Slide 1: Investor Presentation
November 2023 Investor Presentation
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements This presentation, as well as other statements we make, contains “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words s
Slide 3: Agenda
Agenda • Company Update • Industry Outlook • Q3’23 Financial and Operating Results • Appendix © 2023 Stem, Inc. 3
Slide 4: Today's Presenters
Today’s Presenters Seasoned leadership team with extensive experience in software, energy and industrial companies John Carrington Bill Bush CEO and Director Chief Financial Officer Prakesh Patel Ted Durbin Chief Strategy Officer Vice President, Investor Relations © 2023 Stem, Inc. 4
Slide 5: Our Guiding Principles
Our Guiding Principles Drive to positive adjusted EBITDA Build a leading Grow revenues at international business or above market Integrate teams to advance Delight our customers a common mission Make Stem a great place to work © 2023 Stem, Inc. 5
Slide 6: Third Quarter 2023 Results & Highlights
Third Quarter 2023 Results & Highlights Positioned to meet full year performance targets with strong bookings momentum into 2024 Strong Q3 Momentum* Q3 Highlights Revenue Bookings $134M $676M +34% YoY +203% YoY Record Q3 Bookings, +186% QoQ SB Energy agreement for software and Strong CARR growth, +1
Slide 7: Third Quarter Highlights (continued)
Third Quarter Highlights (continued) Bookings reach all-time high $ in millions Record Bookings Record bookings growth $900 and Steady CARR Growth $100 ● Strength in FTM storage, driven by muni / co-op segment $88 $90 $800 ● Solar backlog +41% YoY $75 $676 $80 $700 $72 ● Consistent strong contracted
Slide 8: Operational Excellence
Operational Excellence Successful growth in revenue and profitability across the business $ in millions unless otherwise noted. Revenue $513 - $613 Bookings 4-5x estimated revenue growth over past $563 $1,400 - $1,600 $1,500 two years driven by strong execution and 110% CAGR 90% CAGR $363 $1,057 sig
Slide 9: Creating Value with Software, Hardware & Services
Creating Value with Software, Hardware & Services Growing recurring software cash flows driven by edge solution deliveries Software Hardware Services Turnkey BESS Modular ESS Project configuration & deployment Recurring SaaS revenue Sourced from Tier 1 Proprietary smart Ongoing reporting and other S
Slide 10: Stem + SB Energy Global
Stem + SB Energy Global Software & services opportunity across 10GWh+ project pipeline SB Energy (SBE) ● SoftBank Group’s utility scale solar, energy storage and technology platform Technology and Commercial Alliance ● Offer Stem modular ESS software and services across multi-year 10GWh SBE Pipeline
Slide 11: Accelerating Momentum with Munis and Coops
Accelerating Momentum with Munis and Coops • Stem playbook of investing in markets to gain foothold and then building a leadership position Notable Wins: $1B+ - 2020/2021: entered ISO-NE market and built >50% market share in 18 months 200MWh 313MWh 1.3GWh Cooperative Ameresco Cooperative - 2022/2023
Slide 12: Technology Leadership
Technology Leadership New products driving additional value for customers ● Solutions are resonating with customers in multiple markets: Athena named ○ New York Storage: co-optimizing real-time grid calls, local and seasonal Sustainability Product peaks; expect 700+ MWh under Athena control in NY in
Slide 13: AI Technology Leadership
AI Technology Leadership Customer proof points and industry recognition drive pricing power Best Predictive Analytics Platform AI Breakthrough, June 2023 2023 Top Product of Largest Virtual “Athena’s footprint and the myriad data points that constantly hone its machine Product of the Year the Year P
Slide 14: Accelerating Innovation and Profitability
Accelerating Innovation and Profitability Leveraging AI tools to drive operational efficiency and increase customer value Strongly positioned to leverage predictive analytics and generative AI tools to drive operational leverage ● Deliver scalable professional service offerings via technology ● High
Slide 15: Our Services Deliver Value Across the Entire Clean Energy Project Lifecycle
Professional Services Our Services Deliver Value Across the Entire Clean Energy Project Lifecycle Advisory Services Deployment Services Managed Services Solution Provisioning and Market & Program Remote Operations Engineering Commissioning Revenue Services Center System design and review Support fie
Slide 16: Industry Outlook
Industry Outlook © 2023 Stem, Inc. 16
