[10-Q] STEM, INC. Quarterly Earnings Report

Rhea-AI Filing Summary

Stem, Inc. (STEM)Total revenue was $38.2 million for Q3, up from $29.3 million a year ago, driven by PowerTrack software $9.4 million, Edge hardware $15.6 million, Managed services $6.6 million, and Battery hardware resale $4.3 million. Gross profit rose to $13.6 million from $6.2 million, while net loss improved to $23.8 million from $148.3 million.

Year-to-date, net income of $153.7 million reflects a gain on extinguishment of debt of $220.0 million from a June exchange of convertible notes into 2030 Senior Secured Notes and 439,919 warrants. The new notes carry 11.0% cash interest (or 12.0% PIK). Cash and equivalents were $43.1 million, and management believes liquidity is sufficient for at least the next 12 months. Remaining performance obligations were $389.4 million, with about 18% expected over the next year. Shares outstanding were 8,390,208 as of October 22, 2025, after a 1-for-20 reverse split in June.

Insights

Capital structure analyst

Debt exchange reduced convertibles, added secured notes and warrants.

Stem exchanged $228.8 million of 2028 notes and $121.3 million of 2030 notes for $155.4 million of 2030 Senior Secured Notes, 439,919 warrants, and $10.0 million cash, booking a $220.0 million extinguishment gain. This lowered outstanding convertibles and introduced secured debt.

The secured notes bear 11.0% cash interest (12.0% if PIK), with semiannual payments beginning on January 1, 2026. The warrants (exercise price $30.00) were remeasured to a $6.1 million liability as of September 30, 2025, adding non-cash expense.

Quarterly results showed revenue of $38.2 million and gross profit of $13.6 million. Operating cash flow for nine months was $(1.4) million. Actual leverage and interest burden will depend on the mix of cash versus PIK elections within the notes’ terms.

10/29/2025 - 08:25 PM

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

—————————————————

FORM 10-Q

—————————————————

 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

OR

 ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

STEM, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-39455

85-1972187

(State or Other Jurisdiction of Incorporation or Organization)

(Commission File Number)

(IRS Employer Identification No.)

1400 Post Oak Boulevard., Suite 560, Houston, Texas 77056

(Address of principal executive offices, including zip code)

1-877-374-7836

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001

STEM

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☐			Accelerated filer			☒
Non-accelerated filer			☐			Smaller reporting company			☒
Emerging growth company			☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.									☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Class			Outstanding as of October 22, 2025
Common Stock, $0.0001 par value per share			8,390,208

STEM, INC.

Quarterly Report on Form 10-Q

For the Period Ended September 30, 2025

TABLE OF CONTENTS

			Page
Part I. Financial Information			3
Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Comprehensive (Loss) Income			5
Condensed Consolidated Statements of Stockholders’ Deficit			6
Condensed Consolidated Statements of Cash Flows			8
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			46
Item 4. Controls and Procedures			46
Part II. Other Information			48
Item 1. Legal Proceedings			48
Item 1A. Risk Factors			48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			48
Item 3. Defaults Upon Senior Securities			48
Item 4. Mine Safety Disclosures			48
Item 5. Other Information			48
Item 6. Exhibits			49
Signature			49

Part I - Financial Information

ITEM 1. FINANCIAL STATEMENTS

STEM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

			September 30, 2025						December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents			$	43,121					$	56,299
Accounts receivable, net of allowances of $7,434 and $9,499 as of September 30, 2025 and December 31, 2024, respectively			35,836						59,316
Inventory			5,165						10,920
Other current assets			9,634						10,082
Total current assets			93,756						136,617
Energy storage systems, net			47,894						58,820
Contract origination costs, net			8,663						9,681
Intangible assets, net			129,169						143,912
Operating lease right-of-use assets			10,147						12,574
Other noncurrent assets			72,978						75,755
Total assets			$	362,607					$	437,359
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable			$	10,986					$	30,147
Accrued liabilities			29,913						25,770
Accrued payroll			8,389						6,678
Financing obligation, current portion			14,181						16,521
Deferred revenue, current portion			43,104						43,255
Other current liabilities			6,988						6,429
Total current liabilities			113,561						128,800
Deferred revenue, noncurrent			85,817						85,900
Asset retirement obligation			4,314						4,203
Convertible notes, noncurrent			183,389						525,922
Senior secured notes, noncurrent			127,609						—
Financing obligation, noncurrent			31,091						41,627
Warrant liability			6,089						—
Lease liabilities, noncurrent			10,653						13,336
Other liabilities			35,193						35,404
Total liabilities			597,716						835,192
Commitments and contingencies (Note 13)
Stockholders’ deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized as of September 30, 2025 and December 31, 2024; zero shares issued and outstanding as of September 30, 2025 and December 31, 2024			—						—
Common stock, $0.0001 par value; 250,000,000 and 500,000,000 shares authorized as of September 30, 2025 and December 31, 2024, respectively; 8,389,951 and 8,139,884 issued and outstanding as of September 30, 2025 and December 31, 2024, respectively			1						16
Additional paid-in capital			1,236,905						1,228,042
Accumulated other comprehensive income			175						76
Accumulated deficit			(1,472,768)						(1,626,508)
Total Stem stockholders’ deficit			(235,687)						(398,374)
Non-controlling interests			578						541
Total stockholders’ deficit			(235,109)						(397,833)
Total liabilities and stockholders’ deficit			$	362,607					$	437,359

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except share and per share amounts)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Revenue
Services and other revenue			$	18,409					$	22,143					$	56,982					$	52,086
Hardware revenue			19,828						7,148						52,141						36,673
Total revenue			38,237						29,291						109,123						88,759
Cost of Revenue
Cost of services and other			11,975						15,687						37,650						36,626
Cost of hardware			12,682						7,408						34,555						60,753
Total cost of revenue			24,657						23,095						72,205						97,379
Gross profit (loss)			13,580						6,196						36,918						(8,620)
Operating expenses:
Sales and marketing			6,979						8,216						21,021						30,286
Research and development			6,916						11,086						28,237						40,503
General and administrative			12,536						27,212						35,002						61,618
Impairment of parent company guarantees			—						104,134						—						104,134
Impairment of goodwill			—						—						—						547,152
Total operating expenses			26,431						150,648						84,260						783,693
Loss from operations			(12,851)						(144,452)						(47,342)						(792,313)
Other (expense) income, net:
Interest expense			(7,270)						(4,512)						(15,632)						(13,850)
Gain on extinguishment of debt			—						—						220,047						—
Change in fair value of derivative liability			—						—						—						1,477
Change in fair value of warrant liability			(4,190)						—						(4,190)						—
Other income, net			379						793						1,249						2,153
Total other (expense) income, net			(11,081)						(3,719)						201,474						(10,220)
(Loss) income before provision for income taxes			(23,932)						(148,171)						154,132						(802,533)
Benefit from (provision for) income taxes			141						(129)						(392)						(344)
Net (loss) income			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)
Net (loss) income per share attributable to common stockholders, basic			$	(2.84)					$	(18.24)					$	18.52					$	(99.74)
Net loss per share attributable to common stockholders, diluted			$	(2.84)					$	(18.24)					$	(7.33)					$	(99.74)
Numerator used to compute net (loss) income per share:
Net (loss) income attributable to Stem common stockholders, basic			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)
Net loss attributable to Stem common stockholders, diluted (Note 10)			$	(23,791)					$	(148,300)					$	(61,996)					$	(802,877)
Weighted-average shares used in computing net (loss) income per share to common stockholders, basic			8,376,032						8,131,700						8,301,432						8,049,851
Weighted-average shares used in computing net loss per share to common stockholders, diluted			8,376,032						8,131,700						8,452,552						8,049,851

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

(in thousands)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Net (loss) income			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)
Other comprehensive (loss) income:
Unrealized gain on available-for-sale securities			—						—						—						3
Foreign currency translation adjustment			(173)						208						99						341
Total other comprehensive (loss) income			$	(23,964)					$	(148,092)					$	153,839					$	(802,533)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(UNAUDITED)

(in thousands, except share amounts)

			Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Income						Accumulated Deficit						Non-controlling Interests						Total Stockholders’ Deficit
			Shares						Amount
Balance as of January 1, 2025			8,139,884						$	16					$	1,228,042					$	76					$	(1,626,508)					$	541					$	(397,833)
Issuance of common stock upon release of restricted stock units			177,708						1						—						—						—						—						1
Stock-based compensation			—						—						5,718						—						—						—						5,718
Foreign currency translation adjustments			—						—						—						190						—						—						190
Net loss			—						—						—						—						(25,000)						—						(25,000)
Balance as of March 31, 2025			8,317,592						17						1,233,760						266						(1,651,508)						541						(416,924)
Issuance of common stock upon release of restricted stock units			41,050						—						—						—						—						—						—
Stock-based compensation			—						—						795						—						—						—						795
Foreign currency translation adjustments			—						—						—						82						—						—						82
Adjustment due to reverse stock split (Note 2)			(90)						(16)						16						—						—						—						—
Contributions from non-controlling interests			—						—						—						—						—						37						37
Net income			—						—						—						—						202,531						—						202,531
Balance as of June 30, 2025			8,358,552						$	1					$	1,234,571					$	348					$	(1,448,977)					$	578					$	(213,479)
Issuance of common stock upon release of restricted stock units			31,399						—						—						—						—						—						—
Stock-based compensation			—						—						2,334						—						—						—						2,334
Foreign currency translation adjustments			—						—						—						(173)						—						—						(173)
Net loss			—						—						—						—						(23,791)						—						(23,791)
Balance as of September 30, 2025			8,389,951						$	1					$	1,236,905					$	175					$	(1,472,768)					$	578					$	(235,109)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

			Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive (Loss) Income						Accumulated Deficit						Non-controlling Interests						Total Stockholders’ Equity (Deficit)
			Shares						Amount
Balance as of January 1, 2024			7,796,644						$	16					$	1,198,716					$	(42)					$	(772,494)					$	485					$	426,681
Issuance of common stock upon release of restricted stock units			131,623						—						—						—						—						—						—
Issuance of fully vested restricted stock units for employee bonuses (Note 9)			148,072						—						8,114						—						—						—						8,114
Stock-based compensation			—						—						9,367						—						—						—						9,367
Unrealized gain on available-for-sale securities			—						—						—						3						—						—						3
Foreign currency translation adjustments			—						—						—						193						—						—						193
Net loss			—						—						—						—						(72,307)						—						(72,307)
Balance as of March 31, 2024			8,076,339						16						1,216,197						154						(844,801)						485						372,051
Issuance of common stock upon release of restricted stock units			53,037						—						—						—						—						—						—
Stock-based compensation			—						—						7,542						—						—						—						7,542
Foreign currency translation adjustments			—						—						—						(60)						—						—						(60)
Net loss			—						—						—						—						(582,270)						—						(582,270)
Balance as of June 30, 2024			8,129,376						$	16					$	1,223,739					$	94					$	(1,427,071)					$	485					$	(202,737)
Issuance of common stock upon release of restricted stock units			6,361						—						—						—						—						—						—
Stock-based compensation			—						—						7,218						—						—						—						7,218
Foreign currency translation adjustments			—						—						—						208						—						—						208
Contributions from non-controlling interests			—						—						—						—						—						56						56
Net loss			—						—						—						—						(148,300)						—						(148,300)
September 30, 2024			8,135,737						$	16					$	1,230,957					$	302					$	(1,575,371)					$	541					$	(343,555)

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

STEM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

			Nine Months Ended September 30,
			2025						2024
OPERATING ACTIVITIES
Net income (loss)			$	153,740					$	(802,877)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expense			33,100						33,227
Non-cash interest expense, including interest expenses associated with debt issuance costs			751						1,565
Stock-based compensation			7,929						21,716
Change in fair value of derivative liability			—						(1,477)
Change in fair value of warrant liability			4,190						—
Non-cash lease expense			2,058						2,251
Accretion of asset retirement obligations			178						177
Impairment loss of energy storage systems			1,413						357
Loss on disposal and abandonment of property, plant and equipment			842						—
Impairment loss of project assets			1,130						641
Impairment loss of right-of-use assets			1,357						2,096
Impairment of parent company guarantees			—						104,134
Impairment of goodwill			—						547,152
Net accretion of discount on investments			—						(29)
Provision for (recovery of) credit losses on accounts receivable			2,052						(3,229)
Gain on extinguishment of debt			(220,047)						—
Other			(9)						(157)
Changes in operating assets and liabilities:
Accounts receivable			21,364						106,920
Inventory			5,755						(7,285)
Other assets			2,588						12,447
Contract origination costs, net			(953)						(927)
Project assets			(2,074)						(7,382)
Accounts payable			(19,171)						(30,675)
Accrued expenses and other liabilities			6,027						(19,935)
Deferred revenue			(235)						21,531
Lease liabilities			(3,340)						(2,181)
Net cash used in operating activities			(1,355)						(21,940)
INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale investments			—						8,250
Capital expenditures on internally-developed software			(5,675)						(8,868)
Purchase of property and equipment			—						(228)
Net cash used in investing activities			(5,675)						(846)
FINANCING ACTIVITIES
Repayment of financing obligations			(10,873)						(6,998)
Proceeds from issuance of senior secured notes, net of issuance costs of $5,246 and $0 for the nine months ended September 30, 2025 and 2024, respectively			4,754						—
Investment from non-controlling interests, net			37						56
Net cash used in financing activities			(6,082)						(6,942)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(66)						403
Net decrease in cash, cash equivalents and restricted cash			(13,178)						(29,325)
Cash, cash equivalents and restricted cash, beginning of year			58,085						106,475
Cash, cash equivalents and restricted cash, end of period			$	44,907					$	77,150

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest			$	10,471					$	9,387
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH WITHIN THE UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS SHOWN IN THE STATEMENTS OF CASH FLOWS ABOVE:
Cash and cash equivalents			$	43,121					$	75,364
Restricted cash included in other noncurrent assets			1,786						1,786
Total cash, cash equivalents, and restricted cash			$	44,907					$	77,150

The accompanying notes are an integral part of these condensed consolidated financial statements.

9

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.    BUSINESS

Description of the Business

Stem, Inc., together with its consolidated subsidiaries (“Stem,” the “Company,” “we,” “us,” or “our”), is a global leader reimagining technology to support the energy transition. We help asset owners, operators, and stakeholders benefit from the full value of their energy portfolio by enabling the intelligent development, deployment and operation of clean energy assets.

