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No. of Recommendations: 2
Results were ok. Sounds like warrants from SPAC process effed up their EPS, but otherwise revenue and pipeline intact.

Could be viewed as overpriced today, in the moment. For LTBHers, probably not an issue, but I wouldn't necessarily buy my full allotment here. We saw it dip into the teens during last May drawdown, so potential is there for lower entries. But perhaps I look at this toe dip as the start of a core holding. Need to learn more.

https://seekingalpha.com/article/4448371-stem-inc-stem-ceo-j...

we're reiterating our guidance for full year 2021 revenue and adjusted EBITDA. This represents top line year-over-year growth of 4x in 2021.

Today, there's an inflection point in our market, driven by increasing demand for renewables, and the significant decreases in costs for both renewable generation and battery hardware. Combined, we see these factors resulting in an energy storage market that is expected to grow by 25 times over the next 10 years, leading to a $1.2 trillion market opportunity.

One of our key metrics is assets under management, and we're seeing continued momentum on AUM and pipeline acceleration. From a market position perspective, Stem is one of the leaders in worldwide deployments. We have systems operating or contracted across the U.S., Canada, and South America representing over 1.2 gigawatt hours of capacity.

Our pipeline which stood at $1.7 billion at the end of June is significant and growing. We have also grown our backlog which consist of executed contracts from $184 million at the end of last year to $250 million at the end of Q2, reflecting an increase of 36% year-to-date. This growing backlog gives us increased visibility and confidence that we will achieve our revenue target for 2021, and provides momentum into 2022.

our proprietary artificial intelligence enabled platform called Athena, our market leading software solution. We continue to invest in expanding the capabilities of Athena, enabling it to even better optimize energy storage dispatch. Our scale and ability to co-optimize multiple value streams is highly differentiated. Athena benefits from years of experience operating a large install base with over 20 million run time hours across a diverse set of markets, battery technologies, and multiple use cases, culminating in a significant competitive mode for the company.

Additionally, Athena continues to get smarter as it processes more data in more markets through powerful machine learning cycles. Another differentiated aspect of our model is the 100% software attach rates on our hardware sales, providing exceptional visibility to our software revenue.

We generate software margin north of 80%, which accrue over 10 to 20 year contracts.

Shifting to the policy and regulatory front, we've been encouraged with the support from the White House and Congress, recognizing the importance of enacting a, standalone storage Incentive Tax Credit or ITC. The President specifically included the standalone ITC in his American Jobs Plan, and it is included in the House GREEN Act and the Senate Finance Committee's Clean Energy for America Act among other bills in Congress.

While the situation is fluid, we believe a standalone ITC will be included in the pending reconciliation package.

As the first pure play smart energy storage company to go public, we're attracting top talent including software developers, data scientists, operations experts, and sales leaders. In addition to competitive compensation, and a culture of diversity and inclusion, we offer our team members the unique opportunity to make an impact with sustainable innovation that will define the energy markets of the future.

Turning to our operating metrics, our 12-month pipeline grew to $1.7 billion as of the end of June that's up 21% from the end of the first quarter 2021. We are seeing a lot of new opportunities in the FTM space, which contributed to two-thirds of the growth in the pipeline as our salesforce focuses on that market. We booked $45 million in projects in the quarter and have booked $96 million in the first half 2021 versus $58 million in the first half of 2020.

Our backlog increased 13% sequentially to $250 million at the end of June and up from 36% from the year end 2020. As John mentioned that $250 million backlog gives us increased visibility and confidence that we will be able to achieve our revenue target for 2021 and provides momentum for continued growth in 2022.

Our backlog represents signed contracts that we expect to convert to hardware revenue for the near and medium term and software revenue for the next 10 to 20 years. In contrast, our pipeline metric represent potential revenue from specific opportunities which have a reasonable likelihood contract execution within 12 months.

And then our last major metric, our contracted assets under management, which grew 9% between the first and second quarters 1.2 gigawatt hours equivalent to energy for approximately 240,000 homes. This broad scale indicates the long-term strength of the business and we think that contracted AUM is the best metric to track for software and market participation revenue potential.

Every quarter and every year we are stacking 10 to 20 year recurring revenue software contracts into the model with north of 80% gross margin. These contracts recorded as deferred revenue give us tremendous momentum and confidence in the long-term earnings power of the business will increasingly be driven by software.

That installed base also present upside optionality in the form of market participation or grid services revenue. So when markets or regulations change, we're there with our installed base software to capitalize a new high margin value streams for our customers with shared upside for Stem.

Turning to guidance, as John mentioned, we are reaffirming our guidance of $147 million of revenue for the full year 2021 and negative $25 million of adjusted EBITDA. As we discussed in our January Analyst Day, we expect to recognize 20% to 30% of our full year revenue target in the third quarter, and 50% to 60% in the fourth quarter driven by normal seasonality of the sales and customer installation cycle.

It's important to note over time, the seasonality will flatten as software becomes a larger part of our revenues and gross margins. We expect operating expenses to continue to grow primarily driven by headcount in order to invest in growth initiatives. With respect to our capital structure, we closed our merger transaction on April 28 which put close to $500 million in cash on the balance sheet with no debt

Dreamer
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