New Strategy Implementation in Progress
Increased ARR by more than $3M in 3Q,
Representing +7% QoQ Growth
Revising Full Year 2024 Guidance for Several
Key Metrics
Third Quarter 2024 Financial and Operating Highlights
Financial Highlights
- Revenue of $29.3 million, down from $133.7 million in 3Q23.
Reflects $5.6 million and $37.4 million reductions in revenue,
respectively, due to revised negotiated valuations of assets under
certain hardware price guarantees entered into in 2022 and 2023.
Lower revenue in the quarter also reflects reduced battery hardware
sales, partially offset by growth in software and services
revenue1
- GAAP gross profit of $6.2 million, up from $(20.3) million in
3Q23
- Non-GAAP gross profit of $16.2 million, down from $21.4 million
in 3Q23, reflecting lower battery hardware revenue
- GAAP gross margin of 21%, up from (15)% in 3Q23
- Non-GAAP gross margin of 46%, up from 12% in 3Q23, reflecting a
higher percentage of software and services revenue
- Net loss of $148.3 million versus net loss of $77.1 million in
3Q23, which includes $104.1 million of bad debt expense associated
with impairment of accounts receivable related to customer
contracts that provide a parent company guarantee1
- Adjusted EBITDA of $(3.5) million versus $(0.9) million in
3Q23
- Operating cash flow of $(9.4) million versus $(4.0) million in
3Q23
- Ended 3Q24 with $75.4 million in cash and cash equivalents,
versus $89.6 million at the end of 2Q24
Operating Highlights
- Bookings of $29.1 million, versus $676.4 million in 3Q23,
driven primarily by lower battery hardware resale bookings
- Contracted backlog of $1.5 billion, down 17% from the end of
3Q23, and down 2% from the end of 2Q24
- Contracted storage assets under management (“AUM”) of 6.0
gigawatt hours (“GWh”), up 20% from the end of 3Q23 and up 3% from
the end of 2Q24
- Solar monitoring AUM of 28.5 gigawatts (“GW”), up 8% from the
end of 3Q23 and up 6% from the end of 2Q24
- Contracted annual recurring revenue (“CARR”) of $92.3 million,
up 5% from the end of 3Q23, and up 2% from the end of 2Q24
Stem, Inc. (“Stem,” “we” or the “Company”) (NYSE: STEM), a
global leader in artificial intelligence (AI)-driven clean energy
solutions and services, announced today its financial results for
the three and nine months ended September 30, 2024.
“We reported another strong quarter of growth in Annual
Recurring Revenue, driven by continued adoption of our
industry-leading software,” said David Buzby, Interim Chief
Executive Officer of Stem. “Revenue was down significantly due to
lower hardware revenue in the quarter. We have begun to implement
our new strategy that we announced in early October, which we
expect to drive more predictable, scalable growth in software and
services revenue and improved profitability in the long-term.”
“Sequential growth in software and services revenue drove strong
GAAP gross margins of 21%, and record non-GAAP gross margins of 46%
in the third quarter,” said Doran Hole, Chief Financial Officer and
Executive Vice President. “Revenue was negatively impacted by a
$5.6 million adjustment tied to an updated valuation of certain
hardware contract guarantees that we issued in 2022 and early 2023.
Our bad debt expense increased sequentially by $104.1 million in
the quarter, due to an impairment of accounts receivables related
to certain customer contracts that provide a parent company
guarantee. As a result, our net income was negatively impacted by
$104.1 million. With the adjustments made this quarter, we have
reduced the value of all relevant assets subject to parent company
guarantees to zero on our balance sheet, and do not expect further
material negative impact on our financial statements as a result of
these guarantees.”
“We are adjusting our full year 2024 guidance for several key
metrics to account for our latest financial results, ongoing
implementation of our new strategy and continued expectation of
project delays, which continue to negatively impact our results
including revenue, bookings and cash flow,” said Mr. Hole. “We are
also taking actions to right-size our operating costs to conserve
cash and align with our new strategy. We are confident that the
changes we are making will position the Company to drive faster,
more predictable growth in high-margin revenue streams, and
improved profitability in the long-term.”
