U.S.-based smart energy storage company Stem reported revenue of $29 million in the first quarter (Q1) of 2026, down 11% year-over-year (YoY) from $32.5 million and missing analyst expectations by $5.61 million.

Software, services, and edge hardware revenue rose 4% YoY to $29 million from $28 million, driven by 16% YoY growth in PowerTrack software revenue.

The company reported a net loss of $18.9 million, down from $25 million in Q1 2025, due to lower operating expenses.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved to $2 million from a loss of $4.6 million in the corresponding quarter last year. The improvement was attributed to lower operating expenses and continued software revenue growth.

Stem Chief Executive Officer Arun Narayanan said the company delivered its fourth consecutive quarter of positive adjusted EBITDA and its first-ever positive adjusted EBITDA in the first fiscal quarter, which he described as historically Stem’s lightest revenue quarter.

“Delivering positive adjusted EBITDA in our seasonally lightest revenue quarter, combined with strong gross margins and continued PowerTrack momentum, underscores the strength of our execution and gives us confidence in our outlook,” he said during the earnings call.

Loss per share came in at $2.22, missing analyst expectations by $0.09.

Stem reported bookings of $26.5 million in the quarter compared to $32.7 million in Q4 2025. Management attributed the sequential decline to typical first-quarter seasonality.

Contracted backlog stood at $23 million at the end of the quarter, up from $21.3 million at the end of Q4 2025.

Narayanan said utility scale bookings more than doubled quarter over quarter and described the company’s utility scale pipeline as the “strongest we have ever seen.”

The company booked new utility-scale projects across four geographies, including standalone storage and hybrid solar-plus-storage deployments.

Stem highlighted a utility-scale project in Hungary that integrates a battery energy storage system exceeding 50 MWh with existing solar assets, using its PowerTrack EMS platform.

According to Narayanan, PowerTrack EMS has become a key differentiator for Stem in utility-scale markets by providing unified controls, cloud monitoring, and portfolio-level visibility.

The company also announced a co-marketing agreement with Nuvation Energy to jointly market a North American-designed and manufactured battery energy storage system control stack.

Contracted annual recurring revenue was $67.2 million, flat sequentially. Annual recurring revenue (ARR) increased slightly to $61.2 million from $61.1 million in Q4 2025.

PowerTrack ARR increased 12% YoY and 2% sequentially, according to management.

Managed services ARR declined 4% sequentially due to a battery supplier’s bankruptcy, which affected warranty management contracts tied to those systems.

Solar operating assets under management increased 4% sequentially to 37.5 GW, while storage operating AUM remained flat at 1.7 GWh.

Stem ended the quarter with $36.6 million in cash and cash equivalents, compared to $48.9 million at the end of Q4 2025.

Operating cash flow was negative $8.3 million. Musfeldt said the cash outflow reflected seasonal working-capital timing and scheduled interest payments, rather than a deterioration in business fundamentals.

The company reaffirmed its full-year 2026 guidance, including revenue of $140 million to $190 million, adjusted EBITDA of $10 million to $15 million, and year-end ARR of $65 million to $70 million.

Stem also highlighted its acquisition of Austrian software company raicoon, which provides automated fault detection and event management capabilities for solar assets.

Narayanan said the acquisition would strengthen the company’s PowerTrack platform and improve the ability to identify and prioritize performance issues across customer portfolios.

The company said the acquisition was a “small, focused tuck-in acquisition” intended to integrate quickly into the PowerTrack platform.

International revenue represented approximately 5% of Stem’s total revenue in Q1 2026. The company expects that share to increase as European utility-scale projects move through commissioning and into revenue recognition during late 2026 and 2027.

Stem additionally discussed its AI initiatives during the call. Narayanan said the company also launched PowerTrack Sage, an AI assistant that converts live site data and analytics into plain language operational briefings for customers.

The company continues to explore AI service offerings for customers and opportunities to support data center developers and operators facing rising power costs, grid constraints, and resilience requirements.

Stem’s revenue for the full year 2025 rose 8.1% YoY to $156.3 million from $144.6 million.