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 December 31, 2025 (this “Report”).
Fluence Energy, Inc. is 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 December 31, 2025, Fluence Energy, LLC had subsidiaries operating in Germany, Australia, Philippines, Chile, the Netherlands, the United States, India, Singapore, United Kingdom, Canada, Taiwan, Ireland, Japan, 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.
The Company’s fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2025” and “fiscal year 2026” refer to the twelve months ended September 30, 2025 and September 30, 2026, 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. The CODM uses gross margin, earnings before interest, taxes, depreciation and amortization (“EBITDA”) and consolidated net income to assess performance for the Company, monitor budget versus actual results, and determine how to allocate resources. The Company has concluded that consolidated net income (loss) as reported in the consolidated statements of operations is the measure of segment profit or loss. There are no other expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.
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 an interest as of December 31, 2025. 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:
| | | | | | | | | | | |
| December 31, 2025 | | September 30, 2025 |
| Controlling Interest Ownership | 71.97 | % | | 71.81 | % |
| Non-Controlling Interest Ownership (AES) | 28.03 | % | | 28.19 | % |
Unaudited Interim Financial Information
The accompanying condensed consolidated financial statements as of December 31, 2025, and for the three months ended December 31, 2025 and 2024 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, 2025 filed with the SEC on November 25, 2025 (the “2025 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 December 31, 2025, the results of its operations for the three months ended December 31, 2025 and 2024, and its cash flows for the three months ended December 31, 2025 and 2024. The financial data and other information disclosed in these notes related to the three months ended December 31, 2025 and 2024 are also unaudited. The results for the three months ended December 31, 2025 and 2024 are not necessarily indicative of results for the full year ending or ended September 30, 2026 and 2025, any other interim periods, or any future year or period. The balance sheet as of September 30, 2025 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 Estimates” in the audited consolidated financial statements included in our 2025 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 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; transaction price estimates with variable consideration; accrued bonuses; and various project-related provisions including, but not limited to, estimated losses and warranty obligations.
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 condensed consolidated balance sheets.
The Company typically retains cash for operations within one or more bank accounts. Our U.S. bank 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 any bank 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 | December 31, 2025 | | | | September 30, 2025 |
| Cash and cash equivalents | $ | 452,563 | | | | | $ | 690,768 | |
Restricted cash | 25,211 | | | | | 23,862 | |
| | | | | |
Total cash, cash equivalents and restricted cash | $ | 477,774 | | | | | $ | 714,630 | |
Restricted cash at the end of each respective period consisted of the following:
| | | | | | | | | | | | | |
in thousands | December 31, 2025 | | | | September 30, 2025 |
Collateral for credit card program | $ | 6,119 | | | | | $ | 6,112 | |
Collateral for outstanding bank guarantees | 8,555 | | | | | 7,309 | |
Collateral for surety program | 10,467 | | | | | 10,370 | |
Term deposits | 70 | | | | | 71 | |
| | | | | |
Total restricted cash | $ | 25,211 | | | | | $ | 23,862 | |
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 December 31, 2025, 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 Sale of 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 and solutions. Our projects have a lead time from date of contract execution to substantial completion, typically ranging from approximately twelve up to eighteen months. Generally, we must design the project, as each storage solution is customized depending on the customer’s energy needs, procure the major equipment, obtain manufacturing slots from our contract manufacturers, coordinate the logistics, and assemble the solution prior to delivery and installation at our customer project sites. These actions must be completed timely to adhere to customer schedules and milestones. Depending on the scope of the project we may be responsible for the installation of the equipment. After the equipment is installed, we are responsible for commissioning. The Company recognizes revenue over time when we have enforceable right to payment for work performed to date and the solution, in its completed state, does not have any alternative use to the Company. Revenue is recognized using the percentage of completion (“POC”) method based on actual cost incurred as a percentage of total estimated contract costs. Standard inventory materials (including batteries, enclosures, chillers, and others, which are assembled into “integrated systems”) are included in our measure of progress when they are restricted to a specific customer’s project such that we no longer have the ability to direct their use for other purposes. Contract costs include all direct material and labor costs related to contract performance. As the cost of the assembled integrated systems comprise a substantial portion of the total estimated contract costs, our pattern of revenue recognition may vary materially from period to period. Our judgment on when costs should be included in the measure of progress may have a material impact on revenue recognition.
Since the revenue recognition of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion. The cumulative effects of revisions of estimated total contract costs and revenues, together with any contract reserves which may be deemed appropriate, are recorded in the period in which they occur. Due to the uncertainties inherent in the estimation process, it is reasonably possible that these estimates will be revised in a different period.
The Company determines the transaction price based on the consideration expected to be received which includes estimates of variable consideration that are included in the transaction price in accordance with ASC 606. The transaction price identified is allocated to each distinct performance obligation to deliver a good or service based on the relative standalone selling prices. For our 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 transaction price 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. Generally, our revenues recognized are not sensitive to the Company’s determination of standalone selling prices
We assess any variable consideration using an expected value method which computes a weighted average amount based on a range of potential outcomes. 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 or if we will not meet certain performance specifications per the contract
Our contracts generally provide our customers the right to liquidated damages (“LDs”) against Fluence in the event specified milestones are not met on time or equipment is not delivered according to contract specifications. Liquidated damages are accounted for as variable consideration and the contract price is reduced by the expected LD amount when recognizing revenue. The existence and measurement of LDs 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 LDs is estimated using the expected value method.
Fluence may incur additional costs to execute on the performance of a contract. When this happens, we typically attempt to recover 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 proportionate revenue, since costs are recognized immediately when incurred and the revenue is recognized based upon the transaction price, which is usually increased upon signing a respective change order with the customer.
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.
Revenue is recorded net of any taxes assessed on and collected from customers, which are remitted to the governmental authorities.
Customer payments are due upon meeting certain milestones as defined in the contract, which are generally consistent with contract-specific phases of a project.
Pre-contract costs with no future benefit are expensed in the period in which they are incurred. Generally, pre-contract costs are not material.
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 extended warranty, maintenance, monitoring, and other services. The Company accounts for the services as separate performance obligations from the battery-based energy storage products and solutions. The extended warranty services are typically considered a separate performance obligation from the maintenance, monitoring and other services. We typically recognize revenue ratably over the terms of the services using a straight-line recognition method. The Company believes using a time-based method to measure progress is appropriate as the performance obligations are satisfied evenly over the terms of services. Revenue is recognized for each of the performance obligations by dividing the allocated transaction price over the service period.
Some of the agreements also provide a commitment to perform augmentation activities which would typically be represented by installation of additional batteries, and other components as needed, to compensate for partially lost capacity due to degradation of batteries over time. The obligation to perform augmentation activities can take the form of either maintaining battery capacity above a given threshold for a stated term while others provide a fixed number of augmentations over a contract term. Augmentation arrangements that require us to maintain battery capacity above established thresholds for a given term may be considered service-type warranties depending on the contract terms. These represent a stand-ready obligation in which the customer benefits evenly over time, of 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: 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), ERCOT (Texas), and Japan markets. Fluence Nispera is an asset performance management 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.
Deferred Revenue: Deferred revenue represents the excess billings to date over the amount of revenue recognized to date. The timing and the amount we bill our customer is based on achieving milestones as defined in the contract with the customer.
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 which is recorded in “Accruals and provisions” and “Cost of goods and services” on the Company’s consolidated balance sheets and consolidated statements of operations, respectively.
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 when goods are included in our measure of progress as progress relevant costs, which is when they are restricted to a specific customer’s project.
Inventory, Net
Inventory primarily consists of integrated systems, batteries and related equipment, enclosures, inverters, and spare parts which are used in ongoing battery storage product and solutions projects. 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.
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 condensed 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 “Depreciation and amortization.” The useful life of our internal-use software development costs is generally 3 to 5 years.
During the three months ended December 31, 2025 and 2024, the Company capitalized $2.4 million and $1.8 million, respectively, of internal-use software.
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 condensed 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 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, which is generally 5 to 7 years.
