Good day, and thank you for standing by. Welcome to the Fluence Energy First Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You will then hear an automated message advising 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 first speaker today, Lexington May, Vice President of Finance and Investor Relations. Please go ahead. Thank you. Good morning, and welcome to Fluence Energy's First Quarter 2025 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, and Ahmed Pasha, our Chief Financial 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 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 extend a warm welcome to our investors, analysts, and employees who are participating in today's call. I will review our Q1 results briefly and then provide an update on our business and financial outlook. Ahmed will then go into more detail on our financial results. Beginning on slide four, we continue to see a very strong battery storage market, with the U.S. as the cornerstone. We have carved out a solid competitive advantage with our domestic content offering, where we continue to see strong interest from customers. This has been a key driver of the growth of our backlog, which is now at a record $5.1 billion. Our diversified supply chains, particularly our U.S. domestic content strategy, allow us to mitigate the potential impacts of current geopolitical uncertainty that we expect will continue for the foreseeable future. Looking at our first quarter performance, first, we generated $187 million of revenue, with a 12.5% Adjusted Gross Margin. Revenue was significantly lower than fiscal Q1 2024, resulting from our fiscal 2025 back-end weighted plan, as discussed in our prior earnings call. Second, we continue to add to our backlog with another strong quarter of more than $770 million in order intake. This propelled our backlog to a record $5.1 billion, providing a high degree of visibility to future revenue growth. Third, our Annual Recurring Revenue, or ARR, was $106 million, which is an increase of $6 million from the previous quarter. We're on track to achieve our $145 million ARR target by the end of the fiscal year. Finally, we ended the quarter with more than $650 million of total cash, which puts us in a strong position to continue investing in our products and delivering value to our customers. Turning to slide five, we're providing an update to our fiscal year 2025 guidance. We now expect revenue between $3.1 billion and $3.7 billion, with a midpoint of $3.4. This is a $600 million reduction from the midpoint of our prior guidance, which is due mostly to delays in the expected signing of contracts for three projects in Australia. The delays were project-specific. One was delayed for permitting issues related to traffic control. Another due to recent delays in the corresponding customer offtake agreement, and the third project is located at a brownfield site where it took longer to prepare the site than expected. All these contract delays were unique, rather than systemic, and do not represent a cooldown of the Australia energy storage market. The issues affecting these three projects are now resolved or are close to resolution. We expect to sign all three contracts later this year, with revenue to be recognized in fiscal 2026. The midpoint of our revised revenue guidance is approximately 85% covered by contracts in our backlog and revenue recognized to date. This coverage ratio exceeds the coverage ratio we had at this point in fiscal 2024 and fiscal 2023. The new guidance midpoint, a bit disappointing, still represents approximately 26% growth from fiscal 2024. Turning to slide six, the strong demand for battery energy storage in our markets continues to attract competition, especially from Chinese players trying to preempt trade restrictions and compensate for underperformance in the Chinese market. Recently, we have seen Chinese players intensify their competitive position in international markets, exerting significant pressure on pricing to win contracts. We believe this competitive environment will continue, and as I will discuss later, we are making the required investments in product development to compete successfully. However, as Ahmed will address shortly, this competitive environment is putting pressure on our fiscal 2025 margins. We recognize that the key to our success in the face of this increased competition is our ability to continuously innovate our technology, which should lead to superior performance, competitive pricing, a more reliable supply chain, and better security of our products. Putting the customers at the center of our efforts and ensuring we are the best technology partner to support their project objectives has been the foundation of our success to date and supports our continued leadership position in the market. In response to the increased competition from Chinese players, we have accelerated our product development program. To that end, I would like to highlight a new product platform that we will be launching as part of a customer roadshow this Thursday, February 13. We expect to see the benefits of this new platform beginning in fiscal 2026. This platform will put us in an industry-leading position in terms of density, something our customers are increasingly requesting to reduce their footprint and cost. The design will be an AC block, incorporating the inverter and other balance-of-plant equipment within the enclosure. The new platform also offers a lower cost point, arising from its higher density, modular design, faster installation, and reduced operating costs. This will provide our customers with a significant reduction in their required investments and their total cost of ownership over the life of the project. The new design, in conjunction with our digital capabilities and services offering, will allow us to offer our customers 99% availability, which represents industry-leading performance. We can achieve this performance with the seamless integration of our hardware, proprietary controls, digital tools, and service offering. The platform will also offer industry-leading safety features, similar to the elements found in our proprietary Cube and Gridstack Pro product lines, which includes our unit-level burn certification, but now at a much higher density. This new platform will integrate our most recent developments in cybersecurity, which will provide the confidence that our customers, regulators, and communities require to ensure the security of their power grids. This new platform will also enable faster realization of project investments as we continue to reduce our integration cycle times, which we aim to reduce to 12 months from 18 months historically. All these factors are critical to enable our customers to achieve the lower total cost of ownership across the project life, leading to a higher return on their investments. This new platform will be the most substantial generational change for Fluence since the introduction of the Gen 6 Cube. Because of the significant