Fluence Energy Reports Record Revenue Amid Margin Challenges

Fluence Energy began its 2026 fiscal year by posting a staggering increase in quarterly revenue, though profitability was squeezed by unforeseen project costs. The company's substantial order backlog provides a foundation for its full-year outlook, but achieving its targets hinges on a projected recovery in margins.

For the first quarter of fiscal 2026, the energy storage solutions provider generated revenue of $475.2 million. This represents a surge of 154.4% compared to the same period last year, driven by the deployment of systems with a total capacity of 2.3 gigawatt-hours.

However, this top-line strength was overshadowed by a significant contraction in profitability. The company's GAAP gross margin fell to 4.9%, a sharp decline from the 11.4% reported a year ago. Similarly, the adjusted gross margin was nearly halved, coming in at 5.6%. This pressure was primarily attributed to approximately $20 million in additional costs encountered on two international projects outside the United States. Management expressed confidence that these headwinds would be mitigated over the remainder of the fiscal year.

Consequently, the net loss for the quarter widened to $62.6 million from $57.0 million in the prior-year period. This equated to a loss per share of $0.34.

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Backlog and Liquidity Underpin Annual Guidance

Despite the first-quarter margin weakness, Fluence Energy has reaffirmed its financial outlook for the full 2026 fiscal year. The company continues to anticipate annual revenue in the range of $3.2 billion to $3.6 billion, with adjusted EBITDA projected between $40 million and $60 million. It also expects annual recurring revenue to reach approximately $180 million by year-end.

A key pillar supporting this forecast is a record-high order backlog, which stood at $5.5 billion at the end of the quarter. This backlog fully covers the midpoint of the company's current annual revenue guidance. Furthermore, Fluence ended the period with a strong liquidity position of $1.1 billion, providing what it describes as sufficient flexibility to execute on its growing pipeline in areas like data centers and long-duration storage.

The market's initial reaction to the results, released last Thursday, was negative. Investors focused on the near-term cost overruns, leading to notable selling pressure as these issues eclipsed the robust growth figures. The company's ability to meet its annual goals now depends critically on delivering the promised margin improvement in the coming quarters.