STEM INC

Previous wording

This Quarterly Report on Form 10-Q, 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.

Current wording

This Quarterly Report on Form 10-Q (the “Report”), 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.

Previous wording

Our total revenue decreased from $67.4 million for the three months ended March 31, 2023 to $25.5 million for the three months ended March 31, 2024. For the three months ended March 31, 2024 and 2023, we incurred net losses of $72.3 million and $44.8 million, respectively. As of March 31, 2024, we had an accumulated deficit of $844.8 million.

Current wording

Our total revenue decreased from $92.9 million for the three months ended June 30, 2023 to $34.0 million for the three months ended June 30, 2024. We incurred net losses of $582.3 million for the three months ended June 30, 2024 and generated net income of $19.1 million for the three months ended June 30, 2023. Our total revenue decreased from $160.4 million for the six months ended June 30, 2023 to $59.5 million for the six months ended June 30, 2024. For the six months ended June 30, 2024 and 2023, we incurred net losses of $654.6 million and $25.7 million, respectively. As of June 30, 2024, we had an accumulated deficit of $1,427.1 million.

Previous wording

We depend on a small number of significant customers for our sales, and a small number of customers have historically accounted for a material portion of our revenue. While we are committed to diversifying our customer base, we may continue to derive a significant portion of our revenue from a small number of customers. Loss of a significant customer, the inability to close a significant contract at any time, or a significant reduction in pricing or order volume from a significant customer, could materially reduce our revenue in a given quarter and have a material adverse effect on our operating results.

Current wording

We depend on a small number of significant customers for our sales, and a small number of customers have historically accounted for a material portion of our revenue. While we are committed to diversifying our customer base, we may continue to derive a significant portion of our revenue from a small number of customers. Loss of a significant customer, the inability to close (or a delay in closing) a significant contract at any time, or a significant reduction in pricing or order volume from a significant customer, have (in the case of contractual delays, resulted in material reductions in revenue and other adverse effects in certain quarters, and may do so in the future.

Previous wording

We, through an indirect wholly-owned development subsidiary, have entered into strategic joint ventures with qualified third parties to develop select energy storage generation projects (“DevCo Projects”), as more fully described above under Note 1 —Business, of the Notes to the unaudited condensed consolidated financial statements in this report. These projects require significant upfront investment by us and involve a high degree of risk. These projects require significant upfront investment by us and involve a high degree of risk. If a DevCo Project fails to reach completion or is significantly delayed, we could lose all or a portion of our development capital investment. See“We Face Risks Related to our DevCo Business Model” in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for additional information about certain risks related to these DevCo Projects.

Current wording

We, through an indirect wholly-owned development subsidiary, have entered into strategic joint ventures with qualified third parties to develop select energy storage generation projects (“DevCo Projects”), as more fully described above under Note 1 —Business, of the Notes to the unaudited condensed consolidated financial statements in this report. These projects sometimes require significant upfront investment by us and can involve a high degree of risk. If a DevCo Project fails to reach completion or is significantly delayed, we could lose all or a portion of our development capital investment. See“We Face Risks Related to our DevCo Business Model” in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for additional information about certain risks related to these DevCo Projects.

Previous wording

Prior to July 2023, we agreed in certain customer contracts, to provide a guarantee that the value of purchased hardware will not decline for a certain period of time, as more fully described above under Note 3 —Revenue, of the Notes to the unaudited condensed consolidated financial statements in this report. We account for such contractual terms and guarantees as variable consideration at each measurement date. We update our estimates of variable consideration each quarter, including changes in estimates related to such guarantees, for facts or circumstances that have changed from the time of the initial estimate. As a result, the Company recorded a net revenue reduction of $33.1 million in hardware revenue during the three months ended March 31, 2024. The overall reduction in revenue was related to deliveries that occurred prior to the current fiscal year.

Current wording

Prior to July 2023, we agreed in certain customer contracts, to provide a guarantee that the value of purchased hardware will not decline for a certain period of time, as more fully described above under Note 3 —Revenue, of the Notes to the unaudited condensed consolidated financial statements in this Report. We account for such contractual terms and guarantees as variable consideration at each measurement date. We update our estimates of variable consideration each quarter, including changes in estimates related to such guarantees, for facts or circumstances that have changed from the time of the initial estimate. As a result, the Company recorded a net revenue reduction of $33.1 million in hardware revenue during the six months ended June 30, 2024. The overall reduction in revenue was related to deliveries that occurred prior to the current fiscal year.