benefits to customers, particularly the lower total cost of ownership and improved performance, we plan to price the product competitively while securing gross margins within a range of 10%-15%. This new platform also provides a foundation to continue product development that will allow us to accelerate our innovation roadmap going forward. We believe the speed of our innovation is key to our success. Turning to slide seven, I'm pleased to report that our backlog, as of December 31st, was $5.1 billion and includes a volume of 18.5GW h. This is the highest level in our history, representing a year-over-year increase of 38% in value and more than double in terms of volume. This growth reflects the strong elasticity of demand for our technology, which supports our continuous growth in terms of both revenue and volume despite declining prices. Our backlog provides us with strong visibility to future revenue and positions us well to continue growth in our recurring services and digital businesses. Turning to slide eight, the size of our pipeline continues to reflect the strong growth prospect for energy storage. As a reminder, our pipeline reflects our rolling 24-month views, thus giving us confidence in our ability to continue our growth trajectory. Since the end of the previous quarter, we have increased our pipeline by $500 million to $21.4 billion currently. This is particularly impressive considering that during the first quarter, we converted more than $700 million into backlog. To provide more perspective, our pipeline has increased 60% from this time last year, which reflects significant growth prospects for energy storage globally. We continue to see a very robust international market, which should further diversify our geographic mix in the coming years. Nearly half of our $21.4 billion pipeline is in the U.S. market, and the rest in the international market, with Germany, Australia, Canada, and Chile representing the bulk of it. Turning to slide nine, I would like to provide an update on the U.S. energy storage market, where growth continues to surpass expectations. First, we expect power demand to increase to more than 5,000TWh by 2030, which represents a 2.4% CAGR from 2022 to 2030. This anticipated robust growth is driven by data center growth, domestic manufacturing, and sector-wide electrification. Second, battery storage is becoming more mainstream. In the Americas, battery storage installation increased 83% year- over- year to more than 45 GWh in 2024. This robust growth is reflected in the interconnection queues for major U.S. markets. Across the entire U.S. interconnection queue, battery storage is second only to solar in gigawatts of interconnection request. For example, in ERCOT, battery storage represents 43% of the outstanding grid connection applications. And in CAISO, battery storage represents an even larger contribution at 68%. Turning to slide 10 and continuing with our discussion of the U.S. market, I'd like to review some of the recent policy announcements and headlines since our last call. Starting with trade-related headlines, our U.S. domestic content strategy and our proactive initiatives, especially with respect to supply chain, puts us in an excellent position to successfully weather the changing U.S. trade policy. We view tariffs in two buckets: announced and potential tariffs. The first bucket is a universal tariff that already has been announced on China. Because of our business strategy that I just outlined, less than 15% of our backlog is exposed to this tariff. We estimate that for our fiscal 2025, the impact of the recently announced 10% tariff on Chinese imports is approximately $10 million of gross profit, which is reflected in our updated guidance. The second bucket is potential product-specific tariffs that have not been announced. We view the announced and potential tariffs on China and specifically on Chinese battery storage systems as a net positive, as they will enhance the competitiveness of our U.S. domestic offering. Next, moving to potential changes to the Inflation Reduction Act, or IRA. Regarding the Section 48 ITC that our customers claim, we believe there is sufficient bipartisan consensus in keeping the standalone ITC for storage, as it supports much-needed energy security and reliability. Additionally, looking at Section 45X, we also note that there is sufficient bipartisan consensus for maintaining these tax credits, as it supports domestic manufacturing, something the Trump administration has been very vocal about. As we noted previously, much of our U.S. supply chain is in red states and currently provides thousands of jobs. Finally, on the advocacy front, we've been very proactive with the Trump administration promoting awareness of the importance of cybersecurity for critical grid infrastructure and thus advocating for a ban on foreign control for battery storage systems. The security of power grids is of paramount importance, and regulations should ensure there are no software designs or controls by foreign entities that will provide them the ability to disrupt power grids. This is especially important for battery storage systems, given their increasing role in U.S. power grids. Fluence is proud to build its own control systems for battery storage in the U.S. Battery storage represents the fastest and most economical way to provide the much-needed capacity and resiliency that the U.S. power grids need to support the AI industry, the U.S. reindustrialization, and general economic growth. Turning to slide 11, our strategy of developing a U.S. supply chain is something we've been working on even before the IRA was passed in 2022. As a result, we can now offer a product that is 100% non-Chinese. This is something the market has taken note of, as we have doubled our number of U.S. customers over the past year. Our ability to mix and match various components of the battery storage system to enable our products to meet the required thresholds for domestic content is something unique to Fluence and enables us to stretch our U.S. cell supply beyond its nameplate plant capacity. As a result, we have the ability to meet all our expected U.S. domestic content demand in 2025 and 2026. Regarding our domestic manufacturing efforts, we continue to make good progress with our U.S. cell manufacturing efforts at the AESC Tennessee facility. Line one is in the process of ramping up production, and line two should come online sometime during the summer of 2026. This concludes my prepared remarks. I will now turn the call over to Ahmed. Thank you, Julian, and good morning, everyone. Today, I will review our first quarter financial results and then discuss our updated outlook and liquidity for fiscal 2025. Turning to slide 13, in the first quarter, we generated $187 million of revenue, which was a decrease of 49% from the same quarter last year. The decrease was largely anticipated and reflects the back-end-weighted nature of our expected full-year revenue, which we noted on our last