During the three months ended December 31, 2025 and 2024, the Company capitalized $1.0 million and $10.7 million, respectively, of software 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 condensed consolidated balance sheets and amortized to “Cost of goods and services” on a product basis by the greater of the straight-line method over the estimated economic life of the product or the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product. The useful life of our external-use software development costs is generally 5 years.
During the three months ended December 31, 2025 and 2024, the Company capitalized $1.2 million and $0.9 million, respectively, of external-use software to be sold.
Government Incentives and Grants
The Company is entitled to the Section 45X Advanced Manufacturing Production Tax Credit (the “AMPC”) provided by the IRA (which went into effect in 2023), as modified by the One Big Beautiful Bill Act (“OBBBA”) (which went into effect in 2025). The Company recognizes the production tax credits as a reduction to the related cost of goods and services, when there is reasonable assurance that the Company will be able to claim the credits (i.e., upon recognition of revenue and cost of goods and services related to the sold eligible equipment). During the three months ended December 31, 2025 and 2024 the Company recognized a reduction to cost of goods and services of $5.1 million and $0.0 million.
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 cash on hand and highly liquid investments readily convertible to cash, with an original maturity of 90 days or less when purchased. Fair value of cash equivalents approximates the carrying amount. The carrying amounts of trade receivables and accounts payable, approximate fair values due to their short maturities.
The fair value of the Company’s foreign currency derivatives is measured on a recurring basis by comparing the contracted forward exchange rate to the current market exchange rate. The foreign currency derivatives are categorized as Level 2 in the fair value hierarchy, as the inputs to the derivative pricing model are generally observable and do not contain a high level of subjectivity. Refer to “Note 18 – Derivatives and Hedging” for details regarding the Company’s derivatives and hedging activities.
The Company estimates the fair value of its 2030 Convertible Senior Notes (defined below) using commonly accepted valuation methodologies and market-based risk measurements that are directly observable, such as unadjusted quoted prices in markets that are not active (Level 2). Refer to “Note 12 – Convertible Senior Notes, Net” for further details.
Derivatives and Hedging
The Company records all derivatives at their gross fair values on the condensed consolidated balance sheets. The accounting for the gains or losses resulting from changes in the fair value of derivatives depends on the intended use of the derivatives, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.
Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges. The gains or losses from designated cash flow hedges are deferred in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The gains or losses will be presented in the same income statement line item as the earnings effect of the hedged item. The effectiveness of cash flow hedges is assessed at inception and quarterly thereafter. The change in fair value of the components excluded from the assessment of effectiveness are recognized in current period earnings. The changes in fair value of derivatives that are not designated for hedge accounting are recognized in current period earnings.
Convertible Senior Notes, Net
In December 2024, the Company issued $400.0 million aggregate principal amount of 2.25% convertible senior notes due 2030 (the “2030 Convertible Senior Notes”). The Company accounts for its 2030 Convertible Senior Notes as a liability in their entirety, measured at amortized cost. Debt issuance costs incurred in connection with the issuance of the Company’s 2030 Convertible Senior Notes are reflected in the condensed consolidated balance sheets as a direct deduction from the carrying amount of the outstanding 2030 Convertible Senior Notes. These costs are amortized using the effective
interest rate method over the terms of the 2030 Convertible Senior Notes and are included within interest expense on the condensed consolidated statements of operations.
In connection with the issuance of the 2030 Convertible Senior Notes, the Company entered into privately negotiated capped call transactions with certain counterparties. The capped call transactions are generally expected to offset the potential dilution to the Company’s Class A common stock upon any conversion of the 2030 Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap. Refer to “Note 12 – Convertible Senior Notes, Net” for further details.
Recent Accounting Standards Adopted
The following table presents accounting standards adopted during the three months ended December 31, 2025.
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| Standard | Description | Period of Adoption | Effect on the financial statements and other significant matters |
| Accounting Standards Update (“ASU”) No. 2025-12: Codification Improvements | ASU 2025-12 makes updates for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. | As of the three months ended December 31, 2025. | Issue 20: Clarify Guidance for the Transfer of Receivables from Contracts with Customers was early adopted by the Company and applied on the Company’s sale of receivables. Refer to “Note 19 – Sale of Receivables” for further details. |
Recent Accounting Standards Not Yet Adopted
The following table presents accounting standards not yet adopted:
| | | | | | | | | | | |
| Standard | Description | Required date of adoption | Effect on the financial statements and other significant matters |
| 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. |
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| ASU No. 2024-03: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | ASU 2024-03 requires disclosure of qualitative and quantitative information about certain costs and expenses in the notes to the financial statements on an interim and annual basis. ASU No. 2025-01: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, was subsequently issued and clarified the effective date of ASU 2024-03. | ASU 2024-03 is effective for the Company’s annual report for fiscal year ending September 30, 2028 and interim reporting periods beginning from January 1, 2028. | The Company is evaluating the impact this guidance will have on its disclosures. |
| ASU No. 2025-05: Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets | ASU 2025-05 amends ASC 326-20 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. | ASU 2025-05 is effective for the Company’s annual report for fiscal year ending September 30, 2027 and interim periods within that annual reporting period. | The Company is evaluating the impact this guidance will have on its disclosures. |
| ASU No. 2025-06: Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software | ASU 2025-06 makes targeted improvements to ASC 350-40 and amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The amendments supersede the guidance on Web site development costs in ASC 350-50 and relocate that guidance, along with the recognition requirements for development costs specific to Web sites, to ASC 350-40. | ASU 2025-06 is effective for the Company’s annual report for fiscal year ending September 30, 2029 and interim periods within that annual reporting period. | The Company is evaluating the impact this guidance will have on its disclosures. |
| ASU No. 2025-09: Derivatives and Hedging (Topic 815): Hedge Accounting Improvements | ASU 2025-09 amends certain aspects of the hedge accounting guidance in ASC 815. The amendments are intended to more closely align hedge accounting with the economics of an entity’s risk management activities. | ASU 2025-09 is effective for the Company’s annual report for fiscal year ending September 30, 2028 and interim periods within that annual reporting period. | The Company is evaluating the impact this guidance will have on its disclosures. |
| ASU No. 2025-10: Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities | ASU 2025-10 adds guidance to ASC 832 on the recognition, measurement, and presentation of government grants. In the absence of such guidance, many for-profit entities historically have analogized to other GAAP, including IAS 20 or ASC 958-605, when accounting for government grants. In developing the ASU’s recognition and measurement framework, the FASB largely leveraged the guidance in IAS 20. | ASU 2025-10 is effective for the Company’s annual report for fiscal year ending September 30, 2030 and interim periods within that annual reporting period. | The Company is evaluating the impact this guidance will have on its disclosures. |
| | | | | | | | | | | |
| ASU No. 2025-11: Interim Reporting (Topic 270): Narrow-Scope Improvements | ASU 2025-11 improves the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods and add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. | ASU 2025-11 is effective for the Company’s interim reports within fiscal year ending September 30, 2029. | The Company is evaluating the impact this guidance will have on its disclosures. |
| ASU No. 2025-12: Codification Improvements | ASU 2025-12 makes updates for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. | ASU 2025-12 is effective for the Company’s annual report for fiscal year ending September 30, 2028 and interim periods within that annual reporting period. Early adoption is permitted in both interim and annual reporting periods, and the Company may elect to early adopt the amendments on an issue-by-issue basis. | Issue 20 was early adopted by the Company and applied for the Company’s sale of receivables. The Company is evaluating the impact of other Issues in this guidance will have on its disclosures. |
3. Loss per Share
As of December 31, 2025, the Company has two classes of common stock outstanding, Class A and Class B-1. 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 earnings 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 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 common stock are not entitled to receive any distributions or dividends. When an LLC Interest of Fluence Energy, LLC is redeemed for cash or Class A common stock by a Founder who holds shares of our Class B-1 common stock, such Founder will be required to surrender a share of Class B-1 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 common stock in the computation of basic loss per share.
