BE Q3 2024: Maintains Full-Year Guidance Despite SK Deal Shift to 2025
- Diversified Order Pipeline: The management highlighted a robust and diversified order book with opportunities across U.S. commercial & industrial, international markets, and data centers, which supports resilient revenue growth over the long term.
- Rapid Cost Reduction & Innovation: The company is consistently achieving double-digit cost reductions while integrating new product features (such as load following and islanded microgrids) that enhance value proposition and margins.
- Scalable Manufacturing Capacity: Expanded capacity at the Fremont facility—with planned gigawatt-level production and the flexibility to further scale in 6–9 months—positions the company to meet rising and voracious market demand.
- Revenue Variability and Project Timing Risk: The company’s reliance on large, project-based deals means that revenue can be significantly affected by delays or accelerations in project timelines, leading to unpredictable quarter-to-quarter results.
- Dependence on Government Incentives: With a substantial portion of the business historically tied to the ITC, its scheduled phase down poses a risk, even if management views it as a speed bump, because the loss of this boost could dampen near-term demand.
- Uncertain Data Center Deal Timelines: The complex, multiparty negotiations in the data center segment – especially for large orders like the SK Eternix deal – result in uncertain timing for revenue recognition, with expectations for key revenue to shift into 2025 rather than being realized in the current year.
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Full-Year Guidance
Q: What drives full year guidance conviction?
A: Management is confident in meeting guidance based on a strong pipeline and specific Q4 projects, with a view that even large deals such as the SK Eternix order will transition into 2025 revenue. -
2025 Outlook
Q: How does 2025 revenue and margin look?
A: Management sees a robust U.S. commercial pipeline and expects solid margins as both traditional projects and emerging data center opportunities gain traction, though data center news will likely come early next year. -
ITC Expiry Impact
Q: Are customers worried about ITC phasing down?
A: Though ITC has supported past business, management noted that about 40% of revenue no longer depends on it and that its absence is merely a “speed bump” given the inherent demand for reliable power. -
Cost Reduction Timeline
Q: What is the plan for cost reductions?
A: The focus remains on achieving double-digit cost reductions through improved product generations and operational efficiencies, ensuring both enhanced margins and competitiveness. -
Manufacturing Capacity
Q: Why expand Fremont manufacturing capacity?
A: The capacity expansion is aimed at meeting rapidly growing demand, with the flexibility to add another gigawatt quickly if needed, demonstrating strong execution capability. -
SK Long-Term Potential
Q: What is the long-term view with SK?
A: Management highlighted a steady performance with SK and sees potential for larger orders driven by AI and other market needs, emphasizing Korea as a key strategic market. -
Project Financing Significance
Q: How important is project financing for the 80MW deal?
A: Securing financing from a top-tier institution like Korea Development Bank underscores the creditworthiness of the deal and validates Bloom’s technology and execution track record. -
Sales Process Adjustments
Q: Are new sales processes impacting cycle length?
A: Adjustments to the sales team and processes are expected to shorten long cycle times after initial large deals, paving the way for a more efficient negotiation in future projects. -
Receivables Factoring Query
Q: Does factoring include the AWS-related receivable?
A: Although specifics aren’t detailed, management confirmed confidence in collecting the SK receivable before year-end, indicating strong cash flow management. -
Installation Bottlenecks
Q: Are there downstream installation bottlenecks?
A: Installation has been streamlined using prefabricated skids, enabling power-up in as little as a week, though permitting and local inspections can vary. -
Pricing Strategy
Q: How is pricing approached versus gas turbines?
A: Bloom emphasizes that its unique value – including rapid load following and microgrid capabilities – justifies its premium compared to conventional natural gas turbines. -
SK Localization Benefits
Q: Does local manufacturing in Korea boost wins?
A: Through a joint venture with SK, localized assembly mitigates tariff impacts and strengthens the competitive position, though core technology remains controlled by Bloom.
Research analysts covering Bloom Energy.