Stem Inc (STEM) 2024 Q3 法說會逐字稿

Good afternoon, everyone, and welcome to the Stem Inc third-quarter 2024 results conference call. (Operator Instructions) Please also note that today's event is being recorded. At this time, I'd like to turn the floor over to Ted Durbin, Head of Investor Relations. Sir, please go ahead.

大家下午好，歡迎參加 Stem Inc 2024 年第三季業績電話會議。（操作員說明）也請注意，今天的活動正在錄製中。現在，我想請投資人關係主管 Ted Durbin 發言。先生，請繼續。

Thank you, Operator. This is Ted Durbin, Head of Investor Relations at Stem. Welcome to our third-quarter 2024 earnings call.

謝謝你，接線生。我是 Ted Durbin，Stem 投資人關係主管。歡迎參加我們的 2024 年第三季財報電話會議。

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 10-Q and our other SEC filings.

在開始之前，請注意，我們今天將發表的一些聲明具有前瞻性。這些事項涉及風險和不確定性，可能導致我們的結果與這些聲明中預測的結果有重大差異。因此，我們建議您參閱我們最新的 10-Q 報告和其他 SEC 文件。

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.

我們今天的評論還包括非公認會計準則財務指標。更多詳細資訊以及與最直接可比較的 GAAP 財務指標的調整可以在我們的收益報告中找到。

We will be using a slide presentation today. Our earnings release and presentation are on the investor relations section of our website at www.stem.com.

今天我們將使用幻燈片演示。我們的收益發布和演示位於我們網站 www.stem.com 的投資者關係部分。

David Buzby, our interim CEO, and Doran Hole, CFO and EVP, will start the call today with prepared remarks and Mike Carlson, our COO, will be available for the question-and-answer portion of the call. And now I'll turn the call over to David.

我們的臨時執行長 David Buzby 以及財務長兼執行副總裁 Doran Hole 將在今天的電話會議上發表事先準備好的講話，我們的營運長 Mike Carlson 將參與電話會議的問答部分。現在我將把電話轉給大衛。

Thanks, Ted. Good afternoon, and thank you all for joining us today. Starting on slide 3 with our agenda, we will spend a good portion of our time discussing the results of our strategy review. Doran will then go through our third-quarter results and updated 2024 guidance, and I will wrap up with some key takeaways.

謝謝，泰德。下午好，感謝大家今天加入我們。從幻燈片 3 的議程開始，我們將花大量時間討論策略審查的結果。然後，Doran 將詳細介紹我們的第三季業績和更新的 2024 年指引，我將總結一些關鍵要點。

Turning to slide 4, as Ted mentioned, our Board of Directors appointed me as interim CEO about six weeks ago. I also serve as executive chair of the board. I was one of the early investors in Stem and have been on the Board since 2010, witnessing the evolution of Stem and the maturation of the clean energy industry. I'm well-appointed with the company's mission, strategy, and management team, and it's been a pleasure working more closely with everyone over the past six weeks. Stem is a community of driven individuals focused on the success of our customers.

轉向幻燈片 4，正如 Ted 所提到的，大約六週前，我們的董事會任命我為臨時執行長。我還擔任董事會執行主席。我是Stem的早期投資者之一，自2010年起加入董事會，見證了Stem的演變和清潔能源產業的成熟。我對公司的使命、策略和管理團隊非常了解，在過去的六週裡我很高興與每個人更密切地合作。Stem 是一個由積極進取的個人組成的社區，專注於客戶的成功。

It's been a busy few months since our last earnings call, and these last several months have been transformational for Stem. Over the last 90 days, we completed a comprehensive strategy review and announced several senior leadership changes. Looking forward, we are implementing cost-cutting measures to right-size our business operations to align with our new strategy.

自從我們上次的財報電話會議以來，這幾個月是忙碌的幾個月，過去的幾個月對 Stem 來說是變革性的。在過去 90 天裡，我們完成了全面的策略審查，並宣布了幾項高階領導層變動。展望未來，我們正在實施成本削減措施，以調整我們的業務營運規模，以符合我們的新策略。

This review was a collaborative effort between the Board's Software Strategy Working Group and the management team. This process resulted in an updated and refined business model to drive towards sustainable and predictable revenues, profitability, and scalable expansion.

此次審查是董事會軟體策略工作小組和管理團隊之間的合作成果。這個過程帶來了更新和完善的商業模型，以推動可持續和可預測的收入、獲利能力和可擴展的擴張。

Please turn to slide 5. Our new strategy focuses on four key initiatives. First, refining our product and go-to-market approach to be centered around software and services. Second, expanding and emphasizing consultative energy services as opposed to hardware resale as our entry point into project-based customer relationships. creating predictable revenue and gross profit that is less dependent on project timing or completion.

請翻到投影片 5。我們的新策略重點在於四項關鍵措施。首先，完善我們的產品和進入市場的方法，以軟體和服務為中心。其次，擴大並強調諮詢能源服務（而不是硬體轉售）作為我們建立基於專案的客戶關係的切入點。創造可預測的收入和毛利，減少對專案時間或完成情況的依賴。

Third, enhancing our commitment to innovation by leveraging AI to expand and improve our software products' value to our customers, as well as enhancing edge device capabilities. And fourth, changing our approach to battery hardware. This means offering hardware procurement as a service and sometimes directly procuring it for our customers, but only when it meets strictly defined criteria.

