Stem dips on Q1 earnings, announces new solar and storage asset software

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Stem Inc. announced its Q1, 2024 earnings, showing a decline in revenues and increasing losses. The AI-driven software provider for clean energy asset operations saw its stock price dip over 20% in the trading session the day after earnings were reported.

Revenues for Q1 were $25.5 million, down 62% year-over-year from the first quarter of 2023. The company said the lowered revenues reflect a $33 million reduction due to an updated valuation of certain contract guarantees and hardware revenue recorded in 2022 and 2023. The revenue dip was a shock to Wall Street, coming in nearly 60% lower than consensus expectations.

The company posted net losses of $72.3 million. It ended Q1 2024 reporting $112.8 million in cash, cash equivalents, and short-term investments. The company also improved its operating cash flow from $(35.8) million in Q1 2023 to $(0.6) million in Q1 2024. Gross margin climbed to 24%, up from 19% a year before.

“The first quarter represented Stem’s continuing efforts to maximize cash flow generation in 2024 through cost control and converting receivables to cash,” said John Carrington, chief executive officer, Stem. “During the quarter, we also canceled certain less profitable contracts in both our hardware and software backlog to focus on higher-margin opportunities.”

Carrington said the company “remains confident” in Stem’s ability to generate more than $50 million in operating cash flow for the full year 2024.

“As we expected with our expansion into large-scale front-of-the-meter (FTM) storage projects, our bookings have become increasingly variable on a quarterly basis,” said Carrington. “We reiterate our full-year $1.5 to $2.0 billion bookings target for 2024, based on contracts that are in advanced stages of negotiation or are expected to close in the near-term.”

Stem maintained its guidance for positive adjusted EBITDA and operating cash flow for the full-year 2024, and said it expects meaningful year-over-year growth in its software services revenue.

Software suite

Stem announced it has released a new software suite for asset performance management called PowerTrack. The company said the software enables owners, operators and asset managers to streamline management of storage, solar, and hybrid energy asset portfolios.

The software suite includes configurable, persona-based dashboards and workflows. Users can track information from portfolio-level technical and commercial performance to site-level and granular device-level data.

“Built on the dual foundation of Stem’s solar asset monitoring software and the Athena platform, PowerTrack APM revolutionizes how technical asset managers, commercial asset managers, and operations managers collaborate around a unified set of metrics and streamlined processes,” said Carrington.

Asset management of Energy Storage Systems (ESS) is a game changer that makes the tools, processes, and strategies used with other asset classes obsolete,” said Cedric Brehaut, senior vice president of product at Stem.

Technical and commercial performance are linked by a complex web of revenue streams, technologies, contracts, and warranty constraints. Stem said its software suite is designed to navigate these factors.

“PowerTrack APM helps owners and operators of storage, solar, and hybrid assets understand the commercial impact of technical decisions and the technical impact of commercial strategies, so they can more effectively and efficiently manage risk and drive returns,” said Brehaut.

The suite offers monitoring, commercial performance tracking, energy storage system warranty management and verification, automated operations center processes, commercial impact measurements from technical events, and more.

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