Good afternoon. My name is Joel and I will be your conference operator today. At this time, I would like to welcome everyone to the Bloom Energy Third Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Thank you. I would now like to turn the conference over to Ed Vallejo, Vice President of Investor Relations. Sir, you may begin your conference.

Thank you, and good afternoon everybody. Thank you for joining us for Bloom Energy's third quarter 2022 earnings call. To supplement this conference call, we furnished our third quarter 2022 earnings press release with the SEC on Form 8-K and have posted it along with supplemental financial information that we will reference throughout this call to our Investor Relations website. Our third quarter 2022 10-Q is also in the process of being submitted today as we speak. During this conference call, both in our prepared remarks and in answers to your questions, we may make forward-looking statements that represent our expectations regarding future events and our future financial performance. These include statements about the company’s business results, products, new markets, strategy, financial position, liquidity and full-year outlook for 2022. These statements are predictions based upon our expectations, estimates and assumptions. However, as these statements deal with future events, they are subject to numerous known and unknown risks and uncertainties as discussed in detail in our documents filed with the SEC, including our most recently filed Forms 10-Q and 10-K. We assume no obligation to revise any forward-looking statements made on today’s call. During this call and in our third quarter 2022 earnings press release, we refer to GAAP and non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with US Generally Accepted Accounting Principles and are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A reconciliation between the GAAP and non-GAAP financial measures is included in our third quarter 2022 earnings press release available on our Investor Relations website. Joining me on the call today are K.R. Sridhar, Founder, Chairman and Chief Executive Officer; and Greg Cameron, our Chief Financial Officer. K.R. will begin with an overview of our business, then Greg will review the operating and financial highlights of the quarter. And after our prepared remarks, we will have time to take your questions. I will now turn the call over to K.R.

Thank you, Ed. Hello, everyone. Good day to you. We are very pleased with our financial and operating results in the third quarter and the outlook for the fourth quarter and fiscal year 2022. Greg will go into details on the financial and operating performance in his remarks in a few minutes. Before that, let me share with you some observations on market dynamics and two company highlights. On the market dynamics. The world lacks energy security. The disruption of oil and gas supplies to Europe and the long duration power outages that affected large populations in the aftermath of Hurricane Ian in Florida, all demonstrate the fragile and brittle nature of our fuel and electricity infrastructure. And it could have been worse. We came perilously close to catastrophic power outages in Texas and California during the summer months. Now, the Northeast fears its power reliability over the winter. Businesses and governments are quickly realizing that absent significant changes, power disruptions will increase in severity and frequency as extreme weather events become more frequent. In addition to energy security, the volatility and price increase for both fuel and electricity are contributing heavily to economic insecurity. But the fuel and power industries are not responding to these challenges with urgency. Instead, they're waiting for the perfect zero carbon solution of the future. They are reluctant to deploy anything that may become a stranded asset due to policy and regulatory bans. This creates a large opportunity for Bloom. We