, is that kind of what you're saying?

Speaker 2

Well, I mean, I'll put it differently. As I said, I do not today where we are, I believe that the 45x will help us bringing our line into It will cover the cost of the learning curve. That's our view today. We might be able to do this much better than what we expect. But Having gone through processes like these, they usually carry some risk and you need to be.

Speaker 2

So I don't want to overpromise on this.

Speaker 9

Okay. And then just the last one for me on business mix. Wondering how you're looking in terms of Storage only freestanding products versus wind and solar coupled projects. Thanks. And that's it for me.

Speaker 9

Thank you.

Speaker 2

Yes. We'll see more and more coming into in the first. Outside of the U. S, that's the norm, just to be clear. In the U.

Speaker 2

S, we see them come more and more and more. We have some we signed a few last during the year. We see more coming into our leads and And it will be I cannot give you an exact number, but I don't have it in the top of my head. But we do see that Over time, that will take in the U. S, the U.

Speaker 2

S. Will start looking more like the rest of the world We're about to storage our standalone process. It will take a little time. These projects that need to be people were working On projects that were with renewal assets, it will take a little time until they actually got them permitted in the queue and all that process.

Speaker 9

Okay. Thank you.

Operator

Thank you. One moment for our next question, please. Our next question comes from the line of Dylan Massano with Wolfe Research. Your line is now open.

Speaker 2

Yes. Hi Dylan. Thanks for Good morning.

Speaker 5

Thanks for taking my questions. Welcome, Ahmed, and wishing you the best in your new role, Manu. Just wanted to touch on the domestic content offering. I How are those conversations kind of going with the customers right now? How much volume, I guess, are you seeing it drive within the pipeline?

Speaker 5

And Just on the latest IRS rules that came out, does that kind of give any kind of incremental certainty to move the needle at all?

Speaker 2

I mean, like we said, I think that our volume growth is based on our view of our of domestic content. We do, as we mentioned it also, there might be an opportunity for margin expansion. We said it in the past. It's too early to say today. But we are working with our customers and it's going well, but it's too early to say whether we can spend margins based on That's our view.

Speaker 2

But volumes you already what we are the growth we're offering essentially includes what our view on where we see Our domestic content offering and that's generally our view on this. I think that potentially it could be a margin expansion like we said and As soon as we have visibility, we'll share that with the market to let you know if it changes. Well, that might be a potential upside. For our 25% margins, just to be sure, we won't I don't think we will see any real significant revenue in 2024. It will be a 25% revenue.

Speaker 2

We'll let you know as the year progresses and we start signing contracts, we'll give you a view of And the regulations were a step forward. I think like all these regulations, they respond a set of questions and they Open a new set of questions, but I think that in general is it's good to see it more coming. There's still we're still waiting for more clarifications, but it was good to see some clarifications then. A lot of the issues that they were addressing were not related to our industry, but the ones that were related to our The ones that were related to our industry to about the storage were in line with what we expected.

Speaker 5

Got it. Thank you. And then just quick follow-up. Can you just talk a little bit about the geographic breakout of the current backlog and Where in the pipeline are you maybe seeing incremental opportunities pop up? Thanks.

Speaker 2

Yes. I mean, yes, Aliyah, the same as As our revenue, 2 thirds, the U. S, 1 third of the rest. We see in terms of markets, I think we talked about this already. Canada has Become now a new market where we've been very active and has been doing very well.

Speaker 2

But besides That I think that we see a lot of growth in Australia, Europe as in Germany. And Germany, I guess, is the other market where we have done the 2 Transmission projects and we are continuing to see growth and movement. So very, very strong market all around and the U. S. Still leads the

Speaker 5

Got it. Thank you. That's it for me.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Ben Kallo with R. W. Baird.

Operator

Your line is now open.

Speaker 9

Hi, good morning. Thank you.

Speaker 2

Hey Ben, how are you?

Speaker 9

Good. Just following up on the last question, how do we think about your cell supply Matching up with your geographic opportunities, just being U. S. Cell supply for the Domestic content, how you guys think about that in 2025, 2026 and beyond with those contracts?

Speaker 2

We have I think we are Besides the U. S. Sales, we manage the rest of the world as a global market. So today, we don't there's no risk From sales not having supply to any of our markets in a specific deal. Our deal for the U.

Speaker 2

S. Supply is a multiyear deal that will cover a few years and we expect that as that becomes Solidifies and it will continue for many years. And I will tell you something that I think is important. We do see that the U. S.

Speaker 2

Will have both domestic and import content. So we'll have a mix At the end of the day, so it's not like the U. S. Market will become a fully only domestic content market, At least not at the beginning, for a while, you'll see both imported batteries and the domestic content batteries competing here. So

Speaker 9

Thank you. In the past, you've made some acquisitions. I'm just wondering about, looking at your Slide 21, Different technologies, either on hardware or software, if there's areas that you see opportunities going forward?

