stem-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

—————————————————

FORM 10-Q

—————————————————


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

STEM, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-39455

85-1972187

(State or Other Jurisdiction

of Incorporation or Organization)

(Commission File Number)

(IRS Employer
Identification No.)

4 Embarcadero Ctr., Suite 710, San Francisco, California 94111

(Address of principal executive offices, including zip code)

1-877-374-7836

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001

STEM

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒


Class			Outstanding as of April 22, 2025
Common Stock, $0.0001 par value per share			166,358,775

STEM, INC.

Quarterly Report on Form 10-Q

For the Period Ended March 31, 2025

TABLE OF CONTENTS


			Page
Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Comprehensive Loss			5
Condensed Consolidated Statements of Stockholders’ (Deficit) Equity			6
Condensed Consolidated Statements of Cash Flows			7
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			36
Item 4. Controls and Procedures			36
Part II. Other Information			38
Item 1. Legal Proceedings			38
Item 1A. Risk Factors			38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 3. Defaults Upon Senior Securities			38
Item 4. Mine Safety Disclosures			38
Item 5. Other Information			38
Item 6. Exhibits			39
Signature			39

Part I - Financial Information

ITEM 1. FINANCIAL STATEMENTS

STEM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)


	March 31, 2025		December 31, 2024

ASSETS
Current assets:
Cash and cash equivalents	$	58,584	$	56,299

Accounts receivable, net of allowances of $9,744 and $9,499 as of March 31, 2025 and December 31, 2024, respectively	34,733		59,316
Inventory	8,836		10,920

Other current assets	8,427		10,082
Total current assets	110,580		136,617
Energy storage systems, net	55,557		58,820
Contract origination costs, net	9,373		9,681

Intangible assets, net	141,933		143,912
Operating lease right-of-use assets	11,923		12,574
Other noncurrent assets	75,715		75,755
Total assets	$	405,081	$	437,359
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	19,644	$	30,147
Accrued liabilities	27,849		25,770
Accrued payroll	8,470		6,678
Financing obligation, current portion	17,416		16,521
Deferred revenue, current portion	40,115		43,255
Other current liabilities	6,683		6,429
Total current liabilities	120,177		128,800
Deferred revenue, noncurrent	85,994		85,900
Asset retirement obligation	4,263		4,203

Convertible notes, noncurrent	526,503		525,922
Financing obligation, noncurrent	37,136		41,627
Lease liabilities, noncurrent	12,527		13,336
Other liabilities	35,405		35,404
Total liabilities	822,005		835,192
Commitments and contingencies (Note 12)
Stockholders’ (deficit) equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized as of March 31, 2025 and December 31, 2024; zero shares issued and outstanding as of March 31, 2025 and December 31, 2024	—		—
Common stock, $0.0001 par value; 500,000,000 shares authorized as of March 31, 2025 and December 31, 2024; 166,352,779 and 162,797,684 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively	17		16
Additional paid-in capital	1,233,760		1,228,042
Accumulated other comprehensive income (loss)	266		76
Accumulated deficit	(1,651,508)		(1,626,508)
Total Stem’s stockholders’ (deficit) equity	(417,465)		(398,374)
Non-controlling interests	541		541
Total stockholders’ (deficit) equity	(416,924)		(397,833)
Total liabilities and stockholders’ (deficit) equity	$	405,081	$	437,359

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share amounts)


	Three Months Ended March 31,
		2025		2024
Revenue
Services and other revenue		$	17,721	$	14,840
Hardware revenue		14,791		10,629
Total revenue		32,512		25,469
Cost of Revenue
Cost of services and other revenue		11,413		9,984
Cost of hardware revenue		10,561		39,676
Total cost of revenue		21,974		49,660
Gross profit (loss)		10,538		(24,191)
Operating expenses:
Sales and marketing		6,792		11,126
Research and development		11,328		14,136
General and administrative		13,566		18,560


Total operating expenses		31,686		43,822
Loss from operations		(21,148)		(68,013)
Other expense, net:
Interest expense		(4,290)		(4,707)


Other income, net		496		566
Total other expense, net		(3,794)		(4,141)
Loss before provision for income taxes		(24,942)		(72,154)
Provision for income taxes		(58)		(153)
Net loss		$	(25,000)	$	(72,307)



Net loss per share attributable to common stockholders, basic and diluted		$	(0.15)	$	(0.46)






Weighted-average shares used in computing net loss per share to common stockholders, basic and diluted		163,889,801		158,180,137

The accompanying notes are an integral part of these condensed consolidated financial statements.

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)


	Three Months Ended March 31,
		2025		2024
Net loss		$	(25,000)	$	(72,307)
Other comprehensive loss:
Unrealized gain on available-for-sale securities		—		3
Foreign currency translation adjustment		190		193
Total other comprehensive loss		$	(24,810)	$	(72,111)

The accompanying notes are an integral part of these condensed consolidated financial statements.

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(UNAUDITED)

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Non-controlling Interests		Total Stockholders’ (Deficit) Equity
	Shares	Amount
Balance as of January 1, 2025	162,797,684	$	16	$	1,228,042	$	76	$	(1,626,508)	$	541	$	(397,833)




Issuance of common stock upon release of restricted stock units	3,555,095	1		—		—		—		—		1


Stock-based compensation	—	—		5,718		—		—		—		5,718

Foreign currency translation adjustments	—	—		—		190		—		—		190


Net loss	—	—		—		—		(25,000)		—		(25,000)
Balance as of March 31, 2025	166,352,779	$	17	$	1,233,760	$	266	$	(1,651,508)	$	541	$	(416,924)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Non-controlling Interests		Total Stockholders’ Equity
	Shares	Amount
Balance as of January 1, 2024	155,932,880	$	16	$	1,198,716	$	(42)	$	(772,494)	$	485	$	426,681




Issuance of common stock upon release of restricted stock units	2,632,464	—		—		—		—		—		—
Issuance of fully vested restricted stock units for employee bonuses (Note 8)	2,961,438	—		8,114		—		—		—		8,114
Stock-based compensation	—	—		9,367		—		—		—		9,367
Unrealized gain on available-for-sale securities	—	—		—		3		—		—		3
Foreign currency translation adjustments	—	—		—		193		—		—		193

Net loss	—	—		—		—		(72,307)		—		(72,307)
Balance as of March 31, 2024	161,526,782	$	16	$	1,216,197	$	154	$	(844,801)	$	485	$	372,051

The accompanying notes are an integral part of these condensed consolidated financial statements.

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)


	Three Months Ended March 31,
	2025		2024
OPERATING ACTIVITIES
Net loss	$	(25,000)	$	(72,307)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	10,996		10,809
Non-cash interest expense, including interest expenses associated with debt issuance costs	289		422
Stock-based compensation	4,317		8,374

Non-cash lease expense	679		777
Accretion of asset retirement obligations	60		59


Impairment loss of project assets	699		345




Net accretion of discount on investments	—		(29)

Provision for (recovery of) credit losses on accounts receivable	78		(1,004)



Other	63		(98)
Changes in operating assets and liabilities:
Accounts receivable	24,351		63,943
Inventory	2,084		2,221

Other assets	2,025		(746)

Contract origination costs, net	(324)		(356)
Project assets	(1,516)		(390)
Accounts payable	(10,538)		(16,280)
Accrued expenses and other liabilities	3,861		1,731
Deferred revenue	(3,046)		2,715
Lease liabilities	(542)		(807)

Net cash provided by (used in) operating activities	8,536		(621)
INVESTING ACTIVITIES


Proceeds from maturities of available-for-sale investments	—		8,250

Purchase of energy storage systems	(7)		(51)
Capital expenditures on internally-developed software	(3,583)		(3,463)


Purchase of property and equipment	—		(61)
Net cash (used in) provided by investing activities	(3,590)		4,675
FINANCING ACTIVITIES


Proceeds from employee equity transactions to be remitted to tax authorities, net	—		5,228


Repayment of financing obligations	(2,819)		(2,086)






Net cash (used in) provided by financing activities	(2,819)		3,142
Effect of exchange rate changes on cash, cash equivalents and restricted cash	158		233
Net increase in cash, cash equivalents and restricted cash	2,285		7,429
Cash, cash equivalents and restricted cash, beginning of year	58,085		106,475
Cash, cash equivalents and restricted cash, end of period	$	60,370	$	113,904


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	1,048	$	1,422
NON-CASH INVESTING AND FINANCING ACTIVITIES
Change in asset retirement costs and asset retirement obligation	$	—	$	38
Purchases of energy storage systems in accounts payable	$	—	$	251










Stock-based compensation capitalized to internal-use software	$	1,434	$	992


RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH WITHIN THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS SHOWN IN THE STATEMENTS OF CASH FLOWS ABOVE:
Cash and cash equivalents	$	58,584	$	112,804
Restricted cash included in other noncurrent assets	1,786		1,100
Total cash, cash equivalents, and restricted cash	$	60,370	$	113,904

The accompanying notes are an integral part of these condensed consolidated financial statements.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. BUSINESS

Description of the Business

Stem, Inc., together with its consolidated subsidiaries (“Stem,” the “Company,” “we,” “us,” or “our”) is a global leader in artificial intelligence (“AI”)-driven software and services that enable its customers to plan, deploy, and operate clean energy assets. We offer a comprehensive suite of solutions that transform how solar and energy storage projects are developed, built, and operated, including (i) an integrated suite of software and edge products, and (ii) full-lifecycle energy services from a team of experts. More than 16,000 global customers rely on Stem to maximize the value of their clean energy projects and portfolios.

Our suite of software applications is enabled by our AI platform, Athena®. Each application serves a different purpose in helping customers to maximize the value of their energy assets. We offer software-enabled forecasting and optimization managed services to our storage customers through the Athena AI platform that are designed to support renewable energy generation. We offer solar asset performance management software through our PowerTrack software that enables standardization of clean energy portfolios on one, hardware agnostic application. Our commercial- and utility-scale edge hardware solutions are original equipment manufacturers (“OEMs”)-agnostic devices used to connect customers’ solar and storage assets to our software applications in a unified view.

To help our customers achieve long-term performance and profitability goals for their energy projects, we also provide advisory services spanning development and engineering, procurement and integration, and performance and operation services. In the early stages of project planning, our experts help lay a solid foundation for our customers’ solar and storage projects by guiding the design and ensuring informed decision-making. During the building stage, we provide guidance for hardware procurement and integration for timely deployment. After assets are operational, we enable optimal economic and technical returns with managed energy services like trading and bidding strategies, wholesale market participation, performance reporting, system warranties, and more.

