Revenue at high end of guidance
Company reaffirms 2021 financial guidance
Stem, Inc. ("Stem" or the "Company") (NYSE:STEM), a global
leader in artificial intelligence (AI)-driven clean energy storage
services, announced today its financial results for the second
quarter ended June 30, 2021.
Second Quarter 2021 Financial and Operating
Highlights
Financial Highlights
- Revenues of $19.3 million, up from $4.4 million (+339%) in the
same quarter last year
- Gross Margin (GAAP) of (1)% versus (40)% in the same quarter
last year
- Non-GAAP Gross Margin of 11%, up from 5% in the same quarter
last year
- Net Loss of $(100.2) million versus $(19.0) million in the same
quarter last year
- Adjusted EBITDA of $(8.6) million vs. $(7.5) million in the
same quarter last year
- Ended the second quarter with $474 million in cash and zero
debt
Operating Highlights
- 12-month Pipeline of $1.7 billion, up from $1.4 billion (+21%)
at end of the first quarter
- Contracted Backlog of $250 million, up from $221 million (+13%)
at end of the first quarter
- Contracted Assets Under Management (AUM) of 1.2 gigawatt hours
(GWh), up from 0.5 GWh in the same quarter last year
John Carrington, Chief Executive Officer of Stem, commented, “We
are pleased to announce a solid second quarter of execution,
building on our strong first-quarter results. Revenue was at the
high end of our guidance range, which, coupled with our gross
margin and operating expense performance, keeps us on track to meet
our full-year revenue and Adjusted EBITDA targets. Our sales team
continued to leverage our partner channel in multiple geographies
increasing our contracted backlog to $250 million (13% sequential
growth), providing us with increased visibility into 2022 revenue.
As the first pure-play publicly traded smart energy storage
company, our experience, industry-leading Athena® software
platform, robust service offerings, and strong balance sheet will
continue to differentiate Stem in this rapidly expanding
market.”
Key metrics
$ millions unless otherwise noted
Three Months Ended
June 30,
2021
2020
Financial metrics
Revenue
$19.3
$4.4
Gross Margin (GAAP)
$(0.1)
$(1.7)
Gross Margin (GAAP, %)
-1%
-40%
Non-GAAP Gross Margin***
$2.1
$0.2
Non-GAAP Gross Margin (%)***
11%
5%
Net Loss (GAAP)
$(100.2)
$(19.0)
Adjusted EBITDA***
$(8.6)
$(7.5)
Key Operating metrics*
12-Month Pipeline ($ billions)
$1.7
**
Contracted Backlog
$250
**
Contracted AUM (GWh)
1.2
0.5
* at period end ** not available
***Non-GAAP financial measures. See the
section below titled “Use of Non-GAAP Financial Measures“ for
details and page 9 for reconciliations.
Second-Quarter 2021 Financial and Operating Results
Financial Results
Second quarter revenue increased 339% to $19.3 million, versus
$4.4 million in the same quarter last year. Higher hardware revenue
from Front of the Meter (“FTM”) partnership agreements drove most
of the year-over-year increase, in addition to higher services
revenue from host customer arrangements.
Gross Margin (GAAP) was $(0.1) million, or (1)%, versus $(1.7)
million, or (40)% in the same quarter last year. Non-GAAP Gross
Margin was $2.1 million or 11% versus $0.2 million or 5% in the
same quarter last year. The year-over-year increases in Gross
Margin (GAAP) and Non-GAAP Gross Margin resulted from an increased
mix of software service revenues and higher-margin hardware
deliveries.
Net Loss increased to $(100.2) million versus $(19.0) million in
the same quarter last year. This was primarily due to $76.4 million
of non-cash charges recorded in the quarter from the revaluation of
warrants tied to an increase in the value of the underlying stock,
along with higher operating expenses.