Speaker 2

We have said from there that we were not going to do any M and A until we had a profitability. So that continues to be our case. Clearly, this Quarter has been good. My view on potential acquisitions is as follows. We clearly we see M and A as an opportunity.

Speaker 2

It will be maybe one of our value ways of offering value to our customers. If we were to do any acquisitions, we'll be connected most likely to our product development, accelerating our product development. But we have no we're not working on any acquisitions. There's nothing in the works. So we're not talking to anybody.

Speaker 2

So Don't be there's enough work with our current business and for us to make it happen. So

Speaker 9

Okay. Sounds good. We have

Speaker 2

to do anything, it will be more on the technology side and connected to our product roadmap. Great.

Speaker 9

Thank you.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of Kashy Harrison with Piper Sandler. Your line is now open.

Speaker 2

Kashy. Hey, Kashy, good morning.

Speaker 10

Hey, good morning. Thank you for taking the questions. So maybe just a quick follow-up on gross margins. Fiscal 'twenty four guidance calls for 10% to 12%, but Manu discussed 10% to 15% as we think about fiscal 2025. And so just wondering what are some of the factors that could Potentially push you towards the high end of that range, that 15% versus the low end of the range of 10%.

Speaker 2

I think that, clearly, our execution capabilities move a little higher up. But I think something, as I mentioned, that could be Material I say our material driver will be the U. S. Content offering if we can capture higher margins on that offer. So, Natiane Ali, when you looked at it, say it will be a combination of maybe better even better execution, so we can Do better than what we expected and the U.

Speaker 2

S. Content offering which might the domestic content offering which might as I said, This is something that we might see an opportunity for higher margins.

Speaker 10

That's helpful. Thank you. And then just my follow-up, Manu said this as well and just doing the quick math, it's clear that you guys think you're going to be generating free cash flow As we think about fiscal 2025, I know it's very early, but if you actually do successfully If Fluence actually successfully begins generating free cash flow, how do you think about capital allocation priorities for that free cash So, is it are you going to look to M and A? Are you going to look to returning capital to shareholders, just shore up the balance Maybe just thoughts on how you want to use free cash flow to create

Speaker 2

value for shareholders? I think my view on it today, I don't know, is supporting our growth. Technology, that's what I think that where we will I don't see us distributing cash flows or distributing Dividends or anything of that sort. The growth is so if the growth continues as we expect it to continue and I would say in the world, We will need all those resources to meet our customer needs to create and that I think will be the Best use of money and it will create the most value for shareholders. So that's our view.

Speaker 2

It might change over time, but that if you ask me about 25, that's the way I think about

Speaker 10

Got it. Thank you.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of William Demolins Smith with Bank of America. Your line is now open.

Speaker 8

Good morning. Hey, Julien, it's Alex Grable on for Julien. Hey, how are you? Congratulations. I'm well.

Speaker 8

Congratulations to you guys. Congrats to you, Madhu. We will miss you in your next journey, but great results here. Maybe my first question just to you guys obviously a lot of growth guided for next year and obviously the indication for fiscal 5, robust as well. I'm curious just when we think about the bookings cadence to support that, if I look back It seems like you guys see a pretty big step up in the Q1, and then things seem to be sort of levelized One times are

Speaker 5

a little bit greater book

Speaker 7

to bill throughout the rest

Speaker 8

of the year. Is that what we should look for kind of next year? Or is there any kind of Gyrations or things you should watch for on cadence around IRA, allowing projects to move forward or not that we should think about Sorry, getting confidence in 2025.

Speaker 2

Yes. It's maybe what I think will be kind of the next Step up will be the domestic content going back to it, so that which will happen over the year. It's difficult To have a seasonality on order intake, to be very, very sincere with you, it changes Over time, so I cannot give you a guidance. You choose back much bigger Q1 and then everything kind of staying the same. It's difficult to give you a view on that from where we are today.

Speaker 2

We what we can say is that we feel very, very comfortable about our 24 and 25 guidance and with what when we see how Our converting pipeline into backlog and when we are in discussions with our customers, we feel that we're going to be able to meet very, very Comfortably the 24% 25% volume guidance that we just mentioned.

Speaker 8

So Got it. Super helpful.

Speaker 2

That's what I can say. I don't want to 1st, I don't want to manage this company by quarter. I told my team, let's don't get the deals, the right deals. Don't worry about meeting a quarter number In terms of backlog, it doesn't really matter. As long as we feel confident that we can make it happen, Just do it whenever we get it.

Speaker 2

Yes.

