Bloom Energy Corp Q2 FY2024 Earnings Call

Thank you for standing by. My name is Mandeep, and I will be your operator today. At this time, I would like to welcome everyone to Bloom Energy Q2 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would now like to turn the call over to Ed Vallejo, Vice President, Investor Relations. You may begin.

Thank you, and good afternoon, everybody. Thank you for joining us for Bloom Energy's second quarter 2024 earnings call. To supplement this conference call, we furnished our second quarter 2024 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 2024. 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. We assume no obligation to revise any forward-looking statements made on today's call. During this call and in our second quarter 2024 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 second quarter 2024 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 Dan Berenbaum, our CFO. KR will begin with an overview of our process, and then Dan will review financial highlights for the quarter. And 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 executed the first half of 2024 to plan with strong financial discipline. We are on track to meet our yearly guidance. We expect to end the year in a strong financial position and continue to advance our technology, operations and team for robust future growth. It is now widely understood that demand for electricity is expected to far exceed available supply through the grid. This presents Bloom with a huge opportunity. We are seeing high levels of commercial interest in our products and solutions. We have not experienced anything like this in the past two decades. As I see it, this trend is here to stay for at least another decade, and if anything, will gain further momentum in the coming months and years. While there is concern about the ability to meet growing power needs, I believe it's possible to close the gap in power production in 5 to 10 years by adding a combination of utility scale renewable and gas-based generation. However, this will not solve the time to power issues for an end customer who requires electricity to be delivered reliably at their specific location of use. Most of the demand for power growth will come from data centers and vehicle and building electrification, and this load growth will be location specific. Edge data centers will be the dominant users of power. They will be in economic nerve centers that are already power constrained. Dense and power-scarce population centers will have the greatest need for power to charge their mass transit EV systems and delivery fleets. As you can see from these examples, the markets where the grid is already constrained are also where future stress from increased demand is going to come. The grid's ability to supply more power for timely business growth is going to be severely challenged. In a competitive business environment, every delay means lost revenue and opportunity. So what do you do if you're a data center, a manufacturer, a fulfillment center, a mission-critical hospital, or a retail chain that needs power now? Rather than wait for the grid and forgo revenue growth, it will be important for companies to take control of their own destiny by procuring distributed power generation at the point of use that is dedicated for them. If you want to generate 24/7 power reliably at the point of use, without air pollution and no noise, and you need it now, there is no better solution in the market than the Bloom Energy Servers. Our energy servers can be grid tied or completely islanded, requiring no grid interconnection. Last year, our average fleet availability across our 850 installation sites was 99.995%. Let me repeat, our annual availability of all our energy servers at all our sites, that is over 850 sites, was 99.995%, a metric that cannot be matched by any other commercial solution in the market today. The Bloom Energy Solution, which is zero emissions and operated with net zero fuels, also offers the lowest carbon footprint on-site power compared to conventional natural gas solutions. Today, even the utilities themselves are aware that they need help, and Bloom is an excellent alternative and supplement. They have a choice: either force developers to wait five-plus years for power or embrace Bloom's technology to help their customers and communities grow. We see two paths to serving an end user. First, we can work with the end customer directly, as you have seen with our existing behind-the-meter solutions. We continue to see a strong pipeline and large project sizes, both in the U.S. and internationally. Corvi, a leader in AI, recently purchased Bloom Servers. This is further validation of our technology's importance to artificial intelligence. Second, we can serve the end customer with front-of-the-meter solutions. Silicon Valley Power recently received City Council approval for up to 100 megawatts of new generation to be served with front-of-the-meter generation that will be allocated to specific customers in dedicated megawatt increments. As part of the 100 megawatts, 20 megawatts was approved using Bloom Energy Servers for AWS. Bloom is working with SVP to support the needs of its customers, like AWS. Bloom is excited to support SVP's fuel cell development once it finalizes terms with AWS. Under the planned structure, SVP will resell the power generated by Bloom Energy Server directly to customers under a dedicated restructure or tariff. This fulfills SVP's growth needs without impacting other SVP ratepayers. SVP is currently working on procuring the additional 80 megawatts to serve its customers, mainly data centers using the same model. We applaud Silicon Valley Power for being a leader in providing power choice to its customers, and we thank them for embracing the Bloom solution. Now, switching to technology development, we continue to innovate and further strengthen our leadership position. Earlier this week, we announced that we have achieved 60% electrical efficiency and 90% high-temperature combined heat and power efficiency while using 100% hydrogen in our fuel cells. These are record efficiencies using hydrogen as a fuel in our energy servers. Also, I see our CHP offering as a key benefit to customers for heating and cooling. We can achieve 90% fuel efficiency with this option. The first U.S. installation of our CHP solution is at the Energy & Innovation Center in New Britain Park, Connecticut for 20 megawatts and is ready for commissioning. In this case, the Bloom Solution will be leveraged for the parts development of a high-performance computing and data center corridor. These examples speak to the capability and speed with which our team executes on innovating and implementing new technology, as well as the versatility of our solid oxide platform. I'll be back to take your questions shortly, but for now, I'll turn it over to Dan.

