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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-40978
Fluence Energy, Inc.
(Exact name of registrant as specified in its charter)

Delaware
87-1304612
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4601 Fairfax Drive, Suite 600
Arlington, Virginia
22203
(Address of Principal Executive Offices)
(Zip Code)
(833) 358-3623
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.00001 par valueFLNC
The Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyo
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
As of August 8, 2023, the registrant had 118,507,081 shares of Class A common stock outstanding and 58,586,695 shares of Class B-1 common stock outstanding.


Table of Contents
Table of Contents
Page
Quantitative and Qualitative Disclosures About Market Risk
2

Table of Contents

Cautionary Statement Regarding Forward-Looking Information
Certain statements in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (this “Report”), excluding historical information, contain or may contain forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations, including, among others, statements regarding expected growth, introduction of new products and services, future capital expenditures and debt service obligations, are forward-looking statements. In some cases, you may identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “seeks,” “intends,” “targets,” “projects,” “contemplates,” “grows,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
Factors that could cause our actual results to differ materially from those indicated in any forward-looking statements, include, but are not limited to, the following:
our future financial and operating performance, including our ability to achieve or maintain profitability;
our ability to successfully execute our business plan and growth strategy;
the sufficiency of our cash and cash equivalents to meet our liquidity needs;
our ability to attract and retain customers;
our ability to develop new offerings and services, including digital applications;
our ability to optimize existing and future sales channels and market segmentation;
our ability to compete with existing and new competitors in existing and future markets and offerings;
our revenue may be affected by any disruptions in asset deployment caused by supply, construction or utility
delays;
our ability to manage our supply chains and distribution channels, including our ability to secure inventory from suppliers to meet customer demand and source materials in line with our expectations;
risk associated with fluctuations in the market prices of commodity raw materials, including steel, aluminum, lithium carbonate, and cobalt, that are used in components from suppliers, such as lithium-ion batteries, that are incorporated into our energy storage products and solutions;
risk associated with estimation uncertainty related to our product warranties;
our ability to attract and retain talent;
the impact of economic, social, and political instability in the markets in which we operate and other regions of the world;
instability in the financial services sector and the impact on the viability of financial institutions where we maintain our cash and cash equivalents;
changes in levels of inflation, interest rates, and foreign currency exchange rates and related actions taken by government authorities in connection therewith;
our expectations regarding the size and growth of our existing and future markets in which we compete;
the potential future impact of a global pandemic on our ground operations at project sites, our manufacturing facilities, our customers, our workforce, and our suppliers and our vendors;
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our ability to maintain customer contracts due to events and incidents relating to storage, delivery, installation, operation and shutdowns of our energy storage products and solutions, including events and incidents outside of our control;
our ability to prevent defects, errors, or bugs in hardware or software of our products and technology as well as any defects that may give rise to claims of product liability or other potential legal claims;
our ability to manage information technology related risks;
the impact of compliance with any existing and future applicable laws, regulations, sanctions, or tariffs on our business and operations;
the potential implementation, reduction, elimination or expiration of government and/or economic incentives related to energy storage products and solutions and/or services and their related impact;
our assessment and expectations regarding our global growth;
our ability to maintain, protect, and enhance our intellectual property;
our ability to recognize anticipated synergies from strategic initiatives and/or acquisitions by the Company;
the increased expenses associated with being a public company;
the continued listing of our securities on the Nasdaq Global Select Market;
the significant influence that Siemens AG and AES Grid Stability, LLC have over us, including control over decisions that require the approval of stockholders; and
other factors described in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, filed with the Securities and Exchange Commission (“SEC”) on December 14, 2022 (the “2022 Annual Report”), as updated by Part II, Item 1A. “Risk Factors” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report and in our subsequent filings with the Securities and Exchange Commission (the “SEC”).
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. We qualify all forward-looking statements contained in this Report by these cautionary statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
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Part I - Financial Information
Item 1. Financial Statements
FLUENCE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in Thousands, except share and per share amounts)
Unaudited
June 30,
2023
September 30,
2022
Assets
Current assets:
Cash and cash equivalents$297,709 $357,296 
Restricted cash108,387 62,425 
Short-term investments 110,355 
Trade receivables153,156 86,770 
Unbilled receivables160,596 138,525 
Receivables from related parties58,971 112,027 
Advances to suppliers70,507 54,765 
Inventory, net513,551 652,735 
Other current assets26,592 26,635 
Total current assets$1,389,469 $1,601,533 
Non-current assets:
Property and equipment, net$12,781 $13,755 
Right of use asset - operating leases3,289 2,403 
Intangible assets, net55,438 51,696 
Goodwill26,286 24,851 
Deferred income tax asset2,571 3,028 
Advances to suppliers 8,750 
Debt issuance cost2,361 2,818 
Note receivable - pledged as collateral55,251 24,330 
Other non-current assets17,292 12,490 
Total non-current assets$175,269 $144,121 
Total assets$1,564,738 $1,745,654 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$165,990 $304,898 
Deferred revenue452,069 273,073 
Personnel related liabilities40,097 21,286 
Accruals and provisions95,737 183,814 
Payables and deferred revenue with related parties158,817 306,348 
Taxes payable26,127 11,114 
Current portion of operating lease liabilities1,618 1,732 
Other current liabilities13,764 7,198 
Total current liabilities$954,219 $1,109,463 
Non-current liabilities:
Operating lease liabilities, net of current portion1,874 1,011 
Deferred income tax liability3,544 4,876 
Borrowings against note receivable - pledged as collateral49,505  
Other non-current liabilities10,147 1,096 
Total non-current liabilities$65,070 $6,983 
Total liabilities$1,019,289 $1,116,446 
Stockholders’ Equity:
Preferred stock, $0.00001 per share, 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2023 and September 30, 2022
  
Class A common stock, $0.00001 par value per share, 1,200,000,000 shares authorized; 118,929,106 shares issued and 118,283,318 shares outstanding as of June 30, 2023; 115,424,025 shares issued and 114,873,121 shares outstanding as of September 30, 2022
$1 $1 
Class B-1 common stock, $0.00001 par value per share, 200,000,000 shares authorized; 58,586,695 and 58,586,695 shares issued and outstanding as of June 30, 2023 and September 30, 2022, respectively
  
Class B-2 common stock, $0.00001 par value per share, 200,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2023 and September 30, 2022
  
Treasury stock, at cost(6,632)(5,013)
Additional paid-in capital573,850 542,602 
Accumulated other comprehensive income2,822 2,784 
Accumulated deficit(177,431)(104,544)
Total stockholders’ equity attributable to Fluence Energy, Inc.$392,610 $435,830 
Non-Controlling interests152,839 193,378 
Total stockholders’ equity$545,449 $629,208 
Total liabilities and stockholders’ equity$1,564,738 $1,745,654 
The accompanying notes are an integral part of these condensed statements
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FLUENCE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS (UNAUDITED)
(U.S. Dollars in Thousands, except share and per share amounts)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2023202220232022
Revenue$431,616 $115,999 $1,042,328 $258,850 
Revenue from related parties104,735 123,011 502,669 497,771 
Total revenue536,351 239,010 1,544,997 756,621 
Cost of goods and services514,531 244,207 1,480,324 829,714 
Gross profit (loss)21,820 (5,197)64,673 (73,093)
Operating expenses:
Research and development9,918 18,129 51,631 42,227 
Sales and marketing10,106 8,398 29,299 27,647 
General and administrative38,145 27,334 101,190 83,771 
Depreciation and amortization2,267 1,972 7,360 4,892 
 Interest expense1,513 573 3,473 1,938 
Other income (expense), net3,766 (205)16,586 83 
Loss before income taxes(36,363)(61,808)(111,694)(233,485)
Income tax expense (benefit)(1,318)(979)(2,058)(493)
Net loss(35,045)(60,829)(109,636)(232,992)
Net loss attributable to non-controlling interest(11,655)(41,482)(36,748)(165,656)
Net loss attributable to Fluence Energy, Inc.$(23,390)$(19,347)$(72,888)$(67,336)
Weighted average number of Class A common shares outstanding
Basic and diluted117,456,282 55,625,566 116,368,987 54,637,372 
Loss per share of Class A common stock
Basic and diluted$(0.20)$(0.35)$(0.63)$(1.23)
Foreign currency translation gain, net of income tax expense of $0.0 million in the three months ended June 30, 2023, $0.4 million in the nine months ended June 30, 2023, and $0 in the three months and nine months ended June 30, 2022
5,079 1,631 25 1,910 
Total other comprehensive income$5,079 $1,631 $25 $1,910 
Total comprehensive loss$(29,966)$(59,198)$(109,611)$(231,082)
Comprehensive loss attributable to non-controlling interest(9,963)(40,367)(36,761)(164,470)
Total comprehensive loss attributable to Fluence Energy, Inc.$(20,003)$(18,831)$(72,850)$(66,611)