Previous wording

We do not intend to provide such parent company guarantees in customer contracts going forward. Depending on various market conditions in the future that we cannot currently predict, we may experience future revenue reductions as a result of outstanding guarantees, one or more of which may be material.

Current wording

Depending on various market conditions in the future that we cannot currently predict, we may experience future revenue reductions as a result of outstanding guarantees, one or more of which may be material.

Previous wording

Our revenue growth is directly tied to the continued adoption of energy storage systems by our customers. The cost of lithium-ion energy storage hardware has generally declined over the last decade, but increased demand and global supply chain constraints could cause price increases in the future. The market for energy storage is rapidly evolving, and while we believe costs will continue to decline over time, there is no guarantee. If costs do not continue to decline, or do not decline as quickly as we anticipate, this could adversely affect our ability to increase our revenue and grow our business. The United States Inflation Reduction Act of 2022 (the “IRA”) was signed into law in August 2022 and includes incentives and tax credits aimed at reducing the effects of climate change, such as a tax credit for stand-alone battery storage projects. The implementation of the IRA is expected to further reduce the cost of battery storage systems for certain customers; however, there are numerous restrictions and requirements associated with qualifying for the tax credits and other incentives available under the IRA, and we continue to assess how the IRA may affect our business.

Current wording

Our revenue growth is directly tied to the continued adoption of energy storage systems by our customers. The cost of lithium-ion energy storage hardware has generally declined over the last decade, but increased demand and global supply chain constraints could cause price increases in the future. The market for energy storage is rapidly evolving, and while we believe costs will continue to decline over time, there is no guarantee. If costs do not continue to decline, or do not decline as quickly as we anticipate, this could adversely affect our ability to increase our revenue and grow our business. The United States Inflation Reduction Act of 2022 (the “IRA”) was signed into law in August 2022 and includes incentives and tax credits aimed at reducing the effects of climate change, such as a tax credit for stand-alone battery storage projects. The implementation of the IRA is expected to further reduce the cost of battery storage systems for certain customers; however, there are numerous restrictions and requirements associated with qualifying for the tax credits and other incentives available under the IRA, and we continue to assess Treasury Department and other guidance on how the IRA impacts our business.

Previous wording

Deployment of intermittent resources has accelerated over the last decade, and today, wind and solar have become a low cost energy source. We expect the cost of generating renewable energy to continue to decline and deployments of energy storage systems to increase. As renewable energy sources of energy production are expected to represent a larger proportion of energy generation, grid instability rises due to their intermittency, which can be addressed by energy storage solutions. The IRA is expected to further increase the deployment of renewable energy assets. We are continuing to evaluate the IRA and its requirements, as well as the application to our business and our customers.

Current wording

Deployment of intermittent resources has accelerated over the last decade, and today, wind and solar have become a low cost energy source. We expect the cost of generating renewable energy to continue to decline and deployments of energy storage systems to increase. As renewable energy sources of energy production are expected to represent a larger proportion of energy generation, grid instability rises due to their intermittency, which can be addressed by energy storage solutions. The IRA is expected to further increase the deployment of renewable energy assets. We are continuing to evaluate the IRA and its requirements, including Treasury Department guidance, and its application to our business and our customers.

Previous wording

The following table provides a reconciliation of gross profit and margin (GAAP) to non-GAAP gross profit and margin (in millions, except for percentages):

Current wording

The following table provides a reconciliation of gross profit (loss) and margin (GAAP) to non-GAAP gross profit and margin (in millions, except for percentages):

Previous wording

We calculate adjusted EBITDA as net loss attributable to us before depreciation and amortization, including amortization of internally developed software, net interest expense, further adjusted to exclude stock-based compensation and other income and expense items, including revenue constraint, reduction in revenue, excess supplier costs, restructuring costs and income tax provision or benefit.

