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What changed in Fluence Energy, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Fluence Energy, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+865 added−782 removedSource: 10-K (2025-11-25) vs 10-K (2024-11-29)

Top changes in Fluence Energy, Inc.'s 2025 10-K

865 paragraphs added · 782 removed · 540 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

106 edited+106 added−94 removed19 unchanged
Biggest changeWe believe that competitive factors in the energy storage market include, but are not limited to: • safety, reliability and quality; • ability to obtain financing; • our ability to issue performance guarantees, credit support, and product warranties; • density and duration of our products and solutions; • shortened delivery, installation, and commissioning time; • stability in supply chain; • performance of energy storage products and solutions, services and digital applications; • historical customer track record (as the market and industry continues to grow); • experience in the battery energy storage system market (both of the Company and key members of leadership); • technological expertise and innovation; • comprehensive solutions and offerings from a single provider; 11 • brand recognition; • certain government initiatives, legislation, regulations, and policies; • ease of integration; and • seamless hardware and software-enabled service offerings.
Biggest changeWe believe that competitive factors in the energy storage market include, but are not limited to: • safety, reliability, and quality; • price of energy storage solutions, services, and digital application offerings; • total cost of ownership; • ability to obtain and maximize financing based on system and Company performance; • integration approach (including if competitor has vertical integration); • performance guarantees, credit support, and product warranties; • site density capability; alternative duration success • shortened delivery, installation, and commissioning time; • stability in supply chain; approach to responsible sourcing and supply chain due diligence; • historical customer track record (as the market and industry continues to grow); • experience in the battery energy storage system market (of the respective competitor and the leadership team); • technological expertise and innovation; • comprehensive solutions and offerings from a single provider to scale with; ease of integration; • brand recognition; • ability to take advantage of certain government initiatives and tax credits, including those under the IRA and OBBBA; • size of projects companies are competing on; • cybersecurity components of energy storage solutions and components; and • seamless hardware and software-enabled service offerings.
ITEM 1. BUSINESS Inception and Organization Fluence Energy, Inc., a Delaware corporation (the “Company”), was initially formed on June 21, 2021 and on November 1, 2021, Fluence Energy, Inc. completed its initial public offering (the “IPO”). We conduct our business operations through Fluence Energy, LLC and its direct and indirect subsidiaries.
ITEM 1. BUSINESS Inception and Organization Fluence Energy, Inc., a Delaware corporation (the “Company”), was initially formed on June 21, 2021 and completed its initial public offering (the “IPO”) on November 1, 2021. We conduct our business operations through Fluence Energy, LLC and its direct and indirect subsidiaries.
Cloud-based software applications can be deployed on both energy storage assets and renewable assets. The digital applications and solutions sector is driven by the growth in installed energy storage solutions and renewable assets, and its addressable market is comprised of the total global installed fleet of energy storage solutions and renewable assets.
Cloud-based software applications can be deployed on both energy storage assets and renewable assets. The digital applications sector is driven by the growth in installed energy storage solutions and renewable assets, and its addressable market is comprised of the total global installed fleet of energy storage solutions and renewable assets.
Corporate Information We file or furnish periodic reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”).
Corporate Information We file or furnish periodic reports and amendments thereto, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other information with the Securities and Exchange Commission (“SEC”).
Our storage technology lays the foundation for better energy storage solutions with industry-leading safety, integrated controls systems, and factory-built, highly modular building blocks. By pairing the benefits of mass production with the flexibility of a highly configurable system architecture, we believe we are able to serve the diverse needs of customers around the world from a single, underlying product platform.
Our storage technology lays the foundation for better energy storage solutions with industry-leading safety, integrated controls systems, and factory-built, modular building blocks. By pairing the benefits of mass production with the flexibility of a configurable system architecture, we believe we are able to serve the diverse needs of 7 customers around the world from a single, underlying product platform.
In September 2022, Australia passed climate change legislation containing a targeted 43% reduction in the emissions intensity of its economy of 2005 GHG levels by 2030 and a reduction to net-zero emissions by 2050 and some of its specific states have their own targets, including Victoria’s 95% renewable regeneration by 2035 target and 2.6 GW energy storage by 2030.
In September 2022, Australia passed climate change legislation containing a targeted 43% reduction in the emissions intensity of its economy of 2005 GHG levels by 2030 and a reduction to net-zero emissions by 2050 and some of its specific states have their own targets, including Victoria’s 95% renewable generation by 2035 target and 2.6 GW energy storage by 2030.
Additionally, in December 2022, Australia established the Capacity Investment Scheme which is a government initiative that aims to encourage new investment in dispatchable renewable energy generation and storage to support reliability in Australia’s energy market. It is intended to help support Australia energy system to reach 82% of renewable by 2030.
Additionally, in December 2022, 18 Australia established the Capacity Investment Scheme which is a government initiative that aims to encourage new investment in dispatchable renewable energy generation and storage to support reliability in Australia’s energy market. It is intended to help support Australia’s energy system to reach 82% of renewables by 2030.
The Fluence-designed Battery Packs combine state-of-the-art battery modules, management systems, and monitoring equipment into a unified product architecture designed to improve operations through advanced thermal and state of charge (SOC) management, which is intended to promote consistent product performance and safety at the system level.
The Fluence-designed Battery Packs combine state-of-the-art battery modules, management systems, and monitoring equipment into a unified product architecture designed to improve operations through advanced thermal and state of charge (“SOC”) management, which is intended to promote consistent product performance and safety at the system level.
Supply Chain Many components and parts of our integrated energy storage solutions are sourced from suppliers and stakeholders from all over the world and are reliant on various raw materials including, steel, aluminum, copper, nickel, iron phosphate, graphite, manganese, lithium carbonate, lithium hydroxide, and cobalt.
Many components and parts of our integrated energy storage solutions are sourced from suppliers and stakeholders from all over the world and are reliant on various raw materials including steel, aluminum, copper, nickel, iron phosphate, graphite, manganese, lithium carbonate, lithium hydroxide, and cobalt.
Intellectual Property The success of our business depends, in large part, on our ability to maintain and protect our intellectual property, some of which include patents, patentable ideas, methods, and technologies, proprietary information, trade secrets, trademarks, copyrights, processes and know-how.
Intellectual Property The success of our business depends, in part, on our ability to maintain and protect our proprietary technology and intellectual property, some of which include patents, patentable ideas, methods, and technologies, proprietary information, trade secrets, trademarks, copyrights, processes and know-how.
These statutes and regulations, which are continuously modified, often relate to electricity pricing, net metering, incentives, taxation, competition with utilities, and the interconnection of customer-owned electricity generation. Governments, often acting through state utility or public service commissions, also change and adopt different rates for commercial (and residential) customers on a regular basis.
These statutes and regulations, which are continuously modified, often relate to electricity pricing, net metering, incentives, taxation, competition with utilities, and the interconnection of customer-owned electricity generation. Governments, often acting through state utility or public service commissions, also change and adopt different rates and rate tariff structures for industrial, commercial and residential customers on a regular basis.
The information posted on our website is not incorporated by reference into this Annual Report or any of our other securities filings unless specifically incorporated herein by reference. 16
The information posted on our website is not incorporated by reference into this Annual Report or any of our other securities filings unless specifically incorporated herein by reference. 19
In May 2024, FERC issued Order 1920, which requires transmission operators to conduct and periodically update long-term transmission planning over a 20-year time horizon to anticipate future needs. It also provides for cost-effective expansion of transmission that is being replaced, when needed, known as “right-sizing” transmission facilities.
In May 2024, FERC issued Order 1920, which required transmission operators to conduct and periodically update long-term transmission planning over a 20-year time horizon to anticipate future needs. It also provided for cost-effective expansion of transmission that is being replaced, when needed, known as “right-sizing” transmission facilities.
Further opening of market opportunities across Europe may be expected in the future as member states continue to implement provisions from the European Electricity Market Design and the European Commission’s recommendation on energy storage. Many of these processes are not based on legislative action, but implementation of existing provisions by regulators and transmission service operators (TSOs).
Further opening of market opportunities across Europe may be expected in the future as EU member states continue to implement provisions from the European Electricity Market Design and the European Commission’s recommendation on energy storage. Many of these processes are not based on legislative action, but implementation of existing provisions by regulators and TSOs.
It includes more stringent deadlines and has adjusted processes that had previously created barriers to battery projects obtaining interconnection and improves interconnection procedures with elements such as more accurate operational modeling of energy storage in interconnection studies.
Order 2023 includes more stringent deadlines and has adjusted processes that had previously created barriers to battery projects obtaining interconnection and improves interconnection procedures with elements such as more accurate operational modeling of energy storage in interconnection studies.
We may refer to our energy storage products as “energy storage solutions” and use this term interchangeably as it is more reflective of the full offering available and provided to our customers. We may also refer to battery energy storage systems, systems and cubes interchangeably. We have repeatedly pioneered new use cases for grid-scale energy storage.
We may refer to our energy storage systems as “energy storage solutions” and use this term interchangeably as it is more reflective of the full offering available and provided to our customers. We may also refer to battery-based energy storage systems, systems, integrated systems, enclosures, and cubes interchangeably. We have repeatedly pioneered new use cases for grid-scale energy storage.
Environmental, Social, and Governance We are a purpose-built, purpose-driven company on a mission to transform the way we power our world for a more sustainable future. The Company’s offerings are intended to enable and promote more sustainable, reliable, and resilient electric grids and infrastructure in a repeatable, scalable way.
Sustainability We are a purpose-built, purpose-driven company on a mission to transform the way we power our world for a more sustainable future. The Company’s offerings are intended to enable and promote more sustainable, reliable, and resilient electric grids and infrastructure in a repeatable, scalable way.
We intend to further develop and innovate to provide energy storage solutions and digital software offerings that aim to solve our customers’ energy challenges, and expand our services with additional value-add offerings.
Additionally, we develop and innovate to provide energy storage solutions and digital software offerings that aim to solve our customers’ energy challenges and expand our services with additional value-add offerings.
Such government policies, regulations, legislation, and programs are becoming increasingly instrumental in stimulating adoption of energy storage solutions across different markets through a variety of methods, including by providing financial support and incentives, facilitating grid integration, supporting research and development, and establishing favorable regulatory regimes.
Such government policies, regulations, legislation, and programs have become increasingly instrumental in stimulating adoption of energy storage solutions across different markets through a variety of methods, including by providing financial support and incentives, including tax incentives, facilitating grid integration, supporting research and development, and establishing favorable regulatory regimes.
Some of the uses we have supported include frequency regulation, generation enhancement, capacity peak power, energy cost control, microgrids/islands, renewable integration, virtual dams, transmission and distribution (T&D) enhancement, and critical power. Energy Storage Solutions We sell highly configurable energy storage solutions with integrated hardware, software, and digital intelligence.
Some of the uses we have supported include frequency regulation, generation enhancement, capacity peak power, energy cost control, microgrids/islands, renewable integration, virtual dams, transmission and distribution (“T&D”) enhancement, and critical power. Energy Storage Solutions We sell configurable energy storage solutions with integrated hardware, software, and digital intelligence.
Fluence’s energy storage solutions are built on more than 15 years of development in prior generations, and reflecting, among other things, ongoing safety and design improvements. We believe that Fluence’s energy storage solutions make it simpler for customers to deploy storage faster and more cost effectively without sacrificing quality and configurability.
Fluence’s energy storage solutions are built on years of development of prior generations, and reflect, among other things, ongoing safety and design improvements. We believe that Fluence’s energy storage solutions make it simpler for customers to deploy storage faster and more cost effectively without sacrificing quality and configurability.
Based on those flexibility need assessments, member states are asked to establish indicative national objectives for non-fossil flexibility, including the respective contribution of energy storage. The indicative storage objectives will be part of the member states national energy and climate plans.
Based on those assessments, EU member states are then asked to establish indicative national objectives for non-fossil flexibility, including the respective contribution of energy storage. The indicative storage objectives will be part of their respective national energy and climate plans.
In July 2023, FERC issued Order 2023, which is intended to speed up the process of connecting new energy projects to the grid due to the backlog of more than 10,000 energy projects awaiting interconnection in the United States.
In July 2023, FERC issued Order 2023, which was intended to speed up the process of connecting new energy projects to the grid due to the backlog of more than 10,000 energy projects awaiting interconnection in the United States at the time.
Therefore, the two Siemens entities collectively represent approximately 13.3% of the combined voting power of all of Fluence Energy, Inc.’s common stock and approximately 28.5% of the economic interest in Fluence Energy, Inc.; and • QHL owns 14,668,275 shares of Class A common stock, representing approximately 3.8% of the combined voting power of all of Fluence Energy, Inc.’s common stock and approximately 8.1% of the economic interest in Fluence Energy, Inc.
Siemens and SPT Invest collectively represent approximately 13.3% of the combined voting power of all of Fluence Energy, Inc.’s common stock and approximately 28.5% of the economic interest in Fluence Energy, Inc.; and • QHL owns 14,668,275 shares of Class A common stock, representing approximately 3.8% of the combined voting power of all of Fluence Energy, Inc.’s common stock and approximately 8.1% of the economic interest in Fluence Energy, Inc.
We believe there are multiple factors driving continued growth in the energy storage sector, including, but not limited to: • The accelerating transition from fossil to renewable generation is expected to continue to require significant increases in energy storage capacity to both offset potential grid instability caused by intermittent renewable resources and enable the use of power from renewable generation assets at times when natural resources may be unavailable.
As described above, we believe there are multiple key factors driving continued growth in the energy storage sector, including, but not limited to: • Global Transition Toward Renewable Energy: The ongoing transition from fossil to renewable generation is expected to continue to require significant increases in energy storage capacity to both offset potential grid instability caused by intermittent renewable resources and enable the use of power from renewable generation assets at times when natural resources may be unavailable.
To install and operate energy storage products and solutions on our platform, we, our customers, or our partners, as may be applicable, are required to obtain and maintain applicable permits and approvals from the relevant governmental or regulatory authorities having jurisdiction to install energy storage products and solutions and to interconnect the products with the local electrical utility.
To install, commission, and operate energy storage products and solutions on our platform, we, our customers, or our partners, as may be applicable, are required to obtain and maintain applicable permits and approvals from the relevant governmental or regulatory authorities having jurisdiction for the delivery and installation of energy storage products and solutions and to commission and interconnect the products with the local electrical utility and grid.
Current Ownership of Continuing Equity Owners As of September 30, 2024: • AES Grid Stability owns (1) 51,499,195 limited liability company interests of Fluence Energy, LLC (“LLC Interests”), representing approximately 28.5% of the economic interest in Fluence Energy, LLC and (2) 51,499,195 shares of Class B-1 common stock, par value $0.00001 per share, of Fluence Energy, Inc.
As of September 30, 2025: • AES Grid Stability owns (1) 51,499,195 limited liability company interests of Fluence Energy, LLC (“LLC Interests”), representing approximately 28.5% of the economic interest in Fluence Energy, LLC and (2) 51,499,195 shares of Class B-1 common stock, par value $0.00001 per share, of Fluence Energy, Inc.
Energy Storage Market Opportunity The energy storage market is comprised of three elements: • Energy storage solutions — the components (including batteries), professional services, and labor required to manufacture, assemble, and install battery energy storage systems.
Energy Storage Market Opportunity We believe the energy storage market is comprised of three main elements: • Energy storage solutions — the components (including batteries), professional services, and labor required to manufacture, assemble, and install energy storage systems.
We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good. As of September 30, 2024, women represent 29% of our total workforce. Fluence is committed to cultivating an inclusive culture for our workforce.
We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good. As of September 30, 2025, women represent 28% and men represent 72% of our total workforce. Fluence is committed to cultivating an inclusive culture for our workforce.
The services market is driven by growth in installed energy storage solutions globally, and its addressable market is comprised of the recurring annual service spend across the entire fleet of energy storage projects, which is continuing to grow through new installations. • Digital applications and software — controls systems and cloud-based software that help asset owners optimize the performance of their systems and portfolios, including asset performance management (APM) software and intelligent bidding software for asset trading.
The services market element is driven by growth in installed energy storage solutions globally and its addressable market is comprised of the recurring annual service spend across the entire fleet of energy storage projects, which continues to grow through new installations. • Digital applications and software — cloud-based software that help asset owners optimize the performance of their systems and portfolios, including asset performance management (“APM”) software and intelligent forecasting and bid optimization software for asset trading applications.
Our safety management system, anchored in a plan-do-check-act methodology, is intended to encourage the active involvement of stakeholders. Incorporated into our framework are our Fluence Code of Conduct and Ethics and a stop work 9 authorization.
We are committed to reducing hazards and minimizing risks. Our safety management system, anchored in a plan-do-check-act methodology, is intended to encourage the active involvement of stakeholders. Incorporated into our framework are our Fluence Code of Conduct and Ethics and a stop work authorization.
We may take legal action to prevent third parties from infringing or misappropriating our intellectual property or from otherwise gaining access to our technology. Furthermore, during onboarding, Fluence employees agree to assign all the inventions, designs, and technologies they develop during the course of employment with us, to Fluence. Competition The energy storage sector is highly competitive and continuously evolving.
