Stem's Q1 2025 Earnings Call: Unpacking Key Contradictions on Tariffs, Contracts, and Cost Reductions

Tariff impacts on battery transactions, PowerBidder Pro contract and asset under management, operational cost reductions are the key contradictions discussed in Stem's latest 2025Q1 earnings call.



Revenue Growth and Software Focus:
- Stem, Inc. reported software revenue up 17% year-over-year in Q1 2025, with total revenue up 27%.
- The growth was driven by strong performance from PowerTrack and increased storage software activations, reflecting the company's strategic shift towards higher-margin software and services revenue.

Profitability Milestones:
- Stem achieved a record GAAP gross margin of 32% and a non-GAAP gross margin of 46%, reaching positive quarterly operating cash flow for the first time.
- This was attributed to robust growth in high-margin software, services, and edge devices, as well as ongoing operating cost discipline.

Organizational Changes and Cost Savings:
- The company implemented a 27% reduction in force, expected to result in $30 million in annual cash cost savings, including $24 million in 2025.
- This restructuring was part of a strategic shift to focus on software revenue growth and aimed to preserve the company's financial health and market competitiveness.

Customer and Market Momentum:
- Solar Annual Recurring Revenue (ARR) increased by 10% sequentially and 24% year-over-year in Q1.
- The company is seeing momentum in utility scale deployments with nearly triple the bookings compared to the previous year, indicating strong market interest and growth potential.