Stem (STEM) Q2 2026 earnings summary

Executive summary

• Achieved fifth consecutive quarter of positive adjusted EBITDA, which grew 63% year-over-year to $6.2M, driven by a strategic shift toward higher-margin software and services and disciplined cost management.

• Q2 2026 revenue was $33.7M, down 12% year-over-year, primarily due to a sharp decline in battery hardware resale revenue.

• PowerTrack software revenue grew 11% year-over-year to $11M, with ARR up 13% year-over-year to $42.8M; total ARR reached $62.4M, up 7% year-over-year.

• International expansion continued with new projects in Latin America and Hungary, and PowerTrack EMS received The smarter E AWARD 2026 for Smart Integrated Energy.

• Operating cash flow turned positive at $0.3M, a $22M year-over-year improvement, and cash reserves ended at $38.4M.

Financial highlights

• GAAP gross margin improved to 41% (up from 33% year-over-year); non-GAAP gross margin reached a record 55% (up from 49%).

• Adjusted EBITDA margin strengthened, reflecting higher software/services mix and lower operating expenses.

• Bookings rose to $36.8M in Q2, up 39% sequentially, and contracted backlog increased 18% to $27.1M.

• Cash operating expenses decreased 11% year-over-year to $16.3M.

• Net loss for Q2 2026 was $14.4M, compared to net income of $202.5M in Q2 2025, which included significant one-time items.

Outlook and guidance

• Reaffirmed full-year 2026 guidance: total revenue $140M–$190M; software/services/edge hardware $130M–$150M; battery hardware resale up to $40M.

• Non-GAAP gross margin expected at 40%–50%, trending toward the higher end; adjusted EBITDA $10M–$15M; operating cash flow $0–$10M.

• Year-end ARR projected at $65M–$70M.

• Management anticipates improved margins and operational efficiency as the business transitions to a software-centric model.

• Cash reserves are expected to be sufficient for at least the next 12 months, but additional capital may be needed if operational cash flow does not improve.