8-K: Stem Q1 2026 Results: Software Growth Drives Profitability

Stem, Inc. reported Q1 2026 results featuring positive adjusted EBITDA for the fourth consecutive quarter and reaffirmed full-year 2026 guidance.

Summary

• Revenue of $29.0 million, down 11% year-over-year due to reduced battery hardware sales.
• Software, services, and edge hardware revenue grew 4% to $29.0 million.
• Achieved fourth consecutive quarter of positive adjusted EBITDA at $2.0 million, compared to a $(4.6) million loss in 1Q25.
• Net loss narrowed to $18.9 million from $25.0 million in the prior year period.
• Non-GAAP gross margin reached a record 52%, up from 46% in 1Q25.
• Cash and cash equivalents stood at $36.6 million as of March 31, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report because the company successfully demonstrated operational leverage and maintained profitability in a seasonally weak quarter, despite a decline in top-line revenue.

Positives

• Fourth consecutive quarter of positive adjusted EBITDA.
• Record non-GAAP gross margin of 52%.
• 16% year-over-year growth in PowerTrack software revenue.
• Narrowed net loss compared to the same period last year.
• Reaffirmed full-year 2026 financial and operating guidance.

Negatives

• Total revenue declined 11% year-over-year to $29.0 million.
• Operating cash flow was negative $(8.3) million.
• Cash balance decreased from $48.9 million in 4Q25 to $36.6 million in 1Q26.
• Bookings of $26.5 million were lower than the $32.7 million reported in 4Q25.

Risks

• Uncertainty regarding the effects of the One Big Beautiful Bill (OBBB) on business and supply chains.
• Exposure to increased import tariffs and retaliatory trade policies.
• Global inflationary pressures and high interest rates.
• Geopolitical instability, including conflicts in Ukraine and the Middle East.
• Potential economic slowdowns or recessions.

Future Outlook

The company reaffirmed its full-year 2026 guidance, targeting revenue between $140 million and $190 million, adjusted EBITDA of $10 million to $15 million, and operating cash flow of $0 to $10 million.

Management Comments

• Operational discipline and margin profile established in 2025 are proving durable.
• Delivering positive adjusted EBITDA in our seasonally lightest-revenue quarter underscores the strength of our execution.
• We remain well-positioned to execute against our full-year 2026 plan.

Industry Context

StockSavvy.ai notes that Stem is successfully pivoting toward a software-centric business model, which is a common trend among energy technology firms seeking to improve margins and reduce reliance on volatile hardware supply chains.

Comparison to Industry Standards

• The 52% non-GAAP gross margin is high for the energy storage sector, reflecting the shift toward high-margin software services.
• The company's focus on PowerTrack software aligns with industry leaders prioritizing recurring SaaS revenue over one-time hardware sales.

Stakeholder Impact

• Shareholders benefit from improved margins and consistent adjusted EBITDA performance.
• Customers gain access to enhanced software capabilities through the raicoon acquisition and Nuvation partnership.

Next Steps

• Execute on 2026 strategic priorities: driving operational leverage, strengthening core business, and building growth foundations.
• Integrate newly acquired raicoon GmbH software assets into the PowerTrack platform.
• Commence commercial operations for German BESS projects in summer 2026.

Key Dates

Recommendation

While the company is showing improved operational efficiency and margin expansion, the decline in total revenue and negative operating cash flow suggest a need for caution until the company demonstrates consistent top-line growth alongside its profitability targets.

Keywords

Stem, Energy Storage, PowerTrack, Software as a Service, Renewable Energy, BESS, Clean Tech