Stem Inc (STEM) 2022 Q2 法說會逐字稿

Welcome to the Stem, Inc. Second Quarter 2022 Earnings Conference Call. (Operator Instructions) The conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to Ted Durbin, Head of Investor Relations. Please go ahead.

Thank you, operator. This is Ted Durbin, Head of Investor Relations at Stem, and we welcome you to our second quarter 2022 earnings call.

Before we begin, please note that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. We, therefore, refer you to our latest SEC filings.

Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our earnings release. We will be using a slide presentation today. Our earnings release and presentation are on the Investor Relations portion of our website at www.stem.com.

John Carrington, our CEO; and Bill Bush, CFO, will start the call today with prepared remarks. Larsh Johnson, Chief Technology Officer; Bob Schaefer, President of AlsoEnergy; and Prakesh Patel, Chief Strategy Officer, will also be available for the question-and-answer portion of the call.

And now I'll turn the call over to John.

Thanks, Ted. Starting with Slide 3 and the agenda for our call today. I will review the second quarter 2022 results and highlights, including our increased guidance. Then I'll review our solid commercial execution and discuss how we are expanding the markets we serve. I'll share our initial views on the Inflation Reduction Act and provide an update on how we're managing our supply chain. Finally, I'll talk about how we are accelerating market enablement through technology innovation. Following my remarks, I'll turn the call over to Bill, who will discuss our financial results in more detail and provide further color on revised 2022 guidance.

Turning to Slide 4. Today, we reported strong second quarter 2022 results, including record revenue of $67 million, which was nearly 2.5x higher than our second quarter 2021. Revenue came in 5% above the high end of our guidance range for the quarter, while margins and EBITDA were in line with our expectations. The team executed across the board on key metrics and demand continues to be very strong on a year-over-year and sequential basis. Based on the strong start of the year and visibility into the second half, we are raising our 2022 guidance on 2 of our key metrics, bookings and contracted annual recurring revenue, or CARR. For bookings, another record performance, and we are raising our guidance from a range of $650 million to $750 million to $775 million to $950 million, which is more than a 20% increase at the midpoint. Regarding CARR, we are raising the range of our exit rate guidance from $60 million to $80 million to $65 million to $85 million.

As Bill will discuss, we are reaffirming our full year 2022 guidance on our 3 other key metrics, including revenue, non-GAAP gross margin and adjusted EBITDA. This guidance does not incorporate any potential impact from the Inflation Reduction Act, which I will review later in the presentation.

Moving to some specific Q2 highlights on the right side of the slide. In addition to our strong quarter and increased guidance, we are pleased with our technology and commercial execution. First, with the addition of 2 new value streams, we are now offering all 13 storage services on the Rocky Mountain Institute Wheel, and our AI-driven optimization software, Athena, has achieved over 100% greenhouse gas emissions reductions relative to target. On the solar monitoring aspect of our business, we are proud to report, once again, we were ranked #1 by Guidehouse for Solar and Storage Monitoring and Control. In conjunction with our continued leadership at AlsoEnergy, we collectively have significant momentum on the integration between AlsoEnergy's PowerTrack and Stem's Athena software platforms. We remain focused on improving our operating leverage, which includes increased utilization of our India platform. And we have made incremental progress in securing battery storage supply for 2023 and starting into 2024.

We had a strong quarter of execution for 2022, including records for revenue, GAAP gross margin, contracted backlog and pipeline. Our software leadership and execution on key metrics continues to differentiate the company, and we will continue to drive our focus on high-margin services and operational leverage.

Moving to Slide 5 and our solid commercial momentum. Our commercial and operations teams continue to execute well despite a volatile macro environment. Fundamentally, higher energy prices are increasing project returns for our customers, which is more than offsetting some of the headwinds from higher labor, component prices and interest rates. We are also seeing customers increase focus on ESG initiatives, which is further driving demand. Our CARR increased 12% versus the first quarter to $58 million, an indication of our software leadership and differentiation. Our pipeline of software-only deals is up 10x year-over-year.