第三，透過利用人工智慧來擴展和提高我們的軟體產品對客戶的價值，以及增強邊緣設備功能，加強我們對創新的承諾。第四，改變我們的電池硬體方法。這意味著將硬體採購作為服務提供，有時甚至直接為我們的客戶採購，但前提是它符合嚴格定義的標準。

As we implement these strategic initiatives, we remain committed to our defined path forward while allowing for necessary adjustments along the way. This year, the unpredictability of project timelines for utility-scale storage hardware persisted, prompting a strategic shift to reduce our reliance on this revenue stream. These timeline challenges resulted in significantly lower-than-expected bookings, revenue, and accounts receivable collections.

在實施這些策略性舉措時，我們將繼續致力於既定的前進道路，同時允許在此過程中進行必要的調整。今年，公用事業規模儲存硬體的專案時間表仍然存在不可預測性，促使我們進行策略轉變，以減少對這一收入流的依賴。這些時間安排方面的挑戰導致預訂量、收入和應收帳款收款明顯低於預期。

We expect our refined strategy to accelerate the growth of more predictable revenue from software and services. Through our consultative energy services offering, we aim to generate revenue earlier in the project lifecycle. independent of potential interconnection or permitting delays. Positioning services as a gateway for software sales.

我們預計，我們的精細化策略將加速軟體和服務收入的成長，實現更可預測的收入。透過我們的諮詢能源服務，我們的目標是在專案生命週期的早期產生收入。獨立於潛在的互連或允許的延遲。將服務定位為軟體銷售的入口網站。

By emphasizing our software and services offerings, we believe that we also have a clear path to gross margin expansion and profitability. Finally, by updating our approach to battery hardware, we expect to see improvements in the company's work in capital management.

透過強調我們的軟體和服務產品，我們相信我們也有一條明確的毛利率擴張和獲利之路。最後，透過更新我們的電池硬體方法，我們期望看到公司在資本管理方面的工作得到改進。

To execute our refined strategy, we have a team of talented leaders. I'd like to highlight two of them, Matt Tapin and Jake Berlin, both seasoned professionals with deep industry experience. Matt, who joined us at Stem three years ago, has been leading our software business for the past 18 months and will continue to do so. He brings a robust background in strategy and corporate development with a focus on the energy transition. Meanwhile, Jake Berlin, the current leader of Energy Services, has nearly two decades of experience in the energy sector, developing and delivering service solutions for a wide range of clients.

為了執行我們的精細化策略，我們擁有一支才華橫溢的領導團隊。我想重點介紹其中兩位，馬特·塔平 (Matt Tapin) 和傑克·柏林 (Jake Berlin)，他們都是經驗豐富的專業人士，擁有深厚的行業經驗。Matt 三年前加入 Stem，在過去 18 個月裡一直領導我們的軟體業務，並將繼續這樣做。他在策略和企業發展方面擁有豐富的背景，並專注於能源轉型。同時，能源服務現任領導者 Jake Berlin 在能源領域擁有近二十年的經驗，為廣泛的客戶開發和提供服務解決方案。

Both Matt and Jake are reporting to Doran Hole, our new Executive Vice President and Chief Financial Officer, who joined Stem in early September. Doran has more than 25 years of global finance and management experience, providing leadership and strategy and operational efficiency in the growing clean technology industry. He most recently served as Executive Vice President and Chief Financial Officer of Ameresco, a customer of Stem, where he led the company's financial strategy and capital management. He was also responsible for the company's SaaS and consulting-focused business units, as well as overseeing its off-grid solar business. Doran has deep financial and business experience, strong strategic acumen, and proven leadership success.

Matt 和 Jake 都向 Doran Hole 匯報工作，Doran Hole 是我們的新執行副總裁兼財務官，他於 9 月初加入 Stem。Doran 擁有超過 25 年的全球財務和管理經驗，在不斷發展的清潔技術產業中提供領導力、策略和營運效率。他最近擔任 Stem 客戶 Ameresco 的執行副總裁兼財務官，領導該公司的財務策略和資本管理。他還負責公司的 SaaS 和諮詢業務部門，並監督其離網太陽能業務。多蘭擁有豐富的財務和商業經驗、強大的策略敏銳度以及久經考驗的領導成功。

Mike Carlson, our COO for the last two years, will continue to focus on delivering products and services to our customers on time and on budget. Albert Hofeldt, our recently announced CTO, who has also been with Stem for over two years, will focus on our AI-enabled software product development. With such an experienced team of leaders, we are confident in our ability to drive innovation and achieve our strategic goals, ensuring success and growth for our organization.

過去兩年擔任我們營運長的 Mike Carlson 將繼續專注於按時、按預算向我們的客戶提供產品和服務。我們最近任命的技術長 Albert Hofeldt 在 Stem 工作了兩年多，他將專注於我們的人工智慧軟體產品開發。擁有如此經驗豐富的領導團隊，我們對推動創新和實現策略目標的能力充滿信心，確保我們組織的成功和發展。

I will now pass the call over to Doran.

我現在將把電話轉給多蘭。

Thank you for that introduction, David. As David mentioned, I was a Stem customer while at Ameresco. I was also a customer to many other energy storage companies, and Stem has always stood out amongst them. The quality of Stem's products and strong customer focus have long been differentiating factors. On the solar side, the PowerTrack brand is the industry standard for CNI developers, and for storage, Stem's Athena software and subject matter expertise also stands out.

