Stem(STEM)2024-10-30 20:32Revenue and Financial Performance - Revenue decreased 78% year-over-year to $29.3 million in 3Q24, down from $133.7 million in 3Q23, primarily due to reduced battery hardware sales and a $5.6 million adjustment from revised hardware contract valuations[1][5] - The company updated its full-year 2024 revenue guidance to $135-$155 million, down from the previous range of $200-$270 million, reflecting project delays and the new strategy implementation[14] - Total revenue for the nine months ended September 30, 2024, was $88.759 million, a significant decrease from $294.091 million in the same period in 2023[32] - Revenue for the three months ended September 30, 2024, was $29.3 million, compared to $133.7 million in the same period in 2023[38] - Revenue for the nine months ended September 30, 2024, was $88.8 million, compared to $294.1 million in the same period in 2023[38] Gross Margin and Profitability - GAAP gross margin improved to 21% in 3Q24, up from (15)% in 3Q23, driven by a higher mix of software and services revenue[1][6] - Non-GAAP gross margin reached a record 46% in 3Q24, up from 12% in 3Q23, reflecting strong growth in high-margin software and services revenue[1][7] - GAAP gross profit for the three months ended September 30, 2024, was $6.2 million, with a gross margin of 21%, compared to a loss of $20.3 million and a margin of -15% in 2023[38] - Non-GAAP gross profit for the three months ended September 30, 2024, was $16.2 million, with a gross margin of 46%, compared to $21.4 million and a margin of 12% in 2023[38] - GAAP gross profit for the nine months ended September 30, 2024, was a loss of $8.6 million, with a gross margin of -10%, compared to a loss of $7.4 million and a margin of -3% in 2023[38] - Non-GAAP gross profit for the nine months ended September 30, 2024, was $43.5 million, with a gross margin of 34%, compared to $52.9 million and a margin of 15% in 2023[38] - Gross loss for the nine months ended September 30, 2024, was $8.620 million, compared to a gross loss of $7.426 million in the same period in 2023[32] Net Loss and Impairments - Net loss widened to $148.3 million in 3Q24, compared to $77.1 million in 3Q23, primarily due to a $104.1 million bad debt expense related to impaired receivables[1][8] - Net loss for the nine months ended September 30, 2024, was $802.877 million, compared to a net loss of $102.728 million in the same period in 2023[32] - Net loss for the nine months ended September 30, 2024, was $802.9 million, compared to $102.7 million in the same period in 2023[34] - Impairment of goodwill for the nine months ended September 30, 2024, was $547.152 million[32] - Impairment of goodwill for the nine months ended September 30, 2024, was $547.2 million[34] - A bad debt expense of $104.1 million was recorded in Q3 2024 due to impairment of accounts receivable related to customer contracts with parent company guarantees[16][26] Cash Flow and Liquidity - Cash and cash equivalents decreased to $75.364 million as of September 30, 2024, from $105.375 million as of December 31, 2023[30] - Net cash used in operating activities for the nine months ended September 30, 2024, was $21.9 million, compared to $205.2 million in the same period in 2023[34] - Cash, cash equivalents, and restricted cash at the end of September 30, 2024, were $77.2 million, compared to $98.2 million at the end of September 30, 2023[34] - Proceeds from maturities of available-for-sale investments for the nine months ended September 30, 2024, were $8.3 million, compared to $119.7 million in the same period in 2023[34] - Repayment of financing obligations for the nine months ended September 30, 2024, was $7.0 million, compared to $7.8 million in the same period in 2023[34] Assets and Liabilities - Total current assets decreased to $227.530 million as of September 30, 2024, from $472.965 million as of December 31, 2023[30] - Total liabilities decreased to $881.390 million as of September 30, 2024, from $930.296 million as of December 31, 2023[30] Bookings and Backlog - Contracted backlog decreased 2% sequentially to $1.55 billion in 3Q24, driven by low bookings and backlog conversion to revenue[9] - Bookings dropped to $29.1 million in 3Q24, down from $676.4 million in 3Q23, reflecting the strategic shift towards higher-margin software and services[10] - Contracted Backlog represents the total value of bookings in dollars as of a specific date, increasing with new contracts and decreasing as systems are delivered and recognized as revenue[41] Contracted Assets and Recurring Revenue - Contracted storage AUM increased 3% sequentially to 6.0 GWh in 3Q24, while solar monitoring AUM rose 6% to 28.5 GW[10] - CARR grew 2% sequentially to $92.3 million in 3Q24, up from $90.1 million in 2Q24[11] - Contracted Assets Under Management (AUM) includes the total GWh of storage systems in operation or under contract[41] - Contracted Annual Recurring Revenue (CARR) is the annual run rate for all executed software services contracts, including those for systems not yet commissioned or operating[41] Strategic Shifts and Leadership - The company appointed Albert Hofeldt as Chief Technology Officer to lead enhanced AI-enabled software and edge device capabilities as part of the new software and services-centric strategy[13] - The company has not issued new hardware value guarantees since June 2023 and does not intend to issue any in the future[16] Non-GAAP Metrics - Adjusted EBITDA and non-GAAP gross profit are used for financial and operational decision-making, excluding certain expenses like stock-based compensation and non-cash charges[19][20] - Non-GAAP gross margin is defined as non-GAAP gross profit as a percentage of revenue[23] - Adjusted EBITDA for the nine months ended September 30, 2024, was $(27.0) million, compared to $(24.1) million in the same period in 2023[37] Market Conditions and Risks - The company recorded a net revenue reduction of $37.4 million in hardware revenue for Q3 2023, $38.7 million for Q1 2024, and $5.6 million for Q3 2024 due to market conditions and revised asset valuations[16] - The company faces risks from macroeconomic factors, including inflation, interest rates, geopolitical tensions, and potential economic slowdowns[17] - Forward-looking statements include expectations regarding financial targets, business strategy, and the impact of macroeconomic and geopolitical factors[28] Lithium Carbonate Contracts - The company recorded $42 million in revenue for Q1 2023, net of a $10 million revenue constraint, related to indexed contracts tied to lithium carbonate prices[24] - The total dollar amount of indexed purchase orders for lithium carbonate-related contracts is approximately $52 million[24] - The company expects to receive at least $34 million in final consideration from indexed purchase orders[24] Operating Expenses and Share Metrics - Total operating expenses for the nine months ended September 30, 2024, were $783.693 million, compared to $138.367 million in the same period in 2023[32] - Weighted-average shares used in computing net loss per share increased to 160,997,019 for the nine months ended September 30, 2024, from 155,474,725 in the same period in 2023[32] - Stock-based compensation for the nine months ended September 30, 2024, was $21.7 million, compared to $28.3 million in the same period in 2023[34] - Depreciation and amortization expense for the nine months ended September 30, 2024, was $33.2 million, compared to $33.6 million in the same period in 2023[34] - Change in fair value of derivative liability for the nine months ended September 30, 2024, was $(1.5) million, compared to $7.7 million in the same period in 2023[34] Customer Contracts and Installations - Customer contracts are typically executed 6-24 months ahead of installation, with bookings including hardware and services revenue[40]