Good day, and thank you for standing by. Welcome to the Fluence Energy First Quarter 2024 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 this session, you will need to press star one one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lex May, Vice President of Finance and Investor Relations. Please go ahead. Thank you. Good morning, and welcome to Fluence Energy's First Quarter 2024 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; Ahmed Pasha, 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 relating 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 to not 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. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in 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 participating on today's call. I will provide a brief update on our business and then review progress on our strategic objectives. Ahmed will then give more details on our financial performance and outlook. Beginning on slide four with the key highlights, I'm pleased to report that we are off to a good start for fiscal 2024 and continue to benefit from a robust energy storage market. In the first quarter, we recognized $364 million of revenue. Furthermore, we delivered our second consecutive quarter of double-digit gross margin. Our adjusted EBITDA for the first quarter was approximately -$18 million, in line with our expectations and improving from -$26 million in the first Q of 2023. Additionally, we recognized a record $1.1 billion of new orders. This is broken down by our solution business contracted 2.7 GWh, our services business adding 2.3 GWh, and our digital business adding 400 MWh of new contracts. Furthermore, our signed contract backlogs as of December 31st increased $800 million to $3.7 billion, the highest level in our history. Additionally, our pipeline increased $400 million to $13.4 billion, which gives us confidence to achieve our growth goals in 2024 and beyond. Our service and digital businesses, which together represent our recurring revenue streams, continue to gain traction. We ended the quarter with 3.3 GW of service assets under management. Importantly, our deployed service attachment rate, which is based on our cumulative active services contracts relative to our deployed storage, remains above 90%. We had a strong quarter in our digital business, adding 400 MW to our backlog. More importantly, our digital assets under management increased to 17 GW as of December 31st, from 15.5 GW at September 30th. In summary, our combined services and digital annual recurring revenue, or ARR, was approximately $64 million as of December 31st, and is on track for our guidance of approximately $80 million by the end of fiscal year 2024. Turning to slide 5, I'd like to discuss our progress on the five strategic objectives that guide our decisions and actions. They are also important markers for investors to monitor and measure our performance. First, on delivering profitable growth. This quarter, we continued to grow our backlog, as we added $1.1 billion of projects that we expect to yield double-digit gross margin. Our disciplined approach to offer competitive solutions to customers keeps us on track to deliver on our financial objective. Second, we will continue to develop products and solutions that our customers need. As such, I'm pleased to report that we are on track for our battery module manufacturing to begin production in the summer of 2024, gradually ramping up over the subsequent quarters. This battery module manufacturing will enable us to provide a product that meets the U.S. domestic content requirements for battery energy storage, which I will touch on more in a moment. Third, to our scale and global outreach, we have established a supply chain as one of our key strategic competitive advantage. Our diversity of suppliers is a key component of this, and enables us to take advantage of favorable terms and battery prices, which I will discuss in more detail shortly. Fourth, we will use Fluence Digital as a competitive differentiator and a margin driver. I'm pleased to report that we have strong digital customer retention, with 21 digital contracts renewed during the quarter and zero customer attrition. Our fifth objective is to work better. I'm proud to state that in November, Fluence became an official signatory member of the UN Global Compact, ahead of the expected timeline outlined in our 2023 sustainability report. Turning to slide six. We continue to see strong growth in demand for utility scale energy storage systems. Over the past 12 months, we've seen lithium carbonate prices decline over 80%. This has in turn led to a decrease in battery prices, which has improved customer economics and allowed for more projects to be penciled in. It has been reflected in the growth of our backlog, which now sits at a record level of $3.7 billion, which is an increase of approximately $800 million from the fourth quarter. This is also the ninth consecutive quarter in which we added more order intake to backlog than revenue that was recognized out of backlog, further illustrating the growth in demand. Additionally, this $3.7 billion does not include some awards signed since the end of the quarter, such as our 650 MWh Mortlake project in Australia. More importantly, 100% of our backlog is at fixed battery prices with both suppliers and customers, with no commodity price exposure, thus giving us strong visibility into revenue and margin for these projects. Additionally, approximately 80% of our fiscal 2024 revenue guidance midpoint is already covered by our current backlog attributable to fiscal 2024, plus revenue already recognizing the first quarter. These two data points provide us with high confidence that we will be able to achieve our guidance ranges for revenue and adjusted EBITDA for fiscal 2024. Based on the conversations we're having with our customers and potential customers, we're expecting to see continued strong revenue growth in fiscal 2025 of approximately 35%-40% from fiscal 2024. Our 2025 outlook is supported by our pipeline, which sits at approximately $13.4 billion and grew $400 million from the last quarter. As we have communicated in prior calls, our expectations for pipeline conversion is at approximately 50% over the next 24 months. Turning to slide seven. Over the past couple of years, we have taken major steps to diversify and improve the resilience of our supply chains. Our supply chain strategy is centered around four key elements. The first is diversity of battery suppliers. Currently, we utilize five battery suppliers located in China, South Korea, Sweden, and the United States. This ensures we have multiple geographies to pull from, which support our growth while mitigating disruptions. We will also note that building a stable and reliable U.S. supply chain is critical for the industry, and as I will discuss, we are taking significant steps to establish a U.S.