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    STEM
    Earnings call· Jun 2026(Q2 FY26)

    STEM Q2 FY26 earnings call STEM

    Aug 12, 2026 Source

    Executive summary

    Stem, Inc. Q2 FY26 — Continued Adjusted EBITDA Profitability and International Expansion

    Stem, Inc. delivered its fifth consecutive quarter of positive adjusted EBITDA and record non-GAAP gross margins in Q2 FY26, driven by a software-centric revenue mix. The company reaffirmed its full-year guidance, anticipating continued operational leverage and strategic expansion into utility-scale and international markets, despite a year-over-year revenue decline attributed to lower battery hardware resales.

    Highlights

    5

    • Achieved fifth consecutive quarter of positive adjusted EBITDA at $6.2 million, up 63% from Q2 FY25.

    • Non-GAAP gross margin reached a record 55%, an increase from 49% in Q2 FY25.

    • Operating cash flow turned positive at $0.3 million, representing a $9 million sequential improvement.

    • Bookings grew nearly 40% sequentially to $36.8 million in the quarter.

    • PowerTrack EMS expanded into Latin America (Chile) and Hungary, and won The smarter E AWARD 2026.

    Concerns

    3

    • Total revenue declined 12% year-over-year to $33.7 million, primarily due to lower battery hardware resale revenue ($0.3 million vs. $5.4 million in Q2 FY25).

    • Managed services revenue decreased 34% year-over-year to $5.9 million against an unusually strong Q2 FY25.

    • Battery hardware resale revenue is expected to trend toward the lower end of the full-year $40 million guidance range.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Total Revenue
    $140 million to $190 million
    high materiality
    High
    Full-year 2026 Software, Services, and Edge Hardware Revenue
    $130 million to $150 million
    medium materiality
    High
    Full-year 2026 Battery Hardware Resale Revenue
    up to $40 million, trending toward lower end
    medium materiality
    Medium
    Full-year 2026 Non-GAAP Gross Margin
    40% to 50%, trending toward higher end
    high materiality
    Medium
    Full-year 2026 Adjusted EBITDA
    $10 million to $15 million, tracking toward high end
    high materiality
    High
    Full-year 2026 Operating Cash Flow
    $0 to $10 million
    high materiality
    High
    Year-end 2026 ARR
    $65 million to $70 million
    high materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    PowerTrack software
    Reflecting continued strength in core commercial and industrial solar monitoring business.
    		$10.5 million11%——
    Edge hardware
    Growth driven by shift in revenue mix towards utility-scale projects requiring more edge hardware.
    		$14.8 million22%——
    Project and professional services
    		$2.2 million-6%——
    Managed services
    Against an unusually strong Q2 FY25, where roughly 100 MWh were brought online.
    		$5.9 million-34%——
    Battery hardware resale
    Minimal revenue in the first half of the year, expected to increase in the second half.
    		$0.3 milliondown from $5.4 million in Q2 FY25——

    Operational metrics

    12
    Adjusted EBITDA
    $6.2 millionup 63% YoY
    Q2 FY26

    More than double Q1 FY26 adjusted EBITDA. H1 FY26 adjusted EBITDA was $8.2 million compared to negative $0.8 million for H1 FY25.

    Non-GAAP Gross Margin
    55%up from 49% in Q2 FY25
    Q2 FY26

    Tracking above the 40%-50% full-year guidance range in H1 due to minimal battery hardware resale revenue.

    GAAP Gross Margin
    41%up from 33% in Q2 FY25
    Q2 FY26
    Cash and Cash Equivalents
    $38.4 millionup from $36.6 million at Q1 FY26 end
    Q2 FY26 end
    ATM Equity Sales
    $6 million
    Q2 FY26

    Opportunistically used at-the-market program.

    CARR
    $69.0 millionup 3% QoQ
    Q2 FY26 end
    ARR
    $62.4 millionup 2% QoQ
    Q2 FY26 end
    PowerTrack ARR
    $42.8 millionup 3% QoQ, up 13% YoY
    Q2 FY26 end
    Managed Services ARR
    $19.6 millionflat QoQ
    Q2 FY26 end
    Solar Operating Assets Under Management (AUM)
    38.3 GWup 2% QoQ
    Q2 FY26 end
    Storage Operating Assets Under Management (AUM)
    1.8 GWhup 6% QoQ
    Q2 FY26 end
    Cash Operating Expenses
    sequentially flatdown 11% YoY
    Q2 FY26

    Reflects continued cost management and efficiency through AI use.

    Industry KPIs

    4
    MetricValueDetails
    Orders bookings growth$36.8 millionUSD
    M a acquisition contribution—
    Backlog by segment end market$27.1 millionUSD
    Data center exposure pipeline—

    Orderbook & backlog

    2
    Bookings$36.8 millionQ2 FY26

    up 39% QoQ, up 7% YoY

    Contracted Backlog$27.1 millionQ2 FY26 end

    up 18% QoQ

    Product announcements

    3
    ProductTypeDetails
    Ionalaunch
    PowerTrack EMSmilestone
    PowerTrack UXupdate

    Deals & partnerships

    4
    RaccoonAutomated fault detection and event management technology

    Acquired in April, integration into PowerTrack is progressing well. Development and sales teams are working on packaging and releasing this new capability to customers.