The Company operated as Rollins Road Acquisition Company (f/k/a Stem, Inc.) prior to the Merger with Star Peak Transition Corp. (“STPK”), an entity that was then listed on the New York Stock Exchange under the trade symbol “STPK,” and STPK Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of STPK (“Merger Sub”), providing for, among other things, and subject to the conditions therein, the combination of the Company and STPK pursuant to the merger of Merger Sub with and into the Company, with the Company continuing as the surviving entity (the “Merger”). Stem, Inc. was incorporated on March 16, 2009 in the State of Delaware and is headquartered in San Francisco, California.

Liquidity

As of March 31, 2025, we had cash and cash equivalents of $58.6 million, an accumulated deficit of $1,651.5 million, net accounts receivable of $34.7 million, and negative working capital, which we define as current assets less current liabilities, of $9.6 million. During the three months ended March 31, 2025, we incurred a net loss of $25.0 million and had positive cash flows from operating activities of $8.5 million. As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents totaling $58.6 million, which were held for working capital purposes and for investment growth opportunities. As of March 31, 2025, we believe that our cash position, as well as expected collections from accounts receivable, is sufficient to meet our capital and liquidity requirements for at least the next 12 months.

Our business prospects are subject to various risks, expenses, and uncertainties, including those discussed in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The attainment of profitable operations is dependent upon future events, including successfully transitioning to a new software and services-oriented strategy, the successful delivery of AI-enabled software and edge device capabilities to our customers, regaining and maintaining compliance with the New York Stock Exchange’s continuing listing standards, securing new customers and maintaining current ones, securing and maintaining adequate supplier relationships, building our customer base, successfully executing our business and marketing strategy, and hiring and retaining appropriate personnel. Failure to generate sufficient revenues, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results and financial condition.

Supply Chain Constraints and Risk

We have in the past faced shortages and shipping delays affecting the supply of inverters, enclosures, battery modules and associated component parts for inverters and battery energy storage systems available for purchase. These shortages and delays were due in part to the macroeconomic, geopolitical and business environment, including the effects of global inflationary pressures and interest rates, general economic slowdown or a recession, changes in monetary policy, instability in financial institutions, import tariffs and related trade policies, geopolitical pressures, including the armed conflicts between Russia and

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Ukraine and in the Gaza Strip and nearby areas, as well as tensions between China and the United States and uncertainty around current and future trade policies. The Company cannot predict the full effects the macroeconomic, geopolitical and business environment will have on our business, cash flows, liquidity, financial condition and results of operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X, assuming the Company will continue as a going concern. Accordingly, the consolidated balance sheet at December 31, 2024 has been derived from the audited financial statements at that date, but certain notes or other information that are normally required by GAAP have been omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. In the opinion of the Company’s management, all normal and recurring adjustments considered necessary for a fair statement of the results for the interim period presented have been included in the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other future interim period or year.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and consolidated variable interest entities (“VIEs”). The Company presents non-controlling interests within the equity section of its unaudited condensed consolidated balance sheets, and the amount of consolidated net loss that is attributable to the Company and the non-controlling interest in its unaudited condensed consolidated statements of operations. All intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

The Company has in some instances formed special purpose entities (“SPEs”), some of which are VIEs, with its investors in the ordinary course of business to facilitate the funding and monetization of its energy storage systems. A legal entity is considered a VIE if it has either a total equity investment that is insufficient to finance its operations without additional subordinated financial support or whose equity holders lack the characteristics of a controlling financial interest. The Company’s variable interests arise from contractual, ownership, or other monetary interests in the entity. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests.

The Company consolidates a VIE if it is deemed to be the primary beneficiary. The Company determines it is the primary beneficiary if it has the power to direct the activities that most significantly impact the VIEs’ economic performance and has the obligation to absorb losses or has the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it is the primary beneficiary.

Beginning in January 2022, the Company entered into strategic joint ventures through indirect wholly-owned development subsidiaries of the Company (“DevCo JVs”) with the purpose of originating potential battery storage facility projects in specific locations and conducting early-stage planning and development activities. The Company determined that the DevCo JVs are VIEs, as they lack sufficient equity to finance their activities without additional financial support. The Company determined that it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses or receive benefits from the VIE that could potentially be significant. Accordingly, the Company has determined that it is the primary beneficiary of the DevCo JVs, and as a result, the DevCo JVs’ operating results, assets and liabilities are consolidated by the Company, with third party minority owners’ share presented as noncontrolling interest. The Company applied the hypothetical liquidation at book value method in allocating recorded net income (loss) to each owner based on the change in the reporting period, of the amount of net assets of the entity to which each owner would be entitled to under the governing contracts in a liquidation scenario.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table summarizes the carrying values of the assets and liabilities of the DevCo JVs that are consolidated by the Company as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Assets
Cash and cash equivalents	$	290	$	1,556
Other current assets	8		18
Other noncurrent assets	17,233		16,415
Total assets	17,531		17,989
Liabilities
Accounts payable	906		1,284
Other current liabilities	—		114
Total liabilities	$	906	$	1,398

The Company did not make any material capital investment contributions during the three months ended March 31, 2025 and 2024. The net income from the DevCo JVs was immaterial during the three months ended March 31, 2025 and 2024.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.

Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates of transaction price with variable consideration; the amortization of acquired intangibles; deferred commissions and contract fulfillment costs; the valuation of energy storage systems, finite-lived intangible assets, internally developed software, accruals related to sales tax liabilities, and the fair value of assets acquired and liabilities assumed in a business combination.

Segment Information

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, management has determined that the Company operates as one operating segment that is focused exclusively on innovative technology services that transform the way energy is distributed and consumed. Net assets outside of the U.S. were less than 10% of total net assets as of March 31, 2025 and December 31, 2024.

Accounts Receivable, Net

Accounts Receivable are stated at amounts estimated by management to be equal to their net realizable values. Accounts receivable also includes unbilled accounts receivable, which is composed of milestone development activities of noncancellable purchase orders and monthly energy optimization services provided and recognized but not yet invoiced as of the end of the reporting period. The allowance for credit losses is the Company's best estimate of the amount of expected credit losses. The expectation of collectability is based on the Company's review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and an allowance is recorded accordingly. The total allowance for credit losses balance was $9.9 million and $9.8 million, of which the current portion is $9.7 million and $9.5 million as of March 31, 2025 and December 31, 2024, respectively.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents the changes in the current expected credit losses during the three months ended March 31, 2025 and the year ended December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Balance as of beginning of period	$	9,794	$	5,953
Provision for expected credit losses	1,528		3,978
Write-offs, recoveries and other charges against allowance	(1,438)		(137)

Balance as of end of period	$	9,884	$	9,794

Concentration of Credit Risk and Other Uncertainties

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. The Company’s cash balances are primarily invested in money market funds or on deposit at high credit quality financial institutions in the U.S. The Company’s cash and cash equivalents are held at financial institutions where account balances may at times exceed federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial strength of the depository institution in which the cash is held. The Company has no financial instruments with off-balance sheet risk of loss.

At times, the Company may be subject to a concentration of credit risk in relation to certain customers due to the purchase of large energy storage systems made by such customers. The Company routinely assesses the creditworthiness of its customers. The Company did not experience material losses related to receivables from individual customers, or groups of customers during the three months ended March 31, 2025. The Company does not require collateral. Due to these factors, no additional credit risk beyond amounts provided for credit losses is believed by management to be probable in the Company’s accounts receivable.

The net book value of unbilled receivables, current are $7.7 million and $7.8 million as of March 31, 2025 and December 31, 2024, respectively. Unbilled receivables, current are included in accounts receivable, net. The net book value of unbilled receivables, noncurrent are $6.3 million and $5.9 million as of March 31, 2025 and December 31, 2024, respectively. Unbilled receivables, noncurrent are included in other noncurrent assets.

Significant Customers

A significant customer represents 10% or more of the Company’s total revenue or accounts receivable, net balance at each reporting date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable are as follows:


	Accounts Receivable				Revenue
	March 31,		December 31,		Three Months Ended March 31,
	2025		2024			2025		2024
Customers:
Customer A	33	%	28	%		12	%	24	%
Customer B	*		20	%		*		*
Customer C	*		*			*		22	%




Customer D	*		*			*		22	%

*Total less than 10% for the period.

There are inherent risks whenever a large percentage of total revenue is concentrated in a limited number of customers. Should a significant customer terminate or fail to renew its contracts with us, in whole or in part, for any reason, or experience significant financial or operating difficulties, it could have a material adverse effect on our financial condition and results of operations. In general, a customer that makes up a significant portion of revenues in one period, may not make up a significant portion in subsequent periods.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Fair Value of Financial Instruments

Assets and liabilities recorded at fair value in the unaudited condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 — Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s assessment of the significance of a specific input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

Financial assets and liabilities held by the Company measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 include cash and cash equivalents and convertible notes.

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. Such reclassifications have no impact on previously reported net income (loss), stockholders’ (deficit) equity, or cash flows. A reclassification of $0.4 million from deferred costs with suppliers to other current assets has been made to the December 31, 2024 balance sheet to conform to the March 31, 2025 presentation. This change had no impact to total current assets. For the three months ended March 31, 2024, a $0.4 million net cash inflow was reclassified from changes in deferred costs with suppliers to changes in other assets. This change had no impact to net cash used in operating activities.

New Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, related to income tax disclosures. The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update enhance disaggregated disclosure of income statement expenses for companies by requiring disaggregation of certain expense captions into specified categories in

disclosures within the footnotes to the financial statements. The effective date of ASU 2024-03 was amended by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, though early adoption of is permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3. REVENUE

Disaggregation of Revenue

The following table provides information on the disaggregation of revenue as recorded in the unaudited condensed consolidated statements of operations (in thousands):


	Three Months Ended March 31,
		2025		2024
Hardware revenue		$	14,791	$	10,629
Services and other revenue		17,721		14,840
Total revenue		$	32,512	$	25,469

The following table summarizes reportable revenue by geographic regions determined based on the location of the customers (in thousands):


	Three Months Ended March 31,
		2025		2024
United States		$	31,733	$	24,294
Rest of the world		779		1,175
Total revenue		$	32,512	$	25,469

Remaining Performance Obligations

Remaining performance obligations represent contracted revenue that has not been recognized, which include contract liabilities (deferred revenue) and amounts that will be billed and recognized as revenue in future periods. As of March 31, 2025 and March 31, 2024, the Company had $409.9 million and $440.6 million of remaining performance obligations, respectively, and the approximate percentages expected to be recognized as revenue in the future are as follows (in thousands, except percentages):


	March 31, 2025
	Total Remaining Performance Obligations		Percent Expected to be Recognized as Revenue
			Less Than One Year		Two to Five Years		Greater Than Five Years
Services and other revenue	$	394,068	14	%	39	%	47	%
Hardware revenue	15,818		100	%	—	%	—	%
Total revenue	$	409,886


	March 31, 2024
	Total Remaining Performance Obligations		Percent Expected to be Recognized as Revenue
			Less Than One Year		Two to Five Years		Greater Than Five Years
Services and other revenue	$	344,555	15	%	47	%	38	%
Hardware revenue	96,013		96	%	4	%	—	%
Total revenue	$	440,568

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Contract Balances

Deferred revenue primarily includes cash received in advance of revenue recognition related to energy optimization services and incentives. The following table presents the changes in the deferred revenue balance during the three months ended March 31, 2025 and March 31, 2024 (in thousands):


	Three Months Ended March 31,
	2025		2024
Beginning balance	$	129,155	$	142,647

Upfront payments received from customers	11,030		17,373
Upfront or annual incentive payments received	749		497
Revenue recognized related to amounts that were included in beginning balance of deferred revenue	(13,543)		(10,074)

Revenue recognized related to deferred revenue generated during the period	(1,282)		(5,081)

Ending balance	$	126,109	$	145,362

Parent Company Guarantees

Prior to July 2023, the Company agreed in certain customer contracts to provide a parent company guarantee (“PCG”) that the value of purchased hardware will not decline for a certain period of time. Under such PCGs, if these customers were unable to install or designate the hardware to a specified project within such period of time, the Company would be required to assist the customer in re-marketing the hardware for resale by the customer. If a resale were not to occur, the hardware would be appraised utilizing a third party. Such PCGs provided that, in such cases, if the customer resold the hardware for less than the amount initially sold to the customer or the appraisal value is less than the hardware purchase price, the Company would be required to compensate the customer for any shortfall in fair value for the hardware from the initial contract price. The Company accounted for such contractual terms and guarantees as variable consideration at each measurement date. The Company updated its estimate of variable consideration each quarter with respect to the outstanding guarantees, including changes in estimates related to such guarantees, for facts or circumstances that have changed from the time of the initial estimate. As a result, the Company recorded a net revenue reduction of $33.1 million in hardware revenue during the three months ended March 31, 2024. The overall reduction in revenue was related to deliveries that occurred prior to 2024.

There are no remaining PCGs outstanding, and the Company expects no future impact on its financial results as a result of PCGs.

Impairment and Accounts Receivable Write-Off

For those contracts where the customers invoked PCG protection pursuant to the applicable contract, the Company worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers. Despite such efforts, such negotiations resulted in limited transactions with mutually agreed upon pricing and terms. As stated above, under contracts containing a PCG provision, in the event that the Company and the customer are unable to remarket and sell the relevant assets, the customer was obligated to engage a third party to appraise the fair market value of the remaining hardware. None such customers obtained such third party hardware appraisal. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where the Company believes it has enforceable rights of recovery, the Company believed the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s was no longer probable. Accordingly, the Company wrote-off the remaining receivables of $104.1 million during the fiscal year ended December 31, 2024. The Company is pursuing all potential remedies with respect to its enforceable rights under applicable contracts.

4. FAIR VALUE MEASUREMENTS

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. On March 31, 2025 and December 31, 2024, the carrying amount of accounts receivable, other current assets, accounts payable, and accrued and other current liabilities approximated their estimated fair value due to their relatively short maturities.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table provides the financial instruments measured at fair value (in thousands):


	March 31, 2025
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market fund	$	37,500	$	—	$	—	$	37,500











Total financial assets	$	37,500	$	—	$	—	$	37,500


	December 31, 2024
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market fund	$	37,108	$	—	$	—	$	37,108










Total financial assets	$	37,108	$	—	$	—	$	37,108

The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices.

Fair Value of Convertible Promissory Notes

The convertible notes are recorded at face value less unamortized debt issuance costs (see Note 7 — Convertible Notes for additional details) on the unaudited condensed consolidated balance sheets as of March 31, 2025. As of March 31, 2025 and December 31, 2024, the estimated fair value of the 2028 Convertible Notes was $72.0 million and $77.3 million, respectively, based on Level 2 quoted bid prices of the convertible notes in an over-the-counter market on the last trading date of the reporting period. As of March 31, 2025 and December 31, 2024, the estimated fair value of the 2030 Convertible Notes was $57.4 million and $65.4 million, respectively, based on Level 2 quoted bid prices of the convertible notes in an over-the-counter market on the last trading date of the reporting period.

5. INTANGIBLE ASSETS, NET

Intangible assets, net, consists of the following (in thousands):


	March 31,		December 31,
	2025		2024
Developed technology	$	32,618	$	32,618
Trade name	11,300		11,300
Customer relationships	106,800		106,800

Internally developed software	86,331		81,314
Intangible assets	237,049		232,032
Less: Accumulated amortization	(95,091)		(88,094)
Add: Currency translation adjustment	(25)		(26)
Total intangible assets, net	$	141,933	$	143,912

Amortization expense for intangible assets was $7.0 million and $6.6 million for the three months ended March 31, 2025 and 2024, respectively.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

6. ENERGY STORAGE SYSTEMS, NET

Energy storage systems, net, consists of the following (in thousands):


	March 31,		December 31,
	2025		2024
Energy storage systems placed into service	$	137,616	$	137,616
Less: accumulated depreciation	(84,542)		(81,305)
Energy storage systems not yet placed into service	2,483		2,509
Total energy storage systems, net	$	55,557	$	58,820

Depreciation expense for energy storage systems was approximately $3.2 million and $3.0 million for the three months ended March 31, 2025 and 2024, respectively. Depreciation expense is recognized in cost of services and other revenue.

7. CONVERTIBLE NOTES

2028 Convertible Notes and 2028 Capped Call Options

2028 Convertible Notes

On November 22, 2021, the Company issued $460.0 million aggregate principal amount of its 2028 Convertible Notes in a private placement offering to qualified institutional buyers (the “2021 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended.

The 2028 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 0.5% per year, payable in cash semi-annually in arrears in June and December of each year, beginning in June 2022. The 2028 Convertible Notes will mature on December 1, 2028, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock. The 2028 Convertible Notes are redeemable for cash at the Company’s option at any time given certain conditions (as discussed below), at an initial conversion rate of 34.1965 shares of common stock per $1,000 principal amount of 2028 Convertible Notes, which is equivalent to an initial conversion price of approximately $29.24 (the “2028 Conversion Price”) per share of the Company’s common stock. The conversion rate is subject to customary adjustments for certain events as described in the related indenture.

The Company may redeem for cash all or any portion of the 2028 Convertible Notes, at the Company’s option, on or after December 5, 2025 if the last reported sale price of the Company’s common stock has been at least 130% of the 2028 Conversion Price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest.

The Company’s net proceeds from this offering were approximately $445.7 million, after deducting the 2021 Initial Purchasers’ discounts and debt issuance costs. To minimize the effect of potential dilution to the Company’s common stockholders upon conversion of the 2028 Convertible Notes, the Company entered into separate capped call transactions (the “2028 Capped Calls”) as described below. In connection with the issuance of the 2030 Convertible Notes during the second quarter of 2023, the Company used approximately $99.8 million of the net proceeds to purchase and surrender for cancellation approximately $163.0 million aggregate principal amount of the Company’s 2028 Convertible Notes, which resulted in a $59.4 million gain on debt extinguishment. See 2030 Convertible Notes below for further details of the 2030 Convertible Notes.

Upon adoption of ASU 2020-06, the Company allocated all of the debt discount to long-term debt. The debt discount is amortized to interest expense using the effective interest method, computed to be 0.9%, over the life of the 2028 Convertible Notes or approximately its seven-year term. The outstanding 2028 Convertible Notes balances as of March 31, 2025 and December 31, 2024 are summarized in the following table (in thousands):


	March 31, 2025		December 31, 2024
Long Term Debt
Outstanding principal	$	297,024	$	297,024
Unamortized 2021 Initial Purchasers’ debt discount and debt issuance cost	(4,873)		(5,200)
Net carrying amount	$	292,151	$	291,824

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents total interest expense recognized related to the 2028 Convertible Notes during the three months ended March 31, 2025 and 2024 (in thousands):


	Three Months Ended March 31,
		2025		2024
Cash interest expense
Contractual interest expense		$	371	$	371
Non-cash interest expense
Amortization of debt discount and debt issuance cost		327		324
Total interest expense		$	698	$	695

2028 Capped Call Options

On November 17, 2021, in connection with the pricing of the 2028 Convertible Notes, and on November 19, 2021, in connection with the exercise in full by the 2021 Initial Purchasers of their option to purchase additional Notes, the Company entered into the 2028 Capped Calls with certain counterparties. The Company used $66.7 million of the net proceeds to pay the cost of the 2028 Capped Calls.

The 2028 Capped Calls have an initial strike price of $29.2428 per share, which corresponds to the initial conversion price of the 2028 Convertible Notes and is subject to anti-dilution adjustments. The 2028 Capped Calls have a cap price of $49.6575 per share, subject to certain adjustments.

The 2028 Capped Calls are considered separate transactions entered into by and between the Company and the 2028 Capped Calls counterparties, and are not part of the terms of the 2028 Convertible Notes. The Company recorded a reduction to additional paid-in capital of $66.7 million during the year ended December 31, 2021 related to the premium payments for the 2028 Capped Calls. These instruments meet the conditions outlined in FASB ASU 2022-01 Topic 815, Derivatives and Hedging (“ASC 815”) to be classified in stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

2030 Convertible Notes and 2030 Capped Call Options

2030 Convertible Notes

On April 3, 2023, the Company issued $240.0 million aggregate principal amount of its 2030 Convertible Notes in a private placement offering to qualified institutional buyers (the “2023 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended.

The 2030 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 4.25% per year, payable in cash semi-annually in arrears in April and October of each year, beginning on October 1, 2023. The 2030 Convertible Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, the Company may choose to pay or deliver cash, shares of common stock or a combination of cash and shares of common stock. The 2030 Convertible Notes are redeemable for cash at the Company’s option at any time given certain conditions (as discussed below), at an initial conversion rate of 140.3066 shares of common stock per $1,000 principal amount of the 2030 Convertible Notes, which is equivalent to an initial conversion price of approximately $7.1272 (the “2030 Conversion Price”) per share of the Company’s common stock. The conversion rate is subject to customary adjustments for certain events as described in the related indenture.