-based supply chain this year. Second, to capitalize on growing demand for our products, we have secured multi-year guarantee battery capacity from these suppliers. This cover our needs for fiscal 2024 and fiscal 2025, and provides flexibility for upsiding demand. These capacity agreements are subject to market price adjustments. Additionally, we also use a price discovery mechanism involving multiple battery suppliers to ensure we are constantly delivering the most competitive prices to our customers. And finally, these capacity agreements come with minimal take or pay obligations. Third, to capture the incentives laid out by the IRA, we will be manufacturing our own battery modules in the U.S., which represents 2/3 of our global business. It also enables us to introduce our proprietary battery management system, the software that runs the controls at the battery cell level and the initial point of control in a battery storage system. Additionally, it enables us to further commoditize our supply chains by facilitating the integration of multiple battery vendors. We're currently on schedule for our battery module manufacturing to begin this summer. In doing so, we expect to qualify for the domestic content tax credit under Section 45X. The fourth element of our strategy is an asset-light regional supply chains. This involves using two major contract manufacturers for system integration, one in Vietnam and one in Utah. We will look to continue to regionalize our asset-light model in other areas, such as Europe and India. This strategy provides us with enhanced flexibility and agility, particularly in scaling, and positions Fluence for a high return on invested capital, as we do not incur the capital costs associated with building or maintaining our own production facilities. When we look around the world, we're using various shipping routes for our projects. To that end, I would like to make a few comments in relation to the recent disruptions in the Red Sea. Only approximately 50% of our global shipments were expected to use the Red Sea route. The rerouting of these shipments adds around two weeks to our shipping schedule, that we have been able to accommodate without affecting customer delivery commitments. Finally, the incremental costs we're experiencing in shipping, we're able to transfer to our customers in their entirety, in accordance with our contracts. In any event, our logistic team is working very diligently to reduce as much as possible these increases in costs. Overall, these four elements are the cornerstone of our supply chain strategy, which provides flexibility, competitiveness, and high certainty for our customers. We will look to build on this as we continue to strengthen our global supply chain. Turning to slide eight. We're well positioned to recognize multiple benefits from the IRA, which is already boosting demand for energy storage. These benefits fall in two categories. Under the first category, our customers have the potential to receive up to a 50% tax credit for their project's capital costs, which significantly improves project economics and attractiveness. These incentives to our customers include a base ITC, or Investment Tax Credit, as well as bonus incentives for deploying in an energy community and using domestic content. The second category of incentives under the IRA includes those provisions that directly benefit Fluence. By producing battery modules in the U.S., as I just discussed, we expect to qualify for a production tax credit of $10 per kWh of battery modules produced under Section 45X. These two categories of incentives provide for our products to be more competitive and enables us to benefit from increased scale, more volumes, and operating leverage. Turning to slide nine. I'm proud to report that in November, Fluence became an official signatory member of the United Nations Global Compact. Being accepted as a signatory member is an important step on our sustainability journey of building a strong ESG program based on a structured framework, data, and active engagement. Fluence has joined more than 20,000 companies and organizations around the world that have signed the UN Global Compact, and are committed to responsible corporate citizenship and sustainability. We're excited to collaborate with like-minded companies, non-governmental organizations, and other stakeholders through the Global Compact network to exchange best practices and drive positive change. Now, I would like to make a few remarks regarding the article published in late December regarding the Diablo project in California, that highlighted a contract claim filed against us by the project owner, alleging that we did not have a valid construction license in California. This counterclaims was filed in response to our claim for $37 million in unpaid amounts and related damages. As we have said already, we believe these counterclaims are without merit. We intend to get paid for our work on the project. The legal proceedings are ongoing. In the meantime, I wanted to highlight that the Diablo project is performing very well, and has delivered availability or uptime above its contractual requirement during 2023. In conclusion, I'm pleased with the achievements of the first quarter. Although we are mindful there is still work to be done, we will look to continue this momentum as we progress through 2024. I will now turn the call over to Ahmed. Thank you, Julian, and good morning, everyone. Before we dive into the results, I am very pleased to be here at Fluence, and I would like to share my perspective on my first month at Fluence. On a macro level, Fluence is well positioned to capitalize on this once-in-a-lifetime opportunity as energy storage benefits from declining input prices and an ever-increasing focus on grid stability. I have learned much about the company, the people, and the culture. I have been impressed by the team's laser focus on offering competitive solutions to customers, while adhering to a disciplined approach to growing our top and bottom lines. I am looking forward to maintaining this financial discipline and stewardship of our strong balance sheet, while delivering attractive returns to our shareholders. This morning, I will review our first quarter results and 2024 guidance, which we have reaffirmed across all metrics. Beginning with our first quarter 2024 results on slide 11. We generated $364 million in revenue, 70% of which was in the U.S., and largely in line with our expectations. This was an increase of 17% from the first quarter last year. As we discussed on our previous quarterly call, we expect to realize 30% of fiscal 2024 revenue in the first half, and our first quarter results reflect this mix. Turning to adjusted gross profit. For the quarter, we generated approximately $38 million, or an adjusted gross margin of approximately 10.5%, versus 4.2% in the first quarter of last year. It also represents the second consecutive quarter in which we posted double-digit gross margins. Our operating expenses were $62 million, in line with expectations and consistent with the first quarter of last year, representing 17% of the quarterly revenue. Adjusted EBITDA for the quarter was - $18 million, versus - $26 million