Stem, Inc. · NYSE:STEM

Stem — Star Peak Energy Transition — SPAC Merger (January 2021)

50 slides from Stem's SPAC merger presentation, Jan 25, 2021

  1. Slide 1: Leader in AI-Driven Storage Solutions

    Leader in AI - Driven Storage Solutions January 25, 2021

  2. Slide 2: Disclaimer

    © 2021 Stem, Inc. 2 Disclaimer Information Subject to Change This presentation is provided for informational purposes only and has been prepared to assist interested parties in making th eir own evaluation with respect to the proposed business combination of Star Peak Energy Transition Corp. (“STPK”

  3. Slide 3: Disclaimer

    © 2021 Stem, Inc. 3 Disclaimer This presentation also includes references to financial measures that are calculated and presented on the basis of methodolog ies other than in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Any non - GAAP financial m

  4. Slide 4: Transaction Summary

    © 2021 Stem, Inc. 4 Transaction Summary • Founded in 2009, Stem is an industry leading AI - driven storage solutions business • Star Peak Energy Transition Corp. (NYSE: STPK) is a special purpose acquisition company with over $383MM of cash in trust • PIPE size of $225MM • Pro forma equity value of

  5. Slide 5: Star Peak Mission & Summary

    © 2021 Stem, Inc. 5 Star Peak Mission & Summary Star Peak overview Magnetar Capital and Triangle Peak Partners Experienced Sponsor with Proven Track Record Eric Scheyer CEO • Head of Magnetar Energy & Infrastructure Group since its inception in 2005 • Member of Magnetar Investment Committee & Manage

  6. Slide 6: Our Vision: Smart Storage is Key to Global Decarbonization

    © 2021 Stem, Inc. 6 Our Vision: Smart Storage is Key to Global Decarbonization Climate Change is the problem 27% 60% 3x 72% Risk $200bn Electricity production is the #2 polluter responsible for 27% of greenhouse gas emissions (1) Fossil fuels still accounted for 60% of global electricity generation

  7. Slide 7: Our Vision: Smart Storage is Key to Global Decarbonization

    © 2021 Stem, Inc. Our Vision: Smart Storage is Key to Global Decarbonization A revolutionized grid, with Stem, is the solution 7 Distributed, renewable generation is supplementing and replacing traditional generation Since 2019, 90% of new interconnection requests were renewables and/or storage, but

  8. Slide 8: Investment Highlights

    © 2021 Stem, Inc. 8 Investment Highlights 8 Stem is the first pure play smart energy storage company to go public in the US • ~$1.2 trillion in new revenue opportunities for integrated storage expected to be deployed by 2050 (1) • Battery storage capacity expected to increase by 25x by 2030 (2) • 90

  9. Slide 9: Stem Introduction

    © 2021 Stem, Inc. 9 Stem Introduction Hardware + Network Integration Software Market Participation x Tier 1 standard hardware solutions x Battery optimization via Athena AI x Upside sharing through sales into energy markets Smart Energy Storage Drives The Grid Transformation Creates VPPs and Storage

  10. Slide 10: Network Effect and Intelligence Drives Value

    © 2021 Stem, Inc. 10 Network Effect and Intelligence Drives Value 10 Stem operates the world’s largest network of energy storage systems As cumulative installs grow, Athena becomes more intelligent, creating more value and a larger moat

  11. Slide 11: Global Commitment to Decarbonization

    © 2021 Stem, Inc. 11 Global Commitment to Decarbonization REGULATORS CORPORATES UTILITIES & ASSET OWNERS With the world committed to decarbonization, Stem is well positioned to capture this tailwind. Source: Company filings, EEI, S&P Global Market Intelligence. Japan net zero emissions pledge NY, MA

  12. Slide 12: Historical Power Sector is Being Transformed

    © 2021 Stem, Inc. 12 Historical Power Sector is Being Transformed HISTORICAL POWER SECTOR

  13. Slide 13: The Grid is Being Transformed, Decentralized and Democratized

    © 2021 Stem, Inc. 13 The Grid is Being Transformed, Decentralized and Democratized Power used to be all bulk centralized generation…now it is distributed and islanded to enhance reliability & resilience – requiring new solutions and business models More distributed Power used to flow in one directio

  14. Slide 14: Clean Energy Technology Convergence: Disruption and Exponential Growth

    © 2021 Stem, Inc. $ 0 $ 100 $ 200 $ 300 $ 400 2009 2011 2013 2015 2017 2019 Levelized Cost of Energy ($/kW) Nuclear Coal CCGT Wind Solar PV 14 Clean Energy Technology Convergence: Disruption and Exponential Growth Renewables Lowest Cost Generation Battery Hardware Rapid Cost Reductions Source: Bloom

