Good evening, everyone. Thank you for joining Bloom Energy's Q3 2023 Earnings Conference Call. My name is Adam, and I will be the moderator for today's call. I will now hand it over to your host, Ed Vallejo, Vice President of Investor Relations. Please go ahead.

Thank you, and good afternoon, everybody. Thank you for joining us for Bloom Energy's third quarter 2023 earnings conference call. To supplement this conference call, we furnished our third quarter 2023 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. 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 2023. 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-K and 10-Q. We assume no obligation to revise any forward-looking statements made on today's call. During this call and in our third quarter 2023 earnings press release, we refer to GAAP and non-GAAP financial measures. The non-GAAP financial measures are not prepared in accordance with U.S. 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 2023 earnings press release available on our Investor Relations website. Joining me on the call today are KR Sridhar, Founder, Chairman and Chief Executive Officer; and Greg Cameron, our President and Chief Financial Officer. KR will begin with an overview of our business, then Greg will review the operating and financial highlights of the quarter as well as the outlook for the year. After our prepared remarks, we will have time to take your questions. I will now turn the call over to KR.

Hello, everyone and thanks for joining us today. We are continuing to execute on growing our business in the U.S. and around the world. We remain heads down and focused on performing and innovating at a high level. We continue to increase revenue and expand our growth and operating margins. We do this by selling value to our customers, maintaining price discipline, and reducing costs. In fact, we have lowered costs six quarters in a row, just as we said we would do. We are achieving new levels of success. The strong numbers we report today are proof points that our business model is working and can be profitable. We are well capitalized to continue innovating and handle the cyclical and lumpy nature of our business. The rise in power demand continues to be both steep and sustained. Record high temperatures, adoption of EVs, electrification, data center growth, AI, and re-shoring of industries have all been strong drivers of electricity demand. The antiquated and sluggish electric grid is unable to keep up with this rapid demand spike. A case in point: 66 gigawatts of greenfield projects are delayed in the U.S., and only 14% of capacity requesting interconnection from the years 2000 to 2017 reached commercial operations by the end of 2022 according to a Department of Energy Lab report. Bloom Energy's products and architecture are uniquely suited to these times for both behind and in front of the meter. Where necessary, we can operate in an islanded mode without grid interconnection and offer our customers quick, reliable, and clean power. As an example, we installed 7.8 megawatts of Bloom servers at Coherent's Pennsylvania factory, allowing for significant electrical load to be supplied to that site independently from the grid. The Bloom servers provide clean and reliable power that fortifies the factory's critical infrastructure and helps Coherent meet both customer demand and revenue growth. While the issue of rising interest rates and global conflicts creates some headwinds, there is no question that demand for clean power and the need for availability and reliability will create definite and sustained tailwinds for our business. Looking at our sales inquiry pipeline, the impact of AI on our business cannot be overstated. AI clearly has the potential to expand the adoption of our products in the data center market. AI-powered search on a GPU will take five to twenty times more power per search compared to a regular search on a CPU, and the use of AI is growing rapidly across all segments of our society. This will exponentially increase energy demand in data centers over the next decade. If we look at the projections of future growth from the chip companies and cloud service providers, the imbalance in grid availability and the accelerating demand for compute power is expanding the case for Bloom in this sector from resilience to one of timely primary power availability. For example, we powered our first customer in Taiwan and signed our first customer in Singapore recently. In Taiwan, we installed the first phase of a 10 megawatt solid oxide fuel cell contract with Unimicron Technology Corporation, a chip substrate and printed circuit board maker. Our energy servers went from contract to power on in less than six months, which shows how quickly we can move to solve power availability problems. That success helped us land our first deal in Singapore. Working with our partner, SK ecoplant, we will deploy our Bloom Energy Servers with GDS, a leading developer of high performance data centers. This is exciting as it is illustrative of the strength of our servers as a solution for data centers. In addition, Singapore is a market where 90%-plus of power is natural gas-based today. While we will start with natural gas, our systems are future-proofed. Our customers can switch to carbon capture, to hydrogen, or to green ammonia once the regional infrastructure, supply chain, and regulatory frameworks are established for those cleaner options. We think this is a model for future projects, and it demonstrates the competitive advantage of our fuel flexible platform. Let me spend just a moment on hydrogen. We have long been focused on hydrogen and its many benefits, particularly given the flexibility of our platform technology to operate as fuel cells to provide power or as electrolyzers to produce hydrogen. As many of you know, the Department of Energy announced just a few weeks ago a $7 billion nationwide investment designed to launch seven regional clean hydrogen hubs across the country. Bloom Energy electrolyzers are included in four of the seven winning hydrogen hubs. This should come as no surprise. Bloom Energy is unique in the electrolyzer industry in being able to offer both the highest electrical efficiency products and deliver them at scale today from our fully operational gigafactories in Fremont, California and Newark, Delaware. It is early days for what will be a huge market, but we are clearly pleased about our wins and what it means for Bloom and the world in the future. So to close, growing demand for power solutions driven by data centers and AI, a relentless focus on cost discipline and efficiency, a deep commitment to innovation, and fuel flexibility all make us excited about Bloom Energy's future. I'll be back with you to answer questions. For now, let me hand it over to Greg Cameron.

