STEM - Earnings call 3 2023

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Stem Third Quarter 2023 Earnings Conference Call.

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

Theodore Durbin

at Durbin, operator. earnings XXXX of is you, to Ted Thank Investor third This call. Relations Stem. quarter Welcome our Head

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

Our financial also comments today include measures. non-GAAP

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

be slide We using presentation a will today.

of and www.stem.com. Carrington, over now Patel, will with and Our turn available are to and Chief Busch, earnings Bill prepared And release COO; Officer, will presentation of the the website section remarks. our John our call call CEO; on Pritesh the call. Strategy I will Relations for portion CFO, start Investor Carlson, today John. the question-and-answer be Mike at also the

John Carrington

will and Thank X quarter commercial thank Good afternoon, agenda for our then results. all us items: traction. Beginning product discuss leadership, announcements, Ted. will with and X, results, Bill our you technology, today. third Slide financial you, joining and cover our our

contracted performance million recurring revenue record for sequentially. The exceptional CARR, With $XXX in that growth, cost up continued exclude will profitability third in $XXX Revenue $XX later a in EBITDA control, results $XXX,XXX call. and by came XXXX annual reflects last Xx drove Adjusted breakeven XXXX. solid year. third recorded on highlights. to the reduction We million. our to quarter XX% adjustments third we revenue, XXXX million third in impacted strong set or of and up nonrecurring Adjusted versus Now our an our improve. let's at of adjustment path up the revenue. X quarter an Bill to negative turn negatively XX% in same the quarter, EBITDA margins negative XX% near bookings growth to was this bookings Slide continues revenue and quarter In quarter quarter versus the versus discuss

expect new during this We continue our in to the positive committed we EBITDA achievement we Today, agreement adjusted of Analyst Energy. SB to and half a with in an Investor XXXX. exciting second announced goal year, of Day

across underscores which and revenue. value its We SB core for like up deployments differentiation value. our XX recognition America. This continues AI-driven our will developers receive storage on to technology, to Athena, software partnership growing focus hours scale to gigawatt offer third-party and of North services is service proposition for our of gigawatt Energy the At

announcing our expect of year flow year, equity. is we're expect Finally, in milestone EBITDA positive cash deployments, need that and co-ops storage free a our XXXX U.S. adjusted meter full over the by to without issue the as additional serve will municipal public XX% this market. the future This bulk and power achieve move we to entry we driven positioned customer represent of and segment. guidance into generation history and at key in The earnings to to we well the are bookings system was more turn exceeded in full X. In particularly cooperative power business analysts Xx this for we'll Industry strength we XXXX, contracted our coming $XXX storage Please highest quarter guidance million. company scale and the front largely QX the bookings call Slide nearly to year in in in outline specifics our far February. of

to testament driving this are up gigawatt backlog storage a grew hours. margins, also our to in the quarter We differentiation solutions. XX% consistent AUM of year-over-year.For both we solar businesses, strong X significantly, XX% a Our saw gross increase

AUM in solution. differentiation our year, measurable doubled a remarkable Stem and nearly have the We achievement past storage team the by of the another

also growth some third growth, with healthy contracts. consecutive had additions in more roll-off strong the execution legacy than single of our offsetting customer a quarter. the of AUM million $XX This resulted new quarter of nearly up low-margin CARR Solar in

our project guidance are Additionally, prices and plus we both timelines. market Demand CARR project focus solar perspective, for strong. purchase economics demand recent the remains are developers our and year.End on higher Falling Level clarity interest raising our for for to tracker, increase in prices XXX% that agreement from equipment improving power accelerate partners. by this to can The storage in incentives XXXX some industry. our their interest through on the ways despite data impact rates. key Overall, in key out the from industry asset sector higher we come returns XX And seen debate confirm regarding a from generally the increase for price robust also XXXX. be tailwind see validates PPA owners We tax a of is analysts energy, major project finding assessment have rates. remains several continues we very on and are

project successful and suited this well record industry-leading with for Our is market track software paired services our particularly environment.

