Stem Announces Third Quarter 2021 Financial Results
November 09 2021 - 04:26PM
Company achieves record revenue, gross margin, backlog, pipeline and AUM
Continued expansion of Athena® platform drives strong momentum into 2022
Stem, Inc. ("Stem" or the "Company") (NYSE: STEM), a global leader in artificial intelligence (AI)-driven energy storage services, announced today its financial results for the third quarter ended September 30, 2021.
Third Quarter 2021 Financial and Operating Highlights
Financial Highlights
Record revenues of $39.8 million, up from $9.2 million (+334%) in the same quarter last year
Record Gross Margin (GAAP) of 8% versus (19)% in the same quarter last year
Non-GAAP Gross Margin of 15% versus 8% in the same quarter last year
Net Income of $115.6 million versus Net Loss of $(18.8) million in the same quarter last year. Net Income in the quarter was driven primarily by a non-cash revaluation of Public Warrants. All outstanding Public Warrants were exercised or redeemed during the quarter
Adjusted EBITDA of $(7.2) million versus $(7.9) million in the same quarter last year
Ended the third quarter of 2021 with $576 million in cash, cash equivalents and short-term investments and zero debt
Operating Highlights
Record 12-month Pipeline of $2.4 billion, up from $1.7 billion (+41%) at the end of the second quarter
Record Bookings of $104 million, up from $37 million (+183%) in the same quarter last year
Record Contracted Backlog of $312 million, up from $250 million (+25%) at the end of the second quarter
Record Contracted Assets Under Management (AUM) of 1.4 gigawatt hours (GWh), up from 1.0 GWh in the same quarter last year
John Carrington, Chief Executive Officer of Stem, commented, “We are excited to report a record quarter of commercial and operational execution reflected in revenues, gross margin, backlog, pipeline and AUM this quarter. Customers increasingly demand our smart energy solutions enabled by Athena®, our industry-leading software platform. These financial and operating results include a 25% sequential increase in contracted backlog, driven by a record $104 million in bookings, and a 41% sequential increase in pipeline. Revenue was once again at the high end of our guidance range, and we remain on track to meet our full-year 2021 revenue and Adjusted EBITDA targets. We have secured our anticipated supply requirements through Q3 2022 and are strategically moving to lock in the anticipated hardware deliveries for the full year 2022 to meet contracted customer demand. Combined with a rapidly expanding market, our differentiated offering, and strong balance sheet, we believe our commercial momentum gives us excellent visibility into multi-year growth.”
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The Company will continue to diversify its supply chain, adopt alternative technologies, and deploy its balance sheet to meet the expected significant growth in customer demand. COVID-19 continues to impact the supply chain and the Company is actively working to mitigate any continued effects of the pandemic on its business and results of operations.
Business Highlights
On October 5, 2021, Stem announced two advanced application additions to Athena: (1) Athena SupervisorTM, which provides real-time visibility into how Athena manages and monetizes energy assets, and (2) Athena BidderTM, which automates asset strategies to maximize wholesale market revenues. These applications enable the Company’s project developer customers to meet resource adequacy requirements, optimize wholesale market revenue, and participate in wholesale energy markets. Stem also highlighted three recent customer projects in the Independent System Operator of New England (ISO-NE) market that can co-optimize seven value streams: day-ahead markets, real-time energy markets, frequency regulation, capacity market, coincident peak reduction, solar shifting incentives, and solar ITC earnings.
On September 15, 2021, Stem announced the development of South America’s first virtual power plant (VPP) with Copec, one of the largest energy companies in Central and South America, as well as the completion of their first smart energy storage system in Chile. The companies will be working together with Chilquinta Energía S.A., a local energy supply service company, to establish the first VPP, a network of decentralized BTM power generating sites. For this project, Stem’s Athena has been customized to integrate utility and grid market data points that optimize energy storage assets in the Chilean market. This partnership also involves future collaboration to bring smart energy storage alongside mutual business activities in electric vehicle charging infrastructures and solar project developments.
On August 30, 2021, Stem announced a pilot using Athena to operate a 350 kW / 800 kWh battery system at Penske's heavy-duty truck charging positions in Ontario, California. Athena predicts when the charging site's electricity demand will spike and uses the supplemental stored energy via on-site batteries at the optimal time to drive off-peak electricity savings and minimize utility peak demand charges. Since starting the pilot, smart energy storage has driven a 40% decrease in Penske's site peak energy consumption. Stem collaborated with Penske and its other suppliers in project execution, including optimizing energy tariffs, utilizing energy storage to secure funds from California Air Quality Resources (CARB) as well as securing incentives from California's Self Generation Incentive Program (SGIP).
On August 20, 2021, Stem announced the redemption of all 12.8 million public warrants outstanding. Holders exercised 12.6 million warrants for a purchase price of $11.50 per whole share, generating proceeds to Stem of approximately $145 million. The Company redeemed all remaining outstanding public warrants. The public warrants have been delisted from the New York Stock Exchange, and there are no public warrants left outstanding.
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 50-60% of total 2021 revenue in Q4. The Company expects to provide 2022 guidance in its fourth quarter/full year 2021 earnings call in mid-to-late February 2022.