PowerTrack is our integrated suite of software and solutions for solar, storage and hybrid assets. Within the PowerTrack product suite we offer PowerTrack Software, PowerTrack Energy Management System, PowerTrack Supervisory Control and Data Acquisition (“SCADA”), PowerTrack Power Plant Controller (“PPC”), PowerTrack Logger and PowerTrack Optimizer.

The PowerTrack Software for solar monitoring and analytics enables the standardization of energy portfolios on one hardware agnostic application. Our commercial- and utility-scale edge hardware solutions are original equipment manufacturer (“OEM”)-agnostic devices that are used to connect customers’ solar and storage assets to our software applications in a unified view. Our Managed Services are full lifecycle, storage services covering the design, procurement, commissioning, operation and optimization of energy storage and hybrid systems, enabled by our PowerTrack Optimizer software. Our comprehensive suite of Professional Services supports solar and storage projects through every stage of the project lifecycle, offering the expertise needed to navigate complexity and scale clean energy portfolios.

Stem, Inc. was incorporated on March 16, 2009 in the State of Delaware and is headquartered in Houston, Texas.

Liquidity

As of September 30, 2025, we had cash and cash equivalents of $43.1 million, an accumulated deficit of $1,472.8 million, net accounts receivable of $35.8 million, and negative working capital, which we define as current assets less current liabilities, of $19.8 million. During the nine months ended September 30, 2025, we recognized net income of $153.7 million and had negative cash flows from operating activities of $1.4 million. As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents totaling $43.1 million, which were held for working capital purposes and for investment growth opportunities. As of September 30, 2025, we believe that our cash position, as well as expected collections from accounts receivable, is sufficient to meet our capital and liquidity requirements for at least the next 12 months.

Our business prospects are subject to various risks, expenses and uncertainties, including those discussed in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The attainment of profitable operations is dependent upon future events, including continued execution of our software and services-oriented strategy, the successful delivery of AI-enabled software and edge device capabilities to our customers, securing new customers and maintaining current ones, and motivating, hiring and retaining appropriate personnel. Failure to generate sufficient revenues, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding as required may require us to modify, delay or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results and financial condition.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X, assuming the Company will continue as a going concern. Accordingly, the consolidated balance sheet at December 31, 2024 has been derived from the audited financial statements at that date, but certain notes or other information that are normally required by GAAP have been omitted if they substantially duplicate the disclosures contained in the Company’s annual audited consolidated financial statements. In the opinion of the Company’s management, all normal and recurring adjustments considered necessary for a fair statement of the results for the interim period presented have been included in the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2024. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other future interim period or year.

On June 23, 2025, we effected a 1-for-20 reverse stock split, which reduced the number of our shares of common stock outstanding on that date from 167,169,140 shares to 8,358,370 shares. The number of authorized shares of our common stock has been reduced from 500.0 million shares to 250.0 million shares and the number of authorized shares of preferred stock

10

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

remained unchanged at 1.0 million shares. The number of shares of common stock issuable upon settlement of outstanding restricted stock units and exercise of options was reduced proportionately as a result of the reverse stock split. Additionally, the exercise price of all outstanding options, the number of shares of common stock issuable upon the exercise of all outstanding options, and the number of shares reserved for future issuance pursuant to our equity incentive plans were all adjusted proportionately as a result of the reverse stock split. All share and per share amounts, exercise prices, conversion rates and conversion prices presented herein that relate to dates, or were established, prior to the reverse stock split have been adjusted retroactively to reflect these changes.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and consolidated variable interest entities (“VIEs”). The Company presents non-controlling interests within the equity section of its unaudited condensed consolidated balance sheets, and the amount of consolidated net (loss) income that is attributable to the Company and the non-controlling interest in its unaudited condensed consolidated statements of operations. All intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

The Company has in some instances formed special purpose entities (“SPEs”), some of which are VIEs, with its investors in the ordinary course of business to facilitate the funding and monetization of its energy storage systems. A legal entity is considered a VIE if it has either a total equity investment that is insufficient to finance its operations without additional subordinated financial support or whose equity holders lack the characteristics of a controlling financial interest. The Company’s variable interests arise from contractual, ownership, or other monetary interests in the entity. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests.

The Company consolidates a VIE if it is deemed to be the primary beneficiary. The Company determines it is the primary beneficiary if it has the power to direct the activities that most significantly impact the VIEs’ economic performance and has the obligation to absorb losses or has the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it is the primary beneficiary.

Beginning in January 2022, the Company entered into strategic joint ventures through indirect wholly-owned development subsidiaries of the Company (“DevCo JVs”) with the purpose of originating potential battery storage facility projects in specific locations and conducting early-stage planning and development activities. The Company determined that the DevCo JVs are VIEs, as they lack sufficient equity to finance their activities without additional financial support. The Company determined that it has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses or receive benefits from the VIE that could potentially be significant. Accordingly, the Company has determined that it is the primary beneficiary of the DevCo JVs, and as a result, the DevCo JVs’ operating results, assets and liabilities are consolidated by the Company, with third party minority owners’ share presented as noncontrolling interest. The Company applied the hypothetical liquidation at book value method in allocating recorded net income (loss) to each owner based on the change in the reporting period, of the amount of net assets of the entity to which each owner would be entitled to under the governing contracts in a liquidation scenario.

The following table summarizes the carrying values of the assets and liabilities of the DevCo JVs that were consolidated by the Company as of September 30, 2025 and December 31, 2024 (in thousands):

			September 30, 2025						December 31, 2024
Assets
Cash and cash equivalents			$	199					$	1,556
Other current assets			—						18
Other noncurrent assets			17,360						16,415
Total assets			17,559						17,989
Liabilities
Accounts payable			167						1,284
Other current liabilities			3						114
Total liabilities			$	170					$	1,398

11

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company did not make any material capital investment contributions during the three and nine months ended September 30, 2025 and 2024. The net loss from the DevCo JVs was $0.2 million and $1.3 million during the three and nine months ended September 30, 2025, respectively, and immaterial during the three and nine months ended September 30, 2024.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.

Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, estimates of transaction price with variable consideration; the amortization of acquired intangibles; deferred commissions and contract fulfillment costs; the valuation of energy storage systems, finite-lived intangible assets, internally developed software, accruals related to sales tax liabilities, valuation techniques used to determine gain on debt extinguishment, and the fair value of debt instruments, warrant liability and assets acquired and liabilities assumed in a business combination.

Segment Information

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, management has determined that the Company has one operating segment that focuses exclusively on innovative technology services that transform the way energy is distributed and consumed. Net assets outside of the U.S. were less than 10% of total net assets as of September 30, 2025 and December 31, 2024.

Accounts Receivable, Net

Accounts Receivable are stated at amounts estimated by management to be equal to their net realizable values. Accounts receivable also includes unbilled accounts receivable, which is composed of milestone development activities of noncancellable purchase orders and monthly energy optimization services provided and recognized but not yet invoiced as of the end of the reporting period. The allowance for credit losses is the Company's best estimate of the amount of expected credit losses. The expectation of collectability is based on the Company's review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and an allowance is recorded accordingly. The total allowance for credit losses balance was $7.6 million and $9.8 million, of which the current portion was $7.4 million and $9.5 million as of September 30, 2025 and December 31, 2024, respectively.

The following table presents the changes in the current expected credit losses during the nine months ended September 30, 2025 and the year ended December 31, 2024 (in thousands):

			September 30, 2025						December 31, 2024
Balance as of beginning of period			$	9,794					$	5,953
Provision for expected credit losses			2,052						3,978
Write-offs, recoveries and other charges against allowance			(4,286)						(137)
Balance as of end of period			$	7,560					$	9,794

Concentration of Credit Risk and Other Uncertainties

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. The Company’s cash balances are primarily invested in money market funds or on deposit at high credit quality financial institutions in the U.S. The Company’s cash and cash equivalents are held at financial institutions where account balances may at times exceed federally insured limits. Management believes the Company is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash is held. The Company has no financial instruments with off-balance sheet risk of loss.

12

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The net book value of unbilled receivables, current are $2.9 million and $7.8 million as of September 30, 2025 and December 31, 2024, respectively. Unbilled receivables, current are included in accounts receivable, net. The net book value of unbilled receivables, noncurrent are $5.8 million and $5.9 million as of September 30, 2025 and December 31, 2024, respectively. Unbilled receivables, noncurrent are included in other noncurrent assets.

Significant Customers

A significant customer represents 10% or more of the Company’s total revenue or accounts receivable, net balance at each reporting date. For each significant customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable were as follows:

Accounts Receivable

Revenue

Revenue

September 30,

December 31,

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

2025

2024

Customers:

Customer A

25

%

28

%

*

*

*

*

Customer B

*

20

%

*

*

*

*

Customer C

*

*

11

%

*

*

*

*Total less than 10% for the period.

There are inherent risks whenever a large percentage of total revenue is concentrated in a limited number of customers. Should a significant customer terminate or fail to renew its contracts with us, in whole or in part, for any reason, or experience significant financial or operating difficulties, it could have a material adverse effect on our financial condition and results of operations. In general, a customer that makes up a significant portion of revenues in one period, may not make up a significant portion in subsequent periods.

Fair Value of Financial Instruments

Assets and liabilities recorded at fair value in the unaudited condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

Hierarchical levels which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities are as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 — Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. The Company’s assessment of the significance of a specific input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

Financial assets and liabilities held by the Company measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 include cash and cash equivalents, convertible notes, and warrant liability.

13

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Reclassifications

Certain prior year amounts have been reclassified for consistency with the current year presentation. Such reclassifications have no impact on previously reported net (loss) income, stockholders’ deficit or cash flows. A reclassification of $0.6 million from deferred costs with suppliers to other current assets was made to the December 31, 2024 balance sheet to conform to the September 30, 2025 presentation. This change had no impact to total current assets. For the nine months ended September 30, 2024, a $5.3 million net cash inflow was reclassified from changes in deferred costs with suppliers to changes in other assets. This change had no impact to net cash used in operating activities.

New Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, related to income tax disclosures. The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update enhance disaggregated disclosure of income statement expenses for companies by requiring disaggregation of certain expense captions into specified categories in

disclosures within the footnotes to the financial statements. The effective date of ASU 2024-03 was amended by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, though early adoption of is permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which introduces a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses on current accounts receivable and current contract assets under ASC Topic 606, Revenue from Contracts with Customers. This update is effective prospectively for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, though early adoption is permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which clarifies and modernizes the guidance to reflect the evolution of software development from a sequential to an agile development method. The amendments in this update remove all references to project stages to reflect this change in software development and requires capitalization of software costs to begin when management has authorized and committed to funding the project and it is probable the project will be completed and used to perform the intended function. The amendments do not change what internal-use software costs can be capitalized or when such capitalization ceases. This update is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, though early adoption is permitted as of the beginning of an annual reporting period. The amendments may be adopted either prospectively, using a modified transition approach, or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures.

3.    REVENUE

Disaggregation of Revenue

The Company’s disaggregation of revenue has been adjusted to better align the classification of revenues with the Company’s business strategy announced in 2024. Prior period comparable results have been disaggregated to reflect the change in presentation. This change did not have an impact on consolidated total revenue.

Product line revenue, as presented below, depicts the nature, amount and timing of revenue for the Company’s various offerings.

PowerTrack Software – Recurring Software as a Service (“SaaS”) revenue from our PowerTrack platform supporting customer-owned clean energy assets.

14

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Edge Hardware – Sales of edge device hardware to aid in the collection of site data and the real-time operation and control of sites.

Project and Professional Services & Other – Full lifecycle energy services including development and engineering, procurement and integration, performance and operations support, and revenue tied to DevCo JVs.

Managed Services – Includes (1) recurring revenue related to the operation and optimization of energy storage and hybrid portfolios managed by Stem, (2) full lifecycle, storage services covering the design, procurement and commissioning of energy storage and hybrid systems and (3) Host Customer recurring and merchant revenues.

Battery Hardware Resale – Sales of energy storage systems through partnership arrangements.

The following table provides information on the disaggregation of revenue as recorded in the unaudited condensed consolidated statements of operations (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
PowerTrack software			$	9,380					$	8,488					$	27,755					$	24,185
Edge hardware			15,558						13,202						37,907						32,384
Project and professional services & other			2,475						6,857						6,621						9,540
Subtotal			27,413						28,547						72,283						66,109
Managed services			6,554						6,798						22,606						18,361
Battery hardware resale			4,270						(6,054)						14,234						4,289
Total revenue			$	38,237					$	29,291					$	109,123					$	88,759

The following table summarizes reportable revenue by geographic regions determined based on the location of the customers (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
United States			$	36,066					$	27,425					$	102,563					$	84,361
Rest of the world			2,171						1,866						6,560						4,398
Total revenue			$	38,237					$	29,291					$	109,123					$	88,759

Remaining Performance Obligations

The Company’s remaining performance obligations represent the unrecognized revenue value of its contractual commitments, which include deferred revenue and amounts that will be billed and recognized as revenue in future periods. As of September 30, 2025, the Company had $389.4 million of remaining performance obligations, of which, we expect to recognize in revenue approximately 18% in the next 12 months, with the remainder recognized in revenue in periods thereafter.

15

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Contract Balances

Deferred revenue primarily includes cash received in advance of revenue recognition related to PowerTrack software and optimization services and incentives. The following table presents the changes in the deferred revenue balance during the nine months ended September 30, 2025 and September 30, 2024 (in thousands):

			Nine Months Ended September 30,
			2025						2024
Beginning balance			$	129,155					$	142,647
Upfront payments received from customers			39,618						62,875
Upfront or annual incentive payments received			1,497						1,580
Revenue recognized related to amounts that were included in beginning balance of deferred revenue			(37,902)						(32,287)
Revenue recognized related to deferred revenue generated during the period			(2,567)						(10,636)
Write-off of deferred revenue (1)			(880)						(6,614)
Ending balance			$	128,921					$	157,565

(1) Deferred revenue written off against the associated receivables in connection to terminated projects, contract restructurings, and the parent company

guarantee arrangements discussed below.

