Bloom Energy Corp: Form 10-Q for the period ended Mar 31, 2025

OPERATIONS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, and projections about our industry, management’s beliefs, and certain assumptions made by management. For example, forward-looking statements include, but are not limited to, our plans and expectations regarding future financial results, including our expectations regarding: our ability to expand into and be successful in new markets, including the hydrogen market; our expanded strategic partnership with SK ecoplant Co., Ltd.; statements about our supply chain (including any direct or indirect effects from the Russia-Ukraine war, armed conflict in the Middle East, or geopolitical developments in China); operating results; the sufficiency of our cash, our cash flows from operating activities and our liquidity and our ability to obtain financing; projected costs and cost reductions; development of new products and improvements to our existing products; our manufacturing capacity and manufacturing costs; the adequacy of our agreements with our suppliers; legislative actions and regulatory and environmental compliance; impact of the IRA, including expiration of the Investment Tax Credit with respect to fuel cells running on non-zero carbon fuels and transferability of tax credits on our business; competitive position; management’s plans and objectives for future operations; our ability to comply with debt covenants or cure defaults, if any; our ability to repay our debt obligations as they come due; trends in average selling prices; the success of our customer financing arrangements and ability to secure financiers; capital expenditures; warranty matters; outcomes of litigation; our exposure to foreign exchange, interest and credit risk; general business and macroeconomic conditions in our markets including inflationary pressure; trade policies including tariffs; industry trends; the impact of changes in government incentives; risks related to cybersecurity breaches, privacy and data security; the likelihood of any impairment of project assets, long-lived assets and investments; trends in revenue, cost of revenue and gross profit (loss); trends in operating expenses including research and development expense, sales and marketing expense and general and administrative expense and expectations regarding these expenses as a percentage of revenue; future deployment of our Bloom Energy Server systems, Bloom Electrolyzers, and other solutions; our ability to expand our business, including our ability to secure large data center customers; our ability to increase efficiency of our products; our ability to market our products successfully in connection with the global energy transition and shifting attitudes around climate change; our business strategy and plans and our objectives for future operations; and the impact of recently adopted accounting pronouncements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact are forward-looking statements. Forward-looking statements may be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “designs,” “plans,” “predicts,” “targets,” “forecasts,” “will,” “would,” “could,” “can,” “may,” “aim,” “potential,” “mission,” “commit” and similar terms. These statements are based on the beliefs and assumptions of our management based on information currently available to management at the time they are made. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results, events, circumstances, outcomes and the timing of certain events to differ materially from future results or outcomes expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those factors discussed in the section titled “Risk Factors” included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in our other filings with the SEC. You should review these risk factors for a more complete understanding of the risks associated with an investment in our securities. Such forward-looking statements speak only as of the date of this report. We disclaim any obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Description of Bloom Energy

Our mission is to make clean, reliable energy affordable for everyone in the world. We developed the first large-scale, commercially viable solid oxide fuel cell based power generation platform that empowers businesses, essential services, critical infrastructure and communities to responsibly take charge of their energy. For additional information, refer to Part I, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, section Overview, sub-section Description of Bloom Energy in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Energy Market Conditions

The global energy transition towards a net-zero environment has created new challenges and opportunities for utilities, suppliers of energy solutions, and customers. Shifts and uncertainty in market and regulatory dynamics and corporate and governmental policies are currently impacting the selling process and impacting sales cycles and timelines for our products. Increasing electricity rates, decreasing energy security and reliability, and delays in the development of transmission infrastructure and grid interconnection as well as other time-to-power challenges have led to increased customer interest in our power solutions. At the same time, ongoing natural gas supply and pricing concerns due to geopolitical stresses, as well as customers’ interest in meeting sustainability targets, have led to increased caution from potential customers in their buying decision for energy solutions. Increasing demand for power has forced utilities, states and countries to revisit less clean sources of baseload and intermediate power, which our technology is designed to replace. This supply and demand mismatch globally has threatened energy security, reliability, and availability.

Bloom enables customers to address these energy market challenges by offering fuel flexible solutions designed to provide cost predictable, resilient, and reliable energy in a timely fashion. As customers and utilities navigate the energy transition and evolving landscape, the ability of our power solutions to fit their economic, regulatory, and policy needs depends on a number of factors, including natural gas availability and pricing, electrical interconnection needs and availability, redundant back up power requirements, cost requirements, and sustainability profiles. These factors may influence a customer’s decision to pursue an alternative power solution like ours — even in cases where utility interconnection timeliness span years – because the total cost to interconnect, including the build-out of energy transmission infrastructure, often remains unknown until all interconnection studies are completed.

Policy proposals that have emerged in 2025 may also affect customer demand for power solutions. For example, changes to permitting rules could accelerate domestic fossil fuel infrastructure production, while proposals to limit environmental reviews under the National Environmental Policy Act and other statutes could incentivize investment in, and reduce the cost of, fossil fuels, including natural gas. At the same time, proposals to halt new permits for wind projects, particularly offshore wind, could slow renewable energy adoption and decrease the projected available supply of renewable energy. Bloom stands ready to meet these new opportunities with our low-emission Energy Server systems.

