Stem (STEM) Q4 2024 earnings summary

Executive summary

• Revenue declined sharply in Q4 and full year 2024, reflecting a strategic pivot to software and services, reduced battery hardware sales, and a focus on high-margin recurring revenue, with PowerTrack as the core product for growth domestically and internationally.

• Solar revenue grew 16% year-over-year in Q4 and 15% for the full year, while software and ARR increased, led by PowerTrack's international expansion.

• Net loss widened significantly year-over-year, driven by large impairments, bad debt expenses, and non-recurring charges.

• Bookings in Q4 2024 increased 40% year-over-year, but full-year bookings and backlog fell substantially due to repricing and project eliminations.

• Arun Narayanan was appointed CEO, and a reverse stock split was proposed to regain NYSE compliance.

Financial highlights

• Full-year 2024 revenue was $144.6M–$145M, down 69% from 2023, mainly due to decreased battery hardware sales.

• Q4 2024 revenue was $55.8M–$56M, down 67% year-over-year; Q4 GAAP gross margin was (4)%, non-GAAP gross margin 36% (up from 13%).

• Full-year 2024 GAAP gross margin was (8)%, non-GAAP gross margin 35% (up from 15%).

• Q4 adjusted EBITDA was $4.2M; full-year adjusted EBITDA was $(22.8)M.

• Year-end cash balance was $56.3M–$58M, deemed sufficient for 2025 operations.

Outlook and guidance

• 2025 revenue guidance is $125M–$175M, with $120M–$140M from high-margin software, edge devices, and services, and up to $35M from battery hardware resales.

• Non-GAAP gross margin expected at 30%–40%; battery hardware resale margins at 5%–10%.

• Adjusted EBITDA guidance is $(10)M to $5M; operating cash flow expected between $0M and $15M.

• ARR projected to grow 15% at the midpoint, reaching $55M–$65M by year-end 2025.

• Additional cost savings of over 20% targeted for 2025, on top of a prior 15% reduction.