Parent Company Guarantees

Prior to July 2023, the Company agreed in certain customer contracts to provide a parent company guarantee (“PCG”) that the value of purchased hardware will not decline for a certain period of time. Under such PCGs, if these customers were unable to install or designate the hardware to a specified project within such period of time, the Company would be required to assist the customer in re-marketing the hardware for resale by the customer. If a resale were not to occur, the hardware would be appraised utilizing a third party. Such PCGs provided that, in such cases, if the customer resold the hardware for less than the amount initially sold to the customer or the appraisal value is less than the hardware purchase price, the Company would be required to compensate the customer for any shortfall in fair value for the hardware from the initial contract price. The Company accounted for such contractual terms and guarantees as variable consideration at each measurement date. The Company updated its estimate of variable consideration each quarter with respect to the outstanding guarantees, including changes in estimates related to such guarantees, for facts or circumstances that have changed from the time of the initial estimate. As a result, the Company recorded net revenue reductions of $5.6 million and $38.7 million in hardware revenue during the three and nine months ended September 30, 2024, respectively. The overall reduction in revenue was related to deliveries that occurred prior to 2024.

There are no remaining PCGs outstanding, and the Company expects no future impact on its financial results as a result of PCGs.

Impairment and Accounts Receivable Write-Off

For those contracts where the customers invoked PCG protection pursuant to the applicable contract, the Company worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers. Despite such efforts, such negotiations resulted in limited transactions with mutually agreed upon pricing and terms. As stated above, under contracts containing a PCG provision, in the event that the Company and the customer are unable to remarket and sell the relevant assets, the customer was obligated to engage a third party to appraise the fair market value of the remaining hardware. None of our customers obtained such third party hardware appraisal. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where the Company believes it has enforceable rights of recovery, the Company believed the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s was no longer probable. Accordingly, the Company wrote-off the remaining receivables of $104.1 million during the three months ended September 30, 2024, offset by $1.6 million for amounts previously provided for on these receivables and recorded within general and administrative expense in the unaudited condensed consolidated statements of operations. As of June 30, 2025, the Company entered into an arrangement to recover $3.5 million of the receivables previously written off. As of September 30, 2025, the Company has recovered $2.7 million. The Company continues to pursue remedies with respect to its enforceable rights under applicable contracts.

16

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4.    FAIR VALUE MEASUREMENTS

Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. On September 30, 2025 and December 31, 2024, the carrying amount of accounts receivable, other current assets, accounts payable, and accrued and other current liabilities approximated their estimated fair value due to their relatively short maturities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table provides the financial instruments measured at fair value (in thousands):

			September 30, 2025
			Level 1						Level 2						Level 3						Fair Value
Assets:
Cash equivalents:
Money market fund			$	17,954					$	—					$	—					$	17,954
Total financial assets			$	17,954					$	—					$	—					$	17,954
Liabilities:
Warrant liability			$	—					$	—					$	6,089					$	6,089

			December 31, 2024
			Level 1						Level 2						Level 3						Fair Value
Assets:
Cash equivalents:
Money market fund			$	37,108					$	—					$	—					$	37,108
Total financial assets			$	37,108					$	—					$	—					$	37,108

The Company’s money market funds are classified as Level 1 because they are valued using quoted market prices. Warrant liability is classified as Level 3 in the fair value hierarchy because its valuation is based on significant unobservable inputs, which incorporate the Company’s own assumptions in valuation techniques used to determine fair value; further discussion of these assumptions is set forth below. There were no transfers into or out of Level 3 of the fair value hierarchy during the periods presented.

Fair Value of Convertible Promissory Notes

The convertible notes are recorded at face value less unamortized debt issuance costs (see Note 7 — Debt for additional details) on the unaudited condensed consolidated balance sheets as of September 30, 2025. As of September 30, 2025 and December 31, 2024, the estimated fair value of the 0.50% Green Convertible Notes due 2028 (the “2028 Convertible Notes”) was $17.9 million and $77.3 million, respectively, based on Level 2 quoted bid prices of the convertible notes in an over-the-counter market on the last trading date of the reporting period. As of September 30, 2025 and December 31, 2024, the estimated fair value of the 4.25% Green Convertible Senior Notes due 2030 (the “2030 Convertible Notes”) was $33.1 million and $65.4 million, respectively, based on Level 2 quoted bid prices of the convertible notes in an over-the-counter market on the last trading date of the reporting period.

Private Warrant Liability

As discussed in Note 8 — Warrants, under a warrant agreement dated June 30, 2025, the Company issued 439,919 warrants (the “2030 Private Placement Warrants”), each of which entitled the holder to purchase one share of common stock at an exercise price of $30.00.

Upon issuance, these warrants met the criteria for liability classification. The fair value of the 2030 Private Placement Warrants as of September 30, 2025 was determined using the Black-Scholes-Merton model. Inputs include exercise price, volatility, fair value of common stock, expected term, expected dividend rate and risk-free interest rate.

17

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The key assumptions used for the valuation of the private warrant liability upon remeasurement were as follows:

			Nine Months Ended September 30,
			2025
Volatility			118.6		%
Risk-free interest rate			3.7		%
Expected term (in years)			5.1
Dividend yield			—		%

The following table presents the changes in the liability for the Company’s warrants during the nine months ended September 30, 2025 (in thousands):

			Warrant Liability
Beginning balance			$	—
Issuance of warrants			1,899
Changes in estimated fair value			4,190
Ending balance			$	6,089

5.    INTANGIBLE ASSETS, NET

Intangible assets, net, consists of the following (in thousands):

			September 30,						December 31,
			2025						2024
Developed technology			$	32,618					$	32,618
Trade name			11,300						11,300
Customer relationships			106,800						106,800
Internally developed software			87,896						81,314
Intangible assets			238,614						232,032
Less: Accumulated amortization			(109,435)						(88,094)
Currency translation adjustment			(10)						(26)
Total intangible assets, net			$	129,169					$	143,912

Amortization expense for intangible assets was $7.2 million and $7.0 million for the three months ended September 30, 2025 and 2024, respectively, and $21.4 million and $20.3 million for the nine months ended September 30, 2025 and 2024, respectively.

6.    ENERGY STORAGE SYSTEMS, NET

Energy storage systems, net, consists of the following (in thousands):

			September 30,						December 31,
			2025						2024
Energy storage systems placed into service			$	135,475					$	137,616
Less: accumulated depreciation			(88,818)						(81,305)
Energy storage systems not yet placed into service			1,237						2,509
Total energy storage systems, net			$	47,894					$	58,820

Depreciation expense for energy storage systems was approximately $3.1 million and $3.5 million for the three months ended September 30, 2025 and 2024, respectively, and approximately $9.4 million and $10.0 million for the nine months ended September 30, 2025 and 2024, respectively. Depreciation expense is recognized in cost of services and other revenue.

18

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

We did not recognize impairment expense for energy storage systems during the three months ended September 30, 2025. For the three months ended September 30, 2024, impairment expense for energy storage systems was approximately $0.3 million, and approximately $1.4 million and $0.4 million for the nine months ended September 30, 2025 and 2024, respectively. Impairment expense is recognized in cost of services and other revenue.

7.    DEBT

2028 Convertible Notes and 2028 Capped Call Options

2028 Convertible Notes

On November 22, 2021, the Company issued $460.0 million aggregate principal amount of its 2028 Convertible Notes in a private placement offering to qualified institutional buyers (the “2021 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended.

The 2028 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 0.5% per year, payable in cash semi-annually in arrears in June and December of each year. The remaining 2028 Convertible Notes will mature on December 1, 2028, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of common stock. The 2028 Convertible Notes are redeemable for cash at the Company’s option at any time given certain conditions (as discussed below). At the time of issuance, the initial conversion rate was 34.1965 shares of common stock per $1,000 principal amount of 2028 Convertible Notes, which was equivalent to an initial conversion price of approximately $29.24 per share of the Company’s common stock. As a result of the reverse stock split discussed in Note 2 — Summary of Significant Accounting Policies under “Basis of Presentation”, the conversion rate was adjusted to 1.7098 shares of common stock per $1,000 principal amount, which is equivalent to a conversion price of approximately $584.86 (the “2028 Conversion Price”) per share of the Company’s common stock. The conversion rate is subject to customary adjustments for certain events as described in the related indenture.

The Company may redeem for cash all or any portion of the 2028 Convertible Notes, at the Company’s option, on or after December 5, 2025 if the last reported sale price of the Company’s common stock has been at least 130% of the 2028 Conversion Price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest.

The Company’s net proceeds from this offering were approximately $445.7 million, after deducting the 2021 Initial Purchasers’ discounts and debt issuance costs. To minimize the effect of potential dilution to the Company’s common stockholders upon conversion of the 2028 Convertible Notes, the Company entered into separate capped call transactions (the “2028 Capped Calls”) as described below. In connection with the issuance of the 2030 Convertible Notes during the second quarter of 2023, the Company used approximately $99.8 million of the net proceeds to purchase and surrender for cancellation approximately $163.0 million aggregate principal amount of the Company’s 2028 Convertible Notes, which resulted in a $59.4 million gain on debt extinguishment. See 2030 Convertible Notes below for further details of the 2030 Convertible Notes. On June 30, 2025, the Company exchanged $228.8 million aggregate principal amount of the Company’s 2028 Convertible Notes for a portion of the Senior Secured PIK Toggle Notes due 2030 (the “2030 Senior Secured Notes”), as part of a privately negotiated exchange agreement with holders of 2028 Convertible Notes. See 2030 Senior Secured Notes below for further details.

Upon adoption of ASU 2020-06, the Company allocated all of the debt discount to long-term debt. The debt discount is amortized to interest expense using the effective interest method, computed to be 0.9%, over the life of the 2028 Convertible Notes or approximately its seven-year term. The outstanding 2028 Convertible Notes balances as of September 30, 2025 and December 31, 2024 are summarized in the following table (in thousands):

			September 30, 2025						December 31, 2024
Long Term Debt
Outstanding principal			$	68,206					$	297,024
Unamortized 2021 Initial Purchasers’ debt discount and debt issuance cost			(968)						(5,200)
Net carrying amount			$	67,238					$	291,824

19

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents total interest expense recognized related to the 2028 Convertible Notes during the three and nine months ended September 30, 2025 and 2024 (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Cash interest expense
Contractual interest expense			$	85					$	371					$	828					$	1,114
Non-cash interest expense
Amortization of debt discount and debt issuance cost			75						326						730						975
Total interest expense			$	160					$	697					$	1,558					$	2,089

2028 Capped Call Options

On November 17, 2021, in connection with the pricing of the 2028 Convertible Notes, and on November 19, 2021, in connection with the exercise in full by the 2021 Initial Purchasers of their option to purchase additional Notes, the Company entered into the 2028 Capped Calls with certain counterparties. The Company used $66.7 million of the net proceeds to pay the cost of the 2028 Capped Calls.

At the time of issuance, the 2028 Capped Calls had an initial strike price of $29.2428 per share, which corresponded to the initial conversion price of the 2028 Convertible Notes, and is subject to anti-dilution adjustments. The 2028 Capped Calls had an initial cap price of $49.6575 per share, subject to certain adjustments. As a result of anti-dilution adjustments arising from the reverse stock split described in Note 2 — Summary of Significant Accounting Policies under “Basis of Presentation”, the strike price and cap price were adjusted to $584.856 and $993.15, respectively.

The 2028 Capped Calls are considered separate transactions entered into by and between the Company and the 2028 Capped Calls counterparties, and are not part of the terms of the 2028 Convertible Notes. The Company recorded a reduction to additional paid-in capital of $66.7 million during the year ended December 31, 2021 related to the premium payments for the 2028 Capped Calls. These instruments meet the conditions outlined in FASB ASU 2022-01 Topic 815, Derivatives and Hedging (“ASC 815”) to be classified in stockholders’ deficit and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

2030 Convertible Notes and 2030 Capped Call Options

2030 Convertible Notes

On April 3, 2023, the Company issued $240.0 million aggregate principal amount of its 2030 Convertible Notes in a private placement offering to qualified institutional buyers (the “2023 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended.

The 2030 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 4.25% per year, payable in cash semi-annually in arrears in April and October of each year, beginning on October 1, 2023. The 2030 Convertible Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, the Company may choose to pay or deliver cash, shares of common stock or a combination of cash and shares of common stock. The 2030 Convertible Notes are redeemable for cash at the Company’s option at any time given certain conditions (as discussed below). At the time of issuance, the initial conversion rate was 140.3066 shares of common stock per $1,000 principal amount of the 2030 Convertible Notes, which was equivalent to an initial conversion price of approximately $7.1272 per share of the Company’s common stock. As a result of the reverse stock split described in Note 2 — Summary of Significant Accounting Policies under “Basis of Presentation”, the conversion rate was adjusted to 7.0153 shares of common stock per $1,000.00 principal amount, which is equivalent to a conversion price of approximately $142.55 (the “2030 Conversion Price”) per share of the Company’s common stock. The conversion rate is subject to customary adjustments for certain events as described in the related indenture.

The 2030 Convertible Notes will be redeemable, in whole or in part, at the Company’s option, on or after April 5, 2027 if the last reported sale price of the Company’s common stock has been at least 130% of the 2030 Conversion Price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest.

20

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company’s net proceeds from this offering were approximately $232.4 million, net of $7.6 million in debt issuance costs primarily consisting of underwriters, advisory, legal, and accounting fees. The Company used approximately $99.8 million of the net proceeds to purchase and surrender for cancellation approximately $163.0 million aggregate principal amount of the Company’s 2028 Convertible Notes. See 2028 Convertible Notes above for further details on the impacts of the debt extinguishment. On June 30, 2025, the Company exchanged approximately $121.3 million aggregate principal amount of its 2030 Convertible Notes for a portion of the 2030 Senior Secured Notes, as part of a privately negotiated exchange agreement with certain holders of the 2030 Convertible Notes. See 2030 Senior Secured Notes below for further details.

The outstanding 2030 Convertible Notes balances as of September 30, 2025 and December 31, 2024 are summarized in the following table (in thousands):

			September 30, 2025						December 31, 2024
Long Term Debt
Outstanding principal			$	118,690					$	240,000
Unamortized 2023 Initial Purchasers’ debt discount and debt issuance cost			(2,539)						(5,901)
Net carrying amount			$	116,151					$	234,099

The debt discount and debt issuance costs are amortized to interest expense using the effective interest method, computed to be 4.70%, over the life of the 2030 Convertible Notes or its approximately seven-year term.

The following table presents total interest expense recognized related to the 2030 Convertible Notes during the three and nine months ended September 30, 2025 and 2024 (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Cash interest expense
Contractual interest expense			$	1,261					$	2,550					$	6,361					$	7,650
Non-cash interest expense
Amortization of debt discount and debt issuance cost			128						249						637						738
Total interest expense			$	1,389					$	2,799					$	6,998					$	8,388

2030 Capped Call Options

On March 29, 2023 and March 31, 2023, in connection with the pricing of the 2030 Convertible Notes, and on April 3, 2023, in connection with the exercise in full by the 2023 Initial Purchasers of their option to purchase additional 2030 Convertible Notes, the Company entered into capped calls (the “2030 Capped Calls”) with certain counterparties. The Company used $27.8 million of the net proceeds from the 2030 Convertible Notes to pay the cost of the 2030 Capped Calls.

