Bloom Energy (BE)

Electricity generation and hydrogen production company Bloom Energy (NYSE:BE) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 38.6% year on year to $326 million. The company’s full-year revenue guidance of $1.75 billion at the midpoint came in 1.2% above analysts’ estimates. Its non-GAAP profit of $0.03 per share was significantly 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 can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Bloom Energy’s 14.5% annualized revenue growth over the last five years was exceptional. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Bloom Energy’s annualized revenue growth of 10.9% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, Product. Over the last two years, Bloom Energy’s Product revenue (energy servers and electrolyzers) averaged 14.9% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance.

This quarter, Bloom Energy reported wonderful year-on-year revenue growth of 38.6%, and its $326 million of revenue exceeded Wall Street’s estimates by 11.9%.

Looking ahead, sell-side analysts expect revenue to grow 14.6% over the next 12 months, an improvement versus the last two years. This projection is admirable and implies its newer products and services will spur better top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

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 19% gross margin over the last five years. That means Bloom Energy paid its suppliers a lot of money ($80.96 for every $100 in revenue) to run its business.

In Q1, Bloom Energy produced a 27.2% gross profit margin, up 11 percentage points year on year. Bloom Energy’s full-year margin has also been trending up over the past 12 months, increasing by 15.6 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 one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Bloom Energy’s high expenses have contributed to an average operating margin of negative 10.3% 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 9.2 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 reach long-term profitability.

This quarter, Bloom Energy generated a negative 5.8% operating margin.

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.

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 more recent period because it can provide insight into an emerging theme or development for the business.

For Bloom Energy, its two-year annual EPS growth of 74.4% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, Bloom Energy reported EPS at $0.03, up from negative $0.17 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 to perform poorly. Analysts forecast its full-year EPS of $0.36 will hit $0.45.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

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 17.9%, meaning it lit $17.90 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Bloom Energy’s margin expanded by 28.8 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 burned through $124.9 million of cash in Q1, equivalent to a negative 38.3% margin. The company’s cash burn slowed from $168.7 million of lost cash in the same quarter last year.

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 17.6%, 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 $794.8 million of cash and $1.52 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 $204 million of EBITDA over the last 12 months, we view Bloom Energy’s 3.6× net-debt-to-EBITDA ratio as safe. We also see its $44.69 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.

We were impressed by how significantly Bloom Energy blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. Zooming out, we think this was a solid quarter. The stock remained flat at $18.25 immediately after reporting.

Updated: May 22, 2025 at 11:30 PM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

There are several reasons why we think Bloom Energy is a great business. For starters, its revenue growth was exceptional over the last five years, and analysts believe it can continue growing at these levels. And while its relatively low ROIC suggests management has struggled to find compelling investment opportunities, its rising cash profitability gives it more optionality. Additionally, 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 41x. 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. We’re in the camp that investments like this should be held for at least three to five years to negate the short-term price volatility that can come with high valuations.

Wall Street analysts have a consensus one-year price target of $23.86 on the company (compared to the current share price of $18.89).

Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.

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