Stem Announces Fourth Quarter and Full Year 2024 Results

Focused on Driving Ongoing Business Transformation

Target Approximately ~15% ARR Growth in 2025, Enabled by Stem's Recently Introduced Software and Services-Centric Strategy to Drive Scalable Growth and Profitability

PowerTrack Continues Expansion into International Markets with 484 MW Contract in Hungary

Fourth Quarter and Full Year 2024 Financial and Operating Highlights

Financial Highlights – Fourth Quarter 2024

• Revenue of $55.8 million, down from $167.4 million (-67%) in Q4 2023
• GAAP gross margin of (4)%, down from 7% in Q4 2023
• Non-GAAP gross margin of 36%, up from 13% in Q4 2023
• Net loss of $51.1 million versus net loss of $37.7 million in Q4 2023
• Adjusted EBITDA of $4.2 million versus $4.6 million in Q4 2023
• Ended Q4 2024 with $56.3 million in cash and cash equivalents

Financial Highlights - Full Year 2024

• Revenue of $144.6 million, down from $461.5 million (-69%) for full year 2023
• GAAP gross margin of (8)%, versus 1% for full year 2023
• Non-GAAP gross margin of 35%, versus 15% for full year 2023
• Net loss of $854.0 million versus net loss of $140.4 million for full year 2023
• Adjusted EBITDA of $(22.8) million versus $(19.5) million for full year 2023

Operating Highlights – Fourth Quarter 2024 and Full Year 2024

• Bookings of $357.6 million in Q4 2024, versus $256.1 million (+40%) in Q4 2023
• Bookings of $435.9 million in full year 2024, down from $1,532.4 million (-72%) in full year 2023
• Backlog of $1.2 billion at end of Q4 2024, down from $1.9 billion (-37%) at end of Q4 2023
• Contracted storage assets under management (AUM) of 5.6 gigawatt hours (GWh) at end of Q4 2024, down from 6.0 GWh (-7%) at end of Q3 2024 and up from 5.5 GWh (+2%) at end of 2023
• Solar monitoring AUM of 29.9 gigawatts (GW), up from 28.5 GW (+5%) at the end of Q3 2024 and 27.5 GW (+9%) at the end of 2023
• Contracted Annual Recurring Revenue (CARR) of $86.0 million, down from $92.3 million (-7%) at the end of Q3 2024 and $91.0 million (-5%) at the end of 2023

Stem, Inc. ("Stem" "we" or the "Company") (NYSE:STEM), a global leader in artificial intelligence (AI)-enabled clean energy solutions and services, announced today its financial results for the three and twelve months ended December 31, 2024.

"I am excited to join Stem at such a pivotal moment," stated Arun Narayanan, Chief Executive Officer of Stem. "Our vision to build the leading clean energy software company is compelling, and we believe we are well positioned to achieve it. The strategy we set in motion during the fourth quarter of 2024 is designed to drive sustained, scalable growth in recurring software and services revenue. Our industry-leading PowerTrack software has the potential to grow in both international and utility-scale deployments. We are already seeing successes in this with our recent 484 MW contract win in Hungary."

"Our fourth quarter 2024 results broadly met our expectations," stated Doran Hole, Chief Financial Officer and Executive Vice President of Stem. "Looking ahead, the 2025 guidance introduced today calls for 15% growth in ARR and an expanded focus on reducing operating expenses. We believe this focus will drive substantial improvements in adjusted EBITDA and cash flow."

Fourth Quarter and Full Year 2024 Financial and Operating Results

Financial Results

Fourth quarter 2024 revenue decreased 67% to $55.8 million, versus $167.4 million in the fourth quarter of 2023. Full year 2024 revenue decreased 69% to $144.6 million versus $461.5 million in full year 2023. The lower year-over-year revenue reflects significantly reduced battery hardware sales, attributable in part to the Company's software-focused strategy introduced last year. Reported revenue reflects a $38.7 million reduction in full year 2024, and a $35.1 million reduction in full year 2023, in both cases due to updated valuations of certain contract guarantees for hardware revenue originally recorded in 2022 and 2023.