  15. Slide 15: Stem is a Market Leader with Significant Scale and Visible Growth

    © 2021 Stem, Inc. ` 15 Stem is a Market Leader with Significant Scale and Visible Growth • 900+ systems operating or contracted (~1 GWh) (2) • Systems operating in • 75 jurisdictions • 200+ cities Stem is a Leader in Deployments Worldwide (1) One of the Top Systems Integrators by Disclosed Commissio

  16. Slide 16: Stem's Athena AI Platform is Built On Generations and >10 Years of Data

    © 2021 Stem, Inc. 16 Stem’s Athena AI Platform is Built On 3 Generations and >10 Years of Data + Experience Source: Stem. (1) As of 31 - Oct - 2020. Gen 1 2009 – 2015 5+ years inventing the market Gen 2 2016 – 2018 2+ years commercial growth Gen 3 2019 – 2020 2+ years accelerating growth ▪ First to

  17. Slide 17: Athena: Best-in-Class AI Software Platform

    © 2021 Stem, Inc. 17 Athena: Best - in - Class AI Software Platform ATHENA ANALYTICS ATHENA EDGE PLATFORM ATHENA CLOUD PLATFORM ATHENA PORTAL ATHENA GATEWAY Real - time Control Data Acquisition Site Monitoring Asset Management Forecast Optimize Learn & Train Value Modeling & Simulations Dashboards S

  18. Slide 18: Athena Platform Delivers Value to Multiple Customer Segments

    © 2021 Stem, Inc. 18 Athena Platform Delivers Value to Multiple Customer Segments Stem offers more value streams in more markets with more asset types AI - Driven Athena platform facilitates monetization of 11 out of 13 identified energy storage value streams Source: Rocky Mountain Institute. Servic

  19. Slide 19: Athena Platform Delivers Resource Adequacy in the California Market

    © 2021 Stem, Inc. 19 Athena Platform Delivers Resource Adequacy in the California Market Its Electric Grid Under Strain, California Turns to Batteries New York Times “On Friday, Aug. 14, the first day California ordered rolling blackouts, Stem, an energy company based in the San Francisco Bay Area,

  20. Slide 20: Stem Delivers a Strong Value Proposition to Customers

    © 2021 Stem, Inc. (1,500) (1,000) (500) 0 500 1,000 1,500 2,000 2,500 09:30 13:00 16:30 20:00 23:30 03:00 06:30 10:00 13:30 17:00 kW Time of Day Battery Facility Grid Sees 20 Stem Delivers a Strong Value Proposition to Customers Increasing Asset Returns Athena AI enables solar generation time - shif

  21. Slide 21: Athena Product Demo Video

    © 2021 Stem, Inc. 21 Athena Product Demo Video Video URL reference: https://www.stem.com/technology/

  22. Slide 22: Commercial and Industrial Customers Have Complex Energy Choices

    © 2021 Stem, Inc. 22 Commercial and Industrial Customers Have Complex Energy Choices Athena smart energy storage adapts to changing energy objectives • Shift solar energy to match demand • Manage solar intermittency impact • Maximize value of solar Solar Energy • Co - optimize load management with s

  23. Slide 23: Renewable Asset Owners Have New Opportunities

    © 2021 Stem, Inc. 23 Renewable Asset Owners Have New Opportunities Athena smart storage increases returns Asset Owner Goals Project IRRs Time to Value Reduce Risk Future - ready In the Past Today with Storage • Build and monitor output • Clean and repair as required Large - scale Solar - only Plants

  24. Slide 24: Industry Leading Reach And Unmatched Sales Network

    © 2021 Stem, Inc. 24 Industry Leading Reach And Unmatched Sales Network 500+ sales executives across EPC / developer channels with Stem University Deep relationships across the Fortune 500 Distributor relationships cover entire US market Consistently delivering differentiated returns to renewable as

  25. Slide 25: Strong Balance Sheet Drives Rapid Expansion

    © 2021 Stem, Inc. 25 Strong Balance Sheet Drives Rapid Expansion ~$525MM Athena Expansion & Tech Acquisitions Product development to further extend Athena AI leadership position and accelerate roadmap Supply Chain Savings Capital to further reduce cost structure with OEMs Balance Sheet Strength Supp

  26. Slide 26: Exceptional Leadership Team

    © 2021 Stem, Inc. 26 Exceptional Leadership Team John Carrington CEO and Director Mark Triplett Chief Operating Officer Alan Russo Chief Revenue Officer Prakesh Patel Chief Strategy Officer Larsh Johnson Chief Technology Officer Bill Bush Chief Financial Officer • Seasoned leadership team with 150+

