Fluence Energy: Navigating Short-Term Hiccups to Unlock Long-Term Value

Fluence Energy's Q3 2024 results, while marked by a revenue miss, reveal a company poised to capitalize on a transformative phase in the energy storage sector. Revenue of $602.5 million—a 24.7% year-over-year increase—fell short of expectations due to delays in scaling U.S. manufacturing facilities. Yet, this setback is overshadowed by a robust $4.9 billion backlog, strategic onshoring efforts, and improving margins. For investors, the question is whether these long-term catalysts justify a buy case now, despite near-term operational hiccups.

The Revenue Miss: A Temporary Setback, Not a Structural Problem

Fluence's Q3 revenue miss stemmed from production delays at its newly commissioned U.S. manufacturing facilities. CEO Julian Nebreda acknowledged that these delays pushed $200–300 million in revenue into 2026. However, the company reaffirmed its 2025 revenue guidance of $2.6–2.8 billion, albeit at the lower end of the range. The key takeaway is that this is a temporary bottleneck, not a systemic issue. The Arizona, Texas, and Tennessee facilities are expected to reach full production capacity by late 2025, ensuring on-time deliveries and stronger revenue visibility in the coming year.

What's more, Fluence's gross margins improved to 14.8% (GAAP) and 15.4% (adjusted), outperforming expectations. Adjusted EBITDA surged to $27.4 million, reflecting cost discipline and operational efficiency. These metrics suggest that the company's core business is resilient, even as it navigates near-term execution challenges.

Strategic Onshoring: A Tailwind for Long-Term Margins and Market Share

Fluence's U.S. manufacturing expansion is a cornerstone of its long-term strategy. The new Arizona facility, producing enclosures with U.S. steel and battery management system hardware, is part of a $700 million investment in domestic production. This move aligns with the American Clean Power Association's $100 billion industry pledge to onshore energy storage by 2030. By reducing reliance on global supply chains, Fluence is insulating itself from geopolitical risks and positioning for regulatory tailwinds under the Inflation Reduction Act (IRA).

The benefits extend beyond risk mitigation. Domestic production lowers logistics costs and accelerates delivery timelines, enhancing customer satisfaction. With over 1,200 jobs created in 2025 alone, Fluence is also building a talent pipeline to support future growth. As CEO Nebreda noted, “The U.S. is the fastest-growing energy storage market, and we're ensuring we're built to serve it.”

Backlog as a Future Revenue Engine

Fluence's $4.9 billion backlog is a critical asset. Approximately $2.5 billion of this is expected to convert to revenue in 2026, including contracts signed in July and August 2025. This includes two large Australian projects, underscoring the company's global reach. The backlog provides a clear revenue runway and reduces the need for aggressive sales efforts in the near term.

Moreover, the company's $150 million supply chain financing facility, secured in August 2025, bolsters liquidity and operational flexibility. With $903 million in total liquidity, Fluence is well-positioned to fund its production ramp-up without diluting shareholders.

Risks and Rewards: A Calculated Bet

Investors must weigh near-term risks against long-term opportunities. The production delays, while temporary, could pressure 2025 revenue and investor sentiment. Additionally, the energy storage sector is highly competitive, with players like Tesla and LG Energy Solution vying for market share. Regulatory shifts, such as potential changes under the One Big Beautiful Bill Act (OBBBA), could also impact domestic content incentives.

However, Fluence's strategic advantages are compelling. Its focus on intelligent energy storage and digital optimization software differentiates it from commodity players. The company's recurring revenue model, with ARR guidance of $145 million, adds stability to its financials. Furthermore, the IRA's tax credits for domestic manufacturing could amplify margins once production scales.

Investment Thesis: Buy for the Long Haul

For long-term investors, Fluence's current valuation offers an attractive entry point. The stock trades at a discount to its 2026 revenue potential, given the $2.5 billion backlog conversion and expected margin expansion. The company's U.S. manufacturing strategy, if executed successfully, could drive EBITDA growth to $100+ million by 2026, unlocking significant upside.

While the near-term revenue miss is a red flag, it's a manageable hurdle in a $1.2 trillion global energy storage market. Fluence's ability to scale production, leverage its backlog, and benefit from regulatory tailwinds makes it a compelling buy for those with a 3–5 year horizon.

Conclusion: Patience Pays Off

Fluence Energy's Q3 results highlight the challenges of scaling a capital-intensive business in a rapidly evolving sector. Yet, the company's strategic onshoring, robust backlog, and improving margins paint a picture of a business with strong long-term fundamentals. For investors willing to ride out the near-term noise, Fluence represents a high-conviction opportunity to participate in the energy transition's next phase.

Final Verdict: Buy for long-term growth, with a focus on 2026 revenue visibility and margin expansion.