see that our commercial and industrial consumers want pragmatic solutions that can power their growth today and meet their zero carbon needs in the future. In Bloom, our customers see a peerless platform that is purposeful and practical. By powering them with non-combustion based clean power today, using natural gas, and offering to transition them to net-zero fuels when they become viable. We are offering them energy security, economic security, and environmental security. We are confident that our quick time to power skid mounted energy server will become a solution of choice for commercial, industrial, and utility customers. As a company, we see the market conditions turning favorably for greater adoption of our server platform. We are well positioned to execute on the goals we have set and meet the moment. Now, two highlights. First, we have invested in our capacity expansion by standing up a new factory in Fremont, California. In 2021, we announced our decision to fund and build additional manufacturing capacity to support our growth. Many of you saw that factory under construction during our Investor Day. We told you that we would execute using copy exact manufacturing tools and processes and deliver a doubling of stack manufacturing capacity by end of 2022. We are on track to do what we said we would do. Last month, we produced 40% more stacks than we did in July. We are on track to double our stack production by the end of the year over 2021 levels. The factory also has functional flexibility and advantages we told you it would have. The manufacturing line is currently producing fuel cell stacks and electrolyzer stacks using the same equipment and same team members on the same lines. The commercial and operational advantages of this flexibility are huge. And it is unique to the Bloom Energy server platform and architecture. You will see the benefit of our timely execution of the factory through better margins in Q4 as our volume scales. Second, our technology is flexible. Different products serve different customer needs but are based on the same basic technology. We have discussed the ease and speed with which we can adapt the platform to new applications. Now, I can point to our marine application to illustrate these points. We signed our first contract with Chantiers de l'Atlantique in June of last year. And at that time, I said we planned to deploy on our first ship in Q3 of 2022. I'm very pleased to say we did that with near perfect execution. As of a few weeks ago, we are providing 150 kilowatts of power for MSC's New World Europa, the world's largest liquefied natural gas powered cruise ship, and one of the first to incorporate fuel cell technology. It is on its way to Doha, Qatar, to host guests during the World Cup. This is a sea change moment in this massive industry as it evolves towards a net-zero and sustainable future. The industry wants clean vessels and, in many cases, has been holding off ship purchases to wait for the perfect technologies, even though they may still be years away. Bloom's energy server offers them a better solution that they can deploy today and a clear pathway to a net-zero future. As Linden Coppell, Head of Sustainability & ESG at MSC Cruises has said publicly, Bloom's fuel cells will reduce emissions of greenhouse gases substantially compared to conventional LNG engines without producing emissions of nitrogen oxides, sulfur oxides, or particulates. She also recognized that Bloom's technology was future-proof. It is compatible with low and zero carbon fuels of the future, such as green methanol, ammonia, synthetic LNG, and hydrogen. This is why CDA and MSC adopted Bloom's technology. On the marine front, we believe our execution and success is leading to real momentum, and we will have more to say in the coming months. Let me now turn it over to Greg to elaborate on our financial and operational performance, and join you after that to answer your questions.

