Ameresco (AMRC) Q3 2025: Project Backlog Climbs 33% as Data Center Demand Reshapes Growth Mix
Ameresco’s project backlog expansion and surging data center infrastructure demand signal a business model pivot toward scale and resiliency-driven energy solutions. The quarter’s results highlight both operational discipline and strategic flexibility, with energy storage and firm generation now at the center of backlog growth. Forward visibility is rising as management leans into large-scale, high-margin projects and recurring O&M, with data center and industrial wins shaping the company’s multi-year outlook.
Summary
- Backlog Expansion: Data center and industrial wins drove a step-change in project backlog and future visibility.
- Business Model Evolution: Energy storage and firm generation assets are now core to development, supporting margin mix shift.
- Execution Discipline: Management’s focus on cash flow and diversified customer base supports resilience into 2026.
Performance Analysis
Ameresco delivered a quarter of broad-based growth, with revenue up 5% and adjusted EBITDA rising 13% year over year. The company’s diversified model—combining projects, energy asset ownership, and operations & maintenance (O&M) contracts—enabled robust performance despite federal government shutdown noise and sectoral volatility. Projects revenue grew 6%, buoyed by the European Sunel joint venture and a surge in demand for comprehensive energy infrastructure solutions.
Energy asset revenue also increased 6%, with 16 megawatts added to operations and 32 megawatts entering development. Notably, recurring O&M revenue rose 8%, adding $158 million to backlog. The O&M backlog now stands at $1.5 billion, and total long-term revenue visibility exceeds $10 billion when combining project, O&M, and operating asset portfolios. Gross margin improved to 16% as the mix shifted toward higher-margin projects and assets, while disciplined cost management and improved cash flows from operations ($64 million) underscored Ameresco’s operational rigor.
- Project Backlog Acceleration: Backlog reached $5.1 billion, with contracted backlog up 33% to $2.5 billion, driven by $450 million in new awards and rapid contract conversions.
- Asset Portfolio Growth: Operating assets hit 765 megawatts, and assets in development climbed to 626 megawatts, reflecting a pivot toward battery storage and firm generation.
- O&M Recurring Revenue Strength: O&M wins continue to underpin long-term cash flow stability, offsetting lumpiness in project timing.
Divestiture of the AEG business in late 2024 reduced “other” revenue, but core segments more than compensated, supporting margin and cash flow improvement. The balance sheet remains healthy, with leverage at 3.2x EBITDA—below covenant—and growth funded primarily at the project level to preserve corporate flexibility.
Executive Commentary
"The customized solutions we are providing have evolved over time. We see Ameresco's domain knowledge and ability to deliver these large and complex solutions as a core capability. We also believe our business model gives us the ability to tailor financial solutions to the needs of our customers and is a meaningful differentiator for Ameresco, setting us apart from engineering and construction and ESCO companies."
George Sakolaris, Chairman & Chief Executive Officer
"Adjusted EBITDA increased 13% from the prior year, driven by higher project margins, expanding contributions from Europe and our energy asset portfolio, as well as disciplined operating cost management. Combined, our project backlog, together with our recurring O&M and operating energy asset portfolios, gives us long-term revenue visibility of over $10 billion."
Mark Chiplock, Chief Financial Officer
Strategic Positioning
1. Data Center and Industrial Demand as Growth Catalysts
Ameresco is capitalizing on a surge in data center and industrial energy demand, particularly for resilient, firm power and rapid deployment. The Lemoore Data Center initiative with CyrusOne, designed for AI-driven, high-density computing, exemplifies this pivot. The project could scale to 350 megawatts, with Ameresco both developing and partially owning the infrastructure, and the balance held by financial partners. This model is being actively replicated across a growing pipeline, with management citing substantial interest from hyperscalers, real estate partners, and industrials.
2. Asset Mix Shift: Battery Storage and Firm Generation
Battery storage now accounts for 41% of assets in development (up from 22% of operating assets), while firm generation assets (e.g., natural gas generators) represent 22% of development. This signals a decisive pivot toward technologies that address grid instability and on-demand power needs, especially for mission-critical and industrial customers. The company’s ability to tailor solutions—design, build, operate, and own—enables it to capture both project and recurring revenue streams.
