Good afternoon, and welcome to the Bloom Energy Second Quarter 2019 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mark Mesler, Vice President of Finance and Investor Relations at Bloom Energy. Please go ahead..

Good afternoon, all, and thank you for joining us on Bloom Energy's second quarter 2019 earnings conference call.

To supplement this conference call, we have file our Q2 2019 shareholder letter with the SEC and have posted it along with supplemental financial information that we will periodically reference throughout this call to our investor relations website.

The matters we will be discussing today include forward-looking statements regarding future events and the future financial performance of the company.

These statements are subject to risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

We assume no obligation to revise any forward-looking statements made on today's call. During this call and in our Q2 2019 shareholder letter, we refer to GAAP and non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.

A reconciliation between GAAP and non-GAAP is included as part of our Q2 2019 shareholder letter. Joining me on the call today are KR Sridhar, Principal Co-founder and Chief Executive Officer; and Randy Furr, Chief Financial Officer. KR and Randy will review the operating and financial highlights of the quarter and then we will take questions.

I will now turn the call over to KR.

Hello, this is KR. Good afternoon to all of you. Welcome to the Q2 2019 earnings conference calls. I’ll provide you with a brief summary of our Q2 performance and then discuss a few significant Bloom developments followed by market shifts in power industry that are creating business opportunities for Bloom.

Randy Furr will follow to discuss financial performance. In Q2, we achieved 271 system acceptances, a 50% year-over-year increase. We achieved 233.8 million of revenue, which is an all-time record for Bloom. Our gross margin was 17.8% and operating loss was 67.2 million.

Excluding stock-based compensation, our non-GAAP gross margin was 22.3% and non-GAAP operating income was $1.1 million. Overall, a strong performance. Now on to company developments. We continue to make healthy cost reductions of our current platform, development of our fourth generation Bloom 7.5 platform is on track.

We financed another 14 megawatts of systems through our partner, Southern Company. Duke Energy One, a subsidiary of Duke Energy will acquire 37 megawatts of Bloom Energy server projects through a PPA, a 215 million investment.

Adding in our other partner Exelon, three of the nation's largest power companies have now validated Bloom’s unique place in the transforming power market with substantial investments. Following on our announcements on using landfill biogas for power generation, we announced the capability of Bloom servers to run on renewable hydrogen.

This breakthrough could enable large scale storage of intermittent renewable power generated by solar and wind as well as be an important asset for the hydrogen infrastructure roadmap that Asian countries like Korea and Japan are developing. We are developing landfill, dairy waste, and wastewater sourced bio-methane powered Bloom projects.

You will hear about them in the coming months. Also, in the near future, we expect another important announcement from us on decarbonisation using the Bloom Energy platforms. Now, let us consider the transformational market shifts occurring in the power industry.

In the last few months, climate change has impacted the providers and consumers of electricity at an unprecedented scale. In the modern era, this is the first time ever that communities and businesses in the most advanced nation on Earth are being told that they may lose power for 10 days at a stretch.

Worse still, in fire prone areas, there may be no limits to the frequency of these outages if high wind conditions occur. Last month, New York City was unable to provide reliable power to its customers during a hot summer weekend. The common perception is that such events are a new normal. The reality may be worse.

Such events are expected to become more severe, more frequent, last longer, and impact more cities in the months and years ahead. It is becoming very evident that our aging and brittle electric grid is not capable of providing us with a basic human need, 24/7 reliable electricity.

It is neither built for nor capable of withstanding the consequences of the extreme weather Mother Nature is doling out as we struggle with climate change. Current solutions for coping with the power outages are inadequate and antiquated.

Traditional backup generators and batteries are designed to deal with minutes and maybe hours of outage at best, not days. The smog-related pollution from backup generators creates significant health risks.

For example, the City of Lathrop in California Central Valley, an area with the worst air quality in all of the United States expects to burn 10,000 gallons of diesel every day that it is without power from PG&E.