Fourth quarter 2024 GAAP gross profit (loss) was $(2.5) million, or (4)%, versus $11.0 million, or 7%, in the fourth quarter of 2023, and $6.2 million, or 21%, in the third quarter of 2024. Full year 2024 GAAP gross profit (loss) was $(11.1) million, or (8)%, versus $3.6 million, or 1% for the full year 2023. The year-over-year decrease in the fourth quarter of 2024 GAAP gross profit was primarily due to lower battery hardware sales and a one-time impairment of deferred services related to OEM warranty services. The year-over-year decrease in GAAP gross profit for the full year resulted primarily from significantly reduced battery hardware sales in part, attributable to the Company's software-focused strategy introduced last year.

Fourth quarter 2024 non-GAAP gross profit was $20.2 million, or 36%, versus $22.2 million, or 13%, in the fourth quarter of 2023, and $16.2 million, or 46% in the third quarter of 2024. Full year 2024 non-GAAP gross profit was $63.7 million, or 35% versus full year 2023 non-GAAP gross profit of $75.1 million, or 15%. The decrease in non-GAAP gross profit for the fourth quarter and full year 2024 was primarily due to decreased battery hardware sales and increased services sales.

Fourth quarter 2024 net loss was $51.1 million versus fourth quarter 2023 net loss of $37.7 million. Full year 2024 Net Loss was $854.0 million versus full year 2023 net loss of $140.4 million. The year-over-year change in net loss for the fourth quarter of 2024 was driven by lower revenue and GAAP gross profit. The year-over-year change for the full year was primarily driven by $104.1 million of bad debt expense associated with impairment of receivables related to customer contracts that provide a parent company guarantee and a one-time, $547.2 million impairment of goodwill reported during the second quarter of 2024.

Fourth quarter 2024 adjusted EBITDA was $4.2 million, compared to $4.6 million in the fourth quarter of 2023. Full year 2024 adjusted EBITDA was $(22.8) million compared to $(19.5) million in full year 2023.

The Company ended the fourth quarter of 2024 with $56.3 million in cash and cash equivalents, as compared to $75.4 million in cash and cash equivalents at the end of the third quarter 2024.

Operating Results

Contracted backlog was $1.17 billion at the end of the fourth quarter of 2024, compared to $1.55 billion as of the end of the third quarter of 2024, representing a 25% sequential decrease. The sequential decrease in contracted backlog was driven by repricing of OEM hardware and elimination of delayed projects.

Bookings were $358 million in the fourth quarter of 2024 increased by 40% year-over-year versus $256 million in the fourth quarter of 2023. Full year 2024 bookings of $435.9 million decreased 72% versus full year 2023 bookings of $1,532.4 million.

Fourth quarter 2024 contracted storage AUM increased 2% year-over-year and declined 7% sequentially to 5.6 GWh due to the previously described proactive backlog adjustment.

Fourth quarter 2024 CARR decreased to $86.0 million, down from $92.3 million as of the end of the third quarter of 2024, a 7% sequential decrease due to the previously described proactive backlog adjustment.

The following table provides a summary of backlog at the end of the fourth quarter of 2024, compared to backlog at the end of the third quarter of 2024 ($ millions):

Recent Highlights

On January 14, 2025 the Company announced that its award-winning solar monitoring and optimization solutions will be standard in supporting the commercial operation of a 484 megawatt (MW) solar portfolio for Neovolt, one of the largest asset owners in Hungary. Under the five-year agreement, Stem's PowerTrack Web will monitor, optimize, and control eight utility-scale sites in Hungary, through a comprehensive view across the entire portfolio. Stem's strength in both technical execution and local market adaptation of renewable energy assets was a key deciding factor for Neovolt to standardize on Stem. With PowerTrack Web's more than 720 megawatt peak (MWp) total install base in the region, Stem continues to add to its foothold in Eastern Europe.

