Q3 2026 Fluence Energy Inc Earnings Call

August 6, 2026

Chris Dendrinos: Good morning, welcome to Fluence Energy's Q3 earnings conference call. Joining me on this morning's call are Julian Nebreda, our President and Chief Executive Officer, and Ahmed Pasha, our Chief Financial Officer. A copy of our earnings presentation, press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the investor relations section of our website at fluenceenergy.com.

Chris Shelton: Good morning, welcome to Fluence Energy's Q3 Earnings Conference Call. Joining me on this morning's call are Julian Nebreda, our President and Chief Executive Officer, and Ahmed Pasha, our Chief Financial Officer. A copy of our earnings presentation, press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the investor relations section of our website at fluenceenergy.com.

Speaker #1: A copy of our earnings presentation press release and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on the Investor Relations section of our website at fluencenergy.com.

Speaker #1: During the course of this call, Fluence management may make certain forward-looking statements regarding various matters relating to our business, including but not limited to.

Chris Dendrinos: During the course of this call, Fluence management may make certain forward-looking statements regarding various matters relating to our business, including, but not limited to, statements related to our future financial and operational performance, future market growth and related opportunities, anticipated growth and business strategy, liquidity and access to capital, expectations relating to pipeline, order intake, and contracted backlog, future results of operations and impact of the One Big Beautiful Bill Act, projected costs, beliefs, assumptions, prospects, plans, and objectives of management, and the timing of any of the foregoing. Such statements are based upon current expectations and certain assumptions and are therefore subject to certain risks, uncertainties, and other important factors, which could cause actual results to differ materially. Please refer to our SEC filings for more information regarding these risks, uncertainties, and important factors.

Chris Shelton: During the course of this call, Fluence management may make certain forward-looking statements regarding various matters relating to our business, including, but not limited to, statements related to our future financial and operational performance, future market growth and related opportunities, anticipated growth and business strategy, liquidity and access to capital, expectations relating to pipeline, order intake, and contracted backlog, future results of operations and impact of the One Big Beautiful Bill Act, projected costs, beliefs, assumptions, prospects, plans, and objectives of management, and the timing of any of the foregoing.

Speaker #1: Statements related to our future financial and operational performance, future market growth, and related opportunities. Anticipated growth and business strategy, liquidity and access to capital, expectations relating to pipeline, order intake, and contracted backlog, future results of operations and impact of the one big beautiful bill acts, projected costs, beliefs, assumptions, prospects, plans, and objectives of management, and the timing of any of the foregoing.

Speaker #1: Such statements are based upon current expectations and certain assumptions and are therefore subject to certain risks, uncertainties, and other important factors which could cause actual results to differ materially.

Chris Shelton: Such statements are based upon current expectations and certain assumptions and are therefore subject to certain risks, uncertainties, and other important factors, which could cause actual results to differ materially. Please refer to our SEC filings for more information regarding these risks, uncertainties, and important factors.

Speaker #1: Please refer to our SEC filings for more information regarding these risks, uncertainties, and important factors. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today.

Chris Dendrinos: You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information. This call will also reference non-GAAP measures that we view as important in assessing the performance of our business, including adjusted EBITDA, adjusted gross profit, and adjusted gross profit margin. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the investor relations website. Following our prepared remarks, we will conduct a question and answer session with our team. Thank you very much. I'll now turn the call over to Julian.

Chris Shelton: You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information. This call will also reference non-GAAP measures that we view as important in assessing the performance of our business, including adjusted EBITDA, adjusted gross profit, and adjusted gross profit margin.

Speaker #1: Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information. This call will also reference non-GAAP measures that we view as important in assessing the performance of our business.

Speaker #1: Including adjusted EBITDA, adjusted gross profit, and adjusted gross profit margin. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the Investor Relations website.

Chris Shelton: A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the investor relations website. Following our prepared remarks, we will conduct a question and answer session with our team. Thank you very much. I'll now turn the call over to Julian.

Speaker #1: Following our prepared remarks, we will conduct a question and answer session with our team. Thank you very much. I'll now turn the call over to Julian.

Speaker #2: Thank you, Chris. And welcome to everyone joining us today. Turning to slide four. Today, I will provide an update on the progress we have made in driving new order intake.

Julian Nebreda: Thank you, Chris, and welcome to everyone joining us today. Turning to slide four. Today, I will provide an update on the progress we have made in driving new order intake and building our backlog, both of which were at record levels this quarter. All these calls are growing business, which includes robust demand from our core customers, combined with a rapid expansion of data center customers, from which we received our first orders and contract awards totaling $850 million. We believe that the momentum of the past few months will continue in the quarters to come, driven by our differentiated product offering and our team's longstanding ability to meet customer needs. Following my remarks, Ahmed will review our financial results for the quarter and our outlook for the remainder of the year. Starting with key highlights for Q3.

Speaker #2: And building our backlog. Both of which were at record levels this quarter. I'll discuss our growing business, which includes robust demand from our core customers, combined with a rapid expansion of data center customers.

Speaker #2: From which we receive our first orders and contract rewards totaling $850 million. We believe that the momentum of the past few months will continue in the quarters to come.

Julian Nebreda: We believe that the momentum of the past few months will continue in the quarters to come, driven by our differentiated product offering and our team's longstanding ability to meet customer needs. Following my remarks, Ahmed will review our financial results for the quarter and our outlook for the remainder of the year. Starting with key highlights for Q3.

Speaker #2: Driven by our differentiated product offering, and our team's long-standing ability to meet customer needs. Following my remarks, Ahmed will review our financial results for the quarter.

Speaker #2: And our outlook for the remainder of the year. Starting with key highlights for the third fiscal quarter. First, we signed $1.44 billion of orders during the quarter.

Julian Nebreda: First, we signed $1.44 billion of orders during the quarter, which is nearly triple the $509 million we signed in the same period last year. Second, included in our record order intake was our first deal with a data center developer worth $300 million. During July, we were awarded an additional $550 million of business across multiple data center sites by one of the hyperscalers that we discussed last quarter. Third, we ended the quarter with a record backlog of $6.4 billion, representing 14% growth over Q2, and more than 30% growth since Q3 of last year. Fourth, we ended the quarter with total liquidity of approximately $860 million, in line with our expectations. Fifth, Ahmed will discuss our Q3 financial results shortly, but revenues were affected by delays in expected project deliveries, driven by the ramp-up of two new contracted manufacturing facilities.

Speaker #2: Which is nearly triple the $509 million we signed in the same period last year. Second, included in our record order intake, was our first deal with a data center developer.

Speaker #2: Worth $300 million. During July, we were awarded an additional $550 million of business across multiple data center sites. By one of the hyperscalers that we discussed.

Speaker #2: Last quarter. Third, we ended the quarter with a record backlog of $6.4 billion. Representing 14% growth over the second quarter. And more than 30% growth since the third quarter of last year.

Julian Nebreda: Third, we ended the quarter with a record backlog of $6.4 billion, representing 14% growth over Q2, and more than 30% growth since Q3 of last year. Fourth, we ended the quarter with total liquidity of approximately $860 million, in line with our expectations. Fifth, Ahmed will discuss our Q3 financial results shortly, but revenues were affected by delays in expected project deliveries, driven by the ramp-up of two new contracted manufacturing facilities.

Speaker #2: Fourth, we ended the quarter with total liquidity of approximately $860 million. In line with our expectations. Fifth, Ahmed will discuss our third quarter financial results shortly.

Speaker #2: But revenues were affected by delays in expected project deliveries driven by the ramp-up of two new contracted manufacturing facilities. Accordingly, we are lowering our guidance midpoint for 2026 revenue and adjusted EBITDA to $3 billion and negative $10 million, respectively.

Julian Nebreda: Accordingly, we are lowering our guidance midpoints for 2026 revenue and adjusted EBITDA to $3 billion and -$10 million respectively. We do not take this reduction lightly and have instituted changes in an effort to ensure we deliver on our growing market demand. I will detail our plan further in a moment. Please turn to slide five for more detail on our order intake. With $2.7 billion now signed to Q3 of this year, our orders are 80% higher than the amounts from last year, with utilities and IPPs making up approximately 90% of this total. We expect Q4 orders will be another record level for the company, and we see reason for this strong momentum to continue in future quarters given our current demand and competitive position. Please turn to slide six as I detail our progress with data center customers.

Speaker #2: We do not take this reduction lightly. And have instituted changes in an effort to ensure we deliver on our growing market demand. I will detail our plans further in a moment.

Speaker #2: Please turn to slide five for more detail on our order intake. With 2.7 billion now signed to the third quarter of this year, our orders are 80% higher than the amount from last year.

Julian Nebreda: With $2.7 billion now signed to Q3 of this year, our orders are 80% higher than the amounts from last year, with utilities and IPPs making up approximately 90% of this total. We expect Q4 orders will be another record level for the company, and we see reason for this strong momentum to continue in future quarters given our current demand and competitive position. Please turn to slide six as I detail our progress with data center customers.

Speaker #2: With utilities and IPPs making up approximately 90% of this total. We expect fourth quarter orders will be another record level for the company. And we see reason for this strong momentum to continue in future quarters, given our current demand and competitive position.

Speaker #2: Please turn to slide six, as I detail our progress with data center customers. Our announcements on last quarter's call that we have signed two master supply agreements with hyperscalers raise our profile with other potential data center customers.

Julian Nebreda: Our announcements on last quarter's call that we have signed two master supply agreements with hyperscalers raised our profile with other potential data center customers. Overall, our data center pipeline has increased to 16 GWh, representing a more than 35% increase compared to Q2. Our pipeline now includes a mix of projects from both hyperscalers and data center developers. During the quarter, we signed a $300 million order for a behind-the-meter project with a developer. We were introduced to this customer by one of the hyperscalers we have been working with. The sales cycle for this customer was much faster than our traditional market segments, converting from lead to order in three months. We continue to see the developer segment center on speed-to-power solutions, and we are pleased to be positioned to meet their needs.

Speaker #2: Overall, our data center pipeline has increased to 16 gigawatt hours, representing more than 30.5% increase compared to the second quarter. Our pipeline now includes a mix of projects from both hyperscalers and data center developers.

Speaker #2: During the quarter we signed a $300 million order for a behind-the-meter project with a developer. We were introduced to this customers by one of the hyperscalers we have been working with.

Julian Nebreda: We were introduced to this customer by one of the hyperscalers we have been working with. The sales cycle for this customer was much faster than our traditional market segments, converting from lead to order in three months. We continue to see the developer segment center on speed-to-power solutions, and we are pleased to be positioned to meet their needs.

Speaker #2: The sales cycle for this customer was much faster than our traditional market segment. Converting from lead to order in three months. We continue to see the developers segment center on speed to power solutions.

Speaker #2: And we are pleased to be positioned to meet their needs. Hyperscaler customers continue to focus on quality of power solutions. Where we also stand out in terms of our ability to deliver.

Julian Nebreda: Hyperscaler customers continue to focus on quality of power solutions, where we also stand out in terms of our ability to deliver. We were pleased to receive approximately $550 million of awards under one of our MSAs in July. These are not yet purchase orders. We expect these will add to our total of signed orders in the coming months. These data center customers have a pipeline of projects that we continue to believe we are well-positioned to beat out. We look forward to expanding our business with them in the near future. Please turn to Slide 7 as I discuss backlog and pipeline growth. Our backlog has benefited from record orders in two of the past four quarters and sets a strong base for revenue growth in fiscal 2027.