Studies show that cancer risk increases by 50% in a local population that is exposed to 10 days per year of dirty emissions from diesel backups. Unfortunately, and ironically, all our attention on climate change is focused on solving the long-term problem of decarbonisation. Almost no attention has been given to creating resilient solutions.

It is imperative that we move with speed and vigor to protect ourselves from the disruption that today's climate change brings, starting with our electric power systems. We need large scale deployment of resilient solutions that will secure and safeguard human lives, property, and economic interest for now and for decades to come.

The relevance of Bloom Energy in this rapidly changing world cannot be overstated. There is no other commercial technology that can impact both GHG reduction and bring resiliency in one unified platform. Bloom offers a clean, reliable, and resilient source that is adapted for the post-climate change world.

Let me cite some examples on how Bloom Energy Always-On solutions have performed. Four Home Depot stores [indiscernible] with Bloom Energy Always-On business continuity solutions, rode through hours of power outages multiple times in the New York City area during a hot summer weekend last month.

Bloom has more than 20 deployments located within 100 miles of the epicenter of the 7.1 magnitude earthquake that struck Ridgecrest on July 1. Every single one operated normally during and after the event, including one right at the epicenter.

For years, our systems have powered customers during and after hurricanes, floods, high winds, earthquakes, fires, and other grid outages.

Such successes and heightened customer concern resiliency is driving an uptick in interest for our solutions as evidenced by increased web traffic, inbound calls, and more deals in the pipeline with a micro grid architecture.

A key point to note is that the geographic areas with some of the greatest exposure to extreme weather-related disasters are also the territory where Bloom operates today; California, New York, New Jersey, Massachusetts, and Connecticut. We expect tailwinds for our business as a result.

Let me now tell you about the headwinds we have faced in the first half of 2019. The same geographies I just outlined for you are at the forefront of policy discussions about a race to 100% renewables only power.

Such objectives are well intentioned by ill-informed, there is no credible way to achieve 100% renewables goal without compromising public safety, reliability, resiliency, and affordability of power. Nevertheless, the political rhetoric continues.

The confusion it creates in the marketplace in New York and California has slowed down the conversion of opportunity moving through our otherwise very healthy sales funnel during the first half of the year. We have historically achieved our highest ASPs in New York and California.

With fewer orders from those markets in our anticipated acceptance mix for 2020, our revenue growth and margins for next year may not be in line with Street expectations. We still expect to deliver healthy year over year acceptance growth in 2020, generally in line with expectations/ Randy will go into further detail shortly.

We have high degree of confidence that this is an anomaly that will correct and want to emphasize that we are bullish on these markets going forward. Why? Let me give you a six reasons. One, Mother Nature waits for no one.

As the number, severity, and duration of outages escalates, we expect customers will act to protect their interests Two, economics will drive rational business behavior. Utilities in the markets we discussed have already made rate increase request to the regulators to pay for disaster-related costs.

This will result in higher grid delivered electricity prices. Number three, aggressive costs down on our product offering will enable us to lower our delivered price of electricity to customers without impacting our margins.

Number four, businesses are beginning to quantify the commercial cost of power outages and accounting for it when they switch from grid power to alternatives. Number five, customers are now considering their risk exposure should they be unprepared to deal with long outages after receiving fair warning from their utility providers.

Number six, as I mentioned, traditional diesel powered backup is not a viable option for base of power outage impacting large contiguous service areas. We are taking some key steps to expand our US commercial business opportunity.

We are introducing a microgrid solution without compromising our product pricing where a customer only has to commit to five-year contract term. Such a short-term offer is revolutionary in the baseload power business.

Our new and simple off the shelf microgrid offering provides a solution for customers who would not have traditionally needed one but now do so for safety, risk mitigation, and business continuity. We are very proud to welcome Chris White as our new Chief Sales Officer.

