Fluence Energy (FLNC) Posts Declining Revenues Amid SEC Investigation – Hagens Berman

/EIN News/ -- SAN FRANCISCO, Dec. 16, 2024 (GLOBE NEWSWIRE) -- Shares of electricity storage and software provider Fluence Energy (NASDAQ: FLNC) are down more than 28% year-to-date as the company continues to post declining revenue growth amid an SEC investigation into the company’s alleged improper accounting practices.   

Hagens Berman is investigating whether Fluence Energy may have violated the U.S. securities laws and urges investors who suffered substantial losses to submit your losses now. The firm also encourages persons with knowledge who may be able to assist in the investigation to contact its attorneys.

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Investigation into Fluence Energy, Inc. (FLNC):

Fluence Energy continues to be dogged by allegations of inappropriate accounting.

The company’s woes first began on February 22, 2024, when activist short seller Blue Orca Capital released an investigative report accusing Fluence of artificially inflating revenue and profits through aggressive accounting tactics, including revenue recognition schemes and selective earnings adjustments. Blue Orca’s report stated, “[i]n our opinion, Fluence’s purported improvement over recent quarters is the product of accounting games that have materially inflated revenue growth and Adj. Gross Margins, which we think helps to explain why Fluence is on its third CFO in just over two years.”

Blue Orca expounded, “we believe that much of Fluence’s sales and earnings growth can be attributed to aggressive revenue pull-forwards and selectively applied earnings adjustments[]” and “[w]e estimate that the Company inflated its LTM sales growth from 58% to over 80% in Q1 FY 2023 simply by rewriting of customer contracts that allowed it to recognize revenue on customers in advance of product installation.” The firm also said that “selective earnings adjustments inflated its incremental Adj. EBITDA by 40% in FY23, and its Adj. Gross Margin from 3.9% to 6.6%.”

Fluence Energy tried to calm investors’ nerves by stating that in response to the Blue Orca report, the Audit Committee of its board of directors completed an internal investigation, with the assistance of outside counsel and forensic accountants, into the allegations in the Blue Orca report and that after consultation with the Audit Committee, it believed that the internal investigation demonstrated that the allegations of wrongdoing contained in the Short Seller Report are without merit.

But on August 7, Fluence disclosed that the SEC is seeking information related to its financial reporting and the company’s internal investigation into the claims made by Blue Orca.

Since this time, Fluence has posted weak results over the past two quarters including most recently on Nov. 26, 2024, when the company’s reported revenues missed significantly. The company reported a decline in revenue for its third quarter 2024 and attributed the shortfall to the postponement of two significant projects valued at $100 million and delays in the initiation of other contracted work.

CFO Ahmed Pasha explained the company’s financial performance will continue to be “lumpy,” reflecting its focus on a smaller number of high-value projects. This concentration strategy, while potentially lucrative, exposes the company to greater volatility in quarterly results.

The earnings announcement comes as Fluence continues to navigate a challenging regulatory environment. Last week, the company disclosed that the Securities and Exchange Commission has opened a formal investigation into its accounting practices, prompted by allegations of irregularities raised by activist short seller Blue Orca Capital earlier this year.

Fluence executives vehemently denied the short seller’s allegations, asserting that an internal investigation conducted with the assistance of outside counsel and forensic accountants found “zero merit” to the claims. However, the company has yet to publicly release the underlying report and findings of this inquiry.

While Fluence maintains that the SEC investigation is unlikely to materially impact its financial condition, the uncertainty surrounding the probe has cast a shadow over the company. Fluence shares continue to trade down by 25% since publication of the Blue Orca report.

Prominent shareholder rights firm Hagens Berman has initiated an investigation into Fluence’s accounting and financial reporting practices.

“The firm is exploring potential claims of inaccurate financial reporting to investors,” said Reed Kathrein, the Hagens Berman partner leading the investigation.

If you invested in Fluence Energy and have substantial losses submit your losses now »

If you’d like more information and answers to frequently asked questions about the Fluence investigation, read more »

Whistleblowers: Persons with non-public information regarding Fluence Energy should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email FLNC@hbsslaw.com.

About Hagens Berman
Hagens Berman is a global plaintiffs’ rights complex litigation firm focusing on corporate accountability. The firm is home to a robust practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and other wrongdoings. Hagens Berman’s team has secured more than $2.9 billion in this area of law. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.