The accompanying notes are an integral part of these condensed statements
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FLUENCE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY, MEMBERS’
EQUITY (DEFICIT), AND MEZZANINE EQUITY (UNAUDITED)
(U.S. Dollars in Thousands, except Shares/Units)

Class A
Common Stock
Class B-1
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
 Income (Loss)
Treasury StockNon-Controlling
interest
Total stockholders’ equity and
 members’ deficit
SharesAmountSharesAmountSharesAmount
Balance at March 31, 2023116,486,460 $1 58,586,695  $563,222 $(154,041)$(565)572,251 $(5,301)$164,679 $567,995 
Net loss(23,390)(11,655)(35,045)
Stock-based compensation expense and related vesting358,788 — 5,677 5,677 
Repurchase of Class A common stock placed into Treasury(73,537)— 73,537 (1,331)(1,331)
Effect of remeasurement of non-controlling interest due to other share transactions1,877 (1,877) 
Proceeds from exercise of stock options1,511,607 — 3,074 3,074 
Foreign currency translation loss, net of income tax expense of $0.0 million
3,387 1,692 5,079 
Balance at June 30, 2023118,283,318 $1 58,586,695  $573,850 $(177,431)$2,822 645,788 $(6,632)$152,839 $545,449 
Balance at September 30, 2022114,873,121 1 58,586,695  542,602 (104,544)2,784 550,904 (5,013)193,378 629,208 
Net Loss(72,888)(36,748)(109,636)
Stock-based compensation expense and related vesting667,048 — 21,440 21,440 
Repurchase of Common Stock placed into Treasury(94,884)— — 94,884 (1,619)(1,619)
Effect of remeasurement of non-controlling interest due to other share transactions3,778 — (3,778) 
Proceeds from exercise of stock options2,838,033 — 6,030 — 6,030 
Foreign currency translation loss, net of income tax expense of $0.4 million
38 (13)25 
Balance at June 30, 2023118,283,318 $1 58,586,695  $573,850 $(177,431)$2,822 645,788 $(6,632)$152,839 $545,449 

