Stem, Inc. Reports 31% Revenue Growth and Improved Net Loss in Q3 2025

Stem, Inc. reported significant financial developments in its latest 10-Q filing for the quarter ending September 30, 2025. The company achieved total revenue of $38.2 million for the third quarter, marking a 31% increase from $29.3 million in the same period last year. This growth was primarily driven by a substantial rise in hardware revenue, which surged by 177% to $19.8 million, attributed to increased sales of edge hardware. However, services and other revenue declined by 17% to $18.4 million, reflecting the absence of revenue from DevCo projects compared to the previous year.

In terms of profitability, Stem reported a net loss of $23.8 million for the third quarter, a significant improvement from a loss of $148.3 million in the prior year. The company’s gross profit also increased to $13.6 million, up from $6.2 million, resulting in a gross margin of 35%, compared to 21% in the same quarter of 2024. The reduction in operating expenses, which fell by 82% to $26.4 million, played a crucial role in this improvement, particularly due to the absence of a prior year impairment charge related to parent company guarantees.

Strategically, Stem has been focusing on a new business model centered around its AI-enabled software and services, which has necessitated operational changes and a reduction in workforce by approximately 27% as of April 2025. This restructuring is aimed at enhancing efficiency and driving profitable growth. The company incurred $6 million in restructuring costs during the nine months ended September 30, 2025, as part of this transition.

Operationally, Stem's customer base and engagement metrics reflect its ongoing efforts to expand its market presence. The company reported a contracted backlog of $22.2 million and bookings of $30.3 million for the third quarter. Additionally, the company’s annual recurring revenue (ARR) reached $60.2 million, up from $51.4 million in the previous year, indicating a positive trend in customer retention and service adoption.

Looking ahead, Stem's outlook remains cautious as it navigates the complexities of its new strategy and the broader market conditions. The company holds $43.1 million in cash and cash equivalents as of September 30, 2025, which it believes is sufficient to meet its capital and liquidity requirements for at least the next 12 months. However, the successful execution of its strategy will depend on its ability to generate sufficient revenues and manage operating costs effectively. The company continues to monitor its financial position closely, especially in light of potential future investments and market fluctuations.