Current wording

We calculate adjusted EBITDA as net (loss) income attributable to us before depreciation and amortization, including amortization of internally developed software, net interest expense, further adjusted to exclude stock-based compensation and other income and expense items, including the gain on extinguishment of debt, net, revenue constraint, reduction in revenue, excess supplier costs, change in fair value of derivative liability, impairment of goodwill, restructuring costs and income tax provision or benefit.

Previous wording

The following table provides a reconciliation of adjusted EBITDA to net loss (in thousands):

Current wording

The following table provides a reconciliation of adjusted EBITDA to net (loss) income (in thousands):

Previous wording

(1) Depreciation and amortization includes depreciation and amortization expense, impairment loss of energy storage systems, and impairment loss of project assets.

Current wording

(1) Depreciation and amortization includes depreciation and amortization expense, impairment loss of energy storage systems, impairment loss of project assets, and impairment loss of right-of-use assets.

Previous wording

(5) Adjusted EBITDA for the three months ended March 31, 2024 reflects the exclusion of other expenses of $1.5 million. For the three months ended March 31, 2024, other expenses are comprised of $0.4 million of other non-recurring expenses, and $1.1 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities. Restructuring expenses consisted of employee severance and other exit costs.

Current wording

(5) Adjusted EBITDA for the six months ended June 30, 2024 reflects the exclusion of other expenses of $1.7 million. For the six months ended June 30, 2024, other expenses are comprised of $0.6 million of other non-recurring expenses, and $1.1 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities. Restructuring expenses consisted of employee severance and other exit costs.

Previous wording

Our gross (loss) profit fluctuates significantly from quarter to quarter. Gross (loss) profit, calculated as revenue less costs of revenue, has been, and will continue to be, affected by various factors, including fluctuations in the amount and mix of revenue and the amount and timing of investments to expand our customer base. Over the long term, we hope to increase both our gross profit in absolute dollars and gross margin as a percentage of revenue through enhanced operational efficiency and economies of scale.

Current wording

Our gross profit (loss) fluctuates significantly from quarter to quarter. Gross profit (loss), calculated as revenue less costs of revenue, has been, and will continue to be, affected by various factors, including fluctuations in the amount and mix of revenue and the amount and timing of investments to expand our customer base. Over the long term, we hope to increase both our gross profit in absolute dollars and gross margin as a percentage of revenue through enhanced operational efficiency and economies of scale.

Previous wording

Other income (expense), net consists primarily of income from equity investments and foreign exchange gains or losses.

Current wording

Other income, net consists primarily of income from equity investments and foreign exchange gains or losses.

Previous wording

Sales and marketing expense decreased by$1.3 million, or 10%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The decrease was due to a decrease of$1.3 million in professional services and office-related expenses.

Current wording

Sales and marketing expense decreased by $2.7 million, or 20%, for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The decrease was primarily due to a decrease of $1.1 million in personnel related expenses mainly from a decrease in sales commissions and a decrease of $1.6 million in professional services and office-related expenses.

Previous wording

Research and development expense increased by$0.7 million, or 5%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase was due to an increase of$0.7 million in personnel related expenses.

Current wording

Research and development expense increased by $1.1 million, or 8%, for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase was primarily due to an increase of $0.7 million in professional services and other expenses and an increase of $0.4 million in personnel related expenses as a result of higher headcount.

Previous wording

Other income (expense), net increased by$1.0 million, or 229%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023 primarily due to theprior year’srealized loss of$1.5 million on short-term investments, partially offset bya $0.2 million decrease in accrued interest income from short-term investments, a $0.2 million decrease due to the reversal of previously recognized accretion expense on assets, and a$0.1 million decrease in income from equity investments.

Current wording

Other income, net decreased by $1.0 million, or 57% for the three months ended June 30, 2024, as compared to three months ended June 30, 2023 primarily due to a decrease of $0.5 million in accrued interest income from investments and a decrease of $0.5 million in gains on sales of assets.

Previous wording

Revenue decreased by $41.9 million, or 62%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The decrease was driven by a $42.1 million decrease in hardware revenue primarily due to variable consideration adjustments of $33.1 million related to parent company guarantees as discussed in Note 3 — Revenue, and $9.0 million as a result of fewer hardware deliveries. Services and other revenue increased by $0.2 million primarily due to an increase in solar subscription services revenue from existing and new customers.