Thanks KR. Let me begin with a few highlights about our strong execution in the third quarter. We had a record third quarter revenue of $400 million, up 37% versus last year. Our margins improved. Third quarter non-GAAP gross margins were roughly 32%, bringing our year-to-date margins to 25%, up 680 basis points versus prior year. We continue to execute on cost reductions. Product costs are down 18% versus last year, and our operating expenses are down approximately 20% from the first quarter. Our service margins improved versus the prior quarter, and we expect this quarterly trend in service to continue. We ended the quarter with a total cash balance of roughly $638 million. We are reaffirming our 2023 framework for revenues, margins, and profitability. With those as highlights, let me provide some additional context to our performance. As the need for additional electricity grows, our customers recognize the value of affordable, reliable, and flexible power solutions. Our ability to bring fuel flexible power onsite quickly with our energy server, coupled with combined heat and power and carbon capture solutions, provides a competitive advantage versus alternatives. We remain focused on both large scale projects such as data centers, where the energy project dynamics are complex, requiring longer sales cycles, as well as shorter term projects where the customer needs solutions until the power is available from a local utility. As you heard from KR, our electrolyzer has been selected for several hydrogen hubs. These project sponsors, like many large scale project developers, clearly value our efficiency advantage in manufacturing readiness. As these projects move through their investment decisions, we expect to make announcements on our technology deployments. Historically, most of our bookings close in the fourth quarter. This year is no different as we are very focused on converting our commercial pipeline to orders over the next couple months. Each opportunity has its own unique challenges such as permitting, interconnection timing, complexity, IRA incentives, etc. Although these challenges have added to our sales cycle times, our sales team is committed to delivering a robust backlog to grow our future revenues. We look forward to sharing our results in our year-end earnings call in February. This past quarter, SK ecoplant converted 13.5 million redeemable convertible preferred shares to common equity. We are grateful for their trust and are excited to continue our partnership. As part of this conversion, we eliminated $311 million in liabilities and recorded a non-cash interest charge of $53 million. When SK ecoplant made their investment in the first quarter, they had the option to convert the RCPS to either debt or equity by the end of the third quarter. As they have elected equity, we are expensing the loan commitment asset established in the first quarter to interest expense. This expense is being removed as a pro forma adjustment to our non-GAAP reporting. Our third quarter non-GAAP gross margins of 32% improved 12.4 points versus the third quarter 2022. The margin increase was driven by maintaining pricing on acceptances while reducing unit costs. Both price and costs were positively impacted by the repowering of PPA V. The PPA V repowering is similar to the 2022 PPA repowering. We executed the sale of a previously consolidated PPA entity and by doing so, we paid off $119 million of non-recourse debt, enhanced current margins, and simplified our financial reporting. As part of this transaction, we recorded $133 million of charges through our Electricity segment, operating expenses, and other expense that were removed as a pro forma adjustment from our non-GAAP reporting. This was our last remaining consolidated PPA entity. I want to spend a minute on the impact from rising interest rates on securing project financing. As rates have increased over the past two years, investor cost to capital expectations have also increased. Over this period, we have obtained project financing at attractive rates, allowing us to maintain our product margins. Early in the cycle, we offset much of the pressure through an improving Bloom Energy credit profile. Over the last 12 months, as benchmark rates have continued to rise, we've been able to offset additional pressure through ITC benefits for energy communities and domestic content. Going forward, we will endeavor to offset additional pressure through reducing product cost, maintaining pricing discipline as the cost of alternatives continues to increase competitively bidding new financings and a possible extension of ITC benefits post-2024. Our product margin benefited from nearly an 18% reduction in product costs year-over-year. Lower material costs coupled with automation and increased power output are driving down product costs. Every quarter this year we've achieved double-digit cost reductions, and we are confident we will achieve our 2023 target of a 12% reduction in product costs as we position ourselves for a strong 2024. In the fourth quarter, we are consolidating our California stack manufacturing into our state-of-the-art Fremont facility. Consolidating our legacy Sunnyvale activities in Fremont will reduce headcount and expenses as we maintain our capacity. As expected, our third quarter results and service improved versus the second quarter, and we expect them to continue to improve as revenues grow, performance payments reduce, and replacement power module costs reduce. We remain committed to our service business achieving a 20% non-GAAP gross margin by 2025. In the third and fourth quarter, we have executed a few targeted restructurings to reduce costs. We are committed to delivering profitable growth as we continue to invest in our future. We targeted areas that can be reduced without impacting our technical competencies and our commercial capabilities. These actions have resulted in reducing our operating headcount by about 10%. A restructuring charge of roughly $2 million was recorded in the third quarter with an additional $6 million to be recorded in the fourth quarter. Both will be pro forma adjustments to our non-GAAP reporting. We are reaffirming our 2023 annual guidance for revenue, margins, and profitability. Based on anticipated fourth quarter acceptances, we expect to deliver $1.4 billion to $1.5 billion of annual revenue at our targeted 25% non-GAAP gross margin. At this revenue and gross margin profile, we should achieve a positive non-GAAP operating margin for the year. As we've previously discussed, Bloom is committed to becoming profitable this year, and we are well-positioned given our performance year-to-date. I no longer expect to be CFOA positive for the full year. We are holding additional inventories to support our previously announced time to power value proposition that's elevated our working capital levels. We will continue to be diligent with our investments in working capital, ensuring that we are balancing growth, profitability, and liquidity. In summary, we had a strong operational quarter. As we move forward, we are operating with discipline and focus, and we have compelling product solutions for a net zero carbon future. We're excited about our future. With that, operator, please open the line for questions.

