Fluence Corporation Eyes Double-Digit EBITDA as Margins Climb on $79M Revenue Base

Fluence Corporation positions for accelerated margin growth with $79M revenue base

In its May 2026 investor presentation, Fluence Corporation (ASX: FLC) outlined a growth strategy centred on a deliberate shift toward higher-margin Smart Product Solutions (SPS) and Recurring Revenue (RR) segments. The company described itself as a diversified, profitable, pure-play water platform targeting double-digit EBITDA margins within two to three years, an uncommon profile for a business at this stage of growth.

Key headline metrics from the presentation include:

• FY2025 revenue: $78.4M (+52.3% year-on-year)
• FY2025 EBITDA: $4.0M (vs. -$4.0M in FY2024, an $8.0M improvement)
• TTM Q1 2026 EBITDA margin: 5.4%
• Total backlog as of 31 March 2026: $64.4M
• SG&A reduced approximately 25% since FY2022

The strategic shift driving margin expansion — from large projects to smart solutions

Moving up the margin curve with SPS and recurring revenue

The core investment thesis rests on Fluence’s transition away from low-margin Custom Engineered Solutions (CES) toward its higher-margin SPS and RR product lines. The presentation laid out a clear margin ladder across the company’s segments, illustrating why this revenue mix shift is expected to drive meaningful profit expansion.

SPS revenue has grown from 29% of total revenue in 2022 to 52% in TTM Q1 2026, with a medium-term target of 61%. Over the same period, CES has declined from 62% to 34% of the revenue mix, reflecting the deliberate repositioning underway.

Revenue mix transformation — geography and end markets diversifying

The geographic shift is equally pronounced. SEA and China have declined from 58% of revenue in 2022 to 30% in TTM Q1 2026, with a medium-term target of 12%, as North America and other regions grow toward a combined 30% target. Key end market movements include:

• Industrial Wastewater and Biogas: grew from 7% (2022) to 18% (TTM Q1 2026)
• Industrial Water and Reuse: grew from 11% (2022) to 22% (TTM Q1 2026)
• Municipal Water and Wastewater: medium-term target of 29% (from 15% currently)

The presentation identified the OneFluence integration strategy as the operational backbone enabling this cross-segment expansion, encompassing cross-selling, global talent management, and the alignment of business tools and processes across all divisions.

Understanding Fluence’s core technology — why MABR is a competitive moat

Membrane Aerated Biofilm Reactor (MABR) technology is the proprietary foundation of Fluence’s product portfolio. In plain terms, MABR works by supplying air through a spirally wound, semi-permeable membrane submerged in wastewater. This creates conditions for an aerobic nitrifying biofilm to develop on the membrane surface, treating the wastewater in an energy-efficient manner by eliminating the need for conventional aeration equipment.

A key commercial differentiator is scalability. Fluence’s MABR technology applies across small, mid-sized, and large wastewater treatment plants, whereas competitors Suez and DuPont are limited to larger plants only. DuPont also cannot access the US market with its MABR product; Fluence faces no such restriction globally.

On cost, the presentation cited an estimated ~30% lower total cost of ownership (TCO) compared to competing technologies including MBBR, MBR, and FMBR, based on a 10-year period. The company has deployed 300+ MABR plants in SEA and China and described itself as the market leader in the region for high-concentration NH₃ and total nitrogen (TN) removal.

This installed base matters for the investment case. A global network of operating plants underpins recurring revenue streams from operations and maintenance contracts, and the proprietary technology creates defensible margins that generic engineering service providers cannot easily replicate.

Order momentum, the Ivory Coast catalyst, and the path to double-digit EBITDA

Record order bookings signal accelerating demand

Order activity in the presentation reflected strengthening demand across Fluence’s core segments. Key metrics highlighted included:

• FY2025 new orders: $64.2M (+28.5% growth)
• Q4 2025 new orders: $24.7M, explicitly described as Fluence’s largest SPS and RR order quarter on record
• TTM Q1 2026 new orders: $59.6M
• Total backlog at 31 March 2026: $64.4M
• Core business unit backlog (MWW, IWR, IWB, SEA and China): Q1 2026 increased $6.9M (+18.6%) versus Q1 2025
• SPS and RR backlog in Q4 2025 and Q1 2026 stood at its two highest points in the past three years
• Management flagged an expectation of significant new order growth in H1 2026 compared to H1 2025

Ivory Coast project nearing completion — O&M contract the next prize

The Ivory Coast project, comprising €164M in main works and a €48M addendum, remains a material near-term contributor. Provisional Acceptance on the Main Works was granted on 27 December 2024, with all payments on the Main Works having been collected. Final Acceptance is scheduled for Q3 2026.

Progress on the Addendum Works is advanced. As of the end of Q1 2026, six milestone payments totalling €35.4M had been collected, representing approximately 73% of the project. Milestone 7 was 70% collected in April 2026, with the remainder expected in May 2026.

The strategic opportunity lies beyond construction. The Ivorian government has authorised direct negotiations with Fluence for a long-term Operations and Maintenance (O&M) contract for the plant. Negotiations commenced on 19 March 2026, with a three-month plan targeting contract signature in Q3 2026. The presentation described Fluence as strongly positioned to be awarded the O&M contract, which would represent a potential transformation from one-time construction revenue into a meaningful long-term recurring revenue stream.

Closing the section, management reiterated its target of double-digit EBITDA margins within two to three years. With SG&A already reduced approximately 25% since FY2022, the cost base provides an operating leverage platform that does not require proportional cost increases to generate future profit growth.

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