Stem, Inc. Reports 12% Revenue Decline and $14.4 Million Net Loss in Q2 2026

Stem, Inc. reported a decline in financial performance for the second quarter of 2026, with total revenue decreasing to $33.7 million from $38.4 million in the same period last year, marking a 12% drop. The company's net loss for the quarter was $14.4 million, a significant contrast to the net income of $202.5 million reported in Q2 2025, which included a one-time gain from debt extinguishment. For the first half of 2026, revenue also fell to $62.7 million from $70.9 million year-over-year, with a net loss of $33.3 million compared to a net income of $177.5 million in the prior year.

The decrease in revenue was primarily attributed to a $7.0 million decline in hardware sales, particularly in battery hardware resales, as the company shifts its focus towards higher-margin service offerings. Service revenue also saw a slight decrease, driven by lower managed services revenue. Despite the revenue decline, the cost of revenue decreased by 20% to $37.9 million, leading to a gross profit of $24.7 million, up 6% from the previous year. This improvement in gross profit was attributed to reduced costs associated with hardware sales and services.

In terms of strategic developments, Stem, Inc. completed the acquisition of raicoon GmbH, a software company specializing in automated fault detection for solar asset performance, for $4.3 million in common stock. This acquisition is expected to enhance Stem's PowerTrack product suite, which integrates software and solutions for solar and storage assets. The company also reported a significant reduction in operating expenses, which fell by 19% to $46.6 million, driven by lower personnel costs and a decrease in research and development expenses.

Operationally, Stem's customer base and engagement metrics showed mixed results. The company reported a contracted backlog of $27.1 million, consistent with the previous year, and an annual recurring revenue (ARR) of $62.4 million, up from $58.5 million. However, the company continues to face challenges in scaling its software and services offerings effectively. As of June 30, 2026, Stem had cash and cash equivalents of $38.4 million, with a working capital deficit of $18.2 million, raising concerns about liquidity and the ability to fund future operations.

Looking ahead, Stem, Inc. remains focused on executing its new business strategy centered on AI-enabled software and services. The company acknowledges that achieving profitable operations will depend on successfully implementing this strategy, managing costs, and expanding its customer base. However, the ongoing transition may pose risks, including potential disruptions and the need for additional capital to support growth initiatives. The company believes its current cash position is sufficient to meet its capital and liquidity requirements for at least the next 12 months, but it may need to seek additional financing if cash flows do not improve as anticipated.