FLNC 10-K & 10-Q changes, risk factors and insider trading

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information that management believes is relevant to an assessment and understanding of our audited consolidated financial statements and results of operations and should be read in conjunction with the financial statements and related notes included elsewhere in this Annual Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under Part I, Item 1A. “Risk Factors” and the section entitled “Cautionary Statement Regarding Forward-Looking Information” and in other parts of this Annual Report. The discussion of changes in our financial condition and results of operations from the fiscal year ended September 30, 20232024 to the fiscal year ended September 30, 20222023 is included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 20232024 filed with the SEC on November 29, 2023.2024. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future.

Upon the completion of our initial public offering (the “IPO”) and a series of organization transactions (collectively with the IPO, the “Transactions”) on November 1, 2021, Fluence Energy, Inc. became a holding company whose sole material assets are the limited liability interests in Fluence Energy, LLC (the “LLC Interests”). All of our business is conducted through Fluence Energy, LLC, together with its subsidiaries, and the financial results of Fluence Energy, LLC are consolidated in our financial statements. Except where the context clearly indicates otherwise, “Fluence,” “we,” “us,” “our” or the “Company” refers to Fluence Energy, Inc. and its wholly owned subsidiaries.

The following discussion describes certain line items in our consolidated statements of operations and our consolidated statements of comprehensive income (loss).operations.

We derive the majority of our revenue from selling battery-based energy storage solutions. Generally, we must design the project, as each energy storage solution is customized depending on a customer’s energy needs, procure the major equipment, obtain manufacturing slots from our contract manufacturers, coordinate the logistics, and assemble the solution prior to delivery and installation at our customer project sites. The Company recognizes revenue over time for our energy storage solutions aswhen we transferhave controlenforceable ofright ourto productpayment for work performed to date and the solution, in its completed state, does not have an alternative use to the customer.Company.

Cost of goods and services consists primarily of product costs, including purchased materials and supplies, as well as costs related to shipping, customer support, product warranty, and personnel. Personnel costs in cost of goods and services includesinclude both direct labor costs as well as costs attributable to any individuals whose activities relaterelated to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer. Cost of goods and services are recognized when services are performed or control ofwhen goods are transferred to the customers. Standard inventory materials that could be used interchangeably on other projects are included in costour measure of goodsprogress soldas progress relevant costs, which is when they are integrated into, or restricted to, the production ofto a specific customer’s project.

Gross profit and gross profit margin may vary from quarter to quarter and are primarily affected by our volume fulfilled, product prices, product costs and productproject costs.execution.

Operating expenses consist of research and development, sales and marketing and general and administrative expenses as well as depreciation and amortization. Personnel-related expenses are the most significant component of our operating expenses and include salaries, stock-based compensation, and employee benefits. We expect to invest in additional resources to support our growth which will increase our operating expenses in the near future.

Research and development expenses consist primarily of personnel-related costs across our global research and development (“R&D”) centers for engineers engaged in the design and development and testing of our integrated products and technologies and costs of materials and services procured for research and development projects. Engineering competencies include data science, machine learning, software development, network and cyber security,cybersecurity, battery systems engineering, industrial controls, UI / UX, mechanical design, power systems engineering, certification, and more. R&D expenses also support three product testing labs located across the globe: a system-level testing facility in Pennsylvania that is used for quality assurance and the rapid iteration, testing, and launching of new Fluence energy storage technology and products, a testing facility located in Erlangen, Germany, and a deployment center located in Long Beach, California. We have established an additional Hardware in the Loop testing facility, which is co-located with our technical team in Bangalore, India. We expect R&D expenses to generally increase in future periods to support our growth and as we continue to invest in R&D activities that are necessary to achieve our technology and product roadmap goals. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.

Sales and marketing expenses consist primarily of personnel-related expenses, including salaries, stock-based compensation, employee benefits, and related personnel technology costs,benefits and factoring discounts on receivables sold. We have and intend to continue to expand our sales presence and marketing efforts to additional countries in the future.

General and administrative expenses consist primarily of personnel-related expenses, including salaries, stock-based compensation, and employee benefits, for our executives, finance, human resources, information technology, engineering and legal organizations that do not relate directly to the sales or research and development functions, as well as travel expenses, facilities costs, bad debt expense, and fees for professional services. Professional services consist of audit, legal, tax, insurance, information technology, and other such costs.

Depreciation consists primarily of costs associated with property, plant, and equipment (“PP&E”) and amortization of intangibles consisting of patents, licenses, developed technology, and developedcapitalized technologysoftware over their expected period of use. We expect that as we increase both our revenues and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation and amortization.

Interest Income,Expense (Income), net

Interest income,expense (income), net consists primarily of interest income net of interest expense. Interest income consists of interest earned on cash deposits and interest on customer notes receivables. Interest expense consists primarily of interest on borrowings against notes receivable pledged as collateral, interest on the 2030 Convertible Senior Notes, unused line fees and commitment fees related to credit facilities, and amortization of debt issuance costs.

