UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☑þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the ~~quarter~~quarterly period ended ~~September 30, 2022~~March 31, 2023
or
☐¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to ____________

Commission File ~~Number~~Number: 001-38598

BLOOM ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

________________________________________________________________________


Delaware			77-0565408
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

4353 North First Street, San Jose, California			95134
(Address of principal executive offices)			(Zip Code)

(408) 543-1500
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class(1)	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value	BE	New York Stock Exchange
(1) Our Class B Common Stock is not registered but is convertible into shares of Class A Common Stock at the election of the holder.

________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ☐¨ Emerging growth company ☐¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐¨ No þ

The number of shares of the registrant’s common stock outstanding as of ~~November~~May 1, ~~2022~~2023 was as follows:

Class A Common Stock, $0.0001 par value, ~~179,378,926~~192,864,927 shares

Class B Common Stock, $0.0001 par value, ~~15,800,568~~15,675,130 shares

Bloom Energy Corporation

Quarterly Report on Form 10-Q for the Three ~~and Nine~~ Months Ended ~~September 30, 2022~~March 31, 2023

Table of Contents


			Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Comprehensive Loss			5
Condensed Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity (Deficit)			6
Condensed Consolidated Statements of Cash Flows			87
Notes to Unaudited Condensed Consolidated Financial Statements			98
Item 2 - ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations			3230
Item 3 - Quantitative and Qualitative Disclosures About Market Risk			4943
Item 4 - Controls and Procedures			4943

PART II - OTHER INFORMATION
Item 1 - Legal Proceedings			5044
Item 1A - Risk Factors			5044
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			5044
Item 3 - Defaults Upon Senior Securities			5044
Item 4 - Mine Safety Disclosures			5044
Item 5 - Other Information			5044
Item 6 - Exhibits			5145

Signatures			5246

Unless the context otherwise requires, the terms ~~“Company”,~~“Company,” “we,” “us,” “our,” and “Bloom Energy,” each refer to Bloom Energy Corporation and all of its subsidiaries.


Table of Contents
Index to Financial Statements

~~Part~~PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

Bloom Energy Corporation

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents1	Cash and cash equivalents1	$	492,120	$	396,035	Cash and cash equivalents1	$	320,431	$	348,498
Restricted cash1	Restricted cash1	42,104		92,540		Restricted cash1	47,241		51,515

Accounts receivable less allowance for doubtful accounts of $119 as of September 30, 2022 and December 31, 20211		71,184		87,789
Accounts receivable less allowance for doubtful accounts of $119 as of March 31, 2023 and December 31, 20221						Accounts receivable less allowance for doubtful accounts of $119 as of March 31, 2023 and December 31, 20221	329,757		250,995
Contract assets	Contract assets	25,768		25,201		Contract assets	47,778		46,727
Inventories		254,895		143,370
Inventories1						Inventories1	397,689		268,394
Deferred cost of revenue	Deferred cost of revenue	31,812		25,040		Deferred cost of revenue	40,390		46,191
Customer financing receivable1		—		5,784
Loan commitment asset						Loan commitment asset	5,259		—
Prepaid expenses and other current assets1	Prepaid expenses and other current assets1	46,489		30,661		Prepaid expenses and other current assets1	56,384		43,643
Total current assets	Total current assets	964,372		806,420		Total current assets	1,244,929		1,055,963
Property, plant and equipment, net1	Property, plant and equipment, net1	646,768		604,106		Property, plant and equipment, net1	602,961		600,414
Operating lease right-of-use assets		114,053		106,660
Customer financing receivable1		—		39,484
Operating lease right-of-use assets1						Operating lease right-of-use assets1	129,377		126,955
Restricted cash1	Restricted cash1	135,098		126,539		Restricted cash1	115,773		118,353
Deferred cost of revenue	Deferred cost of revenue	3,462		1,289		Deferred cost of revenue	4,667		4,737

Loan commitment asset						Loan commitment asset	47,533		—
Other long-term assets1	Other long-term assets1	38,316		41,073		Other long-term assets1	46,970		40,205
Total assets	Total assets	$	1,902,069	$	1,725,571	Total assets	$	2,192,210	$	1,946,627
Liabilities, redeemable convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity (deficit)
Liabilities and stockholders’ equity						Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable		$	120,444	$	72,967
Accounts payable1						Accounts payable1	$	130,061	$	161,770
Accrued warranty	Accrued warranty	13,344		11,746		Accrued warranty	9,456		17,332
Accrued expenses and other current liabilities1	Accrued expenses and other current liabilities1	102,010		114,138		Accrued expenses and other current liabilities1	111,761		144,183
Deferred revenue and customer deposits1	Deferred revenue and customer deposits1	98,841		89,975		Deferred revenue and customer deposits1	148,530		159,048

Operating lease liabilities		12,671		13,101
Operating lease liabilities1						Operating lease liabilities1	16,148		16,227
Financing obligations	Financing obligations	16,682		14,721		Financing obligations	20,272		17,363
Recourse debt	Recourse debt	12,792		8,348		Recourse debt	12,971		12,716
Non-recourse debt1	Non-recourse debt1	15,943		17,483		Non-recourse debt1	11,435		13,307

Redeemable convertible preferred stock, Series B						Redeemable convertible preferred stock, Series B	310,957		—
Total current liabilities	Total current liabilities	392,727		342,479		Total current liabilities	771,591		541,946

Deferred revenue and customer deposits1	Deferred revenue and customer deposits1	68,727		90,310		Deferred revenue and customer deposits1	29,059		56,392
Operating lease liabilities		122,412		106,187
Operating lease liabilities1						Operating lease liabilities1	135,287		132,363

Financing obligations	Financing obligations	443,665		461,900		Financing obligations	436,306		442,063
Recourse debt	Recourse debt	274,742		283,483		Recourse debt	269,382		273,076
Non-recourse debt1	Non-recourse debt1	179,955		217,416		Non-recourse debt1	108,564		112,480

Other long-term liabilities	Other long-term liabilities	8,917		16,772		Other long-term liabilities	8,187		9,491
Total liabilities	Total liabilities	1,491,145		1,518,547		Total liabilities	1,758,376		1,567,811
Commitments and contingencies (Note 13)
Redeemable convertible preferred stock, Series A: 10,000,000 shares authorized and 10,000,000 shares and no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively.		208,551		208,551
Redeemable noncontrolling interest		—		300
Stockholders’ equity (deficit):
Commitments and contingencies (Note 12)						Commitments and contingencies (Note 12)

Common stock: $0.0001 par value; Class A shares - 600,000,000 shares authorized and 179,165,539 shares and 160,627,544 shares issued and outstanding and Class B shares - 600,000,000 shares authorized and 15,802,146 shares and 15,832,863 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively.		19		18
Stockholders’ equity:						Stockholders’ equity:

Common stock: $0.0001 par value; Class A shares - 600,000,000 shares authorized and 192,657,993 shares and 189,864,722 shares issued and outstanding and Class B shares - 600,000,000 shares authorized and 15,675,652 shares and 15,799,968 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock: $0.0001 par value; Class A shares - 600,000,000 shares authorized and 192,657,993 shares and 189,864,722 shares issued and outstanding and Class B shares - 600,000,000 shares authorized and 15,675,652 shares and 15,799,968 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	20		20
Additional paid-in capital	Additional paid-in capital	3,691,715		3,219,081		Additional paid-in capital	4,036,697		3,906,491
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,531)		(350)		Accumulated other comprehensive loss	(1,352)		(1,251)
Accumulated deficit	Accumulated deficit	(3,517,311)		(3,263,075)		Accumulated deficit	(3,636,050)		(3,564,483)
Total equity (deficit) attributable to Class A and Class B common stockholders		172,892		(44,326)
Total equity attributable to Class A and Class B common stockholders						Total equity attributable to Class A and Class B common stockholders	399,315		340,777
Noncontrolling interest	Noncontrolling interest	29,481		42,499		Noncontrolling interest	34,519		38,039
Total stockholders' equity (deficit)		$	202,373	$	(1,827)
Total liabilities, redeemable convertible preferred stock, redeemable noncontrolling interest and stockholders' equity (deficit)		$	1,902,069	$	1,725,571
Total stockholders’ equity						Total stockholders’ equity	$	433,834	$	378,816
Total liabilities and stockholders’ equity						Total liabilities and stockholders’ equity	$	2,192,210	$	1,946,627

1We have variable interest ~~entities~~entity related to ~~PPAs,~~PPA V (see Note 10 - Portfolio Financings) and joint venture in the Republic of Korea (see Note 15 - SK ecoplant Strategic Investment), which represent a portion of the consolidated balances recorded within these financial statement line items in the condensedconsolidated balance ~~sheets (see Note 11~~ ~~- Portfolio Financing~~s).sheets.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Bloom Energy Corporation

Condensed Consolidated Statements of Operations

(in thousands, except share data)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Revenue:	Revenue:										Revenue:
Product	Product	$	213,243	$	128,550	$	520,415	$	413,347		Product	$	193,745	$	133,547
Installation	Installation	22,682		22,172		48,964		53,710			Installation	20,525		13,553
Service	Service	37,347		39,251		111,012		111,375			Service	40,663		35,239
Electricity	Electricity	19,002		17,255		56,158		51,273			Electricity	20,258		18,700
Total revenue	Total revenue	292,274		207,228		736,549		629,705			Total revenue	275,191		201,039
Cost of revenue:	Cost of revenue:										Cost of revenue:
Product	Product	158,176		93,704		393,337		289,889			Product	129,613		105,742
Installation	Installation	28,333		25,616		57,836		66,756			Installation	25,100		12,773
Service	Service	41,792		39,586		124,646		111,269			Service	51,244		41,826
Electricity	Electricity	13,029		11,439		83,819		32,913			Electricity	14,967		12,761
Total cost of revenue	Total cost of revenue	241,330		170,345		659,638		500,827			Total cost of revenue	220,924		173,102
Gross profit	Gross profit	50,944		36,883		76,911		128,878			Gross profit	54,267		27,937
Operating expenses:	Operating expenses:										Operating expenses:
Research and development	Research and development	36,146		27,634		112,286		76,602			Research and development	45,690		34,526
Sales and marketing	Sales and marketing	23,275		20,124		65,084		62,803			Sales and marketing	27,111		21,334
General and administrative	General and administrative	44,115		33,014		119,965		90,470			General and administrative	45,147		37,736
Total operating expenses	Total operating expenses	103,536		80,772		297,335		229,875			Total operating expenses	117,948		93,596
Loss from operations	Loss from operations	(52,592)		(43,889)		(220,424)		(100,997)			Loss from operations	(63,681)		(65,659)
Interest income	Interest income	1,109		72		1,364		222			Interest income	1,995		59
Interest expense	Interest expense	(13,099)		(14,514)		(41,000)		(43,798)			Interest expense	(11,746)		(14,087)

Loss on extinguishment of debt		—		—		(4,233)		—
Other income, net		4,472		2,011		254		1,948
Gain (loss) on revaluation of embedded derivatives		54		(184)		623		(1,644)
Other expense, net											Other expense, net	(1,343)		(3,027)
Gain on revaluation of embedded derivatives											Gain on revaluation of embedded derivatives	117		531
Loss before income taxes	Loss before income taxes	(60,056)		(56,504)		(263,416)		(144,269)			Loss before income taxes	(74,658)		(82,183)
Income tax provision	Income tax provision	336		158		888		595			Income tax provision	259		564
Net loss	Net loss	(60,392)		(56,662)		(264,304)		(144,864)			Net loss	(74,917)		(82,747)
Less: Net loss attributable to noncontrolling interest	Less: Net loss attributable to noncontrolling interest	(3,315)		(4,309)		(9,768)		(13,733)			Less: Net loss attributable to noncontrolling interest	(3,350)		(4,088)

Net loss attributable to Class A and Class B common stockholders	Net loss attributable to Class A and Class B common stockholders	$	(57,077)	$	(52,353)	$	(254,536)	$	(131,131)		Net loss attributable to Class A and Class B common stockholders	(71,567)		(78,659)
Less: Net (loss) income attributable to redeemable noncontrolling interest		—		17		(300)		(9)
Less: Net loss attributable to redeemable noncontrolling interest											Less: Net loss attributable to redeemable noncontrolling interest	—		(300)
Net loss before portion attributable to redeemable noncontrolling interest and noncontrolling interest	Net loss before portion attributable to redeemable noncontrolling interest and noncontrolling interest	$	(57,077)	$	(52,370)	$	(254,236)	$	(131,122)		Net loss before portion attributable to redeemable noncontrolling interest and noncontrolling interest	$	(71,567)	$	(78,359)
Net loss per share available to Class A and Class B common stockholders, basic and diluted	Net loss per share available to Class A and Class B common stockholders, basic and diluted	$	(0.31)	$	(0.30)	$	(1.41)	$	(0.76)		Net loss per share available to Class A and Class B common stockholders, basic and diluted	$	(0.35)	$	(0.44)
Weighted average shares used to compute net loss per share available to Class A and Class B common stockholders, basic and diluted	Weighted average shares used to compute net loss per share available to Class A and Class B common stockholders, basic and diluted	186,487		174,269		180,762		172,601			Weighted average shares used to compute net loss per share available to Class A and Class B common stockholders, basic and diluted	206,724		177,189

The accompanying notes are an integral part of these condensed consolidated financial statements.

Bloom Energy Corporation

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Net loss	Net loss	$	(60,392)	$	(56,662)	$	(264,304)	$	(144,864)		Net loss	$	(74,917)	$	(82,747)
Other comprehensive loss, net of taxes:	Other comprehensive loss, net of taxes:										Other comprehensive loss, net of taxes:

Change in derivative instruments designated and qualifying as cash flow hedges		—		(763)		—		(4,031)
Foreign currency translation adjustment	Foreign currency translation adjustment	(1,027)		(299)		(1,774)		(523)			Foreign currency translation adjustment	(271)		(153)
Other comprehensive loss, net of taxes	Other comprehensive loss, net of taxes	(1,027)		(1,062)		(1,774)		(4,554)			Other comprehensive loss, net of taxes	(271)		(153)
Comprehensive loss	Comprehensive loss	(61,419)		(57,724)		(266,078)		(149,418)			Comprehensive loss	(75,188)		(82,900)
Less: Comprehensive loss attributable to noncontrolling interest	Less: Comprehensive loss attributable to noncontrolling interest	(3,811)		(3,691)		(10,361)		(9,956)			Less: Comprehensive loss attributable to noncontrolling interest	(3,520)		(4,088)

Comprehensive loss attributable to Class A and Class B common stockholders	Comprehensive loss attributable to Class A and Class B common stockholders	$	(57,608)	$	(54,033)	$	(255,717)	$	(139,462)		Comprehensive loss attributable to Class A and Class B common stockholders	$	(71,668)	$	(78,812)
Less: Comprehensive (loss) income attributable to redeemable noncontrolling interest		—		17		(300)		(9)
Comprehensive loss after portion attributable to redeemable noncontrolling interest and noncontrolling interest		$	(57,608)	$	(54,050)	$	(255,417)	$	(139,453)
Less: Comprehensive loss attributable to redeemable noncontrolling interest											Less: Comprehensive loss attributable to redeemable noncontrolling interest	—		(300)
Comprehensive loss before portion attributable to redeemable noncontrolling interest and noncontrolling interest											Comprehensive loss before portion attributable to redeemable noncontrolling interest and noncontrolling interest	$	(71,668)	$	(78,512)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Bloom Energy Corporation

Condensed Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)

Three Months Ended September 30, 2022
Class A and Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total equity (deficit) attributable to Class A and Class B common stockholders Noncontrolling Interest Total Stockholders' Equity (Deficit)
Shares Amount
Balances at June 30, 2022 178,913,797 $ 18 $ 3,284,261 $ (1,000) $ (3,460,234) $ (176,955) $ 32,034 $ (144,921)
Issuance of restricted stock awards 539,074 — — — — — — —
ESPP purchase 339,055 — 5,619 — — 5,619 — 5,619
Exercise of stock options 225,759 — 2,233 — — 2,233 — 2,233
Stock-based compensation — — 23,893 — — 23,893 — 23,893
Distributions and payments to noncontrolling interests — — — — — — (1,557) (1,557)
Contributions from noncontrolling interest — — — — — — 2,815 2,815
Public share offering (Note 1) 14,950,000 1 371,526 — — 371,527 — 371,527
Forward to purchase Class A Common Stock (Note 5) — — 4,183 — — 4,183 — 4,183
Foreign currency translation adjustment — — — (531) — (531) (496) (1,027)
Net loss1
— — — — (57,077) (57,077) (3,315) (60,392)
Balances at September 30, 2022 194,967,685 $ 19 $ 3,691,715 $ (1,531) $ (3,517,311) $ 172,892 $ 29,481 $ 202,373


		Three Months Ended March 31, 2023
	Class A and Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Equity Attributable to Class A and Class B Common Stockholders		Noncontrolling Interest		Total Stockholders’ Equity
		Shares	Amount
Balances at December 31, 2022		205,664,690	$	20	$	3,906,491	$	(1,251)	$	(3,564,483)	$	340,777	$	38,039	$	378,816
Issuance of restricted stock awards		2,104,904	—		—		—		—		—		—		—
ESPP purchase		449,525	—		7,756		—		—		7,756		—		7,756
Exercise of stock options		114,526	—		769		—		—		769		—		769
Stock-based compensation		—	—		29,294		—		—		29,294		—		29,294
Derecognition of the pre-modification forward contract fair value (Note 15)		—	—		76,242		—		—		76,242		—		76,242
Equity component of redeemable convertible preferred stock, Series B (Note 15)		—	—		16,145		—		—		16,145		—		16,145
Foreign currency translation adjustment		—	—		—		(101)		—		(101)		(170)		(271)
Net loss		—	—		—		—		(71,567)		(71,567)		(3,350)		(74,917)
Balances at March 31, 2023		208,333,645	$	20	$	4,036,697	$	(1,352)	$	(3,636,050)	$	399,315	$	34,519	$	433,834

1~~There is no net loss attributable to redeemable noncontrolling interest.~~

~~Note: There was no redeemable noncontrolling interest as of June 30, 2022 and September 30, 2022.~~

Three Months Ended September 30, 2021
Class A and Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total deficit attributable to Class A and Class B common stockholders Noncontrolling Interest Total Stockholders' Equity
Shares Amount
Balances at June 30, 2021 173,402,160 $ 17 $ 3,155,917 $ (124) $ (3,177,381) $ (21,571) $ 51,185 $ 29,614
Issuance of restricted stock awards 581,363 — — — — — — —
ESPP purchase 967,797 — 5,319 — — 5,319 — 5,319
Exercise of stock options 126,741 1 1,122 — — 1,123 — 1,123
Stock-based compensation — — 20,743 — — 20,743 — 20,743
Change in effective portion of interest rate swap agreement — — — — — — 763 763
Distributions and payments to noncontrolling interests — — — — — — (540) (540)
Foreign currency translation adjustment — — — (154) — (154) (145) (299)
Net loss2
— — — — (52,370) (52,370) (4,309) (56,679)
Balances at September 30, 2021 175,078,061 $ 18 $ 3,183,101 $ (278) $ (3,229,751) $ (46,910) $ 46,954 $ 44

2~~Excludes $17 attributable to redeemable noncontrolling interest.~~

Note: Beginning redeemable noncontrolling interest of $334 - distributions to redeemable noncontrolling interests of $20 + net income attributable to redeemable noncontrolling interest of $17 = ending redeemable noncontrolling interest of $331.


			Nine Months Ended September 30, 2022																				Three Months Ended March 31, 2022
		Class A and Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total equity (deficit) attributable to Class A and Class B common stockholders		Noncontrolling Interest		Total Stockholders' Equity (Deficit)						Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Deficit Attributable to Class A and Class B Common Stockholders			Noncontrolling Interest			Total Stockholders’ Deficit
			Shares	Amount																			Shares		Amount
Balances at December 31, 2021	Balances at December 31, 2021		176,460,407	$	18	$	3,219,081	$	(350)	$	(3,263,075)	$	(44,326)	$	42,499		$	(1,827)	Balances at December 31, 2021				176,460,407		$	18		$	3,219,081		$	(350)		$	(3,263,075)		$	(44,326)		$	42,499	$	(1,827)
Issuance of restricted stock awards	Issuance of restricted stock awards		2,328,713	—		—		—		—		—		—			—		Issuance of restricted stock awards				964,937		—			—			—			—			—			—		—
ESPP purchase	ESPP purchase		759,744	—		11,600		—		—		11,600		—			11,600		ESPP purchase				420,689		—			5,981			—			—			5,981			—		5,981
Exercise of stock options	Exercise of stock options		468,821	—		3,550		—		—		3,550		—			3,550		Exercise of stock options				149,662		—			980			—			—			980			—		980
Stock-based compensation expense			—	—		82,275		—		—		82,275		—			82,275
Stock-based compensation																Stock-based compensation					—	—		25,586			—			—			25,586			—			25,586
Distributions and payments to noncontrolling interests	Distributions and payments to noncontrolling interests		—	—		(500)		—		—		(500)		(5,472)			(5,972)		Distributions and payments to noncontrolling interests				—		—			(500)			—			—			(500)			(2,376)		(2,876)
Contributions from noncontrolling interest			—	—		—		—		—		—		2,815			2,815
Public share offering (Note 1)			14,950,000	1		371,526		—		—		371,527		—			371,527
Forward to purchase Class A Common Stock (Note 5)			—	—		4,183		—		—		4,183		—			4,183
Foreign currency translation adjustment	Foreign currency translation adjustment		—	—		—		(1,181)		—		(1,181)		(593)			(1,774)		Foreign currency translation adjustment				—		—			—			(153)			—			(153)			—		(153)
Net loss3			—	—		—		—		(254,236)		(254,236)		(9,768)			(264,004)
Balances at September 30, 2022			194,967,685	$	19	$	3,691,715	$	(1,531)	$	(3,517,311)	$	172,892	$	29,481		$	202,373
Net loss1																Net loss1					—	—		—			—			(78,359)			(78,359)			(4,088)			(82,447)
Balances at March 31, 2022																Balances at March 31, 2022					177,995,695	$	18	$	3,251,128		$	(503)		$	(3,341,434)		$	(90,791)		$	36,035		$	(54,756)

1Excludes $300 attributable to redeemable noncontrolling interest.

Note: Beginning redeemable noncontrolling interest of $300 - ~~net~~Net loss attributable to redeemable noncontrolling interest of $300 = ending redeemable noncontrolling interest of Nil.

