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BE Bloom Energy

Participants
Mark Mesler VP of Finance and IR
KR Sridhar CEO
Randy Furr CFO
Tahira Afzal KeyBanc Capital Markets
Stephen Byrd Morgan Stanley
Michael Weinstein Credit Suisse
Paul Coster JP Morgan
Pavel Molchanov Raymond James
Colin Rusch Oppenheimer
Julien Dumoulin-Smith Bank of America
Jeff Osborne Cowen and Company
Call transcript
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Operator

Good afternoon, and welcome to the Bloom Energy Second Quarter 2019 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mark Mesler, Vice President of Finance and Investor Relations at Bloom Energy. Please go ahead.

Mark Mesler

Good afternoon, all, and thank you for joining us on Bloom Energy's second quarter 2019 earnings conference call. we call, the file it investor SEC supplemental information conference shareholder QX along relations this throughout financial with reference letter and that website. supplement we to our have XXXX with this To call periodically our will have posted

documents on the most events company. the which uncertainties differ that actual The we recent assume forward-looking our These reports specifically detail XX-K today's in and subject made risks to and to future statements. forward-looking statements we SEC, on discussing future discuss could call. identify financial in XX-Q forward-looking Forms statements today obligation are with materially matters results contained the include performance any no factors important that those We from in risk be regarding will revise cause the and filed of the to statements

this During and included XXXX as letter, A accounting is principles. not GAAP we GAAP our in and to are generally measures accepted prepared refer measures. financial non-GAAP QX call letter. reconciliation XXXX part and between shareholder non-GAAP with QX accordance in financial shareholder non-GAAP our of These

Joining KR Co-founder Chief Chief of the Sridhar, Officer; we take today call then and will review Furr, me and questions. Financial and and Principal Randy Randy KR financial highlights the Executive Officer. will on operating are the quarter and

call turn now the to over KR will I

KR Sridhar

opportunities followed Randy to a and by earnings follow developments the discuss Bloom. power Hello, this brief XXXX Welcome performance few our is you KR. creating of that QX financial are in a shifts will then significant QX you. to Good calls. business industry of summary I’ll for afternoon market conference to Furr discuss performance. all Bloom provide with

XXX revenue, is In system achieved million year-over-year all-time XXX.X a of We an record which Bloom. acceptances, QX, XX% for increase. achieved we

XX.X loss XX.X% margin million. operating was gross Our was and

strong million. was Excluding and XX.X% non-GAAP stock-based income a gross non-GAAP our Overall, operating performance. compensation, $X.X margin was

developments. company to on Now

make our We to partner, cost X.X current development our of of on continue track. Company. another Southern We systems our financed platform, megawatts Bloom generation is healthy fourth XX of reductions platform through

will XXX other Duke subsidiary Energy a power nation's substantial Adding Energy One, XX in million PPA, server in Duke have megawatts Exelon, Bloom place investment. through largest transforming projects acquire three of with a the now our of Bloom’s of companies partner power validated market investments. the unique a Energy

scale wind Japan Following renewable on important run capability biogas as using hydrogen on our announcements for power to the countries of by storage solar generated Asian and Korea that the and infrastructure large roadmap breakthrough renewable power landfill Bloom hydrogen. like generation, are on announced be servers for intermittent This enable asset an we could developing. well of as

Bloom We bio-methane and landfill, wastewater sourced waste, developing powered projects. are dairy

future, in them using months. about decarbonisation hear will Energy near the You expect Also, the Bloom the another from in we important announcement coming on us platforms.

era, there conditions in power these in XX of outages occur. for this frequency the shifts of Now, that to providers businesses nation being are first in few In the at communities an and a high the change electricity on stretch. prone most Worse that told is let last transformational they ever the the the may days power fire at unprecedented In advanced Earth modern areas, industry. consider if impacted has the us climate and limits the lose market months, wind scale. consumers time be still, no occurring may

Such more a months and last may its to cities to be a ahead. weekend. customers common month, more longer, New frequent, are perception new reliable severe, that hot the during provide expected reality normal. York to City events in Last is become power are was impact such worse. summer The unable and events more years The

grid withstanding capable It electric consequences brittle change. capable and reliable of of a aging nor neither struggle human us Mother is our with providing electricity. as out we is for that evident climate is the with basic XX/X built very the not of becoming is doling need, Nature weather It extreme

coping and health antiquated. power inadequate from the generators of Traditional designed batteries hours outages smog-related and outage The best, with and Current creates solutions minutes backup deal for days. at are not maybe with are generators backup to significant pollution risks.

