Bloom Energy Corporation (BE) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the Bloom Energy Second Quarter 2026 Earnings Call. Just a reminder that today's call is being recorded. At this time, I would like to hand things over to Mr. Michael Tierney. Please go ahead.

Thank you, and good afternoon, everybody. Thank you for joining us for Bloom Energy's Second Quarter 2026 Earnings Call. To supplement this conference call, we furnished our second quarter 2026 earnings press release and supplemental financial information with the SEC on Form 8-K and have posted these materials, which we will reference throughout this call to our Investor Relations website. During this conference call, both in our prepared remarks and in answers to your questions, we may make forward-looking statements that represent our expectations regarding future events and our future financial performance. These include statements about the company's business results, products, markets, customers, strategy, financial position, liquidity and full year outlook for 2026. These statements are predictions based upon our expectations, estimates and assumptions. However, as these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties as discussed in detail in our documents filed with the SEC, including our most recently filed Forms 10-K and 10-Q. We assume no obligation to revise any forward-looking statements made on today's call. During this call and in our second quarter 2026 earnings press release and supplemental financial information, we refer to GAAP and non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with U.S. generally accepted accounting principles and are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non-GAAP financial measures is included in these materials, which are available on our Investor Relations website. Joining me today on the call are K.R. Sridhar, Founder, Chairman and Chief Executive Officer; and Simon Edwards, our Chief Financial Officer. KR will begin with an overview of our progress, and then Simon will review financial highlights for the quarter. After our prepared remarks, we will have time to take your questions. I will now turn the call over to KR.