____________________
1 See the section below entitled “Some Factors Affecting our
Business and Operations.” Adjusted EBITDA and non-GAAP gross profit
and margin percentage for the quarter have been adjusted to exclude
the impact of the $5.6 million revenue reduction. In addition,
adjusted EBITDA for the quarter has been adjusted to exclude the
impact of the $104.1 million of bad debt expense. Further details
are provided below in the section entitled “Definitions of Non-GAAP
Financial Measures.”
Key Financial Results and Operating
Metrics
(in $ millions unless otherwise
noted):
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Key Financial Results(1)
Revenue
$
29.3
$
133.7
$
88.8
$
294.1
GAAP Gross Profit (Loss)
$
6.2
$
(20.3
)
$
(8.6
)
$
(7.4
)
GAAP Gross Margin (%)
21
%
(15
)%
(10
)%
(3
)%
Non-GAAP Gross Profit*
$
16.2
$
21.4
$
43.5
$
52.9
Non-GAAP Gross Margin (%)*
46
%
12
%
34
%
15
%
Net Loss
$
(148.3
)
$
(77.1
)
$
(802.9
)
$
(102.7
)
Adjusted EBITDA*
$
(3.5
)
$
(0.9
)
$
(27.0
)
$
(24.1
)
Key Operating Metrics
Bookings
$
29.1
$
676.4
$
78.3
$
1,276.3
Contracted Backlog**
$
1,547.4
$
1,836.6
$
1,547.4
$
1,836.6
Contracted Storage AUM (in GWh)**
6.0
5.0
6.0
5.0
Solar Monitoring AUM (in GW)**
28.5
26.3
28.5
26.3
CARR**
$
92.3
$
87.5
$
92.3
$
87.5
(1) Revenue, gross profit (loss), and net
loss were negatively impacted by a $5.6 million reduction in
revenue as discussed below for the three months ended September 30,
2024 and a $37.4 million reduction in revenue as discussed above
for the three months ended September 30, 2023. Net income was
negatively impacted by a $104.1 million bad debt expense as
discussed above.
*Non-GAAP financial measures. Adjusted
EBITDA and non-GAAP gross profit and margin have been adjusted to
exclude the impact of the reduction in revenue in the quarter, and
adjusted EBITDA has been adjusted to exclude the impact of
impairment of accounts receivable related to contracts that provide
parent company guarantees, as discussed below. See the section
below titled “Use of Non-GAAP Financial Measures” for details and
the section below titled “Reconciliations of Non-GAAP Financial
Measures” for reconciliations.
** At period end.
Third Quarter 2024 Financial and Operating Results
Financial Results
Revenue decreased 78% year-over-year to $29.3 million, versus
$133.7 million in the third quarter of 2023. Reported revenue
reflects a $5.6 million reduction in the quarter, and a $37.4
million reduction in the third quarter of 2023, in both cases due
to updated valuations of certain contract guarantees for hardware
revenue recorded in 2022 and 2023. The year-over-year lower revenue
reflects significantly reduced battery hardware sales, partially
offset by strong growth in software and services revenue.
GAAP gross profit (loss) was $6.2 million, or 21%, versus
$(20.3) million, or (15)%, in the third quarter of 2023. The
year-over-year increase in GAAP gross profit ($) and GAAP gross
margin (%) was primarily driven by a higher mix of software and
services revenue in the quarter, and a smaller reduction related to
certain contract guarantees ($5.6 million) in the quarter, versus a
similar revenue reduction in third quarter 2023 ($37.4
million).
Non-GAAP gross profit was $16.2 million, or 46%, versus $21.4
million, or 12%, in the third quarter of 2023. The year-over-year
decrease in non-GAAP gross profit ($) was largely due to lower
storage hardware revenue. The year-over-year increase in Non-GAAP
gross margin (%) was primarily driven by a much higher contribution
from high margin software and services revenue in the quarter.
Net loss was $148.3 million versus third quarter 2023 net loss
of $77.1 million. The year-over-year change 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, as well as lower revenues in the quarter.
Adjusted EBITDA was $(3.5) million compared to $(0.9) million in
the third quarter of 2023, primarily due to lower gross profit,
partially offset by lower operating costs.
