Stem(US:STEM)2025-10-30 00:25Financial Performance - Total revenue increased from $88.8 million for the nine months ended September 30, 2024, to $109.1 million for the nine months ended September 30, 2025, representing a growth of approximately 23.1%[161] - Net income for the nine months ended September 30, 2025, was $153.7 million, compared to a net loss of $802.9 million for the same period in 2024[161] - Revenue for the three months ended September 30, 2025, increased by $8.9 million, or 31%, to $38.2 million compared to $29.3 million in the same period of 2024[218] - Hardware revenue surged by $12.7 million, or 177%, to $19.8 million, driven by increased sales of edge hardware[219] - GAAP gross profit for the three months ended September 30, 2025, was $13.5 million, representing a gross margin of 35%, compared to a gross profit of $6.2 million and a margin of 21% in 2024[218] - Adjusted EBITDA for the three months ended September 30, 2025, was $2.0 million, compared to a loss of $3.5 million for the same period in 2024[193] - Annual Recurring Revenue (ARR) increased to $60.2 million for the nine months ended September 30, 2025, up from $51.4 million in 2024[218] - Total revenue increased by $20.4 million, or 23%, for the nine months ended September 30, 2025, driven by a $15.5 million increase in hardware revenue and a $4.9 million increase in services and other revenue[230] - Cost of revenue decreased by $25.2 million, or 26%, for the nine months ended September 30, 2025, primarily due to a $26.2 million decrease in hardware revenue costs[231] - Net loss for the three months ended September 30, 2025, was $23.8 million, a significant improvement from a net loss of $148.3 million in the same period of 2024[218] Cash Flow and Financing - As of September 30, 2025, the company had cash and cash equivalents of $43.1 million, with a working capital deficit of $19.8 million[243] - For the nine months ended September 30, 2025, net cash used in operating activities was $1.4 million, with a net income of $153.7 million adjusted for non-cash items[264] - During the same period, net cash used in investing activities was $5.7 million, primarily for capital expenditures related to internally-developed software[266] - The company reported net cash used in financing activities of $6.1 million for the nine months ended September 30, 2025, mainly due to repayment of financing obligations[268] - The total financing obligation as of September 30, 2025, was $45.3 million, with $14.2 million classified as a current liability[247] - The company accrued $5.2 million in debt issuance costs related to the issuance of new notes[260] - The company used approximately $66.7 million of the net proceeds from the 2028 Convertible Notes to pay for capped call transactions to minimize potential dilution to common stockholders[249] - On April 3, 2023, the company issued $240.0 million in aggregate principal amount of 2030 Convertible Notes, bearing interest at 4.25% per year, maturing on April 1, 2030[253] - The company recorded a $220.0 million gain on debt extinguishment from the exchange of approximately $228.8 million of 2028 Convertible Notes and $121.3 million of 2030 Convertible Notes for 2030 Senior Secured Notes[251] - The 2030 Senior Secured Notes bear interest at 12.00% per year if paid in kind, or 11.00% per year if paid in cash, maturing on December 30, 2030[261] Operational Changes and Workforce - The company announced a 27% reduction in its global workforce on April 9, 2025, incurring $6.0 million in restructuring costs related to this reduction[162] - The company is focusing on developing and marketing AI-enabled software and services, which has resulted in operational changes and increased restructuring-related costs[163] - Research and development expenses decreased by $4.2 million, or 38%, to $6.9 million for the three months ended September 30, 2025, due to reduced headcount[222] - Sales and marketing expenses decreased by $1.2 million, or 15%, to $7.0 million for the three months ended September 30, 2025, primarily due to lower personnel costs[221] - General and administrative expenses decreased by $26.6 million, or 43%, for the nine months ended September 30, 2025, compared to the same period in 2024[234] Market and Regulatory Environment - The One Big Beautiful Bill Act (OBBB) enacted in July 2025 introduced changes to clean energy tax credit programs, including the expiration of the Investment Tax Credit for residential solar and storage systems by December 31, 2025[170] - The OBBB also amended domestic content bonus credit rules, increasing the domestic cost threshold for Section 48E projects from 40% to 45%[171] - The company expects the cost of generating renewable energy to continue to decline, leading to increased deployments of energy storage systems[180] - The company has entered into strategic joint ventures to develop energy storage generation projects but is not making further investments in these projects[179] - The company faces competition from energy monitoring software providers and hardware integration providers, but believes it is well-positioned in the market[182] Accounts Receivable and Backlog - As of September 30, 2025, the company has recovered $2.7 million of the previously written-off accounts receivable totaling $104.1 million[177] - Bookings for the nine months ended September 30, 2025, totaled $99.1 million, reflecting strong demand for energy optimization services[218] - Contracted backlog at the end of September 2025 was $22.2 million, indicating a stable pipeline of future revenue[218] Losses and Liabilities - The company has incurred net operating losses and negative cash flows from operations each year since its inception in 2009, primarily financing operations through customer cash flows and convertible senior notes[160] - As of September 30, 2025, the company had an accumulated deficit of $1,472.8 million[161] - Interest expense increased by $1.8 million, or 13%, for the nine months ended September 30, 2025, compared to the same period in 2024[236] - The company recorded an increase in fair value of warrant liability of $4.2 million during the nine months ended September 30, 2025[239] - Following a reverse stock split of 1-for-20 on June 23, 2025, the company regained compliance with NYSE listing requirements as its share price exceeded $1.00[169]