Bloom raises full-year guidance for the third time; cash collection comes into focus after profit beat

What drove the third-quarter beat?

Bloom’s third-quarter revenue was 1.236 billion dollars, up 138.1% year over year and 14.2% above Bloomberg market consensus. Product revenue was 1.07 billion dollars, up 179% year over year, making it the main source of growth.
Profit grew faster: adjusted EBITDA rose sharply to 300 million dollars from 59 million dollars a year earlier, exceeding market consensus by 24.1%. Adjusted gross margin was 34.5%, up 4.1 percentage points year over year. Bernstein therefore believes the company demonstrated operating leverage while increasing deliveries.
The company raised guidance for the third time this year: 2026 revenue was lifted from 3.9 billion–4.2 billion dollars to 4.4 billion–4.6 billion dollars, and adjusted operating profit from 800 million–900 million dollars to 960 million–1.03 billion dollars. Adjusted gross margin guidance remained at about 34%; the improvement in full-year profit mainly accompanies a larger revenue base.

Management said stack production line capacity expanded from 1 GW to 5 GW, while headcount remained at about 600. This means the associated workforce need not increase in proportion to manufacturing scale, supporting profit growth as revenue rises.
Delivery speed is also part of the competitive advantage. A 300 MW data center project in New Jersey received planning approval three months after signing, and its first units began operating two months later. Bernstein also sees an approval advantage from fuel cells’ lower local emissions.
The company is preparing for annual capacity above 5 GW and continues to add factory properties. Management stressed that the expansion is driven by demand and can proceed gradually; however, third-quarter capital expenditure had already reached 153 million dollars, above expectations, and expansion still requires upfront cash.

Third-quarter operating cash flow was negative 27.1 million dollars, versus a market consensus forecast of an inflow of 130.4 million dollars; free cash flow was negative 181 million dollars. Profit and cash performance diverged markedly, mainly owing to cash tied up in contract assets and higher capital expenditure.
Contract assets tied up 430 million dollars in cash during the quarter. Management expects these balances to turn into cash gradually as projects reach invoicing and collection milestones; but contract assets themselves may continue to grow as deployments increase, so revenue expansion and collection progress need to be assessed together.
Free cash flow for the first three quarters remained positive at 42 million dollars, and the quarter-end cash balance was 2.5 billion dollars, providing a financial buffer. Bernstein is focused on whether growth can continue to convert into cash.

Management said the order backlog is growing faster than revenue, but has not disclosed its value, and plans to provide 2027 guidance on the fourth-quarter earnings call. Bernstein sees order disclosure, next-year guidance and evidence of collection on contract assets as key to an investment thesis supported by profitability.
Utility-side deployment offers a new procurement route: management said fuel cell assets can be included in the regulated asset base as distribution infrastructure and procured through utilities’ integrated resource planning. Bernstein sees international demand as an opportunity toward the end of this decade; it is not currently included in its forecasts.
Demand also faces clear constraints: downside risks listed by Bernstein include grid upgrades weakening demand for on-site generation and data center demand falling short of expectations.

Bernstein raised its price target from 282 dollars to 306 dollars and maintained its Market-Perform rating. The revision reflects updated earnings forecasts after the results and a valuation window rolled forward by one quarter.
The valuation multiple remains 41 times enterprise value to adjusted EBITDA, based on earnings from the fourth quarter of 2027 through the third quarter of 2028. The higher price target does not rely on a further increase in the multiple; future support depends more on earnings growth and cash collection.