In periods in which we have a loss, 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:
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| Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
| Class B-1 common stock | 51,499,195 | | | 51,499,195 | | | | | |
| Shares underlying the conversion option in the 2030 Convertible Senior Notes | 18,738,880 | | | 18,738,880 | | | | | |
| Outstanding pre-IPO options issued pursuant to the 2020 Unit Option Plan | 1,739,395 | | | 2,928,143 | | | | | |
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| Outstanding restricted stock units (“RSUs”) | 2,081,778 | | | 2,914,001 | | | | | |
| Outstanding performance share units (“PSUs”) | 1,046,209 | | | 1,021,724 | | | | | |
| Outstanding non-qualified stock options (“NQSOs”) | 435,302 | | | 492,580 | | | | | |
Outstanding restricted stock (“Nispera equity”) | — | | | 177,067 | | | | | |
Basic and diluted income (loss) per share of Class A common stock for the three months ended December 31, 2025 and 2024, respectively, have been computed as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, |
| 2025 | | 2024 |
| In thousands, except share and per share amounts | Loss | | Shares | | $ per Share | | Loss | | Shares | | $ per Share |
| Basic loss per Share | | | | | | | | | | | |
| Net loss attributable to Fluence Energy, Inc. | $ | (45,070) | | | 131,522,223 | | | $ | (0.34) | | | $ | (41,466) | | | 129,482,668 | | | $ | (0.32) | |
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| Diluted loss per Share | | | | | | | | | | | |
| Net loss attributable to Fluence Energy, Inc | $ | (45,070) | | | 131,522,223 | | | $ | (0.34) | | | $ | (41,466) | | | 129,482,668 | | | $ | (0.32) | |
4. 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 thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
| Revenue from energy storage products and solutions | | $ | 450,881 | | | $ | 169,752 | | | | | |
| Revenue from services | | 22,489 | | | 15,666 | | | | | |
| Revenue from digital applications and solutions | | 1,864 | | | 1,370 | | | | | |
| Total | | $ | 475,234 | | | $ | 186,788 | | | | | |
The following table presents the Company’s revenue disaggregated by geographical region. Revenues are attributed to regions based on location of customers:
| | | | | | | | | | | | | | | | | | |
| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
Americas (North, Central, and South America) | | $ | 333,782 | | | $ | 97,341 | | | | | |
| APAC (Asia Pacific) | | 68,033 | | | 29,805 | | | | | |
| EMEA (Europe, Middle-East, and Africa) | | 73,419 | | | 59,642 | | | | | |
| Total | | $ | 475,234 | | | $ | 186,788 | | | | | |
Customer Concentration
For the three months ended December 31, 2025, the Company’s top three customers, in the aggregate, accounted for approximately 57% of total revenue.
For the three months ended December 31, 2024, the Company’s top two customers, in the aggregate, accounted for approximately 50% of total revenue.
Deferred Revenue
Deferred revenue from related parties is included in the Company’s condensed consolidated balance sheets. The following table provides information about deferred revenue from contracts with customers:
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| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
| Deferred revenue, beginning of period | | $ | 640,457 | | | $ | 274,499 | | | | | |
| Additions | | 306,679 | | | 342,560 | | | | | |
| Revenue recognized related to amounts that were included in beginning balance of deferred revenue | | (142,647) | | | (44,324) | | | | | |
| Deferred revenue end of period | | $ | 804,489 | | | $ | 572,735 | | | | | |
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| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
| Deferred revenue from related parties, beginning of period | | $ | 79,916 | | | $ | 38,162 | | | | | |
| Additions | | 15,235 | | | 2,351 | | | | | |
| Revenue recognized related to amounts that were included in beginning balance of deferred revenue | | (36,536) | | | (7,344) | | | | | |
| Deferred revenue from related parties, end of period | | $ | 58,615 | | | $ | 33,169 | | | | | |
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 December 31, 2025, the Company had $5.5 billion of remaining performance obligations related to contractual commitments, of which we expect to recognize in revenue approximately 57% to 62% in the next 12 months, with the remainder recognized in revenue in periods thereafter.
5. Inventory, Net
Inventory consisted of the following:
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| In thousands | December 31, 2025 | | September 30, 2025 |
| Cost | | Provision | | Net | | Cost | | Provision | | Net |
| Integrated Systems, batteries, and other equipment | $ | 541,684 | | | $ | (24,088) | | | $ | 517,596 | | | $ | 463,493 | | | $ | (30,891) | | | $ | 432,602 | |
Spare parts | 23,063 | | | (21) | | | 23,042 | | | 22,415 | | | (2) | | | 22,413 | |
Total | $ | 564,747 | | | $ | (24,109) | | | $ | 540,638 | | | $ | 485,908 | | | $ | (30,893) | | | $ | 455,015 | |
6. Other Current Assets
Other current assets consisted of the following amounts:
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| In thousands | | December 31, 2025 | | September 30, 2025 |
| Taxes recoverable | | $ | 28,637 | | | $ | 15,186 | |
| Prepaid expenses | | 26,982 | | | 21,667 | |
| Prepaid insurance | | 14,684 | | | 2,538 | |
Current portion of recoverable warranty costs from suppliers | | 9,386 | | | 8,585 | |
| Other | | 3,773 | | | 6,695 | |
| Total | | $ | 83,462 | | | $ | 54,671 | |
7. Intangible Assets, Net
Intangible assets are stated at amortized cost and consisted of the following:
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In thousands | | December 31, 2025 | | September 30, 2025 |
| Cost | | Accumulated Amortization | | Net | | Cost | | Accumulated Amortization | | Net |
| Patents and licenses | | $ | 28,853 | | | $ | (15,396) | | | $ | 13,457 | | | $ | 28,856 | | | $ | (14,911) | | | $ | 13,945 | |
Developed technology | | 32,025 | | | (11,619) | | | 20,406 | | | 31,932 | | | (10,910) | | | 21,022 | |
Customer relationship | | 4,850 | | | (3,266) | | | 1,584 | | | 4,825 | | | (3,035) | | | 1,790 | |
Trade names/Trademarks | | 5,383 | | | (4,803) | | | 580 | | | 5,379 | | | (4,640) | | | 739 | |
| Capitalized internal-use software | | 27,091 | | | (9,354) | | | 17,737 | | | 24,674 | | | (7,966) | | | 16,708 | |
| Capitalized software to be sold | | 12,289 | | | (2,320) | | | 9,969 | | | 11,109 | | | (1,910) | | | 9,199 | |
Total | | $ | 110,491 | | | $ | (46,758) | | | $ | 63,733 | | | $ | 106,775 | | | $ | (43,372) | | | $ | 63,403 | |
Intangible assets are amortized over their estimated useful lives on a straight-line basis. Total amortization expense for the three months ended December 31, 2025 and 2024 was $3.4 million and $2.3 million, respectively. The amortization expense for the three months ended December 31, 2025 and 2024 included $1.8 million and $1.3 million for capitalized software, respectively.
