FLNC

MKT CAP $294.6MP/E —DIV YIELD —FCF YIELD -39.15%REV TTM $2.6B +7.5%NET INCOME −$80.9MNET CASH $339.3M52W 5.50 – 32.23SEC XBRL · TTM TO Invalid Date

How FLNC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Risks Related to Our Business, Customer Demand, and Growth Our business and customer demand for our offerings depends in part on government incentives and/or regulations relating to or mandating the use of renewable energy and/or energy storage.
Changes or potential changes to government incentives or regulations has and could in the future impact demand for our energy storage solutions, which could lead to adverse effects to our business, operating results, and cash flows.
Federal, state, local, and foreign government bodies provide incentives and/or regulations relating to mandating or encouraging use of renewable energy and/or energy storage to owners, end users, distributors, system integrators, and manufacturers of renewable energy and energy storage products and solutions to promote renewable electricity and energy storage in the form of rebates, tax credits, other financial incentives, procurement requirements and market structures.
The range and duration of these incentives and regulations varies widely by jurisdiction and type of asset involved.
Our customers typically use our energy storage solutions for grid-connected applications wherein power is sold under a power purchase agreement or into an organized electric market.
The reduction, elimination, modification, expiration, or determination of inapplicability of government incentives or regulations related to mandating or encouraging the use of grid-connected renewable electricity and/or energy storage or the potential of any such reduction, elimination, modification, expiration, or determination of inapplicability of government incentives or regulations has and may in the future negatively affect the competitiveness of our offerings the growth of our industry and our business.
Such government incentives and/or regulations may expire on a particular date, end when the allocated funding is exhausted or be reduced or terminated as renewable energy adoption rates increase or as a result of legal challenges, changing policies or priorities, the adoption of new statutes or regulations or changes to existing regulations, new regulatory guidance, or the passage of time.
Reductions, modification, terminations, or determination of inapplicability of government incentives and/or regulations may occur without warning.
Such policies, regulations, and incentives may not continue to exist in current form, or at all.
The reduction, modification, elimination, or expiration or the potential of any such reduction, elimination, modification, expiration, of such government incentives or regulations or determination of inapplicability of such government incentives or regulations has impacted and may in the future impact customer demand for our offerings, may lead to a loss of customers and potential customer projects, and has and may in the future harm our business, operating results, and cash flows.
From time to time, we may pursue acquisitions or other strategic transactions in order to take advantage of potential incentives.
However, any such acquisition or transaction may not be consummated on the timeline we expect or at all, and it may not achieve its intended benefits.
For example, in August 2022, the United States passed the IRA, which included incentives that supported the adoption of energy storage solutions, including a new “technology neutral” Section 48E investment tax credit (the “ITC”) and Section 45Y production tax credit (the “PTC”), changes to the previous Section 48 non-“technology neutral” investment tax credit and Section 45 production tax credit, and the Section 45X Advanced Manufacturing Production Tax Credit (the “AMPC”).
On July 4, 2025, the OBBBA was signed into law, which significantly modified certain provisions of the IRA, including those related to energy storage.
The OBBBA supports energy storage in the United States, as the bill includes long-term continued availability of the ITC for energy storage projects and the AMPC for domestically manufactured cells, modules, and inverters in energy storage systems.
Certain tax credits, notably including the ITC for energy storage, will begin to phase down for projects that start construction (in accordance with Internal Revenue Service (“IRS”) guidance) after 2033.
The prevailing wage and apprenticeship requirements enacted under the IRA continue to apply under the OBBBA for the project owner to receive the full ITC value, and the credit value can be further increased if the project owner also qualifies for a domestic content bonus credit and energy communities bonus credit.
The OBBBA amended the provisions of the domestic content bonus credit for the ITC such that the project owner now must achieve higher minimum domestic content percentage thresholds.
In addition, the OBBBA amended the ITC and AMPC establishing new Prohibited Foreign Entity (“PFE”) restrictions.