Speaker #2: We were pleased to receive approximately $550 million of awards on the one of our MSAs in July. These are not yet purchase orders and we expect these will add to our total of signed orders in the coming months.

Julian Nebreda: These data center customers have a pipeline of projects that we continue to believe we are well-positioned to beat out. We look forward to expanding our business with them in the near future. Please turn to Slide 7 as I discuss backlog and pipeline growth. Our backlog has benefited from record orders in two of the past four quarters and sets a strong base for revenue growth in fiscal 2027.

Speaker #2: These data center customers have a pipeline of projects that we continue to believe we are well positioned to bid on. And we look forward to expanding our business with them in the near future.

Speaker #2: Please turn to slide seven as I discuss backlog and pipeline growth. Our backlog has benefited from record orders in two of the past four quarters.

Speaker #2: And sets a strong base for revenue growth in fiscal 27. As of June 30th, approximately $2.2 billion of our $6.4 billion backlog is expected to convert to revenues in fiscal 27.

Julian Nebreda: As of 30 June, approximately $2.2 billion of our $6.4 billion backlog is expected to convert to revenues in fiscal 2027. This compares to the $1.5 billion of fiscal year 2026 revenue coverage we had as of 30 June 2025. Turning to our pipeline, we exited the quarter at $33.1 billion, which is an increase of $1.6 billion compared to last quarter. This indicates $3 billion of new opportunities after considering our conversion of pipeline into orders during the quarter. We continue to see a growing percentage of our pipeline coming from the US market compared to previous years, mostly attributed to the data center sector. Please turn to slide eight for details on the expansion of our supply chains. We have been expanding our supply chain capacity to meet the strong demand for our products, as reflected in the growth of our backlog.

Speaker #2: This compares to the $1.5 billion of fiscal year 26 revenue coverage we had as of June 30th of 2025. Turning to our pipeline, we exited the quarter at 33.1 billion, which is an increase of 1.6 billion compared to last quarter.

Speaker #2: This indicates $3 billion of new opportunities after considering our conversion of pipeline into orders during the quarter. We continue to see a growing percentage of our pipeline coming from the US market, compared to previous years.

Julian Nebreda: This indicates $3 billion of new opportunities after considering our conversion of pipeline into orders during the quarter. We continue to see a growing percentage of our pipeline coming from the US market compared to previous years, mostly attributed to the data center sector. Please turn to slide eight for details on the expansion of our supply chains. We have been expanding our supply chain capacity to meet the strong demand for our products, as reflected in the growth of our backlog.

Speaker #2: Mostly attributed to the data center segment. Please turn to slide eight for this details on the expansion of our supply change. We have been expanding our supply chain capacity to meet the strong demand for our products as reflected in the growth of our backlog.

Julian Nebreda: New, larger contracted manufacturing facilities globally are expected to increase our capacity and also deliver the quality our customers expect. A major driver of our revised revenue expectation for this year is attributable to ramping up production at two of these new factories. In the US, we will be the off-taker of a new, fully automated facility located in Houston, with expected capacity of 15 GWh per year. Completion of this new facility has been delayed by a few months due to delays in construction and issues relating to the automation equipment. Limited production commenced this quarter. Our manufacturer is taking steps to address outstanding issues. We expect the facility to reach full production levels during our fiscal Q1 2027. I will highlight, this contract manufacturer has been our main enclosure supplier from Vietnam, which is a very similar facility to this new one in Houston.

Speaker #2: New, larger contracted manufacturing facilities globally are expected to increase our capacity and also deliver the quality our customers expect. A major driver of our revised revenue expectation for this year is attributable to ramping up production at two of these new factories.

Speaker #2: In the US, we will be the off-taker of a new, fully in Houston. We'd expected capacity of 15 gigawatt hours per year. Completion of this new facility has been delayed by a few months due to delays in construction and issues related to the automation equipment.

Julian Nebreda: Completion of this new facility has been delayed by a few months due to delays in construction and issues relating to the automation equipment. Limited production commenced this quarter. Our manufacturer is taking steps to address outstanding issues. We expect the facility to reach full production levels during our fiscal Q1 2027. I will highlight, this contract manufacturer has been our main enclosure supplier from Vietnam, which is a very similar facility to this new one in Houston.

Speaker #2: Limited production commence this quarter and our manufacturer is taking steps to address outstanding issues. We expect the facility to reach full production levels during our fiscal first quarter of 27.

Speaker #2: I will highlight this contract manufacturer has been our main enclosure supplier from Vietnam. Which is a very similar facility to this new one in Houston.

Speaker #2: We believe their knowledge and experience will be helpful as this factory moves towards full production. Our new international facilities are now fully ramped. And our product is being shipped to customers on a delayed timeline because initial production did not meet our quality expectation.

Julian Nebreda: We believe their knowledge and experience will be helpful as this factory moves towards full production. Our new international facilities are now fully ramped. Our product is being shipped to customers on a delayed timeline because initial production did not meet our quality expectation. Corrections were implemented. We have resumed shipping high-quality products to projects all around the world. Given the importance of timely, consistent, and high quality production to our business, we recently made organizational changes to ensure more direct oversight of, and accountability for, our production capability. Today, we announce that Roman Loosen will assume leadership of our supply chain. Peter Williams will concentrate on product, with both leaders reporting directly to me.

Speaker #2: Corrections were implemented, and we have resumed shipping high-quality products to projects all around the world. Given the importance of timely, consistent, and high-quality production to our business, we recently made organizational changes to ensure more direct oversight of, and accountability for, our production capability.

Julian Nebreda: Given the importance of timely, consistent, and high quality production to our business, we recently made organizational changes to ensure more direct oversight of, and accountability for, our production capability. Today, we announce that Roman Loosen will assume leadership of our supply chain. Peter Williams will concentrate on product, with both leaders reporting directly to me.

Speaker #2: Today we announce that Roman Lucent will assume leadership of our supply chain and Peter Williams will concentrate on product. With both leaders reporting directly to me.

Speaker #2: Roman, currently serves as our Chief Enterprise Operation Officer. And brings more than 20 years of global leadership experience at Siemens. Where we held senior operational and business leadership roles with responsibility for supply chains, manufacturing, and business transformation.

Julian Nebreda: Roman currently serves as our Chief Enterprise Operation Officer, and brings more than 20 years of global leadership experience at Siemens, where he held senior operational and business leadership roles with responsibility for supply chains, manufacturing, and business transformation. Roman will lead a set of managers with deep experience and skill sets in supply chains and manufacturing that have joined our company over the past few months. I am confident that this new management team will strengthen our supply chain and manufacturing to meet the growing demand for our products. When combined with our supply of domestic sales, we expect the Houston facility will expand our annual capacity for domestic content significantly compared to our current footprint.

Speaker #2: Roman will lead a set of managers with deep experience and skill sets in supply chains and manufacturing. That have joined our company over the past few months.

Speaker #2: I am confident that this new management team will strengthen our supply chains and manufacturing to meet the growing demand for our products. When combined with our supply of domestic cells, we expect the Houston facility will span our annual capacity for domestic content significantly compared to our current footprint.

Julian Nebreda: I am confident that this new management team will strengthen our supply chain and manufacturing to meet the growing demand for our products. When combined with our supply of domestic sales, we expect the Houston facility will expand our annual capacity for domestic content significantly compared to our current footprint.

Speaker #2: Once it is fully ramped and added to our current supply chain, we expect to have capacity to meet our current backlog of projects and confidence to meet the growth of the US market.

Julian Nebreda: Once it is fully ramped and added to our current supply chain, we expect to have capacity to meet our current backlog of projects, and confidence to meet the growth of the US market. Please turn to slide nine for details on how we are differentiating in the current market. We have been successful in growing our backlog and penetrating the new and important data center customer segment in a very short period of time. Fluence has new and repeat customers who appreciate our advanced product designs, leading energy density, and focus on total cost of ownership. In addition to these factors, our proprietary software stack, including an operating system, is designed to enable our customers to optimize their solution over its long-term life and allow for remote monitoring. These features can increase availability and extend the life of our solution for customers in all use cases.

Speaker #2: Please turn to slide nine for details on how we are differentiating in the current market. We have been successful in growing our backlog and penetrating the new and important data center customer segment in a very short period of time.

Speaker #2: Fluent has new and repeat customers who appreciate our advanced product designs leading energy density and focus on total cost of ownership. In addition to these factors, our proprietary software stack including an operating system is designed to enable our customers to optimize their solution over its long-term life and allow for remote monitoring.

Julian Nebreda: Fluence has new and repeat customers who appreciate our advanced product designs, leading energy density, and focus on total cost of ownership. In addition to these factors, our proprietary software stack, including an operating system, is designed to enable our customers to optimize their solution over its long-term life and allow for remote monitoring. These features can increase availability and extend the life of our solution for customers in all use cases.

Speaker #2: These features can increase availability and extend the life of our solution for customers in all use cases. Specifically for data center customers the ability of our operating system to efficiently help smooth load and handle periods of low voltage have contributed to new awards and orders.

Julian Nebreda: Specifically, for data center customers, the ability of our operating system to efficiently help smooth loads and handle periods of low voltage have contributed to new awards and orders. SmartStack has been gaining favor in terms of orders these years, representing 75% of our orders year to date. One of the attractive features of SmartStack is that we design it as a product platform, with the ability to upgrade over time. During the quarter, we announced the first evolution, with SmartStack 10 MWh, which increases density of each unit from 7.5 MWh to 10 MWh. The ability to upgrade our SmartStack offering over time with speed and efficiency allows us to quickly adapt to evolving customer needs, which is valuable for both Fluence and our customers. To conclude, we believe we have the right product and team to win in this rapidly growing market.

Speaker #2: Marstack has been gaining favor in terms of orders this year representing 75% of our orders year to date. One of the attractive features of Marstack is that we design it as a product platform.

Speaker #2: With the ability to upgrade over time. During the quarter we announced the first evolution. With Marstack 10. Which increases density of each unit from 7.5 megawatt hours to 10 megawatt hours.

Julian Nebreda: During the quarter, we announced the first evolution, with SmartStack 10 MWh, which increases density of each unit from 7.5 MWh to 10 MWh. The ability to upgrade our SmartStack offering over time with speed and efficiency allows us to quickly adapt to evolving customer needs, which is valuable for both Fluence and our customers. To conclude, we believe we have the right product and team to win in this rapidly growing market.

Speaker #2: The ability to upgrade our SmartStack offering over time with speed and efficiency allows us to quickly adapt to evolving customer needs which is valuable for both Fluence and our customers.

Speaker #2: To conclude, we believe we have the right product and team to win in this rapidly growing market. With our first data center awards adding to our record backlog and a growing global supply chain size to meet future growth, we are committed to delivering for customers and creating long-term value for shareholders.

Julian Nebreda: With our first data center awards adding to our record backlog, and a growing global supply chain sized to meet future growth, we are committed to delivering for customers and creating long-term value for shareholders. With that, I'll turn the call over to Ahmed to discuss our financial results and outlook for the rest of this year.

Speaker #2: With that I'll turn the call over to Ahmed to discuss our financial results and outlook for the rest of this year.