Nine Months Ended September 30, 2021
Class A and Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total (deficit) equity attributable to Class A and Class B common stockholders Noncontrolling Interest Total Stockholders' Equity
Shares Amount
Balances at December 31, 2020 168,002,726 $ 17 $ 3,182,753 $ (9) $ (3,103,937) $ 78,824 $ 62,195 $ 141,019
Cumulative effect upon adoption of Accounting Standards Update 2020-06 — — (126,799) — 5,308 (121,491) — (121,491)
Issuance of restricted stock awards 2,533,027 — — — — — — —
ESPP purchase 1,945,305 — 10,045 — — 10,045 — 10,045
Exercise of stock options 2,597,003 1 62,064 — — 62,065 — 62,065
Stock-based compensation expense — — 55,038 — — 55,038 — 55,038
Change in effective portion of interest rate swap agreement — — — — — — 4,031 4,031
Distributions and payments to noncontrolling interests — — — — — — (5,285) (5,285)
Foreign currency translation adjustment — — — (269) — (269) (254) (523)
Net loss4
— — — — (131,122) (131,122) (13,733) (144,855)
Balances at September 30, 2021 175,078,061 $ 18 $ 3,183,101 $ (278) $ (3,229,751) $ (46,910) $ 46,954 $ 44

4
~~Excludes $9 attributable to redeemable noncontrolling interest.~~

Note: Beginning redeemable noncontrolling interest of $377 - distributions to redeemable noncontrolling interest of $37 - net loss attributable to redeemable noncontrolling interest of $9 = ending redeemable noncontrolling interest of $331.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Bloom Energy Corporation

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(264,304)	$	(144,864)	Net loss	$	(74,917)	$	(82,747)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	46,182		40,079		Depreciation and amortization	18,150		14,384
Non-cash lease expense	Non-cash lease expense	18,153		7,161		Non-cash lease expense	7,934		3,072
Gain on sale of property, plant and equipment		(523)		—

Write-off of assets related to PPA IIIa		44,800		—
Loss on disposal of property, plant and equipment						Loss on disposal of property, plant and equipment	191		—

Revaluation of derivative liabilities		(9,640)		486

Revaluation of derivative contracts						Revaluation of derivative contracts	(117)		2,407
Stock-based compensation	Stock-based compensation	81,460		57,309		Stock-based compensation	27,743		25,542

Gain on remeasurement of investment		—		(1,966)

Loss on extinguishment of debt		4,233		—

Amortization of warranty balance						Amortization of warranty balance	—		150
Amortization of warrants and debt issuance costs	Amortization of warrants and debt issuance costs	2,355		2,824		Amortization of warrants and debt issuance costs	665		706
Unrealized foreign currency exchange loss	Unrealized foreign currency exchange loss	3,086		184		Unrealized foreign currency exchange loss	28		210
Other		3,487		—
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	15,758		34,236		Accounts receivable	(78,872)		(23,046)
Contract assets	Contract assets	(567)		(24,418)		Contract assets	(1,051)		11,668
Inventories	Inventories	(110,797)		(39,953)		Inventories	(127,666)		(39,542)
Deferred cost of revenue	Deferred cost of revenue	(8,856)		7,307		Deferred cost of revenue	5,793		5,865
Customer financing receivable	Customer financing receivable	2,510		4,022		Customer financing receivable	—		1,388

Prepaid expenses and other current assets	Prepaid expenses and other current assets	(15,766)		236		Prepaid expenses and other current assets	(4,527)		(6,340)
Other long-term assets	Other long-term assets	(730)		(374)		Other long-term assets	(128)		703
Operating lease right-of-use assets and operating lease liabilities	Operating lease right-of-use assets and operating lease liabilities	2,162		(7,593)		Operating lease right-of-use assets and operating lease liabilities	(7,507)		3,436
Finance lease liabilities	Finance lease liabilities	499		—		Finance lease liabilities	244		—
Accounts payable	Accounts payable	38,642		37,795		Accounts payable	(26,835)		15,900
Accrued warranty	Accrued warranty	1,597		(2,357)		Accrued warranty	(7,876)		2,925
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	502		(26,178)		Accrued expenses and other current liabilities	(32,277)		(25,144)
Deferred revenue and customer deposits	Deferred revenue and customer deposits	(12,716)		(53,181)		Deferred revenue and customer deposits	(13,108)		(5,783)
Other long-term liabilities	Other long-term liabilities	(9,980)		1,289		Other long-term liabilities	(577)		1,803
Net cash used in operating activities	Net cash used in operating activities	(168,453)		(107,956)		Net cash used in operating activities	(314,710)		(92,443)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(80,907)		(44,625)		Purchase of property, plant and equipment	(26,574)		(18,510)
Net cash acquired from step acquisition		—		3,114

Net cash used in investing activities	Net cash used in investing activities	(80,907)		(41,511)		Net cash used in investing activities	(26,574)		(18,510)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayment of debt of PPA IIIa		(30,212)		—
Repayment of debt	Repayment of debt	(17,262)		(11,017)		Repayment of debt	(9,892)		(4,774)

Debt make-whole payment related to PPA IIIa debt		(2,413)		—

Proceeds from financing obligations	Proceeds from financing obligations	—		7,534		Proceeds from financing obligations	1,163		—
Repayment of financing obligations	Repayment of financing obligations	(28,821)		(10,174)		Repayment of financing obligations	(4,266)		(9,423)
Contributions from noncontrolling interests		2,815		—
Distributions to redeemable noncontrolling interests		—		(37)
Distributions and payments to noncontrolling interests	Distributions and payments to noncontrolling interests	(5,972)		(5,285)		Distributions and payments to noncontrolling interests	—		(2,876)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	15,150		72,109		Proceeds from issuance of common stock	8,525		6,961

Proceeds from issuance of redeemable convertible preferred stock						Proceeds from issuance of redeemable convertible preferred stock	310,957		—

Proceeds from public share offering (Note 1)		385,396		—
Public share offering costs (Note 1)		(13,407)		—
Other		(63)		—
Net cash provided by financing activities		305,211		53,130
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	306,487		(10,112)
Effect of exchange rate changes on cash, cash equivalent and restricted cash	Effect of exchange rate changes on cash, cash equivalent and restricted cash	(1,643)		(472)		Effect of exchange rate changes on cash, cash equivalent and restricted cash	(124)		(153)
Net decrease in cash, cash equivalents and restricted cash	Net decrease in cash, cash equivalents and restricted cash	54,208		(96,809)		Net decrease in cash, cash equivalents and restricted cash	(34,921)		(121,218)
Cash, cash equivalents and restricted cash:	Cash, cash equivalents and restricted cash:					Cash, cash equivalents and restricted cash:
Beginning of period	Beginning of period	615,114		416,710		Beginning of period	518,366		615,114
End of period	End of period	$	669,322	$	319,901	End of period	$	483,445	$	493,896

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid during the period for interest	Cash paid during the period for interest	$	39,664	$	42,598	Cash paid during the period for interest	$	13,409	$	14,405
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	11,759		10,332		Operating cash flows from operating leases	7,446		2,464
Operating cash flows from finance leases	Operating cash flows from finance leases	788		643		Operating cash flows from finance leases	254		230
Cash paid during the period for income taxes	Cash paid during the period for income taxes	1,296		372		Cash paid during the period for income taxes	213		381
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:

Transfer of customer financing receivable to property, plant and equipment, net		42,758		—
Increase in recourse debt, non-current upon adoption of ASU 2020-06, net		—		121,491
Forward to purchase Class A Common Stock (Note 5)		4,183		—
Liabilities recorded for property, plant and equipment, net	Liabilities recorded for property, plant and equipment, net	13,373		6,188		Liabilities recorded for property, plant and equipment, net	$	4,517	$	6,775

Recognition of operating lease right-of-use asset during the year-to-date period	Recognition of operating lease right-of-use asset during the year-to-date period	17,623		43,660		Recognition of operating lease right-of-use asset during the year-to-date period	6,535		147
Recognition of finance lease right-of-use asset during the year-to-date period	Recognition of finance lease right-of-use asset during the year-to-date period	—		1,961		Recognition of finance lease right-of-use asset during the year-to-date period	244		—
Derecognition of the pre-modification forward contract fair value (Note 15)						Derecognition of the pre-modification forward contract fair value (Note 15)	76,242		—
Equity component of redeemable convertible preferred stock, Series B (Note 15)						Equity component of redeemable convertible preferred stock, Series B (Note 15)	16,145		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

Bloom Energy Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

The unaudited interim financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.

The unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in our ~~2021~~ Annual Report on Form ~~10-K.~~10-K for the fiscal year ended December 31, 2022.

Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this report.

1. Nature of Business, Liquidity and Basis of Presentation

Nature of Business

For information on the nature of our business, see Part II, Item 8, Note 1 - Nature of Business, Liquidity and Basis of Presentation, Nature of Business section in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

~~We have not experienced any supply chain disruptions as a result of the invasion by the Russian Federation in Ukraine on February 24, 2022.~~

Liquidity

We have generally incurred operating losses and negative cash flows from operations since our inception. With the series of new debt offerings, debt extensions and conversions to ~~equity~~equity that we completed during ~~2020~~2021, 2022 and ~~2021,~~the first quarter of 2023, we had ~~$287.5~~$282.4 million of total outstanding recourse debt as of ~~September 30, 2022, $274.7~~March 31, 2023, $269.4 million of which iswas classified as long-term debt. Our scheduled recourse debt ~~scheduled~~ repayments commenced in June 2022.

On ~~August 10, 2022, pursuant~~ March 20, 2023, we entered into an Amendment (the “Amended SPA”) to the Securities Purchase Agreement ~~(“the SPA”)~~with SK ecoplant, notified us of its intent to exercise its option to purchase additional shares of our Class A common stock, pursuant to a Second Tranche Exercise Notice (as defined in the SPA) electing to purchase 13,491,701 sharesdated October 23, 2021 (the “Second Tranche Shares”) at a purchase price of $23.05 per share, calculated as a 15% premium to the volume-weighted average closing price of the 20 consecutive trading day period immediately preceding the exercise of the option (see Note 5 - Fair Value). The aggregate purchase price approximates cash proceeds to be received by us of $311.0 million, net of related incremental direct costs of $0.1 million. The payment for the Second Tranche Shares will be due the later of (i) December 6, 2022 and (ii) upon clearance under the Hart Scott Rodino (“HSR”) Act of the sale of the Second Tranche Shares as contemplated by the Second Tranche Exercise Notice.

“

~~On August 19, 2022, we completed an underwritten public offering (“the Offering”~~SPA”), and the Investor Agreement, dated December 29, 2021, pursuant to which we issued and sold ~~13,000,000~~to SK ecoplant 13,491,701 shares of ~~Class A Common Stock at price~~Series B redeemable convertible preferred stock (the “Series B RCPS”) for cash proceeds of ~~$26.00 per share. As~~$311.0 million. For additional information, please see Part I, Item 1, Note 15 - SK ecoplant Strategic Investment.

On March 20, 2023, in connection with the Amended SPA we also entered into a ~~part~~Shareholders’ Loan Agreement with SK ecoplant (the “Loan Agreement”), pursuant to which we may draw down on a loan from SK ecoplant with a maximum principal amount of $311.0 million, should SK ecoplant send a redemption notice to us under the ~~Offering, the underwriters were provided a 30-day option to purchase an additional 1,950,000 shares~~Amended SPA or otherwise reduce any portion of its current holdings of our Class A ~~Common Stock at~~stock. The Loan Agreement has a maturity of five years and bears an interest rate of 4.6%. The proceeds of the ~~same price, less underwriting discounts and commissions (“the Greenshoe”), which was exercised contemporaneously with the Offering. The aggregate net proceeds received~~loan may be used by us ~~from the Offering were $371.5 million after deducting underwriting discounts~~for working capital and ~~commissions of $16.5 million and incremental costs directly attributable to the Offering of $0.7 million.~~general corporate purpose needs.

Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the rate of growth in the volume of system builds and the need for additional manufacturing space, the expansion of sales and marketing activities both in domestic and international markets, market acceptance of our product, our ability to secure financing for customer use of our Energy Servers, the timing of installations, and overall economic conditions, including the ~~impact of COVID-19 and~~ inflationary pressure in the US on our ongoing and future operations. The rising interest rate environment in the US has and will continue to adversely impact the cost of new capital deployment.

In the opinion of management, the combination of our existing cash and cash equivalents and expected timing of operating cash flows is expected to be sufficient to meet our operational and capital cash flow requirements and other cash flow needs for the next 12 months from the date of issuance of this Quarterly Report on Form 10-Q.

Inflation Reduction Act of 2022 – New and Expanded Production and Tax Credits for Manufacturers and Projects to Support Clean Energy

~~On August 7, 2022, the United States Senate passed~~For information on the Inflation Reduction Act of 2022 ~~(“the IRA”~~(the “IRA”) ~~under fiscal year 2022 budget reconciliation instructions. On~~signed into law on August 16, 2022, the IRA was signed into law. This new bill is the U.S. federal government’s largest-ever investment to fight climate change. The IRA includes numerous investments in climate protection, including investments in clean energy production and ~~tax credits aimed at reducing carbon emissions by roughly 40% by 2030. By implementing the IRA, the government aims to make an~~its impact ~~on energy markets so that cleaner options are more affordable to consumers.~~

~~The IRA contains several credits and incentive provisions that may be relevant to us:~~


~~Credit~~			~~Credit summary~~
~~Section 45 – Production Tax credit (“PTC”)~~			~~Provides a 10-year tax credit for a variety of renewable energy technologies to incentivize electricity generation to be sold to a third party.~~
~~Section 48 – Investment Tax Credit (“ITC”)~~			~~Provides a tax credit based on capital investment in a variety of renewable and conventional energy technologies to incentivize investment in new energy resources and more efficient use of fuel.~~
~~Section 45X – Advanced Manufacturing Production~~			Provides a PTC for the production of certain eligible components sold to an unrelated person (exceptions apply). The credit amount varies based on the eligible component, which includes solar components, wind energy components, inverters, qualifying battery components, and critical minerals.
~~Section 48C – Qualified Advanced Energy Project (reenacted)~~			~~Provides an ITC through a competitive application process administered through the Department of Energy equal to 6% or 30% of the investment with respect to advanced energy projects.~~
~~Section 45Y – Clean Electricity Production Credit~~			Provides a 10-year technology-neutral PTC, equal to the kWh of electricity produced by the taxpayer times an applicable amount (based of $0.003/kWh up to $0.015/kWh) for the production of clean electricity produced at a qualifying facility for which the GHG emission rate is not greater than zero and electricity is sold, consumed or stored.
~~Section 48E – Clean Electricity Investment Tax Credit~~			Provides a technology-neutral ITC of between 6% (or 2%) to 30% (or 10%) for qualified capital investments in an electric generating facility or energy storage for which GHG rate is not greater than zero.
~~Section 45V – Clean Hydrogen~~			~~Provides a PTC of up to $3 per kg of clean hydrogen over a 10-year credit period for the production of clean hydrogen at a qualified facility in the US.~~
~~Section 45Q – Carbon Capture Sequestration~~			~~Provides a credit ranging from $12-$17 or $60-$85 per metric ton based on the amount of carbon oxides captured from a qualified facility over a 12-year period.~~

~~We are currently assessing the impact of these provisions~~ on our business, ~~beyond~~see Part II, Item 8, Note 1 - Nature of Business, Liquidity and Basis of Presentation, Inflation Reduction Act of 2022 section in our Annual Report on Form 10-K for the ~~third quarter of~~fiscal year ended December 31, 2022.

Some of our existing contracts contemplated price adjustments due to changes to ITC rate at the inception of the contracts. As a result, we recognized $8.7 million product revenue and $1.3 million installation revenue for the three months ended September 30, 2022, due to a change in variable considerations for energy servers placed in service during the eligible periods from such existing contracts.

Basis of Presentation

We have prepared the condensed consolidated financial statements included herein pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), ~~and as permitted by those rules,~~ including all disclosures required by generally accepted accounting principles as applied in the United States (“U.S. GAAP”). Certain prior period amounts have been reclassified to conform to the current period presentation.

Principles of Consolidation

For information on the principles of consolidation, see Part II, Item 8, Note 1 - Nature of Business, Liquidity and Basis of Presentation, Principles of Consolidation section in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

10Business Combinations

For information on the business combinations, see Part II, Item 8, Note 1 -

Nature of Business, Liquidity and Basis of Presentation, Business Combinations section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Use of Estimates

For information on the use of accounting estimates, see Part II, Item 8, Note 1 - Nature of Business, Liquidity and Basis of Presentation, Use of Estimates section in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Concentration of Risk

Geographic Risk - TheThe majority of our revenue and long-lived assets ~~are~~were attributable to operations in the United States for all periods presented. In addition to shipments in the US, we also ship our Energy Servers to other countries, primarily to the Republic of Korea, Japan and India (collectively, the “Asia Pacific region”). In the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, total revenue in the Asia Pacific region was ~~58%~~5% and ~~61%, respectively, of our total revenue. In the three and nine months ended September 30, 2021, total revenue in the Asia Pacific region was 36% and 38%~~65%, respectively, of our total revenue.

Credit Risk - At ~~September 30, 2022 and December~~March 31, ~~2021, one customer~~2023, two customers accounted for approximately ~~23%~~70% and ~~60%~~18% of accounts ~~receivable, respectively.~~receivable. At December 31, 2022, one customer represented approximately 75% of accounts receivable. To date, we have not experienced any credit losses.

Customer Risk - During the three months ended ~~September 30, 2022,~~March 31, 2023, revenue from two customers ~~represented~~accounted for approximately ~~54%~~41% and ~~26% of our total revenue, respectively. During the nine months ended September 30, 2022, two customers represented approximately 48% and 16% of our total revenue, respectively.~~

~~During the three months ended September 30, 2021, one customer represented 35%~~25% of our total revenue. During the ~~nine~~three months ended ~~September 30, 2021, revenue from~~March 31, 2022, two customers each represented ~~37% and 12%~~approximately 32% of our total ~~revenue, respectively.~~revenue.

2. Summary of Significant Accounting Policies

Please refer to the accounting policies described in Part II, Item 8, Note 2 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Recent Accounting Pronouncements

There have been no significant changes in our reported financial position or results of operations and cash flows resulting from the adoption of new accounting pronouncements.

~~Accounting Guidance Not Yet Adopted~~

~~Contract Assets and Contract Liabilities Acquired in a Business Combination~~ - In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, ~~Revenue from Contracts with Customers, as if it had originated the contracts. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in abusiness combination at fair value. ASU 2021-08 will be effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022.Early adoption is permitted. The adoption impact of ASU 2021-08 will depend on the magnitude of any future acquisitions. The standard will not impact acquiredcontract assets or liabilities from business combinations occurring prior to the adoption date.~~

119

3. Revenue Recognition

Contract Balances

The following table provides information about accounts receivables, contract assets, customer deposits and deferred revenue from contracts with customers (in thousands):


	March 31,		December 31,
	2023		2022

Accounts receivable	$	329,757	$	250,995
Contract assets	47,778		46,727
Customer deposits	89,741		121,085
Deferred revenue	87,848		94,355

September 30, December 31,
2022 2021
Accounts receivable $ 71,184 $ 87,788
Contract assets 25,768 25,201
Customer deposits 64,412 64,809
Deferred revenue 103,156 115,476
Contract assets relate to contracts for which revenue is recognized upon transfer of control of performance obligations, but where billing milestones have not been reached. Customer deposits and deferred revenue include payments received from customers or invoiced amounts prior to transfer of controls of performance obligations. At December 31, 2022, customer deposits included $24.6 million related to transactions with SK ecoplant and refundable fees received from customers. At March 31, 2023 there were no customer deposits related to transactions with SK ecoplant (see Note 15 - SK ecoplant Strategic Investment).

Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current in the condensed consolidated balance ~~sheet~~sheets when both the ~~Company expects~~milestones other than the passage of time, are expected to be complete and the ~~related performance obligations and invoice the customers~~customer is invoiced within one year of the balance sheet date, and as long-term when both the ~~Company expects~~above-mentioned milestones are expected to be complete, and the ~~related performance obligations and invoice the customers~~customer is invoiced more than one year out from the balance sheet date. Contract liabilities are classified as current in the condensed consolidated balance ~~sheet~~sheets when the revenue recognition associated with the related customer payments and invoicing is expected to occur within one year of the balance sheet date and as long-term when the revenue recognition associated with the related customer payments and invoicing is expected to occur in more than one year from the balance sheet date.

Contract Assets


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Beginning balance	Beginning balance	$	33,374	$	18,638	$	25,201	$	3,327	Beginning balance		$	46,727	$	25,201
Transferred to accounts receivable from contract assets recognized at the beginning of the period	Transferred to accounts receivable from contract assets recognized at the beginning of the period	(21,677)		(11,758)		(21,304)		—		Transferred to accounts receivable from contract assets recognized at the beginning of the period		(10,787)		(14,576)
Revenue recognized and not billed as of the end of the period	Revenue recognized and not billed as of the end of the period	14,071		20,865		21,871		24,418		Revenue recognized and not billed as of the end of the period		11,838		2,908
Ending balance	Ending balance	$	25,768	$	27,745	$	25,768	$	27,745	Ending balance		$	47,778	$	13,533

Deferred Revenue

Deferred revenue activity, including deferred incentive revenue activity, during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ consisted of the following (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Beginning balance	Beginning balance	$	96,377	$	116,255	$	115,476	$	135,578	Beginning balance		$	94,355	$	115,476
Additions	Additions	248,574		175,423		597,318		541,519		Additions		224,939		166,676
Revenue recognized	Revenue recognized	(241,795)		(179,808)		(609,638)		(565,227)		Revenue recognized		(231,446)		(178,663)
Ending balance	Ending balance	$	103,156	$	111,870	$	103,156	$	111,870	Ending balance		$	87,848	$	103,489

Deferred revenue is equivalent to the total transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, as of the end of the period. Primary component of deferred revenue at the end of the period consists of performance obligations relating to the provision of maintenance services under current contracts and future renewal periods. Some of these obligations provide customers with material rights over a period that we estimate will be largely commensurate with the period of their expected use of the associated Energy Server. As a result, we expect to recognize these amounts as revenue over a period of up to 21 years, predominantly on a relative standalone selling price basis that reflects the cost of providing these services. Deferred revenue also includes performance obligations relating to product acceptance and installation. A significant amount of this deferred revenue is reflected as additions and revenue recognized in the same 12-month period, and a portion of this deferred revenue is expected to be recognized beyond 12-month period mainly due to deployment schedules.

We do not disclose the value of the unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Disaggregated Revenue

We disaggregate revenue from contracts with customers into four revenue categories: product, installation, services and electricity (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Revenue from contracts with customers:	Revenue from contracts with customers:									Revenue from contracts with customers:
Product revenue	Product revenue	$	213,243	$	128,550	$	520,415	$	413,347	Product revenue		$	193,745	$	133,547
Installation revenue	Installation revenue	22,682		22,172		48,964		53,710		Installation revenue		20,525		13,553
Services revenue	Services revenue	37,347		39,251		111,012		111,375		Services revenue		40,663		35,239
Electricity revenue	Electricity revenue	2,875		804		8,352		2,107		Electricity revenue		3,838		2,682
Total revenue from contract with customers	Total revenue from contract with customers	276,147		190,777		688,743		580,539		Total revenue from contract with customers		258,771		185,021
Revenue from contracts that contain lease:
Revenue from contracts that contain leases:										Revenue from contracts that contain leases:
Electricity revenue	Electricity revenue	16,127		16,451		47,806		49,166		Electricity revenue		16,420		16,018
Total revenue	Total revenue	$	292,274	$	207,228	$	736,549	$	629,705	Total revenue		$	275,191	$	201,039

1311

4. Financial Instruments

Cash, Cash Equivalents and Restricted Cash

The carrying values of cash, cash equivalents and restricted cash approximate fair values and were as follows (in thousands):

September 30, December 31,
2022 2021
As Held:
Cash $ 215,926 $ 318,080
Money market funds 453,396 297,034
$ 669,322 $ 615,114
As Reported:
Cash and cash equivalents $ 492,120 $ 396,035
Restricted cash 177,202 219,079
$ 669,322 $ 615,114


	March 31,		December 31,
	2023		2022
As Held:
Cash	$	319,744	$	226,463
Money market funds	163,701		291,903
	$	483,445	$	518,366
As Reported:
Cash and cash equivalents	$	320,431	$	348,498
Restricted cash	163,014		169,868
	$	483,445	$	518,366

Restricted cash consisted of the following (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
Current:	Current:					Current:
Restricted cash	Restricted cash	$	41,124	$	89,462	Restricted cash	$	46,891	$	50,965
Restricted cash related to PPA Entities1		980		3,078
Restricted cash related to PPA Entity1						Restricted cash related to PPA Entity1	350		550
		$	42,104	$	92,540		$	47,241	$	51,515
Non-current:	Non-current:					Non-current:
Restricted cash	Restricted cash	$	117,590	$	103,300	Restricted cash	$	107,773	$	110,353
Restricted cash related to PPA Entities1		17,508		23,239
Restricted cash related to PPA Entity1						Restricted cash related to PPA Entity1	8,000		8,000
		135,098		126,539			115,773		118,353
		$	177,202	$	219,079		$	163,014	$	169,868

1 We have ~~VIEs~~VIE related to ~~PPAs~~PPA V that ~~represent~~represents a portion of the condensed consolidated balances recorded within the “restricted cash” and other financial statement line items in the condensed consolidated balance sheets (see Note 1110 - Portfolio Financings). In addition, the restricted cash held in the PPA II and PPA IIIb entities as of ~~September 30, 2022, includes~~March 31, 2023, included $33.3 million and ~~$1.1~~$0.7 million of current restricted cash, respectively, and ~~$35.7~~$21.4 million and $6.7 million of non-current restricted cash, respectively. The restricted cash held in the PPA II and PPA IIIb entities as of December 31, ~~2021, includes $41.7~~2022, included $40.6 million and $1.2 million of current restricted cash, respectively, and ~~$57.7~~$28.5 million and $6.7 million of non-current restricted cash, respectively. These entities are not considered VIEs.