call. We generated $23 million of gross profit, representing a gross profit margin of approximately 12.5%. This was our sixth consecutive quarter of double-digit gross profit margins. We reported negative $50 million of Adjusted EBITDA, mainly due to the fact that our operating expenses are more evenly distributed across the year than our revenue. Turning to slide 14 and our guidance for 2025, as Julian discussed, we now expect revenue of between $3.1 billion and $3.7 billion, with a midpoint of $3.4 billion. This is a reduction of $600 million from the midpoint of our prior guidance, which is due mostly to the timing of three specific projects in Australia that have been delayed but not lost. We had been expecting to sign these contracts in January such that we would recognize the associated revenue over the following nine months. However, over the past month, it became clear that the signing would be delayed until later in the year, which does not allow us enough lead time to be able to execute on these contracts and recognize revenue in the fiscal 2025. We expect to recognize revenue from these contracts in fiscal 2026. I would like to emphasize that the midpoint of our revised revenue guidance represents backlog coverage of approximately 85%. Although it is disappointing to us to reduce guidance, the revised midpoint of $3.4 billion still reflects 26% year-over-year growth from fiscal 2024. From a revenue timing perspective, we now expect our fiscal 2025 revenue split to be 15% in the first half and 85% in the second half. The shift primarily reflects the timing of signing some of the projects. In terms of annual recurring revenue from our services and digital businesses, we continue to see traction in our recurring revenue platform and still expect to end the fiscal year with $145 million of ARR. Regarding gross margin, we have narrowed our expectations for gross margin to 10%-12% from 10%-15% due to the factors I will discuss shortly. When looking at our fiscal 2026 outlook, we expect revenue growth of 30%+ in the fiscal 2026, starting from our updated fiscal 2025 guidance midpoint. Turning to slide 15 and looking at fiscal 2025's Adjusted EBITDA, we have lowered the midpoint of our guidance by $95 million to $85 million. This change reflects a $125 million reduction in gross margin, partially offset by cost-cutting initiatives. More specifically, the $600 million reduction to our revenue guidance at the midpoint, attributable to the delay in signing the contracts, has an impact on Adjusted EBITDA of approximately $75 million, based on our previously assumed 12.5% gross margin. In addition, there is an impact of $50 million from competitive pressures and the recently announced tariff on Chinese imports that resulted in a lower gross margin of 11%. To mitigate the impact of EBITDA of lower gross margin, we are implementing a targeted action plan to reduce our costs that will better align our resources to deliver long-term sustainable growth. We expect these actions to generate $30 million of offsets, which takes us to the new revised Adjusted EBITDA guidance midpoint of $85 million. Turning to slide 16, I will now discuss our liquidity, which continues to be strong. We ended the quarter with $654 million of total cash, which represents a 37% increase from the same quarter last year. Additionally, we have $458 million available under our revolver and supply chain facilities, which puts our total liquidity at more than $1.1 billion. This reflects the benefits of $400 million of convertible notes issued in December, which results in a fully funded plan for 2025. During the first quarter, we used more than $200 million of cash for our operating activities, which was partially driven by the purchase of inventory to fulfill near-term contracts. This use of working capital represents the substantial majority of the expected working capital needs for this year. In summary, we have strong liquidity that positions us well to capitalize on significant growth in the energy storage market. With that, let me turn the call back to Julian for his closing remarks. Thank you, Ahmed. Turning to slide 17, I would like to emphasize the key takeaways from this quarter's results. First, we're adjusting fiscal year 2025 guidance primarily to reflect delays in signing specific contracts and, secondly, due to some competitive pressures. The strong backlog coverage of our revised guidance significantly lowers the risk of our year-to-go outlook. Second, the battery storage market remains robust, driven by rising demand and highlighted by the U.S. market, where we have a competitive advantage with domestic content. Third, our U.S. supply chains put us in an excellent position to mitigate the geopolitical volatility we're experiencing and foresee for the near future. And fourth, our strategy of rapid innovation, or more specifically, our new product platform provides the technology foundation to sustain our leadership position in the competitive environment we are experiencing. In summary, even with the disappointing guidance we set today, we have confidence in the strength of our business model to guide us to success in this market. We remain dedicated to delivering the profit return our shareholders are seeking. True. One, our strategy of profitable growth that provides robust top-line growth with double-digit margins. Two, a successful operating track record that provides confidence in our ability to realize the margins in our backlog. Three, scalable operating leverage, implying strong growth of Adjusted EBITDA on top of our top-line growth. Four, continued investment in product innovation and sales capabilities to ensure our offering is competitive. And more important, that customers are well-served and enjoy a secure route to value for their investment. And fifth, and finally, a capital-light approach that, on top of the agility to adapt to a changing environment, allows for robust profitability metrics. With that, I would like to open up the call for questions. Thank you. At this time, we'll conduct the question-and-answer session. As a reminder to ask a question, you'll need to 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. Please stand by while we compile the Q&A roster. And our first question comes from the line of George Gianarikas of Canaccord Genuity. Your line is now open. Good morning, George. Good morning. Good morning. Thank you for taking my questions. Maybe first, just to focus on the 2026 revenue guidance that you pointed to in your deck. You mentioned that you expect 30%+ growth there, which is the same as last quarter, despite the fact that you had some three push-outs this year in Australia. Does that mean that you've maybe lost some business, or do you just decide not to update that for other reasons? Thank you. Thanks, George. We're taking a conservative view of our 2026 and what we have today and the way we present it is kind of a floor or where we see we can do 30% on top of our guidance. Our idea is that as we move