Many data center customers and other large power users have signed exclusivity arrangements with their utilities, and this often creates a more complicated dynamic for them to move to an on-site solution. Rising natural gas costs in some regions, increases in gas distribution rates, limited availability of supply, and disruptions in global gas markets have increased the cost of our power solutions for customers and, in certain cases where fuel is unavailable, have resulted in a complete inability to operate the systems. In the U.S., the lack of, or slow development in, pipeline infrastructure has, in the past, impacted the timing of customers being able to take advantage of our power solution opportunities. In certain jurisdictions in the U.S. and Europe, natural gas bans have prevented the use of our power solutions unless alternative fuels are available.

In addition, many of our potential data center and industrial customers are pursuing greenfield opportunities where the development cycle is long and laden with permitting requirements, and the uncertainty of these factors is leading to a more complex customer decision-making process and longer sales cycles. Data center greenfield projects require significant investments in real estate, facility costs, and technology, among other elements, in addition to the investment in our power solutions, and the timing and sequencing of those investments is largely outside of our control.

Key Macro Trends

Increases in Demand for Power, Driven by Data Centers and Artificial Intelligence (AI)

Demand for power has continued to significantly outpace available grid-based generation supply, with the need for additional power becoming increasingly acute in recent periods. Key factors driving the increasing demand include the transition towards the electrification of transportation and buildings, the rapid adoption of AI that has led to the expansion of existing data centers and plans for new greenfield data centers, and Federal incentives for domestic manufacturing, including semiconductor and battery production. These factors, along with economic growth, have placed significant stress on grid supply and have led companies to consider on-site distributed power, including Bloom Energy Server systems, to meet their power needs.

Time to Power Increases as Power Demand/Supply Mismatch Grows

The increase in power demand, has, in part, elevated the importance of time to power. According to a study published in April 2024 by the Lawrence Berkeley National Laboratory, the time from initiating a request for interconnection to the grid to the start of commercial operations has more than doubled from less than two years during the period from 2000-2007, to more than four years from 2018-2023. Bloom Energy Server systems can be configured as on-site fully-islanded, microgrid solutions that are not interconnected to the grid, which often can provide a customer power in months instead of years. Many utilities have informed data center and manufacturing customers that they cannot interconnect for a period of years because the utility has no power available to serve a customer’s needs, thus making the Bloom Energy Server system an attractive alternative. In addition, our fully-islanded microgrid solutions can provide power on-site, without the need for costly transmission and distribution system upgrades that often are required before a customer can interconnect to the electrical grid. We are seeing greater interest in fully-islanded, microgrid solutions among data center customers because of these interconnection-related delays. If a customer desires back up power or a “grid parallel” solution in combination with the Bloom Energy Server system, required interconnection studies and lengthy interconnection queues may remain, eroding the time to power value proposition.

Co-locating Large Loads with Distributed Generation Configured as Islanded Microgrids are Gaining in Traction as Energy Solutions to Bypass Long Interconnection Queues and Transmission Upgrades

Our islanded microgrid solution allow data center and other customers the ability to skip the interconnection queue and start construction. A key to this solution is that our Be FlexibleTM load following capability allows us to follow a customer’s variable loads without the need to import power from the transmission grid. We believe avoiding lengthy interconnection queues is key to unlocking time to power for our customers. Our islanded microgrid solution also creates ratepayer savings by reducing congestion charges resulting from constraints on the transmission grid and avoiding the need for network transmission investments and upgrades that may be allocated to all ratepayers. In addition to serving a single customer as a distributed generation microgrid solution, our technology can also be used by utilities as an energy transmission asset, helping them serve customers while avoiding the costs of building new transmission and distribution infrastructure.

Utilities are Turning to Distributed Energy Solutions to Decrease their Customers’ Time to Power

Our utility customers are recognizing the challenge of keeping pace with the growing demand for power. Aging infrastructure, coupled with transmission and distribution bottlenecks, are making it more difficult for utilities to integrate additional sources of energy to add capacity. Building new transmission and distribution infrastructure is expensive, takes many years, and would likely cause utility rates to increase. As demand for power continues to grow, utility companies are struggling to meet the soaring demand of data centers, while customers’ time to power becomes increasingly important. Utility companies are exploring alternative means of producing and supplying energy to their end customers, including our Energy Server systems. In 2024, we entered into multiple agreements with utilities, including a landmark 1 GW supply agreement with a customer that included a 100 MW order in 2024. We expect more utility customers in the future to supplement their power generation with the Bloom Energy Server system. As we work to reduce our product costs, and with utility rates expected to rise due to significant infrastructure investments projected over the next five years to meet rapid demand growth, we expect our energy solutions to become more cost-competitive across more countries, communities, and industries worldwide.

