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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 March 31, 2024
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 filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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. o
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 May 6, 2024, the registrant had 127,896,832 shares of Class A common stock outstanding and 51,499,195 shares of Class B-1 common stock outstanding.


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Quantitative and Qualitative Disclosures About Market Risk
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q for the period ended March 31, 2024 (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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”). All statements other than statements of historical facts contained in this Report are forward-looking statements. In particular, statements regarding our future results of operations and financial position, financial and operational performance, growth and business strategy, future revenue recognition and estimated revenues, future capital expenditures and debt service obligations, projected costs, prospects, plans, and objectives of management for future operations, including, among others, statements regarding expected growth and demand for our energy storage solutions, services, and digital application offerings, relationships with new and existing customers and suppliers, introduction of new energy storage solutions, services, and digital application offerings and adoption of such offerings by customers, presumptions relating to the Company’s tax receivable agreement, expectations relating to backlog, pipeline, and contracted backlog, and anticipated impact and benefits from the Inflation Reduction Act of 2022 on us and our customers, contained in this Report 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.
These forward-looking statements are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including our limited operating and revenue history as an independent entity and the nascent clean energy industry; our history of net losses, we anticipate increasing expenses in the future, and our ability to maintain prolonged profitability; delays, disruptions, and quality control problems in our manufacturing operations; difficulties in establishing mass manufacturing capacity and estimating potential cost savings and efficiencies from anticipated improvements to our manufacturing capabilities; dependence on our existing suppliers and supply chain competition; supplier concentration and capacity; interruption of flow and/or availability of components and materials from international vendors; significant changes in the cost of raw materials and product components; vendor non-compliance with ethical business practices and applicable laws and regulations; loss of significant customers or their inability to perform under their contracts; competition for our offerings and our ability to attract and retain customers; ability to effectively manage our recent and future growth and expansion of our business and operations; ability to maintain and enhance our reputation and brand recognition; success of our relationships with third parties; ability to attract and retain highly qualified personnel; risk related to the construction, utility interconnection, commissioning and installation of our energy storage products, cost overruns, and delays; risks related to defects, errors, vulnerabilities and/or bugs in our products and technology; compromises, interruptions, or shutdowns of our systems; lengthy sales and installation cycle for our products and services and ability to timely close sales; amounts included in our pipeline and contracted backlog may not result in actual revenue or translate into profits; events and incidents relating to storage, delivery, installation, operation, maintenance and shutdowns of our products; risks relating to whether renewable energy technologies are suitable for widespread adoption or if sufficient demand for our hardware and software-enabled services does not develop or takes longer to develop than we anticipate; estimates on size of our total addressable market; barriers arising from electric utility industry policies and regulations; cost of electricity available from alternative sources; risk relating to interest rates or a reduction in the availability of tax equity or project debt capital in the global financial markets and corresponding effects on customers’ ability to finance energy storage systems and demand for our products; potential changes in tax laws or regulations, including relating to incentives under the IRA; reduction, elimination, or expiration of government incentives or regulations regarding renewable energy; decline in public acceptance of renewable energy, or delay, prevent, or increase in the cost of customer projects; restrictions set forth in our ABL Credit Agreement or other debt agreements we may enter into; uncertain future capital needs and potential need to raise additional funds in the future; ability to obtain, maintain and enforce proper protection for our intellectual property, including our technology; risks related to us being a “controlled company” within the meaning of the NASDAQ rules; our relationship with our founders; and the factors described under the headings Part I, Item 1A. “Risk Factors” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2023, filed with the Securities and Exchange Commission (the “SEC”) on November 29, 2023 (the “2023 Annual Report”), and Part II, Item 1A. “Risk Factors” and Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report. If one or more events related to these or other risks or uncertainties
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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
March 31,
2024
September 30,
2023
Assets
Current assets:
Cash and cash equivalents$411,798 $345,896 
Restricted cash106,605 106,835 
Trade receivables, net86,798 103,397 
Unbilled receivables132,955 192,064 
Receivables from related parties63,639 58,514 
Advances to suppliers110,759 107,947 
Inventory, net309,059 224,903 
Current portion of notes receivable - pledged as collateral55,251 24,330 
Other current assets45,867 31,074 
Total current assets1,322,731 1,194,960 
Non-current assets:
Property and equipment, net$13,512 $12,771 
Intangible assets, net57,172 55,752 
Goodwill26,266 26,020 
Deferred income tax asset85 86 
Note receivable - pledged as collateral 30,921 
Other non-current assets110,077 31,639 
Total non-current assets207,112 157,189 
Total assets$1,529,843 $1,352,149 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$244,191 $62,899 
Deferred revenue398,639 273,164 
Deferred revenue and payables with related parties59,046 116,488 
Current portion of borrowings against note receivable - pledged as collateral52,667 22,539 
Personnel related liabilities25,784 52,174 
Accruals and provisions159,613 172,223 
Taxes payable22,023 29,465 
Other current liabilities11,150 16,711 
Total current liabilities973,113 745,663 
Non-current liabilities:
Deferred income tax liability$5,159 $4,794 
Borrowings against note receivable - pledged as collateral 28,024 
Other non-current liabilities19,835 17,338 
Total non-current liabilities24,994 50,156 
Total liabilities998,107 795,819 
Stockholders’ Equity:
Preferred stock, $0.00001 per share, 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2024 and September 30, 2023
  
Class A common stock, $0.00001 par value per share, 1,200,000,000 shares authorized; 128,081,961 shares issued and 127,387,538 shares outstanding as of March 31, 2024; 119,593,409 shares issued and 118,903,435 shares outstanding as of September 30, 2023, respectively
