Stem, Inc.

Total revenue for Q2 2026 was $34 million, down 12% year over year from $38 million. GAAP gross margin was 41% versus 33% in Q2 2025, and non-GAAP gross margin reached a record 55% versus 49% a year ago. Adjusted EBITDA was $6 million, up 63% year over year from $4 million, and operating cash flow was positive $0.3 million versus negative $21 million in Q2 2025 and negative $8 million in Q1 2026. Excluding battery hardware resales, revenue from software, services, and edge hardware was $33 million, up 1% year over year. For full-year 2026, Stem reaffirmed revenue guidance of $140 million to $190 million, non-GAAP gross margin of 40% to 50%, adjusted EBITDA of $10 million to $15 million, operating cash flow of $0 to $10 million, and year-end ARR of $65 million to $70 million. Management said battery hardware resale revenue is expected up to $40 million and likely toward the lower end of that range, which should keep gross margin toward the higher end of guidance.

Arun Narayanan framed the quarter as evidence that Stem’s software-centric transformation is working, pointing to record gross margins, positive EBITDA, and breakeven operating cash flow. He emphasized that the company is seeing stronger traction in utility-scale, hybridization, and international deployments, with PowerTrack EMS now booked across six countries and three continents. His tone was confident and focused on execution, while repeatedly stressing disciplined growth into 2027 and beyond.

Brian Musfeldt focused on the mix-driven nature of the quarter, noting that the revenue decline was almost entirely due to lower battery hardware resale revenue of $300,000 versus $5 million a year ago. He highlighted the profitability profile: GAAP gross margin of 41%, non-GAAP gross margin of 55%, adjusted EBITDA margin of 18%, and cash operating expenses down 11% year over year while staying sequentially flat. He also said the company ended with $38.4 million in cash and equivalents, raised about $6 million via ATM sales at an average price of roughly $9.75, and remains on track to the high end of EBITDA guidance because battery resale should ramp in the second half.

Analysts focused on the second-half EBITDA and margin outlook, asking whether the full-year guidance implies a step-down from the strong first half. Management said the main swing factor is battery hardware resale timing, which should increase in the second half and lower margin percentages somewhat, but not because of weakness in software, services, or edge hardware. Questions also centered on policy risk and hybrid-project economics; Arun said recent U.S. policy changes have not impacted their projects, and Erin explained that hybrid deployments can add a second software contract plus services and edge hardware.