Fuel Flexible Solutions Address Reliability Concerns as well as Near- and Long-term Sustainability Considerations

The impacts of climate change, including more severe and unpredictable weather events, have placed additional strain on aging utility grids and contributed to periods of power outages for those reliant on them. In addition, the recognition of the threat of climate change has led companies and governments to set ambitious emissions goals to reduce the release of carbon dioxide to the atmosphere. Large increases in demand for power are expected to challenge prevailing carbon reduction trajectories when large power users turn to conventional solutions to meet their needs. The Energy Server system is able to provide highly available power to displace dirtier and less efficient conventional combustion solutions like turbines and engines. Deeper decarbonization potential is enabled through fuel flexibility, combined heat and power (“CHP”) offerings and carbon capture utilization and storage (“CCUS”) capability. In addition to natural gas, our non-combustion power solutions are designed to run on biofuels or hydrogen, emit near-zero criteria pollutants, and use no water during steady state operation.

Other Factors Affecting our Performance

Shifting Regulatory Environment

In the U.S., the ITC for fuel cells operating on non-zero-carbon fuels expired at the end of fiscal 2024. Although the Company and its customers utilized compliant safe harbor mechanisms to secure deployment of a certain dollar amount of Energy Server systems through 2028, the failure to extend the ITC for such fuel cells could materially impact U.S. bookings, revenue and gross margins in 2025 and beyond.

The IRA established a new clean electricity production credit and a clean electricity investment credit. Although the U.S. Treasury Department developed rules to implement credits and incentives for clean energy resources under President Biden’s administration, there is considerable uncertainty around whether, or the conditions under which such credits will be available for transactions involving our solutions in the future, including as a result of actions taken by President Trump’s administration. For information on the IRA and its impact on our business, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, section Inflation Reduction Act of 2022 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

In addition, delays in adoption of Renewable Fuel Standard regulations in the U.S. for the use of biogas to generate electricity for electric vehicles, along with limited governmental focus on the utilization of biogas outside of use by methane- fueled vehicles, have created uncertainty around the broader availability of biogas for industrial uses, including our power solutions. Furthermore, in most jurisdictions, air permits and various land use permits are required for installation of our solutions above certain megawatt thresholds. The time required to obtain these permits has generally increased, while the certainty of approval has decreased, and when issued, the cost of meeting compliance requirements can be cost prohibitive. We have experienced a reluctance in certain states to issue permits for gas generation equipment. Even if issued, states may require a blend of costly renewable fuels or other measures to advance climate goals.

In Ireland, a major data center market, a directive from the Minister for the Department of the Environment, Climate and Communications under the previous administration to restrict grid connections for data centers and other large power users, along with a halt in high-pressure gas installations, has delayed our sales activities. In 2023, the South Korean government moved to a new, government-run bidding process for fuel cell purchases, which has adversely impacted and may continue to impact demand for our power solutions.

Working with Utilities

The imbalance between power demand and supply has contributed to utilities seeking alternative sources of power to supply to their end customers. Utilities have been unable to meet this demand through the deployment of renewable sources of energy such as solar and wind power. Bloom Energy Server systems can be installed at the utility’s point of distribution or directly on the customer’s site. The energy produced by our systems can be utilized by utilities to provide power to a specific customer or customers or may be used by customers generally. As demand for power continues to grow, and time to power becomes increasingly important, utilities are exploring alternative means of producing and supplying energy to their end customers, including using our Energy Server systems. In 2024, we entered into multiple agreements with utilities, including a landmark 1 GW supply agreement with a customer that included a 100 MW order in 2024. We expect more utility customers in the future to supplement their power generation with the Bloom Energy Server system. Increasing the supply of available power can allow utilities to encourage end customers to remain in their current locations rather than relocating to areas where power is more available. In addition, co-locating our Energy Server systems on-site with large loads, can enable a utility to provide power to a large energy user without impacting its rate base and providing the onsite power as an islanded microgrid can avoid interconnection studies and wait times.

Hydrogen Market Developments

The interest, investment, and stimulation of clean hydrogen in the U.S., Europe and in many other regions across the globe have not yet had significant impacts on the supply of hydrogen. To date, while the number of proposed hydrogen production projects has grown rapidly, only a small fraction has reached the final investment decision stage, and an even smaller fraction has been deployed. In addition, the infrastructure needed to transport hydrogen, whether through pipelines or maritime or land-based tankers, is currently only sufficient for existing uses, and has not begun to be significantly extended for anticipated future uses, with hydrogen blending and other approaches remaining at pilot stages. It remains unclear whether regulators in some jurisdictions will allow hydrogen to be introduced into gas distribution systems, which could limit our customers’ ability to transport hydrogen from the point of production to the point of consumption. Additionally, while U.S. Treasury Department rules regarding the use of market-based renewable energy have been clarified, hurdles remain that could hinder the large-scale development of hydrogen projects. Uncertainty also exists as potential changes may be pursued by the new U.S. federal administration and Congress.

Lengthening Sales Cycles

Many of the factors discussed above have lengthened the selling cycles for our products and we have experienced delays in our anticipated bookings as a result. Our revenue, margins, and cash flow in any given year depend on bookings from prior years as well as current-year bookings. Historically, the majority of our bookings have occurred in the second half of the year, with a significant portion in the fourth quarter, and we expect this trend to continue in 2025. However, if a substantial portion of our anticipated bookings is delayed beyond our expectations, our revenue, margins, and cash flow for the relevant period could be materially adversely impacted.

