Q1 2024 Bloom Energy Corp Earnings Call
Krista: Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bloom Energy first quarter 2024 earnings conference call.
Thank you for standing by my name is Krista and I will be your conference operator today at this time I would like to welcome everyone to Bloom Energy first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and.
Krista: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad.
Ed: Answer session, if you'd like to add if you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question. Adam Press Star. One. Thank you I will now turn the conference over to Ed <unk> head of Investor Relations Ed you may begin your call.
Krista: Brent.
Unknown Executive: Thank you and good afternoon, everybody. Thank you for joining us for Bloom Energy's first quarter 2024 earnings conference call. To supplement this conference call, we filed our first quarter 2024 earnings press release with the SEC on Form 8K and have posted it, along with supplemental financial information that we will reference throughout this call, on our investor relations website. During this conference call, both in our prepared remarks and in answers to your questions, we may make forward-looking statements that represent our expectations regarding future events and our future financial performance.
Speaker Change: Thank you and good afternoon, everybody and thank you for joining us for Bloom Energy first quarter 2024 earnings conference call.
Unknown Executive: To supplement this conference call, we furnished our first quarter 2024 earnings press release with the SEC on form 8-K and have posted it along with supplemental financial information that we will reference throughout this call to our Investor Relations website.
Unknown Executive: These include statements about the company's business results, products, new markets, strategy, financial position, liquidity, and full year outlook for 2024. These statements are predictions based upon our expectations, estimates, and assumptions. However, as these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties, as discussed in detail in our documents filed with the SEC, including our most recently filed Forms 10-K and 10-Q. We assume no obligation to revise any forward-looking statements made on today's call.
Unknown Executive: During this conference call both in our prepared remarks and answers to your questions. We may make forward looking statements that represent our expectations regarding future events and our future financial performance.
Unknown Executive: Includes statements about the company's business results products, new market strategy financial position liquidity and full year outlook for 2024.
Unknown Executive: These statements are predictions based upon our expectations estimates and assumptions.
Unknown Executive: However, these statements deal with future events they are.
Unknown Executive: Due to numerous known and unknown risks and uncertainties as discussed in detail in our documents filed with the SEC, including our most recently filed forms 10-K and 10-Q we.
Unknown Executive: We assume no obligation to revise any forward looking statements made on today's call.
Unknown Executive: During this call and in our first quarter 2024 earnings press release, we referred to GAAP and non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Unknown Executive: During this call and in our first quarter 2024 earnings press release.
Unknown Executive: We refer to GAAP and non-GAAP financial measures.
Unknown Executive: The non-GAAP financial measures are not prepared in accordance with U S generally accepted accounting principles.
Unknown Executive: In our in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.
Unknown Executive: A reconciliation between the GAAP and non-GAAP financial measures is included in our first quarter 2024 earnings press release, available on our investor relations website. Joining me on the call today are K.R. Schroeder, founder, chairman, and chief executive officer. Greg Cameron, our outgoing President and Chief Financial Officer, and Dan Barenboim, our incoming CFO. K.R. will begin with an overview of our business, and then Greg will review the operating and financial highlights of the quarter, and then we'll review the outlook for the year, and after our prepared remarks, we will have time to take your questions. I will now turn the call over to Kaya.
Unknown Executive: A reconciliation between the GAAP and non-GAAP financial measures is included in our first quarter 2024 earnings press release available on our Investor Relations website.
Kaya: Joining me on the call today are <unk>, founder Chairman and Chief Executive Officer.
Unknown Executive: Greg Cameron, our outgoing President and Chief Financial Officer, and Dan Berenbaum, our incoming Chief Financial Officer.
Unknown Executive: <unk> will begin with an overview of our business and then Greg will review, the operating and financial highlights of the quarter and Dan will review our outlook for the year.
Unknown Executive: And after our prepared remarks, we will have time to take your questions.
Kaya: I will now turn the call over to chaos.
Kaya: Hello, everyone.
K.R. Schroeder: Thank you everyone, and thanks for joining us today. We had a good start to the year, and we are seeing strong market interest, increasing momentum, and robust commercial activity across diverse end markets. Q1 results are as I expected.
Kaya: And thanks for joining us today.
K.R. Schroeder: We had a good start to the year and we are seeing strong market interest increasing momentum.
K.R. Schroeder: And robust commercial activity across diverse end markets.
K.R. Schroeder: Q1 results our assay expected.
K.R. Schroeder: Importantly, our strong operational performance and commercial activity augurs well for the next three quarters. As I see it, our business is tracking to the plan we laid out for the year. Meanwhile, business leaders are increasingly recognizing the severity and singularity of the power challenges we face. They now understand that time to power is a business imperative, and the grid cannot meet their growing power demand. They need to turn to distributed on-site power. There is increasing recognition that natural gas is the only bridge fuel at scale and affordability for a decarbonized world, and for companies looking to reduce their carbon footprint and meet their emissions targets, Bloom offers the least carbon intensive way of converting natural gas to electricity with virtually zero air pollution. As grid prices keep rising steadily in the U.S., Bloom's value proposition is becoming attractive even on a pure cost basis alone in more new markets.
K.R. Schroeder: Importantly.
K.R. Schroeder: Our strong operational performance and commercial activity.
K.R. Schroeder: Well for the next three quarters.
K.R. Schroeder: I see it our business is tracking to the plan, we laid out for the year.
K.R. Schroeder: Business leaders are increasingly recognizing the severity and secularity after power challenges we face.
K.R. Schroeder: They now understand that time to power is a business imperative.
K.R. Schroeder: Grid cannot meet.
K.R. Schroeder: Growing power demands they.
K.R. Schroeder: They need to turn to distribute it on site power.
K.R. Schroeder: There is increased recognition that natural gas is the only bridge fuel at scale and affordability for a decarbonize 12.
K.R. Schroeder: And for companies looking to reduce their carbon footprint and meet their emissions targets Bloom offers the least carbon intensive way of converting natural gas to electricity with virtually zero air pollution.
K.R. Schroeder: As grid prices keep pricing steadily in the U S. Bloom's value proposition is becoming attractive even on a pure cost basis alone.
K.R. Schroeder: In more new markets.
K.R. Schroeder: Such markets include regions of Ohio, Illinois, and Indiana, where demand for power is growing, natural gas is available, and a well-accepted fuel of choice, and our solutions are highly compelling for all electric and combined heat and power, or CHP, applications.
K.R. Schroeder: Such markets.
K.R. Schroeder: Claude regions of Ohio, Illinois, and Indiana that demand for power is growing.
K.R. Schroeder: <unk> gas is available.
K.R. Schroeder: Well accepted fuel of choice and our solutions are highly compelling for all electric and combined heat and power or CHP applications.
K.R. Schroeder: The Grid Challenges, and inadequacies are aggravated by a level of AI-related growth in data centers that is far beyond what anyone anticipated pre-charge GPT. Bloom has a long track record of success in supporting data center power needs, with over 200 megawatts of contracted and deployed orders in the earnings call last quarter. I talked about our healthy commercial pipeline for data center power. I also talked about our opportunities falling into two categories.
Speaker Change: It's a great challenges.
K.R. Schroeder: In adequacy is aggravated by a level of AI related growth in data centers that is far beyond what anyone anticipated <unk>.
K.R. Schroeder: Chad GPP.
K.R. Schroeder: Bloom passes long track record of success in supporting data centers power needs.
K.R. Schroeder: With over 200 megawatts of contracted and deployed orders.
K.R. Schroeder: In the earnings call last quarter.
K.R. Schroeder: I talked about our healthy commercial pipeline for data center power.
K.R. Schroeder: I also talked about our opportunities falling in two categories.
K.R. Schroeder: Power needs arising from the expansion of existing data centers and power for Greenfield data centers that are being built for future needs, primarily AI. From a deal flow perspective, existing data centers can often be contracted and deployed relatively quickly as the supporting infrastructure is in place and generally has minor permitting and permission hurdles. Contrast that to Greenfield data center opportunities with much bigger stamp sizes, permitting requirements, Tenant and Finance Security, Grid Interconnection Queues, all leading to longer sales cycles but much higher revenue potential. In this regard,
K.R. Schroeder: Power needs arising from expansion of existing data centers and <unk>.
K.R. Schroeder: For Greenfield data centers that are being built for future needs primarily AI.
K.R. Schroeder: From a deal flow perspective.
K.R. Schroeder: The existing data centers can often be contracted and deployed relatively quickly as the supporting infrastructure is in place and generally has minor permitting and permission hurdles.
K.R. Schroeder: Contrast that to Greenfield data center opportunities with much bigger Sam sizes permitting requirements.
K.R. Schroeder: Tenant and finance secured mint grid.
K.R. Schroeder: Grid interconnection queues.
K.R. Schroeder: All leading to longer sales cycles.
K.R. Schroeder: But much higher revenue potential.
K.R. Schroeder: In this regard.
K.R. Schroeder: Blum's BeFlexible Islanded Mode Power Solution offers a Greenfield data center customer the ability to commence operation of their facilities without worrying about the need for or delays of grid interconnection. Let me give you an example of a deal where we were able to get the contract closed faster because it was an expansion of an existing facility. We are thrilled to announce today a major win on an expansion data center opportunity. Intel has been a customer of Bloom since 2014.
K.R. Schroeder: Blooms be flexible island did more power solution.
K.R. Schroeder: First the Greenfield datacenter customer.
K.R. Schroeder: Ability to commence operation of their facilities without worrying about need or delays of grid interconnection.
K.R. Schroeder: Let me give you. An example of a deal that we were able to get the contract closed faster because it's an expansion of an existing facility.
K.R. Schroeder: We are thrilled to announce today a major win on an expansion data center opportunity.
K.R. Schroeder: Intel has been a customer of bloom since 2014.
K.R. Schroeder: And we have been powering the data center in Santa Clara, California, and the mission critical labs in Bangalore, India. In Santa Clara, Intel is adding to their existing Bloom server capacity significantly to make that location Silicon Valley's largest fuel cell powered high performance computing data center on the larger stamp. Greenfield Data Center Deals: We still expect conversion of some of these opportunities in the second half of the year. The sales pipeline is robust and growing.
K.R. Schroeder: And we have been powering their data center in Santa Clara, California.
K.R. Schroeder: And their mission critical labs in Bangalore, India.
K.R. Schroeder: In Santa Clara, California, Intel is adding to that existing bloom server capacity significantly.
K.R. Schroeder: To make that location silicon Valley's largest fuel cell powered high performance computing data center.
K.R. Schroeder: On the larger stamp Greenfield data center deals.
K.R. Schroeder: We still expect conversion of some of these opportunities in the second half of the year.
K.R. Schroeder: The sales pipeline is.
K.R. Schroeder: Is robust and growing.