The new PFE restrictions apply to virtually all key tax credits under the IRA and come in two forms: (i) for tax years beginning after July 4, 2025, the taxpayer taking the ITC and AMPC tax credit cannot not be a PFE and (ii) for ITC projects that start construction in 2026 and after, and AMPC eligible components that are made and sold in the manufacturing facility’s tax year that begins after July 4, 2025, the ITC eligible project or AMPC eligible component must source a certain percentage of material from non-PFEs (known as “material assistance”), and the percentage of material from non-PFEs increases annually over time.
The OBBBA includes substantive details regarding PFE restriction compliance requirements and requires U.S.
Department of Treasury to issue implementation regulations by December 31, 2026.
There is continuing uncertainty on certain aspects of the IRA and related guidance, the OBBBA and forthcoming related guidance (including with respect to PFE restrictions).
In the past such uncertainty related to the IRA caused certain customers to take an extended period to evaluate, negotiate, and enter energy storage arrangements, which has impacted our business and results of operations.
Current uncertainty related to changes imposed by the OBBBA may in the future similarly cause customers to delay contracting decisions or may cause customers to delay or cancel existing projects as they navigate such uncertainty, which could have a material negative effect on our business and results of operations.
If we are unable to provide energy storage solutions that qualify our customers for the ITC (with or without the domestic content bonus credit) under the OBBBA on the timeline and in such quantities that we currently anticipate, then there may be negative impacts to our reputation, ability to compete in the market, demand from our customers, and our financial condition.
Our competitors may be able to build a more robust domestic supply chain than us and may be able to offer customers U.S. domestic content products in greater quantity, with better pricing, and on a faster timeline than we may be able to if our production of our battery components in the U.S.
(e.g., modules, cells, enclosures, and thermal management systems) is delayed or hindered or otherwise negatively impacted (including through the PFE restrictions under the OBBBA).
Such impacts would adversely impact our brand and ability to compete, and in turn would adversely affect our results of operations.
The full impact of the modifications to the tax credits and PFE restrictions in the OBBBA, its accompanying guidance, and potential changes in law that may apply to our business and operations as well as our customers’ and suppliers’ businesses cannot be known with certainty and we may not recognize the full extent of benefits we currently anticipate, which may materially and adversely impact our business, financial condition, and results of operations.
We are continuing to evaluate the potential overall impact and applicability of these tax credits, as modified by the OBBBA, and any potential future changes in law on our business and operations.
In seeking to achieve growth internationally, we have made and may in the future make investments that, to some extent, rely on governmental incentives and support in a new market.
Governments may not continue to provide sufficient incentives and support to the energy storage industry and the industry in any particular country may suffer significant downturns in the future as the result of changes in public policies or government interest in renewable energy, any of which would adversely affect demand for our energy storage solutions and services.
Several of the rules and regulations we are subject to are not fully defined by the U.S. government at this time, and there are risks related to the interpretations of and assumptions made about such rules and regulations by us and others as a result.
Changes in the global trade environment, including the imposition of new tariffs, changes to existing tariffs, and related general economic uncertainty, has impacted and may in the future impact our business and operations and has and may in the future adversely affect the amount or timing of our revenues, results of operations, and cash flows in the future.
In May 2024, the Biden administration announced a significant shift in the tariff framework for the energy storage industry.
Under this structure, the Section 301 tariff rate on lithium-ion non-EV batteries imported from China would increase from the current 7.5% to 25%, effective January 1, 2026.
This change specifically targeted "batteries" as defined by U.S.
Customs and Border Protection, encompassing integrated battery energy storage systems, modules, and certain types of cells.
Under the May 2024 structure announced by the Biden administration, the Section 301 tariff rate on battery "parts"–including separators, electrolytes, cans, and electrodes remains at its current 25% level.