Your first question comes from Andrew Percoco with Morgan Stanley. Your line is open.

Great. Thanks so much. Good evening, everyone. I just want to start with South Korea. I think they recently switched to an auction process for fuel cell purchases over the last few months. Can you maybe just discuss how this is impacting the timing of deliveries to SK, and if they are delayed, do you have the ability to backfill those orders with other projects outside of South Korea? Thank you.

Thanks for the question, Andrew. SK is a significant partner for us, and we appreciate their increased confidence as they moved to equity this quarter. I have spent considerable time in Korea this year and am very enthusiastic about the market opportunities. As you mentioned, the Clean Hydrogen Portfolio Standards were introduced this year, leading to two bidding processes—one in the summer and another currently ongoing. We believe that, in partnership with SK, we have exciting opportunities and are actively participating in the bidding process, with results expected in the coming weeks. I can assure you there is strong collaboration between our teams to add value and succeed in this market. We remain optimistic about both the short-term and long-term prospects in Korea.

Your next question comes from the line of Julien Dumoulin-Smith at Bank of America. Your line is open.

Hey, good afternoon team. Thank you guys very much. Just first off, can you elaborate a little bit more on the inventory? I mean, what's going on in terms of CFOA and just to what end the buildup and working capital there? I mean, what is that saying about 2024 really is I think what is an interesting nugget or clue there? And then related, can you just elaborate a little bit on where you stand on some of these data center deals like Amazon, what's included this year or next year and what are you seeing just on the data center activity front, whether that's with Amazon or in Ireland or frankly, some of these other opportunities? How much of the overall build could you be seeing in 2024 derive from those as you think about your backlog or guidance composition?