We may take legal action to prevent third parties from infringing or misappropriating our intellectual property or from otherwise gaining access to our technology. Furthermore, during onboarding, Fluence employees agree to assign all the inventions, designs, and technologies they develop during the course of employment with us, to Fluence.
This solution combines state-of-the-art battery modules, management systems, and monitoring equipment into a fully unified architecture designed to improve operations and system safety. Gridstack Pro includes a system of multiple interoperable enclosures that provide different energy capacities and densities for diverse global project needs. Gridstack Pro utilizes the Fluence-designed Battery Packs. • Gridstack™: energy storage solution for front-of-the-meter applications.
This solution combines state-of-the-art battery modules, management systems, and monitoring equipment into a fully unified architecture designed to improve operations and system safety. It includes a system of multiple interoperable enclosures that provide different energy capacities and densities for diverse global project needs.
For example, in February 2018, FERC issued Order 841 directing regional transmission operators and independent system operators to remove barriers to the participation of storage in wholesale electricity markets and to establish rules to help ensure storage resources are compensated for the services they provide. Order 841 was upheld in July 2020 following an appeal to the U.S.
For example, in February 2018, FERC issued Order 841 directing regional transmission operators and independent system operators to remove barriers to the participation of storage in wholesale electricity markets and to establish rules to help ensure storage resources are compensated for the services they provide.
Gridstack Pro is designed to improve density and system performance with both 2- and 4-hour product configurations. Gridstack Pro is intelligent energy storage for MW to GW scale projects with balanced power to energy matching and increased site density.
Gridstack Pro is sold to independent power producers (“IPPs”), developers, utilities, and other generators, and is designed to improve density and system performance with both 2- and 4-hour product configurations. Gridstack Pro is intelligent energy storage for MW to GW scale projects with balanced power to energy matching and increased site density.
During fiscal year 2024, as we continue to grow and scale, we adopted a more comprehensive culture, equity, and inclusion (CEI) approach, emphasizing a global perspective.
During fiscal year 2024, we adopted a more comprehensive culture, equity, and inclusion (CEI) approach, emphasizing a global perspective.
The market for energy storage continues to rapidly evolve and while we believe lithium-ion battery pack costs will continue to decline over the long term, there is no guarantee that they will decline or decline at the rates we expect.
The market for energy storage continues to rapidly evolve and while we believe lithium-ion battery costs will continue to decline over the long-term, they may not decline or decline at the rates we expect.
While the implementation of the market design reform, and notably the development of the methodology for the flexibility assessment, is still underway, the new provisions around flexibility are likely to strengthen the role of energy storage in national power market design and allow EU member states to provide state support for the construction of energy storage projects.
While the implementation of the market design reform, and notably the development of the methodology for the flexibility assessment, is still underway, the new provisions around flexibility are likely to strengthen the role of energy storage in national power market design and allow EU member states to provide state support for the construction of energy storage projects. • In June 2025, the EU adopted new state aid guidelines, formally known as Clean Industrial Deal State Aid (“CIDSA”) Guidelines.
As of September 30, 2024, we had approximately 1,595 full-time employees across 14 different countries. None of our employees in the United States are represented by a labor union. As of September 30, 2024, approximately 179 of our employees in Germany were represented by a works council.
As of September 30, 2025, we had approximately 1670 full-time employees across 15 different countries. None of our employees in the United States are represented by a labor union. As of September 30, 2025, approximately 140 of our employees in Germany were represented by a works council.
Digital Applications Our Fluence digital offerings encompass proprietary artificial intelligence (AI) and data science technologies to enable the advanced capabilities of our two cloud-based software products: Fluence Mosaic and Fluence Nispera. Fluence Mosaic is an intelligent bidding software for utility-scale storage and renewable assets, enabling customers to optimize asset trading in wholesale electricity markets.
Our Fluence digital offerings encompass proprietary machine learning, AI, data science technologies, and applied engineering to enable the advanced capabilities of our two cloud-based software products: Fluence Mosaic and Fluence Nispera. Fluence Mosaic is an intelligent energy forecasting, bid optimization software and service offering for utility-scale storage and renewable assets, enabling customers to optimize asset trading in wholesale electricity markets.
In addition, as of September 30, 2024, approximately 41% of our revenue was with related parties, primarily AES and its affiliates. As of September 30, 2024, the Company had $4.5 billion of remai ning performance obligations related to our contractual commitments, which we refer to as our backlog, of which 16% is with AES.
In addition, as of September 30, 2025, approximately 24% of our revenue was with related parties, primarily AES and its affiliates. As of September 30, 2025, the Company had $5.3 billion of remaining performance obligations related to our contractual commitments, which we refer to as our backlog, of which 13% is with AES.
We sell our energy storage solutions, services, and digital applications to a wide range of customers around the world, including utilities and load-serving entities, IPPs, developers, conglomerates, and C&I customers. In fiscal year 2024, our two largest customers represented approximately 50% of our revenues.
Our Customers We sell our energy storage solutions, services, and digital offerings to a wide range of customers around the world, including utilities and load-serving entities, IPPs, developers, conglomerates, and commercial and industrial (“C&I”) customers. In fiscal year 2025, our two largest customers represented approximately 41% of our revenues.
As of September 30, 2024, our global operational and maintenance (“O&M”) services team was providing services for 4.3 GW of energy storage assets, with a further 4.1 GW of contracted backlog.
As of September 30, 2025, our global operational and maintenance (“O&M”) services team was providing services for 5.6 GW of energy storage assets, with a further 7.0 GW of contracted backlog.
Additionally, we rely on trade secret protection and confidentiality agreements to safeguard our interests with respect to proprietary know-how and software that are not patented and processes for which patents are difficult to enforce.
We rely on both registration of our marks as well as common law protection where available. 11 Additionally, we rely on trade secret protection and confidentiality agreements to safeguard our interests with respect to proprietary know-how and software that are not patented and processes for which patents are difficult to enforce.
We believe that our digital applications provide us a competitive advantage by offering digital capabilities that can be combined with our energy storage solutions and services to optimize revenue and lower the total cost of ownership and thereby provide our customers with incremental value.
Our digital applications allow us to offer digital capabilities that can be combined with our energy storage solutions and services to optimize revenue and lower the total cost of ownership and thereby provide our customers with enhanced value.
Siemens is an affiliate of SPT Invest and may be deemed to share beneficial ownership of the shares held of record by SPT Invest.
Siemens is an affiliate of SPT Invest and may be deemed to share beneficial ownership of the shares held of record by SPT Invest. SPT Invest is a wholly owned subsidiary of Siemens Pension-Trust e.V.
This holistic approach is intended to reflect the different expectations and needs of our varying international operations, positioning us to continue to build a cohesive and respectful work environment that drives innovation and performance across all regions.
This holistic approach reflects the different expectations and needs of our varying international operations, rooted in a foundation of applicable employment and civil rights laws, positioning us to continue to build a cohesive and respectful work environment that drives innovation and performance across all regions.
Energy storage products and solutions require interconnection agreements from the applicable authorities having jurisdiction to operate. In almost all cases, interconnection agreements are standard form agreements that have been pre-approved by the local public utility commission or other regulatory body with jurisdiction over interconnection agreements. As such, no additional regulatory approvals are typically required once interconnection agreements are signed.
In almost all cases, interconnection agreements are standard form agreements that have been pre-approved by the local public utility commission or other regulatory body with jurisdiction over interconnection agreements. As such, no additional regulatory approvals regarding grid interconnection are typically required once interconnection agreements are signed. U.S.
One factor that impacts this continued adoption of energy storage solutions is the cost of lithium-ion energy storage hardware. The cost of lithium-ion energy storage hardware has declined significantly in the aggregate in the last decade and has resulted in a large addressable market today.
The cost of lithium-ion energy storage hardware has declined significantly in the last decade and has resulted in a large addressable market today.
As portfolios of renewable and storage assets quickly scale across the globe, asset owners and managers will require SaaS products that optimize the performance of those assets to maximize their revenues and lower their overall cost of ownership. A significant market opportunity is utilizing storage-as-a-transmission asset (SATA).
As portfolios of renewable and storage assets continue to scale across the globe, we believe that asset owners and managers will require SaaS products that optimize the performance of such assets to maximize their revenues and lower their overall cost of ownership.
We refer to Siemens Industry and AES Grid Stability as the “Founders” in this Annual Report and together with Qatar Holding LLC (“QHL”), an affiliate of the Qatar Investment Authority (“QIA”), they are collectively referred to as the “Continuing Equity Owners”.
We refer to Siemens Industry and AES Grid Stability as the “Founders” in this Annual Report and together with Qatar Holding LLC (“QHL”), an affiliate of the Qatar Investment Authority (“QIA”), they are collectively referred to as the “Continuing Equity Owners.” As the sole managing member of Fluence Energy, LLC, Fluence Energy, Inc. operates and controls all the business and affairs of Fluence Energy, LLC and its direct and indirect subsidiaries.
Federal Energy Regulatory Commission (“FERC”) has taken a number of steps to help to enable the participation of energy storage in wholesale energy markets.
Federal Energy Regulatory Commission (“FERC”) T he U.S. Federal Energy Regulatory Commission has taken several steps to help to enable the participation of energy storage in wholesale energy markets over the last decade.
Manufacturing Our manufacturing strategy is designed to meet certain key objectives: (i) limit capital-intensive and low value-added activities that can be outsourced to other companies, (ii) maintain a capital light business model, (iii) minimize labor content where possible, (iv) minimize the amount of assembly our customers are required to do at any project site, and (v) minimize material movement both from vendors to us and within factories.
Our manufacturing strategy has historically been designed to meet certain key objectives: (i) limit capital-intensive and low value-added activities that can be outsourced (ii) maintain a capital light business model, (iii) minimize labor and automate where possible, (iv) minimize the level of integration and assembly required at a project site, and (v) minimize materials and inventory movement.
If costs do not continue to decline long term and instead remain steady or increase, as seen in fiscal year 2022, this could adversely affect our ability to increase our revenue, our order intake, and grow our business.
If costs do not continue to decline long-term and instead remain steady or increase, as seen in fiscal year 2022, this could adversely affect demand for our products and services, our revenue, order intake, our market share, and ability to grow our business. • Increased Electricity Demand: Driven by factors such as the rise of data centers and AI.
As of September 30, 2024, we had an aggregate of 18.3 GW of renewable energy assets using Fluence digital offerings and 10.6 GW of contracted backlog related to renewable and energy storage assets using Fluence digital offerings. Refer to “Item 7.
As of September 30, 2025, we had an aggregate of 22.0 GW of renewable energy assets using Fluence digital offerings and 12.1 GW of contracted backlog related to renewable and energy storage assets using Fluence digital offerings.
Of the energy storage solutions and services global pipeline, United States customers composed the largest portion of our pipeline at 14.5 GWs or approximately 28%, with Australia customers following at 8.6 GWs or 17%, and Germany customers at 7.2 GWs or 14%.
Of the energy storage solutions and services global pipeline, United States customers composed the largest portion of our pipeline at 16.1 GW or approximately 25%, with Australia customers following at 13.8 GW or 21%, and Germany customers at 7.9 GW or 12%.
Other Policy Initiatives including Tax Incentives, Cash Grants and Performance Incentives U.S. State and Regional Policies U.S. states and regional TSOs have various policies designed to support and accelerate adoption of clean and/or reliable renewable energy and battery storage technologies.
State and Regional Policies U.S. states and regional transmission service operators (“TSOs”) have various policies designed to support and accelerate adoption of clean and/or reliable renewable energy and battery storage technologies.
Current legislation and regulation addressing climate change is making lower GHG-emitting energy sources, such as solar and wind, increasingly desirable to consumers compared to higher GHG-emitting energy sources, such as coal and natural gas and could continue to do so into the future.
In recent years, legislation and regulation addressing climate change have made lower GHG-emitting energy sources, such as solar and wind, increasingly desirable to consumers compared to higher GHG-emitting energy sources, such as coal and natural gas.
Our energy storage products, solutions, services, and digital applications are designed to meet the unique demands of the clean energy industry. The intricacy involved in the design and integration of these offerings underscores their technical complexity. Nevertheless, new companies enter the market annually and offer products and services that compete with ours.
The intricacy involved in the design and integration of our offerings underscores their technical complexity. Nevertheless, new companies enter the market continuously and offer products and services that may compete with ours.
As of September 30, 2024, we had a gross global pipeline of 115.9 GWs, which includes 51.4 GWs for energy storage solutions and services.
As of September 30, 2025, we had a gross global pipeline of 128.8 GW, which includes 65.1 GW for energy storage solutions and services.
We believe there is an opportunity to not only deploy digital applications and software solutions on individual assets but also across entire energy storage fleets and portfolios of generation assets to improve their collective performance and economic output, and to reduce the overall carbon footprint of the electric grid by optimizing the interactions between different asset types.
We believe there is an opportunity to not only deploy digital offerings and software solutions on individual assets but also across entire energy storage fleets and portfolios of generation assets to improve both performance and economic output, as well as to reduce the total cost of ownership (“TCO”) of the asset with improvements in both service productivity and with 6 enhanced predictive maintenance, and the opportunity to reduce the overall carbon footprint of the portfolio by optimizing various asset types.
This solution is sold to IPPs, developers, utilities, and other generators to deliver energy, capacity, and ancillary services in both regulated and deregulated electricity markets globally.
Gridstack Pro® 2000 series utilizes the Fluence-designed Battery Packs. • Gridstack®: Energy storage solution designed for front-of-the-meter applications. This solution is sold to IPPs, developers, utilities, and other generators to deliver energy, capacity, and ancillary services in both regulated and deregulated electricity markets globally.
We continue to explore additional U.S. based supply arrangements for our future operations, including U.S. based battery cell, module, inverter and enclosure integration. We believe that continued expansion and emphasis on domestic content under the IRA will provide Fluence with a competitive advantage to others in the industry.
We continue to explore additional U.S. based supply arrangements for our future U.S. operations. We believe that continued expansion and emphasis on domestic content under the IRA, as modified by the OBBBA, will provide Fluence with a competitive advantage. Our procurement operations, however, remain subject to a complex and evolving supply chain and regulatory landscape.
As of September 2024, we held over 179 granted patents worldwide and had over 82 patent applications pending with domestic and foreign patent offices. As of September 2024, we also had over 108 registered trademarks with domestic and foreign trademark offices.
As of September 2025, we held over 165 granted patents worldwide and had over 161 patent applications pending with domestic and foreign patent offices. As of September 30, 2025, we also had over 114 registered trademarks with domestic and foreign trademark offices. Such trademarks include Fluence, Gridstack, and many other marks.
We remain committed to pioneering novel use cases and exploring untapped market segments, many of which present lower levels of competition.
We remain committed to innovation in the design of our battery energy storage systems and exploring underserved market segments and use cases, many of which present lower levels of competition.
Congress is continuously reviewing and passing various climate change proposals, incentives, regulations, and legislation that may support the energy storage industry, including in the form of tax credits and incentives. We cannot guarantee we will realize any or all of the anticipated benefits of incentives under any such enacted regulations or legislation, including the IRA.
Related Policies, Regulation, and Legislation IRA and OBBBA The U.S. Congress is continuously reviewing and passing various proposals, incentives, regulations, and legislation that may support the energy storage industry, including in the form of tax credits and incentives.
Order 1920 also expressly provides for states’ roles throughout the process of planning, selecting, and determining how to pay for transmission lines. Order 1920 was adopted in an effort to promote the more efficient and cost-effective integration of new renewable generation and battery energy storage resources and help meet the needs of a rapidly evolving grid.
Order 1920 was adopted to promote the more efficient and cost-effective integration of new renewable generation and battery energy storage resources and help meet the needs of a rapidly evolving grid. More recently, FERC, at the direction of the U.S.
For more information about the potential risks relating to our supply chain and exposure to international pressures, see Part I, Item 1A. “Risk Factors.” As of the date of this Annual Report, we believe that we have adequate access to our key components to meet the needs of our operations and demand of our customers.
As of the date of this Annual Report, we believe that we have adequate access to our key components to meet the needs of our operations and demand of our customers.
Energy storage will be essential in managing variations in renewable electricity output. • Growing capacity constraints on existing power grids that were not designed to support distributed and renewable generation infrastructure or technologies, such as electric vehicles, are positioning energy storage assets as a key solution. • Environmental responsibility has become a priority for companies and investors.
Energy storage will be essential in managing variations in renewable electricity output. • Grid Resilience: Growing capacity constraints on existing power grids that were not designed to support distributed and renewable generation infrastructure or technologies, such as electric vehicles, position energy storage assets as a key solution. • Declining Lithium-Ion Battery Prices: Growth of the industry and the continued adoption of energy storage solutions by our customers is driven by the declining cost of the lithium-ion energy storage hardware, mainly the cost of lithium-ion batteries.
The ESG Council reports to our ESG Steering Committee, which is comprised of five management leaders (our Chief Executive Officer, Chief Financial Officer, Chief Human Resources Officer, Chief Supply Chain and Manufacturing Officer, and Chief Legal and Compliance Officer).