謝謝你的介紹，大衛。正如 David 所提到的，我在 Ameresco 時是 Stem 客戶。我也是許多其他儲能公司的客戶，Stem 始終在其中脫穎而出。Stem 產品的品質和對客戶的高度關注長期以來一直是其差異化因素。在太陽能方面，PowerTrack 品牌是 CNI 開發人員的行業標準，而在儲存方面，Stem 的 Athena 軟體和主題專業知識也很突出。

The leadership team that David described combined with the immense talent throughout Stem's ranks makes me very excited about the opportunities ahead.

David 描述的領導團隊加上 Stem 團隊中的巨大人才讓我對未來的機會感到非常興奮。

In implementing our new strategy, we will be focused on growth, but also on increasing operating leverage to maximize profitability. We're looking at ways to optimize our capital structure to fit this new strategy as well. As David said, in addition to my CFO role, I oversee the software and services groups, which takes me back to the refined strategy that David outlined. And I'd like to take a moment here to dive deeper into the four key strategic initiatives we have identified.

在實施我們的新策略時，我們將重點放在成長，同時也提高營運槓桿以實現利潤最大化。我們正在尋找優化資本結構的方法，以適應這項新策略。正如大衛所說，除了我的財務長角色之外，我還負責監督軟體和服務團隊，這讓我回到了大衛概述的完善策略。我想花一點時間更深入地探討我們已經確定的四項關鍵策略措施。

Following our strategy review, we refined our go-to-market approach to lead customer relationships through our consultative energy services, innovative software, and advisory procurement services offerings, rather than battery hardware resale. Slide 6 illustrates how this shift allows us to engage with customers earlier in their project life cycles.

經過策略審查，我們改進了進入市場的方法，透過我們的諮詢能源服務、創新軟體和諮詢採購服務產品（而不是電池硬體轉售）來引導客戶關係。投影片 6 說明了這種轉變如何讓我們能夠在客戶專案生命週期的早期與他們互動。

Previously, we would step in after a project had been de-risked, and the customer-sought hardware procurement, integration services, and a software provider. Now, we will collaborate with developers from the outset, offering services to support a portfolio of potential projects. This change enables us to recognize revenue earlier and reduces our dependency on the success of individual projects. We anticipate these services to generate gross margins in the 30% to 50% range.

以前，我們會在專案消除風險、客戶尋求硬體採購、整合服務和軟體供應商後介入。現在，我們將從一開始就與開發商合作，提供服務來支援潛在專案組合。這項變更使我們能夠更早確認收入，並減少我們對單一專案成功的依賴。我們預計這些服務將產生 30% 至 50% 的毛利率。

Our service-based relationships provide opportunities to upsell Stem software and Edge devices. We have found that most service providers don't have access to in-house software products and capabilities like we offer, so we expect strong cross-selling pull-through. We generally earn 30% to 40% gross margins on our Edge hardware and 70% to 80% gross margins on our software.

我們基於服務的關係提供了追加銷售 Stem 軟體和 Edge 設備的機會。我們發現大多數服務提供者無法獲得我們提供的內部軟體產品和功能，因此我們預計會有強大的交叉銷售拉動。我們的邊緣硬體毛利率通常為 30% 至 40%，軟體毛利率為 70% 至 80%。

Slide 7 outlines the three key reasons we expect to win business with our service offerings. First is market experience. We can bring dozens of clean energy subject matter experts to our clients, along with over 35 million runtime hours on Athena. This leads to smarter initial designs and more efficiently managed systems.

投影片 7 概述了我們期望透過我們的服務贏得業務的三個關鍵原因。首先是市場經驗。我們可以為客戶帶來數十位清潔能源主題專家，以及超過 3500 萬小時的 Athena 運行時間。這將帶來更聰明的初始設計和更有效率的管理系統。

Second is technical expertise. We have vetted and worked with every major solar and storage OEM, we are hardware agnostic, and we continuously evaluate vendors and technologies, new and old. This helps our customers maximize flexibility while minimizing costs and risks.

其次是技術專長。我們已經審查了每個主要的太陽能和儲存原始設備製造商並與他們合作，我們與硬體無關，我們不斷評估新舊供應商和技術。這有助於我們的客戶最大限度地提高靈活性，同時最大限度地降低成本和風險。

Third, software capabilities. In addition to offering our broader Stem software to customers, our team leverages specialized internal software tools to generate data-driven insights for our customers. Even though our service offerings are relatively new, we are not entering this business for the first time. Slide 8 outlines some great examples of how we have provided a multitude of services for a variety of our customers across different deployment types.

第三，軟體能力。除了向客戶提供更廣泛的 Stem 軟體之外，我們的團隊還利用專門的內部軟體工具為客戶產生數據驅動的見解。儘管我們的服務相對較新，但我們並不是第一次進入這個行業。投影片 8 概述了一些很好的範例，說明我們如何為不同部署類型的各種客戶提供多種服務。

Despite our stronger push into services, the core of our strategy revolves around software. Slide 9 shows our three key software products, all powered by our industry-leading Athena platform. PowerBidder Pro uses our deep AI expertise to provide high-accuracy market forecasts and bid optimization for our customers, while still giving them control over their power trading strategies. PowerTrack APM extends and enhances on our industry-leading PowerTrack platform for solar and adds storage functionality. and PowerCore EMS provides technical energy management between the edge and the cloud.