in the first quarter of last year. Negative adjusted EBITDA reflects our revenue weighting towards the second half, and operating costs that are relatively flat on a quarterly basis, as I just discussed. Overall, we believe these results reflect our disciplined approach to grow our top line and improve our bottom line to deliver on our financial commitments. Turning to Slide 12, I am pleased to report that we ended the first quarter with $477 million of cash. This represents an increase of $14 million from the fourth quarter and is the third consecutive quarter that we increased our total cash position. From a liquidity perspective, we are in excellent position to capitalize on the growing energy storage market. In addition to our cash position, we have access to approximately $130 million in credit facilities. This includes $75 million available under our recently signed $400 million asset-backed lending facility, or ABL facility. Availability in this ABL facility is dependent on the level of collateral available to secure, which is mostly our U.S. inventory. Thus, as our inventory balance increases, so should our borrowing capacity, which provides us another lever to manage our working capital needs. In summary, we have total liquidity of more than $600 million, which is sufficient to meet our current business needs. Moving to Slide 13, as Julian noted, we are reaffirming our guidance for fiscal 2024 of revenue between $2.7 billion and $3.3 billion. To that end, we have approximately 80% of the midpoint of our annual revenue guidance covered by our backlog, plus revenue recognized in the first quarter. This provides us confidence that we are on the path to achieving our fiscal 2024 guidance range. From margin perspective, we continue to anticipate fiscal 2024 adjusted gross margins of between 10% and 12%, which is in line with our first quarter results. Additionally, we are reaffirming adjusted EBITDA guidance of $50 million-$80 million. Furthermore, we are on track to achieving ARR of approximately $80 million by the end of fiscal 2024. I would also remind that we continue to expect fiscal 2024 revenue split of 30% in the first half and 70% in the second half, which implies fiscal Q2 revenue of approximately $530 million. For Q2, we expect adjusted EBITDA to be negative, because annual operating costs have a more even weighting by quarter than revenue. Consistent with our full year guidance, we expect second half 2024 adjusted EBITDA to improve significantly relative to the first half, as we realize 70% of annual revenue during that time period. Finally, looking ahead to 2025, we continue to believe that we will achieve 35%-40% year-over-year top-line revenue growth, driven by our robust pipeline and record backlog of signed contracts. With that, let me turn the call back to Julian for his closing remarks. Thank you, Ahmed. Turning to Slide 14, in conclusion, I want to emphasize the key takeaways from this quarter results. First, we had a record-setting order intake and a record backlog of $3.7 billion. We have locked in battery supply at fixed prices for all our projects in our backlog, thus providing us strong visibility to achieving our guidance. Second, we have a sustainable and resilient supply chain that is a key component of our competitiveness. Third, we are on track to begin our module manufacturing this summer. Together with our customers, we believe we are in a prime position to capitalize on various incentives under the IRA. Fourth, the falling battery price environment serves as a tailwind for us, and it allows more energy storage projects to be penciled in by our customers. All of these factors provide us confidence in our ability to successfully deliver on our fiscal 2024 and 2025 objectives. This concludes my prepared remarks. Operator, we're now ready to take questions. Thank you. As a reminder, to ask a question, 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. We ask that you please limit yourself to one question and one follow-up. Please stand by while we compile our Q&A roster. And our first question comes from the line of George Gianarikas with Canaccord Genuity. Your line is open. Please go ahead. Good morning, George. How are you? Good morning. I'm doing great. How about you? Yeah, I'm great. Thanks- Thanks. -for taking my question. So, so maybe just first, I'd like to ask about the orders, the $1.1 billion in orders. Can you help us understand, sort of the geographic profile? And also, are those orders, consistent with your gross margin profile of, you know, mid-teens over the long term? Yeah. The geographic profile is in line with what we have said, you know, 2/3 in the U.S. and 1/3, you know, internationally. And there are, you know, double-digit margins for that order intake. So in line with what we have communicated to the market, so. Great. And then, just as a follow-up here, as you look at the M&A landscape, you know, we talked about Wärtsilä in the past. They're still undergoing their strategic review. Do you feel compelled at all to change, you know, the profile of Fluence? You know, if you have a nice cash balance, and if you look across the landscape, are you looking to potentially expand footprints or your software profile by making acquisitions? Thank you. No, no. Yes, we have said we're very happy with our corporate business position, you know, in terms of strong, very, very strong sales channel. And, you know, you can see it not only in our backlog but also in our pipeline. You know, our technology, we have a very clear roadmap that is going well, and we're very happy with. And so generally, I don't see any need for acquisitions at this stage, and we're not looking at any. We're clearly in the market, you know, ensuring to understand what the environment looks, but there's no need to do any acquisitions in any of our business structure at this stage, you know? Thank you. Thank you, and one moment as we move on to our next question. Our next question is gonna come from the line of Brian Lee with Goldman Sachs. Your line is open. Please go ahead. Hey, good morning, Brian. Hey, Julian, good morning. Good morning, everyone. Thanks for taking the questions. I had two, sort of numbers-related one. First on legacy backlog. I think entering the year, you guys had talked about something like $150 million of still, you know, low margin, no margin, legacy backlog you needed to work off this year, and I believe, you know, most of it was gonna get deployed in Q1. So if that's right, it implies the gross margins on the non-legacy business was, you know, mid- to high-teens or something in that range, since you reported 10.5% for the quarter. So I guess wondering if that's right, if the legacy backlog is all gone, and then how do you... You know, how should we be thinking about gross margin for the rest of the year, given the implicit, you know, higher level for the non-legacy stuff? It seems like the 10%-12% annual guide for gross margin seems a bit conservative. And then I had a follow-up. No, yeah. All the legacy has, you know, it, it's now gone, you