Stem, Inc.

Thank you for standing by. This is the conference operator. Welcome to the STEM Incorporated second quarter 2022 earnings conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Ted Durbin, Head of Investor Relations. Please go ahead.

Thank you, operator. This is Ted Durbin, Head of Investor Relations at STEM, and we welcome you to our second quarter 2022 earnings call. Before we begin, please note that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. We therefore refer you to our latest SEC filings. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our earnings release. We will be using a slide presentation today. Our earnings release and presentation are on the investor relations portion of our website at www.stem.com. John Carrington, our CEO, and Bill Bush, CFO, will start the call today with prepared remarks. Lars Johnson, Chief Technology Officer, Bob Schaefer, President of Also Energy, and Prakash Patel, Chief Strategy Officer, will also be available for the question and answer portion of the call. And now I'll turn the call over to John.

Thanks, Ted. Starting with slide three in the agenda for our call today, I will review the second quarter 2022 results and highlights, including our increased guidance. Then I'll review our solid commercial execution and discuss how we are expanding the markets we serve. I'll share our initial views on the Inflation Reduction Act and provide an update on how we're managing our supply chain. Finally, I'll talk about how we are accelerating market enablement through technology innovation. Following my remarks, I'll turn the call over to Bill, who will discuss our financial results in more detail and provide further color on revised 2022 guidance. Turning to slide four, today we reported strong second quarter 2022 results, including record revenue of $67 million, which was nearly two and a half times higher than our second quarter 2021. Revenue came in 5% above the high end of our guidance range for the quarter, while margins and EBITDA were in line with our expectations. The team executed across the board on key metrics and demand continues to be very strong on a year-over-year and sequential basis. Based on the strong start of the year and visibility into the second half, we are raising our 2022 guidance on two of our key metrics, bookings and contracted annual recurring revenue, or CAR. For bookings, another record performance, and we are raising our guidance from a range of $650 to $750 million to $775 to $950 million, which is more than a 20% increase at the midpoint. Regarding CAR, we are raising the range of our exit rate guidance from $60 to $80 million to $65 to $85 million. As Bill will discuss, We are reaffirming our full year 2022 guidance on our three other key metrics, including revenue, non-GAAP gross margin and adjusted EBITDA. This guidance does not incorporate any potential impact from the Inflation Reduction Act, which I will review later in the presentation. Moving to some specific Q2 highlights on the right side of the slide. In addition to our strong quarter and increased guidance, we are pleased with our technology and commercial execution. First, with the addition of two new value streams, we are now offering all 13 storage services on the Rocky Mountain Institute wheel. And our AI-driven optimization software, Athena, has achieved over 100% greenhouse gas emissions reductions relative to targets. On the solar monitoring aspect of our business, we are proud to report, once again, we were ranked number one by GuideHouse for solar and storage monitoring and controls. In conjunction with our continued leadership at Also Energy, we collectively have significant momentum on the integration between Also Energy's PowerTrack and STEM's Athena software platforms. We remain focused on improving our operating leverage, which includes increased utilization of our India platform. and we have made incremental progress in securing battery storage supply for 2023 and starting into 2024. We had a strong quarter of execution for 2022, including records for revenue, gap gross margin, contracted backlog, and pipeline. Our software leadership and execution on key metrics continues to differentiate the company, and we will continue to drive our focus on high-margin services and operational leverage. Moving to slide five and our solid commercial momentum. Our commercial and operations teams continue to execute well despite a volatile macro environment. Fundamentally, higher energy prices are increasing project returns for our customers, which is more than offsetting some of the headwinds from higher labor, component prices, and interest rates. We're also seeing customers increase focus on ESG initiatives, which is further driving demand. Our