Bloom Energy Earnings: Full-Year Guidance Reiterated; New Products Introduced

We maintain our $18 per share fair value estimate for no-moat Bloom Energy BE following the company’s second-quarter results. We view shares as fairly valued.

Bloom’s second quarter saw product segment non-GAAP gross margins expand to 33.6%, which was partially offset by continued weakness in the company’s service segment ($14 million non-GAAP gross profit loss). The company expects improved results in its service business and reiterated its view for 20% segment gross profit in 2025 (we model in 2026). Bloom reiterated its full-year guidance, and we leave our financial estimates largely unchanged.

Bloom has unveiled two new products in recent weeks that should contribute to growth moving forward. The company’s Series 10 energy server should meet the needs of customers in the data center market who are facing elongated time-to-power timelines from utilities. We view the shorter contract term (five years) as a key positive for customer hesitant to sign-up for longer-term contracts. In addition, the company unveiled its latest combined heat and power solution, which should be well-suited for international industrial customers. We expect these new products to begin contributing to revenue in 2024 and 2025. Bloom’s previously discussed electrolyzer platform for hydrogen applications continues to target first orders in the next 12 months, with initial shipments in 2025.

We view Bloom’s risk-reward as balanced. We see the company’s solid oxide technology as potentially unique in the marketplace, but this is balanced by ongoing business mix shifts and a lack of profitability track record.