Other (Income) Expense,Income, net

Other (income) expense,income, net primarily consists of expense or income from foreign currency exchange gains and losses on monetary assets and liabilities, factoring income from sale of receivables, and income or expense due to estimated payments to be made to related parties under the Tax Receivable Agreement, dated October 27, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC, Siemens Industry, Inc. and AES Grid Stability, LLC (the “Tax Receivable Agreement”), and factoring income from sale of receivables..

KeyResults Operatingof MetricsOperations

AssetsSales Underand ManagementMarketing Expenses

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of our 2025 Annual Report.Report, other than as set forth below. You should carefully consider the risks described below and described in Part I, Item 1A. “"Risk Factors”" of our 2025 Annual Report along with our unaudited condensed consolidated financial statements and the related notes, as well as our other public filings with the SEC, before making an investment decision. Our business, financial condition, and results of operations could be materially and adversely affected by any of these risks or uncertainties.

The following analysis provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Fluence and should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 (this “Report”) and in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 25, 2025 (the “2025 Annual Report”). In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition, and prospects based on current expectations that involve risks, uncertainties, and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed in Part I, Item 1A. “Risk Factors” of the 2025 Annual Report and in our other filings with the SEC, and Part II, Item 1A. “Risk Factors” and the section titled “Cautionary Statement Regarding Forward-Looking Information” included elsewhere in this Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Growth of the battery storage industry and the continued adoption of energy storage solutions by our customers has been driven in part by the overall decrease in cost of lithium-ion energy storage hardware, mainly the cost of lithium-ion batteries, over the last decade or so. However, we have recently seen an increase in prices of lithium carbonate and other commodities since December 2025.2025, therefore increasing the cost of lithium-ion batteries in recent months. The market for energy storage continues to rapidly evolve and while we believe lithium-ion battery costs will continue to decline over the long-term, they may not decline or decline at the rates we expect, if at all over the long-term. Ourour revenue growth is directly tied to the continued adoption of energy storage products by our customers, which may be affected by commodity raw material price fluctuations and component price fluctuations. As we have not historically been the buyer of raw materials for our components and energy storage products, we have not historically entered into hedging arrangements to mitigate commodity risk. Significant price changes or reduced availability for our raw materials and components for our energy storage solutions, including batteries, has had and may in the future have a deleterious effect on our business, financial condition, and results of operations.

Regulatory and Supply Chain and Manufacturing Updates

Our energy storage business is supported by a strategically diversified global supply chain. We continue to work to align our domestic content and U.S. procurement strategy with the Inflation Reduction Act of 2022 (the “IRA”) and the One Big Beautiful Bill Act (“OBBBA”) as well as related agency guidance relating thereto. We believe that continued expansion and emphasis on domestic content under the IRA, as modified by the OBBBA, will provideprovides Fluence with a competitive advantage. As of the date of this Report, we believe that under the current language of the OBBBA, which is subject to Treasury guidance issued on February 12, 2026 and any future regulations, our U.S. domestic suppliers are in compliance with the new applicable prohibited foreign entity (“PFE”) restrictions set forth in the OBBBA. Our procurement operations, however, remain subject to a complex and evolving supply chain and regulatory landscape. For more information about the potential risks relating to regulation and compliance and our solutions and our supply chain, see Part I, Item 1A. “Risk Factors” in our 2025 Annual Report.

Our energy storage solutions incorporate many components and materials sourced from a variety of countries, resulting in exposure to international supply chain risks and logistics disruptions. Uncertain potential actions, policies, and legislation of various government authorities on international and domestic trade, including new or increased tariffs or quotas, border taxes, embargoes, safeguards, duties arising out of various governmental investigations, trade controls, and customs restrictions may impact our ability to manage our costs of production which may then impact our business and results of operations. For example, on February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed by the U.S. government under the International Emergency Economic Powers Act (“IEEPA”). In March 2026, the U.S. Court of International Trade ruled that the U.S. Customs and Border Protection (“CBP”) must refund duties imposed under IEEPA. In response, CBP launched the Consolidated Administration and Processing of Entries portal within the Automated Commercial Environment on April 20, 2026, and the Company has filed a claim for a refund of IEEPA tariffs previously paid. InWe addition,have immediatelyfiled afterfor issuance$57.0 million in refunds, which has been accepted by the CBP. As of theJune decision30, regarding2026, the IEEPACompany tariffs,has thereceived U.S.payments governmentof initiated$32.0 newmillion tariffsand underhas alternative$25.0 authorities.million outstanding to be received. There remains substantial uncertainty regarding the duration of existing andexisting, newly announced tariffs and surcharges, and potential new tariffs and surcharges, potential changes or pauses to such tariffs, the tariff refund process and timing related thereto, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on Fluence’s business. Fluence continues to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations. See Part I, Item 1A. “Risk Factors” in our 2025 Annual Report for further discussion on risks relating to changes in the trade environment.