Thank you, K.R., and good afternoon, everyone. During last quarter's earnings call, which was only two weeks after I joined Bloom, I mentioned that I was already impressed by what I'd seen: the technology, the people, and the drive to succeed in our mission. Now, having had the chance to gain a better understanding of the depth of the team's expertise, the technology, our manufacturing operations, our commercial pipeline, and our product roadmap, I can tell you that I'm even more excited to have joined this team at an inflection point for our solutions. My top priority is to ensure that we're ready to scale profitably as our solution to the problems of delivering power at the point of use becomes more widely adopted. We have strong commercial and operational leadership. Our chief commercial officer, Aman Joshi, and our chief operations officer, Satish Choudhury, are strong partners in this effort, and they are leveraging the innovations and products developed by our engineering team. Looking at our Q2 results, revenue for the quarter was $335.8 million, an increase of 11.5% over the second quarter of 2023. Product and service revenue was $278.8 million, an increase of 8.5% year-over-year, slightly trailing the increase in total revenue due to certain higher average selling price projects that we booked in Q2 2023. Service revenue increased by 24.1% to $52.5 million, while electricity revenue continues to decline as expected. Data centers are becoming a larger part of our mix. In addition to projects like the previously announced Intel data center expansion, we're executing on opportunities to support the broader ecosystem by providing power solutions to critical manufacturers that support the data center build-outs. An example of this is our recently announced deal with Quanta, a large manufacturer of data center hardware, which is looking to grow with its customers but is facing the same time-to-power problems as the data centers they serve. Non-GAAP gross margin was 21.8% for the second quarter, an improvement of approximately 140 basis points over the second quarter of 2023. Our service business results have continued to improve as planned, and we expect service to be profitable for the full year 2024, which will be a first for us. Our product cost reduction efforts continue, supported by our technology roadmap, manufacturing efficiencies, and the benefits of scale. We continue to expect a 10% year-over-year cost reduction in our core energy servers, consistent with what we have communicated in the past. Non-GAAP operating loss for the second quarter was $3.2 million, an improvement of almost $22.7 million from a loss of $25.9 million in the second quarter of 2023. Turning to cash flow, cash from operating activities was an outflow of $175.5 million in the second quarter, due almost entirely to an increase in receivables. It is common for us to have a significant cash outflow in the first half of the year and make it up in the second half of the year as we monetize inventory and collect on receivables. We expect cash flow from operations to be positive for the second half of the year. Turning to the balance sheet, we ended the quarter with $637.8 million of total cash, including the $402 million gross proceeds of the financing we completed in May, net of repurchasing $142 million of our 2025 convertible debt. We are reaffirming our 2024 annual guidance for revenue, margins and profitability. With our backlog and commercial pipeline, we remain confident that we can deliver $1.4 billion to $1.6 billion of annual revenue at approximately 28% non-GAAP gross margin. As stated before, where we land within the guidance range will be determined by the timing of projects that are in the pipeline. Consistent with prior years, revenue is expected to be significantly weighted towards Q4. Gross margins should improve as we move through the remainder of the year on lower product costs and improving service performance. As we have noted previously, there is significant volume leverage in the financial model. With this annual revenue and gross margin profile, we should be well-positioned to achieve non-GAAP operating profit of $75 million to $100 million. As we look beyond 2024, we are conscious that changes in our product mix are changing the way we use certain metrics to forecast our business. We plan to closely evaluate the effectiveness and relevance of certain of our metrics, as well as potentially introducing new metrics to give investors the clearest possible picture of how we operate and assess the performance of our business. To conclude, we're pleased with the momentum we're seeing in our commercial pipeline, and I believe we're on a strong financial footing to continue delivering on these projects and to scale our business further. Our product suite is the perfect fit for the energy challenges that companies around the world are facing, and we are laser-focused on positioning Bloom to scale profitably and continue to provide the most efficient and reliable solutions for the world's evolving energy needs. Before I conclude my remarks, I'd like to note that this will be Ed Vallejo's final earnings call with Bloom Energy as he moves on to other opportunities. I want to thank Ed for everything that he's done for Bloom over the course of the past three years, and we all wish him well in his future endeavors. I'd also like to introduce Michael Cherny, who has just joined Bloom as our new VP of Investor Relations. With over 20 years of buy-side experience, I'm sure that Michael will be able to continue and enhance the investor communications program that Ed has ramped up. With that, operator, please open the line for questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from the line of Andrew Percoco with Morgan Stanley. Please go ahead.