virtue to any Please leadership. rate technology X, interest XXXX into turn have not fixed which do Slide we reminder, maturities our our highlighting rate debt, by direct of a have XXXX. and As exposure

pleased third Sustainability highlight These the products Group. to their recognized Year are the leadership, Intelligence from to the We party Award designed technology Product objectives. again help improve earning of awards Business once for be a companies a sustainability by

in specifically to Bronx, bring the NineDot resonate into helped Energy our side, technology we the first system In multiple storage service. energy markets. On York, New the continue customers with commercial solutions

market customers multiple rapidly in New of at peak developed control have our is years. for ability coming expect hours coincident XXX low incremental Athena This we York another our We markets. our expertise as NineDot over are Athena of York megawatt markets. some the to to value costs over building Between under new the other co-optimizing we New for and the on streams partners, scale enter we and other prediction in example

is in introducing for a and ahead active new agreement The with forecasting customers offerings we assets tool team are issues in launch In of including which onboarded of competitive can software market. a Manager. assets. current customers In of manage helps owners, the we believe resolve the one assets we their X.With Starbucks, our anchor New introduced segment Texas we performance our the refining the assets. that has sustainable energy versus modeling, X day these to The by Please currently control. of Energy who professionals offering, customers management and Additionally, generating to engines and data in asset Gardens revenue the new customers, underserved we on to for power application, are leading clean Manager, credits.In is Pro been energy York. in for believe with operational have monetizing the forecasting purchase optimization the price PowerBidder downtime gigawatt Athena Pro, PowerBidder XX% real-time energy market. turn credits Slide asset PowerBidder solar our asset system in project our Based year a offtakers, empowers believe what their energy product in and traders, their XX% last Event targets market. we is a is supporting uplift to alone, algorithms, including subscriber offer on NineDot offerings ERCOT, Event Pelham science over

tools Our forecast. charge can customers our management input trading their bespoke tailored market strategies, forecasts take of risk and or use own

hours multiple interest strong initial this customer have gigawatt with for We in offering pipeline. seen the

SB development America. SoftBank leading Moving This integrate offer into to of storage. of to revenue. of we utility gigawatt renewable at a as are modular scale example the of Energy. long-duration developers, hour X.Today, the with related significant to development will of generating applications optimization partnership renewable scale.In pipeline are and announce addition, SBE alliance partner XX/X plus services the software to is collaborating solution an control Slide This our their energy our such and our platform. we ESS proud on include excited Energy AI high-margin industry-leading focus and and service Athena North the XX-gigawatt in their software Energy we're to commercial them across one growing SB the vision terms agreement, digital additional to we Under advance technology of will energy and with is project

as template additional drive a to X. partnership a On asset developers engagement and growing for Slide this revenue. view project firms we trading with high-margin for service owners, programmatic Importantly, to energy approach

greater and winning bookings Bill will $X the supply X% to utility very the networks by their our represents our XX% key of financial the our investing leveraged service quarter, in in co-op drive over the an market market decarbonization segment drive this market based future of access in through XXXX. electrical and details market through market for deep over members power deployments from storage municipal and software engagement end on expected As decade. at these to entities months to highlighted but unique arrangements, their we and this nearly are particular, discuss where represent In power FTM resulted In in contracted a deployments co-op with XX% Cooperative to and all market segment last fastest-growing in forecast onboarding XXXX, position level, of in we Stem's of chain relationships. is the billion customers. and reliability and these late can We capabilities. enhancing of early of last preferential to the in and Stem. this has market with an share energy seeking engagement of muni- the focused XX are on public expected with U.S. are accomplished we represent the going attractive high the playbook differentiation stakeholders attractive

I'll leading Stay on We the over power to exciting multiple momentum bulk and this Bill. system with of on expect wins here, projects. continue call gigawatts more to our engagement turn now segment in tuned

William Bush

on Page Starting quarter XX of John. the our third results Thanks, with XXXX. for

the supply the gain not access months. we offered for generally value offer As strategic partners' cases, decline bulk would certain certain of X hardware a the purchased chain In Stem's network. after preferential market, purchase guarantee in mentioned, to John certain system of we that power time a foothold period to a

that a as XX, enter million variable are estimate these achieve bookings period not the reduction for on quarter recorded contracted in company.The we arrangements in facts earnings the half been has EBITDA in for XXXX, Form revenue the us, last future the circumstances of from will quickly $XX.X and gross allowed revenue in consideration us release reduction, forward these financial track a variable intend and I EBITDA XX, time $X the year. such estimates such a of just accounts September have September negative almost impacted to this on in on provided initial negatively during adjusted guarantees this profitability second exceptional The and referenced. our and was an laser-focused to being Adjusted remain company by each XX-Q to reduction position is $XXX,XXX regard to leadership on adjusted goal that the contracts attractive offering margins X- of In consideration in of filed keeping such Achieving expect EBITDA and now update we Adjusted any, results. customer as X-month adjusted this revenue the material. have or market to if impact and was the guarantees of changed months.And of provide XXXX. executed that an us and quarter outstanding result, positive company QX, ended short, this EBITDA milestone details be Additional going revenue segment, to billion for the and have company goal. not million by does as does guarantees' of with where the exclude positive $XX.X was critical reduction. XX our non-GAAP build Revenue and the a

optimization controls We continue leverage and strict cost with strategies. operating drive to

less be expenses operating cash a the We OpEx XX%. to on and revenue as of for XXXX stay percentage than disciplined will continue reaffirm

