Stem : Fourth Quarter 2023 Presentation

February 28, 2024

Q4 & FY 2023 Financial Results and 2024 Guidance

Cautionary Statement Regarding Forward-Looking Statements

This presentation, as well as other statements we make, contains "forward-looking statements" within the meaning of the federal securities laws, which include any statements that are not historical facts. Such statements often contain words such as "expect," "may," "can," "believe," "predict," "plan," "potential," "projected," "projections," "forecast," "estimate," "intend," "anticipate," "ambition," "goal," "target," "think," "should," "could," "would," "will," "hope," "see," "likely," and other similar words. Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and performance targets and other forecasts or expectations regarding, or dependent on, our business outlook; our ability to secure sufficient and timely inventory from suppliers; our ability to meet contracted customer demand; our ability to manage manufacturing or delivery delays; our ability to manage our supply chains and distribution channels; our joint ventures, partnerships and other alliances; forecasts or expectations regarding energy transition and global climate change; reduction of greenhouse gas ("GHG") emissions; the integration and optimization of energy resources; our business strategies and those of our customers; our ability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the effects of natural disasters and other events beyond our control; the ongoing conflict in Ukraine; the expected benefits of the Inflation Reduction Act of 2022 on our business; and future results of operations, including adjusted EBITDA. Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including but not limited to our inability to secure sufficient and timely inventory from our suppliers, as well as contracted quantities of equipment; our inability to meet contracted customer demand; supply chain interruptions and manufacturing or delivery delays; disruptions in sales, production, service or other business activities; general macroeconomic and business conditions in key regions of the world, including inflationary pressures, general economic slowdown or a recession, rising interest rates, changes in monetary policy, instability in financial institutions, and the prospect of a shutdown of the U.S. federal government; the direct and indirect effects of widespread health emergencies on our workforce, operations, financial results and cash flows; geopolitical instability, such as the ongoing conflict in Ukraine; the results of operations and financial condition of our customers and suppliers; pricing pressures; severe weather and seasonal factors; our inability to continue to grow and manage our growth effectively; our inability to attract and retain qualified employees and key personnel; our inability to comply with, and the effect on our business of, evolving legal standards and regulations, including those concerning data protection, consumer privacy, sustainability and evolving labor standards; risks relating to the development and performance of our energy storage systems and software-enabled services; our inability to retain or upgrade current customers, further penetrate existing markets or expand into new markets; the risk that our business, financial condition and results of operations may be adversely affected by other political, economic, business and competitive factors; and other risks and uncertainties discussed in this presentation and in our most recent Forms 10-K,10-Q and 8-K filed with or furnished to the SEC. If one or more of these or other risks or uncertainties materialize (or the consequences of any such development changes), or should our underlying assumptions prove incorrect, actual results or outcomes, or the timing of those results or outcomes, may vary materially from those reflected in our forward-looking statements. Forward-looking and other statements in this presentation regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking environmental, social, and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. Statements in this presentation are made as of the date of this presentation, and Stem disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise, except as required by law.

Non-GAAP measures

In addition to financial measures in accordance with U.S. GAAP, this presentation includes references to non-GAAP financial measures, including adjusted EBITDA, non-GAAP gross profit and non-GAAP gross margin. We believe these non-GAAP measures provide useful supplemental information regarding certain financial and business trends relating to our financial condition and results of operations. We also believe that these non-GAAP financial measures provide an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial performance with other similar companies, many of which present similar non-GAAP financial measures to investors. These non-GAAP financial measures are in addition to, and should not be considered superior to, or a substitute for, financial results prepared in accordance with GAAP. Non- GAAP financial measures should not be considered in isolation and are subject to significant inherent limitations. The non-GAAP measures presented herein may not be comparable to similar non-GAAP measures presented by other companies. Reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures are included in the Appendix to this presentation.

Industry and Market Data

In this presentation, Stem relies on and refers to certain information and statistics obtained from third-party sources which it believes to be reliable, including reports by market research firms. Stem has not independently verified the accuracy or completeness of any such third-party information. This presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners.

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Agenda

• Q4 & FY 2023 Highlights
• 2024 Guiding Principles
• Business Update
• Financial Results & 2024 Guidance

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Fourth Quarter 2023 Results & Highlights

Key EBITDA positive milestone achieved, strong software momentum to begin 2024

Continued Q4 Momentum*

Q4 Highlights

Revenue

$167M

+25% QoQ / +8% YoY

GAAP/Non-GAAP Gross Margin

7% / 13%

Adjusted EBITDA

$4.6M

+$6M QoQ / +$14M YoY

Contracted Annual Recurring Revenue

$91M

+4% QoQ / +39% YoY

Bookings

$256M

(62%) QoQ / (44%) YoY

Operating Cash

Flow

($2.1)M

+$2M QoQ / +$35M YoY

Positive Adj. EBITDA in 2H23 Added $1M+ ARR every quarter

Strong customer satisfaction with top Net Promoter Scores and high retention rates

~800 MWh of software-only contracts

signed since YE23 including Athena® PowerBidder Pro contract with Mercuria

the

ERCOT benchmarking: Stem outperforms competitors by +28% average

Expect to generate >$50M of operating cash flow in 2024, with no equity issuance

* See Appendix for definitions. Revenue and gross profit for the year ended December 31, 2023 were negatively impacted by a $35.1 million reduction in	© 2024 Stem, Inc.	4
revenue and by excess supplier costs and resulting liquidated damages totaling approximately $7.5 million.