Factoring Arrangements

We sell certain customer trade receivables on a non-recourse basis under factoring arrangements with ~~our designated~~certain financial institution. These transactions are accounted for as sales and cash proceeds are included in cash used in operating activities. We derecognized ~~$146.3~~$59.6 million and ~~$116.3~~$46.1 million of accounts receivable ~~as of September 30,~~during the three months ended March 31, 2023 and 2022, ~~and December 31, 2021, respectively, under these factoring arrangements.~~ respectively.

The costs of factoring such accounts receivable on our condensed consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023 were ~~$2.5 million and $3.7 million, respectively.~~$0.7 million. The costs of factoring for ~~the~~ three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, were not material. The cost of factoring isare recorded in general and administrative expenses.

1412

5. Fair Value

Our accounting policy for the fair value measurement of cash equivalents and embedded Escalation Protection Plan (“EPP”) derivatives is described in Part II, Item 8 Note 2 - Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The tables below set forth, by level, our financial assets that are accounted for at fair value for the respective periods. The table does not include assets and liabilities that are measured at historical cost or any basis other than fair value (in thousands):


		Fair Value Measured at Reporting Date Using									Fair Value Measured at Reporting Date Using
September 30, 2022		Level 1		Level 2		Level 3		Total
March 31, 2023										March 31, 2023	Level 1		Level 2		Level 3		Total

Assets	Assets									Assets
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	453,396	$	—	$	—	$	453,396	Money market funds	$	163,701	$	—	$	—	$	163,701

		$	453,396	$	—	$	—	$	453,396		$	163,701	$	—	$	—	$	163,701
Liabilities	Liabilities									Liabilities

Derivatives:	Derivatives:									Derivatives:

Embedded EPP derivatives	Embedded EPP derivatives	—		—		5,838		5,838		Embedded EPP derivatives	—		—		5,778		$	5,778

		$	—	$	—	$	5,838	$	5,838		$	—	$	—	$	5,778	$	5,778


		Fair Value Measured at Reporting Date Using									Fair Value Measured at Reporting Date Using
December 31, 2021		Level 1		Level 2		Level 3		Total
December 31, 2022										December 31, 2022	Level 1		Level 2		Level 3		Total

Assets	Assets									Assets
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	297,034	$	—	$	—	$	297,034	Money market funds	$	291,903	$	—	$	—	$	291,903

		$	297,034	$	—	$	—	$	297,034		$	291,903	$	—	$	—	$	291,903
Liabilities	Liabilities									Liabilities

Derivatives:	Derivatives:									Derivatives:
Option to acquire a variable number of shares of Class A Common Stock		$	—	$	13,200	$	—	$	13,200

Embedded EPP derivatives	Embedded EPP derivatives	—		—		6,461		6,461		Embedded EPP derivatives	—		—		5,895		$	5,895

		$	—	$	13,200	$	6,461	$	19,661		$	—	$	—	$	5,895	$	5,895

~~SK ecoplant Notice to Exercise the Option to Acquire a Variable Number of Shares of Class A Common Stock~~

On August 10, 2022, pursuant to the SPA, SK ecoplant notified us of its intent to exercise its option to purchase additional shares of our Class A common stock, pursuant to a Second Tranche Exercise Notice (as defined in the SPA) electing to purchase 13,491,701 shares at a purchase price of $23.05 per share. Upon receipt of SK’s notice the purchase priceMoney Market Funds - Money market funds are valued using quoted market prices for identical securities and ~~the number of shares of Class A Common Stock that SK will purchase under the Option~~ are fixed. The payment for the Second Tranche Shares will be due the later of (i) December 6, 2022 and (ii) upon clearance under the HSR Act of the sale of the Second Tranche Shares as contemplated by the Second Tranche Exercise Notice.

~~The Option was fair valued as of the notice date at $4.2 million. Upon the receipt of the notice from SK ecoplant the Option met the criteria of equity award and was~~therefore classified as ~~a forward contract as part of additional paid-in capital. The fair value of the Option was reflected~~Level 1 financial assets.

Embedded Escalation Protection Plan Derivative Liability in ~~accrued expenses and other current liabilities in our condensed consolidated balance sheet as of December 31, 2021.~~

Sales Contracts

~~Embedded EPP Derivative Liability~~

~~For the three months ended September 30, 2022 and 2021, we recorded~~- We estimate the fair value of the embedded EPP derivatives in certain sales contracts using a Monte Carlo simulation model, which considers various potential electricity price curves over the sales contracts’ terms. We use historical grid prices and ~~recognized an unrealized gain~~available forecasts of ~~$0.1 million and an unrealized loss of $0.2 million, respectively, in gain (loss) on revaluation of embedded~~future electricity prices to estimate future electricity prices. We have classified these derivatives ~~on our condensed consolidated statements of operations.~~

For the nine months ended September 30, 2022 and 2021, we recorded the fair value of the embedded EPP derivatives and recognized an unrealized gain of $0.6 million and an unrealized loss of $1.6 million, respectively, in gain (loss) on revaluation of embedded derivatives on our condensed consolidated statements of operations.as a Level 3 financial liability.

The changes in the Level 3 financial liabilities during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023 were as follows (in thousands):

Embedded EPP Derivative Liability

Liabilities at December 31, ~~2021~~2022

~~6,461~~5,895

Changes in fair value

~~(623)~~(117)

Liabilities at ~~September 30, 2022~~March 31, 2023

~~5,838~~5,778

Financial Assets and Liabilities and Other Items Not Measured at Fair Value on a Recurring Basis

~~Customer Receivables and~~ Debt Instruments - The ~~fair value for customer financing receivables is based on a discounted cash flow model, whereby the fair value approximates the present value of the receivables (Level 3). The~~ senior secured notes ~~term loans~~ and convertible notes are based on rates currently offered for instruments with similar maturities and terms (Level 3). The following table presents the estimated fair values and carrying values of ~~customer receivables and~~ debt instruments (in thousands):


		September 30, 2022				December 31, 2021					March 31, 2023		December 31, 2022
		Net Carrying Value		Fair Value		Net Carrying Value		Fair Value			Net Carrying Value	Fair Value	Net Carrying Value	Fair Value

Customer receivables
Customer financing receivable		$	—	$	—	$	45,269	$	38,334

Debt instruments	Debt instruments									Debt instruments
Recourse:	Recourse:									Recourse:

10.25% Senior Secured Notes due March 2027	10.25% Senior Secured Notes due March 2027	63,194		59,939		68,968		72,573		10.25% Senior Secured Notes due March 2027	57,029	55,991	60,960	60,472
2.5% Green Convertible Senior Notes due August 2025	2.5% Green Convertible Senior Notes due August 2025	224,340		319,822		222,863		356,822		2.5% Green Convertible Senior Notes due August 2025	225,324	316,664	224,832	309,488
Non-recourse:	Non-recourse:									Non-recourse:

7.5% Term Loan due September 2028 (Note 7)		—		—		29,006		35,669

6.07% Senior Secured Notes due March 2030		68,899		70,085		73,262		83,251

3.04% Senior Secured Notes due June 2031	3.04% Senior Secured Notes due June 2031	125,999		115,294		132,631		137,983		3.04% Senior Secured Notes due June 2031	119,999	112,252	125,787	117,028

6. Balance Sheet Components

Inventories

The components of inventory ~~consist~~consisted of the following (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022

Raw materials	Raw materials	$	156,163	$	80,809	Raw materials	$	195,680	$	165,446
Finished goods	Finished goods	61,376		30,668		Finished goods	147,004		58,288
Work-in-progress	Work-in-progress	37,356		31,893		Work-in-progress	55,005		44,660
		$	254,895	$	143,370		$	397,689	$	268,394

The inventory reserves were ~~$17.6~~$16.5 million and ~~$13.9~~$17.2 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets ~~consist~~consisted of the following (in thousands):

September 30, December 31,
2022 2021

Receivables from employees $ 7,949 $ 5,463
Prepaid hardware and software maintenance 5,079 3,494
Prepaid managed services 4,291 2,480
Tax receivables 3,259 1,518
Prepaid workers compensation 3,114 5,330
Deposits made 1,425 817
Prepaid deferred commissions 794 724
State incentive receivable 214 427
Other prepaid expenses and other current assets 20,364 10,408
$ 46,489 $ 30,661


	March 31,		December 31,
	2023		2022

Receivables from employees	$	13,548	$	6,553
Deferred expenses (Note 15)	8,215		—
Prepaid hardware and software maintenance	4,094		4,290
Tax receivables	3,783		3,676
Prepaid managed services	3,607		4,405
Advance income tax provision	3,343		783
Prepaid workers compensation	3,265		5,536
Prepaid rent	1,811		965
Deposits made	1,723		1,409
Prepaid deferred commissions	905		1,002
State incentive receivable	186		204
Other prepaid expenses and other current assets	11,904		14,820
	$	56,384	$	43,643

Property, Plant and Equipment, Net

Property, plant and equipment, net ~~consists~~consisted of the following (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022

Energy Servers	Energy Servers	$	669,606	$	674,799	Energy Servers	$	538,912	$	538,912
Machinery and equipment	Machinery and equipment	132,965		110,600		Machinery and equipment	146,710		145,555
Leasehold improvements						Leasehold improvements	104,758		104,528
Construction-in-progress	Construction-in-progress	91,301		43,544		Construction-in-progress	87,042		72,174
Leasehold improvements		68,369		52,936
Building		49,240		48,934
Buildings						Buildings	49,419		49,240
Computers, software and hardware	Computers, software and hardware	24,100		21,276		Computers, software and hardware	25,286		24,608
Furniture and fixtures	Furniture and fixtures	9,123		8,607		Furniture and fixtures	9,794		9,581
		1,044,704		960,696			961,921		944,598
Less: accumulated depreciation	Less: accumulated depreciation	(397,936)		(356,590)		Less: accumulated depreciation	(358,960)		(344,184)
		$	646,768	$	604,106		$	602,961	$	600,414

Depreciation expense related to property, plant and equipment was $18.2 million and $14.4 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, was $15.5 million and $46.2 million, respectively. Depreciation expense related to property, plant and equipment for the three and nine months ended September 30, 2021 was $13.3 million and $40.1 million, respectively.

Property, plant and equipment under operating leases by ~~the~~ PPA ~~Entities~~V was ~~$362.0~~$226.0 million and ~~$368.0~~$226.0 million and accumulated depreciation for these assets was ~~$153.8~~$96.3 million and ~~$139.4~~$92.7 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively. Depreciation expense for these assets was $5.8 million and $17.3 million for the three and nine months ended September 30,~~ 2022, respectively. Depreciation expense for ~~these assets~~property, plant and equipment under operating leases by PPA V and PPA IV (sold in November 2022) was ~~$5.9~~$3.6 million and ~~$17.6~~$5.9 million for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2023 and 2022, respectively.

~~PPA IIIa Upgrade~~

In June 2022, we started a project to replace 9.8 megawatts of second-generation Energy Servers (the “old Energy Servers”) at PPA IIIa Investment Company and Operating Company (“PPA IIIa”) with current generation Energy Servers (the “new Energy Servers”) (the “PPA IIIa Upgrade”, the “PPA IIIa Repowering”). The replacement was ongoing as of September 30, 2022. See Note 11 - ~~Portfolio Financing~~ ~~for additional information.~~

~~Change in Estimate~~

In June 2022, due to the replacement of old Energy Servers as part of the PPA IIIa Repowering, we revised the expected useful life of the old Energy Servers. As a result, the expected useful life of old Energy Servers decreased from 15 years to approximately 0.5 years. We recognized accelerated depreciation of $0.2 million in electricity cost of revenue on the revised carrying amount of the old Energy Servers after impairment loss in our condensed consolidated statements of operations. There is no effect from this change in accounting estimate on future periods.

1815

Other Long-Term Assets

Other long-term assets ~~consist~~consisted of the following (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022

Deferred commissions						Deferred commissions	$	8,980	$	8,320
Long-term lease receivable	Long-term lease receivable	$	8,131	$	7,953	Long-term lease receivable	7,971		8,076
Deferred expenses (Note 15)						Deferred expenses (Note 15)	6,636		—
Prepaid insurance	Prepaid insurance	7,969		9,534		Prepaid insurance	3,772		4,047
Deferred commissions		7,229		7,569
Deposits made	Deposits made	2,694		1,923		Deposits made	2,672		2,672
Prepaid managed services	Prepaid managed services	2,533		3,010		Prepaid managed services	2,215		2,373
Deferred tax asset	Deferred tax asset	885		954		Deferred tax asset	1,398		1,151
Investments in subsidiaries		—		1,819

Prepaid and other long-term assets	Prepaid and other long-term assets	8,875		8,311		Prepaid and other long-term assets	13,326		13,566
		$	38,316	$	41,073		$	46,970	$	40,205

Accrued Warranty

Accrued warranty liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2023		2022

Product performance	$	9,075	$	16,901
Product warranty	381		431

	$	9,456	$	17,332

Changes in the product warranty and product performance liabilities were as follows (in thousands):





Balances at December 31, 2022	$	17,332
Accrued warranty, net	7,924
Warranty expenditures during the quarter	(15,800)
Balances at March 31, 2023	$	9,456

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities ~~consist~~consisted of the following (in thousands):


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022

General invoice and purchase order accruals						General invoice and purchase order accruals	$	35,635	$	44,010
Compensation and benefits	Compensation and benefits	$	30,002	$	38,222	Compensation and benefits	30,474		48,156
Sales-related liabilities		10,374		6,040
Delaware grant	Delaware grant	9,495		—		Delaware grant	9,495		9,495
Accrued installation	Accrued installation	6,032		13,968		Accrued installation	8,930		7,905
Sales-related liabilities						Sales-related liabilities	6,387		7,147
Provision for income tax						Provision for income tax	3,970		1,140
Accrued legal expenses	Accrued legal expenses	5,513		1,765		Accrued legal expenses	3,896		4,403
Current portion of derivative liabilities	Current portion of derivative liabilities	3,053		6,059		Current portion of derivative liabilities	3,160		2,596
PPA IV Upgrade financing obligations						PPA IV Upgrade financing obligations	2,958		6,076
Accrued consulting expenses	Accrued consulting expenses	1,423		1,731		Accrued consulting expenses	1,950		1,390
Sales tax liabilities	Sales tax liabilities	1,359		1,491		Sales tax liabilities	1,612		6,172
Finance lease liabilities						Finance lease liabilities	1,062		1,024
Interest payable	Interest payable	719		2,159		Interest payable	719		3,128

Option to acquire a variable number of shares of Class A Common Stock (Note 5)		—		13,200
Other	Other	34,040		29,503		Other	1,513		1,541
		$	102,010	$	114,138		$	111,761	$	144,183

Preferred Stock

As of March 31, 2023, we had 20,000,000 shares of preferred stock authorized, of which 13,491,701 shares were designated as Series B redeemable convertible preferred stock. As of December 31, 2022, we had 20,000,000 shares of preferred stock authorized, of which 10,000,000 shares were designated as Series A redeemable convertible preferred stock. The preferred stock had $0.0001 par value. There were 13,491,701 shares and no shares of preferred stock issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.

1917

7. Outstanding Loans and Security Agreements

The following is a summary of our debt as of ~~September 30, 2022~~March 31, 2023 (in thousands, except percentage data):

Unpaid
Principal
Balance Net Carrying Value Interest
Rate Maturity Dates Entity Recourse
Current Long-
Term Total
10.25% Senior Secured Notes due March 2027 $ 63,966 $ 12,792 $ 50,402 $ 63,194 10.25% March 2027 Company Yes
2.5% Green Convertible Senior Notes due August 2025 230,000 — 224,340 224,340 2.5% August 2025 Company Yes
Total recourse debt 293,966 12,792 274,742 287,534
3.04% Senior Secured Notes due June 30, 2031 127,736 10,332 115,667 125,999 3.04% June 2031 PPA V No
6.07% Senior Secured Notes due March 2030 70,492 5,611 64,288 69,899 6.07% March 2030 PPA IV No
Total non-recourse debt 198,228 15,943 179,955 195,898
Total debt $ 492,194 $ 28,735 $ 454,697 $ 483,432


	Unpaid Principal Balance		Net Carrying Value						Unused Borrowing Capacity		Interest Rate	Maturity Dates	Entity
			Current		Long- Term		Total

10.25% Senior Secured Notes due March 2027	$	57,645	$	12,971	$	44,058	$	57,029	$	57,645	10.25%	March 2027	Company
2.5% Green Convertible Senior Notes due August 2025	230,000		—		225,324		225,324		230,000		2.5%	August 2025	Company
Total recourse debt	287,645		12,971		269,382		282,353		287,645
3.04% Senior Secured Notes due June 30, 2031	121,546		11,435		108,564		119,999		121,546		3.04%	June 2031	PPA V
Total non-recourse debt	121,546		11,435		108,564		119,999		121,546
Total debt	$	409,191	$	24,406	$	377,946	$	402,352	$	409,191

The following is a summary of our debt as of December 31, ~~2021~~2022 (in thousands, except percentage data):


		Unpaid Principal Balance		Net Carrying Value							Interest Rate	Maturity Dates	Entity	Recourse		Unpaid Principal Balance			Net Carrying Value											Interest Rate	Maturity Dates		Entity
				Current		Long- Term		Total		Interest Rate					Unpaid Principal Balance				Long- Term			Total			Interest Rate			Maturity Dates

10.25% Senior Secured Notes due March 2027	10.25% Senior Secured Notes due March 2027	$	70,000	$	8,348	$	60,620	$	68,968			10.25%	March 2027	Company				Yes	10.25% Senior Secured Notes due March 2027		$	61,653		$	12,716		$	48,244	$	60,960		10.25%		March 2027	Company
2.5% Green Convertible Senior Notes due August 2025	2.5% Green Convertible Senior Notes due August 2025	230,000		—		222,863		222,863			2.5%	August 2025	Company	Yes	2.5% Green Convertible Senior Notes due August 2025	230,000			—			224,832			224,832					2.5%	August 2025		Company
Total recourse debt	Total recourse debt	300,000		8,348		283,483		291,831							Total recourse debt	291,653			12,716			273,076			285,792
3.04% Senior Secured Notes due June 30, 2031	3.04% Senior Secured Notes due June 30, 2031	134,644		9,376		123,255		132,631			3.04%	June 2031	PPA V	No	3.04% Senior Secured Notes due June 30, 2031	127,430			13,307			112,480			125,787					3.04%	June 2031		PPA V
7.5% Term Loan due September 2028		31,070		3,436		25,570		29,006			7.5%	September 2028	PPA IIIa	No
6.07% Senior Secured Notes due March 2030		73,955		4,671		68,591		73,262			6.07%	March 2030	PPA IV	No

Total non-recourse debt	Total non-recourse debt	239,669		17,483		217,416		234,899							Total non-recourse debt	127,430			13,307			112,480			125,787
Total debt	Total debt	$	539,669	$	25,831	$	500,899	$	526,730						Total debt	$	419,083		$	26,023		$	385,556		$	411,579

Recourse debt refers to debt that we have an obligation to pay. Non-recourse debt refers to debt that is recourse to only our subsidiaries. The differences between the unpaid principal balances and the net carrying values apply to deferred financing costs. We and all of our subsidiaries were in compliance with all financial covenants as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

Recourse Debt Facilities

Please refer to Part II, Item 8, Note 7 - Outstanding Loans and Security Agreements in our Annual Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, for discussion of our 10.25% Senior Secured Notes due March 2027 and 2.5% Green Convertible Senior Notes due August 2025.

The non-current balance of the outstanding unpaid principal of the 10.25% Senior Secured Notes was $44.7 million and $48.9 million as of March 31, 2023 and December 31, 2022, respectively. The current balance of the outstanding unpaid principal of the 10.25% Senior Secured Notes was $13.0 million and $12.7 million as of March 31, 2023 and December 31, 2022, respectively.

Interest ~~expense~~ on the 2.5% Green Notes for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 was $1.9 million and ~~$5.8~~$1.9 million, respectively, including amortization of issuance costs of 0.5 million and $0.5 million, ~~and $1.5 million,~~ respectively.

Interest ~~expense~~ on the ~~Green~~10.25% Senior Secured Notes for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2023 and 2022 was ~~$1.9~~$1.7 million and ~~$5.8~~$1.7 million, respectively, including amortization of issuance costs of ~~$0.5~~$0.1 million and ~~$1.5~~$0.1 million, respectively.

Non-recourse Debt Facilities

Please refer to Part II, Item 8, Note 7 - Outstanding Loans and Security Agreements in our Annual Form 10-K for the fiscal year ended December 31, ~~2021~~2022 for discussion of our non-recourse debt.

~~Both note~~The purchase and credit ~~agreements require~~agreement for our 3.04% Senior Secured Notes due June 2031 requires us to maintain a debt service reserve, the ~~balances~~balance of which ~~are presented below (in millions):~~

September 30, December 31,
2022 2021

3.04% Senior Secured Notes due June 30, 2031 $ 8.0 $ 8.0
7.5% Term Loan due September 2028 — 3.6
6.07% Senior Secured Notes due March 2030 9.5 9.1

~~These debt service balances are~~was $8.0 million and $8.0 million as of March 31, 2023 and December 31, 2022, respectively, and was included as part of long-term restricted cash in the condensed consolidated balance sheets. ~~Both notes and the loan are secured by assets of respective PPAs.~~

~~7.5% Term Loan due September 2028~~
- On June 14, 2022, as part of the PPA IIIa Upgrade, we paid off the outstanding balance and related accrued interest of $30.2 million and $0.4 million, respectively, and recognized a loss on extinguishment of debt of $4.2 million. The debt service reserve of $3.6 million was reclassified from restricted cash to cash and cash equivalents at the time of extinguishment of debt.

Repayment Schedule and Interest Expense

The following table presents details of our outstanding loan principal repayment schedule as of ~~September 30, 2022~~March 31, 2023 (in thousands):


Remainder of 2022		$	6,755
2023		28,503
Remainder of 2023				Remainder of 2023	$	20,143
2024	2024	31,872		2024	25,623
2025	2025	265,494		2025	258,322
2026	2026	39,078		2026	30,912
2027				2027	18,116
Thereafter	Thereafter	120,492		Thereafter	56,075
		$	492,194		$	409,191

Interest expense of ~~$13.1~~$11.7 million and ~~$14.5~~$14.1 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, and 2021, respectively, was recorded in interest expense on the condensed consolidated statements of operations. Interest expense of $41.0 million and $43.8 million for the nine months ended September 30, 2022 and 2021, respectively, was recorded in interest expense on the condensed consolidated statements of operations.

