Bloom Energy (BE)

Electricity generation and hydrogen production company Bloom Energy (NYSE:BE) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 57.1% year on year to $519 million. Its non-GAAP profit of $0.15 per share was 50.2% above analysts’ consensus estimates.

Company Overview

Working in stealth mode for eight years, Bloom Energy (NYSE:BE) designs, manufactures, and markets solid oxide fuel cell systems for on-site power generation.

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 in the energy industry include NET Power (NYSE:NPWR), Energy Vault (NYSE:NRGV), and NuScale Power (NYSE:SMR).

A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Bloom Energy’s sales grew at an incredible 19.1% compounded annual growth rate over the last five years. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

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. Bloom Energy’s annualized revenue growth of 12.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Bloom Energy’s recent performance shows it’s one of the better Renewable Energy businesses as many of its peers faced declining sales because of cyclical headwinds.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Product and Service, which are 74% and 11.3% of revenue. Over the last two years, Bloom Energy’s Product revenue (energy servers and electrolyzers) averaged 18.5% year-on-year growth while its Service revenue (operations and maintenance agreements) averaged 14.7% growth.

This quarter, Bloom Energy reported magnificent year-on-year revenue growth of 57.1%, and its $519 million of revenue beat Wall Street’s estimates by 23.3%.

Looking ahead, sell-side analysts expect revenue to grow 12.6% over the next 12 months, similar to its two-year rate. This projection is healthy and implies the market sees success for its products and services.

All else equal, we prefer higher gross margins because they usually indicate that a company sells more differentiated products and commands stronger pricing power.

Bloom Energy has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a 20.2% gross margin over the last five years. That means Bloom Energy paid its suppliers a lot of money ($79.79 for every $100 in revenue) to run its business.

Bloom Energy produced a 29.2% gross profit margin in Q3, up 5.4 percentage points year on year. Bloom Energy’s full-year margin has also been trending up over the past 12 months, increasing by 9.6 percentage points. If this move continues, it could suggest a less competitive environment where the company has better pricing power and leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Although Bloom 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 9% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, Bloom Energy’s operating margin rose by 17 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.

This quarter, Bloom Energy generated an operating margin profit margin of 1.5%, up 4.4 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Bloom Energy’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Bloom Energy’s EPS grew at an astounding 386% compounded annual growth rate over the last two years, higher than its 12.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Bloom Energy’s earnings to better understand the drivers of its performance. Bloom Energy’s operating margin has expanded over the last two years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Bloom Energy reported adjusted EPS of $0.15, up from negative $0.01 in 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 expects Bloom Energy’s full-year EPS of $0.71 to grow 2.5%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

While Bloom Energy posted positive free cash flow this quarter, the broader story hasn’t been so clean. Bloom 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 18.6%, meaning it lit $18.59 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Bloom Energy’s margin expanded by 27.5 percentage points during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

Bloom Energy’s free cash flow clocked in at $7.37 million in Q3, equivalent to a 1.4% margin. Its cash flow turned positive after being negative in the same quarter last year, marking a potential inflection point.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Although Bloom Energy has shown solid business quality lately, it struggled to grow profitably in the past. Its five-year average ROIC was negative 16.8%, meaning management lost money while trying to expand the business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Bloom Energy’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

Bloom Energy reported $595.1 million of cash and $1.51 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $272.8 million of EBITDA over the last 12 months, we view Bloom Energy’s 3.4× net-debt-to-EBITDA ratio as safe. We also see its $15.6 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Bloom Energy beat analysts’ revenue, EBITDA, and EPS expectations convincingly this quarter. Zooming out, we think this was a very good print with some key areas of upside. The stock traded up 4.4% to $118.30 immediately after reporting.

Updated: December 4, 2025 at 10:18 PM EST

Are you wondering whether to buy Bloom Energy or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Bloom Energy is a rock-solid business worth owning. To begin with, its revenue growth was exceptional over the last five years, and its growth over the next 12 months is expected to accelerate. And while its relatively low ROIC suggests management has struggled to find compelling investment opportunities, its rising cash profitability gives it more optionality. On top of that, Bloom Energy’s expanding operating margin shows the business has become more efficient.

Bloom Energy’s P/E ratio based on the next 12 months is 119.1x. A lot of good news is certainly baked in given its premium multiple, but we’ll happily own Bloom Energy as its fundamentals really stand out. It’s often wise to hold investments like this for at least three to five years, as the power of long-term compounding negates short-term price swings that can accompany high valuations.

Wall Street analysts have a consensus one-year price target of $111.81 on the company (compared to the current share price of $117.02).