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Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations, financial results and future prospects, plans and objectives of the Company and the trading price of our Class A common stock: • our relatively limited operating and revenue history as an independent entity and the nascent clean energy industry; • anticipated increasing expenses in the future and our ability to maintain prolonged profitability; • fluctuations of our order intake and results of operations across fiscal periods; • potential difficulties in maintaining manufacturing capacity and establishing expected mass manufacturing capacity in the future; • risks relating to delays, disruptions, and quality control problems in our manufacturing operations; • risks relating to quality and quantity of components provided by suppliers; • risks relating to our status as a relatively low-volume purchaser as well as from supplier concentration and limited supplier capacity; • risks relating to operating as a global company with a global supply chain; • changes in the cost and availability of raw materials and underlying components; • failure by manufacturers, vendors, and suppliers to use ethical business practices and comply with applicable laws and regulations; • significant reduction in pricing or order volume or loss of one or more of our significant customers or their inability to perform under their contracts; • risks relating to competition for our offerings and our ability to attract new customers and retain existing customers; • ability to maintain and enhance our reputation and brand recognition; • ability to effectively manage our recent and future growth and expansion of our business and operations; • our growth depends in part on the success of our relationships with third parties; • ability to attract and retain highly qualified personnel; • risks associated with engineering and construction, utility interconnection, commissioning and installation of our energy storage products, cost overruns, and delays; • risks relating to lengthy sales and installation cycle for our energy storage solutions; • risks related to defects, errors, vulnerabilities and/or bugs in our products and technology; • risks relating to estimation uncertainty related to our product warranties; • fluctuations in currency exchange rates; • risks related to our current and planned foreign operations; • amounts included in our pipeline and contracted backlog may not result in actual revenue or translate into profits; • risks related to acquisitions we have made or that we may pursue; • events and incidents relating to storage, delivery, installation, operation, maintenance and shutdowns of our products; • actual or threatened health epidemics, pandemics or similar public health threats; • ability to obtain financial assurances for our projects; • risks relating to whether renewable energy technologies are suitable for widespread adoption or if sufficient demand for our offerings do not develop or takes longer to develop than we anticipate; • estimates on size of our total addressable market; • risks relating to the cost of electricity available from alternative sources; • macroeconomic uncertainty and market conditions; • risk relating to interest rates or a reduction in the availability of tax equity or project debt capital in the global financial markets and corresponding effects on customers’ ability to finance energy storage systems and demand for our energy storage solutions; • decline in public acceptance of renewable energy, or delay, prevent, or increase in the cost of customer projects; • severe weather events; • increased attention to ESG matters; • restrictions set forth in our current credit agreement and future debt agreements; • uncertain ability to raise additional capital to execute on business opportunities; • ability to obtain, maintain and enforce proper protection for our intellectual property, including our technology; • threat of lawsuits by third parties alleging intellectual property violations; • adequate protection for our trademarks and trade names; • ability to enforce our intellectual property rights; • risks relating to our patent portfolio; • ability to effectively protect data integrity of our technology infrastructure and other business systems; • use of open-source software; • failure to comply with third party license or technology agreements; • inability to license rights to use technologies on reasonable terms; • risks relating to compromises, interruptions, or shutdowns of our systems; • barriers arising from current electric utility industry policies and regulations and any subsequent changes; • reduction, elimination, or expiration o f government incentives or regulations regarding renewable energy; • changes in the global trade environment; • potential changes in tax laws or regulations; • risks relating to environmental, health, and safety laws and potential obligations, liabilities and costs thereunder; • failure to comply with data privacy and data security laws, regulations and industry standards; • risks relating to potential future legal proceedings, regulatory disputes, and governmental inquiries; • risks related to ownership of our Class A common stock; • risks related to us being a “controlled company” within the meaning of the NASDAQ rules; • risks relating to the terms of our amended and restated certificate of incorporation and amended and restated bylaws; • risks relating to our relationship with our Founders and Continuing Equity Owners; • risks relating to conflicts of interest by our officers and directors due to positions with Continuing Equity Owners; • risks related to short-seller activists; • we depend on distributions from Fluence Energy, LLC to pay our taxes and expenses and Fluence Energy, LLC’s ability to make such distributions may be limited or restricted in certain scenarios; • risks arising out of the Tax Receivable Agreement; • unanticipated changes in effective tax rates or adverse outcomes resulting from examination of tax returns; • risks relating to improper and ineffective internal control over reporting to comply with Sarbanes-Oxley Act; • risks relating to changes in accounting principles or their applicability to us; and • risks relating to estimates or judgments relating to our critical accounting policies.