The Company ended the third quarter of 2024 with $75.4 million
in cash and cash equivalents, as compared to $89.6 million in cash
and cash equivalents at the end of the second quarter 2024.
Operating Results
Contracted backlog was $1.55 billion at the end of the third
quarter of 2024, compared to $1.58 billion as of the end of the
second quarter of 2024, representing a 2% sequential decrease. The
slight decrease in contracted backlog in the quarter was driven by
the conversion of backlog to revenue and low bookings in the
quarter.
Bookings were $29.1 million in the third quarter of 2024 versus
$676.4 million in the third quarter of 2023. Bookings remain highly
variable due to the Company’s previous expansion into large
front-of-the-meter (FTM) storage projects and the recent strategic
shift towards higher-margin software and services versus hardware
sales.
Contracted storage AUM increased 3% sequentially to 6.0 GWh for
the third quarter of 2024. Solar monitoring AUM increased 6%
sequentially to 28.5 GW for the third quarter of 2024.
CARR increased 2% to $92.3 million at the end of the third
quarter of 2024 versus $90.1 million at the end of the second
quarter of 2024.
The following table provides a summary of backlog at the end of
the third quarter of 2024, compared to backlog at the end of the
second quarter of 2024 ($ in millions):
End of 2Q24
$
1,578.5
Add:
Bookings
29.1
Less:
Hardware revenue
(13.8
)
Software/services activations
(43.2
)
Amendments/Cancellations
(3.2
)
End of 3Q24
$
1,547.4
Strategy Review Outcome
On October 1, 2024, the Company announced the outcome of its
previously announced review of its corporate strategy. 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. The new strategy is driven by four key strategic
priorities: (1) shift to software and services-centric business to
drive predictable, recurring, high-margin revenue, (2) expand and
emphasize energy services as a competitive differentiator and
enable more predictable revenue, (3) deliver enhanced AI-enabled
software and edge device capabilities, and (4) provide hardware
procurement advisory services, rather than procure hardware as the
primary go-to-market approach. The Company will continue to provide
hardware procurement, but only under certain strict profitability
and working capital guidelines.
Recent Business Updates
On September 16, 2024, the Company announced that John
Carrington stepped down as Chief Executive Officer and as a member
of the Board of Directors of the Company (the “Board”), effective
immediately. The Board has engaged an executive search firm to
conduct a search, which includes internal and external candidates,
for a permanent CEO. David Buzby, Executive Chair of the Board, was
appointed interim CEO. Mr. Buzby will continue to serve as
Executive Chair of the Board.
On October 23, 2024, the Company announced the appointment of
Albert Hofeldt, PhD as Stem’s Chief Technology Officer (CTO),
effective immediately. Dr. Hofeldt will lead Stem’s efforts to
deliver enhanced AI-enabled software and edge device capabilities
as part of the company’s recently announced software and
services-centric strategy.
Outlook
The Company is updating its full year 2024 guidance ranges to
account for the Company’s recent financial results, ongoing
implementation of its new strategy and continued expectation of
project delays, which continue to negatively impact results, as
follows ($ millions, unless otherwise noted):
Previous
Updated
Revenue
$200 - $270
$135 - $155
Non-GAAP Gross Margin (%)
25% - 30%
32% - 36%
Adjusted EBITDA
($30) - ($20)
($45) - ($30)
Bookings
$600 - $1,100
$100 - $500
CARR (year-end)
$100 - $110
$90 - $100
Operating Cash Flow
Greater than $15
($30) - $0
See the section below titled “Reconciliations of Non-GAAP
Financial Measures” for information regarding why Stem is unable to
reconcile Non-GAAP Gross Margin and Adjusted EBITDA guidance to
their most comparable financial measures calculated in accordance
with GAAP.