Good afternoon, everyone, and thank you for joining us. It took Bloom 21 years to deliver its first $1 billion year in 2022. It took us another 3 years to double our 2022 revenue. Now we are guiding to double that revenue in just 1 year, having achieved our first $1 billion quarter. Bloom Energy's business is accelerating. We are expanding at breakneck speed and continue to grow more profitable. We have successfully demonstrated the earning power of our agile business model, doing exactly what we built it to do. And through all of it, we kept the promise that we make to our customers. Bloom will not be your bottleneck. We deliver power at AI speed and enable our customers to grow. This makes us a vital strategic partner and builds customer loyalty and demand is compounding. New customers are arriving at a faster pace than ever. Landing a mega customer used to take us years, a moat that protected the incumbents. Now the proven success of our technology, coupled with an increasingly urgent need for efficient, clean and reliable power has collapsed the time from first engagement to first order. Because we can book, ship and convert orders to revenue inside the same fiscal year, that demand shows up in results now while also adding to and diversifying our backlog. Notably, just this year, several customers who had alternative solutions in place abandoned them and came to Bloom. Once customers are in, they see the total economic value of our solution and place more orders. We have booked major customers as of today who are not in our reported backlog at the end of last year for whom we will ship some of our systems this year. These customers are now placing longer-term orders, leading to our backlog growing at a faster pace than revenue. Let me repeat, leading to our backlog growing at a faster pace than revenue. Bloom Energy has emerged as a standard for on-site power as we predicted we would in our third quarter call last year. At that time, we had just announced our first direct hyperscaler customer, Oracle, and delivered them power for a data center within 55 days. Today, all the major U.S. hyperscalers and over a dozen U.S. neoclouds, AI labs and colocation data center operators have validated and approved our power solutions for their AI factories. Our commercial and industrial business continues to grow. We are the standard for on-site power for hospitals, factories, telecom providers, university campuses and retail stores. But it took us nearly a decade to become the accepted solution in these verticals. Contrast that to AI data centers where we have become a standard in less than a year. I founded Bloom on the conviction that on-site power would be essential to powering the world and ushering in the digital transformation. And we have built our company to offer the best on-site power solution that removes friction for our customers. We are clean and reliable and fast and affordable. Customers do not have to choose or compromise. And over time, we are reducing friction and turning headwinds to tailwinds. Let's take a moment to discuss 4 friction points: capital, community, permitting, and speed. Start with capital. For a century, the cost of power plants and the grid was spread across millions of ratepayers and amortized over decades. A new load simply plugged into surplus capacity and only paid a monthly bill. But surplus grid capacity is now gone. New data center load now means new infrastructure, heavy capital, long lead time and rate payers who will not fund or subsidize capacity for a corporate customer. The faster, cheaper, more predictable path for that customer is islanded on-site power. But that solution demands either a capital budget most end customers do not have or a financing partner behind a power purchase agreement and negotiating bespoke terms across financiers, developers, operators, OEMs and end users is complicated and slow. So we kill that friction with strong financial partners who provide our customers project capital. Brookfield anchors that financing shelf. We formed the partnership last fall at $5 billion. 9 months later, in June, Brookfield expanded its commitment fivefold to $25 billion. One of the largest and most experienced infrastructure investors in the world evaluated our technology, our delivery record and our pipeline, backed us with $5 billion, watched us execute and then multiplied that backing by 500%. Capital of that quality and quantity does not follow letters of intent, MOUs or press releases. It follows performance, happy customers and firm bankable orders. And Brookfield is not alone. This quarter, Industrial Development Funding who has previously funded Bloom deployments, partnered with Oaktree, MUFG Bank and Morgan Stanley to fund Bloom deployments, cumulatively bringing their total commitment to $2.6 billion and more financing partners are in the wings. Gigawatt demand needs giga dollars of capital. We arranged that in advance. Next friction point, community. Communities have learned they cannot live with combustion. However, they've also learned they can live next to Bloom Energy servers. No combustion, negligible air pollution compared to turbines and engines, negligible water use, a power server that is aesthetically appealing and runs quieter than air conditioning equipment. No construction project is NIMBY-proof, but communities welcome Bloom, and that is proving to be a real competitive advantage. Our customers can get air permits with our technology faster than they can with a combustion alternative. And every month saved on permits is a month closer to power availability, which brings me to speed because time to power is really time to token revenue. Bloom is increasingly seen as the solution that eliminates the power availability friction point for AI. Chips without power are inventory, not intelligence. Grid operators quote years, time lines on which billion-dollar compute clusters go obsolete in a warehouse. Legacy suppliers celebrate backlog stretching to 2029 and beyond. We think a 4-year backlog is not a trophy. It's a concession of constrained supply. By contrast, Bloom meets the time-critical needs of our customers and delivers power in months. Since the beginning of the year, we have been continuously adding to our American manufacturing capacity in Copy Exact increments and will continue to do so ahead of committed orders. And our speed is dependable because we have built a resilient supply chain with broadly available materials by design, multiple qualified suppliers across multiple countries for every critical input, inventory ahead of the ramp, relationships forged over 2 decades. No single supplier and no single country determines our destiny. And every part of our supply chain is prepared to scale with our growth. When the business case is measured in months of AI compute, the fastest dependable path to power wins. We are on that path. Nobody else is close. None of this is by accident. We built scale into our model years ago for a simple reason. If we were right about the market need for on-site power, the company had to be able to scale rapidly. Now you are seeing that play out in practice. Capital, community, permitting, speed remove all 4 frictions and the market renders its verdict, supplier of choice. I choose those words deliberately because customers are choosing. Customers who had ordered combustion turbines and reciprocating engines cancel those orders and choose Bloom. Nebius did it this quarter. Existing customers are coming back with expansion opportunities and the largest infrastructure investors in the world are underwriting our deployments at scale, trusted partner to customer, to the community and to capital. The market has noticed. Customers now come to us late in their development process and ask Bloom to step in as the primary on-site power solution. The entry point differs, the outcome does not. Once they see our capability, our execution and the total value we deliver over the life of ownership, the conversation expands from one project to a portfolio. So let me be very clear, Bloom Energy is not dependent on one customer or one project. It is multiple customers and multiple projects across every stage of development. And because our Copy Exact Lego block servers redeploy from site to site painlessly, unlike bespoke traditional equipment, every project in the portfolio is fungible. Diversity, fungibility and nimbleness allows us to navigate the fast-changing AI landscape. Consequently, we have visibility and conviction in our growth trajectory for 2026 and beyond. Let me close with how we run this company because I know what's on your minds. Will AI investment keep growing at the breakneck pace? Our engagement with customers suggests that the pace of investment will not just continue but accelerate. However, I do not know for sure, and I will not insult you by pretending to. Henry Ford could not control whether America wanted to drive. He controls the cost, quality and availability of the Model T. Like Ford, we are focused on managing the controllables. We drive costs down every single year, while others benefiting from these build-outs talk only about raising prices. We innovate continuously to better serve our customers and meet every commitment we make. We are experiencing the tailwinds of rapid TAM growth and increasing market share simultaneously, and we are grateful we can meet the market's demands. At the same time, we are building a durable advantage by earning the trust of both our customers and the communities. With that, let me hand it to Simon to take you through the numbers. I'll rejoin you for Q&A. Simon?