儘管我們加強了服務業務的力度，但我們策略的核心仍圍繞著軟體。幻燈片 9 展示了我們的三款關鍵軟體產品，全部由我們行業領先的 Athena 平台提供支援。PowerBidder Pro 利用我們深厚的人工智慧專業知識為我們的客戶提供高精度的市場預測和出價優化，同時仍讓他們能夠控制自己的電力交易策略。PowerTrack APM 擴展並增強了我們領先業界的太陽能 PowerTrack 平台，並增加了儲存功能。 PowerCore EMS提供邊緣和雲端之間的技術能源管理。

Many of you were able to get a demo of the PowerTrack APM software at the RE+ conference in September. We had fantastic feedback from customers on the product and continue to push forward on what we think will be an industry-leading technical and financial monitoring tool. This software will allow users to dive deep into the device-level data and elevate analytics all the way up to the portfolio level.

許多人在 9 月的 RE+ 會議上獲得了 PowerTrack APM 軟體的演示。我們從客戶那裡獲得了對該產品的極好的反饋，並繼續推進我們認為將成為行業領先的技術和財務監控工具。該軟體將允許用戶深入研究設備級數據並將分析一直提升到產品組合層級。

My last point on our new strategy relates to our future approach to energy storage hardware, which is shown on slide 10. As you are aware, we have had mixed results over the years from our resale of third-party battery hardware. Going forward, we intend to lead with procurement services to advise our customers on hardware selection, rather than directly purchasing battery hardware on their behalf.

我關於我們新策略的最後一點涉及我們未來的儲能硬體方法，如投影片 10 所示。如您所知，多年來我們轉售第三方電池硬體的結果好壞參半。展望未來，我們打算以採購服務為主導，為客戶提供硬體選擇的建議，而不是直接代表他們購買電池硬體。

For some customers who want a full-service solution, we will continue to resell battery hardware, but only when the opportunity satisfies strict terms, including profitability metrics and cash flow thresholds. That said, we will honor our commitments to our existing customers with the projects in our backlog.

對於一些想要全方位服務解決方案的客戶，我們將繼續轉售電池硬件，但前提是機會滿足嚴格的條款，包括盈利指標和現金流閾值。也就是說，我們將透過積壓的專案來履行對現有客戶的承諾。

Now moving to our third-quarter results and updates, which are outlined on slide 12. Revenues were $29 million, a sharp decline year over year, driven by lower hardware resale revenue. On the flip side, we reported a strong GAAP gross margin of 21% and a record non-GAAP gross margin of 46%, which reflects a much larger contribution from high-margin software and services revenue.

現在轉向我們的第三季業績和更新，幻燈片 12 中對此進行了概述。由於硬體轉售收入下降，收入為 2900 萬美元，年比大幅下降。另一方面，我們公佈了 21% 的強勁 GAAP 毛利率和 46% 的創紀錄非 GAAP 毛利率，這反映出高利潤軟體和服務收入的貢獻更大。

As you recall, we issued certain hardware contract guarantees in 2022 and early 2023. This quarter, we reduced the value of receivables associated with those guarantees to zero on the balance sheet. We impaired the remaining receivables by a little over $100 million and also adjusted revenue by $5.6 million. We do not expect further material negative impact on our financial statements as a result of these guarantees.

您還記得，我們​​在 2022 年和 2023 年初發布了某些硬體合約擔保。本季度，我們將資產負債表上與這些擔保相關的應收帳款價值降至零。我們對剩餘應收帳款減損略多於 1 億美元，並調整了營收 560 萬美元。我們預計這些擔保不會對我們的財務報表產生進一步的重大負面影響。

On the operating side, we successfully brought our first asset with Mercuria online this summer, and we continue to see strong commercial momentum with the PowerBidder Pro product. In the third quarter, we increased ARR by over $3 million, split roughly evenly between solar and storage assets. We delivered a record amount of edge devices from our facility in Longmont, Colorado, and we reported strong growth in software revenues, 10% quarter-over-quarter and 19% year-over-year.

在營運方面，我們今年夏天成功地將我們的第一個資產與 Mercuria 上線，並且我們繼續看到 PowerBidder Pro 產品的強勁商業勢頭。第三季度，我們的 ARR 增加了超過 300 萬美元，太陽能和儲存資產大致平均分配。我們在科羅拉多州朗蒙特的工廠交付了創紀錄數量的邊緣設備，軟體收入強勁增長，環比增長 10%，同比增長 19%。

The bar charts on slide 13 show that even though total revenue fell on a year-over-year basis, solar revenue growth remained strong, up 19%. Growth in solar revenue and a higher mix of services revenue led to strong growth in gross margins. We reported record services revenue of $22 million this quarter, up 33% year-over-year, which included a little over $5 million of DevCo revenue. Adjusted EBITDA and operating cash flow declined slightly on a year-over-year basis due to lower gross profit dollars from battery hardware resales.

第 13 張投影片上的長條圖顯示，儘管總收入年減，但太陽能收入成長依然強勁，成長了 19%。太陽能收入的成長和服務收入組合的提高導致毛利率強勁成長。我們報告本季服務收入達到創紀錄的 2,200 萬美元，年增 33%，其中包括略高於 500 萬美元的 DevCo 收入。由於電池硬體​​轉售的毛利下降，調整後的 EBITDA 和營運現金流較去年同期略有下降。

The operating metrics on slide 14 show that backlog fell slightly since the second quarter as we recorded relatively low bookings of $29 million. On the other hand, CARR grew by $2 million during the quarter. On the assets under management front, we had a slight uptick in storage AUM by about 200 megawatt-hours and growth of about 1.6 gigawatts for solar during the quarter. Growth in both cases was driven by new contract additions and continued low churn.