Adjusted EBITDA was $(8.6) million compared to $(7.5) million in
the same quarter last year. The lower Adjusted EBITDA results were
primarily driven by higher operating expenses, due to increased
personnel costs reflecting continued investment in our growth
initiatives.
The Company ended the second quarter with $474 million in cash
and no debt.
Operating Results
The Company’s 12-month forward Pipeline was $1.7 billion as of
June 30, 2021, representing significant year-over-year growth. The
21% increase in the 12-month pipeline from $1.4 billion at March
31, 2021 is a result of increased FTM project opportunities and the
seasonal nature of the pipeline.
Contracted Backlog increased 13% sequentially, from $221 million
as of March 31, 2021 to $250 million as of June 30, 2021. The
increase in Contracted Backlog resulted from strong bookings of $45
million tied to increased commercial activity. Bookings grew 18%
year-over-year from $38 million in the quarter ended June 30,
2020.
Contracted AUM more than doubled year-over-year to 1.2 GWh,
driven by increased commercial activity and the addition of the
345-megawatt hour (MWh) Electrodes Holdings LLC portfolio.
Contracted AUM increased sequentially by 9%, driven by new
contracts and new systems that came in service.
The following table provides a summary of current backlog
compared to prior quarter backlog:
$ millions
Period ending 1Q21
$221
$45
($19)
$3
Period ending 2Q21
$250
Business Highlights
Since mid-June 2021, Stem has consistently dispatched more than
500 MWh daily in multiple markets across the United States and
Canada in response to heat waves, increased grid interconnections
from renewables and wildfires that have caused widespread stress on
power grids. Stem’s demand response and grid services programs are
designed to use virtual power plants powered by the Athena software
platform to flatten electricity usage peaks and deliver power to
the most constrained parts of the grid.
Stem has grown rapidly in ISO New England since the system
operator expanded market participation activities for
Front-of-the-Meter ("FTM") storage in 2020. As of the end of June,
Stem-directed systems comprised 52% of Massachusetts and 19% of
ISO-NE of the operational continuous storage facilities active in
the wholesale energy, ancillary services and forward capacity
settlement markets, as reported by the system operator.
On June 25, 2021, Stem entered into an agreement to exchange 7.2
million private warrants for 4.7 million shares of common stock.
The transaction closed on June 30, 2021. As of August 11, 2021,
12.8 million public warrants remain outstanding, which are
redeemable by the Company beginning August 20, 2021.
On June 2, 2021, Stem announced that it had partnered with
Ameresco, a leading cleantech integrator, whereby it will provide
15 MWh of battery storage for Holy Cross Energy, an electric
cooperative in western Colorado. Stem and Ameresco plan to further
collaborate to provide enhanced returns in electric cooperative
markets and beyond. The Company is currently pursuing projects with
cooperatives in 26 states and expects this end market to represent
a significant component of its FTM business.
Outlook
The Company reaffirms its guidance of full-year 2021 revenue of
$147 million and full-year 2021 Adjusted EBITDA of $(25) million.
Consistent with prior guidance, the Company reaffirms that it
expects to recognize 20-30% of total 2021 revenue in Q3, and 50-60%
of total 2021 revenue in Q4.
The Company believes that it has contracted for sufficient
supply chain commitments to meet its 2021 revenue goal and will
continue to diversify its supply chain, adopt alternative
technologies, and deploy its balance sheet to meet the significant
growth in customer demand.