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Mezzanine
Equity
Members’ capital contributionsClass A
Common Stock
Class B-1
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
 Income (Loss)
Treasury StockNon-Controlling
interest
Total stockholders’ equity and
 members’ deficit
SharesAmountSharesAmountSharesAmount
Balance at March 31, 202254,143,275 $ 117,173,390 $1 $289,428 $(47,990)$(2)$484,020 $725,457 
Net loss— — — — — (19,347)$— (41,482)(60,829)
Stock-based compensation expense and related vesting1,427,662 — — — 8,581 — $— — 8,581 
Repurchase of class A common stock placed into treasury(548,445)— — — — — — 548,445 (4,991)— (4,991)
Effect of Siemens Industry redemption of class B-1 common stock for class A common stock58,586,695 1 (58,586,695)(1)227,699 — — (227,699) 
Effect of remeasurement of non-controlling interest due to other share transactions— — — 3,806 — — (3,805)1 
Proceeds from exercise of stock options503,220 — — 1,233 — — 1,233 
Other comprehensive gain subsequent to the Transactions, net of income tax expense of $0
— — — — — 517 1,114 1,631 
Balance at June 30, 2022$ $ 114,112,407 $1 58,586,695 $ $530,747 $(67,337)$515 $548,445 $(4,991)$212,148 $671,083 
Balance at September 30, 2021$117,235 $106,152  $  $ $ $(279,301)$(285) $ $ $(173,434)
Net loss prior to the Transactions(20,317)(20,317)
Other comprehensive income prior to the Transactions, net of income tax benefit of $0
175 — 175 
Effect of the transactions related to the IPO(117,235)(106,152)18,493,275 117,173,390 1 (24,091)279,301 75 (31,899)117,235 
Issuance of class A common stock in IPO, net of issuance costs35,650,000 295,740 $— $— 640,021 935,761 
Net loss subsequent to the Transactions(67,337)$— (145,339)(212,676)
Stock-based compensation expense and related vesting1,427,662 26,360 26,360 
Repurchase of Class A common stock placed into treasury(548,445)548,445 (4,991)(4,991)
Effect of Siemens Industry redemption of class B-1 common stock for class A common stock58,586,695 1 (58,586,695)(1)227,699 (227,699) 
Effect of remeasurement of non-controlling interest due to other share transactions3,806 (3,805)1 
Proceeds from exercise of stock options503,220 $1,233 1,233 
Other comprehensive gain subsequent to the Transactions, net of income tax benefit of $0
550 1,186 1,736 
Balance at June 30, 2022  114,112,407 1 58,586,695 $ 530,747 $(67,337)$515 $548,445 $(4,991)$212,148 $671,083 
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The accompanying notes are an integral part of these condensed statements
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FLUENCE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. Dollars in Thousands)
Nine Months Ended June 30,
20232022
Operating activities
Net loss$(109,636)$(232,992)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization7,739 4,892 
Amortization of debt issuance costs457 550 
Inventory (benefit) provision(1,097)13,329 
Stock-based compensation expense21,440 35,063 
Deferred income taxes(1,276) 
Provision (benefit) on loss contracts(8,554)2,282 
Changes in operating assets and liabilities:
Trade receivables(66,036)(46,343)
Unbilled receivables(17,315)836 
Receivables from related parties55,432 (15,956)
Advances to suppliers(8,142)(52,456)
Inventory, net145,982 (77,255)
Other current assets5,192 (118)
Other non-current assets(30,984)(17,556)
Accounts payable(138,849)68,154 
Payables and deferred revenue with related parties(152,668)5,507 
Deferred revenue168,024 298,986 
Current accruals and provisions(78,225)(53,016)
Taxes payable12,004 (1,150)
Other current liabilities24,593 (1,669)
Other non-current liabilities11,432 (2,031)
Insurance proceeds received 10,000 
Net cash used in operating activities$(160,487)$(60,943)
Investing activities
Purchase of equity securities (1,124)
Proceeds from maturities of short-term investments111,674  
Payments for purchase of investment in joint venture(5,013) 
Capital expenditures on software(7,284) 
Payments for acquisition of businesses, net of cash acquired (29,215)
Purchase of property and equipment(1,877)(2,675)
Net cash provided by (used in) investing activities$97,500 $(33,014)
Financing activities
Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions 935,761 
Repurchase of Class A common stock placed into treasury(1,618)(4,991)
Payment of transaction cost related to issuance of Class B membership units (6,320)
Payment of debt issuance costs (3,120)
Proceeds from exercise of stock options6,030 1,233 
Repayment of promissory notes – related parties (50,000)
Repayment of line of credit (50,000)
Proceeds from borrowing against note receivable - pledged as collateral48,176  
Payments of deferred equity issuance costs (7,103)
Net cash provided by financing activities$52,588 $815,460 
Effect of exchange rate changes on cash and cash equivalents(3,226)2,473 
Net (decrease) increase in cash, cash equivalents, and restricted cash(13,625)723,976 
Cash, cash equivalents, and restricted cash as of the beginning of the period429,721 38,068 
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Cash, cash equivalents, and restricted cash as of the end of the period416,096 762,044 
Supplemental Cash Flows Information
Interest paid$955 $ 
Cash paid for income taxes$928 $1,298 
The accompanying notes are an integral part of these condensed statements
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FLUENCE ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.    Organization and Operations
Fluence Energy, Inc., a Delaware corporation (the “Company”), was formed on June 21, 2021. We conduct our business operations through Fluence Energy, LLC, and its direct and indirect subsidiaries. Fluence Energy, LLC was formed on June 30, 2017 as a joint venture between Siemens Industry, Inc. (“Siemens Industry”), an indirect subsidiary of Siemens AG (“Siemens”), and AES Grid Stability, LLC (“AES Grid Stability”), an indirect subsidiary of the AES Corporation (“AES”), and commenced operations on January 1, 2018. We refer to Siemens Industry and AES Grid Stability as the “Founders” in this Quarterly Report on Form 10-Q (this “Report”).
Upon the completion of our initial public offering (“IPO”) on November 1, 2021, Fluence Energy, Inc. became a holding company whose sole material assets are the limited liability company interests (the “LLC Interests”) in Fluence Energy, LLC. All of our business is conducted through Fluence Energy, LLC, together with its subsidiaries, and the financial results of Fluence Energy, LLC will be consolidated in our financial statements. Fluence Energy, LLC is taxed as a partnership for federal income tax purposes and, as a result, its members, including Fluence Energy, Inc., will pay income taxes with respect to their allocable shares of its net taxable income. As of June 30, 2023, Fluence Energy, LLC had subsidiaries operating in Germany, Australia, Philippines, Chile, the Netherlands, the United States, India, Singapore, United Kingdom, Canada, and Switzerland. Except where the context clearly indicates otherwise, “Fluence,” “we,” “us,” “our” or the “Company” refers to Fluence Energy, Inc. and all of its direct and indirect subsidiaries, including Fluence Energy, LLC. When used in a historical context that is prior to the completion of the IPO, “we,” “us,” “our” or “the Company” refers to Fluence Energy, LLC and its subsidiaries.
Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2021” and “fiscal year 2022” refer to the fiscal years ended September 30, 2021 and September 30, 2022, respectively.
The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The Company’s CODM reviews financial information on a condensed consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating segment, which corresponds to one reportable segment.
2.    Summary of Significant Accounting Policies and Estimates
Principles of Accounting and Consolidation
The accompanying condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and under the rules of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying condensed consolidated financial statements include the accounts of Fluence Energy, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Non-Controlling Interest
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As the sole managing member of Fluence Energy, LLC, Fluence Energy, Inc. operates and controls all the business and affairs of Fluence Energy, LLC and, through Fluence Energy, LLC and its direct and indirect subsidiaries, conducts the Company’s business. Fluence Energy, LLC is a variable interest entity, of which Fluence Energy, Inc. beneficially owns a 66.88% interest as of June 30, 2023. For accounting purposes, Fluence Energy, Inc. is considered the primary beneficiary and therefore consolidates the results of Fluence Energy, LLC and its direct and indirect subsidiaries. Prior to the IPO, Fluence Energy, Inc. had no operations and had no assets or liabilities. Accordingly, financial results, balances, and other information included herein for periods prior to the IPO are reflective of Fluence Energy, LLC. The table below summarizes the ownership structure at end of each respective period:
June 30, 2023September 30, 2022
Controlling Interest Ownership66.88 %66.22 %
Non-Controlling Interest Ownership (AES)33.12 %33.78 %
Unaudited Interim Financial Information
The accompanying condensed consolidated financial statements as of June 30, 2023, and for the three and nine months ended June 30, 2023 and 2022 are unaudited. These financial statements should be read in conjunction with the Company’s audited financial statements included in our 2022 Annual Report. In our opinion, such unaudited financial statements reflect all adjustments, including normal recurring items, that are necessary for the fair statement of the Company’s financial position as of June 30, 2023, the results of its operations for the three and nine months ended June 30, 2023 and 2022, and its cash flows for the nine months ended June 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and nine months ended June 30, 2023 and 2022 are also unaudited. The results for the three and nine months ended June 30, 2023 and 2022 are not necessarily indicative of results for the full year ending September 30, 2023 and 2022, any other interim periods, or any future year or period. The balance sheet as of September 30, 2022 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim financial statements.
For a complete description of our significant accounting policies, refer to Note 2 - Summary of Significant Accounting Policies and Estimates in the audited consolidated financial statements included in our 2022 Annual Report. We include herein certain updates to those policies.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Items subject to such estimates and assumptions include: the relative fair value allocations to contingencies with multiple elements, the carrying amount and estimated useful lives of long-lived assets; impairment of goodwill, intangible assets, and long-lived assets; valuation allowances for inventories; deferred tax assets; revenue recognized under the percentage-of-completion method; accrued bonuses; and various project-related provisions including but not limited to estimated losses, warranty obligations, and liquidated damages.
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include cash on-hand and highly liquid investments readily convertible to cash, with an original maturity of 90 days or less when purchased.
Cash restricted for use as a result of financing or other obligations is classified separately as restricted cash. If the purpose of restricted cash relates to acquiring a long-term asset, liquidating a long-term liability, or is otherwise unavailable for a period longer than one year from the balance sheet date, the restricted cash is included in other long-term assets. Otherwise, restricted cash is included as a separate line item on the Company’s consolidated balance sheets.
The Company typically retains cash for operations within one or more bank accounts. These accounts may hold cash in excess of the FDIC limit of $250,000. As a result, we are subject to concentration risk associated with the underlying custodial banks with whom deposits of cash and cash equivalents in excess of the FDIC limits are held. If access to these accounts is delayed or suspended indefinitely, it could have a material adverse impact on the Company’s ability to meet its financial obligations required for operations.
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The following table provides a reconciliation of cash, cash equivalents, and restricted cash at the end of each respective period as shown in the Company’s condensed consolidated balance sheets.
in thousands
June 30, 2023September 30, 2022
Cash and cash equivalents$297,709 $357,296 
Restricted cash
108,387 62,425 
Restricted cash included in “Other non-current assets”10,000 10,000 
Total cash, cash equivalents and restricted cash
$416,096 $429,721 
Restricted cash at the end of each respective period consisted of the following:
in thousands
June 30, 2023September 30, 2022
Collateral for credit card program
$2,344 $1,580 
Collateral for outstanding bank guarantees
106,043 60,845 
Collateral for surety program included in “Other non-current assets”10,000 10,000 
Total restricted cash
$118,387 $72,425 
Revenue and Cost Recognition
The Company’s revenue recognition policy included herein is based on the application of Accounting Standards Codification - Revenue from Contracts with Customers (ASC 606). As of June 30, 2023, the Company’s revenue was generated primarily from the sale of energy storage products and solutions, providing operational services, and digital applications and solutions.
Revenue from Energy Storage Products and Solutions: The Company enters into contracts with utility companies, developers, and commercial and industrial customers to design, advise on, and build battery-based energy storage products and solutions. Each energy storage product and/or solution is customized depending on the customer’s energy needs. Customer payments are due upon meeting certain milestones that are consistent with contract-specific phases of a project. The Company determines the transaction price based on the consideration expected to be received which includes estimates of liquidated damages or other variable consideration that are included in the transaction price in accordance with ASC 606. We assess any variable consideration using an expected value method. The transaction price identified is allocated to each distinct performance obligation to deliver a good or service based on the relative standalone selling prices. Generally, the Company’s contracts to design and build battery-based energy storage products and solutions are determined to have one performance obligation. The Company believes that the prices negotiated with each individual customer are representative of the stand-alone selling price of the product.
The Company recognizes revenue over time as a result of the continuous transfer of control of our product to the customer. This continuous transfer of control to the customer is supported by clauses in the underlying contracts that provide enforceable rights to payment of the transaction price associated with work performed to date for products that do not have an alternative use to the Company and/or the project is built on a customer’s land that is under the customer’s control.
Revenue for these performance obligations is recognized using the percentage-of-completion method based on cost incurred as a percentage of total estimated contract costs. Standard inventory materials that could be used interchangeably on other projects are included in our measure of progress when they are integrated into, or restricted to, the production of the customer’s project. Contract costs include all direct material and labor costs related to contract performance. Pre-contract costs with no future benefit are expensed in the period in which they are incurred. Since the revenue recognition of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion. The cumulative effects of revisions of estimated total contract costs and revenues, together with any contract reserves which may be deemed appropriate, are recorded in the period in which they occur. Due to the uncertainties inherent in the estimation process, it is reasonably possible that these estimates will be revised in a different period. When a loss is forecasted for a contract, the full amount of the anticipated loss is recognized in the period in which it is determined that a loss will occur. Refer to “Loss Contracts” below for further discussion.
Our contracts generally provide our customers the right to liquidated damages (“LDs”) against Fluence in the event specified milestones are not met on time or equipment is not delivered according to contract specifications. LDs are accounted for as variable consideration, and the contract price is reduced by the expected penalty or LD amount when
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recognizing revenue. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved. Estimating variable consideration requires certain estimates and assumptions, including whether and by how much a project will be delayed and/or will not meet contractual performance specifications. The existence and measurement of liquidated damages may also be impacted by our judgments about the probability of favorable outcomes of customer disputes involving whether certain events qualify as force majeure or the reason for the events that caused project delays. Variable consideration for liquidated damages is estimated using the expected value of the consideration to be received.
