STEM - Earnings call transcript Q4 2021

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Operator

Thank you for standing by, this is the conference operator. Welcome to the Stem, Inc. Fourth Quarter and Full Year 2021 Earnings Conference Call.

As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now Head turn of would to conference I Durbin, Ted Investor instructions] like the to over [Operator Relations. Please go ahead.

Ted Durbin

Thank Head of we is call. Ted at XXXX full This our and and to welcome you, Stem, you earnings quarter year Investor operator. Relations fourth Durbin,

statements. be risks to begin, we these and SEC to projected could our results will uncertainties materially you that are from forward-looking. in the statements some that therefore Before today of These differ our those note filings. we please refer making We matters involve cause latest

measures. Our comments today also include non-GAAP financial

details directly can release. measures Additional to reconciliations our and the comparable GAAP earnings in found most financial be

will We slide today. using be a presentation

Carrington, release the remarks. call CTO; are of in Johnson, John. will the call. and will of and turn the Investor Bill earnings now, available to Bush, our will Chief portion the Patel, presentation also prepared CEO; www.stem.com. the with our be call over today for I CFO, Larsh portion Our Officer John Strategy start Prakesh Relations website And at question-and-answer

John Carrington

last some agenda our this with and and that morning, year the review on AlsoEnergy highlight strategy. three you results and the our call. made Then, year. full closing the integration our discuss Available Thanks, Ted. Power and will Starting fourth I accomplishments slide quarter key I’ll we for XXXX briefly of announcement and update

we annual track and detail, to value and you recurring finally, a understand chain. I the new platform. our pass this in As we then year discuss will then initiatives new supply our and review more Athena have contracted contracts. done provide Bill will XXXX software the financial the revenue, integration platform of the on each quarter, help to PowerTrack called results update will on Larsh, I’ll And it guidance of who will discuss metric an our

We revenues Fourth times higher full than more Today, at again million, the expect than of bookings $XX more up year-over-year, we revenues versus planned. in triple than XXXX of XXXX. and doubled X. million, bookings were fourth tripled $XXX year quarter we quarter the we XXX% slide than fourth XXXX. to was record, more which our quarter our Turning reported and midpoint previous XXXX revenue to guidance, X

AlsoEnergy immediately the company, we is on revenue As expectations. we interconnection projects we’ve of these to renewable a securing acquisition our seen due combines in XXXX. the We details our most will to resulted projects surge, impacted the these more and permitting our month, storage software in the industry, the continued But with three included and which transformative to both make needs excellent expect across is earlier leading Omicron a with constraints that monitoring companies, we hardware deliver experienced the optimization XQ and of company. the associated XXXX this in case share XXXX call. leading later revenue for moving guidance. our projects solar delivery for to We’ve in and This have which completed acquisition accretive progress

to verticals continue our and several geographies Athena and new to software have extend new we importantly, lead More platform. our added

contracts will XX months. times profitable we November, Company in million We oversubscribed business, acquisition the highly a which and of to $X was convertible of positions to of current for million half on green and the significant our of mix of revenues second Based based software basis We of contracts XX-XX software our million have $XXX our over to was represents And we of $XXX end high-margin visible execution that in for In growth. contracts guidance, during bond, booked hardware on recurring of $XXX instrumental generate billion coupon in AlsoEnergy. strong SaaS over years points the long-dated believe XXXX. this that operating leverage in high-margin XXXX, X at to provides come. split, the multi-year revenue course the at our over a expect issued XX book

the five, series of a -- Available to hour gigawatt doubles under from this where our rights a In levels assets to exciting projects storage exclusive than we for up will software total, of to storage Power, become announced portfolio sites. which current Moving X more in XXX today, an could with portfolio, provide X and slide on hardware have management we side. developer Texas renewable a gigawatt

to expect $XXX exceed award million. value We of the this

XXX a big or Power fourth XX be market the Available bookings pipeline. XXXX. will systems of in our to commissioned storage the momentum quarter, in deal. expect that early We the and represents driver largest now megawatts of ERCOT continue energy our was in first with Texas the

big well in maximizes in services We our assets compelling market market markets. to storage both, are Athena proving value signals Athena and this how participate price structure and design. is by bidder capacity ancillary capture these suited wins enables market. to our energy price customer Storage leads the of no with wholesale customers to ERCOT’s

integrate in announcement ability with and prices is market Meter Front mitigate channel the and portfolio application. fastest to of is our a the our one volatility really solar bidding and ERCOT market match to momentum to large optimized to at Athena the and available and Net-net providing ability our dispatch of into U.S. to of of Additionally, is this our manage resources market strategy. return or growing help Athena deliver Developers bidder sites leading wholesale fit-for-purpose wind scale their consumption. these another asset the and multiple owner. energy storage’s markets. example partner about FTM value procure with while generation volatility in Smart the The success firm competitive the can market to across continued hardware and storage it

for our long life sell of software same then Our sales the storage. the hardware in formula battery. that we’ve assets markets a in dated helps for ERCOT follow upfront, used their optimize deliver We the contract and other customers