~~8. Derivative Financial Instruments~~

~~Cash Flow Hedges~~

As of December 31, 2021, we had settled our interest rate swaps, which had been designated as cash flow hedges. There were no cash flow hedges as of September 30, 2022. The changes in fair value of the interest rate swaps designated as cash flow hedges and the amounts recognized in accumulated other comprehensive loss and in earnings were as follows during the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Beginning balance $ — $ 12,651 $ — $ 15,989
Loss (gain) recognized in other comprehensive loss — (264) — (2,548)
Amounts reclassified from other comprehensive loss to earnings — (499) — (1,483)
Net loss (gain) recognized in other comprehensive loss — (763) — (4,031)
Gain recognized in earnings — (35) — (105)
Ending balance $ — $ 11,853 $ — $ 11,853

~~Embedded EPP Derivatives in Sales Contracts~~

~~For information on embedded EPP Derivatives in sales contracts, see Part II, Item 8, Note 8 -~~ ~~Derivative Financial Instruments~~ ~~in our Annual Report on form 10-K for the fiscal year ended December 31, 2021.~~

9.8. Leases

Facilities, Energy Servers, and Vehicles

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, rent expense for all occupied facilities was ~~$5.0~~$5.6 million and ~~$14.2~~$4.5 million, respectively. ~~For the three and nine months ended September 30, 2021, rent expense for all occupied facilities was $4.4 million and $11.4 million, respectively.~~

Operating and ~~finance~~financing lease right-of-use assets and lease liabilities for facilities, Energy Servers, and vehicles as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were as follows (in thousands):


							March 31,		December 31,
		September 30,		December 31,			2023		2022
		2022		2021
Operating Leases:	Operating Leases:					Operating Leases:
Operating lease right-of-use assets, net 1, 2	Operating lease right-of-use assets, net 1, 2	$	114,053	$	106,660	Operating lease right-of-use assets, net 1, 2	$	129,377	$	126,955

Current operating lease liabilities	Current operating lease liabilities	(12,671)		(13,101)		Current operating lease liabilities	(16,148)		(16,227)
Non-current operating lease liabilities	Non-current operating lease liabilities	(122,412)		(106,187)		Non-current operating lease liabilities	(135,287)		(132,363)
Total operating lease liabilities	Total operating lease liabilities	$	(135,083)	$	(119,288)	Total operating lease liabilities	$	(151,435)	$	(148,590)

Finance Leases:	Finance Leases:					Finance Leases:
Finance lease right-of-use assets, net 2, 3, 4	Finance lease right-of-use assets, net 2, 3, 4	$	2,692	$	2,944	Finance lease right-of-use assets, net 2, 3, 4	$	2,814	$	2,824

Current finance lease liabilities		(988)		(863)
Non-current finance lease liabilities		(1,899)		(2,157)
Current finance lease liabilities5						Current finance lease liabilities5	(1,062)		(1,024)
Non-current finance lease liabilities6						Non-current finance lease liabilities6	(1,925)		(1,971)
Total finance lease liabilities	Total finance lease liabilities	$	(2,887)	$	(3,020)	Total finance lease liabilities	$	(2,987)	$	(2,995)
Total lease liabilities	Total lease liabilities	$	(137,970)	$	(122,308)	Total lease liabilities	$	(154,422)	$	(151,585)

1 These assets primarily include leases for facilities, Energy Servers, and vehicles.

2 Net of accumulated amortization.

3 These assets primarily include leases for vehicles.

4 Included in property, plant and equipment, net in the condensed consolidated balance ~~sheet.~~sheets.

5 Included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

6 Included in other long-term liabilities in the condensed consolidated balance sheets.

The components of our facilities, Energy Servers, and ~~vehicles'~~vehicles’ lease costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Operating lease costs $ 6,097 $ 3,925 $ 17,962 $ 10,620
Finance lease costs:
Amortization of finance lease right-of-use assets 230 214 750 1,096
Interest expense for finance lease liabilities 53 51 160 296
Total finance lease costs 283 265 910 1,392
Short-term lease costs 538 625 699 951
Total lease costs $ 6,918 $ 4,815 $ 19,571 $ 12,963


	Three Months Ended March 31,
		2023		2022

Operating lease costs		$	7,799	$	5,818
Financing lease costs:
Amortization of right-of-use assets		201		258
Interest on lease liabilities		62		54
Total financing lease costs		263		312
Short-term lease costs		444		36
Total lease costs		$	8,506	$	6,166

Weighted average remaining lease terms and discount rates for our facilities, Energy Servers and vehicles as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were as follows:

September 30, December 31,
2022 2021
Weighted average remaining lease term:
Operating leases 9.1 years 8.9 years
Finance leases 3.1 years 3.5 years
Weighted average discount rate:
Operating leases 10.0 % 9.6 %
Finance leases 7.6 % 7.6 %


	March 31,		December 31,
	2023		2022

Weighted average remaining lease term:
Operating leases	8.4 years		8.6 years
Finance leases	3.3 years		3.3 years
Weighted average discount rate:
Operating leases	10.4	%	10.3	%
Finance leases	8.8	%	6.9	%

Future lease payments under lease agreements for our facilities, Energy Servers and vehicles as of ~~September 30, 2022~~March 31, 2023 were as follows (in thousands):

Operating Leases Finance Leases
Remainder of 2022 $ 6,365 $ 281
2023 24,688 1,121
2024 23,028 948
2025 23,504 461
2026 23,332 222
Thereafter 54,170 73
Total minimum lease payments 155,087 3,106
Less: amounts representing interest or imputed interest (20,004) (219)
Present value of lease liabilities $ 135,083 $ 2,887


	Operating Leases		Finance Leases

Remainder of 2023	$	23,382	$	989
2024	27,421		1,147
2025	28,158		662
2026	28,304		421
2027	27,014		249
Thereafter	95,503		27
Total minimum lease payments	229,782		3,495
Less: amounts representing interest or imputed interest	(78,347)		(508)
Present value of lease liabilities	$	151,435	$	2,987

Managed Services and Portfolio Financings Through PPA Entities

Managed Services - We recognized $7.3 million of product revenue, $3.0 million of installation revenue, $1.2 million of financing obligations, and $5.5 million of right-of-use assets and lease liabilities from successful sale and leaseback transactions for the three months ended March 31, 2023. There were no successful sale and leaseback transactions for the three months ended March 31, 2022.

The recognized lease expense from successful sale and leaseback transactions for the three months ended March 31, 2023 and 2022 was $2.1 million and $1.3 million, respectively.

At ~~September 30, 2022,~~March 31, 2023, future lease payments under the Managed Services Agreements financing obligations were as follows (in thousands):


		Financing Obligations			Financing Obligations
Remainder of 2022		$	10,889
2023		44,124

Remainder of 2023				Remainder of 2023	$	33,874
2024	2024	42,051		2024	43,014
2025	2025	41,025		2025	41,998
2026	2026	36,426		2026	37,410
2027				2027	21,065
Thereafter	Thereafter	55,508		Thereafter	36,608
Total minimum lease payments	Total minimum lease payments	230,023		Total minimum lease payments	213,969
Less: imputed interest	Less: imputed interest	(128,150)		Less: imputed interest	(116,158)
Present value of net minimum lease payments	Present value of net minimum lease payments	101,873		Present value of net minimum lease payments	97,811
Less: current financing obligations	Less: current financing obligations	(16,682)		Less: current financing obligations	(20,272)
Long-term financing obligations	Long-term financing obligations	$	85,191	Long-term financing obligations	$	77,539

The long-term financing obligations, as reflected in our condensed consolidated balance sheets, were ~~$443.7~~$436.3 million and ~~$461.9~~$442.1 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The difference between these obligations and the principal obligations in the table above will be offset against the carrying value of the related Energy Servers at the end of the lease and the remainder recognized as a gain at that point.

Portfolio Financings through PPA Entities

~~The components of our aggregate net investment in~~- Customer arrangements entered into prior to January 1, 2020 under Portfolio Financing arrangements through a PPA Entity that qualified as leases are accounted for as either sales-type leases or operating leases. Since January 1, 2020, we have not entered into any new PPAs with customers under ~~our Portfolio Financings through PPA entities consisted of the following (in thousands):~~

September 30, December 31,
2022 2021
Lease payment receivables, net1
$ — $ 44,378
Estimated residual value of leased assets (unguaranteed) — 890
Net investment in sales-type leases — 45,268
Less: current portion — (5,784)
Non-current portion of net investment in sales-type leases $ — $ 39,484

1 ~~Net of current estimated credit losses of approximately $0.1 million as of December 31, 2021.~~such arrangements.

~~As of September 30, 2022, there was no net investment in sales-type leases as a result of PPA IIIa Repowering. Please refer to Note 11 -~~ ~~Portfolio Financing~~ ~~for details.~~

~~As of September 30, 2022, future~~Future estimated operating ~~minimum~~ lease payments we expect to receive from Portfolio Financing arrangements through PPA ~~Entities~~V Entity as of March 31, 2023, were as follows (in thousands):


		Operating Leases			Operating Leases
Remainder of 2022		$	9,582
2023		37,608

Remainder of 2023				Remainder of 2023	$	15,668
2024	2024	40,067		2024	21,238
2025	2025	42,589		2025	21,630
2026	2026	43,761		2026	22,092
2027				2027	22,566
Thereafter	Thereafter	197,868		Thereafter	85,009
Total minimum lease payments	Total minimum lease payments	$	371,475	Total minimum lease payments	$	188,203

~~10.~~

9. Stock-Based Compensation ~~Expense~~ and Employee Benefit Plans

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense in the condensed consolidated statements of operations (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022

Cost of revenue	Cost of revenue	$	4,982	$	2,945	$	13,609	$	9,749	Cost of revenue		$	4,161	$	3,860
Research and development	Research and development	4,818		5,678		25,113		15,876		Research and development		8,410		7,082
Sales and marketing	Sales and marketing	3,948		4,391		13,528		12,486		Sales and marketing		5,817		4,775
General and administrative	General and administrative	10,283		7,952		30,688		19,198		General and administrative		11,165		10,591
		$	24,031	$	20,966	$	82,938	$	57,309			$	29,553	$	26,308

Stock Option Activity

The following table summarizes the stock option activity under our stock plans during the reporting period:

Outstanding Options
Number of
Shares Weighted
Average
Exercise
Price Remaining
Contractual
Life (Years) Aggregate
Intrinsic
Value
(in thousands)
Balances at December 31, 2021 10,737,295 $ 21.23 5.2 $ 60,304
Exercised (468,821) 7.52
Forfeited (42,742) 6.97
Expired (1,229,091) 30.38
Balances at September 30, 2022 8,996,641 20.77 4.8 45,054
Vested and expected to vest at September 30, 2022 8,985,005 20.78 4.8 44,901
Exercisable at September 30, 2022 8,598,209 $ 21.46 4.7 39,364


	Outstanding Options
	Number of Shares	Weighted Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
	(in thousands)
Balances at December 31, 2022	8,748,309	$	20.70	4.6	40,532

Exercised	(114,526)	6.71

Expired	(156,405)	30.45
Balances at March 31, 2023	8,477,378	20.71		4.4	42,208
Vested and expected to vest at March 31, 2023	8,474,492	20.71		4.4	42,171
Exercisable at March 31, 2023	8,417,352	$	20.81	4.4	41,425

Stock Options - During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, we recognized ~~$1.2~~$0.2 million and ~~$6.7~~$2.1 million of stock-based compensation ~~expense~~costs for stock options, respectively. ~~During the three and nine months ended September 30, 2021, we recognized $2.7 million and $10.0 million of stock-based compensation expense for stock options, respectively.~~

We did not grant options in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had unrecognized compensation ~~expense~~costs related to unvested stock options of ~~$0.8~~$0.2 million and ~~$6.2~~$0.4 million, respectively. This ~~expense~~cost is expected to be recognized over the remaining weighted-average period of ~~0.5 years~~1.0 year and 0.9 years, respectively. Cash received from stock options exercised totaled ~~$3.6~~$0.8 million and ~~$62.1~~$1.0 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

Stock Award Activity

A summary of our stock awards activity and related information is as follows:


		Number of Awards Outstanding	Weighted Average Grant Date Fair Value			Number of Awards Outstanding	Weighted Average Grant Date Fair Value

Unvested Balance at December 31, 2021		8,367,664	$	20.52
Unvested Balance at December 31, 2022					Unvested Balance at December 31, 2022	9,549,035	$	19.99
Granted	Granted	4,945,001	19.69		Granted	4,115,300	18.99
Vested	Vested	(2,328,713)	17.59		Vested	(2,104,904)	17.81
Forfeited	Forfeited	(900,629)	21.76		Forfeited	(126,807)	28.80
Unvested Balance at September 30, 2022		10,083,323	19.99
Unvested Balance at March 31, 2023					Unvested Balance at March 31, 2023	11,432,624	$	19.93

Stock Awards - The estimated fair value of ~~restricted stock units (“RSUs”)~~RSUs and ~~performance stock units (“PSUs”)~~PSUs is based on the fair value of our Class A common stock on the date of grant. ~~During~~For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, we recognized ~~$18.4~~$22.6 million and ~~$64.4~~$21.0 million of stock-based compensation ~~expense for stock awards, respectively. During the three and nine months ended September 30, 2021, we recognized $15.8 million and $40.6 million of stock-based compensation expense~~costs for stock awards, respectively.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~$155.2~~$187.0 million and ~~$114.9~~$135.7 million of unrecognized stock-based compensation expense related to unvested stock awards, expected to be recognized over a weighted average period of ~~2.1~~2.2 years and ~~2.3~~1.9 years, respectively.

Executive Awards

On February 15, 2023, the Company granted RSU and PSU awards (the “2023 Executive Awards”) to certain executive staff pursuant to the 2018 Plan. The RSUs have time-based vesting schedules, started vesting on February 15, 2023 and shall vest over a three year period. PSUs started vesting on February 15, 2023 and have a three-year cliff vesting period. PSUs will vest based on a combination of time and achievement against performance metrics targets assuming continued employment and service through each vesting date. Stock-based compensation costs associated with the 2023 Executive Awards are recognized over the service period as we evaluate the probability of the achievement of the performance conditions.

The following table presents the stock activity ~~for the nine months ended September 30, 2022,~~ and the total number of shares available for grant under our stock ~~plans as of September 30, 2022:~~plans:


						Plan Shares Available for Grant

Balances at December 31, ~~2021~~2022						~~24,146,784~~28,340,641
Added to plan						~~8,384,460~~8,948,255
Granted						~~(4,981,732)~~(3,851,435)

Cancelled/Forfeited						~~2,062,177~~223,447
Expired						~~(1,196,565)~~(138,839)
Balances at ~~September 30, 2022~~March 31, 2023						~~28,415,124~~33,522,069

2018 Employee Stock Purchase Plan

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we recognized ~~$11.2~~$6.5 million and ~~$4.5~~$2.5 million of stock-based compensation ~~expense~~costs for the 2018 ~~Employee Stock Purchase Plan,~~ESPP, respectively. We issued ~~759,744~~449,525 and ~~1,945,305~~420,689 shares in the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. During the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we added an additional ~~12,055,792~~2,239,563 and 2,055,792 shares and ~~1,902,572 shares, respectively. There~~there were ~~13,840,716 shares~~15,630,754 and ~~2,544,668~~13,840,716 shares available for issuance as of ~~September 30,~~March 31, 2023 and December 31, 2022, ~~and 2021,~~ respectively.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~$10.4~~$21.3 million and ~~$9.8~~$12.0 million of unrecognized stock-based compensation ~~expense,~~costs, expected to be recognized over a weighted average period of ~~1.1~~0.9 years and ~~0.5~~0.6 years, respectively.

2723

~~11.~~10. Portfolio Financings

Overview

We have developed various financing options that enable ~~customers'~~customers’ use of the Energy Servers through third-party ownership financing arrangements. For additional information on these financing options, see our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

PPA ~~IIIa Repowering of Energy Servers~~

PPA IIIa was established in 2012 and we, through a special purpose subsidiary (the “Project Company”), had previously entered into certain agreements for the purpose of developing, financing, owning, operating, maintaining and managing a portfolio of 9.8 megawatts of Energy Servers.

On March 31, 2022, we entered into a Membership Interest Purchase Agreement where we bought out the equity interest of the third-party investor, wherein the PPA IIIa became wholly owned by us (the “Buyout”).

Following the Buyout and prior to June 14, 2022, we repaid all outstanding debt of the Project Company of $30.6 million, and recognized loss on extinguishment of debt in an amount of $4.2 million, which includes the write-off of the debt discount related to warrants of $1.8 million and a make-whole payment of $2.4 million associated with the debt extinguishment. Refer to Note 7 - ~~Outstanding Loans and Security Agreements, Non-recourse Debt Facilities~~ ~~section.~~

On June 14, 2022, we sold our 100% interest in the Project Company to Generate C&I Warehouse, LLC (“Generate”) through a Membership Interest Purchase Agreement (“MIPA”). Simultaneously, we entered into an agreement with the Project Company to upgrade the old 9.8 megawatts of Energy Servers (the “old Energy Servers”) by replacing them with a newer generation of Energy Servers (“new Energy Servers”) and providing related installation services, which was financed by Generate (the “EPC Agreement”). The old Energy Servers will be removed prior to installing the new Energy Servers, whereby upon completion of installation the old Energy Servers will be returned to Bloom. We also amended and restated our operations and maintenance agreement with the Project Company to cover all new Energy Servers and old Energy Servers prior to their upgrade (“the O&M Agreement”). The operations and maintenance fees under the O&M Agreement are paid on a fixed dollar per kilowatt basis.

Certain power purchase agreements within the PPA IIIa portfolio were classified as sales-type leases under ASC 840, while some were classified as operating leases. The Company elected the practical expedient package with the adoption of ASC 842, which allowed the Company to carry forward the lease classification upon adoption of ASC 842 on January 1, 2020. The leases were modified prior to the sale of the PPA IIIa to Generate. Such modified leases were reassessed and determined to not be leases under ASC 842 because customers have no control over the identified assets. Accordingly, on the date of modification, the customer financing receivables were derecognized and recognized as property, plant, and equipment (“PPA IIIa PP&E”).

Due to our repurchase option on the old Energy Servers, the Company concluded there was no transfer of control of the old Energy Servers upon sale of the membership interest to Generate. Accordingly, the Company continued to recognize the old Energy Servers, despite the legal ownership of such assets under the MIPA. Upon reclassification of the lease assets to PP&E, the Company assessed the recorded assets for impairment. The carrying amount of the PPA IIIa PP&E was determined to be not recoverable as the net undiscounted cash flows are less than the carrying amounts for PPA IIIa PP&E. Therefore, we recognized the asset impairment charge as electricity cost, consistent with depreciation expense classification for property, plant and equipment under leases.

The PPA IIIa Upgrade was in progress as of September 30, 2022 and resulted in the following summarized impacts on our condensed consolidated balance sheet as of September 30, 2022: (i) cash and cash equivalents increased by $17.7 million mainly due to $54.7 million cash receipts from the sale of new Energy Servers to the Project Company, offset by $30.6 million for the repayment of outstanding debt, (ii) both customer financing receivables, current and non-current, and property plant and equipment, net decreased by $5.9 million, $36.9 million and $2.2 million, respectively, due to the impairment of $44.8 million and accelerated depreciation of $0.2 million of the existing old Energy Servers (we revised the expected useful life of the old Energy Servers from 15 years to approximately 0.5 years which resulted in recognized accelerated depreciation of $0.2 million in electricity cost of revenue (see Note 6)), (iii) contract assets increased by $5.0 million, (iv) inventories and deferred cost of revenue decreased by $24.1 million, and (v) other liabilities increased by $4.7 million. Impacts on our condensed consolidated statements of operations for the three and nine months ended September 30, 2022 are summarized as follows: (i) net product and installation revenue recognized of $12.7 million and $2.1 million and $49.6 million and $3.2 million, respectively, as a

result of the sale of new Energy Servers; (ii) cost of electricity revenue of nil and $45.0 million, respectively, including the write-off of old Energy Servers of nil and $44.8 million, respectively, accelerated depreciation of nil and $0.2 million, respectively, prior to the completion of installation; (iii) cost of product and installation revenue of $5.7 million and $1.7 million and $21.6 million and $2.5 million, respectively, due to the sale of new Energy Servers; and (iv) nil and $4.2 million, respectively, of loss on extinguishment of debt.

Impacts on our condensed consolidated statements of cash flows for the nine months ended September 30, 2022 are summarized as follows: net cash provided by financing activities decreased by $32.6 million due to the repayment of debt of $30.2 million and cash fee of $2.4 million associated with debt extinguishment.

~~PPA Entities’~~Entity's Aggregate Assets and Liabilities

Generally, the assets of an operating company owned by an investment company can be used to settle only the operating company obligations, and the operating company creditors do not have recourse to us. The following ~~are~~were the aggregate carrying values of our ~~VIEs'~~VIE’s assets and liabilities in our condensed consolidated balance sheets, after eliminations of intercompany transactions and balances, including ~~as of September 30, 2022 each of~~for the PPA ~~Entities~~Entity in ~~the PPA IV transaction and the PPA V transaction, and as of December 31, 2021 each of the PPA Entities in the PPA IIIa transaction, the PPA IV transaction and the PPA V transaction (in thousands):~~

September 30, December 31,
2022 2021
Assets
Current assets:
Cash and cash equivalents $ 1,265 $ 1,541
Restricted cash 980 3,078
Accounts receivable 3,170 5,112
Customer financing receivable — 5,784
Prepaid expenses and other current assets 2,766 3,071
Total current assets 8,181 18,586
Property, plant and equipment, net 208,208 228,546
Customer financing receivable — 39,484
Restricted cash 17,508 23,239
Other long-term assets 1,994 2,362
Total assets $ 235,891 $ 312,217
Liabilities
Current liabilities:
Accrued expenses and other current liabilities $ 111 $ 194
Deferred revenue and customer deposits 662 662
Non-recourse debt 15,943 17,483
Total current liabilities 16,716 18,339
Deferred revenue and customer deposits 4,915 5,410
Non-recourse debt 179,955 217,417
Total liabilities $ 201,586 $ 241,166

~~We consolidated each PPA Entity as VIEs in the PPA IV transaction and~~ the PPA V transaction as ~~we remain~~of March 31, 2023 and December 31, 2022 (in thousands):



	March 31,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	1,815	$	5,008
Restricted cash	350		550
Accounts receivable	1,820		2,072

Prepaid expenses and other current assets	1,322		1,927
Total current assets	5,307		9,557
Property, plant and equipment, net	129,722		133,285

Restricted cash	8,000		8,000
Other long-term assets	1,742		1,869
Total assets	$	144,771	$	152,711

Liabilities
Current liabilities:

Accrued expenses and other current liabilities	$	19	$	1,037
Deferred revenue and customer deposits	662		662
Non-recourse debt	11,435		13,307
Total current liabilities	12,116		15,006
Deferred revenue and customer deposits	4,585		4,748
Non-recourse debt	108,564		112,480

Total liabilities	$	125,265	$	132,234

We consolidated the ~~minority shareholder~~PPA Entity as a VIE in ~~each of these transactions but~~the PPA V transaction, as we have determined that we are the primary beneficiary of ~~these VIEs. These~~this VIE. This PPA ~~Entities contain~~Entity contains debt that is non-recourse to us and ~~own~~owns Energy Server assets for which we do not have title.

~~12.~~11. Related Party Transactions

There have been no changes in related party relationships during the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. For information on our related ~~parties,~~party transactions, see Part II, Item 8, Note 12 -Related Party Transactionsin our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Our operations include the following related party transactions (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021
Total revenue from related parties $ 12,532 $ 3,333 $ 30,231 $ 8,227


	Three Months Ended March 31,
	2023		2022

Total revenue from related parties	$	833	$	7,466

Below is the summary of outstanding related party balances as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in ~~millions)~~thousands):

September 30, December 31,
2022 2021

Accounts receivable $ 12.5 $ 4.4


	March 31,		December 31,
	2023		2022

Accounts receivable	$	—	$	4,257

Debt to Related Parties

We had no debt or convertible notes from investors considered to be related parties as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

~~13.~~12. Commitments and Contingencies

Commitments

Purchase Commitments with Suppliers and Contract Manufacturers - In order to reduce manufacturing lead-times and to ensure an adequate supply of inventories, we have agreements with our component suppliers and contract manufacturers to allow long lead-time component inventory procurement based on a rolling production forecast. We are contractually obligated to purchase long lead-time component inventory procured by certain manufacturers in accordance with our forecasts. We can generally give notice of order cancellation at least 90 days prior to the delivery date. However, we issue purchase orders to our component suppliers and third-party manufacturers that may not be cancellable. As of September 30, 2022, we had a commitment with NetJets to purchase a fractional interest in one of its jets, which is to be used for corporate travel purposes, in the amount of approximately $3.4 million. The jet is expected to be delivered by July of 2023. As ofMarch 31, 2023 and December 31, ~~2021,~~2022, we had no material open purchase orders with our component suppliers and third-party manufacturers that are not cancellable.

~~Portfolio Financings~~ Performance Guarantees - We guarantee the performance of Energy Servers at certain levels of output and efficiency to our customers over the contractual term. We monitor the need for any accruals arising from such guaranties, which are calculated as the difference between committed and actual power output or between natural gas consumption at warranted efficiency levels and actual consumption, multiplied by the contractual rates with the customer. Amounts payable under these guaranties are accrued in periods when the guaranties are not met and are recorded contra service revenue in the condensed consolidated statements of operations. We paid ~~$1.3~~$15.8 million and ~~$0.2~~$0.3 million ~~in performance guarantees~~ for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively.~~respectively, for such performance guarantees.