Our ESG Steering Committee is responsible for prioritization and promoting alignment regarding sustainability initiatives and priorities across all internal stakeholders. The ESG 9 Steering Committee is comprised of five management leaders (our Chief Executive Officer, Chief Financial Officer, Chief Human Resources Officer, Chief Product and Supply Chain Officer, and Chief Legal and Compliance Officer).
These changes can have a positive or negative impact on our ability to deliver cost savings to customers for the purchase of electricity. European Country-Specific Policies There are certain European country specific initiatives that have historically helped the adoption of clean energy and energy storage solutions.
These changes can have a positive or negative impact on our ability to deliver cost savings to customers for the purchase of electricity. Non-U.S.
We currently offer five 6 energy storage solutions built on our common storage platform, which are optimized for common customer use cases but can be configured for specific customer needs: • Gridstack Pro: energy storage solution for large-scale front-of-the-meter applications. Gridstack Pro is sold to independent power producers (IPPs), developers, utilities, and other generators.
Our energy storage solutions are optimized for common customer applications but can be configured for specific use cases and requirements. Our current solutions include: • Gridstack Pro®: Energy storage solution designed for large-scale front-of-the-meter applications.
Fluence Mosaic is currently available in the NEM (Australia), CAISO (California), and ERCOT (Texas) markets. Fluence Nispera is our asset performance management (APM) software, which we acquired in 2022. Fluence Nispera helps customers monitor, analyze, forecast, and optimize the performance and value of renewable energy assets.
Fluence Mosaic is currently available in the NEM (Australia), CAISO (California), ERCOT (Texas), and Japan. Fluence Nispera is our asset performance management (APM) software and related support team.
In a number of European countries, reforms on grid fees structures for energy storage, interconnection, and planning processes for energy storage projects and renewable projects are ongoing.
European Country Specific Policies Countries in the EU promote energy storage through both direct funding programs as well as market-based incentives, such as enabling participation in capacity markets. In a number of European countries, reforms on grid fees structures for energy storage, interconnection, and planning processes for energy storage projects and renewable projects are ongoing.
These policies are driving and accelerating the growth of the utility-scale battery storage market across the U.S., although we cannot guarantee that we will realize the anticipated benefits of these policies. 14 Although we generally are not regulated as a utility, federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our product and services.
These policies are driving and accelerating the growth of the utility-scale battery energy storage market across the U.S., although we cannot guarantee when and if we will realize the anticipated benefits of these policies.
These battery modules will incorporate battery cells manufactured in Tennessee for our domestic content offering. These Fluence-designed Battery Packs will allow Fluence and its customers to capture certain incentives under the IRA. See “Government Regulation and Compliance - U.S.
We initiated domestic production of these battery modules at our contract manufacturer’s facility in Utah in September 2024 and are incorporating battery cells manufactured in Tennessee for our domestic content offering in the U.S. We believe this will allow Fluence and its customers to capture certain incentives under the IRA, as amended by the OBBBA.
We believe this holistic cultural approach positions the Company to attract, retain, and engage top talent from around the world while contributing to a more equitable and inclusive global energy sector. Fluence is dedicated to the holistic well-being of our team members, which is why we offer robust benefits packages that address our workforce’s diverse needs.
We believe this holistic cultural approach positions the Company to attract, retain, and engage top talent from around the world while contributing to a more equitable and inclusive global energy sector. Fluence is committed to supporting the well-being and professional growth of our employees through regionally tailored benefit offerings, with programs designed to reflect local market practices and regulatory standards.
As of September 30, 2024, we had 5.0 gigawatts (“GW”) of energy storage assets deployed and 7.5 GW of contracted backlog across 33 markets in 25 countries with a gross global pipeline of 115.9 GW.
Our energy storage solutions and operational services are designed to help create a more resilient grid and unlock the full potential of renewable portfolios. As of September 30, 2025, we had 6.8 gigawatts (“GW”) of energy storage assets deployed and 9.1 GW of contracted backlog across 33 markets in 25 countries with a gross global pipeline of 128.8 GW.
We are also focused on expanding standardized offerings that are optimized for each of our sales channels and continuing to move towards a more localized, regional organizational structure to better support customers and sales channels, improve logistics, and enhance market focus.
We intend to continue to grow our customer base through new product launches and are also focused on expanding our business with standardized offerings that are optimized for each of our sales channels, and on moving towards an organizational structure better designed to support specific customer types, improving logistics, and enhancing market focus.
In fiscal year 2022, we saw prices for lithium-ion battery packs increase from prior years, though prices returned to their historical trend of declining year-over-year in fiscal years 2023 and 2024.
In fiscal year 2022, we saw prices for lithium-ion batteries increase from prior years, though prices returned to their historical trend of declining year-over-year in fiscal years 2023 through 2025, due in part to manufacturing overcapacity and saturation in the market and lower cost of the underlying raw materials, including lithium as well as softening demand from the electric vehicle (“EV”) sector.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe assumptions relating to our market opportunities include, but are not limited to, the following: (i) according to BloombergNEF, global energy storage capacity grew 63% per annum between 2015 and 2020 based on the Energy Storage Market Outlook dated October 2022 and based on the Energy Storage Market Outlook dated November 2024, BloombergNEF estimates that the global utility scale market, excluding China, will add approximately 2,529 GWh between 2024 and 2035; (ii) declines in overall lithium-ion battery costs and in the cost of renewable generation; (iii) growing demand for renewable energy; (iv) anticipated increased demand for electricity, and (v) increased complexity of the electrical grid.
Biggest changeThe assumptions relating to our market opportunities include, but are not limited to, the following:(i) the global transition toward renewable energy, (ii) heightened focus on grid resilience, (iii) declining lithium-ion battery prices, (iv) increased electricity demand, and (v) supportive regulatory frameworks.
Our business depends on our ability to implement improvements to and properly maintain and protect the continuous operation and data integrity of our technology infrastructure and other business systems and the inability to do so may have a material adverse effect on our reputation and harm our business prospects, financial conditions, and operating results.
Our business depends on our ability to implement improvements to and properly maintain and protect the continuous operation and data integrity of our technology infrastructure, data and other business systems and the inability to do so may have a material adverse effect on our reputation and harm our business prospects, financial conditions, and operating results.
We may also have other obligations, for example, under contracts, to notify customers or other counterparties of a security incident, including a data security breach.
We may also have other obligations, for example, under contracts, to notify customers or other counterparties of a security incident, including a data breach.
To the extent we are unable to make timely payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in the acceleration of payments due under the Tax Receivable Agreement.
To the extent we are unable to make timely payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in the acceleration of payments due under the Tax Receivable Agreement.
These provisions provide for, among other things: • the ability of our board of directors to issue one or more series of preferred stock; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • prohibit cumulative voting in the election of directors; • that certain provisions of amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock; • the right of each of the AES Related Parties, Siemens Related Parties, and the QIA Related Parties (each as defined in the Stockholders Agreement) to nominate certain of our directors; • the shares of our Class B-1 common stock held by AES entitle them to five votes per share on all matters presented to our stockholders generally; and • the consent rights of the Continuing Equity Owners in the Stockholders Agreement.
These provisions provide for, among other things: • the ability of our board of directors to issue one or more series of preferred stock; • advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; • certain limitations on convening special stockholder meetings; • prohibit cumulative voting in the election of directors; • that certain provisions of amended and restated certificate of incorporation may be amended only by the affirmative vote of at least 66 2/3% of the voting power represented by our then-outstanding common stock; • the right of each of the AES Related Parties, Siemens Related Parties, and the QIA Related Parties (each as defined in the Stockholders Agreement) to nominate certain of our directors; 51 • the shares of our Class B-1 common stock held by AES entitle them to five votes per share on all matters presented to our stockholders generally; and • the consent rights of the Continuing Equity Owners in the Stockholders Agreement.
Despite implementation of reasonable security measures designed to prevent cybersecurity risks and threats, we are vulnerable to potential harm and damages from computer viruses, natural disasters, fire, power loss, telecommunications failures, personnel misconduct or theft, human error, unauthorized access, physical or electronic security breaches, cyber-attacks (including malicious and destructive code, misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our suppliers’) IT systems, products, or services, social engineering attacks, phishing attacks, ransomware, and denial of service attacks), and other similar disruptions.
Despite implementation of reasonable security measures designed to prevent cybersecurity risks and threats, we are vulnerable to potential harm and damages from computer viruses, natural disasters, fire, power loss, telecommunications failures, personnel misconduct or theft, human error, unauthorized access, physical or electronic security breaches, cyber-attacks (including malicious and destructive code, misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our suppliers’) IT systems, products, or services, social engineering attacks, phishing attacks, ransomware, and denial of service attacks), and other similar disruptions and incidents.
If our data were found to be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our operations and hinder our ability to provide services, establish appropriate pricing, establish reserves, report financial results timely and accurately and maintain regulatory compliance, among other things.
If our data were found to 43 be inaccurate or unreliable due to fraud or other error, or if we, or any of the third-party service providers we engage, were to fail to maintain information systems and data integrity effectively, we could experience operational disruptions that may impact our operations and hinder our ability to provide services, establish appropriate pricing, establish reserves, report financial results timely and accurately and maintain regulatory compliance, among other things.
If our assumptions regarding the risks and uncertainties that we consider in planning and operating our business are incorrect or change, or if we do not address these risks and uncertainties successfully, including due to the lack of historical data from and experience in operating our business at its current scale and as an independent entity, as well as the evolution of our business, our results of operations could differ materially from our expectations, and our business and our financial condition could be adversely affected.
If our assumptions regarding the risks and uncertainties that we consider in planning and operating our business are incorrect or change, or if we do not address these risks and uncertainties successfully, including due to the lack of historical data from and 35 experience in operating our business at its current scale and as an independent entity, as well as the evolution of our business, our results of operations could differ materially from our expectations, and our business and our financial condition could be adversely affected.
Such harm, damages, attacks, or security breaches may be perpetrated by bad actors internally or externally (including computer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors) and create risks that threaten the confidentiality, integrity, and availability for our (as well as our suppliers’ and our customers’) internal networks, IT infrastructure, and other business systems and the data and information they store and process.
Such harm, damages, attacks, security breaches or disruptions may be perpetrated by bad actors internally or externally (including computer hackers, persons involved with organized crime, or foreign state or foreign state-supported actors) and create risks that threaten the confidentiality, integrity, and availability for our (as well as our suppliers’ and our customers’) internal networks, IT infrastructure, and other business systems and the data and information they store and process.
Governmental agencies in the jurisdictions in which we and our affiliates do business, as well as the Organization for Economic Cooperation and Development (the “OECD”), have recently focused on issues related to the taxation of multinational business, including issues relating to “base erosion and profit shifting,” where profits are reported as earned for tax purposes in relatively low-tax jurisdictions or payments are made between affiliates in jurisdictions with different tax rates.
Governmental agencies in the jurisdictions in which we and our affiliates do business, as well as the Organization for Economic Cooperation and Development (the “OECD”), have focused on issues related to the taxation of multinational business, including issues relating to “base erosion and profit shifting,” where profits are reported as earned for tax purposes in relatively low-tax jurisdictions or payments are made between affiliates in jurisdictions with different tax rates.
We offer and sell our energy storage solutions, services, and digital application offerings globally and have operations in a number of different countries, including, but not limited to, the United States, the United Kingdom, multiple European Union countries, Chile, Australia, Taiwan, India, Canada, Singapore, and the Philippines and may in the future, evaluate and take advantage of opportunities to expand into new geographic markets.
We offer and sell our energy storage solutions, services, and digital application offerings globally and have operations in a number of different countries, including, but not limited to, the United States, the United Kingdom, multiple European Union countries, Chile, Australia, Taiwan, India, Japan, Canada, Singapore, and the Philippines and may in the future, evaluate and take advantage of opportunities to expand into new geographic markets.
The directors so elected have the ability to control actions to be taken by our board of directors, including amendments to our amended and restated certificate of incorporation and amended and restated bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets, and, subject to the terms of our indebtedness and applicable rules and regulations, to approve the issuance of additional stock, implement stock repurchase programs, declare dividends and make other decisions.
The directors so elected 54 have the ability to control actions to be taken by our board of directors, including amendments to our amended and restated certificate of incorporation and amended and restated bylaws and approval of significant corporate transactions, including mergers and sales of substantially all of our assets, and, subject to the terms of our indebtedness and applicable rules and regulations, to approve the issuance of additional stock, implement stock repurchase programs, declare dividends and make other decisions.
Our customers operate in an evolving, nascent industry and have based their commitments to us on assumptions about future energy prices, demand levels, and current and anticipated regulatory regimes and tax incentives, including those currently anticipated under the IRA, among other factors. Further, certain customers may need to obtain financing to fulfill their commitments to us.
Our customers operate in an evolving, nascent industry and have based their commitments to us on assumptions about future energy prices, demand levels, and current and anticipated regulatory regimes and tax incentives, including those currently anticipated under the IRA and OBBBA, among other factors. Further, certain customers may need to obtain financing to fulfill their commitments to us.
The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources, and greater development or commercialization capabilities.
The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources, and 45 greater development or commercialization capabilities.
Our business would suffer if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensors fail to enforce licensed patents against infringing 41 third parties, if the licensed intellectual property is found to be invalid or unenforceable, if the licensed intellectual property expires or if we are unable to enter into necessary licenses on acceptable terms.
Our business would suffer if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensors fail to enforce licensed patents against infringing third parties, if the licensed intellectual property is found to be invalid or unenforceable, if the licensed intellectual property expires or if we are unable to enter into necessary licenses on acceptable terms.
If our assumptions change or if actual circumstances differ from our assumptions, our operating results may be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If our assumptions change or if actual circumstances differ from our assumptions, our operating results may be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our Class A common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 63
If we are unable to prevent or timely and effectively remedy errors, bugs, vulnerabilities, or defects in our offerings, we could potentially suffer reputational damage, increased costs, and 27 potential impact to our customer relationships, any of which could adversely affect our business, prospects, financial condition, results of operations, and cash flows.
If we are unable to prevent or timely and effectively remedy errors, bugs, vulnerabilities, or defects in our offerings, we could potentially suffer reputational damage, increased costs, and potential impact to our customer relationships, any of which could adversely affect our business, prospects, financial condition, results of operations, and cash flows.
Although we have contractual protections, including indemnification, warranty disclaimers and limitation of liability provisions, in many of our agreements with customers, resellers, and other business partners, such protections may not be uniformly implemented 28 in all contracts and, where implemented, may not fully or effectively protect from claims by customers, resellers, business partners, or other third parties.
Although we have contractual protections, including indemnification, warranty disclaimers, and limitation of liability provisions, in many of our agreements with customers, resellers, and other business partners, such protections may not be uniformly implemented in all contracts and, where implemented, may not fully or effectively protect from claims by customers, resellers, other business partners, or other third parties.
An increase in interest rates could lower an investor’s return on investment, increase equity requirements, or make alternative investments more attractive relative to our energy storage solutions and, in each case, could cause these end users to seek alternative investments, which would have an adverse impact to our business and results of operations.
An increase in interest rates could lower an investor’s return on investment, increase equity requirements, or make alternative investments more attractive relative to our energy 39 storage solutions and, in each case, could cause these end users to seek alternative investments, which would have an adverse impact to our business and results of operations.
In order to develop a renewable energy project, our customers are typically required to obtain, among other things, environmental impact permits and other authorizations and building permits, which in turn require environmental impact studies to be undertaken and public 34 hearings and comment periods to be held during which any person, association, or group may oppose a project.
In order to develop a renewable energy project, our customers are typically required to obtain, among other things, environmental impact permits and other authorizations and building permits, which in turn require environmental impact studies to be undertaken and public hearings and comment periods to be held during which any person, association, or group may oppose a project.
These 19 actions must be completed timely to adhere to customer schedules and milestones. Depending on the scope of the project, we may be responsible for the installation of the equipment and commissioning. Delays in projects, from one period to another may cause our results of operations for a particular period to fall below expectations.
These actions must be completed timely to adhere to customer schedules and milestones. Depending on the scope of the project, we may be responsible for the installation of the equipment and commissioning. Delays in projects, from one period to another may cause our results of operations for a particular period to fall below expectations.
The 2024 Credit Agreement limits our ability to make certain payments, including dividends or distributions on Fluence Energy, LLC’s equity and other restricted payments, provided, however, that payments in respect of certain tax distributions under the Third Amended and Restated Limited Liability Company Agreement of Fluence Energy, LLC and certain payments under the Tax Receivable Agreement are permitted.
The 2024 Credit Agreement limits our ability to make certain payments, including dividends or distributions on Fluence Energy, LLC’s equity and other restricted payments, provided, however, that payments in respect of certain tax distributions under the Third Amended and 36 Restated Limited Liability Company Agreement of Fluence Energy, LLC and certain payments under the Tax Receivable Agreement are permitted.
The 42 resulting reductions in demand for energy storage products could harm our business, prospects, financial condition, and results of operations. On July 16, 2020, the Federal Energy Regulatory Commission (“FERC”) issued a final rule amending regulations that implement the Public Utility Regulatory Policies Act (“PURPA”).