Thanks, K.R. I agree with you. We had a very strong operating and financial quarter and are well positioned for the future. To begin, let me point to a few key highlights. We had a record third quarter total revenue of $292 million, up 41% versus the third quarter of 2021 on increased product acceptance. We improved our liquidity through a successful completion of a secondary equity offering. We are on track for doubling our manufacturing capacity this year. We continue to see strong customer interest across our energy server and electrolyzers. We are reaffirming our 2022 guidance. With those highlights, let me provide some additional context to our third quarter performance. Our ending cash balance for the third quarter was nearly $670 million, up over 100% versus the same quarter last year and compares favorably to our recourse debt of $294 million. In August, we executed a secondary offering of 15 million Class A shares. The deal was oversubscribed at $26 a share, yielding $389 million in gross proceeds. We also received notice from SK ecoplant that they were executing their second tranche option to purchase an additional 13.5 million Class A shares at $23.05 per share for gross proceeds of $311 million. They will also be converting their 10 million redeemable convertible preferred shares to Class A shares. The share purchase is subject to the completion of regulatory reviews, and both conversion and the purchase are expected to close in the first quarter of 2023. Our partnership with SK ecoplant is strong and continues to find new avenues for growth. Our value proposition for the energy servers and electrolyzers is robust. The energy servers quickly bring additional resilient power to a client site while providing a pathway to decarbonize. Our customers need solutions today to reduce their carbon intensity while providing future optionality to move to on-site net-zero solutions like hydrogen. In hydrogen production using our electrolyzer, we are engaging large-scale developers of hydrogen and green ammonia projects. As they build their project economics, they clearly value the demonstrated efficiency advantages of our high-temperature, solid oxide technology and our manufacturing readiness that aligns with their timelines. The Inflation Reduction Act passed this summer continues to be a tailwind across our business. Our third quarter total revenue of $292 million was driven by strong demand with an increase in our manufacturing capacity. Product and service revenues were up nearly 50% versus the same quarter last year as we delivered 65% more acceptances. Our third quarter non-GAAP gross margins of 19% were roughly in line with the third quarter of 2021. Pricing continues to remain strong, while our unit costs are temporarily elevated by the commissioning of our new Fremont manufacturing facility. Our supply chain team is navigating the current pressured environment and continues to manage availability, inflation, and lead times for our critical items. Like in the second quarter, as the number of builds increased versus the prior quarter, we saw a modest decrease in unit costs quarter-over-quarter. We expect unit costs to decrease as we continue our manufacturing ramp. As a note, roughly 40% of our 2022 system builds are being completed in the fourth quarter. We continue to invest in our manufacturing capacity, research and development, and our commercial resources. Our engineering teams are developing our technology roadmap for electrolyzer, microgrid, and future generations of our servers. In sales and marketing, we are adding resources to build our selling capability for electrolyzers, waste energy, data centers, and broadening into international markets. Throughout the year, we've invested in inventories and capacity to meet demand. We've doubled our manufacturing capacity this year. As we exit 2022, we will have over 600 megawatts of fuel cell capacity, which when converted at the higher power rating will be over 1.3 gigawatts of electrolyzer capacity. Next year, within our existing facilities, we plan to again double our capacity. As planned, we expect most fourth quarter acceptances and revenue to be domestic, which will benefit from the increase in ITC as part of the Inflation Reduction Act. During the fourth quarter, we plan to execute a repowering of PPA 4. The financial profile will be similar to the second quarter PPA 3A repowering with a noncash charge to accelerate amortization of the prior structure or reduction in nonrecourse debt, and product sales at an attractive margin. These repowering of currently consolidated PPA structures simplify our financial reporting and strengthen our service platform. We are reaffirming our 2022 guidance for revenue, margins, and cash flows. With our strong backlog and pipeline, we remain confident that we can deliver at least $1.1 billion of annual revenue. To achieve our margin plan, we will need fourth quarter non-GAAP gross margins to be about 30%. We have several paths to deliver these margins as our product costs reduce with increased output, higher ITC and domestic acceptances, and a favorable price mix for our plant acceptances. By achieving the roughly 24% non-GAAP gross margins for 2022, we would expect to deliver positive non-GAAP operating margin and cash flows from operations. A note on CFOA. Historically, we have factored some of our receivables to align revenue with cash collections more closely. Given the rising interest rate environment and our strong cash position, we're reevaluating the economic value of this practice. Our current cash flow guidance assumes we continue to factor, and if we make a change, it will impact the timing of cash receipts in our 2022 CFOA guidance. In summary, we had a strong operational quarter and are building momentum into the fourth quarter and 2023. We've had significant tailwinds with the push for abundant, clean, and resilient energy. We believe the company is at an inflection point to build upon our mature technology platform, solid record of accomplishment, and robust growth roadmap. We are extremely excited about our future. With that, operator, please open the line for questions.