Supply Chain Constraints

We continue to see effects from global supply chain tightness due to the current inflationary environment, war in Ukraine, and trade tensions between the U.S. and China. We are not aware of, and do not expect any significant direct impact on our business or supply chain from the armed conflict in Israel and neighboring areas. While we have not experienced any significant component shortages to date, we are facing pressures from inflation. These dynamics could worsen as a result of continued geopolitical instability or escalation of current military conflicts or trade tensions. The new U.S. federal administration has implemented new tariffs on all trade partners. Our supply chain is not dependent on China, but significant tariffs on imports from other countries where we do source materials could impact our costs. At the tariffs present levels of

10%, we expect an impact on gross margin of approximately one percent for the fiscal year 2025. Changes in U.S. or international trade policies, including retaliatory measures, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions for our industry, which may adversely impact our operations, including through increased supply chain challenges and project delays. The ultimate impact of tariffs may be of a different nature and/or of a larger magnitude than we anticipate.

We are also reliant on third party providers of storage equipment, infrastructure equipment and pipelines, and other materials and technologies that work with our products to provide an energy solution for customers. In the event we are unable to mitigate the impacts of delays and rising prices for raw materials and components, including those caused by new tariffs, it could delay the manufacturing and installation, increase the costs of our products and the overall project, and adversely affect our cash flow and results of operations, including revenue and gross margin.

Installations and Maintenance of our Products

In previous years, our installation projects experienced delays related to, among other factors, permitting, utility coordination, and access to customer facilities. We have not experienced any delays in 2025 in either our installation or maintenance activities. If we are delayed in or unable to perform maintenance, our previously installed products would likely experience adverse performance impacts, including reduced output and/or efficiency, which could result in warranty and/or guaranty claims by our customers. If we experience a significant increase of product failure in the future, our service expense may increase and we may fail to achieve the performance commitments to our customers, which could result in warranty and/or guaranty claims. Additionally, product failure and service costs may increase as we initially deploy new applications for our Energy Server system, including Be FlexibleTM load following, CCUS, and CHP.

Financing Constraints

As we grow our business globally and increase the size and number of customer orders, we will need to secure new customer financing options, the amount of financing available as well as the number of financing partners. As we offer an innovative new technology solution, obtaining new financing partners and available funds for customer financings often involves a rigorous and timely due diligence process on our technology, manufacturing and service capabilities. If we are unable to obtain adequate financing for our customers who prefer third-party financing over purchasing the Energy Server system directly, our revenue could be delayed or impacted. In addition, our ability to arrange financing for our products depends partly on the creditworthiness of our customers, and any deterioration in their credit ratings could impact that financing. When interest rates rise, the cost of financing for our customers also increases, and financing our installations may require a higher rate of return, which can place pressure on our margins.

Manufacturing and Labor Market Constraints

As recently as 2022, we experienced impacts from labor shortages and challenges in hiring for our manufacturing facilities. While these constraints have since abated, and we reduced headcount as part of the Restructuring Plan adopted in September 2023, we may still experience difficulties with hiring and retention and may face additional labor shortages in the future. For details on the Restructuring Plan refer to Part II, Item 8, Note 12 — Restructuring in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. In addition, the current inflationary environment has led to rising wages and labor costs as well as increased competition for labor.

Strategic Investment

For information on the strategic investment with SK ecoplant, see Part II, Item 8, Note 17 — SK ecoplant Strategic Investment in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Sustainability

In April 2025, we released our 2025 Impact Report, previously referred to as our Sustainability Report, Transforming Energy for the Digital Age (the “Impact Report”), using generally accepted sustainability frameworks and standards, including alignment with Sustainability Accounting Standards Board standards and the Task Force on Climate-related Financial Disclosures recommendations. In addition, the Impact Report also utilized certain Global Reporting Initiative Standards and was mapped against the United Nations Sustainable Development Goals. We plan to issue an impact report on an annual basis.

The Impact Report can be found on our website at https://www.bloomenergy.com/sustainibility. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this report.

For additional information, refer to Part I, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, section Sustainability in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Inflation Reduction Act of 2022

For information on the IRA, which was signed into law on August 16, 2022, and its impact on our business, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, section Inflation Reduction Act of 2022 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Other than the loss of the ITC for fuel cells operating on non-zero-carbon fuels expired at the end of fiscal 2024, which occurred under President Biden’s administration, we have not experienced any impact from actions relating to the IRA taken by President Trump administration.

Liquidity and Capital Resources

As of March 31, 2025, and December 31, 2024, we had unrestricted cash and cash equivalents of $794.8 million and $802.9 million, respectively. Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds of $759.5 million and $749.4 million as of March 31, 2025, and December 31, 2024, respectively. We seek to maintain these balances with high-credit-quality counterparties, regularly monitor our credit exposure to any single issuer, and diversify our investments to minimize risk.