Thank you, Julien. I'll begin and then hand it over to KR for specifics on the data centers. Regarding working capital, we have noticed an increase in inventory this year, approximately $250 million. This buildup in inventory is a strategic move to shorten the cycle time for our customers who are in need of power. This decision has impacted our cash flows, but I want to highlight that our EBITDA remains positive so far this year, indicating that we are not experiencing a cash burn from operations. Instead, this is more of a deliberate investment to ensure we respond swiftly to customer demands. We are confident in the commercial pipeline and understand that our customers face tight timelines for power. While we are still going through permitting processes, it's essential that once those are resolved, we can provide power without delays related to long lead times for materials. Our increased inventory is a direct response to this confidence and the anticipated conversion of pipeline opportunities into orders that need quick delivery. We have been cautious with our working capital and, as we look ahead for the rest of the year, KR and I have concluded that to meet our cash flow targets, there is no need to reduce inventory levels to a point where we risk not meeting customer demands next year. Therefore, we have opted to maintain higher inventory levels, which we believe is a prudent approach to better serve our customers. Now, I'll let KR discuss data centers.

Hey, Julien. Data centers were extremely active before ChatGPT launched. The demand for data centers has skyrocketed since then. The average AI searches require significantly more power from GPU chips compared to CPU chips. Whether it's an existing data center converting from CPU to GPU or a new data center being established due to society's increasing reliance on AI, it's hard to find any sector that won't adopt this technology. The power shortages that existed before GPT have worsened. In both Virginia and the San Jose, Santa Clara region, around 70% to 80% of the data centers in the U.S. are located, and both areas are facing critical power shortages to meet their needs. I've witnessed the same situation in Taiwan and Singapore, whether it's regarding chip manufacturers or the data centers themselves. This trend also exists in Ireland. We believe this represents a significant long-term opportunity. Bloom's modular and reliable infrastructure, along with its capability to transition to cleaner fuels and its pay-as-you-grow model, combined with our established reputation in the data center sector as a reliable power provider, position us favorably. We see this as an incredible opportunity moving forward. These are complex and large-scale deals that require time to finalize, but it remains our most significant area of interest. Thank you.

Your next question comes from the line of Chris Dendrinos with RBC Capital Markets. Your line is open.

Yeah. Thank you. I wanted to shift the conversation a little bit to the hydrogen topic here. The Project Nujio'qonik, it looked like the EIS was submitted a couple of months back and then still waiting for a response there. Is there anything more to say on that program right now? And when could we maybe hear an announcement on the award, I guess, of the demand to Bloom? I will leave it there. Thanks.

So to the extent that our customer speaks about it or our partners speak about it, we let them do that. But until a deal is finalized, it's normally not our habit to talk about it. So I'm not going to give you any more color other than we are very engaged in that project. I can confirm that. And then, in terms of the hydrogen larger story, I think the big news really is the $7 billion hydrogen hubs and how we have been selected in four of the hubs. And we have invested, and we are continuing to invest in a big way in hydrogen because we believe we have the world's most efficient electrolyzer that can be deployed at scale. And we see this as a huge opportunity.

Your next question comes from the line of Ben Kallo with Baird. Your line is open.

Hey, thanks guys and good evening. Just on the movement over to Fremont. How do we think about any impacts into Q4? I think it's probably seamless, but just wanted to get your thoughts on that. And then just on repowering, is there any way you can quantify the impact on margin there? Thank you.

Yeah, it's Greg. The move to Fremont is going very smoothly. We are transferring the necessary tooling from Sunnyvale to Fremont, and we anticipate that it will not affect our capacity this quarter or next. We have prepared in advance where needed, and the transition is proceeding seamlessly. The two facilities are close to each other, so taking the tooling offline for a brief period won’t have an impact. We are looking forward to consolidating everything into a more efficient location, saving on rent by having one lease instead of two, and streamlining our inventory and indirect labor. Regarding the repowering, the PPA V is quite similar to the repowering we did last year with III A and IV. You'll recall we discussed how we reintroduced those VIs and sold them to a financial investor, who then purchased units from us that we delivered within the quarter. For specific numbers, I encourage you to refer to the Q. The team did an excellent job detailing the individual components on pages 28 through 30, where you can find the financial details associated with each transaction.

The next question comes from the line of Manav Gupta with UBS. Your line is open.

Congrats on a very strong quarter. It's great to see a hydrogen company maintaining its guidance and reaching the top end of it. My question is about the new Series 10 solution and some combined heat and power solutions that were mentioned last quarter. Can you provide an update on those two offerings? Thank you.