At times Fluence will incur additional costs to execute on the performance of a contract. When this happens, we typically attempt to recover the revenue associated with these costs via a negotiated claim or change order with the customer. When this fact pattern occurs, it will create a timing difference between when we have incurred the cost versus when we record the revenue as costs are recognized immediately when incurred and the revenue from the change order is recognized as an increase to contract price when it is legally enforceable, which is usually upon signing a respective change order or equivalent document confirming the claim acceptance by customer. For the three and nine-months ended June 30, 2023, we recognized revenue of approximately $1.8 million and $26.1 million, respectively, on price increase change orders during the period in which the performance obligations were substantially satisfied in previous periods.
Revenue from Services: The Company also enters into long-term service agreements with customers to provide operational services related to battery-based energy storage products and solutions. The services include maintenance, monitoring, and other minor services. The Company accounts for the services as a single performance obligation as the services are substantially the same and have the same pattern of transfer to the customers. We recognize revenue over time using a straight-line recognition method for these types of services. The Company believes using a time-based method to measure progress is appropriate as the performance obligations are satisfied evenly over time based on the fact that customers receive the services evenly. Revenue is recognized by dividing the total transaction price over the service period.
Some of the agreements also provide a commitment to perform augmentation activities which would typically be represented by installation of additional batteries, and other components as needed, to compensate for partially lost capacity due to degradation of batteries over time. The obligation to perform augmentation activities can take the form of either maintaining battery capacity above a given threshold for a stated term while others provide a fixed number of augmentations over a contract term. Augmentation arrangements that require us to maintain battery capacity above an established threshold for a given term are considered service-type warranties. These represent a stand-ready obligation in which the customer benefits evenly over time, and we thus recognize revenue for these arrangements using a straight-line recognition method. Alternatively, augmentation arrangements that require us to perform a fixed number of augmentations over a contract term follow the percentage-of-completion revenue recognition method. Since these arrangements require a fixed number of augmentations be performed, we use the pattern of cost as a proxy to identify when our obligations are satisfied and to recognize revenue.
Revenue from Digital Applications and Solutions: In October 2020, Fluence Energy, LLC acquired the Advanced Microgrid Solutions (“AMS”) software and digital intelligence platform, which became the Fluence Trading Platform. In April 2022, the Company acquired Nispera AG, a Zurich based provider of artificial intelligence (AI) and machine learning-enabled Software-as-a-Service (SaaS) targeting the renewable energy sector. Contracts involving the Fluence Trading Platform are generally entered into with commercial entities that control utility-scale storage and renewable generation assets. Fluence Trading Platform arrangements consist of a promise to provide access to proprietary cloud-based Software-as-a-Service to promote enhanced financial returns on the utility-scale storage and renewable generation assets. The Fluence Trading Platform is a hosted service that delivers automated, market-compliant bids to local electricity market operators. Customers do not receive legal title or ownership of the software as a result of these arrangements.
The Fluence Trading Platform is technology and vendor-agnostic (i.e., it can be utilized for wind and solar assets as well as non-Fluence systems). The Fluence Trading Platform is separately identifiable from other services that the Company offers to its customers (i.e., it is not highly interrelated or integrated with other solutions). As such, we determined that the Fluence Trading Platform is accounted for as a separate performance obligation. Revenue from the Fluence Trading Platform includes an integration fee and a monthly subscription fee. We consider the access to the Fluence Trading Platform and related support services in a customer contract to be a series of distinct services which comprise a single performance obligation because they are substantially the same and have the same pattern of transfer. We recognize revenue over time using a straight-line recognition method.
For our sale of energy storage products, services, and digital applications and solutions contracts where there are multiple performance obligations in a single contract, the Company allocates the consideration to the various obligations in the contract based on the relative standalone selling price method. Standalone selling prices are estimated based on estimated costs plus margin. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities.
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Cost of Goods and Services: 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 includes both direct labor costs as well as costs attributable to any individuals whose activities relate 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 of goods are transferred to the customers, which is generally based upon International Commercial Terms (commonly referred to as ‘‘incoterms’’) stated in corresponding supply agreements or purchase orders. Standard inventory materials that could be used interchangeably on other projects are included in cost of goods sold when they are integrated into, or restricted to, the production of the customer’s project.
Deferred Revenue: Deferred revenue represents the excess billings to date over the amount of revenue recognized to date. Contract advances represent amounts received by the Company upon signing of the related contracts with customers. The advances are offset proportionately against progress billings. Any outstanding portion is included in deferred revenue on the accompanying consolidated balance sheets.
Loss Contracts: A contract becomes a loss contract when its estimated total costs are expected to exceed its total revenue. The Company accrues the full loss expected in the period a loss contract is identified in “Current liabilities — Accruals and provisions” and “Cost of goods and services” on the Company’s consolidated balance sheets and consolidated statements of operations and comprehensive loss, respectively.
Inventory, Net
Inventory consists of batteries and equipment, cases, inverters, and spare parts which are used in ongoing battery storage projects for sale. Inventory is stated at the lower of cost or net realizable value with cost being determined by the specific identification method. Costs include cost of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The Company periodically reviews its inventory for potential obsolescence and write down of its inventory, as appropriate, to net realizable value based on its assessment of market conditions.
Software Development Costs
Our software development costs primarily relate to two categories: 1) internal-use software development costs, and 2) external-use software development costs. We capitalize costs incurred to purchase or develop software for internal use, and software to be sold or leased externally.
Internal-use software development costs are capitalized during the application development stage in accordance with ASC 350-40, Internal-Use Software. These capitalized costs are reflected in “Intangible Assets, Net” on the consolidated balance sheets and are amortized over the estimated useful life of the software. Our internal-use software relates to our SaaS customer offerings and is amortized to cost of goods and services. The useful life of our internal-use software development costs is generally 3 years.
During the three and nine months ended June 30, 2023, the Company capitalized $5.5 million, and in the comparable periods of the prior year $0.0 million, of internal use software.
External-use software development costs developed to be sold or leased externally are capitalized upon the establishment of technological feasibility for a product in accordance with ASC 985-20, Software to be Sold or Leased Externally. These software development costs are reflected in “Intangible Assets, Net” on our consolidated balance sheets and amortized to cost of goods and services on a product basis by the greater of the straight-line method over the estimated economic life of the product, or the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product. The useful life of our external-use software development costs is generally 5 years.
During the three and nine months ended June 30, 2023, the Company capitalized $1.8 million, and in the comparable periods of the prior year $0.0 million, of external-use software to be sold.
Fair Value Measurements
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs and to minimize the use of unobservable inputs. The following fair value hierarchy, defined by ASC 820, Fair Value Measurements, is used to classify assets and liabilities based on the observable inputs and unobservable inputs used to value the assets and liabilities:
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Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 inputs include those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted prices, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.
Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. The Company does not have significant recurring Level 3 fair value measurements.
The Company’s cash equivalents include term deposits with original maturity of less than 90 days and are recorded at amortized cost. Fair value of cash equivalents approximates the carrying amount. The carrying amounts of trade receivables, accounts payable and short-term debt obligations approximate fair values due to their short maturities.
Short-term Investments and Marketable Securities: We obtain pricing from Level 1 inputs which includes information from quoted market prices, pricing vendors or quotes from brokers/dealers. We conduct reviews of our primary pricing vendors to determine whether the inputs used in the vendor’s pricing processes are deemed to be observable. The fair value of U.S. Treasury securities and government-related securities, corporate bonds and notes and common stock is generally determined using standard observable inputs, including reported trades, quoted market prices, matrix pricing, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets and/or benchmark securities. Marketable securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in “Other Income” in the accompanying statements of operations. The table below represents activity on the investments for the three and nine month periods ended June 30, 2023.
in thousandsThree Months Ended
June 30, 2023
Nine Months Ended
June 30, 2023
Beginning balance$70,023 $110,355 
Contributions / (withdrawals)(70,071)(111,674)
Changes in fair market value48 1,319 
Ending Balance$ $ 
Supply Chain Financing
We have provided certain of our suppliers with access to a supply chain financing program through a third-party financing institution (“SCF Bank”). This program allows us to seek extended payment terms with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount. Once a supplier elects to participate in the program and reaches an agreement with SCF Bank, the supplier chooses which individual invoices to sell to the SCF Bank. We then pay SCF Bank on the invoice due date. We have no economic interest in a supplier’s decision to sell an underlying receivable to SCF Bank. The agreements between our suppliers and SCF Bank are solely at their discretion and are negotiated directly between those two parties. Our suppliers’ ability to continue using such agreements is primarily dependent upon the strength of our financial condition and guarantees issued by AES and Siemens. As of June 30, 2023, AES and Siemens issued guarantees of $50 million each, for a total of $100 million, to SCF Bank on our behalf.
As of June 30, 2023, three suppliers were actively participating in the supply chain financing program, and we had $17.3 million of payables outstanding subject to the program. All outstanding payments owed under the program are recorded within “Accounts payable” on the condensed consolidated balance sheets.
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Loss per Share
As of June 30, 2023, the Company’s amended and restated certificate of incorporation authorizes three classes of common stock: Class A, Class B-1 and Class B-2. Loss per share is calculated and reported under the “two-class” method. The “two-class” method is an earnings allocation method under which earnings (loss) per share is calculated for each class of common stock considering both distributions declared or accumulated and participation rights in undistributed earnings as if all such loss had been distributed during the period.
Basic net loss per share of Class A common stock is computed by dividing net loss attributable to Class A common stockholders by the weighted average number of shares of Class A common stock outstanding during the period. Diluted net loss per share of Class A common stock is computed by adjusting the net loss available to Class A common stockholders and the weighted average shares of Class A common stock outstanding to give effect to potentially dilutive securities. Shares of our Class B-1 and Class B-2 common stock are not entitled to receive any distributions or dividends. When a common unit of Fluence Energy, LLC is redeemed, at the Company’s election, for cash or Class A common stock by a Founder who holds shares of our Class B-1 or Class B-2 common stock, as applicable, such Founder will be required to surrender a share of Class B-1 or Class B-2 common stock, as the case may be, which we will cancel for no consideration. In the event of cash settlement, the Company is required to issue new shares of Class A common stock and use the proceeds from the sale of these newly-issued shares of Class A common stock to fully fund the cash settlement. Therefore, we did not include shares of our Class B-1 or Class B-2 common stock in the computation of basic loss per share. As we have incurred losses for all periods presented, diluted loss per share is equal to basic loss per share because the effect of potentially dilutive securities would be antidilutive.
The following table presents the potentially dilutive securities that were excluded from the computation of diluted loss per share:
Three Months Ended June 30,Nine Months Ended June 30,
2023202220232022
Class B-1 common stock58,586,695 58,586,695 58,586,695 58,586,695 
Outstanding stock options5,911,672 10,205,593 5,911,672 10,205,593 
Outstanding phantom units256,935605,591 256,935 605,591 
Outstanding restricted stock units (“RSUs”)1,963,6731,584,196 1,963,673 1,584,196 
In October 2021, the existing limited liability company agreement of Fluence Energy, LLC was amended and restated which recapitalized all existing interests in the Company on the basis of a 14.79-for-1 split. All shares and per share information has been retroactively adjusted to give effect to the recapitalization for all periods presented, unless otherwise indicated.
All earnings prior to and up to November 1, 2021, the date of completion of the IPO, were entirely allocable to non-controlling interest and, as a result, loss per share information is not applicable for reporting periods prior to this date. Consequently, only the net loss allocable to Fluence Energy, Inc. from the period subsequent to November 1, 2021 is included in the net loss attributable to the stockholders of Class A common stock for nine months ended June 30, 2023 and 2022. Basic and diluted net loss per share of Class A common stock for the three and nine months ended June 30, 2023 and 2022, respectively, have been computed as follows:
Three Months Ended June 30,Nine Months Ended June 30,
In thousands, except share and per share amounts2023202220232022
Net loss $(35,045)$(60,829)$(109,636)$(232,992)
Less: Net loss attributable to the non-controlling interest(11,655)(41,482)(36,748)(165,656)
Net loss attributable to Fluence Energy, Inc.$(23,390)$(19,347)$(72,888)$(67,336)
Weighted average number of Class A common stock - basic and diluted117,456,282 55,625,566 116,368,987 54,637,372 
Loss per share of Class A common stock - basic and diluted$(0.20)$(0.35)$(0.63)$(1.23)
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Recent Accounting Standards Adopted
The following table presents accounting standards adopted during the nine months ended June 30, 2023.
StandardDescriptionPeriod of AdoptionEffect on the financial statements and other significant matters
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting; ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and subsequent amendment to the initial guidance: ASU 2021-01, Reference Rate Reform (Topic 848): Scope (collectively, “Topic 848”). Topic 848 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024.Q3 FY23Effective May 19, 2023, the Company transitioned its Revolving Credit Facility from LIBOR to the Secured Overnight Financing Rate ("SOFR"). The Company elected the optional practical expedient as it relates to our Revolver as the amendment does not modify terms that change or have the potential to change, the amount and timing of cash flows unrelated to the replacement of LIBOR. The Company adopted this guidance prospectively on May 19, 2023, and it did not have a material impact on the Consolidated Financial Statements.
Recent Accounting Standards Not Yet Adopted

