Stem Reports First-Ever Positive Quarterly EBITDA in Q4 as Sales Surge

The contracted backlog at the end of Q4 2023 was up 99% YoY to $1.93 billion


Smart energy storage company Stem’s fourth quarter (Q4) net loss widened by 6.8% to $37.7 million from the net loss of 35.3 million in Q4 2022.

The lower gross profit and higher interest expenses drove the increase in net loss.

The AI-driven energy storage system provider’s revenue for Q4 2023 surged by 8% year-over-year (YoY) to $167.4 million, primarily due to the higher storage hardware revenue from Front-of-the-Meter (FTM) partnership agreements and higher solar asset performance revenue.

Stem’s contracted annual recurring revenue (CARR) of $91.0 million at the end of Q4 2023 was up by 39% from $65.3 million at the end of 2022.

The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were recorded at a profit of $4.6 million from a loss of $9.5 million in the same period last year.

The improvement in the adjusted EBITDA, including the first-time achievement of positive adjusted EBITDA in the fourth quarter and second half of 2023, was due to an increase in sales, increased gross margins, and lower cash operating costs, the company said in a statement.

The company’s contracted backlog at the end of Q4 2023 was up 99% YoY to $1.93 billion from $969 million. The increase resulted from quarterly bookings of $256 million, partially offset by revenue recognition and contract cancellations and amendments. The bookings during the period, however, were 44% lower than $457.2 million in Q4 2022.

The company’s solar monitoring assets under management (AUM) grew to 27.5 GW, up by 10% from 25 GW at the end of 2022.

During the company’s earnings call, John Carrington, Stem’s Chief Executive Officer, said, “Energy storage hardware costs continue to decline, driving better economics for our customers and increased overall TAM (total addressable market) and demand for our services. In the U.S., we are encouraged by the domestic supply continuing to ramp up and note that 38 battery gigafactories are either operational under construction or planned for construction.”

“We believe that the U.S. domestic content provides compelling opportunities for improved project economics and are pursuing a vendor-neutral strategy to offer our customers access to top-tier suppliers without committing volumes to any single supplier. We are seeing favorable conditions in the supply chain with battery cell manufacturers potentially entering the market to offer integrated hardware solutions,” he further added.

Full Year 2023

Stem recorded a net loss of $140.4 million for the full year 2023, a 13% increase from the net loss of $124.1 million in 2022.

The year-over-year increase in net loss resulted primarily from a $35.1 million net reduction in revenue, excess supplier costs and resulting liquidated damages.

The company updates its estimate of variable consideration each quarter, including changes in estimates related to such guarantees for facts or circumstances that have changed from the time of the initial estimate, and, as a result, the company recorded a net revenue reduction of $35.1 million during 2023.

The company’s revenue increased by 27.13% YoY to 461.5 million for the year due to the growing customer momentum and standardization of its Athena platform across storage and solar assets.

The adjusted EBITDA in 2023 improved from a loss of $46 million in 2022 to a loss of $19.5 million, driven by the higher revenue, expanded gross margins, and disciplined operating costs of the company.

The company’s order bookings for the full year 2023 were up by 44% YoY to $1.53 billion.

The contracted AUM at the end of December 2023 was 5.5 GWh, a 77% increase from 3.1 GWh in 2022 and a 10% increase from 5 GWh at the end of Q3 2023.

The company’s newly launched energy trading toolkit for asset owners and traders, called PowerBidder Pro, was ordered by Mercuria, who will use the software to access real-time performance metrics, analytics, and customizable trading strategies.

The company has also signed approximately 800 MWh of software-only storage contracts in the ERCOT (Electric Reliability Council of Texas) and CAISO (California ISO), two of the fastest-growing regions for energy storage.

During Q3, 2023, Stem reported a net loss of $77.1 million, a 124% YoY surge from the net loss of $34.3 million, mainly driven by the added costs for hardware.