Bloom Energy Earnings Call

Investment Analysis Clubs Saul’s Investing Discussions
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If you’ve not read the transcript let me encourage you to do so. I wish to highlight just one remark from the Q&A:

David Arcaro
Morgan Stanley, Research Division "…I was wondering, as you look to ramp up your scale significantly here, could you also speak to how you’re seeing the supply chain and its ability to ramp with you? We’ve seen labor, as an example, become a constraint elsewhere…"

K. Sridhar
Co-Founder, CEO & Chairman "…if you had come to our factory and seen the few hundred people that we have manufacturing our stacks when we were doing 200 megawatts a year, and if you came at the end of this year when we will be doing almost 10x that amount, the number of employees on the shop floor will be the same. Not almost equal, will be the same…"

This reminds me of Adam Foroughi, CEO of AppLovin who said that their core employment (direct support of AXON2 and the advertising segment). I paraphrase, “…we have about 400 employees. If we 10x the business I expect we will still have about 400 core employees…”

I can understand that with a software business. How Bloom can do that with a manufacturing businesss is astonishing.

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I have to admit, when I read the first part of that quote, I was thinking: ‘Hmm, they’re quoting power generating machine output not in terms of how many machines they’re making, but in terms of the power generation capacity of those machines. So, if they improve the technology such that one machine now produces twice as much power, then of course describing employee efficiency in terms of power, not machines, will double - but the assembly effort should be roughly similar.’

Imagine Ford, instead of saying how many cars X number of employees built last quarter, instead says how many miles can be driven by the cars produced last quarter. And then, if the newer cars had better MPGs, of course that figure would rise even without actually making more cars.

However, what Sridhar said next was most interesting:

That is the innovation we bring into the field, knowing that for us, automation and figuring out how to train our existing employees, upskill them as they grow. By the way, most of them happen to be the same employees too. They have upskilled from doing that manual labor to automation.

So, he’s attributing manufacturing automation to this improvement, not power per machine increases. I wish I could have been on the call to ask about this difference explicitly.

That said, the report from BE was very good, and their promises of not being the bottleneck in any Data Center or other project development speaks to not only their production and installation capabilities, but the regulatory environment that their fuel cell product has - better than diesel generatiors. For instance, Bloom says they don’t consume water on an on-going basis (it’s recycled), and the noise level is much less than CCGT (closed cycle gas turbines).

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Smorg. that was a very insightful write up. I like your analogy with Ford as it very clearly illustrates exactly what is being communicated. I must admit, I did not catch this as I read the transcript.

Despite the subtle subterfuge (maybe that’s a bit harsh), BE still looks like a pretty solid investment going forward IMO.

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In quick succession, Fluence Energy followed up Bloom Energy with their results and a substantial share price leap. For those keen to see more of opportunities within this industry here are the results for Fluency. Whilst the reported quarter is nothing to write home about, the re-assurance of the future contracted commitments seemed to be well received…

Fluence Energy
Q2 GAAP EPS of -$0.16 beats by $0.01.

  • Revenue of $464.89M (+7.7% Y/Y) misses by $157.42M.
  • The Company is reaffirming its expectations for fiscal year 2026 as follows:
  • Revenue of approximately $3.2 billion to $3.6 billion with a midpoint of $3.4 billion $3.36B consensus
    • Adjusted EBITDA1 of approximately $40.0 million to $60.0 million with a midpoint of $50.0 million.
    • Annual recurring revenue of approximately $180.0 million by the end of fiscal year 2026.

Share price up ~40%.

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