Fluence Energy, Inc. (FLNC)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following analysis provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Fluence and should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2026 (this “Report”) and in conjunction with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 25, 2025 (the “2025 Annual Report”). In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition, and prospects based on current expectations that involve risks, uncertainties, and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed in Part I, Item 1A. “Risk Factors” of the 2025 Annual Report and in our other filings with the SEC, and Part II, Item 1A. “Risk Factors” and the section titled “Cautionary Statement Regarding Forward-Looking Information” included elsewhere in this Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Fluence Energy, Inc. is a holding company whose sole material assets are the limited liability interests in Fluence Energy, LLC (the “LLC Interests”). All of our business is conducted through Fluence Energy, LLC, together with its subsidiaries, and the financial results of Fluence Energy, LLC are consolidated in our financial statements. Except where the context clearly indicates otherwise, “Fluence,” “we,” “us,” “our,” or the “Company” refers to Fluence Energy, Inc. and all of its direct and indirect subsidiaries, including Fluence Energy, LLC.

Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2025,” and “fiscal year 2026” refer to the twelve months ended September 30, 2025 and ending September 30, 2026, respectively.

Key Factors, Trends, and Uncertainties Affecting our Performance

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1. “Business” and in Part I, Item 1A. “Risk Factors” within our 2025 Annual Report.

Industry Outlook

The utility-scale battery storage industry continues to experience unprecedented growth fueled in large part by: (i) the global transition toward renewable energy, (ii) heightened focus on grid resilience, (iii) overall declining lithium-ion battery prices in the last decade or so, (iv) increased electricity demand, and (v) supportive regulatory frameworks. BloombergNEF estimated in its 2H 2025 Energy Storage Market Outlook published on October 20, 2025 that the global utility scale market, excluding China, will add approximately 3,201 GWh between 2024 and 2035.

Growth of the battery storage industry and the continued adoption of energy storage solutions by our customers has been driven in part by the overall decrease in cost of lithium-ion energy storage hardware, mainly the cost of lithium-ion batteries, over the last decade or so. However, we have recently seen an increase in prices of lithium carbonate and other commodities since December 2025, therefore increasing the cost of lithium-ion batteries in recent months. The market for energy storage continues to rapidly evolve and our revenue growth is directly tied to the continued adoption of energy storage products by our customers, which may be affected by commodity raw material price fluctuations and component price fluctuations. As we have not historically been the buyer of raw materials for our components and energy storage products, we have not historically entered into hedging arrangements to mitigate commodity risk. Significant price changes or reduced availability for raw materials and components for our energy storage solutions, including batteries, has had and may in the future have a deleterious effect on our business, financial condition, and results of operations.

Supply Chain and Manufacturing Updates

Our energy storage business is supported by a strategically diversified global supply chain, including contract manufacturers located throughout the world. The Company is actively working to add and scaling up more contract manufacturer facilities to the Company’s supply chain, including in Houston. We are exposed to risks associated with scaling up manufacturing to larger commercial volumes and with the launch of new products and platforms, including Gridstack Pro and Smartstack, which have and may in the future require alterations to existing manufacturing processes. Scaling up new contracting manufacturing facilities also has and may in the future result in unexpected production delays and cost overruns. Generally, our product development, manufacturing, and testing protocols are complex and require significant technological and production process expertise. Any manufacturing delay or disruption from our contract

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manufacturers or any of our suppliers or cost overruns has in the past caused and may in the future cause a delay or disruption in our ability to meet commitments to our customers and has impacted and may in the future impact our business and results of operations. For more information about the potential risks relating to our supply chain and contract manufacturing efforts, see Part I, Item 1A. “Risk Factors” in our 2025 Annual Report.

In the event of delays or disruptions, we work with such contract manufacturer to put in place appropriate corrective measures and corrective plans to remediate the production issues going forward and improve the Company’s execution. We currently believe that recently enacted corrective measures will help to remediate adverse impacts of production issues. However, if our remediation efforts are not successful, they could have an adverse impact on our customers and our business and results of operations and could cause our results to vary materially from period to period. Failure to meet production expectations has and could in the future result in delayed product deliveries, increased costs, reduced revenue, and reputational harm and has and could in the future materially adversely affect our business, financial condition, results of operations, and growth prospects. However, by prioritizing operational excellence and maintaining strong relationships with our partners and customers, we are confident in our ability to continue to navigate challenges and support sustainable growth in future periods through our contract manufacturing operations and supply chain.