Speaker 8

Many of your peers would say you're in the large project business. I know they sort of point to the same. Maybe if I can just ask, obviously, a strong environment for storage, Obviously, sort of a very price elastic product as far as how the returns evolve. But the other thing I want to ask about is how much of this is just I mean as far as the volume growth that you guys are able to put up, how much of this is sort of new customers or a higher win rate as opposed to The size of the projects you're seeing are just ballooning in size because if we look at the developer side, it seems like we've gone from 200 megawatt hours 2 gigawatt hour projects in a year and a half. And I'm just sort of curious how much of that is really kind of driving the confidence here, Where it's not just we have to win a bunch of new customers, it's literally just, hey, it's the same customers, the projects are just 5 times bigger than they used to be 2 years ago.

Speaker 8

You can kind of expand on that.

Speaker 2

My view is that all of the above. Clearly, our customers are doing bigger projects, so great. We're also entering new markets like Canada, which We had before and doing more work in Germany. So I will say in the U. S.

Speaker 2

Is mostly our Projects getting bigger in outside of the U. S. Is new customers we're working with and that's kind of the way I will put it. We have a lot of repeated customers constantly all the time, but we're also looking to for customers that meet our profile, Trying to entice them to come and work with us. So it's

Speaker 4

I think in general as the project sizes get bigger across At least in the U. S. And also outside the U. S, given the fact that we are one of the select set of Providers that can provide multitude of attributes between great safety records, bankability, supply chain, Flexibility on Attribute Management, I think the current customers keep coming back to us and You're starting to see new customers who now want to work with partners who can manage large projects with multiple attributes Start to come our way. That's the way to think about how we step up as we go through the years.

Speaker 8

Yes, it's a very fair point. Well, again, guys, congrats. Again, Manu, we'll miss you, but good luck.

Speaker 6

Yes. Thanks for that.

Speaker 2

Thank you.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of Chris Ellinghaus with Sievert Williams Schenck, your line is now open.

Speaker 11

Hey, good morning, everybody. Congrats to Manu and Hamed.

Speaker 2

Good morning, Chris.

Speaker 11

The 4th quarter, the adjusted gross margin was 11.6%. Is that informative for 2024 relative to the guidance? Or Were there some special circumstances there, particularly related to the legacy contracts?

Speaker 2

I think our guidance is at 10% to 12%, so midpoint is 11%. In the 4th quarter, There were some change orders that helped. That's what I will say. That helped bring it up beyond, below, above the And those are difficult to predict. So that's the way I will put it.

Speaker 11

Okay. And Julian, You talked a lot about battery costs, but there's a bit of a slowdown in EV sales. Are you expecting that To maybe be a tailwind for battery costs in 2024?

Speaker 2

I think that Today, my view is that I don't think prices will continue coming down. That's our current view. They will stay kind of where they are. They won't go up, but I don't see these prices of batteries and lithium and lithium carbonate coming down below where If I knew where they were going to trade, I wouldn't be doing this job. I will be doing something where you make a lot more money.

Speaker 2

We'll be very sincere with you, but that's our view. And I think that talking to our suppliers, Talking to the markets and our visits to China, we're in kind of that's kind of where things will get comfortable, that's the way to think about

Speaker 8

Thanks, Julian. Appreciate it.

Operator

Thank you. One moment for our next question, please. Our next question comes from the line of Pavel Molchanov with Raymond James. Your line is now open.

Speaker 12

Thanks for taking the question. As you look to boost your services and software revenue, Would you be open to the idea of placing some battery assets on your own balance sheet From the perspective of virtual power plants, peak shaving, rate arbitrage, Then you'll be services that Fluence could participate in directly.

Speaker 2

Yes, not really. I mean, my view on this is that It's our customers. It's our customers' job. They should do it. If I started doing what my customers do, it's a recipe for disaster.

Speaker 2

So no, no, I'm not planning we're not planning to get into the storage business Using storage as a service business to third parties.

Speaker 12

Understood. A quick follow-up on M and A, as you look at potential software acquisitions and like AMS couple of years ago. Is it fair to say that valuation multiples in the private Company arena have come down quite a bit since AMS, for example?

Speaker 2

Yes. I mean, as I said, we are not actually in the market. We are not I'm not testing prices. So I cannot give you first evidence of where prices are for potential acquisitions. So Well, generally, I heard what you're telling me that what I hear from the banks is that when they come and pitch me stock that there's like all these great opportunities around.

Speaker 2

But as I said, We're not shopping around. We're not we're in the process of capturing growth.

Operator

All right. Thanks very much.

Speaker 2

Thank you.

Operator

Thank you. One moment for our next question please. Our next question comes from the line of Amit Zaccar with BMO Capital Markets. Your line is now open.

