FCEL Q2 Deep Dive: Data Center Demand, Korean Partnerships, and Restructuring Shape Outlook

Carbonate fuel cell technology developer FuelCell Energy (NASDAQ:FCEL) fell short of the market’s revenue expectations in Q2 CY2025, but sales rose 97.3% year on year to $46.74 million. Its non-GAAP loss of $0.95 per share was 41.7% above analysts’ consensus estimates.

Is now the time to buy FCEL? Find out in our full research report (it’s free).

StockStory’s Take

FuelCell Energy’s second quarter results prompted a significant positive market response, despite missing Wall Street’s revenue expectations. Management attributed the sharp year-on-year sales growth to robust product deliveries in South Korea, particularly module shipments to Goyne Green Energy and new service agreements. CEO Jason Few credited decisive restructuring actions, stating these moves are “lowering costs, sharpening our focus on distributed power generation, and positioning us for investment in technologies and partnerships that can unlock future growth.” The company also emphasized cost control measures and increased focus on its core carbonate power generation platform.

Looking ahead, FuelCell Energy’s outlook centers on scaling its carbonate platform, capitalizing on rising global power demand from AI and data centers, and leveraging policy incentives such as the U.S. investment tax credit. Management sees strong momentum in both U.S. and international data center markets, with Few highlighting the company’s “differentiated position as the only fuel cell manufacturer with demonstrated utility-scale platforms over 10, 20, and 50 megawatts.” The company’s pipeline includes potential large-scale deployments and ongoing innovation in carbon capture and electrolyzer technologies.

Key Insights from Management’s Remarks

Management traced quarterly performance to South Korean module deliveries, expanding data center opportunities, and progress from restructuring efforts, while noting that U.S. tax incentives and global partnerships are shaping the company’s evolving strategy.

• South Korea drives product revenue: The delivery of eight replacement modules to Goyne Green Energy and a new long-term service agreement with CGN in South Korea significantly boosted product and service revenues. Management highlighted South Korea as its most active international market, with 82 modules installed or in backlog and additional partnerships in development.
• Data center market momentum: FuelCell Energy reported a surge in interest from both domestic and international data center developers, including a memorandum of understanding with Inuverse to explore up to 100 megawatts of fuel cell-based power for a planned hyperscale data center in Korea. The company’s modular carbonate platform is positioned as a solution for reliable, always-on power with additional benefits such as thermal energy for cooling.
• Restructuring lowers costs: The company’s recent restructuring plan, implemented in June, has led to a reduction in operating expenses and a sharper focus on distributed power generation. Administrative and research expenses declined, reflecting lower compensation and reduced spending on non-core technology development.
• U.S. policy tailwinds: Management pointed to the reinstated investment tax credit (ITC) for fuel cell technology and the 45Q carbon capture incentive as critical regulatory supports. These incentives are expected to drive adoption among cost-sensitive commercial and industrial customers and accelerate project development.
• Strategic partnerships and financing: Ongoing collaborations with major players such as ExxonMobil for carbon capture, Dedicated Power Partners for data center projects, and Malaysia Marine and Heavy Engineering for electrolyzer technology are expanding the company’s reach. Recent share sales and financing agreements are supporting execution on large projects, particularly in Korea.

Drivers of Future Performance

FuelCell Energy’s guidance is shaped by growing data center demand, manufacturing scale-up, and supportive policy incentives, balanced by ongoing execution risks and the need for additional project financing.

• Scaling to meet data center demand: Management expects continued growth opportunities from rising global data center energy requirements, with a particular focus on converting current memoranda of understanding into firm orders. The company is targeting increased utilization of its Torrington, Connecticut facility, aiming for 100 megawatts in annualized production to achieve positive adjusted EBITDA.
• Policy incentives and market expansion: The U.S. investment tax credit and global carbon capture incentives are expected to support new project wins and customer adoption, especially in distributed generation and industrial segments. The company believes these policies will help reduce customer acquisition costs and improve project economics.
• Execution and financing risks: Management acknowledged that further progress depends on securing commercial offtake agreements, successful capital raises, and timely project delivery. The company is pursuing both individual and portfolio-level financing solutions, particularly for Korean and U.S. data center projects, while monitoring manufacturing ramp-up and cost containment.

Catalysts in Upcoming Quarters

Our analysts will be watching (1) the pace at which FuelCell Energy converts memoranda of understanding, such as with Inuverse, into binding orders for data center projects, (2) execution of scheduled module deliveries in South Korea and expansion of contracts with partners like CGN, and (3) progress toward production scale-up at Torrington to reach positive adjusted EBITDA. Developments in U.S. policy incentives and successful project financing will also be important markers of future performance.

FuelCell Energy currently trades at $5.23, up from $4.21 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

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