K.R. Schroeder: Bloom's opportunities from the AI revolution extend beyond the data center. We can rapidly provide power to the AI supply chain, which has surged and growing energy needs. Since 2018, Bloom Energy has been providing clean, reliable power to super micro, a leading supplier of AI hardware, for their rack integration facility in San Jose. Last year, Bloom Energy installed the first phase of a 10 megawatt contract for Unimicron of Taiwan, a leading developer of hardware solutions for the AI industry.
K.R. Schroeder: Blooms opportunities from the AI Revolution.
K.R. Schroeder: Extend beyond the data centers.
K.R. Schroeder: You can rapidly provide power to the AI supply chain.
K.R. Schroeder: Which has surging and growing energy needs.
K.R. Schroeder: Since 2018.
K.R. Schroeder: Bloom energy has been providing clean reliable power to Super micro <unk>.
K.R. Schroeder: A leading supplier of AI hardware.
K.R. Schroeder: For the rack integration facility in San Jose.
K.R. Schroeder: Last year.
K.R. Schroeder: <unk> energy installed the first phase of a 10 megawatt contract for Uni Micron of Taiwan.
K.R. Schroeder: Leading developer of hardware solutions for the AI industry.
K.R. Schroeder: We alleviated their time to power problem and enabled them to meet their rapidly growing AI-related demands. Just last month, we announced that we would power Qanta's new multi-megawatt manufacturing facility in Fremont, California. QANTA is a leading global supplier of high-powered compute servers for AI data centers. The local power utility could not meet its power needs in a timely manner.
K.R. Schroeder: The alleviated the time to power problem and enable them to meet their rapidly growing AI related demands.
K.R. Schroeder: Just last month.
K.R. Schroeder: We announced that we would power Qantas, new multi megawatt manufacturing facility in Fremont, California.
K.R. Schroeder: Manta is.
K.R. Schroeder: As a leading global supplier of high power compute servers for AI data centers.
K.R. Schroeder: The local power utility could not meet its power needs in a timely manner.
K.R. Schroeder: Bloom's Power Solution is a fully isolated microgrid which will power Quanta's operations around the clock, 24-7, 365 days a year. By leveraging Bloom Energy's innovative and modular microgrid solution. Quanta is eliminating utility-dependent delays and taking control of its destiny to maintain its competitive edge in the fast-paced AI market. The AI revolution creates one more tailwind for Bloom, as AI-related players are able and prepared to pay a premium and use their leverage to procure and lock up merchant and utility power and solve their time-to-power issues. Other industries are finding it harder and harder to get power for their growth needs.
K.R. Schroeder: Blooms power solution.
K.R. Schroeder: Fully islanders micro grid, which will power quanta computer operations around the clock.
K.R. Schroeder: 94, seven 365 days a year.
K.R. Schroeder: By leveraging Bloom Energy's innovative and modular microgrid solution.
K.R. Schroeder: Quanta is eliminating utility dependent delays and taking control.
K.R. Schroeder: Of its destiny.
K.R. Schroeder: And maintain its competitive edge in the fast based AI market.
K.R. Schroeder: The AI Revolution create.
K.R. Schroeder: Creates one more tailwind for bloom.
K.R. Schroeder: As I related players are able and prepared to pay a premium and use that as leverage to.
K.R. Schroeder: Procure and lockup merchant and utility power and saw their time to power issues.
K.R. Schroeder: Other industries.
K.R. Schroeder: Finding it harder and harder to get power for their growth needs.
K.R. Schroeder: We have started seeing more customers inquiring about our products and solutions for this reason. As we look at international growth, Our approach has been to find the right market and the right partners and then scale up with them in Korea. We are seeing strength again after a temporary slowdown last year related to new policies being introduced. Our partner, SK, is confident about our future in Korea. We saw strong demand from SK in the first quarter. In Italy, we are very encouraged by the momentum we are building with CHEF, our partner for biogas-based CHP solutions. We are continuing to develop other opportunities in Europe and Asia.
K.R. Schroeder: <unk> started seeing more customers inquiring about our products and solutions for this reason.
K.R. Schroeder: As we look at international growth.
K.R. Schroeder: Our approach has been to find the right markets.
K.R. Schroeder: <unk> partners.
K.R. Schroeder: And then scaling up with them.
K.R. Schroeder: In Korea.
K.R. Schroeder: We are seeing strength again.
K.R. Schroeder: After a temporary slowdown last year related to new policies being introduced.
K.R. Schroeder: Our partner SK.
K.R. Schroeder: As confident about our future in Korea.
K.R. Schroeder: We saw strong demand from SK in the first quarter.
K.R. Schroeder: Okay.
K.R. Schroeder: In Italy.
K.R. Schroeder: We are very encouraged by the momentum we are building with Tesla.
K.R. Schroeder: Our partner for biogas CHP solutions, we have.
K.R. Schroeder: <unk> to develop other opportunities in Europe and Asia.
K.R. Schroeder: On the personnel side, in April, we were very pleased to announce the appointment of Dan Berenbaum as Bloom's new Chief Financial Officer. Dan's financial and operational career spans more than three decades, and he is a Naval Academy graduate. Dan held executive-level positions at publicly traded companies including National Instruments, Micron, and Everspin, and before that, he spent 10 years on Wall Street as an analyst covering technology stocks. We are excited to have Dan on the team and know that he is the right person to help guide us in this next stage of our journey.
K.R. Schroeder: On the personal side in April we were very pleased to announce the appointment of Dan Birnbaum as Bloom's, New Chief Financial Officer.
K.R. Schroeder: <unk> financial and operational carrier.
K.R. Schroeder: <unk> more than three decades.
K.R. Schroeder: In Naval Academy graduate.
K.R. Schroeder: Dan held executive level positions at publicly traded companies, including national instruments, Micron and ever spin.
K.R. Schroeder: And before that he spent 10 years on wall Street, as an analyst covering technology stocks.
K.R. Schroeder: Excited to have Dan on the team and know that he is the right person to help guide us in this next stage of our journey.
K.R. Schroeder: With that.
K.R. Schroeder: I'd also like to thank Greg Cameron.
K.R. Schroeder: For his service as Bloom CFO.
K.R. Schroeder: He has enabled a smooth transition as we promised and all of US wish him great success in this new chapter that he will come in soon.
K.R. Schroeder: And now I'll.
K.R. Schroeder: I'd also like to thank Greg Cameron, Forest Service as Blum CFO. He has enabled a smooth transition, as he promised, and all of us wish him great success in his new chapter that he'll commence soon. And now... I've turned the call over to both Craig and Dan.
K.R. Schroeder: I'll turn the call over to both Greg and then.
Gregory D. Cameron: Thanks, KR. As this will be my final earnings call with Bloom Energy, I'd like to say how much I appreciate KR, the board, and the entire Bloom team for allowing me to be part of this amazing journey over the past four years. While we've accomplished a lot over that time, there remains more to do. While I will no longer be part of this journey, I remain excited for the opportunities for Bloom Energy and know the best days lie ahead.
Daniel Alan Berenbaum: Thanks KR is this will be my final earnings call with Bloom energy I'd like to say how much I appreciate the board and the entire Bloom team for allowing me to be part of this amazing journey over the past four years, while we've accomplished a lot over that time the remains more to do while I will no longer be part of this journey I remain excited for the <unk>.
Gregory D. Cameron: Opportunities for Bloom energy and know the best days lie ahead.
Gregory D. Cameron: Now I'd like to talk about the first quarter financial performance. As we discussed on the last call, we said that the timing of acceptances could impact our first quarter revenue. At the time, I said revenue for the quarter could be flat to down 20% on a tough comparable as we were up 40% in the first quarter of 2023. Our first quarter 2024 revenues were $235 million, down 14.5% versus the first quarter of 2023, as a few acceptances that we thought could happen in the first quarter are now likely to occur in future quarters. The timing of these acceptances does not change our outlook for the full year.
Gregory D. Cameron: Now I'd like to talk about the first quarter financial performance.
Gregory D. Cameron: As we discussed on the last call you had said that the timing of acceptances could impact our first quarter revenue.
Gregory D. Cameron: At the time I said revenue for the quarter can be flat to down 20% on a tough comparable as we were up 40% in the first quarter of 2023.
Gregory D. Cameron: Our first quarter 2024 revenues were $235 million down 14, 5% versus the first quarter of 2023 as a few acceptances that we thought could happen in the first quarter are now likely to occur in future quarters.
Gregory D. Cameron: The timing of these acceptances does not change our outlook for the full year.
Gregory D. Cameron: The product volume and the mix of acceptances impacted our gross margin. For the first quarter, non-gap gross margin of 17.5% was down 370 basis points versus the first quarter last year. The lower volumes in the first quarter versus the prior quarter reduced manufacturing absorptions, which increased our product costs by over $160 a kilowatt, negatively impacting product margins by 500 basis points. If volumes had been similar to the fourth quarter 2023, adjusted first quarter product costs would have been roughly the same per kilowatt as the prior quarter.
Gregory D. Cameron: The product volume and the mix of acceptances impacted our gross margins.
Gregory D. Cameron: The first quarter non-GAAP gross margins of 17, 5% was down 370 basis points versus the first quarter last year.
Gregory D. Cameron: The lower volumes in the first quarter versus the prior quarter reduced manufacturing absorptions, which increased our product costs by over $160 a kilowatt.
Gregory D. Cameron: <unk> impacting product margins by 500 basis points.
Gregory D. Cameron: If volumes have been similar to the fourth quarter 2023, adjusted first quarter product costs would have been roughly the same per kilowatt as the prior quarter.
Gregory D. Cameron: As volumes grow throughout the year and we continue to drive down material costs and increase power density, I would expect product costs to be reduced by the targeted 10 plus percent. Also, in the quarter, the majority of our acceptances were to Korea. While our volume and pricing to Korea in the first quarter were similar to the prior two quarters, the percentage of the total increased as we had fewer shipments elsewhere over the past several quarters. Projects in Korea are becoming more price sensitive, resulting in a lower average selling price.
Gregory D. Cameron: As volumes growth throughout the year, and we continue to drive down material costs and increased power density I would expect product cost to be reduced the targeted 10% down.
Gregory D. Cameron: Also in the quarter the majority of our acceptances were to Korea.
Gregory D. Cameron: While our volume and pricing to Korea in the first quarter were similar to the prior two quarters the percentage of the total increase as we had less shipments elsewhere.
Gregory D. Cameron: Over the past several quarters.
Gregory D. Cameron: <unk> in Korea are becoming more price sensitive, resulting in a lower average selling price.
Gregory D. Cameron: Through our work on reducing product costs, we have maintained attractive product margins, averaging above 30% in Korea, but the mix in the first quarter negatively affected our average selling price. I would expect an improvement in product margins as acceptance increases in the United States and the rest of our international business increase throughout the year. An area that improved our margins in the first quarter was our service business, as we continue to grow our revenues, reduce performance payments, and reduce our replacement power module costs.
Gregory D. Cameron: Through our work on reducing product costs, we have maintained attractive product margins, averaging above 30% in Korea, but the mix in the first quarter negatively affected our average selling price.
