Stem, a smart energy storage company, reported a net loss of $77.1 million in the third quarter (Q3) of 2023, a 124% year-over-year (YoY) surge from the net loss of $34.3 million, mainly driven by the added costs for hardware.

The company’s net revenue for the quarter stood at $133.7 million, a 34% increase from $99.5 million in Q3 of the previous fiscal year. The increase in revenues despite the losses could be attributed to the increase in the Contracted Annual Recurring Revenue (CARR) during the period, which increased to $87.5 million, up by 43% YoY from $61.4 million.

At the end of three months, the cost of hardware revenue was $1.4 million, nearly double the cost in Q3 2022, which stood at $7.8 million.

According to the company, $16.9 million of $37.4 million reduction in revenue is related to the hardware deliveries that occurred in Q4 of 2022, $15.8 million related to deliveries in Q2, and $4.7 million for deliveries in the third quarter.

The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for Q3 2023 were recorded at a loss of $861,000, a 93% YoY drop from a loss of $12.52 million. The change in adjusted EBITDA was largely due to an increase in sales and continuing cost control programs initiated by the Company, which led to a sequential decline in cash operating expenses.

By the end of Q3 2023, the contracted backlog was $1.84 billion, a 125% YoY surge from $817.2 million and a 35% quarter-over-quarter (QoQ) increase from $1.36 billion. The surge was driven by bookings of $676.4 million in the quarter, partially offset by revenue recognition and contract cancellations and amendments.

During the quarter, bookings saw a 203% YoY increase from $222.9 million in Q3 2022. New contracts led to a 32% sequential increase for contracted storage Assets Under Management (AUM) to 5.0 GW.

John Carrington, Chief Executive Officer of Stem, commented, “We generated strong results in the third quarter, highlighted by record bookings, AUM, CARR, and contracted backlog. Our bookings grew more than 3x versus the same quarter last year, which led to a 17% sequential increase in CARR. We are raising our CARR guidance based on our strong bookings, which we believe positions us well to grow our high-margin software and services revenue in 2024 and beyond.”

9M 2023

At the end of the first nine months (9M) of 2023, the company reported a net loss of $102.73 million, a 15.7% YoY increase from $88.78 million.

The surge in net loss was mainly driven by the increased hardware costs at $264.57 million and research and development (R&D) costs at $42.02 million, a 68.8% and 47.8% YoY increase, respectively.

Stem’s revenue stood at $294.1 million, an $86 million increase from 2022’s figures for the same period.

In addition to higher solar asset performance revenue, this YoY increase was driven mainly by higher storage hardware revenue from Front-of-the-Meter (“FTM”) and Behind-the-Meter (“BTM”) partnership agreements.

The company’s solar asset management backlog is up by 41% YoY. Stem says the revenue growth is poised for a strong momentum. With the SB Energy agreement on software and services for multi-GWh development in the pipeline, service revenue growth is expected to accelerate.

The adjusted EBITDA for 9M 2023 stood at a loss of $24.07 million, a 34% YoY improvement from a $36.45 million loss.

In a recent exclusive interview with Mercom India, Sushain Sharma, Managing Director, Stem India, talks about the company’s energy storage offerings and plans for India. He also shares his thoughts on the Indian government’s policies to promote energy storage.

In Q2 of 2023, the company reported a net income of $19 million, a significant YoY improvement of 159.6%. This was due to a one-time gain of $59 million, resulting in the cancellation of a portion of Stem’s 2028 Convertible Notes, which extinguished the debt. The company showcased a financial turnaround in the first half of this year when it recorded a 52.8% YoY improvement in the net loss, which was recorded at $25.7 million.