Smart energy storage company Stem reported a 27% revenue increase in Q1 2025 to $32.5 million, against the expected $31.27 million, from $25.5 million in the same quarter the previous year.

Net loss of $2.5 million was reported in the first quarter (Q1) of 2025, a 65.4% year-over-year (YoY) improvement from $72.3 million.

Earnings per share (EPS) came in at -$0.15, exceeding the expected -$0.19.

Doran Hole, Chief Financial Officer and Executive Vice President, Stem, said, “The first quarter of 2025 showed strong execution of our strategic initiatives and demonstrates that we are steering Stem in the right long-term direction.”

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss was $4.6 million, a 62.2% YoY improvement from $12.2 million. The improved EBITDA was driven by margin expansion and continued operating cost discipline.

The company ended Q1 2025 with $58.6 million in cash and cash equivalents compared to $56.3 million at the end of Q4 2024.

Driven by increased solar bookings, Stem’s contracted annual recurring revenue increased 7% quarter-over-quarter to $69.0 million from $64.5 million.

Non-generally accepted accounting principles (GAAP) gross profit margin improved by 46% compared to a 24% improvement in Q1 2024.  “We achieved strong GAAP and non-GAAP gross margins, driven by the strength of our high-margin software, services, and edge device offerings. We achieved another positive milestone this quarter by generating positive cash flow from operations for the first time in our history,” said Hole.

At the end of Q1 2025, Stem’s contracted backlog was $25.3 million, and bookings were $34.5 million.

Arun Narayanan, CEO, Stem, said, “Utility-scale deployments are much larger than C&I, and our market share in this segment is modest, presenting significant growth opportunities. We are seeing momentum in the utility-scale (deployments), with nearly triple the bookings in the first quarter compared to the same period last year. We are also investing in growing our software deployment presence in international markets.”

“Our renewed focus on PowerTrack is driving software revenue growth, and we have taken decisive action to optimize our cost structure and enhance our software development capabilities. Our recently announced targeted workforce reductions are consistent with our software-focused strategy and are expected to generate approximately $30 million in annual cash cost savings, including $24 million expected to benefit this year,” he said.

The company recently announced a reduction of its global workforce of approximately 27% as part of the broader efforts to prioritize investments in software, reduce operating costs, increase efficiency, drive profitable growth, and increase stockholder value.

In Q1 2025, Stem’s storage operating assets under management (AUM) decreased 11% sequentially to 1.6 GWh due to the removal of PowerBidder Pro contracts. Its storage operating AUM of 1.6 GWh rose 100% YoY. The company’s solar operating AUM increased 8% to 32.4 GW, driven by system activations.

Outlook for 2025

Stem expects to earn revenues between $125 million and $175 million in 2025. It also expects its non-GAAP gross margin to be between 30% and 40%.

The company’s adjusted EBITDA is projected to range between negative $10 million and positive $5 million. The year-end annual recurring revenue is expected to range from $55 million to $65 million.

“Regarding our adjusted EBITDA and operating cash flow outlook, we are on track to meet our targets.  We have recently undergone significant organizational changes, including a difficult but necessary 27% reduction in our workforce,” said Hole.

Stem reported a revenue of $55.8 million in Q4 2024, a 67% YoY decrease from $167.4 million.