Bloom Energy (BE -6.34%) passed $1 billion in quarterly revenue for the first time in the second quarter of 2026. Sales climbed 166% year over year to $1.07 billion, and the fuel cell maker earned $196 million for common stockholders, compared to a loss of around $43 million a year before.
And management expects the growth to keep coming. In July, Bloom upped its 2026 revenue guidance again, and the latest range of $3.9 billion to $4.2 billion has a midpoint around double 2025's $2.02 billion.
But can Bloom keep making money while it doubles in size? I think the profit looks solid. The margin behind it, though, is weaker than its 33.4% headline number suggests.
Image source: Getty Images.
A refund boosted the margin
Bloom's second-quarter gross margin (the share of revenue left after the direct costs of what it sells) was 33.4%, versus 26.7% a year before. At first glance, that's just what investors like to see from a manufacturer ramping up volume.
Still, part of that rise came from a court decision. In February, the Supreme Court found that some tariffs imposed under the International Emergency Economic Powers Act were illegal.
Bloom flagged around $37.4 million of those already paid tariffs as recoverable. And it booked the full amount as a recovery against its cost of product revenue in the second quarter, but only around $5 million had actually been refunded by June 30.
Pull that refund out, and Bloom's second-quarter gross margin was about 30%. The first quarter landed at 30%, and the fourth quarter of 2025 at 30.8%, so the underlying number has stayed flat for three straight quarters. In the same span, quarterly revenue rose from around $778 million to $1.07 billion. In other words, Bloom sold much more, but each dollar of sales didn't get any more profitable.
Does the profit hold up without the refund?
It does. Taking out the refund cuts Bloom's second-quarter operating income from $182 million to around $145 million, versus an operating loss of $3.5 million the year before.
Net income for common stockholders would have been around $159 million.
Most of the profit is from scale. Bloom's operating expenses climbed 57% year over year as revenue jumped 166%, so they shrank to around 16% of revenue, down from about 28%.
Even without the refund, Bloom's operating margin was about 14%, up from 9.6% in the first quarter.
Part of the business behind the systems is improving, too. Service gross margin rose to 19%, up from 9% the year before, boosted by more revenue from maintenance contracts for Bloom's installed fleet. Bloom also credits manufacturing improvements and more automation with cutting its production costs.
Tariffs are back
Of course, tariffs also squeezed Bloom's margins before. In its third-quarter 2025 filing, Bloom said it expected tariffs to dent its gross margin by around 1% in 2025.
And new ones already apply. In late July, the U.S. Trade Representative put tariffs of 10% or 12.5% on imports from 60 economies. Bloom's annual report also says it expects 50% tariffs on imported steel, aluminum, and copper to hurt its costs.
That ups the stakes for management's margin target. Bloom still guides for a non-GAAP (adjusted) gross margin of around 34% in 2026, the same target it gave in April, before the refund.
Bloom's adjusted gross margin was 31.5% in the first quarter, and the second quarter's would have been around 31% without the refund. Meeting the full-year target, then, probably means more like 35% for the second half.
NYSE: BE
Key Data Points
Meanwhile, Bloom has now had three straight profitable quarters, but the fourth quarter of 2025 barely counted at $1.1 million. A profitable third quarter would mean four in a row -- a full year of profits, and the bar I've been waiting for with this stock.
As I write this, Bloom's stock is near $276, about 21% off its 52-week high of $351.28. But the price is about 56 times the earnings analysts expect for Bloom in 2027. A price-to-earnings ratio that high arguably assumes margins keep expanding as Bloom grows.
In the end, can Bloom stay profitable as it doubles? I think so, refund or no refund. But its underlying gross margin hasn't budged from around 30% for three quarters, and this valuation needs it to rise. Until it does, I'd hold off buying shares.