Slide 17: Significant Market Opportunity
Deployments Significant Market Opportunity US FTM Storage Well positioned to monetize strong industry growth 48,106 21% CAGR FTM Storage: large deployments, strong growth MWh 22,375 ● FTM represents ~85% of current/forecasted storage deployments and ~90% of recent bookings 2023 2027 ● Strong muni /
Slide 18: Munis and Co-ops Represent an Attractive Market
Munis and Co-ops Represent an Attractive Market Direct Pay Provision provides enhanced economics for customers ● Treasury clarification on the Direct Pay Provision in the IRA driving demand amongst municipalities, community choice aggregations (CCAs) and cooperatives ● Tax-exempt and government enti
Slide 19: Interconnection and Permitting
Interconnection and Permitting FERC, Congress taking steps to improve interconnection and permitting queues FERC Order No. 2023 provides a pathway to improvement ● Prioritizes readiness through study withdrawal penalties, site control, and readiness deposits ● Requires projects to be studied as grou
Slide 20: Storage Revenue Conversion Timelines
Storage Revenue Conversion Timelines BTM Project Timeline FTM Project Timeline Software Software BTM FTM Turned On Turned On Booking Software revenue recognized Booking Software revenue recognized Included in operating AUM Included in operating AUM Month 0 +10 months +2-6 months Month 0 +18 months +
Slide 21: Q3'23 Financial and Operating Results
Q3’23 Financial and Operating Results © 2023 Stem, Inc. 21
Slide 22: Financial Metrics
Financial Metrics Revenue, Adjusted EBITDA and Gross Margin* $ millions unless otherwise noted Q3 Highlights Revenue Adjusted EBITDA ● Adjusted EBITDA tracking towards 34 % positive 2H goal (1) ● Driving operating leverage: (13) ○ Cash operating expense as percentage of revenue of 20% in Q3’23 vs. 2
Slide 23: Operating Metrics
Operating Metrics Strong Momentum in Backlog, CARR and AUM $ millions unless otherwise noted Backlog, CARR and AUM Growth • Backlog +35% QoQ / +125% YoY, driven 35% 1.84 17% by strong bookings 1.36 • CARR up 17% QoQ; raising full-year guidance to $90 - $95M • Storage AUM up 32% QoQ, continued commer
Slide 24: Working Capital
Working Capital $125M of cash and equivalents exiting 3Q’23 ● Expect net cash generation in 4Q’23 Expect to exit FY2023 with no less than $150M in cash and equivalents Drivers of expected increase in cash ● Higher adjusted EBITDA and continued operating leverage ● Modular ESS and improved supply cha
Slide 25: Full-Year 2023 Guidance
Full-Year 2023 Guidance 2023E: Q1’23A Q2’23A Q3’23A Q4’23E $513M - $613M $219M- Revenue(1) $67M $93M $134M Prior: $550M –$650M $319M Prior: $230M –$290M 15–20% Non-GAAP Gross Margin 19% 18% 12% Q1’23A Q2’23A Q3’23A Q4’23E 2023E: Bookings $125M- $364M $236M $676M $1.4B - $1.6B $325M 2023E: Year-End 2
Slide 26: Key Takeaways
Key Takeaways Expect Full Year adjusted EBITDA Positive in 2024 • Third quarter momentum driven by strong end market demand: • Record bookings growth • Significant storage backlog, AUM, and CARR growth • Solid solar asset management growth and execution • Software and services deal execution, unders
Slide 27: About Stem
About Stem Stem (NYSE: STEM) provides clean energy solutions and services designed to maximize the economic, environmental, and resiliency value of energy assets and portfolios. Stem’s leading AI-driven enterprise software platform, Athena® enables organizations to deploy and unlock value from clean
Slide 28: Appendix A
Appendix A Revenue model, disclosures, upcoming events, glossary © 2023 Stem, Inc. 28
Slide 29: Revenue Build
Revenue Build Total Revenue Storage Solar Revenue Revenue Storage Solar Total Deliveries (kWh) Storage Solar Services and Services and (x) Project Hardware Hardware Hardware Other Other ASP ($/kWh) = Total Hardware 5%-15% GM 40% GM Revenues Software Project Software Project Services Services Service
Slide 30: Supplemental Revenue Detail
Supplemental Revenue Detail Solar - Supplemental Revenue Detail $ millions Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Solar Hardware Revenue $11.0 $9.5 $27.8 $21.2 Solar Services and Other Revenue 8.5 7.1 25.2 19.1 Total Solar Revenue $19.5 $16.6 $53.0 $40.3
Slide 31: Financial and Operating Metrics
Financial and Operating Metrics Three Months Ended Nine Months Ended $ millions unless otherwise noted September 30, September 30, 2023 2022 2023 2022 Revenue(1) $133.7 $99.5 $294.1 $207.5 GAAP (Loss) Gross Profit (20.3) 9.1 (7.4) 20.5 GAAP Gross Margin % (15%) 9% (3%) 10% Non-GAAP Gross Profit* 21.