1 1 
Class B-1 common stock, $0.00001 par value per share, 200,000,000 shares authorized; 51,499,195 shares issued and outstanding as of March 31, 2024; 58,586,695 shares issued and outstanding as of September 30, 2023, respectively
  
Class B-2 common stock, $0.00001 par value per share, 200,000,000 shares authorized; 0 shares issued and outstanding as of March 31, 2024 and September 30, 2023
  
Treasury stock, at cost(7,885)(7,797)
Additional paid-in capital617,793 581,104 
Accumulated other comprehensive income3,241 3,202 
Accumulated deficit(200,076)(174,164)
Total stockholders’ equity attributable to Fluence Energy, Inc.413,074 402,346 
Non-Controlling interests118,662 153,984 
Total stockholders’ equity531,736 556,330 
Total liabilities and stockholders’ equity$1,529,843 $1,352,149 
The accompanying notes are an integral part of these condensed consolidated 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
March 31,
Six Months Ended March 31,
2024202320242023
Revenue$280,652 $405,110$528,034 $614,564 
Revenue from related parties342,489 293,076459,063 394,082 
Total revenue623,141 698,186987,097 1,008,646 
Cost of goods and services558,961 667,373886,531 965,793 
Gross profit64,180 30,813100,566 42,853 
Operating expenses:
Research and development17,427 22,55132,867 41,713 
Sales and marketing15,792 10,40126,498 19,193 
General and administrative44,067 31,77881,795 63,045 
Depreciation and amortization2,482 2,6694,965 5,093 
Interest income, net(1,261)(2,075)(3,254)(2,731)
Other expense (income), net
215 3,012(972)(8,130)
Loss before income taxes(14,542)(37,523)(41,333)(75,330)
Income tax benefit(1,666)(126)(2,901)(740)
Net loss$(12,876)$(37,397)$(38,432)(74,590)
Net loss attributable to non-controlling interest$(3,707)$(12,542)$(12,520)(25,093)
Net loss attributable to Fluence Energy, Inc.$(9,169)$(24,855)$(25,912)$(49,497)
Weighted average number of Class A common shares outstanding
Basic and diluted126,843,301 116,266,838123,962,636115,825,339 
Loss per share of Class A common stock
Basic and diluted$(0.07)$(0.21)$(0.21)$(0.43)
Foreign currency translation (loss) gain, net of income tax expense (benefit) of $(0.2) million in the three months ended March 31, 2024, $0.1 million in the six months ended March 31, 2024, and $0.1 million in the three months ended March 31, 2023, and $0.4 million six months ended March 31, 2023
(1,603)(1,469)32 (5,054)
Total other comprehensive (loss) income
$(1,603)$(1,469)$32 $(5,054)
Total comprehensive loss$(14,479)$(38,866)$(38,400)$(79,644)
Comprehensive loss attributable to non-controlling interest(4,170)$(13,036)$(12,527)$(26,798)
Total comprehensive loss attributable to Fluence Energy, Inc.$(10,309)$(25,830)$(25,873)$(52,846)

The accompanying notes are an integral part of these condensed consolidated statements
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FLUENCE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
(U.S. Dollars in Thousands, except Shares)
Class A
Common Stock
Class B-1
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
 Income
Treasury StockNon-Controlling
interest
Total stockholders’ equity
SharesAmountSharesAmountSharesAmount
Balance at December 31, 2023126,967,942 $1 51,499,195  $610,230 $(190,907)$4,382 689,974 $(7,797)$123,246 $539,155 
Net Loss
— — — — — (9,169)— — — (3,707)(12,876)
Stock-based compensation expense205,863 — — — 6,616 — — — — — 6,616 
Class A common stock withheld related to settlement of employee taxes for stock-based compensation awards
(4,449)— — — — — — 4,449 (88)— (88)
Effect of remeasurement of non-controlling interest due to other share transactions— — — — 415 — — — — (415) 
Proceeds from exercise of stock options218,182 — — — 532 — — — — — 532 
Foreign currency translation gain, net of income tax benefit of $0.2 million
— — — — — — (1,141)— — (462)(1,603)
Balance at March 31, 2024127,387,538 $1 51,499,195  $617,793 $(200,076)$3,241 694,423 $(7,885)$118,662 $531,736 


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Class A
Common Stock
Class B-1
Common Stock
Additional
Paid-In
Capital
Accumulated DeficitAccumulated
Other
Comprehensive
 Income
Treasury StockNon-Controlling
interest
Total stockholders’ equity
SharesAmountSharesAmountSharesAmount
Balance at September 30, 2023118,903,435 1 58,586,695  581,104 (174,164)3,202 689,974 (7,797)153,984 556,330 
Net Loss— — — — (25,912)— — — (12,520)(38,432)
Stock-based compensation expense375,663 — — — 12,246 — — — — — 12,246 
Effect of AES redemption of Class B-1 common stock for Class A common stock7,087,500 — (7,087,500)— 21,428 — — — — (21,428) 
Class A common stock withheld related to settlement of employee taxes for stock-based compensation awards
(4,449)— — — — — — 4,449 (88)— (88)
Effect of remeasurement of non-controlling interest due to other share transactions354,134 — — — 1,367 — — — — (1,367) 
Proceeds from exercise of stock options671,255 — — — 1,648 — — — — — 1,648 
Foreign currency translation loss, net of income tax expense of $0.1 million
— — — — — — 39 (7)32 
Balance at March 31, 2024127,387,538 $1 51,499,195  $617,793 $(200,076)$3,241 694,423 $(7,885)$118,662 $531,736 

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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
SharesAmountSharesAmountSharesAmount
Balance at December 31, 2022116,072,991 1 58,586,695  554,924 (129,186)410 572,251 (5,301)178,169 599,017 
Net Loss— — — — — (24,855)— — — (12,542)(37,397)
Stock-based compensation expense127,576 — — — 7,286 — — — — — 7,286 
Effect of remeasurement of non-controlling interest due to other share transactions— — — — 454 — — — — (454) 
Proceeds from exercise of stock options285,893 — — — 558 — — — — — 558 
Foreign currency translation loss, net of income tax expense of $0.1 million
— — — — — — (975)— — (494)(1,469)
Balance at March 31, 2023116,486,460 $1 58,586,695  $563,222 $(154,041)$(565)572,251 $(5,301)$164,679 $567,995 
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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
SharesAmountSharesAmountSharesAmount
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— — — — — (49,497)— — — (25,093)(74,590)
Stock-based compensation expense308,260 — — — 15,763 — — — — — 15,763 
Class A common stock withheld related to settlement of employee taxes for stock-based compensation awards
(21,347)— — — — — — 21,347 (288)— (288)
Effect of remeasurement of non-controlling interest due to other share transactions— — — — 1,901 — — — — (1,901) 
Proceeds from exercise of stock options1,326,426 — — — 2,956 — — — — — 2,956 
Foreign currency translation loss, net of income tax expense of $0.4 million
— — — — — — (3,349)— — (1,705)(5,054)
Balance at March 31, 2023116,486,460 $1 58,586,695  $563,222 $(154,041)$(565)572,251 $(5,301)$164,679 $567,995 
The accompanying notes are an integral part of these condensed consolidated statements
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FLUENCE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(U.S. Dollars in Thousands)
Six Months Ended March 31,
20242023
Operating activities
Net loss$(38,432)$(74,590)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization5,971 5,093 
Amortization of debt issuance costs1,037 457 
Inventory provision (benefit)13,970 (422)
Stock-based compensation expense12,266 15,763 
Deferred income taxes295 (1,276)
Changes in operating assets and liabilities:
Trade receivables, net9,753 (244,433)
Unbilled receivables59,869 (8,756)
Receivables from related parties1,941 23,683 
Advances to suppliers(36,504)(3,793)
Inventory(96,382)(103,464)