to air the California diesel day gallons of City in with in worst United is of area States Lathrop PG&E. the of power without quality For it every Central that expects an Valley, burn the all from example, XX,XXX

to solving and a the ironically, exposed change diesel to been Studies XX solutions. show decarbonisation. attention local all long-term days in no that XX% of by that year is emissions population on on of has our problem focused given attention risk per Almost is from dirty resilient creating Unfortunately, cancer increases backups. climate

need that decades with the It interest from that brings, power We ourselves for is we imperative and lives, and come. disruption that and large starting property, of solutions deployment move electric and safeguard will scale economic climate now to to human protect resilient systems. speed vigor our with today's for secure change

Energy this There in that commercial unified other bring world impact The and technology Bloom changing no of can one rapidly in GHG resiliency both is relevance overstated. platform. cannot reduction be

that source Bloom offers reliable, world. a adapted clean, change and for is post-climate resilient the

on performed. how some Let Always-On Bloom have examples Energy solutions me cite

continuity multiple solutions, Depot outages Always-On last month. power business weekend Bloom the hours in rode City Home times of through stores a Four during area Energy summer hot New [indiscernible] with York

during the the epicenter. the located within that of Ridgecrest and single earthquake miles Bloom Every XXX XX epicenter than including more has on after at operated of event, right X. July the struck X.X one magnitude deployments one normally

high grid outages. earthquakes, systems powered floods, and after customers during fires, hurricanes, For winds, and years, have other our

an and architecture. uptick in with by inbound a in is evidenced micro deals successes interest the concern driving web more resiliency grid heightened our as and calls, customer solutions for Such traffic, increased pipeline

Massachusetts, the is the operates territory A also New Jersey, extreme key areas are today; and note to Bloom of Connecticut. the where disasters that point to California, exposure some geographic with New York, greatest weather-related

as our for business tailwinds a result. expect We

forefront for now about me you are you the have The half a faced about just geographies in headwinds at first we the policy tell discussions of outlined I of the XXXX. same Let objectives and is safety, to race no there renewables achieve renewables only compromising public affordability to resiliency, XXX% reliability, power. Such of power. credible way intentioned are well without by XXX% goal ill-informed,

during the otherwise slowed of political our in and of creates first Nevertheless, opportunity the healthy has marketplace rhetoric the The moving year. sales confusion in it California conversion half the continues. New through York funnel the very down

margins in may line not year XXXX, in mix growth to with acceptance in expectations/ healthy with deliver expectations. our achieved We next be ASPs We those have markets still New in generally orders for historically for Street from year York year in acceptance growth California. anticipated our our revenue line and fewer highest With over and expect XXXX,

into go detail will Randy shortly. further

these want have correct we on We degree high confidence Why? emphasize give are going that anomaly reasons. Let of bullish and to this six you me will that forward. that is markets an a

waits Nature no Mother for one. One,

escalates, number, to their As expect the outages interests act will duration and protect customers we severity, of

disaster-related discussed Two, will in increase electricity economics the grid to result drive in already pay we Utilities prices. to behavior. regulators request the higher delivered This for will costs. have rational rate made business markets

costs our without price us aggressive margins. down to to delivered customers electricity three, of on lower our product Number will offering impacting our enable

alternatives. they cost outages quantify Number switch of and power power when to grid four, for commercial it businesses from are beginning accounting to the

their are now after risk their Number to receiving providers. five, should they with customers fair deal from exposure long unprepared considering be warning outages utility

large outage option Number impacting base a traditional not contiguous diesel service I viable six, as of for mentioned, powered power is areas. backup

We are our some US expand taking steps business key opportunity. to commercial

solution without to a power microgrid a Such in our commit five-year are only customer compromising the a short-term where pricing contract business. We introducing revolutionary product is to term. baseload offer has

and shelf for customers off business who the simple a not microgrid and do would provides traditionally risk for now needed continuity. new safety, so one offering Our have but solution mitigation,