As of March 31, 2025, we had $1,126.7 million of recourse debt, $4.1 million of non-recourse debt, and $9.4 million of other long-term liabilities. As of March 31, 2025, $114.6 million and $1,016.2 million of our debt were classified as short-term and long-term, respectively. As of December 31, 2024, we had $1,124.7 million of recourse debt, $4.1 million of non-recourse debt, and $9.2 million of other long-term liabilities. As of December 31, 2024, $114.4 million and $1,014.4 million of our debt were classified as short-term and long-term, respectively. For a complete description of our outstanding debt, please see Part II, Item 8, Note 17 — Outstanding Loans and Security Agreements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

The combination of our cash and cash equivalents and cash flow expected to be generated by our operations is expected to be sufficient to meet our anticipated cash flow needs for at least the next 12 months. If these sources of cash are insufficient or not received in a timely manner to meet our near-term or future liquidity needs, we may require additional equity or debt financing to fund our operations, manufacturing capacity, product development, and market expansion initiatives, as well as to respond to competitive pressures or strategic opportunities. We may, from time to time, engage in a variety of financing transactions for such purposes, including factoring our accounts receivable. During the three months ended March 31, 2024, we factored $80.7 million of accounts receivable, and there were no factoring arrangements during the three months ended March 31, 2025. However, we may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional financing may limit on our financial and operational flexibility. Although we currently do not have any floating-rate notes on our balance sheet, our overall cost of capital may increase if interest rates rise and we refinance our fixed-rate convertible notes. If we raise additional funds through the issuance of equity or equity-linked securities, our existing stockholders could experience dilution in their ownership percentage, and any new securities may have rights, preferences, and privileges senior to those of our common stock.

Our future capital requirements depend on a variety of factors, including our rate of revenue growth; the timing and extent of spending on research and development and other business initiatives; the pace and volume of system builds; the need for additional working capital; the expansion of our sales and marketing activities in both domestic and international markets; market acceptance of our products; our ability to secure financing for customer use of our products; the timing of installations and related inventory build in anticipation of future sales; and overall economic conditions. In order to support and achieve our future growth plans, we may need or seek advantageously to obtain additional funding through equity or debt financing. Failure to obtain this financing in future quarters may affect our results of operations, including our revenues and cash flows.

A summary of our consolidated sources and uses of cash, cash equivalents, and restricted cash was as follows (in thousands):

Operating Activities

Our operating activities consisted of net loss adjusted for certain non-cash items plus changes in our operating assets and liabilities or working capital. Net cash used in operating activities for the three months ended March 31, 2025, related primarily to the changes in our working capital of $137.9 million predominantly due to (1) a decrease in deferred revenue and customer deposits by $74.9 million, driven by timing of acceptances, (2) an increase in inventory levels by $65.6 million to support future demand, (3) an increase in deferred cost of revenue of $7.5 million, and (4) an increase in prepaid expenses and other current assets of $5.1 million, partially offset by the timing of payments to vendors.

Net cash used in operating activities during the three months ended March 31, 2025, was $110.7 million, an improvement of $36.6 million compared to the prior year period. The change in cash used in operating activities during the three months ended March 31, 2025, as compared to the prior year period, was primarily driven by an increase of $40.6 million and $8.6 million attributable to inventories and prepaid expenses and other current assets, respectively, a $57.3 million decrease attributable to deferred revenue and customer deposits, partially offset by an increase of $86.0 million attributable to accounts payable.

Investing Activities

Our investing activities have consisted of capital expenditures, including investments to increase our production capacity. Cash used in investing activities during the three months ended March 31, 2025, was $14.2 million, an improvement of $7.2 million, as compared to the prior year period. The improvement was primarily due to the decrease in expenditures on tenant improvements for a leased engineering and manufacturing facility in Fremont, California, which opened in July 2022. We expect to continue to make capital investments over the next few quarters to expand production capacity at our manufacturing facility in Fremont, California, which includes the purchase of new equipment and other tenant improvements. We intend to fund these capital expenditures from cash on hand as well as cash flow expected to be generated from operations. We may also evaluate and arrange equipment lease financing to fund this capital expenditures.

Financing Activities

Our financing activities consist of proceeds from and repayments of financing obligations, contributions from noncontrolling interests, proceeds from issuance of our common stock, and other cash flows from financing activities. Net cash provided by financing activities during the three months ended March 31, 2025, was $5.1 million, a decrease of $2.0 million, as compared to the prior year period, predominantly due to (1) a decrease in contributions from noncontrolling interest by $4.0 million, and (2) a decrease in proceeds from financing obligations by $1.3 million, partially offset by (1) a decrease in repayment of financing obligations by $2.3 million, and (2) an increase in proceeds from issuance of common stock by $0.8 million.

Net cash provided by financing activities for the three months ended March 31, 2025, consisted of (1) the proceeds from issuance of common stock of $7.7 million, (2) the repayment of financing obligations of $2.7 million, and (3) other cash flows from financing activities of $0.2 million.

