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Second-Quarter 2021 Financial and Operating Results
Financial Results
Second quarter revenue increased 339% to $19.3 million, versus $4.4 million in the same quarter last year. Higher hardware revenue from Front of the Meter ("FTM") partnership agreements drove most of the year-over-year increase, in addition to higher services revenue from host customer arrangements.
Gross Margin (GAAP) was $(0.1) million, or (1)%, versus $(1.7) million, or (40)% in the same quarter last year. Non-GAAP Gross Margin was $2.1 million or 11% versus $0.2 million or 5% in the same quarter last year. The year-over-year increases in Gross Margin (GAAP) and Non-GAAP Gross Margin resulted from an increased mix of software service revenues and higher-margin hardware deliveries.
Net Loss increased to $(100.2) million versus $(19.0) million in the same quarter last year. This was primarily due to $76.4 million of non-cash charges recorded in the quarter from the revaluation of warrants tied to an increase in the value of the underlying stock, along with higher operating expenses.
Adjusted EBITDA was $(8.6) million compared to $(7.5) million in the same quarter last year. The lower Adjusted EBITDA results were primarily driven by higher operating expenses, due to increased personnel costs reflecting continued investment in our growth initiatives.
The Company ended the second quarter with $474 million in cash and no debt.
Operating Results
The Company’s 12-month forward Pipeline was $1.7 billion as of June 30, 2021, representing significant year-over-year growth. The 21% increase in the 12-month pipeline from $1.4 billion at March 31, 2021 is a result of increased FTM project opportunities and the seasonal nature of the pipeline.
Contracted Backlog increased 13% sequentially, from $221 million as of March 31, 2021 to $250 million as of June 30, 2021. The increase in Contracted Backlog resulted from strong bookings of $45 million tied to increased commercial activity. Bookings grew 18% year-over-year from $38 million in the quarter ended June 30, 2020.
Contracted AUM more than doubled year-over-year to 1.2 GWh, driven by increased commercial activity and the addition of the 345-megawatt hour (MWh) Electrodes Holdings LLC portfolio. Contracted AUM increased sequentially by 9%, driven by new contracts and new systems that came in service.
Second-Quarter 2021 Financial and Operating Results
Financial Results
Second quarter revenue increased 339% to $19.3 million, versus $4.4 million in the same quarter last year. Higher hardware revenue from Front of the Meter ("FTM") partnership agreements drove most of the year-over-year increase, in addition to higher services revenue from host customer arrangements.
Gross Margin (GAAP) was $(0.1) million, or (1)%, versus $(1.7) million, or (40)% in the same quarter last year. Non-GAAP Gross Margin was $2.1 million or 11% versus $0.2 million or 5% in the same quarter last year. The year-over-year increases in Gross Margin (GAAP) and Non-GAAP Gross Margin resulted from an increased mix of software service revenues and higher-margin hardware deliveries.
Net Loss increased to $(100.2) million versus $(19.0) million in the same quarter last year. This was primarily due to $76.4 million of non-cash charges recorded in the quarter from the revaluation of warrants tied to an increase in the value of the underlying stock, along with higher operating expenses.
Adjusted EBITDA was $(8.6) million compared to $(7.5) million in the same quarter last year. The lower Adjusted EBITDA results were primarily driven by higher operating expenses, due to increased personnel costs reflecting continued investment in our growth initiatives.
The Company ended the second quarter with $474 million in cash and no debt.
Business Highlights
Since mid-June 2021, Stem has consistently dispatched more than 500 MWh daily in multiple markets across the United States and Canada in response to heat waves, increased grid interconnections from renewables and wildfires that have caused widespread stress on power grids. Stem’s demand response and grid services programs are designed to use virtual power plants powered by the Athena software platform to flatten electricity usage peaks and deliver power to the most constrained parts of the grid.
Stem has grown rapidly in ISO New England since the system operator expanded market participation activities for Front-of-the-Meter ("FTM") storage in 2020. As of the end of June, Stem-directed systems comprised 52% of Massachusetts and 19% of ISO-NE of the operational continuous storage facilities active in the wholesale energy, ancillary services and forward capacity settlement markets, as reported by the system operator.
On June 25, 2021, Stem entered into an agreement to exchange 7.2 million private warrants for 4.7 million shares of common stock. The transaction closed on June 30, 2021. As of August 11, 2021, 12.8 million public warrants remain outstanding, which are redeemable by the Company beginning August 20, 2021.
On June 2, 2021, Stem announced that it had partnered with Ameresco, a leading cleantech integrator, whereby it will provide 15 MWh of battery storage for Holy Cross Energy, an electric cooperative in western Colorado. Stem and Ameresco plan to further collaborate to provide enhanced returns in electric cooperative markets and beyond. The Company is currently pursuing projects with cooperatives in 26 states and expects this end market to represent a significant component of its FTM business.
Outlook
The Company reaffirms its guidance of full-year 2021 revenue of $147 million and full-year 2021 Adjusted EBITDA of $(25) million. Consistent with prior guidance, the Company reaffirms that it expects to recognize 20-30% of total 2021 revenue in Q3, and 50-60% of total 2021 revenue in Q4.
The Company believes that it has contracted for sufficient supply chain commitments to meet its 2021 revenue goal and will continue to diversify its supply chain, adopt alternative technologies, and deploy its balance sheet to meet the significant growth in customer demand.
