Stem (STEM) Q3 2025 earnings summary

Executive summary

• Revenue grew 31% year-over-year to $38.2 million in Q3 2025, with strong gross margin expansion and a second consecutive quarter of positive adjusted EBITDA.

• Annual recurring revenue (ARR) reached $60.2 million, up 17% year-over-year and 3% sequentially, reflecting a shift to a software-focused strategy.

• Strategic transformation prioritized higher-margin software and services, de-emphasizing low-margin battery hardware resale.

• Operating cash flow turned positive at $11.4 million, a $21 million improvement year-over-year.

• Net loss narrowed significantly to $23.8 million from $148.3 million in Q3 2024, driven by lower operating costs and absence of prior-year impairments.

Financial highlights

• Q3 2025 revenue: $38.2 million, up 31% year-over-year; nine-month revenue: $109.1 million, up 23% year-over-year.

• GAAP gross margin: 35% in Q3 2025 (up from 21% in Q3 2024); non-GAAP gross margin: 47%.

• Adjusted EBITDA: $2.0 million in Q3 2025, a $6 million YoY improvement; $1.2 million for the nine months ended September 30, 2025.

• Cash position stable at $43.1 million at quarter end.

• Net loss for Q3 2025: $(23.8) million, a significant improvement from $(148.3) million in Q3 2024.

Outlook and guidance

• Full-year 2025 revenue guidance revised to $135–$160 million, with software, edge hardware, and services expected at $125–$140 million.

• Non-GAAP gross margin guidance raised to 40–50%, with some Q4 compression expected due to hardware mix.

• Adjusted EBITDA and operating cash flow guidance improved to $(5) million to $5 million.

• Year-end ARR guidance remains $55–$65 million.

• Battery hardware resale expectations lowered to up to $20 million as business is de-emphasized.