Use of Non-GAAP Financial Measures
In addition to financial results determined in accordance with
U.S. generally accepted accounting principles (“GAAP”), we use the
following non-GAAP financial measures: non-GAAP gross margin and
Adjusted EBITDA. The presentation of this financial information is
not intended to be considered in isolation or as a substitute for,
or superior to, the financial information prepared and presented in
accordance with GAAP. See “Reconciliations of non-GAAP Financial
Measures” on page 9 of this release. We use these non-GAAP
financial measures for financial and operational decision making
and as a means to evaluate our operating performance and future
prospects, develop internal budgets and financial goals, and to
facilitate period-to-period comparisons. Our management believes
that these non-GAAP financial measures provide meaningful
supplemental information regarding our performance and liquidity by
excluding certain expenses and expenditures that may not be
indicative of our operating performance, such as stock-based
compensation and other non-cash charges, as well as discrete cash
charges that are infrequent in nature. We believe that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing our performance and when planning,
forecasting, and analyzing future periods. These non-GAAP financial
measures also facilitate management’s internal comparisons to our
historical performance and liquidity as well as comparisons to our
competitors’ operating results. We believe these non-GAAP financial
measures are useful to investors both because they (1) allow for
greater transparency with respect to key metrics used by management
in its financial and operational decision making and (2) are used
by our institutional investors and the analyst community to help
them analyze the health of our business.
We define Adjusted EBITDA as net loss before depreciation and
amortization, including amortization of internally developed
software, net interest expense, further adjusted to exclude
stock-based compensation and other income and expense items,
including the change in fair value of warrants and embedded
derivatives.
We define non-GAAP gross margin as gross margin excluding
amortization of capitalized software, impairments related to
decommissioning of end-of-life systems, and adjustments to
reclassify data communication and cloud production expenses to
operating expenses.
About Stem, Inc.
Stem Inc. (NYSE: STEM) provides solutions that address the
challenges of today’s dynamic energy market. By combining advanced
energy storage solutions with Athena®, a world-class AI-powered
analytics platform, Stem enables customers and partners to optimize
energy use by automatically switching between battery power, onsite
generation and grid power. Stem’s solutions help enterprise
customers benefit from a clean, adaptive energy infrastructure and
achieve a wide variety of goals, including expense reduction,
resilience, sustainability, environmental and corporate
responsibility and innovation. Stem also offers full support for
solar partners interested in adding storage to standalone,
community or commercial solar projects – both behind and in front
of the meter.
For more information, visit www.stem.com.
Notes
Stem will hold a conference call to discuss this earnings press
release and business outlook on Wednesday, August 11, 2021 at 5:00
p.m. Eastern Time. The conference call may be accessed via a live
webcast on a listen-only basis on the Events & Presentations
page of the Investor Relations section of the Company’s website at
https://investors.stem.com/events-and-presentations. The call can
also be accessed live over the telephone by dialing 877-705-6003,
or for international callers, 201-493-6725 and referencing Stem. A
replay of the webcast will be available shortly after the call on
the Events & Presentations page in the Investor Relations
section of the Company’s website and will remain available for
approximately one month.
Forward-Looking Statements
This second-quarter 2021 earnings release, as well as other
statements we make, contain “forward-looking statements” within the
meaning of the federal securities laws, which include any
statements that are not historical facts. Such statements often
contain words such as “expect,” “may,” “can,” “believe,” “predict,”
“plan,” “potential,” “projected,” “projections,” “forecast,”
“estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,”
“think,” “should,” “could,” “would,” “will,” “hope,” “see,”
“likely,” and other similar words. Forward-looking statements
address matters that are, to varying degrees, uncertain, such as
the reduction of greenhouse gas (“GHG”) emissions; the integration
and optimization of energy resources; the business strategies of
Stem and those of its customers; the global commitment to
decarbonization; our ability to retain or upgrade current
customers, further penetrate existing markets or expand into new
markets; our ability to manage our supply chains and distribution
channels and the impact of natural disasters and other events
beyond our control, such as the COVID-19 pandemic and the Delta
variant; and future results of operations. Such forward-looking
statements are subject to risks, uncertainties, and other factors
that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. These
forward-looking statements are based upon assumptions and estimates
that, while considered reasonable by Stem and its management,
depend upon inherently uncertain factors and risks that may cause
actual results to differ materially from current expectations,
including our inability to help reduce GHG emissions; our inability
to seamlessly integrate and optimize energy resources; our
inability to achieve our financial and performance targets and
other forecasts and expectations; our inability to recognize the
anticipated benefits of our recent business combination with Star
Peak Energy Transition Corp. (“Star Peak”); our ability to grow and
manage growth profitably; risks relating to the development and
performance of our energy storage systems and software-enabled
services; the risk that the global commitment to decarbonization
may not materialize as we predict, or even if it does, that we
might not be able to benefit therefrom; our inability to retain or
upgrade current customers, further penetrate existing markets or
expand into new markets; our inability to secure sufficient
inventory from our suppliers to meet customer demand, and provide
us with contracted quantities of equipment; supply chain
interruptions and manufacturing or delivery delays; disruptions in
sales, production, service or other business activities; our
inability to attract and retain qualified personnel; the risk that
our business, financial condition and results of operations may be
adversely affected by other political, economic, business and
competitive factors; and other risks and uncertainties set forth in
the section entitled “Risk Factors” in the registration statement
on Form S-1 filed with the SEC on July 19, 2021, and our most
recent Forms 10-K, 10-Q and 8-K filed with or furnished to the SEC.