Other current assets(47,890)3,148 
Other non-current assets14,337 (292)
Accounts payable181,142 93,447 
Deferred revenue and payables with related parties(57,469)(112,586)
Deferred revenue114,568 300,007 
Current accruals and provisions(12,861)(77,681)
Taxes payable(9,646)3,702 
Other current liabilities1,643 10,511 
Other non-current liabilities(27,360)8,071 
Net cash provided by (used in) operating activities90,248 (163,411)
Investing activities
Proceeds from maturities of short-term investments 41,603 
Payments for purchase of investment in joint venture (5,013)
Capital expenditures on software(5,018) 
Purchase of property and equipment(2,473)(1,087)
Net cash (used in) provided by investing activities(7,491)35,503 
Financing activities
Class A common stock withheld related to settlement of employee taxes for stock-based compensation awards
(88)(288)
Debt Issuance Costs(4,299) 
Payments for acquisitions(3,892) 
Proceeds from exercise of stock options1,648 2,956 
Proceeds from borrowing against note receivable - pledged as collateral 21,142 
Net cash (used in) provided by financing activities(6,631)23,810 
Effect of exchange rate changes on cash and cash equivalents2,625 (13,042)
Net increase (decrease) in cash, cash equivalents, and restricted cash78,751 (117,140)
Cash, cash equivalents, and restricted cash as of the beginning of the period462,731 429,721 
Cash, cash equivalents, and restricted cash as of the end of the period$541,482 $312,581 
Supplemental Cash Flows Information
Interest paid$1,098 $511 
Cash paid for income taxes$1,309 $585 
The accompanying notes are an integral part of these condensed consolidated 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 for the period ended March 31, 2024 (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 are 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., pay income taxes with respect to their allocable shares of its net taxable income. As of March 31, 2024, Fluence Energy, LLC had subsidiaries operating in Germany, Australia, Philippines, Chile, the Netherlands, the United States, India, Singapore, United Kingdom, Canada, Taiwan, Ireland, 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.
The Company’s fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2023” and “fiscal year 2024” refer to the twelve months ended September 30, 2023 and September 30, 2024, respectively.
The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The Company’s CODM reviews financial information on a 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.
Siemens Industry Redemption
On June 30, 2022, Siemens Industry exercised its redemption right pursuant to the terms of the Third Amended and Restated Limited Liability Company Agreement of Fluence Energy, LLC (the “LLC Agreement”) with respect to its entire holding of 58,586,695 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of Class B-1 common stock of Fluence Energy, Inc. (the “Siemens Redemption”). The Company elected to settle the Siemens Redemption through the issuance of 58,586,695 shares of the Company’s Class A common stock. The Siemens Redemption settled on July 7, 2022.
The Siemens Redemption increased the beneficial ownership interest of the Company in Fluence Energy, LLC to 66.08% as of June 30, 2022. The impact of the change in ownership interest did not result in a change in control. The Siemens Redemption has been accounted for as an equity transaction and the carrying amount of non-controlling interest has been adjusted.
Secondary Offering and AES Redemption
On December 8, 2023, AES Grid Stability, Siemens Pension-Trust e.V. (“Siemens Pension Trust”), and Qatar Holding LLC (“QHL” and together with AES Grid Stability and Siemens Pension Trust in such context, the “Selling Stockholders”) closed an underwritten public offering (the “Offering”) of 18,000,000 shares of Class A common stock of the Company by the Selling Stockholders. The Company did not sell any of its shares of Class A common stock in the Offering and the Company did not receive any proceeds from the Offering. Pursuant to the terms of the Company’s Registration Rights Agreement, dated as of November 1, 2021, by and among the Company and the Original Equity Owners (as defined therein), the Company paid $0.7 million in certain expenses of the Selling Stockholders related to the Offering, while the Selling Stockholders paid all applicable underwriting discounts and commissions.
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In conjunction with the Offering, AES Grid Stability exercised its redemption right pursuant to the terms of the LLC Agreement with respect to 7,087,500 LLC Interests held by AES Grid Stability, together with the corresponding cancellation of an equivalent number of shares of Class B-1 common stock of the Company (the “AES Redemption”). The Company elected to settle the AES Redemption through the issuance of 7,087,500 shares of the Company’s Class A common stock. The AES Redemption settled on December 8, 2023. All of the 7,087,500 shares issued to AES Grid Stability in connection with the AES Redemption were sold in the Offering.
The AES Redemption increased the beneficial ownership interest of the Company in Fluence Energy, LLC to 71.12% as of December 8, 2023. The impact of the change in ownership interest did not result in a change in control. The AES Redemption has been accounted for as an equity transaction and the carrying amount of the non-controlling interest has been adjusted. Refer to “condensed consolidated statements of changes in stockholders’ equityincluded herein for more information on the impacts of the redemption to stockholder’s equity.
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
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 71.21% interest as of March 31, 2024. 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. The table below summarizes the ownership structure at the end of each respective period:
March 31, 2024September 30, 2023
Controlling Interest Ownership71.21 %66.99 %
Non-Controlling Interest Ownership (AES)28.79 %33.01 %
Unaudited Interim Financial Information
The accompanying condensed consolidated financial statements as of March 31, 2024, and for the three and six months ended March 31, 2024 and 2023 are unaudited. These financial statements should be read in conjunction with the Company’s audited financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2023 filed with the SEC on November 29, 2023 (the “2023 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 March 31, 2024, the results of its operations for the three and six months ended March 31, 2024 and 2023, and its cash flows for the six months ended March 31, 2024 and 2023. The financial data and other information disclosed in these notes related to the three and six months ended March 31, 2024 and 2023 are also unaudited. The results for the three and six months ended March 31, 2024 and 2023 are not necessarily indicative of results for the full year ending September 30, 2024 and 2023, any other interim periods, or any future year or period. The balance sheet as of September 30, 2023 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted in the interim financial statements.
For a complete description of our significant accounting policies, refer to “Note 2 - Summary of Significant Accounting Policies and Estimatesin the audited consolidated financial statements included in our 2023 Annual Report.
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
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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 non-current 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.