Manav, thank you. And so the first question on Series 10, look, Series 10 is one of many opportunities that we are offering our customers. And what is really interesting about that opportunity is it's a five-year commitment for people who believe that the grid problem is going to get solved in five years. We don't want to pass judgment, we just want to give them a five-year solution. And that's a fantastic solution. So for people who are in that category who believe that, it's an opportunity that works very well. And obviously, we do that at a certain size and scale. There is a lot of early funnel movement in that, but these are long cycles, like I said. So we are seeing interest in that area, like we would expect to, but we wouldn't expect to close anything in a month or two. These are tens of millions of dollars deals and they take time. So we would expect to see results coming out of that next year, and that was our projection. So that's on track. Your second question on CHP, I think it's extremely important. CHP is not just for the steam and the heat and the process industry. I just talked about data centers to you and AI data centers. The AI data centers not only consume a lot more electricity, guess what? The cooling load goes up enormously, proportionally because these chips put out a lot of heat inside the data center. So more than 20% of the cooling of that data center has to happen and that's where the electricity is going to go. Here's the good news. When Bloom powers that data center, we can use that excess heat and create cooling with the heat. That's called a vapor absorption system. Unlike the vapor absorption system, this is a heat-driven cooling system absorption, and we are able to provide that cooling and it is net zero cooling for them because they're putting no additional fuel. We are seeing tremendous interest from the data center industry on this particular offering.

The next question comes from Jefferies. Your line is open.

Hi. Just one quick question on the Prairie Island test, any kind of updates there?

It is still in the early stages with our Xcel customer and so, no, we don't have anything as of now, but expect something in the next few months as this does go.

Your next question comes from the line of Jordan Levy with Truist Securities. Your line is open.

Afternoon, all. Appreciate all the comments. Maybe if you can just talk to and remind us kind of what remains to be done on sort of the restructuring and the OpEx cost downs, and where you're at on that.

Thank you, Levy. This is Greg. In the third and fourth quarters, we took several steps in our manufacturing facilities by consolidating teams, which has now been completed. On the operational expenses side, we conducted a focused review to ensure that our investments in growth from the past couple of years remain our top priority. We implemented some small, targeted actions in various areas over the last few weeks. At this point, we have completed all our planned actions. We will always strive to achieve the highest return on your investment. Currently, we feel confident in our team and the measures we've taken, and we believe this positions us well as we head into next year with a focus on reducing costs year-over-year, which is something we are really looking forward to as we pursue profitability.

The next question comes from the line of Colin Rusch with Oppenheimer and Company. Your line is open.

Thanks so much, guys. Given…

Hey, Colin, we lost you.

His line appears to have dropped. Your next question comes from the line of Jeff Osborne with TD Cowen. Your line is open.

Good evening. I have a couple of questions. I wanted to discuss PPA V, which I believe generated around $150 million in revenue this quarter. Greg, could you share what visibility you have for Q4? Initially, I thought the Amazon PDX 109 site in Oregon would be online in the latter half of the year, along with a ramp-up in South Korea. However, it seems neither of those is happening with the Oregon sites. Could you provide more clarity on the visibility for Q4? That would be helpful.

Yeah. Thanks Jeff. So when we went and looked at, we looked at the year and we looked at the sites that we expected to get over the course of the year, that's still consistent. It was how we came in the year. I would say we did really well in the third quarter in making sure that we got everything closed and accepted, which gave us a nice lift even off of where I thought we'd be this time three months ago when we had this call. And I kind of gave a soft guidance for the quarter. But it doesn't change. Based on the list of acceptances that we have planned in the U.S., in Korea, and a few internationally, we see a path here to stay consistent with the guidance we've given you based on what we anticipate to accept here over the next couple months.

And we have the line of Colin Rusch with Oppenheimer and Company back again. Your line is open.

Thanks so much guys. I'm not sure what happened there. Can you talk about the potential for pricing power given what we're seeing in terms of interconnection delays, some of the rate increases that we're seeing at the utilities, and the level of demand that you're talking about with some of these remote locations?

