Shares of Stem Inc. dropped 16.0% following earnings as cautious outlook on hardware margin pressure and limited revenue growth weighed on investor sentiment despite sustained operational efficiency.

• First quarter non-GAAP gross margin remained strong at 52%, driven by a hardware-light revenue mix (no battery resales).
• Management anticipates gross margin compression toward mid-point of 40%-50% as battery hardware sales resume later in the year.
• Adjusted EBITDA was $2 million, marking the fourth consecutive positive quarter and first positive EBITDA in Q1 historically.
• Operating cash flow was negative $8 million due to seasonal working capital timing and scheduled interest payments.
• PowerTrack ARR grew 2%, and 1.5 GW of solar assets were added, but growth momentum appears modest given the size of the installed base.