    Nuvation EnergyCo-marketing agreement for domestic control projects

    Working closely with Nuvation's technical and sales team, co-presented at the IEEE Power & Energy Society General Meeting in Montreal in late July.

    CopecGranja Solar Project in Chile

    PowerTrack EMS will serve as the primary control system for a 420 MWh battery storage system being added to an existing 135-megawatt solar facility in Latin America.

    Solar Markt GroupHybridization project in Hungary

    Selected PowerTrack EMS as the integrated energy management plant control and SCADA platform for two 80 MWh battery systems being added to two existing 60-megawatt solar sites. PowerTrack PPC is already in place for existing solar assets. Commercial operation of fully hybridized assets expected in fall 2026.

    Risks & headwinds

    3
    Lower battery hardware resale revenueQ2 FY26, expected to continue in H2 FY26

    Q2 FY26 revenue of $0.3 million, down from $5.4 million in Q2 FY25

    Mitigation: Shift in revenue mix towards higher-margin software, services, and edge hardware; expectation for increased battery hardware resale in H2.

    Decline in managed services revenueQ2 FY26

    Down 34% YoY to $5.9 million

    Mitigation: Attributed to an unusually strong comparable quarter in Q2 FY25; no specific mitigation mentioned beyond general growth initiatives.

    Potential impact of US policy changes (FCC inverter ruling, Section 232 tariffs)Ongoing

    Not quantified, management states no current impact

    Mitigation: Projects are spread across multiple countries; company navigates by staying on top of policies and working with customers and partners.

    What to watch in Q3 FY26

    5

    Battery hardware resale revenue

    next quarter
    Currenttrending toward lower end of $40 million range
    Targetclarity on actual full-year revenue

    Why it matters

    Impacts total revenue and gross margin mix for the full year.

    We provided guidance on battery hardware resales of up to $40 million, which we still anticipate to be weighted to the second half⚖️ of the year, and we expect to trend toward the lower end of that range.

    Q&A highlights

    5

    What is driving the strong performance in edge hardware revenue (up 22% YoY) and its gross margin?

    The growth in edge hardware is a natural shift in the revenue mix as the company expands into the utility-scale space, where projects inherently require a greater percentage of edge hardware deployment due to their nature and size.

    “Yes, look, we had a good quarter, and as we grow into the utility-scale space, this kind of shift in the mix is natural. These projects come as a configuration with a greater percentage of edge hardware deployment just because of the nature and the size of these projects.”

    asked by Jonathan Windham · answered by Arun Narayanan

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Leverage and Profitability

    Stem achieved its fifth consecutive quarter of positive adjusted EBITDA, reaching $6.2 million in Q2 FY26, a 63% increase year-over-year. Non-GAAP gross margin hit a record 55%, driven by a revenue mix weighted towards software, services, and edge hardware, with minimal battery hardware resales. Operating cash flow turned positive at $0.3 million, a $9 million sequential improvement, reflecting the benefits of increased high-margin billings and disciplined cost management, with cash operating expenses remaining flat sequentially and down 11% year-over-year.

    02

    PowerTrack Platform Strengthening and Enhancements

    The core PowerTrack platform continued to strengthen, adding approximately 0.8 GW of solar assets under management, which contributed to a 3% sequential growth in PowerTrack ARR. Product improvements, including an updated UX with dark mode and feedback tools, were shipped to enhance daily workflows for operators. The integration of the recently acquired Raccoon automated fault detection technology into PowerTrack is progressing well, with plans for a substantive update in Q3.

    03

    Accelerated Growth Foundation and International Expansion

    Stem is building a foundation for accelerated growth in 2027 and beyond, focusing on utility-scale deployments and international expansion. Bookings in the utility-scale segment grew nearly 40% sequentially. PowerTrack EMS successfully entered Latin America with the Granja Solar Project in Chile (420 MWh battery storage) and expanded in Hungary with Solar Markt Group (two 80 MWh battery systems), demonstrating the commercial prospects of their EMS offering for hybrid utility-scale projects.

    04

    Industry Recognition and Strategic Partnerships

    PowerTrack EMS received external validation by winning The smarter E AWARD 2026 in the Smart Integrated Energy category, recognizing its innovative platform for clean energy systems. A co-marketing agreement and partnership with Nuvation Energy continues to build optionality for projects requiring domestic control, with joint presentations already taking place.

    05

    New Market Opportunities in AI and Data Centers

    The company officially launched Iona, its AI services offering, in June, and is actively engaging with existing customers to identify AI applications for their operations. Additionally, Stem is exploring how its energy optimization software and market expertise can support data center developers and operators, with development on this offering currently ongoing.

    06

    Revenue Mix Shift and Guidance Reaffirmation

    Total revenue for Q2 FY26 was $33.7 million, down 12% year-over-year, primarily due to a significant reduction in battery hardware resale revenue to $0.3 million from $5.4 million in Q2 FY25. Conversely, revenue from software, services, and edge hardware grew 1% year-over-year to $33.4 million. Despite the revenue mix shift, the company reaffirmed its full-year 2026 guidance across all metrics, expecting to trend towards the higher end of its non-GAAP gross margin and adjusted EBITDA ranges.

    AI-generated summary of the company’s earnings call. Not investment advice.