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
March 31, 2024September 30, 2023
Cash and cash equivalents$411,798 $345,896 
Restricted cash
106,605 106,835 
Restricted cash included in “Other non-current assets”23,079 10,000 
Total cash, cash equivalents and restricted cash
$541,482 $462,731 
Restricted cash at the end of each respective period consisted of the following:
in thousands
March 31, 2024September 30, 2023
Collateral for credit card program
$2,808 $2,644 
Collateral for outstanding bank guarantees
94,293 102,586 
Collateral for surety program
9,396  
Term deposits
108 1,605 
Collateral for surety program included in “Other non-current assets”23,079 10,000 
Total restricted cash
$129,684 $116,835 
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 March 31, 2024, the Company’s revenue was generated primarily from the sale of energy storage products and solutions, providing operational services, and the sale of 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 and build battery-based energy storage products. Each storage product 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 (“LDs”) 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 storage products are determined to have one performance obligation. When shipping and handling activities are performed after the customer obtains control of the product, we elect to account for shipping and handling as activities to fulfill the promise to transfer the product.
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The Company recognizes revenue over time as we transfer control of our product to the customer. This transfer of control to the customer is supported by clauses in the contracts, that provides 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 as the project is built and control transfers depending on the contract terms.
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 (including batteries, enclosures, chillers, and others, which are assembled into “cubes”) 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. Due to the significance of the costs associated with cubes, our judgment on when such costs should be included in the measure of progress has a material impact on revenue recognition. 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 future 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 against Fluence in the event specified milestones are not met on time, or equipment is not delivered according to contract specifications. Liquidated damages are accounted for as variable consideration, and the contract price is reduced by the expected penalty or LD amount when 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 performance contractual 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.
Fluence may 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 change order with the customer. When this fact pattern occurs, it can 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. Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities.
For our sale of energy storage products and solutions, services, and digital applications contracts where there are multiple performance obligations in a single contract or we sign separate contracts at or near the same time with the same customer that meet the criteria for combination, the Company allocates the consideration to the various obligations in the contract based on the relative standalone selling price. Standalone selling prices are estimated based on estimated costs plus margin taking into consideration pricing history and market factors.
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 customers. We typically recognize revenue overtime 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. Revenue is recognized by dividing the total transaction price over the service period.
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Some of these agreements also provide a commitment to perform certain augmentation activities which could require us to install 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 other contracts provide a fixed number of augmentations over a contract term. Augmentation arrangements that require us to maintain battery capacity above established thresholds for a given term may be considered service-type warranties depending on the respective contract terms. These represent a stand-ready obligation in which the customer benefits evenly overtime, for which we 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 we must perform, 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: The Company provides access to proprietary cloud-based Software-as-a-Service (“SaaS”) offerings through several market facing applications. These applications currently include Fluence Mosaic and Fluence Nispera. Fluence Mosaic is an intelligent bidding software for utility-scale storage and renewable assets, helping to enable customers to optimize asset trading in wholesale electricity markets. Fluence Mosaic is currently available in the NEM (Australia), CAISO (California), and ERCOT (Texas) markets. Fluence Nispera is an asset performance management (APM) software that helps customers monitor, analyze, forecast, and optimize the performance of their renewable energy assets. Fluence Nispera is an AI-driven utility-scale asset performance management platform that supports portfolios of energy storage, solar, and wind assets. Customers do not receive legal title or ownership of the applications as a result of these arrangements. The use of the Fluence Digital software applications is separately identifiable from other promises that the Company offers to its customers. As such, Fluence Digital applications are accounted for as separate performance obligations when combined with other Fluence products, solutions, and services. We consider access to the 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.
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 a 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 cubes, batteries and equipment, enclosures, 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 usefulness and marketability conditions.
Software Development Costs
Our software development costs primarily relate to three categories: (i) internal-use software development costs, (ii) hosting arrangements which are service contracts, and (iii) 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.
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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 (i) SaaS customer offerings and is amortized to “Cost of goods and services” and (ii) internally developed solutions and are amortized to “General and administrative.” The useful life of our internal-use software development costs is generally 3 to 5 years.
During the six months ended March 31, 2024 and March 31, 2023, the Company capitalized $4.0 million and $0.0 million, respectively, of internal-use software.

Internal-use software development costs associated with hosting arrangements are capitalized during the application development stage. These are generally cloud-computing arrangements that are service contracts. The capitalized costs are reflected in “Other non-current assets” on the consolidated balance sheets and are amortized to “General and administrative” once ready for intended use over the estimated useful life of the hosted software. The useful life of our internal-use software development costs associated with hosting arrangements is generally the period the Company expects to benefit from its right to access the hosted software plus consideration for any renewal or cancellation periods.
During the six months ended March 31, 2024 and March 31, 2023, the Company capitalized $13.0 million and $0.0 million, respectively, of development costs related to hosting arrangements.
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 six months ended March 31, 2024 and March 31, 2023, the Company capitalized $1.0 million and $0.0 million, respectively, 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:
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 such as current portion of borrowings against note receivable - pledged as collateral, approximate fair values due to their short maturities.

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Loss per Share
As of March 31, 2024, 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 loss per share is calculated for each class of common stock considering both distributions declared or accumulated and participation rights in undistributed losses as if all such loss had been distributed during the period.
Basic 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 for cash or Class A common stock, at the Company’s election, 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 March 31,
Six Months Ended March 31,
2024202320242023
Class B-1 common stock51,499,195 58,586,695 51,499,195 58,586,695 
Outstanding pre-IPO options issued pursuant to the 2020 Unit Option Plan4,607,929 7,377,287 4,607,929 7,377,287 
Outstanding pre-IPO phantom units256,935 513,865 256,935 513,865 
Outstanding restricted stock units (“RSUs”)2,111,603 2,041,431 2,111,603 2,041,431 
Outstanding performance share units (“PSUs”)381,226  381,226  
Outstanding non-qualified stock options (“NQSOs”)165,521  165,521  
Outstanding restricted stock (“Nispera equity”)
354,134 531,202 354,134 531,202 
Basic and diluted net loss per share of Class A common stock for the three and six months ended March 31, 2024 and 2023, respectively, have been computed as follows:
Three Months Ended March 31,Six Months Ended March 31,
In thousands, except share and per share amounts2024202320242023
Net loss $(12,876)$(37,397)$(38,432)$(74,590)
Less: Net loss attributable to the non-controlling interest(3,707)(12,542)(12,520)(25,093)
Net loss attributable to Fluence Energy, Inc.$(9,169)$(24,855)$(25,912)$(49,497)
Weighted average number of Class A common stock - basic and diluted126,843,301 116,266,838 123,962,636 115,825,339 
Loss per share of Class A common stock - basic and diluted$(0.07)$(0.21)$(0.21)$(0.43)
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Recent Accounting Standards Adopted
The following table presents accounting standards adopted during the six months ended March 31, 2024.