Chris White and Chief very We are proud Officer. growth energy, high him in scaling make Sales experience our His and building and partners, teams, to very channels timely passion, new talent, sales prior a as addition. welcome

rate, power. summary, have climate the an we the have a with point consequences tipping of believe up change way ratcheting In we deal reached alarming with electric to at businesses in

climate are from renewable buying remote only and that Gone signal by days could mitigate the acquiring credits corporate carbon virtue farms. or America change

Today, of protecting capable climate and that operations change The frequent business impacting are if of and employees, consequences is, outages? address assets. companies their customers, we is leaders our power investment the question prolonged must for and experience business we

it serve Bloom the is Energy time. product deliver Bloom’s own to at right the our reliable, in will platform resilient, this needs. mission sustainable. It and solely and on affordable, and and we that positions meets is uniquely We vision accessible, the right market safe, us their electricity and to offer market right execute in the market

Randy, over to you.

Randy Furr

earnings my Thanks, Mark be KR. in referring call I'll that the Throughout referred earlier. slides to comments; presentation to prepared the

that First will some stock-based compensation. highlights. all Note exclude reference numbers I profit that

So, In XXX quarter. on QX XX% a up systems. from respectable XXXX’s to approximately three. Acceptances were slide XXX very summary, systems,

XXX.X Revenue XX.X%. in up over year. was margin approximately come at XX% Non-GAAP gross million, year

was million. adjusted with in X.X income operating non-GAAP million, coming Our XX.X EBITDA at

was this PPA we ended million of in Adjusted quarter loss excludes the cash a EPS $X.XX. XX.X investments, with And cash. term for and short and XXX.X million

Now on some color quarter. to for the

the like cover. there I'd However, is details, before one into item I dive housekeeping to

that used planned financial respect we for QX call, we PPA originally had on that our In upgrade for provided. provided estimates statement the we project QX that for different was we the announced the quarter than during the QX, with estimates ultimately earnings to the to presentation what

our associated now is are net profit upgrade of XXXX QX certain statement. netting the The incremental revenue with on this, relative and received; loss estimates, and instead against proceeds we recognizing expenses expenses our to

and the final to estimates how So actually four results that understand the we or provided the that our better for can the results, adjusted provided. to normalized that expenses methodology affect aligns we slide with bridge have revenue a incremental actual you

financial added can the in you statement see top-line to example, our relative approximately our original revenue million that XX to For estimate. presentation

actuals approximate incremental I million of revenue year was offset expense. to should also adjusted point in Absent our that change, year would the that on increase. XXX.X incremental XX.X% a have million revenue all with basis, over translating show a out normalized XX been

no EPS. So, the on and net impact profit line bottom

up sold, line in X XX non-operating million the operating and million ended million goods in Approximately below cost expenses, approximately in of expense. X

these also can You our see API. are adjustments neutral that to

actuals quarter. adjusted so in comments, reference that, with for originally estimating I the simplify the to discussion, our will that my of were how rest you results Given align order the

a not upgrade, does have which again, is ASPs, installation this five, coming had both X.X% revenue Acceptances XX.X% and onto and XX.X% Adjusted minimal installation were once which over With that sequentially. the behind mix year XX.X% year revenue. XXX.X PPA revenue international, was of XXX in lower to million and year; Bloom. year revenue sequentially, to slide growth acceptances due QX down over up for the up records from revenue us, were

of in food Included United data different in spread projects, were QX’s technology, majority universities, and utility installations geographic XXX in the retail. mix acceptances the the total, centers, beverage and sports systems for five of The XX In customers different were States. markets. over scale venues, healthcare,

the average sale well price And I quarterly On just you do specific of cost system we letter, our range range shareholder provided provide estimates slide in as we a six, QX with discussed, a as QX total estimates. installed estimates. as of

per our estimated ’XX, average kilowatt, range. ASP or $X,XXX come at QX adjusted our a below selling number in For price

we revenue have do can installation mix will vary mix I ASPs geography As and depending where deployments, the pointed the upon and ASP. customer in for generally not included have consistently international out,

year cost down sequentially. system in installed year over $X,XXX, and at Total down XX.X% XX.X% came

and I represents emphasize, acceptances which costs, margin during of installed As the installation total the on our metric is key ASP the between the and real equipment system previously the quarter. delta

a XXXX midpoint margin and PISC The of or the $XXXX estimated of ASP estimate kilowatt. per yielded delta or

per As toward you our estimates. on number the our of higher $X,XXX see actual six, end delta can margin adjusted a was slide kilowatt,

at basis, and million Turning On profit, ‘XX’s excluding seven, over XX.X XX%. gross XX% XX.X profit nicely million a to QX. QX XX.X%, almost a from year gross QX Adjusted adjusted gross last year's slide in compensation adjusted up come above number year in was increased margin in stock-based XX.X ‘XX to XX%.