8. Goodwill
No impairment was recognized for the three months ended December 31, 2025 or 2024. The following table presents the goodwill activity for the three months ended December 31, 2025 and 2024:
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In thousands | | December 31, |
| 2025 | | 2024 |
Goodwill, Beginning of the period | | $ | 28,584 | | | $ | 27,482 | |
| Foreign currency adjustment | | 96 | | | (1,283) | |
Goodwill, End of the period | | $ | 28,680 | | | $ | 26,199 | |
9. Leases
The Company’s right-of-use assets and lease liabilities primarily relate to offices, warehouses, and production lines. The Company’s leases generally have remaining lease terms of one year to nine years. 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 operating 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 the Company’s operating and finance leases are as follows:
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| In thousands | | Balance Sheet Caption | | December 31, 2025 | | September 30, 2025 |
| Right-of-use assets: | | | | | | |
| Operating leases | | Other non-current assets | | $ | 9,783 | | | $ | 11,256 | |
| Finance leases | | Property and equipment, net | | 19,989 | | | 22,057 | |
| Total right-of-use assets | | | | 29,772 | | | 33,313 | |
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| Lease liabilities: | | | | | | |
| Operating leases | | Other current liabilities | | $ | 6,816 | | | $ | 6,789 | |
| | Other non-current liabilities | | 3,516 | | | 5,044 | |
| Finance leases | | Other current liabilities | | 2,554 | | | 3,492 | |
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| Total lease liabilities | | | | $ | 12,886 | | | $ | 15,325 | |
10. Accruals and Provisions
Accruals mainly represent milestones not yet invoiced for inventory such as, but not limited to, batteries, integrated systems, and inverters. Generally, 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. Accruals and provisions consisted of the following:
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| In thousands | | December 31, 2025 | | September 30, 2025 |
Accruals | | $ | 240,719 | | | $ | 203,410 | |
Accruals with related parties | | 942 | | | 6,353 | |
Accruals for software development costs | | 48 | | | 23 | |
Provisions for expected project losses | | 14,298 | | | 15,684 | |
Current portion of warranty accrual | | 22,017 | | | 20,765 | |
Total | | $ | 278,024 | | | $ | 246,235 | |
11. Debt
2024 Revolver
On August 6, 2024, Fluence Energy, Inc. entered into Amendment Number Three ("Amendment No. 3") to the ABL Credit Agreement by and among Fluence Energy, LLC, as parent borrower, the Company, as parent, the other borrowers party thereto, the other guarantors party thereto, the lenders party thereto, and Citibank, N.A., as administrative agent (as successor to Barclays Bank PLC) (such agreement, as so amended, the "2024 Credit Agreement") in order to (i) convert the ABL Facility to a senior secured cash flow revolving credit facility in an initial aggregate principal amount of up to $500.0 million (the "2024 Revolver"), (ii) replace Barclays Bank PLC as administrative agent under the 2024 Credit Agreement with Citibank, N.A., and (iii) make certain other modifications to the 2024 Credit Agreement as set forth therein. Capitalized terms used in this subsection that are not otherwise defined are defined in the 2024 Credit Agreement.
The 2024 Revolver is secured by (i) a first priority pledge of the Company's equity interests in Fluence Energy, LLC and Fluence Energy Global Production Operation, LLC, (ii) first priority security interests in substantially all tangible and intangible personal property of the Company, Fluence Energy, LLC, Fluence Energy Global Production Operation, LLC and certain of its foreign subsidiaries, in each case, subject to customary exceptions and limitations, and (iii) a pledge of the Company's equity interests in certain of its foreign subsidiaries and security interests in certain assets of such foreign subsidiaries.
The 2024 Credit Agreement sets forth that (i) loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus 2.00%, (ii) loans comprising each Term Benchmark Borrowing shall bear interest at the Term
SOFR Rate or the Adjusted EURIBOR Rate, as applicable, plus 3.00%, and (iii) the loans comprising each RFR Borrowing shall bear interest at the Daily Simple RFR plus 3.00%, in each instance subject to customary benchmark replacement provisions including, but not limited to, alternative benchmark rates, customary spread adjustments with respect to borrowings in foreign currencies, and benchmark replacement conforming changes. Fluence Energy, LLC is required to pay to the lenders a commitment fee on the average daily unused portion of the commitments through maturity, which shall accrue at the rate of 0.50% per annum. The 2024 Credit Agreement provides for a cash draw sublimit of $150.0 million as well as a letter of credit sublimit in the amount of $500.0 million if certain conditions are met.
The 2024 Credit Agreement contains customary covenants for this type of financing, including, but not limited to, covenants that restrict our and certain of our subsidiaries’ 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 2024 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 2024 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 the Company, subject to certain exceptions. In addition, we are required to maintain (i) through December 31, 2025, Total Liquidity of no less than $150,000,000, (ii) from January 1, 2026 and thereafter, Total Liquidity of no less than $100,000,000 or a Consolidated Leverage Ratio as of the last day of any Measurement Period not to exceed 3.50:1.00, and (iii) certain other financial requirements at each Guarantor Coverage Test Date. Such covenants are tested on a quarterly basis and upon the occurrence of other certain restricted payments, the incurrence of indebtedness, certain dispositions, and other specified transactions. As of December 31, 2025, we were in compliance with all such covenants.
The 2024 Credit Agreement contains customary events of default for this type of financing. If an event of default occurs with respect to a borrower, the lenders will be able to, among other things, terminate the commitments immediately, cash collateralize any outstanding letters of credit, declare any loans outstanding to be due and payable in whole or in part, and exercise other rights and remedies. The maturity date and the date of termination of lending commitments under the 2024 Credit Agreement both remain unchanged at November 22, 2027. As of December 31, 2025, there are no cash borrowings under the 2024 Revolver, and there are $121.7 million letters of credit outstanding under the 2024 Revolver, with remaining availability of $378.3 million, net of letters of credit issued.
12. Convertible Senior Notes, Net
2030 Convertible Senior Notes
In December 2024, the Company issued $400.0 million aggregate principal amount of 2.25% convertible senior notes due 2030. These 2030 Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of December 12, 2024, between the Company and UMB Bank, National Association, as trustee (the “Indenture”). The net proceeds from the issuance of the 2030 Convertible Senior Notes were $389.4 million, net of $10.6 million of debt issuance costs.
The 2030 Convertible Senior Notes are senior unsecured obligations of the Company and accrue interest at a rate of 2.25% per year, payable semi-annually in arrears, on June 15 and December 15 of each year, beginning on June 15, 2025. The 2030 Convertible Senior Notes will mature on June 15, 2030, unless earlier converted, redeemed, or repurchased. The 2030 Convertible Senior Notes have an initial conversion rate of 46.8472 shares of the Company’s Class A common stock per $1,000 principal amount of 2030 Convertible Senior Notes, which represents an initial conversion price of approximately $21.35 per share of the Company’s Class A common stock. The conversion rate is subject to customary adjustments upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. If a “make-whole fundamental change” (as defined in the Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time.
Prior to the close of business on the business day immediately preceding March 15, 2030, holders of the 2030 Convertible Senior Notes will have the right to convert their 2030 Convertible Senior Notes only upon satisfaction of one or more of the following conditions:
(1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on March 31, 2025, if the last reported sale price per share of the Company’s Class A common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
(2) during the five consecutive business days immediately after any 10 consecutive trading day period (the “measurement period”) if the ‘trading price’ per $1,000 principal amount of the 2030 Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s Class A common stock on such trading day and the conversion rate on such trading day;
(3) upon the occurrence of specified corporate events, as set forth in the Indenture; or
(4) if the Company calls any or all the 2030 Convertible Senior Notes for redemption, but only with respect to such 2030 Convertible Senior Notes called for redemption.
On or after March 15, 2030, holders may convert their 2030 Convertible Senior Notes at any time until the close of business on the second scheduled trading day immediately before June 15, 2030.
Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s Class A common stock, or a combination of both, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture.
The 2030 Convertible Senior Notes will be redeemable, in whole or in part (subject to the partial redemption limitation described in the Indenture), at our option at any time, and from time to time, on or after December 20, 2027 and on or before the 50th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2030 Convertible Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the 2030 Convertible Senior Notes are “freely tradable” (as defined in the Indenture), and all accrued and unpaid additional interest, if any, has been paid in full, as of the date we send the related redemption notice; and (ii) the last reported sale price per share of our Class A common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the redemption notice for such redemption; and (2) the trading day immediately before the date the Company sends such redemption notice. In addition, calling any 2030 Convertible Senior Note for redemption will constitute a make-whole fundamental change with respect to that 2030 Convertible Senior Note, in which case the conversion rate applicable to the conversion of that 2030 Convertible Senior Note will be increased in certain circumstances if it is converted after it is called for redemption.
No sinking fund is required to be provided for the 2030 Convertible Senior Notes. If a “fundamental change” (as defined in the Indenture) occurs prior to the maturity date of the 2030 Convertible Senior Notes, holders may require the Company to repurchase all or a portion of their 2030 Convertible Senior Notes at a cash repurchase price equal to 100% of the principal amount of the 2030 Convertible Senior Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the “fundamental change repurchase date” (as defined in the Indenture).
The 2030 Convertible Senior Notes are accounted for as a liability in their entirety, measured at amortized cost. The debt issuance costs for the 2030 Convertible Senior Notes are amortized to interest expense using the effective interest method over the term of the 2030 Convertible Senior Notes, with an effective interest rate of 2.80%.
