Smart energy storage company Stem reported a revenue of $55.8 million in the fourth quarter (Q4) of 2024, a 67% year-over-year (YoY) decrease from $167.4 million.

The declining revenue was caused by reduced battery hardware sales, partly attributable to the company’s software-focused strategy introduced last year.

The company’s net loss widened to $51.1 million, a 35% increase from a net loss of $37.7 million in Q4 2023. It attributed the rising losses to lower revenue and losses suffered under the generally accepted accounting principles.

Stem’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $4.2 million compared to $4.6 million in the corresponding quarter of the previous year.

Stem’s contracted annual recurring revenue (ARR) in Q4 2024 was $86.0 million, down approximately 6% YoY from $91.0 million.

Doran Hole, Chief Financial Officer and Executive Vice President, Stem, said the company’s Q4 2024 results broadly met expectations.

The company’s solar monitoring assets under management grew to 29.9 GW, up from 27.5 GW at the end of 2023.

Full Year 2024

Stem recorded a net loss of $854 million in 2024, an increase from a net loss of $140.4 million in 2023.

The results were mainly affected by a $104.1 million bad debt expense due to impaired receivables from customer contracts backed by a parent company guarantee and a one-time $547.2 million goodwill impairment recorded in Q2 2024.

The company’s revenue declined 69% YoY to $144.6 million from $461.5 million.

Stem’s earnings per share -$5.29 missing analyst expectations by $0.20.

Stem attributed the falling revenue to updated valuations of certain contract guarantees for hardware revenue originally recorded in 2022 and 2023.

The company’s adjusted EBITDA in 2024 came in at -$22.8 million, a 16.9% YoY increase from the previous year’s EBITDA of -$19.5 million.

In January, the company announced that its solar monitoring and optimization solutions will support the commercial operations of a 484 MW solar portfolio for Neovolt, one of the largest asset owners in Hungary. Under the five-year agreement, Stem’s PowerTrack Web will monitor, optimize, and control eight utility-scale sites in the country.

The company earned 70% to 80% of its gross margins from the PowerTrack software. It earned a high margin on associated offerings, such as 50% gross margins on professional services tied to PowerTrack’s installation and commissioning and 30% to 40% on PowerTrack’s edge devices.

Outlook

Stem expects its revenue to reach between $125 million and $175 million in 2025, of which about $120 million to $140 million is expected to come from high-margin software, edge devices, and services revenue. The remaining $35 million is projected to be driven by battery hardware resales.

The company expects its EBITDA to range between -$10 million and $5 million during the year.

Stem considers ARR a key metric and expects it to reach 15% from year-end 2024 to 2025.

Hole said the company will increase its focus on reducing operating expenses, which it believes will substantially improve adjusted EBITDA and cash flow.

Stem’s revenue in Q3 2024 had dropped 78% YoY to $29.3 million from $133.7 million due to lower battery hardware sales.