for income stock-based excludes non-operating Adjusted was $XXX,XXX. compensation. Again, QX number this

expense related As four, incremental PPA on upgrade. pointed the expenses one-time out adjusted slide operating to to the included

up over This even next of this spending and increased expenses sequentially primarily will note product. invest result is are You as we operating in R&D one-time that in after year excluding a year. our generation expense, both

normalize to adjusted XX.X our the again EBITDA, adjusted with estimates, reported presentation Our financial for quarter. was statement million the QX

at Excluding a adjusted X with to the associated in non-operating referred per expenses, the loss million expenses $X.XX. earlier one-time came of plan EPS were and

eight. of slide PPA short-term million and and PPA million of includes cash; on XXX.X million ended the quarter This excluding ended so, to cash Turning with sheet We investments. short-term of balance the cash, we with XX.X XXX.X cash investments.

that I related off to of to we million. debt was prior note as the decreased at would revenue upgrades. also XX debt This the the paid with by proceeds associated from associated PPA approximately financing non-recourse the with the upgrade closing

Our quarter cash X.X million balance increased quarter. over by

was from to slide nine, QX sales XX by Referencing days XX of days. days down

up QX on variations. Our XX days days XX was was from and up cycle outstanding two business normal our three by from to by QX inventory of days, days payable to days days

we XX operating conversation between and XXXX system X,XXX, the be outlook. our expect to to be between XXX. QX, million our to Also, ASPs between installed million. costs XXX acceptances we and total between XX In be expect Changing expenses to be and X,XXX. to X,XXX and and

dynamics outlined, additional we of tailwinds to we market believe marketplace quickly an to KR opportunities. advantage Given open up have the take that the that opportunity market

an products will We that products discussed we demand for fuel accelerating the that in hydrogen solutions, resiliency offering as announce or simpler therefore bio-gas and are KR spending generation future. other and R&D as well solutions, fuel a our

our include: grid ASP As tariffs site TISC of outage utility of that this number previously includes being the installation. installed, installation. cost does whether includes impacted the the per and/or to are on not generally, the work a larger whether size include applicable location; the kilowatt and basis; lower scope or protection by and past, of I the location mentioned business mission both for our as site Again, the and international the a installation, critical; the factors not in generally, mentioned, site

element not or our important of The profit. bottom in represents between delta two. TISC, the delta but the the the ASP trend level is is the the unit line The trend the

reflected call, our forward. will to of in going results. I to We QX wanted to benefit in benefit Therefore, be earnings we to That do expect one-time just I that loss during X QX, not approximately a highlighted in see outlook, profitability. million loss X one-time related to see Also that is range narrow one-time service our related we last million of our out point benefit X.X this expect profitability in to QX million. the service QX. our

the I year XXXX. would like conversation the to to turn

year communicate backlog our intend past calls, Next not we quarterly and that we at we have year, end on year as to discussed change do earnings will practice. disclose and once a

first appropriate visibility we do However, time feel this This it is XXXX. based on at to high-level on provide XXXX orders. is half some

US industrial For of translating in revenue the revenue to XXXX and X from to ranges the recall that the come booking industrial months our and booked bulk in to commercial XXXX. timeframe, quarter commercial business, time orders XX will from US

acceptance first half do in we on incoming see volume to our based XXXX. So, XXXX orders, the expect growth

to growth anticipate range In be XX% positive. volume in all acceptance year, next fact, we the

our percentage, year. translating a by in expect drop customer the a a ASPs the growth flat top-line to revenue generally also for given However, we mix, similar

no now substantial and Clearly, be mitigated, profitability. can impacted. in may drivers, a increase some volume color growth, and revenue with provide impact and on I ASPs, profitability partially be That will volume

With anticipated sufficient growth volume, offset respect declines. to previously to planned we volume ASP

the somewhat and still lagging our and commercial is and plan. that generally performing Our with internal is at internal It utility industrial well level business international not anticipated. in growing, scale businesses our but US are line expectations, initially

headwinds our delaying out in natural renewables decisions. KR US policies gas some The this? and customers, and, various cases, is are purchasing Why for creating this confusion pointed earlier. political around

decline we an not is did and international Therefore, to costs. any to attributable no profitability, perform no installation thus, increase nor portion With revenue installation of line. where our ASPs ASPs respect business installation; in in hit our the a to bottom

our the is attributable of of the ASP portion decline to Any mix overall business.