Great. Thanks so much, and good evening, everyone. Thanks for taking the question. I do want to start on the data center side here. Great to see you guys make some progress on that front with the core REIT announcement this quarter. So congrats on that. But I guess as we think about the evolution of this opportunity, how should we be thinking about the sizing of these deals? The Corvi's deal looked to be about 15 megawatts. Is that the sweet spot for you guys? Or should we start to expect some larger deals, we're starting to see some data centers obviously well in excess of 100 megawatts. I'm just wondering if we should be expecting those types of deals to be announced from you guys at some point this year? Thank you.

Hey Andrew, thank you for the call, and great question. I think what you should expect is an entire spectrum. You shouldn’t expect a spectrum from anywhere in the single-digit megawatts all the way to hundreds of megawatts. And they're all in our mix right now as we speak. Here is the reason why: there are data centers with additional white space all switching from CPU to GPU that requires more power in the same white space and are not able to get their power right away. There are small edge data centers being built wherever they have fixed land and other infrastructure for which they need smaller size data centers, and I say smaller size in the single-tier 15, 20, 25 megawatts. Then you're looking at data centers on the edge, this is in dense cities, all the way to 100-plus megawatts that are custom-built for the hyperscalers, and those would be in the 100-megawatt range. Both from data center operators that purpose-built, hyperscalers and edge data centers, we are seeing a spectrum from 5 all the way to hundreds of megawatts. Obviously, the smaller the size of the deal, the quicker the velocity on getting the transaction done, but I illustrated many times that these large deals are fairly complex and take a little bit longer to come. So we expect the entire spectrum.

Our next question comes from the line of Jordan Levy with Truist Securities. Please go ahead.

Congrats on the quarter. Just on the remaining Amazon volume that needs to be deployed, I just want to ask what the outlook or timeline we should be expecting for those. If you can say anything at this point on that?

Yes. So, I think there are two references to look at: one is with Silicon Valley Power. Amazon, AWS is negotiating with Silicon Valley Power separately to get into a contract, and that contract of 20 megawatts will be fulfilled by Bloom by having a contract with Silicon Valley Power. This is in front-of-the-meter. Our customer is the municipal entity at Silicon Valley Power, and their customer is AWS. But it is dedicated and sleeve to them at a rate that they negotiate specifically for them, and it doesn't impact any other rate there. I think this model is a phenomenal model and that will grow as we go forward. Separately, you're aware that AWS halted working on the 73-megawatt contract they had with us in Oregon; they have submitted a relocation request to us for all of those 73 megawatts to Ohio. We are currently working with AWS on those details. Both these deals are being worked in parallel, and there will be many other opportunities, hopefully, given our strong working relationship with AWS.

Our next question comes from the line of Dushyant Ailani with Jefferies. Please go ahead.

Hi. Thanks for taking my questions. Just wanted to get an understanding of the guide, the $1.4 billion to $1.6 billion. Does that include any potential near-term data center orders? Or what are the puts and takes of the data centers or whether it's from SK? Thank you.

So we've talked about the $1.4 billion to $1.6 billion. We talked about where we end up within that range being dependent on timing of projects. We haven't talked specifically about what those projects are, and we don't talk specifically about sizes of projects with specific customers. We try to avoid providing those details on specific customers. All we can say is that we have, between our backlog and our commercial pipeline, we are confident in being within that range of $1.4 billion to $1.6 billion for the year. Where we wind up in that range is dependent on timing of projects.

And Dan, to add to that, this is KR. What I would say is given how strong the data center market is for us, you should assume that some amount of our installations will be in the data center space, but it's up to our customers to speak to that size and not up to us.

Our next question comes from the line of Manav Gupta with UBS. Please go ahead.