We closed a multimillion dollar EV charging deal with a Fortune 50 customer this quarter. This is our newest behind-the-meter offering. With strong margins, it is highly differentiated as we can provide our customer a single solution for solar monitoring, energy storage and our Athena platform to monetize all available value streams in their specific market. We are seeing solid momentum in this area and have multiple EV deals in the works.

On the solar monitoring side, we implemented a double-digit price increase in the first quarter and have seen no material impact to churn. This speaks to the strength and value on the PowerTrack's platform. We recently launched our professional services offering for energy storage solutions. We plan to leverage the strong internal expertise we've developed over the years to further support our customers and drive incremental margins in our financials.

Moving to Slide 6. Our diversified revenues provides some protection from regulatory and supply chain uncertainty. We estimate more than 90% of our remaining 2022 revenue will come from recurring revenues and stand-alone storage projects, which insulate us from solar procurement challenges in the market today. We continue to monitor our repeat customers. This is a validation of our team, technology and meeting commitments. More than 50% of our bookings on the storage side came from repeat customers.

As it pertains to solar asset performance, we are pleased to see the 2-year moratorium announcement implemented in early June on AD/CVD duties. However, as we stated last quarter, the uncertainty from the Department of Commerce investigation announced in the spring has caused some slowdown in our business, particularly on the utility-scale projects. The commercial and industrial or BTM business has been less impacted. Our commercial team has managed these headwinds and continues to execute. We do not anticipate an impact to our financial guidance as a result.

We are continuing to monitor the potential impact of the Uyghur Forced Labor Protection Act, UFLPA. So far, that has resulted in limited impacts, though we are carefully watching the ongoing development.

Lastly, we're excited to introduce PowerTrack into our distribution channel in June and reported sales in the quarter demonstrating the strength of Stem's channel presence. AlsoEnergy historically followed a direct sales model, and we think selling into the channel can expand their reach and growth.

Please turn to Slide 7. As you know, last week, some very promising news broke that potential clean energy legislation could become law in the U.S. The climate provisions in the Inflation Reduction Act would drive continued investment in America's aging power grid, support customer adoption of renewable energy and improve energy security by incentivizing development of our domestic supply chain. We strongly support its passage. Importantly, a stand-alone storage investment tax credit for energy storage and the extension of solar ITC would improve the economic returns for our customers and enhance grid stability.

For storage, independent estimates forecast a potentially large increase in total addressable market, subject to final details in the legislation. As we have always emphasized, the impact of potential clean energy legislation is not included in our financial guidance. Passage of the legislation would provide an opportunity to retrofit storage into a significant portion of the 32 gigawatts of solar assets under management at AlsoEnergy. Less than 10% of the solar AUM currently has storage attached. Over 90% of our revenue comes from the U.S. So our customers would be a key beneficiary upon the bill's passage.

In addition, our solar monitoring platform is installed in over 50 countries, and we have seen global interest, particularly in the U.K., Germany and Italy, all of which are enacting similar legislation which could provide additional commercial opportunities globally. We believe we are well positioned to capitalize on the bill's passage. We are in dialogue with our corporate customers, partners, municipalities, co-ops and renewable asset managers, specifically regarding what this legislation could mean for projects in their pipelines. Additionally, we are in discussion with our storage OEM partners to secure supply for the potential increase in demand. We have proactively contracted for additional storage hardware to satisfy this expected demand.

Please turn to Slide 8 for an update on our supply chain. We are fully contracted for our 2022 energy storage supply, and we have made incremental progress on contracting for supply in 2023 and 2024. Recent contracts have focused on supply targeting the BTM market in particular. Industry experts expect increases in lithium-ion battery manufacturing capacity in 2023 and beyond, which should help alleviate some of the supply constraints the industry is currently facing. We continue to monitor inflationary pressure, logistics issues in the supply chain and developing mitigation strategies, including revised pricing as well as a more proactive sourcing plan.

On the solar side, the AD/CVD and UFLPA issues could impact near-term panel deliveries for customers. And as I stated before, we have seen an impact on utility-scale solar projects. The UFLPA process is presenting some uncertainty for developers, specifically more paperwork and compliance requirements are slowing logistics and delivery times. The software price increases I described earlier have mitigated part of this impact on our financials.

