Good day, and thank you for standing by. Welcome to the Fluence Energy the Q2 2023 earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lexington May, Vice President of Investor Relations. Please go ahead. Thank you. Good morning, and welcome to Fluence Energy's Q2 2023 earnings Conference Call. A copy of our earnings presentation, press release and supplementary metric sheet covering financial results along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the investor relations section of our website at fluenceenergy.com. Joining me on this morning's call are Julian Nebreda, our President and Chief Executive Officer, Manu Sial, our Chief Financial Officer, and Rebecca Boll, our Chief Product Officer. During the course of this call, Fluence management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon the current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. 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. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available on our earnings materials on the company's investor relations website. Following our prepared comments, we will conduct a question- and- answer session with our team. During this time, to give more participants an opportunity to speak on this call, please limit yourself to one initial question and one follow-up. Thank you very much. I'll now turn the call over to Julian. Thank you, Lex. I would like to send a warm welcome to our investors, analysts, and employees who are participating in today's call. This morning, I will provide a brief update on our business and review our progress on our strategic objectives. Following my remarks, Manu will discuss our financial performance for the Q2, as well as our outlook for the rest of the fiscal year. Starting on slide 4 with the key highlights. I'm pleased to report that in the quarter, we recognized our record $698 million of revenue and $32 million of adjusted gross profit. Our demand was strong across all three of our business lines, new orders were approximately $847 million, highlighted by our services business contracting 1 gigawatt, and our digital business contracted 2.7 gigawatts. Our signed contract backlog as of March 31st was $2.8 billion, a quarter-over-quarter increase of approximately $100 million, even after recognizing almost $700 million of revenue during the quarter. I will also note that approximately 81% of our backlog is with non-related parties. Lastly, our recurring revenue businesses, which consists of services and digital, experienced a strong growth during the quarter. Our service attachment rate was 263% for the Q2, driven by the signing of the service agreement with Austin. Our deployed service attachment rate, which is based on our cumulative active service contracts relative to our deployed storage, remains above 90%. Looking specifically at our digital business, we had a very strong quarter as we were able to contract 2.7 GW, which is a 200% increase from the previous quarter. These are early signs that our strategic direction is progressing successfully. We added approximately 800 MW of digital assets under management. We still have a lot of work to do regarding our digital business, we are very encouraged by the results so far. Turning to slide 5, I'd like to discuss the 5 strategic objectives that we highlighted previously and provide you with an update on our progress. First, on delivering profitable growth. I'm pleased to report that we are raising our fiscal year 23 guidance for both revenue and adjusted gross profit. As Manu will discuss in more detail, we're able to raise our guidance due to better execution, costing some of our projects being ahead of our expected schedule. I'm pleased to report that we're pulling forward our profitability timeline. You may recall, we previously expected to be adjusted EBITDA positive in fiscal year 2024. We do not provide quarterly guidance. We're expecting to be close to adjusted EBITDA breakeven in the fourth quarter of fiscal year 2023. Second, we will continue to develop products and solutions that our customers need. I'm pleased to report that we received a 200 megawatt binding award for our Ultrastack product, making this our third award of energy storage and transmission. As I noted on our previous calls, we are very bullish on the transmission segment and expect this area to grow as transmission congestion becomes a critical issue around the world. Fluence is well-positioned to make a significant impact for our customers and ourselves by addressing this growing problem, as we're one of only a handful of companies in the world that possess the technology, experience, and performance requirements necessary to use energy storage as a transmission asset. Third, we will convert our supply chain into a competitive advantage. I'm pleased to say that we have signed a master supply agreement with AESC, under which we will procure battery cells. This partnership adds another high-quality battery supplier to the Fluence portfolio, enhancing our ability to meet the growing demand for energy storage solutions. This agreement supports our domestic module manufacturing efforts and it strengthens our position as a leader in the energy storage industry. Fourth, we will use Fluence Digital as a competitive differentiator and a margin driver. Looking now at our Nispera product, starting this month, we will begin including Nispera in our standard hardware solutions offerings. This is an important step, as it will provide us with a path to increasing our IRR as we bundle our offerings and execute on our one sales channel approach we discussed last