We believe we have sufficient capital to operate our business over the next 12 months. Our working capital was strengthened with the supplemented liquidity through issuing the 3% Green Notes due June 2029 and the 3% Green Notes due June 2028 in the second quarter of 2024 and 2023, respectively, as well as financing activities with SK ecoplant in the first quarter of 2023. In addition, we may still enter the equity or debt market as needed to support the expansion of our business. Please refer to Part II, Item 8, Note 7 — Outstanding Loans and Security Agreements, and Part I, Item 1A, Outstanding Loans and Security Agreements of this Quarterly Report on Form 10-Q and Part I, Item 1A, Risk Factors — Risks Related to Our Liquidity — Our indebtedness, and restrictions imposed by the agreements governing our outstanding indebtedness, may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, for more information regarding the terms of and risks associated with our debt.

Purchase and Financing Options

For information about our purchase and financing options, see Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, section Purchase and Financing Options in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Purchase Alternatives

Our customers have several purchase alternatives for our Energy Server systems. The portion of total revenue attributable to each purchase option in the three months ended March 31, 2025, and 2024, was as follows:

Delivery and Installation

For information on delivery and installation of our Energy Server systems, see Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, section Delivery and Installation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Performance Guarantees

As of March 31, 2025, and December 31, 2024, we had incurred no liabilities due to failure to repair or replace the Energy Server systems pursuant to any performance warranties made under the O&M Agreements (“O&M Agreements”).

For the O&M Agreements that are subject to renewal, our future service revenue from such agreements are subject to our obligations to make payments for underperformance against the performance guaranties, which are capped at an aggregate total of approximately $587.5 million (including $460.3 million related to portfolio financing entities and $127.2 million related to all other transactions, and include payments for both low output and low efficiency) and our aggregate remaining potential payment related to these underperformance obligations was approximately $479.8 million as of March 31, 2025. For the three months ended March 31, 2025, and 2024, we made performance guarantee payments of $11.6 million and $15.1 million, respectively.

International Channel Partners

There were no significant changes in our international channel partners during the three months ended March 31, 2025. For information on international channel partners, see Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations, section International Channel Partners in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Results of Operations

A discussion regarding the comparison of our financial condition and results of operations for the three months ended March 31, 2025, and 2024 is presented below.

Revenue

(dollars in thousands)

Total Revenue

Total revenue increased by $90.7 million, or 38.6%, for the three months ended March 31, 2025, as compared to the prior year period. This increase was driven by a $58.5 million increase in product revenue, a $22.2 million increase in installation revenue, and a $12.9 million increase in electricity revenue, partially offset by a $2.9 million decrease in service revenue.

Product Revenue

Product revenue increased by $58.5 million, or 38.1%, for the three months ended March 31, 2025, as compared to the prior year period. This increase was primarily due to the increase in demand for our products, improved pricing from site repowerings and improved pricing due to volume mix shift from international to domestic revenue.

Installation Revenue

Installation revenue increased by $22.2 million, or 194.0%, for the three months ended March 31, 2025, as compared to the prior year period. The increase was primarily driven by the timing of achieving key project milestones on sites requiring installations by us in the first quarter of fiscal year 2025.

Service Revenue

Service revenue decreased by $2.9 million, or 5.2%, for the three months ended March 31, 2025, as compared to the prior year period. The decrease was primarily driven by (1) a reduction in revenue from part of our established install base, as specified by our revenue contracts with customers, and (2) an increase of $0.7 million in product performance guarantees as a result of Energy Server systems fleet depreciation, partially offset by growth in maintenance contracts associated with our fleet of Energy Server systems.

Electricity Revenue

Electricity revenue includes both revenue from contracts with customers and revenue from contracts that contain leases.

Electricity revenue increased by $12.9 million, or 92.1%, for the three months ended March 31, 2025, as compared to the prior year period. The increase was predominantly due to a one-time settlement of a customer contract after redeploying assets for our partner, partially offset by lower straight-line electricity revenue amortization as a result of repowering of Managed Services agreements.

Cost of Revenue

(dollars in thousands)

Total Cost of Revenue

Total cost of revenue increased by $40.1 million, or 20.3%, for the three months ended March 31, 2025, as compared to the prior year period. The increase was driven by a $18.0 million increase in costs of installation revenue, a $23.8 million increase in cost of product revenue, and a $2.0 million increase in cost of electricity revenue, partially offset by a $3.6 million decrease in cost of service revenue.

Cost of Product Revenue

Cost of product revenue increased by $23.8 million, or 20.6%, for the three months ended March 31, 2025, as compared to the prior year period. The increase in cost of product revenue was primarily driven by the increase in demand for our products. This increase was partially offset by our continued efforts to reduce material, labor, and overhead costs through enhanced manufacturing processes and increased automation.

Cost of Installation Revenue

Cost of installation revenue increased by $18.0 million, or 117.0%, for the three months ended March 31, 2025, as compared to the prior year period. The increase was primarily driven by the timing of achieving key project milestones on sites requiring installations by us in the first quarter of fiscal year 2025.

Cost of Service Revenue

Cost of service revenue decreased by $3.6 million, or 6.5%, for the three months ended March 31, 2025, as compared to the prior year period. This decrease was primarily due to (1) a decrease in the deployment of field replacement units, contributing to a decrease of $6.4 million, (2) a $3.3 million decrease in repair and overhaul expenses, partially as a result of repowering our PPA and Managed Services portfolios, which resulted in a relatively newer fleet that required less service, (3) a $1.2 million decrease in rework for production costs, and (4) our cost reduction efforts to proactively manage fleet optimizations. The decrease was partially offset by an increase in maintenance material of $1.4 million.