Hi, there. I was wondering if we could start off actually on the nuclear integration with solid oxide electrolyzers. And curious if there's anything on the horizon that we can expect to see you guys leverage out of the Westinghouse agreement?

So first and foremost, welcome to Bloom team coverage. We're glad to have you on board. And this is K.R. So, we clearly, I think the IML demonstration, which is what you're referring to, and to bring everybody up to speed. We demonstrated using the Department of Energy that our electrolyzer is significantly better in terms of energy efficiency when we do heat integration. There is significant room for improvement. This is what got Westinghouse excited, and this is where we formed the relationship. Currently, as we sit here, we are jointly working with them on several opportunities. And again, as is tradition in Bloom, we will speak about it when something actually materializes, and the customer allows us to speak about it. But we see this as a huge opportunity.

Thank you. Good afternoon, everybody. Wanted to ask in terms of hitting the guidance for the year. Service margins are still in negative territory. So why don’t if you could just speak to is part of the plan to get to these numbers for the year include service margins turning positive, and if so, what's going to drive that? Thanks.

Yes. Hey, Michael, it's Greg. So as we put the construct together this year around service, the biggest component of that service is product costs related to replacement power modules that we put into the fleet. The same issues that we've had, making sure that we continue to drive the cost down of our new product is the same thing that translates into our service business. So as we've been building out the Fremont facility and carrying more capacity than we were currently outputting and absorbing that, those unit costs for both the new products as well as for replacement modules has been somewhat elevated. Our expectation is as we move through the remainder of this year and into next year, and we're building more units, better absorption, and lower product costs, you should see that in our new product business as well as our services business. If you look particularly within the fourth quarter around how we're building that framework, I would expect some improvement in our service margins, given that, but there's still about a breakeven assumption within the business that we're still able to get to our full year guidance around gross margins.

One more thing I would like to add, Michael, when considering this is correct, look at the fundamentals of the service business as Greg mentioned. We are observing improvements in the lifetime of our modules, which is essential for service. While our costs are affected by COVID and supply chain issues, they are currently stalled. We will return to systematically reducing costs quarter by quarter. With longer lifespans and cheaper replacement costs, the units we ship will see decreasing costs. However, there will be initial pressures as we enter new markets with low volume, where service will initially be a cost center. This is necessary for growth, and we are prepared to handle that. This is the balance you will see. Fundamentally, our thesis that service will benefit the business moving forward is solid, and we stand by it. Thank you, Michael.

Hey, good evening. Thanks for taking the questions and congratulations on the ramp there. First, just want to touch upon the revenue growth and the gross margin you're expecting in Q4. Greg, you talked about favorable mix of projects. Could you just provide some more context around those specific customers in the U.S? So like a PPA 4, PPA 5 simplification, which is driving that. And also just wanted to understand I think the Q you've talked about ITC benefiting Q3 revenues or higher ITC rather? How should we think about that?

Yes. Thanks, Maheep. So a couple of things are impacting there. One is we've definitely seen an increase in our acceptances each quarter, and thus an increase in our revenues each quarter as we've gone through the year, and we brought Fremont stack manufacturing online. Stack manufacturing, as you know, has been our capacity constraint. We have more than enough capacity in our Newark Delaware facility around assembly; it's really been about stack. And we've built that out each quarter. Expectation, I think I even said it in the script was we would expect about 40% of our annual build for this year to be done within the fourth quarter. So that was really going to help us as we continue to drive forward to get to a revenue guidance on the year. Listen, on mix in ITC for the quarter and as we look at the fourth quarter, we're very much focused on making sure that we can deliver the revenue against our backlog and pipeline to continue to grow our revenue to where our guidance is. We do see a path to it get to our 24% gross margin targets for the year, driven by a couple of things. One is unit costs should continue to come down as they have each quarter so far this year, we would expect to see those unit costs to come down, and that's a margin improvement. The second thing is we've been shipping, we've been prioritizing our shipments to SK ecoplant as part of their take-or-pay contract because we've been constrained. We've been shipping them through the course of the year and are nearly done with that. So we've got a lot in the fourth quarter that is expected to get shipped to U.S. domestic customers, including the PPA for the powering that we're going to do in the fourth quarter. Ultimately, we've done that, we’ve taken a look at our mix, and make sure that we can get to our targets this year. We have the flexibility and timing with a lot of our customers where we can pick and choose within a 90-day period around how we want that mix of acceptances to come. So you may see within the fourth quarter a slightly above average selling price as we continue to make sure that we can meet our commitments that we've made to everybody and get to the margin numbers that we've set.