His high energy, passion, talent, and prior experience in building sales teams, partners, and channels and scaling growth make him a very timely addition. In summary, with the consequences of climate change ratcheting up at an alarming rate, we believe we have reached a tipping point in the way businesses have to deal with electric power.

Gone are the days that corporate America could signal virtue and mitigate climate change by only buying or acquiring carbon credits from remote renewable farms. Today, companies must address the consequences of climate change that is impacting their business operations and assets.

The question for business leaders is, are we capable of protecting our employees, customers, and investment if we experience prolonged and frequent power outages? Bloom’s platform positions us solely and uniquely in the market to offer electricity that meets their needs.

Bloom Energy is affordable, accessible, reliable, resilient, safe, and sustainable. It is the right product in the right market at the right time. We own this market and we will execute and deliver on our vision and mission to serve it Randy, over to you..

site location and applicable utility tariffs for that location; whether the site includes grid outage protection and/or this mission critical; the size of the site being installed, generally, the larger the installation, the lower the cost on a per kilowatt basis; and as previously mentioned, whether or not the scope of our work includes installation.

Again, generally, our international business does not include installation. The bottom line is the important element is not the trend of the ASP or the TISC, but the trend in the delta between the two. The delta represents our unit level profit.

Also related to our outlook, during our last earnings call, I highlighted one-time benefit of approximately 8 million related to our service profitability. That one-time benefit is reflected in our Q2 results. I just wanted to point out that we will not see that one-time Q2 benefit going forward.

Therefore, in Q3, we expect service profitability to be a loss in the range of 6 million to 7.5 million. We do expect to see this loss narrow in Q4. I would like to turn the conversation to the year 2020.

Next year, as we have discussed on past quarterly earnings calls, we will communicate and disclose our backlog once a year at year end and we do not intend to change that practice. However, we do feel it is appropriate at this time to provide some high-level visibility on 2020. This is based on first half 2019 orders.

For our US commercial and industrial business, recall that the time from quarter booking to revenue ranges in the 9 to 12 months timeframe, translating to the bulk of 2020 US commercial and industrial revenue will come from orders booked in 2019.

So, based on our first half 2019 incoming orders, we do expect to see the acceptance volume growth in 2020. In fact, we anticipate acceptance volume growth to be in the 30% range next year, all positive.

However, given the customer mix, we also expect a drop in our ASPs by a similar percentage, translating to a generally flat top-line revenue growth for the year. Clearly, with a substantial increase in volume and no revenue growth, profitability may be impacted.

That impact can be partially mitigated, and I will now provide some color on volume drivers, ASPs, and profitability. With respect to volume, we previously anticipated sufficient volume growth to offset planned ASP declines. Our utility scale and international businesses are performing well and generally in line with our internal plan.

It is our US commercial and industrial business that is somewhat lagging internal expectations, still growing, but not at the level initially anticipated. Why is this? KR pointed this out earlier.

The various US political headwinds around renewables and natural gas policies are creating confusion for our customers, and, in some cases, delaying purchasing decisions.

With respect to ASPs and profitability, a portion of the decline in ASPs is attributable to an increase in our international business where we did not perform installation; thus, no installation revenue nor any installation costs. Therefore, no hit to our bottom line. Any portion of the ASP decline is attributable to the overall mix of our business.

As our utility scale in international businesses are growing at a faster rate than US commercial and industrial, where historically our US commercial and industrial realizes higher ASPs given the federal investment tax credit.

The majority of the decline is attributable to an anticipated ASP decline for our US commercial and industrial business, as we move into markets outside our typical California and New York markets, where the electricity tariffs are generally lower.

However, in line with historical trends, we expect to mitigate a proportion of any ASP decline through continued product cost reductions. So, in summary, our ASPs are declining at a rate generally as anticipated, but the volume increase is not fully sufficient to offset the decline.