Letters of Credit - In 2019, pursuant to the PPA II upgrade of Energy Servers, we agreed to indemnify our financing partner for losses that may be incurred in the event of certain regulatory, legal or legislative development and established a cash-collateralized letter of credit facility for this purpose. ~~There were no letters of credit or pledged funds associated with the PPA IIIa Upgrade.~~ As of ~~September 30, 2022,~~March 31, 2023, the balance of this cash-collateralized letter of credit was ~~$69.0~~$54.7 million, of which $33.3 million and ~~$35.7~~$21.4 million is recognized as short-term and long-term restricted cash, respectively. As of December 31, ~~2021,~~2022, the balance of this cash-collateralized letter of credit was ~~$99.4~~$69.1 million, of which ~~$41.7~~$40.6 million and ~~$57.7~~$28.5 million is recognized as short-term and long-term restricted cash, respectively.

Pledged Funds - In 2019, pursuant to the PPA IIIb ~~refinancing and energy servers~~ upgrade ~~program,~~of Energy Servers, we ~~pledged~~established a restricted cash fund of $20.0 million, which had been pledged for a seven-year period to secure our operations and maintenance obligations with respect to the totality of our obligations to the financier. ~~We categorized the $20.0 million as restricted cash on our condensed consolidated balance sheet. It was agreed all~~All or a portion of such funds would be released if we meet certain credit rating and/or market capitalization milestones prior to the end of the pledge period. If we do not meet the required criteria within the first five-year period, the funds would still be released to us over the following two years as long as the ~~energy servers~~Energy Servers continue to perform in compliance with our warranty obligations. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the balance of the long-term restricted cash fund was $6.7 million and $6.7 ~~million.~~million, respectively.

Contingencies

Indemnification Agreements - We enter into standard indemnification agreements with our customers and certain other business partners in the ordinary course of business. Our exposure under these agreements is unknown because it involves future claims that may be made against us but have not yet been made. To date, we have not paid any claims or been required to defend any action related to our indemnification obligations. However, we may record charges in the future as a result of these indemnification obligations.

Delaware Economic Development Authority - In March 2012, we entered into an agreement with the Delaware Economic Development Authority to provide a grant of $16.5 million to us as an incentive to establish a new manufacturing facility in Delaware and to provide employment for full time workers at the facility over a certain period of time. We have so far received $12.0 million of the grant, which is contingent upon meeting the milestones through September 30, 2023. In the event that we do not meet the milestones, we may have to repay the Delaware Economic Development Authority, up to an additional $2.5 million on September 30, 2023. We repaid $1.5 million and $1.0 million of the grant in 2017 and 2021, respectively. As of September 30, 2022 the grant became current, and we have recorded $9.5 million in accrued expenses and other current liabilities for future repayments of this ~~grant. As~~grant as of March 31, 2023 and December 31, ~~2021, we have recorded $9.5 million in other long-term liabilities for potential future repayments of this grant.~~2022, respectively.

Investment Tax Credits -~~For information on ITCs, see Part II, Item 8, Note 13 -~~ ~~Commitments and Contingencies~~ ~~on our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Please also refer to Note 1 -~~ ~~Nature of Business, Liquidity and Basis of Presentation~~ Our Energy Servers are eligible for ~~discussion~~federal ITCs that accrued to qualified property under Internal Revenue Code Section 48 when placed into service. However, the ITC program has operational criteria that extend for five years. If the energy property is disposed of or otherwise ceases to be qualified investment ~~tax credits implemented~~credit property before the close of the five-year recapture period is fulfilled, it could result in a partial reduction of the incentives. Energy Servers are purchased by the ~~IRA.~~PPA Entities, other financial sponsors, or customers and, therefore, these parties bear the risk of repayment if the assets placed in service do not meet the ITC operational criteria in the future although in certain limited circumstances we do provide indemnification for such risk.

Legal Matters - We are involved in various legal proceedings that arise in the ordinary course of business. We review all legal matters at least quarterly and assess whether an accrual for loss contingencies needs to be recorded. We record an accrual for loss contingencies when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Legal matters are subject to uncertainties and are inherently unpredictable, so the actual liability in any such matters may be materially different from our estimates. If an unfavorable resolution were to occur, there exists the possibility of a material adverse impact on our condensed consolidated ~~financial condition,~~balance sheets, results of operations or cash flows for the period in which the resolution occurs or onin future periods.

In March 2019, the Lincolnshire Police Pension Fund filed a class action complaint in the Superior Court of the State of California, County of Santa Clara, against us, certain members of our senior management, certain of our directors and the underwriters in our July 25, 2018 IPO alleging violations under Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”), for alleged misleading statements or omissions in our Registration Statement on Form S-1 filed with the SEC in connection with the IPO. Two related class action cases were subsequently filed in the Santa Clara County Superior Court against the same defendants containing the same allegations; Rodriquez vs Bloom Energy et al. was filed on April 22, 2019 and Evans vs Bloom Energy et al. was filed on May 7, 2019. These cases have been consolidated. ~~Plaintiffs'~~Plaintiffs’ consolidated amended complaint was filed with the court on September 12, 2019. On October 4, 2019, defendants moved to stay the lawsuit pending the federal district court action discussed below. On December 7, 2019, the Superior Court issued an order staying the action through resolution of the parallel federal litigation mentioned below. We believe the complaint to be without merit and in contravention of our forum selection clause in our Restated Certificate of Incorporation and we intend to defend this action vigorously. We are unable to estimate any range of reasonably possible losses.

In May 2019, Elissa Roberts filed a class action complaint in the federal district court for the Northern District of California against us, certain members of our senior management team, and certain of our directors alleging violations under ~~Section~~Sections 11 and 15 of the Securities Act for alleged misleading statements or omissions in our Registration Statement on Form S-1 filed with the SEC in connection with the IPO. On September 3, 2019, the court appointed a lead plaintiff and lead plaintiffs’ counsel. On November 4, 2019, plaintiffs filed an amended complaint adding the underwriters in the IPO and our auditor as defendants for the Section 11 claim, as well as adding claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against us, and certain members of our senior management team. The amended complaint alleged a class period for all claims from the time of our IPO until September 16, 2019. On April 21, 2020, plaintiffs filed a second amended complaint, which continued to make the same claims and added allegations pertaining to the restatement and, as to claims under the Exchange Act, extended the putative class period through February 12, 2020. On July 1, 2020, we and the other defendants filed ~~a motion~~motions to dismiss the second amended complaint. On September 29, 2021, the court entered an order dismissing with leave to amend (1) five of seven statements or groups of statements alleged to violate Sections 11 and 15 of the Securities Act and (2) all allegations under the Exchange Act. All allegations against our auditors were also

dismissed. Plaintiffs elected not to amend the complaint and instead on October 22, 2021 filed a motion for entry of final judgment in favor of our auditors so that plaintiffs could appeal the dismissal of those claims. The court denied that motion on December 1, 2021 and in response plaintiffs ~~have~~ filed a motion asking the court to certify an interlocutory appeal as to the accounting claims. The court denied ~~plaintiff’s~~plaintiffs’ motion on April 14, 2022. ~~Separately, the~~The claims for violation of Sections 11 and 15 of the Securities Act that were not dismissed by the court ~~are~~entered the discovery phase.

On January 6, 2023, Bloom and the plaintiffs’ entered into an agreement in principle to settle the claims against Bloom, its executives and directors, and the IPO underwriters for a payment of $3 million, which will be funded entirely by our insurers. If the settlement becomes effective, it will result in a dismissal with prejudice of all claims against us, our executives and directors, and the underwriters. The settlement does not constitute an acknowledgement of liability or wrongdoing. This settlement is conditioned on the execution of a definitive settlement agreement containing the foregoing terms and customary terms for class action settlements, and approval of the settlement by the court. If the court does not approve the settlement and all of its material terms, or the settlement does not otherwise become final or effective, proceedings in the ~~discovery phase. A case schedule has been set, with a trial scheduled for December 2023. We believe the claims to be without merit and we intend to defend this~~ action ~~vigorously.~~

~~We are unable to predict the outcome of this litigation at this time and accordingly are not able to estimate any range of reasonably possible losses.~~

In September 2019, we received a books and records demand from purported stockholder Dennis Jacob (“Jacob Demand”). The Jacob Demand cites allegations from the September 17, 2019 report prepared by admitted short seller Hindenburg Research. In November 2019, we received a substantially similar books and records demand from the same law firm on behalf of purported stockholder Michael Bolouri (“Bolouri Demand” and, together with the Jacob Demand, the “Demands”). On January 13, 2020, Messrs. Jacob and Bolouri filed a complaint in the Delaware Court of Chancery to enforce the Demands in the matter styled ~~Jacob, et al. v. Bloom Energy Corp.~~, C.A. No. 2020-0023-JRS. On March 9, 2020, Messrs. Jacob and Bolouri filed an amended complaint in the Delaware Court of Chancery to add allegations regarding the restatement. The court held a one-day trial on December 7, 2020. On February 25, 2021, the Delaware Court of Chancery issued a decision rejecting the Bolouri Demand but granting in part the Jacob Demand allowing limited access to certain books and records pertaining to the allegations made in the Hindenburg Research Report. On March 29, 2021, the Court of Chancery entered a Final Order and Judgment regarding the required production of documents. On April 28, 2021, we produced documents to Mr. Jacob responsive to the Final Order and Judgment. We are unable to estimate any range of reasonably possible losses.will continue.

In June 2021, we filed a petition for writ of mandate and a complaint for declaratory and injunctive relief in the Santa Clara Superior Court against the City of Santa Clara for failure to issue building permits for two of our customer installations and asking the court to require the City of Santa Clara to process and issue the building permits. In October 2021, we filed an amended petition and complaint that asserts additional constitutional and tort claims based on the City’s failure to timely issue the Energy Server permits. Discovery has commenced and we are aggressively pursuing all claims. On February 4, 2022, the City of Santa Clara filed a ~~Demurrer~~demurrer seeking to dismiss all of the Company’s claims. The trial judge rejected the ~~Demurrer~~demurrer on all claims except one, and allowed Bloom leave to amend that claim. The ~~We filed the~~ second amended petition was filed on July 1,5, 2022. The City of Santa Clara demurred only to ~~one~~the amended cause of action seeking damages for tortious ~~conduct;~~conduct. The trial judge granted that demurrer and struck the ~~hearing is scheduled for~~tort claim on October 27, ~~2022.~~2022; the writ of mandate and constitutional claims were allowed to proceed. The ~~next Status Conference with~~parties are currently briefing the ~~judge is scheduled for September December 115, 2022. If we are unable~~writ of mandate claims which seek immediate issuance of the building permits. On April 21, 2023, the parties executed a settlement agreement which allows our two pending customer installations to ~~secure~~proceed under building permits ~~for these customer~~and requires the City to amend its zoning code so that future installations ~~in a timely fashion, our customers will terminate their contracts with us and select another energy provider. In addition, if we are no longer able to install our~~of Bloom Energy Servers in Santa Clara ~~under~~require only building ~~permits, we may not be able to secure future customer bookings for installation in the City of Santa Clara.~~permits.

In February 2022, Plansee SE/Global Tungsten & Powders Corp. (“Plansee/GTP”), a former supplier, filed a request for expedited arbitration with the World Intellectual Property Organization Arbitration and Mediation Center in Geneva Switzerland (“WIPO”), for various claims allegedly in relation to an Intellectual Property and Confidential Disclosure Agreement between Plansee/GTP and Bloom Energy Corporation. Plansee/GTP’s statement of claims includes allegations of infringement of U.S. Patent Nos. 8,802,328, 8,753,785 and 9,434,003. On April 3, 2022, we filed a complaint against Plansee/GTP in the Eastern District of Texas to address the dispute between Plansee/GTP and Bloom Energy Corporation in a proper forum before a U.S. Federal District Court. Our complaint seeks the correction of inventorship of U.S. Patent Nos. 8,802,328, 8,753,785 and 9,434,003 (the “Patents-in-Suit”); declaratory judgment of invalidity, unenforceability, and non-infringement of the Patents-in-Suit; and declaratory judgment of no misappropriation. Further, our complaint seeks to recover damages ~~hawse~~we have suffered in relation to Plansee/GTP’s business dealings that, as alleged, constitute acts of unfair competition, tortious interference contract, breach of contract, violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act and violations of the Clayton Antitrust Act. On June 9, 2022, Plansee/GTP filed a motion to dismiss the complaint filed in the Eastern District of Texas and compel arbitration (or alternatively to stay). We filed our opposition on June 30, 2022, Plansee/~~GTP’s~~GTP filed its reply on July 14, 2022 and we filed our sur-reply on July 22, 2022. ~~We await~~On February 9, 2023, Magistrate Judge Payne issued a ~~ruling on~~report and recommendation to stay the ~~matter~~district court action pending an arbitrability determination by the arbitrator for each claim.

On February 23, 2023, we filed an amended complaint adding additional causes of action and filed objections to the Magistrate’s report and recommendation. On April 26, 2023, Judge Gilstrap overruled our objections to the Magistrate’s report and recommendation and stayed the district court action pending arbitrability determinations by the arbitrator in the ~~interim, discovery has commenced~~WIPO proceeding. The arbitration had been held in ~~Federal~~abeyance awaiting the District ~~Court.~~Court’s decision. Given that the District Court matter is stayed and the WIPO arbitration had been held in abeyance, the cases are still in their early ~~stages, we~~stages. We are unable to predict the ultimate outcome of the arbitration and district court action at this ~~time, and accordingly are not able to estimate a range of reasonably possible losses.~~time.

~~14.~~

13. Income Taxes

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, we recorded an income tax provisions of $0.3 million and $0.9 million, respectively, on pre-tax losses of $60.1 million and $263.4 million for effective tax rates of (0.6)% and (0.3)%, respectively. For the three and nine months ended September 30, 2021, we recorded income tax provisions of $0.2 million and $0.6 million on pre-tax losses of ~~$56.5~~$74.7 million and ~~$144.3~~$82.2 million for effective tax rates of (0.3)% and ~~(0.4)~~(0.7)%, respectively.

The effective tax rate for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ is lower than the statutory federal tax rate primarily due to a full valuation allowance against U.S. deferred tax assets.

~~U.S. tax law changes~~

On August 16, 2022, the United States government enacted the Inflation Reduction Act of 2022 (“IRA”). The IRA establishes a new corporate alternative minimum tax based on financial statement income adjusted for certain items. The new minimum tax is effective for tax years beginning after December 31, 2022. The enactment of the IRA did not have a material impact to the Company’s financial statements for the three and nine months ended September 30, 2022 and 2021, but we are currently assessing the impact of the production and tax credit-related IRA provisions on our business for future quarters.

~~15.~~14. Net Loss per Share Available to Common Stockholders

Please refer to the condensed consolidated statements of operations for computation of our net loss per share available to common stockholders, basic and diluted.

The following common stock equivalents (in thousands) were excluded from the computation of our net loss per share available to common stockholders, diluted, for the three ~~and nine~~ months presented as their inclusion would have been antidilutive (in thousands):


							Three Months Ended March 31,
		Three Months Ended September 30,		Nine Months Ended September 30,				2023	2022
		2022	2021	2022	2021
Convertible notes	Convertible notes	14,187	14,187	14,187	14,187	Convertible notes		14,187	14,187
Redeemable convertible preferred stock	Redeemable convertible preferred stock	10,000	—	10,000	—	Redeemable convertible preferred stock		1,349	11,000
Stock options and awards	Stock options and awards	6,445	5,415	5,503	6,998	Stock options and awards		6,413	4,949

		30,632	19,602	29,690	21,185			21,949	30,136

15. SK ecoplant Strategic Investment

In October 2021, we expanded our existing relationship with SK ecoplant. As part of this arrangement, we amended the previous Preferred Distribution Agreement (“PDA”) and Joint Venture Agreement (“JVA”) with SK ecoplant. The restated PDA establishes SK ecoplant’s purchase commitments for our Energy Servers for the three year period on a take or pay basis as well as the basis for determining the prices at which the Energy Servers and related components will be sold. The restated JVA increases the scope of assembly done by the joint venture facility in the Republic of Korea, which was established in 2019, for the procurement of local parts for our Energy Servers and the assembly of certain portions of the Energy Servers for the South Korean market. The joint venture is a VIE of Bloom and we consolidate it in our financial statements as we are the primary beneficiary and therefore have the power to direct activities which are most significant to the joint venture.

The following are the aggregate carrying values of the Korean joint venture’s assets and liabilities in our condensed consolidated balance sheets, after eliminations of intercompany transactions and balances, as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	902	$	2,591
Accounts receivable	—		4,257
Inventories	14,524		13,412
Prepaid expenses and other current assets	1,070		2,645
Total current assets	16,496		22,905
Property and equipment, net	1,081		1,141
Operating lease right-of-use assets	2,332		2,390
Other long-term assets	47		47
Total assets	$	19,956	$	26,483
Liabilities
Current liabilities:
Accounts payable	$	1,105	$	5,607
Accrued expenses and other current liabilities	685		1,355
Deferred revenue and customer deposits	5		2
Operating lease liabilities	396		393
Total current liabilities	2,191		7,357
Operating lease liabilities	1,945		2,000
Total liabilities	$	4,136	$	9,357

In October 2021, we also entered into a new Commercial Cooperation Agreement (the “CCA”) regarding initiatives pertaining to the hydrogen market and general market expansion for our products.

The Initial Investment

Simultaneous with the execution of the above agreements, we entered into the SPA pursuant to which we agreed to sell and issue to SK ecoplant 10,000,000 shares of Series A redeemable convertible preferred stock (the “Series A RCPS”), par value $0.0001 per share, at a purchase price of $25.50 per share for an aggregate purchase price of $255.0 million. On December 29, 2021, the closing of the sale of the Series A RCPS was completed and we issued the 10,000,000 shares of the Series A RCPS (the “Initial Investment”). In addition to the Initial Investment, the SPA provided SK ecoplant with an option to acquire a variable number of shares of Class A Common Stock (the “Option”). According to the SPA, SK ecoplant was entitled to exercise the Option through August 31, 2023, and the transaction must have been completed by November 30, 2023.

The sale of Series A RCPS was recorded at its fair value of $218.0 million on the date of issuance. Accordingly, we allocated the excess of the cash proceeds received of $255.0 million plus the change in fair value of the Series A RCPS between October 23, 2021, and December 29, 2021, of $9.7 million, over the fair value of the Series A RCPS on December 29, 2021, and the fair value of the Option on October 23, 2021, to the PDA. This excess amounted to $37.0 million and is recognized as revenue over the take or pay period based on an estimate of the revenue we expect to receive under the PDA. Accordingly, during the three months ended March 31, 2022, we recognized Product Revenue of $1.2 million in connection with this arrangement. No Product Revenue was recognized during the three months ended March 31, 2023 in connection with this arrangement. As of ~~September 30,~~December 31, 2022, the unrecognized amount of $24.6 million included $10.0 million in current deferred revenue and customer deposits and $14.6 million in non-current deferred revenue and customer deposits on the condensed consolidated balance sheets. As of March 31, 2023, the unrecognized amount of deferred revenue and customer deposits was reduced to zero as a result of the Second Tranche Closing (see details below in section “The Second Tranche Closing”).

PDA, JVA, CCA and the SPA entered into with SK ecoplant concurrently were evaluated as a combined contract in accordance with ASC 606 Revenue from Contracts with Customers and, to the extent applicable for separated components,

under the guidance of Topic 815 Derivatives and Hedging and applicable subsections and ASC 480 Distinguishing Liabilities from Equity.

We concluded that the Option was a freestanding financial instrument that should have been separately recorded at fair value on the date the SPA was executed.

On August 10, 2022, pursuant to the ~~notice received from~~SPA, SK ecoplant notified us of its intent to exercise its option to purchase additional shares of our Class A common stock, ~~(see~~pursuant to a Second Tranche Exercise Notice (as defined in the SPA) electing to purchase 13,491,701 shares at a purchase price of $23.05 per share (the “Second Tranche Closing”). Upon receipt of SK’s notice the purchase price and the number of shares of Class A Common Stock that SK will purchase under the Option became fixed. Upon the receipt of the notice from SK ecoplant the Option met the criteria of an equity award and was classified as a forward contract as part of additional paid-in capital.

On November 8, 2022, each share of the Series A RCPS was converted into 10,000,000 shares of Class A Common Stock.

On December 6, 2022, SK ecoplant and Bloom mutually agreed to delay the Second Tranche Closing Date for the purchase of the 13,491,701 shares of Class A Common Stock of the Issuer until March 31, 2023, unless an earlier date is mutually agreed upon and subject to and assuming the satisfaction of applicable regulatory clearance. The mutual agreement to modify the Second Tranche Closing date did not change the accounting or valuation of the equity-classified forward recorded.

For further information, see Part II, Item 8, Note 5)17 - SK ecoplant Strategic Investment in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

The Second Tranche Closing

On March 20, 2023, SK ecoplant entered into the Amended SPA with us, pursuant to which on March 23, 2023, we issued and sold to SK ecoplant 13,491,701 shares of non-voting Series B redeemable convertible preferred stock, par value $0.0001 per share (the “Series B RCPS”), ~~there were an additional 13,491,701~~at a purchase price of $23.05 per share for cash proceeds of $311.0 million.

The Amended SPA triggered the modification of the equity-classified forward contract on Class A common stock, ~~equivalents that~~which resulted in the derecognition of the pre-modification fair value of the forward contract given to SK ecoplant of $76.2 million. The derecognition of the pre-modification fair value was recorded in additional paid-in capital in our condensed consolidated balance sheets as of March 31, 2023.

The Series B RCPS was accounted for as a stock award with liability and equity components. The liability component of the Series B RCPS was recognized at the redemption value of $311.0 million and the equity component of the Series B RCPS was recognized at its fair value of $16.1 million on March 20, 2023, and these were ~~excluded~~recorded in current liabilities and additional paid-in capital, respectively, in our condensed consolidated balance sheets as of March 31, 2023.

On March 20, 2023, in connection with the Amended SPA, we also entered into the Loan Agreement, pursuant to which we have the option to draw on a loan from SK ecoplant with a maximum principal amount of $311.0 million, should SK ecoplant send a redemption notice to us under the Amended SPA. The Loan Agreement has a maturity of five years and bears an interest rate of 4.6%.

The Loan Agreement is a freestanding financial instrument; accordingly, we recognized a loan commitment asset at its fair value of $52.8 million, of which $5.3 million was classified as current and $47.5 million was classified as non-current in our condensed consolidated balance sheets as of March 31, 2023.

The Amended SPA and the Loan Agreement provided us with cash proceeds of $311.0 million and a loan commitment asset of $52.8 million from SK ecoplant for total consideration of $363.8 million. In return, SK ecoplant received consideration of $403.3 million, comprising of the release from the ~~table above.~~obligation to close on the original transaction fair valued at $76.2 million, the obligation from us to issue the Series B RCPS at redemption value of $311.0 million, and the option to convert the Series B RCPS to Class A common stock, which has an estimated fair value of $16.1 million. The excess consideration provided by us amounted to $39.5 million, which resulted in a reduction of our deferred revenue and customer deposits by $24.6 million related to the Initial Investment, as of March 31, 2023. The net excess consideration of $14.9 million was recognized as $8.2 million in prepaid expenses and other current assets and $6.7 million was classified as other long-term assets in our

condensed consolidated balance sheets as of March 31, 2023. The deferred expense will be recognized as contra-revenue over the take or pay period based on an estimate of the revenue we expect to receive under the remaining term of the PDA.

Description of Series B RCPS - The significant rights and preferences of the Series B RCPS are as follows:

Liquidation: Upon the liquidation or dissolution of Bloom, or a deemed liquidation event (which includes a change in control or the sale or other disposition of all or substantially all of our assets), the holders of the Series B RCPS are entitled to receive in preference to the holders of the Common Stock, the greater of (i) their liquidation preference or (ii) an amount they would be entitled to receive on an as-converted basis. After payment of the liquidation preference to the holders of the Series B RCPS, our remaining assets are available for distribution to the holders of Common Stock on a pro rata basis.

Redemption rights: The Series B RCPS may be redeemed upon election of SK ecoplant at the redemption price per share of $311.0 million divided by the number of then outstanding shares of Series B RCPS, which shall be payable in one installment, commencing on a date not less than sixty days after and not more than ninety days after SK ecoplant deliver written notice of the redemption to the Company (the “Redemption Notice”). SK ecoplant shall not send the Redemption Notice until four months have passed from the Series B RCPS issue date and the delivery of the Redemption Notice shall be irrevocable. The Series B RCPS shall not be redeemable upon the election of the Company.

Conversion: The Series B RCPS are convertible at any time at SK ecoplant’s option into Class A common stock (subject to adjustment in the event of stock splits or combinations, and dividends or other distributions on the Class A Common Stock which are payable in shares of Class A Common Stock).