December. Finally, our fifth objective is to work better. I'm proud to state that Fluence has published its inaugural sustainability report on our website. In this report, we outline our commitment to a circular economy that includes sustainable end-of-life management for our products, as well as our firm stance against forced labor. To publish a sustainability report this quickly after becoming a public company is a true testament to our values, and mission to transform the way we power our world for a more sustainable future, and demonstrate our leadership within the sector. Turning to slide six. Demand for energy storage continues to accelerate. In fact, our pipeline now sits at $11.2 billion, which is up from $10.3 billion last quarter. We expect we will start to see some projects awards in the second half of this calendar year that are directly attributable to the Inflation Reduction Act. We reaffirm consolidated revenue growth of 35%-40% year-over-year for fiscal year 2024, irrespective of the issuance of the final IRA guidelines. Our 2023 guidance increase and the incrementally higher 2024 outlook represent an expected benefit to revenues of nearly $500 million over this two-year period, relative to our expectations on our Q1 earnings call conference three months ago. It is worth noting that we're seeing and having success regardless of the IRA. A few examples of recent successes include: the binding award in the transmission segment that I previously mentioned. 2, we were recently awarded a 400 megawatt-hour contract in Australia for Shell's energy Rangebank project. As you may recall, we signed a 1,200 megawatt-hour contract with Ørsted in December. During Q2, we signed a service agreement for this project. All of these were achieved without consideration of the Inflation Reduction Act. Turning to slide 7. We are pleased to see that some of the initial IRA regulations have been released by the USA. Treasury. We are still waiting on the domestic content regulations. We believe the actions we're taking will enable us to meet the domestic content requirements sought by our customers. In regards to our USA. module manufacturing, we're on schedule and expect production to start in our Utah facility in the summer of 2024. As it relates to Section 45X of the IRA, or the production tax credit, we are targeting to be able to record the $10 per kilowatt-hour incentive associated with manufacturing USA. battery modules. Right now, we do not expect that we will capture incremental margin as a result of manufacturing our own modules in the USA. We do believe it will be a volume driver for us, as many of our USA. customers have expressed the need for a USA-made product. We expect the $10 incentive will go towards offsetting the cost of reaching economies of scale. From an accounting standpoint, our current expectation is that we will account for the $10 per kilowatt-hour incentive on our income statement as a reduction to cost of goods and services. This could change based on the final guideline. We expect to elect the direct pay provision for the first 5 years of the credit. The exact timing of the cash payment is unclear at this time, as we are still waiting for the clarification from the USA. Treasury. Currently, we're eagerly waiting for the publication of the IRA guideline for energy storage and domestic content, as several of our customers want the final details that it will provide before moving forward with contracts. We encourage our policymakers to act swiftly. As I mentioned, our 2024 growth expectations remain unchanged, irrespective of the final regulations being published. Turning to slide 8. As I briefly mentioned, we recently published our inaugural sustainability report, which highlights our vision to implement digital solutions to further optimize the energy storage supply chains and lifecycle. I'm pleased to state that we're committed to promoting social sustainability by fostering diversity and inclusion within the organization. We believe this is essential to develop the innovative organization we need. We aim to increase diversity within the organization by setting targets for diversity hiring. We have established a target for fiscal year 2023, which includes that approximately one-third of our employees hired have identified themselves as female. In the report, you will also see that end-of-life management is very important to us, and we have committed to developing a circular economy framework for our products. We highlight in the report that we have established a robust supplier code of conduct that is aligned with the International Bill of Human Rights at Work that ensures that our suppliers adhere to ethical and sustainable business practices. We summarize our policy on conflict minerals and ethical sourcing, in which we commit to working towards avoiding the use of minerals within our supply chains from conflict-affected areas. In the report is a signed commitment letter taking a zero-tolerance stance regarding forced labor. This is an area that is critical to our values. We also included a roadmap and timelines so our stakeholders can monitor our ESG journey. In the spirit of accountability to transparency, we will provide an update on our sustainability program annually so our stakeholders can track our year-over-year progress. Overall, Fluence Energy's sustainability report demonstrates the company's commitment to sustainable practices and its efforts to drive positive environmental and social impact. Through its various initiatives and targets, Fluence Energy is working towards a more sustainable future for all. In