第 14 張投影片上的營運指標顯示，自第二季以來，積壓訂單略有下降，因為我們的預訂量相對較低，為 2,900 萬美元。另一方面，CARR 在本季成長了 200 萬美元。在管理資產方面，本季我們的儲存 AUM 略有上升約 200 兆瓦時，太陽能成長約 1.6 吉瓦。這兩種情況的成長都是由新合約的增加和持續的低流失率所推動的。

Now on to slide 15, which outlines our revised 2024 guidance. Starting at the top with revenue, we're lowering our full-year revenue guidance to a range of $135 million to $155 million. This largely reflects the pushout of storage hardware resale revenue. Our software and services revenue streams are still roughly on track for the year. That lower revenue forecast translates into lower gross profit dollars for the year, but a higher gross margin percentage. The lower gross profit dollars are driving the reduction in our adjusted EBITDA forecast, as well as lower operating cash flow.

現在轉到投影片 15，其中概述了我們修訂後的 2024 年指南。從收入開始，我們將全年收入指引下調至 1.35 億美元至 1.55 億美元之間。這在很大程度上反映了儲存硬體轉售收入的擠出。今年我們的軟體和服務收入流仍大致步入正軌。較低的收入預測意味著今年的毛利較低，但毛利率較高。毛利的下降導致我們調整後的 EBITDA 預測下降，同時營運現金流也下降。

We have lowered our bookings forecast to $100 million to $500 million. We have left a wide range here because we are working on some large deals that could transact in the fourth quarter. The lower booking should also drive a lower level of expected CARR at the end of the year.

我們已將預訂預測下調至 1 億至 5 億美元。我們在這裡留下了很大的範圍，因為我們正在處理一些可能在第四季度完成的大型交易。較低的預訂量也應該會導致年底的預期 CARR 水準較低。

Finally, before I hand it back to David for closing remarks, I want to talk about the implications of our new strategy for the future financial profile of Stem, highlighted on slide 16. First, over the long term, we anticipate a lower overall revenue base, but much more predictable revenue growth. Additionally, we expect our gross margins to be significantly higher. The total contract value of our bookings will likely be lower due to two main factors.

最後，在我將其交還給 David 進行結束語之前，我想談談我們的新策略對 Stem 未來財務狀況的影響，投影片 16 中強調了這一點。首先，從長遠來看，我們預期整體收入基礎較低，但收入成長更可預測。此外，我們預計我們的毛利率將顯著提高。由於兩個主要因素，我們的預訂合約總價值可能會較低。

First, a reduction in battery storage hardware resales within our bookings. And second, a gradual shift toward shorter-duration software and service contracts on the storage side, ranging from 3 to 5 years compared to the historical 15- to 20-year contracts.

首先，我們的預訂中電池儲存硬體轉售的減少。其次，儲存方面逐漸轉向期限較短的軟體和服務合同，與歷史上的 15 至 20 年合約相比，期限為 3 至 5 年。

We will still have some variability in our revenue in 2025 and 2026 based on the timing of delivering battery hardware out of our backlog. Again, we are upholding our existing customer commitments, but over the long term, we expect a lower contribution from hardware resale revenue.

根據我們積壓的電池硬體的交付時間，我們在 2025 年和 2026 年的收入仍將存在一些變化。我們再次重申，我們將恪守現有的客戶承諾，但從長遠來看，我們預期硬體轉售收入的貢獻將會降低。

Second, we have moved quickly to reduce our operating expenses to reflect our new strategy. We expect to reduce our run rate cash OpEx by around 15% between now and the end of the year. Most of the reductions will come from headcount tied to some of our old business lines, alongside reductions in other discretionary spending. In short, we are laser-focused on driving the company to profitability.

其次，我們迅速採取行動減少營運費用，以反映我們的新策略。我們預計從現在到今年年底，我們的運行率現金營運支出將減少約 15%。大部分削減將來自與我們一些舊業務線相關的員工人數，以及其他可自由支配支出的減少。簡而言之，我們專注於推動公司獲利。

Third, we are evaluating the financial and operating metrics the company will use to measure and manage performance going forward. Expect to see some corresponding changes in our reported metrics for 2025, including guidance metrics that align with software and services-centric businesses. We will be looking to provide investors and analysts with useful information, enabling them to better evaluate the company. As usual, we will provide 2025 guidance during our fourth-quarter call.

第三，我們正在評估公司將用來衡量和管理未來績效的財務和營運指標。預計我們報告的 2025 年指標會發生一些相應的變化，包括與以軟體和服務為中心的業務一致的指導指標。我們將尋求為投資者和分析師提供有用的信息，使他們能夠更好地評估公司。與往常一樣，我們將在第四季度電話會議期間提供 2025 年指導。

With that, let me turn the call back over to David.

接下來，讓我把電話轉回大衛。

Thank you, Doran. Before covering our key takeaways, I'd like to comment on the status of our CEO search. While I am passionate about the future of Stem, I have no plans to be the permanent CEO. Since September, the board and an executive search firm have been engaged in the search for our next CEO, looking at both internal and external candidates. Today, the search remains ongoing, but we hope to identify the new permanent CEO by the end of this year or sometime shortly after that. I intend to remain chairman of the board once the new CEO is in place.

謝謝你，多蘭。在介紹我們的要點之前，我想先評論一下我們執行長搜尋的現狀。雖然我對 Stem 的未來充滿熱情，但我並不打算成為永久執行長。自 9 月以來，董事會和一家獵人頭公司一直在尋找我們的下一任首席執行官，尋找內部和外部候選人。如今，尋找工作仍在繼續，但我們希望在今年年底或不久後的某個時候確定新的常任執行長。一旦新任執行長就任，我打算繼續擔任董事會主席。

Now let's turn to page 17 for our key takeaways. Our strategy review is complete. We have moved into the implementation phase, and while we might make slight adjustments along the way, we are moving decisively to focus on software and services growth. This will drive more predictable revenue, higher gross margins, and improved profitability.

