Good morning, and welcome to Fluence Energy's second quarter earnings call. Joining me on this morning's call are Julian Nebreda, our President and Chief Executive Officer, and Ahmed Pasha, our Chief Financial Officer.

A copy of our earnings presentation, press release, and supplementary metrics sheet covering financial results, along with supporting statements, schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the Investor Relations section of our website at fluenceenergy.com. During the course of this call, Fluence management may make certain forward-looking statements regarding various matters related to our business, including, but not limited to, statements related to our future financial and operational performance, future market growth and related opportunities, anticipated growth in business strategy, liquidity and access to capital, expectations related to pipeline, order intake, and contracted backlog, future results of operations, the impact of the One Big Beautiful Bill Act, projected costs, beliefs, assumptions, prospects, plans, and objectives of management, and the timing of any of the foregoing.

Such statements are based upon current expectations and certain assumptions and are therefore subject to certain risks, uncertainties, and other important factors which could cause actual results to differ materially. Please refer to our SEC filings for more information regarding these risks, uncertainties, and important factors.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information.

This call will also reference non-GAAP measures that we view as important in assessing the performance of our business, including adjusted EBITDA, adjusted gross profit, and adjusted gross profit margin. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is available in our earnings materials on the Investor Relations website.

Following our prepared remarks, we will conduct a question-and-answer session with our team. Thank you very much.

I'll now turn the call over to Julian.

Thank you, Chris, and welcome to everyone joining us today. Turning to slide four.

Since our February call, we made meaningful progress on order intake, our US domestic supply chains, and our product roadmap as we position Fluence to capture expanding global demand for energy storage. Our business model keeps us close to customers so we can anticipate their needs early and respond quickly with the right products, applications, and commercial structures.

This morning, I'll highlight our momentum across the business, and then Ahmed will review our financial results for the quarter and our current fiscal '26 outlook. Here are the key highlights for the quarter.

First, order activity is accelerating versus fiscal '25. As of today, we signed approximately $2 billion of orders this year, which is double the amount signed through the same period last year.

Our record backlog was $5.6 billion at the end of the second quarter, and we expect it to grow further based on execution so far this year. Second, second quarter adjusted gross margin was 11.1%, which is within our full-year expectation of 11% to 13%, a meaningful improvement versus Q1 and more reflective of the disciplined execution we deliver historically.

Third, based on our first-half performance and visibility into the remainder of the year, we are reaffirming our fiscal '26 guidance for revenue, ARR, and adjusted EBITDA. Fourth, we ended the quarter on March 31st with approximately $900 million of total liquidity, reinforcing our strong financial position.

Please turn to slide five for more details on order intake. Our expanded commercial effort is translating into stronger conversion into signed orders.

During the quarter, higher lithium prices temporarily slowed some customers' decisions, but momentum reaccelerated as prices stabilized. For third quarter to date, we have signed over $600 million of additional orders.

For the first seven months of this fiscal year, order intake totals approximately $2 billion, and we expect the total for all of fiscal '26 to significantly exceed the level from fiscal '25. Most of the orders this year have come from our core customer segments: developers and utilities.

It is important to note that 50% of our orders this year come from new customers, a signal of the early results from our expanding commercial effort. Please turn to slide six as I detail our progress with new customer segments.

Since our February call, we executed master supply agreements with two major hyperscalers. The selection process for both of these MSAs was subject to multiple rounds of review, and in each case, Fluence was chosen after meeting criteria specific for each customer.

In one case, the customer's process began with 26 different BESS vendors, and Fluence was the first to complete all qualifications to sign a global MSA. In the other case, the customer had requirements which made it hard for many competitors to comply with.

In both cases, we believe Fluence's understanding of customer requirements, rapid response time, and differentiated products were key in driving this engagement. These MSAs establish Fluence as a qualified supplier, positioning us to bid on expected near-term data center projects for both hyperscalers.

With the additional progress with one of these customers over the past few months, we expect to sign the initial order from one of their data center projects within the third quarter. In addition, since our prior call, we have successfully developed a proprietary solution to handle the extreme power usage fluctuations experienced in data centers.

Fluence excels at this based on our deep experience with advanced controls and track record managing fast-response systems. Based on our discussions, we believe these capabilities will be an important differentiator for data center customers concerned with quality of power.

Finally, we're seeing increasing interest in SmartStack for applications requiring longer-duration energy storage. SmartStack's density provides a competitive advantage for these applications because of its smaller footprint.

