STEM - Earnings call transcript Q4 2024

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Operator

Greetings, and welcome to the Stem, Inc. Fourth Quarter 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Ted Durbin, Head of Investor Relations. Ted, please go ahead.

Theodore Durbin

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

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

comments also Our today measures. include non-GAAP financial

today to call Additional details earnings we then most and over our Doran start the financial GAAP your with measures take is will call and which be reconciliations website. Arun now to our prepared the in remarks, CFO I'll directly CEO; turn and will Hole, comparable and found Narayanan, Arun. questions. And on can EVP, release, the

Arun Narayanan

to short weeks the we a joining join employees. time partners spent my first Even software lead its for my Thanks, all CEO, to company. you call Ted. I'm convinced great for a on is chapter. you have and critical speak joining Stem. truly Board I'm with juncture customers, since me in company today. the earnings afternoon, our a pleasure with as to X all the and chose I've foundation build this Good period, that the and to honored industry. next It I'm into at today us first excited the company In thank Stem

company, I make and potential ingredients, overall process my that also talent, to I technology part before of decision. the diligence joined and financial undertook As the of the underlying I evaluated vision the company the

emerging to company's announced technologies competitive positioning see to the the real outlook, address the profitability. right like and the in financial the Looking fall strategy market customer offerings software-centric the Stem, it's laying AI challenges, success clear at plan path industry's XXXX for leverage of to future clear from need the me and that is our growth. the broader company's a thus to strong I opportunity for foundation and

software. my throughout The understanding career, has digital industries management experience by analytics grown and innovative been multiple thread major modernizing hard. data is complex world. common and business around a of key leading introducing a At needed of core customer technologies products, BXB the revenue traditional my launching to digital growth, of I change broader processes. Innovating I an improve software have our course at profitability been foundational software industries driven also my own high-impact the scale businesses to of have experience productivity and harnessing customer the the Over drivers deals built is workflows securing the understanding software of development and solutions ecosystem technology Driving adoption. capital-intensive build achievements. initiatives strong and sustaining and of have and across software to the key

it so believe virtually experience means industry, including things. embracing around is software a of is centered but lot new mission-critical also doing for I renewables, change And of every a way my management.

in to needs see and on expertise which a back to me proposition, few. combined be also Software for customer Stem. the with an value intense opportunities focus brings us highlight direction. human I I'll every

customers. First,

the at XX,XXX to is base of strong have a solar same continuing storage market time, loyal grow. that and We customers, and

strengths, the engagement. domestically the third importantly, and And growth and solid opportunities to share, has fully trifecta I Most expertise challenges is people. subject matter both recognize and the PowerTrack, face. Despite domestic high which products. Second, We market acknowledge margins internationally. gross generates a opportunity every bring has our we of deep

been PowerTrack. has priorities. focal we steps concrete with software recent results one, grow me. And I've identified on the structure. in development. renewed and results. focus we disappointing, software revenue in revamp to quarters we taking we will will been our two, And This reduce Number weeks, our are point few thirdly, my initial key financial a improve Number will X our for have cost Our those

our XX% services and software tied year. recurring and storage, to growth expect First, and edge sites margin as on of Ridge strong have its the more Energy short customers installation top on standardized asset to It's And We high-margin team, booking that PowerTrack, largely on announced asset guidance, on a and PowerTrack Summit earn megawatts. in edge we a XXX-megawatt and XX% and untapped you of large software opportunities a where PowerTrack we see offerings, Hungary, spent PowerTrack. portfolio. I'm relatively fleet months. is our XX% our XX% PowerTrack across I standardize with XXX XX% that gross commissioning and time commercial solar XX of largest also international as is and high have totaling XXXX January, our continued Unlike legacy also the revenue with Neovolt, this I'm margin impressed in cycle. especially margin sales can owners often gross one X PowerTrack. annual on less in excited And on will to PowerTrack time growing PowerTrack markets. In devices. revenue. in particularly significant software on This we the managed such our solar solar XX potential with the XXX services professional with a announced we our today, for this business where U.S. growth associated the reflected has about industrial standardized see device than between owners for in

over teams responsibility these we XX% XX% discussed cost more believe that cost call. in inefficiencies, our a control operational quarter savings and structure savings factors, operational empowering achieve on XXXX, the eliminating and of with operational we decisions. corporate streamlining From combination through lastly, including third we will for expect our savings. Second, and above management the beyond on of I that than additional perspective, an reduction

in increase and and software Third, use the our will refine our in do on maps our product the map, of revamp we following: products. software products development our and road software AI development, the road

changes or We will expect have our limited on customers. no these impact

over a strong key and emphasize Doran detailed of me we turn Doran. I to in driving have things already transformation leader partnership call a a financials want for that, turning to Doran Before be the company. With to over outlook, discussion into software the our built. let our high-growth profitable will