As given realizes US higher and are where businesses rate industrial scale historically than a ASPs investment international our credit. and growing faster utility commercial tax in commercial federal at US our the industrial,

attributable New US and lower. where commercial California for industrial The anticipated outside move are is an markets, markets majority business, typical York the into ASP decline electricity tariffs as to the decline our generally our of we and

trends, However, cost mitigate product proportion with through of line expect decline historical reductions. we to continued a in ASP any

So, decline. not but as volume is are generally the rate our in to a anticipated, the summary, at fully ASPs increase offset declining sufficient

mentioned generation we year. next product the of As I our of another earlier, to expect next and do year declines, cost expect we product see launch do low-double see digit late commercial to

to not of consumer periodic goal be any notwithstanding Finally, a capital cash in working timing our is the of requirements. XXXX

back for for time. call to operator Once the the again, your I Q&A. now to you like turn thank

Operator

[Operator Instructions] from Markets. Tahira KeyBanc the And your Afzal Capital of from comes first question line

Tahira Afzal

First that lead on some side, have the new how given management changes question installation hoping of the just implemented you me on some for had the and times. of team is, been to have maybe just changes in impact an speak could place examples these

Randy Furr

is This question. Good Randy.

So our away I building that a just et earlier, that. fire this folks, from that from parties, hurricane do we’ll the deal there's need customer, landlord, called with as third of these local like the major have challenges and business from to we pointed something that as number get our And or permits, from or utilities, with in often really to are the out fire, get such approvals cetera. to

estimate that we've a the to guide just bigger what will done we’ve that totally control we So quarter. take than in want lot a a yield new team has out that's or a there of I job, we just great is no of matter that the place, and put this way lot the address of able tool -- the management of in to stress is and stuff, we what Bloom policies what been here

because yields than that difference pool at ASPs often a beginning. be see is the you'll pool that might why in we had actual the anticipated that's And the different

management improving that think that process the team there really And And driving conservatism I to yield the focused estimates I just new one of just continue that think on focus, we number build that to there. some, call way pool the led we with talked really is the the going just we costs and deal bigger it to [indiscernible] is future. think for in today but the that's the also have down team by will a we're into uncertainty let's that have. about, quarter

Operator

question Morgan Byrd line the next from Stanley. comes of Your Stephen from

Stephen Byrd

to Hi, being Randy, the cash in the in XXXX. muted the XXXX? for is in just flow this this flow I bit cash on outlook and touch you given the do what on little year cash flow positive more half wanted you mentioned plan still a second company, outlook cash, outlook end, but the conserving about towards of

Randy Furr

And, Stephen, the to Yeah. wanted put we we in expect in cash half XXXX. positive of yes, the the be to answer question, so flow the end. that second to

will that losing is expectation Our not XXXX. be in money we

in In in profit fact, certainly year, finance flow capital expect working cash that in we profitable expect despite want and the even the out to slightly we that is generate to expectations business in cash will the flow capital that our we to that neutral be growth XXXX. and the we’ll company the to We next any have XXXX. just external point needs be profitable

Operator

of Credit next Weinstein question the from Your Suisse. from Michael comes line

Michael Weinstein

is overall XX% XX% projection similar for quarter that that to think be what going had QX going in year wondering, for to to do to year, this be it to you year-over-year to given QX, XX% I’m or closer acceptances, the shapes next increases going next fourth -- Is up? get the last about year? you you've increases you're the guess also that level do I that, Given think XX% and how just

Randy Furr

all, expectations So look, QX, we one only of a from at guide quarter our time. first from

But So that’s if -- what's today, than QX. I'm the out guidance going significantly look to out not not provide any we on provide I we're there at different you guidance on there today. think wouldn't what's street

Operator

Paul line your of from Morgan. from the next And comes question Coster JP

Paul Coster

in at I a installations look so on which you're cancelled me takes purchases, perspective. volume number and puts and moment. think heard year, way thing what that next have to is don't are a you the, I I But or know the from that pointing more postponed There let to many of yet, one say just there. customers focus

two So I reconcile statements. can't those

is it range. unless going the big could for that I I'm I does you be I don't say mean? why on to a would heard that. tag to get such another just XX, question be thought don't I XX which that I OpEx misheard, Randy, what understand

