Bloom Energy Corporation

Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the Bloom Energy Q4 2023 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, please press the star followed by the one once again. Thank you. I will now hand the call over to Ed Vallejo, Vice President of Investor Relations, you may begin your conference.

Thank you and good afternoon, everybody. Thank you for joining us for Bloom Energy's fourth quarter 2023 earnings conference call. To supplement this conference call, we furnished our fourth quarter 2023 earnings press release with the SEC on Form 8K and have posted it, along with supplemental financial information that 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, new markets, strategy, financial position, liquidity, and full-year outlook for 2024. 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 conference call and in our fourth quarter 2023 earnings press release, we referred 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 our fourth order 2023 earnings press release available on our investor relations website. Joining me on the call today are K.R. Schroeder, Founder, Chairman, and Chief Executive Officer, Greg Cameron, our President and Chief Financial Officer, and Aman Joshi, our Chief Commercial Officer. K.R. will begin with an overview of our business, then Greg will review the operating and financial highlights of the quarter as well as the outlook for 2024. And after our prepared remarks, we will have time to take your questions. I will now turn the call over to K.R.

Hello, everyone, and thanks for joining us today. Let me start by thanking the Bloom Energy team for relentlessly working on our top objective of 2023, making the company profitable. Together, we achieved profitability by maintaining price discipline, reducing product costs, improving service margins, and reducing operating costs. What a huge milestone for our company. Now, our goal for 2024 is to increase the profitability on a year-over-year basis. In addition to record revenue, significantly improved margins, and record annual operating income, we introduced innovative products and offerings. including one just this week. More on that later. Now, let me address the macros in the energy market. Digital transformation, AI, electric vehicles, onshoring of manufacturing, and electrification of everything are all increasing demand for electricity at a rate never, ever seen before. All these factors can drive demand for electricity up to 10 times more than the 0.5% average demand growth rate the utility industry is accustomed to for the last four decades. Can a slow-moving industry and the failing grid meet this unprecedented demand challenge? Let's start with electricity generation. Even breakneck speeds of renewable expansion can at best address a very small fraction of this demand growth. In the last 10 years, all the new renewable capacity installed in the U.S. produces less electrical energy than the deficit created by retired coal and nuclear power plants. New nuclear power will not be online during the next decade in a meaningful way. we have to rely on more natural gas to meet the electricity demand. Once power is generated in faraway locations, it has to be transported to the demand centers by high voltage transmission lines. While the National Renewable Energy Laboratory estimates that 90,000 miles of high voltage transmission lines are needed to meet this growth, 90,000 miles we have built less than 700 miles in 2022. All this suggests that as a nation, we will imminently face severe and huge power shortage that will last a couple decades. This situation will be the same in many of the population centers and economic hubs around the world. In the past few months, as I speak to CEOs and business leaders, Energy security and power availability are top of mind issues for them and their boards. Most management teams today view the future supply and availability of electricity as a key enterprise risk. Unlike even five years ago, when most of the conversations were around cost of power, today It is about the opportunity cost and business risk of not having power. So how have these micros played out for Bloom Energy on our commercial side? Let me start with data centers, particularly AI data centers. For the last few months, my team and I have been engaged deeply with several leading companies in the AI space, from CEOs, all the way to working level technical teams. The sales funnel for this sector alone is massive, not in the megawatts, but in the gigawatts. The funnel is composed of several A-list companies with credible growth projections who are told by their utility companies to not rely on them for additional power. They love Bloom's technology, our rapid deployment capability, and the flexibility and optionality of our solution. They are actively working with us on design configurations and implementation scenarios. In these interactions, our prospective customers tell us that in the absence of reliable and timely power from the grid, the Bloom Energy solution would be their best alternative. Unlike our sales funnels in other sectors in the past that had mostly single-digit megawatt opportunities, this sector offered tens and hundreds of megawatts per opportunity. Most of the opportunities we are pursuing today are for greenfield data centers. In contrast to the past, where we offered a cleaner and more reliable power upgrade to an existing data center facility. Greenfield opportunities inherently have elongated sales and implementation cycles. The market in this sector is rapidly evolving, and we will have better visibility on timing as the year progresses. Over the coming years, I'm very excited about the Bloom solution for data center power and particularly AI data centers as I see it as the single biggest segment for our growth in the next decade. This opportunity I highlighted for data centers carries over to other energy intensive industries and service operations that require reliable power, such as semiconductor manufacturing, electric charging of bus, van, and car fleets, and environmentally controlled warehouses. We are in various stages of commercial engagement with prospective customers, and I see great potential to convert some of this interest to bookings this coming year. Let me now comment on our innovative product offerings. In the second half of last year, we announced our combined heat and power CHP offering. This product offering can provide net zero steam to process industries that are looking to lower their carbon intensity. Alternatively, using the steam to create net zero cooling will be a huge economic and environmental benefit to data centers. We are also seeing a strong interest for our CHP offering in Europe. Earlier this week, we announced the BeFlexible offering. This offering has taken our baseload solution offering and transformed it to meet a customer's varying load. For utilities that need reserve power or for data centers whose power usage varies, the BeFlexible offering provides up to 50% cost savings, 50% carbon reduction at reduced load, and more than five times faster power ramp than legacy solutions such as diesel generators and gas turbines. My team is working with several power companies to use the B-Flexible solution in front of the meter. On the international side, let me take a moment to talk about Korea. Five years ago, we started in Korea with our partners, SK EcoPlant, and SKD&D. We had a shared sense of purpose and goals. We knew that together we could grow and build a great business in Korea. In the last five years, Bloom has sold over $4 billion of product and service to the Korean market and established Bloom SK as the market leader in fuel cell power generation. We are positioning ourselves to sell over $4 billion of product and service in the coming four years. We are engaged as partners in the demonstration and deployment of hydrogen-based energy servers and hydrogen electrolyzers in Korea. They are also partnering with us to open up new markets in other countries. In 2023, we had to hit a pause in the deployments to adapt to the new policy and procurement rules that the Korean government enforced in the middle of the year. While that created a lowering of our sales to Korea in second half of 2023 and a slow start in first half of 2024, they are back on track and we expect a strong business in Korea in the second half of 2024 and in the future. For us, Korea is a model and global leader of energy policy progress and commercial adoption. We are bullish about our future in the Korean market. We hope to replicate it in other markets around the world. Outside of Korea, under Tim Schweikert's leadership, we have opened five international markets and have our pilot programs going. He and his team are building a strong pipeline in those countries and confident of opening at least two new global markets. Based on the quality and quantity of the pipeline, we expect our international market to have a strong bookings growth in 2024. At the core of everything we do is our people. We are constantly working to both develop our existing talent and upgrade by adding new talent. Just last week, our CTO, Dr. Ravi Prasher, was elected to the prestigious National Academy of Engineering. It's a huge honor and well-deserved recognition. Congratulations, Ravi. In January, we were thrilled to welcome Aman Joshi as part of our Bloom leadership team. He joined as our chief commercial officer after a long career in power generation sales. Aman will be responsible to grow our robust sales pipeline with a special focus on converting the opportunities to orders with urgency. Aman, welcome and over to you for a few remarks.