Revenue exceeds the high end of guidance

Reaffirms 2021 financial guidance

Stem, Inc. (“Stem” or the “Company”) (NYSE:STEM), a global leader in artificial intelligence (AI)-driven clean energy storage services, announced today the financial results for the first quarter ended March 31, 2021. All financial and operating results included in this release are for the Stem business prior to the closing of the business combination with Star Peak Energy Transition Corp. (“Star Peak”). Based on the timing of the transaction close, the Company will not host an earnings call related to the first quarter results but will hold quarterly earnings calls starting with its second quarter 2021 results.

First Quarter 2021 Financial and Operating Highlights

• Revenues of $15.4 million vs. $4.1 million in the same quarter last year
• Gross Margin (GAAP) of (1)% vs. (34)% in the same quarter last year
• Non-GAAP Gross Margin of 19% vs. 1% in the same quarter last year
• Net Loss of $(82.6) million vs. $(17.5) million in the same quarter last year, which included a $66 million non-cash charge from the revaluation of warrants
• Adjusted EBITDA of $(4.1) million vs. $(9.7) million in the same quarter last year
• Contracted AUM of 1.10 gigawatt hours (GWh)
• 12-month Pipeline of $1.43 billion
• Contracted Backlog increased to $221 million driven by strong year-over-year bookings growth of 150%

John Carrington, Chief Executive Officer of Stem, commented, “We are excited to announce strong first quarter results following the recent completion of our business combination with Star Peak. Revenue exceeded the high end of our guidance range, coupled with strong gross margin and Adjusted EBITDA performance. Our contracted backlog grew more than 20% sequentially, reflecting strong commercial momentum particularly in the Front of the Meter (“FTM”) segment and a quickly growing end market. Looking forward, our sales, product development and operations teams continue to drive toward achieving our 2021 guidance and building momentum into 2022 and beyond. As the first publicly traded pure-play smart storage company, our experience, industry-leading software, robust service offerings, and strong balance sheet will continue to differentiate Stem in this rapidly expanding market.”

First Quarter 2021 Financial and Operating Results

Financial Results

For the first quarter ended March 31, 2021, revenues increased 275% to $15.4 million versus $4.1 million in the same quarter last year. Higher hardware revenue from FTM partnership agreements, and more services revenue from host customer arrangements, drove the year-over year increase.

Gross Margin (GAAP) was $(0.1) million or (1)% versus $(1.4) million or (34)% in the same quarter last year. Non-GAAP Gross Margin was $2.9 million or 19% versus $0.0 million or 1% in the same quarter last year. The year-over-year increase in Non-GAAP Gross Margin resulted from an increased mix of software service revenues and higher-margin hardware deliveries.

Net Loss increased to $(82.6) million versus $(17.5) million in the same period last year. The larger loss was primarily due to a $66 million non-cash charge from the revaluation of warrants tied to an increase in the value of the underlying stock, partially offset by higher margins and lower operating expenses.

Adjusted EBITDA was $(4.1) million compared to $(9.7) million in the same quarter last year. The improved Adjusted EBITDA results were driven by higher gross margins and lower operating expenses, reflecting the success in Stem’s channel strategy driving lower customer acquisition costs.

Operating Results

Contracted Assets Under Management (“AUM”) more than doubled year-over-year to 1.10 GWh, driven by increased commercial activity and the addition of the 345 megawatt hour (MWh) Electrodes Holdings, LLC portfolio. Contracted AUM increased by 10% sequentially as new systems came in service.

The Company’s 12-month forward Pipeline was $1.43 billion as of March 31, 2021 representing significant year-over-year growth. The Gross Pipeline was $1.27 billion as of March 31, 2020. The Company updated its definition of Pipeline from “Gross” to “12-month forward” during 2020.

Contracted Backlog increased 20% sequentially, from $184 million as of December 31, 2020 to $221 million as of March 31, 2021. The increase in contracted backlog resulted from strong bookings of $51 million tied to increased commercial activity, particularly in the FTM market, which more than offset recognized revenue. The growth in bookings represents a 150% year over year increase from the $20M recorded in the quarter ended March 31, 2020.