Thank you, KR. Good afternoon, everyone. This is my second earnings call as Bloom's CFO and my first with a full quarter behind me. In April, I told you why I joined Bloom, belief in the mission, the architectural shift in power, the quality of the team and the chance to help build a generational company. 3 months in, that conviction has only strengthened. The demand environment is robust, and we are neither gated by capacity nor our supply chain. The operating discipline is real. The factory improves every week and cost out is a rhythm here, not a program. And in finance, we have a strong foundation, and my focus is on scaling our systems and processes to keep pace with our rapid growth. Before the results, let me come back to the Brookfield announcement KR discussed, a fivefold expansion of our strategic partnership as Brookfield increases its framework to finance Bloom power projects for AI infrastructure. A commitment of that size from one of the world's largest infrastructure investors is significant on its own. It is also the best way into our revenue model because you cannot fully appreciate what that partnership does without understanding the model behind it. And given our shareholder base has grown considerably this past year, let me take a minute to walk through how a Bloom deal works. Every Bloom deal starts with a contract with the end customer, the party that will actually use the power. That contract takes 1 of 2 basic forms. Either the customer buys the equipment outright, which is a CapEx sale or they contract for power or capacity without owning the equipment. As our 10-K describes, the second form comes in a few flavors. A power purchase agreement price per kilowatt hour, a capacity agreement or an equipment lease priced on installed capacity. Economically, they all work the same way. The customer pays over time rather than owning the asset. In any case, every contract carries committed commercial operation dates. Since most customers choose to pay over time rather than own, we bring in a financier, an institution like Brookfield that purchases the energy servers from Bloom, owns them and delivers the end customer under the contract we originated. So when you see the word customer in our filings, it can mean either party. The financier that buys from us and appears in our revenue and concentration disclosures or the end customer whose demand created the deal. The IDF partnership that was recently announced is another live example of that model, and it was a meaningful contributor to the quarter. Mechanically, it is our standard structure. Nebius signed the offtake and IDF, an independent third party, is purchasing the energy servers on cash terms against identified sites and delivery schedules. One feature of this model worth understanding, especially for newer investors, is that large campus deliveries are lumpy. One or 2 customers could lead our revenue in any given quarter, and the customers rotate as different projects reach their delivery windows. The revenue can look concentrated in any single quarter, that concentration reflects delivery timing, not the composition of our backlog. The backlog spans multiple hyperscalers, neoclouds, colocation providers and commercial and industrial operators. And our contracts carry payment security appropriate to the transaction size. Now to the results. As a reminder, I will focus on non-GAAP adjusted metrics. A full GAAP to non-GAAP reconciliation is in the press release and the supplemental deck on our IR website. Revenue was $1.065 billion, up 166% year-over-year and 42% sequentially. This was another record quarter for Bloom and the first time we exceeded $1 billion in quarterly revenue, reflecting accelerating data center deliveries and disciplined execution, converting signed demand into revenue. Product revenue was $935 million, up 215% year-over-year and 43% sequentially and represented nearly 90% of total revenue in the quarter. Gross margin was 34.3%, up 604 basis points year-over-year. The improvement reflected both favorable mix and margin expansion across both product and services. Product gross margin was 37.2%, up 193 basis points sequentially and up 291 basis points from Q2 of 2025. A word on price. We deliver value, not a commodity kilowatt. Our customers are paying for time to power and what the solution can do, whether that is following the load profile of an AI campus or being ready for carbon capture and our pricing reflects that. And on cost, we continue to drive product costs down across material, labor and overhead, and we are doing that while ramping up our capacity and adding new capabilities. Services margin was 22%, up 977 basis points year-over-year and our fifth consecutive quarter of double-digit service margin. Service revenue is recognized ratably, net of guarantees, while the service costs are booked as incurred. So the timing of fleet maintenance, stack replacements in particular, moves the margin quarter-to-quarter. Underneath that