forward during the year, we will be able to give you more clarity on these numbers and firm them up. Today, our best view is the 30%+ or 30% on top of the midpoint for 2025, and I will provide a better view for 2026 as we move along. Today, we have like $1.2 billion in our backlog for 2026, and we need to bring some additional backlog in order to firm that number up. And we hope to do that as we move forward. But we have taken, after what happened now, we have taken a more conservative view of 2026 than what we have done. Thank you. And maybe as a follow-up, this different topic, do you have any comments on Moss Landing and some of the recent events there to help us kind of work through that? Thank you. Yeah. Moss Landing, we have no information except for what we got from the press. So we have not been to that site since 2022. We have no contract with that site. We have no service agreement with that site. So we don't see there's any liability coming out of that event. As I said, what we know is the same thing you browse on the media and in the general media. So no, we cannot comment more than that. Thank you. One moment for our next question, and our next question comes from the line of Brian Lee of Goldman Sachs. Your line is now open. Good morning, Brian. Hey. Good morning, everyone. Thanks for taking the questions. I'm sure you're going to get a lot of them, but I wanted to focus on the margins for a little bit. So maybe to start off, can you talk about sort of what margins you're seeing on new bookings this quarter as well as these Australia bookings you're expecting later in the year? Is that all going to be at the lower end of that 10%-15% range you've targeted overall, or are you going to be able to start seeing some margin expansion based off the new product and redesign? I just try to understand how structural and how set are these margins at the lower end of the range for a while, and then is it something you recover in 2026, or does it take longer than that? Very good question. Two points I think that are important. Let's talk about first 2026. We believe that our new product design and our strategy for 2026 will bring us back to our range. So it will put us in the middle of that range, at least, or hopefully better than that. But that's our view today when we looked at the product, what it can do. So we see this margin reduction as a temporary situation. What do we have for the year? When we looked at two things that drive this margin point. One, a change of mix. The mix of projects changed due to the delays in the Australia projects. Second, our current view of the recent backlog and the backlog that we will need to enter into to support 2025-2026 revenue is that they will come in high single digits. If you do a simple math, when you do the simple math of what we had in our backlog at 12 1/2, well, the high single digits, it comes around these 10%-12% that we're giving you. We think this is temporary. This is something that we are addressing. It comes out of competitive pressure. We're not that far, but we are putting up a plan to get to where we need to be. That's conceptually. This is a temporary situation that we will address with our investments in technology, essentially. Okay. Fair enough. And then just a follow-up for me would be, I mean, presumably, this competitive pressure you called out, Chinese peers, is more acute in international markets than in the U.S. because I know Julian, you spent a lot of time on the call talking about how the advantages that are starting to come your way in terms of the U.S.. So is this a large function of incremental bookings coming from the international part of your pipeline? And on the U.S. side, are you seeing the same type of pressures, or are you actually seeing any kind of margin upside because of your kind of domestic advantages? Have you started to see any of those benefits accrue to your margins and pricing? Love to maybe just dissect the difference between U.S. and international sort of margin outlook. On the U.S. side first, we see a very strong position. The problem in the U.S., the issue in the U.S. are tariffs. As we said, we mentioned that $10 million hit on margins on U.S. contracts that we expect in 2024 or contracts we're going to be realizing 2025. So that's where we see that lower point. The competition is mostly in international markets, mostly that's significantly more strong in international markets. And that's where we have seen our margins compress. We have seen competition all around, but the compression of margins comes mostly from international markets. However, as I said, just repeating my point, the U.S. has seen the $10 million in tariff, which is a margin. The reduction happens in the U.S. So most of our U.S., essentially all of our U.S. domestic content is in U.S. for 2025 has already been contracted. So generally, we don't see that there will be any ability to that we will lose some of that. Thank you. One moment for our next question. Our next question comes from the line of Dylan Nassano of Wolfe Research. Your line is now open. Hey, Dylan. How are you? Good. How are you? We'll be better. Let me put it that way. Yeah. Understandable. Can you just talk to your confidence level that these Australian contracts do kind of come back and get signed by the end of the year? And then if they do, is there any chance that any of that would be realized in 2025 at the time that you book them? And then, I guess, just taking a step back, can you just talk about what kind of gave you the confidence initially to include them in the guidance and what kind of changed relative to your assumptions? This is a very, very good point. These delays were caused, let's talk about the projects, by minor issues that, being very, very transparent here, my team did not see on time. By the time we saw the delay, we realized these projects have all their major permits. They should be ready. We are very much very advanced. It's things that we had already. We believe we had in our pocket. However, these minor issues delayed the projects in a way that and that's what it is. So we are very confident. At least two of them are essentially fully de-risked and should be signed. We signed, and they should not be and we should be able to. Is there a probability that they might be ready in 2026? There is, but today, I don't feel confident enough to bring it into the forecast. So we decided to take them out of the forecast for this year because clearly, and one point that some of you had asked me many times, interconnection. None of these things is interconnected. These guys fully have all those permits. The issue has been minor issues, like traffic, a road passing through a town that did not get the permits until recently. Small issues with the offtaker that delayed the project and some issues with preparing a site that I will say my team should have picked up, especially because these were big contracts. We see these things, small contracts here and there, and they're usually