Hey, good afternoon. Thanks team for taking the time. I appreciate it. So, first off, just keeping with this IRA focus, if I can. What geographies and applications are seeing greater attention? Clearly, commercial utility rates and demand charges are going higher; ITC should be invigorating. Can you talk a little bit more about the backlog? And then related there, you talked at the Analyst Day about the interconnect opportunity. Utilities are obviously having challenges; data centers are talking that up of late. Are you still seeing an opportunity for novel load, which can't be met with utilities, as you look at your backlog creation to '23?

Yes, hey, Julien it's Greg. So let me kick it off and what I miss, I'll ask K.R. to clean up for me. So there's an IRA we are still really encouraged by everything that we're seeing in there. Whether it is the ITC benefit on our core microgrid equipment, or whether it's on the ITC benefit being extended into our biogas, waste-to-energy business and more of that product getting in, we’re really encouraged by that, as that helps our projects become more attractive to our customers. The 45Q credit around carbon capture is important to us. We've talked before, now only going from $50 to $85, but the size of the projects were before about 200 megawatts and now can get down into single megawatts, probably makes sense for us in the 20 to 30 megawatts, but a lot more opportunity to play in there. Obviously, with the hydrogen PTC at $3 for our electrolyzer business within the U.S., given its performance for there. We're really excited about that. What I'd say generally about how we think about the IRA within our business, across all those different applications, product lines and geographies within the U.S., I would say that our velocity within the deals that we've seen is definitely increasing. It has created some scarcity around resources and other things that we can use to our advantage to make sure that we're moving these deals through the system quickly. No big announcements to make for you or insights into where we think the backlog will be for the end of the year. But we're really excited about the activity we're seeing. Yes, specifically about the interconnection: the time to power within whether it is in the data center space, the advanced manufacturing space, including semiconductors. There is a tremendous need for power right now, whether it's from onshoring back to the U.S. of those activities or just the needs within data centers. Quite frankly, as they go to their local utilities, and which they've shared with previously around this is going to be their energy demand, when they made the commitment to build in that location, they're being told that it is going to take several quarters, if not several years, to get the power they need. We've engaged several customers in that space. We're really encouraged about the velocity of those deals.

Julien, I would add to that a couple of things, right. The new focus on that growth because of the onshoring of manufacturing and data centers and looking at specific hotspots in the country where that gap between supply and projected demand is in the hundreds of megawatts. That could be a deal play. Like Greg mentioned, it would be a freebird, a self-operating microgrid that supplies power for that customer. The other one could be in front of the meter working with utilities, being able to provide the utility with the tools to deliver power for their customers. As they bring transmission distribution and alleviate that, thanks to our skid-mounted platforms, they can move those around where they need to move. This must be super attractive for a utility to be interested. So not only are we talking to potential customers in our funnel, we are also engaging with utilities to say how can we partner. This should be a win for the utilities. The other question you asked in regards to IRA and Greg alluded to this, biogas and waste to power. We are seeing an order of magnitude increase in the funnel because of IRA. We have seen somewhere between 200 and 300 megawatts worth of funnel inquiry that we have in the waste-to-power market. These are project developers, many of these are brand new, trying to utilize all the IRA benefits. What will actually materialize, time will tell. But we clearly see a 200 to 300 megawatt funnel out there in terms of opportunity, which is super exciting.

Thank you for taking my question. I wanted to ask about the Taylor Farms press release that you had during the quarter. I thought that was particularly interesting. And maybe if you could just give any insight that you can into the customer's thought process in leaving the grid and going with Bloom servers and if you're seeing similar kinds of inquiries from other industrial users.