If one or more of these or other risks or uncertainties materialize
(or the consequences of any such development changes), or should
our underlying assumptions prove incorrect, actual outcomes may
vary materially from those reflected in our forward-looking
statements. Statements in this second-quarter 2021 press release
are made as of the date of this release, and Stem disclaims any
intention or obligation to update publicly or revise such
statements, whether as a result of new information, future events
or otherwise.
Source: Stem, Inc.
STEM, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
(in thousands, except share and
per share amounts)
June 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
474,138
$
6,942
Accounts receivable, net
17,833
13,572
Inventory, net
27,167
20,843
Other current assets (includes $206 and
$123 due from related parties as of June 30, 2021 and December 31,
2020, respectively)
19,199
7,920
Total current assets
538,337
49,277
Energy storage systems, net
118,216
123,703
Contract origination costs, net
11,668
10,404
Goodwill
1,786
1,739
Intangible assets, net
12,387
12,087
Other noncurrent assets
15,945
8,640
Total assets
$
698,339
$
205,850
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Current liabilities:
Accounts payable
$
17,798
$
13,749
Accrued liabilities
9,177
16,072
Accrued payroll
4,565
5,976
Notes payable, current portion
—
33,683
Convertible promissory notes (includes $—
and $45,271 due to related parties as of June 30, 2021 and December
31, 2020, respectively)
—
67,590
Financing obligation, current
15,336
14,914
Deferred revenue, current
37,056
36,942
Other current liabilities (includes $880
and $399 due to related parties as of June 30, 2021 and December
31, 2020, respectively)
1,910
1,589
Total current liabilities
85,842
190,515
Deferred revenue, noncurrent
18,648
15,468
Asset retirement obligation
4,178
4,137
Notes payable, noncurrent
1,719
4,612
Financing obligation, noncurrent
74,496
73,128
Warrant liabilities
303,798
95,342
Lease liability, noncurrent
880
57
Total liabilities
489,561
383,259
Commitments and contingencies (Note
13)
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value;
1,000,000 shares authorized as of June 30, 2021 and December 31,
2020, respectively; 0 shares issued and outstanding as of June 30,
2021 and December 31, 2020
—
—
Common stock, $0.0001 par value;
500,000,000 shares authorized as of June 30, 2021 and December 31,
2020; 130,418,055 and 40,202,785 issued and outstanding as of June
30, 2021 and December 31, 2020, respectively
13
4
Additional paid-in capital
799,918
230,620
Accumulated other comprehensive loss
(543
)
(192
)
Accumulated deficit
(590,610
)
(407,841
)
Total stockholders’ equity (deficit)
208,778
(177,409
)
Total liabilities and stockholders’ equity
(deficit)
$
698,339
$
205,850
STEM, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and
per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenue
Services revenue
$
5,153
$
3,670
$
10,035
$
7,062
Hardware revenue
14,184
709
24,723
1,427
Total revenue
19,337
4,379
34,758
8,489
Cost of revenue
Cost of service revenue
5,809
5,510
12,715
10,255
Cost of hardware revenue
13,655
614
22,286
1,365
Total cost of revenue
19,464
6,124
35,001
11,620
Gross margin
(127
)
(1,745
)
(243
)
(3,131
)
Operating expenses:
Sales and marketing
3,913
4,242
6,580
8,646
Research and development
4,827
3,619
9,234
7,032
General and administrative
15,014
2,404
