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Will the Cash Burn Reduction Strategy be a Game Changer for Plug Power?
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Key Takeaways
PLUG reported Q1 revenues of $133.7M, up 11.1% year over year, led by electrolyzer and cryogenic demand.
Cash burn fell nearly 50% in Q1 2025, supported by pricing actions and supply-chain improvements.
PLUG launched Project Quantum Leap to drive more than $200M in annualized savings and improve cash flow.
Plug Power Inc. (PLUG - Free Report) has been plagued by its inability to turn a profit, which has required it to raise outside capital for funding its operations. The company has been persistently suffering due to a high cash burn rate and negative gross margins over the past several quarters.
Despite this, the leading hydrogen company's first-quarter 2025 results showed some signs of recovery. PLUG generated revenues of $133.7 million, an increase of 11.1% year over year, driven by growth in electrolyzer deliveries, sustained demand in materials-handling and the ongoing deployments in its cryogenic platform. However, PLUG’s inability to generate positive gross margins and cash inflows over the long term has been a major concern.
In the first quarter of 2025, the company incurred a net loss of almost $197 million (21 cents per share), which was more than its revenues. On a positive note, the metric reflected an improvement from $295.6 million loss it reported in the year-ago quarter. Meanwhile, its operating cash outflow totaled $105.6 million in first-quarter 2025 compared with $167.7 million in year-ago period.
It recorded a gross margin of negative 55% in the first quarter compared with a gross margin of negative 132% in the year-ago-quarter. Although negative, the gross margin improvement was driven by the its cost reduction and supply-chain optimization efforts, price increases and progress in leveraging its hydrogen platform.
These efforts aided Plug Power to slow down its cash burn rate in the quarter, which declined nearly 50% year over year. In first-quarter 2025, PLUG launched Project Quantum Leap, targeting to generate more than $200 million in annualized savings. As part of the project, it expects to benefit from sales growth, pricing actions, inventory and capex management, and increased leverage of its hydrogen production platform. It expects the project to boost its cash flow and reduce the cash burn rate in the quarters ahead.
Liquidity Profile of PLUG’s Peers
Among Plug Power’s major peers, FuelCell Energy, Inc. (FCEL - Free Report) is a well-known producer of stationary fuel cell and electrolysis platforms that helps in decarbonization of power and hydrogen production. Exiting second-quarter fiscal 2025, FuelCell Energy had cash and cash equivalents (unrestricted) of $116.1 million compared with the current portion of long-term debt of $17.1 million. In the first six months of fiscal 2025, FuelCell Energy used net cash of $75.6 million from operating activities, down 21% year over year.
PLUG’s another peer, Bloom Energy Corporation (BE - Free Report) is a leading provider of solid-oxide fuel cell systems for on-site power generation. Bloom Energy exited first-quarter 2025 with cash and cash equivalents of $794.8 million, higher than $584.4 million of current liabilities. Bloom Energy used net cash of $110.7 million from operating activities, down 24.8% year over year.
The Zacks Rundown for PLUG
Shares of Plug Power have lost 59.1% in the year-to-date period compared with the industry’s decline of 8.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Plug Power is trading at a forward price-to-earnings ratio of a negative 1.69X against the industry average of 22.83X. PLUG carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PLUG’s bottom line for second-quarter 2025 and 2025 has increased in the past 60 days.
Image Source: Zacks Investment Research
PLUG stock currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
Will the Cash Burn Reduction Strategy be a Game Changer for Plug Power?
Key Takeaways
Plug Power Inc. (PLUG - Free Report) has been plagued by its inability to turn a profit, which has required it to raise outside capital for funding its operations. The company has been persistently suffering due to a high cash burn rate and negative gross margins over the past several quarters.
Despite this, the leading hydrogen company's first-quarter 2025 results showed some signs of recovery. PLUG generated revenues of $133.7 million, an increase of 11.1% year over year, driven by growth in electrolyzer deliveries, sustained demand in materials-handling and the ongoing deployments in its cryogenic platform. However, PLUG’s inability to generate positive gross margins and cash inflows over the long term has been a major concern.
In the first quarter of 2025, the company incurred a net loss of almost $197 million (21 cents per share), which was more than its revenues. On a positive note, the metric reflected an improvement from $295.6 million loss it reported in the year-ago quarter. Meanwhile, its operating cash outflow totaled $105.6 million in first-quarter 2025 compared with $167.7 million in year-ago period.
It recorded a gross margin of negative 55% in the first quarter compared with a gross margin of negative 132% in the year-ago-quarter. Although negative, the gross margin improvement was driven by the its cost reduction and supply-chain optimization efforts, price increases and progress in leveraging its hydrogen platform.
These efforts aided Plug Power to slow down its cash burn rate in the quarter, which declined nearly 50% year over year. In first-quarter 2025, PLUG launched Project Quantum Leap, targeting to generate more than $200 million in annualized savings. As part of the project, it expects to benefit from sales growth, pricing actions, inventory and capex management, and increased leverage of its hydrogen production platform. It expects the project to boost its cash flow and reduce the cash burn rate in the quarters ahead.
Liquidity Profile of PLUG’s Peers
Among Plug Power’s major peers, FuelCell Energy, Inc. (FCEL - Free Report) is a well-known producer of stationary fuel cell and electrolysis platforms that helps in decarbonization of power and hydrogen production. Exiting second-quarter fiscal 2025, FuelCell Energy had cash and cash equivalents (unrestricted) of $116.1 million compared with the current portion of long-term debt of $17.1 million. In the first six months of fiscal 2025, FuelCell Energy used net cash of $75.6 million from operating activities, down 21% year over year.
PLUG’s another peer, Bloom Energy Corporation (BE - Free Report) is a leading provider of solid-oxide fuel cell systems for on-site power generation. Bloom Energy exited first-quarter 2025 with cash and cash equivalents of $794.8 million, higher than $584.4 million of current liabilities. Bloom Energy used net cash of $110.7 million from operating activities, down 24.8% year over year.
The Zacks Rundown for PLUG
Shares of Plug Power have lost 59.1% in the year-to-date period compared with the industry’s decline of 8.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Plug Power is trading at a forward price-to-earnings ratio of a negative 1.69X against the industry average of 22.83X. PLUG carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PLUG’s bottom line for second-quarter 2025 and 2025 has increased in the past 60 days.
Image Source: Zacks Investment Research
PLUG stock currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.