現在讓我們翻到第 17 頁來了解我們的要點。我們的戰略審查已經完成。我們已經進入實施階段，雖然我們可能會在過程中進行一些細微的調整，但我們正在果斷地專注於軟體和服務的成長。這將帶來更可預測的收入、更高的毛利率和更高的獲利能力。

We will continue to invest in our industry-leading software and technology platform, which will drive differentiation and commercial success. And we will lead our storage efforts with services, de-emphasizing hardware resale. This will bring forward when we collect revenue from our project-based work and improve our working capital profile, as well as continue to grow a channel for software sales.

我們將繼續投資業界領先的軟體和技術平台，這將推動差異化和商業成功。我們將以服務主導我們的儲存工作，不再強調硬體轉售。當我們從基於專案的工作中獲得收入並改善我們的營運資金狀況以及繼續發展軟體銷售管道時，這將提前。

In closing, I want to thank the Stem employees for their continued strong execution to support our customers, despite significant changes in the business and leadership over the last several months. The strength of our offerings ultimately depends on the strength of our people, and we believe that we have some of the best in the business.

最後，我要感謝 Stem 員工，儘管過去幾個月業務和領導層發生了重大變化，但他們仍然以強大的執行力支持我們的客戶。我們產品的實力最終取決於員工的力量，我們相信我們擁有業內最優秀的人才。

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

那麼，接線員，請讓我們開通提問線路。

(Operator Instructions) James West, Evercore ISI.

（操作員說明）James West，Evercore ISI。

Thanks, and good afternoon, David and Doran. I think the first question for me is really around, you've had a lot of changes here in the last couple of months. Management, strategy, all of the strategy to me seems like kind of the evolution of where the company was already headed into much more of a fast and services business model. Anyway, but I'd love to hear just kind of as you as both of you being. So both of you are new in your seats and I know David you intended to stay in that seat, but I'd love to hear kind of the feedback you're getting from customers, what the -- what you're hearing, obviously, employees that have had been good, what you're hearing from customers around kind of this shift and some of the management changes that that have happened.

謝謝，大衛和多蘭，下午好。我認為對我來說第一個問題確實是圍繞著，在過去的幾個月裡你們發生了很多變化。管理、策略，對我來說，所有策略似乎都是公司已經轉向快速和服務業務模式的演變。無論如何，但我很想聽聽你們倆的情況。所以你們兩個都是新來的，我知道大衛，你打算留在那個座位上，但我很想聽聽你從客戶那裡得到的回饋，顯然，你所聽到的是什麼，表現良好的員工，您從客戶那裡聽到的有關這種轉變的信息以及已經發生的一些管理變化。

Thanks, James. This is David. We think the customer response has generally been very positive, as they're increasingly sophisticated in the way they buy their storage hardware. And it's viewed increasingly as a commodity that's available from multiple sources. So I don't think it'll affect our storage hardware customers.

謝謝，詹姆斯。這是大衛。我們認為客戶的反應總體上非常積極，因為他們購買儲存硬體的方式越來越複雜。它越來越被視為一種可以從多種來源獲得的商品。所以我認為這不會影響我們的儲存硬體客戶。

And to repeat what we've said elsewhere, we'll continue to support those customers if they want us to procure the hardware for them. This won't be a requirement of the relationship going forward. And our 16,000 or so plus solar customers have been very receptive of the new strategy as it reassures them that our primary focus on software improvements will continue and we'll be able to enhance our products and give them some of the enhancements they've been asking for us to optimize their assets.

重複我們在其他地方說過的話，如果這些客戶希望我們為他們購買硬件，我們將繼續支持他們。這不會是未來關係的要求。我們的 16,000 多名太陽能客戶非常接受新策略，因為它讓他們放心，我們將繼續將重點放在軟體改進上，我們將能夠增強我們的產品，並為他們提供一些他們一直以來的增強功能要求我們優化他們的資產。

And I guess maybe to add on to that, David, what are the enhancements that they're asking for in the software product? What are the critical things that they'd like to see more R&D, more focus on going forward?

我想也許要補充一點，大衛，他們要求軟體產品有哪些增強功能？他們希望看到更多的研發、更多關注未來發展的關鍵是什麼？

I'm going to pass this off to Mike Carlson, but this has been a big focus of ours to make sure we prioritize and schedule a product roadmap that fits the market needs.

我將把這個轉告給麥克卡爾森，但這一直是我們的一個重點，以確保我們優先考慮並安排適合市場需求的產品路線圖。

James, this is Mike. Probably, we've obviously got a host of interest from the customers and what they want to see, but they probably bundle into three distinct areas. That is one more capability around just the user information flow and the ease of access to information.

詹姆斯，這是麥克。也許，我們顯然已經從客戶那裡得到了很多興趣以及他們想看到的東西，但他們可能會被捆綁到三個不同的領域。這是圍繞著使用者資訊流和資訊存取的便利性的另一項功能。

Number two is around the predictive and we're looking at leveraging advanced AI for that predictive information flow into the asset, particularly in its operating characteristics. And then third is the automated warnings and resolution process and getting more integrated work process into the platform that automates more of the focus of what they intend to use the software to provide.