The 2030 Convertible Notes will be redeemable, in whole or in part, at the Company’s option, on or after April 5, 2027 if the last reported sale price of the Company’s common stock has been at least 130% of the 2030 Conversion Price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest.

The Company’s net proceeds from this offering were approximately $232.4 million, net of $7.6 million in debt issuance costs primarily consisting of underwriters, advisory, legal, and accounting fees. The Company used approximately $99.8 million of the net proceeds to purchase and surrender for cancellation approximately $163.0 million aggregate principal amount of the Company’s 2028 Convertible Notes. See 2028 Convertible Notes above for further details on the impacts of the debt extinguishment.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The outstanding 2030 Convertible Notes balances as of March 31, 2025 and December 31, 2024 are summarized in the following table (in thousands):


	March 31, 2025		December 31, 2024
Long Term Debt
Outstanding principal	$	240,000	$	240,000
Unamortized 2023 Initial Purchasers’ debt discount and debt issuance cost	(5,648)		(5,901)
Net carrying amount	$	234,352	$	234,099

The debt discount and debt issuance costs are amortized to interest expense using the effective interest method, computed to be 4.70%, over the life of the 2030 Convertible Notes or its approximately seven-year term.

The following table presents total interest expense recognized related to the 2030 Convertible Notes during the three months ended March 31, 2025 (in thousands):


	Three Months Ended March 31,
		2025		2024
Cash interest expense
Contractual interest expense		$	2,550	$	2,550
Non-cash interest expense
Amortization of debt discount and debt issuance cost		253		243
Total interest expense		$	2,803	$	2,793

2030 Capped Call Options

On March 29, 2023 and March 31, 2023, in connection with the pricing of the 2030 Convertible Notes, and on April 3, 2023, in connection with the exercise in full by the 2023 Initial Purchasers of their option to purchase additional 2030 Convertible Notes, the Company entered into capped calls (the “2030 Capped Calls”) with certain counterparties. The Company used $27.8 million of the net proceeds from the 2030 Convertible Notes to pay the cost of the 2030 Capped Calls.

The 2030 Capped Calls have an initial strike price of $7.1272 per share, which corresponds to the initial conversion price of the 2030 Convertible Notes and is subject to anti-dilution adjustments. The 2030 Capped Calls have a cap price of $11.1800 per share, subject to certain adjustments.

The 2030 Capped Calls are considered separate transactions entered into by and between the Company and the 2030 Capped Calls counterparties, and are not part of the terms of the 2030 Convertible Notes. The Company recorded a reduction to additional paid-in capital of $27.8 million during the second quarter of 2023 related to the premium payments for the 2030 Capped Calls. These instruments meet the conditions outlined in ASC 815 to be classified in stockholders’ equity and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

8. STOCK-BASED COMPENSATION

Equity Incentive Plans

In May 2024, the Company adopted the 2024 Equity Incentive Plan (the “2024 Plan”). Under the 2024 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), and other awards that are settled in shares of the Company’s common stock.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Stock Options

The following table summarizes the stock option activity for the period ended March 31, 2025:


	Number of Options Outstanding	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2024	8,552,283	$	5.60	3.1	$	6
Options granted	66,667	0.84

Options forfeited and cancelled	(4,241,780)	4.95

Balances as of March 31, 2025	4,377,170	$	6.14	5.6	$	—
Options vested and exercisable — March 31, 2025	3,500,640	$	5.86	4.9	$	—

As of March 31, 2025, the Company had approximately $2.3 million of remaining unrecognized stock-based compensation expense for stock options, which is expected to be recognized over a weighted average period of 1.0 years.

Restricted Stock Units

The following table summarizes the RSU activity for the period ended March 31, 2025:


	Number of RSUs Outstanding (1)	Weighted-Average Grant Date Fair Value Per Share
Balances as of December 31, 2024	12,284,292	$	3.05
RSUs granted	2,885,549	0.67
RSUs vested	(3,555,095)	6.54
RSUs forfeited	(206,517)	3.01
Balances as of March 31, 2025	11,408,229	$	1.90

As of March 31, 2025, the Company had approximately $16.4 million of remaining unrecognized stock-based compensation expense for RSUs, which is expected to be recognized over a weighted average period of 1.1 years.

During the three months ended March 31, 2024, the Company issued 3.0 million shares of fully vested RSU awards through the Company’s stock bonus program under the Company’s 2021 Equity Incentive Plan.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense recorded in each component of operating expenses in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024 (in thousands):


	Three Months Ended March 31,
		2025		2024
Sales and marketing		$	171	$	1,114
Research and development		1,754		1,531
General and administrative		2,392		5,729
Total stock-based compensation expense		$	4,317	$	8,374

Stock-based compensation expense associated with research and development of $1.4 million and $1.0 million were capitalized as internal-use software during the three months ended March 31, 2025 and 2024, respectively.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. NET LOSS PER SHARE

Net loss per share is computed by dividing net loss by the basic weighted-average number of shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the diluted weighted-average number of shares outstanding during the period and, accordingly, reflects the potential dilutive effect of all issuable shares of common stock, including as a result of stock options, restricted stock units, warrants and convertible notes. The diluted weighted-average number of shares used in our diluted net loss per share calculation is determined using the treasury stock method for stock options, restricted stock units, and warrants, and the if-converted method for convertible notes. For periods in which we recognize losses, the calculation of diluted loss per share is the same as the calculation of basic loss per share.

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts):


	Three Months Ended March 31,
		2025		2024
Numerator:
Net loss attributable to common stockholders		$	(25,000)	$	(72,307)






Denominator:


Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted		163,889,801		158,180,137

Net loss per share attributable to common stockholders, basic and diluted		$	(0.15)	$	(0.46)

The following table shows total outstanding potentially dilutive shares excluded from the computation of diluted net loss per share attributable to common stockholders as their effect would have been anti-dilutive, as of March 31, 2025 and 2024:


	March 31, 2025	March 31, 2024

Outstanding 2028 Convertible Notes (if converted)	10,157,181	10,157,181
Outstanding 2030 Convertible Notes (if converted)	33,673,584	33,673,584
Outstanding stock options	4,377,170	9,672,634
Outstanding warrants	2,533	2,533
Outstanding RSUs	11,408,229	8,493,136
Total	59,618,697	61,999,068

10. INCOME TAXES

The following table reflects the Company’s provision for income taxes and the effective tax rates for the periods presented below (in thousands, except effective tax rate):


	Three Months Ended March 31,
		2025			2024
Loss before provision for income taxes		$	(24,942)		$	(72,154)
Provision for income taxes		$	(58)		$	(153)
Effective tax rate		(0.23)		%	(0.21)		%

For the three months ended March 31, 2025, the Company recognized a provision for income taxes of $0.1 million, representing an effective tax rate of (0.23)%, which was lower than the statutory federal tax rate because the Company maintains a valuation allowance on its U.S. deferred tax assets during the three months ended March 31, 2025. For the three months ended March 31, 2024, the Company recognized a provision for income taxes of $0.2 million, representing an effective tax rate of (0.21)%, which was lower than the statutory federal tax rate because the Company maintains a valuation allowance on its U.S. deferred tax assets.

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11. SEGMENT INFORMATION

The Company’s CODM manages the business and evaluates operating performance based on consolidated net loss. The Company’s CODM uses consolidated net loss to monitor budget versus actual results. The Company operates as one operating segment and has one reportable segment that constitutes consolidated results.

The following table sets forth the Company’s segment information for revenue and significant expenses for the three months ended March 31, 2025 and 2024 (in thousands):


	Three Months Ended March 31,
		2025		2024
Revenue		$	32,512	$	25,469
Less (add):
Cost of revenue		21,974		49,660
Compensation expense excluding stock-based compensation		14,282		21,309
Stock-based compensation		4,317		8,374
Depreciation and amortization		4,240		4,344
Other segment expenses, net (1)		12,641		13,936
Provision for income taxes		58		153
Net loss		$	(25,000)	$	(72,307)

(1) Other segment expenses, net includes interest expense and other income, net.

12. COMMITMENTS AND CONTINGENCIES

Contingencies

The Company is party to various legal proceedings from time to time arising in the ordinary course of its business. A liability is accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss with respect to any currently pending legal proceeding is remote. However, litigation is inherently uncertain and it is not possible to definitively predict the ultimate disposition of any of these proceedings. As of the date of this filing, the Company does not believe that there are any pending legal proceedings or other loss contingencies that will, either individually or in the aggregate, have a material adverse effect on the Company taken as a whole.

Non-cancelable Purchase Obligations

During the three months ended March 31, 2025, there have been no material changes to our non-cancelable purchase obligations.

Non-Income Related Taxes

During 2023, the Company was selected for sales and use tax examination by the state of California and determined that it was not appropriately charging certain customers sales tax and remitting the applicable amounts to the taxing authority for certain revenue arrangements from 2018 through 2022. The Company determined it was probable that it would be subject to sales tax liabilities plus applicable interest in certain states, principally California, and estimated a probable tax liability of $5.6 million. The California sales and use tax examination is ongoing and the Company is awaiting final ruling on its sales tax administration process and clarity on the required settlement amount. The Company accrued this amount and included it in general and administrative expense in the consolidated statement of operations in 2023.

13. SUBSEQUENT EVENTS

On April 9, 2025, the Company announced a reduction of its global workforce of approximately 27%, as part of the Company’s broader efforts to prioritize investments in software, reduce operating costs, increase efficiency, drive profitable growth and increase stockholder value. The Company estimates that it will incur charges of approximately $6.0 million to $6.5 million, primarily consisting of severance payments, notice period payments in applicable jurisdictions, employee benefits and related costs. The Company expects to incur these expenses primarily in the second quarter of 2025.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Report”), as well as other statements we make, contains “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 statements about our financial and operating performance guidance, outlook, targets and other forecasts or expectations regarding, or dependent on, our business outlook and strategy; our expectations around our new software and services-centric strategy; our ability to secure sufficient and timely inventory from suppliers; our ability to meet contracted customer demand; our ability to manage manufacturing or delivery delays; our ability to manage our supply chains and distribution channels; our joint ventures, partnerships and other alliances; forecasts or expectations regarding energy transition and global climate change; reduction of greenhouse gas (“GHG”) emissions; the integration and optimization of energy resources; our business strategies and those of our customers; our ability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the effects of natural disasters and other events beyond our control; the direct or indirect effects on our business of macroeconomic factors and geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the expected benefits of the Inflation Reduction Act of 2022 on our business; and our future results of operations, including revenue, adjusted EBITDA, and the other metrics presented herein.

Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements, including but not limited to our inability to execute on, and achieve the expected benefits from, our operational and strategic initiatives, including from our cost reduction and restructuring efforts; our inability to successfully execute on our new software and services-centric strategy; uncertainty around the status of the Inflation Reduction Act of 2022 as a result of the change in U.S. Administration; our inability to secure sufficient and timely inventory from our suppliers, as well as contracted quantities of equipment; our inability to meet contracted customer demand; supply chain interruptions, manufacturing or delivery delays and increased supply chain costs, including as a result of trade policies; disruptions in sales, production, service or other business activities; general macroeconomic and business conditions in key regions of the world, including inflationary pressures, general economic slowdown or a recession, high interest rates, changes in monetary policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, and instability in financial institutions; the direct and indirect effects of widespread health emergencies on our workforce, operations, financial results and cash flows; geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the results of operations and financial condition of our customers and suppliers; pricing pressures; severe weather and seasonal factors; our inability to continue to grow and manage our growth effectively; our inability to attract and retain qualified employees and key personnel; our inability to comply with, and the effect on our business of, evolving legal standards and regulations, including those concerning data protection, consumer privacy, sustainability, and evolving labor standards; our inability to regain and maintain compliance with New York Stock Exchange listing standards; risks relating to the development and performance of our energy storage systems and software-enabled services; our inability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; 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 discussed in Part II. Item 1A. “Risk Factors” in this Report, in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in our other filings with 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, our actual results or outcomes, or the timing of these results or outcomes, may vary materially from those reflected in our forward-looking statements. Forward-looking statements and other statements in this Report regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to the Company, investors or other stakeholders or required to be disclosed in our filings under U.S. securities laws or any other laws or requirements applicable to the Company. In addition, historical, current, and forward-looking environmental, social, and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements in this Report are made as of the date of such Report, and the Company disclaims any intention or obligation to update publicly or revise such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of

this Quarterly Report on Form 10-Q. This discussion and analysis should also be read together with our audited consolidated financial statements and related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results or Operations” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. You should carefully read the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” herein to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

Overview

Our mission is to help our customers plan, deploy, and operate clean energy assets via AI-enabled software and services.

We offer a comprehensive suite of solutions that transform how solar and energy storage projects are developed, built, and operated, including (i) an integrated suite of software and edge products, and (ii) full-lifecycle energy services from a team of experts.

We operate in two key areas within the renewable energy landscape: solar and storage. In solar, we serve project developers, asset owners and engineering, procurement and construction firms (EPCs) by selling them solar edge devices and monitoring and control software, as well as professional services related to the design and commissioning of the same.

In storage, we serve project developers, asset owners, EPCs, and distributors by selling them software-enabled forecasting and optimization managed services that minimize spending on utility bills, or maximize revenue from energy market participation. In some cases, we also resell battery OEM hardware to our customers for a fee.

Some customers own both solar and storage assets, and use our full software capabilities and services across both asset classes.

Since our inception in 2009, we have engaged in developing and marketing AI-enabled software and services, raising capital, recruiting personnel, and growing our annual recurring revenue. As the energy landscape has changed in recent years, we have increasingly focused on larger, utility-scale projects, supporting asset owners, developers, utilities, operators, and traders. Over the last 15 years, we have grown into one of the most experienced clean energy software providers in the world, achieving milestones such as deploying software with multiple Fortune 500 companies, operating the largest virtual power plant in California, and becoming the de facto standard for commercial and industrial solar asset management software.

We have incurred net operating losses and negative cash flows from operations each year since our inception. We have financed our operations primarily through cash flows from customers, proceeds from the Merger, and the issuance of convertible senior notes and convertible preferred stock.

Our total revenue increased from $25.5 million for the three months ended March 31, 2024 to $32.5 million for the three months ended March 31, 2025. For the three months ended March 31, 2025 and 2024, we incurred net losses of $25.0 million and $72.3 million, respectively. As of March 31, 2025, we had an accumulated deficit of $1,651.5 million.

On April 9, 2025, we announced a reduction of our global workforce of approximately 27%, as part of the Company’s broader efforts to prioritize investments in software, reduce operating costs, increase efficiency, drive profitable growth and increase stockholder value, as more fully described above under Note 13 — Subsequent Events, of the accompanying Notes to the unaudited condensed consolidated financial statements in this Report. We expect to continue to exercise discipline and moderate expenses associated with sales and marketing, research and development, regulatory and related functions. In addition, we expect to continue to manage and reduce our general and administrative expenses associated with scaling our business operations and being a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Key Factors, Trends and Uncertainties Affecting our Business

We believe that our performance and future success depend on several factors, some of which present significant opportunities for us, and some of which pose risks and challenges, including but not limited to:

Our New Strategy

In 2024, we announced a new business strategy that reflects a renewed focus on developing and marketing our AI-enabled software and services offerings. This transition entails significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes are expected to result in reduced revenue, increased restructuring-related costs and short-term disruptions in our operations, which may negatively affect our ability to effectively scale our software and services offerings and achieve our financial and operational targets. Failure to successfully and timely implement our new strategy may have a material adverse effect on our business, financial condition, and results of

operations. See “We may not be able to successfully implement our recently announced new strategy.” in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Cash Reserves

In addition, the execution of our new business strategy is expected to require investment in our human capital and infrastructure. As of March 31, 2025, we had cash and cash equivalents of $58.6 million (as compared to $56.3 million as of December 31, 2024), while our operating expenses for the three months ended March 31, 2025 was $31.7 million. Our cash reserves may constrain our ability to make the investments required to execute our new strategy or may otherwise not be sufficient to fund operations. If our cash flow from operations does not improve as quickly as expected, or if we are unable to secure additional sources of capital if or when the need arises, it may have a material adverse effect on our business, financial condition, and results of operations.

Customer Concentration

We have historically depended on a small number of significant customers for our sales, and a small number of customers have historically accounted for a material portion of our revenue. Although we continue to diversify our customer base, we may continue to derive a significant portion of our revenue from a small number of customers. Loss of a significant customer, the inability to close (or a delay in closing) a significant contract at any time, or a significant reduction in pricing or order volume from a significant customer, have (in the case of contractual delays) resulted in material reductions in revenue and other adverse effects in certain quarters, and may do so in the future.

NYSE Notice

On August 28, 2024, we received formal notice from the New York Stock Exchange (the “NYSE”) that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days. We subsequently notified the NYSE of our intent to regain compliance with the requirements of Section 802.01C. We are able to regain compliance at any time within the six-month period following receipt of the notice if, on the last trading day of any calendar month during this cure period (or the last trading day of this cure period), we have a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the prior 30 trading-day period. If we do not regain compliance with Section 802.01C within such cure period, the NYSE may commence delisting proceedings. The NYSE rules also provide for an exception to the six-month cure period if the action required to regain compliance with Section 802.01C requires stockholder approval, in which case, the action needs to be approved by stockholders by no later than our next annual meeting of stockholders and promptly implemented. We would be able to regain compliance if our share price promptly exceeds $1.00 per share after receiving stockholder approval, and the price remains above that level for at least the following 30 trading days. On February 13, 2025, we notified the NYSE that we intend to regain compliance with Section 802.01C through a reverse stock split, for which we will seek stockholder approval at our 2025 annual meeting of stockholders to be held on June 4, 2025.

The notice does not affect our ongoing business operations or our SEC reporting requirements.

For more information, see “We may fail to qualify for continued listing on the NYSE, which could make it more difficult for our stockholders to sell their shares.” in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Inflation Reduction Act and Infrastructure Investment and Jobs Act

In August 2022, the U.S. government enacted the United States Inflation Reduction Act of 2022 (the “IRA”), which includes several provisions intended to accelerate U.S. manufacturing and adoption of clean energy, battery and energy storage, electrical vehicles, and other solar products and is expected to impact our business and operations. As part of such incentives, the IRA, among other things, extends the investment tax credit and production tax credit at their full rates until at least 2034 and is therefore expected to increase the demand for solar and storage products. The IRA also incentivizes residential solar and storage customers and developers through the inclusion of a tax credit for qualifying energy projects of up to 30%. Section 45X of the IRA offers advanced manufacturing production tax credits (“AMPTC”) that incentivize the production of eligible components within the U.S. These provisions of the law are only several years old, and regulations and guidance concerning their implementation are gradually being published and refined by the U.S. Treasury Department. On October 24, 2024, final regulations concerning the application of IRC §45X were published. The regulations contain detailed rules concerning the eligibility, qualifying and accounting for AMPTCs. Of particular relevance to the Company are the rules concerning the qualification and measurement of AMPTCs to Residential Inverters, Commercial Inverters and DC-Optimized Inverter Systems, that are included in the definition of Microinverters.

In January 2025, the new U.S. administration issued an executive order and a memorandum aimed at pausing the disbursement of grants and other government funds, including funds under the IRA and the Infrastructure Investment and Jobs

Act (“IIJA”), thereby creating uncertainty regarding the ability to secure government awards and grants. This potential loss of financial support could adversely affect our business and the overall financial performance of the Company.

Furthermore, potential federal decisions to modify the IRA, IIJA or their associated regulations or guidance could adversely affect the availability of incentives.

Parent Company Guarantees

Prior to July 2023, we agreed in certain customer contracts, to PCG that the value of purchased hardware will not decline for a certain period of time, as more fully described above under Note 3 — Revenue, of the accompanying Notes to the unaudited condensed consolidated financial statements in this Report. We accounted for such contractual terms and guarantees as variable consideration at each measurement date. We updated our estimates of variable consideration each quarter with respect to outstanding guarantees, including changes in estimates related to such guarantees, for facts or circumstances that had changed from the time of the initial estimate. As a result, the Company recorded a net revenue reduction of $33.1 million in hardware revenue during the three months ended March 31, 2024. The overall reduction in revenue was related to deliveries that occurred prior to 2024.

There are no remaining PCGs outstanding, and the Company expects no future impact on its financial results as a result of PCGs.

Because we have not included these parent company guarantees in our contracts since July 2023, and because we do not intend to provide guarantees in customer contracts going forward, we believe that excluding the effect of the $33.1 million net reduction in revenue from adjusted EBITDA and non-GAAP gross profit enhances the comparability to these metrics in prior periods.