KR Sridhar

So, exact you Randy answer tell can Hi. the I'll Randy take correct. have then And the suggested, will no, first This Paul. what which question are KR. you, you you is question, the the and give and numbers I'll not I will numbers,

be there So your have not what funnel see, of we the need in are anticipated while to is flow is a cancellation healthy funnel in What are the orders, first our observation pipeline, base no the in important deals you sales in to the for giving we we we which point now. is where is or question. state, at an said orders right make you the its as

policies there created York connections, and Just to to gas delay decisions, relates in of their in New is customers be making XXX% California, being are be especially in and light forth. in marketplace, going on the it so so because as to no what our renewable, and confusion a

trying they're while that. there's delay. to a So understand going that on, is And

reductions, already end to the just However, the the getting of them not are that based that that be core shaped as direction are are from these fighting decisions facing it think climate strategy. an has I strategy creating through change policy we that issues emphasized, a states resiliency in we of and carbon resiliency looking understanding on point

our in that's favor. So

expect anomaly one-time to thing be for the reasons. a we and timing this So those

Paul Coster

just mean, in don’t going if -- that. unit dramatic expecting, all an clear very now the surely, down into I be understand I insight still understand this are shipment an of shipments increase sorry. would such is have I pause, a is high, I or this, why number, there elevated you unit understand can't in you but quite drop What ASPs,

Randy Furr

growth here. little amount not the I'll will but not if year, in out get higher in top. growth happen, with for at was translating this XXXX. as a seeing, the in XXXX, the be helps, it top what we're been XXXX so same pretty anticipate will of in what's healthy XXXX flat see there this is fair acceptance pushing And to anticipate keep at great if that add a and we company ASPs growth saying acceptance Paul as growth, the by most from But the away same far And to booked we still it bit been looking to still revenue for XXXX. line and the you've we is mix that if revenue about than we're acceptance amount a expect thing essentially we’ll the decline

Paul Coster

Okay, and then the OpEx comment, Randy?

Randy Furr

Yeah.

pointed I thing will in go that what QX a away. out one-time had So is we that

million. QX in XX be million expenses operating XX our So to will

think I it’s said XX XX, you XX. to

Paul Coster

sorry. Oh, I'm so so I'm sorry.

you. Thank fine. Okay,

Operator

from Your next Pavel question line of comes Raymond James. the Molchanov from

Pavel Molchanov

the in do your half the What went for in of percentage second percentage to of QX and what Korea, year South Korea? you sales anticipate

Randy Furr

going not in were quite United percentage, to that but competitive continue don't revenues our reasons. of a States. ago. to our do more don't we I I and of that. talked a Look, on bit We -- the breakdown we're for here half half call My than just than that more, And, couple of disclose opinion the out disclose that the about of unfortunately, that pointed quarters less

Operator

And Rusch your from next from line Colin Oppenheimer. question comes the of

Colin Rusch

two, Great. one. I’ve with let’s start got but just

In timeframe cost flowing can them terms expect to have us elevated of the to through sense give you products the to spend to market, that market bring these that the and bringing a total rough new of P&L? you

KR Sridhar

Yeah, sure.

and So if platform, And two increase looking a of prototyping And those look at phase now. that years X.X you're R&D this occurring we the is generation for platform, than where then spending the of the has more Bloom where the been will at next pace accelerating occur. that are the you there. in that's parts which is

The is is that working other seeing This soon. next ideas are we happening is hydrogen, our renewable worthwhile ready spending, are other which a we and strategy. you're will think increases announce in very de-carbonization we gas, that bio we the in thing. when That's R&D that on couple extremely

The not third item have R&D Today very with customers kinds tracking the which selling weather a the predicted of need. systems as calls, commercial because need under solution of certain that there for product business be these a who huge on is the think based worth continuity for not we simple be potentially that into potential marketplace outages will see well they are have to spending installed that we we inbound today on days’ as, going is conditions, we from customers. did

product. other the that's so And

million to million that to quarter All by if $XX explained adding $XX as we are our together, that you're R&D spend put Randy you, to that you take this as an example, increase orders. to will our and actual beefing up contributing into OpEx help translate it's these is and sales contributing and ideas in looking which that also great our to products marketing

Colin Rusch

sure next of and warranty are planned the year? And generating no that want I guess is on about about I any impacting understand cash talking you that the deltas an positive you're the warranties for there year or absolute balance make Okay. And concern flow is matter? I already second this assuming then cash to just flow around flow basis that comments. cash really into are question that

Randy Furr

the… Certainly, into coming because anything is sure to question but baked warranties, from do that that's with

Colin Rusch

it to I make in sure there. was baked baked just just It's want in.