car increased 12% versus the first quarter to $58 million, an indication of our software leadership and differentiation. Our pipeline of software-only deals is up 10x year over year. We closed a multi-million dollar EV charging deal with a Fortune 50 customer this quarter. This is our newest behind-the-meter offering. With strong margins, it is highly differentiated as we can provide our customer a single solution for solar monitoring, energy storage, and our Athena platform to monetize all available value streams in their specific market. We are seeing solid momentum in this area and have multiple EV deals in the works. On the solar monitoring side, we implemented a double-digit price increase in the first quarter and have seen no material impact to churn. This speaks to the strength and value on the PowerTrax platform. We recently launched our professional services offering for energy storage solutions. We plan to leverage the strong internal expertise we've developed over the years to further support our customers and drive incremental margins in our financials. Moving to slide six. Our diversified revenues provide some protection from regulatory and supply chain uncertainty. We estimate more than 90% of our remaining 2022 revenue will come from recurring revenues and standalone storage projects, which insulate us from solar procurement challenges in the market today. We continue to monitor our repeat customers. This is a validation of our team, technology, and meeting commitments. More than 50% of our bookings on the storage side came from repeat customers. As it pertains to solar asset performance, we are pleased to see the two-year moratorium announcement implemented in early June on ADCVD duties. However, as we stated last quarter, the uncertainty from the Department of Commerce investigation announced in the spring has caused some slowdown in our business, particularly on the utility scale projects. The commercial and industrial, our BTM business, has been less impacted. Our commercial team has managed these headwinds and continues to execute. We do not anticipate an impact to our financial guidance as a result. We are continuing to monitor the potential impacts of the Uyghur Forced Labor Protection Act, UFLPA. So far, that has resulted in limited impacts, though we are carefully watching the ongoing developments. Lastly, we are excited to introduce Powertrack into our distribution channel in June. and reported sales in the quarter, demonstrating the strength of STEM's channel presence. Also, energy historically followed a direct sales model, and we think selling into the channel can expand their reach and growth. Please turn to slide seven. As you know, last week some very promising news broke that potential clean energy legislation could become law in the US. The climate provisions in the Inflation Reduction Act would drive continued investment in America's aging power grid support customer adoption of renewable energy, and improve energy security by incentivizing development of our domestic supply chain. We strongly support its passage. Importantly, a standalone storage investment tax credit for energy storage and the extension of solar ITC would improve the economic returns for our customers and enhance grid stability. For storage, independent estimates forecast a potentially large increase in total addressable market subject to final details in the legislation. As we have always emphasized, the impact of potential clean energy legislation is not included in our financial guidance. Passage of the legislation would provide an opportunity to retrofit storage into a significant portion of the 32 gigawatts of solar assets under management at Also Energy. Less than 10% of the solar AUM currently has storage attached. Over 90% of our revenue comes from the US, so our customers would be a key beneficiary upon the bill's passage. In addition, our solar monitoring platform is installed in over 50 countries, and we have seen global interest, particularly in the UK, Germany, and Italy. all of which are enacting similar legislation which could provide additional commercial opportunities globally. We believe we are well positioned to capitalize on the bill's passage. We are in dialogue with our corporate customers, partners, municipalities, co-ops, and renewable asset managers specifically regarding what this legislation could mean for projects and their pipelines. Additionally, we were in discussion with our storage OEM partners to secure supply for the potential increase in demand. We have proactively contracted for additional storage hardware to satisfy this expected demand. Please turn to slide eight for an update on our supply chain. We are fully contracted for our 2022 energy storage