Fluence Energy plunges 10% on Q1 earnings miss, margin collapse
GAAP gross margin falls to 4.9% on project cost overruns, though company maintains FY26 guidance
Fluence Energy shares tumbled 10% on Wednesday after the energy storage company reported a first-quarter loss that nearly doubled analyst estimates, with gross margins collapsing on project execution challenges.
The Arlington, Virginia-based company posted an adjusted loss per share of $0.34 for the quarter ended December 31, missing the consensus estimate of a $0.173 loss by 96.6%, according to the company's earnings release. Net loss widened to $62.6 million from $57.0 million in the same period a year earlier, despite revenue that exceeded expectations.
The most concerning metric for investors was the collapse in GAAP gross margin to 4.9%, down sharply from previous quarters, as the company cited project cost overruns. Fluence said the margin pressure stemmed from "certain projects that experienced execution challenges," according to regulatory filings. For context, the company's trailing twelve-month gross profit stands at $297 million on $2.26 billion in revenue.
Despite the earnings miss and deteriorating margins, management reaffirmed its full-year fiscal 2026 guidance, which includes revenue between $2.8 billion and $3.1 billion and adjusted EBITDA of $215 million to $265 million. The company attributed its confidence to a backlog of contracted projects that should drive revenue through the remainder of the year.
The steep sell-off pushed Fluence shares down to $28.99, trimming the company's market capitalization to approximately $5.68 billion. The stock had been volatile in recent sessions, having traded in a 52-week range between $3.46 and $33.51—a beta of 2.91 reflects the stock's high sensitivity to market movements. The 50-day moving average sits at $22.22, above the 200-day average of $12.51, suggesting the stock had been in an uptrend prior to the earnings miss.
Analyst sentiment remains mixed. The consensus price target stands at $19.00, well below the current trading level, with 14 analysts rating the stock a hold, 3 at buy, 3 at sell, and 1 at strong sell. The company trades at a forward price-to-earnings multiple of 93.46, reflecting high growth expectations that the quarter's results may have called into question.
Fluence, a global leader in energy storage solutions, develops battery storage systems and digital applications that help utilities and commercial customers integrate renewable energy into the grid. The company's performance is closely watched as a barometer for the broader energy storage market, which has seen rapid expansion but also operational challenges as projects scale up.
The company's operating margin over the trailing twelve months stands at 4.71%, with a negative profit margin of 2.14%. Revenue growth has slowed recently, with quarterly revenue down 15.2% year-over-year and quarterly earnings growth down 63.7%. Analysts will be focused on whether Fluence can improve its project execution and restore margins to meet its full-year guidance, particularly given the competitive landscape in the battery storage market.
Investors will be watching for any updates on the specific projects that caused the margin pressure and management's strategy to prevent similar issues in future quarters. The company's ability to deliver on its guidance while improving gross margins will be critical to regaining market confidence after Wednesday's sharp decline.