The 2030 Capped Calls had an initial strike price of $7.1272 per share, which corresponds to the initial conversion price of the 2030 Convertible Notes and is subject to anti-dilution adjustments. The 2030 Capped Calls had a cap price of $11.1800 per share, subject to certain adjustments. As a result of anti-dilution adjustments arising from the reverse stock split described in Note 2 — Summary of Significant Accounting Policies under “Basis of Presentation”, the strike price and cap price were adjusted to $142.544 and $223.60, respectively.

The 2030 Capped Calls are considered separate transactions entered into by and between the Company and the 2030 Capped Calls counterparties, and are not part of the terms of the 2030 Convertible Notes. The Company recorded a reduction to additional paid-in capital of $27.8 million during the second quarter of 2023 related to the premium payments for the 2030 Capped Calls. These instruments meet the conditions outlined in ASC 815 to be classified in stockholders’ deficit and are not subsequently remeasured as long as the conditions for equity classification continue to be met.

21

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2030 Senior Secured Notes and 2030 Private Placement Warrants

2030 Senior Secured Notes

On June 30, 2025, the Company issued $155.4 million aggregate principal amount of its 2030 Senior Secured Notes to holders of the Company’s 2028 Convertible Notes and the Company’s 2030 Convertible Notes in a privately negotiated exchange (the “Exchange”) pursuant to Rule 144A under the Securities Act of 1933, as amended.

The transaction included an exchange of approximately (i) $228.8 million principal amount of the 2028 Convertible Notes and (ii) $121.3 million principal amount of the 2030 Convertible Notes, less amounts in lieu of fractional notes, for the 2030 Senior Secured Notes, warrants to purchase 439,919 shares of common stock (the “2030 Private Placement Warrants”), (iii) $10.0 million of cash proceeds, and accrued and unpaid interest on the exchanged 2028 Convertible Notes and 2030 Convertible Notes. The exchange resulted in a $220.0 million gain on debt extinguishment recorded within other income (expenses), net in the unaudited condensed consolidated statements of operations. The gain on debt extinguishment represented the proportional carrying value of the exchanged 2028 Convertible Notes and 2030 Convertible Notes, which in aggregate was $343.9 million, reduced by the collective fair value of the 2030 Senior Secured Notes of $132.0 million and the fair value of the 2030 Private Placement Warrants of $1.9 million, offset by cash received. The fair value of the 2030 Senior Secured Notes was estimated using a Black Derman-Toy lattice model with a yield of approximately 14.6%, synthetic credit rating for the Company, volatility of 32%, and the risk free rate of 3.79% for the expected term associated with the 2030 secured notes. The fair value of the 2030 Private Placement Warrants was estimated using the Black-Scholes-Merton model based on the Company’s closing strike price on the date of extinguishment of $6.23, volatility of 118.6%, and the risk free rate of 3.79% for the expected term associated with the 2030 secured notes. The Company accrued $5.2 million in debt issuance costs primarily consisting of financial advisory, legal, and accounting fees.

At the Company’s election for any interest period, the 2030 Senior Secured Notes bear interest at a rate of (i) 12.0% per year, if interest is paid in kind, subject to a maximum amount of interest able to be paid in kind, and (ii) 11.0% per year if interest is paid in cash. In each case, interest is payable semi-annually in arrears in January and July of each year, beginning on January 1, 2026. The 2030 Senior Secured Notes will mature on December 30, 2030 unless redeemed in accordance with their terms prior to such date.

The 2030 Senior Secured Notes will be redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, at the following redemption prices: on or after the date of issuance to December 31, 2027, at 105.0% of the principal amount of the notes being redeemed, including interest paid in kind, if any, plus accrued and unpaid interest; from January 1, 2028 to December 31, 2028, at 102.5% of the principal amount of the notes being redeemed, including interest paid in kind, if any, plus accrued and unpaid interest; and on or after January 1, 2029, at 100.0% of the principal amount of the notes being redeemed, including interest paid in kind, if any, plus accrued and unpaid interest.

The 2030 Senior Secured Notes are guaranteed by certain of the Company’s current and future restricted subsidiaries on a senior secured basis. The 2030 Senior Secured Notes and the guarantees has been secured by a first priority lien on substantially all of the assets of the Company and the guarantors, subject to certain exceptions.

The outstanding 2030 Senior Secured Notes balances as of September 30, 2025 are summarized in the following table (in thousands):

			September 30, 2025
Long Term Debt
Outstanding principal			$	155,427
Unamortized debt discount and debt issuance cost			(27,818)
Net carrying amount			$	127,609

The debt discount and debt issuance costs are amortized to interest expense using the effective interest method computed to be 16.9% at the time of issuance of the 2030 Senior Secured Notes.

22

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents total interest expense recognized related to the 2030 Senior Secured Notes during the three and nine ended September 30, 2025 (in thousands):

			Three and Nine Months Ended September 30,
			2025
Cash interest expense
Contractual interest expense			$	4,322
Non-cash interest expense
Amortization of debt discount and debt issuance cost			900
Total interest expense			$	5,222

8.    WARRANTS

2030 Private Placement Warrants

In connection with the Exchange, the Company issued 439,919 of 2030 Private Placement Warrants, under a warrant agreement dated June 30, 2025, each of which entitles the holder to purchase one share of common stock at an exercise price of $30.00.

Upon issuance, these warrants met the criteria for liability classification, resulting in a warrant liability of $1.9 million. The 2030 Private Placement Warrants were remeasured to fair value as of September 30, 2025, resulting in a warrant liability of $6.1 million. During the three months ended September 30, 2025, the Company recorded a related loss on remeasurement of $4.2 million in “change in fair value of warrant liability” in the condensed consolidated statements of operation. See Note 4 — Fair Value Measurements and Note 7 — Debt for additional details.

9.    STOCK-BASED COMPENSATION

Equity Incentive Plans

In May 2024, the Company adopted the 2024 Equity Incentive Plan (as amended, the “2024 Plan”). Under the 2024 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), and other awards that are settled in shares of the Company’s common stock.

Stock Options

The following table summarizes the stock option activity for the period ended September 30, 2025:

			Number of Options Outstanding						Weighted- Average Exercise Price Per Share						Weighted- Average Remaining Contractual Life (years)						Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2024			427,463						$	111.77					2.8						$	—
Options granted			39,413						7.64
Options forfeited and cancelled			(270,309)						108.66
Balances as of September 30, 2025			196,567						$	95.07					5.9						$	389
Options vested and exercisable — September 30, 2025			139,763						$	110.73					4.7						$	3

As of September 30, 2025, the Company had approximately $1.0 million of remaining unrecognized stock-based compensation expense for stock options, which is expected to be recognized over a weighted average period of 1.0 years.

23

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Restricted Stock Units

The following table summarizes the RSU activity for the period ended September 30, 2025:

			Number of RSUs Outstanding (1)						Weighted-Average Grant Date Fair Value Per Share
Balances as of December 31, 2024			614,103						$	61.14
RSUs granted			609,177						8.80
RSUs vested			(250,157)						103.60
RSUs forfeited			(233,243)						41.98
Balances as of September 30, 2025			739,880						$	18.58

(1) Includes certain restricted stock units with service and market-based vesting criteria.

As of September 30, 2025, the Company had approximately $8.2 million of remaining unrecognized stock-based compensation expense for RSUs, which is expected to be recognized over a weighted average period of 1.3 years.

During the three months ended March 31, 2024, the Company issued 0.1 million shares of common stock through the Company’s annual incentive program under the Company’s 2021 Equity Incentive Plan.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense recorded in each component of operating expenses in the Company’s unaudited condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2025 and 2024 (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Sales and marketing			$	324					$	130					$	723					$	2,488
Research and development			877						2,038						2,736						6,154
General and administrative (1)			1,016						4,364						4,470						13,074
Total stock-based compensation expense			$	2,217					$	6,532					$	7,929					$	21,716

(1) Stock-based compensation expense recorded in general and administrative expense includes $0.2 million of expenses relating to RSUs granted to non-employee consultants.

Stock-based compensation expense associated with research and development of $0.1 million and $0.7 million corresponding to internal-use software, were capitalized during the three months ended September 30, 2025 and 2024, respectively. Stock-based compensation expense associated with research and development of $0.9 million and $2.4 million were capitalized as internal-use software during the nine months ended September 30, 2025 and 2024, respectively.

24

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10.    NET (LOSS) INCOME PER SHARE

Net (loss) income per share is computed by dividing net loss by the basic weighted-average number of shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the diluted weighted-average number of shares outstanding during the period and, accordingly, reflects the potential dilutive effect of all issuable shares of common stock, including as a result of stock options, restricted stock units, warrants and convertible notes. The diluted weighted-average number of shares used in our diluted net loss per share calculation is determined using the treasury stock method for stock options, restricted stock units, and warrants, and the if-converted method for convertible notes. For periods in which we recognize losses, the calculation of diluted loss per share is the same as the calculation of basic loss per share.

The following table sets forth the computation of basic net (loss) income per share and diluted net loss per share attributable to common stockholders, adjusted on a retroactive basis to reflect the reverse stock split as discussed in Note 2 — Summary of Significant Accounting Policies under “Basis of Presentation” (in thousands, except share and per share amounts):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Numerator:
Net (loss) income attributable to common stockholders			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)
Numerator - Diluted:
Net (loss) income per share attributable to common stockholders, basic			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)
Less: Gain on extinguishment of debt, net of tax			—						—						(215,736)						—
Net loss attributable to Stem common stockholders, diluted			$	(23,791)					$	(148,300)					$	(61,996)					$	(802,877)
Denominator:
Weighted-average number of shares outstanding used to compute net (loss) income per share attributable to common stockholders, basic			8,376,032						8,131,700						8,301,432						8,049,851
Dilutive potential common shares			—						—						151,120						—
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, diluted			8,376,032						8,131,700						8,452,552						8,049,851
Net (loss) income per share attributable to common stockholders, basic			$	(2.84)					$	(18.24)					$	18.52					$	(99.74)
Net loss per share attributable to common stockholders, diluted			$	(2.84)					$	(18.24)					$	(7.33)					$	(99.74)

The following table shows total outstanding potentially dilutive shares excluded from the computation of diluted net loss per share attributable to common stockholders as their effect would have been anti-dilutive, adjusted on a retroactive basis to reflect the reverse stock split as discussed in Note 2 — Summary of Significant Accounting Policies under “Basis of Presentation”, as of September 30, 2025 and 2024:

			September 30, 2025						September 30, 2024
Outstanding 2028 Convertible Notes (if converted)			116,620						507,859
Outstanding 2030 Convertible Notes (if converted)			832,620						1,683,679
Outstanding stock options			196,567						481,080
Outstanding legacy warrants			127						127
Outstanding RSUs			739,880						671,427
Outstanding private placement warrants			439,919						—
Total			2,325,733						3,344,172

25

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11.     INCOME TAXES

The following table reflects the Company’s provision for income taxes and the effective tax rates for the periods presented below (in thousands, except effective tax rate):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
(Loss) income before provision for income taxes			$	(23,932)					$	(148,171)					$	154,132					$	(802,533)
Benefit from (provision for) income taxes			$	141					$	(129)					$	(392)					$	(344)
Effective tax rate			0.59		%				(0.09)		%				0.25		%				(0.04)		%

For the three months ended September 30, 2025, the Company recognized a benefit from income taxes of $0.1 million, representing an effective tax rate of 0.59%, which was lower than the statutory federal tax rate because the Company maintains a valuation allowance on its U.S. deferred tax assets. For the nine months ended September 30, 2025, the Company recognized a provision for income taxes of $0.4 million, representing an effective tax rate of 0.25%, which was lower than the statutory federal tax rate because of a favorable impact from the exclusion of cancellation of debt income (“CODI”) under Section 108 of the Internal Revenue Code and the Company maintained a valuation allowance on its U.S. deferred tax assets during the nine months ended September 30, 2025. For the three months ended September 30, 2024, the Company recognized a provision for income taxes of $0.1 million, representing an effective tax rate of (0.09)%, which was lower than the statutory federal tax rate because the Company maintained a valuation allowance on its U.S. deferred tax assets and a nondeductible goodwill impairment. For the nine months ended September 30, 2024, the Company recognized a provision for income taxes of $0.3 million, representing an effective tax rate of (0.04)%, which was lower than the statutory federal tax rate due to the valuation allowance on U.S. deferred tax assets and a nondeductible goodwill impairment.

In July 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted. The OBBB makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted, which is the date the legislation is signed into law. The OBBB did not have a material impact on our financial statements for the third quarter of 2025, but we continue to evaluate the potential future impact of the OBBB on our financial statements.

12.    SEGMENT INFORMATION

The Company’s CODM manages the business and evaluates operating performance based on consolidated net (loss) income. The Company’s CODM uses consolidated net (loss) income to monitor budget versus actual results. The Company operates as one operating segment and has one reporting segment that constitutes consolidated results.

The following table sets forth the Company’s segment information for revenue and significant expenses (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Revenue			$	38,237					$	29,291					$	109,123					$	88,759
Less (add):
Cost of revenue			24,657						23,095						72,205						97,379
Compensation expense excluding stock-based compensation			10,756						14,955						41,661						55,825
Stock-based compensation			2,217						6,532						7,929						21,716
Depreciation and amortization			4,509						3,732						12,758						14,168
Gain on extinguishment of debt			—						—						(220,047)						—
Other segment expenses, net (1)			20,030						129,148						40,485						702,204
Provision for income taxes			(141)						129						392						344
Net (loss) income			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)

(1) Other segment expenses, net includes impairment of goodwill, impairment of parent company guarantees, interest expense and other income, net.

26

STEM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

13.     COMMITMENTS AND CONTINGENCIES

Contingencies

The Company is party to various legal proceedings from time to time arising in the ordinary course of its business. A liability is accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss with respect to any currently pending legal proceeding is remote. However, litigation is inherently uncertain and it is not possible to definitively predict the ultimate disposition of any of these proceedings. As of the date of this filing, the Company does not believe that there are any pending legal proceedings or other loss contingencies that will, either individually or in the aggregate, have a material adverse effect on the Company taken as a whole.