Please turn to slide seven as I discuss our growing pipeline. A key piece of our commercial strategy has been the growth of our pipeline, which has increased by 35% so far this fiscal year.

We're seeing opportunities in the US market beginning to outpace our other markets, with projects concentrated in California and Arizona, as well as the MISO markets in the Midwest. Most of the growth is from our core customer base, as I mentioned earlier, but also in part by new customer segments, including data centers and other large energy users increasingly adopting storage solutions.

Since our last call, our data center pipeline has increased by over 30%, including projects from both major hyperscalers I just discussed. We expect data center projects to make an increasing contribution to order intake during the fourth quarter of this year, building on the initial order we expect in the next few weeks.

Fluence's business model is intended to keep us close to customers, which we believe puts us in a privileged position to spot evolving needs early and to respond quickly. That insight informs our product design, the applications we support, and the technical, operational, and commercial terms our customers require, backed by a sales organization with deep, long-standing relationships.

In short, we have positioned Fluence to be on the leading edge of BESS. We view the components we use as commodities, which we integrate into finished products to meet customer needs.

Combined with our long-standing technical expertise and hands-on experience and our deep understanding of different markets around the world, we believe Fluence is uniquely positioned to deliver and help our customers maximize the benefits of investing in battery projects. We have evolved our products to accommodate a growing number of customer demands, including market-leading density, digital solutions optimizing operations and profitability, reduced total cost of ownership, large-scale fire testing, and industry-leading reliability.

Fluence was also the first to offer a complete US domestic supply chain, an important advantage for our US customers. We offer a one-stop solution, from early project development through delivery and installation and continuing over the full operating life of each project.

We combine in-house EPC expertise with a dedicated service organization that optimizes performance and extends asset life, resulting in industry-leading operational metrics. Please turn to slide nine for an update on SmartStack.

Product innovation remains another key differentiator for Fluence. SmartStack sets the industry standard for energy density, enabling customers to fit more than 500 megawatt-hours of storage per acre, with additional improvements planned.

We designed SmartStack to lower total cost of ownership through modular architecture, easier maintenance access, and more than 98% reliability, delivering more electricity and more value to our customers. Its flexible design supports a broad range of cell types across multiple manufacturers, including pouch cells commonly used in electric vehicles.

Importantly, SmartStack packaging and modular architecture addresses the density challenges typically associated with pouch format in stationary storage. I'm pleased to report that our first SmartStack has reached substantial completion and commenced commercial operations.

Our growing SmartStack backlog reflects this market's strong interest in our product. Please turn to slide 10 for an update on our domestic supply strategy.

As I just mentioned, we recognized the importance of a US domestic supply chain early. Today, we have US production for all major components, including battery cells from our supplier in Smyrna, Tennessee, which has been operating since '25.

Building on our existing US supply, as we announced in February, we signed an agreement with another source of domestically produced battery cells, beginning in fiscal '27. We believe this incremental capacity strengthens our supply position and supports delivery against our growing order book.

We're also evaluating additional supply options to help support Fluence's growth beyond '27. Our current position gives us flexibility as additional proposed US supply comes online.

Based on our experience, converting EV battery production to BESS cells can take a year or more. When exploring additional proposed supply lines, we plan to evaluate each facility's timeline to first production, its ramp speed, its technical characteristics, and how its location could strengthen and optimize our current US domestic supply network.

Let me also update you on FEOC compliance for our cell supply in Smyrna, Tennessee. AESC closed a deal to sell a majority interest of its facility to Fix Energy, a subsidiary of Lowercarbon Capital.

Ownership changed hands on March 31st, 2026, and the facility continues to produce cells that qualify for tax credits under the One Big Beautiful Bill Act. We moved quickly to establish a relationship with the new owner and have signed a new supply agreement covering the next few years.

We are confident in their plan to sustain the strong production level we've seen this year. Looking ahead, we believe we're well-positioned to benefit from growing diversity in US cell supply and the impact additional capacity may have on battery prices.

Internationally, we competed in markets that have seen meaningful declines in average sales prices for several years, and those lower prices expanded demand by enabling new applications. It's reasonable to expect similar dynamics in the US.

Importantly, we have executed successfully through deflationary pricing cycles before. With an approximate 50% decline in ASPs over the past two years, we more than doubled our adjusted gross margin.

Although we expect ASPs to continue to decline for the balance of fiscal '26, we are forecasting approximately 50% revenue growth with adjusted gross margins in the range of 11% to 13%, reflecting the strength of our execution and operating model. To conclude, we're seeing accelerating demand, improving execution, and expanding opportunity across both our core and emerging customer segments.

