Refined go-to-market strategy and leadership
structure emphasizing software and services; expanding energy
consulting offerings
Actions expected to drive more scalable,
recurring, and profitable revenue streams with improved working
capital and cash flow profile
Company to provide additional details on
strategy roadmap on third quarter 2024 earnings call
Stem, Inc. (NYSE: STEM) (the “Company,” Stem” or “we”), a global
leader in artificial intelligence (AI)-enabled clean energy
software and services, today announced the outcome of its
previously announced review of the Company’s strategy led by the
Board’s Software Strategy Working Group, which worked closely with
the Stem management team. The Company expects its new strategic
priorities will drive more predictable recurring revenue at
significantly higher gross margins than the Company has previously
realized and will enable more scalable growth.
“We are pleased to introduce Stem’s new strategy, which marks an
important milestone for the Company as we shift to a more
predictable software and services-focused business and accelerate a
new path to profitable, scalable growth,” said David Buzby, Stem’s
Interim Chief Executive Officer and Executive Chair of the Board of
Directors. “Our new strategy will build on our industry-leading
software and services to create tangible value for our customers.
We believe we are well positioned to serve the tremendous global
growth in renewable energy with our AI-enabled software, edge
device, and services capabilities, and we are energized by the work
ahead.”
Doran Hole, Chief Financial Officer and Executive Vice President
of Stem, said, “We are confident that our new strategy will drive
more predictable recurring business, shorten our runway to revenue,
significantly improve gross margin profile, and lower our working
capital usage. As we assess our cost structure, we will seek to
maximize profitability and operating leverage, while still
delivering exceptional value to customers with our talented
employee base.”
Executing on Our New Strategic Priorities
Our four key strategic priorities are:
#1. Shift to Software and Services-Centric Business to Drive
Predictable, Recurring, High-Margin Revenue
We will shift to a more predictable business, leading with our
differentiated suite of software and services, with recurring
revenue and higher margins. This go-to-market approach is expected
to drive several critical benefits versus the Company’s previous
strategy, which was more reliant on hardware resale. These benefits
include reduced lumpiness in financial performance, lowered
business and operational complexity, improved predictability and
accelerated collection of cash flow, and reduced impact by outside
market factors such as project delays.
Importantly, we are not abandoning our existing hardware
commitments, but are changing how we engage with our customers in
the future.
#2. Expanding and Emphasizing Energy Services as a
Competitive Differentiator and Enabling More Predictable
Revenue
Our re-focused strategy leads with consultative energy services
as the entry point into project-based customer relationships. This
will create more predictable revenue that is less dependent on
factors beyond our control, such as supply chain, financing, and
interconnection and permitting delays.
This relationship-based service will leverage some of our key
strengths, including market experience, technical expertise, and
software and edge device capabilities, to improve speed to market
and financial results for our customers. We will build on our
strong service reputation to develop relationships that enable
repeatable, higher margin revenue.
#3. Deliver Enhanced AI-enabled Software and Edge Device
Capabilities
We will prioritize our AI-enabled software and edge device
capabilities to drive a product-led, customer-focused culture of
innovation and delivery. Our software solutions will build on our
award-winning, hardware-agnostic PowerTrackTM and Athena®
platforms, which help to maximize value for solar and storage
customers. We will combine these capabilities into a single
platform that spans asset management and optimization software
across both solar and storage assets, and other technologies over
time.
This strategic priority identifies Stem’s PowerTrack solar
monitoring and control capabilities, first added to our product
portfolio through the acquisition of AlsoEnergy in 2022, as a
commercial and strategic core from which we will develop new
products and features and target new customer segments.
We expect that this renewed strategic focus and combined
platform will generate additional value for our large base of
16,000 existing customers, while driving new opportunities with
both “greenfield” and “brownfield” customers.
#4. Updating Our Approach to Battery Hardware Resales
We will provide hardware procurement advisory services as a
subset of our broad service offerings, rather than procure hardware
as our primary go-to-market approach. Going forward, we will
procure hardware for customers only when doing so meets stringent
profitability criteria, requires zero working capital, and is
accompanied by our software and edge devices.
We expect that our new standard contractual terms will drive
cash flow-positive payments so that hardware purchases will no
longer burden our balance sheet or negatively impact our cash
position. We will continue to work through our backlog of
approximately $1.6 billion, upholding our commitment to our
customers.
Third Quarter 2024 Earnings Conference Call
As previously announced, Stem will host its third quarter 2024
earnings conference call on October 30, 2024 to discuss its latest
financial and operating performance, the execution of its new
strategy, and 2024 guidance.
About Stem
Stem (NYSE: STEM) is a global leader in AI-enabled software and
services that enable 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within
the meaning of the U.S. federal securities laws — that is,
statements about the future, not about past events. Such statements
often contain words such as “expect,” “may,” “can,” “estimate,”
“intend,” “anticipate,” “will,” “potential,” “projected" and other
similar words. Forward-looking statements address matters that are,
to varying degrees, uncertain, such as forecasts or expectations
regarding management’s vision for the future of Stem; projections
relating to our future financial results, growth, our products and
services, and our ability to transition to new business models;
statements about the benefits of other strategic, restructuring,
technology, and capital allocation commitments and initiatives; and
other statements that are not historical facts. These statements
are subject to risks and uncertainties beyond Stem’s control,
including, but not limited to our ability to implement our
strategic initiatives; 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; 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 our most recent Forms 10-K,
10-Q and 8-K filed with or furnished to the SEC. Statements in this
press release are made only 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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version on businesswire.com: https://www.businesswire.com/news/home/20241001751717/en/
Stem Investor Contacts Ted Durbin, Stem Marc Silverberg,
ICR IR@stem.com
Stem Media Contact Suraya Akbarzad, Stem
press@stem.com
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