Martin, this is K.R. Thanks for asking that question. Look, Taylor Farms is a great example for us of a repeat customer who started very small with us and grew with us as we went along. For people that are not familiar with the name, if you go to a grocery store and buy good salad mix, chances are that’s the Taylor Farms packaged salad mix. They are the country's largest provider of this. So a very large footprint serving a very important need for the country. Now, they're a fantastic example of what again, we are seeing with our current electricity system. These farms and where these packaging plants are typically at the very end of the line in rural areas. As the energy system is getting constrained, the electricity system is getting constrained. Even on a good day, the quality and the reliability of the power they have at the end of the line is terrible. And God forbid things like public power shutoffs happen, which they have experienced for days on end, they don’t have power. The amount of damage it does to their ability to do business is profound. Therefore, they wanted a microgrid that was completely independent of the grid and could just operate. This was their requirement. We have always said, when you combine our baseload power, with a little bit of energy storage, with a little bit of engines, if you need it, and with solar, you put all that together, you get the Goldilocks of electricity. What you get is energy security, economic security, and environmental stewardship. We put the three together, and Taylor Farms is an example of where we believe the rest of the business world is going to go when they realize what is needed.

Hi, good afternoon. I want to touch a bit more back on biogas. You've talked about the funnel of inquiries you have and just how big it is in the waste-to-power space. I recall you having some optimism earlier in the year that it would be a big second half for that business line. So wonder if you could just expand a little bit on that. Are the drivers pretty much everything you anticipated? Of course, IRA is helpful. And do you have any sense about what trajectory the growth might take as you cross into next year?

That's a great question. Yes, when we talked about the IRA, and the benefits that it had created for taking what would be a problem in that methane from the waste going into the atmosphere, and converting that into an opportunity. Everything was lined up there, right? So that story is absolutely still relevant. We are seeing that more people are realizing that it is not only a good thing to do for the environment, but it's also a good thing to do for their wallet. And those two things combined, meaning the market takes off. There are two aspects of this waste-to-energy that I want to focus on. One aspect of the waste-to-energy is whether it’s landfill or animal waste, in which case, our systems require minimal cleanup; our systems don't need to be very large. For the amount of biomethane produced, they will deliver the maximum amount of electricity as needed. For those reasons, we are the preferred choice by most developers in this field, whether it's a wastewater treatment plant, or a dairy farm, or anyone else. So that's the value proposition there. We see multiple opportunities there. In places like wastewater treatment, it's also a resiliency play, because in the event of a big national disaster, and the grid not operating, they're eating their own dog food. So they're able to make methane and then convert it into electricity and operate their way, like wastewater treatment plants, and that resiliency brings a fantastic advantage. Beyond this, we have clean fuel credits, and there’s a very strong formula on the CI score. These are very large projects being developed in the Midwest. And we currently are actively working on about 8 to 10 projects across all these types. While it's difficult for me to handicap for you, and even if I could, I wouldn't give you a number, we would expect a reasonable chunk of that 200 to 300 megawatts to actually go into contract next year.

Good afternoon, everyone, and thank you for taking the questions. Just two quick ones for me. I was wondering if you guys could give us a sense of your current system contract value backlog. I notice the metric you typically provide annually, but I was wondering if maybe we could get a sneak peek of where it stands today. And then also, it looks like non-GAAP OpEx pickup quarter-over-quarter because of investments, and is maybe tracking up 25% year-over-year versus revenues being up about 20%-ish. So just wondering how you guys are thinking about operating leverage entering 2023. Thank you.

Hey, Kashy, thanks. Listen on GAAP and OpEx, right. As we went through and looked at where we needed to make investments in the company, clearly, we are investing in R&D. That's both in engineers to develop projects, and materials that they can use in the laboratory. We are putting a foot to the accelerator to ensure that, especially post-IRA, we can bring these products to market quickly and resiliently. On the commercial side, we’re continuing to build out our capability, whether it is with resources in the sale of our hydrogen electrolyzers, in waste energy that KR was just speaking about, to utilities or building out our international platform. We are adding resources to there. Lastly, we are ensuring that we run this business in a controlled fashion as you would expect us to, making sure we have the proper resources in place. With each quarter, there are a few things that pop through on the OpEx that were one-timers or things you hadn't planned on. There were a couple that came through this quarter. From a discipline standpoint, this business is all about moving from, as you said, the low 20s as OpEx as a percentage of revenue to that 15% OpEx as a percentage of revenue by the middle part of this decade. We're committed to doing that. There was a bit of catch-up that was needed, and as we pull our plans together this year. My expectation is we won't continue to grow at that rate, and we should see some operating leverage, especially as we move into next year, given the revenue expectations we see.