Spencer Hole

and our Stem On and to results, financial XXXX you metrics. Starting you, operating behalf updates to our in Arun. and quarter of I'll items: expectations fourth were guidance the board. Thank year quarter, we with results call. with our Today, we're have outlined team, key QX on cover full X excited fourth during line the largely then XXXX the

We continue time revenue year-over-year was over hardware increased down reduced to from sales, to storage PowerTrack strong software Total X% activations. hardware significantly focus to battery as we driving on software resales revenues. continued up services and performance revenue by expect due recurring driven was but and decline software year-over-year,

flow revenue. goods sales. mix resale million influenced with In to that lower but Arun sequentially was seeing down $XX impairment to hit on mentioned, dollars customers are a battery total year-over-year. cost cash. for quarter, profit Adjusted was of of warranty and services sequentially the basis margin in services revenue of we we deferred liquidity, margin reduced battery operating services the cash a and As success general, software onetime ended sold. up internationally. GAAP related from due OEM down the hardware fourth approximately and PowerTrack of gross larger gross our services due EBITDA gross Non-GAAP declined gross margins and are by to year-over-year year On among

shortly that capital related in we As I'll XXXX, the have with OEM hardware quarter. expect guidance, to operating in cash already discuss seen improve some including first to we working releases flows hit

AR in This quarter, assets, suppliers. related some deposit recorded inventory reserves, approximately aggregate hardware certain million and $XX.X our forfeitures to impairment with onetime of current the we to adjustments

Turning and up delayed now CARR X% hardware adjusted third sequentially were driven we operating backlog, to of metrics. quarter to reflect activations steady the by PowerTrack and the our as backlog up elimination AUM of XX% storage projects. contracted repricing Operating growth. and versus our down year-over-year, OEM ARR was and storage Contracted

to our million to $XXX come and services million, with revenue. from $XXX which expect expected is device XXXX software, high-margin $XXX million moving approximately between $XXX million guidance. of Starting and Now revenue, and we to recognize edge

the higher funding seasonality. the models prudent $XX business edge analyst over portion some shift of up software, the to is I to battery and uncertainties were of battery by balance with We of to given some device and strategy the our general, resale balance million roughly We're to that understand and anticipating be driven market. year of this expect a revenue the many in ratable policy taking approach significantly revenue. be the resales. back-end slight In remaining expected services hardware

year We in expect to the weighted be heavily to battery with of revenue resale gross end the range. margins the XX% toward X% back

We margin would gross dollars. trend from margins non-GAAP profit in percentage of although XX% to hardware cause our our XXXX. Higher to margins gross benefit expect gross line in roughly with revenue XX%, resale gross would lower, we battery more

$XX flow We and $X to to operating million. million million expect adjusted million cash EBITDA of of positive $XX $X negative

by to Arun As our rate to XXXX achieve reduce expect more targets. relative mentioned, XX% these than cash OpEx rate XXXX we run exit during to

flow. working also OEM capital drive improvement during mentioned, to we operating I cash As an to quarter, expect in the first releases hardware related

time, For guidance the are we providing first ARR. operating on

built businesses. With Our $XX ARR with XX% with is year-end services software year-end range which and in key recurring of software-focused from to a predictable XXXX, we midpoint in our that $XX is at XXXX revenues, for mind, driving the progress, see also million as strategy publicly we growth a traded line million. expect revised on to other ARR tracking and and metric

reported to detail be As stakeholders we out call, we help our those in new are are and understand will we adjustments, our with and rolling new and and metrics business that ARR in materials. earnings storage in results. Commencing we line XXXX CARR operating quarter continue AUM. with are forecast evolve among to making better which Key supplemental outlined changes our the believe several will backlog, strategy, redefined our first

software backlog That solar of captured all disclose from we as where CARR executed are customer. have contracted revenue we breakdown services includes include will fully and ARR. We ARR, ARR services. will We will have managed be future exclude and a purchase storage. from fully a a where plan to a hardware software-related and CARR professional revenues order revenues executed customer. and in backlog, a and Backlog a redefining like Much which order consolidated purchase

Finally, disclosing we storage operating will AUM. begin

generally revenue a system when commences software is storage Our activated.

you AUM. this So our revenue-generating into better metric gives visibility

over $X the a our period. Finally, Stock New compliance were falling out we that we a XXXX with average trading York you August due XX-day received as share notice price in know, below to of standards from Exchange listing

As we listing would back explained our a into in our release, split, compliance with us has NYSE potential vote, of approved, standards. on a Directors to reverse range subject stockholder Board which earnings press a stock bring

Now to remarks. I will pass it Arun closing back for

Arun Narayanan

effectively In on the closing, we structure. believe bullish Stem I want ultimately strong of of The offering in thank please. and believe best customers. our also strength on manage execution our margins. strength and questions, line we our depends let's of for to business. With open the have that, support the remain associated cost can I the I operator, some the for to our their people, that growth I employees continued PowerTrack's

Operator

Cowen. Our Boyes from [Operator Thomas from TD question Instructions] first is coming Certainly.