Reduction XX million the year-over-year quarter. increased $XXX customer on and market a The and billion. Backlog and our remains bookings largest now sequential in increase record clarification Act XXX% of a was for price metrics. the $X.X driver hardware End demand catalyzed continuing improved strong, an Inflation increased Turning look the Slide to the operating at supply basis chain a XX% by backlog environment. of of to

strong significant the Our commercial Solutions. by on movement business to XX% AUM third of hours side second quarter driven for our gigawatt increase the hours That's demand in a grew X.X from storage quarter. STEM of the and in gigawatt the X XXXX customer

X%, quarter by growth XXX solar show solar the business quarter recovery backlog at megawatts the the AUM signs Our XX.X operating up sequential growing AUM on third of of or side industry to year-over-year. growth. approximately ended gigawatts, The monitoring the of performance XX% continues asset and our evidenced

Turning Slide has year's the sole guidance and revenue reduction Full year downward in to guidance. $XX.X now dollar-for-dollar XX our been XXXX revenue. million result adjusted of

to full year expect of guidance. our towards lower end We margin gross trend the non-GAAP

beyond. fiscal A by steady at raising CARR revenue us grow guidance software midpoint. year XXXX are CARR well in We increase X% in and to the XXXX and positions high-margin services

adjusted of still half to guidance fourth expect define adjusted so the million of confidence fourth $XX year. in we SB the of as revenue and result achieve of as today of EBITDA EBITDA are our that partnerships to such the and the EBITDA a negative We positive, be this third will service year negative expected one in driven with We Energy.We positive XXXX. In in strong for expect goal the commissioning growth the positive the we million. $XX of second we announced that addition, quarters have EBITDA to quarter adjusted sum continuing being tightening we full in the books, range by third with adjusted quarter being systems

key year XXXX. in goal expect stated, full EBITDA to the and exit to our achieve expect a achievement this with as maturation. the positive in we to corporate balance sheet.As than $XXX continue year million see cash We on in equivalents adjusted We more cash previously

We John closing XXXX. remarks. will XXXX to in and fourth full February our year details me our earnings for let quarter more on on turn the provide that, call back guidance With some over call

John Carrington

up Thanks, our Wrapping with on Bill. Slide key XX takeaways.

to market execution; significant AUM billion resulting Third in storage and and with strong and in that of bookings to adjusted our EBITDA solar continues markets, quarter record software the asset reiterate half Athena momentum agreement. front finally, additional in we will XX our by and in excited add backlog, achieve new growth demand, us by the expectation months. We solar CARR value opportunity expectation positive for bookings deal the momentum co-op tremendous $X growth, solid achieve about the driven SPE end execution last management and And in multiple XXXX. muni- the we're of and products second with services growth, employees, with to partners, underscored that, storage now, EBITDA customers our channel the And positive contracted continues suppliers, let's thank the and and adjusted full beyond. questions, XXXX year line in open operator, shareholders. With I want stakeholders, please. in key customers, for

Operator

question [Operator TD Thomas Instructions] you. Thank next comes with from Boyce Cohen. The

Thomas Boyes

the made structured customer could up first on quarter way year this next to one understand just Originally, well. first the of revenue want make quick a just adjustments the thought of the Maybe as all in that it's know we how this I guarantee. is contract I sure I year. be saw something because the quarter I until

in in we've of that the Or there pricing in to just there changes declines the be that say, want kind quarter? a exposure this maximum kind any market? reached given of carbonate So why September. of understand XXth structure material the floor already amount recognize after, the I Just lithium you sure did make place of shouldn't to is elect

William Bush

question. that for Thanks Bill. is this Yes,

for contract this the different actually So we that quarter. is you're than somewhat what referencing adjusted

with believe These a associated the In were them. fact, risk lithium. to be tied that contract with differences effectively those. we price is, as mentioned, we've and the downside are them, taken to what there full remarketing associated These so had rate not you now significant which between of contracts

material we any in move expect transaction. fact, don't expect be after in we from on XXXX. to change quarter these contracts this of first to the And their able within So totality

