Slide 1: Investor Presentation
September 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 • Q2’23 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 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: Second Quarter 2023 Results & Highlights
Second Quarter 2023 Results & Highlights Strong revenue growth and solid margins drive improved adjusted EBITDA Strong Q2 Momentum Q2 Highlights Revenue Bookings $93M $236M +39% YoY +5% YoY Q2 revenue above midpoint of 313 MWh Ameresco and 304 MW guidance; Services revenue +11% QoQ Hungary transacti
Slide 7: Creating Value with Software, Hardware & Services
Creating Value with Software, Hardware & Services Strong recurring software cash flows driven by edge solution deliveries Software Hardware Services Turnkey BESS Modular ESS Project configuration & deployment Recurring SaaS revenue Ongoing reporting and other Sourced from Tier 1 Proprietary smart Se
Slide 8: Demand and Differentiation Drives Margin Expansion
Demand and Differentiation Drives Margin Expansion Service revenue growth from differentiated offering $ in millions Strong 11% growth in Services revenue ● Software Services Revenue +10% QoQ Continued Strong Growth in Software Services Revenue in Q2’23 ● Expect Project Services to increase in 2H’23
Slide 9: Operational Excellence
Operational Excellence Successful growth in revenue and profitability across the business $ in millions unless otherwise noted. Revenue Bookings 4-5x estimated revenue growth over past $1,400 - $1,600 $1,500 $550 - $650 $600 two years driven by strong execution and 117% CAGR 90% CAGR $1,057 signific
Slide 10: 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 11: Our Services Deliver Value Across the Entire Clean Energy Project Lifecycle
Stem’s 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 Supp
Slide 12: Accelerating Innovation and Profitability
Accelerating Innovation and Profitability Leveraging AI tools to drive operational efficiency and increase customer value Best positioned to leverage predictive analytics and generative AI tools to drive operational leverage ● Deliver scalable professional service offerings via technology ● High thr
Slide 13: Industry Outlook
Industry Outlook © 2023 Stem, Inc. 13
Slide 14: Significant Market Opportunity
Deployments Significant Market Opportunity US FTM Storage Well positioned to monetize strong industry growth 51,068 FTM Storage: large deployments, strong growth 46% CAGR MWh 11,191 ● FTM represents ~85% of current/forecasted storage deployments and ~90% of recent bookings 2022 2026 ● Strong muni /
Slide 15: 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 16: 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 17: 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 18: Q2'23 Financial and Operating Results
Q2’23 Financial and Operating Results © 2023 Stem, Inc. 18
Slide 19: Financial Metrics
Financial Metrics Revenue, Adj. EBITDA and GAAP / Non-GAAP Gross Margin Period ending June 30, $ millions unless otherwise noted Q2 2023 Highlights Revenue Adjusted EBITDA • Revenue up 39% YoY 39% • Continued improvement in GAAP/Non- GAAP Gross Margin and adjusted EBITDA; fifth consecutive quarter o
Slide 20: Operating Metrics
Operating Metrics Strong momentum in Backlog, CARR and AUM Period ending June 30, $ millions unless otherwise noted Backlog, CARR and AUM Growth 1.36 1.24 10% 5% • Backlog +10% QoQ / +88% YoY, driven by strong end market demand • CARR up 5% QoQ; on track for year- end guidance of $80 - $90M • Storag
Slide 21: Working Capital
Working Capital $138M of cash and equivalents exiting 2Q’23 ● Change in cash vs. 1Q’23 driven by outflows of ~$102M for purchases of hardware, plus higher accounts receivable ● Hardware will convert to revenue primarily in 2H23 Expect to exit FY2023 with no less than $150M in cash and equivalents Dr
Slide 22: Reaffirming Full-Year 2023 Guidance
Reaffirming Full-Year 2023 Guidance 2023E: Q1’23A Q2’23A Q3’23E Q4’23E Revenue $550M - $650M $165M- $230M- $67M $93M $195M $290M 15–20% Non-GAAP Gross Margin 19% 18% Q1’23A Q2’23A Q3’23E Q4’23E 2023E: Bookings $350M- $450M- $364M $236M $1.4B - $1.6B $425M $575M 2023E: Year-End 2023E: Adj. EBITDA CAR
Slide 23: Key Takeaways