The following table presents accounting standards not yet adopted:

StandardDescriptionRequired date of adoption Effect on the financial statements and other significant matters
Accounting Standards Update (“ASU”) No. 2022-04: Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations In September 2022, the Financial ASU No. 2022-04, "Disclosure of Supplier Finance Program Obligations" ("ASU 2022-04"). ASU 2022-04 requires entities to disclose the key terms of supplier finance programs they use in connection with the purchase of goods and services, along with the amount of obligations outstanding at the end of each period and an annual rollforward of such obligations. This standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations.ASU 2022-04 is effective for the Company beginning in its fiscal year ending - September 30, 2024 and is to be applied retrospectively to all periods in which a balance sheet is presented. The annual rollforward disclosure is not required to be made until its fiscal year ending September 30, 2025 and is to be applied prospectively. Early adoption is permitted.The Company is evaluating the impact that this guidance will have on disclosures related to its supplier finance program obligations.
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3.    Revenue from Contracts with Customers
Our revenue is primarily derived from sales of our energy storage products and solutions. The following table presents the Company’s revenue disaggregated by revenue type:
In thousandsThree Months Ended June 30,
Nine Months Ended June 30,
2023
2022
2023
2022
Revenue from energy storage products and solutions$530,268 $234,706 $1,529,766 $742,132 
Revenue from services4,816 3,314 11,347 12,866 
Revenue from digital applications and solutions1,127 933 3,067 1,565 
Other140 57 817 58 
Total$536,351 $239,010 $1,544,997 $756,621 
The following table presents the Company’s revenue disaggregated by geographical region. Revenues are attributed to regions based on location of customers:
In thousandsThree Months Ended June 30,
Nine Months Ended June 30,
2023
2022
2023
2022
Americas (North, Central and South America)
$439,804 $142,872 $1,173,473 $542,197 
APAC (Asia Pacific)29,882 77,289 123,078 115,348 
EMEA (Europe, Middle-East and Africa)66,665 18,849 248,446 99,076 
Total$536,351 $239,010 $1,544,997 $756,621 
Customer Concentration
For the nine months ended June 30, 2023, our top four customers, in the aggregate, accounted for approximately 62% of total revenue.
For the nine months ended June 30, 2022, our top three customers, in the aggregate, accounted for approximately 80% of total revenue.
Deferred Revenue
Deferred revenue represents the excess billings over the amount of revenue recognized to date. Deferred revenue from related parties is included in payables and deferred revenue with related parties on the Company’s condensed consolidated balance sheets. The following table provides information about deferred revenue from contracts with customers:
In thousandsThree Months Ended June 30,Nine Months Ended June 30,
2023202220232022
Deferred revenue, beginning of period$584,425 $222,815 $273,073 $71,365 
Additions167,361 194,398 452,069 369,679 
Revenue recognized related to amounts that were included in beginning balance of deferred revenue(299,717)(46,183)(273,073)(70,014)
Deferred revenue, end of period$452,069 $371,030 $452,069 $371,030 
In thousandsThree Months Ended June 30,Nine Months Ended June 30,
2023202220232022
Deferred revenue from related parties, beginning of period$186,957 $171,466 $300,697 $220,122 
Additions47,489 130,563 138,781 226,330 
Revenue recognized related to amounts that were included in beginning balance of deferred revenue(84,146)(74,198)(289,178)(218,621)
Deferred revenue from related parties, end of period$150,300 $227,831 $150,300 $227,831 
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Remaining Performance Obligations
The Company’s remaining performance obligations (“backlog”) represent the unrecognized revenue value of its contractual commitments, which include deferred revenue and amounts that will be billed and recognized as revenue in future periods. The Company’s backlog may vary significantly each reporting period based on the timing of major new contractual commitments and the backlog may fluctuate with currency movements. In addition, under certain circumstances, the Company’s customers have the right to terminate contracts or defer the timing of its services and their payments to the Company.
As of June 30, 2023, the Company had $2.9 billion of remaining performance obligations related to our contractual commitments, of which we expect to recognize approximately 80% in revenue in the next 3 to 27 months and the remainder thereafter.
Variable Consideration
As of June 30, 2023 and September 30, 2022, our transaction prices have been reduced to reflect variable consideration of $(66.0) million and $75.5 million, respectively. Variable consideration primarily relates to our customers’ rights to liquidated damages in the event a specified milestone has not been met or equipment is not delivered according to contract specifications. Variable consideration is estimated using the expected-value method which computes a weighted average amount based on a range of potential outcomes. For contracts in which a significant reversal may occur we constrain the amount of revenue to be recognized.
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4.    Inventory, Net
Inventory consisted of the following:
In thousands
June 30, 2023September 30, 2022
CostProvisionNetCostProvisionNet
Cubes, batteries, and other equipment
$513,759 $(208)$513,551 $653,059 $(1,294)$651,765 
Shipping containers and spare parts
   982 (12)970 
Total
$513,759 $(208)$513,551 $654,041 $(1,306)$652,735 