further FTM. not diversity are any Available The to commodity cases earning which the as use recurring Athena merchant continuing platform. of years reach multiple our underscore the typically software exposure, Power over and just revenue span geographies, customers our taking commercial demonstrates for our types XX customer contract win period, is We

to slide to X, Let’s AlsoEnergy. go turning

Schaefer, We drive countries. to across industry edge solar XX are over pleased and we AlsoEnergy’s of of a two software for the size our to close Stem or of Meter Also smart has controllers storage AUM SaaS controls AlsoEnergy’s their the with the and at leading including and install solar compelling low PowerTrack accelerate overlap and lead the AlsoEnergy’s contractors, has February. economic platform industrial for have synthesize be O&M of transition. the software solutions. asset Front Together, a solar EPCs. in combination providers, Bob in has the both we’re excited companies Stem’s and service customers, better gigawatts small the and a penetration, Athena executive are PowerTrack markets portfolios extremely storage assets will energy which as and industries heterogeneous my converge. continue high-value joined relationships. the co-founder the owners, only of AlsoEnergy XX% of field for assets XX under of medium core able They commercial energy are transaction storage team. of to offering customer customers’ solar CEO platform and presents outcomes Most AlsoEnergy’s customers technology. projects data stakeholders, management, AlsoEnergy that monitors base will Commercially, about the and beginning We variety believe staff and customer we to and

together working excellent teams we targeting So, opportunities. cross-selling see opportunities our are on and these sales

a very margins the and low from churn. on AlsoEnergy standpoint, Finally, XX% XX% approximately with you’ll overall, gross generates plus recall software margins financial that business gross

we to the cross-selling they revenue alignment. margin for in the started to companies what SaaS tiger From across amount of to and an generate and we X. out strong integration, now contracts. addition integration Please the profile, to lay out In teams have ruled combination significant call slide opportunities the drive from groundwork January their turn a recurring standpoint,

this advancing guiding process. a I a excited commitment we a to team’s alignment, collective and really Thus, roadmap to further of opportunities integration have goal leadership effort. we on significant across summit. global page point platforms. and week spent am we’ve the Boulder, hired headquarters of at leadership synergies software President single and first the seamless operational about ensure pipeline. together, last of integration AlsoEnergy the the Integration You retaining focusing driving can hosted established installed the product people, we’ve principles to our identified I see in side our the excellence, it’s execution, most Vice talent, while we and have to ensure dedicated base are critical Colorado, the we our on I on right are commercial believe of where any extend building

backlog and We organizations growth initiatives. as expect bring execute and to see the we incremental growth on bookings our together

slide of strength and strategy software offerings PowerTrack-ready. the and every on shortly. have to solar our software leverage time spend X. will customers, our for to Please Larsh some value is Ultimately, both is Athena-ready value shared customer system the a We companies. core turn goal centricity our to system to every combined will add storage

me it Larsh, turn to status. on you let I supply update chain over all Before our

of announce to quarter to the the supply agreements contracted expect into XXXX well storage have finalize our we quarter. pleased end We’re the of and supply fourth by first

process of be will our matching fully backlog best our solutions contracted that the for contracted XXXX, confident the We’re this in supply at and hardware time. for

strong have trusted of focus constraints quality, for Outside delivery Our we slowed is customers’ permitting guaranteed issues a to our that in differentiated, a deployment believe and interconnection seen we and and and supply. supplier indicator prior repeat particular, the chain, cost, maximizes supply In customers. We highest to lowest quarters. deployment as Stem value discussed system of being our other chain the systems. is continues have of be supply business this

in that to and from contributed revenue this the variance quarter projects backlog. to three projects now the fact, the these These delays in are in to are expected of delivered cancellations want not fourth part of In the year. XXXX. expected emphasize and contracted be I early our remain

peers project our industry, demand continue across momentum. in the reflected solutions expectations in accelerating bookings of we We as renewable our delays our to have see for although observed forward

pressure also in our And We price supply many indexed are in seeing commodity seen we inflation OEMs. agreements. battery cases, pricing from have

still economics our environment. project ensure work with and to in closely working are the pricing We new this customers suppliers

stay have will our writing we Lithium competitors. this seen disciplined of margin indexed negative contracts been some has We our as for be carbonate from pricing. gross will requirements, focus margin not in a and new we

to right You metal such inputs, the BNEF as Analysts can prices in graph lithium carbonate similarly longer improve gives for on the nickel in economics in battery trajectory long-term and We to commercial us coming expects our this see key decrease for cobalt, term. continue that storage quarters downward the the support the and and momentum. which confidence declines from for should geographies prices. believe forecast new in

to want channel strong customers year-over-year. revenue a I strong thank another and and for partners quarter up Finally, our year Xx, team, with

have on we of across employees, and which the software with in as year. built with addition unrivaled purpose-driven employees, and I’m the enhanced is our XX an remain competitive over as have for In global we have We organization of three with substantial relevant result on expertise now worldwide to data AI XXX inclusion acquisition. talent our a AlsoEnergy This the advantage best-in-class and the candidates footprint diversity, position functions. the employees platform. AlsoEnergy last in and assets organization exceptional the focused energized domain gigawatts over we equity our people is hired deep a and by continents,