The following table presents the net carrying value and fair value of the 2030 Convertible Senior Notes as of December 31, 2025:
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| In thousands | | Principal Amount | | Unamortized Debt Issuance Costs | | Net Carrying Amount | | Fair Value |
| | | | Amount | | Leveling |
| 2030 Convertible Senior Notes | | $ | 400,000 | | | $ | (8,746) | | | $ | 391,254 | | | $ | 488,976 | | | Level 2 |
The fair value was determined based on the quoted prices of the 2030 Convertible Senior Notes in an inactive market on the last traded day of the quarter ended December 31, 2025 and has been classified as Level 2 in the fair value hierarchy.
The following table presents the interest expense recognized related to the 2030 Convertible Senior Notes:
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| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
| Coupon interest | | $ | 2,250 | | | $ | 475 | | | | | |
| Amortization of debt issuance costs | | 450 | | | 96 | | | | | |
| Total | | $ | 2,700 | | | $ | 571 | | | | | |
Capped Call Transactions
In connection with the 2030 Convertible Senior Notes, the Company has entered into privately negotiated capped call transactions with certain financial institutions pursuant to capped call confirmations (collectively the “Capped Calls”). The premiums paid for the purchases of the Capped Calls were $29.0 million. The Capped Calls have an initial strike price of approximately $21.35 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2030 Convertible Senior Notes. The Capped Calls have an initial cap price of $28.74 per share, subject to certain adjustments substantially similar to those applicable to the corresponding 2030 Convertible Senior Notes. The Capped Calls cover, subject to anti-dilution adjustments, approximately 18.7 million shares of the Company’s Class A common stock.
The Capped Calls are generally expected to offset the potential dilution to the Company’s Class A common stock upon any conversion of the 2030 Convertible Senior Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of any converted 2030 Convertible Senior Notes, with such reduction and/or offset subject to a cap.
The Capped Calls are separate transactions and are not part of the terms of the 2030 Convertible Senior Notes. As the Capped Calls qualify for a scope exception from derivative accounting for instruments that are both indexed to the Company’s own stock and classified in stockholders’ equity, the Capped Calls are not accounted for as derivatives and the premiums paid for the purchases of the Capped Calls were recorded as a reduction to the additional paid-in capital.
13. 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 $7.9 million and $1.7 million for the three months ended December 31, 2025 and 2024, respectively. The effective tax rate for the three months ended December 31, 2025 and 2024 was 11.2% and 2.9%, respectively. For the three months ended December 31, 2025, the Company’s effective tax rate differs from the U.S. statutory tax rate of 21% primarily due to valuation allowances.
As of December 31, 2025 and September 30, 2025, the Company does not believe it has any significant uncertain tax positions and therefore, has not recorded any unrecognized tax benefits.
The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establishes valuation allowances when it is more-likely-than-not that all or a portion of a deferred tax asset may not be realized. As of December 31, 2025 and September 30, 2025, 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 Tax Receivable Agreement, dated October 27, 2021, by and among Fluence Energy, Inc., Fluence Energy, LLC, Siemens Industry, Inc. and AES Grid Stability, LLC (the “Tax Receivable Agreement”), 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.
The Organization for Economic Cooperation and Development’s (“OECD”) Pillar II Initiative introduced a 15% global minimum tax for certain multinational groups exceeding minimum annual global revenue thresholds. Some countries in which the Company operates have enacted legislation adopting the minimum tax effective January 1, 2024. To date, the Company does not expect a material top up tax liability to be incurred as a result of the Pillar II provisions. Certain tax jurisdictions either did not have Pillar II enacted for the current fiscal year or the Company has satisfied one or more of the safe harbor tests to prevent any minimum tax under Pillar II. The Company will continue to monitor its jurisdictions for any changes and include appropriate minimum tax throughout the fiscal year.
14. Commitments and Contingencies
Guarantees, Commitments, Letters of Credit, and Surety Bonds
As of December 31, 2025, 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 and letters of credit 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 December 31, 2025. 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.
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| Amount (in $ millions) | Number of Agreements | Maximum Exposure Range for Each Agreement (in $ millions) |
| Guarantees and commitments | $4,968 | 93 | $0 - 422.6 |
| Letters of credit under bilateral credit facilities | 6 | 5 | 0.1 - 3 |
| Letters of credit under 2024 Revolver | 122 | 36 | 0 - 22.5 |
| Surety bonds | 611 | 69 | 0 - 79.2 |
| Total | $5,707 | 203 | |
Purchase Commitments
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 cells and 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 purchases and spend. The following table presents our future minimum purchase commitments by fiscal year, primarily for battery cells and modules, and liquidated damages, if the minimum purchase volumes or spend are not met, as of December 31, 2025:
| | | | | | | | |
| in thousands | Purchase Commitment | Liquidated Damages |
| 2026 | 68,244 | | — | |
| 2027 | 1,224,096 | | 92,796 | |
| 2028 | 864,920 | | 58,100 | |
| 2029 | 244,120 | | 8,100 | |
| 2030 and thereafter | 237,000 | | $ | 8,100 | |
| Total | $ | 2,638,380 | | $ | 167,096 | |
The Company makes advance payments as capacity guarantees pursuant to purchase agreements with our suppliers. As of December 31, 2025, $50.6 million is recorded within “Advances to suppliers” and $46.5 million is recorded within “Other non-current assets” on the condensed consolidated balance sheets.
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 provides both assurance and service-type warranties to its customers. The Company recognizes revenue for service-type warranties, which are referred to as extended warranties, using a straight-line approach over the service period.
The Company provides assurance-type warranties, apart from the service-type warranties described above, related to the successful operation of battery-based energy storage solutions which typically extend from one to five years, beginning at the commercial operation date or substantial completion date, depending on the contract terms. The warranties are considered assurance-type warranties which provide a guarantee of quality of the products. The Company records an estimate of future warranty cost over the period of construction, consistent with transfer of control and revenue recognition. Additionally, we accrue 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. For warranty obligations covered by supplier warranties, the Company records a corresponding asset for the contractually recoverable amounts 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 December 31, 2025 and September 30, 2025, the Company accrued the below estimated warranty liabilities, which the table reflects three months activity and twelve months activity, respectively:
| | | | | | | | |
| In thousands | December 31, 2025 | September 30, 2025 |
| Warranty balance, beginning | $ | 51,807 | | $ | 40,242 | |
| Warranties issued and assumed in period | 3,729 | | 22,409 | |
| Change in estimates | — | | 3,173 | |
| Net changes in liability for warranty expirations, costs incurred, and foreign exchange impact | (2,505) | | (14,017) | |
| Warranty balance, ending | $ | 53,031 | | $ | 51,807 | |
| Less: Recoverable warranty costs from suppliers | 24,758 | | 23,578 | |
| Warranty balance, net of recoverable warranty costs from suppliers, at end of period | $ | 28,273 | | $ | 28,229 | |
The key inputs and assumptions used to estimate our warranty liability are: (1) the expected failure rate, representing the number of units projected to fail or require repair; and (2) the per unit cost to repair or replace, including shipping, labor, and equipment costs.
The assurance warranty liability and related warranty asset are reviewed quarterly and may be adjusted based on actual results, performance trends, or other qualitative factors. These estimates are subject to uncertainty, and differences between the actual failure rates or replacement costs and our assumptions may result in material changes.
Legal Contingencies
From time to time, the Company may be involved in litigation, government investigations, and other regulatory or legal proceedings relating to claims that arise out of our operations and businesses and that cover a wide range of matters, including, but not limited to, securities litigation, intellectual property matters, commercial and contract disputes, insurance and property damage claims, labor and employment claims, torts and personal injury claims, product liability claims, environmental claims, fire safety claims, and warranty claims. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. It is reasonably possible that some matters could have an unfavorable result to the Company and could require the Company to pay damages or make expenditures in amounts that could be material.