Current wording

Revenue decreased by $100.9 million, or 63%, for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The decrease was driven by a $99.8 million decrease in hardware revenue primarily due to variable consideration adjustments of $33.1 million related to parent company guarantees as discussed in Note 3 — Revenue, and a $66.7 million decrease primarily the result of a decrease in demand for hardware systems and extensions of certain project-related timelines. Services and other revenue decreased by $1.1 million primarily due to a decrease in solar subscription services revenue from existing and new customers.

Previous wording

Cost of revenue decreased by$16.8 million, or 25%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The decrease was primarily driven by a decrease in cost of hardware revenue of $15.2 million due to a reduction in cost of materials as a result of improved lithium prices. Cost of services and other revenue also decreased by $1.5 million primarily due to providing services at reduced costs.

Current wording

Cost of revenue decreased by$73.2 million, or 50%, for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The decrease was primarily driven by a decrease in cost of hardware revenue of $70.9 million due to a reduction in cost of materials as a result of improved lithium prices and a change in the mix of hardware and service offerings. Cost of services and other revenue also decreased by $2.3 million primarily due to providing services at reduced costs.

Previous wording

Interest expense, net increased by$2.9 million, or 165%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase was primarily driven by an increase of$2.4 million in interest on our convertible notes, and the accretion of the discount on short-term investments of$0.7 million, partially offset by a decrease of$0.2 million in interest on financing obligations.

Current wording

Interest expense, net increased by$3.7 million, or 64%, for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The increase was primarily driven by an increase of$2.5 million in interest on our convertible notes, and the accretion of the discount on short-term investments of$1.5 million, partially offset by a decrease of$0.3 million in interest on financing obligations.

Previous wording

During thethree months ended March 31, 2024, we recorded a provision for income taxes of $0.2 million primarily as a result of state income tax expense. During the three months ended March 31, 2023, we recorded a$0.1 million benefit from income taxes as a result of the partial release of our deferred tax asset valuation due to an acquisition.

Current wording

During thesix months ended June 30, 2024, we recorded a provision for income taxes of $0.2 million primarily as a result of state income tax expense. During the six months ended June 30, 2023, we recorded a$0.4 million provision for income taxes primarily as a result of foreign and state income tax expense from the gain on extinguishment of 2028 Convertible Notes during the second quarter of 2023, which was offset by a partial release of our deferred tax asset valuation due to an acquisition during the first quarter of 2023.

Previous wording

As of March 31, 2024, our principal sources of liquidity were cash and cash equivalents of $112.8 million, which were held for working capital purposes and for investment growth opportunities. As of March 31, 2024, we had net accounts receivable of $239.9 million and our working capital, which we define as current assets less current liabilities, was $168.9 million. We believe that our cash position is sufficient to meet our capital and liquidity requirements for at least the next 12 months.

Current wording

As of June 30, 2024, our principal sources of liquidity were cash and cash equivalents of $89.6 million, which were held for working capital purposes and for investment growth opportunities. As of June 30, 2024, we had net accounts receivable of $206.4 million and our working capital, which we define as current assets less current liabilities, was $143.3 million. We believe that our cash position is sufficient to meet our capital and liquidity requirements for at least the next 12 months.

Previous wording

We have entered into arrangements wherein we finance the cost of energy storage systems via special purpose entities (“SPEs”) we establish with outside investors. These SPEs are not consolidated into our financial statements, but are accounted for as equity method investments. The investors provide us upfront payments through the SPEs. Under these arrangements, the payment by the SPEs to us is accounted for as a borrowing by recording the proceeds received as a financing obligation. The financing obligation is repaid with the future customer payments and incentives received. A portion of the amounts paid to the SPE is allocated to interest expense using the effective interest rate method. Furthermore, we continue to account for the revenues from customer arrangements and incentives and all associated costs despite such systems being legally sold to the SPEs due to our significant continuing involvement in the operations of the energy storage systems. The total financing obligation as of March 31, 2024 was $64.6 million, of which $15.4 million was classified as a current liability.