Gregory D. Cameron: I would expect an improvement in product margins as acceptances in the United States. The rest of our international business increase throughout the year.
Gregory D. Cameron: An area that improved our margins in the first quarter was our service business as we continue to grow our revenues reduce performance payments and reduce our replacement power module costs.
Gregory D. Cameron: I would expect this trend to continue throughout the year, and we expect our service business to be profitable on a non-gap gross margin basis this year. And, as we've previously said, we are targeting 20% on the same basis in 2025. We maintained our strong diligence on cost control as our operating expenses decreased approximately $21 million in the first quarter versus the same period last year. While we continue to invest in our future, we are very focused on improving our profitability.
Gregory D. Cameron: I would expect this trend to continue throughout the year and.
Gregory D. Cameron: And we expect our service business to be profitable on a non-GAAP gross margin basis. This year and as we've previously said we are targeting a 20% on the same basis in 2025.
Gregory D. Cameron: We maintained our strong diligence on cost control as our operating expenses decreased approximately $21 million in the first quarter versus the same period last year.
Gregory D. Cameron: While we continue to invest in our future we are very focused on improving our profitability.
Gregory D. Cameron: Even on lower revenue and margins, our operating costs allowed us to improve non-GAAP operating loss by $3 million versus the first quarter of 2026. We also significantly reduced our cast usage by over half versus the first quarter last year. We're holding working capital levels roughly flat to year end. This allowed us to end the first quarter with $583 million in total cash.
Gregory D. Cameron: Even on lower revenue and margins, our operating costs allowed us to improve non-GAAP operating loss by $3 million versus the first quarter 2023.
Gregory D. Cameron: We also significantly reduced our cash usage by over half versus the first quarter last year.
Gregory D. Cameron: We're holding working capital levels roughly flat to year end.
Gregory D. Cameron: This allowed us to end the first quarter with $583 million in total cash.
Gregory D. Cameron: Now I'm going to turn the call over to Dan, who will share with you a few thoughts and discuss guidance. But before I do that, I'm very glad Dan and I had time over the past few weeks for transition. I believe he's a great addition to the team, and he's already building meaningful connections with his experience and energy. Thanks for joining Bloom at an exciting time. With this partnership, I expect Bloom to continue to grow to meet the demands of an evolving energy market. With that, welcome, Dan, and over to you.
Gregory D. Cameron: Now I'm going to turn the call over to Dan who will share with you a few thoughts and discuss guidance.
Gregory D. Cameron: But before I do that I am very glad Dan and I are time over the past few weeks for transition.
Dan: I believe he's a great add to the team and he is already building meaningful connections with his experience in energy.
Gregory D. Cameron: He is joining blum and an exciting time.
Dan: With this partnership I expect bloom to continue to grow to meet the demands of an evolving energy market.
Gregory D. Cameron: With that welcome Dan and over to you.
Dan Barenboim: Thanks Greg and thank you KR for your earlier comments as well. I'm excited to be here, and I appreciate the warm welcome I've received from across the company. I've been impressed with what I've seen so far at Bloom, the technology, the people, and the drive to succeed in our mission of making clean, reliable, and resilient energy available for everyone. As Greg mentioned, he and I have been working closely together over the last couple of weeks, and I appreciate his time and the attention of the entire team in getting me up to speed on the financial and operating performance of the business. It's obvious to me what an important part of the Bloom story Greg has been.
Dan: Thanks, Greg and thank you for your earlier comments as well I am excited to be here and I. Appreciate the warm welcome I've received from across the company.
Dan Barenboim: Been impressed with what I've seen so far at Bloom technology, the people and the drive to succeed in our mission of making clean reliable and resilient energy available for everyone.
Dan Barenboim: As Greg mentioned I've been working closely together over the last couple of weeks and I. Appreciate his time in the attention of the entire team and getting up to speed on the financial and operating performance in the business. It's obvious to me what an important part of the balloon story, Greg has been I want to thank him for that and for leaving a mature.
Dan Barenboim: I want to thank him for that and for leaving a mature, competent team in place. As we move past earnings, I plan to spend time digging more deeply into the business. I'm also looking forward to meeting all of you.
Dan Barenboim: Competent team in place.
Dan Barenboim: As we move past earnings I plan to spend time digging more deeply into the business I am also looking forward to meeting all of you I'm committed to continuing to enhance our communications and our relationships with the entire financial community.
Dan Barenboim: I'm committed to continuing to enhance our communications and our relationships with the entire financial community. I want to touch briefly on two things, our relationship with AWS and our outreach. As many of you know, in 2022, AWS entered into a power purchase agreement with Bloom to deploy 73 megawatts of capacity. We sold the energy servers for that project in 2022 and 2023 to our EPC partners. For site-specific reasons, AWS has decided not to proceed with the original deployment location. That said, we are pleased to share that Bloom and AWS are working to deploy the Bloom servers in other AWS locations under the terms of the agreement.
Dan Barenboim: I wanted to touch briefly on two things our relationship with AWS and our outlook.
Dan Barenboim: As many of you know in 2022 AWS entered into a power purchase agreement with Bloom to deploy 73 megawatts of capacity, we sold the energy servers for that project in 2022, and 2023 to our EPC partner.
Dan Barenboim: Where state specific reasons AWS has decided not to proceed with your original deployment location.
Dan Barenboim: We are pleased to share that bloom and AWS are working to deploy bloom servers in other AWS locations under the terms of the agreement.
Dan Barenboim: Again, in line with the PTA, AWS is commencing payments in the current quarter. We value our partnership with AWS, and we look forward to serving them well on this and other potential future transactions. As it relates to our outlook, we are reaffirming our 2024 annual guidance for revenue, margins, and profitability. With our backlog, commercial pipeline, and product supply, we remain confident that we can deliver $1.4 to $1.6 billion of annual revenue at approximately 28% non-GAAP gross margin.
Dan Barenboim: <unk> with the PPA aws's commencing payments in the current quarter.
Dan Barenboim: We value our partnership with AWS, and we look forward to serving them well on this and other potential future transactions.
Dan Barenboim: As it relates to our outlook, we are reaffirming our 2024 annual guidance for revenue margins and profitability.
Dan Barenboim: With our backlog convert full pipeline of product supply we remain confident that we can deliver one four to $1 $6 billion of annual revenue at approximately 28% non-GAAP gross margin.
Dan Barenboim: Where we end up within the revenue range will be primarily dependent on the timing of project approvals and completion. As the year progresses, we will have greater clarity on these opportunities. Consistent with prior years, second half revenue is expected to be greater than first half revenue. Gross margin could improve each quarter as we move through the remainder of the year on lower product costs and improving service performance. With this revenue and gross margin profile for the year, we should be well positioned to achieve non-GAAP operating profit of $75 to $100 million. With that, Operator, please open the line for questions.
Dan Barenboim: Where we end up within the revenue range will be primarily dependent on timing of project approvals and completion.
Dan Barenboim: As the year progresses, we will have greater clarity on these opportunities.
Dan Barenboim: Consistent with prior year's second half revenue is expected to be greater than first half revenue.
Dan Barenboim: Gross margin could improve each quarter as we move through the remainder of the year on lower product costs and improving service performance at this revenue and gross margin profile for the year, we should be well positioned to achieve non-GAAP operating profit of $75 million to $100 million.
Dan Barenboim: With that operator, please open the line for questions.
Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Speaker Change: I would like to withdraw your question simply press Star one again, if you recall the pines you ask your question and our listening via loud speaker on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question and please limit yourself to one question and one follow up your first question comes from the line of Andrew <unk>.
Operator: And please limit yourself to one question and one follow-up. Your first question comes from the line of Andrew Percoco with Morgan Stanley. Please go ahead.
Andrew Salvatore Percoco: <unk> with Morgan Stanley. Please go ahead.
K.R. Schroeder: Great, thanks so much for taking the question here, and Dan, looking forward to meeting you over the coming weeks. I guess I'd start out with some data center questions, so first on this Intel announcement, sounds like, you know, JR, you mentioned it's a sizable increase to the existing capacity. Can you just give us any megawatt ranges and maybe timing in terms of when you expect to ship those units to Intel?
Andrew Salvatore Percoco: Great. Thanks, so much for taking my question here and Dan Clark and meeting you over the coming weeks here.
Speaker Change: I guess, maybe start out with some data center questions.
K.R. Schroeder: So first on the Intel announcement.
K.R. Schroeder: It sounds like you mentioned, it's a sizable increase to the existing capacity can you just give us any megawatt ranges and maybe timing in terms of when you expect to ship those units to Intel and then second is just on the Greenfield opportunities that you are highlighting for the second half of the year can.
K.R. Schroeder: And then second, it's just these greenfield opportunities that you're highlighting for the second half of the year. Can you just maybe give us some additional insight into how your product will be used at some of these larger hyperscaler sites? You know, it seems like they could be upwards of several hundred megawatts in size each. Is it going to be solely your product, or is it going to be more of a microgrid solution where it's tailored or coupled with other solutions as well? Just trying to get a sense of the total megawatt opportunity from some of these greenfield sites. Thank you.
K.R. Schroeder: Can you just maybe give us some additional insight into how your products will be used at some of these larger hyper scaler sites. It seems like it could be upwards of several hundred megawatts in size each.
K.R. Schroeder: Is it going to be solely your product or is it going any more of a micro grid solution, where it's where it's tailored or coupled with other solutions as well I'm just trying to get a sense of the total megawatt opportunity.
K.R. Schroeder: How many greenfield play thank you.
K.R. Schroeder: Andrew, it's very nice to hear from you, and I know that Dan's looking forward to meeting you and discussing the data center opportunities. We only reveal customers' actual loads and capacities when we have their permission to do so, and otherwise, we maintain their confidentiality. That's why we maintain. Having said that, I think there is enough material there on how big they're building their servers and how many servers they're putting there that you all can go But but but I think it's out there so, in terms of total, Contracted and Deployed Data Centers, right?
K.R. Schroeder: Andrew.
K.R. Schroeder: Very nice to hear from you and I know that dance looking forward to meeting you and on the data center opportunities look.
K.R. Schroeder: Okay.
K.R. Schroeder: What.
K.R. Schroeder: We only reveal.
K.R. Schroeder: Customers actual loads and capacities when we have their permission to do so and otherwise we maintain their confidentiality that's why we maintain it.
K.R. Schroeder: Having said that I think.
K.R. Schroeder: There is enough material there on how big they are building their servers and how many servers. They are putting there that you. All can go figure numbers out and don't ask us to either confirm or deny that.
K.R. Schroeder: But but but I think it is out there so in terms of billable.
K.R. Schroeder: Contracted and deploy data centers right.
K.R. Schroeder: We are approaching 300 megawatts, and that's a significant portion of our opportunities, and these data center opportunities will get deployed as fast as possible. All the ecosystem conditions are available in terms of gas availability, permits, and permissions, and all that. They're proceeding as fast as possible. And you know this extremely well.
