Fluence Q1 Revenue Soars 64.5% as Ivory Coast Project Drives Turnaround

Strong Revenue Growth Anchored by Ivory Coast Project

Fluence Corporation Limited (ASX:FLC) delivered a striking performance in the first quarter of 2025, reporting revenue of $16.6 million, a 64.5% increase compared to the same period last year. This surge was largely propelled by the Ivory Coast Addendum project, which contributed $5.7 million in revenue, up $5.3 million from Q1 2024. The company’s strategic focus on high-margin Smart Product Solutions (SPS) and recurring revenue streams also supported a 13.4% growth in these segments.

Historically, Q1 has been a slower quarter for Fluence, with stronger activity expected in the latter half of the fiscal year. Management anticipates continued revenue growth in Q2 through Q4 2025, underpinning confidence in the company’s full-year revenue guidance of $80 to $95 million.

EBITDA Turns Positive Amid Cost Controls

EBITDA for Q1 2025 turned positive at $0.1 million, a marked improvement from a $1.6 million loss in the prior year period. This turnaround was driven not only by revenue growth but also by disciplined cost management, with SG&A and R&D expenses reduced by $0.8 million (14.6%) year-over-year. However, gross margins contracted by 8.4 percentage points to 26.2%, primarily due to the lower margins associated with the Ivory Coast Addendum project.

Among business units, Industrial Wastewater & Biogas (IWB) led EBITDA growth with a $0.7 million increase, while the Ivory Coast Addendum swung from a loss to a $0.6 million positive contribution. Municipal Water & Wastewater (MWW) saw revenue growth but flat EBITDA, influenced by one-time items in the prior year.

Robust Order Book and Backlog Provide Visibility

New orders in Q1 2025 rose 21.8% to $12.1 million, with MWW, Industrial Water & Reuse (IWR), and IWB units contributing $1.8 million of this growth. The company’s backlog stood at $83.5 million, a slight decrease from Q4 2024 due to progress on the Ivory Coast Addendum, but still reflecting a healthy pipeline. Combined with Q1 revenue, the backlog and expected revenue recognition for the remainder of the year amount to $66 million, approximately 75% of the midpoint of Fluence’s FY2025 revenue guidance.

Fluence also highlighted several recent contract wins across diverse geographies, including projects in Italy, the United States, Argentina, and China, underscoring its global footprint and diversified customer base.

Navigating US Tariff Uncertainties

The company addressed the evolving US tariff landscape, noting that the impact on Fluence’s US revenue is expected to be minor. US revenue from key business units MWW and IWB is forecasted at $8 million for FY2025, less than 10% of the budget. Fluence is proactively evaluating alternative manufacturing strategies, including accelerating US-based membrane production, to mitigate potential margin erosion and project delays stemming from tariff fluctuations.

Progress on Ivory Coast Projects and Cash Position

Operationally, Fluence is advancing the commissioning of the Ivory Coast Main Works, expected to complete in Q2 2025, alongside ongoing Addendum works critical for connecting the plant to the distribution system. The company received an initial milestone payment of $8.5 million in Q1, with further payments anticipated in Q2 and Q3.

Financially, Fluence ended the quarter with $8.5 million in cash and $3.7 million in security deposits, maintaining a stable liquidity position. Operating cash flow was slightly negative at $0.2 million, consistent with the breakeven EBITDA result, with expectations for modest positive cash flow in Q2 and improving through the second half of the year.

Looking ahead, Fluence remains focused on executing its growth strategy, managing geopolitical risks, and capitalising on its expanding order book to deliver on its FY2025 targets.