Stem, Inc.

has been recorded. It is now my pleasure to introduce your host for today, Erin Reid, Investor Relations Manager. Please go ahead.

Thank you, Operator. This is Erin Reid, Head of Investor Relations at STEM. We welcome you to our third quarter 2025 earnings call. Before we begin, please note that some of the statements we will be making today are forward-looking. These statements 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 10Q, 10K, and other SEC filings and 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 in our third quarter 2025 earnings release, which is on our website. Arun Narayanan, CEO, and Brian Musfelt, CFO, We'll start the call today with prepared remarks, and then we will take your questions. And now I will turn the call over to Arun.

Thanks, Erin. Hello, everyone, and thank you for joining us today. Q3 2025 marks 12 months since we announced our strategic realignment, and I'm proud to report that our transformation continues to deliver tangible, positive results. Today we reported third quarter revenue of $38 million, up 31% year-over-year, with ARR growing 17% year-over-year to 60 million. We achieved our second consecutive quarter of positive adjusted EBITDA and generated positive operating cash flow. Our software-centric strategy is delivering results. The success of our strategic transformation is evident in our consistent earnings performance with steady growth in software and services revenue and continued improvement across key profitability metrics. As we maintain disciplined cost management, we believe we have achieved operational stability and our high-performing team is laser-focused on execution and results. Today, we are also refining guidance to reflect our revised forecast, which we will go into more detail later in the call. The key takeaways are we have reduced the historical volatility in our business, we have de-risked the low end of nearly all guidance ranges, and we feel confident about the stability of our business. This quarter also marked a pivotal moment in our evolution as we unified our corporate identity under the STEM brand and streamlined our entire product portfolio within the comprehensive power track suite. This transformation goes far beyond surface-level changes. It reflects the deep integration of also energy's solar expertise with STEM's storage and AI capabilities. For our customers, this means that we approach them with a single voice with superior technical solutions across their entire energy portfolio, covering solar, storage, and hybrid assets alike. Combined with STEM's industry-leading subject matter expertise, This creates an unparalleled customer value proposition. We welcome you to visit our redesigned website at stem.com to see this unified vision in action. Each quarter, we have touched upon our strategic priorities for 2025, driving software and services revenue growth, revamping software development, and reducing our cost structure and driving profitability. We've advanced all three strategic priorities in Q3 with concrete results. Let me detail our progress. First, let's focus on software and services growth and revamping our software. On September 2nd, we launched Powertrack EMS for hybrid and standalone storage projects. This energy management system integrates also energy solar CNI offerings with STEM's storage offerings and positions us to meet the needs of key markets, including solar, storage, and hybrid assets in both the CNI and utility scale segments. It is an intelligent control system that manages battery charging and discharging operations while coordinating grid services and enabling revenue streams for energy storage projects. Powertrack EMS fills the critical gap between basic battery management and advanced optimization software, such as our Powertrack Optimizer product, enabling us to provide important control offerings regardless of the commercial management of the battery, including in territories where merchant optimization is not permitted. We remain excited about Powertrack EMS because it expands our total addressable market by widening our potential customer base and the markets we can serve. Here in the US, it unlocks for us the utility scale market, which is heavily hybridized with the CNI market. Outside of the US, PowerTrack EMS unlocks the international market for CNI and utility scale projects, which are also largely hybridized. International expansion is a key component of our corporate strategy that also helps us manage near-term macro headwinds in the U.S. Importantly, in all markets, Powertrack EMS is an optimization-agnostic, controls-oriented product, which means that it can be sold in markets where utilities provide dispatch signals without the need for a third-party optimizer, or in international markets where STEM does not provide managed optimization services with Powertrack Optimizer. It is truly a complimentary offering to the existing portfolio and allows us to offer an end-to-end solution for our customers. We launched Powertrack EMS at the REplus conference to strong customer reception. This product garnered particularly high interest from operators of hybrid energy sites. Just eight weeks after launch, we've already booked significant capacity deployments with blue chip customers in three different countries. validating both our product capabilities and marketing positioning. These deals cover primarily hybrid utility scale projects with existing solar assets that expect to convert to hybrid in the near term and are using Powertrack EMS as a way to future proof this conversion while limiting downtime. We expect these bookings to convert to revenue in the coming quarters with about a six to nine month typical lead time. Our core CNI solar monitoring platform is deeply established in the industry, but we remain dedicated to continuous innovation and addressing key customer feedback as quickly as we can. In the last 90 days alone, we've rolled out over 100 software improvements and bug fixes, directly enhancing the power track experience for our customers. Recently, we have added best monitoring features and enhanced PV performance analytics, ensuring that Powertrack is the platform of choice for our customers as they add storage to their solar portfolios and scale to more complex operations. As we announced last quarter, we are also incorporating advances in AI into our offerings with Powertrack Sage. Powertrack Sage is an AI-powered assistant that sits on top