delays that do not affect our ability to meet our forecast. However, when we have minor issues on three big contracts, it derailed our 2025 plan. So that's what it is. So we feel very confident that they will come in. And our current view is that it will be 2026 revenue. There's a probability that you may get some 2025, but today, we took it out of the forecast and decided to try and continue on this, keep it in quarter clean. Okay. Thank you. It's very helpful. And then just as a quick follow-up, so the slide on the tariff exposure is helpful, but I guess the one thing that's kind of missing in that discussion is the Section 301 tariffs that hit in 2026. Can you just kind of readdress your exposure to that 25% tariff that hits next year and kind of how you're mitigating that? We have that. That we have included in our forecast. It should not affect our numbers. I mean, it affects our cost structure and stuff that we need to do, but it will not affect our ability to meet our forecast. It's already put in place. Great. Thank you. You're welcome. Thank you. One moment for our next question. Maybe a point on tariff. I can add one thing. Sorry, Dylan. It's the following. The problem with tariffs that are announced with time, we have all the tools to manage them because these domestic content gives us that ability. And we have all the tools to manage it very effectively, like the 301s. We'll get it in. The problems are the surprising stuff that comes out of nowhere that people were not expecting that are more difficult, and it takes us a little longer to adapt to. So I think that at some point, we'll get to a normal cadence with the Trump administration, and things will be announced with time, and we will be able to manage it because our domestic content strategy, it is designed for a world of protectionists. That's what it's designed for. And it should do very, very well. So just to give you a sense of why the 301s, we treat them very, very differently than how we treat the tariff on the 10% China tariff, which came out solidly. Our next question comes from the line of Christine Cho of Barclays. Your line is now open. Hi. This is Tom on for Christine. Hey. Good morning. How are you? Good morning, so you guys had a very large deferred revenue number of over $300 million run through your cash flow statement, so the magnitude was much larger than what we've seen in the past. Could you talk about what drove that this quarter and if there's anything notable about when we should see that reverse and book this revenue? I'll give you Ahmed. This is Ahmed. I think we will expect that to be reversed within the next quarter or so, so this is more just the accounting, but I think we expect that to be rolled over within the next three months. Okay. Great. Thank you. That's helpful, and then I guess just one follow-up from me. Could you talk about what measures you're taking on the graphite supply and procurement front given the AD/CVD investigation? How would any duties impact your existing operation in the event that they were retroactive? I don't think they can be retroactive, by the way. They can be retroactive. Okay. So where are we today on this one? First thing, I think is the first point. In order to prepare for potential duties, we are trying to accelerate some graphite into a contract, clearly for retroactive duties that will not apply. But if they were, we should reduce our problem if things were to go forward. How to think about this? Generally, tariffs are roughly 30% of a project. Graphite is 10%-15%. So roughly on a total project cost, 5% is graphite. The way we understand the petition's claim is that they are asking for an application of duties on graphite imports and on all batteries that include, and other elements that include, graphite. So what it will mean is that this will create a level playing field for both domestic content and for imported batteries. So it will not be that domestic offerings will be more expensive than imported. If they were successful in their claim, that's what it will mean. The whole market will go up in price, and we should all feel the same. From our part, what we're doing is accelerating some graphite imports. But at the end of the day, I will say that if it is, if they can go back, I don't know how far back they can go, that will not be sufficient. So that's what we're doing. We believe that this will create disruptions. It will create a problem, no doubt. But it will create a problem for the whole industry. And it should not make domestic content by itself less competitive. The main objective of these graphite manufacturers is to develop a battery industry in the U.S. where they can deliver their products. So if they destroy domestic production, they will not meet their objectives. So I think at the end of the day, we should be able to adapt to this. However, if it comes, let's say that if there is a retroactive tariff, it will create some disruptions that we will let you know when it comes. I mean, it's difficult today to see what it is. Thank you. One moment for our next question. Our next question comes from the line of Andrew Percoco of Morgan Stanley. Your line is now open. Good morning, guys. Thanks for taking the question. Good morning. Good morning. I morning. I just wanted to come back to a question on margins. I think loud and clear that margin compression and pricing compression is really originating in some of these international markets. But just kind of wanted to put a finer point on what you're seeing from domestic customers. You've talked a lot about strong domestic content demand. Can you confirm whether or not that's translating into maybe premium pricing and higher margins on those contracts today? I mean, our margins are within our range of 10%-15%. We have not been able to go beyond that up to now. What we have seen in the U.S. is that a lot of these players are trying to sell into the U.S. ahead of these rules coming out and trying to, I don't know. So there's a little bit of noise about that. Generally, the customers we're working with, which are customers who are betting on domestic content, that's not something that really affects them. But we have seen the Chinese players trying to become more active, especially on projects that are delivering during 2025 to try to win space in the U.S., trying to preempt trade restrictions. Got it. My main point is that I don't think that is affecting our domestic content margins, and our domestic content margins are in the 10%-15%, and today, we haven't seen premiums that will take us out of that range. Understood. Okay. That makes sense. Maybe shifting gears to the cost side of the equation for a second. As you've ramped your facility in Utah, can you just discuss how has the cost trajectory played out maybe relative to your expectations? Is everything going as planned, or are you maybe a little bit higher in the cost per kilowatt hour than maybe expected? Just maybe give a general outlook of cost trajectory from that facility. I tell