Speaker #1: Good morning, everyone. While our results this quarter were disappointing, the challenges we experienced were primarily related to construction and production startup delays at new manufacturing capacity and the scaling of our new products.

Ahmed Pasha: Good morning, everyone. While our results this quarter were disappointing, the challenges we experienced were primarily related to construction and production startup delays at new manufacturing capacity and scaling of our new products. We have taken actions to address issues and improve execution and are now tracking to our revised production plan. Importantly, these investments strengthen our supply chain globally and position us to support our growing backlog. As these new facilities move beyond the initial ramp-up phase, we believe Fluence will be better positioned to deliver profitable growth and create shareholder value. Starting with slide 11, we generated Q3 2026 revenue of $650 million, up 8% year over year. This was approximately $90 million below the expectations we discussed on our last quarterly call. This shortfall was primarily driven by production delays at two new contract manufacturing facilities that are currently ramping.

Speaker #1: We have taken actions to address issues and improve execution, and are now tracking to our revised production plan. Importantly, these investments strengthen our supply chain globally and position us to support our growing backlog.

Speaker #1: As these new facilities move beyond the initial ramp-up phase, we believe Fluence will be better positioned to deliver profitable growth and create shareholder value.

Ahmed Pasha: As these new facilities move beyond the initial ramp-up phase, we believe Fluence will be better positioned to deliver profitable growth and create shareholder value. Starting with slide 11, we generated Q3 2026 revenue of $650 million, up 8% year over year. This was approximately $90 million below the expectations we discussed on our last quarterly call. This shortfall was primarily driven by production delays at two new contract manufacturing facilities that are currently ramping.

Speaker #1: Starting with slide 11, we generated Q3 2026 revenue of $650 million up 8% year over year. This was approximately $90 million below the expectations we discussed on our last quarterly call.

Speaker #1: This shortfall was primarily driven by production delays at two new contract manufacturing facilities that are currently ramping. Production from the enclosure manufacturing facility in Houston was pushed by a quarter due to construction and automation delays.

Ahmed Pasha: Production from the enclosure manufacturing facility in Houston was pushed by a quarter due to construction and automation delays. The facility has begun limited production and is expected to achieve full production levels in Q1 of fiscal 2027. The other issue occurred at one of our two new facilities in China, where initial production of components of SmartStack did not meet stringent standards and required rework. The facility is now producing consistently to our standards and has achieved full production in Q4. While we expect to realize the revenues associated with the Q3 projects that were delayed, the slower ramp-up compresses the timeline for production in Q4, pushing a portion of previously planned 2026 deliveries into fiscal 2027.

Speaker #1: The facility has begun limited production and is expected to achieve full production levels in the first quarter of fiscal 2027. The other issue occurred at one of our two new facilities in China where initial production of components of SmartStack did not meet stringent standards and required rework.

Speaker #1: The facility is now producing consistently to our standards and has achieved full production in the fourth quarter. While we expect to realize the revenues associated with the Q3 Projects that were delayed .

Ahmed Pasha: The facility is now producing consistently to our standards and has achieved full production in Q4. While we expect to realize the revenues associated with the Q3 projects that were delayed, the slower ramp-up compresses the timeline for production in Q4, pushing a portion of previously planned 2026 deliveries into fiscal 2027.

Speaker #1: The slower ramp-up compresses the timeline for production in the fourth quarter, pushing a portion of previously planned 2026 deliveries into fiscal 2027.

Ahmed Pasha: Our Q3 adjusted gross profit reflects the lost margin from revenue shortfall and an approximately $15 million cost associated with new product rollout and production delays. In addition, we recorded $15 million loss on a planned battery supply agreement, most of which was associated with a single project. Despite the upfront cost, this arrangement secures the long-term supply and attractive pricing, strengthening our ability to support growing demand and price future orders with greater confidence. Turning to slide 12, for our fiscal 2026 guidance, we have revised our outlook to reflect our updated expectation for production through the end of this fiscal year. More specifically, we expect revenue in the range of $2.9 to $3.1 billion, with a midpoint of $3 billion. The approximately $400 million reduction versus the prior midpoint is largely the result of manufacturing ramp-up delays that pushed revenue recognition into 2027.

Speaker #1: Q3 adjusted gross profit reflects the loss margin from revenue shortfall and approximately $15 million of costs associated with new products, rollout, and production delays.

Speaker #1: In addition , we recorded 15 million loss on a planned battery supply agreement , most of which was associated with a single project Despite the upfront cost , this arrangement secures the long term supply and attractive pricing , strengthening our ability to support growing demand and price .

Speaker #1: Future orders with greater confidence Turning to slide 12 . For our fiscal 2026 guidance . We have revised our outlook to reflect our updated expectation for production through the end of this fiscal year More specifically , we expect revenue in the range of 2.9 to 3.1 billion , with a midpoint of 3 billion .

Ahmed Pasha: Turning to slide 12, for our fiscal 2026 guidance, we have revised our outlook to reflect our updated expectation for production through the end of this fiscal year. More specifically, we expect revenue in the range of $2.9 to $3.1 billion, with a midpoint of $3 billion. The approximately $400 million reduction versus the prior midpoint is largely the result of manufacturing ramp-up delays that pushed revenue recognition into 2027.

Speaker #1: The approximately 400 million reduction versus the prior midpoint is largely the result of manufacturing ramp up delays that pushed revenue recognition into 2027 .

Speaker #1: In terms of EBITDA , we now expect adjusted EBITDA -30 million to positive 10 million with midpoint of -10 million compared to our prior midpoint guidance of 50 million .

Ahmed Pasha: In terms of EBITDA, we now expect adjusted EBITDA -$30 million to +$10 million, with midpoint of -$10 million, compared to our prior midpoint guidance of $50 million. While there are several puts and takes relative to our prior guidance, the $60 million reduction is largely explained by two items. About $44 million of lost margin from shift of approximately $400 million of revenue into 2027, and $15 million related to the proposed long-term battery supply agreement discussed earlier. We are maintaining our expectation for annual recurring revenue of approximately $180 million by the end of fiscal 2026. Turning to slide 13 for an update on our liquidity position. We ended Q3 with total liquidity of approximately $863 million, which includes approximately $365 million in total cash.

Speaker #1: While there are several puts and takes relative to our prior guidance , the 60 million reduction is largely explained by two items . About 44 million of lost margin from shift of approximately 400 million of revenue into 2027 , and 15 million related to the proposed long term battery supply agreement discussed earlier .

Speaker #1: And we are maintaining our expectation for annual recurring revenue of approximately 180 million by the end of fiscal 2026 . Turning to slide 13 for an update on our liquidity position .

Ahmed Pasha: We are maintaining our expectation for annual recurring revenue of approximately $180 million by the end of fiscal 2026. Turning to slide 13 for an update on our liquidity position. We ended Q3 with total liquidity of approximately $863 million, which includes approximately $365 million in total cash.

Speaker #1: We ended the third quarter with total liquidity of approximately 863 million , which includes approximately 365 million in total cash . Consistent with what we said on the last call , we expect total liquidity will return to 900 million level by fiscal year end , driven by execution on our backlog of projects included in the guidance Bottom line , our liquidity position continues to support our near term working capital needs , particularly heading into our highest revenue quarter Regarding liquidity needs for 2027 .

Ahmed Pasha: Consistent with what we said on the last call, we expect total liquidity will return to $900 million level by fiscal year-end, driven by execution on our backlog of projects included in the guidance. Bottom line, our liquidity position continues to support our near-term working capital needs, particularly heading into our highest revenue quarter. Regarding liquidity needs for 2027, we are comfortable that our existing liquidity has us well-positioned for success. That said, as Julian noted, our expected order intake is reaching new highs and to support that growth may require an additional $300 to $500 million of working capital over the coming year. We will remain disciplined and pursue financing only where there is a clear line of sight to profitable growth and shareholder value creation.

Ahmed Pasha: Regarding liquidity needs for 2027, we are comfortable that our existing liquidity has us well-positioned for success. That said, as Julian noted, our expected order intake is reaching new highs and to support that growth may require an additional $300 to $500 million of working capital over the coming year. We will remain disciplined and pursue financing only where there is a clear line of sight to profitable growth and shareholder value creation.

Speaker #1: We are comfortable that our existing liquidity has us well positioned for success . That said , as Julia are expected order intake is reaching new highs and to support that growth may require an additional 300 to 500 million of working capital over the coming year We will remain disciplined and pursue financing only where there is a clear line of sight to profitable growth in shareholder value creation .

Speaker #1: In summary , while we have more work to do , demands remain strong . Our backlog continues to grow and we are taking actions needed to improve our execution and support long term profitable growth .

Ahmed Pasha: In summary, while we have more work to do, demands remain strong, our backlog continues to grow, and we are taking actions needed to improve our execution and support long-term profitable growth. With that, I return the call back to Julian.

Speaker #1: With that , I will turn the call back to Julien

Speaker #2: Thanks , Amin . Let me close with a few key takeaways First order momentum continues . Our third quarter order intake , our record of 6.4 billion backlog , and the initial order with data center developed .

Julian Nebreda: Thanks, Ahmed. Let me close with a few key takeaways. First, order momentum continues. Our third quarter order intake, record of $6.4 billion backlog, and the initial order with a data center developer, all evidence our successful product strategy and sales effort. We currently expect orders to reach a record level again during Q4 of this year. Second, additional production capacity. We're adding new contract manufacturing capacity in the US and abroad, and have realigned our organization with new leadership to strengthen execution. Third, product offering. The integration of SmartStack density, safety, and reliability metrics with our software and controls capabilities allowing for fast response, load smoothing, and remote operation, puts us in a dominant position to meet the growing demand of the diverse customer segments we serve.

Speaker #2: All evidence are successful . Product strategy and sales efforts . We currently expect orders to reach a record level again during the fourth quarter of this year Second , additional production capacity we're adding new contract manufacturing capacity in the US and abroad , and have realigned our organization with new leadership to strengthen execution Third product offering the integration of smart stacks , density , safety and reliability metrics .

Julian Nebreda: The integration of SmartStack density, safety, and reliability metrics with our software and controls capabilities allowing for fast response, load smoothing, and remote operation, puts us in a dominant position to meet the growing demand of the diverse customer segments we serve. In conclusion, we are positioning our company to continue profitable growth and to deliver value to our customers and shareholders.

Speaker #2: We are software and controls capabilities allowing for fast response , low smoothing , and remote operations . Puts us in a dominant position to meet the growing demand of the diverse customer segments we serve .

Speaker #2: In conclusion , we are positioning our company to continue profitable growth and to deliver value to our customers and shareholders

Julian Nebreda: In conclusion, we are positioning our company to continue profitable growth and to deliver value to our customers and shareholders.

Speaker #3: A brief moment we needed to delay today's call as we have lost our speaker . We'll be back in just one moment All participants , please continue to stand by .

Operator 2: A brief moment. We needed to delay today's call as we have lost our speaker. We'll be back in just one moment. All participants, please continue to stand by. Your meeting will begin momentarily. Once again, please continue to stand by. All participants, please continue to stand by. Your meeting will begin momentarily. Once again, please continue to stand by, and we thank you for your patience. Once again, please continue to stand by, and we thank you for your patience. It is now our question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Your first question comes from the line of George Gianarikas from Canaccord Genuity. Your line is-

Operator: A brief moment. We needed to delay today's call as we have lost our speaker. We'll be back in just one moment. All participants, please continue to stand by. Your meeting will begin momentarily. Once again, please continue to stand by. All participants, please continue to stand by. Your meeting will begin momentarily. Once again, please continue to stand by, and we thank you for your patience.

