STEM INC

To the shareholders and the Board of Directors of Stem, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Stem, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 4, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Revenue – Partnership Arrangements — Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

Partnership arrangements consist of promises to transfer inventory in the form of an energy storage system to a “solar plus storage” project developer and to separately provide energy optimization services to the ultimate owner of the project after the developer completes the installation of the project. Under partnership arrangements, the Company’s customer is the solar plus storage project developer. The Company determined the promise to deliver the inventory as a component of the solar plus storage project for which the customer is responsible to develop is a separate and distinct performance obligation from the promise to provide energy optimization services. The Company determines the transaction price at the outset of the arrangement, primarily based on the contractual payment terms dictated by the contract with the customer. Fees charged to customers for energy optimization services consist of recurring fixed monthly payments throughout the term of the contract. Fees charged for the sale of inventory generally consist of fixed fees payable upon or shortly after successful delivery to the customer. The Company allocates revenue between the hardware and energy storage services performance obligations based on the standalone selling price of each performance obligation. The standalone selling price for the hardware is established based on observable pricing. The standalone selling price for the energy optimization services is established using a residual value approach due to the significant variability in the services provided to each individual customer based on the specific requirements of each individual project and the lack of observable standalone sales of such services.

The Company transfers control of the inventory upon delivery and simultaneous transfer of title to the customer. The Company transfers control of its energy optimization services to its customers continuously throughout the term of the contract (a stand-ready obligation), which does not commence until the customer successfully completes the installation of the project. As a result, the time frame between when the Company transfers control of the inventory to the customer upon delivery is generally several months, and can be in excess of one year, before the Company is required to perform any subsequent energy optimization services. Revenue is recognized ratably as control of these services is transferred to its customers based on a time-based output measure of progress of days elapsed over the term of the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for its services.

We identified the Company’s accounting for the partnership arrangements as a critical audit matter because of (1) management’s judgement in identification of distinct performance obligations within partnership arrangement agreements and (2) management’s judgment and estimation in allocation of revenue between the hardware and energy storage services performance obligations based on the standalone selling price of each performance obligation. This required a high degree of auditor judgment and an increased extent of effort in auditing the judgments and estimates made in in determining the identification of the distinct performance obligations and the estimation of the stand along selling price.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to revenue from partnership agreements included the following, among others:

•We tested the effectiveness of the controls relevant to the revenue process.

•For partnership arrangements, we selected a sample of contracts with customers and performed the following procedures:

–Obtained and read the contracts and contract amendments, if any, and tested management’s identification of significant terms and conditions.

–Tested management’s identification of distinct performance obligations by evaluating whether the underlying goods, services, or both were highly interdependent and interrelated.

–Evaluated management’s allocation of revenue between the hardware and energy storage services performance obligations.

–Evaluated the timing of revenue recognition for each performance obligation through obtaining signed proof of delivery documents and other supporting documents.

–Tested the mathematical accuracy of management’s calculation of revenue recognized in the financial statements.

•We evaluated the sufficiency of the disclosures related to revenue from partnership arrangements in the financial statements.

Goodwill — Refer to Notes 2 and 7 to the financial statements

Critical Audit Matter Description

Goodwill is tested for impairment annually, or more often if an event or circumstance indicates that the carrying amount may not be recoverable. In connection with the preparation of the unaudited condensed consolidated financial statements for the three months ended June 30, 2024, the Company considered the decline in the Company’s stock price, market capitalization, and recent financial performance to be a triggering event for its single reporting unit and therefore completed a test for impairment of goodwill for the reporting unit as of June 30, 2024. The Company tested goodwill for impairment using a Step 1 quantitative test and compared the reporting unit’s fair value to its carrying value. An impairment is recorded for any excess carrying value above the reporting unit’s fair value, not to exceed the amount of goodwill. The Company estimates fair value of its reporting unit using a discounted cash flow model, commonly referred to as the income approach. The income approach uses a reporting unit’s projection of estimated operating results and cash flows that is discounted using a weighted-average cost of capital that reflects current market conditions appropriate to the Company’s reporting unit. The discounted cash flow model uses management’s best estimates of economic and market conditions over the projected period using the best information available, including growth rates in revenues, terminal value growth rates, and weighted average cost of capital. As a result of the impairment test, during the year ended December 31, 2024, the Company recorded a non-cash impairment charge of $547.2 million.

We identified the Company’s test of goodwill impairment as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to the valuation methodology, and selection of weighted-average cost of capital, growth rates in revenue and terminal value growth rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the impairment of goodwill included the following, among others:

•We tested the effectiveness of controls over (1) management’s identification of events or changes in circumstances that indicated that the carrying amount may not be recoverable and (2) management’s review of the valuation methodology and selection of weighted-average cost of capital and growth rates in revenue and terminal value.

•With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology of the discounted cash flow model, weighted-average cost of capital, and terminal value growth rates. We tested the underlying source information and the mathematical accuracy of the calculations and developed a range of independent estimates and compared those to the weighted-average cost of capital and terminal value growth rates selected by management.

•We performed a sensitivity analysis over management’s discounted cash flow model.

•We performed a retrospective analysis by comparing actual results to management’s historical forecasts to evaluate management’s ability to forecast growth rates in revenue.

/s/DELOITTE & TOUCHE LLP

San Francisco, California

March 4, 2025

We have served as the Company’s auditor since 2018.