of Powertrack and transforms complex solar and storage data analysis into natural language conversations. It's like an expert analyst available 24-7 to simplify certain important product workflows and serve as a first line of support for customer questions. There's high customer interest and excitement about this product particularly around solar analytics and diagnosing root causes for unusual data. PowerTrack Sage development remains on track for limited data release with select customers in December and is expected to be broadly available in 2026. PowerTrack software continues to demonstrate strong performance across key metrics. Revenue increased 10% year-over-year, ARR expanded 19% year-over-year, and we commissioned 1.2 gigawatts of solar assets this quarter. Our platform now manages nearly 34 gigawatts of solar assets, reinforcing our market-leading position in CNI solar monitoring. Now, let's move on to managed services. Our managed services are software-enabled, full lifecycle energy storage services covering the design, procurement, commissioning, operation, and optimization of energy storage and hybrid solar plus storage systems. We help asset owners maximize the reliability, performance, and returns of their storage assets. Managed services are supported by our power track optimizer software, previously known as Athena. Energy optimization, especially when value stacking, is a specialized area that requires both our optimization software and humans in the loop to execute well. Humans in the loop ensure that the optimization is keeping up with the constant market and program rule changes, market dynamics, and new value streams. Our competitive advantage in managed services lies in our ability to serve as a full service provider, leveraging our substantial market share across diverse segments. We remain one of the few companies with this expertise. Our managed services contracts include both recurring revenue and performance-based upside when we exceed operational targets. Q3 2024 included significant overperformance that we did not repeat this quarter, which impacts the year-over-year comparison. The underlying health of this business is strong as our recurring base revenue grew 14% year-over-year and 4% sequentially. Finally, Our consultative professional services offering continues to resonate with customers across a wide range of development, deployment, and operational needs. We are continuing to drive repeat business, a clear mark that our offerings are adding value. And we are increasingly focused on cross-selling professional services with other business units offerings. Now to another strategic priority, reducing our cost structure and driving profitability. We remain diligently focused on cost management. We have achieved our second consecutive quarter of positive adjusted EBITDA while maintaining robust GAAP and non-GAAP gross margins. Operating expenses remain flat compared to the second quarter, and they are continuing to drive further efficiencies through AI implementation. Additionally, we've generated positive operating cash flow and kept cash flat sequentially. Our financial performance validates the business model transformation, expanding growth margins, two consecutive quarters of positive adjusted EBITDA, and positive operating cash flow. These results demonstrate both profitability and sustainability. We are dedicated to financial transparency, and we remain committed to helping our investors and stakeholders better understand our business. To that extent, our Form 10Q to be filed today once again disaggregates revenue across distinct categories. What's new this quarter is that we are also providing detailed gross margin disclosure for each revenue category in our supplemental slides. Now on to guidance. With nine months of reported results and early visibility into Q4, Today, we are refining our full year 2025 guidance ranges, including a tightening of ranges previously disclosed. First, we'd like to highlight that our ability to tighten ranges is a significant advancement versus where we were previously, where volatility and back-end seasonality negatively impacted our ability to guide with precision. Our software-centric model has reduced this volatility and enhanced our forecasting accuracy. With that said, we are tracking towards the midpoint, or better, on all metrics except operating cash flow, where timing of working capital movements could result in performance towards the lower end of our range. I'd like to highlight that we have brought up the low end of the ranges for software, edge hardware, and services revenue, and adjusted EBITDA, and raised the guidance for non-GAAP gross profit. Brian will provide the specific updated ranges, but I want to emphasize that the underlying business fundamentals remain strong and we are well positioned entering into 2026. Now turning to the macro environment. Headwinds from policy uncertainty remain and we are actively working with our customers to navigate this environment. We remain on track to meet our guidance expectation through the end of the year. In addition, our diversified software-centric model, combined with our recently enhanced international strategy, should position us well against the potential impact of domestic headwinds. We remain confident in our end markets, and we believe that we are well positioned to benefit from the projected international load growth. Our international expansion efforts are focused on a multi-phase approach. First, we developed an internationally ready product suite with Powertrack EMS. Second, we are leveraging our regional expertise through our existing teams in Berlin and Japan. We see significant opportunities to expand within the European markets, and in Berlin, we recently moved our operations to more centralized and collaborative facilities. We are expanding our technical depth and customer support in Berlin to combine our global expertise with local execution that can service high priority European markets. Our growth strategy for Q4 and beyond centers on two drivers, power track EMS expanding our addressable market into utility scale and international hybrid projects, and continued focus and acceleration in our core CNI solar business. Our recurring revenue base, substantial backlog, and international diversification provide a strong foundation for sustained growth. With that, let me turn the call over to Brian for detailed financial results and the updates to guidance.