管理層發言
Good day, and thank you for standing by. Welcome to the Fluence Energy, Inc. Q2 2026 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chris Shelton, Vice President of Investor Relations. Please go ahead.
Good morning, and welcome to Fluence Energy's Second Quarter Earnings Call. Joining me on this morning's call are Julian Nabrita, our President and Chief Executive Officer; and Ahmed Pasha, our Chief Financial Officer. A copy of our earnings presentation, press release and supplementary metric sheet covering financial results, along with supporting statements, schedules, including reconciliations and disclosures regarding non-GAAP financial measures are posted on the Investor Relations section of our website at fluenceenergy.com. During the course of this call, Fluence's management may make certain forward-looking statements regarding various matters related to our business, including, but not limited to, statements related to our future financial and operational performance, future market growth and related opportunities, anticipated growth and business strategy, liquidity and access to capital, expectations related to pipeline, order intake and contracted backlog, future results of operations, the impact of the Inflation Reduction Act, projected costs, beliefs, assumptions, prospects, plans and objectives of management and the timing of any of the foregoing. Such statements are based upon current expectations and certain assumptions and are, therefore, subject to certain risks, uncertainties and other important factors, which could cause actual results to differ materially. Please refer to our SEC filings for more information regarding these risks, uncertainties and important factors. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information. This call will also reference non-GAAP measures that we view as important in assessing the performance of our business, including adjusted EBITDA, adjusted gross profit and adjusted gross profit margin. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is available in our earnings materials on the Investor Relations website. Following our prepared remarks, we will conduct a question-and-answer session with our team. Thank you very much. I'll now turn the call over to Julian.
Thank you, Chris, and welcome to everyone joining us today. Turning to Slide 4. Since our February call, we made meaningful progress on order intake, our U.S. domestic supply chains and our product roadmap as we position Fluence to capture expanding global demand for energy storage. Our business model keeps us close to customers so we can anticipate their needs early and respond quickly with the right products, applications and commercial structures. This morning, I'll highlight our momentum across the business, and then Ahmed will review our financial results for the quarter and our current fiscal '26 outlook. Here are the key highlights for the quarter. First, order activity is accelerating versus fiscal '25. As of today, we signed approximately $2 billion of orders this year, which is double the amount signed through the same period last year. Our record backlog was $5.6 billion at the end of the second quarter, and we expect it to grow further based on execution so far this year. Second, second quarter adjusted gross margin was 11.1% which is within our full year expectation of 11% to 13%, a meaningful improvement versus Q1 and more reflective of the disciplined execution we delivered historically. Third, based on our first half performance and visibility into the remainder of the year, we are reaffirming our fiscal '26 guidance for revenue, ARR and adjusted EBITDA. And fourth, we ended the quarter on March 31 with approximately $900 million of total liquidity, reinforcing our strong financial position. Please turn to Slide 5 for more details on order intake. Our expanded commercial effort is translating to stronger conversion into signed orders. During the quarter, higher lithium prices temporarily slowed some customer decisions, but momentum reaccelerated as prices stabilized. For third quarter to date, we have signed over $600 million of additional orders. For the first seven months of this fiscal year order intake totals approximately $2 billion, and we expect the total for all of fiscal '26 to significantly exceed the level from fiscal '25. Most of the orders this year have come from our core customer segment, developers and utilities. It is important to note that 50% of our orders this year come from new customers, a signal of the early results from our expanding commercial approach. Please turn to Slide 6, as I detail our progress with new customer segments. Since our February call, we executed master supply agreements with two major hyperscalers. The selection process for both of these MSAs was subject to multiple rounds of review, and in each case, Fluence was chosen after meeting criteria specific for each customer. In one case, the customer's process began with 26 different best-of-class vendors — and Fluence was the first to complete all qualifications to sign a global MSA. In the other case, the customer had requirements which made it hard for many competitors to comply with. In both cases, we believe Fluence's understanding of customer requirements, rapid response time and proprietary products were key in driving this engagement. These MSAs established Fluence as a qualified supplier, positioning us to build on expected near-term data center projects for both hyperscalers. With additional progress with one of these customers over the past few months, we expect to find the initial order from one of the data center projects within the third quarter. In addition, since our prior call, we have successfully developed a proprietary solution to handle the extreme power usage fluctuations experienced in data centers. Fluence excels at this based on our deep experience with advanced controls and track record managing fast response systems. Based on our discussions, we believe these capabilities will be an important differentiator for data center customers concerned with quality of power. Finally, we're seeing increased interest in Smartstack for applications requiring longer-duration energy storage. Smartstack density provides a competitive advantage for these applications because of its smaller footprint. Please turn to Slide 7, as I