Lastly, project time lines continue to be stretched relative to pre-COVID levels with our operations team supporting our customers and their interconnection and permitting processes. In addition to staffing issues at utilities and permitting offices, required utility upgrades to the grid that have been deferred are also affecting project time lines.

Next, I'd like to highlight some of the examples of our technology leadership. Please turn to Slide 9. As you saw from our press release earlier this week, we received the #1 ranking from Guidehouse for solar and storage monitoring and control. Guidehouse is a leading industry research consultancy that covers the global energy transition. The report called out our integrated edge to cloud platform led by our flagship PowerTrack application as a key differentiator over other vendors. AlsoEnergy provides a vertically integrated platform that enables its utility scale, C&I and aggregated residential customers to standardize their entire clean energy portfolio on one application. This is the second time in 2 years that Guidehouse has ranked AlsoEnergy as #1 in its category. And it speaks to the tremendous effort Bob and his team have put into lowering the total cost of ownership while increasing operational excellence for their customers.

AlsoEnergy received high marks across multiple categories, including its strategy, suite of offerings, technology and global partnerships. We couldn't be more proud of this external validation, and we look forward to delivering continued differentiation in the future.

Moving over to Athena. Please turn to Slide 10. This quarter, we launched 2 additional software applications that enables Athena to execute on all 13 value streams in the Rocky Mountain Institute wheel. As a result, Athena continues to provide the most comprehensive suite of applications to our storage customers with no other software solution in the market matching our track record and run time hours. Our software performance continues to lead the market. Across the fleet, we've executed on 100% of our obligations year-to-date despite a 72% increase in grid dispatches, which points to the scalability and robustness of our technology.

We are continuing to perform well in the market segments we serve. In ISO New England, Athena achieved 96% of perfect foresight revenues. This means that Athena had exceptional forecasting ability due to our data advantage, delivering near perfect estimates of customer load and market conditions ahead of implementing its algorithms. In California in June, we outperformed by 43% for a key grid incentive payment, and we have outperformed year-to-date across over 500-megawatt hours, representing hundreds of sites in this program. And for many of our customers who want to optimize for both economic results and greenhouse gas reductions, Athena's co-optimization technology resulted in exceeding the annual GHG reduction target within the first 4 months of operation.

All of these accomplishments speak to the depth of our software expertise, breadth of differentiated offerings and the strong moat we continue to build relative to our competitors. Building on our success, we aim to continuously outperform our commitments and exceed customer expectations. We are proud of the platform that we've built the last 12 years, which wouldn't be possible about our people. Stem and AlsoEnergy have built the leading clean energy intelligence platform through innovation, collaboration and rigor that come from our talented employees. We are attracting the best talent with deep domain expertise, critical as we facilitate the clean energy transition.

Thank you. And now I'll turn the call over to Bill Bush, our Chief Financial Officer.

Thanks, John. Starting on Page 11 with our results for the second quarter of 2022. Before I begin, recall that we closed the AlsoEnergy transaction on February 1 of this year, which impacts the comparability to last year's results. As John mentioned, we reported record revenue of $67 million, which was a 246% increase versus the $19 million in the second quarter of 2021.

The quarterly revenue performance surpassed the Q4 2021 performance of $53 million or an increase of 26%. Most of the growth came from the storage, hardware sales on FTM and BTM partner projects and about $14 million from the addition of AlsoEnergy. We also recognized approximately $13 million of high-margin software and services revenue, representing 19% of the total revenue for the quarter. First half revenue was $108 million, an increase of 246% on a year-over-year basis. Our GAAP gross margin was $7.7 million or 12% versus a slight loss in the same quarter last year. This is the second straight quarter of positive GAAP gross margin, highlighted by the growing base of our software and services offerings.

On a sequential basis, this represents a 33% increase in GAAP gross margin, reflecting the strength of our commercial offerings. Non-GAAP gross margin was $11.3 million, up from $1.5 million or 665% increase in the second quarter last year due to higher revenues and an increased mix of software and services revenue. On a percentage basis, non-GAAP gross margin was up 17% in the quarter, versus 8% last year, an increase over -- of just over 2x. Our margins benefited from a greater share of high-margin software and services revenue. That 17% margin is squarely in line with a 15% to 20% guidance for 2022 we initially provided in February.