The resulting reductions in demand for energy storage products could harm our business, prospects, financial condition, and results of operations. On July 16, 2020, the Federal Energy Regulatory Commission (“FERC”) issued a final rule amending regulations that implement the Public Utility Regulatory Policies Act (“PURPA”).
Our future operations and growth strategy is therefore subject to all of the risks inherent in light of the expenses, difficulties, 18 complications, and delays frequently encountered in connection with the growth of a business in a nascent industry, as well as those that are specific to our business in particular as which are further described herein.
Our future operations and growth strategy is therefore subject to all of the risks inherent in light of the expenses, difficulties, complications, and delays frequently encountered in connection with the growth of a business in a nascent industry, as well as those that are specific to our business in particular as which are further described herein.
From time to time, congressional committees have investigated and called for the inclusion of certain companies that provide materials or components for the battery supply chain to the UFLPA Entity List. Such a listing may adversely impact our ability to source necessary 22 inputs or otherwise adversely impact our operations.
From time to time, congressional committees have investigated and called for the inclusion of certain companies that provide materials or components for the battery supply chain to the UFLPA Entity List. Such a listing may adversely impact our ability to source necessary inputs or otherwise adversely impact our operations.
Many factors may influence the widespread adoption of renewable energy generation and demand for our offerings, including, but not limited to, the cost-effectiveness of renewable energy technologies as compared with conventional and competitive technologies, the performance and reliability of renewable energy products as compared with conventional and non-renewable products, fluctuations in economic and market conditions that impact the viability of conventional and competitive alternative energy sources, increases or decreases in the prices of oil, coal and natural gas, continued deregulation of the electric power industry and broader energy industry, policy priorities of different political administrations at the international, federal, state and local level, including the scope of governmental regulations regarding renewable energy generation, and the availability or effectiveness of government subsidies and incentives, including from the IRA.
Many factors may influence the widespread adoption of renewable energy generation and demand for our offerings, including, but not limited to, the cost-effectiveness of renewable energy technologies as compared with conventional and competitive technologies, the performance and reliability of renewable energy products as compared with conventional and non-renewable products, fluctuations in economic and market conditions that impact the viability of conventional and competitive alternative energy sources, increases or decreases in the prices of oil, coal and natural gas, continued deregulation of the electric power industry and broader energy industry, policy priorities of different political administrations at the international, federal, state and local level, including the scope of governmental regulations regarding renewable energy generation as well as government regulations regarding oil, coal and natural gas, and the availability or effectiveness of government subsidies and incentives, including from the IRA and OBBBA.
These challenges can be caused by the absence or inconsistency of the application of rules and methods for the establishment and enforcement of intellectual property rights outside of the United States. For instance, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable for business methods.
These challenges 42 can be caused by the absence or inconsistency of the application of rules and methods for the establishment and enforcement of intellectual property rights outside of the United States. For instance, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable for business methods.
Any changes to government, utility, or electric market regulations or policies that favor electric utilities or other market participants could reduce the competitiveness of battery energy storage products or our digital offerings and cause a significant reduction in demand for our products and services and adversely impact our growth.
Any changes to government, utility, or electric market regulations or policies that favor electric utilities or other market participants could reduce the competitiveness of battery energy storage products or our digital offerings and cause a significant 48 reduction in demand for our products and services and adversely impact our growth.
An increase in interest rates or a reduction in the availability of tax equity, project debt capital, or project financing in the global financial markets could make it difficult for end customers to finance the cost of a battery energy storage system and could reduce the demand for our energy storage solutions.
An increase in interest rates or a reduction in the availability of tax equity, project debt capital, or project financing in the global financial markets could make it difficult for customers to finance the cost of a battery energy storage system and could reduce the demand for our energy storage solutions.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. 55 We and Fluence Energy, LLC conduct our operations and intend to continue to conduct our operations so that we will not be deemed an investment company.
We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act. We and Fluence Energy, LLC conduct our operations and intend to continue to conduct our operations so that we will not be deemed an investment company.
Additionally, there are increasing expectations in various jurisdictions and by customers that companies monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, and otherwise consider a wider range of potential environmental and social matters for their products and value chain.
Additionally, there are expectations in various jurisdictions and by customers that companies monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, and otherwise consider a wider range of potential environmental and social matters for their products and value chain.
In addition, since 47 we are marketing and selling our energy storage products in a nascent market, we have in the past needed and may in the future need to seek the amendment of existing regulations or, in some cases, the creation of new regulations, in order to operate our business in some jurisdictions.
In addition, since we are marketing and selling our energy storage products in a nascent market, we have in the past needed and may in the future need to seek the amendment of existing regulations or, in some cases, the creation of new regulations, in order to operate our business in some jurisdictions.
Prospective customers often undertake a significant internal evaluation process, which may further extend the sales cycle of our energy storage solutions. Because of the long sales cycle, we previously have and may in the future expend significant resources without having certainty of generating a sale.
Prospective customers often undertake a significant internal evaluation process, which has and may in the future further extend the sales cycle of our energy storage solutions. Because of the long sales cycle, we previously have and may in the future expend significant resources without having certainty of generating a sale.
Even if we are not subject to any fines or penalties, any perceived link between our products and Xinjiang, designated entities, or labor practices not in keeping with industry expectations may result in increased costs, affect our business and damage our reputation.
Even if we are not subject to any fines or penalties, any perceived link between our products and Xinjiang, designated entities, or labor practices not in keeping with industry expectations may result in increased costs, 28 affect our business and damage our reputation.
Potential issues associated with implementation of these technology initiatives has previously and could reduce the efficiency of our operations in the short term. The efficient operation and successful growth of our business depends upon functional and efficient systems, including our financial, information technology, operating, and other systems.
Potential issues associated with implementation of these technology initiatives has previously and could in the future reduce the efficiency of our operations in the short term. The efficient operation and successful growth of our business depends upon functional and efficient systems, including our financial, information technology, operating, and other systems.
If the estimates and assumptions we use to determine the size of our total addressable market are inaccurate, our future growth rate may be affected, and the potential growth of our business may be limited. Market estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate.
If the estimates and assumptions we use to determine the size of our total addressable market are inaccurate, our future growth rate may be affected, and the potential growth of our business could be limited. Market estimates and growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may prove to be inaccurate.
The accounting for our business is subject to change based on the evolution of our business model, interpretations of relevant accounting principles, enforcement of existing or new regulations, and changes in policies, rules, regulations, and interpretations, of accounting 56 and financial reporting requirements of the SEC or other regulatory agencies.
The accounting for our business is subject to change based on the evolution of our business model, interpretations of relevant accounting principles, enforcement of existing or new regulations, and changes in policies, rules, regulations, and interpretations, of accounting and financial reporting requirements of the SEC or other regulatory agencies.
Such 31 issues may, and from time to time have, result in financial losses, including losses resulting from our failure to deliver or install our energy storage solutions on a contractually agreed timeframe, or losses resulting from agreed warranty or indemnity terms.
Such issues may, and from time to time have, result in financial losses, including losses resulting from our failure to deliver or install our energy storage solutions on a contractually agreed timeframe, or losses resulting from agreed warranty or indemnity terms.
If any such failure of our information technology systems or data integrity were to result in the theft, corruption or other harm to the data or operations of our customers, our ability to retain and attract partners or customers may be harmed.
If any such failure of our information technology systems or data integrity were to result in the theft, corruption or other harm to the data or operations of our customers, our ability to retain and attract customers may be harmed.
We ourselves have a relatively limited operating history as an independent entity and therefore must project how our solutions will perform over the estimated warranty period and the estimated reserve may have material changes.
We have a relatively limited operating history as an independent entity and therefore must project how our solutions will perform over the estimated warranty period and the estimated reserve may have material changes.
Among other renewable energy market trends, we have seen and expect to continue to see our business results be driven by declines in the cost of generation of renewable power, decreases in the cost of manufacturing battery modules and cells, customer needs for energy storage products and related services and digital applications, commercial, legal, and political pressure for the reduced use of and reliance on fossil fuels and electric power generation that relies on fossil or other non-renewable fuels, regulatory and governmental incentives towards reduced use of fossil fuels and increased use of renewable energy and energy storage solutions, including through the IRA, and a rapidly growing and evolving global energy storage market driven by increasing demand from C&I customers, IPPs, developers, utilities, and grid operators.
Among other renewable energy market trends, we have seen and expect to continue to see our business results be driven by declines in the cost of generation of renewable power, decreases in the cost of manufacturing battery modules and cells, customer needs for energy storage products and related services and digital applications, commercial and legal, and in some jurisdictions political pressure for the reduced use of and reliance on fossil fuels and electric power generation that relies on fossil or other non-renewable fuels, regulatory and governmental incentives towards reduced use of fossil fuels and increased use of renewable energy and energy storage solutions, including through the IRA and OBBBA, and a rapidly growing and evolving global energy storage market driven by increasing demand from C&I customers, IPPs, developers, utilities, and grid operators.
The global markets in which we operate were impacted by the COVID-19 pandemic and could in the future be adversely affected by COVID-19 or other health pandemics, epidemics, or similar public health threats.
The global markets in which we operate were impacted by the COVID-19 pandemic and could in the future be materially adversely affected by other health pandemics, epidemics, or similar public health threats.
On such date that AES Grid Stability and its affiliates are no longer bound by the exclusivity terms of this storage core frame agreement, AES may decide to explore different energy storage suppliers and we may see a negative impact to our aggregate order volume and revenues from decreased sales with AES and there may be a corresponding material adverse impact to our business, financial condition, and results of operations.
On such date that AES Grid Stability and its affiliates are no longer bound by the exclusivity terms of this agreement, AES may decide to explore different energy storage suppliers and we may see a negative impact to our aggregate order volume and revenues from decreased sales with AES and there may be a corresponding material adverse impact to our business, financial condition, and results of operations.
Macroeconomic uncertainty or weakness could result in: • reduced demand for our solutions, services, and digital offerings as a result of constraints on spending by our customers or changes in contracting behavior by customers; • decreased ability to forecast operating results and make decisions about budgeting, planning, and future investments; • business and financial difficulties faced by our suppliers, distributors or other partners, including impacts to material costs, sales, liquidity levels, ability to continue investing in their businesses, ability to import or export goods, ability to meet development commitments, and manufacturing capability; • increased overhead and production costs as a percentage of revenue; and • reductions in anticipated order intake and pipeline and other operating metrics.
Macroeconomic uncertainty or weakness could result in: • reduced demand for our solutions, services, and digital offerings as a result of constraints on spending by our customers or changes in contracting behavior by customers; • decreased ability to forecast operating results and make decisions about budgeting, planning, and future investments; • business and financial difficulties faced by our suppliers, distributors or our contract manufacturers, including impacts to material costs, sales, liquidity levels, ability to continue investing in their businesses, ability to import or export goods, ability to meet development commitments, and manufacturing capability; • increased overhead and production costs as a percentage of revenue; and • reductions in anticipated order intake and pipeline and other operating metrics.
In addition, there could be potential trademark infringement claims 38 brought by owners of other registered or unregistered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.
In addition, there could be potential trademark infringement claims brought by owners of other registered or unregistered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names.
Any defects or errors in our offerings, or the perception of such defects or errors, or other performance problems could result in any of the following, each of which could adversely affect our business, financial condition, and results of operations: • expenditure of significant financial and product development resources, including recalls, in efforts to analyze, correct, eliminate, or work around errors or defects; • significant re-engineering costs; • loss of existing or potential customers or partners; • interruptions or delays in sales; • delayed or lost revenue; • delay or failure to attain market acceptance; • delay in the development or release of new functionality or improvements; • negative publicity and reputational harm; • sales credits or refunds; • security vulnerabilities, data breaches, and exposure of confidential or proprietary information; • diversion of development and customer service resources; • breach of warranty claims; • legal claims and regulatory actions under applicable laws, rules, and regulations; and • the expense and risk of litigation.
Any defects, errors, or performance problems in our offerings, or the perception of such them, could result in any of the following, each of which could adversely affect our business, financial condition, and results of operations: • expenditure of significant financial and product development resources, including recalls, in efforts to analyze, correct, eliminate, or work around errors or defects; • significant re-engineering costs; 30 • loss of existing or potential customers; • interruptions or delays in sales; • delayed or lost revenue; • delay or failure to attain market acceptance; • delay in the development or release of new functionality or improvements; • negative publicity and reputational harm; • sales credits or refunds; • security vulnerabilities, data breaches, and exposure of confidential or proprietary information; • diversion of development and customer service resources; • breach of warranty claims; • legal claims and regulatory actions under applicable laws, rules, and regulations; and • the expense and risk of litigation.
Additionally, climate change may adversely impact the demand, price, and availability of insurance that may be available to us and to our customers at project sites.
Additionally, climate change may adversely impact the demand, price, and availability of insurance that may be available to us, our suppliers, and to our customers at project sites.
Although past incidents have not had a material effect on our business operations or financial performance, to the extent that any disruption or security breach results in the compromise of the control plane of one or more of our serviced customer sites, or a loss or damage to our data, or an inadvertent disclosure of confidential, proprietary personal, or customer information, it could cause significant damage to our reputation, affect our relations hips with our customers and strategic partners, lead to claims against us from governments and private plaintiffs, and adversely affect our business.
Although past incidents have not had a material effect on our business operations or financial performance, to the extent that any disruption or security breach results in the compromise of the control plane of one or more of our serviced customer sites, or a loss or damage to our data, or an inadvertent disclosure of confidential, proprietary personal, or customer information, it could cause significant damage to our reputation, affect our relations hips with our customers and strategic partners, lead to claims against us from governments and private plaintiffs (including class actions), and adversely affect our business.
This agreement continues until the earlier of (x) October 27, 2028 and (y) the date on which AES Grid Stability holds less than 10% of the then outstanding voting power. If AES Grid Stability holds at least 20% of the then-outstanding voting power, they must continue to purchase certain of our energy storage offerings exclusively from us.
This agreement continues until the earlier of (x) October 27, 2028 and (y) the date on which AES Grid Stability holds less than 10% of the then outstanding voting power. If AES Grid Stability holds at least 20% of the then-outstanding voting po wer, they must continue to purchase certain of our energy storage offerings exclusively from us.
The payments under the Tax Receivable Agreement are not conditioned upon continued ownership of us by the redeeming or exchanging Founders. 53 Although the timing and extent of future payments could vary significantly under the Tax Receivable Agreement, we anticipate funding ordinary course payments under the Tax Receivable Agreement from cash flow from operations of our subsidiaries, available cash, or available borrowings under any current or future debt agreements.
The payments under the Tax Receivable Agreement are not conditioned upon continued ownership of us by the redeeming or exchanging Founders. 57 Although the timing and extent of future payments could vary significantly under the Tax Receivable Agreement, we anticipate funding ordinary course payments under the Tax Receivable Agreement from cash flow from operations of our subsidiaries, available cash, or available borrowings under any current or future debt agreements.
We could be exposed to litigation, investigations, enforcement actions, monetary liability, including fines, and additional costs that could have a material adverse effect on our business, financial condition, and results of operations. In addition, we could lose customers who have concerns about vendor business practices and traceability of our energy storage solutions.
We could be exposed to litigation, investigations, enforcement actions, monetary liability, including fines, and additional costs that could have a material adverse effect on our business, financial condition, and results of operations. In addition, we could lose customers who have concerns about vendor business practices, responsible sourcing, and traceability of our energy storage solutions.
We may need to incur debt to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. 54 We will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are disallowed.
We may need to incur debt to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. 58 We will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are disallowed.
To effectively manage this complexity, we will need to continue to maintain and revise our operational, financial. and management controls, and our reporting systems and procedures.
To effectively manage this complexity, we will need to 62 continue to maintain and revise our operational, financial. and management controls, and our reporting systems and procedures.
Risks Related to Our Intellectual Property and Technology If we are unable to obtain, maintain, and enforce adequate protection for our intellectual property or if the scope of our intellectual property protection is not sufficiently broad, others may be able to develop and commercialize technology and intellectual property substantially similar to ours, and our ability to successfully commercialize our technology or intellectual property may be adversely affected.
Risks Related to Our Intellectual Property and Technology If we are unable to obtain, maintain, and enforce adequate protection for our intellectual property or if the scope of our intellectual property protection is not sufficiently broad, others may be able to develop, commercialize, and/or receive patents for technology and intellectual property substantially similar to ours, and our ability to successfully commercialize our technology or intellectual property may be adversely affected.
In addition, if we increase the pace or size of acquisitions, we will have to expend significant management time and effort into the transactions and integrations, and we may not have the proper human resources bandwidth to ensure successful integrations and accordingly, our business could be harmed or the benefits of our acquisitions may not be realized.
In addition, if we increase the pace or size of transactions, we will have to expend significant management time and effort into the transactions and integrations, and we may not have the proper human resources bandwidth to ensure successful integrations and accordingly, our business could be harmed or the benefits of transactions we pursue may not be realized.
Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our customers or other partners may regard as significant.