As I mentioned earlier, we do expect to see another year of low-double digit product cost declines, and we do expect to see the commercial launch of our next generation product late next year. Finally, our goal is not to be a consumer of cash in 2020 notwithstanding the timing of any periodic working capital requirements.

Once again, thank you for your time. I now like to turn the call back to the operator for Q&A..

[Operator Instructions] And your first question comes from the line of Tahira Afzal from KeyBanc Capital Markets..

First question for me is, just given the new management team in place on the installation side, just hoping you could speak to some of the changes that have been implemented and maybe some examples of how these changes have had an impact on lead times..

This is Randy. Good question. So as I pointed out earlier, the challenges that are in this business really have to do with just the number of approvals that we need to get from third parties, such as from our customer, from our landlord, building permits, from the local utilities, et cetera.

And often these folks, and there's a major fire, we’ll get called away to deal with that fire or hurricane or something like that.

So a lot of this stuff, no matter what policies we put in place, and I want to stress the new management team here has done a great job, is just totally out of the control of Bloom and the way we've been able to address that is we’ve just take a tool of that -- that's a lot bigger than what we guide or what we estimate that will yield there in the quarter.

And that's why you'll see a difference in the ASPs often is because actual pool that yields might be different than the anticipated pool that we had at the beginning.

I think the new management team there led by [indiscernible] is really focused today on improving the process that we just talked about, but also really driving costs down for the future. And that's the number one focus, I think of that team there.

And just the way we're going to deal with that uncertainty is to continue to have a bigger pool that we think will yield in the quarter and build some, let's just call it conservatism into the estimates that we have..

Your next question comes from the line of Stephen Byrd from Morgan Stanley..

Hi, I wanted to touch on the cash flow outlook for the company, given this more muted outlook in 2020.

Randy, towards the end, you mentioned just a little bit about conserving cash, but do you still plan on being cash flow positive in the second half of this year and what is the cash flow outlook in 2020?.

Yeah. Stephen, so the answer to the question, yes, we expect to be cash flow positive in the second half of 2019. And, we wanted to put that in the end. Our expectation is not that we will be losing money in 2020. In fact, we expect to be profitable in 2020.

We just want to point out that even despite the growth in the company next year, our expectations is that the profit that we’ll generate will certainly finance the working capital and any external capital needs that we have in the business and we expect to be cash flow neutral to slightly cash flow profitable in 2020..

Your next question comes from the line of Michael Weinstein from Credit Suisse..

Given that, I guess the last in Q2 and Q3, you've had about 40% to 45% increases year-over-year for acceptances, I’m just wondering, given the 30% projection for overall next year, what do you think -- how do you think the fourth quarter shapes up? Is that also going to be similar increases to this year or is it going to be closer to that 30% level that you're going to get next year?.

So look, from our expectations from Q4, first of all, we only guide one quarter at a time. So I'm not going to provide guidance on Q4. But I think if you look at what's out there on the street today, we're not -- we wouldn't provide guidance that’s any significantly different than what's out there today..

And your next question comes from the line of Paul Coster from JP Morgan..

There are so many puts and takes there. I don't know which way to look at the moment. But let me just focus in on one thing that the, I think what I heard you say is that a number of customers have cancelled or postponed purchases, and yet, you're pointing to more installations next year, from a volume perspective.

So I can't reconcile those two statements. I'm going to tag on another question for Randy, which is I thought I just heard you say that the OpEx could be 24 to 48, unless I misheard, what does that mean? I don't understand why it would be such a big range. I don't get that..

So, I'll take the first question, Paul. Hi. This is KR. And then I'll have Randy answer the question and I can tell you, no, the numbers are not what you suggested, and Randy will give you the exact numbers, which you will correct. So the first important point to make is there are no cancellation in orders, which is what you said in your question.

What we are giving you is an observation as we see, while we have a healthy funnel in our sales pipeline, the flow of the orders or the deals in the funnel is not at its anticipated state, base for where we need to be right now.