K.R. Schroeder: We are approaching 300 megawatts.
K.R. Schroeder: Okay.
K.R. Schroeder: And that's a significant portion of our.
K.R. Schroeder: Opportunities and these data center opportunities.
K.R. Schroeder: Get deployed.
K.R. Schroeder: <unk>.
K.R. Schroeder: The ecosystem foundations that are available in terms of gas availability and permits and permissions and all that they are proceeding as fast as possible and you know this extremely well we applaud you for all of your reports on highlighting how power is the most critical thing for data centers to grow.
K.R. Schroeder: We applaud you for all your reports highlighting how power is the most critical thing for data centers. So that's on Intel, and as you know, our largest prior to this in Silicon Valley, for a data center in a single site was somewhere north of 20 megawatts. So that used to be it.
K.R. Schroeder: So that's on the Intel.
K.R. Schroeder: And as you know.
K.R. Schroeder: Our largest prior to this yen.
K.R. Schroeder: Silicon Valley.
K.R. Schroeder: What a datacenter in a single site was somewhere north of 20 megawatts as what.
K.R. Schroeder: We are facilitating so that goes to me. It. This is the largest silicon Valley data center.
K.R. Schroeder: This is the largest Silicon Valley data center. So now, getting to your question on greenfields. The answer is all of the above in terms of how people plan to deploy them. Some of them plan to deploy purely Bloom on the B-Flexible kind of model that we put out for you. Some of them will use a microgrid, and in that microgrid, they have all sorts of options of all your usual suspects, from combustion engines to batteries to using the grid as a backup, but in many cases, as you would suspect, if it's hundreds of megawatts, they are willing and very seriously considering technology qualifying us for a stand-alone microgrid that's not connected, because getting on that interconnection queue and So that can be a game changer for people who value time to power and are willing to pay a premium for it. I think I have covered your questions in terms of where we stand. Look.
K.R. Schroeder: So now.
K.R. Schroeder: Getting to your question on Greenfield.
K.R. Schroeder: The answer is all of the above in terms of how people plan to deploy <unk>.
K.R. Schroeder: Some of them plan to deploy purely bloom on the be flexible kind of a model that we put out for you.
K.R. Schroeder: Some of them will use a micro grid in that micro grid.
K.R. Schroeder: Sorts of options.
K.R. Schroeder: All your usual suspects.
K.R. Schroeder: From combustion engines to batteries to using <unk> as a backup but in many cases.
K.R. Schroeder: As you would suspect if it's hundreds of megawatts.
K.R. Schroeder: They are.
K.R. Schroeder: Willing and very seriously technology qualifying us for a standalone microgrid thats not connected to the grid because getting getting on that interconnection queue and getting that done is hard and we bring a unique solution there because of our fault.
K.R. Schroeder: <unk> architecture, and high resiliency availability and reliability, we can be a standalone grid for them. So that is.
K.R. Schroeder: That can be a game changer for people for whom.
K.R. Schroeder: Who value time to power and are willing to pay a premium for it.
K.R. Schroeder: I think I covered your questions in terms of where we stand look.
K.R. Schroeder: In most cases, when we talk about our pipeline increasing and things moving within that funnel, with a velocity that is consistent with what you expect for a deal of this size. For example... If you're doing a 100-megawatt Bloom data center over a 15-year period, the contracted value is well north of a billion dollars. So it has to go through its own, you know, like diligence process and governance process within, you know, within the companies.
K.R. Schroeder: In most cases, when we talk about our pipeline, increasing and things moving within that funnel.
K.R. Schroeder: The velocity that is consistent with what you expect for a deal of this size for example.
K.R. Schroeder: If youre doing a 100 megawatt bloom data center or a 15 year period the.
K.R. Schroeder: The contract value is well north of $1 billion.
K.R. Schroeder: It has to go through its own.
K.R. Schroeder: Like diligence process and governance process within.
K.R. Schroeder: Within the companies after they do that they need to go seek.
K.R. Schroeder: And after they do that, they need to go seek, you know, secure both tenant and finance agreements. Once they have all that in place, they have to negotiate a contract with a hyperscaler for whom they are purpose-built. If it's a hyperscaler, they can avoid that particular step, and all this needs to fall in place, but they do all this in parallel. And when anything gets finally all aligned and signed, it is going to be the slowest. The next step is going to be the rate-limiting step on it. This is the reason it's taking longer, and we still believe that we should be able to announce some green field deals.
K.R. Schroeder: Secure both tenant and finance agreements.
K.R. Schroeder: Once they have all that in place they have to negotiate a contract with the hyperscale or floor reformed their purpose building. It if it's a hyperscale or they can avoid that particular stat.
K.R. Schroeder: And all of these needs to fall in place. They do all this in parallel and then anything gets finally, all aligned and signed.
K.R. Schroeder: He is going to be the slowest.
K.R. Schroeder: The step is going to be the rate limiting step on it. This is the reason, it's taking longer and.
K.R. Schroeder: And we still believe that we should be able to announce some greenfield deals and.
K.R. Schroeder: By the end of the year.
K.R. Schroeder: Sure.
Operator: Your next question comes from the line of Manav Gupta with UBS. Please go ahead.
K.R. Schroeder: Your next question comes from the line of Manav Gupta with UBS. Please go ahead.
Unknown Attendee: First, thank you, Greg, for all the help over the years. Welcome, Dan.
Manav Gupta: First thank you break for all the help over the years welcome Dan. My first question is on the service side I think big you had expressed a lot of confidence that service margins will slip and the has slipped so im trying to understand can you give us some more details what can ensure that these martin.
Unknown Attendee: My first question is on the service side. I think, Greg, you expressed a lot of confidence that service margins would flip, and they have flipped. So I'm trying to understand. Can you give us some more details?
Unknown Attendee: What can ensure that these margins remain in positive territory? And then what could help you get towards that 20 percent service margin next year? And my quick follow-up question, this is more of a modeling question, as I understand it. Very glad to hear that the situation has worked out with AWS. From the perspective of how we model this, should we just model it as a delay in terms of an order which was supposed to be implemented at a particular time, and then it's delayed by a few quarters? Or does that change the way we are modeling this AWS for financial statement purposes? Thank you.
Unknown Attendee: <unk> remain in the positive territory and then what could help you get towards that 20% service margin next year and my quick follow up question. This is more of a modeling question I understand is very glad to hear that the situation has worked out with AWS from the perspective looks like how we model. This should we just margins at the delay.
Unknown Attendee: In terms of.
Unknown Attendee: Which was supposed to be implemented at a particular time and then it's delayed by a few quarters does that anything changed with the way. We are modeling. This AWS followed the financial Keigwin purposes. Thank you.
Gregory D. Cameron: Hey Manav, it's Greg. I'll take the first half of it and then pass it to Dan for the AWS side. Listen, service. This time last year, we talked about being a bit behind on getting our FRUZE out the door, our replacement power modules, and that we were going to be in a situation for a few quarters where we'd be paying performance bonuses and making the replacement power modules. And we talked about the second quarter being the high water mark, and by the end of the year, each quarter we'd be getting better. And we saw a crossover point early in 2024, and it is, the business has performed exactly on the roadmap that we laid out at that time. Listen, the drivers of it are, we're all knowable, right?
Unknown Attendee: <unk>, it's Greg I'll take the first half of it and then pass it to Dan for the AWS service. This time last year, we talked about being a bit behind on getting our <unk> out the door replacement power modules and that we're going to be.
Gregory D. Cameron: And situations for a few quarters, where we'd be paying performance payment and making the replacement power modules and we talked about second quarter being the high watermark and by the end of the year each quarter, we be getting better and we saw a crossover point.
Gregory D. Cameron: Early in 2024 and it is the business has performed exactly to the roadmap that we laid out at that time listen the drivers of it are we're all know right from a from a installation standpoint, when we achieve COO and when we begin to get service payment that tells us how the.
Gregory D. Cameron: From an installation standpoint, when we achieve COO and when we begin to get service payments, that tells us how revenue is going to grow. And you can see each quarter how our overall gross revenues have been growing. We also knew that as we increased our power module shipments and replacement power module shipments, our power output would increase, and we would reduce our performance payment. And that has happened each quarter exactly as we thought we could.
Gregory D. Cameron: Our revenue is going to grow and you can see each quarter. Our overall gross revenues have been growing we also knew that as we increased our power module shipments replacement power module shipments our power output would increase and we reduce our performance payment and that has happened each quarter exactly as we thought we'd happen lastly, what we've really put a.
Gregory D. Cameron: Lastly, we've really put a tremendous obligation on the team to perform, and they've done it, which is to continue to drive down the cost of those replacement power models, and through the efforts of the engineering team, the sourcing team, and the service team, they've accomplished that both on an individual basis as well as on a mixed basis. So the average cost has been coming down, pulling on both of those levers.
Gregory D. Cameron: Tremendous.
Gregory D. Cameron: Obligation onto the team to perform and they've done it which is to continue to drive down that cost of those replacement power module.
Gregory D. Cameron: And through the efforts of the engineering team and the sourcing team and the service team they've accomplished that.
Gregory D. Cameron: <unk> on a individual basis as well as on a mixed basis. So the average cost has been coming down.
Gregory D. Cameron: Pulling on both of those levers so our expectation is that the business has achieved.
Gregory D. Cameron: So our expectation is that the business has achieved a breakeven point here, and we would expect that to continue to improve through the rest of 2024. And we remain committed to the 20% gross margin achievement by 2025, which is something that we laid out several years ago, and the business has been achieving it. So I would say, for the team, job well done. They performed and took a difficult situation and addressed it and performed exactly as they said they would, and they accomplished it. So with that, I'll pass it over to Dan on the AWS questions. Thanks, Greg. So, Manav, you know, we're not.
Daniel Alan Berenbaum: Our breakeven point here and we would expect that to continue to improve through the rest of 2024, and we remain committed to the 20% gross margin achievement by 2025, which is something that we laid out several years ago and the business has been performing yet so I would say.
Daniel Alan Berenbaum: For the team job well done they performed.
Daniel Alan Berenbaum: It took a difficult situation.
Gregory D. Cameron: And addressed it and performed exactly as they said they would and they've accomplished it so with that I'll pass over to Dan on the AWS question.
Dan Barenboim: Thanks, Greg. So, Manav, you know, we're not going to give specific guidance on how to model individual deals or individual customers. I think the important thing to focus on is we're reiterating our guidance for the full year, that $1.4 to $1.6 billion at approximately 28% non-GAAP gross margin. You know, to give you a little bit of thought about how to model that, obviously, you understand where we came in for Q1. If you look at sort of the last five years, the split between the first half and the second half has been somewhere between, you know, 40-60, one-third, two-thirds.