One Big Beautiful Bill Act (“OBBBA”)

We continue to work to align our domestic content and U.S. procurement strategy with the Inflation Reduction Act of 2022 (the “IRA”) and the One Big Beautiful Bill Act (“OBBBA”) as well as related agency guidance relating thereto. We believe that continued expansion and emphasis on domestic content under the IRA, as modified by the OBBBA, provides Fluence with a competitive advantage. As of the date of this Report, we believe that under the current language of the OBBBA, which is subject to Treasury guidance issued on February 12, 2026 and any future regulations, our U.S. domestic suppliers are in compliance with the new applicable prohibited foreign entity (“PFE”) restrictions set forth in the OBBBA. Our procurement operations, however, remain subject to a complex and evolving supply chain and regulatory landscape. For more information about the potential risks relating to regulation and compliance and our solutions and our supply chain, see Part I, Item 1A. “Risk Factors” in our 2025 Annual Report.

Continuing Impact of Tariffs

Our energy storage solutions incorporate many components and materials sourced from a variety of countries, resulting in exposure to international supply chain risks and logistics disruptions. Uncertain potential actions, policies, and legislation of various government authorities on international and domestic trade, including new or increased tariffs or quotas, border taxes, embargoes, safeguards, duties arising out of various governmental investigations, trade controls, and customs restrictions may impact our ability to manage our costs of production which may then impact our business and results of operations. For example, on February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed by the U.S. government under the International Emergency Economic Powers Act (“IEEPA”). In March 2026, the U.S. Court of International Trade ruled that the U.S. Customs and Border Protection (“CBP”) must refund duties imposed under IEEPA. In response, CBP launched the Consolidated Administration and Processing of Entries portal within the Automated Commercial Environment on April 20, 2026, and the Company filed a claim for a refund of IEEPA tariffs previously paid. We have filed for $57.0 million in refunds, which has been accepted by the CBP. As of June 30, 2026, the Company has received payments of $32.0 million and has $25.0 million outstanding to be received. There remains substantial uncertainty regarding the duration of existing, newly announced tariffs and surcharges, and potential new tariffs and surcharges, potential changes or pauses to such tariffs, the tariff refund process and timing related thereto, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on Fluence’s business. Fluence continues to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations. See Part I, Item 1A. “Risk Factors” in our 2025 Annual Report for further discussion on risks relating to changes in the trade environment.

Legal Proceedings and Legal Contingencies

The results of any current or future litigation, government investigations, or other regulatory or legal proceedings to which we are a party cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of claims, litigation, government investigations, and other regulatory or legal proceedings.

For a description of our material pending legal contingencies, please see “Note 14 - Commitments and Contingencies”, to the unaudited condensed consolidated financial statements included elsewhere in this Report.

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Key Operating Metrics

The following tables present our key operating metrics as of June 30, 2026 and September 30, 2025. The tables below present the metrics in either Gigawatts (GW) or Gigawatt hours (GWh). Our key operating metrics focus on project milestones to measure our performance and designate each project as either “deployed”, “assets under management”, “contracted backlog”, or “pipeline”.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information that management believes is relevant to an assessment and understanding of our audited consolidated financial statements and results of operations and should be read in conjunction with the financial statements and related notes included elsewhere in this Annual Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under Part I, Item 1A. “Risk Factors” and the section entitled “Cautionary Statement Regarding Forward-Looking Information” and in other parts of this Annual Report. The discussion of changes in our financial condition and results of operations from the fiscal year ended September 30, 2024 to the fiscal year ended September 30, 2023 is included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2024 filed with the SEC on November 29, 2024. Our historical results are not necessarily indicative of the results that may be expected for any periods in the future.

Upon the completion of our IPO and a series of organization transactions (collectively with the IPO, the “Transactions”) on November 1, 2021, Fluence Energy, Inc. became a holding company whose sole material assets are the limited liability interests in Fluence Energy, LLC (the “LLC Interests”). All of our business is conducted through Fluence Energy, LLC, together with its subsidiaries, and the financial results of Fluence Energy, LLC are consolidated in our financial statements. Except where the context clearly indicates otherwise, “Fluence,” “we,” “us,” “our” or the “Company” refers to Fluence Energy, Inc. and its wholly owned subsidiaries.

Our fiscal year begins on October 1 and ends on September 30. References to “fiscal year 2023”, “fiscal year 2024” and “fiscal year 2025” refer to the fiscal years ended September 30, 2023, September 30, 2024 and September 30, 2025, respectively.

Key Factors, Trends, and Uncertainties Affecting our Performance

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” within this Annual Report. See also subsections “Our Industry and Market Opportunity”, “Our Growth Strategy”, “Manufacturing”, “Supply Chain”, “Government Regulation and Compliance”, and “Competition” under Part I, Item 1. “Business” of this Annual Report for additional discussion of certain key factors, trends and uncertainties that may affect our performance.

Legal Proceedings and Legal Contingencies

The results of any current or future litigation, government investigations, or other regulatory or legal proceedings to which we are a party cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of claims, litigation, government investigations, and other regulatory or legal proceedings.

For a description of our material pending legal contingencies, please see “Note 15 - Commitments and Contingencies,” to the audited condensed consolidated financial statements included elsewhere in this Annual Report.