you, that's a very good question. I'm very pleasantly surprised. Not surprised, maybe that's not. I'm very pleased with how that facility is going. And he makes the point that I don't know how to say I'm not originally born in the U.S. The U.S. can't compete manufacturing stuff. Come on, let's get out of this idea that only the Chinese can do it. This is a facility with machines made in Indianapolis, Indiana, and that is run by Americans. And it works very, very well. And if you go to a facility in China, you go to this, our facility is better. There's no reason why we need to think we lost the battle of production. I know that it's difficult. Your financial market, you're not into this. But when I talk to people, I don't know why. I mean, this is a battle we can win. And we're not even experts on this. And we've been able to put in this facility very quickly and doing very, very well. I really think that hopefully, I hope that we all get the confidence. Not you, but the entrepreneur world in the U.S. gets the confidence that we can build stuff in the U.S. at competitive prices. There's no reason why we need to think that the Chinese are any better than us and doing any of this stuff. So hey, but very, very good. It's doing very, very well. I'm very, very happy. I do hope that when things get better, we'll invite you over. You can see it and see for yourself how great these machines. These machines were not imported. They were made in Indiana, so. Thanks so much. Thank you, Andrew. Thank you. One moment for our next question. Our next question comes from the line of Mark Strouse of J.P. Morgan. Your line is now open. Yes. Good morning. Thanks for taking the questions. Hey, Julian. I want to go back to slide 10. So we talked about government policy and trade. There's nothing on there about the temporary permitting freeze in Trump's executive order. Is it safe to say that there's no impact to Fluence there, or is it maybe just too early to tell? No, we haven't seen any impact today. No real impact. I understand that they were all it applied to federal lands, and they were all lifted. That's what I read earlier this week. I don't know if that's the case or not, but that's what I because I haven't been involved directly. What I heard is that all the permitting freeze were lifted earlier this week. Got it. Okay. I'll take the rest offline. Thank you very much. Yeah. Thank you. One moment for our next question. Our next question comes from the line of Chris Dendrinos of RBC Capital Markets. Your line is now open. Hey, Chris. Good morning. Thanks. I wanted to ask about the new product launch. And I guess the question is, is this sort of industry-leading, or is this a bit of a catch-up product? The reason I'm asking is I'm curious if you think you're going to be able to maintain that margin profile if it's an industry-leading product and your, I guess, competition would play catch-up and price down as well? Thanks. We see this as an industry-leading product. It will allow us to get to the 7.5GW-7.2 GW. Sorry. It will get us to 7MW of capacity per unit, which is industry-leading, 30% better than anybody else. So we believe that people will copy us, but we will. And what have we done to make this? We separated the batteries from the intelligence of the unit. We're putting all the units in the base of that product line that you see there. That allows us to go higher in terms of batteries per square meter. But it also allows us to continue transporting everything in containers. So by separating the pods that you see, the individual pods into the specific units and putting all the intelligence and balance-of-plant equipment in the base, we can go higher in terms of height, and we can reach a much higher density than anybody else using 300 amp-hour cells. So that's, I think, will put us in a very, very, very competitive position. All the other products that are close to what we're doing are products that are using higher-end power cells batteries. So this will allow us to provide these with lower amp-hour cell batteries, which means if we adopt the higher amp-hour cell batteries, we'll be even higher than that. So we're very, very happy with the product. We believe we're industry-leading, and this will allow us to regain our competitive advantage. And also, this facility gives us a platform. This new product gives us a platform where we can innovate. So we already have our product roadmap to ensure that this is not just the beginning of a set of innovations that will keep that project competitive as we go along and our competitors try to copy us and come with other stuff. So I think this is Ahmed, Chris. I think your question, as Julian mentioned, I mean, I think the goal is to create value for our customers and in return, at the same time, it's a win-win proposition that will bring us back our targeted returns that we talked about, 10% to 15%. That's right. Okay. And then maybe as just a follow-up here, I hate to hit the margin question again, but if I go back to the prior commentary, the original outlook, and I think you mentioned that you were 65% booked for the year. So if I just do kind of the bridge on that to the new guide, it looks like the incremental margin on the unbooked portion here is pretty low to kind of almost negative. Is that? There's no way. No, Chris, just to, I think, step back. Last time when we gave our guidance, we were saying 10%-15% margin, and we had 65% of our coverage for our revenue guidance of $4 billion. Fast forward, what we are saying today is, I think since then, the contracts we have signed are roughly high single digits, I mean, 9% plus or minus. So I think that is what we are saying. Net- net, that brings us at around 11% gross margin for the revised guidance. So the impact is only on the new contracts, not the backlog that we had signed at that time. We have not seen any material change except the tariff that we talked about, which is only $10 million, and that shaves roughly 0.3%-0.4%. Okay. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Kashy Harrison of Piper Sandler. Your line is now open. Just good morning, everyone. Just two quick ones for me. Good morning, Julian. So a quick clarification question. Is the margin weakness in the U.S., or is the margin weakness in international markets? I just want to make sure I fully understand that. Mostly international. I mean, we do have some, as you know, non-domestic offering in the U.S., but it's mostly international. Okay. And then my follow-up question. So if I just take a step back and I just think about the broader renewable space, a recurring theme is that competition against the Chinese, especially when they have severe excess capacity in markets that don't have strong protectionist policies in place, it just never seems to end well. It's fantastic to hear your enthusiasm on competition, but generally speaking, they're more focused on utilization than profitability, which makes it tough. And so as you look at markets outside the U.S. that you're competing in, are there any places you feel have strong protectionist policies in place? And is there perhaps a thought on pulling back from some of these more competitive markets where the Chinese can play without worrying about duties and whatnot? Thank you. I mean, Kashy, my first point is I will disagree on the premise. When you looked at these products, why do we have a battery cell, which is a commodity? And the ability to make that battery cell work well is a combination of cooling, software, controls, delivery. That's where the value comes. You are right. The Chinese could have an ability to sell batteries at very low margins or very zero margin, but the reality is that batteries are less and less relevant in the value proposition we gave. So when we looked at our new product, we compared it against the prices that we're seeing in the Middle East, where there are zero restrictions, where we're seeing in some of the markets where we see very little restrictions. And we can get competitive through innovation, by integrating our software, by designing our products in a way that we can transport them better, that we can deliver better reliability, that they can be safer at a lower cost point. So I don't disagree. That was my point earlier, that this is a manufacturing industry. This is an industry of innovation, of technology innovation. And I think that we have the technology innovation to compete and will continue doing it. So that's what I think. Clearly, as you said, now going to your question, there are markets that have more restrictions. The U.S. is a market with significant restrictions to Chinese competition. Australia is a market with some restrictions to Chinese competition. Taiwan is a market that has many restrictions to Chinese competition. Then you see more open markets. Europe is in the way, and they are defining how they're going to manage it, but they say it is a more open market. The Middle East is very much open. I'll say Latin America is open today, so that's kind of where you see the world. There are markets where, but our objective as a company is to compete globally. We are here to compete globally. I think this is important, and we believe that through innovation, integrating software, our controls, our ability to rethink all the value added around the battery, we can create enough value to beat up on price the Chinese willingness to sell stuff at lower cost. That's our view today. When we look at it, when we see the margins they have, how they do business, that's where we can see a value, so that's our premise. That today, clearly, I can understand after what happened, you probably do not necessarily need to believe me, but you might put it in doubt, but that's the premise of our view. Through technology, in a world with lower battery costs, through technology, we can win this competition, let's put it that way. Thank you. I don't know if I answered your question, Kashy. I went a little bit, or if you need a second one here. No, no. You answered the question. You answered all points, and I appreciate your thoughts on the market. I mean, if I could just sneak one more in since I'm talking right now, so I think in the past, you had thought of the in-house inverter as being margin accretive to the business. When you look at your current offering, do you think that this in-house inverter gives you a path to go from this 10%-1 5%? And then how long do you and how long do you think it'll take before 100% of your shipments are using the in-house inverter? Thank you. Yeah. The in-house, I mean, adding the inverter into it. It's not only the inverter. We're adding all the balance of plant equipment. And by adding this additional space, we're also adding edge computing to the software, to the system, which will allow a much better performance because you don't need to put things in the cloud, then send them back. We will be able to now add artificial intelligence in the system itself by the way we are now designing this. This is all attributed to the in-house inverter. We believe this is a product that is like our Cube. It's going to be able to take all our cells as we move forward. And we're very happy. We believe that at some point, all our cells will be under this type of architecture. But it's more than the inverter. That's my point. Thank you. One moment for our next question. Our next question comes from the line of Jordan Levy of Truist Securities. Your line is now open. Morning, Julian. Thanks for all the details. Just to get your thoughts on the new guide, 85% covered a current backlog. I think you've covered that well. I recognize that that's higher than the same time last year, but can you just talk through your thinking process there, given what we saw last year in terms of project push-outs? I know these are kind of one-off occurrences that aren't necessarily interconnection related or anything, but maybe just talk to your confidence on the ability to deliver on that uncovered portion of the guide. Yeah. No. I mean, we feel very confident, clearly. We're sending the guidance today on that number. What I will say, I mean, I know where we are today. We're kind of in a penalty box. We need to find a substantial part of this number by the next earnings call. And that will be the that's the point. We are working on it. We believe we're going to get it. And we'll see whether by the next earnings call, we should have a substantial part of this resolved and the risk. It doesn't mean that we'll get to 100% because, as you know, we recognize some revenue as we sign contracts, but we will get to a point that you can feel comfortable that the mid-size of the range is covered enough that we can get your trust back on our ability to deliver. Thanks for that. And then just a quick follow-up on the $30 million in cost reductions and right-sizing. Depending on market conditions, is there still more wood to chop on that front, or is that sort of the level you're comfortable with on a go-forward basis? These cost reductions align our cost structure with our business model of half or not allowing our cost to grow more than half of our top-line growth. So if our growth is 25%, not allowing our cost to go more than 12.5%. So that's what we're doing with this cost structure, aligning it to that business case. There probably are always a little opportunity here or there, but that's the objective. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Vikram Bagri of Citi. Your line is now open. Good morning, everyone. Julian, you talked about winning from the Chinese through tech, and we know tech is deflationary as well. We saw the announcements from China and EU and D.C. recently, which seems like they might make the situation for Chinese manufacturers a little more desperate and a little more worse. I was wondering, how are you thinking about ASP this year and next year? Do you understand and appreciate that you should be able to get to the targeted margins and protect the margins? I was wondering, how much of ASP pressure do you anticipate we might see this year and next year? We still see some, as we mentioned during the call. We still see some ASP pressure going forward, that the competitive environment is not there, and we're working with a view of further reduction in ASPs going forward. We looked at the Chinese tender prices, which we get information on it, so we kind of know. And I know we have had some recent tenders in the Middle East, especially in Saudi Arabia, that gives us a sense of where the lower side of that range is. So we already are expecting certain reductions going forward that we will be working on, and we have in our that's part of our plan. Yeah. This is Ahmed. I mean, since last year, we have seen roughly 35%-40% decline in ASPs, but I think at the same time, we have seen volume pickup north of 60%. So I think there's a benefit in the volume pickup that helps to continue to grow our revenue. But these trends are continuing, but at the same time, we are seeing more and more volume. Got it. And then as a follow-up, I wanted to ask about the $30 million in cost reductions, if you can share where they're happening. And to your answer for the last question, I was wondering if this $30 million reduction speaks to the growth this year, or you're aligning your expenses to growth longer term? So it's related more to growth next year, and your expectation for growth outlook are changing for forward years, and that's why the reduction is happening. I mean, we looked at our cost structure per year depending on our top-line growth, and then we looked at our cost structure. Generally, what we're doing is things that we were planning to do during the year that we now won't do because we don't have the revenue, and it's simple as that. I mean, we are defending all investments in product, and I'm defending all investments in sales, but the rest of the organization, we are adapting it to a company that now is selling 15% less than what originally was expected, and for next year, whatever we have the 30% top plus that we just communicated to you, depending where we end up, we will ensure that our cost structure aligns with our business models of not allowing our cost to grow more than half the rate of growth of our top-line growth. Thank you. Thank you. One moment for our next question. Our final question comes from the line of Julien Dumoulin-Smith of Jefferies. Your line is now open. Good morning. Hey, can you hear me okay? Hey, Julien. Good morning. Hey, good morning, guys. Thank you very much for letting me on. Just following up here on a couple of things you said. First, briefly on liquidity backdrop. Obviously, you commented about working capital here at the start of the year. I mean, given the EBITDA profile interest, I mean, you're basically suggesting that the cash balance should remain relatively intact through the course of the year, Ahmed. I just want to make sure we're on the same page about how to think. You said yes, right? Yes. Working capital use. Yes. Hey, Julien. Yes. I think the main reason for working capital use is the build-up in our inventory. As you may have seen, we have over $300 million of inventory, and that is primarily to basically serve our demand contracts we have in place. So net-net, during the whole year, we are not expecting the working capital use more than I think it's totally roughly $225 million that we are forecasting for the full year, and 200 of that is already in the Q1. So we don't expect any material change in the forecast. And no material build in cash, though? That was the key piece, just in terms of where you land for the year, or do you expect it to reverse here? I mean, for the full year, we basically will be in around the same ballpark because we will have significant receivables in the Q4 given the revenue profile we have. But I think we expect that to be collected in the following quarters. But for the full year, we feel pretty good where we are today. Awesome. And Julian, if I can go back to the competitor pressures, I mean, obviously, 2025, 2026, you've got this running advantage versus your peers in the U.S. Admittedly, by 2027, we start to see some suggestions of international entrants into the U.S. market at various levels here. How do you think about the competitive landscape in the U.S. over time, in as much as what you just described internationally, of competitive pressures bearing weight here? Again, would you think that 2026 would be a relative peak versus 2027 as you see some of those new entrants come in? Again, open question. Obviously, you responded in part to Kashy on this, but would love to hear your thoughts, especially as you think about your product innovation in 2027. So in terms of we believe that over time, the U.S. market will be a domestic content market. So most players that will compete in the market will compete with domestic offerings. So you're right. Probably I'm surprised that it has taken them this long to get ready, in my own personal view. But so I agree with you. Our view today is that they will be probably in 2026, sorry, in 2027, where we'll see more domestic offering and competing. Our competition will have to win through technology by offering things that are better, that do better, that behave, that run better, and that last longer. And that's the way to win. That's what I will say, the normal way you win in any industry. So that will be my view. I think the domestic content gives us a couple of years of opportunity to have kind of a "safe place," but we are getting ready for a world where we compete just with all the domestic content players, and it will be technology the driver of success. Right. But the margin dynamics there, over time, I mean, obviously, you brought down expectations here in the near term. Do you think there's a little bit more pressure, and you need to offset that with technology beyond the near term? I think that generally will be 10%-15%. To be very clear, I don't think I have a view yet on 2027 margins, but I think that our current view, when we looked at our product, our cost, and our competitors, the 10%-15% is something that we can safely guide to. So that's what I will tell you. Part of this new platform, it already has a roadmap of improvements to ensure that because we know our competition will not sit idle. So we already have that as part of it. So we have investments in product development that we will need to continue to do to ensure that we continue to be competitive. Great. Excellent, guys. Thank you. Thank you, Julien. And thank you, everybody, for participating on today's call. I really appreciate your participation. Thank you. This concludes the question-and-answer session. I'll now like to turn it back to Lexington May for closing remarks. Thank you for your participation on today's call. If you have any questions, feel free to reach out to me. We look forward to speaking with you again when we report our second quarter results. Have a good day. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.