XXXX. will Johnson, have I come that me Chief us turn the employees back talented confident numerous With be Technology in more And We Officer. and to will call comments. let some closing of over in Larsh accomplishments bring success even proud with XXXX our to our

Larsh Johnson

our hybrid how these term, storage storage time value project we API-based the to base support X, delivering Thanks, single streamlining of combined of user plus management. customers solar will market mutual consolidated AlsoEnergy the we of converge who equipment, and a in slide enriches the customers focusing data John. value integration technology are offerings extend experience roadmaps to in our And and edge joint pane sites. integrated the overview we grow capabilities. user leading Athena On on provide our solar own portfolio deliver and near PowerTrack enhancing glass their Today, to customer management, and with integrations, that platform our an to

data operations largest As the years, we world’s classes a data assets. across decade over a will roadmap energy of the accumulated would training the XX,XXX replicate Athena an of ecosystem this from it and software on building combined platform, emerge that common to as We sites. machine clean execute if next believe and over learning sharpens gigawatts markets, AI operations repository acquired of our impossible, difficult, experience solar storage across be of hosting vertical XX couple applications not and asset a covering

Athena vision $X with is highlight platform Penske, have addressable scale Athena data-driven by in electric AI-automated, offering is with announcement with been opening to of extending I we doing empower and operators Amazon vehicle on solutions owners work sector. software vertical and such space. This by to partnership management vehicle and want involves another builds for slide fleet shared that a asset the example ENGIE, Athena. December, charging of Our leveraging fleet which to UPS, an clean their energy eMobility their market integration additional XX, a Athena we which And deep customers announced operations is billion of businesses as electric the In into partners the on infrastructure. enabled

the utility will Our while energy building cost who perspective, avoid of to will dispatch fee, energy wallet share and our upside, their superior for GHG with impact additional data and over of capabilities resiliency for section. it and software peak up software-as-a-service an which From that, electrification. wrap detailed participation revenues. seamlessly providing charges, their financial increasing Athena offerings hand score this at management, distributed on market Bill to And storage additional a integration financial customers, is corporate the of Integrating fleet resources expanding operations. will leverage enable an will I charging we fleet future the with is application Athena’s

Bill Bush

Larsh. Thanks,

XXXX. annual or will discuss First, new then, of year I will revenue And fourth the contracted review recurring the and called full results a we I are quarter metric the CARR. calling,

financial does sales which in results XXX% the XXXX was financial last will with operating year. which with hardware $XX on software our vast of FTM of slide revenue BTM and growth AlsoEnergy. versus revenue from and on not fleet. same review results record the service quarter, the fourth million include I Starting We a our Lastly, majority quarter up from projects The our XX, financial partner of guidance. additional recognized came the

mentioned, fourth that our John in As quarter. some delays customers impacted and experienced interconnection in revenue of the negatively partners permitting our

coming revenue and to we quarters. realize these not are cancellations, Importantly, project expect the in the

the supply and permitting labor, project have we the progress to and interconnection surge While logistics stopped so at far challenges, successfully due managed unavailability sites chain several Omicron the of for in approvals. particular

experience to quarter. project and permitting Our as improvement and utilities their teams partners more return their normal markets in operations relationships to in advance see help agencies this operations We used these timelines.

gross basis, X% margin a was the quarter quarter margin $X.X XX% last negative Our gross was to in quarter versus Non-GAAP same the million GAAP or On the higher year. in in up versus non-GAAP gross fourth year, X% $X.X revenues. from $X.X margin or negative year. last last percentage million, due was million $X.X million X%

by were also FTM hardware but delays impact in a project fourth quarter, negatively the from there mix shift due impacted is Our in segment. to margins, gross margins the specifically

we through expect these we subside year move we However, drive the high-margin to service as revenue. issues more and

in the XXXX. of note completely large associated personnel advance as of as of we million out part We expenses, negative last from result related like software XXXX quarter a in and our As with million teams expect revenue of growing retired Adjusted those continue our last EBITDA for loss to $XX.X related we charge XXXX services. all build the to loss same fell additional hiring, EBITDA the the be from XX% significant operating non-cash issued million opportunities. quarter convertible lastly, to you’ll $XXX the because to share not That gross the advantage in of of costs reporting substantially and collecting was And was and expect from roadmap technology adjusted guidance, see future. public in range in financings XXXX, and $XX warrants costs is market swing XXXX, charges same total XX% year. do April of versus negative we million year. in margin take the in Net higher versus almost $X.X that the warrants our from quarter a fourth of a and the expenses

the end and Moving to XX, from results at from of $X quarters than billion slide our XXXX, end billion doubled just our financial of of between our the at metrics to third operating XXXX. the pipeline and on in grew fourth XX% more year-over-year $X.X XXXX