Because of the large amount of data that we collect and manage, it is possible that hardware failures or errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain inaccuracies that our customers or other parties may regard as significant.
Liability under these laws and regulations can be imposed on a joint and several basis and without regard to fault or the legality of the activities giving rise to the claim, including related to past or present contamination of the soil or groundwater associated with leased or owned real property.
Liability under various laws and regulations can be imposed on a joint and several basis and without regard to fault or the legality of the activities giving rise to the claim, including related to past or present contamination of the soil or groundwater associated with leased or owned real property.
In addition, at the time of the IPO, the Company entered into an amended and restated storage core frame purchase agreement with AES Grid Stability, pursuant to which AES Grid Stability may purchase energy storage solutions and related services from us under preferred purchasing conditions.
In addition, at the time of the IPO, the Company entered into an amended and restated storage core frame purchase agreement with AES Grid Stability, pursuant to which AES Grid Stability and its affiliates may purchase energy storage solutions and related services from us under preferred purchasing conditions.
The challenging markets in which we compete for talent has in the past and may in the future cause us to invest significant amounts of cash and equity to attract and retain employees. In addition, a significant portion of our compensation to key senior employees is in the form of stock-related grants.
The challenging markets in which we compete for talent has in the past and may in the future cause us to invest 24 significant amounts of cash and equity to attract and retain employees. In addition, a significant portion of compensation for key senior employees is in the form of stock-related grants.
If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions, continues, and given the complex and evolving nature of EEA and UK privacy laws, this may lead to additional costs, require significant systems changes, may lead customers to demand certain standards due to strict privacy laws, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities and there can be no assurances that we will be successful in our compliance efforts.
If the trend of increasing enforcement by regulators of the strict approach to opt-in consent for all but essential use cases, as seen in recent guidance and decisions, continues, and given the complex and evolving nature of EU, EU Member State and UK privacy laws, this may lead to additional costs, require significant systems changes, may lead customers to demand certain standards due to strict privacy laws, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, and subject us to additional liabilities and there can be no assurances that we will be successful in our compliance efforts.
Our order intake and results of operations may fluctuate across fiscal periods, which could make our future performance difficult to predict and could cause results of operations for a particular period to fall below expectations, resulting in a decline in the price of our Class A common stock.
Our order intake and operating metrics may fluctuate across fiscal periods, which could make our future performance difficult to predict and could cause results of operations for a particular period to fall below expectations, resulting in a decline in the price of our Class A common stock.
It is difficult and costly to track the requirements of every individual authority having jurisdiction over our energy storage solution installations, to design our energy storage solutions to comply with these varying standards, and for our customers to obtain and maintain all applicable necessary approvals and permits.
It is difficult and costly to monitor the requirements of every individual authority having jurisdiction over our energy storage solution installations, to design our energy storage solutions to comply with these varying standards, and for our customers to obtain and maintain all applicable necessary approvals and permits.
Our order intake and results of operations are difficult to predict quarter to quarter and have in the past and may in the future fluctuate significantly. Through fiscal year 2021, we experienced variability in the timing of our order intake, with higher volumes of orders coming the second half of our fiscal year.
Our order intake, operating metrics, and results of operations are difficult to predict quarter to quarter and have in the past and may in the future fluctuate significantly. Through fiscal year 2021, we experienced variability in the timing of our order intake, with higher volumes of orders coming the second half of our fiscal year.
Violation of applicable labor (including forced labor and child labor) laws and standards, human rights standards, environmental standards, safety codes, quality standards, production practices, or other applicable laws and regulations by our manufacturers, vendors, or suppliers or the divergence of a manufacturer’s or supplier’s labor or other work practices from those generally accepted as ethical in the U.S. or other markets in which we do business could attract negative publicity for us and otherwise adversely harm our business.
Violation of applicable labor (including forced labor and child labor) laws and standards, human rights standards, environmental standards, safety codes, quality standards, production practices, or other applicable laws and regulations by our manufacturers, vendors, or suppliers or the divergence of labor or other work practices from those generally accepted as ethical in the U.S. or other markets in which we do business could attract negative publicity for us and otherwise adversely harm our business.
The variability and unpredictability of our operating metrics and quarterly operating results could result in our failure to meet our expectations or those of analysts that cover us or investors with respect to order intake, revenue or other operating results for a particular period.
The variability and unpredictability of our operating metrics and quarterly operating results could result in our failure to 22 meet our expectations or those of analysts that cover us or investors with respect to order intake, revenue or other operating or financial results for a particular period.
For example, in fiscal years 2021 and 2022, as a result of the COVID-19 pandemic, our ground operations at project sites, our manufacturing facilities, and our suppliers and vendors were disrupted by worker absenteeism, quarantines, shortage of COVID-19 test kits, and personal protection equipment for employees, office and factory closures, disruptions to ports and other shipping infrastructure, and other travel and health-related restrictions.
For example, in fiscal years 2021 and 2022, as a result of the COVID-19 pandemic, our ground operations at project sites, our contract manufacturer’s facilities, and our suppliers and vendors were disrupted by worker absenteeism, quarantines, shortage of COVID-19 test kits, and personal protection equipment for employees, office and factory closures, disruptions to ports and other shipping infrastructure, and other travel and health-related restrictions.
If any of our suppliers is unable or unwilling to provide us with contracted quantities in a timely manner at prices, quality levels (including environmental, social, and/or geographic provenance), and volumes acceptable to us and which are contracted for, we would have limited alternatives for supply of such components, and we may not be able to contract for and receive suitable alternative components in a timely manner for our customers, if at all.
If any of our suppliers are unable or unwilling to provide us with contracted quantities in a timely manner at prices, quality levels (including environmental, social, and/or geographic provenance), and volumes acceptable to us and which are contracted for, we will have limited alternatives for supply of such components, and we may not be able to contract for and receive suitable alternative components in a timely manner for our customers, if at all.
We have experienced fluctuations from fiscal period to fiscal period in the past and may experience such fluctuations in the future as a result of fluctuations in our customers’ businesses including as a result of permitting and installation delays. Such permitting and installation delays can impact the timing of orders for our products.
We have experienced fluctuations from fiscal period to fiscal period in the past and may experience such fluctuations in the future as a result of fluctuations in our customers’ businesses including as a result of permitting, approval, commissioning, and installation delays. Such permitting, approval, commissioning, and installation delays can impact the timing of orders for our products.
If our ground operations at project sites, our manufacturing facilities and our suppliers or vendors are so affected in the future, our supply chain, manufacturing and product shipments may be delayed, which could adversely affect our business, operations, and customer relationships.
If our ground operations at project sites, our contract manufacturers’ facilities and our suppliers or vendors are so affected in the future, our supply chain, manufacturing, and product shipments may be delayed, which could adversely affect our business, operations, and customer relationships.
We have encountered and could encounter in the future project delays and resulting liquidated damages claims from customers due to impacts arising from or related to actual or threatened health epidemics, pandemics, similar public health threats on suppliers, customers, or others.
We have encountered and could encounter in the future project delays and resulting liquidated damage claims from customers due to impacts arising from or related to actual or threatened health epidemics, pandemics, similar public health threats on suppliers, customers, or others.
If costs do not continue to decline long term and instead remain steady or increase as in fiscal year 2022, this could adversely affect our ability to increase our revenue, our order intake, and grow our business.
If costs do not continue to decline long-term and instead remain steady or increase as they did in fiscal year 2022, this could adversely affect our ability to increase our revenue, our order intake, and grow our business.
As a result of the factors discussed above, our future financial performance, sales, working capital requirements and cash flow may fluctuate, and our past order intake and results of operations may not be good indicators of future performance.
As a result of the factors discussed above, our future financial performance, sales, working capital requirements and cash flow may fluctuate, and our past order intake, operating metrics, and results of operations may not be good indicators of future performance.
We have experienced and may continue to be exposed to risks associated with engineering and construction, utility interconnection, commissioning and installation of our energy storage solutions, and other project delays, including those related to obtaining government authorizations and permits, issues relating to customer financing, and other contingencies that may arise in the course of completing installations.
We have experienced and may continue to be exposed to risks associated with engineering and construction, utility interconnection, commissioning and installation of our energy storage solutions, and other project delays and disruptions, including those related to obtaining government authorizations and permits, issues relating to customer financing, and other contingencies that may arise in the course of delivering equipment and completing installations.
Complying with such numerous and complex regulations in the event of a data security breach would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.
Complying with such numerous and complex regulations in the event of a data breach or security incident would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability.
We are still evaluating the impact these IRA-related tax 45 incentives and the guidance thereto may have on our financial results. Additionally, we are currently unable to predict whether other proposed changes to tax laws will be enacted and, if so, when they would be effective or the ultimate impact on us or our business.
We are still evaluating the impact these IRA-related tax incentives, the guidance thereto and the OBBBA may have on our financial results. Additionally, we are currently unable to predict whether other proposed changes to tax laws will be enacted 47 and, if so, when they would be effective or the ultimate impact on us or our business.
The timeliness, thoroughness, and quality of the installation-related services performed by our general contractors and their subcontractors in the past have not always met our or our customers’ expectations or standards and in the future may not meet our or our customers’ expectations and standards, and it may be difficult to find and train third-party general contractors that meet our standards at a competitive cost.
The timeliness, thoroughness, and quality of the installation-related services performed by our general contractors and their subcontractors have not always met our or our customers’ expectations or standards and may not do so in the future, and it may be difficult to find and train third-party general contractors that meet our standards at a competitive cost.
Adoption of more stringent such laws and regulations in the future, or increased enforcement of existing laws, could require us to incur substantial costs to come into compliance with these laws and regulations.
Adoption of more stringent such laws and regulations in the future, or novel interpretations or increased enforcement of existing laws, could require us to incur substantial costs to come into compliance with these laws and regulations.
Siemens and AES will be entitled to receive payments under the Tax Receivable Agreement equaling 85% of such amount, or $107.4 million; assuming, among other factors, (i) we will have sufficient taxable income to full utilize the tax benefits; (ii) Fluence Energy, LLC is able to fully depreciate or amortize its assets; and (iii) there are no material changes in applicable tax law.
Siemens and AES will be entitled to receive payments under the Tax Receivable Agreement equaling 85% of such amount, or $117 million; assuming, among other factors, (i) we will have sufficient taxable income to fully utilize the tax benefits; (ii) Fluence Energy, LLC is able to fully depreciate or amortize its assets; and (iii) there are no material changes in applicable tax law.
Delays in the construction of these U.S. domestic supply chains or unanticipated increased costs relating to such supply chains could cause delays to our projects and could result in lower sales, profitability, and potentially canceled contracts. This could harm our relationships with our customers if projects are delayed.
Delays in the construction and ramp up of these U.S. domestic supply chains and U.S. manufacturing or unanticipated increased costs relating to such supply chains could cause delays to our projects and could result in lower sales, profitability, and potentially canceled contracts. This could harm our relationships with our customers if projects are delayed.
We may not be able to obtain letters of credit, surety bonds, or other financial assurances for our projects, if and when needed on favorable terms, if at all, and we may not have sufficient liquidity to satisfy any indemnification obligations thereunder.
Risks Related to Our Financial Condition and Liquidity We may not be able to obtain letters of credit, surety bonds, or other financial assurances for our projects, if and when needed on favorable terms, if at all, and we may not have sufficient liquidity to satisfy any indemnification obligations thereunder.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+4 added−3 removed7 unchanged
Biggest changeWe also use external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes. To date, we are not aware of any risks from known cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect Fluence.
Biggest changeTo date, we are not aware of any risks from known cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect Fluence.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include: briefings from internal security personnel; threat 64 intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
The Cybersecurity Steering Committee convenes quarterly to review the ISMS, identify new material risks and potential treatment plans that are recorded in our cybersecurity 57 risk register, and review the overall health of security key risk indicators, technical key performance indicators, and roadmaps for the expected delivery of new and updated controls.
The Cybersecurity Steering Committee convenes quarterly to review the ISMS, identify new material risks and potential treatment plans that are recorded in our cybersecurity risk register, and review the overall health of security key risk indicators, technical key performance indicators, and roadmaps for the expected delivery of new and updated controls.
While Fluence’s board of directors oversees all enterprise risks, the Audit Committee of our board of directors has primary responsibility for overseeing cybersecurity risks and management’s implementation of our cybersecurity risk management program. The Audit Committee receives quarterly updates from the CISO and CIO.
While Fluence’s board of directors oversees all enterprise risks, the Audit Committee of our board of directors has primary responsibility for overseeing cybersecurity risks and management’s implementation of our cybersecurity risk management program. The Audit Committee receives quarterly updates from CIO.
For more information on potential cybersecurity risks, please see Part I, Item 1A “Risk Factors” for the risk factor entitled “ Our business depends on our ability to implement improvements to and properly maintain and protect the continuous operation and data integrity of our information technology infrastructure and other business systems and the inability to do so may have a material adverse effect on our reputation and harm our business prospects, financial conditions, and operating results.” Cybersecurity Governance Our cybersecurity program and supporting ISMS are governed by our Cybersecurity Steering Committee, which is chaired by our Chief Information Security Officer (“CISO”) and is comprised of other members of our management team, including individuals from our finance, supply chain, product, information technology (“IT”), and legal departments.
For more information on potential cybersecurity risks, please see Part I, Item 1A “Risk Factors” for the risk factor entitled “ Our business depends on our ability to implement improvements to and properly maintain and protect the continuous operation and data integrity of our information technology infrastructure, data, and other business systems and the inability to do so may have a material adverse effect on our reputation and harm our business prospects, financial conditions, and operating results.” Cybersecurity Governance Our cybersecurity program and supporting ISMS are governed by our Cybersecurity Steering Committee, which is includes our Chief Information Officer (“CIO”) and is comprised of other members of our management team, including individuals from our finance, supply chain, product, information technology (“IT”), and legal departments.
These updates typically cover topics such as: overview of material cybersecurity incidents that have occurred since the last update, overview of residual cybersecurity risks to our critical business assets, recent investments in our cybersecurity program, and relevant cybersecurity operational metrics. The Audit Committee will report material updates regarding cybersecurity to the Board.
These updates typically cover topics such as: overview of material cybersecurity incidents that have occurred since the last update, overview of residual cybersecurity risks to our critical business assets, recent investments in our cybersecurity program, and relevant cybersecurity operational metrics. The Audit Committee will report updates regarding cybersecurity to the Board, as it deems appropriate.
Removed
Our CISO, in coordination with our Chief Information Officer (“CIO”) to whom the CISO reports, leads our approach to assessing and managing cybersecurity-related risks.
Added
We also use external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes. We maintain a third-party risk management process for key service providers based on our assessment of their criticality to our operations and respective risk profile.
Removed
Our CISO has over thirty years of experience in IT, with twenty years in information security, as well as a background in software engineering and in leading security engineering teams, technical services and support teams, and sales engineering teams. Our CIO has over 20 years of experience with information technology and cyber security and a background in software engineering.
Added
Cybersecurity oversight and related risk-management activities are currently led by the CIO, who has more than 20 years of experience in information technology, cybersecurity governance, and enterprise-risk management.
Removed
Our CIO has served in lead cyber security roles at global public companies and holds a CISA certification from the Information Systems Audit and Control Association.
Added
The CIO has implemented defense-in-depth cybersecurity frameworks and controls aligned with industry standards such as COBIT and ITIL and has regularly reported on cybersecurity risks and mitigation activities to boards of directors and audit committees throughout his career.
Added
Management is informed about cybersecurity risks through ongoing monitoring and reporting processes, including real-time incident dashboards, periodic risk assessments, and collaboration with internal and external cybersecurity experts. The CIO provides updates on cybersecurity risks, incident response readiness, and mitigation efforts to executive leadership and Fluence’s board of directors through the Audit Committee as part of the Company’s enterprise-risk-management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to our office and co-working spaces, we also lease other facilities in East Huntingdon Township, Pennsylvania, and Long Beach, California. These facilities are primarily for product staging and storage and research and development activities.
Biggest changeOur Erlangen office includes an energy storage testing facility and we have a deployment center in Alamitos, California. In addition to our office and co-working spaces, we also lease other another facility in East Huntingdon Township, Pennsylvania, which is primarily for product staging and storage and research and development activities.
We also lease offices or co-working spaces in Alpharetta, Georgia, Mountain View, California, Irving, California, Houston, Texas, Erlangen, Germany, Berlin, Germany, Zurich, Switzerland, Melbourne and Sydney, Australia, Amsterdam, Netherlands, New Delhi and Bengaluru, India, Singapore, London, United Kingdom, Salerno, Italy, Taipei, Taiwan, and Taguig City, Philippines. Our Erlangen office includes an energy storage testing facility.
We also lease offices or co-working spaces in Alpharetta, Georgia, Mountain View, California, Houston, Texas, Irvine, California, Needham, Massachusetts, Erlangen, Germany, Berlin, Germany, Zurich, Switzerland, Melbourne and Sydney, Australia, Amsterdam, Netherlands, New Delhi and Bengaluru, India, Singapore, London, United Kingdom, Salerno, Italy, Taipei, Taiwan, Minhang District, Shanghai, Tokyo, Japan, and Taguig City, Philippines.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, the results of any current or future legal proceedings cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of claims and litigation.