第二點是預測性，我們正在考慮利用先進的人工智慧來預測資訊流入資產，特別是其營運特徵。第三是自動化警告和解決流程，並將更整合的工作流程整合到平台中，從而自動化更專注於他們打算使用軟體提供的功能。

Those are probably the three categories of information that they're looking for. Then when you get into the storage optimization, obviously, there's a financial modeling that goes along with that as well.

這些可能是他們正在尋找的三類資訊。然後，當您進入儲存最佳化時，顯然，還有一個與之相伴的財務模型。

Right. Okay. That's very helpful, Mike. Thanks for that. Thanks, guys, for the questions. Thanks.

正確的。好的。這非常有幫助，麥克。謝謝你。謝謝各位的提問。謝謝。

Thomas Boyes, TD Cowen.

托馬斯·博伊斯，TD·考恩。

Maybe just first, you know, as you move deeper into, you know, the procurement advisory services space, is the intention to continue to leverage the modular ESS solution that you had, or is that something that's not as germane given the new path?

也許首先，當您更深入地進入採購諮詢服務領域時，您是否打算繼續利用您擁有的模組化 ESS 解決方案，或者考慮到新的路徑，這是否不是那麼密切相關？

Yeah, this is Mike again. Yeah, absolutely. The modular component, and we've talked a little bit about in the deck, you'll see a reference to the PowerCore EMS, which is part of that solution. That's a big component of whatever that hardware platform is and the connectivity into the cloud services. So that modular edge device will continue to be a major part of that overall architecture and strategy.

是的，這又是麥克。是的，絕對是。模組化元件，我們在本文中已經討論過一些，您將看到對 PowerCore EMS 的引用，它是該解決方案的一部分。無論硬體平台是什麼，這都是雲端服務連接的重要組成部分。因此，模組化邊緣設備將繼續成為整體架構和策略的主要部分。

Yeah, and Thomas, just to clarify, this is Doran. I would say, it is important to distinguish between the edge device hardware and the kind of battery hardware, OEM battery resale. when considering what we're talking about here with the strategy. The edge devices are a critical component of our strategy going forward. We have dominant market share here in solar, and as Mike described, that modular offering is really, really important. It's really the large-ticket OEM hardware resales that we're going to be focused on kind of working through the backlog, and providing the procurement advisory services on.

是的，湯瑪斯，我想澄清一下，這是多蘭。我想說，區分邊緣設備硬體和電池硬體、OEM 電池轉售的類型非常重要。當考慮我們在這裡談論的策略時。邊緣設備是我們未來策略的關鍵組成部分。我們在太陽能領域擁有主導市場份額，正如麥克所描述的，模組化產品非常非常重要。我們將重點關注的是大宗 OEM 硬體轉售，以解決積壓訂單並提供採購諮詢服務。

Understood. So that the -- when I was referring to the module, the S SI was talking about the decoupling with the inverter and the DC block. So that sounds like that's the emphasis on that and more on the edge device.

明白了。因此，當我提到該模組時，S SI 正在談論與逆變器和直流模組的解耦。所以聽起來這就是重點，而且更多的是邊緣設備。

Exactly that, that's a continued component of the strategy that gives that optionality that we talked about prior.

正是如此，這是該策略的一個持續組成部分，它提供了我們之前討論過的選擇性。

And then just for my follow-up on bookings, is it safe to say then for any additional bookings heading into the end of the year that they will be under kind of this, again, the new strategy and they would be software in nature and hardware would not be a significant component of that?

然後，就我對預訂的後續行動而言，可以肯定地說，對於進入年底的任何額外預訂，它們將再次採用新策略，它們本質上將是軟體，硬體不會是其中的重要組成部分嗎？

So between now and the end of the year, I think it's fair to say it's going to be both. As we talked about, there's the potential for us to opportunistically and as a customer requires it to do this hardware resale, if it's satisfying all the criteria. I've laid it out pretty heavily internally about profitability, cash flow metrics, coming accompanied with the software. So I expect that to be a continued theme, even on some of the things that are -- you know, as we, you look at that range in the bookings forecast, obviously there's some things in there we've been working on for a while. And so we don't want to really just kind of suddenly back away from that and we're --

因此，從現在到今年年底，我認為可以公平地說兩者都會發生。正如我們所討論的，如果滿足所有標準，我們就有可能機會主義地作為客戶要求進行硬體轉售。我在內部對軟體附帶的獲利能力、現金流量指標進行了相當多的闡述。因此，我希望這將成為一個持續的主題，即使是在一些事情上——你知道，正如我們所見，你在預訂預測中查看這個範圍，顯然我們一直在努力解決一些問題。所以我們不想真的只是突然退後一步，我們--

One of the reasons I'm here, Stem was focused on the customer. We want to keep focusing on the customer. You know, we want to be able to deliver what they're expecting. But I do expect us to satisfy those criteria. And you will see a combination of some hardware and software between now and the end of the year. And really, frankly, that's why the range is so wide.

我來到這裡的原因之一是 Stem 專注於客戶。我們希望繼續專注於客戶。您知道，我們希望能夠滿足他們的期望。但我確實希望我們能夠滿足這些標準。從現在到今年年底，您將看到一些硬體和軟體的組合。坦白說，這就是範圍如此廣泛的原因。

Understood. Now, I appreciate the clarity there. And if I could just squeeze one more in, just for my own edification, the switch from like 15- to 20-year contracts to three to five, is that because of the de-emphasis of hardware that won't be attached to it? And it's just that the nature of that market is on shorter duration contracts? Like, what is the mechanism there?

