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Stem Announces Second Quarter 2025 Results

Increased revenue by 13% YoY to $38M

Achieved positive adjusted EBITDA by driving cost savings efforts

Increased ARR by 3% QoQ and 22% YoY to $59M evidencing continued software-focused strategy execution

Tracking towards the high end of guidance for nearly all metrics

HOUSTON--(BUSINESS WIRE)-- Stem, Inc. (鈥淪tem,鈥� 鈥渨e鈥� or the 鈥淐ompany鈥�) (NYSE: STEM), a global leader in artificial intelligence (AI)-driven clean energy solutions and services, announced today its financial results for the quarter ended June 30, 2025.

Financial Highlights

• Revenue of $38.4 million, up 13% from $34.0 million in 2Q24
• GAAP gross profit of $12.8 million, up from $9.4 million in 2Q24
• Non-GAAP gross profit of $18.7 million up from $13.5 million in 2Q24
• GAAP gross margin of 33%, up from 28% in 2Q24
• Non-GAAP gross margin of 49%, up from 40% in 2Q24
• Net income of $202.5 million versus net loss of $582.3 million in 2Q24
• Adjusted EBITDA of $3.8 million versus $(11.3) million in 2Q24
• Operating cash flow of $(21.3) million versus $(11.9) million in 2Q24
• Ended 2Q25 with $40.8 million in cash and cash equivalents

Operating Highlights¹

• Bookings of $34.3 million versus $34.5 million in 1Q25
• Contracted backlog of $26.8 million, up 6% from end of 1Q25
• Storage operating assets under management (鈥淎UM鈥�) of 1.7 gigawatt hours (鈥淕Wh鈥�), up 42% from the end of 2Q24 and up 6% from the end of 1Q25
• Solar operating AUM of 32.7 gigawatts (鈥淕W鈥�), up 22% from end of 2Q24 and up 1% from end of 1Q25
• Contracted annual recurring revenue (鈥淐ARR鈥�) of $69.2 million, nearly flat from the end of 1Q25
• Annual recurring revenue (鈥淎RR鈥�) of $58.5 million, up 3% from end of 1Q25

鈥淲e delivered record software revenue and positive adjusted EBITDA in the second quarter of 2025,鈥� said Arun Narayanan, CEO of Stem. 鈥淲e also refinanced our debt and significantly strengthened our balance sheet, continued to manage our operating costs including a difficult but critical strategic reduction-in-force, and executed on our software-centric strategy defined by our new business unit structure. While achieving all this, we are also looking to the future with new AI-centric PowerTrack offerings and the reaffirmation of guidance across all metrics. Despite tariff and policy headwinds, our diversified software鈥慶entric model, international expansion, and regulatory expertise position us to navigate the landscape effectively. Rising load growth continues to make the US commercial and industrial solar market a strong, sustainable opportunity even without government incentives.鈥�

鈥淭he second quarter of 2025 demonstrated our continued financial discipline with continued revenue growth, strong GAAP and non-GAAP gross margins and positive adjusted EBITDA, which serves as a testament to our operational focus,鈥� said Brian Musfeldt, CFO of Stem. 鈥淭his consistent performance gives us confidence to reaffirm full year 2025 guidance across all key metrics. Our debt exchange that we closed in June was transformational, reducing outstanding debt by $195 million and extending the majority of our debt maturities to 2030. We believe it provides a solid financial runway to achieve our goals. While cash was lower this quarter due to timing of working capital commitments and one-time payments related to our second quarter workforce reduction, we have subsequently collected a significant amount of cash and reduced our operating expenses providing a solid liquidity foundation.鈥�

Second Quarter 2025 Financial and Operating Results

Financial Results

Revenue for the second quarter of 2025 increased 13% year-over-year to $38.4 million, versus $34.0 million in the second quarter of 2024.

GAAP gross profit was $12.8 million, or 33%, versus $9.4 million, or 28%, in the second quarter of 2024. The year-over-year increase in GAAP gross profit ($) and GAAP gross margin (%) was primarily driven by a higher contribution from software and services revenue in the quarter.

Non-GAAP gross profit was $18.7 million, or 49%, versus $13.5 million, or 40%, in the second quarter of 2024. The year-over-year increase in non-GAAP gross profit ($) and non-GAAP gross margin (%) was due to a higher contribution from software and services revenue in the quarter.