Biggest changeHowever, the results of any current or future litigation, government investigations, or other regulatory or legal proceedings cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of claims, litigation, government investigations, and other regulatory or legal proceedings.
For a description of our material pending legal contingencies, please see “Note 14 - Commitments and Contingencies”, to the consolidated financial statements included elsewhere in this Annual Report. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 58 PART II
For a description of our material pending legal contingencies, please see “Note 15 - Commitments and Contingencies”, to the consolidated financial statements included elsewhere in this Annual Report. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 65 PART II
LEGAL PROCEEDINGS From time to time, we may be involved in legal proceedings relating to claims that arise out of our operations and business that cover a wide range of matters, including, but not limited to, intellectual property matters, commercial and contract disputes, insurance and property damage claims, labor and employment claims, personal injury claims, product liability claims, environmental claims and warranty claims.
LEGAL PROCEEDINGS From time to time, we may be involved in litigation, government investigations, or other regulatory or legal proceedings relating to claims that arise out of our operations and business that cover a wide range of matters, including, but not limited to, securities litigation, intellectual property matters, commercial and contract disputes, insurance and property damage claims, labor and employment claims, personal injury claims, product liability claims, environmental claims, fire safety claims, and warranty claims.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOur ability to pay dividends was previously restricted by our Revolving Credit Agreement, dated November 1, 2021, which was terminated effective November 22, 2023, was restricted by our ABL Credit Agreement (as defined below), and is currently restricted under our 2024 Credit Agreement, and may similarly be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us or our subsidiaries.
Biggest changeOur ability to pay dividends has historically been restricted by our then-existing credit agreements and is currently restricted under our 2024 Credit Agreement, and may similarly be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us or our subsidiaries.
The performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act. ITEM 6.
The performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act. ITEM 6. RESERVED 67
Recent Sales of Unregistered Equity Securities There were no unregistered sales of our equity securities during the fiscal year ended September 30, 2024, that were not otherwise disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Recent Sales of Unregistered Equity Securities There were no unregistered sales of our equity securities during the fiscal year ended September 30, 2025, that were not otherwise disclosed in a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
Issuer Purchases of Equity Securities None. 59 Performance Graph The following graph compares the total stockholder return from October 28, 2021, the date on which our Class A common stock commenced trading on the Nasdaq Global Select Market through September 30, 2024 of (i) our Class A common stock, (ii) the NASDAQ Clean Edge Green Energy Index Fund (QCLN), and (iii) the NASDAQ Composite Index.
Issuer Purchases of Equity Securities None. 66 Performance Graph The following graph compares the total stockholder return from October 28, 2021, the date on which our Class A common stock commenced trading on the Nasdaq Global Select Market through September 30, 2025 of (i) our Class A common stock, (ii) the NASDAQ Clean Edge Green Energy Index Fund (QCLN), and (iii) the NASDAQ Composite Index.
Our Class B-1 common stock and Class B-2 common stock are not traded in any public market. Holders As of November 19, 2024, there were approximately nine stockholders of record of our Class A common stock, one holder of our Class B-1 common stock, and no holders of our Class B-2 common stock.
Our Class B-1 common stock and Class B-2 common stock are not traded in any public market. Holders As of November 20, 2025, there were 12 stockholders of record of our Class A common stock, one holder of our C lass B-1 common stock, and no holders of our Class B-2 common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

105 edited+34 added−65 removed60 unchanged
Biggest change(c) Amount for the fiscal year ended September 30, 2023 includes $0.9 million in severance costs related to the restructuring plan from November 2022. in thousands Fiscal Year Ended September 30, Change Change % 2024 2023 Net cash provided by (used in) operating activities $ 79,685 $ (111,927) $ 191,612 171 % Less: Purchase of property and equipment (8,115) (2,989) (5,126) 171 % Free Cash Flow $ 71,570 $ (114,916) $ 186,486 162 % 67 Results of Operations Comparison of the Fiscal Year Ended September 30, 2024 to the Fiscal Year ended September 30, 2023 The following table sets forth our operating results for the periods indicated. in thousands Fiscal Year Ended September 30, Change Change % 2024 2023 Total revenue $ 2,698,562 $ 2,217,978 $ 480,584 21.7 % Costs of goods and services 2,357,482 2,077,023 280,459 13.5 Gross profit 341,080 140,955 200,125 142.0 Gross profit margin % 12.6 % 6.4 % Operating expenses: Research and development 66,195 66,307 (112) (0.2) Sales and marketing 63,842 41,114 22,728 55.3 General and administrative 172,996 136,308 36,688 26.9 Depreciation and amortization 11,426 9,835 1,591 16.2 Interest income, net (5,676) (5,388) (288) 5.3 Other income, net (7,276) (6,952) (324) 4.7 Income (loss) before income taxes 39,573 (100,269) 139,842 139.5 Income tax expense 9,206 4,549 4,657 102.4 Net income (loss) $ 30,367 $ (104,818) $ 135,185 129.0 % Total Revenue Total revenue increased by $480.6 million, or 21.7%, in the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023.
Biggest changeResults of Operations Comparison of the Fiscal Year Ended September 30, 2025 to the Fiscal Year ended September 30, 2024 The following table sets forth our operating results for the periods indicated. in thousands Fiscal Year Ended September 30, Change Change % 2025 2024 Total revenue $ 2,262,830 $ 2,698,562 $ (435,732) (16.1)% Cost of goods and services 1,967,045 2,357,482 (390,437) (16.6) Gross profit 295,785 341,080 (45,295) (13.3) Gross profit margin % 13.1 % 12.6 % Operating expenses: Research and development 86,217 66,195 20,022 30.2 Sales and marketing 79,489 63,842 15,647 24.5 General and administrative 163,068 172,996 (9,928) (5.7) Depreciation and amortization 13,348 11,426 1,922 16.8 Interest expense (income), net 4,110 (5,676) 9,786 NM Other income, net (5,375) (7,276) 1,901 (26.1) (Loss) Income before income taxes (45,072) 39,573 (84,645) NM Income tax expense 22,917 9,206 13,711 148.9 Net (loss) income $ (67,989) $ 30,367 $ (98,356) NM NM = not meaningful.
We have established an additional Hardware in the Loop testing facility, which is co-located with our technical team in Bangalore, India. We expect R&D expenses to generally increase in future periods to support our growth and as we continue to invest in R&D activities that are necessary to achieve our technology and product roadmap goals.
We have established an additional Hardware in the Loop testing facility, which is co-located with our technical team in Bangalore, India. We expect R&D expenses to generally increase in future periods to support our growth as we continue to invest in R&D activities that are necessary to achieve our technology and product roadmap goals.
We expect that as we increase both our revenues and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation and amortization. Interest Income, net Interest income, net consists primarily of interest income net of interest expense.
We expect that as we increase both our revenues and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation and amortization. Interest Expense (Income), net Interest expense (income), net consists primarily of interest income net of interest expense.
O ther (Income) Expense, net Other (income) expense, net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities, expense due to estimated payments to be made to related parties under the Tax Receivable Agreement, dated October 27, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC, Siemens Industry, Inc. and AES Grid Stability, LLC (the “Tax Receivable Agreement”), and factoring income from sale of receivables.
O ther Income, net Other income, net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities, factoring income from sale of receivables, and income or expense due to estimated payments to be made to related parties under the Tax Receivable Agreement, dated October 27, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC, Siemens Industry, Inc. and AES Grid Stability, LLC (the “Tax Receivable Agreement”).
Capitalized terms used in this subsection that are not otherwise defined in this subsection are defined in the 2024 Credit Agreement.
Capitalized terms used in this subsection that are not otherwise defined are defined in the 2024 Credit Agreement.
In addition, we are required to maintain (i) from the Amendment Effective Date through December 31, 2025, Total Liquidity of no less than $150,000,000 at any time, (ii) from January 1, 2026 and thereafter, Total Liquidity of no less than $100,000,000 at any time or a Consolidated Leverage Ratio as of the last day of any Measurement Period not to exceed 3.50:1.00, and (iii) certain other financial requirements at each Guarantor Coverage Test Date.
In addition, we are required to maintain (i) from the Amendment Effective Date through December 31, 2025, Total Liquidity of no less than $150,000,000, (ii) from January 1, 2026 and thereafter, Total Liquidity of no less than $100,000,000 or a Consolidated Leverage Ratio as of the last day of any Measurement Period not to exceed 3.50:1.00, and (iii) certain other financial requirements at each Guarantor Coverage Test Date.
Adjusted EBITDA is calculated from the consolidated statements of operations using net income (loss) adjusted for (i) interest income, net, (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) other non-recurring income or expenses. Adjusted EBITDA also includes amounts impacting net income related to estimated payments due to related parties pursuant to the Tax Receivable Agreement.
Adjusted EBITDA is calculated from the consolidated statements of operations using net income (loss) adjusted for (i) interest expense (income), net, (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) other non-recurring income or expenses. Adjusted EBITDA also includes amounts impacting net income related to estimated payments due to related parties pursuant to the Tax Receivable Agreement.
The Form S-3 allows us to offer and sell from time-to-time Class A common stock, preferred stock, depository shares, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell up to 135,666,665 shares of Class A common stock in one or more offerings.
The Form S-3 allows us to offer and sell from time-to-time Class A common stock, preferred stock, depository shares, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 135,666,665 shares of Class A common stock in one or more offerings.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under Part I, Item 1A.
In April 2023, we aggregated and transferred an additional $30.9 million in receivables into a second long term note with the same customer to SCB for proceeds of $27.0 million, upon substantially similar terms as the December 2022 transfer and with a maturity date of December 27, 2024.
In April 2023, we aggregated into an additional long-term note and transferred an additional $30.9 million in receivables with the same customer to SCB for proceeds of $27.0 million, upon substantially similar terms as the December 2022 transfer and with a maturity date of December 27, 2024.
Any credit support under the Credit Support and Reimbursement Agreement will remain in effect after any such termination until such credit support has been replaced by the Company. Currently, the Company has outstanding performance guarantees provided by AES and Siemens Industry and their respective affiliates that guarantee Fluence’s performance obligations under certain contracts with Fluence’s customers.
Any credit support under the Credit Support and Reimbursement Agreement will remain in effect after any such termination until such credit support has been replaced by the Company. 78 Currently, the Company has outstanding performance guarantees provided by AES and Siemens Industry and their respective affiliates that guarantee Fluence’s performance obligations under certain contracts with Fluence’s customers.
Under the terms of the 2024 Credit Agreement, Fluence Energy, LLC and its subsidiaries are currently limited in their ability to pay cash dividends to, lend to, or make other investments in the Company, subject to certain exceptions.
Under the terms of the 2024 Credit Agreement, Fluence Energy, LLC and its subsidiaries are currently limited in their ability to pay cash dividends to, lend to, or make other investments in the 77 Company, subject to certain exceptions.
Adjusted Gross Profit is calculated using gross profit, adjusted to exclude (i) stock-based compensation expenses, (ii) amortization, and (iii) other non-recurring income or expenses. Adjusted Gross Profit Margin is calculated using Adjusted Gross Profit divided by total revenue.
Adjusted Gross Profit is calculated using gross profit, adjusted to exclude (i) stock-based compensation expenses, (ii) depreciation and amortization, and (iii) other non-recurring income or expenses. Adjusted Gross Profit Margin is calculated using Adjusted Gross Profit divided by total revenue.
Pursuant to the Credit Support and Reimbursement Agreement, if AES or Siemens Industry agree to provide a particular credit support (which they are permitted to grant or deny in their sole discretion), they are entitled to receipt of a credit support fee, reimbursement of actual costs and expenses incurred in having a credit support instrument issued and maintained, and reimbursement for all amounts paid to our lenders or other counterparties, payable upon demand.
Pursuant to the Amended and Restated Credit Support and Reimbursement Agreement, if AES or Siemens Industry agree to provide a particular credit support (which they are permitted to grant or deny in their sole discretion), they are entitled to receipt of a credit support fee, reimbursement of actual costs and expenses incurred in having a credit support instrument issued and maintained, and reimbursement for all amounts paid to our lenders or other counterparties, payable upon demand.
Deployed is monitored by management to measure our performance towards achieving project milestones. Assets Under Management Assets under management for service contracts represents our long-term service contracts with customers associated with our completed energy storage system products and solutions. We start providing maintenance, monitoring, or other operational services after the storage product projects are completed.
Deployed is monitored by management to measure our performance towards achieving project milestones. Assets Under Management Assets under management for service contracts represents our long-term service contracts with customers associated with our completed energy storage system products and solutions. In general, we start providing maintenance, monitoring, or other operational services after the storage product projects are completed.
“Risk Factors” and the section entitled “Cautionary Statement Regarding Forward-Looking Information” and in other parts of this Annual Report. The discussion of changes in our financial condition and results of operations from the fiscal year ended September 30, 2023 to the fiscal year ended September 30, 2022 is included in Part II, Item 7.
“Risk Factors” and the section entitled “Cautionary Statement Regarding Forward-Looking Information” and in other parts of this Annual Report. The discussion of changes in our financial condition and results of operations from the fiscal year ended September 30, 2024 to the fiscal year ended September 30, 2023 is included in Part II, Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2023 filed with the SEC on November 29, 2023. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2024 filed with the SEC on November 29, 2024. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future.
These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel-related expenses, including salaries, stock-based compensation, employee benefits, and related personnel technology costs, and factoring discounts on receivables sold.
These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments. Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel-related expenses, including salaries, stock-based compensation, employee benefits and factoring discounts on receivables sold.
Assets under management serves as an indicator of expected revenue from our customers and assists management in forecasting our expected financial performance. 65 Contracted Backlog For our energy storage products and solutions contracts, contracted backlog includes signed customer orders or contracts under execution prior to when substantial completion is achieved.
Assets under management serves as an indicator of expected revenue from our customers and assists management in forecasting our expected financial performance. 69 Contracted Backlog For our energy storage products and solutions contracts, contracted backlog includes signed customer orders or contracts under execution prior to when substantial completion is achieved.
Gross Profit and Gross Profit Margin Gross profit and gross profit margin may vary from quarter to quarter and are primarily affected by our volume fulfilled, product prices, and product costs. Operating Expenses Operating expenses consist of research and development, sales and marketing and general and administrative expenses as well as depreciation and amortization.
Gross Profit and Gross Profit Margin Gross profit and gross profit margin may vary from quarter to quarter and are primarily affected by our volume fulfilled, product prices, product costs and project execution. Operating Expenses Operating expenses consist of research and development, sales and marketing and general and administrative expenses as well as depreciation and amortization.
Refer to “Note 14 - Commitments and Contingencies” to our consolidated financial statements included elsewhere in this Annual Report for more information regarding our contingent obligations, including off-balance sheet arrangements and legal contingencies. Historical Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented.
Refer to “Note 15 - Commitments and Contingencies” to our condensed consolidated financial statements included elsewhere in this Annual Report for more information regarding our contingent obligations, including off-balance sheet arrangements, and legal contingencies. Historical Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented.
These performance guarantees are issued pursuant to the terms of the Credit Support and Reimbursement Agreement. Fluence paid performance guarantee fees to its affiliates in exchange for guaranteeing Fluence’s performance obligations under certain contracts with Fluence’s customers. The guarantee fees are included in “Costs of goods and services” on Fluence’s consolidated statements of operations.
These performance guarantees are issued pursuant to the terms of the Credit Support and Reimbursement Agreement. Fluence paid performance guarantee fees to its affiliates in exchange for guaranteeing Fluence’s performance obligations under certain contracts with Fluence’s customers. The guarantee fees are included in “Cost of goods and services” on Fluence’s condensed consolidated statements of operations.
The increases in tax basis and tax basis adjustments increases (for tax purposes) the depreciation and amortization deductions available to Fluence Energy, Inc. and, therefore, may reduce the amount of U.S. federal, state, and local tax that Fluence Energy, Inc. would otherwise be required to pay in the future, although the IRS may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge.
The increases in tax basis and tax basis adjustments increases (for tax purposes) the depreciation and amortization deductions available to Fluence Energy, Inc. and, therefore, may reduce the amount of U.S. federal, state, and local tax that Fluence Energy, Inc. would otherwise be required to pay in the future, although the Internal Revenue Service may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge.
Upon the completion of our initial public offering (the “IPO”) and a series of organization transactions (collectively with the IPO, the “Transactions”) on November 1, 2021, Fluence Energy, Inc. became a holding company whose sole material assets are the limited liability interests in Fluence Energy, LLC (the “LLC Interests”).
Upon the completion of our IPO and a series of organization transactions (collectively with the IPO, the “Transactions”) on November 1, 2021, Fluence Energy, Inc. became a holding company whose sole material assets are the limited liability interests in Fluence Energy, LLC (the “LLC Interests”).
The Siemens and AES Redemptions resulted in increases in the tax basis of the assets of Fluence Energy, LLC and certain of its subsidiaries.
The redemptions resulted in increases in the tax basis of the assets of Fluence Energy, LLC and certain of its subsidiaries.