On January 16, 2025 the Board of Directors appointed Arun Narayanan as Stem's new Chief Executive Officer, effective January 27, 2025. Effective as of that date, David Buzby stepped down as Interim CEO and Executive Chairman of the Board, and re-assumed the role of Chairman of the Board.

On February 13, 2025, the Company's Board of Directors approved a reverse stock split of the Company's common stock at a ratio of 1-for-10 up to a ratio of 1-for-20, subject to stockholder approval at the Company's 2025 Annual Meeting of Stockholders. The reverse stock split is intended to enable the Company to regain compliance with the minimum listing standards of the New York Stock Exchange. If approved by Stem stockholders, the Company intends to effect the reverse stock split promptly thereafter. Information relating to the reverse stock split will be included in the Company's proxy statement for the 2025 Annual Meeting of Stockholders.

On March 4, 2025, the Company announced that Summit Ridge Energy will standardize on PowerTrack across its fleet of 200 solar sites totaling 514 MW. Summit Ridge, a leading U.S. developer, owner and operator of commercial solar assets, is using PowerTrack to efficiently commission, monitor, optimize and control its energy assets.

Outlook

The Company is introducing full-year 2025 guidance ranges as follows ($ millions, unless otherwise noted):

Some Factors Affecting our Business and Operations

As previously disclosed, the Company entered into certain contractual guarantees in 2022 and 2023 pursuant to which, if a customer were unable to install or designate hardware to a specified project within a specified period of time, the Company would be required to assist the customer in re-marketing the hardware for resale by the customer. Such guarantees provide that, in such cases, if the customer resold the hardware for less than the amount initially sold to the customer, the Company would be required to compensate the customer for any shortfall in fair value for the hardware from the initial contract price. The Company accounts for specified contractual guarantees as variable consideration. The Company reviews its estimate of variable consideration, including changes in estimates related to such guarantees, each quarter for facts or circumstances that have changed from the time of the initial estimate. As previously disclosed, the Company recorded a net revenue reduction of $35.1 million in hardware revenue during the full year 2023, and a net revenue reduction of $38.7 million in hardware revenue during the full year 2024, in both cases due to market conditions and revised negotiated valuations of assets under certain hardware price guarantees entered into in 2022 and 2023. Such reductions in revenue were related to deliveries that occurred prior to 2023. Additionally, the Company recorded a $104.1 million bad debt expense during the year ended December 31, 2024, as a result of an impairment of accounts receivable related to customer contracts that provide a parent company guarantee. The Company has not issued such guarantees since June 2023, does not intend to issue any new guarantees in the future, and does not expect further material negative impact on its financial statements as a result of such guarantees.

The Company is subject to risk and exposure from the evolving macroeconomic, geopolitical and business environment, including uncertainty regarding the U.S. Administration's potential changes to the Inflation Reduction Act, the effects of increased global inflationary pressures and interest rates, potential import tariffs, potential economic slowdowns or recessions, and geopolitical pressures, including the armed conflicts between Russia and Ukraine, and in the Gaza Strip and nearby areas, as well as tensions between China and the United States, and unknown effects of current and future trade and other regulations. We regularly monitor the direct and indirect effects of these circumstances on our business and financial results, although there is no guarantee of the extent to which we will be successful in these efforts.

Use of Non-GAAP Financial Measures

In addition to financial results determined in accordance with U.S. generally accepted accounting principles ("GAAP"), this earnings press release contains the following non-GAAP financial measures: adjusted EBITDA, non-GAAP gross profit and non-GAAP gross margin.

We use these non-GAAP financial measures for financial and operational decision-making and to evaluate our operating performance and prospects, develop internal budgets and financial goals, and facilitate period-to-period comparisons. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our operating performance, such as stock-based compensation and other non-cash charges, as well as discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results, to the extent that competitors define these metrics in the same manner that we do. We believe these non-GAAP financial measures are useful to investors both because they (1) allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) are used by investors and analysts to help them analyze the health of our business. Our calculation of these non-GAAP financial measures may differ from similarly-titled non-GAAP measures, if any, reported by other companies. In addition, other companies may not publish these or similar measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP. For reconciliation of adjusted EBITDA and non-GAAP gross profit and margin to their most comparable GAAP measures, see the section below entitled "Reconciliations of Non-GAAP Financial Measures."

