Stem's Q4 2024: Unpacking Contradictions in Backlog Metrics, Software Growth, and Project Delays

These are the key contradictions discussed in Stem's latest 2024Q4 earnings call, specifically including: Backlog Definition and Calculation, Software Revenue Growth, USDA Financing Impacts on the Backlog, and Interconnection Delays:



Software Revenue and Market Share:
- Stem Inc. reported that its software revenue was up 6% year-over-year, driven by strong performance from PowerTrack and increased storage software activations.
- The growth was attributed to the high market share of PowerTrack among top commercial and industrial solar asset owners in the U.S.

Cost Reduction and Operational Efficiency:
- The company expects additional cost savings of more than 20% in 2025, beyond the 15% reduction discussed in the previous quarter.
- These savings will be achieved through eliminating operational inefficiencies, streamlining corporate structure, and empowering management teams.

PowerTrack Growth and International Opportunities:
- PowerTrack, a key product, earned 70% to 80% gross margins, contributing to high-margin business with large and growing annual recurring revenue.
- International expansion opportunities are highlighted, with recent announcements from Neovolt in Hungary and Summit Ridge Energy in the U.S., supporting growth in both domestic and international markets.

Operating ARR and Financial Guidance:
- Stem Inc. provided guidance for 15% ARR growth at the midpoint from year-end 2024 to year-end 2025, with a range of $55 million to $65 million.
- The guidance reflects a strategic focus on driving recurring and predictable software and services revenues.