Thomas Boyes

a you is And to for PowerBidder about Got been that Is response it. just thus that expectation a Pro. commenting to more the to kind place the with little go-to-market the something Or Could customer what's new existing then Appreciate back in through of year. timing there. talk to far, clarity the Pro is enjoyed at PowerBidder strategy? has customers? there I was bit maybe this what obviously going deployment earlier demo the them how users over convert and kind way as focus going the you're PowerBidder this something of be Pro? And then RE+ on go

Michael Carlson

for thanks the is So question. Carlson. Mike This

they're the had RE+, show then, We far As at in as high what 'XX. response the which exactly as the where level, second considered. out not at specific is at opportunities early We've the At for got field, response, put front to September. it launched forward in other a we and to of in able move got of quarter of they're a correspondingly, opportunities we beginning number they in looking that indications are we've it of customers. response we're going initial find and proposals great some

and new our their They've far And PowerBidder we'll So expanding in managed solution own would then existing that the Production got release want trading up a them their then with that obviously, this go-to-market end half into base. expected opportunity we look our the at of of it, doesn't service customer that at first is own as of bring product got services. base add to obviously, this their whole our next offerings market to. have to year.As the to continue customer year. strategy considering beyond is own capabilities an that risk Pro portfolio opening management, our we've desk,

John Carrington

bulk want side about the... the talk to you of do Prakesh, power

Prakesh Patel

as a large power gives trading management. very in sophisticated, we dispatching functionality risk bulk more I'd greater because Yes. for strategies system scale, meter lot this power very this is customers call into the a greater One the control these both control, are that owners for a segment front Prakash lot suited of well systems Patel, add, is is this need typically or thing of offering the you're grid. And asset have involves the better enabling what

really that the having momentum we're of about with John So the with things the and FTM it need talked some at earlier larger scale. and compounds co-ops new broadly

Thomas Boyes

If more the on sneak same could in just Excellent. just appreciate vein. one color I there. the I

to Slide to Pro the the that know. vanilla referenced For was PowerBidder? XX% that uplift I for plain potential the is Or on that wanted was XX% X, version,

Prakesh Patel

engine. that's optimization core Yes, Athena the

Pro, across that that's energy assets. further optimize like, customers certain for It's but their to So The the PowerBIdder views these is metrics to of allows tweak available ability either what our to offering. really risk forecasts or it's everyone. and

Operator

The next question comes from Goldman Sachs. Lee Brian with

Brian Lee

medium-term guess, can you relationship, the of convertible, I the had kind but with a afternoon, done on a what magnitude to sizing you the deployed date, of impact thinking is how context would couple. just you one, as the do you to what about XX near-term well get kind Maybe pretty Power, are maybe the you've opportunity? SB in pipeline of, when entire and or of especially framing sounds how as I I that the the announcement of deployments imagine think you're the date. gigawatts the give first opportunity? this robust, of XX-gigawatt sense volume us also quickly Can they've them it

John Carrington

here. really excited Carrington And John we're about it. Brian, Thanks,

our do And intend are larger look, many I side, would to with kind which to of I say extensive include also these of view these and our intend is ESS we about pipelines longer. becoming I that developer first solution.On some take X this an pipeline. you're say has a tend a timing software think on it our would that multi-gigawatt and is to strategy. of collaborate services developer, projects, talking the much the modular we -- growing that top also again,

pipeline, it our pipeline. expect believe, that So particular, it we services we and offering. do because in is is multiyear and that the multiyear shows like the in we'll like I software continued would this, a this strength, just fact others

looking where. in think a can really But timing the at of it's on view, now be and pipeline provide more significant a exciting it's We've is assessing specifically announcement forward. kind of that Day. and about what there'll software this, for us. deal. signed and a we're And go discussion again, So here our since as a our announcement we just of we We talked very objective the had services I and Analyst really on these both that multiyear lot so we only. But

Brian Lee

some based factor you That's all? it Power great into sound on do I here, bookings the follow-ups. those but to If this just kudos so a timing at guess had doesn't color. huge did of deal, bookings you quarter signing that. SB just you on when It Maybe not, And customers bookings these that first haven't from to you press? framework that already then in yet of sort record are that bookings you any been new expect the bookings given relationship? were actually but you'd the announce of there in the been just see like able type here, haven't multi-gigawatt

William Bush

Yes.

thanks Brian, the for So question.

those part First that this general, projects. projects, XXX-megawatt are Energy. or we recorded for and from revenue bookings large hour then lead size But XXX-plus these include that seeing is CISO thereafter. any in start In bookings that longer plus quarter referenced bookings XXXX and are size, those we'll of don't SoftBank the

the in we're a hour, to that, approach the portion templatized same to with your I Athena software partner traditionally -- a that us. is, we played, announced as really, around question, arm quarter we I think a think string the XXX just for an when we're to they're to working service the X.X-gigawatt SoftBank platform. moving for have than It's play services. markets that us it's shot other software of and think of those not deals be the it's what going other on this the I aspects average.As of and So -- I in far and that Brian, real that represent the XXX, bigger into lot add Energy that mean

So this model seems to be working.