In addition, on the 6-month anniversary of the issuance date, the Series B RCPS shall automatically convert into shares of Class A common stock at the conversion price in effect at that time. The automatic conversion will not occur should SK ecoplant elect to redeem the Series B RCPS prior to six months after the original issuance date, but not earlier than four months have passed from the original issue date.

Protective provisions: Bloom is prohibited from the following actions without the affirmative vote of a majority of the holders of the Series B RCPS: (i) increasing the authorized number of shares of Series B RCPS; (ii) authorizing or creating any new class of stock that is senior to or on a parity with the Series B RCPS or increasing or decreasing the authorized number of shares of any such new class of stock; (iii) amending the rights, preferences or privileges of the Series B RCPS; and (iv) redeeming the Series B RCPS.

Voting and dividend rights: The holders of the Series B RCPS have no voting rights, except on matters related to the RCPS, and are not entitled to dividends.

16. Subsequent Events

There have been no subsequent events that occurred during the period subsequent to the date of these condensed consolidated financial statements that would require adjustment to our disclosure in the condensed consolidated financial statements as presented.

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ITEM 2 - ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, and projections about our industry, management’s beliefs, and certain assumptions made by management. For example, forward-looking statements include, but are not limited to, our expectations regarding our products, services, business strategies, ~~impact of COVID-19,~~ our expanded strategic partnership with SK ecoplant, operations, supply chain (including any direct or indirect effects from the Russia-Ukraine ~~conflict~~war or geopolitical developments in China), new markets, government incentive programs, impact of the IRA on our business, growth of the hydrogen market and the sufficiency of our cash and our liquidity. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact are forward-looking statements. Forward-looking statements ~~can also~~may be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “designs,” “plans,” “predicts,” “targets,” “forecasts,” “will,” “would,” “could,” “can,” “may” and similar terms. These statements are based on the beliefs and assumptions of our management based on information currently available to management at the time they are made. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results, outcomes and the timing of certain events to differ materially from future results or outcomes expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those ~~identified below, and those~~factors discussed in the section titled “Risk Factors” included in Part ~~II,~~I, Item 1A of ~~this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission, including~~ our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021 filed on February 25, 2022.~~2022 and in our other filings with the Securities and Exchange Commission. You should review these risk factors for a more complete understanding of the risks associated with an investment in our securities. Such forward-looking statements speak only as of the date of this report. We disclaim any obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of ~~such statements. You should review these risk factors for a more complete understanding~~this report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the ~~risks associated with an investment~~plans, intentions or expectations disclosed in our ~~securities.~~forward-looking statements, and you should not place undue reliance on our forward-looking statements. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q.

Overview

Description of Bloom Energy

Our mission is to make clean, reliable energy affordable for everyone in the world. We created the first large-scale, commercially viable solid oxide fuel-cell based power generation platform that empowers businesses, essential services, critical infrastructure and communities to responsibly take charge of their energy.

Our technology, invented in the United States, is one of the most advanced electricity and hydrogen producing technologies on the market today. Our fuel-flexible Bloom Energy Servers can use biogas, hydrogen, natural gas, or a blend of fuels to create resilient, sustainable and cost-predictable power at significantly higher efficiencies than traditional, combustion-based resources. In addition, our same solid oxide platform that powers our fuel cells can be used to create hydrogen, which is increasingly recognized as a critically important tool ~~necessary~~ for the ~~full~~ decarbonization of the energy economy. Our enterprise customers include some of the largest multinational corporations in the world. We also have strong relationships with some of the largest utility companies in the United States and the Republic of Korea.

At Bloom Energy, we look forward to a net-zero future. Our technology is designed to help enable this future ~~in order to deliver~~by delivering reliable, low-carbon, electricity in a world facing unacceptable levels of power disruptions. Our resilient platform has kept electricity available for our customers through hurricanes, earthquakes, typhoons, forest fires, extreme heat and grid failures. Unlike traditional combustion power generation, our platform is community-friendly and designed to significantly reduce emissions of criteria air pollutants. We have made tremendous progress ~~making~~towards renewable fuel production ~~a reality~~ through our biogas, hydrogen and electrolyzer programs, and we believe that we are well-positioned as a core platform and fixture in the new energy paradigm to help organizations and communities achieve their net-zero objectives.

We market and sell our Energy Servers ~~directly and~~primarily through ~~indirect channels to~~ our ~~customers both~~direct sales organization in the United States, and ~~abroad. In order to appeal to the largest variety of customers,~~we also have direct and indirect sales channels internationally. Recognizing that deploying our solutions requires a significant financial commitment, we have developed a number of financing options to ~~enable customers' use~~support sales of our Energy Servers to customers who lack the financial capability to purchase our Energy Servers directly, and who may prefer to finance the acquisition using third-party financing or to contract for our services on a pay-as-you-go ~~model, made available through third-party ownership financing arrangements. For information about our different financing options, see Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Purchase and Financing Options~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.~~model.

Our typical target commercial or industrial customer has historically been either an investment-grade entity or a customer with investment-grade attributes such as size, assets and revenue, liquidity, geographically diverse operations and

general financial stability. We have also expanded our product and financing options to ~~the~~ below-investment-grade ~~customer~~

customers and have also expanded internationally to target customers with deployments on a wholesale grid. Given that our customers are typically large institutions with multi-level decision making processes, we generally experience a lengthy sales process.

Strategic Investment

~~On October 23, 2021, we entered into~~For information on the ~~SPA~~strategic investment with SK ecoplant, in connection with a strategic partnership. Pursuant to the SPA, on December 29, 2021, we sold to SK ecoplant 10 million shares of zero coupon, non-voting redeemable convertible Series A Preferred Stock in us, par value $0.0001 per share (“RCPS”), at a purchase price of $25.50 per share for an aggregate purchase price of $255 million (the “Initial Investment”). According to the SPA, on December 29, 2022, the first anniversary of the original issue date, all outstanding shares of Series A Preferred Stock will automatically be converted into shares of Class A Common Stock.

~~Please refer to~~see Part II, Item 8, Note 1 - Nature of Business, Liquidity and Basis of Presentation, Liquidity section in our Annual Report on Form 10-K for the ~~Second Tranche Shares Option exercise notice received from~~ fiscal year ended December 31, 2022, and Part I, Item 1, Note 15 - SK ecoplant ~~on August 10, 2022.~~Strategic Investment

Simultaneous with the execution of the SPA, we and SK ecoplant executed an amendment to the Joint Venture Agreement (“JVA”), an amendment and restatement to our Preferred Distribution Agreement (“PDA Restatement”) and a new Commercial Cooperation Agreement regarding initiatives pertaining to the hydrogen market and general market expansion for the Bloom Energy Server and Bloom Energy Electrolyzer..

Certain Factors Affecting our Performance

Global Macroeconomic Conditions

We generally are seeing worsening global macroeconomic conditions, including rising interest rates, recession fears, foreign exchange rate volatility, ~~and~~ inflationary pressures, and financial institution instability, as well as increasing geopolitical instability. These conditions impact our business in several ways. For example, the strengthening U.S. dollar has caused our Energy Servers to become relatively more expensive in several markets outside the United States, which, coupled with worsening global macroeconomic conditions, has the potential to adversely impact demand for our ~~products.~~Energy Servers. Our Energy ~~Server Product runs~~Servers run on a variety of fuels, including natural gas. The rising cost of natural gas, limited availability of natural gas supply, as well as disruptions to the world gas markets ~~increase~~has increased the cost of our ~~product to~~Energy Servers for the end ~~customer. To date, the potential impact of this on customer demand has been offset by the customer needs for resiliency and time to power that our Energy Server provides. In addition, these~~customers. These conditions also impact our manufacturing and supply chain, as discussed below.

~~Manufacturing and Labor Market Constraints~~

We are experiencing impacts from the ongoing labor shortage and continue to face challenges in hiring for our manufacturing facilities, which is exacerbated by absences for any employees who are recovering from or have been exposed to COVID-19. While we continue to dedicate resources to supporting our capacity expansion efforts, we are experiencing difficulties with hiring and retention, particularly for our new manufacturing facility in Fremont, California. In addition, the current inflationary environment has led to rising wages and labor rates and increased competition for labor. To date, ~~we have been able to mitigate any~~the potential impact ~~to production through a contingent workforce and other measures. In the event we are unable to mitigate the impacts~~ of these ~~challenges, it could delay~~conditions on customer demand has been largely offset by our customers’ need for resiliency and a quick time to power that our Energy Server provides as well as the ~~manufacturing and installation of~~sustainability that both our Energy Servers and we may be unable to meet customer demand, which would adversely impact our cash flows and results of operations, including revenue and gross margin. We expect the hiring and retention challenges arising from the labor shortages to continue for the foreseeable future.Electrolyzers provide.

Supply Chain Constraints

We continue to see effects from ~~the~~ global supply chain disruptions and are experiencing supply chain challenges and logistics constraints. While we have not experienced any significant component shortages to date, we are facing pressures from longer lead times, shipping and freight delays, and increased costs of raw materials. These dynamics could worsen as a result of continued increase in geopolitical instability. In addition, the current inflationary environment and ~~conflict~~war in Ukraine has led to an increase in the price of components and raw materials. In the event we are unable to mitigate the impacts of delays and/or price increases in raw materials, components, and freight, it could delay the manufacturing and installation of our Energy Servers and increase the ~~cost~~costs of our Energy ~~Server,~~Servers, which would adversely impact our cash flows and results of operations, including ~~revenue~~our revenues and gross margin. We expect these supply chain challenges and logistics constraints to continue for the foreseeable future.

~~For additional information on~~Manufacturing and Labor Market Constraints

As recently as 2022, we experienced impacts from labor shortages and challenges in hiring for our manufacturing facilities. While these constraints abated in the first quarter of 2023 and ~~supply chain matters, see Part II, Item 7 -~~ ~~Management's Discussion~~we continue to dedicate resources to supporting our capacity expansion efforts, we may still experience difficulties with hiring and ~~Analysis~~retention, particularly for our new manufacturing facility in Fremont, California, and may face additional labor shortages in the future. In addition, the current inflationary environment has led to rising wages and labor costs as well as increased competition for labor. In the event these constraints return and we are unable to continue to mitigate the impacts of ~~Financial Condition~~these challenges, it could delay the manufacturing and ~~Results~~installation of ~~Operations~~ our Energy Servers or Electrolyzers and we may be unable to meet customer demand, which could adversely impact our cash flows and results of operations, including our revenues and gross margin.

Customer Financing Constraints

Our ability to obtain financing for our Energy Servers depends partially on the creditworthiness of our customers, and deterioration of our customers’ credit ratings can impact the financing for their use of our Energy Servers. Ongoing regional banking and financial institution instability that began in the first quarter of 2023, initiated by the failure of Silicon Valley Bank, may make it more difficult for our ~~Annual Report~~customers to obtain financing. We continue to work on ~~Form 10-K~~obtaining the financing required for our 2023 installations, but if we are unable to secure such financing, our revenue, cash flow and liquidity could be materially impacted. We expect that in the ~~fiscal year ended December 31, 2021.~~United States, the Inflation Reduction Act of 2022 (the “IRA”) and the transferability of tax credits, should make the financing market more robust.

Installations and Maintenance of Energy Servers

In the first quarter of 2023, our installation projects experienced some delays relating to, among other things, permitting and utility delays and access to customer facilities due to shutdowns or other restrictions. Despite the impact on installations

3331

~~COVID-19 Pandemic~~during the three months ended March 31, 2023 and given our mitigation strategies, we only had a couple instances of significant delay in the installation of our Energy Servers.

~~We continue~~If we are delayed in or unable to ~~monitor and adjust as appropriate~~perform maintenance, our ~~operations~~previously installed Energy Servers would likely experience adverse performance impacts including reduced output and/or efficiency, which could result in ~~response~~warranty and/or guaranty claims by our customers. Further, due to the COVID-19 pandemic. We maintain protocols to minimize the risk of COVID-19 transmission within our facilities, including enhanced cleaning and masking if required by the local authorities, as well as providing testing for all employees. We will continue to follow CDC and local guidelines when notified of possible exposures.~~For more information regarding the risks posed to our company by the COVID-19 pandemic, refer to Part I, Item 1A,~~ ~~Risk Factors – Risks Related to Our Products and Manufacturing –Our business has been and continues to be adversely affected by the COVID-19 pandemic~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021~~.

~~Our Energy Server Product runs on a variety of fuels, including natural gas. The rising cost of natural gas increases the cost~~nature of our ~~product~~Energy Servers, if we are unable to replace worn parts in accordance with our standard maintenance schedule, we may incur higher costs in the ~~end customer. To date, the potential impact of this on customer demand has been offset by the customer needs for resiliency and time to power that our Energy Server provides.~~future.

Environmental, Social and Governance (“ESG”)

We are committed to a goal of providing consistent returns to our stockholders while maintaining a strong sense of good corporate citizenship that places a high value on the environment, welfare of our employees, the communities in which we operate, the customers we serve, and the world as a whole. We believe that prioritizing, improving, and managing our Environmental, Social, and Governance (“ESG”) related risks, opportunities and programs will allow us to better create long-term value for our investors.

In April 2023, we released our ~~2021~~2022 Sustainability Report, ~~Solutions for a Decarbonized Future,~~Advancing the Mission of Decarbonization (the “Report”) ~~during the first quarter of 2022~~, using accepted ESG frameworks and standards, including alignment with Sustainability Accounting Standards Board standards and the Task Force on Climate-related Financial Disclosures recommendations. In addition, the Report also utilized certain Global Reporting Initiative standards and was mapped against the United Nations Sustainable Development Goals. We plan to issue ~~the Report~~a sustainability report on an annual basis. ~~Certain items within the Report will be updated~~

Our mission is to ~~investors to the extent they are considered meaningful and reflective of our mission – “To~~ make clean, reliable energy affordable for everyone in the ~~world”.~~

Weworld. To that end, we strive to empower businesses and communities to responsibly take charge of their ~~energy.~~energy while addressing both the causes and consequences of climate change. We aim to serve our customers with products that are resilient, providing uninterrupted power with predictable pricing ~~from fixed power prices~~ over the long-term, while addressing sustainability issues by ~~considering and~~ developing an increasingly broad portfolio of solutions ~~relating to causes and consequences of climate change.~~for decarbonization.

~~For further details of the~~The Report ~~please refer to the following website:~~can be found on our website at ~~2021-bloom-energy-sustainability-report.pdf (bloomenergy.com)~~https://www.bloomenergy.com/sustainibility. ~~Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this report.~~

Inflation Reduction Act of 2022 -

For information on the IRA, which was signed into law on August 16, 2022, and its impact on our business, see Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Inflation Reduction Act of 2022 – New and Expanded Production and Tax Credits for Manufacturers and Projects to Support Clean Energy

~~On August 16, 2022, President Biden signed into law~~ section in our Annual Report on Form 10-K for the Inflation Reduction Act of 2022 (the “IRA”). The IRA contains provisions which we expect will have a significant impact on the development and financing of clean energy projects in the United States over the next ten years. The IRA includes a number of key changes relevant to clean energy in the United States, among them the extension of the Investment Tax Credit and Production Tax Credit and the addition of expanded tax credits for other technologies and for manufacturing of clean energy equipment as well as terms allowing parties to more easily monetize the tax credits. The IRA also includes some targeted incentives intended to encourage development in low-income communities and the use of domestically produced materials and compliance with certain prevailing wage requirements. The IRA contains a two-tiered credit-amount structure for many applicable tax credits. Specifically, many of the credits have a lower base credit amount that can be increased up to five times if the taxpayer can satisfy applicable prevailing wage or apprenticeship requirements. In general, under the prevailing wage requirements, the IRA requires all laborers, mechanics and workers to be paid the prevailing wage during project construction (and, during the credit term, for repairs and alterations). Separately and subject to certain exceptions, to meet the apprenticeship requirements, qualified apprentices have to perform an applicable percentage of total labor hours for project construction. Further, the IRA establishes certain options to cure the failure to meet either the prevailing wage or apprenticeship requirements.

~~Please refer to Note 1 -~~ ~~Nature of Business, Liquidity and Basis of Presentation~~ ~~for discussion of credits and incentive provisions implemented by the IRA relevant to us. We are currently assessing the impact of these provisions on our business.~~fiscal year ended December 31, 2022.

Liquidity and Capital Resources

~~While we improved our~~We raised cash and supplemented liquidity in ~~2021,~~the first quarter of 2023 from financing activities with SK ecoplant, but at the same time we increased our working capital spend, resulting in an overall reduction of cash and cash equivalents. In the first quarter of 2023, we built up inventory in preparation for more expected shipments in the ~~first~~second half of ~~2022. We~~2023. This enabled us to level load production and gain manufacturing efficiency. In addition, we have entered into new leases in Delaware intended to ~~maintain sufficient manufacturing facilities~~expand our warehouse space to store more inventory to meet anticipated increase in demand in ~~2022~~the second half 2023 and ~~beyond, including new product line expansion. In addition, we also increased our working capital spend and resources~~beyond. Inventory is expected to ~~enhance our marketing efforts and~~continue to ~~expand into new geographies both domestically and internationally.~~

On August 10, 2022, pursuant to the Securities Purchase Agreement (“the SPA”) SK ecoplant notified us of its intent to exercise its option the Option to purchase additional shares of our Class A common stock, pursuant to a Second Tranche Exercise Notice (as definedgrow in the ~~SPA) electing to purchase 13,491,701 shares (the “Second Tranche Shares”) at a purchase price~~second quarter of ~~$23.05 per share, calculated~~2023, with an anticipated subsequent decrease in the second half of 2023 as a 15% premium to the volume-weighted average closing price of the 20 consecutive trading day period immediately preceding the exercise of the option. The aggregate purchase price approximates cash proceeds to be received by us of $311.0 million, net of related incremental direct costs of $0.1 million. The payment for the Second Tranche Shares will be due the later of (i) December 6, 2022 and (ii) upon clearance under the HSR Act of the sale of the Second Tranche Shares as contemplated by the Second Tranche Exercise Notice.we ship Energy Servers.

On ~~August 19, 2022,~~March 20, 2023, we ~~completed an underwritten public offering,~~ entered into the Amended SPA with SK ecoplant, pursuant to which we issued and sold ~~13,000,000~~to SK ecoplant 13,491,701 shares of ~~Class A Common Stock at~~Series B RCPS for cash proceeds of $311.0 million.

On March 20, 2023, in connection with the Amended SPA, we also entered into the Loan Agreement, pursuant to which we may draw down on a ~~price~~loan from SK ecoplant with a maximum principal amount of ~~$26.00 per share (the “Offering”). As~~$311.0 million, should SK ecoplant send a ~~part~~redemption notice to us under the Amended SPA or otherwise reduce any portion of ~~the Offering, the underwriters were provided a 30-day option to purchase an additional 1,950,000 shares~~its current holdings of our Class A ~~Common Stock at~~common stock. The Loan Agreement has a maturity of five years and bears an interest rate of 4.6%. The proceeds of the ~~same price, less underwriting discounts and commissions, which was exercised contemporaneously with the Offering. The aggregate net proceeds received~~loan can be used by us ~~from~~for working capital and general corporate purpose needs. There were no amounts outstanding under the ~~Offering wer~~Loan Agreement as of March 31, 2023.

For further information on the strategic investment with SK ecoplant, see Part I, Item 1, Note 15 - ~~e $371.5 million, after deducting underwriting discounts and commissions of $16.5 million and incremental costs directly attributable to the Offering of $0.7 million.~~SK ecoplant Strategic Investment.

As of ~~September 30, 2022,~~March 31, 2023, we had cash and cash equivalents ~~of $492.1~~of $320.4 million. Our cash and cash equivalents consist of highly liquid investments with maturities of three months or less, including money market funds. We maintain these balances with high credit quality counterparties, continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk.

As of ~~September 30, 2022,~~March 31, 2023, we ~~had $287.5~~had $282.4 million of ~~total~~ outstanding recourse debt, ~~$195.9~~$120.0 million of non-recourse debt and ~~$8.9~~$8.2 million of other long-term liabilities. As of March 31, 2023, the current portion of our total debt was $24.4 million, of which $11.4 million was outstanding non-recourse debt. For a complete description of our outstanding debt, please see Part I, Item 1, Note 7 - Outstanding Loans and Security Agreements ~~in Part I, Item 1,~~ ~~Financial Statements (unaudited)~~.

The combination of our ~~existing~~ cash and cash equivalents and cash flow to be generated by our operations is expected to be sufficient to meet our anticipated cash flow needs for at least the next 12 months. If these sources of cash are insufficient or are not received timely to satisfy our near-term or future cash needs, we may require additional capital from equity or debt financings to fund our operations, and in particular our manufacturing capacity, product development and market expansion requirements, to timely respond to competitive market pressures or strategic opportunities, or otherwise. We may, from time to time, engage in a variety of financing transactions for such purposes, including factoring our accounts receivable. WeHowever, we may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional ~~financings~~financing may place limits on our financial and operating flexibility. If we raise additional funds through further issuances of equity or equity-linked securities, our existing stockholders could suffer dilution in their percentage ownership of us, and any new securities we issue could have rights, preferences and privileges senior to those of holders of our common stock.

Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, the rate of growth in the volume of system builds and the need for additional manufacturing space, the expansion of sales and marketing activities both in domestic and international markets, market acceptance of our products, our ability to secure financing for customer use of our Energy Servers, the timing of installations and of inventory build in anticipation of future sales and installations, and overall economic ~~conditions including the impact of COVID-19 on our ongoing and future operations.~~conditions. In order to support and achieve our future growth plans, we may need or seek advantageously to obtain additional funding through an equity or debt financing. Failure to obtain this financing or financing in future quarters may affect our results of operations, including ~~revenue~~our revenues and cash flows.

~~As of September 30, 2022, the current portion of our total debt is $28.7 million, of which $15.9 million is outstanding non-recourse debt.~~

A summary of our consolidated sources and uses of cash, cash equivalents and restricted cash was as follows (in thousands):

Nine Months Ended
September 30,
2022 2021
Net cash (used in) provided by :
Operating activities $ (168,453) $ (107,956)
Investing activities (80,907) (41,511)
Financing activities 305,211 53,130


	Three Months Ended March 31,
	2023		2022

Net cash (used in) provided by:
Operating activities	$	(314,710)	$	(92,443)
Investing activities	(26,574)		(18,510)
Financing activities	306,487		(10,112)

Net cash provided by (used in) our PPA Entities, which are incorporated into the condensed consolidated statements of cash flows, was as follows (in thousands):


								Three Months Ended March 31,
		Nine Months Ended September 30,				2023		2022
		2022		2021
PPA Entities ¹	PPA Entities ¹						PPA Entities ¹
Net cash provided by PPA operating activities	Net cash provided by PPA operating activities	$	95,445	$	15,751		Net cash provided by PPA operating activities	$	3,041	$	7,658
Net cash used in PPA financing activities	Net cash used in PPA financing activities	(103,546)		(17,641)			Net cash used in PPA financing activities	(6,434)		(8,114)

1 The PPA ~~Entities'~~Entities’ operating and financing cash flows are a subset of our consolidated cash flows and represent the stand-alone cash flows prepared in accordance with U.S. GAAP. Operating activities consist principally of cash used to run the operations of the PPA Entities, the purchase of Energy Servers from us and principal reductions in loan balances. Financing activities consist primarily of changes in debt carried by our PPAs, and payments from and distributions to noncontrolling partnership interests. We believe this presentation of net cash provided by (used in) PPA activities is useful to provide the reader with the impact to consolidated cash flows of the PPA Entities in which we have only a minority interest.

Operating Activities

Our operating activities ~~have~~ consisted of net loss adjusted for certain non-cash items plus changes in our operating assets and liabilities or working capital.Net cash used in operating activities during the three months ended March 31, 2023 was $314.7 million, an increase of $222.3 million compared to the prior year period. The increase in cash used in operating activities during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period was primarily ~~the result of~~due to an increase in ~~our net loss and a decrease in our net~~ working capital of ~~$70.6~~$272.4 million ~~in the nine months ended September 30, 2022~~ due to an increase in accounts receivable triggered by the timing of revenue transactions and corresponding collections, the increase in inventory levels to support future demand, and the timing of payments to ~~vendors.~~vendors, partially offset by an improvement in our net loss.