  27. Slide 27: Financial Forecast

    © 2021 Stem, Inc. 27 Section 2 Financial Forecast

  28. Slide 28: Hardware Deliveries Drive Strong Recurring Software Cash Flows

    © 2021 Stem, Inc. 28 Hardware Deliveries Drive Strong Recurring Software Cash Flows Hardware + Network Integration Software Market Participation Total Deliveries (kWh) (x) Project Hardware ASP ($kWh) = Total Hardware Revenues Total AUM (kWh) (x) Software Subscription ($/kWh/month) = Total Software (

  29. Slide 29: Illustrative project revenue contribution

    © 2021 Stem, Inc. Delivery Year 1-20 Total Revenue 29 Illustrative project revenue contribution Case Study • Front of the Meter, New York Market • Hardware + Software • 5 MW / 20 MWh Standalone Storage Solution • ~$10MM customer lifetime value Hardware + Network Market Participation (2) Software Rev

  30. Slide 30: Contracted backlog underpins strong 2021 visibility

    © 2021 Stem, Inc. 30 Contracted backlog underpins strong 2021 visibility Current Contracted Backlog Overview of 2021 Revenue Coverage Source: Stem. As of October 31, 2020 140 Projects in Process 88% Of 2021 Revenue in Contracted Backlog 2.5 MWh Average System Size As of January 17, 2021 182 Projects

  31. Slide 31: Stem Key Metrics and Seasonality

    © 2021 Stem, Inc. 31 Stem Key Metrics and Seasonality Key Metrics Reporting 1Q21 2Q21 3Q21 4Q21 5 - 10% 5 - 15% 20 - 30% 50 - 60% Contracted AUM 12 Month Pipeline Contracted Backlog Revenue EBITDA 1.04 GWh $1.6B 182 projects / $200MM 2021E: $147M 2021E: ($25M) Estimated Seasonality In Line with 2020

  32. Slide 32: Business scales with accelerating storage adoption

    © 2021 Stem, Inc. 32 Business scales with accelerating storage adoption Bookings & Revenues ($MM) Bookings & Deliveries (1) (MWh) Software and market participation growth driven by recurring software revenue streams and expanding market participation Source: Stem. Note: Bookings represent value of e

  33. Slide 33: Robust revenue growth by customer type and segment

    © 2021 Stem, Inc. $14 $17 $24 $44 $83 $144 $241 $0 $75 $150 $225 $300 2020E 2021E 2022E 2023E 2024E 2025E 2026E Software Revenue Market Participation Revenue 33 Robust revenue growth by customer type and segment By Software Type ($MM) By Customer Type ($MM) By Segment ($MM) Market participation reve

  34. Slide 34: Gross margin expands with increasing scale and software growth

    © 2021 Stem, Inc. 34 Gross margin expands with increasing scale and software growth Gross Margins Driven by Increasing Software Margin (2) Pro Forma Gross Profit by Type ($MM) (1) As Stem’s AUM grows, software becomes material portion of gross profit Hardware Gross Margin Source: Stem. (1) Stem tota

  35. Slide 35: Stem delivers consistent growth and improving margins

    © 2021 Stem, Inc. ($MM) FY20E FY21E FY22E FY23E FY24E FY25E FY26E Cumulative AUM (MWh) 714 1,046 1,754 3,785 7,257 11,834 17,799 YoY Growth 153% 46% 68% 116% 92% 63% 50% Bookings $145 $198 $342 $721 $848 $974 $1,159 YoY Growth 65% 37% 72% 111% 18% 15% 19% Revenue $33 $147 $315 $526 $748 $944 $1,167

  36. Slide 36: Sources and Uses

    © 2021 Stem, Inc. Sources and Uses Sources $MM % Uses $MM % Committed Equity PIPE 225 17.9% Stock to Stem Shareholders 650 51.7% Star Peak Trust 383 30.4% Estimated Fees and Expenses 51 4.1% Stem Shareholder Equity Rollover 650 51.7% Estimated Repayment of Debt 45 3.6% Cash to Stem Balance Sheet 512

  37. Slide 37: Public comparable universe

    © 2021 Stem, Inc. 37 Public comparable universe Solar Technology Solutions Distributed Solar Sustainable Infrastructure Diversified Energy Tech Stem Peers Relevance to Stem • Upfront equipment margins augmented by recurring cash flows • Diversified long - term contracted cash flows • Increasing BTM