The following tables present our key operating metrics as of MarchJune 31,30, 2026 and September 30, 2025. The tables below present the metrics in either Gigawatts (GW) or Gigawatt hours (GWh). Our key operating metrics focus on project milestones to measure our performance and designate each project as either “deployed”, “assets under management”, “contracted backlog”, or “pipeline”.

The following table presents our order intake for the three and sixnine months ended MarchJune 31,30, 2026 and 2025. The table is presented in Gigawatts (GW):

Assets under management for service contracts represents our long-term service contracts with customers associated with our completed energy storage system products and solutions. In general, we start providing maintenance, monitoring, or other operational services after the storage product projects are completed. This is not limited to energy storage solutions delivered by Fluence. Assets under management for digital software represents contracts signed and active (post go live). Assets under management serves as an indicator of expected revenue from our customers and assists management in forecasting our expected financial performance.

OtherInterest (Income) Expense, Netnet

Other (income) expense,income, net primarily consists of expenseincome or incomeexpense from foreign currency exchange gains and losses on monetary assets and liabilities, and income or expense due to estimated payments to be made to related parties under the Tax Receivable Agreement, dated October 27, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC, Siemens Industry, Inc., and AES Grid Stability, LLC (the “Tax Receivable Agreement”).

Comparison of the three and sixnine months ended MarchJune 31,30, 2026 and 2025

Total revenue increased by $33.3$47.3 million, or 8%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increase in total revenue for the three months ended MarchJune 31,30, 2026 was mainly attributable to an increase in revenue from our battery-based energy storage products and solutions which was primarily driven by increased volumes of solutions projects fulfilled.fulfilled, partially offset by liquidated damages incurred due to project delays. In the current period the majority of the fulfillments related to newer offerings, Gridstack Pro and Smartstack solutions, whereas in the prior period the majority of fulfillments were legacy Gridstack (“Gen6”) solutions.

Total revenue increased by $321.7$369.0 million, or 52%,30%, for the sixnine months ended MarchJune 31,30, 2026, compared to the sixnine months ended MarchJune 31,30, 2025. The increase in total revenue for the sixnine months ended MarchJune 31,30, 2026 was mainly attributable to an increase in revenue from our battery-based energy storage products and solutions which was primarily driven by increased volumes of solutions projects fulfilled.fulfilled, partially offset by liquidated damages incurred due to project delays. In the current period the majority of the fulfillments related to newer offerings, Gridstack Pro and Smartstack solutions, whereas in the prior period the majority of fulfillments were Gen6 solutions.

Cost of goods and services increased by $315.8$103.2 million, or 57%,20%, for the sixthree months ended MarchJune 31,30, 2026, compared to the sixthree months ended MarchJune 31,30, 2025. The increase in cost of goods and services for the sixthree months ended MarchJune 31,30, 2026 was mainly attributable to (i) the increased volumes of solutions projects fulfilled as described above, (ii) various cost increasesoverruns incurredprimarily onrelated certainto deployment of newer solutions produced in the U.S.,offerings, and (iii) negative effects of revisions ofincreased estimated total contract costs on certain projects due to delaysincreases in battery prices. The increase in cost of goods and changesservices inwas scope.partially offset by the IEEPA tariff refunds.

Gross profit increaseddecreased by $5.9$55.9 million, or 9%,63%, for the sixthree months ended MarchJune 31,30, 2026, compared to the sixthree months ended MarchJune 31,30, 2025, while gross profit margin decreased.2025. The increasedecrease in gross profit for the sixthree months ended MarchJune 31,30, 2026 was primarily due to, (i) liquidated damages incurred due to theproject increaseddelays volumes of solutions projects fulfilledas described above in “Revenue.Revenue”, The(ii) decreasecost in gross profit margin for the six months ended March 31, 2026 wasoverruns primarily duerelated to thedeployment variousof cost increases incurred on certainnewer solutions produced in the U.S.offerings, and negative(iii) effects of revisions ofincreased estimated total contract costs on certain projects due to delays and changesincreases in scopebattery prices, partially offset by the IEEPA tariff refunds as described above in “Cost of Goodsgoods and Services.services.”

Research and development expenses were relatively flat for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025.

Research and development expenses were relatively flat for the sixnine months ended MarchJune 31,30, 2026, compared to the sixnine months ended MarchJune 31,30, 2025.