discuss our growing pipeline. A key piece of our commercial strategy has been the growth of our pipeline, which has increased by 35% so far this fiscal year. We are seeing opportunities in the U.S. market beginning to outpace our other markets with projects concentrated in California and Arizona, as well as the MISO market in the midwest. Most of the growth is from our core customer base, as I mentioned earlier, but also in part by new customer segments, including data centers and other large energy users increasingly adopting storage solutions. Since our last call, our data center pipeline has increased by over 30%, including projects from both major hyperscalers I just discussed. We expect data center projects to make an increasing contribution to order intake during the fourth quarter of this year, building on the initial order we expect in the next few weeks. Fluence's business model is intended to keep us close to customers, which we believe puts us in a privileged position to spot evolving needs early and to respond quickly. That insight informs our product design, the applications we support and the technical, operational and commercial terms our customers require — backed by a sales organization with deep long-standing relationships. In short, we have positioned Fluence to be on the leading edge of the market. We view the commodity components as those we integrate into finished products to meet customer needs. Combined with our long-standing technical expertise, hands-on experience and deep understanding of different markets around the world, we believe Fluence is uniquely positioned to deliver and help our customers maximize the benefit of invested-in battery projects. We have evolved our product to accommodate growing customer demand, including market-leading density, digital solutions optimizing operations and profitability, reduced total cost of ownership, large-scale fire testing and industry-leading reliability. Fluence was also the first to offer a complete U.S. domestic supply chain — an important advantage for our U.S. customers. We offer a one-stop solution, primarily from project development through delivery and installation and continuing over the full operating life of each project. We combine in-house EPC expertise with a dedicated service organization that optimizes performance and extends asset life resulting in industry-leading operational net outcomes. Please turn to Slide 9 for an update on Smartstack. Product innovation remains another key differentiator for Fluence. Smartstack set the industry standard for energy density, enabling customers to fit more than 500 megawatt-hours of storage per acre with additional improvement planned. With Smartstack designed to lower total cost of ownership through modular architecture, easier maintenance access and more than 98% reliability delivering more electricity and more value to our customers. A flexible design supports a broad range of cell types across multiple manufacturers, including pouch cells, commonly used in electric vehicles. Importantly, smart packaging and modular architecture addresses the density challenges typically associated with pouch-form stationary storage. I'm pleased to report that our first Smartstack has reached substantial completion and commenced commercial operations. Our growing Smartstack backlog reflects this market's strong interest in our product. Please turn to Slide 10 for an update on our domestic supply strategy. As I just mentioned, we recognized the importance of a U.S. domestic supply chain early. Today, we have U.S. production for all major components, including battery cells from our supplier in Smyrna, Tennessee, which has been operating since 2025. Building on our existing U.S. supply, as we announced in February, we signed an agreement with another source of domestically produced battery cells beginning in fiscal '27. We believe this incremental capacity strengthens our supply position and supports delivery against our growing order book. We're also evaluating additional supply options to help support Fluence growth beyond '27. Our current position gives us flexibility as additional proposed U.S. supply comes online. Based on our experience, converting EV battery production to stationary cells can take a year or more. When exploring additional proposed supply lines, we plan to evaluate each facility from stand line to first production, its ramp speed, its technical characteristics and how its location could strengthen and optimize our core U.S. domestic supply network. Let me also update you on PFE compliance for our cell supply in Smyrna, Tennessee. ASC closed a deal to sell a majority interest of its facility to Fixed Energy, a subsidiary of Lombard Capital. Ownership changed on March 31, 2026 and the facility continues to produce cells that qualify for tax credits under the Inflation Reduction Act. We moved quickly to establish a relationship with the new owner and have signed a new supply agreement covering the next few years. We are confident in their plan to sustain the strong production level we see this year. Looking ahead, we believe we are well positioned to benefit from growing diversity in U.S. cell supply and the impact additional capacity may have on battery price. Internationally, we compete in markets that have seen meaningful declines in average cell prices for several years. Those lower prices expanded demand by enabling new applications. It's reasonable to expect similar dynamics in the U.S. Importantly, we have executed successfully through earlier inflationary pricing cycles. With an approximate 50% decline in ASPs over the past two years we more than doubled adjusted gross margin. Although we expect ASPs to continue to decline for the balance of fiscal '26, we are forecasting approximately 50% revenue growth with adjusted gross margins in the range of 11% to 13%, reflecting the strength of our execution and operating model. To conclude, we are seeing accelerating demand, improving execution and expanding opportunity across both our core and emerging customer segments. With a record backlog, a strengthening U.S. domestic supply position and a differentiated product platform, we are committed to delivering for customers and creating long-term value for shareholders. With that, I'll turn the call over to Ahmed to discuss our financial results.