supply, and we have made incremental progress on contracting for supply in 2023 and 2024. Recent contracts have focused on supply targeting the BTM market in particular. Industry experts expect increases in lithium ion battery manufacturing capacity in 2023 and beyond, which should help alleviate some of the supply constraints the industry is currently facing. We continue to monitor inflationary pressure, logistics issues in the supply chain, and developing mitigation strategies, including revised pricing, as well as a more proactive sourcing plan. On the solar side, the ADCBD and UFLPA issues could impact near-term panel deliveries for customers. And as I stated before, we have seen an impact on utility-scale solar projects. The UFLPA process is presenting some uncertainty for developers. Specifically, more paperwork and compliance requirements are slowing logistics and delivery times. The software price increases I described earlier have mitigated part of this impact on our financials. Lastly, project timelines continue to be stretched relative to pre-COVID levels with our operations team supporting our customers in their interconnection and permitting processes. In addition to staffing issues at utilities and permitting offices, required utility upgrades to the grid that have been deferred are also affecting project timelines. Next, I'd like to highlight some of the examples of our technology leadership. Please turn to slide nine. As you saw from our press release earlier this week, we received the number one ranking from GuideHouse for solar and storage monitoring and control. GuideHouse is a leading industry research consultancy that covers the global energy transition. The report called out our integrated edge to cloud platform led by our flagship power track application. as a key differentiator over other vendors. Also Energy provides a vertically integrated platform that enables its utility scale, CNI, and aggregated residential customers to standardize their entire clean energy portfolio on one application. This is the second time in two years that GuideHouse has ranked Also Energy as number one in its category. And it speaks to the tremendous effort Bob and his team have put into lowering the total cost of ownership while increasing operational excellence for their customers. Also, Energy received high marks across multiple categories, including its strategy, suite of offerings, technology, and global partnerships. We couldn't be more proud of this external validation, and we look forward to delivering continued differentiation in the future. Moving over to Athena, please turn to slide 10. This quarter, we launched two additional software applications that enabled Athena to execute on all 13 value streams in the Rocky Mountain Institute wheel. As a result, Athena continues to provide the most comprehensive suite of applications to our storage customers, with no other software solution in the market matching our track record and runtime hours. Our software performance continues to lead the market. Across the fleet, we've executed on 100% of our applications year to date, despite a 72% increase in grid dispatches, which points to the scalability and robustness of our technology. We are continuing to perform well in the market segments we serve. In ISO New England, Athena achieved 96% of perfect foresight revenues. This means that Athena had exceptional forecasting ability due to our data advantage delivering near perfect estimates of customer load and market conditions ahead of implementing its algorithms. In California in June, we outperformed by 43% for a key grid incentive payment, and we have outperformed year-to-date across over 500 megawatt hours, representing hundreds of sites in this program. And for many of our customers who want to optimize for both economic results and greenhouse gas reductions, Athena's co-optimization technology resulted in exceeding the annual GHG reduction target within the first four months of operation. All of these accomplishments speak to the depth of our software expertise, breadth of differentiated offerings, and the strong moat we continue to build relative to our competitors. Building on our success, we aim to continuously outperform our commitments and exceed customer expectations. We are proud of the platform that we've built the last 12 years, which wouldn't be possible without our people. STEM and also energy have built the leading clean energy intelligence platform through innovation, collaboration, and rigor that come from our talented employees. We are attracting the best talent with deep domain expertise, critical as we facilitate the clean energy transition. Thank you, and now I'll turn the call over to Bill Bush, our Chief Financial Officer.