Operator

from next from question of comes America. Dumoulin-Smith Your Julien line of Bank the

Julien Dumoulin-Smith

wanted you Just don't to follow up mind. on quick few items if a

is what if it as elaborate end on geography sense piece just you're next or year both you get you a those about those we market for the the sales as and why little if bit can composition on expectations coming little how so is can so to elaborate like as to bit the much, the respect a ASPs thinking that's a with backlog down think volume, well a like about about composition are First seeing, or can where you the – the of just on ASP what are, sales? like you’re of sales what

about what how And you by think here, positive do last do given talked point flipping jump services the in then them position, one separately, service quarter at et if in this time, to positive the I can the that about margins think margin obviously, year, about question. year, just of Very you net everything a some on current in cetera. nuances briefly, turning to each there's you

KR Sridhar

answer part is two the So following. the

we depending On some and don't perspective, what or you but the services, the a do overall, today, large have upgrades, on from recharge the give ship do margins and we before us that service units do again, when of is service we there large will we profitability scale for bill a breakeven be will that forth correlations new the updates, have. some we the back we -- scale told

we to looking X.X current talked you we seeing different what the We you're X.X our on shipping have And us to with shipping are There the long get you that on our talked will from generations. we That's service about. X.X quarterly systems of doing last, with but you give shipments. that and that's will as upgrade service profitability to the have our be have anything revenue guidance they're term will that what with be. is give that we the And various for today basis we we goal. that our a about with what out we're forecast there fleet and a units on

– the On

Julien Dumoulin-Smith

that, need so generation in you’re to and if KR, flip the sales can, right. necessarily given to So, newer in expecting near switch I the into not a those term, in blend just to jump clarify

KR Sridhar

Yes.

Julien Dumoulin-Smith

part? second the And

KR Sridhar

Randy, -- not which expect we current delayed what numbers was of that of question the on with like that's this to closed, lights at we of we or resiliency, every when reasons you causes this But will -- term long shift. that cannot I that because have delayed, today's have the deal states, the fraction that created to an and by York you and change of orders that the the translate the higher said is our in given typically deals is as we The we observation. anomaly an deal is here margin look New is, we And from currently on reality not why ASPs, mix, with the and have reason sit canceled, hence keeping our on, while deals command California, statement the simply the may margins California confusion of York as marketplace. of the so climate believe less that we in second delayed, and from shift, what six New not high the gave

we months have However, don't still six the left in year. forget,

see. this a of heads is up we So what

you on and understand did. what's we So going in transparency. marketplace what full the That's

Julien Dumoulin-Smith

if more a specific you a aggregate, But or is will saw something think specific much pervasive two drive confusion just help bit to these point Because that I confusion is little channel is understand, there that why trying a large in can? that to pivot in or geographies? understand you argument? that Sorry. there there customer Just so

KR Sridhar

multiple it. that are things there will we think shift Well,

First the a reliability, on. give make carbon, going when excited lower that decisions help and all like those customer year time five see one can think the that's in we We contract, talked that clearly to about, resiliency, going that period, we're that one what's faster, that's is, in they because to package. going product about, so a five provide we year offer,

are, second days they related for have don't power customers costs. disaster up all the for is, of first the time, The pay businesses really of prices utilities their out against own their have exposure because the when trying their their rates going their to to increase having and one backdrop figure they extended the to and power risk impact not the to

in are we clear, see, pivot these here, as sit happening we marketplace. that points the So

Operator

Your next Jeff question of comes from the Cowen line and from Osborne Company.