Great. Thanks for taking my question. Just thinking about your cash balance, turning to positive, I guess, plus or minus operating cash flow, depending on the accounting, and also the additional cash sitting in the beginning part of next year. Just kind of thinking about, how are you looking at capital investment in this environment? If you like, it's because of all the backlog that you've got, are you already thinking about the need to add new manufacturing capacity?

Yes. Hey, Alex, thanks for the call. It's Greg. So, listen on the cash balance. A big part of the secondary was to make sure we had properly capitalized to display not only to our supply chain but to developers or projects, especially as we've gotten into more complex contracts that we have the substantial financial resources to participate at the level needed. We wanted to signal to the supply chain that we are increasing our capacity significantly and we have the financial wherewithal to encourage them to invest. That was the primary reason we did the secondary in August. On capital investment, we are very focused on bringing the Fremont facility up this year and into next year. Where we were about 300 megawatts of total stack capacity at the end of last year, we will reach 600 megawatts of total stack capacity and a fuel cell basis. That's over a gigawatt of electrolyzer capacity that we have as of today. We will continue to bring those online next year. The investment is roughly $200 million. From that, we'll double our capacity again next year on the same $200 million we've been investing this year and next year. The payback is incredibly attractive at 6 to 8 months, and we'll go from there. After we've gotten that manufacturing capacity in Fremont, we feel confident that we can get more capacity out of that same facility going forward. We don't think we stop at the gigawatt of fuel cell capacity, or the 2.5 gigawatts of electrolyzer capacity in Fremont. But to the extent we need to build another factory down the road in a different location, we are prepared for that. Once you have the building, it's fairly quick to make those investment decisions. It's about 6 to 8 months to bring it online and to fully utilize.

Now, there’s one more thing I want to add to what Greg shared: would we continue to invest to double the capacity next year? The answer is absolutely yes. While we understand the context of the economic environment we are all seeing in the macro, just look at electricity and the drivers for the demand, whether it is electrification of transportation, digitization and data center growth, waste to energy, and the opportunity that has been created. There is hydrogen and the PTC. From their reset, this is not going to slow down for us. The astronomical pace at which it needs to happen may come down a little bit, but there will still be huge growth opportunities. Both with the previous question on our OpEx as well as this question on our CapEx, we are going to meet the moment. That's the reason why we raised the money and we are sitting with a relevant product and platform for today, tomorrow, and the long-term future. We see nothing but opportunity and we will continue to invest both in building the team and in CapEx to lead and be the lead player in this transition.

Hi, thanks for taking my question. Can you share with us how Bloom is participating in the hydrogen hub proposals that are being prepared for submission to the DOE?

We are in active conversations with multiple hubs. Again, these are competitive at this stage. So I don't know that I'm at liberty to talk about which hubs. But trust us, there are multiple hubs competing. When it comes to hydrogen, I have used this before, I think, in the last call, we are like the dogs in the hunt for the biggest bone. We are participating with anybody and everybody that wants our superior electrolyzer to put together a superior proposal. Thanks, Sangita.

Thanks so much, guys. Could you speak to the improvement in yields that you're getting out of that California facility at this point?