Thomas Boyes

wasn't offering I how if and that's which Maybe was PowerBidder, remarks. just product wondering one you prepared with overall comment fits of around your led broader on that could me. just think into first maybe your that in strategy for PowerTrack? was you It kind just

Arun Narayanan

question. variety has Look, PowerBidder software using looking is Thank And part to address the your we quarter of offering. at and announced actively. previous of obviously market Okay. technologies we that that looking would needs. in have pivot different much a you it currently, we that strategy the customer very for one build Pro us

We are customers we continue well. evaluating additional use as new to for search cases, and

Thomas Boyes

backlog. that those projects delayed? could cost Is around maybe it for us just projects impact getting or there? the projects walk challenges Got increases? from the through able in That's then wage the overages are you some just being was for the secure reasons EPC there What developers not What of interconnection continued of those being of the helpful. the elimination was And or delayed kind to it. transformers just

Spencer Hole

question. the you it the actually answered appreciate question The answer a a bit I little before kitchen have I sink. of to is is truth chance a

The number And We conservative of development that we the seen delays, developers enter factors haven't interconnection feeling were of a delays up. facing permitting, clean but new a and equation, taking into we associated these are in any this et were kind having cetera. the stale. increased like bookings process step to felt was costs with whereby continued the

Thomas Boyes

could in. Got more sneak it. one just if I And

Just million million kind over? for of new in of steady do the for and just always XXXX the ongoing battery state hardware that resale more think something, move we like year, kind on eventually out or that's for as $X as does Or that strategy phases offer? to takes this a of $XX just something

Spencer Hole

may to So can in hardware to attach that and where talking looking with we continue of what through this financial meets at hardware element all we're to some forward. pivot services we issued, when with going hardware It particular situation are about POs deals, we opportunistic. criteria, we see revenue doing start the backlog software a going is carry and to

focus However, not it the it certainly was. that is

wouldn't that we're give as million the for Keep see same that it kind if the did this we similar I from be to very place going cadence indications $X rate low. necessarily margin run of that different relatively million sense that there XXXX. the are is for mind in in the to XXXX. in we giving almost So on $XX We'll numbers

They the on profitability. revenues. the here focus dollars business and the bring is software and recurring in chances Our increase don't to to profit long-term opportunistic services door. that Those of cash strategy of kind build represent are gross

Operator

Next ROTH question from coming from Justin is Clare MKM.

Justin Clare

metrics. to start wanted I just the with new So out

where here Slide we a bit so at look And I'm of $XX X $XXX million, if the little of between help million. see million Slide -- of just $X.X the could have $XX backlog bookings, you at billion. backlog, you contracted looking us And XX, bookings, if difference wondering we contracted understand more

represent and help is the through metrics just the fully new gap? difference us orders that's the walk here. So the purchase that executed Maybe difference

Spencer Hole

Yes.

reducing new definitions of the metric, I order purchase backlog. under is to to of future. of think And see somewhat did contracted coming booking we hardware the our related or with executed CARR services. that and intended the in combined criteria go will to when containing Again, the focusing a sources old you metric that fully look are backlog exercise metric, on the were something that backlog through of backlog, revenue the the give in the are we into to and everything CARR treating for you'll contracts backlog contracted visibility some of through the But recurring as going the related stale. company anything related to the onetime full software it all whereas on purposes anything even really therefore, kind nonrecurring into services, contain

Justin Clare

I see.

for the recurring contracted right? So $XX the include does backlog, there that not in revenue software. million Is

Spencer Hole

order executed a that customer. rule That's have contracted from we in between correct. Same be correct. That's absolutely an segregating included, to have We're CARR PO backlog. to and

Justin Clare

more. from hours of one just to -- hours X, same then Slide AUM operating And XXX The gigawatt the X.X megawatt course the storage going through it. the Got Okay. looking XXXX. at

growth revenue So us Wondering We with a corresponding understand pretty there. could why jump in associated just we software didn't that didn't help storage. see see if increase. you significant the

Spencer Hole

Sorry.