Net loss was $32 million versus a loss of $100 million in the same quarter last year. That swing is almost completely the result of a large noncash loss in the second quarter of 2021 from the then outstanding common stock warrants. We retired all of those warrants last year, and we do not expect significant charges similar to those in the future. And lastly, adjusted EBITDA was negative $11 million versus a negative $8 million in the same quarter last year. Adjusted EBITDA was negatively impacted by higher operating costs from additional hiring, personnel-related expenses, costs associated with public reporting and related expenses as we continue to build out our teams and advance our technology road map to take advantage of market opportunities.

Second quarter bookings were $226 million, up more than 5x versus bookings in the same quarter last year. This was the second highest bookings quarter in the company history and $375 million of bookings for the 6 months ended June 30 is nearly what we booked in all of 2021.

Moving from our financial results to our operating metrics on Slide 12. Our backlog nearly tripled year-over-year from $250 million in the first quarter of 2021 to $727 million in the second quarter of 2022. The backlog increased approximately 29% from $560 million on a sequential basis from the period ended March 31, 2022. The largest driver of the backlog was the $226 million of new bookings in the quarter, offset by revenue recognized during the quarter as well as some amendments and adjustments to booked project configurations. We believe that the backlog gives us excellent visibility in the short and medium term, that is for the back half of '22 and into 2023.

Our contracted AUM on the storage side grew from 1.2 gigawatt hours in the second quarter of 2021 to 2.1 gigawatt hours in the second quarter of 2022, that's a 75% year-over-year increase, again driven by our strong execution on the sales and operations side of the business. Our operating AUM on the solar asset performance and monitoring side of the business ended the quarter at 32.1 gigawatts, relatively flat sequentially. We believe the opportunity to bring the Athena platform to the PowerTrack customer base represents a significant cross-sell opportunity with low penetration of storage into that solar AUM. As John mentioned, the storage ITC could accelerate that cross-sell opportunity.

Contracted annual recurring revenue, or CARR, ended the quarter at $58 million. This software metric showcases the importance of the Athena and PowerTrack network and services as we offer our customers, which drive long-term value. We ended the quarter with $335 million in cash on the balance sheet. As in this quarter, you will see us strategically deploy our cash to secure storage hardware for our customers and drive greater adoption of high-margin recurring revenue. In the interim, we are also evaluating other tools and structures to allow us to continue to deliver energy storage systems to our customers.

Turning to Slide 13. As John mentioned earlier, we are raising our guidance for bookings and CARR for the full year 2022, and we are affirming our guidance for revenue in the range of $350 million to $425 million, non-GAAP gross margin in the range of 15% to 20% and adjusted EBITDA in the range of a negative $20 million to $60 million. Remember, none of these updates reflect any potential impact of the Inflation Reduction Act. On bookings, we are raising our guidance by about 20% at the midpoint from $700 million to about $840 million. We are adjusting our disclosures to show absolute dollar ranges rather than the percentages for the remaining half of the year.

While the business continues to be lumpy based on the increasing importance of the FTM business and its project sizes, based on our sales visibility, we feel confident that we'll be able to hit the low end of these ranges. And if things break well, we expect that we will be able to hit the high end of our range. Our revised bookings guidance now calls for us to more than double our bookings relative to 2021. And remember, our 2021 bookings were triple our 2020 bookings. We have grown the business very rapidly in a short amount of time and without any changes in legislation. This is a testament to our differentiated software offering as well as our ability to help customers enter new markets profitably. It is also due to our focus on customer service and supply chain management that allows us to deliver the right product to the customer that meets their needs.

We're also raising the range of our CARR guidance by $5 million, to $65 million to $85 million. This is a function of our increased bookings, which will drive solid upfront hardware margins, but more importantly, high-margin long-dated software revenue. By now, you should have received the "save your date" notice for our Investor and Analyst Day on September 28 in Midtown Manhattan. We will provide additional details on our financial outlook from our long-range planning process as well as discuss our strategy and technology differentiation at the event. We continue to focus on commercial differentiation and an important component of our planning processes is accelerating our operating leverage and the drive to profitability.