Just because there is a delay in customers making decisions, in light of the confusion being created in our marketplace, especially in New York and California, as it relates to what their policies are going to be to be 100% renewable, no gas connections, and so on and so forth. So they're trying to understand that.

And while that is going on, there's a delay.

However, I think as we emphasized, we are looking from the policy decisions that are already getting shaped based on the resiliency issues that these states are facing that point in the direction of them understanding that it has to be an end strategy of creating resiliency and fighting climate change through carbon reductions, not just a core strategy.

So that's in our favor. So we expect this anomaly and the timing to be a one-time thing for those reasons..

I understand all of that. What I don’t understand is why you are expecting, you now have such a clear insight into dramatic drop in ASPs, but an increase in -- or very high, still an elevated unit shipment number, I mean, surely, the unit shipments would be going down if there is this pause, I just can't quite understand this, sorry..

I'll add to it a little bit Paul and see if this helps, and if not keep pushing away here. But if you've been looking at 2019, most of the acceptance growth for the company out there is higher than the revenue growth by a fair amount in 2019.

And what we're saying for 2020 is essentially the same thing will happen, acceptance growth will not be as great in 2020 as it was in 2019.

And we still anticipate from what's been booked so far this year, with the mix that we're seeing, we anticipate that we’ll still get pretty healthy top line acceptance growth, but we expect ASPs to decline in about the same amount translating to a flat revenue at the top..

Okay, and then the OpEx comment, Randy?.

Yeah. So what I pointed out is that we had a one-time thing in Q2 that will go away. So our operating expenses in Q3 will be 44 million to 48 million. I think you said 24, it’s 44 to 48..

Oh, I'm so sorry. I'm so sorry. Okay, fine. Thank you..

Your next question comes from the line of Pavel Molchanov from Raymond James..

What percentage of your sales in Q2 went to South Korea, and what percentage for the second half of the year do you anticipate in Korea?.

Look, we don't disclose the breakdown of that. We talked about that a couple of quarters ago. And, I pointed out on the call here that less than half of our -- more than half of our revenues were in the United States.

My opinion quite a bit more, but I don't disclose that percentage, and unfortunately, we're just not going to continue to do that for competitive reasons..

And your next question comes from the line of Colin Rusch from Oppenheimer..

Great. I’ve got two, but let’s just start with one.

In terms of bringing these new products to market, can you give us a sense of the total cost to bring them to market and the rough timeframe that you expect to have that elevated spend flowing through the P&L?.

Yeah, sure. So if you look at the Bloom next generation platform, which is a 7.5 platform, that R&D has been occurring for more than two years now. And then this is the phase where the prototyping of those parts will occur. And we are accelerating the pace of that and that's where you're looking at the increase in spending there.

The other increases that you're seeing in R&D spending, which we think is extremely worthwhile is happening in our de-carbonization strategy. This is bio gas, renewable hydrogen, and a couple other ideas that we are working on that we will announce when we are ready very soon. That's the next thing.

The third item that we are spending on R&D for which the commercial product we will be selling into the marketplace today is a very simple business continuity solution for customers who not have these kinds of systems installed because they did not have the need.

Today with days’ worth of outages potentially predicted under certain weather conditions, we think that there is going to be a huge need based on inbound calls, as well as, tracking that we see from potential customers. And so that's the other product.

All that put together, as Randy explained to you, if you take this quarter as an example, we are adding to our R&D spend by that $44 million to $48 million that you're looking in OpEx increase is contributing to that and it's also contributing to our beefing up our sales and marketing which will help translate these great products and ideas into actual orders..

Okay. And then I guess the second question is really about the cash flow comments.

I just want to make sure I understand that you're talking about generating positive cash flow on an absolute basis for the balance of this year and next year? And is there any concern around warranties impacting that or are you assuming that no warranty deltas are already planned into that cash flow matter?.

Certainly, anything to do with warranties, but sure that question is coming from because that's baked into the….

