![]() ![]() Hence, whilst the broader secular growth story remains with its contracted backlog of $1.24 billion, up 119% from $565 million in the year-ago quarter, the market is simply less caring about growth. Whilst, net losses are expected at this stage, the company broadly failed to show progress on profitability during the quarter. Net losses at $44.78 million grew by around 100% year-over-year with a net loss per share at $0.29 as the company's weighted-average shares outstanding increased by 2.9% year-over-year to 154.97 million. Outlook For Profit And LiquidityĪdjusted EBITDA was negative at $14 million and up around $1 million versus the year-ago comp. The company is behind its initial SPAC guidance that overall non-GAAP gross margins would have been driven to 26% by the end of its fiscal 2022, rising to 32% for fiscal 2023. Stem's price-to-sales multiple at 1.77x is meant to reflect not only the new risk-off paradigm of the stock market but revenue that is still wholly dominated by hardware sales. The stock market wants to value Stem as a software company and has historically done so but this is changing. Stem's bullish story is highly dependent on the success of its services revenue as this drives significantly higher margins over low-margin battery sales. ![]() Non-GAAP gross profit margins actually increased in line with the company's guidance to reach 19%, up around 300 basis points versus the year-ago quarter. This was due to the cost of hardware revenue jumping 90.5% year-over-year to $54.9 million. ![]() However, GAAP gross profit at $994,000 was a total collapse versus $3.6 million in the year-ago period. Higher margin service revenue grew by 47% year-over-year to reach $14.67 million. This was mostly driven by hardware revenue which jumped to $52.7 million from $31 million in the year-ago quarter. Stem fiscal 2023 first-quarter revenue came in at $67 million, an increase of 63.1% over the year-ago comp and a beat by $3.68 million on consensus estimates. Fiscal 2023 first-quarter earnings saw Stem record a beat on revenue but with GAAP gross profit margins seeing some disruption. This is as revenue growth continues to come in strong. The company would have to do 10x as much revenue as it currently does to trade on the same market cap as it did in the summer 2022 peak. To be clear here, the market now values every $1 of revenue earned by Stem 90% less than it did in the summer of 2022. Stem's current price-to-sales multiple stands at 1.77x and continues to trend lower as the old era of cheap liquidity has come to an end on the back of the Fed funds rate being hiked to a level not seen since 2008. This brief period in stock market history was defined by unfettered investor euphoria around ESG stocks built on cheap capital. This year-to-date move has happened against what's now a more than 90% fall from early 2021 highs. I previously covered Stem earlier this year in February. At risk here is the whole thesis that the transition to zero-carbon sources of energy would catalyze a generational boom in demand for energy storage. Initial investor enthusiasm around the large opportunities posed by the 2022 Inflation Reduction Act has now been wholly replaced by uncertainty with Stem's large downward move coming against short interest at 20% of its shares outstanding. The smart energy storage company has joined in with the broader market chaos that's been deepened by the angst around the health of the US regional banking system. Stem ( NYSE: STEM) is down by 47% year-to-date, far outpacing the 3% decline of clean energy ETFs like iShares Global Clean Energy ( ICLN). ![]()
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