Brian Lee

But fiscal positive positive of to sort year, metrics EBITDA. full know not 'XX forward, I as that as Okay. going yet reiterations you're then in great. the EBITDA not No, at be we here give And calendar. going in on well around because we're you'll just, the company you the transitioning view that's into adjusted you a guidance about EBITDA can think becoming there starting next as a driven, are growth gross embedding and scale off a just volume, purely that's high getting revenue of expansion it higher us you sense you level, this level? of give year's margin to Is adjusted of the positive year, maybe how get next view EBITDA around for to kind giving the exact of ingredients? outlook some workings us maybe year the full without the that you for

William Bush

Yes.

mentioned, quarter, really stay driven. So primarily not with quarter, going mean, for dramatic hardware think close and I full I year But negative amount as of at you revenue of to which kind that's from we're year. third we're breakeven. to next in is a away mean, guidance additional this significant $XXX,XXX I from the think improvement growth, starting a I really particular,

as XXXX, see I about So part -- we're general, to start think what growth, be think in doing. you think a continue cost I to as going thinking And going part high-margin be I software revenue. of control is to to is, continues big we're which

parts so you're And going to have X think I there.

our sales. You that in next expecting do Mike Preserve expanding of services, importantly, team initiative. year. lot could and more But are a software doing I more think more have hardware terms and his mean of to we're more I

so that standpoint in and see going And margin more general. to volume expansion you're from just

going mean for for see line cost pathway in I XXXX, top with So items continued us. you're the that's I positive -- think control think a of EBITDA X combination to year those I the

Operator

next Partners. Osha Guggenheim from comes The question with Joe

Joseph Osha

A couple of questions.

accounts, inventory First, you made been still some a I receivables particularly just and really mean there's drawing quite number. working at number good guys looking beefy dramatic progress the capital swings that some here down,

I should these think how wondering about QX. Just in

Just in trend I grow? course how then And of several another your question. to business the to have numbers quarters continues are as these likely next general, over the

William Bush

Sure. for question, the Thanks Joe.

at minimum I would reiterated that, say that $XXX -- of a First, part course, we're we around I cash guidance the is level. -- million that would of of first the so

drive like indicate to X So going the which QX to as are we effectively then also to cash quarter, would at that much continue ultimately One today, able drive inventory be down to expect QX. receivables we to that the would collection. be were and from least -- did we where would be we're in be well, going to down we the And to between generator a which cash fourth get means things.

So cash sheet the on have today. strengthen should it to balance relatively than more and what continue it does

Joseph Osha

Okay. that's have made; going for just you right, forward, of mean you And you've I in But but I just kind progress. QX, kudos the guess, general, business more right? to this do I to mean, this business should ties try How awful about going up you working these manage forward? think it How an to its we numbers lot over scale. of capital to are relative going time?

William Bush

the combination think, to drive is going is I of going modular ESS I think capital down effects. be to a usage. going to be working One, there's

and see same receivables less less amount you'll So of the inventory, cash.

us Second, way nonmodular on for deals less because other just I that think the you'll having generally equipment. the we're inventory purchasing balance see shifting sheet we're

were I X ago, to longer type spot the and take now, on latest are we much to the even terms. is favorable think today.Right market the past, we to more, than months advantage like turning X, by more equipment be in of able say, pricing

of So receivables decline well. as is inventory overall a balance part as part the of going sheet. to continue I And I the will think to think

inventory I I in I general. for that million down collections be shape. and pretty we all pretty should and the a good capture cash, were I So collections $XXX driving of good quarter quarter receivables over mean in think turn into in while well think had we as more payable. and we accounts we that mean

to that's going think in the I'm saying cash I the think the and from same is on next of with of more bunch is quarters, general what balance improve like I up -- it. over end So sheet point

Joseph Osha

year. And just $X.X software just storage number XX% million, number, questions. in X up look the gears, then last it's your Okay. really around that I If from looking at software revenues, at and recurring same

as Your than storage has you AUM, more doubled. report it

believe number optimist in commissioned. one it? some is are implies think fair that way software there to that significant Is stick the to of the projects embedded that about this kind So hockey these a in the as

