Stem (STEM) Q3 2024 earnings summary

Executive summary

• Q3 2024 marked a transformational period with a completed strategy review, new executive appointments, and a shift toward software and services as core growth drivers, moving away from hardware resale.

• Revenue declined 78% year-over-year to $29.3M, mainly due to lower hardware sales and a $5.6M revenue reduction from revised hardware contract guarantees.

• Net loss widened to $148.3M from $77.1M in Q3 2023, driven by a $104.1M bad debt expense and $547.2M goodwill impairment.

• Bookings fell sharply to $29.1M from $676.4M in Q3 2023, reflecting the strategic shift away from hardware.

• Received NYSE non-compliance notice due to share price below $1.00, at risk of delisting if compliance is not regained.

Financial highlights

• Q3 2024 revenue: $29.3M (down 78% year-over-year); services revenue up 33% to $22.1M, hardware revenue down 94% to $7.1M.

• GAAP gross margin improved to 21% (from -15% in Q3 2023); non-GAAP gross margin rose to 46% (from 12%).

• Net loss for Q3: $148.3M; adjusted EBITDA: $(3.5)M; operating cash flow: $(9.4)M.

• Contracted annual recurring revenue (CARR) at period end: $92.3M, up 5% year-over-year.

• Bookings totaled $29.1M, down 96% year-over-year; contracted backlog: $1.55B (down 17% year-over-year).

Outlook and guidance

• Full-year 2024 revenue guidance lowered to $135–$155M (from $200–$270M) due to project delays and strategy shift.

• Non-GAAP gross margin guidance raised to 32–36% (from 25–30%), reflecting higher software/services mix.

• Adjusted EBITDA guidance revised to $(45)M–$(30)M; bookings to $100–$500M; year-end CARR to $90–$100M.

• 4Q24 revenue expected between $45M–$65M.

• Company believes current cash and receivables are sufficient for at least 12 months of operations.