On February 28, 2024, Stem Inc (STEM, Financial), a global leader in AI-driven clean energy solutions and services, released its 8-K filing, announcing its financial results for the fourth quarter and full year of 2023. The company, known for bundling third-party hardware with its proprietary Athena software to provide turnkey solutions, has reported a year of growth despite facing challenges.
Financial Performance and Challenges
Stem Inc's Q4 revenue saw an 8% increase to $167.4 million compared to Q4 2022, with a full-year revenue surge of 27% to $461.5 million. This growth is attributed to higher storage hardware revenue from Front-of-the-Meter (FTM) partnership agreements and increased solar asset performance revenue. Despite the revenue growth, the company experienced a decrease in GAAP gross margin from 8% to 7% in Q4 and from 9% to 1% for the full year. The non-GAAP gross margin, however, improved from 11% to 13% in Q4 and from 13% to 15% for the full year.
The company's net loss widened slightly from $35.3 million in Q4 2022 to $37.7 million in Q4 2023, and from $124.1 million to $140.4 million for the full year. However, Stem Inc achieved a milestone with a positive adjusted EBITDA of $4.6 million in Q4, compared to a negative $9.5 million in the same quarter of the previous year. The full-year adjusted EBITDA also improved, with a loss of $19.5 million compared to a loss of $46.0 million in 2022.
Financial Achievements and Importance
The achievement of positive adjusted EBITDA in Q4 and the second half of 2023 is a critical milestone for Stem Inc, as it reflects the company's ability to increase margins and maintain operating cost discipline. The company's contracted backlog nearly doubled to $1.9 billion at the end of Q4 2023, up from $969.0 million at the end of Q4 2022, indicating a robust pipeline for future revenue.
Stem Inc's contracted storage assets under management (AUM) grew to 5.5 gigawatt hours (GWh) at the end of Q4 2023, a 77% increase from the end of 2022. The solar monitoring AUM also increased to 27.5 gigawatts (GW), up 10% from the end of 2022. These metrics are crucial as they demonstrate the company's expanding footprint in the clean energy sector and its recurring revenue potential.
Analysis and Outlook
Despite the challenges, Stem Inc's management remains focused on extending its technology leadership, building software services revenue, and achieving profitable growth. The company's outlook for 2024 is optimistic, with expectations of continued revenue growth, bookings, CARR, and AUM increases. Stem Inc anticipates generating positive operating cash flow of at least $50 million in 2024, a testament to the company's financial health and strategic initiatives.
Stem Inc's performance in 2023 and its positive outlook for 2024 demonstrate the company's resilience and potential for growth in the clean energy industry. As the company continues to innovate and expand its offerings, investors and stakeholders can look forward to its contributions to a cleaner and more resilient energy grid.
For a detailed analysis of Stem Inc's financials and future prospects, investors are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Stem Inc for further details.