Prakesh Patel

think I there's this Prakash, X facts Joe. is --

as I higher. extraordinary our think prior we in market -- the been performance market quarter, and side last on we there's Definitely, participation had the much impacting then size quarter, factors separately, QX. X has that. the extraordinary And factoring not performance in deal average on had much

see changes as step expect So these to we income hit the your do in going point, systems the you're statement. software larger larger to ARR come online,

So trend. that a definitely is

Operator

Our Percoco Stanley. next question with from Morgan comes Andrew

Andrew Percoco

what I just follow cost and business economics to rising discuss the services? supply. light pass-through for terms hardware know of environment of and your business. on it's just in of project the of can in price you customer how up impacting your you're it's side But seeing of capital demand therefore, for I just wanted a on availability the

William Bush

it's to past -- we be at why siding the is this we're time, down referencing shorter to solar And supply purchase been a we a the, have But in and part agreement, I just been are falls mean, business in going it's tough also in to we're we're at to which in a And placing say, think Sure. going be long-dated because I this inventory feel down, on continue, part also. like pretty of through point change. prices that batteries we expect general. the ask. than you like dramatic as look or orders availabilities

think. I

market that's in shifted us, the we're But for the dramatically seeing marketplace last what in So the has year. today.

time it's watchful think period. something got incoming to over that pretty I So be we've the

is -- supply and but which seeing really driving in the China. market the just right are You coming new lot now, a U.S. also into in not of

to likely see prices. going you're declining So

Prakesh Patel

other Prakesh. Andrew, declines from equipment I'd is available price and just we're impact interest higher is alone rates project the thing One economics. this of offsetting add seeing the is OEMs

very the not a that has as it's pricing positive highlighted, only fact robust. that purchase continued really So environment trend, be agreement with John power but to

seeing better point. Got significant helpful data we're it. super overall, demand. much economics and So That's project

Andrew Percoco

what Or What year-over-year needs to question And to do that up to happen maybe the services rate towards to your closer we need within target. follow growth just business get just see? XX% software on growth. on prior

do this been you've maybe what that expect And to practically that frame happen so What within needs think business? lagging I to far behind time happen? in year. you the

Prakesh Patel

and state larger seen the federal actions of the complex, is some on projects big about level moved is recent systems more the the have broader some it at These is we the I'd level. a say to interconnected at market -- and and we've have well permitted, projects FERC tunnel as the size been the scale. the This talked of end Prakesh. up getting that part at generally. side with light as There challenges

So things to the we're hopeful these start of let's in say, beyond. XXXX and second half normalize,

them helping asset today, life to not we it's cycle programmatic What's revenue. where developers actually, as tied is, about piece right? large design, that's announced services with of to drive way engagements earn we're we really other in proformas time or lines compelling The system that owners Because or is a earlier not pipelines, revenue the on things even or interconnection to sort. take that project develop project can project service

momentum smooth of seeing continue with multiple should seasonality. parties we're space. and the the mentioned, it And in to we're So that John some as looking of these engaged

Operator

question next Bank America. comes of Dumoulin-Smith with from The Julien

Unknown Analyst

what of think I could beyond very in in what mean, share I'm you media storage space? carving Northeast of of those that I sort you of definitely showed guys niches. run out It's have interesting good Alex in definitely and on the we'll take comp do kind on say, differentiation? up. of for and you of interesting. seeing, crop And guys guess one wins and sort are your space How one in I you at dominating sort space, in co-op competitors happening, thing drive is guys I do media the what's Julian. And you then thought is the like share and you the you that been we congrats this when do into? curious. niches ISO mean, places more I just think, slide market built the sort

curious can push you just So with far these announcements. how really that

William Bush

Yes.

entities. capabilities. cost a suited smaller market very On that's well for are These the muni typically it's side, our

large sheet like utilities balance have investor-owned So the a the engineers they army may hardware. where to they're IOU software larger to not or write of procure

forward wanting customers. So we wanting of can thinking the we to And generation, very engagement just really the solution right bring the And customers. around distributed they're time. the complete greater part with right STEM these hit their market at

continue We think to we I there's X% in less than as to bang that. away we'll think a XX% discussion at run and John mentioned market from in there, upside these, his share. year, around

Unknown Analyst

it. Got of a sense. ton Makes

bookings bookings. a quarter a really Just of this as as the is far for follow-on. themselves as outsized Obviously, a bit

guess Your full to moving been is relative that that out in I pieces. year basis, I'm kind sorts projects the reconcile shifted have up. have other CARR pulled guidance these may Were those sorts discussions. is trying of of just some of forward to late-stage on may maintained but

your in guess the of the relative and the up clarify, year, can, maintain sort you this I between prior Just bookings quarter, full CARR to interplay if going expectations?