Speaker 13

Hi, good morning. Thanks for squeezing me in. Hopefully, 2 quick ones here.

Speaker 12

It looks like we talked

Speaker 13

a lot about ASPs Out in 'twenty four, but it looks like in the current quarter for your revenue recognition megawatts were kind of flat at 600 megawatts, but Pretty big revenue increase. I was just wondering what kind of caused that big kind of step up in ASPs? Was it the change orders you mentioned a little while ago, Huiyen?

Speaker 4

That is correct. I think it's a combination of project mix and change orders.

Speaker 13

So we should kind of think of that as a little bit of a kind of a one off?

Speaker 4

Yes. Look, remember, as we run off our legacy projects, some of them were signed way back in 2022 early 2023. You should expect the ASPs to kind of reflect what's happening with the battery prices. But as we said, our margins continue to be intact and grow through 2024 and 2025.

Speaker 13

Great. Thank you. And then, I think in your kind of cash flow guidance, you included The impact of deposits for the AESCS battery U. S. Cells, I was wondering if you can kind of give us a little bit of clarity on What the magnitude of that is and when that cash comes back to you?

Speaker 4

Yes. So what we've said is, I think It's $150,000,000 over a 2 year period. I think it's roughly half and half between 2024 and 2025. Half of it gets financed through customer deposits and the other half we get financed through our own liquidity sources and as you can see we have ample of them. And then as the product starts coming through, we get it a little bit as we as AESC ships the product to us.

Speaker 4

So should start to see some of that deposit come back to us starting end of 2024, 2025 along with the supply of

Speaker 13

Great. Thanks for that and good luck Manu.

Speaker 4

Thanks a lot.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Thomas Curran with Seaport Research Partners. Your line is now open.

Speaker 5

Thanks for going into overtime here guys. Manu kudos on making so many positive contributions in such a short period of time and best of luck on the Private side of the auto parts world. Ahmed, congratulations on

Speaker 2

the timing. Thanks for your time.

Speaker 5

Yes, yes, we were quick to pounce on And then, Meg, congratulations on stepping into some big shoes. Look forward to collaborating with you. A follow-up on how the nature of storage projects have been evolving. It was just touched on about how the size of them has soared over the last 18 to 24 months. We've also seen an uptrend in the average duration Of systems being installed, would you expect that ever longer duration trend to continue?

Speaker 5

And if So what are some of the specifics of how you're positioning Fluence to ensure that strategically and technologically and supply chain wise, You're staying ahead of that trend.

Speaker 14

Yes. Hi, Thomas, it's Rebecca. So what we see right now And what we're developing and delivering from the product roadmap really is still on that 2, 4 and 6 hour duration system. So kind of in the next 18 to 24 months, we're going to deliver what we deliver, which is not yet the multi day or longer duration than that. What we're doing from a product roadmap perspective is we're examining what's out there in the Crystal ball of battery chemistries that allow for longer duration solutions and we're just starting now to engage with those suppliers and put Prototyping efforts in place, so when those things become more viable in the market, we will be ready.

Speaker 5

Makes sense. Thanks for that, Rebecca. And then just looking to dissect the contracted backlog a bit further, I I was hoping you could share 2 percentages with us. First, what's the portion of The current backlog that's non related parties and then could you give us a rough estimate for how much of it represents Mega projects and storage of the transmission asset combined.

Speaker 2

So on the unrelated part, it's around 75%. As we said, we want to I want to bring it to around 20%. So we're kind of it will be bumpy, so we'll go up and down. I believe these projects are big, but I think we are it's been coming down and around 20 will be a number I feel comfortable with. So Today, I think it's around 75%, kind of in line with what and our if you looked at our revenue for the year, I think it was around 29 29 with related parties and 61 with so and it should tend to go towards the 75% revenue And then at some point get to the 80% that I just talked about.

Speaker 2

And then you were saying on standalone, that was the second part of your question?

Speaker 5

Just trying to get a sense either if you want to break them out, that would be great. But even if you just want to look at them on a combined basis, The percentage of the contracted backlog that's either a mega project or storage as a transmission asset?

Speaker 2

Yes. I know. It's difficult to prefer not to go into that also at this stage, but we have a lot of flavors in that pipeline. That's the way I'll put Yes. Hence my curiosity.

Speaker 2

Yes, I know. But I think that I think it's Better to keep it with this view and that allows us all of us to work better as we move forward.

Speaker 5

Fair enough. Thanks for taking my questions.

Speaker 2

Thanks for the question. And I think this is one of our successes, The ability to continue growing with non we are on unrelated party transactions that's growing at a much higher rate Than the 35 to 40 as you can see from where our pipeline stands today and where our revenue stands today.

Operator

Thank you for your questions. This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.

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