Commitments

In September 2025, the Company recognized a $0.8 million operating lease liability and a corresponding operating lease right-of use asset, which are included in the unaudited condensed consolidated balance sheets as of September 30, 2025, consisting of 4,263 square feet of leased office in Berlin, Germany. As of the commencement date of the lease, the remaining lease term was 60 months and base rent is approximately $16,025 per month with escalating payments over the lease term.

In September 2025, the Company terminated the lease for its office in Gurugram, India. As a result, the Company derecognized the related right-of-use asset and lease liability. The Company recorded net lease termination costs of $0.1 million recorded within other (expenses) income, net in the unaudited condensed consolidated statements of operations. No future lease commitments remain under this agreement. The Company now leases office space under a month-to-month arrangement that qualifies as a short-term lease under ASC 842. As such, the Company has elected not to recognize a right-of-use asset or lease liability for this lease.

Non-cancelable Purchase Obligations

During the three months ended September 30, 2025, there were no material changes to our non-cancelable purchase obligations.

Non-Income Related Taxes

During 2023, the Company was selected for sales and use tax examination by the state of California and determined that it was not appropriately charging certain customers sales tax and remitting the applicable amounts to the taxing authority for certain revenue arrangements from 2018 through 2022. The Company determined it was probable that it would be subject to sales tax liabilities plus applicable interest in certain states, principally California, and estimated a probable tax liability of $5.6 million. The Company accrued this amount and included it in general and administrative expense in the consolidated statement of operations in 2023. During 2025, the sales and use tax examination was extended by the state of California to include revenue arrangements for 2023 and 2024. The California sales and use tax examination is ongoing and the Company is awaiting final ruling on its sales tax administration process and clarity on the required settlement amount.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (the “Report”), 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 such as “expect,” “may,” “can,” “believe,” “predict,” “plan,” “potential,” “projected,” “projections,” “forecast,” “estimate,” “intend,” “anticipate,” “ambition,” “goal,” “target,” “think,” “should,” “could,” “would,” “will,” “hope,” “see,” “likely,” and other similar words.

Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and operating performance guidance, outlook, targets and other forecasts or expectations regarding, or dependent on, our business outlook and strategy; our joint ventures, partnerships and other alliances; forecasts or expectations regarding energy transition and global climate change; reduction of greenhouse gas (“GHG”) emissions; the integration and optimization of energy resources; our business strategies and those of our customers; our ability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the effects of natural disasters and other events beyond our control; the expected impacts of the One Big Beautiful Bill Act (“OBBB”) on our business and that of our customers; the direct or indirect effects on our business of macroeconomic factors and geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; and our future results of operations, including revenue, adjusted EBITDA, and the other metrics presented herein.

Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements, including but not limited to our inability to execute on, and achieve the expected benefits from, our operational and strategic initiatives, including from our cost reduction, workforce reduction and restructuring efforts; our inability to successfully execute on our new software and services-centric strategy; the effects of the OBBB on our business and that of our customers; disruptions in sales, production, service or other business activities; general macroeconomic and business conditions in key regions of the world, including inflationary pressures, general economic slowdown or a recession, high interest rates, changes in monetary policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, government shutdowns and instability in financial institutions; the direct and indirect effects of widespread health emergencies on our workforce, operations, financial results and cash flows; geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the results of operations and financial condition of our customers; pricing pressures; severe weather and seasonal factors; our inability to continue to grow and manage our growth effectively; our inability to attract and retain qualified employees and key personnel; our inability to comply with, and the effect on our business of, evolving legal standards and regulations, including those concerning data protection, consumer privacy, sustainability, and evolving labor standards; risks relating to the development and performance of our software-enabled services; our inability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the risk that our business, financial condition and results of operations may be adversely affected by other political, economic, business and competitive factors; and other risks and uncertainties discussed in Part II. Item 1A. “Risk Factors” in this Report, in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in our other filings with the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, our actual results or outcomes, or the timing of these results or outcomes, may vary materially from those reflected in our forward-looking statements. Forward-looking statements and other statements in this Report regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to the Company, investors or other stakeholders or required to be disclosed in our filings under U.S. securities laws or any other laws or requirements applicable to the Company. In addition, historical, current, and forward-looking environmental, social, and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Forward-looking statements in this Report are made as of the date of such Report, and the Company disclaims any intention or obligation to update publicly or revise such forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This discussion and analysis should also be read together with our audited consolidated financial statements and related notes, as well as the section entitled “Management’s Discussion and Analysis of Financial Condition and Results or Operations” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. You should carefully read the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” herein to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

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Overview

Stem is reimagining technology to drive the energy transition. We help asset owners, operators and stakeholders benefit from the full value of their energy portfolio by enabling the intelligent development, deployment and operation of clean energy assets. Our integrated software suite, PowerTrack, provides asset monitoring software and solutions, supported by professional and managed services, under one roof. Our solutions and services are designed to provide customers with the information they need clearly and accurately and help harness raw data to inform actionable insight. With global projects managed in 55 countries, customers have relied on Stem for nearly 20 years to help maximize the value of their clean energy projects.

PowerTrack is our integrated suite of software and solutions for solar, storage and hybrid assets. Within the PowerTrack product suite we offer PowerTrack Software, PowerTrack Energy Management System, PowerTrack Supervisory Control and Data Acquisition (“SCADA”), PowerTrack Power Plant Controller (“PPC”), PowerTrack Logger, and PowerTrack Optimizer.

Our PowerTrack Software for solar monitoring and analytics enables the standardization of energy portfolios on one hardware agnostic application. We offer commercial- and utility-scale edge hardware solutions, which are original equipment manufacturer (“OEM”)-agnostic devices that are used to connect customers’ solar and storage assets to our software applications in a unified view. We offer project services to our PowerTrack customers to assist with designing and commissioning of solutions. We offer Managed Services, which are full lifecycle, storage services covering the design, procurement, commissioning, operation and optimization of energy storage and hybrid systems, enabled by our PowerTrack Optimizer software, to our customers. We also offer a comprehensive suite of Professional Services to support solar and storage projects through every stage of the project lifecycle, providing our customers with the expertise needed to navigate the complexity and scale of clean energy portfolios. We serve project developers, asset owners, engineering, procurement and construction firms (EPCs) and distributors.

Since our inception in 2009, we have engaged in developing and marketing AI-enabled software and services, raising capital, recruiting personnel, and growing our annual recurring revenue. Over the last 15 years, we have an industry leader in clean energy software and solutions.

Each year since our inception, we have incurred net operating losses and negative cash flows from operations. We have financed our operations primarily through cash flows from customers and the issuance of convertible senior notes.

Our total revenue increased from $88.8 million for the nine months ended September 30, 2024 to $109.1 million for the nine months ended September 30, 2025. For the nine months ended September 30, 2025 and 2024, we recognized net income of $153.7 million and incurred a net loss of $802.9 million, respectively. As of September 30, 2025, we had an accumulated deficit of $1,472.8 million.

On April 9, 2025, we announced an approximately 27% reduction of our global workforce, as part of our broader efforts to prioritize investments in software, reduce operating costs, increase efficiency, drive profitable growth and increase stockholder value. For the nine months ended September 30, 2025, we incurred $6.0 million in restructuring costs related to the reduction of our global workforce. We expect to continue to exercise discipline and moderate expenses associated with sales and marketing, research and development, regulatory and related functions. In addition, we expect to continue to manage and reduce our general and administrative expenses associated with scaling our business operations, including legal, audit, additional insurance expenses, investor relations activities and other administrative and professional services.

Key Factors, Trends and Uncertainties Affecting our Business

We believe that our performance and future success depend on several factors, some of which present significant opportunities for us, and some of which pose risks and challenges, including but not limited to:

Our New Strategy

In 2024, we announced a new business strategy that reflects a renewed focus on developing and marketing our AI-enabled software and services offerings. This transition entails significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes have resulted in reduced revenue, increased restructuring-related costs and short-term disruptions in our operations, which may negatively affect our ability to effectively scale our software and services offerings and achieve our financial and operational targets. Failure to successfully and timely implement our new strategy may have a material adverse effect on our business, financial condition, and results of operations. See “We may not be able to successfully implement our recently announced new strategy.” in Part I. Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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Cash Reserves

The execution of our new business strategy has required, and is expected to continue to require, investment in our software, our employees and infrastructure. As of September 30, 2025, we had cash and cash equivalents of $43.1 million, while our operating expenses for the three months ended September 30, 2025 were $26.4 million. If our cash flow from operations does not improve as expected, or if we are unable to secure additional sources of capital if or when the need arises, we may be constrained in our ability to make the investments required to continue execution of our new strategy.

NYSE Notice and Reverse Stock Split

On August 28, 2024, we received formal notice from the New York Stock Exchange (the “NYSE”) that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days.

At the Company’s 2025 Annual Meeting of Stockholders, our stockholders approved a reverse stock split of our common stock, par value $0.0001 per share. After such stockholder approval, our Board of Directors implemented the reverse stock split at a ratio of 1-for-20 and a reduction in the total number of authorized shares of common stock from 500 million shares to 250 million shares on June 23, 2025 (the “Effective Time”).

At the Effective Time, every 20 shares of common stock outstanding was combined, automatically and without any action on the part of the Company or its stockholders, into one new share of common stock. No fractional shares of common stock were issued as a result of the reverse stock split. In lieu of any fractional shares to which a stockholder of record was otherwise entitled, the Company paid cash to the applicable stockholder. The common stock began trading on a split-adjusted basis at the open of trading on June 23, 2025.

Adjustments proportionate to the 1-for-20 split ratio were made to the number of shares of Common Stock available for issuance under the Company’s equity incentive plans; the number of shares issuable, and the applicable exercise prices under the Company’s outstanding equity awards under such plans and any outstanding warrants; the conversion rates of outstanding convertible notes, in accordance with the related indentures; the strike prices of existing capped call options; the number of shares authorized for issuance pursuant to the convertible notes and capped call options; the shares reserved for issuance under any equity plan, outstanding equity award, convertible notes, capped call options or otherwise, and as otherwise described in the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 23, 2025.

Following the Effective Time, we regained compliance with the requirement of Section 802.01C, as our share price promptly exceeded $1.00 per share, and remained above that level for the following 30 trading days.

All share and per share amounts, exercise prices, conversion rates and conversion prices presented herein that relate to dates, or were established, prior to the reverse stock split have been adjusted retroactively to reflect these changes.

One Big Beautiful Bill Act of 2025

In July 2025, the OBBB was enacted, which introduced material changes to clean energy tax credit programs that are significant to our business and may affect our financial condition, results of operations and future prospects. Included in this legislation are provisions that allow for the immediate expensing of domestic Unites States research and development expenses, immediate expensing of certain capital expenditures, and other changes to the U.S. taxation of profits derived from foreign operations. The OBBB did not result in any material changes to tax expense or cash tax for Q3 2025, primarily as a result of the valuation allowance we have on our deferred tax assets

The OBBB scales back the Investment Tax Credit (the “ITC”) available under Section 25D of the Internal Revenue Code (the “Code”) for residential solar and storage systems purchased through cash or loans. Under the OBBB, the Section 25D credit will expire on December 31, 2025. In addition, the OBBB imposes new timing requirements for eligibility under Section 48E of the Code, which governs ITCs for leased solar and storage systems. Specifically, solar-only projects that do not commence construction within 12 months of the OBBB’s enactment must be placed in service by December 31, 2027 in order to remain eligible for the credit. Energy storage projects are not subject to this placed-in-service deadline; however, the ITC for storage systems will begin to phase down in 2034 - decreasing to 75% in 2034, 50% in 2035 and phasing out entirely by 2036.

The OBBB also amends the domestic content bonus credit rules for Section 48E projects. Projects commencing construction after June 16, 2025 must meet a 45% domestic cost threshold, up from 40%.

Additionally, the OBBB introduces new compliance requirements under the Foreign Entity of Concern (“FEOC”) provisions for both Section 48E and the Advanced Manufacturing Production Tax Credit (“AMPTC”) under Section 45X. These provisions establish an escalating threshold of non-FEOC content that must be met by solar and storage projects beginning construction in 2026 and by manufactured components produced beginning in 2026.

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On July 7, 2025, the President issued an Executive Order directing the Secretary of the Treasury to issue updated guidance within 45 days on the “beginning of construction” requirements applicable to Section 48E projects. The Executive Order also requires the Secretary to implement the FEOC restrictions set forth in the OBBB. We are currently evaluating the full impact of this legislation on our consolidated financial statements.

The OBBB makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws to be recognized in the period in which the legislation is enacted, which is the date the legislation is signed into law. The OBBB did not have a material impact on our financial statements for the third quarter of 2025, but we continue to evaluate the potential future impact of the OBBB on our financial statements.

Parent Company Guarantees

Prior to July 2023, we agreed in certain customer contracts, to PCG that the value of purchased hardware will not decline for a certain period of time, as more fully described above under Note 3 — Revenue, of the accompanying Notes to the unaudited condensed consolidated financial statements in this Report. We accounted for such contractual terms and guarantees as variable consideration at each measurement date. We updated our estimates of variable consideration each quarter with respect to outstanding guarantees, including changes in estimates related to such guarantees, for facts or circumstances that had changed from the time of the initial estimate. As a result, the Company recorded net revenue reductions of $5.6 million and $38.7 million in hardware revenue during the three and nine months ended September 30, 2024, respectively. The overall reduction in revenue was related to deliveries that occurred prior to 2024.

There are no remaining PCGs outstanding, and the Company expects no future impact on its financial results as a result of PCGs.

Because we have not included these parent company guarantees in our contracts since July 2023, and because we do not intend to provide guarantees in customer contracts going forward, we believe that excluding the effect of the $5.6 million and $38.7 million net reduction in revenue during the three and nine months ended September 30, 2024, respectively, from adjusted EBITDA and non-GAAP gross profit enhances the comparability to these metrics in prior periods.

Impairment and Accounts Receivable Write-Off

For those contracts where the customers invoked PCG protection pursuant to the applicable contract, we worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers, as more fully described above under Note 3 — Revenue, in the accompanying notes to the unaudited condensed consolidated financial statements in this Report. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where we believe we have enforceable rights of recovery, we believed the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s was no longer probable. Accordingly, we wrote-off the remaining receivables of $104.1 million during the fiscal year ended December 31, 2024. As of June 30, 2025, the Company has entered into an arrangement to recover $3.5 million of the receivables previously written off. As of September 30, 2025, the Company has recovered $2.7 million. We are pursuing all potential remedies with respect to its enforceable rights under applicable contracts.

