Stem(US:STEM)2021-11-10 01:46Financial Data and Key Metrics Changes - The company reported record revenues of $40 million, up 400% from the same quarter last year [3] - The contracted backlog increased to $312 million, up 25% since the second quarter [3] - The 12-month pipeline grew to $2.4 billion, up 41% from the second quarter [3][35] - GAAP gross margin was 8%, compared to a negative 19% in the same quarter last year [32] - Non-GAAP gross margin was 15%, up from 8% in the third quarter last year [33] Business Line Data and Key Metrics Changes - The company achieved $104 million in bookings for the quarter, more than double the bookings in the second quarter [10] - 80% of the bookings in the third quarter were from Front of the Meter (FTM) projects [49] - The average project size has doubled in the last year, indicating increased customer engagement [6] Market Data and Key Metrics Changes - The Texas market has become the second largest market in the company's pipeline, contributing significantly to bookings [9] - The company is expanding its presence in South America, particularly in Chile, through partnerships [8][57] Company Strategy and Development Direction - The company aims to expand its position as a leading energy intelligence software provider, focusing on its Athena platform [4] - The strategy includes leveraging direct sales, channel partners, and strategic investors to maximize market reach [6] - The company plans to continue diversifying its supply chain to mitigate risks and ensure adequate supply [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential passage of a standalone storage Incentive Tax Credit, which could increase the total addressable market by up to 25% [26][27] - The company has secured adequate supply to meet demand through the third quarter of next year, indicating strong supply chain management [28] - Management expects strong commercial prospects in the fourth quarter and beyond, with a focus on maintaining customer relationships [10][11] Other Important Information - The company has $576 million in cash and liquid investments, with no debt, providing a strong financial position for future growth [39] - The Athena platform is continuously updated with new features, enhancing its competitive edge in the market [18] Q&A Session Summary Question: Visibility in end markets and backlog differences - Management highlighted the importance of their channel partner strategy in understanding project lead times and securing supply [44][45] Question: Nature of contracts for battery needs - Management expects to finalize Q4 2022 deliveries by mid-January, with good visibility on bookings [46] Question: Split of bookings between Behind the Meter and Front of the Meter - 80% of bookings were Front of the Meter, with a growing emphasis on software in total bookings [49][51] Question: New markets and projects - Management noted accelerated demand in California, Texas, Arizona, and the Northeast, with a focus on South America [57] Question: Seasonality of Q4 bookings - Management expects strong bookings in Q4, typically their largest revenue quarter, but did not provide specific projections [62] Question: Service revenue composition - Service revenue is 100% software-related [70] Question: Growth potential in residential energy storage market - Management acknowledged the growth in the residential market but emphasized their focus on software solutions [72] Question: Standalone ITC for battery storage - Management is optimistic about the potential impact of the ITC but has not included it in their long-term planning [78][79]