The Company is updating its full-year 2024 revenue projected
quarterly performance as follows:
1QA
2QA
3QA
4QE
Revenue
$25M
$34M
$29M
$45M-$65M
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 $37.4
million in hardware revenue during the three months ended September
30, 2023, a net revenue reduction of $38.7 million during the three
months ended March 31, 2024 due to market conditions, and a net
revenue reduction of $5.6 million during the three months ended
September 30, 2024 due to revised negotiated valuations of assets
under certain hardware price guarantees entered into in 2022 and
2023. Such reductions in revenue are related to deliveries that
occurred prior to 2023. Additionally, the Company recorded a $104.1
million bad debt expense during the three months ended September
30, 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, and does not intend to issue any new guarantees in the
future.
The Company is subject to risk and exposure from the evolving
macroeconomic, geopolitical and business environment, including 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 revenue constraint, reduction in revenue, excess
supplier costs, 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, 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 may exclude when
calculating adjusted EBITDA.
We define non-GAAP gross profit as gross profit excluding
amortization of capitalized software, impairments related to
decommissioning of end-of-life systems, excess supplier costs,
reduction in revenue, and including revenue constraint. Non-GAAP
gross margin is defined as non-GAAP gross profit 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
is variable and indexed to the price per ton of lithium carbonate
in the first quarter of 2024 such that the Company may 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 million. However, as a result of the pricing
structure in such purchase orders, the Company recorded revenue in
the first quarter of 2023 of approximately $42 million in
accordance with GAAP, net of a $10 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. The Company
expects to receive, pursuant to such purchase orders, final
consideration of at least $34 million. The Company recorded the
full cost of hardware revenue for these indexed contracts in the
first quarter of 2023.
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. See 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, October 30, 2024,
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 (844) 825-9789,
or for international callers, (412) 317-5180 and referencing Stem.
An audio replay will be available shortly after the call, and can
be accessed by dialing (844) 512-2921 or for international callers
by dialing (412) 317-6671. The passcode for the replay is 10192999.
The replay will be available until Saturday, November 30, 2024. An
archive of the webcast will be available shortly after the call on
Stem’s website at https://investors.stem.com/overview for 12 months
following the call.
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.
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 performance targets and other forecasts or
expectations regarding, or dependent on, our business outlook and
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; 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
investors or required to be disclosed in our filings with the SEC.
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.
STEM, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(in thousands, except share and
per share amounts)
September 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
75,364
$
105,375
Short-term investments
—
8,219
Accounts receivable, net of allowances of
$2,341 and $4,904 as of September 30, 2024 and December 31, 2023,
respectively
92,659
302,848
Inventory
33,950
26,665
Deferred costs with suppliers
15,237
20,555
Other current assets
10,320
9,303
Total current assets
227,530
472,965
Energy storage systems, net
63,663
74,418
Contract origination costs, net
9,746
11,119
Goodwill
—
547,205
Intangible assets, net
148,183
157,146
Operating lease right-of-use assets
12,065
12,255
Other noncurrent assets
76,648
81,869
Total assets
$
537,835
$
1,356,977
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Current liabilities:
Accounts payable
$
47,363
$
78,277
Accrued liabilities
57,648
76,873
Accrued payroll