Let me turn the call back to John for some closing remarks.

Thanks, Bill. Turning to Slide 14. To wrap up, we're excited about our strong commercial and operating momentum heading into the second half of 2022, with record revenue above the high end of our guidance range and record bookings up 5x year-over-year. Our technology differentiation continues to drive growth in contracted annual recurring revenue and supports our pricing power with customers. We are raising our guidance for bookings and CARR for the year and reiterating our guidance on other key metrics, which, again, do not include any upside from the Inflation Reduction Act. We continue to build a strong and inclusive culture at Stem with the launch of 2 new employee networks in the quarter focused on LGBTIA+ and women in leadership. We are committed to building the best workplace in our communities and the broader industry.

In addition, the integration of the AlsoEnergy acquisition is proceeding well, and we expect to detail initiatives on driving commercial synergies and operating leverage as we drive a focus on profitability in the forthcoming Analyst Day, as Bill mentioned, on September 28 in New York City.

With that, let's open the line for questions, please.

(Operator Instructions) The first question comes from David Peters with Wolfe Research.

First question I have is just on the revised guidance for bookings specifically. Can you talk a little bit on where you're seeing the increased momentum relative to initial expectations? Is it being driven primarily by FTM or anything available power related? And then just related to that, what ISOs are you seeing the most success in?

Yes. David, this is Bill. Thanks for the question. I appreciate that. So I think much like we've talked about in prior quarters, the FTM segment of the business is growing very rapidly. And that's where we're seeing -- we continue to see the most momentum there. Although we are starting to see some initial, say, on the BTM side, some initial opportunities, and on the AE side as we come out of the AC any competitive component with the government. So I think we're really seeing it across the business, but the biggest impact is clearly on the FTM side of the business.

And ISO-wise is ERCOT. Certainly, it's as strong as [Stem].

On the New England, ISO is also quite strong as well. So really those 2 primary markets.

Does the bump up in bookings, obviously, knowing that this drives revenue next year and so on, does that accelerate or change the thinking about at all when you guys might expect to see EBITDA inflect positive?

Well, I think for sure that the growth in bookings does and will relate and create revenue opportunities. I mean I think one of the things that we do see as well is that those FTM projects tend to take a little bit longer and that those are really kind of 18 months and up these days. I think some of the initial guidance that we gave a while back was more like, say, in the 12-month range. So we will see that. So we're starting -- effectively in the second half, we'll start to see actually deals that will hit in 2024 as opposed to 2023. And that, of course, will drive all the software aspects that we've talked about. So I mean that's all good news from that standpoint. And I think that, in general, as it relates to the EBITDA what we'll do is in the Analyst Day call or initially, meetings, excuse me, in New York. We'll get some additional guidance around that then.

Okay. Last one, if I could, just with respect to the IRA, obviously, you need to pass, but just wondering if you had any initial thoughts on what this would mean specifically for Stem's pipeline? And then as it relates to AlsoEnergy's solar AUM, how quick could you move to retrofit some of those solar sites with batteries and would there be any limitations just from a supply standpoint?

Yes, David, thanks. A couple of things. Look, we're obviously very supportive of the Inflation Reduction Act. I think, as I said in the prepared remarks, it will certainly drive strong job growth, obviously, a renewable expansion, I think U.S. manufacturing, which is also becoming more and more significant in light of some of the things that are going on at a global level. And clearly significantly more storage with the stand-alone ITC included.

I'd say that we need to get the final details of how this rolls out. We certainly see TAM upside. And if you look at some third parties, their range is all over the place. The low end is 20%. I think one of the things that we've talked about before is we have been talking to our customers about when this occurs, what we would do with them. And when you think about C&I Fortune 500 in particular, there's a lot of activity in markets that were maybe on the edge that become highly economically viable in light of this. So we have been talking to them for some time, and there's a variety of other customers who are in the process of having discussions on. I am really excited and think it's highly differentiated the fact that we now have AlsoEnergy as part of the family. And the reason for that is there are 41,000 sites that they currently are managing.

And these are existing customers. Obviously, we know who they are, we know the system size, the location and the production. So it's a perfect kind of lead sheet for us to go and address. So we're excited about that. We think it's highly differentiated and a very strong competitive moat that we will execute as soon as this is finalized.