Risks Related to Our Business Our relatively limited operating and revenue history as an independent entity and the nascent clean energy industry in which we operate makes evaluating our business and future prospects difficult.
We have benefited and continue to benefit from the industry experience and support AES and Siemens have provided and continue to provide, but we have a relatively limited history operating our business and generating revenue as an independent entity after the time of our IPO, and therefore a limited history upon which you can base an investment decision.
Our prospects must be considered in light of the risks by companies in the earlier stages of development, especially those in newer and rapidly evolving markets.
Among other renewable energy market trends, we have seen and expect to continue to see our business results be driven by declines in the cost of generation of renewable power, decreases in the cost of manufacturing battery modules and cells, customer needs for energy storage products and related services and digital applications, commercial, legal, and political pressure for the reduced use of and reliance on fossil fuels and electric power generation that relies on fossil or other non-renewable fuels, regulatory and governmental incentives towards reduced use of fossil fuels and increased use of renewable energy and energy storage solutions, including through the IRA, and a rapidly growing and evolving global energy storage market driven by increasing demand from C&I customers, IPPs, developers, utilities, and grid operators.
Additionally, we are seeing an increase in demand for electricity in multiple markets in response to transformations in technologies like artificial intelligence (AI), data center expansion, new domestic manufacturing, and electrification in different sectors.
We anticipate increasing our expenses in the future and we may not be able to maintain prolonged profitability.
Although we achieved approximately $30.3 million of net income in fiscal year 2024, we have historically incurred net losses on an annual basis since our inception.
We expect our aggregate costs will increase substantially in the foreseeable future as we continue to invest heavily in increasing our customer base, expanding our operations, and operating as a public company, which in turn, may impact our ability to maintain profitability.
These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses.
Since inception and through September 30, 2024, our principal sources of liquidity were the proceeds from our IPO, our cash and cash equivalents from operations, short-term borrowings, borrowings available under our debt agreements, supply chain financing, equity contributions from AES Grid Stability, Siemens Industry, and proceeds from the investment by QIA Florence Holdings, LLC, an affiliate of QIA in 2021, proceeds from short-term investments, and borrowings against note receivables and proceeds from sale of accounts receivable under the Master Receivables Purchase Agreement by and among Fluence Energy, LLC and any other seller from time to time party thereto, as sellers and servicers, and Credit Agricole Corporate and Investment Bank (“CACIB”), as purchaser, dated February 27, 2024 (the “MRPA”).
We may not generate positive cash flow from operations or profitability in any given period and our relatively limited operating history as an independent entity may make it difficult for you to evaluate our current business and our future prospects.
Operating results for future periods are subject to a number of uncertainties and risks and we cannot assure you that we will maintain or increased prolonged profitability.
Our ability to maintain and increase prolonged profitability in the future depends on a number of factors, including the continued successful development and customer acceptance of our energy storage solutions, services, and digital applications, our ability to obtain components from suppliers on cost-effective terms and on a timely basis, our ability to maintain and grow our market share and effectively compete against others in the industry, as well as our ability to effectively manage both our operating and capital expenditures.
We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies in new and rapidly changing industries.
We expect our operating expenses to continue to increase significantly over the next several years as we continue to hire additional personnel, expand our operations and infrastructure, and continue to expand to reach more customers.
Further, we may encounter unforeseen operating expenses, difficulties, complications, delays, and other factors as we expand our business and execute our business plans, including factors relating to macroeconomic uncertainties and market conditions, which may result in losses or a failure to generate profitable growth in future periods.