10,265
14,372
Financing obligation, current portion
15,037
14,835
Deferred revenue, current portion
70,766
53,997
Other current liabilities
5,905
12,726
Total current liabilities
206,984
251,080
Deferred revenue, noncurrent
86,799
88,650
Asset retirement obligation
4,150
4,052
Convertible notes, noncurrent
525,345
523,633
Financing obligation, noncurrent
44,662
52,010
Lease liabilities, noncurrent
12,807
10,455
Other liabilities
643
416
Total liabilities
881,390
930,296
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value;
1,000,000 shares authorized as of September 30, 2024 and December
31, 2023; zero shares issued and outstanding as of September 30,
2024 and December 31, 2023
—
—
Common stock, $0.0001 par value;
500,000,000 shares authorized as of September 30, 2024 and December
31, 2023; 162,714,738 and 155,932,880 issued and outstanding as of
September 30, 2024 and December 31, 2023, respectively
16
16
Additional paid-in capital
1,230,957
1,198,716
Accumulated other comprehensive income
(loss)
302
(42
)
Accumulated deficit
(1,575,371
)
(772,494
)
Total Stem’s stockholders’ equity
(deficit)
(344,096
)
426,196
Non-controlling interests
541
485
Total stockholders’ equity (deficit)
(343,555
)
426,681
Total liabilities and stockholders’ equity
(deficit)
$
537,835
$
1,356,977
STEM, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and
per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenue
Services and other revenue
$
22,143
$
16,597
$
52,086
$
47,630
Hardware revenue
7,148
117,143
36,673
246,461
Total revenue
29,291
133,740
88,759
294,091
Cost of revenue
Cost of services and other revenue
15,687
13,684
36,626
36,944
Cost of hardware revenue
7,408
140,347
60,753
264,573
Total cost of revenue
23,095
154,031
97,379
301,517
Gross profit (loss)
6,196
(20,291
)
(8,620
)
(7,426
)
Operating expenses:
Sales and marketing
8,216
11,605
30,286
37,691
Research and development
11,086
14,420
40,503
42,020
General and administrative
27,212
21,955
61,618
58,656
Impairment of parent company
guarantees
104,134
—
104,134
—
Impairment of goodwill
—
—
547,152
—
Total operating expenses
150,648
47,980
783,693
138,367
Loss from operations
(144,452
)
(68,271
)
(792,313
)
(145,793
)
Other (expense) income, net:
Interest expense
(4,512
)
(4,405
)
(13,850
)
(10,085
)
Gain on extinguishment of debt, net
—
—
—
59,121
Change in fair value of derivative
liability
—
(5,155
)
1,477
(7,731
)
Other income, net
793
713
2,153
2,114
Total other (expense) income, net
(3,719
)
(8,847
)
(10,220
)
43,419
Loss before (provision for) benefit from
income taxes
(148,171
)
(77,118
)
(802,533
)
(102,374
)
(Provision for) benefit from income
taxes
(129
)
46
(344
)
(354
)
Net loss
$
(148,300
)
$
(77,072
)
$
(802,877
)
$
(102,728
)
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.91
)
$
(0.49
)
$
(4.99
)
$
(0.66
)
Weighted-average shares used in computing
net loss per share to common stockholders, basic and diluted
162,633,996
155,829,348
160,997,019
155,474,725
STEM, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended
September 30,
2024
2023
OPERATING ACTIVITIES
Net loss
$
(802,877
)
$
(102,728
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization expense
33,227
33,593
Non-cash interest expense, including
interest expenses associated with debt issuance costs
1,565
1,969
Stock-based compensation
21,716
28,320
Change in fair value of derivative
liability
(1,477
)
7,731
Non-cash lease expense
2,251
2,162
Accretion of asset retirement
obligations
177
178
Impairment loss of energy storage
systems
357
2,347
Impairment loss of project assets
641
158
Impairment loss of right-of-use assets
2,096
—
Impairment of parent company guarantees
104,134
—
Impairment of goodwill
547,152
—
Net accretion of discount on
investments
(29
)
(1,672
)
Income tax benefit from release of
valuation allowance
—
(335
)
(Recovery of) provision for credit losses
on accounts receivable
(3,229
)
1,754
Net loss on investments
—
1,561
Gain on extinguishment of debt, net
—
(59,121
)
Other
(157
)
(831
)
Changes in operating assets and
liabilities:
Accounts receivable
106,920
(67,029
)
Inventory
(7,285
)
(57,282
)
Deferred costs with suppliers
5,318
30,579
Other assets
7,129
(17,947
)
Contract origination costs, net
(927
)
(4,184
)
Project assets
(7,382
)
(2,827
)
Accounts payable
(30,675
)
1,771
Accrued expenses and other liabilities
(19,935
)
(28,910
)
Deferred revenue
