Stem Reports Mixed Q2 2026: Revenue Dips but Margins Improve
Event summary
- Stem's Q2 2026 revenue declined 12% YoY to $33.7M, driven by reduced battery hardware resales and lower managed services revenue.
- Non-GAAP gross margins improved to 55%, up from 49% in Q2 2025, reflecting a higher mix of high-margin software and services revenue.
- Bookings surged 39% sequentially to $36.8M, with contracted backlog increasing 18% to $27.1M.
- Stem expanded internationally with PowerTrack EMS deployments in Chile and Hungary.
- The company reaffirmed full-year 2026 guidance across all metrics.
The big picture
Stem's Q2 2026 results highlight the tension between revenue declines in hardware and services versus improved margins from software-centric offerings. The company's strategic pivot toward AI-enabled clean energy software aligns with broader industry trends of digital transformation in energy management. Stem's international deployments signal its ambition to capture utility-scale hybrid market opportunities, but execution risks remain as it navigates macroeconomic uncertainties.
What we're watching
- Revenue Diversification
- How Stem's shift toward higher-margin software and services will offset declines in lower-margin hardware resales.
- International Growth
- Whether Stem can sustain its international expansion momentum, particularly in Latin America and Europe.
- Operational Efficiency
- The pace at which Stem can improve operational leverage to drive further margin expansion.