Daniel Alan Berenbaum: Thanks, Greg So manav, we're not going to give specific guidance on how to model individual deals or individual customers I think the important thing to focus on is we are reiterating our guidance for the full year that one four to $1 6 billion at approximately 28% growth non <unk>.
Dan Barenboim: <unk> gross margin.
Dan Barenboim: To give you a little bit of thought about how to model that obviously you understand where we came in for Q1. If you look at sort of the last five years. The split between first half and second half has been somewhere between 40 and 61 third two thirds. So I think just overall that might be a good way to be just to give you some.
Dan Barenboim: So I think just overall, that might be a good way to be, you know, just to give you some thoughts for the modeling. But to be clear, we're not going to guide specific deals, how to think about them, and we're not providing specific revenue guidance on a quarterly basis. We're just focused on that year and just an idea of how that year might shape out.
Dan Barenboim: Thoughts for the modeling but to be clear, we're not going to guide specific deals how to think about them and we're not providing specific revenue guidance on a quarterly basis. We're just focused on that year and just an idea of how that year might shape out.
Speaker Change: Thank you.
Dan Barenboim: Okay.
Dan Barenboim: Yeah.
Operator: Your next question comes from Chris Dendrinos with RBC Capital Markets. Please go ahead.
Speaker Change: Your next question comes right.
Speaker Change: Hi, Chris and Dan Rios with RBC capital markets. Please go ahead.
Unknown Attendee: Yeah, good afternoon, and congratulations on the Intel announcement. I guess maybe just to start out here, and I want to focus a little bit on permitting here, you know, are the permits in hand for this data center expansion, I guess, both for Quanta and for Intel? And then, you know, how are you guys navigating this with your customers to, you know, hopefully, I guess, keep things out of the public light that might cause, I guess, call them disruptions? Thanks.
Christopher J. Dendrinos: Yes, good afternoon, and congratulations on the Intel announcement.
Unknown Attendee: Yes.
Unknown Attendee: I guess, maybe just to start out here and I want to focus a little bit on permitting here.
Unknown Attendee: Are the permits in hand for this data center expansion.
Unknown Attendee: I guess, both for Quanta and for Intel and then how are you guys navigating this with your customer too.
Unknown Attendee: Hopefully I guess keep things out of the public life that might cause I guess call. It disruption. Thanks.
K.R. Schroeder: Look, we again, don't get into specifics of customer permits and permissions because it's their applications and what they do. But we absolutely see no issues with us deploying for Quanta this year their systems and showing the speed with which we can solve a problem for them. There are no interconnection issues for Quanta because it's a completely isolated system that is not connected to the grid. And so they were able to eliminate any delays that it could potentially cause by choosing a better solution of keeping it isolated.
Speaker Change: Look we again, we don't get into specifics of customer permits and permissions because it's their applications and what they do but we absolutely see no issues with us deploying for quanta.
K.R. Schroeder: This year, there are systems and showing the speed with which we can solve a problem for them. There are no interconnection issues for quanta, because it's a completely island. It system that is not connected to the grid.
K.R. Schroeder: So dealer they were able to eliminate any delays that keith can potentially cause by choosing a better solution of keeping at.
K.R. Schroeder: Island.
K.R. Schroeder: Similarly, in Lake Santa Clara, you've heard us speak about it before, we have a very cooperative local government that works with us, and we are confident that we will be able to get these systems installed, and we don't see an issue with it.
K.R. Schroeder: Similarly.
K.R. Schroeder: Yan Yan like Santa Clara you heard us speak about it before we have.
K.R. Schroeder: A very cooperative local government.
K.R. Schroeder: That works with us.
K.R. Schroeder: And we are confident.
K.R. Schroeder: We will be able to get these systems installed and we don't see an issue with it.
Speaker Change: Thank you got it.
K.R. Schroeder: Understood.
Speaker Change: And then I guess, maybe just shifting gears here and I wanted to touch on hydrogen opportunity here. So.
Unknown Attendee: touch on the hydrogen opportunity here. So, you know, it looks like the project with World Energy is on track for FID early 2025. And I recognize that, in the past, you haven't wanted to comment too much on this, just given that it's not your project. But I guess, could you just provide any incremental color that you might have in terms of expectations, kind of moving forward there? You know, what type of things should we be on the lookout for? Thank you. Nothing has changed with them.
Unknown Attendee: It looks like the project with with World Energy is.
Unknown Attendee: It is on track for.
Unknown Attendee: Early 2025, and I recognize that.
Unknown Attendee: In the past you haven't wanted to comment too much on this just given that you are.
Unknown Attendee: Your project.
Unknown Attendee: I guess could you just provide any incremental color that you might have in terms of.
Unknown Attendee: Expectations kind of moving forward there.
Unknown Attendee: What type of things should we be on the lookout for thank you.
K.R. Schroeder: Nothing has changed with how we talk about projects, so if we have a contract, we will let you know, but until then, we don't comment on our potential customers' processes. Thank you. Your next question comes from the line of Sherif Elmaghrabi with BTIG. Please go ahead.
Unknown Attendee: Nothing has changed with how we talk about projects so.
Sherif Ehab Elmaghrabi: If you have a contract we will let you know, but until then we don't comment on.
Sherif Ehab Elmaghrabi: Our our potential customers' processes.
Sherif Ehab Elmaghrabi: Thank you.
Sherif Ehab Elmaghrabi: Your next question comes from the line of <unk>, Hello, Maggie <unk> with BTG. Please go ahead.
Operator: Hey, good afternoon, and thanks for taking my question.
Sherif Ehab Elmaghrabi: Hey, good afternoon, and thanks for taking my questions.
Sherif Ehab Elmaghrabi: Sticking with quanta for a second.
Sherif Ehab Elmaghrabi: Did I hear correctly that you are saying that.
Sherif Ehab Elmaghrabi: Youre thinking youre thinking youll start deploying that this year and then more generally because I thought Ireland and solutions took longer time, how long after receiving an island at order.
Sherif Ehab Elmaghrabi: Does bloom recognize revenue.
K.R. Schroeder: Well, our goal, again, we announced this A week, two weeks ago, you know, like ago, it's all blurry for me, but you can look at the date. So don't quote me on the date. But we just announced it a few days ago, and we are confident that the customer will have the entire multi-megawatt power available to them before we, before you, all ring the bell, and you know, like Times Square for 2025. That's, that's good to know.
Sherif Ehab Elmaghrabi: Well our goal again, we announced this.
K.R. Schroeder: Two weeks ago.
K.R. Schroeder: It's all blurring for me, but you can look at that date. So don't quote me on that date.
K.R. Schroeder: But we just announced it a few days ago.
K.R. Schroeder: And we are confident that the customer will have the entire multi megawatt power available to them.
K.R. Schroeder: Before we before you you all during the Berlin like times square for 2025.
Speaker Change: That's good to know and then second very simply can you guys quantify where the backlog is this quarter relative to last quarter.
Dan Barenboim: So no, we're not going to provide guidance on the backlog; we will only provide guidance on the backlog, or we'll provide the backlog once a year, as has been our practice. You know, look, again, I'll just take the opportunity to say, as a relative newcomer to the company, as I've dug in, you know, very confident in the commercial pipeline that we have, obviously, you know, we feel comfortable with reiterating the guidance that we previously provided. So we're not going to provide any specifics other than to say that, you know, me as the new CFO coming in, I feel pretty comfortable with the commercial pipeline as KR discussed.
Speaker Change: So no we're not going to provide guidance on the backlog, where we will only provide guidance on the backlog or will provide the backlog once a year as has been our practice look again I will just take the opportunity to say as a relative newcomer to the company as I've dug in very confident in the commercial pipeline that we have obviously that's why.
Dan Barenboim: We feel comfortable with reiterating the guidance that we had previously provided so we're not going to provide any specifics other than to say that EMEA is the new CFO coming in.
Dan Barenboim: Feel pretty comfortable with the commercial pipeline as <unk> discussed.
Dan Barenboim: Yes.
Speaker Change: Thank you.
Dan Barenboim: Okay.
Operator: Your next question comes from the line of: Ameet Thakkar with BMO Capital Markets. Please go ahead.
Speaker Change: Your next question comes from the line of.
Operator: Matt Tucker with BMO capital markets. Please go ahead.
Unknown Attendee: Hi, good afternoon. Thanks for taking my question. Um, I just wanted to come back to, I guess, some additional disclosure you had around the AWS facility in Oregon in your 10-Q. It refers to a distributor and a distributor making PPA payments. Is that SK EcoPlant, or is that Amazon?
Ameet Ishwar Thakkar: Hi, Good afternoon. Thanks for taking my question I, just wanted to come back to I guess, some additional disclosure you add around the AWS.
Unknown Attendee: Facility in Oregon in your 10-Q, it refers to the distributor and.
Unknown Attendee: And then distribute youre, making a PPA payments.
Unknown Attendee: Is that S K ego client or is that Amazon.
K.R. Schroeder: So, in this case, our PPA agreement is with Amazon, and starting April, Amazon will start making the monthly payments for the PPA to Bloom as per the agreement. So that's that's the clarification I think you're seeking.
Speaker Change: So so in this case it is our PPA agreement is with Amazon.
K.R. Schroeder: And starting April Amazon will start, making the monthly payments.
K.R. Schroeder: Florida PPA to Bloom as per the agreement.
K.R. Schroeder: So that's that's the clarification I think you are seeking.
Speaker Change: Okay, and just one follow up then.
K.R. Schroeder: The 10-K 10-Q does mentioned that this year as the ability to kind of reduce future orders.
K.R. Schroeder: Or cancel existing orders until the I guess, the energy service or redeployed.
Speaker Change: Is that is not Amazon correct, and how does that since you guys. Both that revenue last year. I was just wondering if you could give us a sense on what sort of cash flow impact we can have.
K.R. Schroeder: Expecting that this year.
Gregory D. Cameron: Yeah, it's great. I'll take that since I'm around.
K.R. Schroeder: Yes, it's Greg I'll take that sometimes around so it was very clear <unk> made that the payments on the PPA youre going to may be may contractual as Amazon have it last year in.
Speaker Change: In the fourth quarter of 2022, we sold 73 megawatts to our partner SK equal plant that was going to be the EPC unit on that our expectation is as we find new sites as Amazon finds new sites at the units can be deployed it would make sense that SK will deploy their units there and that is that is.
Speaker Change: Our expectation and our preference.
Speaker Change: What we wanted to make sure we disclosed fully with in our Q and in our K previously was if for some reason SK.
Speaker Change: If Amazon they decided they didnt want the units and we had some disagreement with Amazon around that we wanted folks to know that we would most likely work with our partner not contractually, but out of a partnership to help them get their units placed going forward, but our expectation is that Amazon will find additional place.
Speaker Change: As for SK to deploy the inventory that they have.
Dan Barenboim: And again, you know, I'll just add, you know, we understand why folks are asking the question. You know, one of the things that I want to make sure that people hear from me is that as I've come in, and I've looked at our projected cash flows, as I've looked at our projected P&L, you know, we're very comfortable with the state of the balance sheet, we're very comfortable with the receivables that we have, and our ability to collect those receivables.