Congrats on the new orders. A quick back of the envelope calculation indicates to hit about 28% gross margins, you have to be around 32% gross margin, a significant improvement from the first half. You guys are known to hit the guidance. So help us understand all the factors that will help drive a materially better gross margin in the second half of this year. Thank you.

Well, I can walk through all of the factors if you don't mind, Manav. As we've discussed, there's significant volume leverage in our model. As we ramp volume, we expect to see the benefits of that. To the point we reiterate our guidance, we are confident in our commercial pipeline, and we are confident in the margin leverage that comes with that growing volume. And so that's what will get us to 28%. Your math is correct. I do understand that we need to have very strong gross margins in the back half of the year to hit that 28% for the full year, and we're confident in doing so.

Our next question comes from the line of James West with Evercore ISI. Please go ahead.

Hey, good afternoon, guys. So KR, we certainly agree with your view of the role of the next 5 to 10 years with electrification and the need for gas electrification, especially. And we've heard from a number of the traditional energy companies already, especially the pipeline companies that are being asked to pipe natural gas directly to data centers. I was curious how that works between Bloom, the data center, and the maybe traditional energy companies. Are you all in a consortium? Is it all run by the data center producer? I mean, how does it all come together?

So the way—that's a very good question. There is not a specific model as the first thing that I would say. It varies from place to place and state to state. That's the first answer. The second answer is the following. When a data center deal is being put together, assuming it's a purpose-built data center, they would first negotiate their deal with their hyperscaler, who is their customer. They will have an LOI with them, and that's the process. Even for them to have an LOI, they need to have a fairly good handle on their overall cost, their partners, and how much that compute is going to cost in order to have the LOI. So these things, to some extent, are happening in parallel. They will engage with us as a technology provider. We will be working with them to assess whether there is an upgrade to the gas system as the gas system already exists, are they going to procure the gas wholesale or retail, and what the local regulations are. This is how it all comes together. It’s a multiparty negotiation happening together. I’m glad you asked the question because I've mentioned multiple times how this deal is fairly complex. However, if you think about a 100-plus megawatt deal that is well north of $1 billion in total value, and look at the number of parties that have to be engaged, that gives you that longer duration or a long-cycle sale, but it's a very sticky and good sale, and you will see these things happen.

Our next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.

Are you there, Colin? We'll come back to Colin then.

Our next question comes from the line of Chris Dendrinos with RBC Capital Markets. Please go ahead.

Yes, thank you. So I think South Korea is hosting one of its hydrogen power options, and I guess just in light of the announcement on your fuel cell with hydrogen and the efficiency improvement, can you maybe speak to your overall competitiveness in that market and how this fuels helps position you all there? Thanks.

That’s a very good question. You're absolutely right. As Korea has modified the auction process and has a strong emphasis on hydrogen as a possible fuel, you would have noticed we are not reactive; we are proactive. The press release that we put out is the work in progress of our engineering team and our product development team for the last few years. I just want to emphasize, 60% electrical efficiency and a 90% overall efficiency, with the other 30% of heat coming out as high-temperature steam, there is not a technology in the world that can match that. So we are extremely well positioned in that market, both for the natural gas systems as well as the hydrogen systems. Our job is to ensure it is up to the customer to figure out when they transition from one fuel to another, but irrespective of what that fuel is, we provide our really good partner, SK, with the best technology option. If they were on the call, I would assume they would say Bloom has given them the best technology option.

Our next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead.

Good afternoon. Just wanted to try to get a better idea around the economics of the Bloom server. I was wondering if maybe you could speak to the heat rate for one of your servers or just give us some sense for the costs associated with a behind-the-meter situation, say, $2.50 gas per kilowatt hour basis.

Hey, Martin, you're asking a question that's all over the map, and we may need to spend the rest of the call if I were to explain that. So here's what we will do: I'll have our team work with you separately to provide you that, because we have provided that information in multiple other places. Look, I think this is the way you've got to think about our business: at the end of the day, we are serving an end customer, specifically sleeved end for whom the option of buying from us or not buying from us is based on their cost of electricity. The customer buys from us because we are equal to or better than the grid in terms of price along with all the other attributes: reliability, sustainability, you name it. The same goes for front of the meter; the reason the customer will transact with us is because there is no other way for that customer to get reliable power on site in a timely manner. Let me emphasize, there is no other way for that customer to get reliable power on site in a timely manner, where the price of not having power is significantly larger than the cost of power.

Our next question comes from the line of Chris Senyek with Wolfe Research. Please go ahead.