timing, margins have now reached the 20% plus level driven by fleet performance, longer stack life and scale, and we believe we will sustain them there over the long term. Blended gross margin will move quarter-to-quarter, driven by the pricing mix of projects delivered in any given period, deliberate trade-offs between cost optimization and expediting where the customers' time to power is worth more than the incremental cost and the service maintenance timing I just described. Across all of this, we continue to feel good about our full year gross margin outlook of approximately 34%, which we revised up last quarter. Operating income was $240 million, up 737% year-over-year, and operating margin was 22.5%, an expansion of approximately 1,536 basis points. Adjusted EBITDA was $253 million, approximately 24% of revenue. Non-GAAP diluted EPS was $0.78 and GAAP diluted EPS was $0.62. The increase in profitability reflects both higher volume and substantial operating leverage as the business scales. To that point, the operating leverage in these numbers is notable. This is structural, not a 1 quarter effect. Revenue grew 166%, while operating expenses grew just 48%. The mechanics behind that should persist. The leverage comes from how we have built our cost structure. Our R&D base and our G&A infrastructure are largely fixed against a rapidly growing revenue base. So each incremental gigawatt of deliveries carries little incremental overhead. We run our support functions the way we run our factories, using automation and analytics across SG&A, service operations and supply chain. So those functions grow with technology rather than people. We will continue to invest across the business, including G&A and R&D, but we expect operating expense growth to remain well below revenue growth, which should drive continued operating margin expansion. Cash flow from operations was $226 million, an increase of $439.5 million from the same period last year, driven by profitability and favorable working capital performance. Free cash flow was $175 million, and we ended the quarter with $2.7 billion of cash. Generating significant operating cash flow while growing revenue at this current rate truly reflects the strength of the underlying business and the working capital discipline of the team. Now turning to guidance. On the strength of our year-to-date performance as well as the visibility and confidence we have for our second half, we are raising our full year revenue outlook to $3.9 billion to $4.2 billion. At the midpoint, that represents 100% growth over 2025 revenue of just over $2 billion. Our outlook is built bottoms up in 2 layers. The foundation is backlog conversion, signed commitments delivering against customer site readiness dates. The second layer is in-year bookings. We intentionally reserve manufacturing capacity for time to power customers who need power in months and for whom we expect to book and convert into that capacity at rates consistent with recent experience. On gross margin, we are holding our full year margin rate at approximately 34% on a non-GAAP basis. I'll also use this as an opportunity to make one point on how we run the business. When we have to choose between protecting a point of margin in a given quarter and expediting to deliver an order quickly to a customer who is going to be with us for years, we are going to prioritize the customer and the long-term strategic value of that relationship. Time to power is what our customers value most right now, and we are going to keep delivering against that. Over a full year, that discipline is fully consistent with the margin rate we are guiding to. On operating income, we are raising our full year non-GAAP operating income outlook to $800 million to $900 million. And at the updated revenue midpoint, this implies an operating margin of approximately 21%. That is a material step-up from the $425 million to $450 million operating income guide at the beginning of the year, which represented a 14% margin at the midpoint. This is the operating leverage I described earlier flowing directly through the model. Full year non-GAAP diluted EPS outlook is now expected to be $2.55 to $2.85. Finally, a word on how to read our guidance. Demand in the AI business does not follow the traditional selling cycle. Today, we see the demand, we book the order and when the customer is ready, we ship the equipment. So both the level and shape of our outlook come from the same inputs, which are signed commitments and their schedules, our capacity and our time to power pipeline. What was once seasonality is now simply delivery timing based on customer readiness. To conclude, this was a milestone quarter. We exceeded $1 billion in quarterly revenue for the first time, delivered record profitability, generated strong cash flows and raised our full year outlook. We are executing with discipline against the demand environment that keeps getting stronger. With that, operator, we are now ready for questions.