William Bush

This Yes. And thanks for Bill. that is question.

I So couple referenced there. record One, I little us. last mean, we also a this you'll was a in quarter, course, quarter bit for points lower. that think of were But booking of a

so the points bookings quarter, we the some deals. to said of are think second of of it much like I the lumpiness in not kind And And the revenue-based.

less make particular a feel so And a to terms sign we the us. in for until deal quarter pressure sense

fourth was reasonable We're the kind And $X.X think the $X.X midpoint think I able way billion get quarter about just going the how be under to billion. that.We've of a to at so is thought the for that's us rest there. the we And us. target of always

to There's for which -- transactions opportunity and mentioned, the happened as in interesting. unit England as ISO. here little for are bit. really it's to markets, well the kind core think Prakesh space as And whole last markets us our our been of an successful in New co-op So really California, been has it the Texas, a us area sign that in continue we bunch of is have deals

from our deals mentioned, area place the Prakesh good medico-space think that for And I opportunities one So that is standpoint, is I we software for more that. is really into us of continue to and that, as good them. tenets for think a services to look that represent

Operator

comes question Sean with Milligan next Janney. from The

Sean Milligan

the I just wanted and Joe's a bit to on supplemental to revenue go question back detail. focus little

there. software the there your services market core but SBE revenue, So was was participation the, higher going understanding this there. think that like down out, keep I to I my kind revenue else implies revenue. software I million quarter. of just a quarter-over-quarter when quarter, guess, think at the on storage quarter, you Prakesh, thoughts mentioned there look that last anything you Vegas if was it of $X.X was if storage wanted you running last XX% from some due $X.X that million like that Is back And kind in decline

there any just So thoughts helpful. would be

William Bush

Yes. Thanks for the question.

think -- quite there through of quarter, come moving things last of are got we we had through we a So I market as the a reflected there. that quarters. books couple the I bit think revenue One, noted participation

up, up. of basic slightly not it's like the but business, looks a it really kind a on So sequential when it's lot, slightly really down

say, be software the I think ISOs really to is. we're systems get in And York would I how with uptick terms the an New seeing across slowdowns Texas, thing can I Prakesh issue revenue in program, think quickly particular, on. and in in the significant So and Veeder the what And mentioned, turned I to mean, that's interconnection continues of as one note.

happening in So hardware not sale accompanying have a you but time when sale is you reasonable a end period. software up

so ground. good is what's there's the happening really of that's The news no And on cancellation. kind

what's you markets in of but it continuing So not to necessarily That's it's those direct reflected that's and interconnection. being happening CARR the pushing a statement as line. software to really reflective CARR grow, revenue out, whereas difference, see the relates on income of reflection

Prakesh Patel

-- The this thing add is Prakesh. I'd other

the been Some on out focused recently we've this generally. apps of rolling trend

you as or at existing can customers. PowerBidder Pro, an look Event existing Manager, if go to So example, those assets,

product So generally. to of we're field a big interconnections tied as not And development. that's our green part just map and road

Sean Milligan

And helpful. that then build That's the just Okay. in response on there. to

look $XX.X you at you $XX.X the million. now guess, million, last third year, were CARR, of I If quarter you're

think if And takes Just XX the I wanted in XX how does CARR kind CARR extends. I on on an car an far think terms storage it just look on services of on implied storage months? guidance at should how time And something about, the of to there the one, you model-- how not, frame if haven't you in is solar, $X to there million rate year-over-year. to is like to to turn of that and annualized unlock an on kind you know business? include average basis like you're next up business the of confirm, project run seeing you're turn But additional portfolio long over given storage assets?

William Bush

Yes.

there. in points of couple a So

in So to projects on first, back the the operations. the into to interconnection timing way that of September. takes you investor them it detailed all There's I get through had would the slide pretty reference a types that presentation we various and

and website, up just on about that to available you, out those extent any our later. we can that, So that's I to pick point questions think to the have you

first the that's part. So

in not include not your does item is and line It just software software second the we and are to point, really that nonrecurring. is includeâ€”CARR the line services growth think a does software. be I would That's that item. seeing items CARR

So to side, that X last software that years, term, the like contracts service years. side, style imagine X have typically adjustments XX mentioned, with on generally I XX would solar them to cold be, that anywhere and associated to are long say, storage that