With a record backlog, a strengthening US domestic supply position, and a differentiated product platform, we are committed to delivering for customers and creating long-term value for shareholders. With that, I'll turn the call over to Ahmed to discuss our financial results.

Good morning, everyone. Since our previous earnings call, we have continued to capitalize on strong demand trends in our industry while maintaining a disciplined focus on delivering on our fiscal year 2026 commitments.

We also maintained a strong liquidity that provides us flexibility to execute on our growth expectations. More specifically, starting with slide 12, we generated Q2 2026 revenue of $465 million, up 8% year-over-year.

Approximately $80 million of revenue was pushed into Q3 due to two issues. Specifically, roughly half was attributable to a customs issue in Vietnam, with the remainder due to shortage of loading equipment in Spain.

Both issues have since been resolved. The delayed shipments have been received, and we are current on the quarter's deliveries with no further delays.

Also, to confirm, we do not have any material exposures to the Middle East conflict as none of our shipments utilize the Strait of Hormuz. Our adjusted gross profit for the quarter was $51 million, representing an adjusted gross margin of 11.1%.

This result is within our full-year expectations of 11% to 13% and reflects a meaningful improvement from the first quarter level, as well as comparable quarter for fiscal 2025. The primary driver of the improvement was consistent execution and operational discipline across our portfolio.

Adjusted EBITDA for the second quarter was negative $9 million, an improvement of $21 million compared to the second quarter of last year. The improvement reflects higher gross margin, lower operating costs, and $6 million gain from unwinding an FX derivative.

This offset a $6 million loss on the same FX derivative recorded in the first quarter of 2026, with no net year-to-date impact. Turning to slide 13 for an update on our adjusted gross margin progression and how disciplined execution translates to returns for our stakeholders.

As you can see, our rolling 12 months adjusted gross margin is 12.4%, marking two full years of consistent double-digit returns. We believe this progression underscores the durability of our margin profile, even in the dynamic pricing environment.

Importantly, it reflects the product, commercial, and supply chain actions we have taken across the portfolio. These actions position us for continued margin improvement beyond this year.

Turning to slide 14 for an update on our liquidity position. We ended the second quarter with total liquidity of approximately $900 million, which includes approximately $413 million in total cash.

During the quarter, we invested $220 million in inventory to support deliveries that underpin our second half fiscal 2026 revenue. In addition, we will invest approximately $100 million in inventory during Q3 to support second half deliveries.

Liquidity is expected to return to $900 million levels by the fiscal year-end, driven by execution on our backlog and new orders. Bottom line, our liquidity position fully supports delivery of our fiscal 2026 commitments.

Turning to slide 15 for our fiscal year 2026 guidance. We are reaffirming our guidance ranges for revenue, ARR, and adjusted EBITDA, reflecting our strong visibility into the year and continued momentum we see across our business.

More specifically, we expect revenue in the range of $3.2 to $3.6 billion, with a midpoint of $3.4 billion. We expect approximately 70% in the second half, consistent with the weighting of revenue last year.

We expect roughly 30% of second half revenue in Q3 and the remainder in Q4, again, consistent with last year. With all equipment ordered and production tracking as planned, we are confident in delivering on our customer commitments and our full-year revenue goals.

We expect annual recurring revenue, or ARR, to reach approximately $180 million by the end of fiscal 2026, up from $148 million in fiscal 2025. We continue to expect adjusted EBITDA in the range of $40 to $60 million for the full year.

In summary, we are committed to achieving full revenue and profitability outlook for fiscal 2026. We remain laser-focused on ensuring disciplined execution for our customers and delivering value to our shareholders.

With that, I will now turn the call back to Julian for his closing remarks.

Thanks, Ahmed. Let me close with a few key takeaways.

First, strong execution. Our second quarter performance, record $5.6 billion backlog, and on-track production levels support our confidence in our fiscal '26 guidance.

We ended the quarter with approximately $900 million of liquidity, which we believe provides us with the flexibility to fund growth. Second, order momentum accelerating.

Order intake has doubled year-to-date, led by orders from both new and existing customers, an indication of strong demand in the US and the positioning of our business. Third, expanding customer base.

We are in an excellent position to capture a portion of the rapidly expanding data center demand, with the signing of MSAs with two major hyperscalers, after meeting all of their commercial and technical requirements. We expect to execute the first purchase order with one of these customers within the third quarter.