Slide 32: Reconciliation of GAAP and Non-GAAP Gross Profit
Reconciliation of GAAP and Non-GAAP Gross Profit Three Months Ended Nine Months Ended $ millions unless otherwise noted September 30, September 30, 2023 2022 2023 2022 Revenue $133.7 $99.5 $294.1 $207.5 Cost of Revenue (154.0) (90.4) (301.5) (187.0) GAAP Gross (Loss) Profit (20.3) 9.1 (7.4) 20.5 GAA
Slide 33: Reconciliation of Net Loss to Adjusted EBITDA
Reconciliation of Net Loss to Adjusted EBITDA Three Months Ended Nine Months Ended September 30, September 30, $ thousands 2023 2022 2023 2022 Adjusted EBITDA, as used in the Company's full-year 2023 guidance, is a non-GAAP financial measure that Net loss attributable to Stem $(77,072) $(34,279) $(1
Slide 34: Upcoming events
Upcoming events December 4, 2023 BMO Growth and ESG Conference December 6, 2023 Janney Clean Energy Investment Symposium Goldman Sachs Energy, CleanTech & Utilities January 4, 2024 Conference February 2024 Fourth Quarter Earnings Call © 2023 Stem, Inc. 34
Slide 35: Definitions
Definitions Item Definition Total value of executed customer agreements, as of the end of the relevant period • Customer contracts are typically executed 6-24 months ahead of installation • Booking amount typically includes: Bookings • 1) Hardware revenue, which is typically recognized at delivery o
Slide 36: Glossary
Glossary • ASP – Average selling price • IPP – Independent power producer • ROC – Remote operations center • AUM – Assets under management • IRA – Inflation Reduction Act • RTO – Regional transmission organization • BESS – Battery energy storage system • IRP – Integrated resource plan • SW – Softwar
Slide 37: Appendix B
Appendix B Stem Overview © 2023 Stem, Inc. 37
Slide 38: The Journey to Today
The Journey to Today Industry leadership, innovation, and execution First to market C&I storage to the Fortune 500 First California ISO wholesale market participation Largest Virtual Power Plant provider in North America Largest fleet of FTM storage in ISO-New England #1 solar asset performance mana
Slide 39: Athena AI Platform Built on Over 10 Years of Data + Experience
Stem’s Athena AI Platform is Built on Over 10 Years of ATHENA CUMULATIVE RUNTIME HOURS 40M Data + Experience 30M 5.0 GWh 20M contracted 900+ sites & 10M ~1 GWh 400+ sites & contracted 100 MWh in 100+ operation 0M sites in operation 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gen 1 Gen 2 Gen 3
Slide 40: Stem Offers Leading Solutions to both BTM and FTM Customers
Stem Offers Leading Solutions to both BTM and FTM Customers Behind-the-Meter “BTM” 2,500 Representative Customers Discharging when prices are high 2,000 Commercial and Industrial Services 1,500 • Reducing consumer energy bills 1,000 10% - 30% kW 500 • Electric vehicle offerings 0 Charging when price
Slide 41: Stem Offers More Value with BTM & FTM Services
Stem Offers More Value with BTM & FTM Services Athena’s clean energy solutions provide ITC & Energy services to multiple PV Self- Arbitrage Spin / Consump- (EA) markets and asset types. Backup tion (ITC) Non-Spin Reserve Power Frequency ibl ot Demand Regulation po ice n e Charge Stem’s Reduction Vol
Slide 42: Athena AI Simplifies Operations
Athena AI Simplifies Operations Predict Increased Machine learning forecasts the near term Yield and multi-day future Settle Analyze data to monitor value and Dispatch Optimize support billing and Economic Automated controls Solves millions of settlements operate assets complex equations to Optimiza
