FCEL Stock: Why FuelCell Energy Reported a 40% Drop in Revenue


  • FuelCell’s (FCEL) revenue plunged by 42% to $22.4 million.
  • That’s attributed to service agreement revenue falling by 95% to $1.4 million.
  • FCEL stock is down more than 30% so far this year.
FCEL stock - FCEL Stock: Why FuelCell Energy Reported a 40% Drop in Revenue

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FuelCell Energy (NASDAQ:FCEL) stock is in the green despite reporting a 42% revenue drop in its fiscal second-quarter earnings. Revenue tallied in at $22.4 million compared to $38.3 million a year ago. Furthermore, FuelCell remains unprofitable with a net loss of $37.65 million compared to a loss of $33.91 million a year ago. Net loss attributable to common stockholders improved to $32.94 million from $35.10 million.

The green hydrogen company’s revenue is composed of four segments: service agreements, generation, advanced technologies and product. Product revenue was $0, unchanged from a year ago, although backlog attributed to the segment is $12.30 million.

Service agreement revenue was the culprit behind the 42% overall drop, as revenue derived from the segment fell by 95% to $1.4 million.

“The decrease in service agreements revenues during the three months ended April 30, 2024 was primarily driven by the fact that there were no module exchanges during the quarter,” said FuelCell. “Service agreements revenues recognized during the second quarter of fiscal 2023 were primarily driven by module exchanges at the plants owned by Korea Southern Power Company in Korea.”

FCEL Stock: Why FuelCell Energy Reported a 40% Drop in Revenue

Meanwhile, FuelCell’s other two revenue segments saw significant gains. Generation revenue increased by 67% to $14.11 million and was boosted by a project in collaboration with Toyota (NYSE:TM) as well as the opening of a fuel cell location in Derby, Connecticut.

Next, advanced contract revenue increased by 86% to $6.9 million. Within the segment, revenue recognized under government contracts and other contracts rose by $3.3 million year-over-year (YOY), more than offsetting a roughly $100,000 decline from a joint development agreement with ExxonMobil (NYSE:XOM).

So, why exactly is FCEL stock trading higher on the revenue drop? First, the company’s backlog, which represents contract revenue that has not yet been fulfilled, rose by 3.8% to $1.06 billion. On top of that, cost of revenues sank to $29.49 million from $44.44 million.

FCEL stock’s short interest may also be a factor. The metric tallied in at 22.62% as of May 15, equivalent to 101.88 million shares sold short.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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