Seasonality

Our results of operations have typically fluctuated due to seasonal trends, which we expect to recur in future periods. Historically, we have recognized more of our revenue in the third and fourth fiscal quarters of each year due to various factors, including the requirement by our customers to reach target commercial operation dates for their renewable energy projects as well as tax equity and financing considerations. For instance, our revenue recognized in the third and fourth quarters of the fiscal year ended December 31, 2024 accounted for 59% of the total revenue recognized in the fiscal year ended December 31, 2024. The seasonality of our results of operations may be mitigated as our software and services offerings begin to comprise a greater percentage of our total revenue.

DevCo Joint Ventures

We, through an indirect wholly-owned development subsidiary, entered into strategic joint ventures with qualified third parties to develop select energy storage generation projects (“DevCo Projects”), as more fully described above under Note 2 — Summary of Significant Accounting Policies, of the Notes to the unaudited condensed consolidated financial statements in this report. These projects sometimes required significant upfront investment by us and involved a high degree of risk. If a DevCo Project fails to reach completion or is significantly delayed, we could lose all or a portion of our development capital investment. See “We Face Risks Related to our DevCo Business Model” in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for additional information about certain risks related to these DevCo Projects. We are not making further investments in these DevCo Projects.

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Increase in Deployment of Renewables

Deployment of intermittent resources has accelerated over the last decade, and today, wind and solar have become a low cost energy source. We expect the cost of generating renewable energy to continue to decline and deployments of energy storage systems to increase. As renewable energy sources of energy production are expected to represent a larger proportion of energy generation, grid instability rises due to their intermittency, which can be addressed by energy storage solutions.

Competition

Our key competitors include energy monitoring and optimization software providers, energy storage and edge device OEMs and hardware integration providers. Our PowerTrack software is hardware agnostic and benefits from operational data across a multitude of hardware types, geographies, utilities and grid operator service areas. Our edge devices provide customers with a flexible solution that meets their individual project needs.

We believe we are well-positioned to compete successfully in the market for software and software-enabled services. We are among the leaders in global distributed solar and energy storage assets under management, supported by proven technology, focused customer service, strong strategic partnerships and a seasoned leadership team with a track record of success.

Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. Furthermore, our competitors include other types of software providers and some hardware manufacturers that offer software solutions. If our market share declines due to increased competition, our revenue and ability to generate profits in the future may be adversely affected.

Government Regulation and Compliance

Although we are not regulated as a utility, the market for our products and services is heavily influenced by federal, state, and local government statutes and regulations concerning electricity. These statutes and regulations affect electricity pricing, net metering, incentives, taxation, competition with utilities, and the interconnection of customer-owned electricity generation. In the United States and internationally, governments regularly modify these statutes and regulations and acting through state utility or public service commissions, regularly change and adopt different rates for commercial customers. These changes can positively or negatively affect our ability to deliver cost savings to customers.

Non-GAAP Financial Measures

In addition to financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we use adjusted EBITDA and non-GAAP gross profit and margin, which are non-GAAP financial measures, for financial and operational decision making and as a means to evaluate our operating performance and prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our operating performance, such as stock-based compensation and other non-cash charges, as well as discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance and liquidity as well as comparisons to our competitors’ operating results. We believe these non-GAAP financial measures are useful to investors because they both (1) allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) are used by our institutional investors and the analyst community to help them analyze the health of our business. Adjusted EBITDA and non-GAAP gross profit and margin should be considered in addition to, not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP.

Non-GAAP Gross Profit and Margin

We define non-GAAP gross profit as gross profit excluding amortization of capitalized software, impairments related to decommissioning of end-of-life systems, excess supplier costs and resulting liquidated damages, and reduction in revenue. We define non-GAAP gross margin as non-GAAP gross profit as a percentage of revenue.

In the first quarter of 2024, we incurred costs of $1.0 million above initially agreed prices on the acquisition of certain hardware systems from one of our suppliers, which resulted from production delays by such supplier. Because we had not previously incurred costs above initially agreed prices with a hardware supplier, we excluded this item from adjusted EBITDA and non-GAAP gross profit to better facilitate comparisons of our underlying operating performance across periods.

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The following table provides a reconciliation of GAAP gross profit (loss) and margin to non-GAAP gross profit and margin (in millions, except for percentages):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Revenue			$	38.2					$	29.3					$	109.1					$	88.8
Cost of revenue			(24.7)						(23.1)						(72.3)						(97.4)
GAAP gross profit (loss)			13.5						6.2						36.8						(8.6)
GAAP gross margin (%)			35		%				21		%				34		%				(10)		%
Non-GAAP Gross Profit
GAAP Revenue			$	38.2					$	29.3					$	109.1					$	88.8
Add: Revenue reduction, net (1)			—						5.6						—						38.7
Subtotal			38.2						34.9						109.1						127.5
Less: Cost of revenue			(24.7)						(23.1)						(72.3)						(97.4)
Add: Amortization of capitalized software & developed technology			4.4						4.1						13.2						12.0
Add: Impairments			—						0.3						1.4						0.4
Add: Excess supplier costs (2)			—						—						—						1.0
Non-GAAP gross profit			$	17.9					$	16.2					$	51.4					$	43.5
Non-GAAP gross margin (%)			47		%				46		%				47		%				34		%

(1) Refer to the discussion of reduction in revenue in “— Parent Company Guarantees” above.

(2) Refer to the discussion of excess supplier costs in “— Non-GAAP Gross Profit and Margin” above.

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Adjusted EBITDA

As discussed above, we believe that adjusted EBITDA is useful for investors to use in comparing our financial performance with the performance of other companies. Nonetheless, the expenses and other items that we exclude in our calculation of adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude when calculating adjusted EBITDA.

We calculate adjusted EBITDA as net (loss) income attributable to us before depreciation and amortization, including amortization of internally developed software, interest expense, further adjusted to exclude stock-based compensation and other income and expense items, including net gain on extinguishment of debt, reduction in revenue, excess supplier costs and resulting liquidated damages, and income tax provision or benefit.

The following table provides a reconciliation of adjusted EBITDA to net (loss) income (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
			(in thousands)												(in thousands)
Net (loss) income			$	(23,791)					$	(148,300)					$	153,740					$	(802,877)
Adjusted to exclude the following:
Depreciation and amortization (1)			11,022						11,516						35,643						36,321
Interest expense			7,270						4,512						15,632						13,850
Gain on extinguishment of debt			—						—						(220,047)						—
Stock-based compensation			2,217						6,532						7,929						21,716
Revenue reduction, net (2)			—						5,525						—						38,653
Excess supplier costs and resulting liquidated damages (3)			—						—						—						1,012
Change in fair value of derivative liability			—						—						—						(1,477)
Change in fair value of warrant liability			4,190						—						4,190						—
Impairment of goodwill			—						—						—						547,152
Contract termination payment (4)			—						10,000						—						10,000
Impairment and (expected recovery of) accounts receivable write-off (5)			—						104,134						(3,500)						104,134
(Benefit from) provision for income taxes			(141)						129						392						344
Other expenses (6)			1,280						2,460						7,258						4,125
Adjusted EBITDA			$	2,047					$	(3,492)					$	1,237					$	(27,047)

(1) Depreciation and amortization includes depreciation and amortization expense, impairment loss of energy storage systems, and impairment loss of project assets.

(2) Refer to the discussion of reduction in revenue in “— Parent Company Guarantees” above.

(3) Refer to the discussion of excess supplier costs in “— Non-GAAP Gross Profit and Margin” above.

(4) Contract termination payment to a vendor for the delivery of hardware.

(5) Refer to the discussion of write-offs relating to parent company guarantee related arrangements in “— Impairment and Accounts Receivable Write-Off” above.

(6) Adjusted EBITDA for the three and nine months ended September 30, 2025 included other expenses of $1.3 million and $7.3 million, respectively. For the three months ended September 30, 2025, other expenses includes $0.9 million for one-time costs associated with a loss on disposal and abandonment of property, plant and equipment, $0.1 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities and $0.3 million of other non-recurring expenses. For the nine months ended September 30, 2025, other expenses included $0.4 million of other non-recurring expenses, $0.9 million for one-time costs associated with a loss on disposal and abandonment of property, plant and equipment, and $6.0 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities. Restructuring expenses included employee severance and other exit costs.

Adjusted EBITDA for the three and nine months ended September 30, 2024 included other expenses of $2.5 million and $4.1 million, respectively. For the three months ended September 30, 2024, other expenses includes $1.2 million for advisory services relating to strategy and $1.3 million in connection with separation agreements for certain of the Company’s former executive officers. For the nine months ended September 30, 2024, other expenses includes $1.2 million for advisory services relating to strategy, $1.3 million in connection with separation agreements for certain of the Company’s former executive officers, $1.1 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities and $0.5 million of other non-recurring expenses.

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Financial Results and Key Metrics

The following table presents our financial results and our key metrics (in millions, except for percentages and unless otherwise noted):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2025						2024						2025						2024
Key Financial Metrics
Revenue			$	38.2					$	29.3					$	109.1					$	88.8
GAAP gross profit (loss)			$	13.5					$	6.2					$	36.8					$	(8.6)
GAAP gross margin (%)			35		%				21		%				34		%				(10)		%
Non-GAAP gross profit			$	17.9					$	16.2					$	51.4					$	43.5
Non-GAAP gross margin (%)			47		%				46		%				47		%				34		%
Net (loss) income			$	(23.8)					$	(148.3)					$	153.7					$	(802.9)
Adjusted EBITDA			$	2.0					$	(3.5)					$	1.2					$	(27.0)
Key Operating Metrics
Bookings (1)			$	30.3					$	—					$	99.1					$	—
Contracted backlog* (2)			$	22.2					$	—					$	22.2					$	—
Storage operating AUM (in GWh)* (3)			1.8						1.6						1.8						1.6
Solar operating AUM (in GW)* (4)			33.9						28.5						33.9						28.5
CARR* (5)			$	70.1					—						$	70.1					$	—
ARR* (6)			$	60.2					51.4						$	60.2					$	51.4
* at period end
(1) Redefined versus prior periods. Beginning with the first quarter of 2025, the Company is redefining “Bookings” as the total value of executed purchase orders. Previously this metric included all relevant executed contracts, regardless of whether or not a related purchase order had been executed. The definition of Bookings is discussed in more detail below under the heading “Bookings.” Prior period amounts have been excluded as they do not reflect the newly defined metrics.
(2) Redefined versus prior periods. Beginning with the first quarter of 2025, the Company is redefining “Contracted Backlog” as the total value of hardware and non-recurring services bookings with executed purchase orders in dollars, as of a specific date. Previously, this metric included the total contract value of hardware, software and services contracts recognized ratably over the contract period, regardless of whether or not a related purchase order had been executed. Prior period amounts have been excluded as they do not reflect the newly defined metrics.
(3) Represents total GWh of energy storage systems in operation. Beginning with the first quarter of 2025 contracted storage AUM was replaced with this metric.
(4) Total GW of solar systems in operation.
(5) Contracted Annual Recurring Revenue (“CARR”): Redefined versus prior periods. Beginning with the first quarter of 2025, the Company is redefining CARR as the annualized value from Stem customer subscription contracts with executed purchase orders signed in the period for systems that are not yet operating and all operating Stem customer subscription contracts, including PowerTrack software, storage software & recurring managed services, and some recurring professional services contracts. Previously, this metric included the annualized value from all executed Stem customer subscription contracts, regardless of whether or not a related purchase order had been executed. Prior period amounts have been excluded as they do not reflect the newly defined metrics.
(6) Annual Recurring Revenue (“ARR”): Annualized value from operating customer subscription contracts, including PowerTrack software, storage software & recurring managed services, and any recurring professional services contracts.

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Bookings

Due to the long-term nature of our contracts, bookings are a key metric that allows us to understand and evaluate the growth of our Company and our estimated future revenue related to customer contracts for our energy optimization services, sales of energy storage systems, asset monitoring software, edge devices, and project and professional service engagements. Bookings represent the total value of executed customer purchase orders. Customer purchase orders are typically executed three to six months ahead of hardware installation. The booking amount includes (1) hardware revenue, which is typically recognized at delivery of the energy storage system and/or edge device to the customer, and (2) services revenue, which represents the total nominal software and services contract value which will be recognized ratably over the contract period.

Components of Our Results of Operations

Revenue

We generate services and other revenue and hardware revenue. Services and other revenue is generated through (i) energy optimization software (ii) asset management software, and (iii) advisory services and (iv) the sale of project assets. Software fees charged to customers generally consist of recurring fixed monthly payments throughout the term of the contract and in some arrangements, an installation and/or upfront fee component. We may also receive incentives from utility companies in relation to the sale of our services.

We generate hardware revenue through (i) sales of OEM energy storage systems and (ii) edge hardware devices. Performance obligations are satisfied when the energy storage system and edge hardware device along with all ancillary hardware components are delivered. The milestone payments received before the delivery of hardware are treated as deferred revenue. In certain customer contracts, we agreed to provide a guarantee that the value of purchased hardware will not decline for a certain period of time, as more fully described above under Note 3 — Revenue, of the Notes to the unaudited condensed consolidated financial statements in this Report.

Cost of Revenue

Cost of services and other revenue primarily includes costs to service our storage and solar subscription customers. It includes expenses related to providing support to our customers and cloud-related costs, such as hosting costs. These costs primarily consist of personnel-related expenses of our services and customer support personnel, amortization of internal-use software development, and public cloud and cellular infrastructure costs. Cost of services and other revenue also includes depreciation of the cost of energy storage systems we own under long-term customer contracts, which includes capitalized fulfillment costs, such as installation services, permitting and other related costs. Additionally, cost of services and other revenue may include the costs for the development and constructions of project assets or any impairment of inventory and energy storage systems, along with system maintenance costs associated with the ongoing services provided to customers.

Cost of hardware revenue generally includes the cost to produce edge hardware and the battery hardware purchased from a manufacturer, shipping, delivery, and other costs required to fulfill our obligation to deliver the energy storage system to the customer location. Cost of hardware revenue may also include any impairment of energy storage systems held in our inventory for sale to our customer. Cost of hardware revenue related to the sale of energy storage systems is recognized when the delivery of the product is completed.