Thanks, John. Starting on page 11 with our results for the second quarter of 2022, but before I begin, recall that we closed the also energy transaction on February the 1st of this year, which impacts the comparability to last year's results. As John mentioned, we reported record revenue of $67 million, which was a 246% increase versus the $19 million in the second quarter of 2021. The quarterly revenue performance surpassed the Q4 2021 performance of $53 million, or an increase of 26%. Most of the growth came from the storage hardware sales on FTM and BTM partner projects and about $14 million from the addition of also energy. We also recognize approximately $13 million of high margin software and services revenue, representing 19% of the total revenue for the quarter. First half revenue was $108 million, an increase of 246% on a year-over-year basis. Our GAAP gross margin was $7.7 million, or 12%, versus a slight loss in the same quarter last year. This is the second straight quarter positive GAAP gross margin highlighted by the growing base of our software and services offerings. On a sequential basis, this represents a 33% increase in GAAP gross margin, reflecting the strength of our commercial offerings. Non-GAAP gross margin was $11.3 million, up from $1.5 million, or a 665% increase in the second quarter last year due to higher revenues and an increased mix of software and services revenue. On a percentage basis, non-GAAP gross margin was at 17% in the quarter versus 8% last year, an increase of just over 2x. Our margins benefited from a greater share of high-margin software and services revenue. That 17% margin is squarely in line with the 15 to 20% guidance for 2022 we initially provided in February. Net loss was $32 million versus a loss of $100 million in the same quarter last year. That swing is almost completely the result of a large non-cash loss in the second quarter of 2021 from the then outstanding common stock warrants. We retired all of those warrants last year, and we do not expect significant charges similar to those in the future. And lastly, adjusted EBITDA was negative $11 million versus a negative $8 million in the same quarter last year. Adjusted EBITDA was negatively impacted by higher operating costs from additional hiring, personnel-related expenses, costs associated with public reporting and related expenses, as we continue to build out our teams and advance our technology roadmap to take advantage of market opportunities. Second quarter bookings were $226 million, up more than five times versus bookings in the same quarter last year. This was the second highest bookings quarter in the company history and $375 million of bookings for the six months ended June 30th is nearly what we booked in all of 2021. Moving from our financial results to our operating metrics on slide 12, our backlog nearly tripled year over year from $250 million in the first quarter of 2021 to $727 million in the second quarter of 2022. The backlog increased approximately 29% from $560 million in a sequential basis from the period ended March 31st, 2022. The largest driver of the backlog was the $226 million of new bookings in the quarter offset by revenue recognized during the quarter, as well as some amendments and adjustments to book project configurations. We believe that the backlog gives us excellent visibility in the short and medium term, that is for the back half of 22 and into 2023. Our contracted AUM on the storage side grew from 1.2 gigawatt hours in the second quarter of 2021 to 2.1 gigawatt hours in the second quarter of 2022. That's a 75% year-over-year increase, again, driven by our strong execution on the sales and operations side of the business. Our operating AUM on the solar asset performance and monitoring side of the business ended the quarter at 32.1 gigawatts, relatively flat sequentially. We believe the opportunity to bring the Athena platform to the Powertrack customer base represents a significant cross-sell opportunity with low penetration of storage into that solar AUM. As John mentioned, the solar ITC could accelerate that cross-sell opportunity. Contracted annual recurring revenue, or CAR, ended the quarter at $58 million. This software metric showcases the importance of the Athena and Powertrack network and services as we offer our customers, which drive long-term value. We ended the quarter with $335 million in cash on the balance sheet. As in this quarter, you will see us strategically deploy our cash to secure storage hardware for our customers and drive greater adoption of high margin recurring revenue. In the interim, we are also evaluating other tools and structures to allow us to continue to deliver energy storage systems to our customers. Turning to slide 13. As John mentioned earlier, we are raising our guidance for bookings and CAR for the full year 2022, and we are affirming our guidance for revenue in the range of $350 to $425 million, non-GAAP gross margin in the range of 15% to 20%, and adjusted EBITDA in the range of a negative $20 to $60 million. Remember, none of these updates reflect any potential impact of the Inflation Reduction Act. On bookings, we are raising our guidance by about 20% at the midpoint from $700 million to about $840 million. We are adjusting our disclosures to show absolute dollar ranges rather than the percentages for the remaining half of the year. While the business continues to be lumpy based on the increasing importance of the FTM business and its project sizes, based on our sales visibility, we feel confident that we will be able to hit the low end of these ranges, and if things break well, we expect that we will be able to hit the high end of our range. Our revised bookings guidance now calls for us to more than double our bookings relative to 2021. And remember, our 2021 bookings were triple our 2020 bookings. We've grown the business very rapidly in a short amount of time and without any changes in legislation. This is a testament to our differentiated software offering as well as our ability to help customers enter new markets profitably. is also due to our focus on customer service and supply chain management that allows us to deliver the right product to the customer that meets their needs. We're also raising the range of our car guidance by $5 million to $65 to $85 million. This is a function of our increased bookings, which will drive solid upfront hardware margins, but more importantly, high margin long-dated software revenue. By now, You should have received the save your date notice for our investor analyst day on September 28th in Midtown Manhattan. We will provide additional details on our financial outlook from our long range planning process, as well as discuss our strategy and technology differentiation at the event. We continue to focus on commercial differentiation and an important component of our planning processes is accelerating our operating leverage and the drive to profitability. Let me turn the call back to John for some closing remarks. Thanks, Bill.