明白了。現在，我很欣賞那裡的清晰度。如果我可以再擠一份，只是為了我自己的啟發，從 15 年到 20 年的合約轉變為 3 到 5 年，是因為不再強調不會附加到它的硬體？只是該市場的本質是短期合約？比如，那裡的機制是什麼？

Yeah, this is Mike again. And the primary drive of that is the change, the focus of software. And software SaaS agreements, probably industry standard is closer to that three to five year. That's what our solar business model has been. It's really responsiveness to the customer. That long 20-year commitment is directly tied to the OEM hardware warranties that -- they want that extended confidence of asset performance. And that's why we're decoupling those. And you'll see that change in contract duration as a result.

是的，這又是麥克。其主要驅動力是變化，即軟體的焦點。而軟體SaaS協議，可能業界標準更接近那三到五年。這就是我們的太陽能商業模式。這確實是對客戶的回應。這項長達 20 年的承諾與 OEM 硬體保固直接相關——他們希望對資產性能有更大的信心。這就是我們將它們解耦的原因。您將看到合約期限的變化。

Perfect, really appreciate it.

完美，真的很欣賞。

(Operator Instructions) Justin Clare, Roth Capital Partners.

（操作員說明）Justin Clare，Roth Capital Partners。

I wanted to just follow up on the prior question here on the shorter duration contracts, 3 to 5 years versus 15 to 20. I was wondering if the annual revenue expectations for these contracts are changing at all, or if it's just the length of the contract. And I think you have to consider the offering that you're providing here as well, and the fact that you're engaging with the customer earlier. So maybe you can just to speak to the potential change in the revenue opportunity.

我想繼續討論之前的問題，即期限較短的合同，即 3 至 5 年與 15 至 20 年。我想知道這些合約的年收入預期是否發生了變化，或者只是合約的長度發生了變化。我認為你還必須考慮你在這裡提供的產品，以及你更早與客戶接觸的事實。因此，也許您可以只談談收入機會的潛在變化。

So, Justin, I think one thing I've been looking at closely here is the way that we price our software, and we're going to consider that very closely. However, I would say, based on the business that we've got in front of us, probably not a lot of change in the annual revenue numbers, not anything really material. It's really all about just running into shorter contracts because it's the customers looking for, again, trying to offer them flexibility there.

所以，賈斯汀，我認為我一直在密切關注的一件事是我們為軟體定價的方式，我們將非常仔細地考慮這一點。然而，我想說，根據我們面前的業務，年收入數字可能沒有太大變化，也沒有任何真正重要的變化。這實際上只是簽訂較短的合同，因為客戶再次尋求為他們提供靈活性。

Okay, got it. And then when we consider, like, the services opportunity, the fact that you're engaging earlier, is there a larger revenue opportunity there that could be more of a one-time opportunity as opposed to an ongoing contract?

好的，明白了。然後，當我們考慮服務機會時，您更早參與的事實，是否存在更大的收入機會，可能更多是一次性機會，而不是持續的合約？

Absolutely. It's going to be a mix. There are a number of engagements, called site assessments, forecasting assignments. You name it, we have a variety of different types of services that we kind of outlined, and many of those are engagements that might be one-time, two-month, three-month, six-month assignments where our subject matter experts are helping customers work through particular items that they need to sort of check off to help de-risk their projects. And the customer base there are folks who just aren't equipped internally to handle that type of work, so they really look to us as the experts. But yeah, there will be a mix of that as well as some of the longer-term service contracts that we'll be offering.

絕對地。這將是一個混合。有許多約定，稱為現場評估、預測任務。您能想到的，我們概述了各種不同類型的服務，其中許多服務可能是一次性、兩個月、三個月、六個月的任務，由我們的主題專家負責幫助客戶完成他們需要檢查的特定項目，以幫助降低項目風險。客戶群中有些人內部不具備處理此類工作的能力，因此他們確實將我們視為專家。但是，是的，我們將提供混合的服務以及一些長期服務合約。

Okay, got it. That's helpful. And then just one more, wanted to ask if you could update us on the outlook for storage software activations. Any chance you could give us an idea for where ARR could be when you exit 2024 or the timeframe in which you can convert all of the CARR to ARR. That'd be helpful.

好的，明白了。這很有幫助。還有一件事，想詢問您是否可以向我們介紹儲存軟體啟動前景的最新情況。如果有機會您可以告訴我們，當您退出 2024 年時，ARR 可能會在哪裡，或者您可以將所有 CARR 轉換為 ARR 的時間範圍。那會有幫助的。

Yeah, Justin, appreciate the question. It's not something we've talked about in the past. I think this cadence between timeframe from CARR to ARR is something that we're taking a close look at and we'll probably talk more about when we report the full year and set our metrics for 2025. It's not something we're in a position to disclose today.

是的，賈斯汀，感謝這個問題。這不是我們過去談論過的事情。我認為從 CARR 到 ARR 的時間範圍之間的節奏是我們正在密切關注的事情，當我們報告全年並設定 2025 年的指標時，我們可能會更多地討論。這不是我們今天可以透露的事情。

Okay, got it. Appreciate it. Thanks.

好的，明白了。欣賞它。謝謝。

And ladies and gentlemen, with that we're going to conclude today's question-and-answer session as well as today's conference call. We thank you for joining. You may now disconnect your lines.

女士們、先生們，我們今天的問答環節和電話會議都到此結束。我們感謝您的加入。現在您可以斷開線路。