I disparity. that quarter think software with of that the kind revenue caused we fourth had in deals probably a SPE onetime associated reduction

question. that way probably answer think to best I that's the

Operator

coming is Capital question from Next sorry, from Markets. Ameet BMO Thakkar,

Ameet Thakkar

and you with you kind equivalents minimum if set have of $XX XXXX plan kind external of Just of of what's X kind on for was amount level me. just about go questions The guys the before think cash to could of you can wondering financing? us cash forward I million, the

Spencer Hole

for hardware And associated tied of forth mentioned on between I is we've at think huge some was balance balance kind mean to we've capital put cash with I million cash is some the operating in seen as deals. we cyclicality guidance that releases I end up I that somewhere the So in keep the in means million that. already the my that working cash year, of any that year. not facing us and $X flow going. sufficient expect OEM to comments, the think be of the what as We're $XX

with we're So sitting. where we feel comfortable

Arun Narayanan

I diligent can to that, make be costs, sure just think I think, if that to line add that, Doran, with of us on we continue And margin. that to I sort our keeps in operationally and reduces running with squeeze cash

Ameet Thakkar

going Okay. the this the Understood. X and back And to in belabor change point, then not but just backlog. to Slide

I the And it strategic $X.X the here billion and at of some backlog think the I end ] of review the in verbiage $X.X [ billion. commentary appreciate sometime is earlier of like amongst your But the backlog and the part trying and was some strategic review? change has scrubbed operating target? continue of not of conditions the developers to to was you segment as kind the guess the of understand of here. kind I that November,

Spencer Hole

backlog pull. going our the feel was backlog, -- it that the we decided of isn't just in additional When I'm where you with do of business, a so kind of of to post was actually next the on number from in step which removing change PO scrubbing those X business strategic think we Those review, to issuance that just definitive things combination is well commenting be definition removing did to I made significant with are the some -- away. executed about PO items simply going that pending. And be in fully kind what to as continue able would my some backlog. of predictable didn't backlog. was -- I that It's to projects metric. and to keeping that the we backlog stick number issued, as deals the then of PO provide And we of the expectation issued forward, necessarily confident of funnel that but sort is using the meant is a under discussion, the think the the old the backlog. biggest probably was be POs going you what And bridge to more to new

Ameet Thakkar

the but this all against it? that issued just and POs sorry that if sorry, question, for XXXX, I'm of updated -- of year-end a has So, surmise we silly figure is can backlog

Spencer Hole

The $XX with you're the... about million about $XX -- the million, for talking one talking updated or you're me the second. Bear backlog

Ameet Thakkar

on billion $X.X the No, X. Slide

Spencer Hole

The $X.X does not billion have...

Arun Narayanan

[ ] That number. just a is

Spencer Hole

definition, definition. old backlog Yes. the new the That is the under not

Ameet Thakkar

it. Got Okay.

Spencer Hole

$XX that of POs So million issued. was

Operator

Next from Wolfe Dylan question Nassano from Research. is coming

Dylan Nassano

Welcome, Arun.

to to XXXX outlook. kind of back go Just the want

I when gross look back of kind a of pretty kind the step lines So revenue adjusted the take specifically, up I and actual. and at like to XXXX it margin similarly

those would delta? So XXXX, those you're idea reductions kind savings? And bridging are operating kind of if I kind of some big kind XXXX us the and just of can you you driver specifically guess of give between of an of say of can cost you the find where

Arun Narayanan

Yes, it bit. I talk can to little a

one inefficiencies So cost is might that that trying exist. we that thing the the savings to is to referred operational some sure eliminate you of and make

of quite some costs, are might costs we our some and in example. duplicated But expensive. tools software be time the in some using production be of applications development of want that other example, the software the run for might to to computing try or For cloud we also bring down

applications operational focused story this that have. centered help on we quite us of a be other we around efficiencies continue the type to is will growth. hand, one And on PowerTrack software the hand. and But growth these on other So

So combination achieve. to X the that's things that we're of the trying

Dylan Nassano

of terms Okay. are just follow-up, kind I apologies And to you what expectations both for can revenue for but if then EBITDA? in seasonality as of XXXX missed this, your and speak a

Spencer Hole

the back in and software little The the should million, a of it. seasonality year, you hardware of back toward QX. expect $XX be ratable services with piece, up is the the to even to half that So half fairly bit possibly

Operator

is coming from from question Joseph Osha Partners. Next Guggenheim

Joseph Osha

offerings at least relative I I'm particular the functionality PowerTrack because the and you're about tracker in trying should talking how companies it's about competitively how about a from the software to understand think here. some to they lot talk of positioned

it from and as offerings directly PowerTrack I more Or Array with the should Nextracker? complementary? competitive is think So of