conclusion, I'm very pleased with the achievements of the Q2. We're mindful there's still a lot of work to be done, we will look to continue this momentum as we progress through the remainder of the year. I will now turn the call over to Manu. Thank you, Julian. I will begin by reviewing our financial performance for the Q2 and then discuss our guidance for fiscal year 2023. Please turn to slide 10. Our Q2 revenue reached a record high of $698 million with a record adjusted gross profit of $32 million. Revenues benefited from a pull forward of more than $200 million into the Q2 from the second half of this year, driven by improved project execution on select projects relative to our expectations and aided by the availability of materials. In the Q2, more than 85% of our revenue or roughly $600 million came from legacy contracts. The revenue that we pulled forward into the Q2 was associated with legacy contracts, and we now anticipate that almost all of our low-margin legacy backlog will be turned over by the end of this fiscal year. Since we are working faster through our legacy backlog, we are set up well for significantly higher margin rates in the second half of the year when compared to the first half. With regard to operating expense and adjusted EBITDA, the Q2 operating expense, excluding stock compensation, was $61 million or approximately 9% of revenue, which is down from approximately 17% of revenue in the first quarter. We remain disciplined about holding our operating expense growth to less than 50% of revenue growth and expect this model to create operating leverage in 2023 and beyond. Turning to our cash balance, we ended the quarter with more than $380 million of total cash, including short-term investments and restricted cash. This figure is in line with our comments on our first quarter earnings call. Rounding out the balance sheet discussion and in line with prior communication, we saw a decrease in inventory of approximately $300 million in the Q2 2023 from the first quarter 2023 level. Our decision to focus on battery supply chain assurance and risk management has enhanced our ability to deliver projects ahead of earlier expectations. Given the improvements in the supply chain environment and as communicated in our last earnings call, we should expect improvement in inventory turns through the end of the current fiscal year. We continue to believe that we do not need to raise any additional capital to meet our needs and have ample liquidity to meet our cash needs for the next 12 months. Please turn to slide 11. As Julian indicated, we have increased our fiscal year 2023 guidance ranges for both revenue and adjusted gross profit and narrowed the ranges. We now expect our total revenue to be between $1.85 billion and $2 billion, which is up from our previous revenue guidance of $1.6 billion to $1.8 billion. This is an increase of $225 million based on the guidance midpoint, driven by our overall project timeline acceleration. While we expect that most of our projects will be executed within the 15-18 month time frame that we have previously discussed, we are seeing faster progress on certain projects compared to prior expectations, and thus expect this trend to continue in the future, benefiting both the second half of this year as well as fiscal year 2024. This improvement is attributable to better supply chain visibility and improved execution as we leverage lessons learned from prior projects. We are also coming into the 3rd quarter with 100% of our second half 2023 expected revenue in our backlog. Turning to our 2024 revenue outlook, we continue to expect 35%-40% growth in revenue from 2023 to 2024. Notwithstanding the higher revenue base we now see for 2023, this implies an incremental $300 million of revenue for 2024 relative to our previous outlook. For the two-year period, 2023 and 2024, we now see revenues of more than $500 million higher than what we had conveyed on our Q1 call. We also increased our guidance for adjusted gross profit to be between $110 million and $135 million, which is up from our previous guidance of $85 million to $115 million. It is important to note that this implies an increase in gross margin of approximately 50 basis points to 6.4% based on the guidance midpoint. Before I turn the call back to Julian for final comments, I would like to reiterate that we have high confidence in our ability to be close to adjusted EBITDA breakeven during the fourth quarter. With that, I will turn the call back over to Julian. Thank you, Manu. In closing, I would like to reiterate what I consider to be the key takeaways from this quarter's results. First, we had a record quarter in terms of our financial performance with our highest revenue and gross margin in Fluence history. Second, we continue to make significant progress on our risk management, most notably in reducing our supply chain risk as reflected in diversifying our battery cell suppliers. Third, we continue to expand our offerings, concentrate on efforts in developing new products and solutions that create value for our customers, as shown in our third Transformation Segment Award. Fourth, we are positioning Fluence for increased IRR by including Nispera in our standard offer starting this month. Fifth, the financial results and covering today's call provide us with high confidence to increase our total revenue and adjusted gross profit guidance for fiscal year 2023, and to pull forward our timeline to profitability. This concludes my prepared remarks. Operator, we're now ready to take questions. As a reminder, if you'd like to ask a question