Fluence Energy Q2 Earnings Call Highlights

Key Points

• Order momentum surged with roughly $2 billion signed year-to-date (about double last year) and a record contracted backlog of $5.6 billion, with Q3-to-date orders topping $600 million and half of this year's bookings coming from new customers.
• Fluence executed master supply agreements with two major hyperscalers, expanding its data center pipeline to roughly 12 GWh (mostly tied to those MSAs) and expects an initial hyperscaler-related order in the third quarter.
• Q2 revenue rose 8% to $465 million with an adjusted gross margin of 11.1% and adjusted EBITDA of negative $9 million, while management reaffirmed full-year guidance of $3.2–$3.6 billion revenue and $40–$60 million adjusted EBITDA, and ended the quarter with about $900 million liquidity.

Fluence Energy NASDAQ: FLNC reported fiscal second-quarter 2026 results and reiterated its full-year outlook, pointing to accelerating order intake, a record backlog, and growing traction with data center customers following the signing of master supply agreements (MSAs) with two major hyperscalers.

Order momentum accelerates as backlog hits a record

President and CEO Julian Nebreda said the company has signed approximately $2 billion of orders year-to-date, “double the amount signed through the same period last year.” Fluence ended the quarter with a record contracted backlog of $5.6 billion, which Nebreda said the company expects to grow further based on execution so far this year.

During the quarter, Nebreda noted that higher lithium prices “temporarily slowed some customer decisions,” but he said momentum re-accelerated as prices stabilized. He added that third quarter-to-date order signings exceeded $600 million.

A notable feature of the year-to-date bookings mix is customer diversification. Nebreda said 50% of orders this fiscal year have come from new customers, attributing that progress to an expanded commercial effort.

Data center push expands with hyperscaler MSAs

Management emphasized progress with emerging customer segments, particularly data centers. Nebreda said Fluence executed MSAs with two major hyperscalers following “multiple rounds of review” that included strict commercial, operational, and technical evaluation. In one process, he said the customer started with 26 vendors and Fluence was the first to complete all qualifications to sign a global MSA.

While the MSAs qualify Fluence to bid rather than guaranteeing volume, Nebreda said they position the company to compete for “expected near-term data center projects” for both customers. He added that Fluence expects to sign an initial order tied to one of those data center projects within the third quarter.

On customer needs, Nebreda said hyperscaler discussions have become more focused than in prior periods. “Their main need is quality of power, helping them manage the fluctuation of the data centers and helping us do it quickly and effectively,” he said, crediting Fluence’s “advanced controls” and experience with fast-response systems.

In response to questions about system configuration, Nebreda said data center deployments “tend to be shorter duration,” while adding that Fluence does not provide systems smaller than two hours. He also said the required response times are “very, very short,” and “significantly shorter than 100 milliseconds” typical of some transmission-system qualifications in Europe, while declining to provide a specific number because he said it is proprietary to the solution and customer engagements. Nebreda added that achieving such response times depends heavily on inverter capabilities and said Fluence works closely with inverter companies.

Regarding domestic content and foreign entity of concern (FEOC) considerations, Nebreda said domestic content was not a specific requirement in the hyperscaler selection process, though he suggested the company’s U.S.-built offering could be attractive given the customers’ U.S. footprint. He also indicated the MSAs support a “significant pipeline” that the company expects to convert into orders over time, though management said it is too early to provide financial metrics tied to those opportunities.

Pipeline growth and SmartStack product updates

Nebreda said Fluence’s overall pipeline has increased 35% so far in fiscal 2026, with U.S. opportunities beginning to outpace other markets. He highlighted project concentration in California and Arizona and in MISO markets in the Midwest. He also said the data center pipeline increased by more than 30% since the prior call.

On a later question, Nebreda characterized Fluence’s data center pipeline at roughly 12 gigawatt-hours, and said the “great majority” is connected to the two hyperscaler MSAs. He also noted that leads are about three times the size of the pipeline.