Good morning, everyone. Since our previous earnings call, we have continued to capitalize on strong demand trends in our industry while maintaining our disciplined focus on delivering on our fiscal year 2026 commitments. We also maintained strong liquidity that provides us flexibility to execute on our growth priorities. More specifically, starting with Slide 12. We generated Q2 2026 revenue of $465 million, up 8% year-over-year. Approximately $80 million of revenue was pushed into Q3 due to two issues. Specifically, roughly half was attributable to a customs issue in Vietnam, with the remainder due to shortage of loading equipment in Spain; both issues have since been resolved. The delayed shipments have been received, and we are current on the quarter's deliveries with no further delays. Also to confirm, we do not have any material exposures to the Middle East conflict as none of our shipments utilize the Strait of Hormuz. Our adjusted gross profit for the quarter was $51 million, representing an adjusted gross margin of 11.1%. This result is within our full year expectations of 11% to 13% and reflects a meaningful improvement from the first quarter level as well as the comparable quarter for fiscal 2025. The primary driver of the improvement was consistent execution and operational discipline across our portfolio. Adjusted EBITDA for the second quarter was negative $9 million — an improvement of $21 million compared to the second quarter of last year. The improvement reflects higher gross margin, lower operating costs and a $6 million gain from unwinding an FX derivative. This offsets a $6 million loss on the same FX derivative recorded in the first quarter of 2026, with no net year-to-date impact. Turning to Slide 13 for an update on our adjusted gross margin progression and how disciplined execution translates to returns for our stakeholders. As you can see, our rolling 12 months adjusted gross margin is 12.4%, marking two full years of consistent double-digit returns. We believe this progression underscores the durability of our margin profile even in a dynamic pricing environment. Importantly, it reflects the product, commercial and supply chain actions we have taken across the portfolio. These actions position us for continued margin improvement beyond this year. Turning to Slide 14 for an update on our liquidity position. We ended the second quarter with total liquidity of approximately $900 million, which includes approximately $430 million in total cash. During the quarter, we invested $220 million in inventory to support deliveries that underpin our second half fiscal 2026 revenue. In addition, we will invest approximately $100 million in inventory during Q3 to support second half deliveries. Liquidity is expected to return to $900 million levels by the fiscal year-end, driven by execution on our backlog and new orders. Bottom line, our liquidity position fully supports delivery of our fiscal 2026 commitments. Turning to Slide 15 for our fiscal year 2026 guidance. We are reaffirming our guidance ranges for revenue, ARR and adjusted EBITDA reflecting our strong visibility into the year and continued momentum we see across our business. More specifically, we expect revenue in the range of $3.2 billion to $3.6 billion, with a midpoint of $3.4 billion. We expect approximately 70% in the second half, consistent with the pacing of revenue last year. We expect roughly 30% of second half revenue in Q3 and the remainder in Q4, again, consistent with last year. With all equipment ordered and production tracking as planned, we are confident in delivering on our customer commitments and our full year revenue goals. We expect annual recurring revenue, or ARR, to reach approximately $180 million by the end of fiscal 2026, up from $148 million in fiscal 2025. And we continue to expect adjusted EBITDA in the range of $40 million to $60 million for the full year. In summary, we are committed to achieving core revenue and profitability outlook for fiscal 2026. We remain rather focused on ensuring disciplined execution for our customers and delivering value to our shareholders. With that, I will now turn the call back to Julian for his closing remarks.