Investing Activities

Our investing activities have consisted of capital expenditures, ~~that include investment~~including investments to increase our production capacity. We expect to continue such investing activities as our business grows. Cash used in investing activities ~~of $80.9 million~~ during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was $26.6 million, an increase of $8.1 million compared to the prior year period, and was primarily ~~the result of~~due to expenditures on tenant improvements for a newly leased engineering and manufacturing building in Fremont, ~~California.~~California, opened in July 2022. We expect to continue to make capital expenditures over the next few quarters to prepare our new manufacturing facility in Fremont, California for production, which includes the purchase of new equipment and other tenant improvements. We intend to fund these capital expenditures from cash on hand as well as cash flow to be generated from operations. We may also evaluate and arrange equipment lease financing to fund these capital expenditures.

Financing Activities

Historically, our financing activities ~~have~~ consisted of borrowings and repayments of debt, proceeds and repayments of financing obligations, distributions paid to noncontrolling interests, contributions from noncontrolling interests, and ~~the~~ proceeds from the ~~issuance~~issuances of our common stock. Net cash provided by financing activities during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~$305.2~~$306.5 million, an increase of ~~$252.1~~$316.6 million compared to the prior year period, and was primarily due to the proceeds from ~~public share offering~~the issuance of ~~$372.0~~redeemable convertible preferred stock as part of the SK ecoplant Second Tranche Closing of $311.0 million and the proceeds from issuance of common stock of ~~$15.2~~$8.5 million, partially offset by ~~the~~our repayment ~~debt related to PPA IIIa~~ of ~~$30.2 million and other~~ debt of ~~$17.3~~$9.9 million, and repayment of financing obligations of ~~$28.8~~$4.3 million.

We believe we have the sufficient capital to operate our business over the next 12 months, including the completion of the build out of our manufacturing facilities. Our working capital was strengthened with the initial and subsequent investments by SK ecoplant and our public offering. In addition, we may still enter the equity or debt market as needed to support the expansion of our business. Please refer to Part I, Item 1, Note 7 - Outstanding Loans and Security Agreements~~in Part 1, Item 1,~~ ~~Financial Statements (unaudited);~~ of this Quarterly Report on Form 10-Q and Part I, Item 1A, Risk Factors - Risks Related to Our Liquidity - Our ~~substantial~~ indebtedness, and restrictions imposed by the agreements governing our and our PPA ~~Entities'~~Entities’ outstanding indebtedness, may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs, and We may not be able to generate sufficient cash to meet our debt service obligations or our growth plans section in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for more information regarding the terms of and risks associated with our debt.

Purchase and Financing Options

For information about our purchase and financing options, see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, Purchase and Financing Options sectionin our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021for more information regarding the terms of and risks associated with our debt.~~2022.

Performance Guarantees

As of March 31, 2023, we had incurred no liabilities due to failure to repair or replace Energy Servers pursuant to any performance warranties made under operations and maintenance agreements (“O&M Agreements”). For O&M Agreements that are subject to renewal, our future service revenue from such agreements are subject to our obligations to make payments for underperformance against the performance guaranties, which are capped at an aggregate total of approximately $540.2 million (including $417.8 million related to portfolio financing entities and $122.4 million related to all other transactions, and include payments for both low output and low efficiency) and our aggregate remaining potential liability was approximately $478.1 million against future O&M Agreements subject to renewal. For the three months ended March 31, 2023, we made performance guarantee payments of $15.8 million.

3634

~~Purchase and Financing Options~~

~~For information on purchase and financing options, see the~~ ~~Purchasing and Financing Options~~ ~~section in Part II, Item 7 -~~ ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.~~

International Channel Partners

There were no significant changes in our international channel partners during the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. For information on international channel partners, see ~~the~~ ~~International Channel Partners~~ ~~section in~~ Part II, Item 7 - ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, International Channel Partners section in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Key Operating Metrics - Comparison of the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

For a description of the key operating metrics we use to evaluate business activity, to measure performance, to develop financial forecasts and to make strategic decisions, see Part II, Item 7, ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, - Key Operating Metrics section in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Product Acceptances

The product and megawatts accepted in the three months ended March 31, 2023 and 2022 were as follows:


	Three Months Ended March 31,	Change
		2023	2022	Amount	%

Product accepted (in 100 kilowatt systems)		512	375	137	36.5	%

Product accepted for the three months ended March 31, 2023 as compared to the prior year period increased by 137 systems, or 36.5%. Acceptance volume increased as demand increased for our Energy Servers.


	Three Months Ended March 31,	Change
		2023	2022	Amount	%

Megawatts accepted, net		51	38	13	34.2	%

Megawatts accepted, net, for the three months ended March 31, 2023 as compared to the prior year period increased by 13 megawatts, or 34.2%. The increase in megawatts accepted was in line with the increase in product accepted. The increase in acceptances of 51 megawatts achieved from December 31, 2022 to March 31, 2023 was added to our installed base and, therefore, increased our total megawatts accepted, net, from 973 megawatts to 1,024 megawatts.

Purchase Options

Our customers have several purchase options for our Energy Servers. The portion of acceptances attributable to each purchase option in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021

Direct Purchase 99 % 99 % 100 % 99 %
Traditional Lease 1 % — % — % — %
Managed Services — % 1 % — % 1 %


	Three Months Ended March 31,
		2023		2022

Direct purchase (including third-party PPAs and international channels)		96	%	100	%
Traditional Lease		4	%	—	%

The portion of total revenue attributable to each purchase option in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2022 2021 2022 2021

Direct Purchase 91 % 86 % 89 % 88 %
Traditional Lease 1 % 1 % 1 % 1 %
Managed Services 5 % 8 % 6 % 6 %
Bloom Electrons 3 % 5 % 4 % 5 %

~~Product Acceptances~~

Three Months Ended
September 30, Change Nine Months Ended
September 30, Change
2022 2021 Amount % 2022 2021 Amount %

Product accepted during the period
(in 100 kilowatt systems) 581 353 228 64.6 % 1,427 1,144 283 24.7 %

Product accepted increased approximately 228 systems, or 64.6%, for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. Acceptance volume increased as demand increased for the Bloom Energy servers.

Product accepted increased approximately 283 systems, or 24.7%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Acceptance volume increased as demand increased for the Bloom Energy servers.

Megawatts accepted, net, increased approximately 208 megawatts, or 30.4%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increase in acceptances achieved from September 30, 2021 to September 30, 2022 was added to our installed base and, therefore, increased our megawatts accepted, net, from 682 megawatts to 890 megawatts.

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	Three Months Ended March 31,
		2023		2022

Direct purchase (including third-party PPAs and international channels)		87	%	87	%
Traditional Lease		1	%	1	%
Managed Services		9	%	7	%
Portfolio Financings		3	%	5	%

Costs Related to Our Products

Total product related costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was as follows:


		Three Months Ended September 30,				Change			Nine Months Ended September 30,				Change				Three Months Ended March 31,	Change
		2022		2021		Amount	%		2022		2021		Amount	%				2023		2022		Amount		%

Product costs of product accepted in the period	Product costs of product accepted in the period	$2,344/kW		$2,434/kW		$-90/kW	(3.7)	%	$2,438/kW		$2,362/kW		$76/kW	3.2	%	Product costs of product accepted in the period		$2,288/kW		$2,561/kW		-$273/kW		(10.7)	%
Period costs of manufacturing related expenses not included in product costs (in thousands)	Period costs of manufacturing related expenses not included in product costs (in thousands)	$	15,496	$	7,774	$7,722	99.3	%	$	38,672	$	19,653	$19,019	96.8	%	Period costs of manufacturing related expenses not included in product costs (in thousands)		$	12,594	$	9,687	$	2,907	30.0	%
Installation costs on product accepted in the period	Installation costs on product accepted in the period	$465/kW		$726/kW		$-261/kW	(36.0)	%	$398/kW		$584/kW		$-186/kW	(31.8)	%	Installation costs on product accepted in the period		$487/kW		$341/kW		$146/kW		42.8	%

Product costs of product accepted decreased ~~approximately $90~~$273 per kilowatt, or ~~3.7%~~10.7%, for the three months ended ~~September 30, 2022~~March 31, 2023 compared to the three months ended ~~September 30, 2021.~~March 31, 2022. This decrease in cost iswas primarily driven by ~~our~~our ongoing ~~cost reduction~~ efforts to reduce material costs, labor and overhead through improved automation of our manufacturing facilities, our increased facility utilization and our ongoing material cost reduction programs with our vendors.

Product costs of product accepted increased approximately $76 per kilowatt, or 3.2%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. This increase in cost is primarily driven by some of the cost pressures seen in the external inflationary environment with commodity pricing and logistics increasing significantly from one year ago. Our ongoing cost reduction efforts to reduce material costs, labor and overhead through improved automation of our manufacturing facilities, our increased facility utilization and our ongoing material cost reduction programs with our vendors continued but were offset by the temporary increases in cost that we experienced.

Period costs of manufacturing related expenses increased ~~approximately $7.7~~$2.9 million, or ~~99.3%~~30.0%, for the three months ended ~~September 30, 2022 compared~~March 31, 2023 compared to the three months ended ~~September 30, 2021.~~March 31, 2022. Our period costs of manufacturing related expenses increased primarily as a result of costs incurred to support capacity expansion efforts, which are expected to be brought online in future periods.

Period costs of manufacturing related expenses increased approximately $19.0 million, or 96.8%, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Our period costs of manufacturing related expenses increased primarily as a result of costs incurred to support capacity expansion efforts which are expected to be brought online in future periods.

Installation costs on product accepted ~~decreased approximately $261~~increased $146 per kilowatt, or ~~36.0%~~42.8%, for the three months ended ~~September 30, 2022~~March 31, 2023 as ~~compared~~compared to the three months ended ~~September 30, 2021.~~March 31, 2022. This ~~decrease~~increase in cost is primarily driven by the change in the mix of sites requiring Bloom installation and changes in installation process. Each customer site is different and installation costs can vary due to a number of factors, including site complexity, size, location of gas, etc. As such, installation on a per kilowatt basis can vary significantly from period-to-period. In addition, some customers handle their own installation for which we have little to no installation cost.

Installation costs on product accepted decreased approximately $186 per kilowatt, or 31.8%, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. This decrease in cost iswas primarily driven by the change in the mix of sites requiring Bloom installation. Each customer site is different and installation costs can vary due to a number of factors, including site complexity, size, and location of gas, ~~etc.~~among other factors. As such, installation on a per kilowatt basis can vary significantly from ~~period-to-period.~~period to period. In addition, some customers handle their own installation for which we have little to no installation cost.

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Results of Operations

A discussion regarding the comparison of our financial condition and results of operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ is presented below.

Revenue


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change						Three Months Ended March 31,	Change
		2022		2021		Amount		%		2022		2021		Amount		%					2023		2022		Amount		%
		(dollars in thousands)								(dollars in thousands)									(dollars in thousands)
Product	Product	$	213,243	$	128,550	$	84,693	65.9	%	$	520,415	$	413,347	$	107,068	25.9	%	Product			$	193,745	$	133,547	$	60,198	45.1	%
Installation	Installation	22,682		22,172		510		2.3	%	48,964		53,710		(4,746)		(8.8)	%	Installation			20,525		13,553		6,972		51.4	%
Service	Service	37,347		39,251		(1,904)		(4.9)	%	111,012		111,375		(363)		(0.3)	%	Service			40,663		35,239		5,424		15.4	%
Electricity	Electricity	19,002		17,255		1,747		10.1	%	56,158		51,273		4,885		9.5	%	Electricity			20,258		18,700		1,558		8.3	%
Total revenue	Total revenue	$	292,274	$	207,228	$	85,046	41.0	%	$	736,549	$	629,705	$	106,844	17.0	%	Total revenue			$	275,191	$	201,039	$	74,152	36.9	%

Total Revenue

Total revenue increased by ~~$85.0~~$74.2 million, or ~~41.0%~~36.9%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was driven by a ~~$84.7~~$60.2 million increase in product revenue, a ~~$1.7 million increase in electricity revenue, a $0.5~~$7.0 million increase in installation revenue, ~~offset by~~ a ~~$1.9 million decrease in service revenue.~~

~~Total revenue increased by $106.8 million, or 17.0%, for the nine months ended September 30, 2022 as compared to the prior year period. This increase was primarily driven by a $107.1~~$5.4 million increase in ~~product~~service revenue, and a ~~$4.9~~$1.6 million increase in electricity ~~revenue, offset by a $4.7 million decrease in installation revenue and a $0.4 million decrease in service~~ revenue.

Product Revenue

Product revenue increased by ~~$84.7~~$60.2 million, or ~~65.9%~~45.1%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. The product revenue increase was driven primarily by a ~~64.6%~~36.5% increase in product acceptances resulting from higher demand ~~in existing markets and revenue recognized from the PPA 3a Upgrade of $12.7 million.~~

~~Product revenue increased by $107.1 million, or 25.9%,~~ for the nine months ended September 30, 2022 as compared to the prior year period. The product revenue increase was driven primarily by a 24.7% increase in product acceptances resulting from higher demand in existing markets and revenue recognized from the PPA IIIa Upgrade of $49.6 million. We expect our ~~product revenue to grow in the future as we expand our addressable markets.~~products.

Installation Revenue

Installation revenue increased by ~~$0.5~~$7.0 million, or ~~2.3%~~51.4%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase in installation revenue was primarily driven by the ~~revenue recognized from the PPA IIIa Upgrade of $2.1 million and the~~ change in the mix of product acceptances requiring installations by us ~~as more sites had installation costs~~ in the three months ended ~~September 30, 2022.~~March 31, 2023.

~~Installation~~Service Revenue

Service revenue ~~decreased~~increased by ~~$4.7~~$5.4 million, or ~~8.8%~~15.4%, for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This ~~decrease in installation revenue was driven by the change in mix of product acceptances requiring installations by us, as fewer sites had installation costs in the nine months ended September 30, 2022, offset by the revenue recognized from the PPA IIIa Upgrade of $3.2 million.~~

~~Service Revenue~~

~~Service revenue decreased by $1.9 million, or 4.9%, for the three months ended September 30, 2022 as compared to the prior year period. This decrease~~increase was primarily due to ~~a one-off revenue~~the 36.5% increase ~~of $2.7 million~~ in ~~the three months ended September 30, 2021~~product acceptances and the ~~impact of product performance guarantees, partially offset by the 64.6% increase~~$11.1 million in ~~acceptances plus the~~ maintenance contract renewals associated with the increase in our fleet of Energy ~~Servers.~~

~~Service revenue decreased~~Servers, offset by $0.4 million, or 0.3%, for the nine months ended September 30, 2022 as compared to the prior year period. This decrease was primarily due to a one-off revenue increase of $2.7 million in the three months ended September 30, 2021 and the impact of product performance guarantees ~~partially offset by the 24.7% increase~~of $4.5 million and $1.0 million decrease related to a decrease in ~~acceptances plus the maintenance contract renewals associated with the increase in our fleet of Energy Servers. We expect our service revenue to grow in the future.~~state incentives.

Electricity Revenue

Electricity revenue includes both revenue from contracts with customers and revenue from contracts that contain leases.

Electricity revenue increased by ~~$1.7~~$1.6 million, or ~~10.1%~~8.3%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period, primarily due to the increase in installed units as a result of the increase in Managed Services transactions recorded inbetween the ~~second half~~third quarter of fiscal year ~~2021.~~

~~Electricity revenue increased by $4.9 million, or 9.5%, for~~2021 and the nine months ended September 30, 2022 as compared to the prior year period due to the increase in installed units as a result of the increase in Managed Services transactions recorded in the second halffirst quarter of fiscal year ~~2021.~~2023.

Cost of Revenue


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change						Three Months Ended March 31,	Change
		2022		2021		Amount		%		2022		2021		Amount		%					2023		2022		Amount		%
		(dollars in thousands)								(dollars in thousands)									(dollars in thousands)
Product	Product	$	158,176	$	93,704	$	64,472	68.8	%	$	393,337	$	289,889	$	103,448	35.7	%	Product			$	129,613	$	105,742	$	23,871	22.6	%
Installation	Installation	28,333		25,616		2,717		10.6	%	57,836		66,756		(8,920)		(13.4)	%	Installation			25,100		12,773		12,327		96.5	%
Service	Service	41,792		39,586		2,206		5.6	%	124,646		111,269		13,377		12.0	%	Service			51,244		41,826		9,418		22.5	%
Electricity	Electricity	13,029		11,439		1,590		13.9	%	83,819		32,913		50,906		154.7	%	Electricity			14,967		12,761		2,206		17.3	%
Total cost of revenue	Total cost of revenue	$	241,330	$	170,345	$	70,985	41.7	%	$	659,638	$	500,827	$	158,811	31.7	%	Total cost of revenue			$	220,924	$	173,102	$	47,822	27.6	%

Total Cost of Revenue

Total cost of revenue increased by ~~$71.0~~$47.8 million, or ~~41.7%~~27.6%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period, primarily driven by a ~~$64.5~~$23.9 million increase in cost of product revenue, a ~~$2.7~~$12.3 million increase in costs of installation revenue, a ~~$2.2~~$9.4 million increase in cost of service revenue and a ~~$1.6~~$2.2 million increase in cost of electricity revenue. The cost of revenue increase was ~~primarily~~ driven by the increase in revenue adjusted by the net effect of increased freight charges and other supply chain-related pricing pressures and costs incurred to support capacity expansion efforts which are expected to be brought online in future ~~periods. This increase was partially offset by our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers~~periods, and ~~our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities.~~

Total cost of revenue increased by $158.8 million, or 31.7%, for the nine months ended September 30, 2022 as compared to the prior year period primarily driven by a $103.4 million increase in cost of product revenue, a $50.9 million increase in cost of electricity revenue, a $13.4 million increase in cost of service revenue, offset by a $8.9 million decrease in costs of installation revenue. The increase was primarily driven by the write-off of old Energy Servers of $44.8 million as a result of the PPA IIIa Upgrade, increased freight charges and other supply chain-related pricing pressures and costs incurred to support capacity expansion efforts which are expected to be brought online in future periods. This increase was partially offset by our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers and our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities.

~~Cost of Product Revenue~~

Cost of product revenue increased by $64.5 million, or 68.8%, for the three months ended September 30, 2022 as compared to the prior year period. The cost of product revenue increase was in line with the increase in product revenue and was driven primarily by a 64.6% increase in product acceptances, the sale of new Energy Servers of $5.7 million as a result of the PPA IIIa Upgrade, increased freight charges and other supply chain-related pricing pressures and costs incurred in support of upcoming capacity expansion efforts. This increase was partiallywere more than offset by our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers and our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities.

Cost of Product Revenue

Cost of product revenue increased by ~~$103.4~~$23.9 million, or ~~35.7%~~22.6%, for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. The cost of product revenue increase was driven ~~primarily~~ by ~~a 24.7%~~the increase in product ~~acceptances,~~revenue adjusted by the ~~sale~~net effect of ~~new Energy Servers of $21.6 million as a result of the PPA IIIa Upgrade,~~ increased freight charges and other supply chain-related pricing pressures and costs incurred in support of upcoming capacity expansion ~~efforts. This increase was partially~~efforts which are expected to be brought online in future periods, and which were more than offset by our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers and our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities.

Cost of Installation Revenue

Cost of installation revenue increased by ~~$2.7~~$12.3 million, or ~~10.6%~~96.5%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was driven by the change in mix of product acceptances requiring Bloom Energy installations, as more sites had installation costs in the three months ended ~~September 30, 2022.~~

~~Cost of installation revenue decreased by $8.9 million, or 13.4%, for the nine months ended September 30, 2022~~March 31, 2023 as compared to the prior year period. ~~This decrease was driven by the change in mix of product acceptances requiring Bloom Energy installations, as fewer sites had installation costs in the nine months ended September 30, 2022.~~

Cost of Service Revenue

Cost of service revenue increased by ~~$2.2~~$9.4 million, or ~~5.6%~~22.5%, for the three months ended September 30, 2022 as compared to the prior year period. This increase was primarily due to the deployment of field replacement units, partially offset by cost reductions and our actions to proactively manage fleet optimizations.

~~Cost of service revenue increased by $13.4 million, or 12.0%, for the nine months ended September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was primarily due to the deployment of field replacement units, partially offset by cost reductions and our actions to proactively manage fleet optimizations.

Cost of Electricity Revenue

Cost of electricity revenue includes both cost of revenue from contracts with customers and cost of revenue from contracts that contain leases.

Cost of electricity revenue increased by ~~$1.6~~$2.2 million, or ~~13.9%~~17.3%, for the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period, primarily due to ~~the increase in installed units driven by Managed Services transactions recorded in the second half of fiscal year 2021.~~

Cost of electricity revenue increased by $50.9 million, or 154.7%, for the nine months ended September 30, 2022 as compared to the prior year period, primarily due to the write-off of old Energy Servers of $44.8 million as a result of the PPA IIIa Upgrade and an increase in installed units driven by Managed Services transactions recorded inbetween the ~~second half~~third quarter of fiscal year ~~2021.~~2021 and the first quarter of fiscal year 2023.

4238

Gross Profit (Loss) and Gross Margin


		Three Months Ended September 30,						Change				Nine Months Ended September 30,										Change							Three Months Ended March 31,					Change
		2022			2021					2022					2021													2023		2022
		(dollars in thousands)																												(dollars in thousands)
Gross profit (loss):	Gross profit (loss):																							Gross profit (loss):
Product	Product	$	55,067		$	34,846				$	20,221				$	127,078				$	123,458				$	3,620	Product							$	64,132		$	27,805	$	36,327
Installation	Installation	(5,651)			(3,444)			(2,207)				(8,872)					(13,046)					4,174		Installation							(4,575)			780			(5,355)
Service	Service	(4,445)			(335)			(4,110)				(13,634)					106					(13,740)		Service							(10,581)			(6,587)			(3,994)
Electricity	Electricity	5,973			5,816			157				(27,661)					18,360					(46,021)		Electricity							5,291			5,939			(648)
Total gross profit (loss)		$	50,944		$	36,883		$	14,061			$	76,911				$	128,878				$	(51,967)
Total gross profit																								Total gross profit							$	54,267		$	27,937		$	26,330

Gross margin:	Gross margin:																							Gross margin:
Product	Product	26		%	27		%					24		%			30		%					Product							33		%	21		%
Installation	Installation	(25)		%	(16)		%					(18)		%			(24)		%					Installation							(22)		%	6		%
Service	Service	(12)		%	(1)		%					(12)		%			—		%					Service							(26)		%	(19)		%
Electricity	Electricity	31		%	34		%					(49)		%			36		%					Electricity							26		%	32		%
Total gross margin	Total gross margin	17		%	18		%					10		%			20		%					Total gross margin							20		%	14		%

Total Gross Profit

Gross profit improved by ~~$14.1~~$26.3 million in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period which was primarily driven by ~~the $20.2~~a $36.3 million increase in product gross profit, primarily driven by ~~an 64.6%~~a 36.5% increase in product acceptances resulting from higher demand in existing markets, and our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers and our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing ~~facilities.~~

~~Gross profit decreased~~facilities, offset by ~~$52.0 million~~increased freight charges and other supply chain-related pricing pressures and costs incurred to support capacity expansion efforts which are expected to be brought online in the nine months ended September 30, 2022 as compared to the prior year period which was primarily driven by the $46.0 million decrease in electricity gross profit primarily due to the write-off of old Energy Servers of $44.8 million as a result of the PPA IIIa Upgrade; the $13.7 million decrease in service gross profit due to a 24.7% increase in acceptances plus the maintenance contract renewals associated with the increase in our fleet of Energy Servers. This decreasefuture periods, and was partially offset by ~~our ongoing cost reduction efforts to reduce material costs~~a $5.4 million and $4.0 million decrease in ~~conjunction with our suppliers~~installation gross profit and ~~our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities.~~

service gross profit, respectively.

Product Gross Profit

Product gross profit increased by ~~$20.2~~$36.3 million in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. The increase iswas primarily driven by ~~an 64.6%~~a 36.5% increase in product acceptances ~~revenue recognized from the PPA IIIa Upgrade~~ ~~of $12.7~~ ~~million~~ and our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers and our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities, partially offset by increased freight charges and other supply chain-related pricing ~~pressures and costs incurred to support capacity expansion efforts which are expected to be brought online in future periods.~~pressures.