know, but the actual number for the first quarter of the legacy contracts that we had or that we recognized revenue in the first quarter, closer to 50, $50 million, not 150. So that gives you. You know, I think that we are in line with our 10%-12% margins that we, that we communicated for the year, and this quarter proves that if you take into account the $50 million of, you know, of legacy contracts, which are essentially at roughly break even. So, but you're at no more legacy going forward, and the actual number for this quarter was $50 million. Okay. Okay, that's fair. Then if I take the $50 million, it seems like you're sort of closer to the mid-teens, but still within that range. Understood. And then, you know, there's been a lot of questions, Julian, about lower battery prices. We see what's happening with lithium carbonate. I think you made a comment on slide 12 or 13 that your fiscal 2024 battery supply and prices are locked in. So does that mean? I know, you know, there's the index-based adjustments for your customers. Is there anything in your, I guess, fiscal 2024 backlog to be deployed that can still get adjusted on price, or is that all for future, you know, outside of fiscal 2024 backlog, that maybe still has some of those indexed linked adjustments that could take place? I'm just trying to understand how locked and loaded the backlog dollar value is for this year versus, you know, what potentially could maybe move around next year if battery prices keep going lower. Yeah. Good. Good. So let me walk you through where we are. So we use RMI, as you know. So that's part, that's an important part of how we manage our risk. The RMI supports our projects from the time we start negotiating with our customers to the point when we issue the purchase order, you know, when we buy the batteries, when we make a down payment to our battery suppliers and get an actual commitment from the battery suppliers, too. So what do we have in our backlog today? So what we have said, what we have, you know, what we have in our backlog is that we have fixed all our battery prices in, in all our backlog, all of it, you know, the $3.8 billion. We already fixed it with our suppliers and with our customers. Our current backlog does not have any commodity risk on either direction, any exposure to the suppliers moving up or down, or the customer moving up or down. That means that for 2024, as we have said, also, 80% of our revenue for 2024 is already in our backlog. So though that 80% is very much already fixed and the, you know, battery prices will not move that 80%. However, we have 20% to go, 20% that it will be subject to contracts that are in very late stage of negotiation, that will be coming in the next couple of months, and where the current offers we have outside or what we are negotiating with our customers is based on current prices. So, you know, we feel very, very comfortable that, you know, and secure that we will meet our guide, you know, our, our guidance for the year. And then that gives us 25, no? That gives us 25 in front of us. And we have roughly $1.5 billion of revenue of 25 already in our backlog. That billion, so roughly 40% of next year's, you know, implied guidance we have given you. That is already in our backlog and is already also fixed. So when you looked at, you know, if you looked at it from a, from a, you know, from the upside, 80% already in the backlog fixed, 20% in 2024, 20% subject to new contracts, which are already very late stage on negotiations. We feel very confident, which reflect current battery prices, and as I said, we feel very, very confident that we'll meet our numbers. You know, we are negotiating the numbers, we're talking to our customers, we know where we are. Those will support our 2024 revenue guidance. And then for 2025, we're still nego- clearly working on this. 40% is already in our books. The 60% to go, we know when we looked at. And then you can say, "Well, how do, why do you feel confident about it?" Looked at our pipeline. If you look at our pipeline, sorry for the long answer, maybe. If you look at our pipeline, we grew our pipeline by $400 million. Well, that means that the $1.1 billion we converted from our pipeline to backlog, we also cover. So in reality, we brought in, into our pipeline, at current prices, $1.5 billion of new contracts. So it gives us, you know, very, very clear in one quarter that, you know, the demand we're seeing in the market, the interest that is coming to this, the how much, you know, investors, customers, regulators, feel comfortable with our technology, makes us, you know, very confident that we will meet our commitments for 2024 and 2025. And I do understand that sometimes the financial markets are concerned about the potential downward pressure on revenue of battery prices. But let me be very clear. This is a tremendous headwind for this industry. The elasticity of the demand is tremendous, and that provides for a significant uptake in demand that significantly covers the potential downside of our, you know, revenue prices are about. So, you know, very, very confident on 2024, 80% on it, already fixed. Clear line of sight within, you know, shooting range, like to use an army concept, and for 2024, for the other 20% and 2025, 40% in the book, 60% to go, and with tremendous pipeline coming in that will fill, that will more than cover all our problems, you know, all our challenges. All right. That, that's great. I appreciate all that. Sorry for the very long answer, Ryan. No, crystal clear. I, I think I got the message crystal clear. Thanks a lot, guys. I appreciate it. Yeah. Thank you, Ryan. Thank you, and one moment as we move on to our next question. Our next question is gonna come from the line of Christine Cho with Barclays. Your line is open. Please go ahead. Hey, good morning, Christine. Good morning. Thank you for taking the question. I just wanted a clarification question on the backlog. You know, as I understood it, you know, if the customer had not issued notice to proceed but had booked, that was still subject to move, and it sounded like you locked everything in as for the backlog that, you know, as it stands today. But as you get incremental bookings, should we think that on a go-forward basis, all of that will be locked in when it enters your backlog as well? Or same thing, you know, it's subject to move until they issue notice to proceed. Yeah. Yeah, good point. As I said, the RMI covers from the point we start negotiating with the customer, to the point that the purchase order is issued, which is usually at the point of notice to proceed. So the new order intake that we will get, there will be a point between the moment we sign the contract to the point we issue the notice to proceed, where that potential risk is. However, what we have seen and what we can show you this time is that that time frame has, you know, collapsed significantly, and that we are now issuing notice to proceed very close, in most cases, very close to the point at which we are signing the contract. So, you know, I will say that