I’ll begin and then hand it over to KR. Regarding pricing, if you examine our reports from the past several quarters, we've maintained flat to slightly increased pricing in certain market areas, despite some upward pressures on internal rate returns and various factors from financiers. This stability is influenced not just by the increase in the Investment Tax Credit, but also by our strategic positioning relative to the grid and the observed price fluctuations. We have successfully retained our pricing strength throughout the past two years, which has significantly contributed to our margin expansion. I expect this trend to persist as we continue to focus our resources in markets where we can achieve the greatest potential for margin growth. We're applying stringent discipline to maintain these pricing levels, even as we expand. KR, from a strategic perspective, what are your thoughts?

Yeah. From a strategic point, Colin, I think you've been with us since the IPO, the big question back then used to be, are we going to have pricing discipline or is pricing going to have to shrink pretty significantly as we scale up in volume? If you just look at the supply/demand mismatch, if you just look at the price of utility electricity going up the way it is, there is no reason for us to not have pricing discipline. At the same time, we are not an instantaneous commodity. We are building these relationships over 15 years, 20 years with solid C&I customers who are going to be with us for a long time. So we clearly exercise our pricing in such a way that this is beneficially priced for them, for us, and from a market perspective. That's how we think about it.

The next question comes from the line of Michael Blum with Wells Fargo. Your line is open.

Thanks. Good evening, everyone. I would like to revisit the hydrogen hubs for a moment. Can you provide some insight into the potential opportunity and the timeline for when we might begin to see shipments impact the profit and loss statement?

So of the four hydrogen hubs out of the seven that we were participating in that actually won the DOE selection. What has come out so far is the DOE announcement, right? What needs to come out in addition to this is where PTC is and things like that, because that's a very big part for the developers doing these hubs to figure out who the offtakers of their electricity are going to be and what the rules are. Then it's about selecting and negotiating with the DOE and getting to where it needs to go. Most people would tell us today when we talk to the principals who are running these hubs, it's in the 2025, 2026 timeframe is when we should see these projects going on. So the impact of this on our revenue, that's the timeframe we think about, but there's a very important case to be made out here, the DOE going through a very rigorous process and selecting these winners and the criteria for these winners send a huge market signal, not just in the U.S., but in Europe, in Asia, in Australia, where people are thinking about big projects. So we think of this signal as a huge market signal and an affirmative market signal for Bloom.

I would add that our perspective on electrolyzer revenue remains steady. We have always anticipated that 2024 would not bring significant material impact. However, as we enter 2025, we expect to see some electrolyzer shipments that will influence revenue. We believe this market will grow rapidly, unlike our initial experience with the fuel cell market, which expanded gradually at double-digit rates. This new market is expected to scale quickly, consistent with the 10-year guidance we provided two years ago, and we remain confident in how this market will evolve.

And if you look at the policies, whether it's local, state, federal, or global, all those policy incentives coming together are going to be a huge catalyst. And that's the reason why Greg is saying you should expect the offtake once it takes off to be a pretty steep ramp and not the normal adoption of a new technology.

The next question comes from the line of Ameet Thakkar with BMO Capital Markets. Your line is open.

Hi, good afternoon. Thanks for taking my question. Greg, I wanted to revisit the section of the 10-Q you mentioned regarding the PPA V restructuring. My first question has been part of your guidance for the year. I know you have discussed it for some time, but I just wanted to clarify that.

Yes, yes.

Okay. It appears that there was a revenue impact of $162 million, and the cost of goods sold is approximately $196 million. If I adjust for that based on the information on page 27, I am arriving at a gross margin of about 12%. Is that correct?

The $162 million relates to the 31 megawatts we sold, which were completed in the third quarter, contributing to a margin figure. When considering the COGS, remember that it includes impairments removed for the non-GAAP pro forma adjustments. The best approach to understand the margin is to refer to the supplemental information and check the average cost per kilowatt, which will clarify the margins. We have seen a healthy margin, which is why we have pursued these opportunities multiple times, and that's the best way to calculate the margin for this.

The next question comes from the line of Abhishek Sinha with Northland Capital Markets. Your line is open.

Hey, just wanted to get an update on the electrolyzers in Korea for the nuclear power plant. Any updates on that?