Thanks, Ahmed. Let me close with a few key takeaways. First, strong execution. Our second quarter performance, record $5.6 billion backlog and on-track production levels support our confidence in our fiscal '26 guide. We ended the quarter with approximately $900 million of liquidity, which we believe provides us the flexibility to fund growth. Second, momentum accelerated. Order intake has doubled year-to-date, led by orders from both new and existing customers, an indication of strong demand in the U.S. and the positioning of our business. And third, expanding customer base. We are in an excellent position to capture a portion of the rapidly expanding data center demand with the signing of MSAs with two major hyperscalers after meeting all of their commercial and technical requirements. We expect to execute the first purchase order with one of these customers within the third quarter. In conclusion, we are positioning our company to continue profitable growth and to deliver value to our customers and shareholders. With that, we are now prepared to take your questions.
分析師問答
Our first question comes from George Gianarikas from CG.
My first one is on the competitive landscape. How are you viewing the recent trend of some cell manufacturers vertically integrating? And specifically, how are you looking at their push for market share and any impact on pricing? And maybe as a follow-up, first, congrats on the two hyperscaler MSAs. If you could — you did this a little bit, but if you could pull back the curtain a bit on the mechanics of those wins? What specifically did the validation process look like? And what do you think was the primary differentiator for you that led to these larger wins?
We have seen both CATL and BYD become common and integrate vertically, particularly where we have not worked in the past. We have worked with CATL. It hasn't really changed the intensity of the market. The value — the ability to meet customer needs at a reasonable price — hasn't effectively changed. So we continue — we're growing our backlog. We're winning projects the same as we are. So we feel confident it hasn't made a big difference in the competitive environment from our point of view. We attracted 50% of our orders from new customers, so I don't see it as a new challenge. It's not new, by the way. It has happened in the past. The change of CATL was they expanded but it was not a major change in the competitive landscape from our point of view. Regarding the MSAs, two things. We went through a very strict commercial, operational and technical evaluation. In one of the cases, there were 26 players; the majority would not make it — there's a limited number of companies that could meet these very stringent requirements. Our deep knowledge and deep experience managing fast-response systems in Europe were especially useful. Having the lab, the test infrastructure and the technology capability to prove our case to them very quickly is a differentiator. We have the lab, we have the testing, we do this every day. We know how the applications work. We understand how critical systems operate globally. That made a big difference as we were the first one to complete the process. I think that will continue to keep us ahead of the market because some of our competitors are still trying to figure out how to meet the criteria. We're focused on exceeding their needs and offering more value and capabilities, and that's what we bring to the table.
Our next question comes from Julien Dumoulin-Smith from Jefferies.
I got to hand it to you guys — really kudos here, I'm seeing it through. In particular, I wanted to ask you, as it pertains to the hyperscale orders, what specific product are they following up with you on? I know there's been some ambiguity in the marketplace as to whether or not you have the right product and product positioning for the hyperscalers to get this kind of confirmation with two as you guys have flagged, in particular, is quite notable. Can you speak to the specific deployment permutation that they're using you for? Is it a BTM, FTM — is it capacity support, load shifting? And then also, how do they think about the domestic content or IRA compliance? Is that another nuance that we should consider? Just can you speak to the product and more broadly in these wins? And whether this is a leading indicator for further orders like this in coming quarters? And quickly, Ahmed, can you speak to this slide that has this interesting commentary that says you're going to invest additional inventory during the third quarter but you're going to rebuild liquidity towards $900 million by fiscal year-end. When you say rebuilding liquidity, is that going to be capitalized in some ways? Or is that just kind of cash flow?
