Fluence Corporation lifts gross margin to 35.2% as orders fall 20%

Key Facts

Fluence Corporation lifted its gross profit margin to 35.2% in the first nine months of 2026, compared with about 29% in the same period a year earlier, while new orders fell about 20% year to date. The company provides water, wastewater and reuse solutions, according to the Australian Securities Exchange description, and is distinct from Fluence Energy, which operates in energy storage. Results showed revenue rose 11.3% year over year to $58.0 million. Earnings before interest, taxes, depreciation and amortization also rose to $4.7 million from $1.4 million a year earlier, an increase of 230%. The performance leaves the company facing two divergent trends: improving margins and revenue, alongside a slowdown in new orders.

The margin improvement coincided with growth in Smart Products Solutions and recurring revenue, the two activities that company data said added $12.5 million to revenue during the nine months, up 38.5% year over year. In the third quarter alone, revenue from these activities rose 44.6% from a year earlier, while recurring revenue accounted for 18% of total sales. These figures provide context for a shift in the revenue mix toward recurring sources and Smart Products Solutions, whose growth was linked to the higher gross margin. In the first half, the company had reported revenue of $37.6 million, up 14.7% year over year, and growth of 34.7% in revenue from Smart Products Solutions and recurring revenue. New orders also reached $23.6 million in the first half, 5% above the year-earlier period, including $16.1 million in the second quarter alone, up 53.9%.

Order momentum later reversed: new orders totaled $8.0 million in the third quarter and $31.6 million year to date in 2026, with total new orders down about 20% since the start of the year. Management said some customers had postponed investment decisions because of geopolitical uncertainty and that most delayed projects had not been lost. In a July update, the company had cited delays to some order schedules because customers were deferring investment decisions, and said at the time that it had not recorded any project or order cancellations. It also forecast in July that second-half orders would be significantly higher than first-half orders and that new orders would grow strongly in fiscal 2026. At the end of 2025, the order backlog stood at $74.8 million, while the company recorded $24.5 million in new orders in the fourth quarter of that year, describing it as the largest quarter on record for Smart Products Solutions and recurring revenue.

Cash generation remained a challenge despite improved adjusted operating earnings: cash and cash equivalents totaled $6.7 million on September 30, 2026, and operating cash flow was negative $4.3 million in the third quarter. Management attributed the negative flow mainly to the timing of customer receivables. In July, it had forecast negative operating cash flow in the third quarter because of the timing of supplier payments, followed by a return to positive territory in the fourth quarter, when it expected to receive two milestone payments. Management said it expects to collect two customer payments totaling more than $5.5 million at the start of the fourth quarter. The payments include operations and maintenance fees due for Côte d’Ivoire for 2025 and a payment related to the Qurayyah water treatment project.

By contrast, management forecast that the fourth quarter would deliver positive earnings before interest, taxes, depreciation and amortization, positive operating cash flow and the strongest bookings of the year. The forecasts place the expected collections at the start of the quarter within a path back to positive cash flow, alongside the company’s efforts to convert delayed projects into orders. The results show a divergence between wider margins, supported by growth in smart and recurring activities, and weaker new orders so far this year. Management had based its earlier forecasts on second-half orders being much higher than first-half orders, despite acknowledging delays to some investment decisions. The next operational milestone identified by the company is the fourth quarter of 2026, with the bookings, cash flow and earnings forecasts outlined above.