Cost of Electricity Revenue

Cost of electricity revenue includes both cost of revenue from contracts with customers and cost of revenue from contracts that contain leases.

Cost of electricity revenue increased by $2.0 million, or 20.4%, for the three months ended March 31, 2025, as compared to the prior year period. This increase was predominantly due to redeploying assets for our partner to enable a one-time settlement of a customer contract.

Gross Profit (Loss) and Gross Margin

(dollars in thousands)

Total Gross Profit

Gross profit increased by $50.6 million in the three months ended March 31, 2025, as compared to the prior year period. This increase was predominantly driven by (1) a $34.7 million increase in product gross profit, primarily driven by higher demand for our products, leading to a 38.1% increase in product revenue and only a 20.6% increase in respective cost of revenue, (2) a $11.0 million increase of electricity gross profit, (3) a $4.2 million improvement of installation gross margin, and (4) a $0.7 million improvement of service gross margin, due to our efforts to proactively manage fleet optimizations, and our ongoing efforts to reduce product costs.

Product Gross Profit

Product gross profit increased by $34.7 million in the three months ended March 31, 2025, as compared to the prior year period. The increase was primarily driven by (1) an increase in demand for our products, improved pricing from site repowerings and improved pricing due to volume mix shift from international to domestic revenue, and (2) our continued efforts to reduce material, labor, and overhead costs through enhanced manufacturing processes and increased automation.

Installation Gross Profit (Loss)

Installation gross margin improved by $4.2 million in the three months ended March 31, 2025, as compared to the prior year period. The change for the period was primarily driven by (1) the timing of achieving key project milestones on sites requiring installations by us in the first quarter of fiscal year 2025, and (2) other site related factors such as site complexity, size, local ordinance requirements, and location of the utility interconnect.

Service Gross Profit (Loss)

Service gross margin improved by $0.7 million in the three months ended March 31, 2025, as compared to the prior year period. This was primarily driven by (1) a decrease in the deployment of field replacement units, contributing an improvement of $6.4 million, (2) repair and overhaul cost reductions of $3.3 million, and (3) our cost reduction efforts to proactively manage fleet optimizations. The improvement was partially offset by (1) a $2.2 million decrease in revenue from maintenance contracts associated with our fleet of Energy Server systems, (2) an increase of $0.7 million in product performance guarantees as a result of Energy Server systems fleet depreciation, and (3) the timing of revenue recognition on certain contracts.

Electricity Gross Profit

Electricity gross profit increased by $11.0 million in the three months ended March 31, 2025, as compared to the prior year period. This increase was predominantly due to a one-time settlement of a customer contract after redeploying assets for our partner.

Operating Expenses

(dollars in thousands)

Total Operating Expenses

Total operating expenses increased by $20.7 million in the three months ended March 31, 2025, as compared to the prior year period. This increase was primarily attributable to (1) an increase in employee compensation and benefits of $16.6 million, predominantly due to an increase in stock-based compensation and bonus expenses, (2) an increase in consulting, advisory and other professional services costs of $2.4 million, (3) an increase in computer equipment maintenance expenses of $1.6 million, (4) an increase in consumable laboratory supplies and other laboratory related costs of $0.8 million, and (5) an increase in depreciation expenses of $0.8 million. The overall increase was partially offset by a decrease in office and other operating expenses of $1.5 million, primarily related to corporate insurance costs and factoring and financing fees.

Research and Development

Research and development expenses increased by $5.1 million in the three months ended March 31, 2025, as compared to the prior year period. This overall increase was primarily driven by (1) an increase in employee compensation and benefits of $4.0 million, predominantly due to an increase in stock-based compensation and bonus expenses, (2) an increase in consumable laboratory supplies and other laboratory-related costs of $0.8 million, and (3) an increase in consulting, advisory and other professional services costs of $0.6 million. The increase was partially offset by a decrease in other research and development expenses of $1.0 million.

Sales and Marketing

Sales and marketing expenses increased by $8.7 million in the three months ended March 31, 2025, as compared to the prior year period. The increase was primarily driven by (1) an increase in employee compensation and benefits of $6.0 million, predominantly due to an increase in stock-based compensation and bonus expenses, and (2) an increase in consulting, advisory and other professional services costs of $1.9 million.

General and Administrative

General and administrative expenses increased by $6.9 million in the three months ended March 31, 2025, as compared to the prior year period. This increase was primarily driven by (1) an increase in employee compensation and benefits of $6.6 million, predominantly due to stock-based compensation expenses, principally related to new awards for our Chief Executive Officer (the “CEO”) granted on December 18, 2024, partially offset by a decrease in bonus expenses, (2) an increase in computer equipment maintenance expenses of $1.1 million, and (3) an increase in depreciation expenses of $0.7 million. The overall increase was partially offset by a decrease in office and other general and administrative expenses of $1.9 million, primarily related to corporate insurance costs and factoring and financing fees.