Sean Milligan

to from million software side $X Okay. looking Yes, that I of sort the annualized. numbers this of kind the is business storage just guess a like at implies $X million it is I'm like quarter,

guess sort, line-item of bit little a half on year, solar the in a a comes Athena was little software of revenue of trying right was when of more turn revs. thought bit side So and the true participation storage most underlying more more we to market change there now. kind better come from the see to through than little the there start just understand Again, to but recurring was that a revenues I step this bit I you first start like --

William Bush

solar mentioned, been mentioned, connected. is not of long -- I we But that are why you today. we've think are it's is and think, revenue the relation reason how in to mean, the is get I seeing -- there software mean as think more really storage Yes. I taking I I revenue more storage these as products

had really I -- the going across New is always future to ARR think transitioning getting we've just CARR really and point say, at I what's particular the Texas, we've in really those happen time, metric. And a in it's spots just in would York into, out straight year way. and time contracted any a seen So this point aspect projects the in from like hard

those chain a result, interconnection, cases, there that issues projects. supply either, in have in individual some down cases, slowed As some

As away not I mentioned, the good to into GAAP CARR item. news a is gone revenue those turn that projects have is and going

Operator

The with next Roth comes question from Clare MKM. Justin

Justin Clare

wanted to a software-only about So the expected sale. line delivering for ask or I just time first off, first ESS the modular solution

to that modular feel QX, or looking ESS software-only in any from associated get how just scales for trying revenue the So up sales? with was a here. And there forward

William Bush

Yes.

of quite the -- but some on, to So system doing course, first now again, of hate and should see harp we can only to software for I XXXX. dragged the time. interconnections half we do get point, We, depending modular expect systems as next installed kind I be the start on in seeing have out, of ESS been modular first think year

and dates actually did to back that. just when in California, down we the Southern we portfolio even to software XXXX, system first The apply

have So for those some that time. are continuing been longer-term quite efforts

Justin Clare

Got it.

through into your Just of the there? share so structure? XX-gigawatt Is that Okay. agreement, if contracts a how SB of bit how wondering moves on I then you And supply just detail All Energy where right. shifting and hours first on into was refusal, bookings of could this how have flowing right something the little more projects you kind to wondering gears, through agreement that the here...

John Carrington

to far but exciting platform don't John. on on I very they Athena platform storage be think be well. able to I closely This Look, we to project go that the contract, is have. what's the every really digital is And as want that we'll integrate too will working suffice specifics and their into say into

a it's, growing said power this services to large I massive more earlier, view like we or follow. about the updated I strategy. pipeline. on bulk that. And further So template really software a a and certainly and keep to earlier, model other on as fact am as excited also I that to our stated carry But developers We'll to everybody drive

Operator

[Operator question from Instructions] with The Sinha Abhi comes next Northland Capital.

Abhishek Sinha

these wanted learn to you to guys sometimes event, wanted these profitable it's something follow. is you that from how understand if What do are one it's the getting ones a trying and compare mean of -- how projects deal. see I I just you multiyear like smaller big you Just of Like do project. I'm on projects? maybe the know the the SB if exactly to X on And these you on 'XX Energy elaborate or from 'XX this I that guys how economics when like comparing start announced? bunch event? revenues can smaller do second, smaller, And ones you have

John Carrington

This is John.

going working it's question, a in part to 'XX, around. first of your interconnection, the to that. the 'XX on but predicated on harping and hate keep On be chance possibly specifically, moves we're I project through it There's

it it to to going the hard importantly. it's we'll So set first to when the was understand But for is operational project hard second be right us say part. And now interconnected to more obviously and speed.

economics. it was the think I around

Abhishek Sinha

project hold the projects for big-sized Right. you of understand get much that profitable I'm can smaller versus that are the these smaller see to like this trying economics kind of. you projects, get how trying to just

Prakesh Patel

is hardware projects customer, a engagement higher-margin Prakesh. particular this a should than This Yes, into deliver engagement. we're generally, software and services is This right? selling when purely

GM. are life and So around margin, project the time services in delivered is those the be XX% can any software cycle the XX% that gross to XX%

Abhishek Sinha

to profit even understand. comes does kind change want a I you technology there. in that mean such that of big project I maintain So still if margin. not

Prakesh Patel

capabilities. These leveraging Yes. just anything right. or of discounted are That's sort. that It's not our

Operator

would like I for session. to over question-and-answer the Carrington John any back closing conference concludes This to turn remarks. the

John Carrington

forward and February. call, for speaking during everyone quarter with Yes. take which fourth call, Thanks. third earnings to you earnings certainly look place we joining thank want I to will in quarter our

Operator

concludes This call. conference today's

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

Stem (STEM) 2 Nov 232023 Q3 Earnings call transcript