Key Takeaways Reaffirming FY2023 Guidance Solid second quarter results: • Revenue above midpoint of guidance and strong gross margin results • Continued strength in Services revenue growth +11% QoQ Consistent commercial execution: • Robust end market demand with significant FTM deals executed and in
Slide 24: About Stem
About Stem Stem (NYSE: STEM) provides clean energy solutions and services designed to maximize the economic, environmental, and resiliency value of energy assets and portfolios. Stem’s leading AI-driven enterprise software platform, Athena® enables organizations to deploy and unlock value from clean
Slide 25: Appendix A
Appendix A Revenue model, disclosures, upcoming events, glossary © 2023 Stem, Inc. 25
Slide 26: Revenue Build
Revenue Build Total Revenue Storage Solar Revenue Revenue Storage Solar Total Deliveries (kW) Storage Solar Services and Services and (x) Project Hardware Hardware Hardware Other Other ASP ($/kWh) = Total Hardware 5%-15% GM 40% GM Revenues Software Project Software Project Services Services Services
Slide 27: Financial and Operating Metrics
Financial and Operating Metrics Three Months Ended Six Months Ended $ millions unless otherwise noted June 30, June 30, 2023 2022 2023 2022 Revenue $93.0 $66.9 $160.4 $108.0 GAAP Gross Profit 11.9 7.7 12.9 11.4 GAAP Gross Margin % 13% 12% 8% 11% Non-GAAP Gross Profit 16.4 11.3 31.5 17.9 Non-GAAP Gro
Slide 28: Supplemental Revenue Detail
Supplemental Revenue Detail Solar - Supplemental Revenue Detail $ millions unless otherwise noted Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Solar Hardware Revenue $9.9 $6.9 $16.8 $11.7 Solar Services and Other Revenue 8.7 7.2 16.7 12.0 Total Solar Revenue $18.6 $14.1
Slide 29: Reconciliation of GAAP and Non-GAAP Gross Profit
Reconciliation of GAAP and Non-GAAP Gross Profit Three Months Ended Six Months Ended $ millions unless otherwise noted June 30, June 30, 2023 2022 2023 2022 Revenue $93.0 $66.9 $160.4 $108.0 Cost of Revenue (81.1) (59.2) (147.5) (96.6) GAAP Gross Profit 11.9 7.7 12.9 11.4 GAAP Gross Margin (%) 13% 1
Slide 30: Reconciliation of Net Income (Loss) to Adjusted EBITDA
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three Months Ended Six Months Ended June 30, June 30, $ thousands 2023 2022 2023 2022 Net income (loss) attributable to Stem $19,122 $(32,019) $(25,656) $(54,502) Adjusted to exclude the following: Depreciation and amortization 12,609 12,910 24,
Slide 31: Upcoming events
Upcoming events September 6, 2023 Barclays CEO Energy-Power Conference / NYC September 11-14, 2023 RE+ Conference / Las Vegas September 28, 2023 Wolfe Clean Energy Conference / NYC Early November Third Quarter Earnings Call © 2023 Stem, Inc. 31
Slide 32: 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 33: 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 34: Appendix B: Stem Overview
Appendix B Stem Overview © 2023 Stem, Inc. 34
Slide 35: 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 36: Stem's Athena AI Platform Built on Over Years of Data + Experience
Stem’s Athena AI Platform is Built on Over 10 Years of ATHENA CUMULATIVE RUNTIME HOURS 40M Data + Experience 30M ~3.8 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 37: 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 38: 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 39: 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 40: 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 41: 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 42: Improving Access to Large Scale Solar + Storage
Improving Access to Large Scale Solar + Storage Modular ESS enhances customer flexibility while driving better Stem margin Initiative Customer benefits Stem benefits • Develop universal “unit controller” edge • Enables supplier optionality to • Increases penetration into large solar / device for Ath
Slide 43: Appendix C: Market Outlook
Appendix C Market Outlook © 2023 Stem, Inc. 43
Slide 44: 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 3,132 • Typically 10-year software contract 3,000 • Average system of 2MWh and $1M HW+
Slide 45: 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 51,068 46%
Slide 46: 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 BTM project revenues for solar projects 21% C
Slide 47: 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 48: 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 49: 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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