StandardDescriptionPeriod of AdoptionEffect 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 ObligationsASU 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 roll forward of such obligations. This standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations.As of the three months ended December 31, 2023.The Company presented the key terms of its supply chain financing programs along with a roll forward of activity in “Footnote 16 - Supply Chain Financing.” There was no impact as a result of the adoption on financial statement presentation or results of operations for any period presented.
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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
ASU No. 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The update requires other specified segment items and amounts, such as depreciation, amortization, and depletion expense, to be disclosed under certain circumstances. The amendments in this update do not change or remove those disclosure requirements. The amendments in this update also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.ASU 2023-07 is effective for the Company’s annual report for fiscal year ending September 30, 2025.
The Company is evaluating the impact that this guidance will have on its disclosures. The Company only has one reportable segment.
ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures
ASU 2023-09 adopts certain amendments to improve the effectiveness of income tax disclosures, including jurisdictional information, by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid, disaggregated by jurisdiction.
ASU 2023-09 is effective for the Company’s annual report for fiscal year ending September 30, 2026.
The Company is evaluating the impact this guidance will have on income tax disclosures.
SEC Final Rule Release Nos. 33-11275; 34-99678: The Enhancement and Standardization of Climate-Related Disclosures for Investors
SEC Final Rule Release Nos. 33-11275; 34-99678 requires registrants to provide certain climate-related information in their registration statements and annual reports, including climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition. In addition, certain disclosures related to severe weather events and other natural conditions will be required in registrants’ annual reports.SEC Final Rule Release Nos. 33-11275; 34-99678 is effective for the Company’s annual report for fiscal year ending September 30, 2026.The Company is evaluating the impact this guidance will have on climate-related disclosures.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period presentation. Interest income of $3.2 million and $4.7 million for the three and six months ended March 31, 2023, respectively, was reclassified from other expense (income), net to interest income, net on the condensed consolidated statement of operations and comprehensive loss. The reclassification had no impact on loss before income taxes or net loss for any period presented. Provision on loss contracts, net of $2.0 million for the six months ended March 31, 2023, was reclassified to current accruals and provisions on the condensed consolidated statement of cash flows. The reclassification had no impact on cash provided by (used in) operations for the period presented.
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3.    Revenue from Contracts with Customers
Revenue is primarily derived from sales of our energy storage products and solutions. The following table presents the Company’s revenue disaggregated by product or service type:
In thousandsThree Months Ended March 31,Six Months Ended March 31,
2024202320242023
Revenue from energy storage products and solutions$613,736 $693,937 $970,678 $1,000,175 
Revenue from services8,066 3,090 13,812 6,531 
Revenue from digital applications and solutions1,339 1,159 2,607 1,940 
Total$623,141 $698,186 $987,097 $1,008,646 
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 March 31,Six Months Ended March 31,
2024202320242023
Americas (North, Central and South America)
$533,774 $557,197 $792,991 $733,668 
APAC (Asia Pacific)58,208 73,637 140,079 93,197 
EMEA (Europe, Middle-East, and Africa)31,159 67,352 54,027 181,781 
Total$623,141 $698,186 $987,097 $1,008,646 
Customer Concentration
For the six months ended March 31, 2024, the Company’s top two customers, in the aggregate, accounted for approximately 72% of total revenue.
For the six months ended March 31, 2023, the Company’s top three customers, in the aggregate, accounted for approximately 58% of total revenue.
Deferred Revenue
Deferred revenue from related parties is included in deferred revenue and payables 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 March 31,Six Months Ended March 31,
2024202320242023
Deferred revenue, beginning of period$382,832 $469,098 $273,164 $273,073 
Additions138,571 261,903 265,239 549,743 
Revenue recognized related to amounts that were included in beginning balance of deferred revenue(122,764)(146,576)(139,764)(238,391)
Deferred revenue, end of period$398,639 $584,425 $398,639 $584,425 
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In thousandsThree Months Ended March 31,Six Months Ended March 31,
2024202320242023
Deferred revenue from related parties, beginning of period$258,232 $350,895 $110,274 $300,697 
Additions21,156 51,860 29,602 140,390 
Revenue recognized related to amounts that were included in beginning balance of deferred revenue(232,694)(215,798)(93,182)(254,130)
Deferred revenue from related parties, end of period$46,694 $186,957 $46,694 $186,957 
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 March 31, 2024, the Company had $3.7 billion of remaining performance obligations related to contractual commitments, of which, we expect to recognize in revenue approximately 60% in the next 12 months, with the remainder recognized in revenue in periods thereafter.
Variable Consideration
As of March 31, 2024 and September 30, 2023, transaction prices have been reduced to reflect variable consideration of $81.8 million and $84.1 million, respectively. Variable consideration primarily relates to the Company’s customers’ rights to liquidated damages in the event a specified milestone has not been met or equipment is not delivered 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. In contracts in which a significant reversal may occur, we constrain the amount of revenue recognized based on our estimations using the expected-value method.
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4.    Inventory, Net
Inventory consisted of the following:
In thousands
March 31, 2024September 30, 2023
CostProvisionNetCostProvisionNet
Cubes, batteries, and other equipment
$318,374 $(13,971)$304,403 $221,711 $(105)$221,606 
Spare parts
4,932 (276)4,656 3,469 (172)3,297 
Total
$323,306 $(14,247)$309,059 $225,180 $(277)$224,903 

5.    Other Current Assets
Other current assets consisted of the following amounts:
In thousandsMarch 31, 2024September 30, 2023
Taxes recoverable$17,910 $16,411 
Advance payments1,007 1,102 
Prepaid expenses9,973 3,470 
Prepaid insurance7,712 674 
Derivative assets (a)
3,295 2,310 
Other5,970 7,107 
Total$45,867 $31,074 
(a) Derivative assets primarily 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 consisted of the following:
In thousands
March 31, 2024September 30, 2023
Cost
Accumulated
Amortization
Net
Cost
Accumulated
Amortization
Net
Patents and licenses$28,674 $(11,969)$16,705 $28,673 $(11,002)$17,671 
Developed technology
29,663 (6,485)23,178 29,430 (5,218)24,212 
Customer relationship
4,334 (1,611)2,723 4,277 (1,233)3,044 
Trade names/Trademarks
5,276 (3,655)1,621 5,265 (3,337)1,928 
Capitalized internal-use software10,478 (1,515)8,963 6,458 (762)5,696 
Capitalized software to be sold4,295 (313)3,982 3,266 (65)3,201 
Total
$82,720 $(25,548)$57,172 $77,369 $(21,617)$55,752 
Intangible assets are amortized over their estimated useful lives on a straight-line basis. Total amortization expense for the three months ended March 31, 2024 and 2023 was $1.7 million and $1.4 million, respectively. The amortization expense for the three months ended March 31, 2024 included $0.6 million for capitalized software. No capitalized software amortization expense was recorded for the three months ended March 31, 2023. Total amortization expense for the six months ended March 31, 2024 and 2023 was $3.9 million and $2.9 million, respectively. The amortization expense for the six months ended March 31, 2024 included $1.0 million for capitalized software. No capitalized software amortization expense was recorded for the six months ended March 31, 2023.