2024 Guiding Principles

Grow free cash flow by leveraging our software leadership

Focus on Cash Flow Generation

• Generate free cash flow to fund operations
• Reduce working capital intensity
• Do not issue equity

Build software services revenue

• Expand gross margin by converting Contracted Annual Recurring Revenue (CARR) to Annual Recurring Revenue (ARR)
• Dedicated team and retooled leadership focused on professional services and software-only opportunities

Extend technology leadership position

• Accelerate cadence of software product launches into markets where Stem has differentiated advantage (eg. Co-Op's, Public Power, CCAs)
• Leverage generative AI and India Center of Excellence to enhance software development productivity

Execution on Commitments

• Achieved positive adjusted EBITDA in 2H23
• FY23 gross margin, bookings, and CARR within guidance range
• On track to achieve non-GAAP cash OpEx target of 10-20% of revenue in 2024

See Appendix for definitions and reconciliation of non-GAAP financial measures to most directly comparable GAAP measures.

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Continued Commercial Traction

Software-only momentum and low churn from differentiated technology solutions

Strong Software Commercial Traction

Signed ~800 MWh of software-only storage contracts since YE2023:

Customer	Product	ISO
Mercuria	Athena PowerBidder Pro	ERCOT
CCAs	Athena PowerBidder Pro	CAISO
Developer	Managed Services	ERCOT

Multiple Proof Points of Customer Satisfaction

Strong retention rates for Stem customers(1)

• Solar = 99.2%, Storage = 98.5%
• High renewal rates / low churn

"Great" Net Promoter Scores since inception(2)

• Solar = 68, Storage = 62
• Represent above average likelihood of customers willing to recommend Stem for clean energy management

"Great" Net Promoter Scores Highlight

Strong Customer Satisfaction

100

80								Excellent
60								Great
40
20								Good
0
1H22	2H22	1H23	2H23
(20)
(40)								Needs
(60)								Improvement

(80)

(100)

Solar Storage

(1) As of 12/31/2023

(2) Since commencement of customer surveys in 2022© 2024 Stem, Inc. 6 CCA = Community Choice Aggregator

Strong Demand for Athena® PowerBidder Pro

Software-only solution for wholesale market forecasting and bid optimization

	Mercuria Selects PowerBidder Pro
	● Marquee customer in energy trading
+	● First contracted PowerBidder Pro asset in
ERCOT
	● Opportunity for future growth as customer
	portfolio expands

PowerBidder Pro Selected by CCAs

• Portfolio of software-only awards with community choice aggregators
• First contracted PowerBidder Pro solution for CAISO
• Continued public power / muni / co-op momentum

Mercuria Global Energy Solutions

• Leading independent energy and commodity group
• 20 GW renewable energy pipeline
• Operations in 50+ countries with 1,100+ professionals

High-margin recurring revenue on operational assets

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Athena Delivers Best-in-Class Performance in ERCOT

Stem outperforms competitors by +28% on average in ERCOT

Key Athena Takeaways

• Optimization captured 75% of the theoretical maximum revenue, versus competitors at 61%
• Probabilistic price forecasts enabled a +53% uplift in revenue compared to a naïve persistence-based approach
• Stem program management could enhance automated results

Stem Outperforms Competitors by 28% on Average

AVG:	+42%	+30%	+90%	+5%	(4)%	+7%
28%
	175
$/kWh	125
	75
	25
	(25)	Callisto*	Solanis*	Gabrion*	Aphrodyne*	Argoth*	Xeolite*

*Competitor assets anonymized

Stem

Competitor

Source:https://www.stem.com/benchmarking-ercot-whitepaper/	© 2024 Stem, Inc.	8
ERCOT = Electric Reliability Council of Texas

Continued Macro Tailwinds

Strong underlying demand for renewables

Robust Demand Environment

• Energy storage and solar remains in demand catalyzed by sustainability initiatives, IRA, decreasing equipment prices and improving project economics
• Solar back to double-digit growth trend: four consecutive quarters of revenue, AUM and ARR growth for Solar business

Deflationary Hardware Prices and Domestic Supply Ramping

• Decline in energy storage hardware costs expected to continue downward trajectory driven by destocking and oversupply(1)
• 38 battery gigafactories are either operational (8), under construction (13), or planned (17) in the US(1)

Increasing State Mandates for Energy Storage

• Maryland, New Mexico, and Michigan enact new energy storage mandates
• Continued strong demand in California and Texas

(1) Source: Wood Mackenzie Global Lithium-Ion Battery Supply and Demand Update January 2024.

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Financial and Operating Results

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