Not in Korea, we have a lot of activity happening here in the U.S. regarding nuclear power. We are engaged in some industrial applications with our partner, which will be larger than pilot projects but not yet at full scale. We anticipate making some announcements on these developments in the next six to twelve months, and they will be deployed very quickly. In terms of the hydrogen market, as you may have noticed during a visit to Korea, it's prominently featured everywhere, especially in the airport. They are very committed to the hydrogen market over time. We believe this aligns well with both our electrolyzer and our fuel cell, as they can operate on a mix and ultimately transition to hydrogen. This is one of the reasons we are so enthusiastic about the Korean market.

And just as a follow up. Out of all the potential international projects, which one seems the most imminent and promising? Thanks.

We generally do not discuss projects until they are finalized. However, we are working on several initiatives. In the past 18 months, we have entered five markets: Italy, the UK, Belgium, Germany, and Taiwan. We will be re-entering Singapore soon due to customer and partner demand. Recently, we showcased our first units using CHP in Italy with Cefla, and CHP is crucial for Northern Europe. As cooling needs emerge in Southern Europe, CHP becomes increasingly significant. We believe these markets hold great potential. Taiwan and Singapore are particularly promising for us because of their power shortages. Singapore, for example, has limited land for renewable energy sources like solar or wind and relies on natural gas for over 95% of its power generation. We can provide a solution that lowers their carbon footprint along with CHP. They are also focused on carbon capture and the introduction of green hydrogen and green ammonia. Our solutions are future-proof, unlike some other technologies, and we can offer a rapid power supply, which is essential for their data centers. We see strong opportunities in the short, medium, and long term in these markets. We will share more details about specific projects once they are finalized.

The next question comes from the line of Noel Parks with Tuohy Brothers. Your line is open.

Good afternoon.

Hi.

I wanted to expand on something, particularly regarding data centers and potential expansion opportunities with existing firms in this sector. When you're evaluating new projects, whether commercial or industrial builds, I'm curious if you see a distribution channel involving EPC vendors who are planning larger-scale projects. I'm interested in how Bloom technology might be integrated into these projects, either as a supplement or to address immediate challenges, like in a microgrid context. I'd appreciate any insights you can share on this.

That's a very good question. From a financial perspective, the structure of our CV offerings should make it easier to understand, as they are pre-packaged with minimal contractual details. This simplicity allows EPCs to include them in their catalogs and present them to customers. Our technology has simplified installations to the point where we are nearing a plug-and-play experience, similar to an HVAC appliance. Over the last three years, we've made significant progress to enable exactly what you're suggesting. As we continue to scale, we envision a model where builders, developers, and EPCs purchase our devices and use them like HVAC appliances. They can offer our solutions early in the planning stages for renovations or new projects, making it accessible for architects and consultants to recommend them to their clients. That's our perspective on this.

Your next question comes from the line of Martin Malloy with Johnson Rice. Your line is open.

Thank you for taking my question. Wanted to find out if you could maybe give us an update on your carbon capture technology and the development of that.

We are making excellent progress on our carbon capture technology, which will be beneficial in two main ways. First, for large-scale applications where sequestration is available nearby, it allows for the production of zero carbon power. We are in the early stages of engaging with potential customers to find those interested in purchasing this zero carbon electricity, particularly at the 5,000 megawatt scale. Second, there is significant interest in direct air capture due to the incentives associated with CO2 capture. These large projects require substantial amounts of clean electricity, and our technology can provide that clean energy while also facilitating the inclusion of carbon dioxide in sequestration via the 45Q tax credit. Both avenues represent significant opportunities. To achieve targets like 1.5 degrees or 2 degrees Celsius, the world needs carbon capture and sequestration as part of the solution. We are well positioned to contribute to this effort and are excited about the potential.

This was the last question.

Okay. With that, thank you again for all of you for participating in the call. Whether it is our core technology, the business model with which hopefully you're looking at the numbers and agreeing with us, that this is a model that leads to a very profitable business. If you look at our capability with hydrogen, two ways, producing the hydrogen with our electrolyzer, using hydrogen as a fuel cell. Whether it's hydrogen, natural gas, being able to do cooling with our CHP, and being able to offer carbon capture, whether it's straight natural gas to carbon capture or carbon capture for direct air capture, Bloom has it all. So we are excited about where the future is and look forward to updating you in three months. Thank you.

Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.