The next question comes from Brian Lee with Goldman Sachs.

Kudos on the nice execution. I guess first question would just be around the bookings momentum. I appreciate the color around the mix and where you're seeing that strength. But you're not raising guidance metrics for 2022. And I think Bill just mentioned some of these bookings are even set for delivery into '24 if I heard that right. So is the sort of composition of bookings as you think about cadence changing here? Are you seeing more long-dated bookings?

So Brian, thanks for the question. First, let me clarify one comment there. What I was saying is the bookings in the second half could be into 2024 not bookings that would have been in the first half, just so we're super clear on that point. But as far as -- and that's, of course, why we're not changing because say the 2022 revenue guidance because those are more than likely a sale that's happening, particularly in the front of meter side, a sale that's happening in 2022 is likely going to create revenue during that same time period. But as far as the, say, the velocity of the business, I mean, I think that's where it gets super interesting is that the bookings growth really determines what's going to happen longer term for us. And that's really -- so we're kind of locking in -- and that's where the CARR metric comes in. And so you're starting to lock in long-term, long-dated software contracts during that time period.

Okay. Fair enough. And then just second question on the gross margin. Encouraging to see the uplift here this quarter. Can you talk about some of the puts and takes on the margins? Is this sort of where we should expect things to trend if not maybe higher through the rest of the year?

Well, of course, our guidance is 15% to 20%. So we're right in the middle of that. We're pretty comfortable where that is. I think the big impact for us longer term or even say, shorter term is going to be our ability to break some of those logjams in the permitting and interconnection side of the business. And we have a lot of projects that are set up to start -- effectively to start operating as soon as we can get through those logjams. And so I think that over time, you're going to see more and more software revenue rolling into the P&L. And so we would expect that software -- really services line item to grow quite significantly over the coming years.

The next question comes from Maheep Mandloi with Credit Suisse.

Congratulations on the nice quarter here. Maybe just quickly on the revenue [BTM]. Could you just talk about the drivers of that? And is it mostly the ASP increase you talked about? Or is there anything -- any pull forward you saw from Q3, Q4 over here as well?

Yes. So I think -- and thanks for the question, Maheep. I appreciate it. So I mean the revenue beat is going to be tied into hardware sales. I mean that's where you get the biggest bang from a top line perspective. And so that was really where -- from the standpoint of where we outperformed during the quarter at the top line revenue level, it would be there. Now as it relates to kind of was it a pull forward or not, I would say really not. I don't think that we did -- we're at above the high end of the guidance, but we are affirming the full year. So I think that we're in pretty good shape from where we are from that standpoint.

Got you. And then probably just on the previous question here from Brian. Just for next year, demand over here, if we get like an IRA or not if -- when we get the IRA approved, do we have enough supply for batteries to support that kind of demand here?

I'd say that we have to understand exactly the details around this as far as what the demand looks like. I mean if you -- as I said, if you look at some of the third-party estimates, it's ranging from 20% to 300%. So we'll have to unpack that. I feel very good about our supply chain and our OEM commitments to the company. We've talked about this in the past. I think we've been pretty good about very granular reviews on a weekly level, as we've discussed in previous calls. And I would also say that we've been super transparent with our OEMs to say, make Stem the first call if you get excess capacity, and in fact, in the last couple of weeks, we've seen that occur, and we executed on a fairly significant amount of hardware, specifically for the BTM market and feel great about that move and we continue to get incoming calls.

So we'll monitor it closely. I think we have to understand how big this could be in the time frame associated with it, in particular, and we feel like we could put a supply agreement in place with the variety of OEMs that we have. Another advantage of our very dispersed amount of OEMs that we've partnered with over the last few years. So we have a lot of optionality in that category.

Got you. And then just one last one, and then I'll jump back in the queue on UFLPA, you gave some color around that. Could you just elaborate more on that? Is it causing projects which are previously planned earlier this year to be moved to next year? Or what is the latest you're hearing on that end?