Spencer Hole

a largely kind tracker our it's know, case that. it's of I to software on edge stab I'll believe competition necessarily. have, we but market at and of by Joe, be we tracker do are is tracking large what first share doing companies Doran. is, optimization in that are case, And are not you companies take front-of-the-meter. believe behind-the-meter That's right? as focused sector. step The one, The device software solutions front-of-the-meter with in the going the direct

we related tracker irrespective going of a likely for we -- front-of-the-meter so I tilt engine to think that kind that as we're expansion of edge and we're devices, fixed applications. or growth PowerTrack see And the whether after of as the see type

especially on in when As you aren't scale look you know that trackers utility every Europe. application,

market instances. to And so I the tracker offering what broadly speaking, think to it's a circumstantial I what trying be think some to in going than is after. But is bigger go we're software

Arun Narayanan

maybe to Doran. that, And to add just

for whole of competitive holistically, unique, the the a come the and Just have. significant the your problem sure in of the differentiation analysis the to space, edge connection do very PowerTrack as is needed as to that that as question, expected, making which that we from data well online edge differentiation software data the make ability is cycle for that getting the supplement devices, to the the intention life solve though, is sort devices ability to works the PowerTrack and

Joseph Osha

but a when should behind-the-meter, think I think So perhaps I about going try about obviously, like front-of-the-meter, is scale behind-the-meter to solar to is or amplify farms something this more go systems -- should that hitting you're sell of PowerTrack or what? kind to I XXX-megawatt commercial to bit, just

Spencer Hole

us fruit not low-hanging be ]. the or the Joe, it, from, on front-of-the-meter, I is XXX-megawatt for [ to to the XXX-megawatt call anywhere XXX-megawatt think of our kind ], XX-megawatt going the sector -- [

Operator

Sandler. question from Kashy Piper from Next is Harrison coming

Kashy Harrison

cash profit look $XX if looking cash I'm maybe at looks think less So XX, Page about for But XQ OpEx is first EBITDA, is one million. correctly, like guidance. -- I me at $XX I XXXX Slide gross it this million. OpEx just the is If on

from a you're So that in what expecting in drop were XQ doing implies XXXX. you big pretty to what

help reconcile just OpEx of about maybe bridge over maybe to how cadence how gap us and the you can to the the then course So think of XXXX?

Spencer Hole

consider. I you XXXX, would continue there's that we think So an year, continue expectation say rate to in as first, that what move some I with When to see certainly in the XXXX, OpEx go might of noncash our see down to we'll through perhaps versus decrease, overall we run QX.

As we've talked about efficiencies, the moves internally that order we're going continue increase of roll the out to to to over will course make here operational the in year. those

the see would over you So naturally drop run rate time.

Kashy Harrison

Got it.

then And follow-up. Okay. maybe a

In on this ability on gigawatt solar of scale, side to Because hours guess I we how of about company the storage have the X.X do gigawatt here side. associated EBITDA But and of the and grow? terms these that's neutral. get think here the you're then certainly, required that? of the how to scale go-to-market about $XXX to million at like level think example, with levels, we EBITDA, you for do

Arun Narayanan

standard and markets into ability then you for differentiated use scaling. IP different you're questions us software-centric are future, models that the different the announced The asking to comes growth software going out for back the or in software type strategy was with Look, deploy with a comes strategy but It's the with. it's familiar to of to last a that it already quarter. little the build linear not bit investment established and

great we have it We'll complete need on amazing, do would if manufacturing and to costs But we get I that mean, in it's We journey will edge question, will reliance are itself. supply chain be not sales. We the that's and support, software but that incur will that the in we a point, that in boxes, overall costs the incur so scale. on. to

Spencer Hole

PowerTrack that, the we the look the market. of to well is a continue megawatt amount at versus I And the out behind-the-meter the Kashy, products those new growth communicate of to to think ASPs try growth you European business engine will on to to into because the we a that's sectors. as continue per revenue bit in have expect and side, different obviously, market, little especially the front-of-the-meter front-of-the-meter that, push when as And about

keep is really we'll our continue on those as to on And that's revenue focused AUM because eyes we're one where reasons comes. operating why the the AUM. But so of operating again, kind metrics of

Next question?

Operator

today's our We've gentlemen, question-and-answer reached webcast. of the does session. teleconference ladies And and conclude end that

have may your participation for time, at day. and You thank wonderful today. lines your We a this disconnect you

Stem (STEM) 4 Mar 252024 Q4 Earnings call transcript