5.    Other Current Assets
Other current assets consisted of the following amounts:
In thousandsJune 30, 2023September 30, 2022
Taxes recoverable$18,943 $14,378 
Advance payments686 1,813 
Prepaid expenses3,392 2,095 
Prepaid insurance3,134 1,549 
Derivative assets (a)
56 5,574 
Other381 1,226 
Total$26,592 $26,635 
(a) Derivative assets represent forward contracts which are used predominantly to mitigate foreign exchange rate exposure on costs incurred on customer projects. Gains and losses on forward contracts are recorded to cost of goods and services.
6.    Intangible Assets, Net
Intangible assets are stated at amortized cost and consist of the following:
In thousands
June 30, 2023September 30, 2022
Cost
Accumulated
Amortization
Net
Cost
Accumulated
Amortization
Net
Patents and licenses$28,675 $(10,520)$18,155 $28,551 $(9,033)$19,518 
Developed technology
29,675 (4,629)25,046 28,347 (2,720)25,627 
Customer relationship
4,347 (1,073)3,274 3,340 (263)3,077 
Trade names /Trademarks
5,276 (3,180)2,096 5,216 (2,679)2,537 
Capitalized internal-use software5,513 (461)5,052    
Capitalized software to be sold1,845 (30)1,815    
Other
   1,213 (276)937 
Total
$75,331 $(19,893)$55,438 $66,667 $(14,971)$51,696 
Total amortization expense for the three months ended June 30, 2023 and 2022 was $1.9 million and $1.3 million, respectively. Total amortization expense for the nine months ended June 30, 2023 and 2022 was $5.3 million and $3.2 million, respectively. Included within amortization expense for the three and nine months ended June 30, 2023 was $0.5 million for capitalized software. No capitalized software amortization expense was recorded for the three and nine months ended June 30, 2022.
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7.    Goodwill
No impairment was recognized for the nine months ended June 30, 2023 and 2022, respectively. The following table presents the goodwill activity for the nine months ended June 30, 2023 and 2022:
In thousands
Nine months endedNine months ended
June 30, 2023June 30, 2022
Goodwill, Beginning of the period
$24,851 $9,176 
Foreign currency adjustment1,435 (498)
   Acquisition related goodwill
 16,536 
Goodwill, End of the period
$26,286 $25,214 

8.    Current Accruals and Provisions
Accruals mainly represent milestones not yet invoiced for inventory such as batteries, cubes, and inverters. According to master supply agreements between the Company and suppliers of our inventory, vendor invoices are issued according to contracted billing schedules with certain milestones invoiced after delivery, upon full installation and commissioning of the equipment at substantial completion and final completion project stages. Current accruals and provisions consisted of the following:
In thousandsJune 30, 2023September 30, 2022
Accruals
$84,212 $152,996 
Provisions for expected project losses
8,154 30,032 
Warranty accrual
13,518 1,625 
Total$105,884 $184,653 
Less: non-current portion
(10,147)(839)
Current portion$95,737 $183,814 
9.    Debt
Revolving Credit Facility
On November 1, 2021, we entered into a credit agreement for a revolving credit facility (the “Revolver”), by and among Fluence Energy, LLC, as the borrower, Fluence Energy, Inc., as a parent guarantor, the subsidiary guarantors party thereto, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent (the “Credit Agreement”). The Revolver is secured by a (i) first priority pledge of the equity securities of Fluence Energy, LLC and its subsidiaries and (ii) first priority security interests in, and mortgages on, substantially all tangible and intangible personal property and material fee-owned real property of Fluence Energy, LLC, the parent guarantor and each subsidiary guarantor party thereto, in each case, subject to customary exceptions and limitations. The initial aggregate amount of commitments was $190.0 million from the lenders party thereto including JP Morgan Chase Bank, N.A., Morgan Stanley Senior Funding, Inc., Bank of America, N.A., Barclays Bank PLC, and five other banks. On June 30, 2022, the Company increased the revolving commitment available under the Revolver by $10.0 million to an aggregate of $200.0 million with the addition of UBS AG, Stamford Branch as an additional lender under the Revolver. The maturity date of the Revolver is November 1, 2025. On May 19, 2023, the Credit Agreement was amended to replace Adjusted LIBOR with Adjusted Term SOFR as the applicable benchmark interest rate with respect to certain classes of loans. The Company elected the optional practical expedient as it relates to our Revolver as the amendment does not modify terms that change or have the potential to change, the amount and timing of cash flows unrelated to the replacement of LIBOR.