Speaker #3: Your meeting will begin momentarily . Once again , please continue to stand by All participants , please continue to stand by . Your meeting will begin momentarily .

Speaker #3: Once again , please continue to stand by and we thank you for your patience Once again , please continue to stand by and we thank you for your patience It is now a question and answer session .

Operator: Once again, please continue to stand by, and we thank you for your patience. It is now our question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Your first question comes from the line of George Gianarikas from Canaccord Genuity. Your line is-

Speaker #3: If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Your first question comes from the line of George Julian Marquez from Canaccord Genuity.

Speaker #3: Your line is

Speaker #4: Hey everyone . Nice to have you back .

George Gianarikas: Hey, everyone. Nice to have you back.

Speaker #2: Good morning George . And before you answer , I really want to you know , apologize for the technical mishap . We have this morning , which we'll figure out what it is .

Julian Nebreda: Good morning, George. Before you answer, I really want to apologize for the technical mishap we had this morning, which we'll figure out what it is. We've been waiting in hope for the same time you were waiting, and we would not have been connected. Sorry for that, everybody. We really appreciate and value your time, and we know it was a little bit of a waste of time, but hey, great. Hey, George, good morning.

Speaker #2: But we've been waiting on hope for some at the same time , you were waiting , and we were not having connected . So sorry for that .

Speaker #2: Everybody . We really we really appreciate and value your time . And we know it was a little bit of a waste of time , but hey , great .

Speaker #2: Hey , George . Good morning .

George Gianarikas: Good morning. All good. Maybe first, if you could provide some additional granularity on the production delays and just sort of go into a little bit of detail what's happening at the facility. Thank you.

Speaker #4: Good morning . All good . . , maybe first , if you could provide some additional granularity on the production delays and , and just sort of going a little bit of detail what's happening at the facility .

Speaker #4: Thank you .

Speaker #2: Yeah . Great . So we had we were , you know , as you know , as we're scaling up the company , we are in , you know , increasing our production capacity .

Julian Nebreda: Yeah. Great. As you know, as we're scaling up the company, we are increasing our production capacity. As part of that, we brought in two new manufacturing groups, one to serve the international market and one to serve the US market. On the international market, we're working with reputable, well-known, and seasoned contract manufacturers. One of these manufacturers, as they are producing our SmartStack for the international markets. One of those manufacturers is producing our pods, the things that go on top of the skates that we have. The initial production was not meeting our stringent testing, and we had to significantly delay production to ensure that we got the production in line with our quality. That meant significant delays that have been significant. That since then, we have fully resolved, and now we are producing. They are working full time.

Speaker #2: As part of that , we're we brought in two new two new manufacturing groups , one to serve the international market and one to serve the US market and the international market .

Speaker #2: We're working with reputable , well known a . And , you know , seasoned contract manufacturers . One of these manufacturers , as they were , they are producers for the international markets .

Speaker #2: One of those manufacturers producing our pods , the ones that , you know , the things that go on top of the skids that we out and the initial production had some were not was not meeting our our , you know , our stringent testing and , and we had to significantly delay production to ensure that we got the production in line with our quality and that meant , you know , significant delays that that have been significant , that since then , we have fully , you know , fully resolved .

Julian Nebreda: One of those manufacturers is producing our pods, the things that go on top of the skates that we have. The initial production was not meeting our stringent testing, and we had to significantly delay production to ensure that we got the production in line with our quality. That meant significant delays that have been significant. That since then, we have fully resolved, and now we are producing. They are working full time.

Speaker #2: And now we're producing the working full time , fully ramp up this . They're doing a great job . But we won't be able to recuperate the full amount of the volumes we had .

Julian Nebreda: We have fully ramped up this. They're doing a great job, but we won't be able to recuperate the full amount of the volumes we lost during the quarter, during the year. That's that case, and we feel confident, and we're seeing it today, that they can meet our quality, our volumes going forward, and it will really put us in a good position to serve the international market with a competitive product. The US is slightly different. The US, we're putting a facility with our contract manufacturer that works out of Vietnam. The same one is putting up fully automated facilities, an improved version of the one we have in Vietnam. Fully automated, a lot more automated because of the US labor cost also, but fully automated system. They experienced construction delays where the construction delays were then we got delays in connecting to the utility.

Speaker #2: We had we lost during the quarter a during the year . So that's that that case . And you know , we feel confident and we're we're seeing it today that they can meet our quality , our volumes going forward .

Speaker #2: And and it will really put us in a good position to serve the international market with a competitive with a competitive product , the US is slightly different .

Speaker #2: The US , we're putting a fully facility with our contra manufacturer that works out of Vietnam . The same one is putting a fully automated facilities and improved version of the one we have in Vietnam .

Julian Nebreda: The US, we're putting a facility with our contract manufacturer that works out of Vietnam. The same one is putting up fully automated facilities, an improved version of the one we have in Vietnam. Fully automated, a lot more automated because of the US labor cost also, but fully automated system. They experienced construction delays where the construction delays were then we got delays in connecting to the utility.

Speaker #2: Fully automated a lot more automated because of the US labor costs somehow . So . But , you know , fully automated system and they experienced construction delays where the construction delays were then we got delays in connected to the utility .

Speaker #2: And out of the you know , we've been running the plant with a generators . And that meant that we had to manage that .

Julian Nebreda: We've been running the plant with generators, and that meant that we had to manage it. We could not do all the works in parallel. That meant that some of the automation took longer than. It's the same thing as these delays got stuck one another. There was a moment it was clear that we were not going to be able to recuperate the volumes for 2026, and that we had to move volumes to 2027. That facility is ramping up. It's producing today. It will connect to the grid in the next couple of weeks. The issues have been resolved, and as I said, this is very much a sister company to the one that's in Vietnam.

Speaker #2: We do . We could not do all the works in parallel . That meant that some of the automation took longer than . And it's the same thing as these delays got stuck .

Speaker #2: One another . There was a moment it was clear that we would not meet . We were not going to be able to recuperate the volumes for 26 , and that we had to volumes to 20 to 27 .

Speaker #2: That facility is ramping up its producing today . It will connect to the to the grid in the next couple of weeks . The issues have been resolved .

Speaker #2: And as I said , this is a you know , very much a sister company to the one that that in Vietnam . So we're confident that the production levels we have set for ourselves , for the quarter , that it will be met , that the issues that we have identified are fully resourced and resolved .

Julian Nebreda: We're confident that the production levels we have set for ourselves for the quarter, that it will be met, that the issues that we have identified are fully resourced and resolved. We're very confident on it. I would say on a more general point, this facility will provide us a competitive advantage in the US market. That we believe is a very, very important of our strategy here in the US market. It will allow us to produce 15 gigawatts of fully US-made products, a fully automated integration. We are really, really happy with what we will receive. However, we're going through these delays that unfortunately we could not fully resolve on time.

Speaker #2: So we're very confident on it . I would say on a more general point , this facility will be will be a will provide us a competitive advantage in the US market .

Speaker #2: You know , that we believe is a very , very important of our strategy here in the US market . It will allows us to produce 15 gigas of fully US made products , a fully automated integration .

Julian Nebreda: That we believe is a very, very important of our strategy here in the US market. It will allow us to produce 15 gigawatts of fully US-made products, a fully automated integration. We are really, really happy with what we will receive. However, we're going through these delays that unfortunately we could not fully resolve on time.

Speaker #2: So we're really , really happy with what we will receive . However , we're going through this , you know , this delays that unfortunately , we could not fully resolve on

Speaker #4: Thank you . And maybe just as a follow up , an update on your recent commercial traction in data center , specifically , how would you characterize the the competitive dynamics in your win rates and deals you've participated in ?

George Gianarikas: Thank you. Maybe this as a follow-up. An update on your recent commercial traction in data center. Specifically, how would you characterize the competitive dynamics in your win rates and deals you've participated in, and what are the key differentiating factors that lead to your wins? Thank you.

Speaker #4: And what are the key differentiating factors that lead to your wins? Thank you.

Speaker #5: Yeah .

Julian Nebreda: Yeah. Great question. I think that how we win, we win because of the density, safety, and reliability of SmartStack as it combines with our operating systems that allows for very efficient load management and very good response times to the low voltage ride through. That is a combination of technical, of our operating systems and our enclosures, which are our delivery equipment, which are safe and reliable. That's how we win. Generally has been very good. We're very happy with the traction we had. This is significantly better than our plans, and we are very confident that as that industry grows, that will be an important part.

Speaker #2: Very great . Great question . I think that , you know , a how we win . We win because of the density , safety and reliability of Smart Start as it combines with our operating systems that allows for very efficient load load Management .

Speaker #2: And , you know , very , very good response times to the low voltage ride through . So it's a it's a combination of technical , you know , of our operating systems and our and our , a and our enclosures , which are our delivery equipment , which are safe and reliable .

Julian Nebreda: That is a combination of technical, of our operating systems and our enclosures, which are our delivery equipment, which are safe and reliable. That's how we win. Generally has been very good. We're very happy with the traction we had. This is significantly better than our plans, and we are very confident that as that industry grows, that will be an important part.

Speaker #2: That's how we win . A generally has been very , very good . It's not , you know , and we're very happy with the traction we had with this is significantly better than our plans .

Speaker #2: And we are very , very confident that as an industry grows , that will be an important part . What's interesting for us also is that we are now looking not only in the US with most of the activities we have on the contracts we have time today are from , but also looking at some other markets to with some of the hyperscalers and some of the same developers to help them in other markets , which I think we'll put us our global footprint will help us on , on capturing that demand more globally

Julian Nebreda: What's interesting for us also is that we are now looking not only in the US, with most of the activities we have and the contracts we have signed today are from, but also looking at some other markets, too, with some of the hyperscalers and some of the same developers to help them in other markets. I think our global footprint will help us on capturing that demand more globally.

Speaker #4: Thank you .

George Gianarikas: Thank you.

Speaker #3: Your next question comes from . Your next question comes from the line of Brian Lee from Goldman Sachs and Co . Your line is live

Julian Nebreda: Thank you, Josh.

Operator 2: Your next question comes from the line of Brian Lee from Goldman Sachs & Co. Your line is live.

Operator: Your next question comes from the line of Brian Lee from Goldman Sachs & Co. Your line is live.

Speaker #6: Hey guys . Good morning . Thanks for taking the questions . , wanted to ask about the , , the battery cell cost uplift .

Brian Lee: Hey, guys. Good morning. Thanks for taking the questions. Wanted to ask about the battery cell cost uplift. It sounds like it's international supplier. Can you give us a little bit more detail? Does this have anything to do with the new AESC ownership? Or maybe just walk us through what's changing to impact costs here, and is this also a drag into your fiscal 2028 procurement and costs as well?

Speaker #6: It sounds like it's in international supplier , but can you give us a little bit more detail ? , does this have anything to do with the new a ownership or maybe just walk us through , you know , what's changing to impact costs here ?

Speaker #6: And is this also a drag into your fiscal 2028 procurement and costs as well ?

