STEM, INC.STEM
STEM, INC. Revenue Disclosure
REVENUE
Disaggregation of Revenue
The following table provides information on the disaggregation of revenue as recorded in the consolidated statements of operations (in thousands):
| Year ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Hardware revenue | $ | 76,774 | $ | 398,967 | $ | 310,837 | |||||||||||
| Services and other revenue | 67,810 | 62,548 | 52,143 | ||||||||||||||
Total revenue | $ | 144,584 | $ | 461,515 | $ | 362,980 | |||||||||||
The following table summarizes reportable revenue by geographic regions determined based on the location of the customers (in thousands):
| Year ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| United States | $ | 139,405 | $ | 443,450 | $ | 353,792 | |||||||||||
| Rest of the world | 5,179 | 18,065 | 9,188 | ||||||||||||||
| Total revenue | $ | 144,584 | $ | 461,515 | $ | 362,980 | |||||||||||
Remaining Performance Obligations
Remaining performance obligations represent contracted revenue that has not been recognized, which includes contract liabilities (deferred revenue) and amounts that will be billed and recognized as revenue in future periods. As of December 31, 2024 and 2023, the Company had $412.3 million and $471.3 million of remaining performance obligations, respectively, and the approximate percentages expected to be recognized as revenue in the future are as follows (in thousands, except percentages):
| December 31, 2024 | |||||||||||||||||||||||
| Total remaining performance obligations | Percent Expected to be Recognized as Revenue | ||||||||||||||||||||||
| Less than one year | Two to five years | Greater than five years | |||||||||||||||||||||
Services and other revenue | $ | 398,260 | 19 | % | 35 | % | 46 | % | |||||||||||||||
Hardware revenue | 14,071 | 100 | % | — | % | — | % | ||||||||||||||||
| Total revenue | $ | 412,331 | |||||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Total remaining performance obligations | Percent Expected to be Recognized as Revenue | ||||||||||||||||||||||
| Less than one year | Two to five years | Greater than five years | |||||||||||||||||||||
Services and other revenue | $ | 348,056 | 14 | % | 47 | % | 39 | % | |||||||||||||||
Hardware revenue | 123,243 | 97 | % | 3 | % | — | % | ||||||||||||||||
| Total revenue | $ | 471,299 | |||||||||||||||||||||
Contract Balances
Deferred revenue primarily includes cash received in advance of revenue recognition related to energy optimization services and incentives. The following table presents the changes in the deferred revenue balance during the years ended December 31, 2024, 2023, and 2022 (in thousands):
| 2024 | 2023 | 2022 | |||||||||||||||
| Balance as of beginning of period | $ | 142,647 | $ | 138,074 | $ | 37,443 | |||||||||||
| Deferred revenue acquired upon business combination | — | — | 49,626 | ||||||||||||||
| Upfront payments received from customers | 76,923 | 270,130 | 206,868 | ||||||||||||||
| Upfront or annual incentive payments received | 2,463 | 4,204 | 5,797 | ||||||||||||||
| Revenue recognized related to amounts that were included in beginning balance of deferred revenue | (47,309) | (54,638) | (22,669) | ||||||||||||||
| Revenue recognized related to amounts that were included in acquired balance of deferred revenue | — | — | (3,338) | ||||||||||||||
| Revenue recognized related to deferred revenue generated during the period | (31,343) | (215,123) | (135,653) | ||||||||||||||
Write-off of deferred revenue (1) | (14,226) | — | — | ||||||||||||||
| Balance as of end of period | $ | 129,155 | $ | 142,647 | $ | 138,074 | |||||||||||
(1) Deferred revenue written off against the associated receivables in connection to terminated projects, contract restructurings, and the parent company guarantee arrangements discussed below.
Parent Company Guarantees
Prior to July 2023, the Company agreed in certain customer contracts to provide a guarantee that the value of purchased hardware will not decline for a certain period of time. Under this guarantee, if these customers were unable to install or designate the hardware to a specified project within such period of time, the Company would be required to assist the customer in re-marketing the hardware for resale by the customer. If a resale does not occur, the hardware will be appraised utilizing a third party. The guarantee provided that, in such cases, if the customer resold the hardware for less than the amount initially sold to the customer or the appraisal value is less than the hardware purchase price, the Company would be required to compensate the customer for any shortfall in fair value for the hardware from the initial contract price. The Company accounts for such contractual terms and guarantees as variable consideration at each measurement date. The Company updates its estimate of variable consideration each quarter, including changes in estimates related to such guarantees, for facts or circumstances that have changed from the time of the initial estimate. As a result, the Company recorded a net revenue reduction of $38.7 million in hardware revenue during the year ended December 31, 2024. The overall reduction in revenue was related to deliveries that occurred prior to 2024.
Impairment and Accounts Receivable Write-Off
For those contracts where the customers invoked parent company guarantee (“PCG”) protection pursuant to the applicable contract, the Company has worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers. The Company has been engaged in ongoing negotiations with several parties, including the original customers who hold title to the assets, for the purchase of the remarketed hardware. Despite such efforts, such negotiations have resulted in limited transactions with mutually agreed upon pricing and terms. Recent closed transactions have resulted in resales at prices significantly below carrying values. Under contracts containing a PCG provision, in the event that the Company and the customer are unable to remarket and sell the relevant assets, the customer shall engage a third party to appraise the fair market value of the remaining hardware. As of the date of this report, none of such customers have elected to obtain a third party hardware appraisal for the previously purchased hardware. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where the Company believes it has enforceable rights of recovery, the Company believes the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s is no longer probable. Accordingly, the Company wrote-off the remaining receivables of $104.1 million during the year ended December 31, 2024. The Company is evaluating all potential remedies with respect to its enforceable rights under applicable contracts.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.