Hi, KR, Dan. Thanks for taking my question. I noticed in the queue there's an electrolyzer agreement to sell to a European buyer. Are you able to expand on that a bit just in terms of size or timing of sales? Thanks.

So, look, there are many things in the pipeline at various stages. Our policy with talking about any commercial agreement with any customer is that we have the permission of that customer to speak so. We are pursuing electrolyzers. You know that we have the world's best, most efficient electrolyzer. There are many markets where we are engaged in conversations. Please stay tuned. When we have the proper permissions and the proper timing, we will let you know.

Our next question comes from a line of Noel Parks with Tuohy Brothers. Please go ahead.

Hi, good afternoon. One thing I was interested in, of course, the most attention-getting situation is a brand-new customer with a specific need, and they're coming to you, and what sort of deal and economics can you work out? I wonder if you could talk a bit about trends you're seeing with your repeat customers, maybe some of your long-time existing customers, because they are also at the door wanting product, wanting expansion. So maybe what comes down is simply a sales cycle being much compressed with those. And how much when you're just looking at the year's guidance, how much of that really can be accomplished just on the backs of your well-established customers looking to expand?

That's a very good question. Look, without getting into particular quarters and the year, traditionally, I can tell you roughly two-thirds of our business comes from repeat customers, okay? In terms of the volume from dollar amounts. Obviously, we used to have many more new customers through the pilot-and-scale strategy, but what we are seeing now is that some first-time customers, especially in the data center space, given that we are a well-established technology for this segment, are coming in with very large sales cycles. So that dynamic could change this year potentially depending on when we land those big deals, and you will see more of that as we go forward. Our existing customer base is a strong base, and we have a good share of their wallet, but we can get a lot more share of their wallet.

Our next question comes from the line of Ameet Thakkar with BMO Capital Markets. Please go ahead.

Hi. Thanks for taking my question. I know I think in the last time we had an earnings call, the IRS proposed initial guidance for the investment tax credit. I think last week, you guys filed some comments with the IRS and the Department of Treasury on that, kind of something to the effect that the credit will be rendered useless as it's proposed. I was just wondering, how you could talk to us about how that would necessitate more cost-down if the guidelines stay as they are? Thanks.

Yes. Look, I can't remember in our couple of decades of commercial history that policy uncertainty hasn't been a looming issue for the company. There have been times when that policy has been reworked and then brought back. Even in those early days when our cost structure was significantly higher than it is now and the need for power and the lack of availability of power were not major issues, we demonstrated the resilience to be able to operate. It is that same discipline that we are bringing here. We will clearly advocate for and try to get the best policies for our customers and for the environment. However, should that not happen, we will find ways to still work with our customers and be profitable. That's how the company is built. We not only sell resilient products; we're building a resilient business.

Yes. I'll just add. We operate in jurisdictions with government support and jurisdictions that have no government support. We're successful with customers in all those cases, and we will make sure that we're working towards setting up a company that is going to be profitable under any of those circumstances.

Our next question comes from the line of Alex Kania with Marathon Capital. Please go ahead.

Hi there. Good afternoon. Maybe a broader question just on demand, if you could help characterize the sense of customers that are interested in the fuel cell solutions even beyond data centers? And just thinking about the PJM auction that happened a couple of weeks ago as to whether that serves as a bit of a wake-up call for a broader range of customers, I be more willing to explore behind-the-meter solutions? Thanks.

Alex, that's a very good question. The electrification of everything, charging, and the automation of warehouses, the amount of power per square foot in warehouse settings will start consuming additional power as automation is introduced. A warming planet means that more cooling electricity is needed in more places. You put all that together, the demand is not just from the data centers, but the size, scale, and velocity with which the data centers move will be faster than these other sectors. Notwithstanding that, you will see equal or greater demand coming from every other sector. Our business is broader and a lot stronger; each sector is growing. We expect the utility model like the one implemented by Silicon Valley Power—power choice for customers—to become more prevalent in addressing congestion and empowering growth.

Our next question comes from the line of Ben Kallo with Baird. Please go ahead.

Good afternoon, guys. Just a short-term question on product costs that picked up by, I guess, year-over-year. But then the longer-term question is just the targets you gave at your Analyst Day. I think that we don't know what the visibility you have. Just wanted to understand your thoughts around those targets, given that we are now a couple of years closer from what you first provided. Thank you.