Definitions of Non-GAAP Financial Measures

We define adjusted EBITDA as net loss attributable to Stem before depreciation and amortization, including amortization of internally developed software, interest expense, further adjusted to exclude stock-based compensation and other income and expense items, including gain on the extinguishment of debt, revenue constraint, reduction in revenue, excess supplier costs and resulting liquidated damages, change in fair value of derivative liability, impairment of goodwill, contract termination payment, restructuring costs, impairment of accounts receivable related to customer contracts that provide parent company guarantees, impairment of inventory and other deferred costs, and income tax provision or benefit. The expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies exclude when calculating adjusted EBITDA.

We define non-GAAP gross profit (loss) as gross profit (loss) excluding amortization of capitalized software, impairments related to decommissioning of end-of-life systems, excess supplier costs and resulting liquidated damages, reduction in revenue, and including revenue constraint. Non-GAAP gross margin is defined as non-GAAP gross profit (loss) as a percentage of revenue.

The Company generally records the full purchase order value as revenue at the time of hardware delivery; however, for certain non-cancelable purchase orders entered into during the first quarter of 2023, the final settlement amount payable to the Company was variable and indexed to the price per ton of lithium carbonate in the first quarter of 2024 such that the Company was able to increase or decrease the final prices in such purchase orders based on the price per ton of lithium carbonate at final settlement. Lithium carbonate is a key raw material used in the production of hardware systems that the Company ultimately sells to customers. The total dollar amount of such purchase orders for the indexed contracts is approximately $52.0 million. As a result of the pricing structure in such purchase orders, the Company recorded revenue in the first quarter of 2023 of approximately $42.0 million in accordance with GAAP, net of a $10.2 million revenue constraint, using a third party forecast of the lithium carbonate trading value in the first quarter of 2024. Because the Company had not before used indexed pricing in its customer contracts or purchase orders and had not previously constrained revenue related to forecasted inputs of its hardware systems, the Company believes that including the $10.2 million revenue constraint from the first quarter of 2023 into non-GAAP gross profit enhances the comparability to the Company's non-GAAP gross profit in prior periods. All amounts associated with such indexed contracts have been settled. The Company recorded the full cost of hardware revenue for these indexed contracts in the first quarter of 2023.

In the year ended December 31, 2024 and 2023, we incurred costs of $1.0 million and $2.7 million, respectively, above initially agreed prices on the acquisition of certain hardware systems from one of our suppliers, which resulted from production delays by such supplier. This in turn caused fulfillment and delivery delays on an order to one of our customers, as a result of which we further incurred liquidated damages of $4.8 million during the year ended December 31, 2023 under the customer contract. Because we had not previously incurred costs above initially agreed upon prices with a hardware supplier and were subsequently required to pay liquidated damages to a customer, we excluded these two items from adjusted EBITDA and non-GAAP gross profit to better facilitate comparisons of our underlying operating performance across periods.

As stated above, in certain customer contracts, the Company previously agreed to provide a guarantee that the value of purchased hardware will not decline for a certain period of time. The Company accounts for such contractual terms and guarantees as variable consideration at each measurement date. The Company reviews its estimate of variable consideration each quarter, including changes in estimates related to such guarantees, for facts or circumstances that have changed from the time of the initial estimate.

Additionally, as a result of impairment of accounts receivables related to contracts that provided for a parent company guarantee, the Company recorded a bad debt expense of $104.1 million during the year ended December 31, 2024, as a result of an impairment of accounts receivable related to customer contracts that provide a parent company guarantee.

See also the section below entitled "Reconciliations of Non-GAAP Financial Measures."

