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Stem Q2 revenue rose 12.9% year over year to $38.4M, beating the consensus estimate.
Software and managed services growth fueled higher recurring revenue and new customer gains.
Non-GAAP gross margin expanded 900 bps to 48.9%, while adjusted EBITDA turned positive.
Stem (STEM - Free Report) shares have gained 11.9% since it reported second-quarter 2025 results on Aug. 7. The uptick can be attributed to strong growth in software and managed services, new customer engagements, expanded professional services, and increased recurring revenue momentum.
In the second quarter of 2025, Stem reported a loss of $3.73 per share, which was narrower than $4.40 per share reported in the year-ago quarter. The figure missed the Zacks Consensus Estimate by 24.33%.
Revenues of $38.4 million climbed 12.9% year over year and beat the consensus mark by 15.93%.
Stem shares have gained 15.5% year to date, outperforming the Zacks Computer & Technology sector’s 13.5% return.
Solar Software revenues (24.8% of revenues) climbed 20.4% year over year to $9.5 million. Edge Hardware (31.5% of revenues) increased 8.6% year over year to $12.1 million.
Project and Professional Services (6.1% of revenues) increased 76.1% year over year to $2.3 million. Storage Software & Managed services (23.5% of revenues) increased 53.2% year over year to $9 million. Battery Hardware resale (14.2% of revenues) decreased 30% year over year to $5.4 million.
In the second quarter of 2025, Stem maintained bookings of $34.3 million, slightly down from $34.5 million in the first quarter of 2025, and increased its contracted backlog by 6% to $26.8 million.
Storage operating assets under management (AUM) grew 42% year over year to 1.7 gigawatt hours (GWh), while solar operating AUM increased 22% year over year to 32.7 gigawatts (GW).
Contracted Annual Recurring Revenue remained nearly flat at $69.2 million, while Annual Recurring Revenue (ARR) rose 3% quarter over quarter to $58.5 million, reflecting 22% year-over-year growth.
In the second quarter, operating expenses decreased 95.6% year over year to $26.1 million. In the reported quarter, research & development expenses declined 34.6% year over year to $10 million. General & administrative expenses decreased 43.8% year over year to $8.9 million. Selling and marketing expenses decreased 33.8% year over year to $7.3 million.
In the second quarter of 2025, adjusted EBITDA reached $3.8 million, up from an adjusted EBITDA loss of 11.3 million in the second quarter of 2024.
STEM Balance Sheet Details
As of June 30, 2025, Stem had cash and cash equivalents of $40.8 million compared with $58.6 million as of March 31, 2025.
Operating cash outflow for the second quarter of 2025 was $21.3 million compared with $11.9 million in the second quarter of 2024.
STEM Provides 2025 Guidance
Stem now expects 2025 revenues between $125 million and $175 million.
Software, edge hardware, & services are expected to be between $120 million and $140 million.
For 2025, Battery hardware resale is expected to be approximately $35 million.
Non-GAAP gross margin is expected to be between 30% and 40%.
Adjusted EBITDA is expected to be between a loss of $10 million and a gain of $5 million.
Year-end ARR is projected to be between $55 million and $65 million.
Image: Bigstock
STEM Shares Gains 12% on Narrower Q2 Loss, Revenues Increased Y/Y
Key Takeaways
Stem (STEM - Free Report) shares have gained 11.9% since it reported second-quarter 2025 results on Aug. 7. The uptick can be attributed to strong growth in software and managed services, new customer engagements, expanded professional services, and increased recurring revenue momentum.
In the second quarter of 2025, Stem reported a loss of $3.73 per share, which was narrower than $4.40 per share reported in the year-ago quarter. The figure missed the Zacks Consensus Estimate by 24.33%.
Revenues of $38.4 million climbed 12.9% year over year and beat the consensus mark by 15.93%.
Stem shares have gained 15.5% year to date, outperforming the Zacks Computer & Technology sector’s 13.5% return.
Stem, Inc. Price, Consensus and EPS Surprise
Stem, Inc. price-consensus-eps-surprise-chart | Stem, Inc. Quote
STEM Q2 Top-Line Details
Solar Software revenues (24.8% of revenues) climbed 20.4% year over year to $9.5 million. Edge Hardware (31.5% of revenues) increased 8.6% year over year to $12.1 million.
Project and Professional Services (6.1% of revenues) increased 76.1% year over year to $2.3 million. Storage Software & Managed services (23.5% of revenues) increased 53.2% year over year to $9 million. Battery Hardware resale (14.2% of revenues) decreased 30% year over year to $5.4 million.
In the second quarter of 2025, Stem maintained bookings of $34.3 million, slightly down from $34.5 million in the first quarter of 2025, and increased its contracted backlog by 6% to $26.8 million.
Storage operating assets under management (AUM) grew 42% year over year to 1.7 gigawatt hours (GWh), while solar operating AUM increased 22% year over year to 32.7 gigawatts (GW).
Contracted Annual Recurring Revenue remained nearly flat at $69.2 million, while Annual Recurring Revenue (ARR) rose 3% quarter over quarter to $58.5 million, reflecting 22% year-over-year growth.
STEM Q2 Operating Details
STEM’s second-quarter 2025 non-GAAP gross margin expanded 900 basis points (bps) to 48.9%.
In the second quarter, operating expenses decreased 95.6% year over year to $26.1 million. In the reported quarter, research & development expenses declined 34.6% year over year to $10 million. General & administrative expenses decreased 43.8% year over year to $8.9 million. Selling and marketing expenses decreased 33.8% year over year to $7.3 million.
In the second quarter of 2025, adjusted EBITDA reached $3.8 million, up from an adjusted EBITDA loss of 11.3 million in the second quarter of 2024.
STEM Balance Sheet Details
As of June 30, 2025, Stem had cash and cash equivalents of $40.8 million compared with $58.6 million as of March 31, 2025.
Operating cash outflow for the second quarter of 2025 was $21.3 million compared with $11.9 million in the second quarter of 2024.
STEM Provides 2025 Guidance
Stem now expects 2025 revenues between $125 million and $175 million.
Software, edge hardware, & services are expected to be between $120 million and $140 million.
For 2025, Battery hardware resale is expected to be approximately $35 million.
Non-GAAP gross margin is expected to be between 30% and 40%.
Adjusted EBITDA is expected to be between a loss of $10 million and a gain of $5 million.
Year-end ARR is projected to be between $55 million and $65 million.
Zacks Rank & Stocks to Consider
Stem currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector are Autodesk (ADSK - Free Report) , Applied Materials (AMAT - Free Report) , and Cisco Systems (CSCO - Free Report) . Each stock carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Autodesk is set to report second-quarter fiscal 2026 results on Aug. 28. Autodesk shares have lost 3.7% year to date.
Applied Materials is slated to report third-quarter fiscal 2025 results on Aug. 14. Applied Materials shares have gained 13.5% year to date.
Cisco Systems is set to report fourth-quarter fiscal 2025 results on Aug. 13. Cisco Systems shares ave rallied 19.3% year to date.