Speaker Change: Great Thanks for that.
Speaker Change: I'll just add we're.
Dan Barenboim: Understand why folks are asking the question.
Dan Barenboim: One of the things that I want to make sure that people here for me is as I've come in and I've looked at our projected cash flows as I've looked at our projected P&L, we're very comfortable with the state of the balance sheet, we're very comfortable with the receivables that we have in our ability to collect those receivables. So we're not going to get too much in.
Dan Barenboim: Into specifics with specific customers with specific partners, that's just probably not.
Dan Barenboim: Our partners would want quite frankly, but I do think that you hear from me that as we look at the balance sheet as we look at our receivables we are quite comfortable with our position.
Dan Barenboim: So we're not going to get too much into specifics with specific customers with specific partners. That's just probably not what our partners would want, quite frankly. But I do think that, you know, you hear from me that as we look at the balance sheet, as we look at our receivables, we are quite comfortable with our P&L. Thank you.
Dan Barenboim: Thank you.
Operator: Your next question comes from the line of Biju Perincheril from Susquehanna. Please go ahead.
Speaker Change: Your next question comes from the line of <unk> parents <unk> from Susquehanna. Please go ahead.
Operator: Okay.
Unknown Attendee: Thanks for taking my questions. Well, first of all, there have been some reports and industry publications about a sizable data center project in California that will be using solid oxide fuel cells. Can you confirm that's one of your projects? It doesn't sound like either that's Quanta or the Intel projects you're talking about today.
Biju Perincheril: Hey, Thanks for taking my questions.
Speaker Change: Got it.
Unknown Attendee: Well first of all there's been some reports in industry publications about a sizeable.
Unknown Attendee: Data Center project in California that will be using solid oxide fuel cells.
Unknown Attendee: Can you confirm that.
Unknown Attendee: That's one of your projects it doesn't sound like either.
Unknown Attendee: Quanta or the Intel projects, you're talking about today.
K.R. Schroeder: I am sorry Biju, I haven't, I don't know what specifically this is, so I can't comment on it. To my knowledge, I don't know how many other suppliers there are for solid oxide fuel cells that can deliver megawatts worth of solid oxide fuel cells to any data center. We are the only ones that I know of, but there could be somebody I don't know, but we are not aware of anybody. So, if somebody is saying they are talking about us, but without the specifics, I cannot speak to that.
Speaker Change: I am sorry, if you do I have I don't know what specifically this is so I can't comment on it.
K.R. Schroeder: But.
K.R. Schroeder: To my knowledge I don't know how many other suppliers that there are four solid oxide fuel cells that can deliver megawatts worth of.
K.R. Schroeder: Off solid oxide fuel cells to any data center, we are the only ones that I know of but there could be somebody I don't know, but we don't we are not aware of anybody so.
K.R. Schroeder: Somebody is saying they may be talking about us, but without the specifics I cannot speak to it.
Unknown Attendee: Got it, and my follow-up question is on your manufacturing capacity. Obviously, demand here seems to be accelerating. So how are you positioned on the capacity front? Do you need to fast-track sort of the build out that you've talked about in the past?
Speaker Change: Got it.
Biju: My follow up is on on your manufacturing capacity obviously.
Speaker Change: The demand here seems to be accelerating so.
Unknown Attendee: How are you positioned on the capacity front do you need to fast track sort of the build out there.
Biju: You've talked about in the past.
K.R. Schroeder: We are extremely comfortable with being able to meet the surge demands as they come forward with our Fremont factory and our Delaware factory and what we have facilitated. And I think we have talked about it in the past with very modest investments to even further upgrades. We can keep up with the capacity as we go, and our speed to catch up. 200 megawatts, 300 megawatts will be faster than the cycle time it takes for all the other systems to be in place for the Greenfield Data Center.
Unknown Attendee: We are extremely comfortable.
K.R. Schroeder: That being able to meet the surge demands as they come forward with our Fremont factory in our Delaware factory and whats your facilities and I think we have talked about it in the past with very modest investments.
K.R. Schroeder: To even further upgrades, we can keep up with the capacity as we go.
K.R. Schroeder: Our speed to catch up.
K.R. Schroeder: 200 megawatts 10 megawatts will be faster than the cycle time. It takes for all the other systems to be in place for a greenfield data centers. So we feel like we're well situated to be able to meet the demands as the demands of rights for us from a from a capacity perspective and today.
K.R. Schroeder: So we feel like we are well situated to be able to meet the demands as the demands arise for us from a capacity perspective. And today, we know that we don't have a capacity constraint to meet this year.
K.R. Schroeder: We know that we don't have a capacity constraint the meeting this year.
K.R. Schroeder: And we will make sure that by the time the new year comes, we can make the same statement about whatever our capacity needs are for 2025, all within that cash balance and everything that Greg talked about, sorry Dan talked about. And I think, well, there are a couple of important points there. You know, I think I mentioned in the prepared remarks that the puts and takes in that 1.4 to 1.6 billion revenue guidance for 24 are really about timing.
K.R. Schroeder: And.
K.R. Schroeder: We will make sure by the time the new year comes.
K.R. Schroeder: Can make the same statement about whatever the capacity needs are for 2025 all within.
K.R. Schroeder: The cash balance and everything that Greg talked about sorry, Dan talked about.
K.R. Schroeder: Well there are a couple of important points. There I think I did mentioned in the prepared remarks, the puts and takes in that one four to $1 6 billion revenue guidance for 'twenty. Four is really about timing we have the commercial pipeline. We have the manufacturing capacity that we need we have the supply chain preparedness that we need to.
K.R. Schroeder: And we have the commercial pipeline, we have the manufacturing capacity that we need, we have the supply chain preparedness that we need to be, you know, within that range. And really, where we end up within that range is really going to be things like timing of acceptances. And then, of course, you know, one of my priorities coming here is that as we grow the company, we need to grow it profitably, and we need to invest at the right time.
K.R. Schroeder: <unk> to be.
K.R. Schroeder: Within that range.
K.R. Schroeder: And really it's that where we end up within that range is really going to be things like timing of acceptances and then of course, one of my priorities coming here is as we grow the company, we need to grow it profitably and we need to invest at the right time, we need to make sure that we're investing in our manufacturing capacity so that we.
K.R. Schroeder: We need to make sure that we're investing in our manufacturing capacity so that we have the capacity to meet demand, which, again, for 24, clearly isn't a problem. And as we move beyond that, and as we grow the company, there's going to be a focus on using our cash wisely at the right time and growing the company profitably. Your next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead. Thank you for taking my question.
Martin Whittier Malloy: Have the capacity to meet demand, which again for 'twenty four clearly that's not a problem.
Martin Whittier Malloy: And as we move beyond that and as we grow the company, there's going to be a focus on using our cash wisely at the right time and growing the company profitably.
K.R. Schroeder: Okay.
Operator: Your next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead.
K.R. Schroeder: Your next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead.
Martin Whittier Malloy: Thank you for taking my question and Greg Best of luck in your future endeavors.
Operator: Hum.
Martin Whittier Malloy: First question I just wanted to ask.
Martin Whittier Malloy: About progress in terms of development of the carbon capture technology could you maybe give us an update on that in conjunction with the fuel service.
K.R. Schroeder: Yeah, so look, if you look at our pipeline, both domestically and internationally, we are working with several partners, and where we are at this stage in that is technology qualification. We have developed great partners who can take our gas and process it to the specifications required to put that in a pipeline to meet their standards for it to go into a classic swap. Number one.
Martin Whittier Malloy: Yeah. So look if you if you're looking at a pipeline both domestically and internationally.
K.R. Schroeder: Working with several partners.
K.R. Schroeder: And where we are at this stage on that is technology qualification.
K.R. Schroeder: We have devil of Great partners.
K.R. Schroeder: Who can take our gas and process. It through the specifications required to put that DNA pipeline to meet their standards for it to go into a classic slow.
K.R. Schroeder: Okay. Number two is that we are talking to large utilities that have been playing in this field already in the U.S. and who have tried other techniques and now believe that we have the better mousetrap that we are working with, with a number of states figuring out who has domain dominance issues to getting Class 6 wells approved to the pipelines coming on board, to everything else that needs to happen. This also has a longer sales cycle.
K.R. Schroeder: Number one okay number.
K.R. Schroeder: Number two is PR talking too.
K.R. Schroeder: Large utilities that have been playing in this field already in the U S and who have tried other techniques.
K.R. Schroeder: Now believe that we have the better mouse trap that we are working with.
K.R. Schroeder: The number of a number of states figuring out.
K.R. Schroeder: Who has domain dominance issues to getting classics wells <unk> to the pipeline.
K.R. Schroeder: Since coming on board.
K.R. Schroeder: Everything else that needs to happen. This also has a longer sales cycle, but the way I would characterize where we are on that is most people are getting extremely comfortable our technology and saying that we would like to baseline year technology now it's about the next steps it will take.
K.R. Schroeder: But the way I would characterize where we are on that is most people are getting extremely comfortable with our technology and saying that they would like to baseline your technology. Now it's about the next steps. It will take time, but this is a huge opportunity. And thanks for asking that question, Marty, because I want to emphasize something to you. This world cannot decarbonize by 2050 without carbon sequestration. There is no possible way that we can.
K.R. Schroeder: Time, but this is a huge opportunity and thanks for asking that question, Marty because I want to emphasize something to you.
K.R. Schroeder: This world.
K.R. Schroeder: Cannot decarbonize by 2050.
K.R. Schroeder: Carbon sequestration.
K.R. Schroeder: There is no possible way.
K.R. Schroeder: This is huge. And we have one of the best available technologies anybody has shown to take natural gas and create a concentrated stream of carbon dioxide to sequester, which means if you have the dual Issues of Needing More Power and decarbonizing, we are about as good as it gets.
K.R. Schroeder: That we can this is huge and we have one of the best available technologies anybody has shown to take natural gas and create a concentrated stream of carbon dioxide to see cluster, which means you have the deal.
K.R. Schroeder: Issues of needing more power.
K.R. Schroeder: And to Decarbonize.
K.R. Schroeder: Yet about as good as it comes as a solution.
Operator: Your next question comes from the line of Noel Parks with TUI Brothers. Please go ahead.
K.R. Schroeder: Your next question comes from the line of Noel Parks with Tuohy Brothers. Please go ahead.
Unknown Attendee: Hi, good afternoon. Just had a couple, you know. I wondered, and as generally or specifically, as you feel comfortable, the Intel relationship is such a long-standing one. And I was wondering if you could talk a little bit about the evolution of the relationship. And I'm curious, even sort of what model of the BDF did they originally run, just kind of what it's been like as far as just going through upgrade cycles and so on with such an established customer. Sure. No.
Noel Augustus Parks: Hi, good afternoon.
