Stem, Inc. has entered into a partnership with a leading clean‑energy asset owner to operate and optimize a portfolio of four battery energy‑storage systems that serve a Southern California water utility. The deal will deploy Stem’s PowerTrack software suite to provide real‑time asset monitoring, issue detection, warranty and field‑service management, and participation in California’s demand‑response programs.
The four‑site portfolio includes one hybrid solar‑and‑storage system and three standalone battery installations. Stem’s PowerTrack platform will enable the utility to reduce operating costs, improve asset uptime, and capture additional revenue from demand‑response incentives. The partnership underscores Stem’s growing footprint in the utility‑scale market and its ability to scale its managed‑services offering across diverse asset types and geographic regions.
Stem’s recent financial results illustrate the strategic importance of this partnership. In Q3 2025, the company reported revenue of $38.2 million, up 31% year‑over‑year, and GAAP gross profit of $13.5 million, a 35% margin that reflects the higher mix of software and services. In contrast, Q4 2024 revenue fell 67% to $55.8 million, driven by a sharp decline in hardware resale revenue, while the company’s non‑GAAP gross margin improved to 36% from 13% in Q4 2023, highlighting the shift toward higher‑margin recurring revenue. The partnership aligns with Stem’s strategy to reduce reliance on low‑margin hardware and accelerate growth in its PowerTrack software and managed‑services business.
Management emphasized that the partnership is a key milestone in the company’s transition to a software‑centric model. CEO Arun Narayanan said the deal “demonstrates the value of our PowerTrack platform in delivering operational resilience and revenue growth for utilities, while reinforcing our commitment to expanding our managed‑services portfolio.” The partnership also supports Stem’s guidance for full‑year 2025 revenue of $135 million–$160 million, a range that reflects confidence in continued demand for battery‑storage optimization solutions in California’s renewable‑energy‑heavy market.
The partnership is expected to generate incremental revenue and margin expansion for Stem. By leveraging PowerTrack’s advanced analytics and automation, the utility can reduce maintenance costs and extend asset life, while the software’s demand‑response capabilities create new revenue streams. This aligns with Stem’s broader objective of achieving higher operating margins through software and services, as evidenced by the 35% gross margin in Q3 2025 and the company’s focus on recurring base revenue growth of 14% year‑over‑year in managed services.
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