Stem, Inc. reported a significant decline in financial performance for the fiscal year ending December 31, 2024, with total revenue dropping to $144.6 million from $461.5 million in the previous year, marking a 69% decrease. The company's net loss widened to $854 million compared to a loss of $140.4 million in 2023. This downturn was primarily attributed to a substantial reduction in hardware revenue, which fell by 81% to $76.8 million, largely due to decreased demand and adjustments related to variable consideration in customer contracts. In contrast, services and other revenue increased by 8% to $67.8 million, driven by growth in solar services subscriptions.
The company is undergoing a strategic shift announced in October 2024, focusing on AI-enabled software and services rather than hardware sales, which historically constituted the majority of its revenue. This transition is expected to result in short-term revenue reductions and increased restructuring costs, potentially impacting cash flow and operational stability. As of December 31, 2024, Stem had cash and cash equivalents of $56.3 million, down from $105.4 million a year earlier, raising concerns about its ability to fund operations and investments necessary for executing its new strategy.
Operationally, Stem reported a total of 16,000 global customers, with a contracted backlog of $1.17 billion as of December 31, 2024. The company also noted a slight increase in contracted storage assets under management, which reached 5.6 GWh, while solar monitoring assets under management grew to 29.9 GW. However, the company faced challenges with customer concentration, as a small number of significant customers historically accounted for a large portion of its revenue, raising risks associated with potential contract terminations or reductions in order volumes.
Looking ahead, Stem's management expressed cautious optimism regarding the potential benefits of the Inflation Reduction Act of 2022, which is expected to stimulate demand for clean energy solutions. However, uncertainties surrounding government incentives and the broader economic environment, including inflation and geopolitical tensions, could pose risks to the company's recovery and growth trajectory. The company is also focused on managing its operational costs and improving its gross margins as it navigates this transition.
About STEM, INC.
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