In conclusion, we are positioning our company to continue profitable growth and to deliver value to our customers and shareholders. With that, we're now prepared to take your questions.

Thank you.

Hi, everyone.

Good morning.

Good morning, George.

Good morning.

Thank you for taking my questions. My first one is on the competitive landscape.

How are you viewing the recent trend of some cell manufacturers vertically integrating, and specifically, how are you looking at their push for market share and any impact on pricing? Thank you.

We have seen both CATL and BYD become common and integrate vertically. We have not worked in the past with BYD, but we have worked with the CATL.

It hasn't really changed the intensity of the market, if you tell me the truth. The ability to meet customer needs at a reasonable price hasn't changed effectively.

We continue. We're growing our backlog.

We're growing our winning projects the same as we are. We feel confident it hasn't really made a big difference in the competitive environment.

We attracted 50% are new sales and new customers. I don't see it as a challenge.

It's nothing new, by the way. It has happened in the past.

The change of CATL was big, but not a major change in the competitive landscape from our point of view.

Thank you, and maybe as a follow-up. First, congrats on the two hyperscaler MSAs.

You did this a little bit, but if you could pull back the curtain a bit on the mechanics of those wins. Specifically what did the validation process look like, and what do you think was the primary differentiator for you that allowed you to win those?

Thank you.

Two things. We went through a very strict commercial and operational and technical, let's say, evaluation.

In one of the cases, there were 26 players. I would say the majority would not make it.

It was a limited number of companies that could meet this very stringent requirement. Our deep knowledge, our deep experience managing fast-response systems in Europe especially, and having the infrastructure and the technology capability to prove their case to them very, very quickly is what made a difference.

We had the labs, we have the technicians. We do this every day.

We know how the applications work. We understand how the grid codes work globally.

That made a big difference, and we were the first one. We believe that will continue to be what will keep us ahead of the market because some of our competitors are still trying to figure out how to meet the criteria.

We're thinking how to exceed what they need and trying to offer them more value and more capabilities, and that's what we bring to the table.

Thanks.

Thank you.

Hey, team. Guys, nicely done.

I got to hand it to you guys, really, kudos here on seeing it through.

In particular

Absolutely, Julian. Look, I wanted to ask you in particular here as it pertains to hyperscaler orders, what specific product are they following up with you guys with?

I know there's been some ambiguity in the marketplaces to whether or not you had the right product and the product positioning for the hyperscalers. To get this kind of confirmation with two, as you guys just flagged, in particular is quite notable.

Can you speak to the specific deployment permutation that they're using you guys with? Is it BTM, FTM?

Is it a capacity support, load shifting? Then also, how do they think about the domestic contents or FEOC compliance?

Is that another nuance that we should consider? Just can you speak to the product and more broadly in these wins,

and

whether this is a leading indicator for further orders like this in coming quarters?

Yeah. To on in terms of what they're they're asking, for different than what I said in the last call, when we had were looking at a portfolio that was a little bit more mixed, now that we concentrated in these hyperscalers, their main need is quality of power, helping them manage the fluctuation of the data centers and helping us do it quickly and effectively.

That's what they need, and that's what we proved with our advanced controls and our products. We can prove very, very quickly to them that we can do it, I would say, if I can brag, better than anyone else, you know?

That's what what is driving this. If you go beyond this, the hyperscalers into kind of the developers' world, it seems to be that or it seems to be what we have experienced more of, speed to power and meeting, grid codes.

It's a little bit more it's a little bit more mixed. With these two hyperscalers has been quality of power the main the main ask.

In terms of domestic content, it wasn't a requirement from them or something they were specifically looking at. We clearly are selling it.

I think that as we have explained to them the competitive position of domestic content, the, value it can create and the tremendous branding opportunity of having a product that is built here by Americans for America here, especially as these two hyperscalers, most of the business is the US, I think they have they are, seriously considering that part. Their objectives were meeting their quality of power, meeting their technical and commercial objectives, and that's where they concentrated on, and that's how we we moved it.

In terms of these two MSAs, they have behind, significant pipeline that we expect that within the next year will convert into, the orders. Not we won't necessarily win them all, but it will be a significant amount of demand that we see behind this that will will convert.

Having these MSAs gives us, puts us in a in a very, very good position to capture. If this is a hurdle in order to compete, not many people can do it.

I think gives us a stamp of approval that when we make an offer, they know that we will deliver what we're promising. So

Awesome, guys. Quickly, Ahmed, can you speak to the slide has this interesting commentary that says you're going to invest additional inventory during the third quarter, but you're going to rebuild liquidity towards $900 million by fiscal year-end?