Yes. So in terms of what they're asking for — different from what I said in the last call, when we had a more mixed portfolio. Now that we concentrated on the hyperscalers, their main need is power quality — helping them manage the fluctuations of the data centers which happen quickly and effectively. That's what they need, and that's what we proved with our advanced controls and our products; we can prove very quickly to them that we can do it. I will say we believe we perform better than many others. And that's what is driving this. If you go beyond the hyperscalers into the developers, it seems to be more about capacity and load shifting and is a bit more mixed, but for hyperscalers, it's been quality of power they prioritize. In terms of domestic content, it wasn't a requirement from them specifically, but we are clearly selling domestic-content solutions. As we've explained to them the competitive position of domestic content and the value it can create, and the branding opportunity of having a product built here in the U.S., they are seriously considering it — particularly as many of these hyperscalers have significant businesses in the U.S. Their objectives were meeting power quality, meeting their technical and commercial objectives, and that's where they concentrated. In terms of these two MSAs, they underlie a significant pipeline that we expect will convert into orders within the next year. We won't necessarily win them all, but it will be a significant amount of demand. Having these MSAs puts us in a very good position to capture it. This was a hard-to-get qualification; now when we make an offer, they know we will deliver what we promise.
Julien, I would not read too much between the lines there. I think the point was that as we invest because we have roughly $2.5 billion of revenue in the second half, we will be delivering that. We're building up inventory, but as we deliver the inventory, we will be collecting cash. So at the end of the day, our liquidity will be back at roughly $900 million levels by the end of the year, consistent with what we guided for the full year. So that was the intent there.
Awesome. And just to clarify from earlier, how many other hyperscaler MSAs are you working on with you guys?
Very, very selective, Julien. They all fit on my hand — I think we have fingers left. They are very selective, very few people. We're not disclosing specifics, but very few companies have these approvals today.
Our next question comes from Brian Lee from Goldman Sachs.
Congrats on the strong backlog here and the hyperscaler updates. I had a couple of questions on the hyperscaler MSAs. I'm not sure how much you can provide, but would love to maybe get some detail around quantification of the size of the deals: how many megawatts over what years — and is it over multiple sites that are already identified? Maybe just if you could elaborate a bit more on the scope of these two MSA deals and how meaningful they are in terms of quantitative impact?
I'll tell you, the great majority of our pipeline is supported by deals that are behind these two MSAs, and those deals are across several different data centers around the U.S., mostly. In terms of financial specifics, our current pipeline is in the low double-digit gigawatt-hours, so that'll give you a sense. We're not providing the financial numbers around it today — it's too early and we're still competing. My expectation is that as we end the fourth quarter and hopefully convert a good number of these projects, I will be able to provide more financial metrics and included detail.
Fair enough. And then maybe just zooming out a little bit because this is a new business for you and obviously very high growth potential: what's the deployment schedule? Can you help us visualize from RFPs or bake-offs — what's the timeline from submitting your design and proposal to when one is finalized? And then when you get a PO to when you're going to deliver and sit — what are the sequence of events and how long is that?
They are in a hurry, generally. Most of these projects, as I said, we believe will convert into orders during the year, often quicker than our typical utility or developer projects. They have very tight schedules for delivery and we commit because we've been working on our speed for some time. I can't give you a single fixed timeline because it varies project by project, but generally — conversion from pipeline to order and order to revenue is faster for hyperscalers than for traditional developers. Developer projects are more tied to broader project timelines and can take longer.
Understood. Maybe last one on the gross margin bounce back: nice to see it back in the range even on the lower volume here in Q2; that was a pretty impressive gross margin rebound. What does that bode for the back half of the year? Is there volume leverage and some of the efficiencies from this quarter that can spill over? Is there any potential upward bias to margins as you move through the rest of the year?
In terms of gross margin, you're right: an 11% adjusted gross margin in Q2 which is higher than Q1. We reaffirmed our guidance where we said 11% to 13% for the full year. Our goal is about a 12% rolling figure. So yes, we expect to be better than what we earned in Q2 as we progress through the year.
Our next question comes from Dylan Nassano from Wolfe Research.
Just wanted to check on the broader data center pipeline. Any updated thinking there in terms of how much of that fits your previous criteria of pipeline versus leads? And then I noticed there's this 6 gigawatt-hour kind of target for what gets included — how did you come up with that number? Any thinking around there would be helpful.
