Fluence Energy (FLNC)

Electricity storage and software provider Fluence (NASDAQ:FLNC) missed Wall Street’s revenue expectations in Q2 CY2025, but sales rose 24.7% year on year to $602.5 million. The company’s full-year revenue guidance of $2.7 billion at the midpoint came in 1.1% below analysts’ estimates. Its GAAP profit of $0.01 per share was $0.03 above analysts’ consensus estimates.

Company Overview

Pioneering the use of lithium-ion batteries for grid storage, Fluence (NASDAQ:FLNC) helps store renewable energy sources with battery systems.

Renewable energy companies are buoyed by the secular trend of green energy that is upending traditional power generation. Those who innovate and evolve with this dynamic market can win share while those who continue to rely on legacy technologies can see diminishing demand, which includes headwinds from increasing regulation against “dirty” energy. Additionally, these companies are at the whim of economic cycles, as interest rates can impact the willingness to invest in renewable energy projects.

Competitors of Fluence Energy include Tesla (NASDAQ:TSLA) and private companies LG Chem Energy SOlutions and BYD Company.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, Fluence Energy’s 49% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Fluence Energy’s annualized revenue growth of 11% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Fluence Energy recent performance stands out, especially when considering many similar Renewable Energy businesses faced declining sales because of cyclical headwinds.

This quarter, Fluence Energy generated an excellent 24.7% year-on-year revenue growth rate, but its $602.5 million of revenue fell short of Wall Street’s high expectations.

Looking ahead, sell-side analysts expect revenue to grow 39% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will spur better top-line performance.

Fluence Energy has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 7.2% gross margin over the last five years. Said differently, Fluence Energy had to pay a chunky $92.81 to its suppliers for every $100 in revenue.

This quarter, Fluence Energy’s gross profit margin was 14.8%, marking a 2.4 percentage point decrease from 17.2% in the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Although Fluence Energy was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 7.5% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, Fluence Energy’s operating margin rose by 9.1 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to show consistent profitability.

In Q2, Fluence Energy generated an operating margin profit margin of 2.1%, up 1.1 percentage points year on year. The increase was encouraging, and because its gross margin actually decreased, we can assume it was more efficient because its operating expenses like marketing, R&D, and administrative overhead grew slower than its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although Fluence Energy’s full-year earnings are still negative, it reduced its losses and improved its EPS by 21.1% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Fluence Energy, its two-year annual EPS growth of 55.3% was higher than its five-year trend. We love it when earnings improve, but a caveat is that its EPS is still in the red.

In Q2, Fluence Energy reported EPS at $0.01, in line with the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast Fluence Energy’s full-year EPS of negative $0.12 will reach break even.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Fluence Energy’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 13.3%, meaning it lit $13.28 of cash on fire for every $100 in revenue.

Taking a step back, we can see that Fluence Energy’s margin dropped by 6.4 percentage points during that time. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business.

Fluence Energy burned through $161.2 million of cash in Q2, equivalent to a negative 26.7% margin. The company’s cash burn increased from $27.05 million of lost cash in the same quarter last year.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Fluence Energy burned through $426.3 million of cash over the last year. With $436.3 million of cash on its balance sheet, the company has around 12 months of runway left (assuming its $390.4 million of debt isn’t due right away).

Unless the Fluence Energy’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Fluence Energy until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

Fluence Energy's revenue missed significantly and its full-year revenue guidance also fell slightly short of Wall Street’s estimates. A bright spot was that EBITDA beat, although full-year EBITDA guidance was just in line. Zooming out, we think this was a bad quarter. Shares traded down 14.4% to $7.92 immediately after reporting.

Updated: November 13, 2025 at 10:40 PM EST

Before investing in or passing on Fluence Energy, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Aside from its balance sheet, Fluence Energy is a pretty good company. For starters, its revenue growth was exceptional over the last five years. And while its cash profitability fell over the last five years, its backlog growth has been marvelous. Additionally, Fluence Energy’s expanding operating margin shows the business has become more efficient.

Fluence Energy’s EV-to-EBITDA ratio based on the next 12 months is 69.3x. Despite its notable business characteristics, we’d hold off for now because its balance sheet concerns us. If you’re interested in buying the stock, wait until its debt falls or its profits increase.

Wall Street analysts have a consensus one-year price target of $10.53 on the company (compared to the current share price of $16.36).