This year brought a mix of extraordinary achievements, challenges, and opportunities for Stem. Most importantly, the Company announced a new strategy anchored in customer needs, innovation, and operational efficiency to become a software and services-led clean energy company, paving the way for the success of our customers, our shareholders, and our employees.
We generate a large portion of our software revenue from our PowerTrack solution which serves approximately 16,000 commercial and industrial solar customers, and where we enjoy about a 70% market share. This is a steadily growing product, and we are proud that Stem’s solar business has achieved record-breaking growth built on the legacy of our award-winning solar software solutions. As part of our new strategy, we are developing a suite of software solutions that bring together the strengths of Stem’s PowerTrack and Athena® platforms into a combined PowerTrack™APM solution – extending PowerTrack’s capabilities to both existing and new solar and storage customers across the C&I and utility-scale markets. Similarly, Stem’s professional services offering is also gaining traction. In an increasingly complex energy market, our customers value Stem’s experienced subject matter experts, who also leverage more than 15 years of our platform’s real-world data, to support them throughout the lifecycle of renewable asset projects.
Multiple strategic priorities within Stem’s go-forward strategy are well underway and proving to be fruitful including customer wins this week’s announcement of a second Mercuria renewable asset standardizing on PowerBidder™ Pro in Texas, and two community choice aggregators (CCAs) in the California wholesale market. Our investments are already driving improved financial results: in Q3 2024, strong sequential growth in software and services revenue drove solid GAAP gross margins of 21% and record non-GAAP gross margins of 46%.
We have had an incredible start to Stem’s new approach to energy services, laying the groundwork for long-term success. We signed our first standalone Procurement & Integration scope, demonstrating that Stem can disaggregate its value and customize it for customers. We also secured our first BESS project in Nebraska, expanding into new markets. Our expertise in BESS is resonating with developers, asset owners, EPCs, and utilities alike – all of whom rely on Stem for guidance across the project lifecycle.
The momentum is growing, and we’re just getting started. Stem’s past successes are a testament to the strength, creativity, and adaptability of our talented employees that are passionate about the company’s mission to enable our customers to plan, deploy, and operate clean energy assets via AI-enabled software and services. The strength of our offerings ultimately depends on the strength of our people, and we believe we have some of the best in the business.
Looking Ahead
In 2025, we will deliver on the promises of our new strategy. Our key end markets, solar and energy storage, are growing rapidly. Our industry-leading software and services create tangible value for our customers, and we are well-positioned to create additional value as clean energy technologies and markets evolve. We remain committed to driving innovation to deliver new and enhanced offerings that exceed our customers’ expectations and adapt with their evolving needs. We will soon announce Stem’s new CEO, who will lead our strategy with the right experience, software knowledge and vision of our future. We are excited about the year ahead and look forward to sharing more about the progression of our journey.
Thank you
As we reflect on 2024, I want to extend my gratitude to our dedicated employees, customers, and partners. Your unwavering support and commitment have been instrumental to our success. On a personal note, as an early investor, serving on the Board and now as Interim CEO has been an incredibly rewarding experience. I am inspired by the passion and innovation that drive our company forward every day. I am excited about the opportunities ahead and I am confident that together, we will continue making a significant positive impact on the world’s clean energy landscape.
Here’s to a successful and inspiring 2025 ahead. Wishing everyone a joyous holiday season and a happy new year from Stem!