deepen multiple markets teams Our and customers, with develop and business new development to existing. relationships continued

grew as counter-seasonally biggest the program $XXX and primarily end was termination from them in than Cancellations to XX% million by relatively driven that not third result. become million been the The do by a at It’s in in backlog or backlog future. as contracted in last end quarter, quarter is during amendment, the recognize not backlog million. of our the revenue the of we to some doubled and at recognized a year. Our increase more up NYSERDA. of of That’s of driver history, early have cancellation the frequent project the well and cancellations $XXX the to important expect the offset quarter $XXX so unusual substantial bookings this

of impact high-margin market was of the term record, backlog predictable our service for the and represents gives of the include does foundation sales revenue. excellent backlog XX% leading again all team and represent booking, of solution. set is backbone bookings participation. revenue XXXX total new XXXX, in software and more the revenues. approximately Long XX% not the This importantly our which These a Our than is into software a expected the to us quarterly reported bookings testament hardware visibility

by the bookings year X.X strong X at cash grew the with AUM contracted We sequentially end and and XX%, of million XX% the almost transaction. the gigawatt $XXX cash of XXXX million in We momentum. from end XX% AlsoEnergy gigawatt Our stock. the driven ended with grew purchase or at the $XXX sheet XXXX to again, financed the XX%, before cash payment associated balance on with price our

the about few Please will software long-term network we to that value. want importance metric, customers the to of Athena the Stem our drives Starting showcase slide a costs, the and constraints, services offer our minimizing including revenues, customers. talking incentives with to I storage our and automates minutes with and everything, reducing Athena increasing think economics which XX. we for turn energy spend exceptional software emissions. business, Next, greenhouse drive complying new gas regulatory

allows our broad to Our real customers. for and value us co-optimize time in and economic streams maximize over market value scope multiple reach to time

We also of for monitoring and support provide to exceptional development, troubleshooting. renewable lifetime and the asset from the performance control customer reporting

customer’s As over why out brings growing services fee. roll revenue for evolve, economics same recurring have they software can of business, is these market the and value-add so their and opportunity our been to additional time. successful markets expanding we the revenues side to share enhance AlsoEnergy additional in which the solar

software in CARR charge in software We our side, complex. for we of to to fees we our for revenue big more shift contracts. mix charge historically While hardware and higher for will ago energy bringing XX%-plus services low comes The is margin from incremental optimize with had add improvement the more fees the software Athena for the those we metric, at annualized XX% Athena hardware CARR and captures We from PowerTrack enter we -- or value new and that becomes to more as services that generate and across XX call value platforms, in margins and value markets are need services. added able third for we a time, and becoming margins to we annual and years storage services, hardware-software been continue which mentioned expect XX% XX-XX contracts gross represents has value on streams, XX-year reducing on able sign the driver revenues Similarly, point the the customers. those software Power assets. quarter and a us contracted contracted as optimization low-single-digits. as a that both we’re to contracts that able fees our and PowerTrack, is split annual additional which dynamic. started software recurring its additional it grow couple Today, are Customers real are storage customers. CARR, the to between increase Stem churn embedded currently. we’re AlsoEnergy and to additional to the software its for the

storage contracts contain our services pure that is clauses for earn of can remember This opportunities grid where market Lastly, optionality us. upside arise. as additional we revenue participation

continued favor of to as middle the assumed our to upside and assets, numbers. see meaningful we have participation conditions guidance, our We that could market distributed revenue market have

here example, Massachusetts, SaaS and in are business growth. initial we leverage by XX%. expectations highly we profitable multiyear operating our believe message For to is our that positions outperforming revenue the already visible for significant provides Company Key this high-margin

guidance. our discuss will I Lastly,

slide to Turning XX.

we million. revenue $XXX introducing million First, $XXX guidance are to of XXXX

All of closed year-over-year. February of AlsoEnergy there’s operations we the a XX At in range, XXX% months guidance the transaction midpoint increase revenue as of that reflects Xst. on our

in had higher XXXX. which John we momentum, expected have bookings mentioned, than we drove As significantly commercial tremendous

will much software the bookings expected of to thereafter. hardware of and We the component translate in that XXXX revenue

we metric, a bookings, we guided but new guidance on have historically Second, not reported are introducing on. which

growth year, long-term contract year-over-year. all carrying and million approximately that to At between XX%-plus $XXX million to well up XXXX of indicators of substantial expect service $XXX are on if revenue. key revenue. the a bookings to reoccurring long-term gross and another Bookings XX-plus-percent SaaS We we translates goals for for are in able representing of significant this base margins. our build midpoint will meet set And and million $XXX year, backlogs bookings next it revenue leading us contracts,

between introducing EBITDA guidance negative Third, million. and adjusted are we $XX our million $XX negative

we margins impacting range our cost storage gross XXXX, in to are but expect margins. inflation in XX% hardware generate the XX% some strong seeing We to

more software $X investing through Importantly, our which ‘XX. in to December markets, we than ‘XX over bookings July in the offerings in the reflected in growth of is period expanding billion our are

margins, While and improve operational in we software business. continue low-churn of effects we the profile our the the margin We’ll for and also long-term contracts. believe are will reflect currently our the long-dated efficiency looking to growth Company invest to accretive

our this see platforms, year and costs you’ll we operating and increase up Athena so, as open features the Larsh add as markets And detailed PowerTrack new new to earlier.