Engineering competencies include data science, machine learning, software development, network and cyber security, battery systems engineering, industrial controls, UI / UX, mechanical design, power systems engineering, certification, and more.
Engineering competencies include data science, machine learning, software development, network and cybersecurity, battery systems engineering, industrial controls, UI / UX, mechanical design, power systems engineering, certification, and more.
Professional services consist of audit, legal, tax, insurance, information technology, and other such costs. 62 Depreciation and Amortization Depreciation consists primarily of costs associated with property, plant, and equipment (“PP&E”) and amortization of intangibles consisting of patents, licenses, and developed technology over their expected period of use.
Professional services consist of audit, legal, tax, insurance, information technology, and other costs. Depreciation and Amortization Depreciation consists of costs associated with property, plant, and equipment (“PP&E”) and amortization of intangibles consisting of patents, licenses, developed technology, and capitalized software over their expected period of use.
Once a supplier elects to participate in the program and reaches an agreement with the SCF Bank, the supplier elects which individual invoices to sell to the SCF Bank. We then pay the SCF Bank on the invoice due date. We have no economic interest in a supplier’s decision to sell a receivable to the SCF Bank.
Once a supplier elects to participate in either program and reaches an agreement with the respective SCF Bank, the supplier elects which individual invoices to sell to the respective SCF Bank. We then pay the respective SCF Bank on the applicable due date. We have no economic interest in a supplier’s decision to sell a receivable to the SCF Banks.
Interest income consists of interest earned on cash deposits and interest on customer notes receivables. Interest expense consists primarily of interest on borrowings against notes receivable pledged as collateral, unused line fees and commitment fees related to credit facilities, and amortization of debt issuance costs.
Interest income consists of interest earned on cash deposits and interest on customer notes receivables. Interest expense consists primarily of interest on borrowings 71 against notes receivable pledged as collateral, interest on the 2030 Convertible Senior Notes, unused line fees and commitment fees related to credit facilities, and amortization of debt issuance costs.
As a result of the tax basis adjustment of the assets of Fluence Energy, LLC and its subsidiaries upon the Siemens Redemption and our possible utilization of certain tax attributes, the payments that we may make under the Tax Receivable Agreement will be substantial. The Redemptions will result in future tax savings of $126.4 million.
As a result of the tax basis adjustment of the assets of Fluence Energy, LLC and its subsidiaries upon the redemptions and our possible utilization of certain tax attributes, the payments that we may make under the Tax Receivable Agreement will be substantial. The redemptions will result in future tax savings of $137.6 million.
Siemens and AES will be entitled to receive payments under the Tax Receivable Agreement equaling 85% of such amount, or $107.4 million; assuming, among other factors, (i) we will have sufficient taxable income to fully utilize the tax benefits; (ii) Fluence Energy, LLC is able to fully depreciate or amortize its assets; and (iii) no material changes in applicable tax law.
The Founders will be entitled to receive payments under the Tax Receivable Agreement equaling 85% of such amount, or $117 million; assuming, among other factors, (i) we will have sufficient taxable income to fully utilize the tax benefits; (ii) Fluence Energy, LLC is able to fully depreciate or amortize its assets; and (iii) there are no material changes in applicable tax law.
Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2022”, “fiscal year 2023” and “fiscal year 2024” refer to the fiscal years ended September 30, 2022, September 30, 2023 and September 30, 2024, respectively.
Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2023”, “fiscal year 2024” and “fiscal year 2025” refer to the fiscal years ended September 30, 2023, September 30, 2024 and September 30, 2025, respectively.
Sale of Receivables under Master Receivables Purchase Agreement On February 27, 2024, Fluence Energy, LLC entered into the MRPA, by and among Fluence Energy, LLC and any other seller from time to time party thereto, as sellers and servicers, and Credit Agricole Corporate and Investment Bank ("CACIB"), as purchaser, of certain receivables on an uncommitted basis.
Sale of Receivables under Master Receivables Purchase Agreement On February 27, 2024, Fluence Energy, LLC entered into a Master Receivables Purchase Agreement (the “MRPA”), by and among Fluence Energy, LLC and any other seller from time to time party thereto, as sellers and servicers, and Credit Agricole Corporate and Investment Bank ("CACIB"), as purchaser.
Limitations on the use of Free Cash Flow include (i) it should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures (for example, cash is still required to satisfy other working capital needs, including short-term investment policy, restricted cash, and intangible assets); (ii) Free Cash Flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities; and (iii) this metric does not reflect our future contractual commitments. 66 These non-GAAP measures are intended as supplemental measures of performance and/or liquidity that are neither required by, nor presented in accordance with, GAAP.
With respect to Free Cash Flow, limitations on its use include that (i) it should not be inferred that the entire Free Cash Flow amount is available for discretionary expenditures (for example, cash is still required to satisfy other working capital needs, including short-term investment policy, restricted cash, and intangible assets); (ii) Free Cash Flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities; and (iii) this metric does not reflect our future contractual commitments.
The table is presented in Gigawatts (GW): (amounts in GW) Fiscal Year Ended September 30, 2024 2023 Change Change % Energy Storage Products and Solutions Contracted 5.2 2.2 3.0 136.4 % Service Contracts Contracted 3.0 1.8 1.2 66.7 % Digital Contracts Contracted 8.6 6.2 2.4 38.7 % Deployed Deployed represents cumulative energy storage products and solutions that have achieved substantial completion and are not decommissioned.
The table is presented in Gigawatts (GW): (amounts in GW) Fiscal Year Ended September 30, 2025 2024 Change Change % Energy Storage Products and Solutions Contracted 3.4 5.2 (1.8) (34.6)% Service Contracts Contracted 4.5 3.0 1.5 50.0% Digital Contracts Contracted 6.6 8.6 (2.0) (23.3)% Deployed Deployed represents cumulative energy storage products and solutions that have achieved substantial completion and are not decommissioned.
These cash inflows were partially offset by (i) deferred revenue, inclusive of related parties decreasing in aggregate by $82.0 million, and (ii) receivables, inclusive of trade, unbilled accounts receivable and related parties increasing in aggregate by $393.8 million, due to timing of various customer project billings and cash collections in accordance with contract milestone payment schedules.
Specifically, receivables, inclusive of trade, unbilled accounts receivable and receivables from related parties, increasing in aggregate by $393.8 million and (ii) deferred revenue, inclusive of related parties, decreasing in aggregate by $82.0 million, due to timing of various customer project billings and cash collections in accordance with contract milestone payment schedules.
Refer to “Note 2 - Summary of Significant Accounting Policies and Estimates” to our consolidated financial statements included elsewhere in this Annual Report for further discussion of other accounting policies and estimates including income taxes, goodwill, and loss contracts.
Generally, pre-contract costs are not material. Refer to “Note 2 - Summary of Significant Accounting Policies and Estimates” to our consolidated financial statements included elsewhere in this Annual Report for further discussion of other accounting policies and estimates including income taxes, goodwill, and loss contracts.
For further discussion of the ABL Credit Agreement, refer to “Note 12 - Debt” to our consolidated financial statements included elsewhere in this Annual Report. 2024 Revolver On August 6, 2024 (the "Amendment Effective Date"), Fluence Energy, Inc. entered into Amendment No. 3 to the ABL Credit Agreement (such agreement, as amended, the "2024 Credit Agreement") in order to (i) convert the existing ABL Facility to a senior secured cash flow revolving credit facility in an initial aggregate principal amount of up to $500.0 million (the "2024 Revolver"), (ii) replace Barclays as administrative agent under the 2024 Credit Agreement with Citibank, N.A., and (iii) make certain other modifications to the 2024 Credit Agreement as set forth therein.
For further discussion of the ABL Credit Agreement, refer to “Note 12 - Debt” to our consolidated financial statements included elsewhere in this Annual Report. 2024 Revolver On August 6, 2024 (the "Amendment Effective Date"), Fluence Energy, Inc. entered into Amendment Number Three ("Amendment No. 3") to that certain ABL Credit Agreement by and among Fluence Energy, LLC, as parent borrower, the Company, as parent, the other borrowers party thereto, the other guarantors party thereto, the lenders party thereto, and Citibank, N.A., as administrative agent (as successor to Barclays Bank PLC) (such agreement, as so amended, the "2024 Credit Agreement") in order to (i) convert the existing ABL Facility to a senior secured cash flow revolving credit facility in an initial aggregate principal amount of up to $500.0 million (the "2024 Revolver"), (ii) replace Barclays Bank PLC as administrative agent under the 2024 Credit Agreement with Citibank, N.A., and (iii) make certain other modifications to the 2024 Credit Agreement as set forth therein.
These transactions are treated as secured borrowings as we did not transfer the entire note receivables due from the customer to SCB. We continue to receive quarterly interest income from the customer, while SCB is responsible for collecting payments on the principal balances which represent the initial receivable balances from the customer.
These transactions were treated as secured borrowings as we did not transfer the entire note receivables due from the customer to SCB. We continued to receive quarterly interest income from the customer, while SCB was responsible for collecting payments on the principal balances which represented the initial receivable balances from the customer.
For further discussion of the Revolver, refer to “Note 12 - Debt” to our consolidated financial statements included elsewhere in this Annual Report. 70 Asset-Based Lending Facility On November 22, 2023, the Company entered into an asset-based syndicated credit agreement (the “ABL Credit Agreement”) by and among Fluence Energy, LLC, as parent borrower, Fluence Energy, Inc., as parent, the other borrowers party thereto, the other guarantors party thereto, the lenders party thereto (the “ABL Lenders”), and Barclays Bank PLC (“Barclays”), as administrative agent, which was amended by the Master Assignment and Assumption and Issuing Bank Joinder, effective December 15, 2023 (the “ABL Joinder”), Amendment No. 1, dated April 8, 2024 (“Amendment No. 1”), and Amendment No. 2, dated May 8, 2024 (“Amendment No. 2”), which provided for revolving commitments in an aggregate principal amount of $400.0 million (the "ABL Facility").
Asset-Based Lending Facility On November 22, 2023, the Company entered into an asset-based syndicated credit agreement (the “ABL Credit Agreement”) by and among Fluence Energy, LLC, as parent borrower, Fluence Energy, Inc., as parent, the other borrowers party thereto, the other guarantors party thereto, the lenders party thereto (the “ABL Lenders”), and Barclays Bank PLC, as administrative agent, which was amended by the Master Assignment and Assumption and Issuing Bank Joinder, effective December 15, 2023 (the “ABL Joinder”), Amendment No. 1, dated April 8, 2024 (“Amendment No. 1”), and Amendment No. 2, dated May 8, 2024 (“Amendment No. 2”), which provided for revolving commitments in an aggregate principal amount of $400.0 million (the "ABL Facility").
Net cash flows used in financing activities were $8.7 million for the fiscal year ended September 30, 2024, which were primarily related to (i) $8.5 million in payments related to debt issuance costs for the ABL Facility and 2024 Revolver, (ii) $3.9 million in payments for a previously acquired company (Nispera), and (iii) $1.7 million related to Class A common stock withheld related to settlement of employee taxes for stock-based compensation awards, partially offset by $5.3 million of proceeds from the exercise of stock options during the period.
Net cash flows used in financing activities were $8.7 million for the fiscal year ended September 30, 2024, which were primarily driven by (i) $8.5 million in payments related to debt issuance costs for the ABL Facility and 2024 Revolver, (ii) $3.9 million in payments for a previously acquired company (Nispera), and (iii) $1.7 million related to Class A common stock withheld related to settlement of employee taxes for stock-based compensation awards, partially offset by $5.3 million of proceeds from the exercise of stock options during the period. 80 Critical Accounting Policies and Use of Estimates Our financial statements have been prepared in accordance with GAAP.
These cash outflows were offset by positive effects of utilization of inventory of $432.8 million. 74 Net cash flows used in investing activities were $19.0 million for the fiscal year ended September 30, 2024 which were primarily due to capital expenditures on software of $10.9 million and purchases of property and equipment of $8.1 million.
Net cash flows used in investing activities were $19.0 million for the fiscal year ended September 30, 2024 which were primarily due to capital expenditures on software of $10.9 million and purchases of property and equipment of $8.1 million.
Personnel costs in cost of goods and services includes both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer.
Personnel costs in cost of goods and services include both direct labor costs as well as costs attributable activities related to the transformation of raw materials or component parts into finished goods or the 70 transportation of materials to the customer.
S uch covenants are tested on a quarterly basis and upon the occurrence of other certain restricted payments, the incurrence of indebtedness, certain dispositions, and other specified transactions. As of September 30, 2024, we were in compliance with all such covenants.
S uch covenants are tested on a quarterly basis and upon the occurrence of other certain restricted payments, the incurrence of indebtedness, certain dispositions, and other specified transactions. As of September 30, 2025, we were in compliance with all such covenants. The 2024 Credit Agreement contains customary events of default for this type of financing.
General and Administrative Expenses General and administrative expenses increased by $36.7 million, or 26.9%, in the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023.
General and Administrative Expenses General and administrative expenses decreased by $9.9 million, or 5.7%, in the fiscal year ended September 30, 2025, as compared to the fiscal year ended September 30, 2024.
We have no other continuing involvement or exposure related to the underlying receivables. On September 16, 2024, the $24.3 million of receivables were paid in full, resulting in release of the corresponding note and borrowing.
We had no other continuing involvement or exposure related to the underlying receivables. On September 16, 2024 and December 27, 2024, $24.3 million and $30.9 million of receivables, respectively, were paid in full, resulting in the release of the corresponding notes and borrowings.
On December 8, 2023, AES Grid Stability exercised its redemption right pursuant to the terms of the LLC Agreement with respect to 7,087,500 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of Class B-1 common stock of Fluence Energy, Inc., par value $0.00001 per share (the “AES Redemption” and, together with the Siemens Redemptions, the “Siemens and AES Redemptions”).
On December 8, 2023, AES Grid Stability exercised its redemption right pursuant to the terms of the LLC Agreement with respect to 7,087,500 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of our Class B-1 common stock.
Fluence enters into contracts with utility companies, developers, and commercial and industrial customers. We derive the majority of our revenue from selling battery-based energy storage solutions.
Total Revenue We generate revenue from battery-based energy storage solutions, service agreements with customers to provide operational services related to battery-based energy storage solutions, and from digital application contracts. Fluence enters into contracts with utility companies, developers, and commercial and industrial customers. We derive the majority of our revenue from selling battery-based energy storage solutions.
On June 30, 2022, Siemens Industry, Inc. exercised its redemption right pursuant to the terms of LLC Agreement with respect to its entire holding of 58,586,695 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of Class B-1 common stock of Fluence Energy, Inc., par value $0.00001 per share.
On June 30, 2022, Siemens Industry, Inc. exercised its redemption right pursuant to the terms of the Third Amended and Restated Limited Liability Agreement of Fluence Energy, LLC, dated October 27, 2021, as may be amended from time to time (the “LLC Agreement”) with respect to its entire holding of 58,586,695 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of our Class B-1 common stock, par value $0.00001 per share (“Class B-1 common stock”).
Guarantees are also issued by AES and Siemens, pursuant to the terms of the Credit Support and Reimbursement Agreement, in connection with the supplier chain financing program.
Guarantees are also issued by AES and Siemens Corporation, pursuant to the terms of the Credit Support and Reimbursement Agreement, in connection with one of our supplier chain financing programs (as described in greater detail above).
In addition, we have a limited number of parent company guarantees issued as payment security to certain vendors. The Company also has certain battery purchase obligations and spending requirements under our master supply agreement with suppliers. We are also party to both assurance and service-type warranties for various lengths of time.
The Company also has certain battery purchase 79 obligations and spending requirements under our master supply agreement with suppliers. We are also party to both assurance and service-type warranties for various lengths of time.
The Revolving Credit Agreement was terminated effective November 22, 2023, in conjunction with the entry into the ABL Credit Agreement (as further described below), and at such time, the Company prepaid all amounts outstanding under the Revolver and terminated all commitments thereunder. No penalties were required to be paid as a result of the termination.
The aggregate amount of commitments was $200.0 million. The Revolving Credit Agreement was terminated effective November 22, 2023, in conjunction with the entry into the ABL Credit Agreement (as further described below), and at such time, the Company prepaid all amounts outstanding under the Revolver and terminated all commitments thereunder.
Our key operating metrics focus on project milestones to 64 measure our performance and designate each project as either “deployed”, “assets under management”, “contracted backlog”, or “pipeline”.
The tables below present the metrics in either Gigawatts (GW) or Gigawatt hours (GWh). Our key operating metrics focus on project milestones to measure our performance and designate each project as either “deployed”, “assets under management”, “contracted backlog”, or “pipeline”.
Standard inventory materials (including batteries, enclosures, chillers, and others, which are assembled into “cubes”) that could be used interchangeably on other projects are included in our measure of progress when they are integrated into, or restricted to a specific customer’s project such that we no longer have the ability to direct their use for other purposes.
Standard inventory materials (including batteries, enclosures, chillers, and others, which are assembled into “integrated systems”) are included in our measure of progress when they are restricted to a specific customer’s project such that we no longer have the ability to direct their use for other purposes. Contract costs include all direct material and labor costs related to contract performance.
