Stem(US:STEM)2025-04-29 22:01Part I. Financial Information Financial Statements (Unaudited) Stem, Inc. presents its unaudited condensed consolidated financial statements for Q1 2025, showing a net loss of $25.0 million and decreased total assets Condensed Consolidated Balance Sheets Total assets decreased to $405.1 million, liabilities to $822.0 million, and stockholders' deficit increased to $416.9 million as of March 31, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $58,584 | $56,299 | | Accounts receivable, net | $34,733 | $59,316 | | Total current assets | $110,580 | $136,617 | | Total assets | $405,081 | $437,359 | | Total current liabilities | $120,177 | $128,800 | | Convertible notes, noncurrent | $526,503 | $525,922 | | Total liabilities | $822,005 | $835,192 | | Total stockholders' (deficit) equity | ($416,924) | ($397,833) | Condensed Consolidated Statements of Operations Revenue increased to $32.5 million, gross profit turned positive at $10.5 million, and net loss narrowed to $25.0 million in Q1 2025 Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $32,512 | $25,469 | | Gross profit (loss) | $10,538 | ($24,191) | | Loss from operations | ($21,148) | ($68,013) | | Net loss | ($25,000) | ($72,307) | | Net loss per share, basic and diluted | ($0.15) | ($0.46) | Condensed Consolidated Statements of Cash Flows Operating activities generated $8.5 million in cash, with total cash, cash equivalents, and restricted cash ending at $60.4 million for Q1 2025 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,536 | ($621) | | Net cash (used in) provided by investing activities | ($3,590) | $4,675 | | Net cash (used in) provided by financing activities | ($2,819) | $3,142 | | Net increase in cash, cash equivalents and restricted cash | $2,285 | $7,429 | Notes to Condensed Consolidated Financial Statements Notes detail business, accounting policies, liquidity, convertible notes, and subsequent events, including a 27% workforce reduction in April 2025 - The company leads in AI-driven software and services for clean energy assets, utilizing its Athena® AI platform and PowerTrack software2223 - As of March 31, 2025, the company held $58.6 million in cash and cash equivalents, deemed sufficient for the next 12 months despite a $9.6 million negative working capital26 - Q1 2024 included a $33.1 million net revenue reduction from Parent Company Guarantees (PCGs) on hardware, with no remaining PCGs as of March 31, 20256970 - On April 9, 2025, the company announced a 27% global workforce reduction, anticipating $6.0 million to $6.5 million in Q2 2025 charges121 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2025 financial results, including a 28% revenue increase, improved gross profit, a new software strategy, NYSE compliance, and liquidity, with an Adjusted EBITDA loss of $4.6 million Key Factors, Trends and Uncertainties Key factors include a new AI-enabled software strategy, NYSE non-compliance due to stock price, and uncertainty regarding the Inflation Reduction Act - The company adopted a new business strategy focusing on AI-enabled software and services, reducing battery resales, a historical revenue source134 - The company received an NYSE non-compliance notice on August 28, 2024, due to its stock price falling below $1.00, and plans to seek stockholder approval for a reverse stock split138 - Uncertainty surrounds the Inflation Reduction Act (IRA) and Infrastructure Investment and Jobs Act (IIJA) due to a new U.S. administration's executive order pausing government fund disbursements141142 Non-GAAP Financial Measures Non-GAAP Gross Profit reached $14.8 million (46% margin) and Adjusted EBITDA loss improved to $4.6 million in Q1 2025, excluding specific non-recurring items Reconciliation of GAAP Gross Profit to Non-GAAP Gross Profit (in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | GAAP gross profit (loss) | $10.5 | ($24.2) | | Add: Revenue reduction, net | — | $33.1 | | Add: Amortization of capitalized software | $4.3 | $3.9 | | Add: Excess supplier costs | — | $1.0 | | Non-GAAP gross profit | $14.8 | $13.8 | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | ($25,000) | ($72,307) | | Depreciation and amortization | $11,695 | $11,154 | | Stock-based compensation | $4,317 | $8,374 | | Revenue reduction, net | — | $33,128 | | Adjusted EBITDA | ($4,627) | ($12,239) | Financial Results and Key Metrics Key operating metrics for Q1 2025 include Bookings of $34.5 million, Contracted Backlog of $25.3 million, and ARR of $56.9 million, with redefined definitions Key Operating Metrics | Metric (at period end unless noted) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Bookings (for the quarter) | $34.5M | $23.8M | | Contracted backlog* | $25.3M | $1,639.6M | | Storage operating AUM (GWh) | 1.6 | 0.8 | | Solar operating AUM (GW) | 32.4 | 26.9 | | CARR* | $69.0M | $89.3M | | ARR | $56.9M | $45.1M | *Redefined metric vs. prior periods Results of Operations Q1 2025 revenue increased 28% to $32.5 million, gross profit reached $10.5 million, and total operating expenses decreased 28% to $31.7 million - Revenue increased by $7.0 million (28%) year-over-year, driven by $4.2 million in hardware revenue and $2.9 million in services and other revenue growth184 - Cost of revenue decreased by $27.7 million (56%) year-over-year, primarily due to a $29.1 million reduction in hardware cost from product mix changes185 - Total operating expenses decreased by $12.1 million (28%) year-over-year, with reductions across Sales & Marketing ($4.3 million), R&D ($2.8 million), and G&A ($5.0 million) due to lower headcount and professional services costs186187188 Liquidity and Capital Resources Liquidity as of March 31, 2025, was $58.6 million in cash, deemed sufficient for 12 months despite a $9.6 million working capital deficit, with significant convertible notes outstanding - Principal liquidity sources as of March 31, 2025, were $58.6 million in cash and cash equivalents, with a $9.6 million working capital deficit193 - Long-term debt includes $297.0 million for 2028 Convertible Notes and $240.0 million for 2030 Convertible Notes8598 - The company generated $8.5 million in cash from operations in Q1 2025, a significant improvement from a $0.6 million use of cash in Q1 2024, driven by a smaller net loss and a $24.4 million decrease in accounts receivable207 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Stem, Inc. is not required to provide quantitative and qualitative disclosures about market risk216 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025218 - No material changes to internal controls over financial reporting occurred during Q1 2025219 Part II. Other Information Legal Proceedings The company is involved in various legal proceedings but does not anticipate a material loss from any pending cases - The company does not believe any pending legal proceedings will have a material adverse effect on the company118222 Risk Factors No material changes to risk factors were reported from the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, were reported223 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales or repurchases of its equity securities during the period - There were no unregistered sales of equity securities or company repurchases of its equity securities in the quarter224225 Other Information A Section 16 officer adopted a Rule 10b5-1 trading plan on March 18, 2025, to sell up to 20,017 shares of common stock - Matthew Tappin, President, Software, adopted a Rule 10b5-1 trading plan on March 18, 2025, to sell up to 20,017 shares of common stock229