It's just baked in. I just want to make sure it was baked in there..

Your next question comes from the line of Julien Dumoulin-Smith from Bank of America..

Just wanted to follow up on a few quick items if you don't mind.

First with respect to expectations on – if you can elaborate a little bit on the backlog for next year and what you’re seeing, what is the composition of the sales just like if you think about like end market or geography or can you elaborate a little bit on both the ASP piece as well as how you're thinking about the volume, that's a composition of where those sales are, just so we can get a sense as to why the ASPs are coming down so much, like what is it about those sales? And then separately, if I can just jump in on the last question.

Very briefly, you talked about service margins by quarter here, obviously, there's some nuances to each one of them in the current year, how do you think about that flipping to a net positive position, at what point in time, do you think about the services margin turning positive given everything this year, et cetera..

So the two part answer is the following.

On the services, again, there will be correlations back and forth depending on when we do some large scale updates, or we don't do some large scale upgrades, but overall, from a profitability perspective, what we have told you before is the units we ship today, the service of a new recharge bill -- breakeven for the service that we do and will give us the margins that we have.

We have talked about as our long term goal. That's what we're doing with our current shipments. There is a fleet of units out there that we have to upgrade from various different generations. And that's the forecast we give you and guidance we give you on a quarterly basis on what that service revenue will be.

And you're seeing that last, but anything they're shipping with our 5.0 systems today and what we will be shipping with our 7.5 will get us to the profitability that we are looking for with the 7.5 on the service that we have talked to you about. On the –.

So, KR, just to jump in if I can, to clarify that, so not necessarily you’re expecting a flip in the near term, given the need to blend in and switch into those newer generation sales right..

Yes..

And the second part?.

The second question was on ASPs, what we said is, our -- currently when we look at the deals that have closed, the fraction of the deals from our high margin states, California, New York is delayed, not canceled, delayed, because of the confusion created in the marketplace.

And we have every reason and I gave you six reasons by numbers of why we believe that that's an anomaly that will shift, given that you cannot simply deal with the long term causes of climate change or not -- and not deal with today's current reality of keeping the lights on, which is like resiliency, so we expect this to shift.

But while this is delayed in the mix, we have less of the California and New York orders that typically command the higher margins and hence the statement from Randy, on what that may translate to as we sit here as an observation. However, don't forget, we still have six months left in the year. So this is a heads up of what we see.

So you understand what's going on in the marketplace and full transparency. That's what we did..

But just to understand, is there a pivot point or something specific that you think will help drive that confusion argument? Because I saw that in aggregate, is there a specific customer channel or why is there so much pervasive confusion in these two large geographies? Just trying to understand that a little bit more if you can? Sorry..

Well, there are multiple things that we think will shift it. First one is, when we provide a five year product offer, like we talked about, that we're so excited about, that's going to give the resiliency, a five year contract, lower carbon, and reliability, all in one package.

We think that that's going to help the customer make those decisions faster, because they can clearly see that in that time period, what's going on.

The second one really is, they are, for the first time, trying to figure out the impact to their businesses and their customers and their own risk exposure when they don't have extended days of not having power against the backdrop of their power prices going up because the utilities have to increase their rates to pay for all the disaster related costs.

So these are clear, pivot points that we see, as we sit here, happening in the marketplace..

Your next question comes from the line of Jeff Osborne from Cowen and Company..

Just to follow up on the prior question. So are you assuming that confusion, KR, is resolved to hit the 30% target or is this going to be a lingering issue next year? And then I also had a question on the gas moratoriums that was seen in cities like Berkeley as well as some delays and kind of territory and Massachusetts area as well.

Are those impacting the 2020 funnel at all as well?.

Well, based on our conversations in both California and New York with the policymakers, they are beginning to understand very clearly as we're educating them, that the solutions to resiliency have to be treated as an end to their goals for de-carbonization.