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7.    Goodwill
No impairment was recognized for the six months ended March 31, 2024 or 2023. The following table presents the goodwill activity for the six months ended March 31, 2024 and 2023:
In thousands
March 31,
20242023
Goodwill, Beginning of the period
$26,020 $24,851 
Foreign currency adjustment246 1,093 
Goodwill, End of the period
$26,266 $25,944 
8.Leases
The Company’s right-of-use assets and lease liabilities primarily relate to offices and warehouses. The Company’s leases generally have remaining lease terms of one year to three years. The Company's leases are all classified as operating leases. Certain of the Company’s leases contain renewal, extension, or termination options. The Company assesses each option on an individual basis and will only include options reasonably certain of exercise in the lease term. The Company generally considers the base term to be the term provided in the contract. None of the Company’s lease agreements contain material options to purchase the leased property, material residual value guarantees, or material restrictions or covenants.
The amounts of assets and liabilities and other information for our operating leases are as follows:
In thousandsBalance Sheet CaptionMarch 31, 2024September 30, 2023
Assets:
Right of use asset - operating leases
Other non-current assets
$5,162 $2,857 
Liabilities:
Current portion of operating lease liabilities
Other current liabilities
$2,785 $1,569 
Operating lease liabilities, net of current portion
Other non-current liabilities
2,512 1,334 
9.    Current Accruals and Provisions
Accruals mainly represent milestones not yet invoiced for inventory such as, but not limited to, 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 thousandsMarch 31, 2024September 30, 2023
Accruals
$133,251 $148,906 
Provisions for expected project losses
12,988 12,072 
Current portion of warranty accrual
13,374 11,245 
Total
$159,613 $172,223 
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10.    Debt
Revolving Credit Facility
On November 1, 2021, the Company entered into a credit agreement for a revolving credit facility (the “Revolver”), by and among Fluence Energy, LLC, as borrower, Fluence Energy, Inc., as parent guarantor, the subsidiary guarantors party thereto, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent and collateral agent (as amended, the “Revolving Credit Agreement”). The Revolver was 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 aggregate amount of commitments was $200.0 million. The Revolving Credit Agreement was terminated effective November 22, 2023, in conjunction with the entry into the ABL Credit Agreement (as further described below).
The Revolving Credit Agreement provided that borrowings under the Revolver bore interest at (i) with respect to loans comprising a Term Benchmark Borrowing (as defined in the Revolving Credit Agreement), the Adjusted Term SOFR Rate, the Adjusted EURIBOR Rate, or the AUD Rate (each as defined in the Revolving Credit Agreement), as applicable, plus 3.0%, (ii) with respect to loans comprising an ABR Borrowing (as defined in the Revolving Credit Agreement), the Alternate Base Rate (as defined in the Revolving Credit Agreement) plus 2.0%, or (iii) with respect to each RFR Loan (as defined in the Revolving Credit Agreement), the applicable Daily Simple RFR (as defined in the Revolving Credit Agreement) plus 3.1193%, in each instance subject to customary benchmark replacement provisions. Fluence Energy, LLC was required to pay to the lenders a commitment fee of 0.55% per annum on the average daily unused portion of the revolving commitments through maturity. The Revolver also provided for up to $200.0 million in letter of credit issuances, which required 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 Revolving Credit Agreement contained covenants that, among other things, restricted 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. Under the terms of the Revolving Credit Agreement, Fluence Energy, LLC and its subsidiaries were limited in their ability to pay cash dividends to, lend to, or make other investments in Fluence Energy, Inc., subject to certain exceptions. In addition, we were required to maintain (i) minimum liquidity and gross revenue requirements, in each case, until consolidated EBITDA reached $150.0 million for the most recent four consecutive fiscal quarters and we made an election, and (ii) thereafter, a maximum total leverage ratio and a minimum interest coverage ratio. Such covenants were tested on a quarterly basis.
Asset-Based Lending Facility
On November 22, 2023, the Company entered into an asset-based syndicated credit agreement (the “ABL Credit Agreement”) by and among Fluence Energy, LLC, as parent borrower, Fluence Energy, Inc., as parent, the other borrowers party thereto, the other guarantors party thereto, the lenders party thereto (the “ABL Lenders”), and Barclays Bank PLC (“Barclays”), as administrative agent, which was amended by the Master Assignment and Assumption and Issuing Bank Joinder, effective December 15, 2023, Amendment No. 1, dated April 8, 2024 (“Amendment No. 1”), and Amendment No. 2, dated May 8, 2024 (“Amendment No. 2”), which provides for revolving commitments in an aggregate principal amount of $400.0 million (the "ABL Facility"). The ABL Facility is secured by (i) a first priority pledge of Fluence Energy, Inc.’s equity interests in Fluence Energy, LLC 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, Inc., Fluence Energy, LLC and Fluence Energy Global Production Operation, LLC, in each case, subject to customary exceptions and limitations. Borrowings under the ABL Facility will mature, and lending commitments thereunder will terminate, on November 22, 2027.
As of March 31, 2024, borrowing availability under the ABL Facility was determined by a borrowing base calculation that was based on specified percentages of U.S. eligible inventory, net orderly liquidation value of most recent inventory appraisal, and U.S. eligible in-transit inventory, less the aggregate amount of any reserves. Pursuant to the terms of Amendment No. 2, borrowing base calculation under the ABL Facility was expanded to also include borrowing base qualified cash, which is defined as the lesser of (a) the aggregate amount of cash (other than restricted cash) of the borrowers that is held in a specific borrowing base qualified cash account as of the applicable date of determination and (b) $100.0 million. After the deposit of any funds into the borrowing base qualified cash account, such funds are required to remain in the borrowing base qualified cash account subject to the satisfaction of certain conditions. The Company is obligated to provide a borrowing base certificate to lenders twenty days following the end of each calendar month, except during a reporting trigger period where it will provide such certificates on a weekly basis.