Unknown Attendee: Just had a couple.
Unknown Attendee: Wonder.
Unknown Attendee: As generally.
Unknown Attendee: Specifically as you can.
Unknown Attendee: The Intel relationship is such a long standing one I was wondering if you could talk a little bit about the evolution of the relationship.
Unknown Attendee: Curious, even sort of what model.
Speaker Change: The BS.
Unknown Attendee: They originally Ryan and just kind of what it's been like as far as it's going through upgrade cycles and so on with petrol established customers.
K.R. Schroeder: Sure Noel, that's a very good question. Look, you know, we have always tried it. If you look at it historically, about two-thirds of our business comes from repeat orders from customers. Multihundred Million Dollar Orders. And to us, there is no better validation of us taking care of a customer's pain. At the end of the day, you're solving their problems, and if you see them well, they come back, and that's that there's no better indication, and I would like to grow even more new customers, but it's always the land and expand strategy that we have, and Intel would be a very good example of that. Our first installations for Intel were in California, both in the Bay Area and in Folsom, for their facilities, where they And this was in 2014.
Speaker Change: Sure enough that's a very good question look.
K.R. Schroeder: We have always prided.
K.R. Schroeder: That if you look at historically about two thirds of our business comes from repeat orders from customers multi.
K.R. Schroeder: Multi $100 million orders in to US there is no better validation of us taking care of our customers pain at the end of the day, you're solving their problems and if you saw them will they come back deal and Thats.
K.R. Schroeder: There is no better indication and I would like to grow even more new customers, but it's always the land and expand strategy that we have and Intel would be a very good example of that our first installations for Intel there in California.
K.R. Schroeder: Pull it in the Bay area and in Folsom.
K.R. Schroeder: For their facilities.
K.R. Schroeder: Wanted to try it.
K.R. Schroeder: And this was in 2014.
K.R. Schroeder: So it was our second generation technology. And then I still today vividly remember the CEO at that time sitting in my conference room evaluating it and saying, if you really want to solve my pain, I'll tell you where my pain is. It's in Bangalore, India, and we are building a new building. We have no power for it, and the old building we have loses power three times a day. I cannot run the kind of labs and data centers I want to run in Bangalore if I lose power three times a day, I said. If it's not for the long relationship we want with you, we are happy to go try.
K.R. Schroeder: It was our second generation technology.
K.R. Schroeder: And then.
K.R. Schroeder: Hi, still today remember vividly.
K.R. Schroeder: The CEO at that time sitting in my conference room evaluating it and seeing if you really want to sell my pain I'll tell you that in my opinion is if it's in Bangalore, India.
K.R. Schroeder: And we are building a new building, we have no tolerance for it and the whole building we have loses power three times a day I cannot run the kind of labs in data centers I wanted on in Bangalore, If I lose power three times a day.
Speaker Change: And I said.
K.R. Schroeder: Yes.
K.R. Schroeder: For the long relationship we want with you.
Speaker Change: We are happy to go try.
K.R. Schroeder: We had never installed anything in India at that time, so we had to run three kilometers of gas pipelines for them, working with the Gas Authority of India, to bring the gas, and we had power for them before they finished the building, and I'm proud to say that that 2014 system has been upgraded along the way with field replacement units. We don't drop load for them. They never have to worry about losing power.
K.R. Schroeder: Had another install anything in India at that time.
K.R. Schroeder: To run three kilometers of gas pipelines for them working with the gas authority of India.
K.R. Schroeder: To bring the gas and we had power for them.
K.R. Schroeder: Before they finish the building.
K.R. Schroeder: And I'm proud to say that that 24 2014 system, that's been upgraded along the way that the replacement units.
K.R. Schroeder: We don't drop load for them.
K.R. Schroeder: Never have to worry about losing power. So we have a long established and proven relationship with them and we are extremely grateful for them to have taken that early step and we applaud them for being a leader.
K.R. Schroeder: So we have a long-established and proven relationship with them, and we are extremely grateful for them having taken that early step, and we applaud them for being a leader and huge thanks to them for again trusting us and entrusting us with that expansion of their data center in Santa Clara. Your next question comes from the line of Pavel Molchanov with Raymond James. Please go ahead. Thanks for taking the question. Let me start with a question.
K.R. Schroeder: A.
Pavel Molchanov: A huge thanks to them for again, trusting us and trusting us with that expansion of their data center and Santa Clara.
Operator: Your next question comes from the line of Pavel Molchanov with Raymond James. Please go ahead.
Pavel Molchanov: Your next question comes from the line of Pavel <unk> with Raymond James. Please go ahead.
Pavel Molchanov: Thanks for taking the question.
Pavel Molchanov: Let me start with a conceptual one.
Pavel Molchanov: When you speak with data centers and they want to reconcile.
Pavel Molchanov: Baseload generation and sustainability targets.
Pavel Molchanov: How often do you hear.
Pavel Molchanov: Hydrogen and RMG feedstock entering that conversation.
K.R. Schroeder: Pavel, this is a very good question. They and us and everybody on the planet would love to have zero carbon fuel and be able to power the data center with that. We all know that that's aspirational for the foreseeable future in the short term. But we also believe that definitely will happen in the future.
Pavel Molchanov: Paul lets say a very good question look.
K.R. Schroeder: They and us and everybody on the planet.
K.R. Schroeder: What allowed to have zero carbon fuel.
K.R. Schroeder: Okay.
K.R. Schroeder: And be able to power.
K.R. Schroeder: The data center with that.
K.R. Schroeder: All know that that's aspirational.
K.R. Schroeder: For the foreseeable future in the short term.
K.R. Schroeder: We also believe that definitely in the future.
K.R. Schroeder: That renewable molecule, whether it is green ammonia, green hydrogen, RNG, biogas, all of the above should become available so our children and our grandchildren can have a great planet. But don't forget, one additional option is large-scale power generation from natural gas with carbon capture, because Mother Nature does not care about renewable sources; it cares about the carbon dioxide molecules in the atmosphere. They get the same effect.
K.R. Schroeder: That renewable molecule, whether it is a clean ammonia green hydrogen R&D biogas all of the above should become available so our children and our grandchildren can have a great planet, but don't forget.
K.R. Schroeder: One additional option.
K.R. Schroeder: Is large scale power generation from natural gas with carbon capture because mother nature does not care about renewable sources fossil it cares about the carbon dioxide molecules in the atmosphere. They get the same effect so with our solution what they see is it's the best available offer.
K.R. Schroeder: So with our solution, what they see is it's the best available option of anything that they can possibly do, in real terms for the atmosphere. Yes, they can go and buy it. Green Credits and RECs and Build Solar Farms. That is not displacing the dirty, highly power-intensive power that they use wherever they use it. Whereas here, they are actually producing power with the least amount of carbon footprint and with no air pollution.
K.R. Schroeder: Shen of anything that they can possibly do.
K.R. Schroeder: In real terms for the atmosphere.
K.R. Schroeder: Yes, they can go and buy.
K.R. Schroeder: Green credits in Jacksonville solar funds that is not displacing the dirty.
K.R. Schroeder: Highly powered intend so Paulo.
K.R. Schroeder: Power that they use that or are they using that is here.
K.R. Schroeder: They are actually producing power with the least amount of carbon footprint and with noise pollution then.
K.R. Schroeder: As these green molecules become available... from zero to small blends to 100% pure green fuel, they can use our same existing systems without stranding them, so we are future-proofing them. If, as a country, we figure out carbon capture and have pipelines and sequestration available, they can use natural gas until such time as they are able to do it. With all these, they are convinced that this is a great opportunity. Your next question comes from the line by Colin Rusch with Oppenheimer. Please go ahead, there.
K.R. Schroeder: As these green molecules become available.
Colin Rusch: From zero, two small blends to a 100% pure green fuel.
Colin Rusch: He can use our same existing systems with outstanding at Sylvia future proofing them.
K.R. Schroeder: <unk>.
Colin Rusch: Yes, as a country, we figured out carbon capture and have pipelines.
Colin Rusch: And sequestration available they can use natural gas until such time and to be able to do it with all of those they are convinced that this is a great option.
Operator: Your next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.
K.R. Schroeder: Your next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.
Andre: Hi, there this is andre items on for Colin.
Colin Rusch: As you are quoting microgrid opportunities can you just.
Colin Rusch: Just speak again too.
Colin Rusch: Those customers desire for zero emission natural gas solutions, and whether you are trying to integrate additional solar wind or chemical storage on site.
K.R. Schroeder: So, yeah, you know, the answer is we believe in all of the above. We are big fans of solar energy. We're big fans of wind power, and as they grow, they are going to need to store it. And hydrogen is one option. And you know that we are playing on both sides of hydrogen, both the hydrogen electrolyzer as well as using hydrogen as a fuel in our fuel cells. So we encourage people to do all of the above.
Colin Rusch: So yes.
Colin Rusch: The answer is we believe in all of the above we are big fans of solar we are big.
K.R. Schroeder: Hence event and as they grow.
K.R. Schroeder: They're going to need to store it and hydrogen is one option and you know that we have a play on both sides of hydrogen.
K.R. Schroeder: Hydrogen electrolyze, it as well as using hydrogen as a fuel and non fuel cells. So.
K.R. Schroeder: We encourage people to do all of the above.
K.R. Schroeder: And obviously, our customers will, in their mix, have as much solar and wind because that industry, especially the data center industry and the information industry, is at the leading edge of any other industry in terms of reducing their carbon footprint. So, the great thing about Bloom is we integrate beautifully with any of them, and we are firming up that base load without dirty diesel and all the air pollution associated with it.
K.R. Schroeder: And obviously our customers will.
K.R. Schroeder: In their mix have asked much solar and wind because that industry, especially the data center industry and information industry is in the leading edge of any other industry in terms of.
K.R. Schroeder: Reducing their carbon footprint so so.
K.R. Schroeder: The great thing about Bloom is we integrate beautifully with any of those micro grids.
K.R. Schroeder: And VR firming up that base load without dirty diesel.
K.R. Schroeder: And all of the air pollution associated with that.
Operator: Your next question comes from the line of Ben Kallo with Baird. Please go ahead.
K.R. Schroeder: Your next question comes from the line of Ben <unk> with Baird. Please go ahead.
Unknown Attendee: Hey guys, thanks for taking my question. Dan, just welcome. I know you have a lot of questions, and kudos to you jumping in early and starting. I'm not asking about the guidance that you guys put out there, not you, but that was out there for 26 before you arrived, but what do you, since you've been here, how's your visibility looked? It seems good for this year, but there was guidance out there a couple of times for 26.
Benjamin Joseph Kallo: Hey, guys. Thanks.
Benjamin Joseph Kallo: Thanks for taking my questions.
Unknown Attendee: Dan welcome.
Unknown Attendee: I know you've got a lot of questions.
Unknown Attendee: <unk> jumped on this early started.
Unknown Attendee: Paul.