generally, the risk for RMI in our backlog will continue to be a small number as we move forward, no? There might be one or two projects that come in where the customer wants to wait a little bit, and, you know, maybe that, that will happen. But in general, I think most of the contracts we're signing, the customers wants to secure batteries immediately, take advantage of the good price, and, and, you know, and, and move forward. So, you know. Okay, got it. And then can you give us an idea of how much of your backlog has EPC services tied to it, maybe percentage of the contracted volumes? And as demand goes up, should we think that this number, you know, this percentage number moves up, down, consistent, with incremental bookings? And, sorry, how different are the ASPs and margins today for new orders if you provide the EPC versus not? Yeah. The EPC are roughly around 30%. A lot of market, you know, and it's very much market and project dependent, no? So let's give you a sense. All our transmission projects, our Ultrastack projects, have EPC. Very complex projects that require significant, you know, coordination between all the elements, those are EPC, so, you know. Australia is a market for EPC. The US is less. So it depends a little bit where, what, how we're working. As we see, we clearly are working on improving, continue moving forward on our Ultrastack project. Australia is a market that we're very excited with. You might see that, you know, those, though, as we bring more Australia and Ultrastack projects, those will be, those will be EPC. But generally, if you wanna model this going forward, I think with the 30% is a good proxy for it. As I said, it depends a little bit on the complexity of the projects and the markets we're working on. And in terms of returns, you know, I think they're within the 10%-15%. They'll not change. Clearly, the more complex projects where we take more risks are closer to the upper band, as we have always said, and the ones that are simpler and less of a problem are on the lower side of that band. Generally, you will say that most of the EPC projects are more complex, but, you know, I wouldn't necessarily, you know, it doesn't take us out of the range of 10%-15%, no? Got it. Thank you. Okay, thank you. Thank you. And one moment as we move on to our next question. Our next question comes from the line of Justin Clare with Roth MKM. Your line is open. Please go ahead. Hey, Justin. Yeah, good morning. Good morning. Thanks for taking our questions here. So first, I wanted to ask about the demand that you're seeing for batteries that would meet the domestic content requirements, and have you signed contracts at this point for those, domestic, batteries? And then, is it possible to give us a sense for what the uplift in pricing might be? And then, do you see potential for a margin uplift, given that you're gonna be one of the first to supply, domestically produced, batteries? Could you get out of that 10%-15% range? Strong demand, you know, but I'll say that not only with our current customers, we're also attracting new customers that have... Are, you know, talking to John, our President of Americas, CEO or president, who's really, you know, we see a lot of people interested and understanding and getting in. So that's the first thing, very strong demand. In terms of margins, so we have said that, well, like, kind of what had you- what you implied, we believe we have a first-mover advantage here, and that first-mover advantage will allow us to capture some additional margin. However, you know, this is early in the game. We're still negotiating with our customers. You know, we have to wait. You know, if I tell you here a number, my customers will use it against me. So, you know, we are—we're working with our customers to ensure that they can meet the higher returns, and then we can capture some additional margin because they're doing much better than anybody else on those projects. That's what we're working with them on. You know, as these things settle down and we see those projects, you know, those contracts, you know, coming in and our customers, you know, secure about the returns they're getting, I think we will communicate to you what potential upside we might get. But for now, I prefer not to talk about it, no? Up to date, we have not signed any domestic content contracts, even though they are, you know, they are very, very late stage. Just to give you a point, which I think is important, the domestic content projects are 2025 revenue. They're not gonna be supporting 2024 revenue. Our supply, our module manufacturing starts in the summer, and then it will pick up during the quarter, and we will start receiving, you know, domestic manufactured batteries in the last quarter of this year. But, you know, we need to integrate them and then move them into a deliver to our customers, so we won't see any revenue in this year from domestic content. Got it. Okay. And then just following up on that, just wondering, how much of your Utah manufacturing capacity could be supplied with domestically produced cells, given your agreement with AESC? You know, could you fully utilize that facility to produce, you know, domestic content or- Yeah ... domestic cells that meet the requirements? How are you thinking about that? That's the idea, that we will have, you know, we could fully utilize our current capacity, and as you—we, I think we have communicated to you that capacity can be easily double if we need to. So- Got it. Okay, thank you. Thank you very much. Thank you. One moment as we move on to our next question. Our next question is going to come from the line of Andrew Percoco with Morgan Stanley. Your line is open. Please go ahead. Hey, Andrew. Good morning. Hey, good morning. Thanks so much for taking the question. I did just want to go back to some of your commentary on the Red Sea. Sounds like you haven't seen an impact to margins from the freight rates yet. But I'm just curious, do all of your contracts kind of exposed to the Red Sea have freight adjusters, or could there be some potential margin risk if freight rates don't come back down? All our contracts, irrespective of going through the Red Sea or any other route, freight adjustments, logistics adjustments. So you know, there are all these costs are passed on. So, you know, we should not see any effect on our margins coming out of the Red Sea issues. Okay, that's, that's super helpful. And then my second question is a little bit more thematic, but, you know, there's been a lot of attention paid to, you know, AI data center power needs, and it's a, it's a big theme right now. And I think it's the view as energy storage is a pretty critical component, when thinking about powering that load with, with reliable, clean electricity. So could you maybe just provide some insights into your conversations that you're having with maybe some of these customers and, and what the timeline might look like for Fluence, for, for this opportunity? I mean, this is something we have looked at. We work with Google on a project. However, to