[Operator Instructions] Our first question comes from Mark Strouse, JPMorgan.

KR, I want to go back to your comment about all of the major U.S. hyperscalers and over a dozen other operators are now validated and approved to use your technology. Are you able to talk about a bit more how many of those are actively using your technology today? And how many of those are kind of in your backlog or in your near-term pipeline? And then I've got a quick follow-up.

Mark, as you very well know, we let our customers speak about the deployments and what they do. What I can tell you is the combination of the 3 things that you spoke about, customers already using it, customers who booked orders and we have shipped units to them for whom the power will be delivered and it's in construction and customers who have given us definitive agreements. They fall in that category. We are not going to split that up, but it is all the major -- as you pointed out, it's all the major U.S. hyperscalers and over a dozen of the neoclouds and the ecosystem around it, colocation partners. That is all true. We don't break it up. But again, let's just take a moment to think about this. 9 months ago, we announced our first direct hyperscaler customer and said, we want to enter into this market and do what we did in C&I and become a standard. It took us 10 years to do that previously for commercial and industrial. And I would have -- I can tell you, I never thought within 9 months, we will become the standard. It just speaks to our value proposition in this entire industry, okay? This is not a faster horse. This is a car. And that is why this is happening, and this is not reversible. Thank you.

Okay. Very helpful. If I can sneak one more in. I know going back to the last call, you don't want to get into specific comments on capacity anymore. But just -- maybe just relative to the last call, I mean, just given your comments today several times about things accelerating, is it safe to assume that your -- maybe your time line or your magnitude of capacity that you're planning is accelerating as well?

Yes. So here's how we do the capacity planning, right? It is very clear to us based on our commercial pipeline and our commercial orders when our customers need their products and when they are ready to turn the units on. And as you understand, very clearly, depending on whose reports you read, somewhere between 30 and 40 gigawatts of new AI data center capacity is going to be turned on in 2027, right? And they are in various stages of development. They're all greenfield. And we have a very sophisticated algorithm that we use to figure out how many of those projects are going to land when. And luckily for us, unlike everybody else, our units are fungible. When they're on a truck, we can redirect them to a different site if we need to. And that's how fungible our systems are. So based on that, we can predict what our capacity needs are going to be such that we never become the bottleneck to the customer. And I can tell you, as we sit here today, we are confident of keeping that promise for everything we have in the order book and everything that we see coming forward. That's all we are going to comment on our capacity. Capacity is not going to be our constraint as we see right now. Thank you.

Your next question comes from Chris Dendrinos, RBC Capital Markets.

Congratulations on the strong quarter. I wanted to ask about the supply chain here. And I guess when you're having conversations with hyperscalers, what are they asking you? And what are you telling them or responding to them to give them confidence that you won't be the bottleneck in terms of delivering on time?

That's a very good question. Look, you are raising something very important. These are extremely sophisticated consumers and customers. So the amount of diligence that they go through is not just about our product, not just about our performance, not just about our economic value proposition. They want to understand where we are with respect to committed orders, where we are with respect to new orders that can come online. And look, most of them, if you talk to them, are not just signing up for a single transaction. They are signing up with us for the future. They want to be a strategic partner with us for the future. They want to understand as they share confidentially with us what their capacity expansion plans are and ask us if we can meet that. And we have to walk through with them under NDA in great detail and convince them that we will be able to scale. That's when we get validated. So to that previous question of what does all that validation mean, that's the process we go through. It's a pretty rigorous process with each of those customers.

