What happened

Markets are inching north today, but shares of FuelCell Energy (FCEL -4.08%) are downright flying higher following the fuel cell company's reporting of its first-quarter 2023 earnings.

As of 11:39 a.m. ET, shares of FuelCell Energy are up 8.8%, retreating from their earlier climb of 21.8%.

So what

Beating analysts' top-line estimates of $28.1 million, FuelCell Energy reported Q1 2023 sales of $37.1 million, a year-over-year increase of 17%. The bottom line of the income statement provided additional fuel for investors' excitement. While analysts had expected FuelCell Energy to report a loss per share of $0.07, the company's loss per share was narrower: $0.05. Its improved performance also contributed to the market's excitement. During the same period last year, FuelCell Energy reported a loss per share of $0.11.

In the middle of the income statement, investors found more reason to celebrate. FuelCell Energy reported a Q1 2023 gross profit of $5.2 million -- a significant improvement over the $2.9 million gross loss that it reported during the same period last year.

Now what

While the company provided encouraging results on the top and bottom of the income statement, investors should recognize that there were sources of concern in the report -- namely, the company's declining backlog. At the end of Q1 2023, FuelCell Energy had a backlog of $1.06 billion, representing a year-over-year decrease of 18.8%. Prospective hydrogen investors should look for this as a green flag in future earnings reports, tempering their excitement for the company's success in beating top- and bottom-line expectations.