at this time, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of James West with Evercore. Good morning, James. Hey, James. How are you? Hey, good morning, guys. Julian, quick question from me about your customer base, and kind of how they're thinking about their storage needs right now. I know as we think about last year, it was kind of a mad dash scramble for assets and for getting equipment and batteries in place. We've obviously had the IRA, and there's been some, you know, timeline lag on total understanding what the IRA means in the USA. Are the customers, are they coming to you now, still with, "Okay, what's it gonna cost me?" Or is it more of a question of, "When can you get to me?" You know, "What, what's the timeline?" Because we know you're not just focused on, you know, land and expand, but you're focused on profitability too, which is I would say was clear this quarter. Congratulations again, on this quarter. Thanks, James. I mean, we do a lot of. Our ability to expand our margins comes. The main driver has been a real, you know, detailed segmentation of the customers we work with. No? Mm-hmm. It might be a long way to answer your question. What do we do? We look for customers who value what we offer. No? That value clearly products that are, that we that they are sure that they were gonna be delivered, that they're gonna perform as we tell them that it's gonna be, they're gonna perform, that will provide services, that will keep these solutions up to date, and that will, you know, have them running for them when they need it. You know, that they can insure it very well, and that they can finance it. The customers who care about that are the customers we work with. Right. For some of them, you know, some of them, you know, A, price is very, more important than others. For some of them is, you know, ensuring the performance. For some of them is, A, especially where the regulatory systems are gonna change, I need somebody who will know, will help me, you know, adapt my systems to it. What do we see this quarter, which I guess is a little, what do we see in the very front end. Clearly, the reduction in lithium prices and the more liquid market for batteries, you know, opens up more optionality. I think that the RMI that we offer our customers, which when prices were going up, was something that, you know, make them a little more comfortable, now it makes them feel better on, you know, signing a contract because they know at the end of the day they will get something that's in line with what the market's paying or close to what the market's paying. That's great. That's globally you see that. On the other side, you have in the USA. the Inflation Reduction Act, the delayed. Some of our customers or, you know, are talking to their off-takers and, you know, asking their off-takers, "Do you need the products by certain date or do you wanna wait until we know what the... we're gonna get this 10% upside that will convert into better prices for your off-take, you know, for whatever services you're selling?" The answers are different. I think that some customers will need to have the projects online by certain dates or the off-takers will need, so those will move forward, we think. Some of them are, "Yeah, no, this can wait." You know, that's kind of where, you know, where this will land. I don't know if that's You know, that's kind of the landscape of where we are today, you know? We, today, and the reason why we were able to affirm our growth for next year, irrespective of the IRA, which we, you know, was because we have seen very, very strong demand outside of the USA, you know. That give, you know, you look at our backlog, what we have signed already, what we are seeing outside of the USA, and we believe that, you know, the, we can meet the 35%-40% growth irrespective of where the IRA regulations come up, you know? Okay. Okay, that's very helpful, Julian. Thanks for that. Maybe a quick follow-up on margins, and maybe for, from Anuj. The, you know, getting to EBITDA breakeven by the end of this fiscal year, obviously good target and making good progress there. How should we think about EBITDA margins as we go through, you know, fiscal 2024 and getting to a level of, you know, profitability, sustainable profitability on EBITDA? Consistent with what we have said in our last call, we expect to be EBITDA positive in the fiscal year 2024. I think you'll see the margins progressively improve as we go through the quarters in the fiscal year 2024 as well. That's because if you look at our trajectory and look at it from a trailing 12-month kind of revenue average, we continue to grow our revenue. As we've said, we'll grow our operating expense at less than half the revenue growth rate. If you couple that, those two comments with the fact that we are signing new contracts in the 10%-15% margin rate, you can see the profiling of the EBITDA progressively- Okay. growing, through the quarters. Okay, got it. Thanks, guys. Thanks. Our next question comes from the line of Brian Lee with Goldman Sachs. Yeah, good morning, Brian. Hey, Brian. Hey, everyone, this is Miguel on for Brian. Maybe just the first question here on the $500 million incremental for fiscal 2023 and 2024. You're talking about, you know, attributing that to just better supply chain visibility and obviously the better execution here. Maybe could you just expand a bit on that with some specifics or some examples? Is it just a function of getting, you know, more visibility on batteries? Is it being able to pull in projects faster than expected? Just hoping to get a bit more color there