Current wording

We have entered into arrangements wherein we finance the cost of energy storage systems via special purpose entities (“SPEs”) we establish with outside investors. These SPEs are not consolidated into our financial statements, but are accounted for as equity method investments. The investors provide us upfront payments through the SPEs. Under these arrangements, the payment by the SPEs to us is accounted for as a borrowing by recording the proceeds received as a financing obligation. The financing obligation is repaid with the future customer payments and incentives received. A portion of the amounts paid to the SPE is allocated to interest expense using the effective interest rate method. Furthermore, we continue to account for the revenues from customer arrangements and incentives and all associated costs despite such systems being legally sold to the SPEs due to our significant continuing involvement in the operations of the energy storage systems. The total financing obligation as of June 30, 2024 was $62.5 million, of which $15.1 million was classified as a current liability.

Previous wording

During the three months ended March 31, 2024, net cash used in operating activities was $0.6 million, primarily due to our net loss of $72.3 million, adjusted for non-cash items of $19.7 million and net cash inflow of $52.0 million from changes in operating assets and liabilities. Non-cash items primarily consisted of depreciation and amortization of $10.8 million, non-cash interest expense of $0.4 million related to debt issuance costs, stock-based compensation expense of $8.4 million, non-cash lease expense of $0.8 million, and other non-cash items of $0.3 million, partially offset by provision for accounts receivable allowance of $1.0 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $63.9 million partially from a $33.1 million variable consideration adjustment, a decrease in inventory of $2.2 million, a decrease in deferred costs with suppliers of $0.4 million, an increase in accrued expenses and other liabilities of $1.7 million, and an increase in deferred revenue of $2.7 million, partially offset by an increase in other assets of $1.2 million, an increase in contract origination costs of $0.4 million, an increase in project assets of $0.4 million, a decrease in accounts payable of $16.3 million, and a decrease in lease liabilities of $0.8 million.

Current wording

During the six months ended June 30, 2024, net cash used in operating activities was $12.5 million, primarily due to our net loss of $654.6 million, adjusted for non-cash items of $586.7 million and net cash inflow of $55.4 million from changes in operating assets and liabilities. Non-cash items primarily consisted of depreciation and amortization of $22.2 million, non-cash interest expense of $1.0 million related to debt issuance costs, stock-based compensation expense of $15.2 million, non-cash lease expense of $1.5 million, impairment of energy storage systems of $0.1 million, impairment of right-of-use assets of $2.1 million, impairment of goodwill of $547.2 million and other non-cash items of $0.4 million, partially offset by a change in fair value of derivative liability of $1.5 million, and a provision for accounts receivable allowance of $1.5 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $97.8 million partially from a $33.1 million variable consideration adjustment, a decrease in deferred costs with suppliers of $0.4 million, a decrease in other assets of $0.7 million, and an increase in deferred revenue of $4.3 million, partially offset by an increase in inventory of $6.5 million, an increase in contract origination costs of $0.7 million, an increase in project assets of

Previous wording

During the three months ended March 31, 2023, net cash used in operating activities was $35.8 million, primarily due to our net loss of $44.8 million, adjusted by non-cash charges of $21.2 million and net cash outflow of $12.3 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of depreciation and amortization of $11.1 million, non-cash interest expense of $0.4 million, related to debt issuance costs, stock-based compensation expense of $7.2 million, impairment of energy storage systems of $0.9 million, non-cash lease expense of $0.7 million, provision for accounts receivable allowance of $0.5 million, and net recognized loss on investments of $1.6 million, partially offset by net accretion of the discount on investments of $0.7 million and an income tax benefit of $0.3 million. The net cash outflow from changes in operating assets and liabilities was primarily driven by an increase in accounts receivable of $10.1 million, an increase in inventory of $34.9 million, an increase in contract origination costs of $0.8 million, an increase in project assets of $1.4 million, a decrease in accrued expenses and other liabilities of $31.7 million, and a decrease in lease liabilities of $0.6 million, offset by a decrease in deferred costs with suppliers of $28.2 million, a decrease in other assets of $0.3 million, for future hardware orders, an increase in accounts payable of $28.8 million due to timing of payments, and an increase in deferred revenue of $9.9 million.