last. We guidance the we flatter approximately introducing and are seasonality And contracts. our million. service a $XX lastly, XX% introducing bookings we million years, guidance minimum trajectory in increase revenue where between we to while XXXX for CARR, also exit for run at compared previous are the across Similar revenue $XX of a and a year and That we rate year-over-year expect bookings. high-margin of as metric the XXX% to XX-plus-percent back to new year, represents this half expect expect

goes signing of leverage recognition contract strength purposes, think and For commissioning We system long-term P&L the CARR timing is because with operating of low the should the modeling revenue lag our software you CARR churn a good indicator and the actual between assume on the of between live. and business. when some along

turn me John some Let for back call the remarks. closing to

John Carrington

and Wrapping on Bill. slide takeaways. our here key up XX Thanks,

XXXX. Our we bookings will growth momentum on strong and drive and in significant saw in momentum expect expansion as continued Athena XXXX

software We software will revenues. maintain higher which our high-value mix delivering and focus of customers, margins services higher to will our of and drive

$X a across XXXX with of bookings contracted in backlog billion and continue an to build expectation XXXX. will We substantial a

purposefully our XXXX in we have position. We’ll invested our our capital leadership. leadership years, extending in the people that software, Over extend to allocate and

of over will offer XX us you monetize we AlsoEnergy, the And of solution comprehensive most the platform clean in built the gigawatts have we in as addition energy the platform With see XX leading value countries. the most across industry. intelligence tested, the

allocation like functionality We to highest optimization, verticals add as internationally, return we markets enter capital we the move U.S. and on will Athena the and continue generate investment. charging on our EV new we remain but GHG to into also prudent in features will and as to and new

our our cash As operating we hardware amortize strong flows. growing will over line, cost shift scale high-margin to software, expect a as stream revenue mix our SaaS increase revenue. we revenue and leverage we up, will which Bottom from margins of long-term, fixed

We annual the on tracking are revenue reporting this that recurring progress through our outlined. contracted front Bill focused on on metric

XXXX will our year We bullish up and our the XXXX And and growth set the let’s for deliver be of that, open on trajectory in please. will on our beyond. are to growth for another commitments. exceptional competitive and positioning. With we questions, execute very this industry XXXX line

Operator

[Operator Brian Lee Sachs. with ahead. Instructions] question The comes first go Please from Goldman

Brian Lee

on us taking Thanks here. bridge. Hey, guess, I for I afternoon. bookings if give the question, outlook the nice Good revenue guys. Kudos you ask on margins could questions. the first a to bit and Maybe here. wanted the more

I think margin you said AlsoEnergy is doing XX% gross overall.

Stem a for gross margin. So, that at the your about maybe XX% profit midpoint half XXXX. core doing of And guidance, is it about means implies there dollars gross

But, we’re kind maybe the originally math margin? different quantify parts. targeting before I’m be you of can bit a a and right of if implied were for core think to XQ. where know XXXX. ‘XX number Stem is before if here. of you to ending also reconcile I and help kind my and you XX% can, trying throughout XX% XX% with, a kind off bridge in were maybe I of like mentioned all up sharp drop had target you mid-XXs of we guys here you where And to

John Carrington

the can and of turn all question. out company’s those to to Yes. some each But, over consolidated you few I’ll of for say, that want But Bill. guidance. not appreciate and those want on to I you Good Thanks, it address first really Bill, Brian. we’re consolidated, performance. asked. tackle break don’t it Brian maybe we a points, It’s the items if to I’d -- call. providing have or separated we

Bill Bush

the -- Brian, so, No I question. Yes. thanks, appreciate John.

think, math we John I your in think won’t that way. the think mean, of is basic future, pretty So out said, I I the correct. as breaking I But be two Company divisions the

continued the bookings the issue value the think, driving on the is is the there the of making that of I focus that Company. long-term software the what’s and Company, we focused is sure are

possible that’s the metric. in but why margins near-term, we’ve it’s that past CARR a pretty going as a reflection think be. -- So, software rolled CARR great lower in medium-term that is is is the of of to we’ll think said out I we ultimately will see I -- I the consistently think going and that’s the what short- what we be reflection revenues mature. we the to great to be, backlog mean,

are the think I is in the CARR. so, growth we about thinking what And

to So, on gross we going experienced midpoint, really really positive from terms times it’s foundation for of you X.X a That’s what’s what about in be the depending margins. in lay XXXX. growth -- -- take the to long-term it’s going