2021 Overheating Event at Customer Facility
As we previously reported, on September 4, 2021, a 300 MW energy storage facility owned by one of our customers experienced an overheating event. Fluence served as the energy storage technology provider and designed and installed portions of the facility, which was completed in the fiscal year ended September 30, 2021. The customer alleged that Fluence was partially liable for the incident, and Fluence denied those allegations. Following the incident, the customer made substantial changes to the facility’s fire suppression system without Fluence’s involvement. In December 2025, the matter was settled for an immaterial amount by the Company in conjunction with its insurers and subcontractors on confidential terms. The settlement includes a full release of the claims against the Company and no admission of responsibility or ultimate liability by the Company for the 2021 incident. As reported by the customer, it has other pending issues with the facility related to a more recent incident in January 2025 that have resulted in litigation against the customer and others, but not Fluence. Notwithstanding the December 2025 settlement with the customer, we may be subject to legal and regulatory proceedings relating to these matters or other similar proceedings arising in the ordinary course of our business. The outcome of these proceedings is inherently uncertain, and we cannot predict the timing or resolution of any such matters.
2023 Project-Related Litigation
In October 2023, Fluence filed a complaint in the Superior Court of California, Contra Costa County, against Diablo Energy Storage, LLC, Empire Business Park, LLC, the Bank of New York Mellon and others, seeking approximately $37.0 million in damages arising from the supply and construction of an energy storage facility for the defendants, including for the defendants’ nonpayment of contractual amounts owed. On or about November 10, 2023, Defendant Diablo Energy Storage, LLC filed a cross-complaint against Fluence, seeking a minimum of $25.0 million of alleged damages and disgorgement of all compensation received by Fluence for the project, in the amount of approximately $230.0 million. The disgorgement claim was based upon an alleged deficiency in Fluence’s contractor license. In December 2025, Fluence obtained a court dismissal of Diablo’s $230.0 million disgorgement claim. Fluence denies the other allegations in the cross-complaint and intends to vigorously defend against them and to enforce our claims against the defendants. We are currently not able to estimate the impact, if any, that this litigation may have on our reputation or financial results, or on market adoption of our products and solutions.
SEC Investigation
On February 22, 2024, as previously disclosed, a short-seller report was published about the Company (the “Short Seller Report”). In response to the Short Seller Report, the Audit Committee of the Company’s Board of Directors completed an internal investigation, with the assistance of outside counsel and forensic accountants, into the allegations in the Short Seller Report. The Company has been informed that the SEC is conducting a formal investigation and asking for certain information regarding our financial reporting. The Company is fully cooperating with the SEC’s investigation. While we are unable to predict the likely outcome of this matter or the potential cost, exposure or duration of the process, based on the information we currently possess, we do not expect the total potential cost to be material to our financial condition.
Securities Class Actions
On March 11, 2025, a putative federal securities class action complaint captioned Abramov v. Fluence Energy, Inc. et al. (Case No. 1:25-cv-00444) was filed in the United States District Court, Eastern District of Virginia, against the Company and certain of the Company’s executive officers. On April 15, 2025, a putative federal securities class action complaint captioned Kramer v. Fluence Energy, Inc. et al. (Case No. 1:25-cv-00634) was filed in the United States District Court, Eastern District of Virginia, against the Company, certain of the Company’s current and former executive officers, AES Grid Stability, and AES. Both actions purported to be brought on behalf of a purported class of stockholders, and asserted violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. The complaints sought unspecified damages and other relief. On May 30, 2025, the United States District Court, Eastern District of Virginia ordered the consolidation of the Abramov and Kramer cases, captioned the consolidated matter In re Fluence Energy, Inc. Securities Litigation (Case No. 1:25-cv-00444-PTG-IDD) and appointed a lead plaintiff and lead counsel. The court-appointed lead plaintiff subsequently filed a consolidated complaint that asserts claims under Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder against the Company, AES Grid Stability, AES, and certain of the Company’s former and current executive officers. The consolidated complaint seeks unspecified damages and other relief. The defendants filed a motion to dismiss the consolidated complaint on July 11, 2025. The Company does not believe the consolidated complaint states any meritorious claim and intends to defend this case vigorously.
Shareholder Derivative Actions
On March 25, 2025, a purported stockholder, Raffi Elmajian, filed a shareholder derivative complaint captioned Elmajian v. Nebreda et al. in the United States District Court, Eastern District of Virginia (Case No. 1:25-cv-521) against current and former officers and directors of the Company, naming the Company as a nominal defendant. On April 3, 2025, a purported stockholder, Diaa Al Amad, filed a second shareholder derivative complaint captioned Al Amad v. Nebreda et al. in the United States District Court, Eastern District of Virginia (Case No. 1:25-cv-577) against current and former officers and directors of the Company, naming the Company as a nominal defendant. Both derivative complaints allege claims under Section 14(a) of the Exchange Act and Rule 14-9 promulgated thereunder, and breaches of fiduciary duties, among other claims. The actions purport to be brought derivatively on behalf of the Company and seek damages and other various relief. On April 22, 2025, the United States District Court, Eastern District of Virginia ordered the consolidation of the Elmajian and Al Amad cases, captioned In re Fluence Energy, Inc. Shareholder Derivative Litigation (Case No.: 1:25-cv-00521). On July 21, 2025, the United States District Court, Eastern District of Virginia ordered a stay on all proceedings and deadlines in the consolidated derivative matter until resolution of the consolidated securities class action detailed above. On January 16, 2026, a purported stockholder, Jung Jae Hyung, filed a shareholder derivative complaint captioned Hyung v. Nebreda et al. in the United States District Court for the District of Delaware (Case No. 1:26-cv-00050) against current and former officers and directors of the Company, naming the Company as a nominal defendant. The Company believes the claims in the complaints are without merit and intends to defend the matter vigorously.
15. Related-Party Transactions
Related parties are primarily represented by AES and Siemens, their respective subsidiaries, other entities under common control, and other entities in which Siemens and AES have significant influence. As of December 31, 2025, AES Grid Stability holds 51,499,195 shares of Class B-1 common stock of Fluence Energy, Inc. and Siemens beneficially owns an aggregate of 51,499,195 shares of Class A common stock of Fluence Energy, Inc.
Sales and Procurement Contracts with Related Parties
The Company signs back-to-back battery-based energy storage solution and related service contracts with AES, Siemens, their respective subsidiaries, other entities under common control, and other entities in which Siemens and AES have significant influence (collectively referred to as affiliates) in relation to execution of the affiliates’ contracts with external customers and also signs direct contracts with affiliates. The Company also signs consortium agreements to partner with affiliates to deliver battery-based energy storage products and related service contracts to external customers. When performing our obligations pursuant to such contracts, we may, from time to time, enter into related change orders or settlements with our related parties and their affiliates.
The Company also provides consulting services to AES whereby Fluence will advise and in some cases provide support to AES on procurement, logistics, design, safety, and commissioning of certain of their projects. Revenue from consulting services is classified as “Revenue from sale of energy storage products and solutions” in the Company’s Disaggregation of revenue table in “Note 4 - Revenue from Contracts with Customers.” Revenue from the consulting services is primarily recognized ratably over time based on a project specific period of performance in which we expect the performance obligation to be fulfilled. For the three months ended December 31, 2025 and 2024, the Company recognized $0.1 million and $1.6 million in revenue from consulting services with AES, respectively.
Revenue from contracts with affiliates is included in “Revenue from related parties” on the Company’s condensed consolidated statements of operations.
In addition, the Company purchases materials and supplies from its affiliates and records the costs in “Cost of goods and services” on the Company’s condensed consolidated statements of operations.
Service Agreements
For the three months ended December 31, 2025, the Company has received limited treasury services related to executing trades for derivative contracts from The AES Corporation. The cost associated with this administrative service is recorded in “General and administrative expenses” on the Company’s condensed consolidated statement of operations.
Guarantees
Fluence paid performance guarantee fees to its affiliates in exchange for guaranteeing Fluence’s performance obligations under certain contracts with Fluence’s customers, which are based on the affiliates’ weighted-average cost for bank guarantees and their per annum cost with a reasonable markup. These guarantees are provided pursuant to the Amended and Restated Credit Support and Reimbursement Agreement, dated June 9, 2021, with AES and Siemens Industry (the “Credit Support and Reimbursement Agreement”) whereby they may, from time to time, agree to furnish credit support to us in the form of direct issuances of credit support to our lenders or other beneficiaries or through their lenders’ provision of letters of credit to backstop our own facilities or obligations. The guarantee fees are included in “Costs of goods and services” on Fluence’s condensed consolidated statements of operations.
