Fluence Doubles Q4 Revenue, Eyes 55% Growth in 2025 Amid Ivory Coast Recovery

Strong Finish to a Challenging Year

Fluence Corporation Limited (ASX: FLC) closed out 2024 on a high note, reporting Q4 revenue of $21.2 million, more than double any other quarter in the fiscal year. This surge helped the company meet its revised FY 2024 revenue guidance of $51.5 million despite a full-year revenue decline of 26.5% compared to 2023. The standout quarter also delivered a positive EBITDA of $1.0 million, illustrating profitability when quarterly revenue exceeds $20 million.

However, the year was marked by significant operational challenges. Delays in the Ivory Coast Addendum project and a slowdown in China’s water treatment market weighed heavily on overall performance. Revenue from these two segments fell by $15.2 million and $9.8 million respectively, dragging down total revenue despite strong growth in other areas.

Strategic Shift and Margin Gains

Fluence’s renewed focus on high-margin Smart Product Solutions (SPS) and recurring revenue streams is beginning to bear fruit. Excluding the Ivory Coast and Southeast Asia & China segments, revenue grew 18.8% year-on-year, driven by gains in Municipal Water & Wastewater (MWW), Industrial Wastewater & Biogas (IWB), and Industrial Water & Reuse (IWR) units. Recurring revenue increased by 30.5%, bolstering gross margins to 30.1%, up 2 percentage points from the prior year.

Cost discipline also improved, with SG&A and R&D expenses reduced by 11.4% compared to 2023, and a 25.2% cut versus 2022. These savings reflect ongoing restructuring efforts, including headcount and facility reductions across global operations, aimed at streamlining the business and reallocating resources to growth areas.

Backlog and Outlook Signal Growth Ahead

Fluence enters 2025 with a robust backlog of $88 million, of which $58.1 million is expected to be recognised as revenue this year. This backlog represents 61-73% of the company’s FY 2025 revenue guidance of $80-95 million, implying growth of 55-84% over 2024. Management is optimistic that the recent commencement of the Ivory Coast Addendum works, coupled with improved operational discipline and cost savings, will drive a return to EBITDA profitability, forecast between $3 million and $5 million.

Notably, the Ivory Coast Addendum project, which faced bureaucratic and financing delays in 2024, has now secured the Notice to Proceed and commenced execution. The initial milestone payment of $8.5 million was received in January 2025, providing a critical cash flow boost. Completion of this project is key to unlocking further revenue and potential long-term operations and maintenance contracts.

Management Changes and Market Focus

In response to weak performance in China, Fluence has restructured its Southeast Asia & China business unit, appointing Michael (Miki) Schnitzer as Interim General Manager. The company is pivoting its regional strategy to focus on growth markets outside mainland China, including Taiwan, Vietnam, the Philippines, and South Korea. These moves aim to restore competitiveness and operational discipline in a region that remains strategically important.

Additionally, Fluence has fully repaid its Upwell Facility, replacing it with a more flexible $20 million revolving credit facility on favourable terms. This refinancing reduces interest costs and enhances financial flexibility to support growth initiatives.

Looking Ahead

While 2024 presented hurdles, Fluence’s strong Q4 performance, growing recurring revenue, and solid backlog provide a foundation for a promising 2025. The company’s strategic realignment towards higher-margin products and recurring revenue, combined with operational improvements and a recovering Ivory Coast project, suggest a turning point. Investors will be watching closely to see if Fluence can translate this momentum into sustained profitability and market share gains.