Business Highlights

On April 28, 2021, Stem completed its business combination with Star Peak, and on April 29, 2021 began trading under the ticker symbol “STEM” on the New York Stock Exchange (NYSE). All prior Stem shareholders rolled 100% of their equity holdings into the new public company.

On April 14, 2021, Stem announced it had completed six months of successful operation of the 345 MWh energy storage portfolio owned by Electrodes. Customers in the 86-site portfolio realized more than 30% greater monthly energy savings compared to the previous software provider. Stem seamlessly onboarded the portfolio to its Athena^TM smart energy storage software within two months of being awarded the exclusive contract.

On March 2, 2021, Stem announced the installation of its largest Massachusetts “solar plus storage” site. Located in Haverhill, MA, the 9 MWh battery will generate revenues from multiple value streams by enabling Stem’s partner Kearsarge Energy’s storage system to participate in the Solar Massachusetts Renewable Target (SMART) program, New England wholesale energy markets, and Massachusetts’s Clean Peak Energy Standard program.

Outlook

The Company reaffirms its previously issued guidance, which includes revenue of $147 million and Adjusted EBITDA of $(25) million for the full year 2021. Consistent with prior guidance, Stem reaffirms the remaining expected 2021 quarterly revenue as follows: 2Q 5-15%, 3Q 20-30%, 4Q 50-60%.

The Company has contracted for sufficient supply chain commitments to meet its 2021 revenue goal and will continue to diversify its supply chain, adopt alternative technologies, and utilize its balance sheet to meet the significant growth in customer demand.

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, such as Non-GAAP Gross Margin and Adjusted EBITDA. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this release. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions, and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and facilitate period-to-period comparisons. The Company believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

About Stem, Inc.

Stem, Inc. (NYSE: STEM) provides solutions that address the challenges of today’s dynamic energy market. By combining advanced energy storage solutions with Athena™, a world-class AI-powered analytics platform, Stem enables customers and partners to optimize energy use by automatically switching between battery power, onsite generation and grid power. Stem’s solutions help enterprise customers benefit from a clean, adaptive energy infrastructure and achieve a wide variety of goals, including expense reduction, resilience, sustainability, environmental and corporate responsibility and innovation. Stem also offers full support for solar partners interested in adding storage to standalone, community or commercial solar projects – both behind and in front of the meter. For more information, visit www.stem.com.

Forward-Looking Statements

Certain statements in this communication may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. For example, projections of future revenue and other metrics are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Stem and its management, depend upon inherently uncertain factors that may cause actual results to differ materially from current expectations, including, but not limited to: Stem’s ability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, the ability of Stem to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; risks relating to the development and performance of Stem’s energy storage systems and software-enabled services; the possibility that Stem may be adversely affected by other economic, business and/or competitive factors; the ability to maintain the listing of Stem’s securities on the NYSE following the consummation of the business combination; the risk that the business combination disrupts current plans and operations of Stem; changes in applicable laws or regulations; Stem’s estimates of its financial performance; the outcome of any legal proceedings that may be instituted against Stem or others following the consummation of the business combination; the impact of the COVID-19 pandemic and its effect on Stem’s business, financial condition and results of operations; and other risks and uncertainties set forth in the section entitled “Risk Factors” in the definitive proxy statement relating to the business combination filed by Star Peak on March 30, 2021 and other documents Stem files with the SEC in the future. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward looking statements will be achieved. We caution you that the foregoing list of factors is not exhaustive, and readers should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Stem does not undertake any duty to update these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

STEM, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands, except percentages; unaudited)

The following table provides a reconciliation of Net loss to Adjusted EBITDA:

The following table provides a reconciliation of Gross Margin (GAAP) to Non-GAAP Gross Margin:

The following table provides a reconciliation of current backlog to prior quarter backlog:

Key Definitions:

Source: Stem, Inc.

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