Sales and marketing expenses increased by $5.9$5.5 million, or 15%,28%, for the sixthree months ended MarchJune 31,30, 2026, compared to the sixthree months ended MarchJune 31,30, 2025. The increase in sales and marketing expenses for the sixthree months ended MarchJune 31,30, 2026 was primarily attributable to a $5.8$4.5 million increase in salaries and personnel-related expenses due to an increase in accrued annual cash bonus expenses.

General and administrative expenses were relatively flat for the sixthree months ended MarchJune 31,30, 2026, compared to the sixthree months ended MarchJune 31,30, 2025.

Depreciation and amortization increased by $1.3$0.4 million, or 45%,10%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025, primarily attributable to an increase in amortization of capitalized software.

Depreciation and amortization increased by $2.3$2.6 million, or 39%,28%, for the sixnine months ended MarchJune 31,30, 2026, compared to the sixnine months ended MarchJune 31,30, 2025, primarily attributable to an increase in amortization of capitalized software.

OtherInterest (Income) Expense, Net

OtherInterest (income) expense, net increased by $12.5$4.0 millionmillion, for the sixthree months ended MarchJune 31,30, 2026, compared to the sixthree months ended MarchJune 31,30, 2025, primarily attributable to a(i) $14.9$3.5 million netof increaseinterest income associated with the sales tax refund received from the state of Arizona and (ii) $1.5 million of interest income associated with the IEEPA tariff refund, partially offset by a $0.9 million decrease in favorableinterest foreign currency exchange gainsincome on monetarycash assetsdeposits and liabilities period over period.investments.

Income tax expense (benefit) increaseddecreased by $3.5$3.8 millionmillion, or 83%, for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. The increasedecrease in income tax expense for the three months ended MarchJune 31,30, 2026 was primarily attributable to ana increasedecrease in pre-tax income in foreign tax jurisdictions without historical losses.

Income tax (benefit) expense increased by $2.6$6.4 million, or 71%,million for the sixnine months ended MarchJune 31,30, 2026, compared to the sixnine months ended MarchJune 31,30, 2025. The increase in income tax (benefit) expense for the sixnine months ended MarchJune 31,30, 2026 was primarily attributable to afavorable decreaseprovision to return adjustments in valuationforeign allowances.tax jurisdictions.

Net (Loss) Income

Net lossincome decreased by $7.1$51.2 million,million orto 7%,a net loss of $44.3 million for the sixthree months ended MarchJune 31,30, 2026, compared to the sixthree months ended MarchJune 31,30, 2025. The decrease in net lossincome for the sixthree months ended MarchJune 31,30, 2026 was primarily attributable to ana increasedecrease in “OtherGross (income) expense, net,” partially offset by an increase in “Sales and marketing expensesprofit” as described above.

Adjusted EBITDA is calculated from the condensed consolidated statements of operations using net income (loss) adjusted for (i) interest expense (income), expense, net, (ii) income taxes, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) other non-recurring income or expenses. Adjusted EBITDA also includes amounts impacting net income related to estimated payments due to related parties pursuant to the Tax Receivable Agreement.

Free Cash Flow is calculated from the condensed consolidated statements of cash flows and is defined as net cash provided by (used in) operating activities, adjusted to exclude purchases made under supply chain financing arrangements, less repayments of obligations under supply chain financing arrangements and purchase of property and equipment made in the period. We expect our Free Cash Flow to fluctuate in future periods as we invest in our business to support our plans for growth.

Since inception and through MarchJune 31,30, 2026, our principal sources of liquidity have been the proceeds from our initial public offering (“IPO”), our cash and cash equivalents from operations, short-term borrowings, borrowings available under our debt agreements, proceeds from the issuance of the 2030 Convertible Senior Notes (as defined below), supply chain financing, capital contributions from AES Grid Stability, LLC (“AES Grid Stability”) and Siemens Industry, Inc. (“Siemens Industry”), proceeds from the investment by QIA Florence Holdings, LLC, an affiliate of Qatar Holding LLC in 2021, and proceeds from sale of accounts receivable.

We believe our existing cash and cash equivalents,equivalents whichand includesanticipated cash flows from operations, and proceeds from the issuance of the 2030 Convertible Senior Notes, in addition to our supply chain financing arrangements, and availability under our Revolver (as defined below), will be sufficient to meet our expense and capital requirements for at least the next 12 months following the filing of this Report.

On AugustMay 11,12, 2023,2026, we filed an automatic shelf registration statement on Form S-3 with the SEC (the “Form S-3”) which became effective upon filing and will remain effective through AugustMay 11,12, 2026,2029, subject to our continued eligibility to use such form. The Form S-3 allows us to offer and sell from time-to-timetime to time Class A common stock, preferred stock, depository shares, debt securities, warrants, purchase contracts or units comprised of any combination of these securities for our own account and allows certain selling stockholders to offer and sell 117,666,665a remaining 94,666,665 shares of Class A common stock in one or more offerings.