Unknown Attendee: I'm not asking you about the guidance.
Unknown Attendee: You guys put out there.
Unknown Attendee: That was out there before but.
Speaker Change: To assist you.
Unknown Attendee: How's your visibility seems drug for this year there was guidance other a couple of times six.
Unknown Attendee: <unk>.
Dan Barenboim: Just as you think about all of that,
Speaker Change: Thank you Bill.
Dan Barenboim: Yeah, Ben, so thanks for the question. You know, it's a bit difficult for me to comment, not having the full perspective on that. I will tell you that, I'm just going to reiterate, you know, I got pretty comfortable pretty quickly with what the commercial pipeline looks like, and what our revenue will look like for this year and our path to increasing profitability, as we talked about. I won't really talk about things beyond that, you know, but I will say that my focus is on making sure that we're ready to scale profitably.
Dan Barenboim: Yes.
Speaker Change: Thanks for the question.
Dan Barenboim: It's a bit difficult for me to comment.
Dan Barenboim: Not having a full perspective on that I will tell you that.
Dan Barenboim: I'm just going to reiterate.
Dan Barenboim: Got pretty comfortable pretty quickly and what the commercial pipeline looks like and what our revenue will look like for this year and our path to increase profitability as we talked about I won't really talk about things beyond that I will say that my focus is on making sure that we're ready to scale profitably. It's on obviously the first things that I have jumped into.
Dan Barenboim: It's obviously, the first things that I've jumped into, we're looking at the balance sheet, some of the concerns that I know we've heard from investors in the past, the receivables, the cash flow, you know, we have optionality on the convert that's due on August 25. So that's where my focus has been more immediately, to get comfortable and confident in those things. And as I say, the commercial pipeline gives me a significant amount of confidence in that.
Dan Barenboim: We're looking at the balance sheet some of the concerns that I know we've heard from investors in the past the receivables and the cash flow.
Dan Barenboim: We have optionality on the convert that's due in August of 25, So that's where my focus has been more immediately to get to get comfortable and confident in those things and as I say the commercial pipeline gives me a significant amount of kind of confidence for that.
Dan Barenboim: I'm going to have you're gonna have to give me maybe another 90 days to be able to comment on anything further. Your next question comes from the line of Jordan Levy with Truist Securities. Please go ahead. Hi all, it's Henri on for Jordan here. Thanks for squeezing me in.
Speaker Change: I am going to have you're going to have to give me maybe another 90 days to be able to comment on anything further than that.
Operator: Your next question comes from the line of Jordan Levy with Truist Securities. Please go ahead.
Henri: Your next question comes from the line of Jordan Levy with <unk> Securities. Please go ahead.
Henri: It's Henry on for Julian here, Thanks for sneaking me in and congratulations Greg and Dan for joining the team.
Henri: Just a quick one as you look to the rest of the year you I'll provide some detail on the walk from this quarter to hitting that operating income guidance for the remainder of the year.
Henri: We're just going to be looking at.
Speaker Change: The quarter has progressed.
Operator: So, uh, the only real comment we've made, you know, I talked a little bit about, you know, in general terms, how to think about maybe a revenue profile first half, second half. And I would just say that, you know, I would expect gross margin to improve sequentially every quarter as we move through the Your next question comes from the line of Chris Tassone with Wolf Research. Please go ahead.
Henri: So the only real comment we made I talked a little bit about in general terms, how to think about maybe a revenue profile first half second half.
Unknown Attendee: And I would just say that I would expect gross margin to improve sequentially every quarter as we move through the year.
Operator: Okay.
Unknown Attendee: Your next question comes from the line of Chris <unk> with Wolfe Research. Please go ahead.
Unknown Attendee: Hi, Thanks for taking my question I wanted to just clarify on the prepared remarks on the product Asps being weighed down from international sales are those sales to S. K Eagle plant and should we expect the rest of the sales under that preferred distributor.
Unknown Attendee: To reflect this ASC.
Gregory D. Cameron: Hey, it's Craig. The ASPs that we're getting from our partners in Korea this quarter were very consistent with the prior quarter. So as you look at our mix of ASPs during 2023, and you think about them for the quarter, and you think about them as they go forward, yeah, mix worked against us a little bit on timing from the quarter, not because those were down materially versus where they've been, but just other shipments weren't there. So I would expect ASPs to continue to increase through the course of the year as we have other sources of volume moving And that's consistent with the way we thought about putting the framework together.
Greg: Hey, it's Greg.
Unknown Attendee: The asps.
Gregory D. Cameron: Asps that we're getting from from from our partners in Korea. This quarter very consistent with the prior quarter. So as you look at our mix of Asp's. During 2023, and you think about them for the quarter and you think about it as they go forward, yes mix worked against us a little bit on timing in the quarter.
Gregory D. Cameron: Not because those were down materially.
Gregory D. Cameron: Versus where they've been but just other shipments werent there so I would expect to asps.
Gregory D. Cameron: To continue to incur.
Gregory D. Cameron: Increase through the course of the year as we have other sources of volume moving in and Thats consistent with the way, we thought about putting the framework together for the year.
Gregory D. Cameron: Okay.
K.R. Schroeder: That concludes our question and answer session. I will now turn the conference back over to K. R. for closing remarks. Thank you.
Gregory D. Cameron: That concludes our question and answer session I will now turn the conference back over to KR for closing remarks.
K.R. Schroeder: Thank you. Thanks, everyone, for your participation on the call and for your support of Bloom Energy. As I close, I just think there are three things I want to emphasize. The first one is, I think we laid it out to you even in the last call, and we want to confirm this again to you that we are reaffirming our guidance for the year and also reminding you that we said it's going to be a heavy-loaded second half of the year and not the first half of the year, and that's how it's going to turn out.
K. R.: Thank you.
K. R.: Thanks, everyone for your participation on the call and for your support of Bloom energy.
K.R. Schroeder: As a close I just think there are three things I want to emphasize the.
K.R. Schroeder: The first one is.
K.R. Schroeder: I think we laid it out to you even in the last call and we want to confirm is again to you that we are reaffirming our guidance for the year.
K.R. Schroeder: And also reminding you that we said.
K.R. Schroeder: It's going to be a.
K.R. Schroeder: And that's just the rhythm of the business, as we say, based on the orders we have at hand and how we can prosecute. Second, And on that issue, again, we have within that guidance where we will be on those numbers, as Dan pointed out. We have the sites, we have the orders, we have the customers, we have the products we can make. It is purely about timing when those things fall here or there.
K.R. Schroeder: Heavy loaded second half of the year and not the first half of the year and that's how it is kind of done and Thats just the rhythm of the business SBC based on the orders we have at hand, and how we can prosecute.
K.R. Schroeder: Second.
K.R. Schroeder: And on that issue again.
K.R. Schroeder: Within that guidance, where we will be on those numbers.
K.R. Schroeder: As Dan pointed out I want to reiterate.
K.R. Schroeder: We have the sites we have the orders we have the customers. We have the products. We can make it is purely about timing of when those things fall here or there is what's going to decide that on that range before we'll know more as the year progresses, and we are working hard.
K.R. Schroeder: It's what's going to decide where on that range we fall. We'll know more as the year progresses, and we're working hard to see what we can pull off on the second point, the Intel Agreement, the Quanta Agreement. Continuing orders from existing customers and the strong Commercial Pipeline are all showing that we have the right product at the right time for a market that very badly needs the solution. This is what we are offering; it is not a product for somebody to buy.
K.R. Schroeder: To see what we can pull out.
K.R. Schroeder: On the second point.
K.R. Schroeder: The Intel agreement.
K.R. Schroeder: Onto agreement.
K.R. Schroeder: Continuing orders from existing customers.
K.R. Schroeder: And a strong commercial pipeline.
K.R. Schroeder: All are showing that.
K.R. Schroeder: We have the right product.
K.R. Schroeder: At the right time for a market that very badly needs. This solution. This is what we had offering is not a product for somebody to buy is a solution that enables them to protect their business and take care of their business and grow.
K.R. Schroeder: It's a solution that enables them to protect their business and take care of their business and grow; the market dynamics are very clearly in our favor. People want low carbon solutions right now. They know that there is no miracle switch to a zero carbon solution overnight, and so our low carbon solution has the right market dynamic from that perspective. People want power now, and the utilities are not moving at this speed.
K.R. Schroeder: The market dynamics.
K.R. Schroeder: Very clearly in our favor.
K.R. Schroeder: People want low carbon solutions right now they know that there is no medical switch to a zero carbon solution overnight.
K.R. Schroeder: And so our low carbon solution.
K.R. Schroeder: Has the right market dynamic from that perspective.
K.R. Schroeder: People want power now.
K.R. Schroeder: And the utilities are not moving at the speed.
K.R. Schroeder: The data center industry and the utility industry are operating on two different timescales, and that helps us provide either to the utility or to the customer, we are agnostic in front of the meter or behind the meter, a solution so we can help businesses, the local economy, and everybody. Clearly, the data center and AI space has opened up an opportunity for us in the data center space, but the entire AI ecosystem space, as you saw with the supply chain.
K.R. Schroeder: The data center industry in the utility industry are operating on two different timescales.
K.R. Schroeder: And that helps us provide either to the utility.
K.R. Schroeder: Or to the customer we are agnostic in front of the meter our behind the meter solution. So we can help.
K.R. Schroeder: <unk>, the local economy and everybody.
K.R. Schroeder: Clearly the data center and AI.
K.R. Schroeder: Space.
K.R. Schroeder: Not only has opened up an opportunity for us in the data center space, but the entire ecosystem.
K.R. Schroeder: Ecosystem space as your solid supply chain.
K.R. Schroeder: And.
K.R. Schroeder: With all that opportunity, we have to execute, and hopefully, you are seeing, quarter over quarter, what we say and what we do. And I'll let you be the judge of figuring out whether we are doing what we say. I feel very good with our entire team, functioning as one team at a very high level. We're adding quality people to our leadership team as well as to our employee base. They're deeply committed to the mission, and I feel very good about where we are as a company. I'm excited about our future, and I'm confident about our future. Thank you. This concludes today's conference.
K.R. Schroeder: With all of that opportunity.
K.R. Schroeder: Execute.
K.R. Schroeder: And hopefully you are seeing quarter over quarter.
K.R. Schroeder: What we say and what we do.
K.R. Schroeder: Ill, let you be the judge of figuring out are we doing what we say.
K.R. Schroeder: I feel very good.
K.R. Schroeder: With our entire team.
K.R. Schroeder: <unk> is one team at a very high level.
K.R. Schroeder: Adding quality people into our leadership team as well as in our employee base. They are deeply committed to the mission and I feel very good about where we are as a company I'm excited about our future and I'm confident about our future. Thank you.
Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for your participation and you may now disconnect.
Operator: Okay.
Operator:
K.R. Schroeder: Our future, and I'm confident about our
Operator: But our future and I am confident about.