In some cases, services may be commenced for energy storage solutions prior to achievement of substantial completion. This is not limited to energy storage solutions delivered by Fluence. Assets under management for digital software represents contracts signed and active (post go live).
This is not limited to energy storage solutions delivered by Fluence. Assets under management for digital software represents contracts signed and active (post go live).
The receivables all related to our largest customer in that country. The underlying receivables transferred were previously aggregated into a long term note, with interest, with a maturity date of September 30, 2024.
The underlying receivables transferred were previously aggregated into a long-term note, with interest, and a maturity date of September 30, 2024.
Although the timing and extent of future payments could vary significantly under the Tax Receivable Agreement for the factors discussed above, we anticipate funding payments from the Tax Receivable Agreement from cash flow from operations of our subsidiaries, available cash or available borrowings under any future debt agreements, and such payments are not anticipated to be dependent upon the availability of proceeds of the IPO.
Although the timing and extent of future payments could vary significantly under the Tax Receivable Agreement, we anticipate funding payments from the Tax Receivable Agreement from cash flow from operations of our subsidiaries, available cash or available borrowings under any future debt agreements.
Commitments, Guarantees, Letter of Credits, Surety Bonds, and other Off-Balance Sheet Arrangements As of September 30, 2024, the Company had outstanding bank guarantees, parent guarantees, letters of credit, and surety bonds issued as performance security arrangements for a large number of customer projects.
Commitments, Contingencies, and Off-Balance Sheet Arrangements As of September 30, 2025, the Company had outstanding bank guarantees, parent guarantees, letters of credit, and surety bonds issued as performance security arrangements for a large number of customer projects. In addition, we have a limited number of parent company guarantees and letters of credit issued as payment security to certain vendors.
Our judgement on when costs should be included in the measure of progress has a material impact on revenue recognition. Since the revenue recognition of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion.
Since the revenue recognition of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion.
Should we determine that the Tax Receivable Agreement payment is probable, a corresponding liability will be recorded and as a result, our future results of operations and earnings could be impacted as a result of these matters. 73 Credit Support and Reimbursement Agreement We are party to an Amended and Restated Credit Support and Reimbursement Agreement, dated June 9, 2021, with AES and Siemens Industry (the “Credit Support and Reimbursement Agreement”) whereby they may, from time to time, agree to furnish credit support to us in the form of direct issuances of credit support to our lenders or other beneficiaries or through their lenders’ provision of letters of credit to backstop our own facilities or obligations.
Credit Support and Reimbursement Agreement We are party to an Amended and Restated Credit Support and Reimbursement Agreement, dated June 9, 2021, with The AES Corporation (“AES”) and Siemens Industry (the “Credit Support and Reimbursement Agreement”) whereby they may, from time to time, agree to furnish credit support to us in the form of direct issuances of credit support to our lenders or other beneficiaries or through their lenders’ provision of letters of credit to backstop our own facilities or obligations.
Customer payments are due upon meeting certain milestones as defined in the contract, which are generally consistent with contract-specific phases of a project. Pre-contract costs with no future benefit are expensed in the period in which they are incurred.
Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities. 81 Customer payments are due upon meeting certain milestones as defined in the contract, which are generally consistent with contract-specific phases of a project. Pre-contract costs with no future benefit are expensed in the period in which they are incurred.
Fiscal Year Ended September 30, Change Change % 2024 2023 Energy Storage Products Deployed (GW) 5.0 3.0 2.0 66.7 % Deployed (GWh) 12.8 7.2 5.6 77.8 % Contracted backlog (GW) 7.5 4.6 2.9 63.0 % Pipeline (GW) 25.8 12.2 13.6 111.5 % Pipeline (GWh) 80.5 34.2 46.3 135.4 % (amounts in GW) Fiscal Year Ended September 30, Change Change % 2024 2023 Service Contracts Assets under management 4.3 2.8 1.5 53.6 % Contracted backlog 4.1 2.9 1.2 41.4 % Pipeline 25.6 13.7 11.9 86.9 % (amounts in GW) Fiscal Year Ended September 30, Change Change % 2024 2023 Digital Contracts Assets under management 18.3 15.5 2.8 18.1 % Contracted backlog 10.6 6.8 3.8 55.9 % Pipeline 64.5 24.4 40.1 164.3 % The following table presents our order intake for the fiscal years ended September 30, 2024 and 2023.
Fiscal Year Ended September 30, Change Change % 2025 2024 Energy Storage Products Deployed (GW) 6.8 5.0 1.8 36.0% Deployed (GWh) 17.8 12.8 5.0 39.1% Contracted backlog (GW) 9.1 7.5 1.6 21.3% Pipeline (GW) 35.7 25.8 9.9 38.4% Pipeline (GWh) 122.0 80.5 41.5 51.6% (amounts in GW) Fiscal Year Ended September 30, Change Change % 2025 2024 Service Contracts Assets under management 5.6 4.3 1.3 30.2% Contracted backlog 7.0 4.1 2.9 70.7% Pipeline 29.4 25.6 3.8 14.8% (amounts in GW) Fiscal Year Ended September 30, Change Change % 2025 2024 Digital Contracts Assets under management 22.0 18.3 3.7 20.2% Contracted backlog 12.1 10.6 1.5 14.2% Pipeline 63.7 64.5 (0.8) (1.2%) The following table presents our order intake for the fiscal years ended September 30, 2025 and 2024.
We cannot guarantee that our contracted backlog will result in actual revenue in the originally anticipated period or at all. Contracted backlog may not generate margins equal to our historical operating results.
We cannot guarantee that our contracted backlog will result in actual revenue in the originally anticipated period or at all. Contracted backlog may not generate margins equal to our historical operating results. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control.
The increase in general and administrative expenses for the fiscal year ended September 30, 2024 was primarily attributable to a $38.8 million increase in salaries and personnel-related expenses, including stock-based compensation, due to higher headcount to support our growth, partially offset by a net decrease in other general and administrative expenses.
The increase in sales and marketing expenses for the fiscal year ended September 30, 2025 was primarily attributable to a $12.0 million increase in salaries and personnel-related expenses, including stock-based compensation, due to an increase in headcount to support our growth.
Costs of Goods and Services Cost of goods and services increased by $280.5 million, or 13.5%, in the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023.
Cost of Goods and Services Cost of goods and services decreased by $390.4 million, or 16.6%, in the fiscal year ended September 30, 2025, as compared to the fiscal year ended September 30, 2024.
Net cash flows used in operating activities of $111.9 million for the fiscal year ended September 30, 2023, were primarily due to (i) net loss of $104.8 million, (ii) decreases in accounts payable of $242.3 million due to timing of purchases and payments to various vendors (iii) deferred revenue, inclusive of related parties decreasing in aggregate by $198.4 million, due to timing of various customer project billings and cash collections in accordance with contract milestone payment schedules.
Specifically, deferred revenue, inclusive of related parties, increased in aggregate by $403.6 million, due to timing of various customer project billings and cash collections in accordance with contract milestone payment schedules. • Net cash flows provided by operating activities of $79.7 million for the fiscal year ended September 30, 2024, were primarily due to (i) net income of $30.4 million and (ii) increases in accounts payable of $370.1 million and current accruals and provisions of $160.2 million due to the timing of purchases and payments to various vendors.
When shipping and handling activities are performed after the customer obtains control of the product, we elect to account for shipping and handling as activities to fulfill the promise to transfer the product. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities.
When shipping and handling activities are performed after the customer obtains control of the product, we elect to account for shipping and handling as activities to fulfill the promise to transfer the product.
Our product costs are affected by the underlying cost of raw materials, such as lithium-ion, and components to our solutions including inverters. Our product costs are also affected by technological innovation, economies of scale resulting in lower supply costs, and improvements in production processes and automation.
Our product costs are also affected by technological innovation, economies of scale resulting in lower supply costs, and improvements in production processes and automation.
Depending on the scope of the project we may be responsible for the installation of the equipment. After the equipment is installed, we are responsible for commissioning. The Company recognizes revenue over time as we transfer control of our product to the customer.
Depending on the scope of the project we may be responsible for the installation of the equipment. After the equipment is installed, we are responsible for commissioning.
We have provided certain of our suppliers with access to a supply chain financing program through a third-party financing institution (the “SCF Bank”). This program allows us to seek extended payment terms with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount.
These supply chain financing (“SCF”) programs allows us to seek extended payment terms with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount.
Interest Income, Net Interest income , net was relatively flat in the fiscal year ended September 30, 2024, as compared to the fiscal year ended September 30, 2023. Other Income, Net Other income, n et increased by $0.3 million, or 4.7%, in the fiscal year ended September 30, 2024, as compared to the fiscal year ende d September 30, 2023.
Other Income, Net Other income, n et decreased by $1.9 million, or 26.1%, in the fiscal year ended September 30, 2025, as compared to the fiscal year ende d September 30, 2024.
Personnel-related expenses are the most significant component of our operating expenses and include salaries, stock-based compensation, and employee benefits. We expect to invest in additional resources to support our growth which will increase our operating expenses in the near future.
Personnel-related expenses are the most significant component of our operating expenses and include salaries, stock-based compensation, and employee benefits.
Revolving Credit Facility We entered into a Revolving Credit Agreement for a revolving credit facility (the “Revolver”) on November 1, 2021, by and among Fluence Energy, LLC, as the borrower, Fluence Energy, Inc., as a parent guarantor, the subsidiary guarantors party thereto, the lenders party thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent.
The terms of any future offering under the Form S-3 will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering. 76 Revolving Credit Facility On November 1, 2021, we entered into a credit agreement for a revolving credit facility (the “Revolver”), by and among Fluence Energy, LLC, as borrower, Fluence Energy Inc., as a parent guarantor, the subsidiary guarantors party thereto, the lenders party thereto, and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent (as amended, the “Revolving Credit Agreement”).
Contracted/Order Intake Contracted, which we use interchangeably with “order intake”, represents new energy storage product and solutions contracts, new service contracts. and new digital contracts signed during each period presented.
If our contracted backlog fails to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity. Contracted/Order Intake Contracted, which we use interchangeably with “order intake”, represents new energy storage product and solutions contracts, new service contracts. and new digital contracts signed during each period presented.
If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition. On November 1, 2021, upon the closing of our IPO, we received net proceeds of $935.8 million.
If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations, and financial condition. 2030 Convertible Senior Notes In December 2024, the Company issued $400.0 million aggregate principal amount of 2.25% convertible senior notes due 2030.
The increase was mainly attributable to (i) the expansion of sales of our battery-based energy storage solutions by $454.6 million primarily driven by increased volumes of Gridstack cubes fulfilled and (ii) an increase of services revenue primarily due to additional battery-based energy storage products and solutions being deployed and transitioned to assets under management and increases in augmentation activities performed for certain projects.
The decrease in revenue from our energy storage solutions was partially offset by a $39.1 million increase of services revenue primarily due to additional energy storage solutions being deployed and transitioned to assets under management and increases in augmentation activities performed for certain projects.
Contract costs include all direct material and labor costs related to contract performance. As the cost of the assembled cubes comprise a substantial portion of the total estimated contract costs, our pattern of revenue recognition may vary materially from period to period.
As the cost of the assembled integrated systems comprise a substantial portion of the total estimated contract costs, our pattern of revenue recognition may vary materially from period to period. Our judgment on when costs should be included in the measure of progress may have a material impact on revenue recognition.
Estimating variable consideration requires certain estimates and assumptions, including whether and by how much a project will be delayed or if we will not meet certain performance specifications per the contract. 75 Our contracts generally provide our customers the right to liquidated damages (“LDs”) against Fluence in the event specified milestones are not met on time or equipment is not delivered according to contract specifications.
Estimating variable consideration requires certain estimates and assumptions, including whether and by how much a project will be delayed or if we will not meet certain performance specifications per the contract.
The details of cash provided by (used in) operations for each period are described below: Net cash flows provided by operating activities of $79.7 million for the fiscal year ended September 30, 2024, was primarily due to (i) net income of $30.4 million (ii) increases in accounts payable of $370.1 million due to the timing, as compared to fiscal year 2023, payments to various vendors, and (iii) net positive effects of changes in current accruals and provisions of $160.2 million.
Below we describe in more detail the cash flows (used in) provided by operating activities for each period: • Net cash flows used in operating activities of $145.5 million for the fiscal year ended September 30, 2025, was primarily due to (i) net loss of $68.0 million, (ii) increases in inventory balances of $278.7 million due to cash expenditures on inventory, and (iii) decreases in accounts payable of $119.2 million and current accruals and provisions of $93.6 million due to the timing of purchases and payments to various vendors.
With the exception of the $1.5 million of Tax Receivable Agreement payment recorded as of September 30, 2024, we determined it is not probable additional payments under the Tax Receivable Agreement would be made, given there is no expectation of future sufficient taxable income over the term of the agreement to utilize deductions in the future.
With the exception of an estimated $0.3 million of Tax Receivable Agreement payment realized as of September 30, 2025, we have determined it is not probable payments under the Tax Receivable Agreement would be made, given the projected inability to fully utilize the related tax benefits over the term of the agreement.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−2 removed11 unchanged
Biggest change“Risk Factors” titled “ Significant changes in the cost and/or availability of raw materials and components that are incorporated into our energy storage products could adversely affect our business, results of operations, and future prospects,” and “We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results”, and “An increase in interest rates or a reduction in the availability of tax equity or project debt capital or project financing in the global financial markets could make it difficult for end customers to finance the cost of a renewable energy storage system and could reduce the demand for our energy storage solutions”.
Biggest change“Risk Factors” titled “ Significant changes in the cost and/or availability of raw materials that are incorporated into component pieces of our energy storage products could adversely affect our business, results of operations, and future prospects”, and “We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results”, and “An increase in interest rates or a reduction in the availability of tax equity, project debt capital, or project financing in the global financial markets could make it difficult for customers to finance the cost of a battery energy storage system and could reduce the demand for our energy storage solutions.” Credit Risk Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to us.
Currently, management does not anticipate a material adverse effect in our financial position or results of operations as a consequence of counterparty non-performance. We continuously monitor the creditworthiness of all our counterparties. 76 Foreign Currency Risk Our reporting currency is the U.S. dollar, while certain of our current subsidiaries have other functional currencies, reflecting their principal operating markets.
Currently, management does not anticipate a material adverse effect in our financial position or results of operations as a consequence of counterparty non-performance. We continuously monitor the creditworthiness of all our counterparties. Foreign Currency Risk Our reporting currency is the U.S. dollar, while certain of our current subsidiaries have other functional currencies, reflecting their principal operating markets.
Significant price changes for these raw materials could reduce our operating margins if suppliers increase component prices and we are unable to recover such increases from our customers and could harm our business, financial condition, and results of operations.
Significant price changes for these raw materials could reduce our 82 operating margins if suppliers increase component prices and we are unable to recover such increases from our customers and could harm our business, financial condition, and results of operations.
The safe harbor provided in Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act shall apply to the disclosures contained in this Item 7A. For further information regarding market risk, see Part I, Item 1A.
The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act shall apply to the disclosures contained in this Item 7A. For further information regarding market risk, see Part I, Item 1A.
Interest Rate Risk During fiscal year 2024, we were exposed to interest rate risk in connection with borrowings under the Revolver and the ABL Facility, which bore interest at floating rates. In addition, we are exposed to interest rate risk in connection with borrowings under the 2024 Revolver, which bears interest at floating rates.
Interest Rate Risk We are exposed to interest rate risk in connection with borrowings under the 2024 Revolver, which bears interest at floating rates.
Credit Risk Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to us. Our counterparties for sale of our energy storage solutions and delivery service are customers including conglomerates, utilities / load-serving entities, independent power producers, developers, and C&I customers in the United States and other countries.
Our counterparties for sale of our energy storage solutions and delivery service are customers including conglomerates, utilities / load-serving entities, independent power producers, developers, and C&I customers in the United States and other countries.
Effective August 6, 2024, we entered into the 2024 Credit Agreement, under which borrowings bear a variable interest rate based on the Alternate Base Rate, Term SOFR Rate, Adjusted EURIBOR Rate, or Daily Simple RFR, plus applicable margin (each as defined in the 2024 Credit Agreement).
Pursuant to the 2024 Credit Agreement, borrowings bear a variable interest rate based on the Alternate Base Rate, Term SOFR Rate, Adjusted EURIBOR Rate, or Daily Simple RFR, plus applicable margin (each as defined in the 2024 Credit Agreement). As of September 30, 2025, there are no cash borrowings under the 2024 Revolver. 83
Removed
Effective November 22, 2023, we terminated the Revolver and entered into the ABL Credit Agreement, under which borrowings bore a variable interest rate based on the Adjusted Term SOFR Rate, Alternate Base Rate, Adjusted EURIBOR Rate, or Adjusted Daily Compounded CORRA Rate, plus applicable margin depending on available excess availability (each as defined in the ABL Credit Agreement).
Removed
As of September 30, 2024, there are no cash borrowings under the 2024 Revolver. 77

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