on the execution front. Thanks. Yeah. Brian, the way I will, you know, first, clearly it's the fact that our machine is working better. We have the batteries, our manufacturing did a great job this quarter, we have been able to de-risk our deliveries in our contracts with our customers, no? I think the effort of, you know, a lot of work from everybody from our supply chains, from our sales team, from our manufacturing team, but also at the end that, you know, we have been able to de-risk our deliveries in a way that, you know, are, you know, allows us to recognize revenue, even if some of our customers are not fully ready to install the equipment. No? That's the way to think about it. The combination of the three. Yeah, I cannot tell you now is that, you know, one, you know, each one is very essential for this. You know, if the supply chain had not worked, we wouldn't be here. If the manufacturer had not been able to pick up production, we wouldn't be here. If we have not de-risked and our implementation people have not done the work they're doing, we, you know, we wouldn't be here. It's, it's the machine working better. No? We have identified the projects that we, you know, where we believe we can do this, and those are the basis for our, you know, $500 million better revenue over the next between this year and next year, no? I got it. I appreciate that. You know, kudos on the, you know, update to the guidance obviously, but outside of that, just we're hearing about module constraints in the USA in general still hampering a bit the solar projects. Could you maybe give an update on what you've seen specifically for projects in your backlog for solar plus storage projects and maybe to what degree you've seen. You know, those kinds of projects push out because of these module constraints? Thanks. Yeah. I mean, our own defense, some we haven't heard anything specific from our customers. You know, as you know, we sell to customers who are probably on the, you know, bigger side and have the ability to manage that better. I will tell you what, that's clearly one of the reasons we took into consideration when we looked at our risk enterprise risk management. One of the things we changed in our contract was that, you know, if our solutions are ready for delivery, we, you know, the customer, you know, needs to take them irrespective of where they are in their solar project, you know. If it is connected to a solar project, irrespective of where they are with some other elements. That's what I will tell you. W e, you know, our customers today, I haven't heard anybody, you know, coming up to us and telling us, "Hey, I'm not gonna be..." You know, more of the questions on being a little bit cautious are connected to the IRA than whether they can get modules in or not. Okay. Got it. Thanks, everyone. I'll pass it on. In the USA, you know, clearly. Our next question comes from the line of Maheep Mandloi with Credit Suisse. Hey, Maheep. How are you? Hey, good morning, thanks for taking the questions here. Sorry, hopping between calls here, I might have missed this. The $500 million over the two-year period, is that higher revenues versus the prior run rate, or is that just looking at FY24 versus FY22? Yeah. Hey, Maheep. The way to think about the half a billion dollars is as follows: We've increased the guidance for 2023, and at the midpoint it's $225 million. We've kept the same run rate, you have a higher 2024 implied outlook or outlook based on a higher 2023. If you take that math to 2024, that's incremental $300 million for 2024. You add the 225 with the 300, you get to over half a billion dollars of revenue. That's on the backs of, you know, great project execution, and that's in the Q2, and that has a read-through for the remaining 2023 and 2024 as well. You know, I would be remiss if I don't reiterate the fact that we have very strong demand signals with over $1 billion increase in our pipeline. Got it. No, I appreciate that clarification. Did you kind of talk about which regions are driving that? Is this, customers accelerating the projects or, more, benefits from manufacturing or procurement on your end? Thanks. Yeah. What I would say, you know, in terms of the demand signals, and if you look at our order book for the Q2, as Julian mentioned, we are winning globally. We are winning both in solutions and in services. That's kind of color and context, for your question on the, on the top line of the demand signals. Obviously, the Americas is the, you know, is 2/3 of our overall business, and that's gonna be the larger, dollar driver of it, but we are winning globally. In terms of what's driving the revenue upside in the Q is, you know, we typically, will see, execute our projects within the 15-18 months. Because of better execution, as well as, you know, how we are writing our contracts now, we have the ability to pull forward some select contracts, you know, in the lower end of the 15-18 month range. That carries through in the back half of this year and next year as well. Got it. Appreciate it. All right. I'll take the rest of time. Thank you. Thanks, Maheep. Our next question comes from Tom Curran with Seaport Research Partners. Hey, Tom. Good morning. Good morning. Good morning. For the growth you've had in services assets under management for fiscal 2023 year to date, could you share with us, for the contracts you've added, the split between those with augmentation and those without? Yeah. I don't think we give that split, but the way to think about it is a significant portion of our contracts have the ability to augment the site if the