Bloom Energy Corp. engages in the manufacture and installation of on-site distributed power generators. Its product, Bloom Energy Server, converts standard low-pressure natural gas or biogas into electricity through an electrochemical process without combustion. The company was founded by K. R. Sridhar, John Finn, Jim McElroy, Matthias Gottmann, and Dien Nguyen on January 18, 2001 and is headquartered in San Jose, CA.
Our limited operating history and our nascent industry make evaluating our business and future prospects difficult.
Our products involve a lengthy sales and installation cycle and, if we fail to close sales on a regular and timely basis, our business could be harmed.
Our Energy Servers have significant upfront costs, and we will need to attract investors to help customers finance purchases.
The economic benefits of our Energy Servers to our customers depends on the cost of electricity available from alternative sources including local electric utility companies, which cost structure is subject to change.
We rely on net metering arrangements that are subject to change.
We currently face and will continue to face significant competition.
We derive a substantial portion of our revenue and backlog from a limited number of customers, and the loss of or a significant reduction in orders from a large customer could have a material adverse effect on our operating results and other key metrics.
Our future success depends in part on our ability to increase our production capacity, and we may not be able to do so in a cost-effective manner.
If we are not able to continue to reduce our cost structure in the future, our ability to become profitable may be impaired.
If our Energy Servers contain manufacturing defects, our business and financial results could be harmed.
If our estimates of useful life for our Energy Servers are inaccurate or we do not meet service and performance warranties and guaranties, or if we fail to accrue adequate warranty and guaranty reserves, our business and financial results could be harmed.
Our business is subject to risks associated with construction, utility interconnection, cost overruns and delays, including those related to obtaining government permits and other contingencies that may arise in the course of completing installations.
The failure of our suppliers to continue to deliver necessary raw materials or other components of our Energy Servers in a timely manner could prevent us from delivering our products within required time frames, and could cause installation delays, cancellations, penalty payments, and damage to our reputation.
We have, in some instances, entered into long-term supply agreements that could result in insufficient inventory and negatively affect our results of operations.
We, and some of our suppliers, obtain capital equipment used in our manufacturing process from sole suppliers and, if this equipment is damaged or otherwise unavailable, our ability to deliver our Energy Servers on time will suffer.
Possible new tariffs could have a material adverse effect on our business.
Our business currently depends on the availability of rebates, tax credits and other financial incentives, and the reduction, modification, or elimination of such benefits could cause our revenue to decline and harm our financial results.
We rely on tax equity financing arrangements to realize the benefits provided by investment tax credits and accelerated tax depreciation and, in the event these programs are terminated, our financial results could be harmed.
We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in building our manufacturing facilities.
The installation and operation of our Energy Servers are subject to environmental laws and regulations in various jurisdictions, and there is uncertainty with respect to the interpretation of certain environmental laws and regulations to our Energy Servers, especially as these regulations evolve over time.
As a fossil fuel-based technology, we may be subject to a heightened risk of regulation, to a potential for the loss of certain incentives, and to changes in our customers’ energy procurement policies.
Existing regulations and changes to such regulations impacting the electric power industry may create technical, regulatory, and economic barriers which could significantly reduce demand for our Energy Servers or affect the financial performance of current sites.
We may become subject to product liability claims which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
Current or future litigation or administrative proceedings could have a material adverse effect on our business, our financial condition and our results of operations.
Our failure to protect our intellectual property rights may undermine our competitive position, and litigation to protect our intellectual property rights may be costly.
Our patent applications may not result in issued patents, and our issued patents may not provide adequate protection, either of which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
We may need to defend ourselves against claims that we infringed, misappropriated, or otherwise violated the intellectual property rights of others, which may be time-consuming and would cause us to incur substantial costs.
We have incurred significant losses in the past and we may not be profitable for the foreseeable future.
Our financial condition and results of operations and other key metrics are likely to fluctuate on a quarterly basis in future periods, which could cause our results for a particular period to fall below expectations, resulting in a severe decline in the price of our Class A common stock.
If we fail to manage our growth effectively, our business and operating results may suffer.
If we discover a material weakness in our internal control over financial reporting or otherwise fail to maintain effective internal control over financial reporting, our ability to report our financial results on a timely and an accurate basis may adversely affect the market price of our Class A common stock.
Our ability to use our deferred tax assets to offset future taxable income may be subject to limitations that could subject our business to higher tax liability.
We must maintain customer confidence in our liquidity and long-term business prospects in order to grow our business.
We may not be able to generate sufficient cash to meet our debt service obligations.
Under some circumstances, we may be required to or elect to make additional payments to our PPA Entities or the Power Purchase Agreement Program Equity Investors.
We may have conflicts of interest with our PPA Entities.
If we are unable to attract and retain key employees and hire qualified management, technical, engineering, and sales personnel, our ability to compete and successfully grow our business could be harmed.
A breach or failure of our networks or computer or data management systems could damage our operations and our reputation.
We are an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors and may make it more difficult to compare our performance with other public companies.
The stock price of our Class A common stock has been and may continue to be volatile.
Sales of substantial amounts of our Class A common stock in the public markets, or the perception that they might occur, could cause the market price of our Class A common stock to decline.
The dual class structure of our common stock and the voting agreements among certain stockholders have the effect of concentrating voting control of our Company with KR Sridhar, our Chairman and Chief Executive Officer, and also with those stockholders who held our capital stock prior to the completion of our IPO including our directors, executive officers and significant stockholders, which limits or precludes your ability to influence corporate matters including the election of directors and the approval of any change of control transaction, and may adversely affect the trading price of our Class A common stock.
The conversion of the 6% Convertible Promissory Note could result in a significant stockholder with substantial voting control.
The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the market price of our Class A common stock and trading volume could decline.
We do not intend to pay dividends for the foreseeable future.
Provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, may limit attempts by our stockholders to replace or remove our current management, may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees, and may limit the market price of our Class A common stock.
Total revenue increased approximately $64.9 million, or 38.4%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. This increase was driven primarily by the increase in product acceptances of approximately 90 systems, or 49.7%, for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018.
Total revenue increased approximately $96.2 million, or 28.5%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018. Revenue in the six months ended June 30, 2018 included a one-time benefit of $45.5 million associated with the 2017 retroactive ITC benefit recognized in the same period in 2018. Excluding this one-time retroactive ITC benefit in 2018, revenue increased during the six months ended June 30, 2019 by approximately $141.7 million, or 48.4% compared to the same period in 2018. This increase was driven primarily by the increase in product acceptances of approximately 159 systems, or 45.8%, for the six months ended June 30, 2019, as compared to the six months ended June 30, 2018.
Product and installation revenue combined increased approximately $62.3 million, or 46.2%, to $197.2 million for the three months ended June 30, 2019 from $134.9 million for the three months ended June 30, 2018. The upfront portion of the product and install revenue increased approximately $67.2 million to $195.2 million for the three months ended June 30, 2019 from $128.0 million for the three months ended June 30, 2018. This increase in upfront product and install revenue was primarily due to the increase in upfront acceptances to 271 in the three months ended June 30, 2019 from 181 in the three months ended June 30, 2018. The upfront product and install average selling price increased to $7,203 per kilowatt for the three months ended June 30, 2019, from $7,093 per kilowatt for the three months ended June 30, 2018.