Speaker #2: Yeah . Great question . No , this is an international this is for the international market . It's not connected to AC . And it is if we enter into a long term agreement that is not only a supply but also some technical or technological alignment in how the batteries will work in our models and how we work with going forward .

Julian Nebreda: Yeah, great question. No, this is for the international market. It's not connected to AESC. We enter into a long-term agreement that is not only a supply but also some technological alignment in how the batteries will work in our modules and how we work going forward. It's a longer-term contract that we believe will put us in a very good position for 2027 and 2028 and going forward. However, we had to take a charge in one project that we had, that was being supplied by the same customer that as part of the deal with, as a deal adjustment we needed to take. That's what it was, and part of the NPV of the project is significantly higher than the charge we're taking. We decided that better take the charge than move forward. That's what it is.

Speaker #2: And it's a longer term contract that we believe will put us in a very good position for 27 and 28 , and , you know , going forward , however , we had to take a charge in one project that we had , , that was being supplied by the same customer that as part of the deal , we , you know , as the deal adjusted , we needed to take .

Julian Nebreda: However, we had to take a charge in one project that we had, that was being supplied by the same customer that as part of the deal with, as a deal adjustment we needed to take. That's what it was, and part of the NPV of the project is significantly higher than the charge we're taking. We decided that better take the charge than move forward. That's what it is. I think that as we have continued to grow, we believe that integrating our technological roadmap with the technological roadmap of our cell supplier is the fundamental for our success in the longer term.

Speaker #2: So that's what it was . And , but the NPV of the project is significantly higher than the , than the charge were taking .

Speaker #2: So we decided that , hey , better take the charge and move forward . That's what it is . I think that we , as we have continued to grow , we believe that , you know , integrating our technological roadmap with the technological roadmap of our self suppliers , the fundamental for our success longer term

Julian Nebreda: I think that as we have continued to grow, we believe that integrating our technological roadmap with the technological roadmap of our cell supplier is the fundamental for our success in the longer term.

Speaker #6: Yeah . Fair enough . Okay . , and then maybe just a question on sort of the conversion cycle because , you know , this is if you look at slide seven , obviously a lot of backlog growth .

Brian Lee: Yep, fair enough. Okay. Maybe just a question on sort of the conversion cycle, because if you look at slide seven, obviously a lot of backlog growth the past couple of years, a lot of pipeline growth, especially the past couple of quarters. You have a lot of top of the funnel momentum heading into fiscal 2028. Obviously, there's some operational challenges here that are tripping you up in terms of meeting expectations this year. How should we think about the conversion cycle on these record backlog levels and kind of the impact of these data center and hyperscaler bookings? Just any sense of how quickly we should start to see these turn into P&L impact, and does it differ from your historical backlog conversion cycles? Thanks, guys.

Speaker #6: The past couple of years , a lot of pipeline growth , , especially the past couple of quarters . So you have a lot of , you know , top of the funnel momentum , , heading into , into fiscal 28 , obviously there's some operational challenges here that , that , are tripping you up in terms of meeting expectations this year , but how should we think about the conversion cycle on these record backlog levels ?

Brian Lee: Obviously, there's some operational challenges here that are tripping you up in terms of meeting expectations this year. How should we think about the conversion cycle on these record backlog levels and kind of the impact of these data center and hyperscaler bookings? Just any sense of how quickly we should start to see these turn into P&L impact, and does it differ from your historical backlog conversion cycles? Thanks, guys.

Speaker #6: And , you know , kind of the , , the impact of , of these data center and hyperscaler bookings , , just any , any sense of how quickly we should start to see these turn into PNL , , impact and does it , you know , , differ from your historical backlog conversion cycles .

Speaker #6: Thanks guys .

Speaker #5: I mean .

Julian Nebreda: As you said, we are just starting with data centers, we have limited proof points. What it is, the proof points we have is that they work at a much faster commercial cycle. We have the deal with the developer. We signed it from lead to contract in less than three months, so tremendously fast. They will also have a very fast commercial cycle going forward. We believe those will help accelerate our commercial cycle. Our normal, the other 90% today or our other segments are working on the same conversion cycle of roughly a year to 18 months that we had had. As you know, we recognize revenue, so the revenue recognition occurs in accordance to the milestones of the program. I would say in a period of 18 months, you recognize the full revenue. Some of it is recognized fairly quickly.

Speaker #2: As you said , I mean , we are starting just starting with data centers . So a , we have no proof , but we have limited proof points of what it is .

Speaker #2: Our , the proof points we have is that they work at a much faster conversion cycle . You know , we had the deal with the developer .

Speaker #2: We signed it from lead to to contract in less than in three months or tremendously fast . And they will also have a very , very fast conversion cycle going forward .

Speaker #2: So we're , you know , we believe those those will help accelerate our conversion cycle , our normal , you know , the other 90% today or the other our other segments are working on the same conversion cycle of , you know , roughly a year to 18 months that we had had .

Julian Nebreda: Our normal, the other 90% today or our other segments are working on the same conversion cycle of roughly a year to 18 months that we had had. As you know, we recognize revenue, so the revenue recognition occurs in accordance to the milestones of the program. I would say in a period of 18 months, you recognize the full revenue. Some of it is recognized fairly quickly. It's recognized in milestones as we move on the execution of the project. Not like it all happens at the end.

Speaker #2: So , so , you know , as you know , we recognize revenue . So the revenue recognition occurs in accordance to the milestones of the program .

Speaker #2: And I would say in a period of 18 months , you recognize the full revenue . Some of it is recognized fairly quickly as we , you know , recognizing milestones as we move on .

Julian Nebreda: It's recognized in milestones as we move on the execution of the project. Not like it all happens at the end.

Speaker #2: The execution of the project, it's not like it all happens at the end.

Speaker #7: Okay .

Brian Lee: Okay. Appreciate it. I'll pass it on. Thanks, guys.

Speaker #6: Appreciate it . I'll pass it on . Thanks , guys

Speaker #3: Your next question comes from the line of Julian Dumoulin-smith from Jefferies . Your line is live

Operator 2: Your next question comes from the line of Julien Dumoulin-Smith from Jefferies. Your line is live.

Operator: Your next question comes from the line of Julien Dumoulin-Smith from Jefferies. Your line is live.

Speaker #5: Good morning . Good morning . Thank you guys very much . I appreciate it .

Julian Nebreda: Good morning.

Julien Dumoulin-Smith: Hey, good morning, team. Thank you guys very much. I appreciate it.

Speaker #2: Thank you Julien .

Julian Nebreda: Thank you, Julien.

Speaker #5: Hey . , a couple things real quickly . Just to rehash number one . , you made comments about the expedited nature of the BTM .

Julien Dumoulin-Smith: Hey. A couple things real quickly just to rehash. Number one, you made comments about the expedited nature of the potential customers here with BTM. Can you elaborate a little bit more about how you're thinking about the potential cadence for incremental bookings from here against some of these arrangements? Also elaborate a little bit on the composition of customers in as much as, obviously, last quarter we talked about a couple in particular. BTM could be an array of different kinds of counterparties as well. Can you talk about sort of the nature of these counterparties? I got a quick follow-up.

Speaker #5: , , the potential customers here with BTM . Can you elaborate a little bit more about how you're thinking about the potential cadence for incremental bookings from here against some of these arrangements , and also elaborate a little bit on the composition of customers , inasmuch as obviously last quarter , we talked about a couple in particular , BTM could be an array of different kinds of counterparties as well .

Speaker #5: Can you talk about sort of the nature of these counterparties and I got a quick follow up .

Speaker #2: Yeah . So , , last time we talked mostly about hyperscalers , you know , and , and now we have the hyperscalers have brought on into , which was our plan go to hyperscalers because we know that the door for the developers and what we have seen with the develop , and they have been the change .

Julian Nebreda: Yeah. Last time we talked mostly about hyperscalers. Now the hyperscalers. Which was our plan, go to a hyperscaler because we know that's a door for the developers. What we have seen, and there has been a change when you talk to hyperscalers, mostly speed to power. Sorry, quality of power solutions. That's where they look, they spend very technical analysis, very deep understanding. When we're talking to the developers, it's mostly speed to power. What we have seen is that the developers are probably, I would say, I don't know if that, but at least what we have seen today, they are in a much of a hurry than compared to the hyperscalers.

Speaker #2: When you talk to hyperscalers , mostly speed to power , mostly , sorry , quality of power solutions , that's what they're looking to spend .

Speaker #2: Very technical analysis , you know , very deep understanding . When we're talking to the developers , mostly speed to power and what we have seen is that the need , the developers are probably , I would say , I don't know if , but at least what we have seen today , they are in a much faster in a in a much of a hurry than compared to the to the hyperscalers .

Julian Nebreda: When we're talking to the developers, it's mostly speed to power. What we have seen is that the developers are probably, I would say, I don't know if that, but at least what we have seen today, they are in a much of a hurry than compared to the hyperscalers.

Speaker #2: So we see that market a lot more active and we see those activities , especially moving from leads to pipelines to pipelines to orders more quickly .

Julian Nebreda: We see that market a lot more active, and we see those activities, especially moving from leads to pipelines to orders more quickly. That's what we can say as what we have seen up to date. The pipeline, today, hyperscalers have the majority, but the developers represent the growing segment that is working right now.

Speaker #2: Or , you know , so that's what we can say as what we have seen up to date . So the , the pipeline is today , hyperscalers have , you know , the majority , but the represent the are the growing , the growing segment that is working kind of

Speaker #5: Understood . Excellent . And then just quickly , I see a comment here about strategic expenses just of late here . Just would love to hear how are you thinking about the company strategically if there's anything to flag there , I don't know , on the quarterly expenses , just is there anything we should be watching for ?

Julien Dumoulin-Smith: Understood. Excellent. Just quickly, I see a comment here about strategic expenses just of late here. How are you thinking about the company strategically, if there's anything to flag there? I don't know, on the quarterly expenses?

Julian Nebreda: We have some.

Julien Dumoulin-Smith: Is there anything we should be watching for in spending?

Speaker #5: Yeah .

Speaker #2: You know , we have , you know , this is we're looking at we're always in the market and we're always looking at stuff as , you know , earlier in the year , we look at ASC as an option .

Julian Nebreda: We're always in the market, and we're always looking at stuff. As you know, earlier in the year, we look at AESC as an option, and there some of the costs are connected to the AESC review and all the analysis we have to do for the AESC review. We're hearing nothing to announce.

Speaker #2: And there are some of the costs are connected to the ASC review and all the analysis we have to do for the ASC review .

Speaker #2: So there are nothing we're here nothing to announce .

Speaker #5: Got it . But still looking at all alternatives on that front on procurement .

Julien Dumoulin-Smith: Got it. Still looking at alternatives on that front, on procurement?

Speaker #2: Well , you know , we are seeing we are spending a lot of time looking at talking to the all the the battery capacity in the market and talking to them .

Julian Nebreda: Well, we are spending a lot of time looking at talking to all the battery capacity in the market and talking to them. Nothing really to talk about at this stage, but that's where we're spending our time as we see an opportunity to work more closely with the battery manufacturers in the US.

Speaker #2: Nothing really to talk about at this stage . But you know , that's where we're spending our time as we see an opportunity to , to work more closely with the battery manufacturers in the US

Speaker #5: Got it . Excellent . Well , thank you very much .

Julien Dumoulin-Smith: Got it. Excellent. Well, thank you very much.

