Stem has finished the hard part of walking away from battery resale and is now trying to prove that the leftover software-and-controls franchise can carry a still-heavy capital structure. The June quarter is the fifth consecutive period of positive adjusted EBITDA, the cash-earnings proxy that strips stock compensation and one-offs, even as reported sales contracted. Common equity is a thin residual claim. The cash balance only held because the company sold stock into the market.
PowerTrack software, the subscription layer that monitors and dispatches solar, storage, and hybrid plants, grew 11%. That product now carries most of recurring revenue. Battery resale almost vanished, which is why the company-defined gross margin that adds back software amortization printed at 55%. That mix is flattering. Management still guides to a second-half hardware rebound that would pull reported margins back toward the middle of the full-year band, and contracted annual recurring revenue barely moved versus a year ago. International hybrid wins in Chile and Hungary are the commercial proof points. They have not yet shown up as a step-change in the recurring base.
Operating cash flow flipped barely positive after a large year-ago outflow. Full-year cash-from-operations guidance still tops out at $10 million. Interest on the post-exchange notes is running ahead of that run-rate, which is why the paid-in-kind toggle, the option to add interest to principal rather than write a check, remains the real liquidity valve. Can PowerTrack and the new energy-management deployments grow the recurring base fast enough that the equity is more than an option on a refinancing?