Impairment and Accounts Receivable Write-Off

For those contracts where the customers invoked PCG protection pursuant to the applicable contract, we worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers, as more fully described above under Note 3 — Revenue, in the accompanying notes to the unaudited condensed consolidated financial statements in this Report. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where we believe we have enforceable rights of recovery, we believed the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s was no longer probable. Accordingly, we wrote-off the remaining receivables of $104.1 million during the fiscal year ended December 31, 2024. We are pursuing all potential remedies with respect to its enforceable rights under applicable contracts.

Seasonality

Our results of operations have typically fluctuated due to seasonal trends, which we expect to recur in future periods. Historically, we have recognized most of our revenue in the third and fourth fiscal quarters of each year due to various factors, including the requirement by our customers to reach target commercial operation dates for their renewable energy projects as well as tax equity and financing considerations. For instance, our revenue recognized in the third and fourth quarters of the fiscal year ended December 31, 2024 accounted for 59% of the total revenue recognized in the fiscal year ended December 31, 2024. The seasonality of our results of operations may be mitigated as our software and services offerings begin to comprise a greater percentage of our total revenue.

Supply Chain Constraints and Risk

We rely on a very small number of suppliers of energy storage systems and other equipment. If any of our suppliers were unable or unwilling to provide us with contracted quantities in a timely manner at prices, quality levels, and volumes acceptable to us, we would have very limited alternatives for supply, and we may not be able find suitable replacements for our customers, if at all. Such an event could materially adversely affect our business, prospects, financial condition, and results of operations.

DevCo Joint Ventures

We, through an indirect wholly-owned development subsidiary, have entered into strategic joint ventures with qualified third parties to develop select energy storage generation projects (“DevCo Projects”), as more fully described above under Note 1 — Business, of the Notes to the unaudited condensed consolidated financial statements in this report. These projects sometimes require significant upfront investment by us and can involve a high degree of risk. If a DevCo Project fails to reach completion or is significantly delayed, we could lose all or a portion of our development capital investment. See “We Face Risks Related to our DevCo Business Model” in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for additional information about certain risks related to these DevCo Projects.

Decline in Lithium-Ion Battery Costs

Our revenue growth is directly tied to the continued adoption of energy storage systems by our customers. The cost of lithium-ion energy storage hardware has generally declined over the last decade, but increased demand and global supply chain constraints or trade and tariff actions could cause price increases in the future. The market for energy storage is rapidly evolving, and while we believe costs will continue to decline over time, there is no guarantee. If costs do not continue to decline, or do not decline as quickly as we anticipate, this could adversely affect our ability to increase our revenue and grow our business. The United States Inflation Reduction Act of 2022 (the “IRA”) was signed into law in August 2022 and includes incentives and tax credits aimed at reducing the effects of climate change, such as a tax credit for stand-alone battery storage projects. The implementation of the IRA is expected to further reduce the cost of battery storage systems for certain customers; however, there are numerous restrictions and requirements associated with qualifying for the tax credits and other incentives available under the IRA, and we continue to assess Treasury Department and other guidance on how the IRA impacts our business. Additionally, a new Congress and presidential administration introduces uncertainty as to whether these financial and tax incentives will be modified, reduced or restricted in the future.

Increase in Deployment of Renewables

Deployment of intermittent resources has accelerated over the last decade, and today, wind and solar have become a low cost energy source. We expect the cost of generating renewable energy to continue to decline and deployments of energy storage systems to increase. As renewable energy sources of energy production are expected to represent a larger proportion of energy generation, grid instability rises due to their intermittency, which can be addressed by energy storage solutions. The IRA is expected to further increase the deployment of renewable energy assets, provided that the law or its implementation is not modified or restricted in a way that counters these effects. We are continuing to evaluate the IRA and its requirements, including Treasury Department guidance, and its application to our business and our customers.

Competition

Our key competitors include energy monitoring and optimization software providers, energy storage and edge device OEMs, hardware integration providers, renewable project developers, EPC firms, and consulting firms. In storage, our competitors are typically focused on the development and marketing of single-purpose built solutions with captive hardware offerings, while our AI-powered software is hardware agnostic, and benefits from operational data across a multitude of hardware types, geographies, utilities, and grid operator service areas. In solar, our competitors provide monolithic software and edge devices, whereas PowerTrack™ and our edge devices provide customers with a flexible solution that meets their individual project needs.

We believe we are well-positioned to compete successfully in the market for software and software-enabled services. We are among the leaders in global distributed solar and energy storage assets under management, supported by proven technology, focused customer service, strong strategic partnerships and a seasoned leadership team with a track record of success.

Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. Furthermore, our competitors include other types of software providers and some hardware manufacturers that offer software solutions. If our market share declines due to increased competition, our revenue and ability to generate profits in the future may be adversely affected.

Government Regulation and Compliance

Although we are not regulated as a utility, the market for our products and services is heavily influenced by federal, state, and local government statutes and regulations concerning electricity. These statutes and regulations, like the IRA, affect electricity pricing, net metering, incentives, taxation, competition with utilities, and the interconnection of customer-owned electricity generation. In the United States and internationally, governments regularly modify these statutes and regulations and acting through state utility or public service commissions, regularly change and adopt different rates for commercial customers. These changes can positively or negatively affect our ability to deliver cost savings to customers.

Non-GAAP Financial Measures

In addition to financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we use adjusted EBITDA and non-GAAP gross profit and margin, which are non-GAAP financial measures, for financial and operational decision making and as a means to evaluate our operating performance and 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 because they both (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. Adjusted EBITDA and non-GAAP gross profit and margin should be considered in addition to, not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP.

Non-GAAP Gross Profit and Margin

We define non-GAAP gross profit as gross profit excluding amortization of capitalized software, impairments related to decommissioning of end-of-life systems, excess supplier costs and resulting liquidated damages, and reduction in revenue. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

In the three months ended March 31, 2024, we incurred costs of $1.0 million above initially agreed prices on the acquisition of certain hardware systems from one of our suppliers, which resulted from production delays by such supplier. Because we had not previously incurred costs above initially agreed prices with a hardware supplier, we excluded this item from adjusted EBITDA and non-GAAP gross profit to better facilitate comparisons of our underlying operating performance across periods.

The following table provides a reconciliation of GAAP gross profit (loss) and margin to non-GAAP gross profit and margin (in millions, except for percentages):


	Three Months Ended March 31,
		2025			2024
Revenue		$	32.5		$	25.5
Cost of revenue		(22.0)			(49.7)
GAAP gross profit (loss)		10.5			(24.2)
GAAP gross margin (%)		32		%	(95)		%








Non-GAAP Gross Profit
GAAP Revenue		$	32.5		$	25.5

Add: Revenue reduction, net (1)		—			33.1

Subtotal		32.5			58.6
Less: Cost of revenue		(22.0)			(49.7)
Add: Amortization of capitalized software & developed technology		4.3			3.9

Add: Excess supplier costs (2)		—			1.0
Non-GAAP gross profit		$	14.8		$	13.8
Non-GAAP gross margin (%)		46		%	24		%

(1) Refer to the discussion of reduction in revenue in “— Parent Company Guarantees” above.

(2) Refer to the discussion of excess supplier costs in “— Non-GAAP Gross Profit and Margin” above.

Adjusted EBITDA

As discussed above, we believe that adjusted EBITDA is useful for investors to use in comparing our financial performance with the performance of other companies. Nonetheless, the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude when calculating adjusted EBITDA.

We calculate adjusted EBITDA as net loss attributable to us before depreciation and amortization, including amortization of internally developed software, interest expense, further adjusted to exclude stock-based compensation and other income and expense items, including reduction in revenue, excess supplier costs and resulting liquidated damages, and income tax provision or benefit.

The following table provides a reconciliation of adjusted EBITDA to net loss (in thousands):


	Three Months Ended March 31,
		2025		2024
	(in thousands)
Net loss		$	(25,000)	$	(72,307)
Adjusted to exclude the following:
Depreciation and amortization (1)		11,695		11,154
Interest expense		4,290		4,707

Stock-based compensation		4,317		8,374


Revenue reduction, net (2)		—		33,128
Excess supplier costs and resulting liquidated damages (3)		—		1,012







Provision for income taxes		58		153
Other expenses (4)		13		1,540
Adjusted EBITDA		$	(4,627)	$	(12,239)

(1) Depreciation and amortization includes depreciation and amortization expense, impairment loss of energy storage systems, impairment loss of project assets, and impairment loss of right-of-use assets.

(2) Refer to the discussion of reduction in revenue in “— Parent Company Guarantees” above.

(3) Refer to the discussion of excess supplier costs in “— Non-GAAP Gross Profit and Margin” above.

(4) Adjusted EBITDA for the three months ended March 31, 2024 reflects other expenses of $1.5 million, comprised of $1.1 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities, and $0.4 million of other non-recurring expenses.

Financial Results and Key Metrics

The following table presents our financial results and our key metrics (in millions, except for percentages and unless otherwise noted):


	Three Months Ended March 31,
		2025			2024

Key Financial Metrics
Revenue		$	32.5		$	25.5
GAAP gross profit (loss)		$	10.5		$	(24.2)
GAAP gross margin (%)		32		%	(95)		%


Non-GAAP gross profit		$	14.8		$	13.8
Non-GAAP gross margin (%)		46		%	24		%
Net loss		$	(25.0)		$	(72.3)
Adjusted EBITDA		$	(4.6)		$	(12.2)

Key Operating Metrics

Bookings (1)		$	34.5		$	23.8
Contracted backlog* (2)		$	25.3		$	1,639.6

Storage operating AUM (in GWh)* (3)		1.6			0.8
Solar operating AUM (in GW)* (4)		32.4			26.9
CARR* (5)		$	69.0		$	89.3
ARR* (6)		$	56.9		$	45.1

* at period end

(1) Redefined versus prior periods. Beginning with this Report, the Company is redefining “Bookings” as the total value of executed purchase orders. Previously this metric included all relevant executed contracts, regardless of whether or not a related purchase order had been executed. The definition of Bookings is discussed in more detail below under the heading “Bookings.”
(2) Redefined versus prior periods. Beginning with this Report, the Company is redefining “Contracted Backlog” as the total value of hardware and non-recurring services bookings with executed purchase orders in dollars, as of a specific date. Previously, this metric included the total contract value of hardware, software and services contracts recognized ratably over the contract period, regardless of whether or not a related purchase order had been executed.
(3) New metric, introduced in this Report. Represents total GWh of energy storage systems in operation. Contracted storage AUM from prior periods has been replaced with this metric.
(4) Total GW of solar systems in operation.
(5) Contracted Annual Recurring Revenue (“CARR”): Redefined versus prior periods. Beginning with this Report, the Company is redefining CARR as the annualized value from Stem customer subscription contracts with executed purchase orders signed in the period for systems that are not yet operating and all operating Stem customer subscription contracts, including solar software, storage software & recurring managed services, and some recurring professional services contracts. Previously, this metric included the annualized value from all executed Stem customer subscription contracts, regardless of whether or not a related purchase order had been executed.
(6) Annual Recurring Revenue (“ARR”): New metric, introduced in this Report. Annualized value from operating customer subscription contracts, including solar software, storage software & recurring managed services, and some recurring professional services contracts.

