Plug Power has reported strong Q2 2017 results, setting up the business for continued growth in 2018.
Plug Power’s Q2 2017 saw continued execution of efforts to Improve its business model, improve margins, and expand its multi-site customer base. These efforts allow Plug Power to enter the back-half of 2017 from a position of strength, allowing it to reconfirm its full-year 2017 guidance.
Strong Q2 deals were made with significant customers such as Amazon and Walmart. The GenKey agreement with Amazon will generate approximately $70m in revenue for the full-year 2017 and the Walmart deal represents $80m worth of contracts over a three-year period. Looking to the next six months, the company will begin to realise the positive economic impact of the key agreements.
Total GAAP gross revenue for Q2 of 2017 was $22.6m, compared to $20.5m in the Q2 of 2016, and reflected delivery of four sites in total, including two under a power purchase agreement (PPA).
Q2 revenue represents 24.1% year-over-year growth in recurring revenue streams, showing the continued growth of the business model and contracted revenue backlog.
Two highlights for the quarter were GenDrive gross margins coming in at 31%, and service margins near breakeven. While service will see some variability quarter-to-quarter, Plug Power are seeing a positive trend in service costs and continue to target sustainable positive gross margins for service in 2018
Free cash flow for the second quarter of 2017 was an outflow of $45.4m compared to $24.1m in the Q2 of 2016. As of 30th June 2017, Plug Power had a total cash position of $54.1m, including cash and cash equivalents of $2.1m and restricted cash of $52.0m.
Plug Power believes that the third quarter will be a benchmark quarter, as the company continues to grow the top line, expand its cost reduction programmes and drive new customers for continued growth, leading to sustainable positive cash flow in the second half of 2018 and beyond.