Got it. And then I guess maybe fair to say that you go through that same process with IDF and Brookfield. And then maybe just as a follow-up here, on the Brookfield topic, you expanded that partnership by $20 billion. How should we think about the timing to execute on that? Is there sort of a window to which you all think about being able to execute on $20 billion of transactions?

Sure. Great 2-part question. You snuck into one question. So -- but I'm happy to answer both of them. They're very relevant, right? The first part is, look, at the end of the day, the financial customers take title of our equipment. When they take title of our equipment, it is not just about can they place it in service. They care about how will it operate through the entire period to be able to deliver. So they go through additional layers of our ability to perform, our ability to be available, our ability to be available and can we upkeep that equipment for the time that is needed based on the financial model that they came up with so they can actually get their returns. So it is 2 additional layers of detail that they would go through in their diligence and they go through the same other process that we discussed. And even in today's world, $20 billion is a lot of money. So very obviously, they go through this process deeply with us. And again, remember this, they didn't come into it in first step. They put the $5 billion in, they watched how we perform. They watch what we are capable of. They watch the execution. And they spoke to several of our customers, the oldest of them now being more than 15 years our customer, to understand how we perform and how satisfied they are. Happy customers is absolutely essential. So it is on the strength of all that, they come and invest. As to the timing, look, think of this as a financial shelf. This shelf is now available. The pace at which it will get used up is going to depend on the uptake of those funds. I think I can again say it's very similar to us becoming the standard for AI in less than 9 months. I wouldn't have predicted 9 months ago when they invested $5 billion, we'll come back that quickly for the next $20 billion. And this just speaks to the pace of acceleration, both in AI and in our business. Thank you.

David Arcaro from Morgan Stanley has the next question.

So there have been some project development challenges that have gotten headlines at a few large projects. I was wondering if you could characterize your financial exposure to project delays, any contractual protections that you typically have in place and alternatives that you may work on with customers.

Yes. Thanks for the question. Look, I think we don't comment specifically on individual projects, as you know. But I take a step back and just think about how we contract, right? Our contract is structured with master service agreements, and there's flexibility for us to deploy this equipment given its Copy Exact nature to various customer projects. With that said, we have strong protections with our contracts. And then ultimately, our financiers also need those same protections, right? So as you think about the way these contracts kind of flow to the extent that there are any project delays, the end customer is able to redeploy that equipment to other projects. But ultimately, the financier is on the hook to take delivery of the equipment from Bloom.

And the other thing, extremely important point to talk about in terms of projects because it would be on the minds of people. We can tell you when we gave you this guidance and we upward revised it, right? The 2026 revenue guidance is not dependent on any single project. Again, we have a sophisticated algorithm, and we expect certain projects to push out certain projects to come in, certain projects to just come out of the blue and absorb it in the same year as we described in our script. So we take all that into account when we give the guidance. So construction projects, as long as construction projects have existed, I'm sure there have been delays, okay? I'm not a historian, but that's what I would expect. That should -- we should bake that in, but that's not going to affect our revenue guidance because we have a sophisticated algorithm to figure that out for the year. So our 2026 guidance is not going to have any dependence on any single project.

Understood. Yes. That's helpful. And then KR, I appreciate your additional comments on the supply chain and your confidence there. I was wondering if you could address your access to scandium, which has gotten a lot of attention. Is there any way you might characterize your use of scandium, how much you see as available supply and stockpile, et cetera?

Look, I think we have put out a detailed blog on this topic, and we have filed an 8-K. The 3 takeaways for you all as investors to understand are the following: there is enough scandium on the planet that can be recovered economically viably to power of the planet. That is what's available on the planet. We have visibility currently based on what we are working for, for 25 gigawatts of like deployments. And so -- and we are not dependent on China. Those are the statements we make. That's all we are going to say about it. Everything else is proprietary to the company.

The next question is from Nick Amicucci, Evercore ISI.

Simon, sorry, I'll put you on the hot seat for a little bit. Just curious, so obviously, impressive raise in guidance on a strong 2Q, but the free cash flow guide was pulled. Just wanted to get some context around that and just considering that you have $2.7 billion worth of cash on the balance sheet, just thinking through kind of capital allocation.