The improvement in yields? Yes, listen, it is a copy exact process, right. The same printer technology, the same furnace technologies, the same manufacturing processes, the same parts go through both our Sunnyvale factory and Fremont facility. In some cases, as we brought the Fremont facility on, we used both facilities to create stacks. It's not that there's not a different manufacturing process nor a different outcome between what we get out of Fremont versus what we get out of Sunnyvale. The capacity that we've been able to add has really been amazing over the course of the year, and this speaks to the ability of the team to bring this tooling on place very quickly. Kudos to the team that built the original manufacturing line, that they've been able to bring these processes in and build out this manufacturing line. We've got it 95% up, and we'll have the remainder up by the end of the year, with plans to add more lines next year. Our expectation is that the yield from it from a process standpoint will be equivalent; while we always look to improve that with automation and manufacturing process improvements, we spend a lot of time on those to help drive quality improvements and cost reductions. But no real difference exists between the California facilities.

One important thing to consider is our copy exact and modular technology, which allows us not to have an on/off function and simply start a new factory. Instead, we keep adding capacity every week, every month as new tools come on board. For example, in our Fremont factory, we were able to produce 17% more fuel cells in October than in September, 25% more than in August, and 40% more than in July. So every week and every month, we keep ramping up from a factor of 1x to 2x. By the end of the year, we will reach double our production capacity overall. This is a low-risk approach to scaling.

Hey, good evening, guys. Thanks for squeezing me in. Maybe a quick one for Greg. But it looks like the installation margins were like a 140 basis point drag on gross margins this quarter. And you've indicated that this is kind of going away. Is that another potential tailwind for you guys in the fourth quarter? Or has that improvement ceased by the fourth quarter?

Yes, it's a good question, Ameet. So we are definitely engaging more with EPC partners here in the U.S. They are taking this work away from us and bringing their expertise to help drive lead times with customers as well as to improve profitability, given that it's their core competence, not ours. If you look particularly at the fourth quarter, though, I would caution you on seeing something very similar to what we saw in the third quarter, just due to the amount of U.S. domestic installations. While we may improve margins on individual projects, our expectation with the SEC team is we will still see nominally more deals in the U.S. in the fourth quarter. Over the long term, the way we help improve margins to 30% by the middle of this decade is by continuing to create profitable product sales and improving service margins.

Yes, thanks for getting me in here. Just curious on two things. One, any commentary you have on pricing in particular on the electrolyzer side? I'm just curious what you're seeing as you're going out and bidding projects.

What was your second one, Jeff, so we can get them both and get them answered?

Certainly. And I hopped on a few minutes late, so I don't know if it's in the prepared remarks you've addressed. Eversource's comments earlier in the week on gas shortages. How should we think about that? What your exposure is to the Northeast? Thank you.

Yes. Great. On the pricing of electrolyzers, I will tell you our view remains strategic. Our technology is superior regarding efficiencies. With our technology, we can potentially provide competitive pricing by focusing on the value we offer to our customers. Our primary goal is to create value for them and share that value. I generally do not get into discussions about precise pricing adjustments, but our priority is customer-centric solutions. Regarding Eversource and gas shortages, we have been engaging with gas companies across the U.S. There is a significant demand, but it's a short-term issue. We believe we can navigate through it. Our community is cooperative and focused on problem-solving. Projects aren’t strictly LCOE-driven; instead, they revolve around time to enable power. This creates opportunities for us to invest in solutions, possibly justifying additional spending in the short term to deliver the necessary power. Overall, this allows us to advance swiftly through the process. Thank you, Greg, and thank you all for taking the time to join us today. As you can tell, we are very excited about the opportunity ahead of us. You've seen us articulate our capacity not just to generate revenue, but to innovate and adapt our platform across a variety of applications, like the marine application we mentioned earlier. The overall demand in the marketplace continues to be robust, driven by significant supply-demand mismatches and a need for timely power solutions. We see this as a remarkable opportunity and appreciate our team's execution in delivering timely project developments, optimal production capabilities, and effective supply chain readiness. We eagerly look forward to discussing our end-of-year results in 90 days. Thank you.

Thank you.

This concludes today's conference call. You may now disconnect your lines.