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Fluence Energy Improves, But It’s Still Risky

December 20. 2023. 5 mins read

Selling a product or service for less than it costs to produce isn’t a business, it’s a charity. That’s referred to as a “negative gross margin,” and companies that exhibit this trait are immediately filed in the circular filing cabinet. As time passes, some of these companies manage to achieve a positive gross margin. That’s still not a viable business unless it’s consistent and sufficient to cover variable costs. Still, it’s a step in the right direction, which bring us to Fluence Energy (FLNC).

A few years ago we published a piece titled Fluence Energy Stock: A Global Energy Storage Leader which raised some concerns. While negative gross margins were an obvious showstopper, there was also customer concentration risk, oddly volatile geographic revenue growth and declines, and no revenue segmentations. The appeal was the AI-powered software tools they acquired, like the Fluence Bidding Application (FBA) which promised high-margin growth alongside their hardware sales.

What Fluence Energy lacks is any sort of recurring revenue streams that might help offset some of the revenue volatility we mentioned earlier. While FBA may bring that to the table, we just can’t tell unless they provide more granularity when reporting revenues.

Credit: Nanalyze

Several years later, the company has managed to achieve positive gross margins for an entire year, and now provides some much-needed revenue segmentations.

A Vanishing Showstopper

Our biggest concern – negative gross margins – is no longer an issue. Fluence has managed to consistently realize positive gross margi

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