Speaker #2: Thank you . Nice talking to you .

Julian Nebreda: Thank you, Julian. Nice talking to you.

Speaker #3: Next question comes from the line of Dylan Nissan from Wolfe Research . Your line is live .

Operator 2: The next question comes from the line of Dylan Nassano from Wolfe Research. Your line is live.

Operator: The next question comes from the line of Dylan Nassano from Wolfe Research. Your line is live.

Speaker #8: Yeah . Hi . Good morning .

Dylan Nassano: Yeah. Hi, good morning.

Speaker #2: , how .

Julian Nebreda: Hey, Dylan, how are you?

Speaker #9: Are you

Speaker #8: Doing ? Well , , I just wanted to check . So in terms of the scope of the delays that you guys are seeing from the manufacturing facilities to what extent , if any , are those impacting the Hyperscaler MSAs and these orders that you guys are talking about here ?

Dylan Nassano: Doing well. Just wanted to check, so in terms of the scope of the delays that you guys are seeing from the manufacturing facilities, to what extent, if any, are those impacting the hyperscaler MSAs and these orders that you guys are talking about here?

Speaker #2: Yeah . No , no , not at all . The these are issues of contracts that we have today and that , you know , that are that we signed a year , a year ago and a half ago .

Julian Nebreda: No, not at all. These are issues of contracts that we have today and that we signed a year, a year and a half ago. They have nothing. They are normal contracts. They are typical segments, so in no way affecting the MSA. The MSAs of the contracts we are signing with a data center.

Speaker #2: And they have nothing . There are no contracts that are not normal contracts . There are normal are typical segments . So no affection to no , in no way affecting the the MSAs of the contracts were signed in with data centers .

Speaker #8: Got it . Okay . Thanks . And then , I mean , maybe it would just be helpful if you could just level set us again on the number of MSAs .

Dylan Nassano: Got it. Okay, thanks. Maybe it would just be helpful if you could just level set us again on the number of MSAs, I believe it was two last quarter. How many hyperscalers exactly does that include? Can you just clarify, you have the $300 million first order and the $550 million-

Speaker #8: I believe it was due last quarter . , and you know , how many hyperscalers exactly does that include ? And can you just clarify ?

Speaker #8: So you have the 300,000,001st order and then the 550 million , , awarded ? Are those from the same hyperscale , or is that two different hyperscalers ?

Julian Nebreda: Yeah

Dylan Nassano: awarded. Are those from the same hyperscaler, or is that two different hyperscalers? Thanks.

Speaker #8: Thanks .

Speaker #2: So we have two MSAs with two hyperscalers as we have engaged in working with hyperscalers , they have referrals to developers that work for them .

Julian Nebreda: We have two MSAs with two hyperscalers. As we have engaged in working with hyperscalers, they have referred us to developers that work for them. We are now, as I said, our pipeline and our work is we are spending a lot of time with developers as they continue to work with the hyperscalers a lot. As they have a pipeline that requires very quick response time. In terms of the contract we signed, we signed the $300 million contract with a developer that was referred by one of the hyperscalers we have an MSA with. This was a contract of a developer that is building a data center for one of the hyperscalers that we will be providing our equipment to. We have on one of the hyperscalers, there was a tender, we got awarded the $550 million.

Speaker #2: And we are now , as I said , they are pipeline and our work is we're spending a lot of time with developers as they are continue to work with the hyperscalers , no doubt , but as they have a pipeline that requires very quick response time in terms of the contracts we sign , we sign the the , the $300 million contract with a developer that was referred by one of the hyperscalers .

Speaker #2: We have an MSA with . So this was a contract of a developer that building a data center for one of the hyperscalers that we will be providing our equipment to .

Julian Nebreda: This was a contract of a developer that is building a data center for one of the hyperscalers that we will be providing our equipment to. We have on one of the hyperscalers, there was a tender, we got awarded the $550 million. One that we're in the process now of finalizing all the final technical points to be able to convert this into a backlog, and we should convert into backlog in the coming months.

Speaker #2: Then we have one of the . Under one of the hyperscalers , there was a tender . We got awarded the 550 million .

Speaker #2: We saw one that . We're in the process now of finalizing all the . The final technical points to be able to convert this into a backlog .

Julian Nebreda: One that we're in the process now of finalizing all the final technical points to be able to convert this into a backlog, and we should convert into backlog in the coming months.

Speaker #2: And we convert into backlog in the coming month

Speaker #8: Got it. Very helpful. Thank you.

Dylan Nassano: Got it. Very helpful. Thank you.

Speaker #2: And what we continue to work to engage with more hyperscalers . And we have seen , you know , both hyperscalers , we're working and we're working on several projects , both in the US and internationally that we will provide , you know , that that we will want to beat on and we would like to to serve them with our projects

Julian Nebreda: We continue to work to engage with more hyperscalers, and we have seen both hyperscalers we're working on several projects, both in the US and internationally, that we will provide, that we will want to bid on or we would like to serve them with our products.

Speaker #3: Your next question comes from the line of Vikram Bagri , from Citi . Your line is live .

Operator 2: Your next question comes from the line of Vikram Bagri from Citi. Your line is live.

Operator: Your next question comes from the line of Vikram Bagri from Citi. Your line is live.

Speaker #2: Hi , Vikram .

Julian Nebreda: Hi, Vikram. Good morning.

Speaker #9: Good morning . Morning , everyone . , .

Vikram Bagri: Morning, everyone. Julian. I wanted to ask about the margins first. One of your larger peers indicated margin pressures in storage. I was wondering how you feel about the 10% to 15% margin guidance you have, backlog converting $2.2 billion next year, $2.8 billion after that. Pretty long-dated backlog at this point. Is there a variance in margins when you look at the backlog in the near term, medium term, and long term? Are you witnessing the same pressures your peer talked about?

Speaker #10: I wanted to ask about the margins first . , one of your larger peers indicated margin pressures and storage . I was wondering how you feel about the 10 to 15% margin guidance you have .

Speaker #10: Backlog converting 2.2 billion next year , 2.8 after that . So , you know , pretty long dated backlog at this point . Are there any variants ?

Speaker #10: Is there is there a variance in margins ? When you look at the sort of like backlog in the near term , medium term and long term , , are you are you witnessing the same pressures your your doc talked about

Speaker #9: It ?

Julian Nebreda: The reality is that we are still very comfortably within the 10% to 15% range. Even when you looked at our results this year, if you take out some of the one-time costs that we had during the year, we will have been around the 12% that we guided the market toward. We're confident. In our backlog or in the new orders, they are only in line with the 10% to 15%. We do not understand the pressure that the other big supplier announced that they were coming out with this. It might be something in their cost structure that is different. As we move forward, our big issue is scaling this company. Now that's the issue, and that's the pains we're having going through are connected to scale, and scale drives competitiveness.

Speaker #2: The reality is that we are very , still very , very comfortably within the 10 to 15 range , even when you looked at our results this year , you know , if you take out some of the one time off that we have during the year , we will be we will have been in the around , around the 12% that we got in the market .

Speaker #2: The market or so . And so we're confident we don't see in our in our backlog or in the new orders . They are all in line with the 10 to 15 .

Speaker #2: We don't we do not understand the pressure that the other big supplier is You know , announced that they were coming out with .

Julian Nebreda: We do not understand the pressure that the other big supplier announced that they were coming out with this. It might be something in their cost structure that is different. As we move forward, our big issue is scaling this company. Now that's the issue, and that's the pains we're having going through are connected to scale, and scale drives competitiveness. Probably in the case of our competitors, that some of them have already reached a scale, they're finding some other issues that, for us, but they're not the issue.

Speaker #2: We don't really know . There might be something in their cost structure that is different . You know , as we move forward , our big issue is scaling this company .

Speaker #2: That's the issue . That's the kind of the pains we're having going through our connected to scale and scale drives competitiveness . Probably in the case of our competitors , that some of them have already reached scale .

Julian Nebreda: Probably in the case of our competitors, that some of them have already reached a scale, they're finding some other issues that, for us, but they're not the issue.

Speaker #2: They're finding some other issues that , for us , they're not visible

Speaker #10: Got it . And you talked about scale . And my next question is , , you know , loosely tied to that , , will be talking about guidance for next fiscal year on the next call .

Vikram Bagri: Got it. You talked about scaling. My next question is loosely tied to that. We'll be talking about guidance for next fiscal year on the next call. I was wondering what is the mechanism, how you're thinking about setting the guidance. You have $2.2 billion of backlog for fiscal 2027. Is 85% coverage the right way to think about it, or it should be connected to the capacity that's coming online, how much you can bring online, the capacity from supplier perspective, and/or the 85% coverage should be higher? Relative to that, very encouraging to see the executive management changes to improve execution. I was wondering what specific changes Roman and Peter will make in the next 12 months. You're dealing with contract manufacturers, you have relatively less control over their operations. What sort of changes the new team will make to ensure on-time deliveries? Thank you.

Speaker #10: I was wondering what is the mechanism ? How are you thinking about , you know , setting the guidance ? You have $2.2 billion of backlog for fiscal 27 is 85% coverage the right way to think about it , or it should be connected to the capacity that's coming online , how much you can bring online , the capacity from supplier perspective and or the 85% coverage should be should be higher relative to that .

Vikram Bagri: Relative to that, very encouraging to see the executive management changes to improve execution. I was wondering what specific changes Roman and Peter will make in the next 12 months. You're dealing with contract manufacturers, you have relatively less control over their operations. What sort of changes the new team will make to ensure on-time deliveries? Thank you.

Speaker #10: Very encouraging to see the executive management changes to , , to improve execution . I was wondering what specific changes Roman and Peter will make in next 12 months .

Speaker #10: You're dealing with contract manufacturers , so you have relatively less control over their operations . So what sort of changes that the new team will make to , to , to ensure on time deliveries ?

Speaker #10: Thank you .

Speaker #2: Let me start with your second question . So I am bringing Roman to lead our manufacturing and supply chain . Due to his deep transformation .

Julian Nebreda: Let me start with your second question. I am bringing Roman to lead our manufacturing and supply chains due to his deep transformation and his work on supply chains and manufacturing, but he's very experienced in transformation. One of the things you realize as you scale a company, and we moved to a very different scale, is that your systems and your processes need to transform to the new scale. That's what he's working on. We have very good suppliers. We have great manufacturing partners. It's not a strategic change; it's an execution issue. That's what he will concentrate on delivery. Peter has been leading the development of SmartStack, so I think that he will continue ensuring that, continue developing SmartStack.

Speaker #2: And you know , he's been working on supply chains and manufacturing , but he's very experienced in transformation . And one of the things you realize as you scale a company and we move to a very different scale , is that you need a transformation that your systems and your processes need to transform to the new scale .

Speaker #2: So that's what he's working on . We have very good suppliers . We have great manufacturing partners . So it's not a strategic change .

Julian Nebreda: That's what he's working on. We have very good suppliers. We have great manufacturing partners. It's not a strategic change; it's an execution issue. That's what he will concentrate on delivery. Peter has been leading the development of SmartStack, so I think that he will continue ensuring that, continue developing SmartStack.

Speaker #2: It's a execution issue . That's what what he will concentrate on , on delivery . Peter has been you know , has been leading the development of its stack .