Yes. I think we're seeing a little bit of impact on the large-utility scale. We are not necessarily seeing the BTM. It's something we're closely monitoring. It's still a little bit early, but it's certainly gotten our attention, and we'll continue to closely monitor. I don't know, Bill, you've been working on the supply chain quite a bit recently, if you have anything to add.

Yes, we haven't yet seen an impact on the -- and it's really probably more the battery cells. I think that's where you're going to see probably the most and that some of the ruling seem to indicate that the customs department is looking actually at the mineral level. And so I think that is probably going to -- depending on how that works out, we could see some impacts there. But we have not seen any yet. I think what we have heard is that it's more impacting solar panels coming into the port. And so I think that -- which we haven't seen a significant impact yet, but that's what we've heard. I don't know, Bob, if you guys have seen anything on your...

For us -- this is Bob Schaefer. Thanks for the question, Maheep. So I think for us, when we see challenges just related about kind of large-scale utility projects on the PV side. And there is just a timing problem. It takes a long time to get those projects in the ground. So you need pricing certainty before you really want to embark. And so that favors projects that can execute quickly and that's kind of what we see here in our part of the business.

(Operator Instructions) The next question comes from Biju Perincheril with Susquehanna.

Congrats on a great quarter. So I was kind of intrigued by your comments about software-only deals, the increase there. Could you give us a little bit more color? Are these -- are you replacing a previous provider of software solutions? Or are these adding software existing, call it, dumb storage facilities? Any extra color there will be good.

Sure, Biju. Thanks for the question. Good to hear from you. I would say a couple of things. One is the largest behind-the-meter portfolio down in Southern California was a replacement with Athena software on an existing platform. And we have talked about that in the past. That's not inclusive in this 10x, obviously. But I would say the majority of what we're seeing are large front-of-the-meter projects, whereby the developer may be procuring their own hardware and utilizing Athena and all the attributes that we bring. I think it's exciting, too, because as we mentioned in the prepared comments, we've added 2 more applications as part of our offering that gives us all 13 of the Rocky Mountain wheel. So that's really compelling, we think.

And obviously, as you look at the car metric. It's one that captures the progress of the business. And so that's going to continue to grow both as we sell more hardware and software and start to do more software-only deals. It's something we've talked about. It's something we've been focused on, and we're really starting to see strong demand for our platform. So very excited to see that. We'll update everybody as we get more closes and hopefully have more to talk about in the Analyst Day as well in September around this.

One thing I would add to that, though, as well is even if we're not selling the hardware, we are selling services into those same projects. And so the interesting part of the business for us, of course, from a margin perspective is on that software and services line. So even if we are losing the "top end" of it as a result of the hardware, we're not necessarily losing the engineering services and such that we would be providing to those same customers. So they still need our help in terms of the battery warranties, the selection itself and a number of other topics, interconnection, et cetera.

Got it. Now I was thinking this is a sort of a nice tailwind sort of adding to your hardware plus software business, sort of making that transition to software becoming a bigger part of the business, making that to faster transition.

Yes. We feel great about the momentum and I think it will only continue, Biju. Thanks.

And then maybe can you add a little bit more color on the bookings this quarter was a nice, pleasant surprise with all the headwinds the sector has been facing. But the bookings, are they mostly stand-alone storage? Or is it because behind the meter projects were not as impacted by the supply chain constraints?

Yes. I mean I appreciate the comment on the bookings. We're really excited about it as well, as we mentioned, $226 million. That's 50% quarter-over-quarter growth and 400% year-over-year. So the demand on the ground continues to be extremely strong.

From a mix standpoint, 91% FTM, 9% BTM. We do believe that BTM will increase. We feel like coming out of COVID, we're seeing more and more activity around behind-the-meter opportunities. Obviously, with the inflation Reduction Act, that's a huge lever for that as well? So we'll monitor that piece? But just continued strong demand really across the board? I wouldn't highlight one geography, and it's been very strong? And we're excited about the balance of the year and, obviously, excited enough to move up guidance.

This concludes the question-and-answer session. I would like to turn the conference back over to John Carrington for any closing remarks.

Thank you, and thank everyone for joining us on our second quarter 2022 earnings call. We look forward to speaking with you at our Investor and Analyst Day on September 28 in New York.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.