Fluence also highlighted progress on SmartStack, its high-density storage solution. Nebreda said SmartStack is designed to enable “more than 500 MWh of storage per acre,” with further improvements planned, and that it is intended to lower total cost of ownership through modular architecture and easier maintenance access. He reported that Fluence’s “first SmartStack has reached substantial completion and commenced commercial operation,” and said the company’s SmartStack backlog reflects strong interest, including for longer-duration applications where a smaller footprint can be advantageous.

Q2 results: revenue grew 8% as margin improved

Chief Financial Officer Ahmed Pasha reported fiscal Q2 2026 revenue of $465 million, up 8% year-over-year. Pasha said approximately $80 million of revenue was pushed into the third quarter due to two shipping-related issues: a customs problem in Vietnam and a shortage of loading equipment in Spain. He said both issues have been resolved, delayed shipments have been received, and the company is current on deliveries with no further delays.

Pasha also said Fluence does not have material exposure to the Middle East conflict because “none of our shipments utilize the Strait of Hormuz.”

Adjusted gross profit was $51 million, implying an adjusted gross margin of 11.1%, which management said was within its full-year expectations and represented a meaningful improvement from the first quarter. Pasha attributed the improvement primarily to “consistent execution and operational discipline across our portfolio.”

Adjusted EBITDA was negative $9 million, an improvement of $21 million from the year-ago quarter. Pasha said the improvement reflected higher gross margin, lower operating costs, and a $6 million gain from unwinding an FX derivative. He noted this offset a $6 million loss recorded on the same derivative in the first quarter, resulting in no net year-to-date impact.

Management also pointed to its rolling 12-month adjusted gross margin of 12.4%, which Pasha said reflects “two full years of consistent double-digit returns” and demonstrates margin durability amid a shifting pricing environment.

Liquidity, supply chain updates, and reaffirmed fiscal 2026 guidance

Fluence ended the quarter with approximately $900 million of total liquidity, including about $430 million of cash, according to Pasha. He said the company invested $220 million in inventory during the quarter to support second-half deliveries and expects to invest about $100 million in inventory during Q3. Pasha said liquidity is expected to return to around $900 million by fiscal year-end, driven by execution on backlog and new orders.

On supply chain strategy, Nebreda said Fluence has U.S. production for all major components, including battery cells supplied from Smyrna, Tennessee, which he said has been operating since 2025. He added that the company signed an agreement for another domestically produced cell source beginning in fiscal 2027 and is evaluating additional supply options beyond 2027.

Nebreda also addressed FEOC compliance tied to the Smyrna facility, noting that AESC sold a majority interest in the facility to Fixx Energy, a subsidiary of Longroad Energy, with ownership changing on March 31, 2026. He said the facility continues to produce cells that qualify for tax credits under the One Big Beautiful Bill Act, and that Fluence signed a new supply agreement with the new owner covering the next few years.

Looking ahead, Fluence reaffirmed its fiscal 2026 guidance. Pasha said the company continues to expect:

• Revenue of $3.2 billion to $3.6 billion (midpoint $3.4 billion), with about 70% in the second half
• Annual recurring revenue (ARR) of approximately $180 million by fiscal year-end, up from $148 million in fiscal 2025
• Adjusted EBITDA of $40 million to $60 million for the full year

Nebreda closed by emphasizing “strong execution,” accelerating order momentum, and an expanding customer base, highlighting the hyperscaler MSAs as a key step toward capturing growing data center-related demand.

About Fluence Energy NASDAQ: FLNC

Fluence Energy is a leading global provider of energy storage products and services, specializing in the deployment of advanced battery systems to support grid stability and renewable integration. The company develops, engineers and delivers turnkey energy storage solutions designed to optimize the reliability, efficiency and economic performance of power networks. By combining hardware, software and lifecycle services, Fluence addresses the growing need for flexible energy assets in an evolving electricity landscape.

The company's core offerings include modular energy storage platforms that pair lithium-ion battery technology with control and optimization software.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.