Speaker #2: So I think that he will continue ensuring that we continue developing smart tech. And for 2027 and forward, the main point is to continue the integration of our software and our hardware in a way that we can provide, you know, much more stringent solutions to customers than what we had historically.

Julian Nebreda: For 2027 and forward, the main point is continuing the integration of our software and our hardware in a way that we can provide much more stringent customers than what we had historically. That's what these two groups are going to do. Transformation of our manufacturing, which is not changing suppliers or anything. It's just ensuring our processes, our systems, our planning is aligned with our bigger scale and continue developing SmartStack as our platform and continue strengthening the connection between one and the other. Very happy. Your first question was on the-

Speaker #2: So that's what what these two groups are going to do . You know , transformation of our manufacturing , which is not changing suppliers or anything , just ensuring our processes or systems , our planning is aligned with our bigger scale and , you know , continue on developing smart platform and continue strengthening the connection between one or the other .

Speaker #2: So very happy . And your first question was on the on the current . This is , I still believe that 80 to 90% is the right one .

Vikram Bagri: Coverage

Julian Nebreda: on the coverage. I still believe that 80% to 90% is the right one, the 85%. That's our view. We clearly, this is a learning, new facilities, even though we put in a plan, we put a hedge and a contingency, and what happened is that we had a hedge. It worked. We went over the hedge, and we had the contingency. We went over the contingency. That is when the problem becomes a problem. To the extent that we have new facilities coming up, we will probably hedge them for next year. Having said that, we do not expect any closure of facilities. We do not expect any major new manufacturing capacity that will support our revenue in 2027. I feel confident that 80% to 90% coverage will be the right coverage in 2027.

Speaker #2: The 85% . So that's our view . We clearly , clearly , and this is a learning new facilities , you know , even though we put in a plan , we put a hedge and a contingency .

Speaker #2: And , you know , we are what happened is this is that we had a hedge . We went over the hedge and we had the contingency .

Speaker #2: We went over the contingency . And that is when the problem becomes a problem . So to the extent that we have new facilities coming up , we will probably hedge them .

Julian Nebreda: That is when the problem becomes a problem. To the extent that we have new facilities coming up, we will probably hedge them for next year. Having said that, we do not expect any closure of facilities. We do not expect any major new manufacturing capacity that will support our revenue in 2027. I feel confident that 80% to 90% coverage will be the right coverage in 2027. We'll look at it clearly as we looked at it here risk.

Speaker #2: You know , more for next year . Having said that , we do not expect any , you know , enclosure facilities . We do not expect any major new manufacturing capacity out of that will support our revenue in 2020 .

Speaker #2: 27 . So , you know , I feel confident that 80 to 90% coverage will be the right coverage in 2027 . But we will look at it clearly as we looked at it , risk

Julian Nebreda: We'll look at it clearly as we looked at it here risk.

Speaker #9: Thank you

Vikram Bagri: Thank you.

Operator 2: Your next question comes from the line of Justin Clare from Roth Capital. Your line is live.

Operator: Your next question comes from the line of Justin Clare from Roth Capital. Your line is live.

Speaker #3: Your next question comes from the line of Justin Clare from Roth Capital . Your line is live .

Speaker #9: Hey good morning . Good morning , good morning . Thanks for the time here . So just wanted to , ask about the guidance here .

Julian Nebreda: Hey, Justin. Good morning.

Justin Clare: Good morning. Thanks for the time here. Just wanted to ask about the guidance here. Based on the revised revenue and adjusted EBITDA guide, it looks like the fiscal Q4 gross margin could be roughly 12%, around that range. Just wondering if you could clarify what's embedded in the assumption for the gross margin in Q4. Are there any costs associated with the new products or the production delays from fiscal Q3 expected to extend into fiscal Q4?

Speaker #9: So, based on the revised revenue and adjusted EBITDA guide, it looks like the fiscal Q4 gross margin could be roughly 12%, around that range.

Speaker #9: Just wondering if you could clarify what's embedded in the assumption , , for , the gross margin in Q4 . And then are there any , , costs associated with the new products or the production delays from fiscal Q3 expected to extend into fiscal Q4

Speaker #1: Sure . Hi , Justin , this is Ahmed . So I think the implied gross margin we are looking at roughly 11% for Q4 based on the guidance we discussed , it's a little less at the midpoint .

Ahmed Pasha: Sure. Hi, Justin. This is Ahmed. I think the implied gross margin, we are looking at roughly 11% for Q4. Based on the guidance we discussed, it's a little less at the midpoint, if you're looking at midpoint to midpoint. Yes, we have considered additional costs that we may incur based on the outlook we see today. There are many puts and takes, but I think net-net, we feel pretty good, that after taking those additional costs for delays, we should land at the guidance that we gave based on the outlook that we see today.

Speaker #1: If you're looking at . Midpoint to midpoint . And yes , we have considered , you know , additional costs that we may incur based on the outlook we see today .

Speaker #1: , there are many puts and takes , but I think net net , we feel pretty good . , that after taking those additional costs for delays , , the guidance we gave , , we should land at the guidance that we gave , , based on the outlook that we see today .

Speaker #9: Got it . Okay . That's helpful . And then just on the supply chain here , you know , I was wondering if you could , , discuss the potential impact of the FX restrictions on inverters here .

Justin Clare: Got it. Okay, that's helpful. Just on the supply chain here, I was wondering if you could discuss the potential impact of the FCC's restrictions on inverters here. I know you have access to a US-based inverter supplier. Wondering if you have any exposure to sourcing inverters from China. Just curious if compliant domestic sourcing of inverters could be a competitive advantage here as your customers kind of reassess some-

Speaker #9: I know you have access to us based inverter supplier . Wondering if you have any exposure to sourcing inverters from China . And then just curious if you know , compliant domestic , , sourcing , , of inverters could be a competitive advantage here .

Speaker #9: , as your customers kind of reassess , , exposure to imported inverters .

Julian Nebreda: Yeah

Justin Clare: exposure to imported inverters.

Speaker #2: We only work with a non-Chinese inverters in the US , mostly US made some of them imported out of Europe . So we feel that , you know , we will not be affected in any way .

Julian Nebreda: We only work with non-Chinese inverters in the US, mostly US-made. Some of them imported out of Europe. We feel that we will not be affected in any way. That has been our policy since then. We do see that those restrictions on inverters will also increase in Europe, that that will happen also, and we expect, and we are working towards continuing. In Europe, we work with a mix of Chinese and non-Chinese, but we're working towards getting ready for a fully European solution for the European market. We see the market, our view from day one when we first started, that there will be more technological restrictions on this technology as it continues to grow and plays a more important role in the grid for our technology.

Speaker #2: That has been our policy since then. We do see that those restrictions on inverters will also increase in Europe, that that will happen also.

Speaker #2: And we expect and we are working towards continuing , you know , a but in Europe , we work with a mix of Chinese and non-Chinese , but we we're working towards getting ready for a fully European solution for the European market .

Julian Nebreda: In Europe, we work with a mix of Chinese and non-Chinese, but we're working towards getting ready for a fully European solution for the European market. We see the market, our view from day one when we first started, that there will be more technological restrictions on this technology as it continues to grow and plays a more important role in the grid for our technology.

Speaker #2: And we see the market , our view from day one , when we started that there will be more technological restrictions on these technology .

Speaker #2: As it continues to grow in place . And more important role in the grid for our

Speaker #9: Okay .

Speaker #11: Thank you. Okay, thanks very much.

Justin Clare: Got it. Okay. Thank you.

Julian Nebreda: Yeah.

Justin Clare: Okay. Thanks very much.

Speaker #3: Your next question comes from the line of Christine Cho from Barclays . Your line is now live .

Operator 2: Your next question comes from the line of Christine Cho from Barclays. Your line is now live.

Operator: Your next question comes from the line of Christine Cho from Barclays. Your line is now live.

Speaker #2: Christine . Good morning . Good morning Christine .

Julian Nebreda: Hey, Christine. Good morning. Good morning, Christine.

Speaker #12: , okay , so I wanted to start with the order intake of 1.44 billion this quarter . So 300 million of that was for the behind the meter project and the rest , the 1.1 billion was your typical front of the meter projects for the 1.1 billion .

Christine Cho: I wanted to start with the order intake of $1.44 billion this quarter. $300 million of that was for the behind-the-meter project, and the rest, the $1.1 billion, was your typical front-of-the-meter projects. For the $1.1 billion, how should we think about the split of that between US and international? And then with the $850 million award with the hyperscaler or data centers collectively, do those include EPC, and is there any difference between the developer versus hyperscaler? And should we assume that both of these projects have a duration of 2 hours?

Speaker #12: How should we think about the split of that between us and international ? And then with the 850 million , you know , award with the Hyperscaler or data centers collectively , do those include EPC ?

Speaker #12: And is there any difference between the developer versus Hyperscaler ? And should we assume that both of these projects have a duration of two hours ?

Speaker #2: Yes . On the data centers , they have a duration of two hours . That's we do not offer . And they're really not really offers are less than than two hours in the market .

Julian Nebreda: Yes. On the data centers, they have a duration of 2 hours. That's generally we do not offer, and they're really not real offers at less than 2 hours in the market. All the markets are at 2 hours. No real difference on the technical requirements and the margins of them, generally very much aligned. As I said, the developers, which are usually smaller companies, more agile and who can make decisions a lot faster, the conversion rate is significantly faster. I will say that's our current view of it. This is, as you know, an emerging segment. Some of the things we're learning as we move forward. Going very happy with it. In terms of the 1.1 of the non-data center, roughly the US continues to be where we're making the most traction. I will say, the number is around 60/40.

Speaker #2: So all the markets are at two hours , no real difference on the what the technical requirements or and , you know , and the , the , the margins of the generally very much aligned or what , as I said , the developers , which are usually smaller companies , more agile and more , you know , and who can make decisions a lot faster .

Speaker #2: The conversion rate is significantly faster . So I would say that's , that's our current view of it . This is , as you know , an emerging , an emerging segment .

Julian Nebreda: I will say that's our current view of it. This is, as you know, an emerging segment. Some of the things we're learning as we move forward. Going very happy with it. In terms of the 1.1 of the non-data center, roughly the US continues to be where we're making the most traction. I will say, the number is around 60/40. 60% the US and 40% the international markets. One doesn't mean that that's what this is going to be. It was a quarter where it was a lot of activity in the US and limited activity in the international market.

Speaker #2: So , you know , some of the things we're learning as we move forward , but , you know , going very happy with it in terms of , of the 1.1 of the non , non , non data center , it's roughly the US continues to be our we're making the most traction .

Speaker #2: And I would say you know number is around 60 , 40 , 60% . The US and 40% the the the the international markets , you know one doesn't mean that that's what this is going to be .

Julian Nebreda: 60% the US and 40% the international markets. One doesn't mean that that's what this is going to be. It was a quarter where it was a lot of activity in the US and limited activity in the international market.

Speaker #2: It was a quarter where it was very a lot of activity in the US . And , you know , limited activity in the international market .

Speaker #2: So

Speaker #12: Okay . , , and then just a housekeeping item , , the 10-q , , indicates that there were some refunds , , did any of that show up in cogs or was it applied to inventory

Christine Cho: Then just a housekeeping item. The 10-Q indicates that there were some AIPA refunds. Did any of that show up in COGS, or was it applied to inventory?

Speaker #1: Yeah , I think that was the point . I was saying the puts and takes there is some , , I refund , we have , , I think it's a little over 10 million .

