Fluence (ASX:FLC) management used its fiscal fourth-quarter 2025 earnings call to highlight what it described as an “inflection point” after a multi-year turnaround that shifted the business toward standardized products and recurring revenue. The company’s CFO said the strategy, initiated in fiscal 2023, was designed to improve execution, margins, cost discipline, and cash flow after Fluence’s historical challenges in converting its portfolio and geographic footprint into consistent financial results.
Strategic shift toward SPS and recurring revenue
Management reiterated that Fluence realigned its operations in fiscal 2023 to focus on “SPS and recurring revenue products” through four core business units. According to the CFO, the mix shift has been significant: SPS and recurring revenue represented 38% of total revenue in fiscal 2022 and rose to 65% in fiscal 2025.
Fiscal 2025 and Q4 results: revenue surge and EBITDA turnaround
Management reported fiscal 2025 revenue of $78.4 million, up $26.9 million, or 52%, versus fiscal 2024. Fourth-quarter revenue was $26.0 million, up 22% year-over-year.
For the full year, Fluence delivered EBITDA of $4.0 million on $78.4 million in revenue, which management said met the midpoint of its EBITDA guidance. The CFO noted that EBITDA improved by $8.0 million compared with a $4.0 million loss in fiscal 2024.
Gross margin for fiscal 2025 was 29.9%, which management said was flat compared with fiscal 2024 despite a higher contribution from the lower-margin Ivory Coast addendum project. The CFO attributed the margin performance to project execution and “outperformance of bid margins” across the core business units, noting that all units except Southeast Asia and China delivered meaningful gross-margin increases. The company said municipal, industrial water and reuse, and industrial wastewater and biogas exceeded their prior-year gross margins by an average of more than 6%.
- Ivory Coast addendum: Revenue from the project was $20.4 million higher than fiscal 2024, and it contributed $3.4 million of EBITDA in fiscal 2025 compared with $0.2 million in fiscal 2024.
- Industrial wastewater and biogas: EBITDA increased by $1.8 million, which management said was driven by $5.0 million of revenue growth and gross-margin improvements.
- Municipal water and wastewater: Revenue increased $1.4 million and EBITDA increased $0.9 million.
- Southeast Asia and China: Revenue grew $2.8 million, and the unit reduced its EBITDA loss by nearly $1.0 million.
- Industrial water and reuse: EBITDA increased by about $0.5 million despite modestly lower revenue, which management attributed to higher gross margins and positive project variances.
- Corporate costs: The company cited approximately $0.5 million of corporate cost savings that supported EBITDA.
In response to a webcast question about whether the business is profitable without the Ivory Coast contribution, management said the answer is “yes,” pointing to profitability in both Q4 and the full year driven by SPS and recurring revenue growth, gross-margin expansion, and a lower cost base.
Cash flow, balance sheet, and orders
Fluence ended fiscal 2025 with $16.6 million in cash and $4.1 million in security deposits. Operating cash flow was $3.8 million in Q4 and $10.9 million for fiscal 2025, which the CFO said was higher than forecast because a number of Ivory Coast payables were not settled before year-end.
As a result, management expects negative operating cash flow in Q1 fiscal 2026, with a return to positive operating cash flow from Q2 through Q4 of fiscal 2026. The company also said it repaid $2.5 million in debt during fiscal 2025 due to strong cash flow generation.
On demand, management highlighted a sharp increase in quarterly orders. New orders in Q4 were $24.5 million, up $15.0 million, or nearly 158%, from Q4 of the prior year. The CFO said the company believes this was the largest order quarter on record for SPS and recurring revenue. For fiscal 2025, new orders totaled $64.2 million, up $14.2 million, or 28.5%.
Backlog ended the year at just under $75 million, with approximately $53 million forecast to be recognized in fiscal 2026. Management said backlog for the core business units increased by $14.8 million, or more than 40%, which it expects to provide a strong foundation for fiscal 2026 growth alongside recurring revenue expectations.
Fiscal 2026 outlook and key project updates
Despite what management characterized as strong momentum, Fluence said it will not issue discrete guidance for fiscal 2026. However, the company expects:
- Double-digit revenue growth, even with a significant reduction in revenue from the Ivory Coast addendum project
- Continued gross margin expansion
- Strong growth in EBITDA and EBITDA margins
During Q&A, management confirmed it expects double-digit growth on the fiscal 2025 revenue base of $78 million.
On the Ivory Coast addendum, management said work continued through Q4 with progress on road construction, earthworks, drainage, and pipeline installation reaching approximately 2.2 kilometers. The project is expected to be completed in Q3 2026, with “no significant deviations” from budget. Fluence said it is pursuing a long-term operations and maintenance (O&M) contract and is currently maintaining the plant on an interim basis; however, management said no revenue was recognized for interim maintenance in fiscal 2025 because there was no contract in place, despite a commitment from the client to reimburse at standard market rates. Fluence reported that as of Dec. 31, 2025, it had collected six milestone payments under the addendum contract totaling EUR 35.4 million, or about 73% of total payments.
Egypt receivables reserve and leadership changes
Management provided an update on its Egypt joint venture, IWS, which was established in 2018 with Fluence as a 75% majority owner. While the business has executed municipal and industrial projects, including the $20 million New Mansoura water treatment plant commissioned in 2023, management said it has not been fully successful in collecting outstanding accounts receivable, with balances “substantially in arrears” even though the plant has been operational for more than two years.
As a result, Fluence said it is taking a $4.5 million reserve on accounts receivable at IWS. Management said the reserve will be recorded as an extraordinary item in other losses and is not expected to impact cash flow because collections from these accounts have not been forecast for some time. The company said it will continue efforts to collect and is reviewing the future of IWS, including considering “all available alternatives.” In Q&A, management said it believes IWS likely represents the last of the major legacy write-downs and that it does not expect additional write-downs from existing operations at this time.
The call also included several executive updates, including the appointment of CFO Ozzie Llanes, who joined in December and will work on capital efficiency, investor relations, and integrating global financial processes. The company also added Anda Cao to its business unit leadership group and expanded the roles of Rick Cisterna (Chief Growth Officer) and Spencer Smith (Chief Talent and Legal Officer). Management said Cisterna will lead initiatives including global key account management and establishing a global water services business unit, and will take ownership of transitioning the Ivory Coast project from a CES project to a long-term O&M project.
In closing remarks, management credited recently retired CEO Tom Pokorsky for laying the foundation for the turnaround and said the combination of record orders, a strong backlog, expanding gross margins, and a lower cost base positions the company for what it expects to be a stronger fiscal 2026.
About Fluence (ASX:FLC)
Fluence Corporation Limited, together with its subsidiaries, provides water and wastewater treatment solutions for the municipal, commercial, and industrial markets worldwide. The company offers water products, such as decentralized water treatment, NIROBOX desalination building blocks, NIROFLEX smart packaged plants, ultrafiltration, and reverse osmosis systems. It also provides wastewater treatment products, including decentralized wastewater treatment, dissolved air floatation, MABR and SUBRE wastewater treatment, anaerobic digestion, nitro shortcut nitrogen removal, Smart packaged Aspiral and EcoBox, and Tipton series extended aeration WWTPS.