I invest we think it we’re to those the that extent going anything, think that’s to sales. than get the that near-term in about So, more way the to

as I’ll we’ve exceed the And another was we that’s almost that, $XXX here, got Power than be of. bookings that today, what like you XX% so, about talked should in did Xx potentially deal projects and bookings. worth talking or about more are ‘XX to remind in -- again, the million Available we thought we even And going

just of not this for ‘XX kind really ourselves but it’s beyond. So, and setting year, up

Brian Lee

guys Okay. higher that’s I I Athena medium shift software, embedded gets mix story that’s to have know you margins. more fair at these term mean, here enough. a longer

margin on hardware is in gross you going about going but hardware more thinking something still near-term, margins And going the obviously on and mean, get be suggest supply consolidated a margins that Just XX, I to temporary margin. this be guys not to you to sort side. XX% the anymore? see you you doing a maybe, maybe or trying about structural XX% hardware gross But we if lower mix. I talked is shift up, had structurally relatively help some this think there mix high a there expansion. XX% is out chain, are eventually see if is XX% to it the the issue logistics figure if of hardware to gross hardware are margin you’re should to You see here just

Bill Bush

chain use larger word the integration lower consistently larger versus say millions of that maybe would integration. or services being -- ones”, company does about margin. of procurement the I have that And a and difference they the structural, department? added projects the to isn’t FTM -- gross that multi you that project that I required. which When No, that the size mean, a a means have primary the extent the To say, said dollars, supply deals VTM XXX “smaller I those we that, have relationship kind of you’re just think but they to guess, normally into I’m would I not the think carry some we the tend come range, is relationships, sure doing have bring value developers, gigawatt

hardware. result a as the so, margins That’s gross what just it on you’re And of is. lower that, to see going

However, the more gross contract, important still to software is long thing layer over is period contract, signing you’re margin going a is time. high in of a which which super

of thought one services. the the think, margin about hardware which the what of I and frankly irrespective think decision I is, really software AlsoEnergy that the on and the we to profile margin gross things was acquire drove so, And

that’s the with so -- a so, well, even in that’s we’re term, that. trade extent off then low goes great to where for contract the really think we focused suffers it long-term. that’s that a And near beyond XX super the to XX-year mean, I churn, hardware

kind really thought that’s -- that so always way. what And of

along We’re well, as starting that more kind to software-only do which path. same deals is of

in think other And competitors continues where from that’s the where we to And that be. so, going in the I think software differentiate end itself we’re marketplace. to really

Larsh Johnson

I the as the does $X billion -- value. million represent of $XXX total mentioned I think that important opening it’s mentioned, Brian, contracted remarks, to of I Yes. software mean, bookings Bill think underscore Bill in

around the there’s focused which of we just minimal. leverage see. the So, piece, somewhat in decline we’ve that mentioned, or more gross left, hardware exciting the And Bill hardware a piece as margins and around actually even if modeled we’ve is continue margin to much software

Brian Lee

cognizant path this does term you is that long I to and have a to term, -- take market laid medium the in be the there just guys out. know to it I I sense. do near lot investors. matter tactically want makes Yes, speaking,

gigawatt Available we the that would and Sorry, Maybe deal, just cognizant all margin is it the Power of a the software then be megawatts commissioning, forward like on overall the a the split to on it it switching to revenue. XXX on path Do want million? million of this? how on, profile. pass their embedded X just that XXXX? lot sounds is So opportunity, gears, all I’ll that that great kind just just going in versus of what’s then, understand of know wanted the $XXX early is in I it’s to assume same for or Stem, to hardware The wanting dynamics And Just in your $XX guys. include million or $XXX the sure and dig for XXXX I in also be some question. win potentially AP on make split. you see suppose from earning there we’re you that means if what page. just opportunity, does is know I And there’s that

John Carrington

it, I’ll Yes. take a run at Brian.

of other number on like ERCOT and this mentioned installation. tends to related the the From think how proceed is it’s unpack a we’ll more a this, line everyone the I higher throughput to can And than And markets in on approximately the to tranches, quickly a expect What have market you I that’s perspective XXXX. together. coming on in answer do XXX-plus Stem. clarity of assumed as we would bit best some is it trying how So, about bit thinking $XXX little update be obviously we about the we’re -- million. to start a bookings the that get get and little the executed. be to XXXX plan is we it We how majority we’re you of

probably about we largest our issues. market quarter. kind talked about great as pipeline That’s well we’ve interconnection talked we’re the what it’s permitting which -- as of last is and in, as So, even highest market because velocity

can quicker coupled probably with with installations. solution on think value our we a lot there’s So, bring I of velocity velocity -- higher or

Operator

The next ahead. Maheep Suisse. Credit comes Please Mandloi from go question with

Maheep Mandloi

well. booking on Thanks for Maybe revenue just taking to with. begin the guidance XXXX questions. Nice as

from kind how of guys million-plus AlsoEnergy. you of rate last stem and framework Just is run growing about I wanted revenue split to range year talked the know to much think that that a core about understand between $XX XX%, guidance like year-over-year. that XX% Is right of and AlsoEnergy?

