Fuel cell company Bloom Energy (BE 5.47%) grew its revenue by 37% in the fourth quarter, a solid improvement from 3.5% growth in the third quarter. The revenue growth was the highest in the last seven quarters. Encouraged by its recent growth and industry tailwinds, Bloom Energy sees significant growth for itself in the coming decade and beyond.
Let's discuss how the company fared in the last year, its future plans, and where it could be 10 years from now.
Fulfilling energy needs sustainably
A key factor driving Bloom Energy's growth is its differentiated offerings. The company's fuel cell servers fulfill the need for a resilient, predictable, and sustainable power source. They can be used to replace diesel generators as well as to ensure consistent quality power supply for mission-critical operations such as data centers, hospitals, and biotechnology. Additionally, Bloom's servers are used to ensure consistent power supply at competitive costs for customers with fluctuating needs, who may need to rely on backup power quickly.
Image source: Bloom Energy.
Bloom Energy uses solid-oxide fuel cells in its servers. These cells generate electricity by an electrochemical reaction instead of burning a fuel. This reduces emissions significantly compared to traditional generation by burning fuel. Further, the company's fuel cells are fuel-flexible and can take natural gas, biogas, or hydrogen as input fuel.
The company is focusing on renewable natural gas as well as carbon capture and utilization to minimize the emissions associated with generation using its fuel cells. It is also focused on advancing the use of green hydrogen in its fuel cells over time. It has already launched electrolyzers to produce green hydrogen. The company expects to start commercial shipments of electrolyzers in 2022.
Bloom Energy believes that the main factor restricting the growth of hydrogen as an input fuel in fuel cells is hydrogen costs, and not electrolyzer costs. Further, power is the major cost in hydrogen generation using electrolyzers. The company believes that it has an edge over the competition in this segment as its costs of input energy required are lower than that of others.
Overall, Bloom Energy is targeting the market using a practical approach with products that are in demand right now, rather than focusing only on hydrogen fuel cells. That may change over time, and Bloom Energy is also evolving with the changing needs. The company's approach looks pragmatic, compared to Plug Power or FuelCell Energy, which have been selling hydrogen fuel cells at losses for decades.
So, Bloom Energy believes that hydrogen isn't the only way to generate clean energy. Its solid oxide fuel cells offer a cleaner way to generate power than burning fuel. The company has refined its fuel cells over years and holds 270 patents in the U.S. and 129 patents internationally relating to its technology.
Strong fourth-quarter performance
Bloom Energy reported strong growth in the fourth quarter. Its revenue for the quarter grew 37.3% year over year to $342.5 million. The company reported a positive cash flow from operating activities of $47.2 million. Gross margin for the quarter improved to 20.1% from 17.8% in the third quarter. Bloom Energy's gross margin compares favorably with that of other fuel cell companies.
BE Gross Profit Margin (Quarterly) data by YCharts
For the full year, revenue was $972.2 million, growing 22.4% compared to 2020. Overall, Bloom Energy's performance so far has been impressive.
In 2022, Bloom Energy expects to grow its revenue by around 16%. It also expects to generate positive cash flows from operations for the full year.
Targeting over $10 billion in revenue
In the longer term, the company has set an ambitious target of $15 billion to $20 billion in annual revenue by 2031. It expects nearly half of this coming from its power generation products, primarily fuel cell energy servers. Roughly $6 billion to $8 billion is expected to come from decarbonizing technologies, primarily electrolyzers. Finally, Bloom expects to generate $1 billion to $2 billion in revenue from its offerings in the marine market. Further, Bloom Energy expects to generate a non-GAAP gross margin of 30% and an operating margin of 15% by 2025.
So, 10 years from now, Bloom Energy could be a much bigger fuel cell company, with established operations in the hydrogen market as well. It could also be generating consistently positive cash flows from its operations and bottom-line profits by then. Indeed, these are expectations and there is a fair chance of things not panning out as planned.
All in all, a robust demand growth for Bloom Energy's products, growth potential in the hydrogen segment, differentiated offerings using patented technology, and a strong expected growth for cleaner energy sources positions Bloom Energy well to grow in the coming decade and beyond.