A couple of questions in there, but good questions, and let me take them one at a time. This is my first full quarter at the company, so we're continuing to look at the business, identify ways to simplify our reporting. Most importantly, we want to ensure that what we tell investors reflects the underlying fundamentals of our business. On the cost side, a number of things are changing. The metrics that were very relevant are becoming a little bit less relevant. For example, we talk about the cost per kilowatt that we publish. We're adding new countries, and our geographic mix is changing. We're looking at solutions in front of the meter and behind the meter. We're looking at new solutions like combined heat and power, carbon capture, and microgrid. All of those things add to the cost per kilowatt in a high-level view, but it's because the flexibility of our product and configurations around our core product continue to expand. Therefore, some of those metrics are becoming a little bit less relevant; it’s difficult to compare apples to apples across time periods. This ties into the question you asked about our longer-term model; we still have some thinking to do about the metrics we want to communicate, simplify, and how we’ll assess our business performance.

And one additional thing, Dan, I would add is that on an apples-and-apples basis, the company, as we promised at the beginning of the year, will meet a double-digit cost reduction. So we are on track to meeting cost reductions on that basis. While the cost changes, we will also be able to command higher prices. We should focus on revenues and margins as the true measures of our business.

Our next question comes from the line of Pavel Molchanov with Raymond James. Please go ahead.

Thanks for taking my question. Can we get a quick update on Baker Hughes and the Microgrid initiatives?

So, look, we roughly operate more than 150 microgrids today. So that's where we are as a business. Given the frequency of natural disasters and the grid disruptions they cause, we have done thousands of sales for our customers through these 150-plus microgrids. More importantly, we are moving past microgrids as we have time-to-power issues that go beyond just connection. It’s not only providing power quickly but doing so without being connected to the grid, completely islanded. Most technologies cannot do that. That 99.995% availability that we had on our sites is significant, and we expect this business to grow along with our recent announcement in the AI space for Quanta, which is an islanded microgrid, which is not connected to the grid.

Our next question comes from Skye Landon with Redburn Atlantic. Please go ahead.

Hi. Thanks for taking my question. I wanted to circle back on data centers and specifically revenue mix. Are you able to provide us with some color around the historical mix of Bloom's revenues, which can be attributed to data center deployments, how this has developed over time?

We haven't broken that out as a percentage of our mix. I will tell you, again, relative to some of the questions earlier about our geographic mix, if you look at our targets and if you look at the business that we have in front of us, you might expect the U.S. and other geographies with significant data center activity to grow even faster. We don’t break those out as a specific part of the mix, but given the commercial opportunity we’ve talked about, you would expect data centers to become a larger portion of our business.

That's right, Dan. I would add two things to what Dan just told you. We can tell you that the booked and deployed data center business for us is more than 300 megawatts; that should provide a sense of the history. Expect, given the issues the U.S. is facing regarding growth in demand and power shortage, for our U.S. business to be growing more robustly today than the rest of the world. The rest of the world will catch up, and you will see that dynamic as time goes on.

Our next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.

Thanks so much, guys, and apologies for the trouble earlier. I just had two quick questions on the cash flow statement. You know, the receivables were up $175 million, and the contract assets were written down. I just want to understand both those dynamics and how we should think about cash flow on the balance of the year, if you're going to get some of those receivables back or if we should be thinking about this as a more normalized level for receivables?

Yes, so a couple points. I said in my prepared remarks that we expect cash flow from operating activities to be positive in the second half of the year. You're right; that's just the math. We just had timing of sales, which means a use of cash went to receivables. It's common for Bloom to see cash outflow in the first half of the year and then positive cash flow in the second half. Recall that the largest piece of our receivables currently is related to SK, our related party receivable. SK is a great partner, and we are confident in collecting that receivable.

I think we are out of time. Let's keep Colin's question as the last question. Thank you for joining this call. At a high level, this is how I see it. I don't have to convince any of you today that energy demand driven by AI, electrification, and other growth vectors in the country is creating a demand that simply cannot be met by the grid in many places. Bloom has power being provided at the point of use with the right attributes of reliability and cleanliness. This is becoming the best alternative option in this scenario. Gas will be critical for many years to come, and you don't have to take my word for it. Look at the hyperscalers who have been the leaders in adopting renewable power; they continue to grow their renewable power portfolio, which is the right thing to do, but they simply cannot operate without gas. In this context, no better technology for them to convert gas reliably than Bloom. Our business model can operate profitably, as shown over the last few quarters through our customer engagement and contract negotiations. For that reason, we are strengthening our commercial team and growing it due to the enthusiasm we see on the customer side.

That concludes today's call. You may now disconnect.