The Revolver bears interest at (i) with respect to Term Benchmark Loans (as defined in the Credit Agreement), the Adjusted Term SOFR Rate, the Adjusted EURIBOR Rate or the AUD Rate (each as defined in the Credit Agreement), as applicable, plus 3.0%, (ii) with respect to ABR Loans (as defined in the Credit Agreement) the Alternate Base Rate (as defined in the Credit Agreement) plus 2.0%, or (iii) with respect to RFR Loans (as defined in the Credit Agreement), the applicable Daily Simply RFR (as defined in the Credit Agreement) plus 3.1193%, in each instance subject to customary benchmark replacement provisions including, but not limited to, alternative benchmark rates, customary spread adjustments with respect to borrowings in foreign currency and benchmark replacement conforming changes. Fluence Energy, LLC is required to pay to the lenders a commitment fee of 0.55% per annum on the average daily unused portion of the revolving
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commitments through maturity, which will be the four-year anniversary of the closing date of the Revolver. The Revolver also provides for up to $200.0 million in letter of credit issuances, which will require customary issuance and administration fees, as well as a fronting fee payable to each issuer thereof and a letter of credit participation fee of 2.75% per annum payable to the lenders.
The Credit Agreement contains customary covenants for these types of financing, including, but not limited to, covenants that restrict our ability to incur additional indebtedness; incur liens; sell, transfer, or dispose of property and assets; make investments or acquisitions; make dividends, distributions or other restricted payments; and engage in affiliate transactions. The Credit Agreement limits our ability to make certain payments, including dividends and distributions on Fluence Energy, LLC’s equity, Fluence Energy, Inc.’s equity and other restricted payments. Under the terms of the Credit Agreement, Fluence Energy, LLC and its subsidiaries are currently limited in their ability to pay cash dividends to, lend to, or make other investments in Fluence Energy, Inc., subject to certain exceptions, including among others (i) the ability to make investments of up to the greater of (a) $10,500,000 and (b) 1.5% of the consolidated assets of Fluence Energy, Inc. and its subsidiaries, and (ii) the ability to issue dividends and make other Restricted Payments (as defined in the Credit Agreement) (a) if after giving pro forma effect to such dividend or other Restricted Payment the Total Liquidity (as defined in the Credit Agreement) of Fluence Energy, Inc. and its subsidiaries party to the Credit Agreement is at least $600,000,000, or (b) such dividend or other Restricted Payment is made to reimburse Fluence Energy, Inc. for certain tax distributions under the Third Amended and Restated Limited Liability Company Agreement of Fluence Energy, LLC (the “LLC Agreement”) and certain payments under the Tax Receivable Agreement, dated as of November 1, 2021, entered into connection with the IPO, by and among Fluence Energy, Inc., Fluence Energy, LLC and the Founders (the “Tax Receivable Agreement”) and certain operational expenses incurred in connection with the ownership and management of Fluence Energy, LLC.
In addition, we are required to maintain (i) minimum liquidity and gross revenue requirements, in each case, until consolidated EBITDA reaches $150.0 million for the most recent four fiscal quarters and we make an election, and (ii) thereafter, a maximum total leverage ratio and a minimum interest coverage ratio. Such covenants will be tested on a quarterly basis. As of June 30, 2023, we were in compliance with all such covenants or maintained availability above such covenant triggers.
As of June 30, 2023, we had no borrowings under the Revolver and have availability under the facility of $165.3 million, net of letters of credit issued of $34.7 million.

Line of Credit.
Prior to the IPO, the Company had an Uncommitted Line of Credit Agreement (“Line of Credit’) with Citibank, N.A. (“Citibank”) which allowed us to borrow an amount in aggregate not to exceed $50.0 million, with the expiration date on March 31, 2023. Outstanding borrowings from the Line of Credit were $50.0 million as of September 30, 2021. The weighted-average annual interest rate of the borrowing was 2.83%. On November 1, 2021, the $50.0 million outstanding borrowings from the Line of Credit was paid off using the proceeds from our IPO and the Line of Credit was canceled shortly thereafter.
Borrowings Against Note Receivable - Pledged as Collateral
In December 2022, we transferred $24.3 million in customer receivables to Standard Charter Bank (“SCB”) in the Philippines for proceeds of $21.1 million. The receivables all related to our largest customer in that country. The underlying receivables transferred were previously aggregated into a long term note, with interest, and has a maturity date of September 30, 2024 and was previously classified under “Other non-current assets” on our condensed consolidated balance sheet. In April 2023, we aggregated into an additional long term note and transferred an additional $30.9 million in receivables with the same customer to SCB for proceeds of $27.0 million, upon substantially similar terms as the December 2022 transfer and has a maturity date of December 27, 2024. These transactions are treated as secured borrowings as we did not transfer the entire note receivables due from the customer to SCB. We continue to receive quarterly interest income from the customer, while SCB is responsible for collecting payments on the principal balances which represent the initial receivable balances from the customer. We have no other continuing involvement or exposure related to the underlying receivables. We will record aggregate interest expense of $3.2 million to SCB over the 24 months period from September 30, 2022 until the first note receivable is fully due from the customer. We will record aggregate interest expense of $3.9 million to SCB over the 21 month period from April 1, 2023 until the second note receivable is fully due from the customer.
Refer to Note 12 — Related-Party Transactions for details regarding borrowings from related parties.
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10.    Income Taxes
The Company’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items.
Income tax expense (benefit) was $(1.3) million and $(1.0) million for the three months ended June 30, 2023 and 2022, respectively. The effective tax rate for the three months ended June 30, 2023 and 2022 was 3.6% and 1.6%, respectively. For the three months ended June 30, 2023, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to flow-through losses attributable to the Founder, AES Grid Stability, valuation allowances and foreign exchange losses. For the three months ended June 30, 2022, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to flow-through losses attributable to the Founders, AES Grid Stability and Siemens Industry, valuation allowances, and foreign exchange losses.
Income tax expense (benefit) was $(2.1) million and $(0.5) million for the nine months ended June 30, 2023 and 2022, respectively. The effective tax rate for the nine months ended June 30, 2023 and 2022 was 1.8% and 0.2%, respectively. For the nine months ended June 30, 2023, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to flow-through losses attributable to the Founder, AES Grid Stability, valuation allowances and foreign exchange gains. For the nine months ended June 30, 2022, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to flow-through losses incurred prior to the IPO on November 1, 2021, and flow-through losses attributable to the Founders, AES Grid Stability and Siemens Industry, valuation allowances, and foreign exchange losses.
As of each of June 30, 2023 and September 30, 2022, the Company does not believe it has any significant uncertain tax positions and therefore, has not recorded any unrecognized tax benefits.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more-likely-than-not that all or a portion of a deferred tax asset may not be realized. As of June 30, 2023 and September 30, 2022, the Company had recorded a full valuation allowance against deferred tax assets on Fluence Energy, Inc. primarily related to its investment in Fluence Energy, LLC, as well as on certain foreign subsidiaries based on the weight of available evidence, including cumulative losses.
11.    Commitments and Contingencies
Guarantees
As of June 30, 2023, the Company had outstanding bank guarantees, parent guarantees and surety bonds issued as performance security arrangements for a number of our customer projects. These contractual commitments are all accounted for off balance sheet.
The following table summarizes contingent contractual obligations as of June 30, 2023. Amounts presented in the following table represent the Company's current undiscounted exposure to guarantees and the range of maximum undiscounted potential exposure. The maximum exposure is not reduced by the amounts, if any, that could be recovered under the recourse or collateralization provisions in the guarantees.
Contingent Contractual Obligations
Amount
(in $ millions)
Number of Agreements
Maximum Exposure Range for Each Agreement (in millions)
Guarantees and commitments$1,57943
$0 - 445.8
Letters of credit under the bilateral credit facility9713
0 - 28.7
Letters of credit under Revolver3527
0 - 7.7
Surety bonds34829
0 - 109.3
Total$2,059112
Typical turn-key contracts and long-term service agreements contain provisions for performance liquidated damages payments if the solution fails to meet the guaranteed performance thresholds at completion of the project or throughout the service agreement period.
Purchase Commitments
The Company has commitments for minimum volumes of purchases of battery modules under a master supply agreement. Liquidated damages apply if the minimum purchase volumes are not met. The Company expects to meet the
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minimum committed volumes of purchases. The following table presents our future minimum purchase commitments by fiscal year, primarily for battery modules, and liquidated damages, if the minimum purchase volumes are not met, as of June 30, 2023:
in thousandsPurchase CommitmentsLiquidated Damages
2023$338,834 $10,700 
20241,412,117 121,738 
2025346,015 34,110 
2026 and thereafter36,450 5,630 
Total$2,133,416 $172,178 