When you say rebuilding liquidity, is that coming from capital raises in some ways, or how is that just kind of organic cash flow?

Julien, I would not read too much in between the lines there. I think it was more as we invest because we have roughly $2.5 billion of revenue in the second half, we will be delivering that and building up the inventory.

As we deliver the inventory, we will be collecting. At the end of the day, our liquidity will be back at $900 million levels by the end of the year, consistent with what we told you when we gave our guidance for the year.

That was the intent there.

Awesome. Just to clarify from earlier, how many other suppliers have MSAs with you guys?

Wait. We are very, very selective, Julien.

They'll fit in my hand, I think, and I have fingers left. We don't have the specific information, but we understand they're very, very selective, very very few people have been able to do it today.

They're probably working on it, but let's see if they get there.

Got it. All right, awesome.

I'll leave it there. Congrats again, guys.

Speak to you soon.

Thank you. Thank you, Julien.

Hey, Brian. Good morning.

Hey, Julian. Good morning.

Thanks for taking the questions. Congrats on the strong backlog here and the hyperscaler updates.

I had a couple questions, I guess, on the hyperscaler MSAs. I'm not sure how much you can provide, but would love to maybe get some detail around quantification of the size of the deals, how many megawatts, over what years, and is it over multiple sites that are already identified?

Maybe just if you could elaborate a bit more on kind of the scope of these two MSA deals and how meaningful they are in terms of quantitative impact?

Yeah. I'll tell you the majority, or the great majority, of our pipeline is supported by deals that are behind these two MSAs.

That pipeline is several different data centers that they have around the US mostly. That's what it is.

Our current pipeline is 12 gigawatts, so that gives you a sense. We're not providing the financial numbers around it as it's too early and we're competing, as you know.

We are not providing those numbers today. My expectation is that as we end the fourth quarter and bring, hopefully, a good number of these projects, and I can offer numbers including everything, and I will provide you more financial metrics on this.

Okay. Fair enough.

We'll look forward to that. Then maybe just zooming out a little bit, this is a new business for you, and obviously, very, very high growth potential.

What sort of the deployment schedule? I guess, can you help us kind of visualize, as you go into some of these, whether they're RFPs or bake-offs, what's the timeline for submitting your design and your proposal to when one is finalized, and then when you get a PO to when you're going to deliver to site?

Kind of what are the sequence of events and how long is that timeframe?

They're they are in a hurry, generally. Most of these projects, as I said, that that I don't know if I mentioned it, but the pipeline we have, we believe, will convert into orders during the year within a year.

Quicker than generally when a pipeline that comes into our things, and very, very tight schedules for for delivery that, we can meet because we, we've been working on our on our speed for some time. I cannot give you today a specific rule.

This is one-to-one, but generally, I would say a lot faster than the conversion rate we have for our order from pipeline to orders and a lot faster of the conversion rate from orders to revenue than what we do in a normal utility and developer type of thing. Especially with these two hyperscalers.

The case of the developers, and it's a little bit different, as those are more project-tied, that they're looking for permits and stuff, those will probably take a little longer.

Okay. Understood.

Maybe last one, if I could squeeze it in, just on the gross margin bounceback. I know that's been a focus for you guys for a little while, nice to see it back to the range.

Even on the lower volume here in 2Q, that was a pretty impressive gross margin rebound. What does that maybe entail for the back half of the year?

Is there volume leverage and some of the efficiencies from this quarter that can spill over, and is there any potential upward bias to margins as you kind of move through the rest of the year?

I'll give Ahmed to

Hey, Brian. In terms of the gross margin, you're right, an 11% gross margin we earned, which is higher than what we had in Q1.

Year to go, we just reaffirmed our guidance, where we said 11% to 13%, we will be somewhere in the middle of that range for year to go. I think, at least that is our goal, is about 12%, we will definitely be better than what we earned in Q2.

Okay. Thanks, guys.

I'll pass it on.

Thank you, Brian.

Good morning.

Hey, Dylan. Good morning.

Good morning. Just wanted to check on the broader data center pipeline, any updated thinking there in terms of how much of that kind of fits your previous criteria of pipeline versus leads?

Then I noticed there's this 6 gigawatt-hour kind of target for what gets included. Just how did you come up with that number?

Any thinking around there would be helpful. Thanks.

To tell you that our numbers for our pipeline and leads, our pipeline it went up 30% from last quarter. We concentrated a lot of the hyperscalers.