customer so chooses. It gives them an option. Gives them an option. That's the way to think about it. Most of our customers do have the option in their contract if they so choose to augment. You know, years ago or before, you know, the, you know, it was not an option for customers. They had to take our augmentation proposal. The way these, you know, service agreements are, they do have, you know, they do have an option, and they can decide to take or not take our augmentation proposal. We believe that we're all gonna take it, but because. Okay. You know, that's how it works. You are seeing evidence to support the expectation of a trend towards ever more augmentation, opt-in? Yeah. The, the issue is that, you know, as it is an option that the customer can take, we cannot put it as a, you know, backlog value. You know what I mean? It's an option that they have. I think that, when we have looked at this, we believe in most cases it will, you know. I mean, it all depends a little bit on where the customer needs are on his side, on his contract and his off-take and stuff. We say if there's a need for augmentation, they will do it with us, you know? We have worked from a product perspective, you know, we have made some changes to our offering to ensure that we can provide our augmentation offering is a lot wider, so we can offer augmentations with different technologies. That I think will also make us a lot more competitive when the time comes. I think it will, you know. I don't think anybody will be able to get into that territory. You know, I don't wanna brag about something that hasn't happened yet. I appreciate that, Julian. For the consolidated pipeline, can you give us a sense of how much visibility you have on the portions of that are mega projects or storage as transmission awards, that, you know, could be doled out over the next 12-18 months? For storage as transmission, you know, would you expect your next award to most likely come from the USA, Australia, Germany, or Chile? Yeah. On, I mean, I prefer not to go into the details about our pipeline, you know. I think it's, you know. You know, that would be my preference, you know, not to go into start giving details on the pipeline will make our life, all our life more difficult. On the Storage as Transmission, we're working in, you know, both in Europe, in Chile and the USA, like you mentioned. I will say that most likely it will be again in Europe. That's my opinion. You know, I can say this, I will say it, the Chilean regulations for transmission do not work. Do not work. That system, like it's, they designed it's not gonna work. They came up with this 15-minute storage. That's not gonna be good. It's not gonna work. I think unlikely. I don't know if we'll bid or not. We'll probably will bid, but I think that's gonna be a successful project. We continue to see the transmission regulators in Europe much more clearly understanding how this works and how the, how to make them work. The USA, we're just starting. It... I appreciate that color. I send this message to the regulator. I'm sure they don't listen to these calls, but it will be good for them to go back, look at it, because they, we have, you know, we told them, this is not gonna work. They, you know, I think they have a different view of what they wanna do. Got it. Thanks for taking my questions. Great. Our next question comes from Julien Dumoulin-Smith with Bank of America. Hey, Julian. How are you? Hey, good morning, guys. Hey, Julian. Pleasure. Namesake. Thank you very much for the time. Appreciate it. That's right. Listen, I just wanted to first come back to the half- billion- dollars revenue commentary that Manu provided. Can you elaborate a little bit on what this says about getting to kind of the target gross margins, especially as you think about what that says for next year here? Obviously you have that improvement through the course this year, but what does that say on the incremental margin that you're getting for next year now that you're really accelerating the revenue side of this? Thanks for that question, Julian. Just way to think about our gross margin, and you can see that come through our guidance updates, right? We are signing the new contracts in the 10%-15% margin rates, and more importantly, the new contracts we're signing, we are keeping those margin rates. As you look at the increase in the guidance from the last call to the current call, you can see the increase from a gross margin perspective or a gross margin rate perspective of 50 basis points. The new contracts being signed at in the 10%-15% margin rates that I alluded. As you roll forward into 2024, that's a good assumption from a gross margin perspective. As you translate the gross margin into EBITDA, it gets even better and increases our confidence from a EBITDA positive outlook for 2024 is because we are getting operating leverage, and we are very disciplined about our overhead expense and our model of spending overhead at less than 50% of our top line growth. If you model out 2023 going to 2024, top line growing at 35%-40% over a higher revenue base in 2023, our gross margins, contracts being signing in the 10%-15% rates. Remember, one of the advantages of better execution in 2023 is we are able to pull forward our legacy backlog earlier in our life cycle, and therefore there's very little legacy backlog to be executed in the fiscal year 2024. The gross margins on the new contracts are coming through, and then, you know, that translates into a very healthy EBITDA. Excellent. All right. Great. Just going back to the commentary in the call on