Gross Profit (Loss)

Our gross profit (loss) is subject to fluctuation from quarter to quarter. Gross profit (loss), calculated as revenue less costs of revenue, has been, and will continue to be, affected by various factors, including fluctuations in the amount and mix of revenue and the amount and timing of investments to expand our customer base. We expect to increase both our gross profit in absolute dollars and gross margin as a percentage of revenue in future periods through enhanced operational efficiency and economies of scale.

Operating Expenses

Sales and Marketing

Sales and marketing expense consists of payroll and other related personnel costs, including salaries, stock-based compensation, commissions, bonuses, employee benefits, and travel for our sales and marketing personnel. In addition, sales and marketing expense includes trade show costs, amortization of intangibles and other expenses. We expect our sales and marketing expense to increase in future periods to support the overall growth in our business.

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Research and Development

Research and development expense consists primarily of payroll and other related personnel costs for engineers and third parties engaged in the design and development of products, third-party software and technologies, including salaries, bonuses and stock-based compensation expense, project material costs, services and depreciation. Our research and development expenses support our investments in optimization, accuracy and reliability of our platform and other technology improvements to support and drive efficiency in our operations. These expenses may vary from period to period as a percentage of revenue, depending primarily upon when we choose to make more significant investments.

General and Administrative

General and administrative expense consists of payroll and other related personnel costs, including salaries, stock-based compensation, employee benefits and expenses for executive management, legal, finance, human resources and other costs. In addition, general and administrative expense includes fees for professional services and occupancy costs. We expect to continue to manage and reduce our general and administrative expense associated with scaling our business operations and being a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Impairment of Parent Company Guarantees

Account balances deemed to be uncollectible are charged to bad debt expense after all means of collection have been exhausted and the potential for recovery is considered remote.

Impairment of Goodwill

Impairment of goodwill represents impairment charges as a result of the carrying amount being greater than the fair value.

Other (Expense) Income, Net

Interest Expense

Interest expense consists primarily of interest on our outstanding borrowings under our convertible senior notes, and financing obligations and accretion on our asset retirement obligations.

Gain on Extinguishment of Debt

Gain on extinguishment of debt consists of income recognized in relation to the exchange of our outstanding borrowings under our outstanding convertible notes and the write-off of any unamortized debt issuance costs associated with such notes.

Change in Fair Value of Derivative Liability

Change in fair value of derivative liability is related to the revaluation of a derivative feature within a revenue contract, whereby final settlement is indexed to the price per ton of lithium carbonate.

Change in Fair Value of Warrant Liability

Change in fair value of warrant liability is related to the revaluation at each reporting date of our private placement warrants issued in connection with our senior secured notes.

Other (Expense) Income, Net

Other income, net consists primarily of income from equity investments and foreign exchange gains or losses.

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Results of Operations for the Three Months Ended September 30, 2025 and 2024

			Three Months Ended September 30,												$ Change						% Change
			2025						2024
			(in thousands, except percentages)
Revenue
Services and other revenue			$	18,409					$	22,143					$	(3,734)					(17)%
Hardware revenue			19,828						7,148						12,680						177%
Total revenue			38,237						29,291						8,946						31%
Cost of Revenue
Cost of services and other			11,975						15,687						(3,712)						(24)%
Cost of hardware			12,682						7,408						5,274						71%
Total cost of revenue			24,657						23,095						1,562						7%
Gross profit (loss)			13,580						6,196						7,384						119%
Operating expenses:
Sales and marketing			6,979						8,216						(1,237)						(15)%
Research and development			6,916						11,086						(4,170)						(38)%
General and administrative			12,536						27,212						(14,676)						(54)%
Impairment of parent company guarantees			—						104,134						(104,134)						*
Total operating expenses			26,431						150,648						(124,217)						(82)%
Loss from operations			(12,851)						(144,452)						131,601						(91)%
Other expense, net:
Interest expense			(7,270)						(4,512)						(2,758)						61%
Change in fair value of warrant liability			(4,190)						—						(4,190)						*
Other income, net			379						793						(414)						(52)%
Total other expense, net			(11,081)						(3,719)						(7,362)						198%
(Loss) income before provision for income taxes			(23,932)						(148,171)						124,239						(84)%
Benefit from (provision for) income taxes			141						(129)						270						(209)%
Net loss			$	(23,791)					$	(148,300)					$	124,509					(84)%

*Percentage is not meaningful

Revenue

Revenue increased by $8.9 million, or 31%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was primarily driven by a $12.7 million increase in hardware revenue primarily due to an increase in edge hardware revenue from new and existing customers. Additionally, for the three months ended September 30, 2024, we recorded net revenue reductions due to updated valuations of certain contracts that provided parent company guarantees for hardware revenue related to deliveries that occurred prior to 2024. The increase was partially offset by a $3.7 million decrease in service and other revenue primarily due to the absence of DevCo Project revenue for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

Cost of Revenue

Cost of revenue increased by $1.6 million, or 7%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was primarily driven by an increase in cost of hardware revenue of $5.3 million due to the increase in edge hardware sales. The increase was partially offset by a decrease in cost of services and other revenue of $3.7 million, primarily due to the absence of DevCo Project cost of revenue for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

38

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $1.2 million, or 15%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The decrease was primarily due to a decrease of $1.0 million in personnel related expenses mainly due to a decrease in headcount, and a decrease of $0.2 million in professional services, primarily resulting from reductions in advisory services as a result of marketing related cancellations.

Research and Development

Research and development expense decreased by $4.2 million, or 38%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The decrease was primarily due to a decrease of $3.3 million in personnel related expenses as a result of lower headcount and a decrease of $0.9 million in professional services and office-related expenses.

General and Administrative

General and administrative expense decreased by $14.7 million, or 54%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The decrease was primarily driven by a prior year one-time contract cancellation payment of $10.0 million, a decrease of $4.3 million in personnel costs driven by a decrease in headcount and a decrease of $1.8 million in professional services, partially offset by an increase of $1.5 million in office-related and other expenses.

Impairment of Parent Company Guarantees

During the three months ended September 30, 2024, we recorded a $104.1 million write-off of receivables related to certain customer contracts, which provided for parent company guarantees, that were deemed to be uncollectible.

Other Expense, Net

Interest Expense, Net

Interest expense increased by $2.8 million, or 61%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase was driven by an increase of $3.3 million in interest on notes due to the debt exchange executed in the second quarter of 2025, partially offset by a decrease of $0.5 million in interest on financing obligations.

Change in Fair Value of Warrant Liability

During the three months ended September 30, 2025, we recorded an increase in fair value of $4.2 million relating to our private placement warrants.

Other Income, Net

Other income, net decreased by $0.4 million, or 52% for the three months ended September 30, 2025, as compared to three months ended September 30, 2024, primarily due to a decrease of $0.4 million in interest income from investments.

Benefit from (Provision for) Income Taxes

During the three months ended September 30, 2025, we recorded a benefit from income taxes of $0.1 million as a result of foreign and state income tax expense. During the three months ended September 30, 2024, we recorded a provision for income taxes of $0.1 million primarily as a result of foreign and state income tax expense.

39

Results of Operations for the Nine Months Ended September 30, 2025 and 2024

			Nine Months Ended September 30,												$ Change						% Change
			2025						2024
			(in thousands, except percentages)
Revenue
Services and other revenue			$	56,982					$	52,086					$	4,896					9%
Hardware revenue			52,141						36,673						15,468						42%
Total revenue			109,123						88,759						20,364						23%
Cost of revenue
Cost of services and other			37,650						36,626						1,024						3%
Cost of hardware			34,555						60,753						(26,198)						(43)%
Total cost of revenue			72,205						97,379						(25,174)						(26)%
Gross profit (loss)			36,918						(8,620)						45,538						(528)%
Operating expenses:
Sales and marketing			21,021						30,286						(9,265)						(31)%
Research and development			28,237						40,503						(12,266)						(30)%
General and administrative			35,002						61,618						(26,616)						(43)%
Impairment of parent company guarantees			—						104,134						(104,134)						*
Impairment of goodwill			—						547,152						(547,152)						*
Total operating expenses			84,260						783,693						(699,433)						(89)%
Loss from operations			(47,342)						(792,313)						744,971						(94)%
Other income (expense), net:
Interest expense			(15,632)						(13,850)						(1,782)						13%
Gain on extinguishment of debt			220,047						—						220,047						*
Change in fair value of derivative liability			—						1,477						(1,477)						*
Change in fair value of warrant liability			(4,190)						—						(4,190)						*
Other income, net			1,249						2,153						(904)						(42)%
Total other income (expense), net			201,474						(10,220)						211,694						(2,071)%
Income (loss) before provision for income taxes			154,132						(802,533)						956,665						(119)%
Provision for income taxes			(392)						(344)						(48)						14%
Net income (loss)			$	153,740					$	(802,877)					$	956,617					(119)%

*Percentage is not meaningful

Revenue

Revenue increased by $20.4 million, or 23%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily driven by a $15.5 million increase in hardware revenue primarily due to an increase in edge hardware revenue from new and existing customers. Additionally, for the nine months ended September 30, 2024, we recorded net revenue reductions due to updated valuations of certain contracts that provided parent company guarantees for hardware revenue related to deliveries that occurred prior to 2024. Service and other revenue also increased $4.9 million primarily due to an increase in PowerTrack revenue from existing and new customers.

Cost of Revenue

Cost of revenue decreased by $25.2 million, or 26%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease was primarily driven by a decrease in cost of hardware revenue of $26.2 million primarily reflecting the reduction in battery resale activities. This decrease was partially offset by an increase in cost of services and other revenue of $1.0 million primarily due to higher cloud infrastructure costs to support our growing PowerTrack software platform and increased personnel costs associated with expanded project deliveries.

40

Operating Expenses

Sales and Marketing

Sales and marketing expense decreased by $9.3 million, or 31%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease was driven by a decrease of $7.5 million in personnel related expenses due to a decrease in headcount, and a decrease of $1.7 million in professional services, resulting from reductions in advisory services, marketing related subscription cancellations and office-related expenses.

Research and Development

Research and development expense decreased by $12.3 million, or 30%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease was primarily due to a decrease of $8.9 million in personnel related expenses as a result of lower headcount, and a decrease of $3.3 million in professional services and other expenses.

General and Administrative

General and administrative expense decreased by $26.6 million, or 43%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The decrease was primarily driven by a decrease of $11.5 million in personnel related expenses driven by a decrease in headcount, a prior year one-time contract cancellation payment of $10.0 million and a decrease of $4.2 million in office-related and other expenses, partially offset by a decrease of $0.9 million in professional services, resulting from increases in advisory services.

Impairment of Goodwill

During the nine months ended September 30, 2024, we recorded an impairment of goodwill of $547.2 million as the carrying amount of the reporting unit exceeded its fair value.

Other Income (Expense), Net

Interest Expense, Net

Interest expense, net increased by $1.8 million, or 13%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase was primarily driven by an increase of $3.3 million in interest on notes and prior period accretion of the discount on short-term investments of $0.1 million, partially offset by a decrease of $1.6 million in interest on financing obligations.

Gain on Extinguishment of Debt

During the nine months ended September 30, 2025, we recorded a $220.0 million gain on extinguishment of debt driven by the $155.4 million issuance of our 2030 Senior Secured Notes, 2030 Private Placement Warrants, and cash proceeds, which extinguished approximately $228.8 million aggregate principal amount of our 2028 Convertible Notes and approximately $121.3 million aggregate principal amount of our 2030 Convertible Notes.

Change in Fair Value of Derivative Liability

During the nine months ended September 30, 2024, we realized gains of $1.5 million relating to the settlement of our derivative liability related to customers contracts.

Change in Fair Value of Warrant Liability

During the nine months ended September 30, 2025, we recorded an increase of $4.2 million relating to our private placement warrants.

Other Income, Net

Other income, net decreased by $0.9 million, or 42%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024 primarily due to a $1.1 million decrease in interest income from short-term investments.

Provision for Income Taxes

During the nine months ended September 30, 2025, we recorded a provision for income taxes of $0.4 million primarily as a result of foreign and state income tax expense. During the nine months ended September 30, 2024, we recorded a $0.3 million provision for income taxes primarily as a result of state income tax expense.

41

Liquidity and Capital Resources

Sources of Liquidity

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, acquisitions, contractual obligations and other commitments. We assess liquidity in terms of our cash flows from operations and their sufficiency to fund our operating and investing activities. To meet our payment service obligations, we must have sufficient liquid assets and be able to move funds on a timely basis. Significant factors in the management of liquidity are funds generated from operations, levels of accounts receivable and accounts payable and capital expenditures.

As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents of $43.1 million, which were held for working capital purposes and for investment growth opportunities. As of September 30, 2025, we had net accounts receivable of $35.8 million and our working capital (deficit), which we define as current assets less current liabilities, was a deficit of $19.8 million. We believe that our cash position is sufficient to meet our capital and liquidity requirements for at least the next 12 months.

Our attainment of profitable operations is dependent upon future events, including continued implementation of our new business strategy, hiring and retaining our key executives and personnel with the requisite experience to develop our software and AI-based solutions, controlling our operating costs and building our customer base. Failure to successfully implement our new business strategy, generate sufficient revenues from our software and services offerings, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, and financial condition. The execution of our new strategy has required significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes have resulted in reduced revenue, increased costs and short-term disruptions in our operations, which have negatively impacted our financial condition in the near term. Furthermore, our cash reserves may constrain our ability to make the investments required to execute our new strategy or may otherwise not be sufficient to fund operations. If our cash flow from operations does not improve as quickly as expected, or if we are unable to secure additional sources of capital if or when the need arises, it may have a material adverse effect on our business, financial condition, and results of operations.

In the future, we may be required to obtain additional equity or debt financing in order to support our continued capital expenditures and operations, which may not be available on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies, this could reduce our ability to compete successfully and harm our business, growth and results of operations.

Our long-term liquidity requirements are linked primarily to the expansion of our software and services offerings and the implementation of our new business strategy, as well as the continued extension of PowerTrackTM and other software applications. While we have plans to potentially expand our geographical footprint beyond our current partnerships and enter into joint ventures, those are not required initiatives to achieve our plans.

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Financing Obligations

We have entered into arrangements wherein we finance the cost of energy storage systems via special purpose entities (“SPEs”) we establish with outside investors. These SPEs are not consolidated into our financial statements, but are accounted for as equity method investments. The investors provide us upfront payments through the SPEs. Under these arrangements, the payment by the SPEs to us is accounted for as a borrowing by recording the proceeds received as a financing obligation. The financing obligation is repaid with the future customer payments and incentives received. A portion of the amounts paid to the SPE is allocated to interest expense using the effective interest rate method. Furthermore, we continue to account for the revenues from customer arrangements and incentives and all associated costs despite such systems being legally sold to the SPEs due to our significant continuing involvement in the operations of the energy storage systems. The total financing obligation as of September 30, 2025 was $45.3 million, of which $14.2 million was classified as a current liability.