A good driver of that has been the hyperscalers, we're roughly at 12 gigas. Our leads are three times that, essentially the same that we had last quarter.

We converted some into pipeline, and we were able to replenish. That's the rule.

The 6 gigas, I don't know what you're referring to, Dylan, I'm sorry. Oh,

it's on slide six at the bottom. It says classified as systems 6 gigawatt-hours or more.

Let me check. In any event, strong growth, great opportunities here, and I think that by concentrating hyperscalers, we are in a market segment that we expect will transact faster and that we will convert into execution quickly.

Dylan, that 6 gigawatt-hours, it's not a pipeline. That's how we classify an LDES project, anything over 6 gigawatt-hours.

Okay.

Sorry.

That's for

long-duration

storage. Those are long-duration storage, they need to be more than 6 hours in order to be long-duration.

That's the definition of long-duration for our

For us, yeah.

So 6 and more.

That makes sense.

I didn't know. Sorry for that.

My mistake. Then just to follow up on the quarter, it looks like revenue was kind of lower than analyst expectations, even kind of including this $80 million.

I just wanted to check, was there any other seasonality in the quarter or other disruptions beyond the shipping stuff that you guys noted?

No, I'd say there was none. I think if you recall, when we gave our guidance Q4, we did say that about 1/3 of our revenue in the first half and the rest.

Given frankly, we don't give quarterly guidance, I think that was the only reason why there is a difference. Overall, from internal perspective, as I mentioned, the $80 million of this shipping delay was the only reason why we were lower on the revenue for Q2.

The shipment we have already received, we feel pretty good on year to go.

If I can add one point, our indication of where we see revenue divided among quarters is more indicative so you can model it and stuff, but we don't run the company on a quarterly basis, to be very clearly. We run it on a yearly basis.

That's why we intend to meet our yearly numbers. We try clearly to what we indicate to meet it, but we do not provide quarterly guidance, Dylan.

I know it creates some confusion, but it's a way of trying to help you model and, at the same time, keep the flexibility to manage things effectively and efficiently within the company.

Sounds good. Thank you.

Thank you, Dylan.

Hey, Joe. How are you?

Just fine. How are you?

Thanks for taking my question.

Doing great. Thank you.

I wanted to drill down a little bit on two product details. Julian, you said that hyperscalers and data center more broadly tends to be more about power quality.

Is the implication then that we're seeing shorter duration configurations, say, an hour or two as opposed to four? That's my first question.

The second question, just to confirm, thinking about the inverters, are you generally being asked to deliver a response time of 10 milliseconds or less? Those are my two questions.

Thanks.

On the first one, they tend to be shorter duration, you're right. We don't provide anything smaller than 2 hours, 2 hours is what we do, and I guess that's where the market is trending.

They tend to be shorter than that. Even though our main point to the data centers, as we engage with them and the developers, hyperscalers, the great beauty of our technology compared to other technologies that are trying to resolve this is that we can stack business models on top.

We can do quality of power, help them with doing some of the work of solving some of the deficiencies of interconnection or backup, we can help them on soft and voltage, we can help them on many, many fronts. I think that as they are looking at the asset, they are expanding also their view of what this can do.

That was on that point. On the second one, generally, I would say, the second one?

10 10 milliseconds.

Just

asking Ah, 10 yeah, 10 milliseconds. Sorry.

Sorry, got it got it. Sorry, got got confused.

No, the 10, because I was answering the Yeah, it's they they we need to We're not providing the actual number, but it's very short, you know? That's the way I will put it.

We're not providing the actual number because it is proprietary to the solution and to the people we are working with, but it is very, very short. Significantly shorter than a 100 milliseconds we tend to do for transmission systems and European qualifications.

Just to follow up on that very quickly, that would probably, I assume, create the need for inverters with wide-bandgap MOSFETs and some of the exotic stuff, yeah?

You need inverters that can provide that. That capability is very much dependent on the inverter you use.

We work with inverter companies. We have done this in Europe for many years, we know exactly who do this, how they do it, and their strategy very well.

We have that. Our advanced controls work very well with these inverters and have the processing time to ensure the whole system responds on that not behind the inverter as it's supposed.

Okay. Thank you, guys.

Thank you very much.

Pleasure.

Good morning, John.

Hey, good morning, Julian. Nice result.

I was wondering if you could talk about the US storage market continues to grow at a rapid pace. Are you able to provide a sort of where you are on being able in sort of capacity in gigawatt-hours to provide over the next 12 months, and then just sort of thoughts on the roadmap to keeping up with the market growth over the next two or three years?