Nispera, right? You talked about this new strategy this month about including it in as standard in your hardware offerings. What does that say vis-a-vis the Fluence IQ outlook and the revenue contribution and its level of meaningfulness, right? I think earlier you guys had said it wasn't really that meaningful until 25. Now that you're including it as quote-unquote standard, does that change that expectation? No, Julian. This was always part of the plan. Remember when we looked at the business, one of the changes we did was integrating the sales channel and our view on when this business will be material and when we will get to has not changed. You know, this was part of what we wanted to do. When we announced our plan, our new plan in December of last year, this was, you know. Apparently that is going as planned as we expected. We remember that we talked about. Yeah. You know, single channel and then re-platforming our Mosaic business. Re-platform is going very well. The single channel, which is essentially for Nispera, which will give us a base for both upsells and cross-sells. You know, we were able to pull it out, so we are starting. Actually, already it's been done. We're already offering to our customers as part of our standard offer. Excellent. Okay, perfect. We'll leave it there. Thank you guys very much. Speak soon. Bye. Thank you, Julian. Our next question comes from Ben Kallo with Baird. Hey, good morning, Ben. Hey, guys. Good results and good progress. Thank you for taking my question. I just wanted to follow up just on margin. Sorry to keep going on this question, but I just wanted to think about the different levers and cost improvements versus legacy contracts. I think Julien asked something similar to this. Then attachment rates of other services software, as we go into 2024 and beyond, and how you guys think about that. Then just my follow-up is kind of housekeeping, but just the IRA benefits in profitability. I'm sorry, Manu, if you said this, but have you baked any of that into your profitability change going forward, so the production tax credits or anything like that? Thank you. Yeah, sure. Ben, if I can. There are lots to unpack there, so, let me, let me take it as how I understood the question. If you bridge gross margins from our legacy contracts to some of the new deals we are signing in the 10%-15% margin range, right? We put a bridge in the back of the deck as well. The drivers of our margins, between the legacy contracts and the newer contracts we're signing is, you know, better execution, better pricing, and then I would say, better risk management. Those are the big drivers. We have also increased our margin expectations to be 10-15% from a much lower single-digit expectations we've had in the past. As a result, when we are executing our legacy contract, we are usually executing them, you know, at very low single-digit margins, almost close to breakeven. As compared to the newer projects that we are executing in the 10-15% margin rates, depending on size and complexity in the region. You can see that trend come through in the gross margin guidance. If you take our first half actuals, gross margin rate and compare that to the guidance for the full year and calculate the implied second half, you can get to high single digits gross margin rate for the second half of the year. That's important is because it gives you a good read-through of gross margins going into 2024 and EBITDA going to 2024, which is what, you know, we are pulling forward our EBITDA expectations to be close to adjusted EBITDA breakeven in the fourth quarter. That's kind of contextualizing the margins of the legacy business compared to what we are signing from a new contract perspective. In terms of the IRA PTC benefit that you specifically asked. What we've said is, look, it'll be a contributor to more volume potentially, as opposed to taking us outside of the 10%-15% margin range, maybe in the, in the rounds it takes us to the, you know, for those contracts that have the Fluence make to the top end of the range versus the bottom end of the range. We're still within the 10%-15% margin range. As we go through the years to kind of round out your question, we are seeing high attach rates for services on the assets we have deployed. We are seeing 97% attach rates. That's slightly better than what we had last quarter or kind of in line with what we had last quarter. That in terms of a meaningful contributor to our margin rates and margin dollars will be better in 2024, more meaningful in 2025, and then kind of gets to a higher number in 2026. Those contracts are at a higher margin rate than our average solutions margin. It is the power of the install base. It also gives us a great option to kind of sell incremental services as well as attach digital contracts to them. Great. Thank you very much. That concludes today's question and answer session. I'd like to turn the call back to Julian Nebreda for closing remarks. Great. Well, first I wanna thank to everybody for participating and joining us and your questions. You know, hey, we are really proud of the work of the team here and the success. This is clearly working better than what we were expecting. That's great news. This only will, I think, in a way, reaffirms our commitment to continue working hard and because, you know, it really makes a difference at the end of the day. You know, really happy. Thank you again for participating and we'll talk to all of you during the quarter and hopefully see you soon. Bye-bye. This concludes today's Conference Call. Thank you for participating. You may now disconnect.