17,706
5,383
Total operating expenses
23,754
10,265
33,520
21,061
Loss from operations
(23,881
)
(12,010
)
(33,763
)
(24,192
)
Other income (expense), net:
Interest expense
(3,929
)
(5,192
)
(10,162
)
(9,561
)
Loss on extinguishment of debt
(5,064
)
—
(5,064
)
—
Change in fair value of warrants and
embedded derivative
(67,179
)
(1,918
)
(133,577
)
(909
)
Other income (expenses), net
(163
)
139
(203
)
(1,790
)
Total other income (expense)
(76,335
)
(6,971
)
(149,006
)
(12,260
)
Loss before income taxes
(100,216
)
(18,981
)
(182,769
)
(36,452
)
Income tax expense
—
—
—
—
Net loss
$
(100,216
)
$
(18,981
)
$
(182,769
)
$
(36,452
)
Net loss per share attributable to common
shareholders, basic and diluted
$
(1.00
)
$
(0.48
)
$
(2.59
)
$
(1.14
)
Weighted-average shares used in computing
net loss per share, basic and diluted
100,611,965
39,801,379
70,684,750
40,209,877
STEM, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended June
30,
2021
2020
OPERATING ACTIVITIES
Net loss
$
(182,769
)
$
(36,452
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization expense
10,315
7,918
Non-cash interest expense, including
interest expenses associated with debt issuance costs
7,119
4,570
Stock-based compensation
1,784
932
Change in fair value of warrant liability
and embedded derivative
133,577
909
Noncash lease expense
334
286
Accretion expense
112
160
Impairment of energy storage systems
1,275
947
Issuance of warrants for services
9,183
—
Changes in operating assets and
liabilities:
Accounts receivable
(4,219
)
2,212
Inventory
(6,323
)
(6,340
)
Other assets
(16,924
)
(2,691
)
Contract origination costs
(1,650
)
(1,383
)
Accounts payable and accrued expenses
3,292
412
Deferred revenue
3,294
12,308
Lease liabilities
(289
)
(310
)
Other liabilities
56
25
Net cash used in operating activities
(41,833
)
(16,497
)
INVESTING ACTIVITIES
Purchase of energy storage systems
(5,603
)
(7,555
)
Capital expenditures on
internally-developed software
(2,693
)
(2,628
)
Purchase of property and equipment
(300
)
—
Net cash used in investing activities
(8,596
)
(10,183
)
FINANCING ACTIVITIES
Proceeds from exercise of stock options
and warrants
2,933
54
Net contributions from Merger and PIPE
financing, net of transaction costs of $58,061
550,322
—
Proceeds from financing obligations
4,929
8,391
Repayment of financing obligations
(4,609
)
(4,267
)
Proceeds from issuance of convertible
notes, net of issuance costs of $8 and $911 for the six months
ended June 30, 2021 and 2020, respectively
1,118
14,050
Proceeds from issuance of notes payable,
net of issuance costs of $101 and $1,502 for the six months ended
June 30, 2021 and 2020, respectively
3,940
23,498
Repayment of notes payable
(41,446
)
(19,665
)
Net cash provided by financing
activities
517,187
22,061
Effect of exchange rate changes on cash
and cash equivalents
438
(176
)
Net increase (decrease) in cash and cash
equivalents
467,196
(4,795
)
Cash and cash equivalents, beginning of
period
6,942
12,889
Cash and cash equivalents, end of
period
$
474,138
$
8,094
STEM, INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
(unaudited)
The following table provides a
reconciliation of net loss to Adjusted EBITDA:
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
(in thousands)
(in thousands)
Net loss
$
(100,216
)
$
(18,981
)
$
(182,769
)
$
(36,452
)
Adjusted to exclude the following:
Depreciation and amortization
5,236
3,924
10,315
7,918
Interest expense