Yeah.

We see the US market growing, expanding significantly. That's right.

We have, as our domestic products, our flagship solution in the US. We have the AESC capacity.

We entered into with another supplier for additional capacity, and we are looking at additional capacity for the 20 28 going forward. We have enough capacity to cover the pipeline we see and the conversion rate we expected.

We don't provide specifically the numbers, but it's multi-giga capacity, and we have seen no problems getting and we have put in the whole infrastructure that delivers that multi-giga offering in the US with a domestic content offering. We can also import equipment if we need to, but our preference is to do the domestic content solution.

Perfect. Thank you.

Maybe just a quick follow-up. There's been a lot of commentary on the gross margin, but historically, some of the issue has been that OpEx as a percentage of revenue has basically been offsetting the positive gross margin.

Just your thoughts on internal initiatives to get the OpEx number down to drive bottom-line profitability and free cash flow? Thanks.

The operating costs as a percentage of revenue is essentially a function of growth of the top line. If you follow it carefully, you'll see that it's very much follow.

Our costs are very, very stable, and how much of our costs represent out of our revenue depends on how much we can grow revenue. We have an operating leverage that we believe that we can grow this company, that we can keep our costs down at half the rate of growth of our top line, which adds tremendous value.

You'll see it when you look at the numbers. It's very, very clear.

It's an operating leverage formula. Yeah.

Unfortunately, as last year we didn't grow, so that's where the percentage of revenue of cost of revenue was a little higher than what we expected.

To add to

what Julián said,

our goal is that we basically create the operating leverage, and we do. That as the revenue grows, we will maintain that cost discipline, and our cost will be increasing at less than half of the growth in our revenue, as Julian just mentioned.

I think that's our key focus from my perspective.

Thanks so much.

Thank you, John.

Thank you.

Hey, Ameet. How are you?

I'm very well. Thank you, Julian.

Thanks for taking my questions. It looked like ASPs, if we look at revenue and kind of your revenue recognition megawatts for the quarter, were up pretty nicely quarter-over-quarter.

I was just wondering, was there a lot more EPC work this quarter, or is this kind of maybe of the level we should be thinking about for the balance of the year for modeling purposes? I've got one quick follow-up.

Thanks, Ameet. As this number, as you say, moves up and down quarter after quarter based on the mix of the cells, I wouldn't read too much on it.

We are designed to meet our financial objectives independent of where the ASPs go up or down. Our planning assumptions that they will continue coming down.

We are designed to make money and make it successful. I'll say even more, every time we have seen ASPs come down, what happens is that demand expands at a rate that is much bigger than the reduction in revenue that comes out of the lower ASP.

I wouldn't read too much on it. I know that something the analysts care a lot about, but it is not a big driver of our business financial results.

Great. Then, I know you had mentioned earlier in answering one of the kind of questions before about your pipeline is 12 gigawatts.

I think you said that the vast majority of that is data center related. Is that right?

Is it a little bit over half, or is it substantially all of that 12 gigawatt pipeline is data center related? And Oh, yeah.

No,

we have a 12 GW pipeline, all of it is to the data center related. What I said that a great majority was connected to the two MSAs that we just signed.

The 12 GW gigawatt-hours are all of it is data center related, of which the great majority, more than 60, yeah, or more, a good portion of it, I don't want to give a number, supports these two MSAs which we signed.

Understood. Thank you so much.

Yeah.

Hey, thank you. Good morning.

I was wondering, are there other MSA opportunities that you're currently working on? Is that something that you would expect most hyperscalers to be pursuing on the storage front?

We're looking at it. These are the two that had more urgent needs, but we're looking to work with all of them.

We believe the problems are similar and that we can meet their needs with our capability. We hope to work with all of them eventually.

Makes sense. Are there any active now or any sense of timing as to when those opportunities might pop up?

It seemed like they're all very active on the data center side of things,

and

I imagine looking at storage. Is that also a near-term opportunity?

I cannot give you a real sense of timing when they will happen. I think will depends on where they are and what they're doing.

The two that we have signed are people who are very clear what they need. They're in a hurry to win, and they seem to be ahead of the market, if you ask me.

We're working with everybody. We are contacting all of them, working with them, and these two are ahead.

Got it. Great.

Then the 50% proportion of new customers I thought was notable. I was just wondering, could you give any characteristics of kind of who those customers are, what type of customers they are?