Turning to slide 14. To wrap up, we're excited about our strong commercial and operating momentum heading into the second half of 2022, with record revenue above the high end of our guidance range and record bookings up 5x year over year. Our technology differentiation continues to drive growth in contracted annual recurring revenue and supports our pricing power with customers. We are raising our guidance for bookings in car for the year, and reiterating our guidance on other key metrics, which again, do not include any upside from the Inflation Reduction Act. We continue to build a strong and inclusive culture at STEM with the launch of two new employee networks in the quarter focused on LGBTIA plus and women in leadership. We are committed to building the best workplace in our communities and the broader industry. In addition, the integration of the also energy acquisition is proceeding well, and we expect to detail initiatives on driving commercial synergies and operating leverage as we drive a focus on profitability in the forthcoming Analyst Day, as Bill mentioned, on September 28th in New York City. With that, let's open the line for questions, please.

We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two.

We will pause for a moment as callers join the queue. The first question comes from David Peters with Wolf Research.

Please go ahead.

Hey, good afternoon, everybody. Brad's on the update. First question I have is just on the revised guidance for booking specifically. Can you talk a little bit on where you're seeing the increased momentum relative to initial expectations? Is it being driven primarily by FTM or anything available power related? And then just related to that, what ISOs are you seeing the most success in?

Yeah. Hey Dave, this is Bill.

Thanks for the question. Appreciate that. So I think much like we've talked about in prior quarters, the FTM segment of the business is growing very rapidly and that's where we're seeing, we continue to see the most momentum there. Although we are starting to see some initial, you know, say on the BTM side, some initial opportunities and on the AE side, you know, as we come out of the, to the AC, any competitive component of the government. So I think we're really seeing it across the business, but the biggest impact is clearly on the FTM side of the business. And ISO-wise, ERCOT certainly is the strongest still. Although New England ISO is also quite strong as well. So really those two primary markets.

Thanks for that. Does the bump up in bookings, obviously just knowing that this drives revenue next year and so on, does that accelerate or change the thinking about at all when you guys might expect to see EBITDA inflect positive?

Well, I think for sure that the growth in bookings does and will relate and create revenue opportunities. I mean, I think one of the things that we do see as well is that those FTM projects tend to take a little bit longer and that those are really 18 months and up. these days, where I think some of the initial guidance that we gave a while back was more like in the 12-month range. So we will see that. So we're starting effectively in this second half, we'll start to see actually deals that will hit in 2024 as opposed to 2023. And that, of course, will drive all the software aspects that we've talked about. So, I mean, that's all good news from that standpoint. And I think that, you know, in general, as it relates to the EBITDA, What we'll do is in the analyst day call or initially meeting, excuse me, in New York, we'll get some additional guidance around that then.

Okay. Last one, if I could, just, you know, with respect to the IRA, you know, obviously need it to pass, but just wondering if you had any initial thoughts on what this would mean specifically for STEM's pipeline and then, you know, as it relates to also energy's solar AUM. You know, how quick could you move to retrofit, you know, some of those solar sites with batteries, and will there be any limitations just from a supply standpoint? Thank you.

Yeah, David, thanks. A couple things. Look, we're obviously very supportive of the Inflation Reduction Act. I think, as I said in the prepared remarks, it will certainly drive strong job growth, obviously a renewable expansion. I think U.S. manufacturing, which is also becoming more and more significant in light of some of the things that are going on at a global level, and clearly significantly more storage with the standalone ITC included. I'd say that we need to get the final details of how this rolls out. We certainly see TAM upside, and if you look at some third parties, their range is all over the place. The low end is 20%. I think one of the things that we've talked about before is we have – been talking to our customers about when this occurs, what we would do with them. And when you think about CNI, Fortune 500 in particular, there's a lot of activity in markets that were maybe on the edge that become highly economically viable in light of this. So we have been talking to them for some time, and there's a variety of other customers who are in the process of having discussions on. I am really excited and think it's highly differentiated the fact that we now have also energy as part of the family. And the reason for that is there are 41,000 sites that they currently are managing, and these are existing customers. Obviously, we know who they are. We know the system size, the location, and the production. So it's a perfect kind of lead sheet for us to go and address. So we're excited about that. We think it's highly differentiated and a very strong competitive moat. that we will execute as soon as this is finalized.

Perfect. Thank you. You bet. Thank you.

The next question comes from Brian Lee with Goldman Sachs. Please go ahead.

Hey, guys. Thanks for taking the questions. Kudos on the nice execution. I guess the first question would just be around the bookings momentum. I appreciate the color around the mix and where you're seeing that strength, but you're not raising guidance metrics for 2022. I think Bill just mentioned some of these bookings are even set for delivery into 2024, if I heard that right. Is the sort of composition of bookings, as you think about cadence changing here, are you seeing more long-dated bookings?