be very sincere, today, we're so busy with utility scale projects and, you know, that we haven't really worked a lot on it recently, you know? But we did have a project to test it with them. It went well, and but it's something that we have not actually, you know, in the recent quarters, something that we have not worked on, you know. But, you know, it's one of those opportunities where going to the point on battery cost reductions, where this lowering of prices will start making these projects very attractive. No? It makes it a lot more attractive than what they were when we looked at it, I think, roughly a year ago. So, I think this is kind of the type of things that, that when we talk about elasticity, on-demand elasticity, sorry for that, that comes in. And it becomes this one-off. You know, you put the price sets a point, and you turn the lights on, and all this demand comes in that exists. And that's kind of my point to all of you on the tremendous, the tremendous tailwind of battery prices in our technology, you know, and how business cases start, you know, start getting made, start being penciled in, and it become very, very attractive. So... Got it. That, that's helpful. And I guess maybe just one more follow-up on that. When you had that pilot project or you did that demonstration with Google, was there anything on the software side or battery chemistry side that they were looking for, you know, to be changed versus your traditional utility customer? This is Rebecca. On the battery side, no, the chemistry is the same. The physical delivery of the product was the same. Based on the size of what we're delivering for Google, there were some changes on the software side for the application space that was working in. Thank you. Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Julien Dumoulin-Smith with Bank of America. Your line is open. Please go ahead. Hey, good morning, Julian, team. Ahmed, congrats again. Pleasure. Hey, guys, just good morning. I'm just coming back to the top of the Q, the Q&A roster here. On the gross margin piece, I just want to come back to this a little bit. I mean, you guys obviously have this 10%-15% and then 10%-12% here in the near term. Starting off the year, the way that you did with revenues really poised to scale through the year, again, I get there's not an OpEx operating leverage piece here, but I mean, to what extent can we expect those gross margins to scale as revenues and the size of these projects conceivably continue to expand into the bulk of the year here? I mean, is there an argument to be trending higher within even that 10%-12% range? No, I think our guidance. Hey, Julien, thanks for your comments. Compliments. I think in terms of the gross margin, I think our guidance was 10%-12%. I think we feel pretty good about that range, going through the rest of the year. So I think it will be north of where we had realized in the first quarter, but I think we feel pretty good where we will end up in terms of our range for the full year. Got it. Excellent. And then, Julian, you mentioned this earlier on domestic content, your ability to potentially I think you said something like double AESC contributions here, potentially, if need be. I mean, just looking at the trade backdrop here, can you comment a little bit about like, what the back-- what your ability to pivot is, depending on any future shift in trade policy landscape here? I'm really curious about your ability to shift even more so back to domestic product, especially if the ESS market demands it, what is your ability to bring that to market as you think about providing further disclosures to the year in scaling up, if you will? Yeah, I mean, this is a 2025, you know, issue, more than 2024. As you know, this line will come back, will come online, or these cells will come online. We are working with our suppliers to ensure that we have access to their additional production capabilities and have a first right of refusal on the production as we move forward. This is a multi-year contract, so, you know, that, this is what I can tell you. We haven't really disclosed the volumes and stuff that we're working with, but the way we envision this project is a, you know, a long-term relationship where we are able to take advantage of their increasing production as it continues moving forward. No, that's the way I will put it. Yeah. I heard them. And because- So in case, I guess your questions indirectly, Julien, maybe I'm sorry that I'm implying, is that what happens is that, you know, trade issues, and then this, production becomes even more value. Well, we, you know, we believe that, you know, we have, we are putting that into consideration the way we, at least for a period of time, to be able to scale up if this becomes a lot more attractive than what it is today due to potential trade disruptions. Right. And your point is that 10-15 as it stands today, there is fundamentally sort of upside as you disclose what that domestic content sort of ASP upside is. That's right. That's right. That's our current view. Right. That's right. That's our current view. We'll talk more as we move forward and we sign these contracts and the, you know, the competitive environment settles. But essentially, just going back, it is our customers need to feel comfortable with their business cases. We have, you know, and they- that they can capture more than what they usually capture, and that we will capture part of what they usually... You know, that upside that we're giving them. So that, that's kind of how all this works out. And we're working with them on, on that process, and as soon as that settles down in a way that feel comfortable, that is the way it's gonna work for a period of time, we'll communicate to the financial markets what it, what it is. Excellent. Thank you, guys. Good luck. Speak to you soon. Thank you. Thank you. And one moment as we move on to our next question. And our next question comes from the line of Kashy Harrison with JP Morgan. Your line is open. Please go ahead. Thanks. This is Kashy Harrison from Piper Sandler. Hey, Kashy, how are you? Kashy, how are you? Okay. I'm doing well, thanks. Yeah, so first question is for 2024 guidance. You know, you indicated that you have 80% already locked in, and you should be able to get to 100% shortly. But I was just wondering if you could give a sense of how of where you were at this point last year. Were you 80% booked last year as well, or were you 100% booked at this point for the prior year? And then just- Yeah ... in general, how should we conceptually think about the amount of revenues that can be booked and captured within a year? Yeah. So last year, if you looked at our order, what we had in the backlog last year at the end of the first quarter, compare against where we ended in revenue, not where we were guiding. As you remember, we guided up over the years, so that gives a little better. Again, we were roughly at 90%. So 90% of our revenue for 2023 was in our backlog at this stage. So we're a little bit behind compared to last year from that