Bookings

Due to the long-term nature of our contracts, bookings are a key metric that allows us to understand and evaluate the growth of our Company and our estimated future revenue related to customer contracts for our energy optimization services, sales of energy storage systems, asset monitoring software, edge devices, and project and professional service engagements. Bookings represent the total value of executed customer purchase orders. Customer purchase orders are typically executed three to six months ahead of hardware installation. The booking amount includes (1) hardware revenue, which is typically recognized at delivery of the energy storage system and/or edge device to the customer, and (2) services revenue, which represents the total nominal software and services contract value which will be recognized ratably over the contract period.

For host customer sales, bookings represent the expected consideration from energy optimization services contracts, including estimated incentive payments that are earned by the host customer from utility companies in relation to the services provided by us and assigned by the host customer to us. For host customer sales, there are no differences between bookings and remaining performance obligations at any point in time.

For partnership sales, once a purchase order has been executed, the booking is considered to be a contract in accordance with ASC 606, and therefore, gives rise to a remaining performance obligation as we have an obligation to transfer hardware and energy optimization services in our partnership agreements. We also have the contractual right to receive consideration for our performance obligations.

The accounting policy and timing of revenue recognition for host customer contracts and partnership arrangements that qualify as contracts with customers under FASB ASU 2014-09 Topic 606, Revenue from Contracts with Customers (“ASC 606”), are described within Note 2 — Summary of Significant Accounting Policies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Components of Our Results of Operations

Revenue

We generate services and other revenue and hardware revenue. Services and other revenue is generated through (i) energy optimization software (ii) asset management software, and (iii) the sale of project assets and advisory services. Software fees charged to customers generally consist of recurring fixed monthly payments throughout the term of the contract and in some arrangements, an installation and/or upfront fee component. We may also receive incentives from utility companies in relation to the sale of our services.

We generate hardware revenue through (i) sales of OEM energy storage systems and (ii) edge hardware devices. Performance obligations are satisfied when the energy storage system and edge hardware device along with all ancillary hardware components are delivered. The milestone payments received before the delivery of hardware are treated as deferred revenue. In certain customer contracts, we agreed to provide a guarantee that the value of purchased hardware will not decline for a certain period of time, as more fully described above under Note 3 — Revenue, of the Notes to the unaudited condensed consolidated financial statements in this Report.

Cost of Revenue

Cost of services and other revenue includes depreciation of the cost of energy storage systems we own under long-term customer contracts, which includes capitalized fulfillment costs, such as installation services, permitting and other related costs. Cost of services and other revenue also includes the costs for the development and constructions of project assets. Cost of revenue may also include any impairment of inventory and energy storage systems, along with system maintenance costs associated with the ongoing services provided to customers. Costs of revenue are recognized as energy optimization and other supporting services are provided to our customers throughout the term of the contract.

Cost of hardware revenue generally includes the cost of the hardware purchased from a manufacturer, shipping, delivery, and other costs required to fulfill our obligation to deliver the energy storage system to the customer location. Cost of hardware revenue may also include any impairment of energy storage systems held in our inventory for sale to our customer. Cost of hardware revenue related to the sale of energy storage systems is recognized when the delivery of the product is completed.

Gross Profit (Loss)

Our gross profit (loss) fluctuates significantly from quarter to quarter. Gross profit (loss), calculated as revenue less costs of revenue, has been, and will continue to be, affected by various factors, including fluctuations in the amount and mix of revenue and the amount and timing of investments to expand our customer base. Over the long term, we hope to increase both our gross profit in absolute dollars and gross margin as a percentage of revenue through enhanced operational efficiency and economies of scale.

Operating Expenses

Sales and Marketing

Sales and marketing expense consists of payroll and other related personnel costs, including salaries, stock-based compensation, commissions, bonuses, employee benefits, and travel for our sales and marketing personnel. In addition, sales and marketing expense includes trade show costs, amortization of intangibles and other expenses. We expect our sales and marketing expense to increase in future periods to support the overall growth in our business.

Research and Development

Research and development expense consists primarily of payroll and other related personnel costs for engineers and third parties engaged in the design and development of products, third-party software and technologies, including salaries, bonuses and stock-based compensation expense, project material costs, services and depreciation. Our research and development expenses support our investments in optimization, accuracy and reliability of our platform and other technology improvements to support and drive efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.

General and Administrative

General and administrative expense consists of payroll and other related personnel costs, including salaries, stock-based compensation, employee benefits and expenses for executive management, legal, finance and other costs. In addition, general and administrative expense includes fees for professional services and occupancy costs. We expect to continue to manage and reduce our general and administrative expense associated with scaling our business operations and being a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Other Expense, Net

Interest Expense

Interest expense consists primarily of interest on our outstanding borrowings under our convertible senior notes, and financing obligations and accretion on our asset retirement obligations.

Other Income, Net

Other income, net consists primarily of income from equity investments and foreign exchange gains or losses.

Results of Operations for the Three Months Ended March 31, 2025 and 2024


	Three Months Ended March 31,				$ Change		% Change
	2025		2024
	(in thousands, except percentages)
Revenue
Services and other revenue	$	17,721	$	14,840	$	2,881	19%
Hardware revenue	14,791		10,629		4,162		39%
Total revenue	32,512		25,469		7,043		28%
Cost of revenue
Cost of services and other revenue	11,413		9,984		1,429		14%
Cost of hardware revenue	10,561		39,676		(29,115)		(73)%
Total cost of revenue	21,974		49,660		(27,686)		(56)%
Gross profit (loss)	10,538		(24,191)		34,729		(144)%
Operating expenses:
Sales and marketing	6,792		11,126		(4,334)		(39)%
Research and development	11,328		14,136		(2,808)		(20)%
General and administrative	13,566		18,560		(4,994)		(27)%


Total operating expenses	31,686		43,822		(12,136)		(28)%
Loss from operations	(21,148)		(68,013)		46,865		(69)%
Other expense, net:
Interest expense	(4,290)		(4,707)		417		(9)%


Other income, net	496		566		(70)		(12)%
Total other expense, net	(3,794)		(4,141)		347		(8)%
Loss before provision for income taxes	(24,942)		(72,154)		47,212		(65)%
Provision for income taxes	(58)		(153)		95		(62)%
Net loss	$	(25,000)	$	(72,307)	$	47,307	(65)%

*Percentage is not meaningful

Revenue

Revenue increased by $7.0 million, or 28%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase was primarily driven by a $4.2 million increase in hardware revenue primarily due to an increase in solar and storage hardware revenue from new and existing customers. Services and other revenue also increased by $2.9 million primarily due to an increase in solar subscription services revenue from existing and new customers.

Cost of Revenue

Cost of revenue decreased by $27.7 million, or 56%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily driven by a decrease in cost of hardware revenue of $29.1 million due to a change in the mix of hardware and service offerings. This decrease was partially offset by an increase in cost of services and other revenue of $1.4 million primarily due to providing services at higher costs.

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $4.3 million, or 39%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was driven by a decrease of $1.0 million in professional services, resulting from reductions in advisory services and office-related expenses as a result of marketing related subscription cancellations, and a decrease of $3.3 million in personnel related expenses due to a decrease in headcount.

Research and Development

Research and development expense decreased by $2.8 million, or 20%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily due to a decrease of $2.9 million in personnel related expenses as a result of lower headcount, partially offset by an increase of $0.1 million in professional services and other expenses.

General and Administrative

General and administrative expense decreased by $5.0 million, or 27%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily driven by a decrease of $4.8 million in personnel related expenses driven by lower stock-based compensation expense, a decrease of $0.4 million in professional services and other expenses, and an increase of $0.2 million in office-related expenses.

Other (Expense) Income, Net

Interest Expense, Net

Interest expense, net decreased by $0.4 million, or 9%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily driven by a decrease of $0.5 million in interest on financing obligations, partially offset by the accretion of the discount on short-term investments of $0.1 million.

Other Income, Net

Other income, net decreased by $0.1 million, or 12%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 primarily due to a $0.3 million decrease in interest income from short-term investments, partially offset by a $0.2 million increase due to the prior period reversal of a previously recognized accretion expense on assets.

Provision for Income Taxes

During the three months ended March 31, 2025, we recorded a provision for income taxes of $0.1 million primarily as a result of foreign income tax expense. During the three months ended March 31, 2024, we recorded a $0.2 million provision for income taxes primarily as a result of state income tax expense.

Liquidity and Capital Resources

Sources of Liquidity

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. To meet our payment service obligations, we must have sufficient liquid assets and be able to move funds on a timely basis. Significant factors in the management of liquidity are funds generated from operations, levels of accounts receivable and accounts payable and capital expenditures.

As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents of $58.6 million, which were held for working capital purposes and for investment growth opportunities. As of March 31, 2025, we had net accounts receivable of $34.7 million and our working capital (deficit), which we define as current assets less current liabilities, was a deficit of $9.6 million. We believe that our cash position is sufficient to meet our capital and liquidity requirements for at least the next 12 months.

The attainment of profitable operations is dependent upon future events, including successfully implementing our new business strategy, hiring and retaining our key executives and personnel with the requisite experience to develop our software and AI-based solutions, obtaining adequate financing to complete our development activities, developing an adequate network of suppliers, and building our customer base. Failure to successfully implement our new business strategy, generate sufficient revenues from our software and services offerings, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, and financial condition. The execution of our new strategy will entail significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes are expected to result in reduced revenue, increased costs and short-term disruptions in our operations, which is expected to negatively impact our financial condition in the near term. Further, our cash reserves may constrain our ability to make the investments required to execute our new strategy or may otherwise not be sufficient to fund operations. If our cash

flow from operations does not improve as quickly as expected, or if we are unable to secure additional sources of capital if or when the need arises, it may have a material adverse effect on our business, financial condition, and results of operations.