John Carrington

I’m sorry, Maheep.

bit end. broke say there the up You little Could towards that again? you a

Maheep Mandloi

acquisition. of it -- wanted AlsoEnergy during ran million, million assume, revenues, guys $XX off around $XX you just the AlsoEnergy for from in looking in million Could XXXX? and revenues from XXXX to try $XX base. revenues It growing understand guidance gave at break-up the Stem revenues I and the we somewhere just AlsoEnergy right, that of like

Bill Bush

Yes.

ballpark. I certainly think in the that’s

Maheep Mandloi

you. for Thanks Got clarification. And…

Bill Bush

just -- will be that clear There up. to

the within Ks, there too. around segment see some you’ll reporting So, will be Qs that and

going item. So, you’ll revenue forward be the able line to track on that

Maheep Mandloi

Got it.

So, it that like AlsoEnergy recurring guidance, revenue the of million, business, just looks and $XX majority you’re probably around which giving, services of million $XX is software right?

Bill Bush

the In mean something terms CARR of or else? projections you

Maheep Mandloi

Yes…

Bill Bush

XXXX. exit $XX characterize wouldn’t it way. I million mean, that $XX in a I we’re rate to million, guiding so

what from a describe Stem house lot side going of think I would side. to that or we the the older as is come of

Also say, the the side as It’s quite business. storage love not as, we quick the growing So, of business.

not that’s Meter is the think, nor the o growth you’ll for mean, creative, what So, solar the -- Front growing plus storage that of the but storage really, Behind segment like I the by talked neither driven getting solar going million always of going business. on the side, about, the see. I the that’s I deals you’re to still of side likely very the side see really mean, storage $XXX Meter profitable, signed. And kind we’ve see the fastest piece.

numbers the and pretty sign change of couple about a So, -- dramatically. think kind more of growth those

Maheep Mandloi

the the And some just question, like Can like that customer and Is drives makes That other talk range? you. color or helpful? projects end on for on revenues. guidance waiting be the on would higher end just lower you Got then specific any you’re about, here sense. of it what that

Bill Bush

Yes…

John Carrington

ahead the safety, kind But We’re Bill, go and said, in. the really at the that macro environment, think fact I highlight global building year-over-year. would of it’s he a given margin but midpoint, jump growth I Xx even

Bill Bush

as Yes. No, I visibility good you know, that we have going to -- we as pretty was say have to projects. you,

big so, And number PTO year, a big a having XXXX. number of of projects just looking we’re at that this for a projects like -- there’s there’s

you deals, question see rolls how we view other But, large generally, there’s to I we’ll the so, over sign supply goes mean, the around to time, course And could like marks as year out. guys we chains one what the that as happen. of took definitely a thought conservative of we’ll -- lot on. we We, a update and within business continue they just I the John kind going million announced hardware, those sorts results deals some those to we hardware it’s of going a mentioned have the in today, piece, That are -- that of of as naturally to mean software $XXX of talked we’ve contracts. mean, lumpiness as long-dated lumpy as is drive the about million are. and I nice business. $XXX

you on close that keep eye a updated. So, keep and we’ll

Maheep Mandloi

me, Got in jump and I from one will you. back last And queue. just the

wanted of previously for margin, understand, out EBITDA back just we or expect think you that kind you breakeven, laid on to that do which, of target some expenses to because return expansion of should a that adjusted like when expansion, on ‘XX? to the of understand guys I increase when kind ‘XX, So, expect some of but that investment? you operating return

John Carrington

to take you Bill, that? want

Bill Bush

Sure.

So I note generating EBITDA EBITDA that and to the some important investments the or results. think it’s are interesting OpEx -- pretty really obviously

$XX kind combined I a to OpEx. to a going And we’re guiding on minus million $XX back be mean, $XXX EBIT. EBITDA minus we’re that, guiding a wanted solve is this you of pair the we to -- basis, for we OpEx number, to a could And, if year, million can right? around XXXX. see million So,

touchstones we what those position trying sales number. none this growth and throughout investments -- positive for there’s business do has EBITDA, of have and science, so And though in to structure that there’s year, like really that there’s if or new the were in for back there. see that a I So, is that business, understanding us data we pair But think markets, people, that’s wouldn’t market when came solve the you the announced are types contracts from that today. we the could

of goes those that of into sorts lot a things. there’s So, work

a bit you And so, might it’s little definitely complicated more than expect.

I there’s of as of market really number markets, about so, some like where little to of bit. to Texas $X service talked in think opportunity the in long-dated end that’s billion we mentioned of over of us to year, when $XXX $X contracts. that to months interesting software that’s July generate the a feel a those an able XXXX result, invest kind a -- billion million through next of or starting contracts. we’re trajectory, mean, which, going John we’ve be I And continue ahead And XX of bookings you --

pay that that’s an but extent in off -- this that near-term, get to to really comes where with investment the be to we in think long. the And have so to that. invest to that’s And going that able to we

Maheep Mandloi

run-rate OpEx well, similar as in then? Should we expect ‘XX

Bill Bush

the terms ‘XX growth ‘XX to in from Similar of or…?