During the three months ended December 31, 2021, the Company made a $60.0 million advance payment as a capacity guarantee pursuant to a purchase agreement with one of our suppliers, of which, as of June 30, 2023, the balance of $36.5 million is recorded within “Current assets - Advances to suppliers” and no portion remains within “Non-current assets - Advances to suppliers” on the condensed consolidated balance sheets.
Negotiations with our Largest Battery Module Vendor
In December 2021, we entered negotiations with our largest battery module vendor to amend our battery supply agreement. As part of the discussions the vendor sought to renegotiate the price, we were to pay for battery modules purchased in calendar year 2022 as well as those expected to be purchased during the remainder of calendar year 2022 and calendar year 2023. As part of these negotiations, we also discussed settlement of contractual claims by Fluence to the vendor. These negotiations continued throughout calendar year 2022.
On December 15, 2022, we finalized an agreement with the vendor, amending the supply agreement and resolving our claims. The amendments and settlement were consistent with what we had estimated and disclosed in our consolidated financial statements in our 2022 Annual Report. The approximately $19.5 million settlement for our claims was recognized as a reduction of costs of goods and services for the nine months ended June 30, 2023.
Warranties
The Company is party to both assurance and service-type warranties for various lengths of time. The Company recognizes revenue for service-type warranties using either a straight-line or cost-to-cost method depending on the contract. Extended warranties that customers purchase separately from the related products and services are accounted for as separate performance obligations.
The Company provides a limited warranty related to the successful operation of battery-based energy storage products and solutions, apart from the service type warranties described above and are normally provided for a limited period of time from one to five years, after the commercial operation date or substantial completion depending on the contract terms. The warranties are considered assurance-type warranties which provide a guarantee of quality of the products and solutions.
For assurance-type warranties, we accrue an estimate of future warranty liability cost over the period of construction, consistent with transfer of control and revenue recognition on the equipment or battery-based energy storage products as part of our estimated recurring warranty reserve. Furthermore, we accrue the estimated liability cost of specific reserves or recalls when they are probable and estimable if identified. Our assurance type warranties are often backed by supplier covered warranties. We record a recoverable asset for any specific reserves or recalls when it is probable and estimable that the supplier will reimburse us for the expense.
Warranty expense is recorded as a component of “Costs of goods and services” in the Company’s condensed consolidated statements of operations.
As of June 30, 2023 and September 30, 2022, the Company accrued the below estimated warranty liabilities of $13.5 million and $1.6 million, respectively.
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In thousandsJune 30, 2023September 30, 2022
Warranty balance, beginning$1,625  
Warranty issued and assumed in period - specific campaigns1,845  
Warranties issued and assumed in period - recurring product warranty3,565 1,625 
Change in estimates8,287  
Net changes in liability for pre-existing warranties, included expirations and foreign exchange impact(104) 
Less: costs incurred and settlements(1,700) 
Warranty balance, ending$13,518 $1,625 
Less: supplier recoveries balance at end of period (a)
  
Warranty balance, net of supplier recoveries, at end of period$13,518 $1,625 
(a) The supplier recoveries are recorded in other current assets on the balance sheet.
Effective March 31, 2023, the Company updated its estimation model for calculating the recurring warranty reserve rate, which is a key input into our estimated assurance warranty liability.
The key inputs and assumptions used by us to estimate our warranty liability are: (1) the number of units expected to fail or be replaced over time (i.e., failure rate); and (2) the per unit cost of replacement, including shipping, labor costs, and costs for equipment necessary for repair or replacement that are expected to be incurred to replace or repair failed units over time (i.e., repair or replacement cost). Our Safety and Quality department has primary responsibility to determine the estimated failure rates for each generation of product.
The key inputs and assumptions used in calculating the estimated assurance warranty liability are reviewed by management on as needed basis. We may make additional adjustments to the estimated assurance warranty liability based on our comparison of actual warranty results to expected results for significant differences or based on performance trends or other qualitative factors. If actual failure rates, or replacement costs differ from our estimates in future periods, changes to these estimates may be required, resulting in increases or decreases in our estimated assurance warranty liability which may be material. As we are in a rapidly evolving market there is higher degree of estimation uncertainty regarding our estimated recurring warranty accrual rate.
Legal Contingencies
From time to time, the Company may be involved in litigation relating to claims that arise out of our operations and businesses and that cover a wide range of matters, including, among others, intellectual property matters, contract and employment claims, personal injury claims, product liability claims, and warranty claims. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. It is reasonably possible that some matters could have an unfavorable result to the Company and could require the Company to pay damages or make expenditures in amounts that could be material.

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2021 Overheating Event at Customer Facility
On September 4, 2021, a 300 MW energy storage facility owned by one of our customers experienced an overheating event. Fluence served as the energy storage technology provider and designed and installed portions of the facility, which was completed in fiscal year 2021. No injuries were reported from the incident. The facility was taken offline as teams from Fluence, our customer, and the battery designer/manufacturer investigated the incident. Our customer released initial findings in the second fiscal quarter of fiscal year 2022 on what it contends is the root cause of the incident. The customer’s stated findings, if ultimately confirmed and proven, could relate to certain scopes of work for which Fluence or its subcontractors could be responsible. The customer’s stated findings, however, could also relate to certain scopes of work for which other parties were responsible and/or relate to other causes, including the design and installation of portions of the facility over which Fluence did not have responsibility or control. The customer has alleged that Fluence is liable for the incident but has not yet demanded a specific amount of compensation nor alleged a particular level of responsibility. At this time, Fluence cannot accept the customer’s stated findings and has denied liability. No formal legal proceedings have commenced, but it is reasonably possible that litigation may result from this matter if a resolution cannot be achieved. Any such dispute would also likely include claims by Fluence and counterclaims by the customer relating to disputed costs arising from the original design and construction of the facility. The customer announced in July of 2022 that a large portion of the facility was back online. We are currently not able to estimate the impact that this incident may have on our financial results. To date, we do not believe that this incident has impacted the market’s adoption of our products and solutions.
2022 Overheating Event at Customer Facility
On April 18, 2022, a 10 MW energy storage facility in Chandler, Arizona owned by AES experienced an overheating event. Fluence served as the energy storage technology provider for the facility, which was completed in 2019, and Fluence currently provides maintenance services for the facility. There were no injuries. The facility has been taken offline as teams from Fluence, AES, and the battery manufacturer investigate the incident. We are currently not able to estimate the impact, if any, that this incident may have on our reputation or financial results, or on market adoption of our products and solutions.
12.    Related-Party Transactions
Related parties are represented by AES and Siemens, their respective subsidiaries and other entities under common control. As of June 30, 2023, AES, holds 58,586,695 shares of Class B-1 common stock of Fluence Energy, Inc. and Siemens beneficially owns an aggregate of 58,586,695 of Class A common stock of Fluence Energy, Inc.
Borrowings from Related Parties
On August 11, 2021, the Company borrowed $25.0 million each from AES and Siemens, in the form of subordinated promissory notes, each bearing interest at 2.86% per annum. The promissory notes were paid off in full on November 1, 2021 using proceeds from the IPO. All related party borrowings were for general working capital needs. There were no new related party borrowings during the three and nine months ended June 30, 2023.