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Pursuant to Amendment No. 1, the ABL Credit Agreement was amended to provide that during the period from March 29, 2024 through and including May 10, 2024, to the extent that no event of default was outstanding under the ABL Credit Agreement and there was no aggregate revolving credit exposure by the ABL Lenders thereunder, then in the event of a full cash dominion period, Barclays was not required to initiate daily cash sweeps of the Company’s controlled accounts. During the full cash dominion period existing between March 29, 2024 and May 8, 2024, Barclays did not initiate any daily cash sweeps of the Company’s controlled accounts. After giving effect to Amendment No. 2, unless a Covenant Relief Period (as defined below) has occurred and is continuing, the ABL Credit Agreement provides for a full cash dominion period (a) if an event of default is occurring or (b) beginning on the date on which Excess Availability (as defined below) is less than the greater of (i) 12.5% of the Line Cap and (ii) if the borrowing base then in effect is (A) less than $200.0 million, $25.0 million and (B) greater than or equal to $200.0 million, $50.0 million. Upon entering into Amendment No. 2, the Company is no longer in a full cash dominion period as a Covenant Relief Period is currently in effect. Excess Availability is defined under the ABL Facility as an amount equal to (a) the lesser of (i) the total commitments of all ABL Lenders and (ii) the borrowing base, minus (b) total revolving extensions of credit then outstanding. Line Cap is defined under the ABL Facility as the lesser of the total commitments of the ABL Lenders and the borrowing base. Covenant Relief Period is defined under the ABL Facility as a period during which (a) no default or event of default has occurred and continuing and (b) either of the following shall exist: (i) the aggregate revolving credit exposure of the ABL Lenders is not greater than $0 or (ii) each of (A) the amount of aggregate borrowings under the ABL Facility is not greater than $0; (ii) the non-cash collateralized LC exposure (as defined under the ABL Credit Agreement) is not greater than $15.0 million, and (C) the borrowing base exceeds the sum of all lenders’ letter of credit exposure.
In addition, Amendment No. 1 amended the ABL Credit Agreement to provide that during the period from March 29, 2024 through and including May 10, 2024, to the extent that there was no aggregate revolving credit exposure by the ABL Lenders thereunder, then the amount of required Excess Availability was zero. After giving effect to Amendment No. 2, the Company agreed that it will not, and its subsidiaries will not, permit Total Liquidity (as defined in the ABL Credit Agreement) at any time to be less than the greater of (i) 20% of the Line Cap then in effect and (ii) (A) if the borrowing base then in effect is less than $200.0 million, $50.0 million and (B) if the borrowing base then in effect is greater than or equal to $200.0 million, $64.0 million. In addition, unless a Covenant Relief Period is then in effect, the Company agreed that it will not, and its subsidiaries will not, permit Excess Availability at any time to be less than the greater of (i) $15.0 million and (ii) 10% of the Line Cap then in effect.
The ABL Credit Agreement sets forth that (i) loans comprising each ABR Borrowing (as defined in the ABL Credit Agreement) shall bear interest at the Alternate Base Rate (as defined in the ABL Credit Agreement) plus an additional margin ranging from 1.00% to 1.50%, (ii) loans comprising each Canadian Prime Loan Borrowing (as defined in the ABL Credit Agreement) shall bear interest at the Canadian Prime Rate (as defined in the ABL Credit Agreement) plus an additional margin ranging from 1.00% to 1.50%, and (iii) the loans comprising each Term Benchmark Borrowing (as defined in the ABL Credit Agreement) shall bear interest at the Adjusted Term SOFR Rate, the Adjusted EURIBOR Rate or Adjusted Term CORRA (each as defined in the ABL Credit Agreement), as applicable, plus an additional margin ranging from 2.00% to 2.50%, in each instance subject to customary benchmark replacement provisions. Fluence Energy, LLC is required to pay to the ABL Lenders a commitment fee on the average daily unused portion of the commitments through maturity, which shall accrue at the rate of (a) until the last day of the first full calendar quarter following the closing of the ABL Facility, 0.450% per annum, and (b) thereafter, 0.450% per annum if average revolving loan utilization is less than or equal to 50% and 0.375% per annum if average revolving loan utilization is greater than 50%. The ABL Facility also provides for a letter of credit sublimit in the amount of $200.0 million, if certain conditions are met. Each letter of credit issuance will be conditioned upon, among other conditions, the payment of certain customary issuance and administration fees, as well as payment of a fronting fee to each issuer thereof and payment of a letter of credit participation fee payable to the ABL Lenders.
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The ABL Credit Agreement contains customary covenants for this type of financing, including, but not limited to, covenants that restrict our ability to incur indebtedness; incur liens; sell, transfer, or dispose of property and assets; make investments or acquisitions; pay dividends, make distributions or other restricted payments; and engage in affiliate transactions. The ABL Credit Agreement limits our ability to make certain payments, including dividends and distributions on Fluence Energy, LLC’s equity, the Company’s equity and other restricted payments. Under the terms of the ABL 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. In addition, if certain payment conditions under the ABL Credit Agreement are satisfied, including the satisfaction of a minimum excess availability requirement, then additional specified transactions may be made by the Company and its subsidiaries. Such covenants will be tested on a quarterly basis and upon certain restricted payments, the incurrence of indebtedness, certain dispositions, and other specified transactions. As of March 31, 2024, giving effect to the terms of Amendment No. 1, we were in compliance with all such applicable covenants or maintained availability above such covenant triggers. As of the date of this Report, giving effect to the terms of Amendment No. 2, we are in a Covenant Relief Period and to the extent applicable and required during a Covenant Relief Period, we are in compliance with any such applicable covenants or maintained availability above such applicable covenant triggers.
As of each of March 31, 2024 and the date of this Report, we had no borrowings under the ABL Facility and no letters of credit outstanding. Based on the borrowing base certificate in effect on each of March 31, 2024 and the date of this Report, we had $0.9 million of borrowing capacity and no borrowing capacity under the ABL Facility, respectively, in each case giving effect to the applicable terms of the ABL Credit Agreement then in effect.
Borrowings Against Note Receivable - Pledged as Collateral
In December 2022, the Company transferred $24.3 million in customer receivables to Standard Chartered 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 a maturity date of September 30, 2024. In April 2023, the Company 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 the Company did not transfer the entire note receivables due from the customer to SCB. The Company continues 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. The Company has no other continuing involvement or exposure related to the underlying receivables. For the six months ended March 31, 2024, the Company recorded net interest income of $0.2 million, which represents the aggregate of $2.3 million in interest income and $2.1 million in interest expense recorded in “Interest income, net.”