Maheep Mandloi

Either ‘XX $XXX or to ‘XX, growth million either way... from that in

Bill Bush

Yes.

most is so we OpEx think would our headcount-related. I of because expect

non-personnel-related on OpEx line. investment really the not it’s -- So doing we’re not

Maheep Mandloi

right. All you. Got

Bill Bush

Yes.

what have mean, think too result base CARR is ‘XX of a investments. you though, a much will those as of larger I I in

Maheep Mandloi

some kicking Right, operating leverage in, right.

Bill Bush

what Exactly. That’s we’re thinking. exactly

Operator

ahead. go with The next Please question comes Susquehanna. from Biju Perincheril

Biju Perincheril

Thanks taking Maybe questions. margin more on the side. for my one

the is at on bit And along business. for to you, -- the about, business software hardware extent threshold? what cost much are talk pass is growing how on side, really is for higher the the a able hardware input you current to hardware is margin aim at And your I customers? side means environment, understand, you you the also, which some more little least the So, to a can

John Carrington

shipping say that about to are moderating. on. the And you. for thanks kind we call, I’d some things chain they the from piece. call Biju. last talked we have as those the supply were Yes. to couple softening pass hear freight And around costs, one, on fees, the oversea able we Number a of in Good seen

of that build. our lithium seeing some remarks. is working over pricing through we and carbonate ideas the the a are we’re think that outlined that in now And on suppliers, represents opening I with what we index little focused half primarily

that. So are on they why obviously, that’s focused

we from that talking we’ve and So, of invite And to ESS through we’ll these a of give will continue the because call our about Does us have bookings standing far a projects as, the been have got if supplier kind opt projects kind away, do pencil? that everything to volume. pass today on to suppliers else we as think our fall momentum and continue. to play

So being are long we feel where about we good hardware be. today. may a good again, spot to But very

get down that this XXXX, as to carbonate today side. that it total we contracted. We in lithium there’s chart plays of come see our forward, kind of we’ll how put from I that as an XXXX are to we’ll confident out. pricing example trough supply And on mean, index these peak together, feels the XX% deck commodity BNEF like

And revenue So, the I recurring they up reduction are and margins. we is believe high markets drives open I outlined Bill’s think really potentially and hardware focus call, and think accurate. gross driving more on as software helps some But more that’s us clearly margin. raws, that during more and our and forecasting pretty in

Biju Perincheril

That’s you the anything on can you -- about for new say threshold helpful. business? And margin have side the hardware in

John Carrington

a we any on pretty really process, thorough that through large have -- we Biju, mean, I we go deals.

they’ve it want what If threshold. we a come and Our has that, sales do. then got and team we me Bill, to to to decide goes below

haven’t deals than the we’ve a it’s And a needed, tight very that out and But as so, some would from seen I us. of on, for that on outlined goes not more if rest our take margin weekly there. also focus competition publicly. process negative as really that’s not to assured, interest basis, But a And say that we is it’s weekly.

our XXXX So, we’re front. to we don’t like on over XXXX. were the hardware and know, you as else that feel anything assuring like we Bill, add if I piece, on it, supply, all have much and

Bill Bush

Yes.

talked leaning side. number on I of is to of the that’s one guidance go ago of range FTM we’ve to things And margins more house. the kind think XX% FTM XX-XX, as XX now, are the -- we’re towards that’s closer the we of back the about we XX% the higher I more and almost to ever years more seeing. note side, that mean, in what talked is important you the two FTM to getting about side on

we it percentages of that though towards So, we’re I kind close that leaning think heavily kind talked operating more about, the we’re plan, than it. the of it’s still to that Other then we elongated somewhat mixed and be. would that there we’re good that FTM. happy could has, I think in is way Texas predicted we’re force the back market that to news become the but don’t have

Because you know, side the Fortune think impacted good So, that more tends I margins, maybe the growing, but on to think be side on XXX by the still pandemic. BTM more house. of the, the I definitely

Biju Perincheril

it’s needed whether mix, [Technical BTM? software Difficulty] that you margin, the FTM still has FTM business the same or

Bill Bush

have I the I story. else’s that’s to Exactly. I is to think hardware going always this platform. not what It’s mean, It’s And really agreed, true. software of That’s ultimately, I the be true think in we’ve been is Stem continue always as future. story. the said, sale somebody and a differentiating think a most of component

Operator

John remarks. closing have Carrington over that time we the This I today. for turn the And back is to to for would all questions like conference any

John Carrington

XXXX full on call. you earnings you, joining year us thank and quarter Susan, all fourth Thank for and our

have in into the year are quarter We the carried very-pleased our the and momentum XXXX. that and strong execution fourth with full we XXXX,

forward look And again, we speaking all you quarter joining. thank to for you earnings during first So, our with call.

Operator

conference call. today’s concludes This

have lines. your disconnect for you Thank may day. pleasant a You and participating,

Stem (STEM) 25 Feb 222021 Q4 Earnings call transcript