  38. Slide 38: Strong Balance Sheet Drives Rapid Expansion

    © 2021 Stem, Inc. 38 Strong Balance Sheet Drives Rapid Expansion Stem is the first pure play smart energy storage company to go public in the US Investment thesis Large Addressable Market and Strong Macro Tailwinds Market Leader with Industry Leading Technology Balance Sheet Well Positioned to Capit

  39. Slide 39: Q&A

    © 2021 Stem, Inc. 39 Q&A

  40. Slide 40: Appendix A Supplemental Information

    Appendix A Supplemental Information

  41. Slide 41: Item Definitions

    © 2021 Stem, Inc. 41 Item Definition 12 - Month Pipeline Total value of uncontracted, potential hardware and software revenue from opportunities currently in process by Stem direct s ale sforce and channel partners (see page 15), which have a reasonable likelihood of contract execution within 12 mon

  42. Slide 42: Market Leader and Continued Growth With Asset Owners and Utilities

    © 2021 Stem, Inc. 42 Market Leader and Continued Growth With Asset Owners and Utilities 2,381 9,679 14,107 17,107 17,219 21,006 26,533 0 5,000 10,000 15,000 20,000 25,000 30,000 2020 2021 2022 2023 2024 2025 2026 All Others California Arizona Hawaii New York Massachusetts PJM (excl. NJ) Texas x Util

  43. Slide 43: Dominant Market Share with Commercial & Industrial Customers

    © 2021 Stem, Inc. 43 Dominant Market Share with Commercial & Industrial Customers 292 593 1,336 1,252 1,761 2,238 3,043 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2020 2021 2022 2023 2024 2025 2026 California New York All Others Massachusetts PJM (excl. NJ) Arizona Hawaii Texas BTM US Energy Storage

  44. Slide 44: Growing Global Total Addressable Market

    © 2021 Stem, Inc. 44 Growing Global Total Addressable Market Worldwide Energy Storage Outlook (Ex - US) (MWh) 7,881 10,611 13,040 16,979 18,195 21,233 26,630 0 5,000 10,000 15,000 20,000 25,000 30,000 2020 2021 2022 2023 2024 2025 2026 Australia Canada China France Germany India Italy Japan South Ko

  45. Slide 45: Global Energy Storage Market to Grow ~25x By 2030

    © 2021 Stem, Inc. 45 Global Energy Storage Market to Grow ~25x By 2030 Global Energy Storage Outlook (GWh) x All major global markets forecasted at double digit storage growth rates over the decade x US and China lead energy storage growth with respective CAGRs of ~45% and ~41% respectively through

  46. Slide 46: Audited GAAP Income Statement

    © 2021 Stem, Inc. 46 Audited GAAP Income Statement Source: Stem financials. Year Ended December 31, 2019 Revenue $ 13,595,787 Cost of Revenue 15,705,449 Gross Margin (2,109,662) Operating expenses Sales and marketing 17,461,687 Research and development 14,702,562 General and administrative 10,896,51

  47. Slide 47: Audited GAAP Balance Sheet

    © 2021 Stem, Inc. 47 Audited GAAP Balance Sheet Source: Stem financials. Assets Year Ended December 31, 2019 Current assets: Cash and cash equivalents $ 12,888,863 Accounts receivable, net 6,618,528 Prepaid expenses 867,802 Inventory 6,507,959 Due from related parties 483,300 Other current assets 6,

  48. Slide 48: Audited GAAP Balance Sheet (Cont'd)

    © 2021 Stem, Inc. 48 Audited GAAP Balance Sheet (Cont’d) Source: Stem financials. Liabilities and Total Equity Year Ended December 31, 2019 Current liabilities: Accounts payable $ 12,691,307 Accrued liabilities 7,307,231 Accrued payroll 5,573,434 Notes payable - short term 28,894,760 Convertible pro

  49. Slide 49: Audited GAAP Cash Flow Statement

    © 2021 Stem, Inc. 49 Audited GAAP Cash Flow Statement Source: Stem financials. Cash flows from operating activities: Year Ended December 31, 2019 Net loss $ (58,513,378) Adjustments to reconcile net loss to net cash used in operating activities: Provision for doubtful accounts 93,647 Depreciation an

  50. Slide 50: Audited GAAP Cash Flow Statement (Cont'd)

    © 2021 Stem, Inc. 50 Audited GAAP Cash Flow Statement (Cont’d) Source: Stem financials. Cash flows from financing activities: Year Ended December 31, 2019 Proceeds from issuance of Series D preferred and common stock - Equity issuance costs incurred with Series D preferred stock and common stock off

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