Stem(US:STEM)2022-08-04 23:45Financial Data and Key Metrics Changes - The company reported record revenue of $67 million for Q2 2022, a 246% increase compared to $19 million in Q2 2021, and a 26% increase from Q4 2021's $53 million [38] - GAAP gross margin was $7.7 million (12%) compared to a slight loss in the same quarter last year, marking the second consecutive quarter of positive GAAP gross margin [39] - Non-GAAP gross margin increased to $11.3 million (17%) from $1.5 million (8%) in Q2 2021, reflecting a 665% increase [40] - Net loss was $32 million, significantly improved from a loss of $100 million in the same quarter last year [41] - Adjusted EBITDA was negative $11 million, slightly worse than negative $8 million in Q2 2021 [42] Business Line Data and Key Metrics Changes - The company achieved $226 million in bookings for Q2 2022, up more than five times compared to the same quarter last year [43] - Contracted annual recurring revenue (CAR) ended the quarter at $58 million, showcasing the importance of the Athena and PowerTrack networks [47] - The contracted asset under management (AUM) for storage grew from 1.2 GWh in Q2 2021 to 2.1 GWh in Q2 2022, a 75% year-over-year increase [46] Market Data and Key Metrics Changes - The company noted that over 90% of its remaining 2022 revenue will come from recurring revenues and standalone storage projects, providing insulation from solar procurement challenges [18] - The company has seen strong demand in the ERCOT and ISO New England markets, with ERCOT being the strongest [62] Company Strategy and Development Direction - The company is focused on improving operating leverage and increasing utilization of its India platform while securing battery storage supply for 2023 and 2024 [12] - The company is excited about the potential impact of the Inflation Reduction Act, which could enhance economic returns for customers and increase the total addressable market [22][23] - The integration of AlsoEnergy is proceeding well, with expectations to detail initiatives on driving commercial synergies and operating leverage [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong commercial momentum heading into the second half of 2022, with record revenue and bookings [54] - The company is monitoring the potential impacts of the Uyghur Forced Labor Prevention Act, which has so far resulted in limited impacts [20] - Management highlighted that higher energy prices are increasing project returns for customers, offsetting some headwinds from rising labor and component prices [14] Other Important Information - The company has launched two new employee networks focused on LGBTIA+ and Women in Leadership, emphasizing its commitment to building an inclusive workplace [55] - The company is fully contracted for its 2022 energy storage supply and has made progress on contracting for supply in 2023 and 2024 [27] Q&A Session Summary Question: Can you talk about the revised guidance for bookings and where the increased momentum is coming from? - Management noted that the FTM segment is growing rapidly and is the primary driver of increased momentum, with ERCOT being the strongest ISO [58][62] Question: Does the increase in bookings change the expectations for when EBITDA might turn positive? - Management indicated that while bookings growth will create revenue opportunities, FTM projects typically take longer to realize revenue, pushing some deals into 2024 [63][64] Question: What are the initial thoughts on the Inflation Reduction Act and its impact on the pipeline? - Management expressed strong support for the Inflation Reduction Act, highlighting its potential to drive job growth and renewable expansion, and noted that they are prepared to retrofit existing solar sites with storage [66][68] Question: Can you elaborate on the drivers of revenue and whether there was any pull forward from future quarters? - Management clarified that revenue was primarily driven by hardware sales and did not indicate a pull forward from future quarters [77] Question: Is there enough supply for batteries to support potential demand from the Inflation Reduction Act? - Management expressed confidence in their supply chain and OEM commitments, indicating they are well-positioned to meet increased demand [80] Question: What impact is the Uyghur Forced Labor Prevention Act having on project timelines? - Management noted that while there is some impact on large utility-scale projects, the behind-the-meter projects are less affected [83][86] Question: Can you provide more color on the increase in software-only deals? - Management indicated that many software-only deals are large front-of-the-meter projects where developers procure their own hardware while utilizing the company's software [88][90]