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Key Operating Metrics

The following tables present our key operating metrics for the fiscal years ended September 30, 2025 and 2024. The tables below present the metrics in either Gigawatts (GW) or Gigawatt hours (GWh). Our key operating metrics focus on project milestones to measure our performance and designate each project as either “deployed”, “assets under management”, “contracted backlog”, or “pipeline”.

The following table presents our order intake for the fiscal years ended September 30, 2025 and 2024. The table is presented in Gigawatts (GW):

Deployed

Deployed represents cumulative energy storage products and solutions that have achieved substantial completion and are not decommissioned. Deployed is monitored by management to measure our performance towards achieving project milestones.

Assets Under Management

Assets under management for service contracts represents our long-term service contracts with customers associated with our completed energy storage system products and solutions. In general, we start providing maintenance, monitoring, or other operational services after the storage product projects are completed. This is not limited to energy storage solutions delivered by Fluence. Assets under management for digital software represents contracts signed and active (post go live). Assets under management serves as an indicator of expected revenue from our customers and assists management in forecasting our expected financial performance.

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Contracted Backlog

For our energy storage products and solutions contracts, contracted backlog includes signed customer orders or contracts under execution prior to when substantial completion is achieved. For service contracts, contracted backlog includes signed service agreements associated with our storage product projects that have not been completed and the associated service has not started. For digital applications contracts, contracted backlog includes signed agreements where the associated subscription has not started.

We cannot guarantee that our contracted backlog will result in actual revenue in the originally anticipated period or at all. Contracted backlog may not generate margins equal to our historical operating results. Our customers may experience project delays or cancel orders as a result of external market factors and economic or other factors beyond our control. If our contracted backlog fails to result in revenue as anticipated or in a timely manner, we could experience a reduction in revenue, profitability, and liquidity.

Contracted/Order Intake

Contracted, which we use interchangeably with “order intake”, represents new energy storage product and solutions contracts, new service contracts. and new digital contracts signed during each period presented. We define “Contracted” as a firm and binding purchase order, letter of award, change order, or other signed contract (in each case an “Order”) from the customer that is received and accepted by Fluence. Our order intake is intended to convey the dollar amount and gigawatts (operating measure) contracted in the period presented. We believe that order intake provides useful information to investors and management because the order intake provides visibility into future revenue and enables evaluation of the effectiveness of the Company’s sales activity and the attractiveness of its offerings in the market.

Pipeline

Pipeline represents our uncontracted, potential revenue from energy storage products and solutions, service, and digital software contracts, which have a reasonable likelihood of contract execution within 24 months. Pipeline is an internal management metric that we construct from market information reported by our global sales force. Pipeline is monitored by management to understand the anticipated growth of our Company and our estimated future revenue related to customer contracts for our battery-based energy storage products and solutions, services, and digital software.

We cannot guarantee that our pipeline will result in actual revenue in the originally anticipated period or at all. Even if our pipeline generates revenue, it may not generate margins equal to our historical operating results. Among other factors, our pipeline may be impacted by customer project delays or cancelled orders as a result of external market factors and economic or other factors beyond our control. If our pipeline fails to result in revenue or margins as anticipated or in a timely manner, we could experience a reduction in anticipated revenue, profitability, and liquidity.

Key Components of Our Results of Operations

The following discussion describes certain line items in our consolidated statements of operations.

Total Revenue

We generate revenue from battery-based energy storage solutions, service agreements with customers to provide operational services related to battery-based energy storage solutions, and from digital application contracts. Fluence enters into contracts with utility companies, developers, and commercial and industrial customers.

We derive the majority of our revenue from selling battery-based energy storage solutions. Generally, we must design the project, as each energy storage solution is customized depending on a customer’s energy needs, procure the major equipment, obtain manufacturing slots from our contract manufacturers, coordinate the logistics, and assemble the solution prior to delivery and installation at our customer project sites. The Company recognizes revenue over time when we have enforceable right to payment for work performed to date and the solution, in its completed state, does not have an alternative use to the Company.

Our revenue from selling battery-based energy storage solutions is affected by volume fulfilled, which is dependent on customer schedules and demand, changes in price, which is primarily dependent on the cost of lithium-ion energy storage hardware, and mix of products and solutions purchased by our customers.

Cost of Goods and Services

Cost of goods and services consists primarily of product costs, including purchased materials and supplies, as well as costs related to shipping, customer support, product warranty, and personnel. Personnel costs in cost of goods and services include both direct labor costs as well as costs attributable activities related to the transformation of raw materials or component parts into finished goods or the

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transportation of materials to the customer. Cost of goods and services are recognized when services are performed or when goods are included in our measure of progress as progress relevant costs, which is when they are restricted to a specific customer’s project.

Our product costs are

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