Our pipeline grew about 30% from last quarter and we've concentrated a lot on hyperscalers, which is a key driver of that pipeline increase. Our hyperscaler-related pipeline is roughly around 12 gigawatt-hours. Leads are generally larger than pipeline entries and are about three times the size of a single pipeline classification. The 6 gigawatt-hours you referenced is a threshold we use to classify long-duration storage projects. For long-duration storage, the industry typically defines long duration as systems with six hours or more of duration. Anything over 6 gigawatt-hours in total project size is classified under our long-duration storage designation.
Yes, Dylan, that's 6 gigawatt-hours. That's how we classify a long-duration storage project — anything over 6 gigawatt-hours.
My mistake. And then just a follow-up on the quarter: revenue looked lower than analyst expectations even including this $80 million. So I just wanted to check, was there any other seasonality in the quarter beyond the shipping issues some have noted?
No, there was none. When we gave our guidance in Q4, we expected about one-third of our revenue in the first half and the rest in the second half. We don't provide quarterly guidance, so fluctuations quarter-to-quarter can be normal. The $80 million of shipping delay was the primary reason Q2 revenue was lower versus some expectations, but those shipments have been received and we feel good on the year.
If I can add one point: our intention in discussing quarter pacing is to help you model, but we run the company on a yearly basis. We intend to meet our yearly numbers. We try to help with quarterly pacing but we don't provide quarterly guidance, which can create confusion. We prefer the flexibility to manage operations efficiently.
Next question comes from Joseph Osha from Guggenheim Partners.
I wanted to drill down a little bit on two product details. Julian, you said that hyperscalers and data centers more broadly tend to be more about power quality. So is the implication then that we're seeing shorter-duration configurations, say an hour or two as opposed to four? That's my first question. Second, just to confirm, thinking about the inverters, are you generally being asked to deliver a response time of 10 milliseconds or less? Those are my two questions.
On the first one, they tend to be shorter duration, you're right. We typically configure two hours for data center work, and that's where the market is trading. We tend not to provide configurations much smaller than two hours. The key is that our technology allows stacking business models on top of those assets — improving power quality, supporting backup functions, helping with interconnection efficiency and voltage support. On the second question, we won't provide an exact proprietary number because it is part of the solutions we develop with each customer, but response requirements are very short — significantly shorter than 100 milliseconds and typically much faster than what we do for some transmission systems.
Just to follow up very quickly: that would probably create the need for inverters with wide-bandgap semiconductors (e.g., SiC) — is that consistent with what you're seeing?
Yes, you need inverters, and that capability depends on the inverter vendor. We work with inverter companies and have done these kinds of fast-response deployments in Europe for many years. Our advanced controls integrate with these inverters and the processing and control strategy ensures whole-system response, not just a function of the inverter alone.
Our next question comes from Jon Windham from UBS.
Nice result. The U.S. storage market continues to grow at a rapid pace. Where are you — are you able to provide if possible the capacity in gigawatt-hours you can provide over the next 12 months? And then thoughts on the roadmap to keeping up with market growth over the next two to three years?
We see the U.S. market growing significantly. We have domestic product lines and our Smyrna supplier plus the additional supplier coming online for fiscal '27. We're also evaluating additional capacity for 2028 and beyond. We have enough capacity to cover the pipeline we see and the expected conversion rates; it's multi-gigawatt-hour capacity. We haven't provided a precise numeric public figure for next 12 months, but we have the flexibility to deliver domestically and can also import if needed, though we prefer domestic solutions.
Perfect. Maybe a quick follow-up: historically operating expense as a percentage of revenue has offset gross margin improvement. Thoughts on initiatives to get OpEx down to drive bottom-line profitability and free cash flow?
Operating costs as a percentage of revenue are essentially a function of top-line growth. Our plans are to grow revenue such that operating costs increase less rapidly than revenue, delivering operating leverage. Our costs are stable; as revenue grows, that percentage should decline. Last year, slower revenue growth resulted in higher OpEx as a percent of revenue. We expect to deliver operating leverage as revenue grows.
Our goal is to create operating leverage. As revenue grows, we will maintain cost discipline and aim for costs to increase less than half of the revenue growth rate, which is a key focus for us.
Our next question comes from Ameet Thakkar from BMO Capital Markets.
It looked like ASPs and revenue recognition megawatt-hours for the quarter were up nicely quarter-over-quarter. I was just wondering, was there a lot more EPC work this quarter? Or is this the level we should be thinking about for the balance of the year for modeling purposes?