They also understand that our resiliency solution has a very clear roadmap to de-carbonization that other resiliency solutions don't offer.

They also understand that the existing backup systems cannot possibly operate for days on end in an entire city, even if you had all the diesel gensets, even if you had diesel for a day, you cannot provide that for long periods of time and provide safety for your customers.

So, this is educating customers and educating policy to make the right decisions. Mother Nature is helping us enormously. At the end of the day, when you are without light for a couple of days, you begin to realize why this is important and why it's not about just the end of the world. It's about end of the day and end of the week..

Anything on the gas moratorium side?.

Same thing. If -- there will be no expert who will say today legitimately without having any other solution, just with intermittent renewables and storage, they can power a city like Berkeley. So, it is visual thinking, it is well intention, it is ill informed, it is impractical..

Your next question comes from the line of Paul Coster from JP Morgan. And your final question comes from the line of Pavel Molchanov from Raymond James..

On the New York and California, given that those fossil fuel phase outs in the electricity mix are not until 2040, so 21 years from now, why would they be impacting sales that far ahead, given that your fuel cell product is probably not even designed to run for an entire 20 year period..

Exactly. Pavel, that's a great question and that is, you actually answered your question in your like question. We will not say that it’s going to be an impediment.

We will -- we don't believe that in fact, we believe to the contrary, we believe that our demand in these states are going to go up and not down is the way that I see it sitting where I sit here. Our fine seasons are getting worse, your hurricane seasons are getting worse. So I expect exactly that to happen.

The issue is one of confusion in the marketplace that is simply causing a delay, think about it as somebody hitting the pause button, not the end button. Okay? It is a pause button that's going to get restarted extremely soon. That's why we call it a one-time anomaly.

The second thing is even through that period, if you're going to use a fuel, that's not the fuel of your choice, you want to use it, where you can get the maximum power with the lowest amount of carbon. That is today's Bloom system.

You want to use a system that can take that fuel and combine it with renewable bio methane, and be able to operate it from landfills, from wastewater treatment plants, from excess fluid. That's the Bloom system.

You want to use it in such a way that you can build a micro grid and provide resiliency in a natural disaster situation, because climate change is upon us. It's not happening sometime in the future, it has started and it's going to get worse with time. And if you want that safety and resiliency, that's a Bloom system.

And you pointed out correctly, our systems, we are a technology play as opposed to a 50-year utility play in order to make our money every five years with our new product, we can upgrade it with better and better systems to meet the future needs of where you need to go.

So lawmakers, and they allow our systems to be implemented, customers when they buy our systems to use to not have to wait for 40 to 50 years stuck with the system that they purchase. They are backward compatible and upgradeable to the latest systems.

So what I would say is people are happy driving their cars that had no rearview mirrors, that had no seat belts, that had no airbags. But now that we have all those in a system and you can provide that has one combined product, nobody other than for a weekend drive in a safe road will want to get in one of those cars.

The Bloom system is your electricity system with the seat belts, with the air bags, the rearview mirrors and the most safety and comfort you're going to get. That's why we are bullish about this market. We are unique in this field..

And that is all the time we have for questions today. I will turn the call back over to Mr. KR Sridhar for our closing remarks..

Well, thank you very much. We appreciate you all joining the call. As you can see, climate change is not just about mitigating the cause.

It's also about mitigating the cost, which we see here too, climate change is about dealing with the consequences, as it happens today in a digitized world, making sure a fundamental human need electricity is always on.

Bloom with its always on solution offers that hope to mitigate the fear that people have about today and tomorrow, and gives them a hope of how we can decarbonize that same solution for the future. So we are extremely bullish on where our product is going to go in the future. And we understand that this is an education.

We are building this company for the long term, with exactly the right attributes with the right set of tools that the customer is going to need today, tomorrow, and for a long time to come. We greatly appreciate you being a part of this journey and being a part of the investor base. Thank you..

Thank you..

This concludes today's conference call. You may now disconnect..