Slide 43: Athena Learns and Adapts, Automatically and Continuously
Athena Learns and Adapts, Automatically and Continuously Unparalleled data management and complex co-optimization capabilities Updates multi-day forecasts, running millions of Automated forecast model selection scenarios to create market bids and operating plans adapts to changing conditions Every S
Slide 44: PowerTrack is the Industry Standard for Solar Asset Performance Management
PowerTrack is the Industry Standard for Solar Asset Performance Management Asset Performance 13 of the top 15 Management US C&I Asset Owners standardized on PowerTrack Integrated edge-to-cloud solution that simplifies clean energy management Monitoring and control offering reduces operating costs by
Slide 45: Improving Access to Large Scale Solar + Storage
Improving Access to Large Scale Solar + Storage Modular ESS enhances customer flexibility while driving better Stem margins and cash flows Initiative Customer benefits Stem benefits • Develop universal “unit controller” edge • Enables supplier optionality to • Increases penetration into large solar
Slide 46: Appendix C
Appendix C Market Outlook © 2023 Stem, Inc. 46
Slide 47: Resurgent Behind-the-Meter Storage Market Outlook
Resurgent Behind-the-Meter Storage Market Outlook Leading market share and technology differentiation Key Metrics BTM US Energy Storage Market Outlook • Customers include community, commercial and industrial 3,500 • Typically 10-year software contract 2,878 3,000 • Average system of 2MWh and $1M HW+
Slide 48: Strong Front-of-the-Meter Storage Market Outlook
Strong Front-of-the-Meter Storage Market Outlook Proven track record in driving higher revenue and project returns Key Metrics FTM US Energy Storage Market Outlook • Customers include Utilities, IPPs, and Renewable Asset Owners 60,000 • ~25% of total FTM bookings are software-only by 2025 21% • Typi
Slide 49: Solar Asset Performance Management Market Outlook
Solar Asset Performance Management Market Outlook #1 in the industry and positioned to move upstream into large portfolios integrated with storage Key Metrics US Solar PV Market Outlook • AlsoEnergy PowerTrack reduces operating costs and enhances Utility Scale BTM project revenues for solar projects
Slide 50: Expect Battery Supply Chain to Improve
Expect Battery Supply Chain to Improve Global battery supply expected to exceed demand in coming years 7,000 Lithium-ion Battery Cell Supply and Demand 2023–2032(1) Global OEMs building dedicated Supply could exceed demand stationary storage 6,000 by 66% by 2032 manufacturing facilities 5,000 Announ
Slide 51: Expect Battery Prices to Decline
Expect Battery Prices to Decline Lower battery system prices should increase demand US Grid-Scale Storage System Costs 2022–2031(1) Storage System Cost Components $400 $380 Expect US battery prices to $360 decline ~20% Balance $340 of System 23% $320 US$ / kWh $300 Cell $280 49% EPC $260 20% $240 $2
Slide 52: Domestic Battery Manufacturing Plants
Domestic Battery Manufacturing Plants California California Operational Construction Planned Michigan Michigan New York New York Tesla LG ES 20 Our next 27 Imperium3 1 18 Fremont Holland energy Endicott 10GWh* 25GWh Van Buren 2028,36GWh 2024,20GWh 2 Statevolt 19 LG ES-GM North Carolina North Carolin
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