That metric moves up and down quarter to quarter based on the mix of cells and project mix. I wouldn't over-read one quarter. We plan to meet our financial objectives regardless of ASP fluctuation. Our planning assumes ASPs will continue to decline, and we are focused on making money regardless of ASP movement. Demand often expands as ASPs decline, and our model accounts for that dynamic.
Great. And you mentioned earlier the large data center pipeline — you said the vast majority is data-center related. Is that right? Is it a little over half or substantially all of the 12 gigawatt pipeline data-center related?
Yes. That 12 gigawatt-hours pipeline is data center related. A great majority of it is connected to the two MSAs we signed. So it's largely hyperscaler-driven and a significant portion supports those MSAs.
Our next question comes from David Arcaro from Morgan Stanley.
Are there other MSA opportunities that you're currently working on? Is that something that you would expect most hyperscalers to be pursuing on the storage front?
Yes. We're engaging broadly. These two MSAs represent the more urgent and immediate opportunities, but we're working with other hyperscalers as well. We believe the problems are similar and our solutions can meet their needs. Timing depends on each customer's schedule, but we're actively working with multiple large data center customers.
Got it. The 50% proportion of new customers was notable. Could you give characteristics of who those new customers are? Are they traditional developers and utilities, or a new profile?
This is the result of work led by our VP of Growth who has invested in identifying new customers. Many are within our core segments — developers and utilities — but we've also engaged new profiles such as large energy users and data centers. This is a global effort, not just U.S.-based, and it reflects our sales organization's success in developing and bringing these new customers into the mix.
Our next question comes from Ben Kallo from Baird.
Could you just talk a little bit about the specific product they're looking for and the size? If you could talk about pricing and margin — how we should think about that for these data center deals? And then outside the U.S. where do you see pockets of demand and remind us how margin compares internationally versus the U.S.?
For data center deals, durations tend to be shorter-term and the primary requirement is power quality. In terms of margins, we expect these projects to be within our guidance range of 10% to 15% adjusted gross margin. Margin varies by market according to competitive dynamics; U.S. projects tend to be on the higher side and some markets like the U.K. can be more competitive and show lower margins. But our 10% to 15% range is intended to cover the various markets.
Our next question comes from Maheep Mandloi from Mizuho.
A question on the MSAs with the hyperscalers: do they have any special requirements on the battery types? Are they asking for the general battery grades you have for the broader industry, or is it a higher-grade requirement? Just curious if on the supply side you need to make any changes to cell sourcing. Separately, some deployers are proposing high-rate batteries which might sit inside data centers at higher voltages (e.g., 800V). Is that something you're exploring or interested in?
We can work with various battery cell chemistries and grades. Battery is a commodity in the sense that we can accommodate many cell types depending on customer requirements. The main differentiator is our packaging, controls and integration. LFP is increasingly common and acceptable; brand or supplier is less important so long as cells meet technical specifications. Regarding high-rate, high-voltage battery options, it's part of our product roadmap to evaluate such technologies for data center applications. We're exploring those options though they are not immediate near-term rollouts.
Our next question comes from Moses Sutton from BNP Paribas.
Congrats on the update. If these data center opportunities convert into reality, how should we think about the ratio between the data center compute capacity (MW) and the amount of storage required? We've seen examples where a gigawatt data center might need a wide range of battery capacity depending on its needs. What do these projects start to look like so we can map a data center TAM in gigawatts to the storage opportunity?
It's too early to provide a reliable rule of thumb. We are developing internal views but it's premature to publicize a generalized ratio between data center MW and required storage capacity. As the market and projects mature, we'll be able to provide better heuristics. For now, our emphasis is converting the ~12 gigawatt-hour pipeline into orders; we expect a good portion of that to convert within the next 12 months and will provide more clarity over time.
On the MSAs, what's the nature of exclusivity? Are you one of a few approved vendors? Is there any geographic exclusivity?
You are one of a very limited number of approved vendors. These are competitive processes, not directed awards. We're an approved supplier among a small group of competitors and will continue to compete for projects under those agreements. Well, thank you, everybody, for participating today. Chris will be available, and I will also be available to answer any questions you may have. Goodbye.
Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.