In the future, we may be required to obtain additional equity or debt financing in order to support our continued capital expenditures and operations, which may not be available on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies, this could reduce our ability to compete successfully and harm our business, growth and results of operations.

Our long-term liquidity requirements are linked primarily to the expansion of our software and services offerings and the implementation of our new business strategy, as well as the continued extension of Athena PowerTrack and other software applications. While we have plans to potentially expand our geographical footprint beyond our current partnerships and enter into joint ventures, those are not required initiatives to achieve our plans.

Financing Obligations

We have entered into arrangements wherein we finance the cost of energy storage systems via special purpose entities (“SPEs”) we establish with outside investors. These SPEs are not consolidated into our financial statements, but are accounted for as equity method investments. The investors provide us upfront payments through the SPEs. Under these arrangements, the payment by the SPEs to us is accounted for as a borrowing by recording the proceeds received as a financing obligation. The financing obligation is repaid with the future customer payments and incentives received. A portion of the amounts paid to the SPE is allocated to interest expense using the effective interest rate method. Furthermore, we continue to account for the revenues from customer arrangements and incentives and all associated costs despite such systems being legally sold to the SPEs due to our significant continuing involvement in the operations of the energy storage systems. The total financing obligation as of March 31, 2025 was $54.6 million, of which $17.4 million was classified as a current liability.

2028 Green Convertible Senior Notes

On November 22, 2021, we sold to Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Barclays Capital Inc, as initial purchasers (the “2021 Initial Purchasers”), and the 2021 Initial Purchasers purchased from us, $460.0 million aggregate principal amount of our 0.50% Green Convertible Notes due 2028 (the “2028 Convertible Notes, pursuant to a purchase agreement dated as of November 17, 2021, by and between us and the 2021 Initial Purchasers. Our net proceeds from this offering were approximately $445.7 million, after deducting the 2021 Initial Purchasers’ discounts and commissions and the estimated offering expenses payable by us. The 2028 Convertible Notes will accrue interest payable semi-annually in arrears and will mature on December 1, 2028, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock. The 2028 Convertible Notes are redeemable for cash at our option at any time given certain conditions. Refer to Note 7 — Convertible Notes, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

On November 17, 2021, in connection with the pricing of the 2028 Convertible Notes, and on November 19, 2021, in connection with the exercise in full by the 2021 Initial Purchasers of their option to purchase additional 2028 Convertible Notes, we entered into capped call transactions with certain of the 2021 Initial Purchasers of the 2028 Convertible Notes to minimize the potential dilution to our common stockholders upon conversion of the 2028 Convertible Notes. We used approximately $66.7 million of the net proceeds from the 2028 Convertible Notes to pay the cost of the capped call transactions described above. We intend to allocate an amount equivalent to the net proceeds from this offering to finance or refinance, in whole or in part, our existing or new eligible green expenditures, including investments related to creating a more resilient clean energy system, optimized software capabilities for energy systems, and reducing waste through operations.

On April 3, 2023, we used approximately $99.8 million of the net proceeds from the issuance of the 4.25% Green Convertible Senior Notes due 2030 (“2030 Convertible Notes”) to purchase and surrender for cancellation approximately $163.0 million in aggregate principal amount of our 2028 Convertible Notes. See Note 7 — Convertible Notes, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

2030 Convertible Notes

On April 3, 2023, we issued $240.0 million aggregate principal amount of our 2030 Convertible Notes in a private placement offering to qualified institutional buyers (the “2023 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2030 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 4.25% per year, payable in cash semi-annually in arrears in April and October of each year, beginning in October 1, 2023. The 2030 Convertible Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver cash, shares of common stock or a combination of cash and shares of common stock. The 2030 Convertible Notes are redeemable for cash at our option

at any time given certain conditions. See Note 7 — Convertible Notes, of the Notes to the unaudited condensed consolidated financial statements in this Report, for additional details regarding this transaction.

Our net proceeds from this offering were approximately $232.4 million, after deducting for $7.6 million of debt issuance costs primarily consisting of underwriters, advisory, legal, and accounting fees. We used approximately $99.8 million of the net proceeds to purchase and surrender for cancellation approximately $163.0 million aggregate principal amount of our 2028 Convertible Notes.

On March 29, 2023 and March 31, 2023, in connection with the pricing of the 2030 Convertible Notes, and on April 3, 2023, in connection with the exercise in full by the 2023 Initial Purchasers of their option to purchase additional 2030 Convertible Notes, we entered into capped calls (the “2030 Capped Calls”) with certain counterparties. We used $27.8 million of the net proceeds from the 2030 Convertible Notes to pay the cost of the 2030 Capped Calls.

Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):


	Three Months Ended March 31,
	2025		2024
Net cash provided by (used in) operating activities	$	8,536	$	(621)
Net cash (used in) provided by investing activities	(3,590)		4,675
Net cash (used in) provided by financing activities	(2,819)		3,142
Effect of exchange rate changes on cash, cash equivalents and restricted cash	158		233
Net increase in cash, cash equivalents and restricted cash	$	2,285	$	7,429

Operating Activities

During the three months ended March 31, 2025, net cash provided by operating activities was $8.5 million, primarily due to our net loss of $25.0 million, adjusted for non-cash items of $17.2 million and net cash inflow of $16.4 million from changes in operating assets and liabilities. Non-cash items primarily consisted of depreciation and amortization of $11.0 million, non-cash interest expense of $0.3 million related to debt issuance costs, stock-based compensation expense of $4.3 million, non-cash lease expense of $0.7 million, and provision for accounts receivable allowance of $0.1 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $24.4 million, a decrease in inventory of $2.1 million, a decrease in other assets of $2.0 million, an increase in accrued expenses and other liabilities of $3.9 million, partially offset by an increase in contract origination costs of $0.3 million, an increase in project assets of $1.5 million, a decrease in accounts payable of $10.5 million, a decrease in deferred revenue of $3.0 million, and a decrease in lease liabilities of $0.5 million.

During the three months ended March 31, 2024, net cash used in operating activities was $0.6 million, primarily due to our net loss of $72.3 million, adjusted for non-cash charges of $19.7 million and net cash inflow of $52.0 million from changes in operating assets and liabilities. Non-cash items primarily consisted of depreciation and amortization of $10.8 million, non-cash interest expense of $0.4 million, stock-based compensation expense of $8.4 million, non-cash lease expense of $0.8 million, and other non-cash items of $0.3 million, partially offset by provision for accounts receivable allowance of $1.0 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $63.9 million partially from a $33.1 million variable consideration adjustment, a decrease in inventory of $2.2 million, an increase in accrued expenses and other liabilities of $1.7 million, and an increase in deferred revenue of $2.7 million, partially offset by an increase in other assets of $0.7 million, an increase in contract origination costs of $0.4 million, an increase in project assets of $0.4 million, a decrease in accounts payable of $16.3 million, and a decrease in lease liabilities of $0.8 million.

Investing Activities

During the three months ended March 31, 2025, net cash used in investing activities was $3.6 million, and consisted of $3.6 million in capital expenditures related to internally-developed software.

During the three months ended March 31, 2024, net cash provided by investing activities was $4.7 million, and primarily consisted of $8.3 million in proceeds from maturities of available-for-sale investments, partially offset by $0.1 million in purchases of energy systems, $3.5 million in capital expenditures related to internally-developed software, and $0.1 million in purchases of property and equipment.

Financing Activities

During the three months ended March 31, 2025, net cash used in financing activities was $2.8 million, and primarily consisted of the repayment of financing obligations of $2.8 million.

During the three months ended March 31, 2024, net cash provided by financing activities was $3.1 million, and primarily consisted of proceeds from equity transactions to be remitted to tax authorities of $5.2 million, partially offset by the repayment of financing obligations of $2.1 million.

Contractual Obligations and Commitments

As of March 31, 2025, except as discussed in Note 12 — Commitments and Contingencies, there have been no material changes to our contractual obligations.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, or unconsolidated VIEs that either have, or would reasonably be expected to have, a current or future material adverse effect on our unaudited condensed consolidated financial statements.

Critical Accounting Policies and Estimates

A summary of our critical accounting policies and estimates is presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and there have been no material changes to our critical accounting estimates during the three months ended March 31, 2025.

Recent Accounting Pronouncements

As of March 31, 2025, there have been no material changes to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (“Disclosure Controls”) within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Our Disclosure Controls are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our Disclosure Controls are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Based on management’s evaluation (under the supervision and with the participation of our CEO and our CFO) of the effectiveness of the design and operation of our Disclosure Controls as of March 31, 2025, our CEO and CFO have concluded that our Disclosure Controls were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the first quarter of 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Internal Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in business conditions or deterioration in the degree of compliance with policies or procedures.

Part II - Other Information

ITEM 1. LEGAL PROCEEDINGS

The information with respect to this Item 1 is set forth under Note 12 — Commitments and Contingencies, of the Notes to the unaudited condensed consolidated financial statements in this Report.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Part 1, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(c) Trading Plans. The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted or terminated by our Section 16 officers and directors during the three months ended March 31, 2025, and intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (“Rule 10b5-1 Trading Plans”). No Section 16 officer or director adopted or terminated any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K promulgated under the Exchange Act) during the three months ended March 31, 2025.


Name and Title	Date of Adoption or Termination of Rule 10b5-1 Trading Plan	Duration of Rule 10b5-1 Trading Plan	Aggregate Number of Securities to be Purchased or Sold
Matthew Tappin, President, Software	Adopted 03/18/2025	3/18/2025 through 3/31/2026	Sell up to 20,017 shares of common stock, subject to certain conditions

ITEM 6. EXHIBITS

EXHIBIT INDEX

Exhibit No.

Description

3.1

Second Amended and Restated Certificate of Incorporation, dated April 28, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 4, 2021).

3.2

Amended and Restated Bylaws, dated October 27, 2022 (incorporated by reference to Exhibit 3 to the Current Report on Form 8-K filed on October 31, 2022).

10.1*†

Amendment to Executive Chair and Interim CEO Employment Agreement dated September 16, 2024 by and between the Company and David Buzby.

10.2*†

Separation and Release of Claims Agreement dated January 30, 2025 by and between the Company and William Bush.

10.3*†

Separation and Release of Claims Agreement dated March 24, 2025 by and between the Company and John Carrington.

31.1*

Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith

**Furnished herewith

† Management or compensatory plan or arrangement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized on April 29, 2025.


			STEM, INC.

			By:			/s/ Spencer Doran Hole
						Spencer Doran Hole
						Chief Financial Officer
						(Principal Financial Officer)