We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Plug Power Cuts Costs to Lift Margins: Will the Results be Sustainable?
Read MoreHide Full Article
Key Takeaways
Plug Power's revenues rose 21% year over year, driven by demand for fuel cells and hydrogen solutions.
The Quantum Leap program cut costs, lifting gross margins from -92% to -31% year over year.
Retiring PPAs and reducing inventory aim to free up over $300M in annual savings and liquidity.
Plug Power Inc. (PLUG - Free Report) reported progress in cost reductions and margin improvement, with revenues rising 21% year over year in the second quarter of 2025. The results were driven by robust demand for its GenDrive fuel cells, GenFuel hydrogen infrastructure and GenEco electrolyzer platform.A key highlight of the quarter was PLUG’s success in narrowing losses through its Quantum Leap cost reduction program. This initiative focuses on supply-chain efficiencies, optimization of the workforce and lowering input costs. Because of this initiative, the company’s gross margins improved from negative 92% in the second quarter of 2024 to negative 31% in the second quarter of 2025.
Plug Power also expects about $200 million in savings each year as it is retiring the old power purchase agreements (PPA), which should improve cash flow. New hydrogen supply agreements are expected to bring more savings in the second half of 2025. Also, the company is reducing its inventory, which will free up more than $100 million in cash in 2025. These moves provide much-needed liquidity as PLUG continues to fund its hydrogen plant buildout and electrolyzer expansion.
However, Plug Power is burning a lot of cash and is managing debt while trying to grow its hydrogen plants and electrolyzer sales. At the same time, the company is working to improve margin performance by lowering input costs. It is targeting to improve gross margins by the end of 2025, supported by operational efficiencies, new hydrogen supply agreements and higher sales volumes in the quarters ahead.
Margin Performance of PLUG’s Peers
Among PLUG’s major peers, Flux Power Holdings, Inc.’s (FLUX - Free Report) total cost of sales was about $11.4 million, up 9.8% year over year in the fiscal third quarter of 2025. However, Flux Power’s gross profit surged 31% year over year. Flux Power’s gross margin improved 40 basis points, driven by a decrease in warranty-related expenses.
Plug Power’s another peer, Bloom Energy Corporation’s (BE - Free Report) cost of revenues increased 10.1% year over year in the second quarter of 2025. However, Bloom Energy’s gross profit rose 56.3% year over year. Bloom Energy’s gross margin expanded 630 basis points to 26.7% driven by productivity gains, higher volumes and favorable pricing.
The Zacks Rundown for PLUG
Shares of Plug Power have lost 26.8% in the year-to-date period against the industry’s growth of 10.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Plug Power is trading at a forward price-to-earnings ratio of a negative 3.54X against the industry average of 22.18X. PLUG carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PLUG’s bottom line for third-quarter 2025 has remained the same in the past 60 days.
Image: Bigstock
Plug Power Cuts Costs to Lift Margins: Will the Results be Sustainable?
Key Takeaways
Plug Power Inc. (PLUG - Free Report) reported progress in cost reductions and margin improvement, with revenues rising 21% year over year in the second quarter of 2025. The results were driven by robust demand for its GenDrive fuel cells, GenFuel hydrogen infrastructure and GenEco electrolyzer platform.A key highlight of the quarter was PLUG’s success in narrowing losses through its Quantum Leap cost reduction program. This initiative focuses on supply-chain efficiencies, optimization of the workforce and lowering input costs. Because of this initiative, the company’s gross margins improved from negative 92% in the second quarter of 2024 to negative 31% in the second quarter of 2025.
Plug Power also expects about $200 million in savings each year as it is retiring the old power purchase agreements (PPA), which should improve cash flow. New hydrogen supply agreements are expected to bring more savings in the second half of 2025. Also, the company is reducing its inventory, which will free up more than $100 million in cash in 2025. These moves provide much-needed liquidity as PLUG continues to fund its hydrogen plant buildout and electrolyzer expansion.
However, Plug Power is burning a lot of cash and is managing debt while trying to grow its hydrogen plants and electrolyzer sales. At the same time, the company is working to improve margin performance by lowering input costs. It is targeting to improve gross margins by the end of 2025, supported by operational efficiencies, new hydrogen supply agreements and higher sales volumes in the quarters ahead.
Margin Performance of PLUG’s Peers
Among PLUG’s major peers, Flux Power Holdings, Inc.’s (FLUX - Free Report) total cost of sales was about $11.4 million, up 9.8% year over year in the fiscal third quarter of 2025. However, Flux Power’s gross profit surged 31% year over year. Flux Power’s gross margin improved 40 basis points, driven by a decrease in warranty-related expenses.
Plug Power’s another peer, Bloom Energy Corporation’s (BE - Free Report) cost of revenues increased 10.1% year over year in the second quarter of 2025. However, Bloom Energy’s gross profit rose 56.3% year over year. Bloom Energy’s gross margin expanded 630 basis points to 26.7% driven by productivity gains, higher volumes and favorable pricing.
The Zacks Rundown for PLUG
Shares of Plug Power have lost 26.8% in the year-to-date period against the industry’s growth of 10.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Plug Power is trading at a forward price-to-earnings ratio of a negative 3.54X against the industry average of 22.18X. PLUG carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for PLUG’s bottom line for third-quarter 2025 has remained the same in the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.