If we are not able to achieve or maintain positive cash flow in the long term, we may require additional financing, which may not be available on favorable terms or at all a nd/or which would be dilutive to our stockholders.
Our ability to obtain any such additional financing is subject to a number of factors, including general market conditions, investor and customer acceptance of our business model and our products, and market and stakeholder confidence in our ability to perform against our business plans.
Our order intake and results of operations may fluctuate across fiscal periods, which could make our future performance difficult to predict and could cause results of operations for a particular period to fall below expectations, resulting in a decline in the price of our Class A common stock.
Our order intake and results of operations are difficult to predict quarter to quarter and have in the past and may in the future fluctuate significantly.
The variability in our order intake in the most recent quarters was primarily driven due to the ambiguity regarding the timing of the proposed domestic content guidelines released by the U.S.
We have experienced fluctuations from fiscal period to fiscal period in the past and may experience such fluctuations in the future as a result of fluctuations in our customers’ businesses including as a result of permitting and installation delays.
Such permitting and installation delays can impact the timing of orders for our products.
In addition, we have had, and may continue to have, customers experience project delays for a variety of other reasons including, but not limited to, issues with financing, changes in government regulations, including uncertainty relating to the imposition of additional potential tariffs, supply chain challenges, tax incentives, macroeconomic factors, geopolitical uncertainty, or other circumstances unique to a customer.
Any unexpected delay in a material project could materially adversely affect our financial performance in a fiscal period.
If we experience delays or cancellations in the permitting and installation process in the future, our business, financial condition, and results of operations could be adversely affected.
We also have and may in the future experience fluctuations as a result of supply chain disruptions.
Supply chain disruptions, such as inclement weather, regulatory environment, including tariffs, disruptions relating to pandemics or epidemics, production issues, and other supply chain related-delays have in the past and may in the future affect logistics relating to our operations by causing delays in the shipping and delivery of our materials, components and products which may, in turn, cause delays in our installation and completion of our projects.
As a result of the factors discussed above, our future financial performance, sales, working capital requirements and cash flow may fluctuate, and our past order intake and results of operations may not be good indicators of future performance.
The variability and unpredictability of our operating metrics and quarterly operating results could result in our failure to meet our expectations or those of analysts that cover us or investors with respect to order intake, revenue or other operating results for a particular period.
We may experience difficulties in maintaining our current manufacturing capacity and establishing our expected full commercial scale mass manufacturing capacity in the future.
Although we continued to progress on track to meet our internal corporate initiatives related to mass manufacturing, the manufacturing process for our expected full commercial scale in the future is still being refined and improved.
There are risks associated with scaling up manufacturing to larger commercial volumes including, among others, technical or other such problems with process scale-up, process reproducibility, stability issues, quality consistency, timely availability of raw materials, supply chain delays and bottlenecks, cost overruns, adherence to documentation and other quality requirements, and adequate definitions or qualifications for safety, reliability, and quality.
There is no assurance that our contract manufacturers will be successful in establishing and then maintaining larger-scale commercial manufacturing processes that achieve s our objectives for manufacturing capacity and cost, in a timely manner or at all, or that they will be able to maintain and build effectively and efficiently upon such processes over time.
We are in the process of qualifying a few potential additional manufacturers.
If such new potential manufacturers are not qualified and then onboarded in a timely manner, or if they fail to provide products and components that meet our expectations, then our business and results of operations may suffer.
If we are unable to produce sufficient quantities of products on a timely basis and in a cost-effective manner, the Company’s commercialization efforts would be impaired which could materially adversely affect our business, financial condition, results of operations, and growth prospects.
We have experienced and may continue to experience delays, disruptions, and quality control problems in our manufacturing operations, in part due to our third-party manufacturer concentration, which may in turn adversely affect our business, results of operations, financial condition, and future prospects.
We currently depend on a limited number of th ird-party contract manufacturers.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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