Refer to “Note 17 - Supply Chain Financing” for details of the related party guarantees associated with a supply chain financing program.
Balance Sheet Related Party Transactions
The Company's condensed consolidated balance sheets included the following balances with related parties for the periods indicated:
| | | | | | | | | | | | | | |
| In thousands | | December 31, 2025 | | September 30, 2025 |
| Accounts receivable | | $ | 67,605 | | | $ | 26,615 | |
| Unbilled receivables | | 155,424 | | | 174,133 | |
| Total receivables from related parties | | $ | 223,029 | | | $ | 200,748 | |
| Advances to suppliers | | $ | 6,388 | | | $ | 9,603 | |
| Accounts payable | | 927 | | | 4,985 | |
| Deferred revenue | | 58,615 | | | 79,916 | |
Accruals and provisions | | 942 | | | 6,353 | |
Other current liabilities | | 301 | | | 301 | |
| | | | |
Receivables, deferred revenue, advances, accounts payables, accruals and provisions, and other current liabilities with related parties are unsecured and settlement of these balances occurs in cash. No provision has been made related to the receivables from related parties.
Statement of Operations Related Party Transactions
The following table presents the related party transactions that are included in the Company’s condensed consolidated statements of operations for the periods indicated:
| | | | | | | | | | | | | | | | | | |
| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
Revenue (a) | | $ | 182,232 | | | $ | 70,589 | | | | | |
Cost of goods and services (b) | | 7,215 | | | 2,880 | | | | | |
| Research and development expenses | | 8 | | | — | | | | | |
| Sales and marketing | | 18 | | | — | | | | | |
| General and administrative expenses | | 1,559 | | | 715 | | | | | |
| Other expense (income), net | | — | | | — | | | | | |
(a) Revenue from AES and its affiliates was approximately $182.1 million and $68.7 million for the three months ended December 31, 2025 and 2024, respectively.
(b) Represent purchases from related parties that are included in costs of goods and services and are not associated with the revenue listed in the table above.
16. Stock-Based Compensation
Option Plan
In 2020, the Company established the 2020 Unit Option Plan (the “Option Plan”) under which employees, directors, and consultants, were originally granted non-qualified options to purchase Class A-1 units of Fluence Energy, LLC. As of September 30, 2021, the Company determined that achievement of the performance conditions related to awards granted under the Option Plan was not probable and therefore, no expense was recognized for the non-qualified options during the fiscal year ended September 30, 2021. The completion of the initial public offering on November 1, 2021 (the “IPO”) resulted in achievement of the performance condition for the majority of the underlying awards granted under the Option Plan. In connection with the IPO, the non-qualified options were converted into non-qualified stock options to purchase shares of Class A common stock of Fluence Energy, Inc. Non-qualified stock options under the Option Plan have a contractual term of ten years from the date of grant and an exercise price of $2.45. The Company estimated the fair value of the awards using the Black-Scholes option-pricing model. The outstanding awards will continue to be governed by the existing terms under the Option Plan. The Option Plan is accounted for as an equity plan. The Company will not make any further awards under the Option Plan.
As of December 31, 2025, 1,739,395 stock options under the Option Plan remain outstanding with no unrecognized stock compensation expense.
2021 Incentive Award Plan
During the fiscal year ended September 30, 2021, the Company established the 2021 Incentive Award Plan (the “2021 Incentive Plan”) which reserved 9,500,000 shares of Class A common stock of Fluence Energy, Inc. for issuance to management, other employees, consultants, and board members of the Company. The 2021 Incentive Plan governs both equity-based and cash-based awards, including incentive stock options, NQSOs, restricted stock, PSUs, and RSUs. Stock-based awards currently issued pursuant to the 2021 Incentive Plan that are expected to be settled by issuing shares of Class A common stock are recorded as equity awards. The Company accounts for forfeitures as they occur.
Restricted Stock Units
RSUs granted under the 2021 Incentive Plan vest ratably at one-third annually on the anniversary of the grant date over a three-year period pursuant to the terms of their applicable award agreements. The Company generally expenses the grant date fair value of the awards on a straight-line basis over each of the three separately vesting tranches within a given grant. There is no contractual term on the RSUs granted under the 2021 Incentive Plan. The Company estimated the fair value of the awards using the market value of our Class A common stock on the grant date. The market value of our Class A common stock is calculated using the closing price of our Class A common stock on the date of grant. The following table summarizes activity under the 2021 Incentive Plan for the three months ended December 31, 2025:
| | | | | | | | |
| | Number of RSUs |
| Outstanding as of October 1, 2025 | | 2,232,320 | |
| Granted | | 620,337 | |
Vested | | (682,608) | |
| Forfeited | | (88,271) | |
| Outstanding as of December 31, 2025 | | 2,081,778 | |
As of December 31, 2025, 2,081,778 RSUs previously issued remained outstanding with unrecognized stock compensation expense of $21.1 million.
Non-Qualified Stock Options
Non-qualified stock options under the 2021 Incentive Plan have a contractual term of ten years from the date of grant. The Company estimated the fair value of the awards using the Black-Scholes option-pricing model. The non-qualified stock options granted under the 2021 Incentive Plan vest ratably at one-third annually on the anniversary of the grant date over a three-year period pursuant to the terms of their applicable award agreements. The Company generally expenses the
grant date fair value of the awards on a straight-line basis over each of the three separately vesting tranches within a given grant. As of December 31, 2025, 435,302 non-qualified stock options previously issued pursuant to the 2021 Incentive Plan remained outstanding with unrecognized stock compensation expense of $1.2 million. There were no non-qualified stock options granted during the three months ended December 31, 2025.
Performance Share Units
During the three months ended December 31, 2025, the Company granted 502,304 PSUs redeemable for Class A common stock under the 2021 Incentive Plan. The Company has two rounds of PSU grants under the 2021 Incentive Plan outstanding, the first commencing at the start of fiscal year 2025 and the second commencing at the start of fiscal year 2026. The PSUs for the 2025-2027 performance cycle and the 2026-2028 performance cycle are both earned based on (i) the achievement of two financial performance metrics: cumulative Adjusted EBITDA (65% weight) and cumulative revenue (35% weight), over a two-year performance period beginning October 1st in the year of grant through September 30th in the second year after grant, and (ii) service-based vesting based on continued employment from the date of grant through September 30th in the third year after grant. The performance targets for cumulative revenue and cumulative Adjusted EBITDA are set by the Compensation and Human Resources Committee of the Company’s Board of Directors. PSUs are considered fully vested when both the performance and service based requirements are met in accordance with the vesting requirements and will be settled in Class A common stock no more than 60 days after the end of the third fiscal year. The awards can be paid out in a range of 50% to 200%, with 0% paid out for below-threshold performance, based on the achievement of the performance criteria and upon continued service through the performance period. The Company estimated the fair value of the awards using the market value of our Class A common stock. The market value is calculated using the closing price of our Class A common stock on the date of grant. The Company monitors the achievement of the performance criteria and expenses ratably the grant date fair value of the awards probable to vest over the requisite service period. If there are changes to the amount of probable awards to vest based on achievement of performance criteria, the related stock-based compensation expense may be significantly increased or reduced in the period that our estimate changes.
As of December 31, 2025, 1,046,209 PSUs previously issued remained outstanding with estimated unrecognized stock compensation expense of $9.3 million.
Other
In connection with the acquisition of Nispera AG in 2022, Fluence issued 531,202 shares of restricted stock to Nispera’s management team. The estimated post combination expense to the Company as a result of the business combination was approximately $6.9 million which is being recognized on a straight-line basis over the remaining service period that was stipulated in each holder’s original restricted stock agreement. As of December 31, 2025, no restricted stock awards previously issued remained outstanding with and there is no unrecognized stock compensation expense.