~~Product~~Installation Gross (Loss) Profit

Installation gross (loss) profit ~~increased~~worsened by ~~$3.6~~$5.4 million in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. ~~The increase is~~This change was primarily ~~driven by a 24.7% increase in product acceptances, revenue recognized from the PPA IIIa Upgrade~~ ~~of $49.6~~ million and our ongoing cost reduction efforts to reduce material costs in conjunction with our suppliers and our reduction in labor and overhead costs through increased volume, improved processes and automation at our manufacturing facilities. This increase was partially offset by increased freight charges and other supply chain-related pricing pressures and costs incurred to support capacity expansion efforts which will be brought online in future periods.

~~Installation Gross Loss~~

Installation gross loss worsened by $2.2 million in the three months ended September 30, 2022 as compared to the prior year period driven by the change in site mix and other site related factors such as site complexity, size, local ordinance requirements and location of the utility interconnect.

~~Installation gross loss improved by $4.2 million in the nine months ended September 30, 2022 as compared to the prior year period~~ driven by the change in site mix and other site related factors such as site complexity, size, local ordinance requirements and location of the utility interconnect.

Service Gross ~~(Loss) Profit~~Loss

Service gross loss worsened by ~~$4.1~~$4.0 million in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This was primarily due to deployments of field replacement units and the impact of product performance guarantees offset by cost reductions and our actions to proactively manage fleet optimizations.

~~Service~~

Electricity Gross Profit

Electricity gross ~~loss worsened~~profit decreased by ~~$13.7~~$0.6 million in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. ~~This~~The year over year change was ~~primarily due to deployments of field replacement units and the impact of product performance guarantees offset by cost reductions and our actions to proactively manage fleet optimizations.~~

~~Electricity Gross (Loss) Profit~~

Electricity gross profit increased by $0.2 million in the three months ended September 30, 2022 as compared to the prior year period mainly due to the increase in Managed Services transactions recorded in the second half of fiscal year 2021.

Electricity gross profit decreased by $46.0 million in the nine months ended September 30, 2022 as compared to the prior year period mainly due to the write-off of old Energy Servers from the PPA IIIa Upgrade of $44.8 million partially offset by the increase in Managed Services transactions recorded in the second half of fiscal year 2021.immaterial.

Operating Expenses

Three Months Ended
September 30, Change Nine Months Ended
September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(dollars in thousands) (dollars in thousands)
Research and development $ 36,146 $ 27,634 $ 8,512 30.8 % $ 112,286 $ 76,602 $ 35,684 46.6 %
Sales and marketing 23,275 20,124 3,151 15.7 % 65,084 62,803 2,281 3.6 %
General and administrative 44,115 33,014 11,101 33.6 % 119,965 90,470 29,495 32.6 %
Total operating expenses $ 103,536 $ 80,772 $ 22,764 28.2 % $ 297,335 $ 229,875 $ 67,460 29.3 %


		Three Months Ended March 31,	Change
			2023		2022		Amount		%
	(dollars in thousands)
Research and development			$	45,690	$	34,526	$	11,164	32.3	%
Sales and marketing			27,111		21,334		5,777		27.1	%
General and administrative			45,147		37,736		7,411		19.6	%
Total operating expenses			$	117,948	$	93,596	$	24,352	26.0	%

Total Operating Expenses

Total operating expenses increased by ~~$22.8~~$24.4 million in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was primarily attributable to our continued investment in R&D capabilities to support our technology roadmap, our ~~investment in business development, and an increase in General and Administrative outside services.~~

~~Total operating expenses increased by $67.5 million in the nine months ended September 30, 2022 as compared to the prior year period. This increase was primarily attributable to our~~ continued investment in ~~R&D capabilities~~our workforce to support our ~~technology roadmap,~~growth, our investment in business development, and ~~an increase~~increases in ~~General~~office, facility and ~~Administrative outside services.~~travel expenses.

Research and Development

Research and development expenses increased by ~~$8.5~~$11.2 million in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was primarily driven by ~~increases~~an increase in employee compensation and benefits of ~~$4.7~~$5.3 million to expand our employee base, and an increase in ~~order to support our technology roadmap~~laboratory supplies and ~~cost reduction initiatives, including our hydrogen, electrolyzer, marine and biogas solutions.~~

~~Research~~materials of $2.6 million. The increase in research and development ~~expenses increased by $35.7 million in the nine months ended September 30, 2022 as compared to the prior year period. This increase~~spending was ~~primarily driven by increases in employee compensation and benefits of $13.3 million to expand our employee base~~ in order to support our technology roadmap, including our hydrogen, electrolyzer, marine and biogas solutions.

Sales and Marketing

Sales and marketing expenses increased by ~~$3.2~~$5.8 million in the three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was primarily driven by ~~increases~~an increase in employee compensation and benefits of $4.3 million to expand our U.S. and international sales force, ~~increased investment~~an increase in ~~brand~~travel expenses of $0.6 million to support our sales force and ~~product management, partially offset by a decrease~~an increase in outside ~~services.~~services of $0.5 million.

~~Sales~~General and ~~marketing~~Administrative

General and administrative expenses increased by ~~$2.3~~$7.4 million in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year period. This increase was primarily driven by ~~increases~~an increase in office and facility expenses of $5.9 million, inclusive of a $1.0 million increase in depreciation expense, an increase in employee compensation and benefits of ~~$8.8~~$3.6 million, ~~to expand our U.S.~~ and ~~international sales force, increased investment~~an increase in ~~brand and product management, partially~~travel expenses of $0.8 million, primarily offset by a decrease in ~~outside services.~~

~~General and Administrative~~

~~General~~other general and administrative expenses ~~increased by $11.1 million in the three months ended September 30, 2022 as compared to the prior year period. This increase was primarily driven by increases in employee compensation and benefits~~ of ~~$4.0 million and outside services and an increase in factoring of receivables.~~$3.4 million.

~~General and administrative expenses increased by $29.5 million in the nine months ended September 30, 2022 as compared to the prior year period. This increase was primarily driven by increases i~~
~~n employee compensation and benefits of $10.6 million, outside services and an increase in factoring of receivables.~~

Stock-Based Compensation


		Three Months Ended September 30,				Change				Nine Months Ended September 30,				Change						Three Months Ended March 31,	Change
		2022		2021		Amount		%		2022		2021		Amount		%					2023		2022		Amount		%
		(dollars in thousands)								(dollars in thousands)									(dollars in thousands)
Cost of revenue	Cost of revenue	$	4,982	$	2,945	$	2,037	69.2	%	$	13,609	$	9,749	$	3,860	39.6	%	Cost of revenue			$	4,161	$	3,860	$	301	7.8	%
Research and development	Research and development	4,818		5,678		(860)		(15.1)	%	25,113		15,876		9,237		58.2	%	Research and development			8,410		7,082		1,328		18.8	%
Sales and marketing	Sales and marketing	3,948		4,391		(443)		(10.1)	%	13,528		12,486		1,042		8.3	%	Sales and marketing			5,817		4,775		1,042		21.8	%
General and administrative	General and administrative	10,283		7,952		2,331		29.3	%	30,688		19,198		11,490		59.8	%	General and administrative			11,165		10,591		574		5.4	%
Total stock-based compensation	Total stock-based compensation	$	24,031	$	20,966	$	3,065	14.6	%	$	82,938	$	57,309	$	25,629	44.7	%	Total stock-based compensation			$	29,553	$	26,308	$	3,245	12.3	%

Total stock-based compensation for the three months ended ~~September 30, 2022~~March 31, 2023 increased by $3.2 million as compared to the prior year period, ~~increased by $3.1 million primarily driven by the efforts to expand our employee base across all of the Company’s functions.~~

~~Total stock-based compensation for the nine months ended September 30, 2022 compared to the prior year period increased by $25.6 million~~ primarily driven by the efforts to expand our employee base across all of the Company’s functions.

Other Income and Expense


		Three Months Ended September 30,				Change				Nine Months Ended September 30,								Change							Three Months Ended March 31,				Change
		2022		2021				2022				2021												2023		2022
		(in thousands)																								(in thousands)
Interest income	Interest income	$	1,109	$	72			$	1,037			$	1,364			$	222				$	1,142	Interest income						$	1,995	$	59	$	1,936
Interest expense	Interest expense	(13,099)		(14,514)		1,415				(41,000)				(43,798)				2,798		Interest expense							(11,746)		(14,087)		2,341

Other income, net		4,472		2,011		2,461				254				1,948				(1,694)
Loss on extinguishment of debt		—		—		—				(4,233)				—				(4,233)
Gain (loss) on revaluation of embedded derivatives		54		(184)		238				623				(1,644)				2,267
Other expense, net																				Other expense, net							(1,343)		(3,027)		1,684

Gain on revaluation of embedded derivatives																				Gain on revaluation of embedded derivatives							117		531		(414)
Total	Total	$	(7,464)	$	(12,615)	$	5,151			$	(42,992)			$	(43,272)			$	280	Total							$	(10,977)	$	(16,524)	$	5,547

Interest Income

Interest income is derived from investment earnings on our cash balances, primarily from money market funds. The increase in interest income of $1.9 million was due to the increase in cash balances for money market funds for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 as compared to the prior year ~~periods.~~period.

Interest Expense

Interest expense is from our debt held by third parties.

Interest expense for the three months ended ~~September 30, 2022~~March 31, 2023 decreased by $2.3 million as compared to the prior year ~~period decreased by $1.4 million.~~period. This decrease was primarily due to ~~lower interest expense as a result of our~~the repayment of the 7.5% Term Loan due September 2028 and ~~refinancing our notes at a lower interest rate.~~

~~Interest expense for the nine months ended September 30, 2022 as compared to the prior year period decreased by $2.8 million. This decrease was primarily~~6.07% Senior Secured Notes due ~~to lower interest expense as a result of our repayment of the 7.5% Term Loan due September 2028 and refinancing our notes at a lower interest rate.~~March 2030.

Other ~~Income,~~Expense, net

Other ~~income,~~expense, net is primarily derived from ~~gain from SK Option revaluation,~~ investments in joint ventures, the impact of foreign currency ~~translation,~~transactions, and adjustments to fair value for derivatives.

Other ~~income,~~expense, net for the three months ended ~~September 30, 2022~~March 31, 2023 decreased by $1.7 million as compared to the prior year period, ~~increased by $2.5 million~~ primarily as a result of ~~the gain on the revaluation of the Option to purchase Class A common stock upon receipt of notice of exercise from SK ecoplant on August 10, 2022 of $7.9 million, partially offset by the loss on~~ foreign currency ~~translation of $3.6 million.~~

Other income, net for the nine months ended September 30, 2022 as compared to the prior year period decreased by $1.7 million primarily as a result of the loss on remeasurement of our equity investment in the Bloom Energy Japan joint venture, loss on foreign currency translation of $5.3 million, partially offset by the gain on the revaluation of the Option to purchase Class A common stock upon receipt of notice of exercise from SK ecoplant on August 10, 2022 of $9.0 million.

~~Loss on Extinguishment of Debt~~

Loss on extinguishment of debt for the nine months ended September 30, 2022 was $4.2 million, which was recognized as a result of repayment of 7.5% Term Loan due September 2028 as part of the PPA IIIa Upgrade.

transactions.

Gain ~~(Loss)~~ on Revaluation of Embedded Derivatives

Gain ~~(loss)~~ on revaluation of embedded derivatives is derived from the change in fair value of our sales contracts of embedded EPP derivatives valued using historical grid prices and available forecasts of future electricity prices to estimate future electricity prices.

Gain on revaluation of embedded derivatives for the three months ended ~~September 30, 2022~~March 31, 2023 decreased by $0.4 million as compared to the prior year period ~~increased by $0.2 million due to the change in fair value of our embedded EPP derivatives in our sales contracts~~

~~Gain on revaluation of embedded derivatives for the nine months ended September 30, 2022 as compared to the prior year period increased by $2.3 million~~ due to the change in fair value of our embedded EPP derivatives in our sales contracts.

Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests

Three Months Ended
September 30, Change Nine Months Ended
September 30, Change
2022 2021 Amount % 2022 2021 Amount %
(dollars in thousands)
Net loss attributable to noncontrolling interests $ (3,315) $ (4,309) $ (994) (23.1) % $ (9,768) $ (13,733) $ (3,965) (28.9) %
Net (loss) income attributable to redeemable noncontrolling interest $ — $ 17 $ 17 (100.0) % $ (300) $ (9) $ 291 3,233.3 %


	Three Months Ended March 31,		Change
			2023		2022		Amount		%
		(dollars in thousands)
Net loss attributable to noncontrolling interest			$	(3,350)	$	(4,088)	$	738	18.1	%
Net loss attributable to redeemable noncontrolling interest			—		(300)		300		100.0	%

Net loss attributable to noncontrolling interests is the result of allocating profits and losses to noncontrolling interests under the hypothetical liquidation at book value (“HLBV”) method. HLBV is a balance sheet-oriented approach for applying the equity method of accounting when there is a complex structure, such as the flip structure of the PPA Entities.

Net loss attributable to noncontrolling interests for the three months ended ~~September 30, 2022~~March 31, 2023 decreased by $0.7 million as compared to the prior year period ~~changed by $1.0 million~~ due to the decreased losses in our PPA Entities, which are allocated to our noncontrolling ~~interests.~~

Net loss attributable to noncontrolling interests for the nine months ended September 30, 2022 as compared to the prior year period changed by $4.0 million due to decreased losses in our PPA Entities, which are allocated to our noncontrolling interests.

~~Changes~~interest. Change in net ~~(loss) income~~loss attributable to redeemable noncontrolling interest for the three ~~and nine~~ months ended ~~September 30, 2022 and 2021 were~~March 31, 2023 as compared to the prior year period was immaterial.

~~Off-Balance Sheet Arrangements~~

We include in our condensed consolidated financial statements all assets and liabilities and results of operations of our PPA Entities that we have entered into and over which we have substantial control. For additional information, see Part II, Item 8, Note 11 -~~Portfolio Financingsin our Annual Report on Form 10-K for the fiscal year ended December 31, 2021~~.

We have not entered into any other transactions that have generated relationships with unconsolidated entities or financial partnerships or special purpose entities. Accordingly, as of September 30, 2022 and December 31, 2021 we had no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as applied in the United States (“U.S. GAAP”). The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. Our discussion and analysis of our financial results under Results of Operations above are based on our ~~audited~~ results of operations, which we have prepared in accordance with U.S. GAAP. In preparing these condensed consolidated financial statements, we make assumptions, judgments and estimates that can affect the reported amounts of assets, liabilities, revenues and expenses, and net income. On an ongoing basis, we base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are representative of estimation uncertainty, and are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating the consolidated financial condition and results of operations.

The accounting policies that most frequently require us to make assumptions, judgments and estimates, and therefore are critical to understanding our results of operations, include:

•~~Discussion of Earliest Year of Changes in Financial Condition and Results of Operations;~~

•Revenue Recognition;

•~~Leases: Incremental Borrowing Rate;~~

•~~Valuation of Escalator Protection Plan Agreements (“EPP”);~~

•~~Valuation of Certain Financial Instruments and Customer Financing Receivables;~~

•Valuation of Assets and Liabilities of the SK ecoplant Strategic Investment;

•Incremental Borrowing Rate ~~(“IBR”)~~ by Lease Class;

•Stock-Based Compensation;

•Income Taxes;

•Principles of Consolidation; and

•Allocation of Profits and Losses of Consolidated Entities to Noncontrolling ~~Interests and Redeemable Noncontrolling~~ Interests.

Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operation in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 provides a more complete discussion of our critical accounting policies and estimates. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, there were no significant changes to our critical accounting policies and estimates.

4842

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no significant changes to our quantitative and qualitative disclosures about market risk during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. Please refer to Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk included in our Annual Report on Form 10-K for our fiscal year ended December 31, ~~2021~~2022 for a more complete discussion of the market risks we consider.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our Principal Executive Officer) and Chief Financial Officer (our Principal Financial Officer) as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2023. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2023, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

During the three months ended ~~September 30, 2022,~~March 31, 2023, there were no changes in our internal ~~controls~~control over financial reporting, which were identified in connection with management’s evaluation required by ~~paragraph~~paragraphs (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As of September 30, 2022 based on evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer and Chief Financial Officer (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) it was concluded that our disclosure controls and procedures were effective.

For further information on controls and procedures, see Part II, Item 9A, Controls and Procedures in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~

2022.

4943

~~Part~~PART II- OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

We are, and from time to time we may become, involved in legal proceedings or be subject to claims arising in the ordinary course of our business. For a discussion of our legal proceedings, see ~~Part II, Item 8~~ ~~Note 13 - Commitments and Contingencies~~ ~~in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and~~ Part I, Item 1, Note 1312 - Commitments and Contingencies. We are not presently a party to any other legal proceedings that in the opinion of our management and if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows.

ITEM 1A - RISK FACTORS

~~There~~Except as discussed below, there were no material changes in risk factors as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

We or our customers may maintain cash at financial institutions, often in balances that exceed federally-insured limits. The failure of financial institutions could adversely affect our customers’ ability to obtain financing, our ability to pay our operational expenses or make other payments and our revenues, cash flows and liquidity.

Our or our customer’s cash may be held at banking institutions in non-interest-bearing and interest-bearing accounts in amounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we or our customers could lose all or a portion of those amounts held in excess of such insurance limitations. For example, the FDIC took control of Silicon Valley Bank (“SVB”) on March 10, 2023. While the Federal Reserve subsequently announced that account holders would be made whole, the FDIC may not make all account holders whole in the event of future bank failures. In addition, even if account holders are ultimately made whole with respect to a future bank failure, account holders’ access to their accounts and assets held in their accounts may be substantially delayed. Any material loss that we may experience in the future or inability for a material time period to access our cash and cash equivalents could have an adverse effect on our ability to pay our operational expenses or make other payments, which could adversely affect our business. In addition, regional banking and financial institution instability may make it more difficult for our customers to obtain financing, which could adversely affect our revenues, cash flows and liquidity.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 - MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 - ~~Other~~OTHER INFORMATION

~~Not applicable.~~None

5044

ITEM 6 - EXHIBITS

Incorporated by Reference
Exhibit Number Description Form File No. Exhibit Filing Date
3.1
Amended and Restated Bylaws of Bloom Energy Corporation (effective as of August 10, 2022) 8-K 001-38598 3.1 8/16/2022
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith
32.1
** Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith
101.INS XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document Filed herewith
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed herewith
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by Reference

Exhibit Number

Description

Form

File No.

Exhibit

Filing Date

3.1

Restated Certificate of Incorporation

10-Q

001-38598

3.1

9/7/2018

3.2

Certificate of Amendment to the Restated Certificate of Incorporation of Bloom Energy Corporation

10-Q

001-38598

3.1

8/9/2022

3.3

Certificate of Withdrawal of Certificate of Designation of Series A Redeemable Convertible Preferred Stock

Filed herewith

3 .4

Certificate of Designation of Series B Redeemable Convertible Preferred Stock

8-K

001-38598

3.1

3/23/2023

3 .5

Certificate of Amendment to the Certificate of Designation of Series B Redeemable Convertible Preferred Stock

8-K

001-38598

3.1

4/18/2023

3.6

Amended and Restated Bylaws, as effective February 15, 2023

8-K

001-38598

3.1

2/17/2023

10.1

Amendments to Securities Purchase Agreement and Investor Agreement, dated March 20, 2023, between the Company and SK ecoplant Co., Ltd.

8-K

001-38598

10.1

3/23/2023

10.2

Shareholder’s Loan Agreement dated as of March 20, 2023, between the Company and SK ecoplant Co., Ltd.

8-K

001-38598

10.2

3/23/2023

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith

32.1

Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished herewith

101.INS

XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Filed herewith

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed herewith

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


†			~~Portions of this exhibit are redacted as permitted under Regulation S-K, Rule 601.~~
**			The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BLOOM ENERGY CORPORATION

Date:

~~November 3, 2022~~May 9, 2023

By:

/s/ KR Sridhar

KR Sridhar

Founder, ~~President,~~ Chief Executive Officer, Chairman and Director

(Principal Executive Officer)

Date:

~~November 3, 2022~~May 9, 2023

By:

/s/ Gregory Cameron

Gregory Cameron

~~Executive Vice~~ President and

Chief Financial Officer

(Principal Financial and Accounting Officer)

5246


		Three Months Ended September 30, 2022
	Class A and Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total equity (deficit) attributable to Class A and Class B common stockholders		Noncontrolling Interest		Total Stockholders' Equity (Deficit)
		Shares	Amount
Balances at June 30, 2022		178,913,797	$	18	$	3,284,261	$	(1,000)	$	(3,460,234)	$	(176,955)	$	32,034	$	(144,921)
Issuance of restricted stock awards		539,074	—		—		—		—		—		—		—
ESPP purchase		339,055	—		5,619		—		—		5,619		—		5,619
Exercise of stock options		225,759	—		2,233		—		—		2,233		—		2,233
Stock-based compensation		—	—		23,893		—		—		23,893		—		23,893
Distributions and payments to noncontrolling interests		—	—		—		—		—		—		(1,557)		(1,557)
Contributions from noncontrolling interest		—	—		—		—		—		—		2,815		2,815
Public share offering (Note 1)		14,950,000	1		371,526		—		—		371,527		—		371,527
Forward to purchase Class A Common Stock (Note 5)		—	—		4,183		—		—		4,183		—		4,183
Foreign currency translation adjustment		—	—		—		(531)		—		(531)		(496)		(1,027)
Net loss1		—	—		—		—		(57,077)		(57,077)		(3,315)		(60,392)
Balances at September 30, 2022		194,967,685	$	19	$	3,691,715	$	(1,531)	$	(3,517,311)	$	172,892	$	29,481	$	202,373


		Three Months Ended September 30, 2021
	Class A and Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total deficit attributable to Class A and Class B common stockholders		Noncontrolling Interest		Total Stockholders' Equity
		Shares	Amount
Balances at June 30, 2021		173,402,160	$	17	$	3,155,917	$	(124)	$	(3,177,381)	$	(21,571)	$	51,185	$	29,614
Issuance of restricted stock awards		581,363	—		—		—		—		—		—		—
ESPP purchase		967,797	—		5,319		—		—		5,319		—		5,319
Exercise of stock options		126,741	1		1,122		—		—		1,123		—		1,123
Stock-based compensation		—	—		20,743		—		—		20,743		—		20,743
Change in effective portion of interest rate swap agreement		—	—		—		—		—		—		763		763
Distributions and payments to noncontrolling interests		—	—		—		—		—		—		(540)		(540)
Foreign currency translation adjustment		—	—		—		(154)		—		(154)		(145)		(299)
Net loss2		—	—		—		—		(52,370)		(52,370)		(4,309)		(56,679)
Balances at September 30, 2021		175,078,061	$	18	$	3,183,101	$	(278)	$	(3,229,751)	$	(46,910)	$	46,954	$	44


		Nine Months Ended September 30, 2021
	Class A and Class B Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total (deficit) equity attributable to Class A and Class B common stockholders		Noncontrolling Interest		Total Stockholders' Equity
		Shares	Amount
Balances at December 31, 2020		168,002,726	$	17	$	3,182,753	$	(9)	$	(3,103,937)	$	78,824	$	62,195	$	141,019
Cumulative effect upon adoption of Accounting Standards Update 2020-06		—	—		(126,799)		—		5,308		(121,491)		—		(121,491)
Issuance of restricted stock awards		2,533,027	—		—		—		—		—		—		—
ESPP purchase		1,945,305	—		10,045		—		—		10,045		—		10,045
Exercise of stock options		2,597,003	1		62,064		—		—		62,065		—		62,065
Stock-based compensation expense		—	—		55,038		—		—		55,038		—		55,038
Change in effective portion of interest rate swap agreement		—	—		—		—		—		—		4,031		4,031
Distributions and payments to noncontrolling interests		—	—		—		—		—		—		(5,285)		(5,285)
Foreign currency translation adjustment		—	—		—		(269)		—		(269)		(254)		(523)
Net loss4		—	—		—		—		(131,122)		(131,122)		(13,733)		(144,855)
Balances at September 30, 2021		175,078,061	$	18	$	3,183,101	$	(278)	$	(3,229,751)	$	(46,910)	$	46,954	$	44