21,531
27,630
Lease liabilities
(2,181
)
(2,135
)
Net cash used in operating activities
(21,940
)
(205,248
)
INVESTING ACTIVITIES
Acquisitions, net of cash acquired
—
(1,847
)
Purchase of available-for-sale
investments
—
(58,034
)
Proceeds from maturities of
available-for-sale investments
8,250
119,650
Proceeds from sales of available-for-sale
investments
—
73,917
Purchase of energy storage systems
—
(2,912
)
Capital expenditures on
internally-developed software
(8,868
)
(10,123
)
Purchase of property and equipment
(228
)
(395
)
Net cash (used in) provided by investing
activities
(846
)
120,256
FINANCING ACTIVITIES
Proceeds from exercise of stock options
and warrants
—
257
Repayment of financing obligations
(6,998
)
(7,766
)
Proceeds from issuance of convertible
notes, net of issuance costs of $0 and $7,601 for the nine months
ended September 30, 2024 and 2023, respectively
—
232,399
Repayment of convertible notes
—
(99,754
)
Purchase of capped call options
—
(27,840
)
Investment from (redemption of)
non-controlling interests, net
56
(56
)
Repayment of notes payable
—
(2,101
)
Net cash (used in) provided by financing
activities
(6,942
)
95,139
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
403
114
Net (decrease) increase in cash, cash
equivalents and restricted cash
(29,325
)
10,261
Cash, cash equivalents and restricted
cash, beginning of year
106,475
87,903
Cash, cash equivalents and restricted
cash, end of period
$
77,150
$
98,164
RECONCILIATION OF CASH, CASH
EQUIVALENTS, AND RESTRICTED CASH WITHIN THE UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS SHOWN IN THE STATEMENTS
OF CASH FLOWS ABOVE:
Cash and cash equivalents
$
75,364
$
97,064
Restricted cash included in other
noncurrent assets
1,786
1,100
Total cash, cash equivalents, and
restricted cash
$
77,150
$
98,164
STEM, INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
(UNAUDITED)
The following table provides a
reconciliation of adjusted EBITDA to net loss:
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
(in thousands)
(in thousands)
Net loss
$
(148,300
)
$
(77,072
)
$
(802,877
)
$
(102,728
)
Adjusted to exclude the following:
Depreciation and amortization (1)
11,516
11,531
36,321
36,098
Interest expense
4,512
4,405
13,850
10,085
Gain on extinguishment of debt, net
—
—
—
(59,121
)
Stock-based compensation
6,532
11,198
21,716
28,320
Revenue constraint (2)
—
—
—
10,200
Revenue reduction, net (3)
5,525
37,377
38,653
37,377
Excess supplier costs (4)
—
—
1,012
—
Change in fair value of derivative
liability
—
5,155
(1,477
)
7,731
Impairment of goodwill
—
—
547,152
—
Contract termination payment (5)
10,000
—
10,000
—
Impairment and accounts receivable
write-off (6)
104,134
—
104,134
—
Provision for (benefit from) income
taxes
129
(46
)
344
354
Other expenses (6)
2,460
6,591
4,125
7,612
Adjusted EBITDA
$
(3,492
)
$
(861
)
$
(27,047
)
$
(24,072
)
Adjusted EBITDA, as used in the Company's full year 2024
guidance, is a non-GAAP financial measure that excludes or has
otherwise been adjusted for items impacting comparability. The
Company is unable to reconcile projected adjusted EBITDA to net
income (loss), its most directly comparable forward-looking GAAP
financial measure, without unreasonable effort, because the Company
is unable to predict with a reasonable degree of certainty its
change in stock-based compensation expense, depreciation and
amortization expense, revenue constraint and other items that may
affect net loss. The unavailable information could have a
significant effect on the Company’s full year 2024 GAAP financial
results.
(1) Depreciation and amortization includes depreciation and
amortization expense, impairment loss of energy storage systems,
impairment loss of project assets, and impairment loss of
right-of-use assets.
(2) Refer to the discussion of revenue constraint in the
definition of non-GAAP gross profit provided above.
(3) Refer to the discussion of reduction in revenue in the
definition of non-GAAP gross profit provided above.
(4) Refer to the discussion of excess supplier costs in the
definition of non-GAAP gross profit provided above.
(5) Contract termination payment to a vendor for the delivery of
hardware.
(6) See Note 3 — “Impairment and Accounts Receivable Write-Off”
in the notes to the unaudited condensed consolidated financial
statements in the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2024.
