STEM’s Revenue Miss Was Not The Only Thing Worrying Retail Traders

• Core revenue from software, services, and edge hardware was up 4% YoY. 
• The company also posted a fourth consecutive quarter of positive adjusted EBITDA. 
• On Stocktwits, retail sentiment around STEM stock dipped from ‘bullish’ to ‘neutral’ territory over the past 24 hours.

Shares of Stem Inc. (STEM) plunged more than 20% in Thursday’s premarket trading after the company posted a double-digit decline in its first-quarter (Q1) revenue.

Stem reported a quarterly revenue of $29 million, a 11% dip year-over-year, primarily due to the absence of battery hardware resales. However, core revenue from software, services, and edge hardware was up 4% YoY.

The company also posted a fourth consecutive quarter of positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). For the quarter, Stem’s adjusted EBITDA came in at $2 million versus a negative $4.6 million in the comparable period of last year.

What’s Retail Saying?

On Stocktwits, retail sentiment around STEM stock dipped from ‘bullish’ to ‘neutral’ territory over the past 24 hours as message volumes rose to ‘high’ levels.

One user remarked about the company’s growing debt, adding that they would be “surprised if they are still in business the end of next year.”

Another user also said that while the earnings results were fine, debt was a problem.

A third user, however, highlighted that the topline miss was only because of a decline in battery sales, and that software sales were growing. “Patience is required,” the user said.

Stem's Financials

The company said that it ended the quarter with $36.6 million in cash and cash equivalents. However, its bookings for the quarter declined to $26.5 million, down from $32.7 million in the previous quarter.

Storage operating assets under management were also sequentially flat at 1.7 gigawatt hours, and contracted annual recurring revenue was also flat sequentially at $67.2 million.

The company’s senior secured notes increased by about $5.5 million to $134.27 million as of the end of the quarter.

STEM stock has declined more than 35% this year.

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