FLNC Q3 Deep Dive: Orders Rebound, Data Center Pipeline Expands, Supply Chain Challenges Persist

Electricity storage and software provider Fluence (NASDAQ:FLNC) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 15.2% year on year to $1.04 billion. On the other hand, the company’s full-year revenue guidance of $3.4 billion at the midpoint came in 5% above analysts’ estimates. Its GAAP profit of $0.10 per share was 50.2% below analysts’ consensus estimates.

Is now the time to buy FLNC? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Fluence Energy’s third quarter results were shaped by both operational setbacks and rising demand for energy storage solutions. While the company’s revenue fell short of Wall Street’s expectations due to production delays at its Arizona manufacturing facility, management pointed to a record $1.4 billion in new orders and a growing project backlog. CEO Julian Jose Marquez acknowledged the impact of labor shortages on output but noted, “We have implemented corrective actions. Production is improving, and we are confident in meeting delivery commitments.”

Looking ahead, management is focused on capitalizing on accelerating demand for large-scale storage, especially from data centers and long-duration renewable projects. The company’s guidance reflects expectations of significant backlog conversion and expanding margins as production issues are resolved and new products, like Smartstack, gain traction. CFO Ahmed Pasha emphasized investment plans to strengthen the domestic supply chain and meet compliance requirements, stating, “Our strong liquidity gives us confidence to make investments that will grow our business.”

Key Insights from Management’s Remarks

Fluence Energy’s management cited three main factors impacting the quarter’s performance and future outlook: manufacturing delays, surging pipeline demand, and evolving supply chain strategy.

• Manufacturing delays in Arizona: Delays at the Arizona enclosure facility, caused by slower-than-expected staffing ramp, directly limited product deliveries and revenue recognition in the quarter. Management reported that corrective actions have led to higher staffing and throughput, supporting confidence in meeting future commitments.
• Record order intake: The company secured $1.4 billion in new orders, with strong contributions from Australia and the signing of a landmark 4 gigawatt-hour project in Europe. This influx drove the backlog to $5.3 billion, with expectations for further growth as demand accelerates for both domestic and international projects.
• Surging data center demand: Management highlighted a sharp increase in inquiries and pipeline opportunities from data center operators, citing over 30 gigawatt-hours of potential projects. These customers are drawn by the Smartstack platform's density and reliability, with U.S. demand leading but global interest rising.
• Product innovation with Smartstack: The newly launched Smartstack product, designed for high-density, flexible deployment and lower total cost of ownership, is expected to account for a majority of new orders. Smartstack’s adaptability to customer requirements and safety features are positioned as key differentiators.
• Supply chain and regulatory compliance: To reduce risk and meet U.S. domestic content regulations, Fluence secured a second compliant battery cell supplier and continues to negotiate for full compliance at its Tennessee facility, including a potential acquisition. Management views a diversified supplier base as critical for future growth and regulatory adherence.

Drivers of Future Performance

Fluence Energy’s near-term growth will be shaped by the pace of backlog execution, continued manufacturing recovery, and demand from emerging data center and renewable markets.

• Backlog conversion and project execution: Management expects the sizable project backlog to drive revenue growth, with a focus on fulfilling delayed orders and ensuring operational stability at key U.S. manufacturing sites. Timely delivery is seen as essential to capturing market opportunities and maintaining customer trust.
• Expanding data center and renewable demand: Rising demand for large-scale storage from data centers and long-duration renewable projects is expected to fuel new bookings, particularly in the U.S. and Europe. Fluence aims to leverage Smartstack's high-density capabilities to win contracts in these segments, though the timing of revenue recognition remains uncertain.
• Domestic content and regulatory compliance: The company’s ability to meet U.S. domestic content rules and secure compliant battery supply will be critical for accessing government incentives and winning regulated contracts. Management highlighted ongoing investments in supply chain resilience and compliance as a strategic priority, with potential margin implications depending on final supplier arrangements.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will focus on (1) the stabilization of output at Fluence’s Arizona and other U.S. manufacturing facilities, (2) the pace of Smartstack adoption in data center and long-duration storage markets, and (3) concrete progress toward full domestic content and regulatory compliance—including updates on the Tennessee supplier negotiations. Any shift in customer mix, contract wins in emerging sectors, or further supply chain disruptions will also be closely monitored as signs of execution and competitive positioning.

Fluence Energy currently trades at $16.69, up from $15.80 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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