Current wording

During the six months ended June 30, 2023, net cash used in operating activities was $201.2 million, primarily due to our net loss of $25.7 million, adjusted by non-cash charges of $10.8 million and net cash outflow of $164.8 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of a gain on extinguishment of debt, net of $59.1 million, net accretion of the discount on investments of $1.3 million, an income tax benefit of $0.3 million, and other non-cash items of $0.4 million, partially offset by depreciation and amortization of $22.4 million, non-cash interest expense of $1.6 million, related to debt issuance costs, stock-based compensation expense of $17.1 million, change in fair value of derivative liability of $2.6 million, impairment of energy storage systems of $2.1 million, non-cash lease expense of $1.4 million, provision for accounts receivable allowance of $1.7 million, and net recognized loss on investments of $1.6 million. The net cash outflow from changes in operating assets and liabilities was primarily driven by an increase in accounts receivable of $72.2 million, an increase in inventory of $137.1 million, an increase in other assets of $17.8 million, an increase in contract origination costs of $2.3 million, an increase in project assets of $2.8 million, a decrease in accrued expenses and other liabilities of $35.1 million, and a decrease in lease liabilities of $1.3 million, partially offset by a decrease in deferred costs with suppliers of $28.8 million, for future hardware orders, an increase in accounts payable of $19.0 million due to the timing of payments, and an increase in deferred revenue of $56.0 million.

Previous wording

During the three months ended March 31, 2024, net cash provided by investing activities was $4.7 million, and primarily consisted of $8.3 million in proceeds from maturities of available-for-sale investments, partially offset by $0.1 million in purchases of energy storage systems, $3.5 million in capital expenditures on internally-developed software, and $0.1 million in purchases of property and equipment.

Current wording

During the six months ended June 30, 2024, net cash provided by investing activities was $1.5 million, and primarily consisted of $8.3 million in proceeds from maturities of available-for-sale investments, partially offset by $6.6 million in capital expenditures on internally-developed software, and $0.2 million in purchases of property and equipment.

Previous wording

During the three months ended March 31, 2023, net cash provided by investing activities was $67.8 million, and primarily consisted of $1.8 million used for an acquisition, net of cash acquired, $75.0 million in net sales of available-for-sale investments, $1.6 million in purchases of energy systems, $3.6 million in capital expenditures on internally-developed software, and $0.2 million in purchases of property and equipment.

Current wording

During the six months ended June 30, 2023, net cash provided by investing activities was $88.5 million, and primarily consisted of $100.6 million in net sales of available-for-sale investments, partially offset by $1.8 million used for an acquisition, net of cash acquired, $2.6 million in purchases of energy systems, $7.4 million in capital expenditures on internally-developed software, and $0.3 million in purchases of property and equipment.

Previous wording

During the three months ended March 31, 2024, net cash provided by financing activities was $3.1 million, and consisted of proceeds from equity transactions to be remitted to tax authorities of $5.2 million offset by the repayment of financing obligations of $2.1 million.

Current wording

During the six months ended June 30, 2024, net cash used in financing activities was $4.2 million, and consisted of the repayment of financing obligations of $4.2 million.

Previous wording

During the three months ended March 31, 2023, net cash used in financing activities was $2.2 million, and primarily consisted of repayment of financing obligations of $2.1 million, and a redemption of non-controlling interests of $0.1 million and a repayment of notes payable of $0.1 million, partially offset by proceeds from the exercise of stock options of $0.1 million.

Current wording

During the six months ended June 30, 2023, net cash provided by financing activities was $100.3 million, and primarily consisted of net proceeds from the issuance of convertible notes of $132.6 million and proceeds from the exercise of stock options of $0.2 million, partially offset by the purchase of capped calls of $27.8 million, the repayment of financing obligations of $2.6 million, a repayment of notes payable of $2.1 million, and a redemption of non-controlling interests of $0.1 million.

Previous wording

As of March 31, 2024, there have been no material changes to our contractual obligations describedin our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

As of June 30, 2024, except for the operating lease liability discussed in Note 12— Commitments and Contingencies, there have been no material changes to our contractual obligations describedin our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Previous wording

A summary of our critical accounting policies and estimates is presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and there have been no material changes to our critical accounting estimates during thethree months ended March 31, 2024.

Current wording

A summary of our critical accounting policies and estimates is presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and there have been no material changes to our critical accounting estimates during thethree and six months ended June 30, 2024.