2028 Green Convertible Senior Notes

On November 22, 2021, we sold to Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Barclays Capital Inc, as initial purchasers (the “2021 Initial Purchasers”), and the 2021 Initial Purchasers purchased from us, $460.0 million aggregate principal amount of our 0.50% Green Convertible Notes due 2028 (the “2028 Convertible Notes’), pursuant to a purchase agreement dated as of November 17, 2021, by and between us and the 2021 Initial Purchasers. Our net proceeds from this offering were approximately $445.7 million, after deducting the 2021 Initial Purchasers’ discounts and commissions and the estimated offering expenses payable by us. The 2028 Convertible Notes accrue interest payable semi-annually in arrears and will mature on December 1, 2028, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock. The 2028 Convertible Notes are redeemable for cash at our option at any time given certain conditions. Refer to Note 7 — Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

On November 17, 2021, in connection with the pricing of the 2028 Convertible Notes, and on November 19, 2021, in connection with the exercise in full by the 2021 Initial Purchasers of their option to purchase additional 2028 Convertible Notes, we entered into capped call transactions with certain of the 2021 Initial Purchasers of the 2028 Convertible Notes to minimize the potential dilution to our common stockholders upon conversion of the 2028 Convertible Notes. We used approximately $66.7 million of the net proceeds from the 2028 Convertible Notes to pay the cost of the capped call transactions described above. We intend to allocate an amount equivalent to the net proceeds from this offering to finance or refinance, in whole or in part, our existing or new eligible green expenditures, including investments related to creating a more resilient clean energy system, optimized software capabilities for energy systems, and reducing waste through operations.

On April 3, 2023, we used approximately $99.8 million of the net proceeds from the issuance of the 4.25% Green Convertible Senior Notes due 2030 (“2030 Convertible Notes”) to purchase and surrender for cancellation approximately $163.0 million in aggregate principal amount of our 2028 Convertible Notes. See Note 7 — Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

On June 30, 2025, we exchanged approximately $228.8 million aggregate principal amount of the Company’s 2028 Convertible Notes and approximately $121.3 million aggregate principal amount of the Company’s 2030 Convertible Notes, for a portion of the Senior Secured PIK Toggle Notes due 2030 (the “2030 Senior Secured Notes”), which resulted in a $220.0 million gain on debt extinguishment. See Note 7 — Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report, for additional details regarding this transaction.

We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding 2028 Convertible Notes through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

2030 Convertible Notes

On April 3, 2023, we issued $240.0 million aggregate principal amount of our 2030 Convertible Notes in a private placement offering to qualified institutional buyers (the “2023 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2030 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 4.25% per year, payable in cash semi-annually in arrears in April and October of each year, beginning in October 1, 2023. The 2030 Convertible Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver cash, shares of common stock or a combination of cash and shares of common stock. The 2030 Convertible Notes are redeemable for cash at our option

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at any time given certain conditions. See Note 7 — Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report, for additional details regarding this transaction.

Our net proceeds from this offering were approximately $232.4 million, after deducting for $7.6 million of debt issuance costs primarily consisting of underwriters, advisory, legal, and accounting fees. We used approximately $99.8 million of the net proceeds to purchase and surrender for cancellation approximately $163.0 million aggregate principal amount of our 2028 Convertible Notes.

On March 29, 2023 and March 31, 2023, in connection with the pricing of the 2030 Convertible Notes, and on April 3, 2023, in connection with the exercise in full by the 2023 Initial Purchasers of their option to purchase additional 2030 Convertible Notes, we entered into capped calls (the “2030 Capped Calls”) with certain counterparties. We used $27.8 million of the net proceeds from the 2030 Convertible Notes to pay the cost of the 2030 Capped Calls.

On June 30, 2025, we exchanged approximately $121.3 million aggregate principal amount of the Company’s 2030 Convertible Notes, for a portion of the new 2030 Senior Secured Notes, which resulted in a $220.0 million gain on debt extinguishment. See Note 7 — Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report, for additional details regarding this transaction.

We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding 2030 Convertible Notes through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

2030 Senior Secured Notes

On June 30, 2025, the Company issued $155.4 million in aggregate principal amount of its new 2030 Senior Secured Notes with certain of the holders of the Company’s 2028 Convertible Notes and/or the Company’s 2030 Convertible Notes in a privately negotiated exchange (the “Exchange”) pursuant to Rule 144A under the Securities Act of 1933, as amended.

The transaction included an exchange of approximately (i) $228.8 million principal amount of the 2028 Convertible Notes and (ii) $121.3 million principal amount of the 2030 Convertible Notes, less amounts in lieu of fractional notes, for the 2030 Senior Secured Notes, warrants to purchase 439,919 shares of common stock (the “2030 Private Placement Warrants”), (iii) $10.0 million of cash proceeds, and accrued and unpaid interest on the exchanged 2028 Convertible Notes and 2030 Convertible Notes. The exchange resulted in a $220.0 million gain on debt extinguishment recorded within other income (expenses), net in the unaudited condensed consolidated statements of operations. The gain on debt extinguishment represented the proportional carrying value of the exchanged 2028 Convertible Notes and 2030 Convertible Notes, which in aggregate was $343.9 million, reduced by the collective fair value of the 2030 Senior Secured Notes of $132.0 million and the fair value of the 2030 Private Placement Warrants of $6.1 million, offset by cash received. The fair value of the 2030 Senior Secured Notes was estimated using a Black Derman-Toy lattice model with a yield of approximately 14.6%, synthetic credit rating for the Company, volatility of 32%, and the risk free rate of 3.79% for the expected term associated with the 2030 secured notes. The fair value of the 2030 Private Placement Warrants was estimated using the Black-Scholes-Merton model based on the Company’s closing strike price on the date of extinguishment of $6.23, volatility of 118.60%, and the risk free rate of 3.79% for the expected term associated with the 2030 secured notes. The Company accrued $5.2 million in debt issuance costs primarily consisting of financial advisory, legal, and accounting fees. See 2028 Convertible Notes and 2030 Convertible Notes above for further details on the impacts of the debt extinguishment.

At the Company’s election for any interest period, the 2030 Senior Secured Notes bear interest at a rate of (i) 12.00% per year, if interest is paid in kind, subject to a maximum amount of interest able to be paid in kind, and (ii) 11.00% per year if interest is paid in cash. In each case, interest is payable semi-annually in arrears in January and July of each year, beginning on January 1, 2026. The 2030 Senior Secured Notes will mature on December 30, 2030 unless redeemed in accordance with their terms prior to such date.

The 2030 Senior Secured Notes will be redeemable, in whole or in part, for cash at the Company’s option at any time, and from time to time, at the following redemption prices: on or after the date of issuance to December 31, 2027, at 105.00% of the principal amount of the notes being redeemed, including interest paid in kind, if any, plus accrued and unpaid interest; from January 1, 2028 to December 31, 2028, at 102.50% of the principal amount of the notes being redeemed, including interest paid in kind, if any, plus accrued and unpaid interest; and on or after January 1, 2029, at 100.00% of the principal amount of the notes being redeemed, including interest paid in kind, if any, plus accrued and unpaid interest.

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Cash Flows

The following table summarizes our cash flows for the periods indicated (in thousands):

			Nine Months Ended September 30,
			2025						2024
Net cash used in operating activities			$	(1,355)					$	(21,940)
Net cash used in investing activities			(5,675)						(846)
Net cash used in financing activities			(6,082)						(6,942)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(66)						403
Net decrease in cash, cash equivalents and restricted cash			$	(13,178)					$	(29,325)

Operating Activities

During the nine months ended September 30, 2025, net cash used in operating activities was $1.4 million, primarily due to our net income of $153.7 million, adjusted for non-cash items of $165.1 million and net cash inflow of $10.0 million from changes in operating assets and liabilities. Non-cash items primarily consisted of a gain on extinguishment of debt of $220.0 million, partially offset by depreciation and amortization of $33.1 million, non-cash interest expense of $0.8 million related to debt issuance costs, stock-based compensation expense of $7.9 million, change in fair value of warrant liability of $4.2 million, non-cash lease expense of $2.1 million, an impairment of energy storage systems of $1.4 million, loss on disposal and abandonment of property, plant, and equipment of $0.8 million, impairment of right-of-use assets of $1.4 million, provision for accounts receivable allowance of $2.1 million, and other non-cash items of $1.3 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $21.4 million, a decrease in inventory of $5.8 million, a decrease in other assets of $2.6 million, an increase in accrued expenses and other liabilities of $6.0 million, partially offset by an increase in contract origination costs of $1.0 million, an increase in project assets of $2.1 million, a decrease in accounts payable of $19.2 million, a decrease in deferred revenue of $0.2 million, and a decrease in lease liabilities of $3.3 million.

During the nine months ended September 30, 2024, net cash used in operating activities was $21.9 million, primarily due to our net loss of $802.9 million, adjusted for non-cash items of $708.4 million and net cash inflow of $72.5 million from changes in operating assets and liabilities. Non-cash items primarily consisted of depreciation and amortization of $33.2 million, non-cash interest expense of $1.6 million related to debt issuance costs, stock-based compensation expense of $21.7 million, non-cash lease expense of $2.3 million, impairment of energy storage systems of $0.4 million, impairment of right-of-use assets of $2.1 million, impairment and accounts receivable write-off of $104.1 million, impairment of goodwill of $547.2 million, a reversal of provision for accounts receivable allowance of $3.2 million, and other non-cash items of $0.7 million, partially offset by a change in fair value of derivative liability of $1.5 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $106.9 million, a decrease in other assets of $12.4 million, and an increase in deferred revenue of $21.5 million, partially offset by an increase in inventory of $7.3 million, an increase in contract origination costs of $0.9 million, an increase in project assets of $7.4 million, a decrease in accounts payable of $30.7 million, a decrease in accrued expenses and other liabilities of $19.9 million, and a decrease in lease liabilities of $2.2 million.

Investing Activities

During the nine months ended September 30, 2025, net cash used in investing activities was $5.7 million, and primarily consisted of $5.7 million in capital expenditures related to internally-developed software.

During the nine months ended September 30, 2024, net cash used in investing activities was $0.8 million, and primarily consisted of $8.9 million in capital expenditures related to internally-developed software, and $0.2 million in purchases of property and equipment, partially offset by $8.3 million in proceeds from maturities of available-for-sale investments.

Financing Activities

During the nine months ended September 30, 2025, net cash used in financing activities was $6.1 million, and primarily consisted of the repayment of financing obligations of $10.9 million, partially offset by net proceeds from the issuance of senior secured notes of $4.8 million.

During the nine months ended September 30, 2024, net cash used in financing activities was $6.9 million, and consisted of the repayment of financing obligations of $7.0 million.

Contractual Obligations and Commitments

As of September 30, 2025, except as discussed in Note 13 — Commitments and Contingencies, there have been no material changes to our contractual obligations described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

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Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, or unconsolidated VIEs that either have, or would reasonably be expected to have, a current or future material adverse effect on our unaudited condensed consolidated financial statements.

Critical Accounting Policies and Estimates

A summary of our critical accounting policies and estimates is presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and there have been no material changes to our critical accounting estimates during the three and nine months ended September 30, 2025.

Recent Accounting Pronouncements

As of September 30, 2025, , except as discussed in Note 2 — Summary of Significant Accounting Policies, there have been no material changes to the recent accounting pronouncements described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934, as amended, and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (“Disclosure Controls”) within the meaning of Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Our Disclosure Controls are designed to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Our Disclosure Controls are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

Based on management’s evaluation (under the supervision and with the participation of our CEO and our CFO) of the effectiveness of the design and operation of our Disclosure Controls as of September 30, 2025, our CEO and CFO have concluded that our Disclosure Controls were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the third quarter of 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Internal Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Furthermore, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in business conditions or deterioration in the degree of compliance with policies or procedures.

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Part II - Other Information

ITEM 1. LEGAL PROCEEDINGS

The information with respect to this Item 1 is set forth under Note 13 — Commitments and Contingencies, of the Notes to the unaudited condensed consolidated financial statements in this Report.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Part 1, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, , as updated by Part II, Item IA, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(c) Trading Plans. During the three months ended September 30, 2025, no Section 16 officer or director of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K promulgated under the Exchange Act).

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ITEM 6. EXHIBITS

						EXHIBIT INDEX
Exhibit No.						Description
3.1						Second Amended and Restated Certificate of Incorporation, dated April 28, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on May 4, 2021).
3.2						Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of Stem, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on June, 16, 2025).
3.3*						Second Amended and Restated Bylaws, dated October 15, 2025.
10.1†						Stem, Inc. Amended and Restated 2024 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8 filed on July 9, 2025).
10.2*†						Separation and Release of Claims Agreement, dated July 21, 2025, by and between the Company and Spencer Doran Hole.
10.3*†						Advisor Agreement, dated July 21, 2025, by and between the Company and Spencer Doran Hole.
31.1*						Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

*Filed herewith

**Furnished herewith

† Management or compensatory plan or arrangement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized on October 29, 2025.

			STEM, INC.
			By:			/s/ Brian Musfeldt
						Brian Musfeldt
						Chief Financial Officer
						(Principal Financial Officer)

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FAQ

What was STEM's Q3 2025 revenue?

Q3 revenue was $38.2 million, up from $29.3 million a year earlier.

How profitable was STEM in Q3 2025?

STEM reported a net loss of $23.8 million, improved from $148.3 million last year.

What drove STEM’s year-to-date net income in 2025?

Year-to-date net income of $153.7 million includes a $220.0 million gain on extinguishment of debt from a June exchange.

What is STEM’s cash position and liquidity outlook?

Cash and equivalents were $43.1 million. Management believes liquidity is sufficient for at least the next 12 months.

What are STEM’s remaining performance obligations (RPO)?

RPO totaled $389.4 million, with about 18% expected to be recognized over the next 12 months.

What changed in STEM’s capital structure in June 2025?

STEM issued 2030 Senior Secured Notes and 439,919 warrants in exchange for portions of its 2028 and 2030 convertible notes.

How many STEM shares were outstanding recently?

There were 8,390,208 common shares outstanding as of October 22, 2025 after a 1-for-20 reverse split.