Brian, thanks for the question. First, let me clarify one comment there. What I was saying is the bookings in the second half could be into 2024, not bookings that would have been in the first half, just so we're super clear on that point. But as far as, you know, and that's, of course, why we're not changing, because the, you know, say the 2022 revenue guidance because those are, you know, more than likely, you know, a sale that's happening, particularly on the front of the meter side, a sale that's happening in 2022 is likely not going to create revenue during that same time period. But, you know, as far as the, you know, say the philosophy of the business, I mean, I think that's where it gets super interesting is that, you know, the bookings growth really, you know, determines what's going to happen longer term for us. And that's really, you know, so we're kind of locking in, you know, and that's where the car metric comes in. And so you're starting to lock in long-term, long-dated software contracts during that time period.

Okay, fair enough. And then just second question on the gross margins, you know, encouraging to see the uplift here this quarter. Can you talk about some of the puts and takes on the margins? Is this sort of where we should expect things to trend, if not maybe higher, through the rest of the year?

Well, of course, our guidance is 15% to 20%, so we're right in the middle of that. We're pretty comfortable where that is. I think the big impact for us longer term, or even say shorter term, is going to be our ability to break some of those log jams in the permitting and interconnection side of the business. And we have a lot of projects that are set up to effectively start operating as soon as we can get through those log jams. And so I think that over time, you're going to see more and more software revenue rolling into the P&L And so we would expect that software related services line item to grow quite significantly over the coming years.

Okay, fair enough. Thanks a lot, guys. I'll pass it on. Thanks, Brian.

The next question comes from Maheep Manloy with Credit Suisse. Please go ahead.

Hey, good evening, and congratulations on the nice quarter here. Maybe just quickly on the revenue beat here, could you just talk about the drivers on that end? Is it mostly the ASP increase you talked about, or is there anything, any pull forward you saw from Q3, Q4 over here as well?

Yeah, so I think, and thanks for the question, Mahid, appreciate it. So, I mean, the revenue beat is going to be tied into hardware sales. I mean, that's where, you know, you get the biggest bang for the buck from a top line perspective. And so that was really where, you know, from the standpoint of where we outperformed during the quarter at the top line revenue level, it would be there. Now, as it relates to, you know, kind of was it a pull forward or not? I would say really not. I don't think that, you know, we did, you know, we're at the, you know, above the high end of the guidance, but we are affirming the full year. So I think that we're in pretty good shape from where we are from that standpoint.

And probably just on the previous question here from Brian, on just for next year's demand over here, if we get like an IRA or not, when we get the IRA approved, do we have enough supply for batteries to support that kind of demand here?

I'd say that we have to understand exactly the details around this as far as what the demand looks like. As I said, if you look at some of the third-party estimates, it's ranging from 20% to 300%, so we'll have to unpack that. I feel very good about our supply chain and our OEM commitments to the company. We've talked about this in the past. I think we've been pretty good about this. very granular reviews on a weekly level as we've discussed in previous calls. And I would also say that we've been super transparent with our OEMs to say, make STEM the first call if you get excess capacity. And in fact, in the last couple of weeks, we've seen that occur and we executed on a fairly significant amount of hardware specifically for the BTM market and feel great about that move and we continue to get incoming calls. We'll monitor it closely. I think we have to understand how big this could be and the timeframe associated with it in particular. And we feel like we could put a supply agreement in place with the variety of OEMs that we have. Another advantage of our very dispersed amount of OEMs that we've partnered with over the last few years. So we have a lot of optionality in that category.

Gotcha. And then just one last one, then jump back in the queue on UFLPA. and you gave some color around it. Could you just elaborate more on that? Is it causing projects which were previously planned earlier this year to be moved to next year, or what is the latest you're hearing on that end? Thanks.

Yeah, I think we're seeing a little bit of impact on the large utility scale. We are not necessarily seeing the BTM It's something we're closely monitoring. You know, it's still a little bit early, but, you know, it's certainly gotten our attention and we'll continue to closely monitor it. I don't know, Bill, you've been working on the supply chain quite a bit recently, if you have anything to add.