Jeff Osborne

to Just up follow the prior question. on

XXXX KR, assuming to hit on Berkeley like So confusion, is are I some question cities lingering and Are resolved this gas next impacting that then all XX% as and kind or a as be area moratoriums the seen as target well a the issue well? those Massachusetts delays funnel had And territory of as was going year? in you to is the at that well. also

KR Sridhar

for to also diesel de-carbonization. their have They are and de-carbonization with resiliency periods had very as even an to resiliency They policymakers, treated for city, cannot end as in in you for understand solutions had of solutions even on also end California offer. based safety cannot goals clearly the a systems possibly provide and don't clear resiliency backup if your provide day, the them, very to beginning you if York New other that understand all a Well, understand you that diesel the customers. to that that educating gensets, solution for they to long conversations we're roadmap that existing for be the on operate both our has our entire an time days

world. the when educating this is make end of without it's you and right is important helping for the a the is of end why about Mother not of of days, policy day, and just week. to to us At about end realize It's you begin why Nature the decisions. enormously. couple the light So, of customers this end and day the the educating are

Jeff Osborne

side? Anything gas moratorium on the

KR Sridhar

Berkeley. Same thing. be with a legitimately say will just having city no storage, expert like can If who renewables they power intermittent -- other there solution, today without any and will

thinking, it is impractical. So, it is informed, intention, is well ill visual is it it

Operator

Your the Coster Raymond comes And Paul Pavel from of James. of from final question line from your next line from JP Morgan. question comes the Molchanov

Pavel Molchanov

given outs period. cell would not to that now, until fossil designed be probably is product your mix run California, not from that so entire XX year fuel electricity New XX phase and even those York the sales ahead, given why XXXX, years for in an On the far are that fuel they impacting

KR Sridhar

actually and question your great question. in a that like question that's Pavel, is, your Exactly. you answered

to We will an it’s be not that impediment. say going

is don't sit that in demand way sitting states that believe believe here. and I We going these up it we where -- the our will see contrary, go to are we the in believe not we fact, that I down to

are worse, are seasons seasons fine your getting hurricane Our getting worse.

So I confusion causing the expect in somebody exactly marketplace button, that to button. hitting happen. delay, that a it is not The issue think of as end is the about simply one pause the

to That's one-time that's extremely soon. Okay? a anomaly. It it a why restarted we going get pause is button call

where choice, through even it, fuel, power is thing today's not system. you period, That if the maximum that you're going a carbon. second want you is fuel with to that's the of to use The get the can of your use Bloom lowest amount

a plants, it able wastewater methane, from and excess that That's landfills, system. You fluid. bio to renewable use can take that be Bloom with treatment to combine want and the from operate from system it fuel

us. and safety to You way and want climate And a it going build to provide that's resiliency, if a in sometime a is upon time. with resiliency you has change use it can worse not happening future, started in the in such you Bloom It's it's grid and system. situation, that a micro because disaster get want natural that

the better correctly, better And you XX-year as you we can utility need to systems pointed order we future to new money opposed it product, a to are meet out our with play a of our to our years systems, five in and with play where technology make go. every needs upgrade

wait to to our have the and they to purchase. years they the and that customers systems They to not system systems. are with for buy to be upgradeable implemented, So allow latest when XX stuck to backward systems lawmakers, compatible use XX our they

would safety I The we provide product, and going people that comfort had other drive that no system those is will airbags. bullish we no system all has why combined with your the than rearview are in you're belts, and nobody this you in market. belts, mirrors, no want seat a say can in and rearview had That's seat for system their one that happy about had the mirrors what a of get. is driving are to the bags, So weekend But have cars now that road get a electricity those to cars. safe Bloom one with air most the that

field. in unique this are We

Operator

Mr. And for our time over that today. the call have closing the all is will I turn to questions back we remarks. Sridhar for KR

KR Sridhar

Well, much. all the thank call. you you appreciate joining We very

fundamental with the you the is also making it about dealing It's see, can climate is consequences, see today digitized cause. just here cost, As which as change a about mitigating too, sure climate is about change mitigating in the world, happens we a human not always solution the that tomorrow, and that and a with that have hope of to the offers them decarbonize can on need its mitigate fear solution same today gives about we hope people on. electricity future. always for Bloom how

our that we And bullish an where extremely the product going this go is education. is understand on future. are to we So in

base. tools and a the exactly appreciate the of the We attributes greatly of tomorrow, going to a set with are this building We long of part is being that company for a come. long time part today, with the for term, customer this right you need the being and investor right you. Thank journey to

Randy Furr

you. Thank

Operator

call. This concludes today's conference

You may disconnect. now