(7) Adjusted EBITDA for the three and nine months ended
September 30, 2024 reflects other expenses of $2.5 million and $4.1
million, respectively. For the three months ended September 30,
2024, other expenses includes $1.2 million for advisory services
relating to strategy and $1.3 million in connection with separation
agreements for certain of the Company’s former executive officers.
For the nine months ended September 30, 2024, other expenses are
comprised of $1.2 million for advisory services relating to
strategy, $1.3 million in connection with separation agreements for
certain of the Company’s former executive officers, $0.5 million of
other non-recurring expenses, and $1.1 million of expenses related
to restructuring costs to pursue greater efficiency and to realign
our business and strategic priorities. Restructuring expenses
consisted of employee severance and other exit costs.
The following table provides a
reconciliation of non-GAAP gross profit and margin to GAAP gross
profit (loss) and margin ($ in millions):
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenue
$
29.3
$
133.7
$
88.8
$
294.1
Cost of revenue
(23.1
)
(154.0
)
(97.4
)
(301.5
)
GAAP gross profit (loss)
6.2
(20.3
)
(8.6
)
(7.4
)
GAAP gross margin (%)
21
%
(15
)%
(10
)%
(3
)%
Non-GAAP Gross Profit
GAAP Revenue
$
29.3
$
133.7
$
88.8
$
294.1
Add: Revenue constraint (1)
—
—
—
10.2
Add: Revenue reduction, net (2)
5.6
37.4
38.7
37.4
Subtotal
34.9
171.1
127.5
341.7
Less: Cost of revenue
(23.1
)
(154.0
)
(97.4
)
(301.5
)
Add: Amortization of capitalized software
& developed technology
4.1
3.5
12.0
9.8
Add: Impairments
0.3
0.8
0.4
2.9
Add: Excess supplier costs (3)
1.0
—
Non-GAAP gross profit
$
16.2
$
21.4
$
43.5
$
52.9
Non-GAAP gross margin (%)
46
%
12
%
34
%
15
%
Non-GAAP gross margin as used in the Company's full year 2024
guidance, is a non-GAAP financial measure that excludes or has
otherwise been adjusted for items impacting comparability. The
Company is unable to reconcile projected non-GAAP gross margin to
GAAP gross margin, its most directly comparable forward-looking
GAAP financial measure, without unreasonable efforts, because the
Company is currently unable to predict with a reasonable degree of
certainty its change in amortization of capitalized software,
impairments, and other items that may affect GAAP gross margin. The
unavailable information could have a significant effect on the
Company’s full year 2024 GAAP financial results.
(1) Refer to the discussion of revenue constraint in the
definition of non-GAAP profit provided above.
(2) Refer to the discussion of reduction in revenue in the
definition of non-GAAP profit provided above.
(3) Refer to the discussion of excess supplier costs in the
definition of non-GAAP profit provided above.
Key Definitions:
Item
Definition
Total value of executed customer agreements, as of the end of the
relevant period (e.g. quarterly bookings or annual bookings)
●
Customer contracts are typically executed
6-24 months ahead of installation
●
Bookings amount typically includes:
Bookings
1. Hardware revenue, which is typically recognized at
delivery of system to customer, 2. Services revenue, which
represents total nominal software and services contract value
recognized ratably over the contract period,
●
Market participation revenue is excluded
from booking value
Total value of bookings in dollars, as of a specific date
Contracted Backlog
●
Backlog increases as new contracts are
executed (bookings)
●
Backlog decreases as integrated storage
systems are delivered and recognized as revenue
Contracted Assets Under
Management (“AUM”)
Total GWh of storage systems in operation or under contract
Solar Monitoring AUM
Total GW of solar systems in operation or under contract
Contracted Annual Recurring
Revenue (CARR)
Annual run rate for all executed software services contracts,
including contracts signed in the applicable period for systems
that are not yet commissioned or operating
Project Services
Professional services and revenue tied to Development Company
investments
Operating Cash Flow
Net cash provided by (used in) operating activities. Does not
represent the change in balance sheet cash which will be further
impacted by investing and financing activities
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028760199/en/
Stem Investor Contacts Ted Durbin, Stem Marc Silverberg,
ICR IR@stem.com
Stem Media Contacts Suraya Akbarzad, Stem
press@stem.com
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