Yeah, we haven't yet seen an impact on the – and it's really probably more the battery cells. I think that's where you're going to see probably the most in that some of the rulings seem to indicate that the – the Customs Department is looking at actually at the mineral level. And so I think that is probably going to, you know, depending on how that works out, you know, we could see some impacts there, but we have not seen any yet. I think what we have heard is that it's more impacting solar panels coming in through the port. And so I think that, which we haven't seen a significant impact yet, but that's what we've heard. I don't know, Bob, if you guys have seen anything on your

For us, and this is Bob Schaefer, thanks for the question. So I think, you know, for us, when we see, you know, challenges just related about, you know, kind of large-scale utility projects on the PV side, and there it's just a timing problem. You know, it takes a long time to get those projects in the ground, so you need pricing certainty before you really want to embark. And so that favors projects that can, you know, execute quickly, and, you know, that's kind of what we see here in our part of the business.

Thanks for the call.

Once again, if you have a question, please press star, then 1.

The next question comes from Biju Paranchu with Susquehanna. Please go ahead.

Hey, thanks. Congrats on a great quarter. So I was kind of intrigued by your comment about software-only deals, the increase there. Can you give us a little bit more color? Are you replacing a previous provider of software's solutions, or are these adding software existing, call it dump storage? Cecilia, any extra call there will be good.

Sure, Bijou. Thanks for the question. Good to hear from you. I would say a couple things. One is, you know, the largest behind-the-meter portfolio down in Southern California was a replacement with Athena Software on an existing platform, and we have talked about that in the past. That's not inclusive in this 10x, obviously. But I would say the majority of what we're seeing are large front-of-the-meter projects whereby the developer may be procuring their own hardware and utilizing Athena and all the attributes that we bring. I think it's exciting, too, because as we mentioned in the prepared comments, we've added two more applications as part of our offering. That gives us all 13 of the Rocky Mountain wheel. So that's really compelling, we think. And obviously, as you look at the Car metric, it's one that captures the progress of the business, and so that's going to continue to grow both as we sell more hardware and software and start to do more software-only deals. It's something we've talked about. It's something we've been focused on, and we're really starting to see strong demand for our platform. So very excited to see that. We'll update everybody as we get more closes and hopefully have more to talk about on the analyst day as well in September around this.

One thing I would add to that, though, as well, is even if we're not selling the hardware, we are selling services into those same projects. And so the interesting part of the business for us, of course, from a margin perspective, is on that software and services line. So even if we are losing the quote-unquote top end of it as a result of the hardware, we're not necessarily losing the engineering services and such that we would be providing to those same customers. So they still need our help in terms of the battery warranties, the selection itself and a number of other topics, interconnection, et cetera.

Got it. Now, I was thinking this is sort of a nice tailwind, sort of adding to your hardware plus software business, sort of making that transition to software becoming a bigger part of the business, making that a faster transition.

Yeah, we feel great about the momentum, and I think it will only continue, Bijou. Thanks. Go ahead.

And then maybe to add a little bit more color on the bookings this quarter. It was a nice, pleasant surprise with all the headwinds the sector has been facing. But are these – you know, the bookings, are they mostly standalone storage bookings? or is it because the behind-the-meter projects were not as impacted by the supply chain constraints?

Yeah, I mean, I appreciate the comment on the bookings. We're really excited about it as well. As we mentioned, $226 million, that's 50% quarter-over-quarter growth and 400% year-over-year. So the demand on the ground continues to be extremely strong. You know, from a mixed standpoint, 91% FTM, 9% BTM, We do believe that BTM will increase. We feel like coming out of COVID, we're seeing more and more activity around behind-the-meter opportunities. Obviously, with the Inflation Reduction Act, that's a huge lever for that as well, so we'll monitor that piece, but just continued strong demand really across the board. I wouldn't highlight one geography even. It's been very strong, and we're excited about the balance of the year, and obviously you've excited enough to move up guidance.

Perfect. Thank you.

This concludes the question and answer session. I would like to turn the conference back over to John Carrington for any closing remarks.

Thank you, and thank everyone for joining us on our second quarter 2022 earnings call. We look forward to speaking with you at our Investor and Analyst Day on September 28th in New York.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.