Net income was $202.5 million versus second quarter 2024 net loss of $582.3 million. The year-over-year increase was primarily due to a one-time gain on extinguishment of debt, higher gross profit, lower operating costs, and a one-time impairment of goodwill in the second quarter of 2024.

Adjusted EBITDA was $3.8 million compared to $(11.3) million in the second quarter of 2024, primarily due to higher gross profit and lower operating expenses.

The Company ended the second quarter of 2025 with $40.8 million in cash and cash equivalents versus $58.6 million reported at the end of the first quarter 2025.

Operating Results

As previously disclosed, beginning with our Q1 2025 Quarterly Report on Form 10-Q, the definitions of bookings, contracted backlog, and CARR have been revised.

Contracted backlog was $26.8 million at the end of the second quarter of 2025, compared to $25.3 million as of the end of the first quarter of 2025, representing a 6% sequential increase.

Bookings remained steady at $34.3 million in the second quarter of 2025 compared to $34.5 million in the first quarter of 2025.

Storage operating AUM increased 6% sequentially to 1.7 GWh for the second quarter of 2025. Solar operating AUM increased 1% sequentially to 32.7 GW for the second quarter of 2025.

CARR was $69.2 million at the end of the second quarter of 2025 versus $69.0 million at the end of the first quarter of 2025.

ARR increased 3% sequentially to $58.5 million at the end of the second quarter of 2025 from $56.9 million at the end of the first quarter of 2025. This increase of $1.6 million was driven by system activations and higher renewals.

The following table provides a summary of contracted backlog at the end of the second quarter of 2025, compared to backlog at the end of the first quarter of 2025 ($ in millions):

Outlook

The Company is reaffirming its full year 2025 guidance as follows ($ millions, unless otherwise noted):

Business Updates

• On June 3, 2025, the Company announced its Professional Services support in the engineering advisory and design of Green River Energy Center. Stem鈥檚 services for the project include energy storage metering configuration, review of power flow scenarios, and auxiliary load assumptions. Developed and indirectly owned by rPlus Energies and situated in Eastern Utah, this transformative 400-megawatt (MW) solar and 1,600-megawatt-hour (MWh) battery energy storage project is one of the nation鈥檚 largest solar-plus-storage projects under construction.

• On June 12, 2025, the Company announced that Norbut Solar Farms (NSF), a leading community solar developer in the New York ISO (NYISO) power market, will standardize on Stem鈥檚 PowerTrack鈩� software to scale and manage its growing portfolio of solar projects. The collaboration is intended to enable NSF to accelerate its Engineering, Procurement, and Construction (EPC) strategy, bringing more clean energy projects online while enhancing operational efficiency and streamlining critical reporting processes.

• On June 23, 2025, the Company implemented a 1-for-20 reverse stock split of its issued and outstanding shares of the Company's common stock, in order to regain compliance with the minimum average closing price requirement under the rules of the New York Stock Exchange (the 鈥淣YSE鈥�). The Company's common stock began trading on a reverse split-adjusted basis as of the opening of trading on June 23, 2025 under the Company's existing trading symbol "STEM鈥� with new CUSIP number 85859N300.

• On June 30, 2025, the Company completed a privately negotiated exchange with certain holders of the Company鈥檚 outstanding 0.500% convertible senior notes due 2028 and 4.250% convertible senior notes due 2030. The transaction resulted in a reduction in outstanding debt of approximately $195 million and exchanged $350 million in aggregate principal amount of 2028 and 2030 Convertible Senior Notes and raised $10 million of cash for $155 million in new Senior Secured PIK Toggle Notes due 2030, warrants exercisable for shares of the Company鈥檚 common stock and accrued and unpaid interest on the exchanged Convertible Senior Notes. The transaction significantly strengthened Stem鈥檚 balance sheet and bolstered the Company鈥檚 ability to execute its software-focused strategy.

• On July 7, 2025, the Company announced the appointment of Brian Musfeldt as Chief Financial Officer (CFO), effective July 17, 2025. Musfeldt returns to Stem after having served as CFO of AlsoEnergy from 2017 to 2023.

