Stem, Inc.

Greetings and welcome to the STEM Inc. Fourth Quarter 2024 Results Conference Call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You will be placed in the question queue at any time by pressing star one on your telephone keypad. We ask that you please ask one question and one follow-up to return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn it over to your host, Ted Durbin, Head of Investor Relations.

Ted, please go ahead. Thank you, Operator. This is Ted Durbin, Head of Investor Relations at STEM. Welcome to our fourth quarter and full year 2024 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 10-K filing and other SEC filings and the supplemental materials, which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found on our earnings release, which is on our website. Arun Narayanan, CEO, and Doran Hull, CFO and EVP, will start the call today with prepared remarks, and then we will take your questions. And now I'll turn the call over to Arun.

Thanks, Ted. Good afternoon and thank you all for joining us today. I'm excited to join STEM at a critical juncture for the company and the industry. It is a pleasure to speak with you all today on my first earnings call since joining STEM. In my first five weeks as CEO, I've spent time with our customers, partners and employees. Even in this short period, I'm convinced that we have the foundation to build a truly great software company. I'm honored the board chose me to lead the company into its next chapter. As part of the diligence process that I undertook before I joined the company, I evaluated the overall financial potential of the company and also the underlying ingredients, talent, technology, and vision to make my decision. Looking at the company's competitive positioning and the broader industry's outlook, it's clear to me that the software centric strategy announced in the fall of 2024 is the right plan for the company's future financial success and growth. I see strong offerings from STEM, a clear market need, and the opportunity to leverage emerging technologies like AI to address real customer challenges. That's laying the foundation for our path to profitability. Over the course of my career, I have built and grown digital businesses across multiple industries around the world. The common thread throughout my experience has been launching innovative software products, harnessing data analytics to improve workflows and customer productivity, and leading complex high impact change management initiatives driven by technology adoption. At the core of my experience is an understanding of the key drivers of a software business, and the broader ecosystem of B2B software. Driving revenue growth, securing major customer deals, and sustaining profitability have been key achievements. I also have a strong understanding of the foundational technologies needed to build software at scale and modernizing our own software development processes. Innovating and introducing digital solutions to traditional capital intensive industries is hard. And so a lot of my experience is also centered around change management. I believe software is mission critical for virtually every industry, including renewables, but it means embracing a new way of doing things. Software also needs to be combined with human expertise and an intense focus on the customer value proposition. Which brings me back to STEM. I see opportunities for us in every direction. I'll highlight a few. First, customers. We have a strong, loyal base of 16,000 solar and storage customers, and at the same time, that market is continuing to grow. Second, products. Most importantly, Powertrack, which has the trifecta of a solid domestic market share, generates high growth margins and has growth opportunities both domestically and internationally the third opportunity is people we bring deep subject matter expertise to every engagement despite our strengths i fully recognize and acknowledge the challenges we face our financial results in the recent quarters have been disappointing and we are taking concrete steps to improve those results this has been a key focal point for me And in my initial few weeks, I've identified three priorities. Number one, we will grow our software revenue with renewed focus on PowerTrack. Number two, we will reduce our cost structure. And thirdly, we will revamp our software development. First, as I have spent more time with customers and our team, I'm particularly impressed with PowerTrack. 13 of the top 16 commercial and industrial solar asset owners in the U.S. have standardized on PowerTrack. And today we announced that Summit Ridge Energy has standardized on PowerTrack across its fleet of 200 solar sites, totaling 514 megawatts. I'm also especially excited about our international opportunities with PowerTrack, where we see significant growth potential in largely untapped markets. In January, we announced that Neowalt, one of the largest asset owners in Hungary, will standardize on Powertrack for a 484 megawatt solar portfolio. We earn 70 to 80 percent growth margin on the Powertrack software and a high margin on associated offerings, such as 50 percent growth margin on our professional services tied to Powertrack installation and commissioning, and 30 to 40 percent on Powertrack edge devices. This is a high margin business with large and growing annual recurring revenue. It's also relatively short cycle. Unlike our legacy managed services for storage, the time between a booking and software revenue is often less than six months. And you can see this reflected in our 2025 guidance, where we expect continued strong growth in our software and edge device sales this year. Second, On cost savings, from an operational perspective, we expect additional cost savings of more than 20% in 2025, above and beyond the 15% reduction that we discussed on the third quarter call. I believe that we will achieve these savings through a combination of factors, including eliminating operational inefficiencies, streamlining our corporate structure, and lastly, empowering our management teams with control over and responsibility for operational decisions. Third, on our software products and roadmap, we will do the following, revamp our software development, refine the product roadmaps, and increase the use of AI in our software development and in our products. We expect these changes will have limited or no impact on our customers. Before turning things over to Doran for a detailed discussion of our financials and outlook, I want to emphasize the strong partnership we've already built. Doran will be a key leader in driving our transformation into a high-growth, profitable prospect company. With that, let me turn the call over to Doran.