Stock-based compensation expense
Stock-based compensation expense was recorded as follows:
| | | | | | | | | | | | | | | | | | |
| In thousands | | Three Months Ended December 31, | |
| 2025 | | 2024 | | | | |
| Cost of goods and services | | $ | 504 | | | $ | 883 | | | | | |
| Research and development | | 221 | | | 423 | | | | | |
| Sales and marketing | | 823 | | | 238 | | | | | |
| General and administrative | | 3,740 | | | 3,764 | | | | | |
| Total | | $ | 5,288 | | | $ | 5,308 | | | | | |
17. Supply Chain Financing
The Company provides certain of our suppliers with access to a supply chain financing program through a certain third-party financing institution (the “SCF Bank”). This program allows the Company to seek extended payment terms up to 120 days with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount. The Company does not pledge any assets as collateral under this program. Once a supplier elects to participate in this program and reaches an agreement with SCF Bank, the supplier chooses which individual invoices to sell to the SCF Bank. The Company then pays SCF Bank on the applicable due date. The Company has no economic interest in a supplier’s decision to sell an underlying receivable to SCF Bank. The agreements between our suppliers and SCF Bank are solely at their discretion and are negotiated directly between those two parties. Our suppliers’ ability to continue using such agreements is primarily dependent upon the strength of our financial condition and guarantees issued by AES and Siemens Corporation, a subsidiary of Siemens, pursuant to the terms of the Credit Support and Reimbursement Agreement. As of December 31, 2025, AES and Siemens Corporation issued guarantees of $50 million each, for a total of $100 million, to SCF Bank on our behalf.
For the three months ended December 31, 2025, no suppliers were actively participating in this supply chain financing program. The Company had no outstanding obligations confirmed as valid under the program as of December 31, 2025.
The Company entered into a new $150.0 million supply chain financing arrangement (the “New SCF Facility”) with a third-party financial institution (the “New SCF Bank”) on August 8, 2025. This New SCF Facility allows the Company to seek extended payment terms with our suppliers and allows our suppliers to monetize their receivables prior to the payment due date, subject to a discount. Such sales are at the sole discretion of the supplier, and on terms and conditions that are negotiated between the supplier and the New SCF Bank. The Company is not a party to the arrangement between its suppliers and the New SCF Bank and the Company has no economic interest in a supplier’s decision to sell an underlying receivable to the New SCF Bank. The Company does not provide secured legal assets or other forms of guarantees under this arrangement, nor do any of the Company’s affiliates. Under the New SCF Facility, the Company is required to maintain a liquidity ratio of 2:1 as of the last day of each calendar month. Liquidity ratio is defined as the ratio of (i) liquidity to (ii) the sum of (x) the aggregate outstanding notional amount of all receivables, bills of exchange or similar negotiable instruments purchased by the original SCF Bank under the existing supply chain financing arrangement described above and (y) the aggregate outstanding notional amount of payables outstanding under this New SCF Facility. Liquidity under the New SCF Facility includes the Company’s cash and cash equivalents and aggregate availability under the Company’s committed credit facilities, including the 2024 Revolver.
For the three months ended December 31, 2025, two suppliers participated in the New SCF Facility. The payment terms the Company has with the suppliers who participate in the New SCF Facility are generally consistent with the typical terms the Company has with the suppliers who do not participate. The Company had outstanding obligations of $11.4 million confirmed as valid under the program as of December 31, 2025. All outstanding payments owed under the program are recorded within “Accounts Payable” on the condensed consolidated balance sheets.
18. Derivatives and Hedging
Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the functional currency of the transacting party. The Company’s primary exposure results from the foreign currency impact of intercompany sales of inventory to regional entities by the Company’s centralized procurement legal entity. These intercompany sales are denominated in the functional currency of the regional entities, primarily the Euro, the British Pound, and the Australian dollar, while the functional currency of the centralized procurement legal entity is the U.S. dollar. This introduces foreign exchange risk on the revenues recorded for such intercompany sales. The Company enters into foreign currency forward contracts to manage its exposure to fluctuations in foreign exchange rates. These contracts are entered into with large, reputable financial institutions that are monitored for counterparty credit risks.
For the Company’s foreign currency forward contracts that are designated and qualify as cash flow hedges, the gains or losses on the effective portion of such hedges are recorded in accumulated other comprehensive income and subsequently reclassified in the period during which the hedged transaction affects earnings within revenue in the consolidated statements of operations (i.e., when control of the inventory is passed to third-party customers and revenue is recognized). The change in fair value of the components excluded from the assessment of effectiveness, including changes in the spot-forward differential and counterparty non-performance risk, will also be recognized within revenue in the consolidated statements of operations.
The Company also has foreign currency forward contracts that are not designated as hedges and the changes in fair value of such derivatives are recognized in current period earnings.
Cash Flow Hedges
The fair value of the Company’s cash flow hedges as well as their classification on the condensed consolidated balance sheets as of December 31, 2025 and September 30, 2025 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| In thousands | | December 31, 2025 | | September 30, 2025 |
| Notional Value | | Other Current Assets | | Other Current Liabilities | | Notional Value | | Other Current Assets | | Other Current Liabilities |
Foreign currency forward contracts | | $ | 212,812 | | | $ | 37 | | | $ | 6,423 | | | $ | 80,269 | | | $ | 155 | | | $ | 1,493 | |
The gains or (losses) resulting from changes in fair value of the Company’s cash flow hedges recognized in accumulated other comprehensive income (loss) for the three months ended December 31, 2025 and 2024 are as follows:
| | | | | | | | | | | | | | | | | | |
| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
Foreign currency forward contracts, net of tax | | $ | (5,412) | | | $ | 7,865 | | | | | |
The amounts recognized within “Revenue” in the condensed consolidated statements of operations with respect to the Company’s cash flow hedges for the three months ended December 31, 2025 and 2024 are as follows:
| | | | | | | | | | | | | | | | | | |
| In thousands | | Three Months Ended December 31, | | |
| 2025 | | 2024 | | | | |
Foreign currency forward contracts | | $ | (1,130) | | | $ | 6,377 | | | | | |
The following table details the changes in the cumulative impact of the gain (loss) on derivatives designated for hedge accounting for the three months ended December 31, 2025:
| | | | | | | | |
In thousands | | December 31, 2025 |
| Loss as of September 30, 2025 | | $ | (3,168) | |
Amount recognized in accumulated other comprehensive income (loss) | | (5,412) | |
Amount reclassified from accumulated other comprehensive income (loss) into earnings | | 1,870 | |
| Loss as of December 31, 2025 | | $ | (6,710) | |
19. Sale of Receivables
Master Receivables Purchase Agreement
On February 27, 2024, Fluence Energy, LLC entered into a Master Receivables Purchase Agreement (“MRPA”), by and among Fluence Energy, LLC and any other seller from time to time party thereto, as sellers and servicers, and Credit Agricole Corporate and Investment Bank ("CACIB"), as purchaser. Pursuant to the MRPA, Fluence Energy, LLC may sell certain receivables (the “Purchased Receivables”) to CACIB from time to time, and CACIB may agree to purchase the Purchased Receivables in each case, on an uncommitted basis. The MRPA provides that the outstanding amount of all Purchased Receivables under the MRPA will not exceed $75.0 million, with sublimits for each account debtor and for certain kinds of receivables. The MRPA contains other customary representations and warranties and covenants. There were no transactions for the three months ended December 31, 2025.
Master Drafts Sales Agreement
On October 7, 2025, Fluence Energy, LLC entered into a Master Drafts Sale Agreement (“MDSA”), by and among Fluence Energy, LLC as seller and CACIB as purchaser. Pursuant to the MDSA, Fluence Energy, LLC may sell negotiable drafts (the “Drafts”) identified in Purchase Requests to CACIB, and CACIB may agree to purchase the Drafts on an uncommitted basis. Each Draft represents unconditional payments owed to Fluence Energy, LLC by its customers. For the three months ended December 31, 2025, the Company sold receivables to CACIB under the MDSA for net proceeds of $39.4 million. At the date of the true sale, the receivables were derecognized in their entirety from the condensed consolidated balance sheet and the proceeds are reflected in operating cash flows on the condensed consolidated statements of cash flows.