3,929
5,192
10,162
9,561
Loss on extinguishment of debt
5,064
—
5,064
—
Stock-based compensation
1,024
476
1,784
932
Vesting of warrants
9,184
—
9,184
—
Change in fair value of warrants and
embedded derivative
67,179
1,918
133,577
909
Provision for income taxes
—
—
—
—
Adjusted EBITDA
$
(8,600
)
$
(7,471
)
$
(12,683
)
$
(17,132
)
Adjusted EBITDA as used in connection with the Company's 2021
outlook is a non-GAAP financial measure that excludes or has
otherwise been adjusted for items impacting comparability. The
Company is unable to reconcile Adjusted EBITDA to net loss, its
most directly comparable forward-looking GAAP financial measure,
without unreasonable efforts, because the Company is currently
unable to predict with a reasonable degree of certainty its change
in fair value of warrants expense for 2021. In addition, the
Company may incur additional expenses that may affect Adjusted
EBITDA, such as stock-based compensation expense and other items.
The unavailable information could have a significant effect on the
Company’s full year 2021 GAAP financial results.
The following table provides a reconciliation of gross margin
(GAAP) to non-GAAP gross margin:
$ millions, unless otherwise noted
Three Months Ended
June 30,
2021
2020
Revenue
$19.3
$4.4
Cost of Goods Sold
($19.4)
($6.1)
Gross Margin (GAAP)
($0.1)
($1.7)
Gross Margin (GAAP) (%)
-1%
-40%
Adjustments to Gross Margin
Amortization of Capitalized Software
$1.3
$0.9
Impairments of Storage Systems
$0.3
$1.1
Other Adjustments(1)
$0.6
($0.1)
Non-GAAP Gross Margin
$2.1
$0.2
Non-GAAP Gross Margin (%)
11%
5%
(1) Consists of certain operating expenses including
communication and cloud service expenditures reclassified to cost
of revenue.
Key Definitions:
Item
Definition
12-Month Pipeline
Total value of uncontracted, potential
hardware and software revenue from opportunities currently in
process by Stem direct salesforce and channel partners which have a
reasonable likelihood of contract execution within 12 months
- Market participation revenue is excluded from pipeline
Gross Pipeline
Total value of uncontracted, potential
hardware and software revenue from opportunities currently in
process by Stem direct salesforce and channel partners
- Market participation revenue is excluded from pipeline
Bookings
Total value of executed customer
agreements, as measured during a given period (e.g. quarterly
booking or annual booking)
- Customer contracts are typically executed 6-12 months ahead of
installation
- Booking amount typically includes:
- Hardware revenue, which is typically recognized at delivery of
system to customer,
- Software revenue, which represents total nominal software
contract value recognized ratably over the contract period,
- Market participation revenue is excluded from booking
value
Contracted Backlog
Total value of bookings in dollars, as
reflected on a specific date
- Backlog increases as new contracts are executed (bookings)
- Backlog decreases as integrated storage systems are delivered
and recognized as revenue
Contracted AUM
Total MWh of systems in operation or under
contract
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210811005842/en/
Stem Investor Contacts Ted Durbin, Stem Marc Silverberg,
ICR IR@stem.com (847) 905-4400
Stem Media Contacts Cory Ziskind, ICR
stemPR@icrinc.com
Stem (NYSE:STEM)
Historical Stock Chart
From Aug 2024 to Sep 2024
Stem (NYSE:STEM)
Historical Stock Chart
From Sep 2023 to Sep 2024