11.    Income Taxes
The Company’s provision for income taxes is based on the estimated annual effective tax rate, plus discrete items.
Income tax benefit was $1.7 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The effective tax rate for the three months ended March 31, 2024 and 2023 was 11.5% and 0.3%, respectively. For the three months ended March 31, 2024, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to valuation allowances. For the three months ended March 31, 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 Founders, valuation allowances, and foreign exchange gains.
Income tax benefit was $2.9 million and $0.7 million for the six months ended March 31, 2024 and 2023, respectively. The effective tax rate for the six months ended March 31, 2024 and 2023 was 7.0% and 1.0%, respectively. For the six months ended March 31, 2024, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to valuation allowances. For the six months ended March 31, 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 Founders, valuation allowances, and foreign exchange gains.
As of each of March 31, 2024 and September 30, 2023, the Company does not believe it has any significant uncertain tax positions and therefore, has not recorded any unrecognized tax benefits.
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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 March 31, 2024 and September 30, 2023, 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. In the event that the valuation allowance related to tax benefits associated with the Company’s Tax Receivable Agreement, dated as of November 1, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC and the Founders (the “Tax Receivable Agreement”) is released in a future period, a Tax Receivable Agreement liability will be recorded based on the amounts probable and reasonably estimable in accordance with ASC 450.
12.    Commitments and Contingencies
Guarantees, Commitments, Letter of Credits, and Surety Bonds
As of March 31, 2024, the Company had outstanding bank guarantees, parent company guarantees, letters of credit, and surety bonds issued as performance security arrangements associated with a number of our customer projects. In addition, we have a limited number of parent company guarantees issued as payment security to certain vendors. These contractual commitments are all accounted for off-balance sheet. In the event that we fail to perform under a project backstopped by such credit support, the customer or vendor, respectively, may demand performance and/or payment, as applicable, pursuant to the terms of the project contract or vendor contract and applicable credit support instrument from the Company, surety, or bank, as the case may be. Our relationship with our sureties is such that we will indemnify the sureties for any damages and expenses they incur in connection with any of the bonds they issue on our behalf and we may be required to post collateral to support the bonds. With respect to letters of credit, in the event of non-performance under a contract, direct obligations to repay the banks may arise. The Company expects that its performance and payment obligations secured by these bank guarantees, parent company guarantees, letters of credit, and surety bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms.
The following table summarizes our contingent contractual obligations as of March 31, 2024. Amounts presented in the following table represent the Company's current undiscounted exposure to guarantees, commitments, letters of credit, and surety bonds 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, commitments, letters of credit, and surety bonds.
Amount
(in $ millions)
Number of Agreements
Maximum Exposure Range for Each Agreement (in $ millions)
Guarantees and commitments$1,95453
$0.1 - 445.8
Letters of credit under bilateral credit facilities (a)
8731
0 - 29.5
Letters of credit under ABL Credit Agreement
0 - 0
Surety bonds64853
0 - 81.9
Total$2,689137
(a) In conjunction with the termination of the Revolving Credit Agreement on November 22, 2023 (as described above in “Note 10 – Debt”), the outstanding letters of credit under the terminated agreement were transferred to a bilateral credit facility with JP Morgan Chase Bank, N.A.
The Company has commitments for minimum volumes or spend under master supply agreements with our vendors. The majority of the commitments are for purchases of battery modules. Liquidated damages apply if the minimum purchase volumes or spend are not met. The Company currently expects to meet the minimum committed volumes of
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purchases and spend. The following table presents our future minimum purchase commitments by fiscal year, primarily for battery modules, and liquidated damages, if the minimum purchase volumes or spend are not met, as of March 31, 2024:
in thousandsPurchase CommitmentsLiquidated Damages
2024$45,389 $ 
2025336,841 8,970 
2026753,083 16,200 
2027750,000 16,200 
2028 and thereafter2,250,000 48,600 
Total$4,135,313 $89,970 

The Company makes advance payments as capacity guarantees pursuant to purchase agreements with our suppliers. As of March 31, 2024, $23.4 million is recorded within “Advances to suppliers” and $42.0 million is recorded in advances to suppliers within “Other non-current assets” on the condensed balance sheets.
Negotiations with our Largest Battery Module Vendor
In December 2021, the Company entered negotiations with our largest battery module vendor to amend the battery supply agreement. As part of the discussions, the vendor sought to renegotiate the price the Company would 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, the Company also discussed settlement of contractual claims by Fluence to the vendor. These negotiations continued throughout calendar year 2022. On December 15, 2022, the Company finalized an agreement with the vendor, amending the supply agreement and resolving Fluence’s claims. The approximately $19.5 million settlement for the Company’s claims was recognized as a reduction of costs of goods and services for the six months ended March 31, 2023.
Product Performance Guarantees
Typical energy storage products and solutions contracts and long-term service agreements contain provisions for performance liquidated damages payments if the energy storage solution fails to meet the guaranteed performance thresholds at completion of the project or throughout the service agreement period.
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 a straight-line approach.

The Company provides a limited warranty related to the successful operation of battery-based energy storage 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. For assurance-type warranties, the Company records an estimate of future warranty cost over the period of construction, consistent with transfer of control and revenue recognition on the equipment or battery-based energy storage products. Furthermore, we accrue the estimated liability cost of specific reserves or recalls when they are probable and estimable if identified. Warranty expense is recorded as a component of “Costs of goods and services” in the Company’s condensed consolidated statements of operations.

The Company’s assurance-type warranties are often backed by supplier covered warranties for major original equipment manufacturers (OEMs) such as batteries and inverters, which is included in our estimated warranty liability. The Company records a corresponding asset for a portion of the warranty cost to be covered by the supplier warranty due to the fact that the contracts are enforceable, the suppliers are financially viable, and we have a history of satisfying claims with our suppliers. The asset is recorded within “Other current assets” and “Other non-current assets” on the condensed consolidated balance sheets.
As of March 31, 2024 and September 30, 2023, the Company accrued the below estimated warranty liabilities, which the table reflects six months activity and twelve months activity, respectively:
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In thousandsMarch 31, 2024September 30, 2023
Warranty balance, beginning$26,909 1,625 
Warranties issued and assumed in period5,227 12,168 
Change in estimates 8,288 
Change in balance sheet presentation 10,307 
Net changes in liability for warranty expirations, costs incurred, and foreign exchange impact(1,799)(5,479)
Warranty balance, ending$