point of view. However, you know, looking at the late stage of the development of our contracts and how we're gonna, you know, how we're going to, you know, where these contracts are, we have very, very high confidence that we will be able to secure the contracts we need to meet our guidance, you know? So yeah, that's the way it is. And you know, that's it. You know, we feel very, very good. We have several contracts, you know. They're all—we're very positive in all of them, and it should allow us to be at a point that we will meet our guidance for the year. Yeah, Kashy, this is Ahmed. I think your second part of your question was on the profile for the rest of the year. I think as I discussed in my comments, you know, I mean, 70% of our revenue or annual revenue is in the second half, and it's more back-ended loaded, but that is frankly all based on our current contracts that we have, which are when we execute. It's a timing when we are delivering those contracts, so it's more driven by the timing of the projects that we have in our pipeline or backlog. Got it. Thanks for both of those responses. My follow-up question is just around the order intakes. You know, $1.1 billion clearly very impressive. If we look at, you know, last year and the prior year, it seems like your order there was some type of order seasonality where, you know, the second quarter orders look about the same as the first quarter, then you have, like, a dip into 3Q, and then somewhat of a recovery into 4Q. Is that directionally how we should... You know, without giving, you know, super explicit order guidance, I'm just wondering if that's directionally how we should think about seasonality for orders in your, in your- No - business moving forward? I mean, it's if you look back, every year is very different. So I don't think there is a strong seasonality in our order intake, you know? So, that's where, you know, it moves around, so yeah. So it's, you know, it's more of how things worked out and, you know, something that can be signed on, you know, December 15 or January 15 is quite nothing to do with season. It's more of, you know, whether people wanna take vacations, to give you a sense of this part, you know? So I wouldn't give any. Don't—we cannot give you a view on season and seasonality of product orders. Got it. Thank you. Thank you. And one moment for our next question. And our next question comes from the line of Mark Strouse with JP Morgan. Your line is open. Please go ahead. Great. Good morning, everybody. Thanks for taking our question. I appreciate the color that you were giving earlier about no margin risk from changes in pricing because your contracts with your suppliers and your customers are locked in. Can you talk about the ability, though, of your customers to potentially cancel an order, I mean, especially if the pricing goes lower enough? And if so, can you kind of give us what your average deposits that you're collecting on those contracts? And then on the other side, do you then have the ability to turn around and cancel any orders with suppliers? Yeah. I mean, what we bring in our backlog are binding contracts that the customer cannot get out with making us whole on any, on any cancellation. Today, to this day, we have never seen a cancellation of a contract in our backlog. There's a reason for it. We are very, very strict on what comes in. Even though we have contracts that we have signed, which are, or are not in our backlog until they meet the conditions to ensure that they—if there's a cancellation, everybody's covered. So, you know, we haven't seen a cancellation. Nobody has turned down. You know, these projects very much are... So, you know, that's, that has never been at risk, and the contract will make it difficult for the customer to get out if they, you know, they'll have significant financial penalties, you know, penalties to ensure they meet and make us whole. But as I said, that has never happened. And your second question, sorry, on... If you don't mind reminding me? Well, maybe it's not a risk now, but the second question was, if your customers canceled on you, would you have the ability to cancel with your suppliers? Yeah, I mean, we put purchase orders. We'll have, we'll have penalties if we cancel with our, with our suppliers. But as I said, our customers will, will more compensate for that. So that's the way we should be, you know? So the only thing I would add to that is, Mark, I think our contract when we sign the contract, our counterparties sign the contract at the price that makes sense for them at that time. So they look into, take into account the economics of the project. So I think that is what really drives their decision to continue, and then they make advanced payments, you know, because we generally get anywhere from 10%-30% advanced payments. And I think those are the things, and that you have to take into account. I think, but overall, as Julian mentioned, you know, we have never seen any contract getting canceled for the same reasons. Yeah. Yeah, that makes sense. Okay, thank you both. One quick follow-up, and on the last call, Manu gave some color about the timing of down payments to AESC. Was there any update there? I'm sorry if I just, No, nothing changed. I think we basically are on track. No, nothing to report beyond what we discussed. Okay, excellent. Thank you very much. Great. Thank you. Thank you. And one moment as we move on to our next question. And our next question comes from the line of Tom Curran with Seaport Research Partners. Your line is open. Please go ahead. Good morning. Hey, Tom. How are you? Good. Good. So, under the EU climate law, the European Commission is working on an updated version of its National Energy and Climate Plans that will establish decarbonization targets for 2040. Between an early draft that leaked into the media and then a subsequent official communication, the commission has proposed a target for the power gen mix of 90% renewables, complemented by nuclear, and referred to grid-scale energy storage as a key element, in their words, for achieving that. You know, this news, following last year's adoption of accelerated permitting for standalone storage, suggests the EU really is placing increasing emphasis on storage support when it comes to policy. What are you guys most excited about, that either is gestating and seems to have good odds of, you know, becoming part of law or a new rule or incentive? What are you most excited about that you have visibility on over, you know, either this year or let's say, by the end of fiscal 2025? I'll tell you what, the things we have seen in the last quarters, clearly, demand very strong. Also, I don't know if you saw the announcements, supply chain moving into Germany or into Europe, let's put it, you know, Northvolt announcing a big factory in Germany, other players announcing factories all around Europe. So our localization of supply chains coming now with a better environment for it. So good. That's a good sign. And then our pipeline moving very strongly, you know? Especially Germany