Stem Posts First Annual Profit as Software Shift Pays Off
Event summary
- Stem reported $156.3M in full-year 2025 revenue, up 8% YoY, with first-ever positive adjusted EBITDA of $6.7M.
- Q4 2025 revenue fell 15% YoY to $47.2M due to reduced battery hardware sales as part of a software-focused strategy.
- Full-year 2025 GAAP gross profit was $60M (38% margin), reversing a $11.1M loss in 2024.
- Bookings increased 14% YoY to $131.8M, driven by software and services growth.
- Stem introduced 2026 guidance projecting 85% adjusted EBITDA growth and 10% ARR increase.
The big picture
Stem's transition to a software-centric model is paying dividends, with its first profitable year marking a strategic inflection point. The company's ability to capitalize on clean energy demand hinges on executing its operational discipline while navigating macroeconomic headwinds and regulatory uncertainties like the OBBB Act.
What we're watching
- Software Monetization
- Whether Stem can sustain its 10% ARR growth in 2026 as it further de-emphasizes hardware sales.
- Operational Leverage
- The pace at which Stem achieves cost efficiencies to meet its 85% adjusted EBITDA growth target.
- Market Expansion
- How international projects like the German BESS deployments will impact Stem's revenue diversification.
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