Conference Call Information

Stem will hold a conference call to discuss this earnings press release and business outlook on Wednesday, March 4, 2025 beginning at 5:00 p.m. Eastern Time. The conference call and accompanying slides may be accessed via a live webcast on a listen-only basis on the Events & Presentations page of the Investor Relations section of the Company's website at https://investors.stem.com/events-and-presentations. The call can also be accessed live over the telephone by dialing (877) 407-3982, or for international callers, (201) 493-6780 and referencing Stem. An audio replay will be available shortly after the call until April 4, 2025, and can be accessed by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671. The passcode for the replay is 13751335. A replay of the webcast will be available on the Company's website at https://investors.stem.com/overview for 12 months after the call.

About Stem

Stem (NYSE:STEM) is a global leader in AI-enabled software and services that enables its customers to plan, deploy, and operate clean energy assets. The Company offers a complete set of solutions that transform how solar and energy storage projects are developed, built, and operated including an integrated suite of software and edge products, and full lifecycle services from a team of leading experts. More than 16,000 global customers rely on Stem to maximize the value of their clean energy projects and portfolios. Learn more at stem.com.

Forward-Looking Statements

This earnings press release, as well as other statements we make, contains "forward-looking statements" within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words such as "expect," "may," "can," "believe," "predict," "plan," "potential," "projected," "projections," "forecast," "estimate," "intend," "anticipate," "ambition," "goal," "target," "think," "should," "could," "would," "will," "hope," "see," "likely," and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and operating performance guidance, outlook, targets and other forecasts or expectations regarding, or dependent on, our business outlook and strategy and expectations around our new software and services-centric strategy; our expectations regarding future estimates of variable consideration in connection with guarantees of certain customer contracts, and the resulting effects on revenue and net income; our ability to secure sufficient and timely inventory from suppliers; our ability to meet contracted customer demand; our ability to manage manufacturing or delivery delays; our ability to manage our supply chains and distribution channels; our joint ventures, partnerships and other alliances; forecasts or expectations regarding energy transition and global climate change; reduction of greenhouse gas ("GHG") emissions; the integration and optimization of energy resources; our business strategies and those of our customers; our ability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the effects of natural disasters and other events beyond our control; the direct or indirect effects on our business of macroeconomic factors and geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the expected benefits of the Inflation Reduction Act of 2022 on our business; and our future results of operations, including revenue, adjusted EBITDA and the other metrics presented under Outlook. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to our inability to execute on, and achieve the expected benefits from, our operational and strategic initiatives; our inability to successfully execute on our new software and services-centric strategy; our inability to secure sufficient and timely inventory from our suppliers, as well as contracted quantities of equipment; our inability to meet contracted customer demand; supply chain interruptions and manufacturing or delivery delays; disruptions in sales, production, service or other business activities; general macroeconomic and business conditions in key regions of the world, including inflationary pressures, general economic slowdown or a recession, rising interest rates, changes in monetary policy, and instability in financial institutions; the direct and indirect effects of widespread health emergencies on our workforce, operations, financial results and cash flows; uncertainty around the status of the Inflation Reduction Act of 2022 as a result of the change in U.S. Administration; geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the results of operations and financial condition of our customers and suppliers; pricing pressures; severe weather and seasonal factors; our inability to continue to grow and manage our growth effectively; our inability to execute on our ongoing management transition and to attract and retain qualified employees and key personnel; our inability to comply with, and the effect on our business of, evolving legal standards and regulations, including those concerning data protection, consumer privacy, sustainability, and evolving labor standards; our inability to regain and maintain compliance with New York Stock Exchange listing standards; risks relating to the development and performance of our energy storage systems and software-enabled services; our inability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the risk that our business, financial condition and results of operations may be adversely affected by other political, economic, business and competitive factors; and other risks and uncertainties discussed in this release and in our most recent Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes, or the timing of these results or outcomes, may vary materially from those reflected in our forward-looking statements. Forward-looking statements and other statements in this release regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to Stem, investors, or other stakeholders, or required to be disclosed in our filings under U.S. securities laws or any other laws or requirements applicable to us. In addition, historical, current, and forward-looking environmental, social, and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Statements in this earnings press release are made as of the date of this release, and Stem disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise, except as required by law.

Source: Stem, Inc.

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Stem Investor Contacts

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