Stock-Based Compensation

(dollars in thousands)

Total stock-based compensation for the three months ended March 31, 2025, increased by $13.3 million, as compared to the prior year period, and the increase was predominantly related to an increase of stock-based compensation related to PSUs and RSUs of $10.9 million, an increase in stock-based compensation costs related to the 2018 ESPP of $3.5 million, and an increase of stock-based compensation costs related to stock options of $1.2 million, partially offset by a $2.3 million consisting of capitalized stock-based compensation expenses and stock-based compensation cash component. The increase was primarily driven by (1) new awards for our CEO granted on December 18, 2024, (2) increase in a number of granted RSUs provided to all employees of the Company starting fiscal year 2025, (3) an increase in Bloom’s share price, and (4) an increase in contributions to 2018 ESPP.

Other Income and Expense

(in thousands)

Interest Income

Interest income is derived from investment earnings on our cash balances, primarily from money market funds. The increase in interest income of $1.0 million for the three months ended March 31, 2025, as compared to the prior year period, was primarily due to an increase in average cash balance in our money market funds for the respective period.

Interest Expense

Interest expense is primarily due to our debt held by third parties and interest expense related to managed services agreements.

A decrease in interest expense for the three months ended March 31, 2025, was not material, and was primarily due to (1) a decrease in interest expense of $2.8 million related to managed services agreements, and (2) the partial repurchase of the 2.5% Green Notes on May 29, 2024, contributing a decrease in interest expense of $1.0 million, partially offset by an increase in interest expense of $3.7 million related to the 3% Green Notes due June 2029, issued on May 29, 2024.

Other Income (Expense), Net

Other income (expense), net is primarily derived from foreign currency transactions and other income related to managed services transactions. Other income (expense), net for the three months ended March 31, 2025, improved by $3.2 million, as compared to the prior year period, primarily as a result of a $2.5 million other income related to managed services transactions, and a decrease in loss from foreign currency transactions of $1.0 million.

Loss (Gain) on Revaluation of Embedded Derivatives

Loss (gain) on revaluation of embedded derivatives is derived from the change in fair value of our sales contracts of embedded Escalation Protection Plan derivatives valued using historical grid prices and available forecasts of future electricity prices to estimate future electricity prices. Loss (gain) on revaluation of embedded derivatives for the three months ended March 31, 2025, as compared to the prior year period, was immaterial.

Income Tax Provision (Benefit)

(dollars in thousands)

Income tax provision (benefit) consists primarily of income taxes in foreign jurisdictions in which we conduct business. We maintain a full valuation allowance for domestic deferred tax assets, including net operating loss and certain tax credit carryforwards. The income tax benefit flipped to the income tax provision for the three months ended March 31, 2025, as compared to the prior year period. The change was primarily due to fluctuations in the effective tax rates on income earned by international entities.

Net Income Attributable to Noncontrolling Interests

(dollars in thousands)

Net income attributable to noncontrolling interests is the result of allocating profits and losses to noncontrolling interests under the hypothetical liquidation at book value (“HLBV”) method. HLBV is a balance sheet-oriented approach for applying the equity method of accounting when there is a complex structure, such as consolidation of a variable interest entity (“VIE”).

Net income attributable to noncontrolling interests for the three months ended March 31, 2025, as compared to the prior year period, decreased by $0.6 million due to a decrease in income allocated to our noncontrolling interest related to Korean JV, our consolidated VIE.

Critical Accounting Policies and Estimates

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as applied in the United States (“U.S. GAAP”). The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Our discussion and analysis of our financial results under Results of Operations above are based on our results of operations, which we have prepared in accordance with U.S. GAAP. In preparing these condensed consolidated financial statements, we make assumptions, judgments and estimates that can affect the reported amounts of assets, liabilities, revenues and expenses, and net income. On an ongoing basis, we base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are representative of estimation uncertainty and are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating the consolidated financial condition and results of operations.

The accounting policies that most frequently require us to make assumptions, judgments and estimates, and therefore are critical to understanding our results of operations, include:

• Revenue Recognition;
• Valuation of Assets and Liabilities of the SK ecoplant Strategic Investment;
• Modification of Performance-Based Stock Unit Awards;
• Income Taxes; and
• Principles of Consolidation.

Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 provides a more complete discussion of our critical accounting policies and estimates. During the three months ended March 31, 2025, there were no significant changes to our critical accounting policies and estimates.

There were no significant changes to our quantitative and qualitative disclosures about market risk during the three months ended March 31, 2025. Please refer to Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk included in our Annual Report on Form 10-K for our fiscal year ended December 31, 2024, for a more complete discussion of the market risks we consider.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO (our Principal Executive Officer) and Chief Financial Officer (our Principal Financial Officer) as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our CEO and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2025. Based on such evaluation, our CEO and Chief Financial Officer have concluded that as of March 31, 2025, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2025, there were no changes in our internal control over financial reporting, which were identified in connection with management’s evaluation required by paragraphs (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

For further information on inherent limitations on effectiveness of internal controls and management’s report on internal control over financial reporting, see Part II, Item 9A, Controls and Procedures in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

There were no material changes in risk factors as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.