3. Diversification Beyond Federal Exposure
Federal business now represents only 20% of revenue, down from historical levels, as Ameresco’s customer base broadens to include electric co-ops, manufacturers, and tech companies. This diversification reduces risk from federal funding cycles and government shutdowns, which management expects to have minimal impact on Q4 and beyond. The company’s European joint venture and commercial sector wins are expanding both geographic and end-market reach.
4. Operational Scale and Execution Infrastructure
Ameresco has proactively built out its utility-scale project unit, shifting resources and talent—including from the Bright Canyon acquisition—to support larger, more complex deployments. This operational build-out is enabling the company to manage multiple large-scale projects simultaneously, a key requirement as the data center and industrial backlog grows.
Key Considerations
The quarter’s results reflect Ameresco’s strategic transition from traditional ESCO roots to a high-visibility, asset-backed energy infrastructure provider. The company’s ability to secure, finance, and deliver large projects, while maintaining recurring O&M growth, is central to its evolving value proposition.
Key Considerations:
- Data Center Pipeline Momentum: Ameresco’s early wins and deepening relationships with hyperscalers and industrials position it to capture a disproportionate share of new energy infrastructure spend.
- Resilient Revenue Model: The blend of project, asset ownership, and O&M recurring revenue supports margin and cash flow stability even as project timing remains lumpy.
- Supply Chain and Battery Procurement: Management is actively diversifying suppliers and “safe harboring” battery inventory to mitigate tariff and FEOC (Foreign Entity of Concern) risks, with battery costs expected to provide a natural hedge.
- Margin and Capital Allocation Discipline: The mix shift toward higher-margin projects and recurring revenue, alongside project-level financing, preserves corporate balance sheet flexibility for growth investments.
Risks
Risks include project execution complexity as scale increases, supply chain volatility (especially for batteries and critical components), and regulatory uncertainty around tariffs and FEOC rules. Prolonged federal shutdowns could delay project conversion, but management views this risk as limited given diversification. Lumpy project timing and customer concentration in new verticals (data centers, industrials) may introduce earnings volatility as the mix evolves.
Forward Outlook
For Q4 2025, Ameresco guided to:
- Continued execution on project backlog with minimal disruption from federal shutdowns
- Ongoing margin expansion from higher-value projects and recurring O&M
For full-year 2025, management reaffirmed guidance:
- 10% revenue growth and 20% adjusted EBITDA growth targets over the multi-year cycle
Management highlighted several factors that support confidence in the outlook:
- Strong year-to-date performance and robust demand from new and existing customers
- Expanding visibility from contracted backlog and recurring revenue streams
Takeaways
Ameresco’s business model is pivoting toward high-visibility, asset-backed growth as data center and industrial demand reshape its opportunity set.
- Backlog and Pipeline Strength: Project and O&M backlog growth signal durable demand for resilient energy infrastructure, with data center and industrial wins set to drive multi-year growth.
- Margin and Recurring Revenue Expansion: The shift to battery storage, firm generation, and recurring O&M is supporting margin gains and cash flow stability as project timing remains variable.
- Execution and Supply Chain Management: Operational buildout and proactive supply chain strategies are critical as Ameresco ramps up to serve larger, more complex projects in a dynamic market.
Conclusion
Ameresco’s Q3 results highlight a business in transition: expanding backlog, rising recurring revenue, and a strategic pivot toward data center and industrial energy infrastructure solutions. As management executes on a growing pipeline and navigates supply chain and regulatory headwinds, the company’s diversified model and operational discipline are positioning it for sustained, higher-margin growth.
Industry Read-Through
Ameresco’s results offer a clear read-through for the broader energy infrastructure and clean tech sector: Data center electrification and industrial resilience are driving a new wave of demand for battery storage, firm generation, and rapid-deployment energy solutions. Companies able to combine project development, asset ownership, and O&M services are best positioned to capture this multi-year tailwind. Regulatory uncertainty around tariffs and supply chain constraints will continue to shape the competitive landscape, favoring those with diversified sourcing and financing models. The pivot away from federal reliance and toward commercial and industrial customers is a trend likely to accelerate sector-wide.