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 a software- and services-centric business model, moving away from hardware resale.

• Revenue for Q3 2024 was $29.3M, down 78% year-over-year, driven by a sharp decline in 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, including a $104.1M bad debt expense.

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

• Contracted annual recurring revenue (CARR) grew 5% year-over-year to $92.3M, with software and services revenue partially offsetting hardware declines.

• 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 from $133.7M); services revenue up 33% to $22.1M, hardware revenue down 94% to $7.1M; solar revenue up 19% year-over-year.

• GAAP gross profit improved to $6.2M (21% margin) from $(20.3)M ((15)%) in Q3 2023; non-GAAP gross profit was $16.2M (46% margin), up from 12% prior year.

• Net loss widened to $148.3M; adjusted EBITDA was $(3.5)M, compared to $(0.9)M in Q3 2023.

• Operating cash flow was $(9.4)M, down from $(4.0)M in Q3 2023; cash and equivalents ended at $75.4M.

• 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%).

• 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.

• Plan to reduce run-rate cash operating expenses by 15% by year-end, mainly through headcount and discretionary spending cuts.

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