Julian Nebreda: Yeah. I think that was the point I was saying, the ports and takes. There is some AIPA refund we have. I think it's a little over $10 million. Yes, that we have recognized year to date.

Ahmed Pasha: Yeah. I think that was the point I was saying, the ports and takes. There is some AIPA refund we have. I think it's a little over $10 million. Yes, that we have recognized year to date.

Speaker #1: Yes . That we have recognized year to date .

Speaker #12: And you'll and you'll expect to recognize some more in for Q

Christine Cho: You'll expect to recognize some more in 4Q?

Speaker #1: Seven . Yes .

Julian Nebreda: Definitely.

Speaker #2: Some over time , you know , because it goes into part of it is recognized part it goes into inventory . And I think the inventory converts into revenue .

Ahmed Pasha: Yes. Some.

Ahmed Pasha: Over time.

Julian Nebreda: Over time.

Ahmed Pasha: Over time.

Julian Nebreda: It goes into, as I said, part of it is recognized, part of it goes into inventory, and as the inventory converts into revenue, then you recognize it over time.

Speaker #2: Then you recognize it over time . So .

Speaker #12: Okay

Christine Cho: Okay.

Speaker #3: Your next question comes from the line of Chris Dendrinos Dendrinos from RBC Capital Markets . Your line is live .

Operator 2: Your next question comes from the line of Chris Dendrinos from RBC Capital Markets. Your line is live.

Operator: Your next question comes from the line of Chris Dendrinos from RBC Capital Markets. Your line is live.

Speaker #4: Hey , Greg . Yeah .

Julian Nebreda: Hey, Chris. Good morning.

Speaker #11: Good morning . Hey , good morning . , you know , I guess I hate to belabor the point here just a little bit more .

Chris Dendrinos: Hey, good morning. I guess I hate to belabor the point here just a little bit more, following up on Rob's question around the guidance here, but if I look at the outlook for the remainder of the year, pretty wide range, just given the amount of time left in the year. What is driving that guidance range? Then I guess I'm asking, just trying to get a sense for how confident you are in the execution path here going forward. Thanks.

Speaker #11: Following up on Ross question around , around the guidance here . But you know , if I look at at the outlook for the remainder of the year , , you know , pretty wide range just given the amount of time left in the year .

Speaker #11: And so , you know , what is driving that , that guidance range . And I guess I'm asking , just trying to get a sense for how confident you are in the execution path here , going forward .

Speaker #11: Thanks .

Speaker #1: Yeah . No , that's a fair question . , I don't think you need to read too much into it . I frankly , I think based on the execution , we have still some work to do on execution .

Ahmed Pasha: No, that's a fair question. I don't think you need to read too much into it. Frankly, I think based on the execution, we have still some work to do on execution. We thought it is prudent to give you a guidance in case there are any incremental costs we may have to incur as we ramp up our operations. That is what is really driving that wider gap versus the revenue guidance we gave. EBITDA guidance is wider than what you would expect. The only thing that reflects is additional costs that we may incur. That is what really is underlying driver.

Speaker #1: So, we thought it is prudent to give you some guidance in case you are seeing any incremental costs we may have to incur as we ramp up our operations.

Speaker #1: So that is what is really driving that . , wider gap versus the revenue guidance we gave . So EBITDA guidance is , , wider than what you would expect .

Speaker #1: So the only thing that reflects is additional costs that we may incur , , so , so that is what is really is underlying driver

Speaker #11: Got it That's it on my end . Thank you

Chris Dendrinos: Got it. That's it on my end. Thank you.

Speaker #3: Thank you . Your final question comes from the line of Amit Thakkar from BMO Capital Markets . Your line is live

Julian Nebreda: Thank you.

Operator 2: Your final question comes from the line of Ameet Thakkar from BMO Capital Markets. Your line is live.

Operator: Your final question comes from the line of Ameet Thakkar from BMO Capital Markets. Your line is live.

Speaker #13: Hi . Thanks . Hey , hey . Good morning . Thanks for the time . Squeezing me in . , maybe just following up on Chris's question .

Ameet Thakkar: Hi. Thanks.

Julian Nebreda: Hey, Ameet

Ameet Thakkar: squeezing me in. Hey, good morning.

Julian Nebreda: Hey.

Ameet Thakkar: Thanks for the time.

Julian Nebreda: Thank you.

Ameet Thakkar: Thanks for squeezing me in. I'm just following up on Chris's question in a little bit different way. If I think about the midpoint of your guidance now for fiscal year 2026, I think it implies like $1.4 billion of revenue for 4Q. If I look at kind of where the revenue recognition and kind of implied ASPs are, it's kind of like, let's just say kind of $235. I think it implies like 6,000 megawatts of revenue recognition. Are you guys anticipating a large portion of what you'll recognize in 4Q to have kind of EPC? I know some of the European contracts you have in the past have had pretty attractive kind of implied ASPs because you were doing EPC work. Is that the case for 4Q? I've got one more quick follow-up.

Speaker #13: Maybe in a little bit different way . If I think about the midpoint of your , , guidance now for for fiscal year 2026 , I think it implies like $1.4 billion of revenue for , , for , for .

Speaker #13: Q , you know , if I look at kind of the , where the revenue recognition and kind of implied ASPs are , it's kind of like , let's just say kind of .

Speaker #13: 235 I think it implies like 6000 . Megawatts of revenue recognition megawatts . , does that , are you guys anticipating like a large portion of what you'll recognize in for .

Ameet Thakkar: I think it implies like 6,000 megawatts of revenue recognition. Are you guys anticipating a large portion of what you'll recognize in 4Q to have kind of EPC? I know some of the European contracts you have in the past have had pretty attractive kind of implied ASPs because you were doing EPC work. Is that the case for 4Q? I've got one more quick follow-up.

Speaker #13: Q to have kind of EPC ? , you know , I know some of the European contracts you have in the past have had , you know , pretty attractive kind of implied ASPs because you were doing EPC work .

Speaker #13: Is that the case for for . Q And I've got one more quick follow up .

Speaker #1: No , I don't think most of that is in the US . And that's mostly the deliveries that we have under our domestic content .

Julian Nebreda: No, I don't think. Most of that is in the US, that's mostly the deliveries that we have under our domestic content.

Ahmed Pasha: No, I don't think. Most of that is in the US, that's mostly the deliveries that we have under our domestic content.

Speaker #1: Yeah .

Ameet Thakkar: Yeah.

Julian Nebreda: I would say, for this quarter, we already have produced and have fully integrated roughly half of what we need to do for the quarter. We're confident that we will get to the numbers. Clearly, as I said, we're ramping up Houston, we believe we have it under control, like any ramp-up, there's always risk that we cannot ambition today. That's why the wider range. No saying, in line with what we can do. We already did half already. We already have our wind boats going to where they need to be or wind trucks going to where they need to be. We feel the guidance is still good.

Speaker #2: , and I will say , you know , for the , for the , for the quarter , for this quarter , we already have produce and have fully integrated roughly half of what we need to do for the quarter .

Speaker #2: So we are , we are confident that we will get to the numbers . Clearly , as I said , we're ramping Houston and that we believe we have it under control .

Speaker #2: But like any any ramp up , there's always risks that we cannot ambition today . And that's why , you know , the wider range .

Speaker #2: But I'm in line with what we can do . You know , we already did have already they already have our imports going to where they need to be or , or in trucks going to where they need to be .

Speaker #2: So we feel , you know , the , guidance is , , still good

Speaker #13: Understood . , and then just , just if you could kind of help us kind of , it looks like your cumulative deployed megawatts , , were unchanged versus the prior quarter .

Ameet Thakkar: Understood. If you could kind of help us, it looks like your cumulative deployed megawatts were unchanged versus the prior quarter, I think they're only up like, I think, 8% or 9% from the beginning of the year or from the end of the last year. I think cumulative deployed-

Speaker #13: And I think they're only up like , I think 8 or 9% from the beginning of the year . , or for the end of the last year .

Speaker #13: I mean , I think , I think cumulative deployed megawatts and it's like 7.4GW , I think at the end of the year with 6.8 , , but like the revenue is obviously from a percentage basis a little bit better .

Julian Nebreda: Yeah

Ameet Thakkar: megawatts, it's like 7.4 GW, I think, at the end of the year, with 6.8. The revenue is obviously, from a percentage basis, a little bit better. Can you just help us kind of-

Speaker #13: Can you just help us kind of understand when all of those megawatts get deployed ? Thanks .

Julian Nebreda: Yeah

Ameet Thakkar: understand when all of those megawatts get deployed? Thanks.

Speaker #2: I definition of deployed megawatts in our , you know .

Julian Nebreda: Our definition of deployed megawatts in our

Speaker #1: Revenue .

Ahmed Pasha: Revenue

Ameet Thakkar: Revenue

Ahmed Pasha: metrics is projects that have reached Substantial Completion. Our revenue recognition happens significantly earlier when we deliver the equipment to site and transfer title. That's why you see the disconnect. Our definition of delivery is actual Substantial Completion, while our revenue recognition is on transfer of title.

Julian Nebreda: metrics is projects that have reached Substantial Completion. Our revenue recognition happens significantly earlier when we deliver the equipment to site and transfer title. That's why you see the disconnect. Our definition of delivery is actual Substantial Completion, while our revenue recognition is on transfer of title.

Speaker #2: Metrics in projects that have reached substantial completion are revenue recognition happens significantly earlier with most of our revenue, when we deliver the equipment to site and transfer title.

Speaker #2: So that's what you see the disconnect . So you know , we use the definition of delivery is actual completion while revenue recognition is on transfer of title , which occurred , within a quarter , a quarter of you know , this all convert into into actual , what we call deliver products later on .

Ahmed Pasha: It's going to take.

Ameet Thakkar: It's going to take.

Julian Nebreda: a quarter off. These all convert into actual, what we call delivered products later on. I know it creates a confusion because our competitors use delivered as actual delivery into site rather than substantial completion. We probably need to amend our definition to align it more with the revenue recognition definition.

Speaker #2: I know it creates a confusion because a part or competitors use delivered as actual delivery into site rather than substantial completion . We probably need to amend our definition to align it more with with the revenue recognition definition .

Speaker #1: Which is percentage of completion . Yeah .

Ahmed Pasha: Which is percentage of completion.

Ameet Thakkar: Which is percentage of completion.

Julian Nebreda: Yeah.

Speaker #13: Got it .

Speaker #2: So that's the disconnect . I mean

Ameet Thakkar: Got it. Thank you.

Julian Nebreda: That's the disconnect there, Ameet.

Speaker #1: Okay .

Ahmed Pasha: Okay.

Ameet Thakkar: Okay.

Speaker #2: Well thank you everybody for joining . And again , you know , really , you know , we want to we are sorry that we weren't , you know , that we had to be late and we had a technical issues .

Julian Nebreda: Well, thank you, everybody, for joining. Again, we are sorry that we had to be late, and we had technical issues. It's really an inconvenience, I know, for all of you, and we'll assure you that it won't happen again. Thank you so much for your time and your questions.

Speaker #2: It's really an inconvenience . I know for all of you . And we assure you that it won't happen again . And thank you so much for your time and your questions .

Operator 2: This concludes today's meeting. You may now disconnect.

Operator: This concludes today's meeting. You may now disconnect.

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