Carbonate fuel cell technology developer FuelCell Energy (NASDAQ: FCEL) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 11.5% year on year to $55.02 million. Its non-GAAP loss of $0.83 per share was 19.3% above analysts’ consensus estimates.

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“We believe that our fourth quarter performance and ongoing cost reductions have positioned us well to meet the accelerating demand for electricity and data center projects in the U.S. and internationally. Our strategy is deeply focused on the data center market where we see significant opportunities for our efficient, resilient power solutions. We’ve simplified our product line, advanced efficiency, and integrated absorption chilling to help manage thermal loads—critical for high-compute environments. Our sales and marketing focus is increasingly centered on data center opportunities, as we have taken deliberate steps to prepare for this market, and we are actively engaging with data center operators and infrastructure finance providers to deliver the message that we are ready to provide reliable, cost-competitive solutions for these energy-intensive applications,” said Jason Few, President and CEO of FuelCell Energy.

Company Overview

Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, FuelCell Energy’s 17.4% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. FuelCell Energy’s annualized revenue growth of 13.2% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. FuelCell Energy’s backlog reached $1.19 billion in the latest quarter and averaged 9.9% year-on-year growth over the last two years. Because this number is lower than its revenue growth, we can see the company fulfilled orders at a faster rate than it added new orders to the backlog. This implies FuelCell Energy was operating efficiently but raises questions about the health of its sales pipeline.

This quarter, FuelCell Energy reported year-on-year revenue growth of 11.5%, and its $55.02 million of revenue exceeded Wall Street’s estimates by 25.1%.

Looking ahead, sell-side analysts expect revenue to grow 15.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.

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Operating Margin

FuelCell Energy’s high expenses have contributed to an average operating margin of negative 117% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, FuelCell Energy’s operating margin decreased by 28.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. FuelCell Energy’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, FuelCell Energy generated a negative 51.5% operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although FuelCell Energy’s full-year earnings are still negative, it reduced its losses and improved its EPS by 8.5% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For FuelCell Energy, its two-year annual EPS growth of 26.6% was higher than its five-year trend. Its improving earnings is an encouraging data point, but a caveat is that its EPS is still in the red.

In Q3, FuelCell Energy reported adjusted EPS of negative $0.83, up from negative $1.99 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects FuelCell Energy to improve its earnings losses. Analysts forecast its full-year EPS of negative $5.04 will advance to negative $4.23.

Key Takeaways from FuelCell Energy’s Q3 Results

We were impressed by how significantly FuelCell Energy blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its backlog fell short of Wall Street’s estimates. Overall, this was still a decent quarter. The stock traded up 5.3% to $8.32 immediately following the results.

Is FuelCell Energy an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.