becoming a hotspot, a market that's very active. The U.K. has always been a market, but then markets that have not been that active now becoming more, you know. Italy came out with a six-hour, you know, capacity payment there. A few things happening around that makes us very, very excited. You know, I will tell you, if you ask me what I'm excited about, all of the above, you know, everything. I'm excited about the fact that we have, you know, the supply chain is, you know, starting, incipient, but, you know, good. The fact so that, you know, we believe in the realization of supply chain, so that's great. And now there's a lot of more players and regulators supporting, you know, the regulators supporting it. So great, we see these changes in Italy and in some of the Nordic countries. That's right. And then a lot of customers in Germany, in the U.K., that we have been working on contacting us to move forward. So, you know, all of the above, I will say Europe is a fertile ground for battery storage, so. That's helpful. It makes sense. And then, Ahmed, on the balance sheet, you saw a big sequential increase in inventory, which more than doubled to $564 million. You know, given the steep ramp in shipment and installation activity that you're preparing for as part of recognizing roughly 70% of fiscal 2024 revenue over the second half, I suppose that, you know, it's at least partly self-explanatory, but could you just expound on that inventory surge and then give us an idea of how working capital as a source or use of CFFO should evolve quarter by quarter over fiscal 2024? Sure. I think in terms of— Yes, you're right. I think our inventory balance has increased by a couple of hundred million dollars, you know, I mean, this year. I think this quarter, and that is primarily, I think, as we are ramping up our growth in revenue. Because as I discussed, you know, I mean, our revenue next quarter, second quarter, will be about $550 million. So that inventory balance is largely, I think, will be deployed to serve our or recognize our revenue in Q2. In terms of our working capital needs, you know, I think we discussed on our Q4 call, I think in 2024, there will be, I think, about $100 million or so of additional working capital needs. But that is part of the plan, I think, that we will be funding through our existing liquidity. So nothing changed from that perspective what we discussed on our Q4 call. Feel pretty good, given our liquidity is north of $600 million, so we can manage any short-term working capital needs if we have to. Great. I appreciate the insights. Thank you, and one moment. Our last question is gonna come from the line of Ben Kallo with Baird. Your line is open. Please go ahead. Hey, thanks for fitting me in, guys. Just two quick ones. First, maybe this relates to the Notice to Proceed, but could you talk about any risk in, you know, project or sales timing based on interconnection delays or, you know, shortage of electricians or labor shortages? And then my second question is just your appetite for, you know, offering your software to other battery providers, whether lithium-ion or other types of storage providers. Thank you. In terms of, you know, when you looked at our... In terms of the risk of the delays is interconnection. Essentially, it is an acute problem in the U.S., less of a problem generally, you know, in the other markets. It's important to make that point. The second one is that what we have in our backlog already has, you know, the queue has been resolved. Our customer has a clear line of sight of when they're gonna connect, what they need to do, one by one. So, you know, there could be delays, but the delays are usually weeks because, you know, something didn't get to a site on time or, you know, things like that. So not the delays we talked about. So generally, I would say that our backlog is the risk on, you know, transmission delays in general, you know, except for, you know, more of a civil work step type of delays. Then you do see, you know, clearly our pipeline, the our ability to convert our pipeline into backlog, you know, it is subject to our customers in the U.S., ensuring that they can get on the queue and get those problems resolved. We just see what happened this quarter. You know, we are not seeing a significantly—When we build our pipeline, we set dates when we see that projects are gonna be projects that we believe we're gonna be able to sign them. And we haven't seen significant delays of, you know, that, that in any way affect our results or ability to meet our financial metrics. There are projects here or there, ones that surprise you by how fast they move and ones that surprise you because they're a little late, but I'll say when you put them in balance, they're generally, they're generally not the same. In terms of digital solutions, I think I will have to make two. We have, you know, our BMS, our operating systems, which are integral to our, you know, hardware solutions. And those are not, that we're not gonna sell that to anybody. We're not, we don't offer to third parties. This is ours. We use it for ourselves, and it makes us different. It's one of our competitive barriers, you know, and our competitive capacity. However, we do have our Fluence digital offering, our Mosaic offering, which is a bidding app, and our Nispera offering, which is a performance management tool. Those two, those we do sell to third party, to third-party technology. So there are competitors of us who the owners of their technology prefers to use our bidding app and prefer to use our performance management tools rather than whatever the other competitor is offering. But I'll say that only on those two points, on the OS and on the operating system and the BMS, it is integral to what we do, and we don't offer that to anyone else. Thank you. Thank you, and I would now like to hand the conference back over to Julian for any further remarks. Great. Well, thank you. Thank you so much, everybody, for your interest and questions, and you know, we had a great quarter, a great quarter, great order intake. Revenue, we knew from you know that in line with what we expected, what this is, what kind of in line where we were going. I think an important point and something that you all brought to me last year that you know as a main point is you know the double-digit gross margins you know. This was a main discussion during 2023, whether we were gonna able to do it. Now we have two quarters of delivering meaning you know double-digit gross margins. I think this is the basis of which, you know, as we ramp up on revenue, the basis on which we will be able to become, you know, to get reach profitability for this quarter again. So we're very confident on our 2023, 2024 guidance and our ability to meet our $2 billion -$3 billion middle of the range earnings revenue guidance and our $50 million -$80 million in terms of adjusted EBITDA. So very happy for what's going on. Thank you so much, and talk to you. This concludes today's conference call. Thank you for participating. You may now disconnect.