Is it the traditional profile of developers and utilities that you would see or any specific locations? Curious if it's a new profile.

I would say this is a result of the great work that Jeff Monday, who joined us as our VP of growth, has done since he arrived. He really had invested significantly in business development, identified all these customers, which are, I would say, we're not the typical who used to work before, but are the developers or utilities that we have not contacted in the past, and now he has made significant progress.

This is a global effort what we're doing, not only in the US, but outside of the US. I would say that, as we said during the call, these are customers that are within our normal or our core customer segments, utilities and developers globally.

Great kudos to our sales organization that has really invested into developing and bringing these new customers into the mix.

Right. Understood.

Thanks so much.

Welcome.

Hey, thanks for fitting me in here.

Just

back on data centers. Hey, good morning.

Could you just talk a little bit, because of the specific product they're looking for in the size, if you could talk about just pricing and margin, how we should think about that on these bigger deals? Then also, my second question, just outside of the US, where do you see pockets of demand?

Then just remind us how margin compares internationally versus the US. Thanks very much, guys.

Yeah.

In terms of data centers, I will say, as we said, duration shorter, and I'll say the margins in line with our average, our guidance of 10% to 15%. That's what we'll say.

Generally, that's what it is. Most of their needs are quality of power, which we do this for grids globally.

We're doing for them here, and I think it works well and very successful. In terms of margins, margins change market per market.

Depends on the competitive environment, we go within our 10% to 15% range, but there are markets that are a little bit more, or they go through it's more competition than others. I will say that markets like the US and the US is probably a little bit on the high side, the UK on the lower side, and then changes market per market.

Our 10% to 15% range works for all these markets.

Hey, Maheep.

Hey, morning, and thanks for the questions, and nice to hear on the MSAs. A question on the MSAs with the hyperscalers.

Do they have any special requirements on the battery types? Is it like the standard batteries you have for the BESS industry or is it high C-rate?

Just curious if on the supply side if you need to make any changes on the cells or think about that. Thanks.

We make any battery great, as well. We make any battery great, the battery is a commodity.

Whatever they need, I think the main driver is density, in short, and that comes out of our packaging, our capabilities. No real need on Clearly, LFP to nobody knows today NMC for many reasons, but brand or supplier is not relevant for them.

Whatever battery we put in our systems, we can make it to great things.

Thanks. Separately, like we saw some battery suppliers proposing high C-rate batteries, which go inside the data center for 800-volt DC.

Is that something of interest or you're exploring,

or

you're looking at outside the data center itself? Thanks.

We're looking at it. Our product roadmap includes among not only this, many other elements that we're looking at to continue improving our offering to data centers and to prove solutions.

One option is this, higher C-rates batteries that will go into the data center. Has some limitations, but it's part of our product roadmap that we have for whether it will happen or not, we'll see.

It's not anytime soon.

Understood. Thank you.

Thanks, Maheep.

Thanks for squeezing me in. Congrats on the great update.

As these data center opportunities convert into reality, how do we think about the ratio watt for watt, meaning the watts of load to the watts of storage? We've seen examples out there of gigawatt data center might need 800 megawatts of batteries,

and examples that could be

a fifth of that, right, depending on their need. What do these projects start to look like right now as we're connecting sort of a data center TAM in gigawatt terms to the storage opportunity TAM that you're converting against it?

Yeah.

Too early to give you a rule of thumb that we can calculate. We clearly have some views, but premature to give you a rule of thumb how to sync a gigawatt, what would technically how many watts is.

We will with time, I think that we'll be able to develop that as it becomes more clear, but today that we cannot do. We have, as I said, a 12 giga pipeline ahead of us, of which we want to convert into orders a good portion of it within the next 12 months, so that's what we're concentrated on.

As we learn more about this and we see how the industry develops, we'll provide you a rule of thumb that will give you a better sense of the whole market.

Got it. That's helpful.

We'll look forward for that. Then on the MSAs, what's the nature of the exclusivity from what you've won?

Like, are there multiple vendors? I couldn't tell if you were answering that in some of the earlier questions.

For those hyperscalers, are you one of a few players, are you exclusive, is that a geographic exclusivity? How do we think of that?

One of a few players. One of a very, very limited number of players, but this is a competitive process.

These are not directed somewhat, at least not yet. Maybe we'll be able to take them there at some point.

There are very limited players and a competitive process as we move forward. Thank you, everybody, for participating today.

We'll be available Chris will be available, I also will be available, and Ahmed, clearly, to answer any questions you may have on the side. Bye-bye.