• On July 29, 2025, the Company announced the successful deployment of its advanced energy system at the Camino Solar project in Kern County, California, developed by Avangrid, a leading energy company and member of the Iberdrola group. Stem鈥檚 expert engineering services and software platform enabled grid integration and operational excellence for this milestone renewable energy facility, delivering optimized clean energy to approximately 14,000 homes. The comprehensive scope of work included project management, design, procurement, configuration, testing and commissioning of the PowerTrack Power Plant Controller (PPC) and data acquisition system.

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 $33.1 million during the six months ended June 30, 2024 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. The Company has not issued such guarantees since June 2023 and does not intend to issue any new guarantees in the future.

There are no remaining PCGs outstanding, and the Company expects no future impact on its financial results as a result of PCGs.

The Company is subject to risk and exposure from the evolving macroeconomic, regulatory, geopolitical and business environment, including the effects of the One Big Beautiful Bill (OBBB) on our business and that of our suppliers and customers, the effects of increased import tariffs and retaliatory trade policies, global inflationary pressures and interest rates, 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 uncertainty around other current and future trade policies. We regularly monitor and attempt to mitigate 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 (鈥淕AAP鈥�), 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鈥檚 internal comparisons to our historical performance and liquidity as well as comparisons to our competitors鈥� 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 鈥淩econciliations of Non-GAAP Financial Measures.鈥�

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

In the three months ended March 31, 2024, we incurred costs of $1.0 million 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 accounted for such contractual terms and guarantees as variable consideration at each measurement date. The Company reviewed its estimate of variable consideration each quarter, including changes in estimates related to such guarantees, for facts or circumstances that 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.

See also the section below entitled 鈥淩econciliations of Non-GAAP Financial Measures.鈥�

Conference Call Information

Stem will hold a conference call to discuss this earnings press release and business outlook on Thursday, August 7, 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鈥檚 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, and can be accessed by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671. The passcode for the replay is 13754161. The replay will be available until Sunday, September 7, 2025. An archive of the webcast will be available shortly after the call on Stem鈥檚 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 鈥渇orward-looking statements鈥� within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words such as 鈥渆xpect,鈥� 鈥渕ay,鈥� 鈥渃an,鈥� 鈥渂elieve,鈥� 鈥減redict,鈥� 鈥減lan,鈥� 鈥減otential,鈥� 鈥減rojected,鈥� 鈥減rojections,鈥� 鈥渇orecast,鈥� 鈥渆stimate,鈥� 鈥渋ntend,鈥� 鈥渁nticipate,鈥� 鈥渁mbition,鈥� 鈥済oal,鈥� 鈥渢arget,鈥� 鈥渢hink,鈥� 鈥渟hould,鈥� 鈥渃ould,鈥� 鈥渨ould,鈥� 鈥渨ill,鈥� 鈥渉ope,鈥� 鈥渟ee,鈥� 鈥渓ikely,鈥� and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about financial and operating performance, guidance, outlook, targets and other forecasts or expectations regarding, or dependent on, our business outlook and strategy; our joint ventures, partnerships and other alliances; forecasts or expectations regarding energy transition and global climate change; reduction of greenhouse gas (鈥淕HG鈥�) 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 expected impacts of the One Big Beautiful Bill Act (鈥淥BBB鈥�) on our business and that of our customers; 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; and our future results of operations, including revenue, adjusted EBITDA and the other metrics presented here. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results or outcomes 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; including from our cost reduction, workforce reduction and restructuring efforts; our inability to successfully execute on our new software and services-centric strategy; the effects of the OBBB on our business and that of our customers; 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, high interest rates, changes in monetary policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, 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; pricing pressures; severe weather and seasonal factors; our inability to continue to grow and manage our growth effectively; our inability 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 maintain compliance with New York Stock Exchange listing standards; risks relating to the development and performance of our 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, our 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 the Company, 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 the Company. 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. Forward-looking statements in this earnings press release are made as of the date of this release, and the Company disclaims any intention or obligation to update publicly or revise such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Source: Stem, Inc.

The following table provides a reconciliation of non-GAAP gross profit and margin to GAAP gross profit (loss) and margin ($ in millions):

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Stem Investor Contacts

Erin Reed, Stem

Marc Silverberg, ICR

[email protected]

Stem Media Contacts

Jessie Smiley, Stem

[email protected]

Source: Stem, Inc.