STEM, INC.

Previous wording

Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and operating performance guidance, outlook, targets and other forecasts or expectations regarding, or dependent on, our business outlook and strategy; our expectations around our new software and services-centric strategy; 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 direct or indirect effects on our business of macroeconomic factors and geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the expected benefits of the Inflation Reduction Act of 2022 on our business; and our future results of operations, including revenue, adjusted EBITDA, and the other metrics presented herein.

Current wording

Forward-looking statements address matters that are, to varying degrees, uncertain, such as statements about our financial and operating performance guidance, outlook, targets and other forecasts or expectations regarding, or dependent on, our business outlook and strategy; 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 expected impacts of the One Big Beautiful Bill Act (“OBBB”) on our business and that of our customers; the direct or indirect effects on our business of macroeconomic factors and geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; and our future results of operations, including revenue, adjusted EBITDA, and the other metrics presented herein.

Previous wording

Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements, including but not limited to our inability to execute on, and achieve the expected benefits from, our operational and strategic initiatives, including from our cost reduction and restructuring efforts; our inability to successfully execute on our new software and services-centric strategy; uncertainty around the status of the Inflation Reduction Act of 2022 as a result of the change in U.S. Administration; 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, manufacturing or delivery delays and increased supply chain costs, including as a result of trade policies; 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, high interest rates, changes in monetary policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, and instability in financial institutions; the direct and indirect effects of widespread health emergencies on our workforce, operations, financial results and cash flows; geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; 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; our inability to regain and maintain compliance with New York Stock Exchange listing 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 Part II. Item 1A. “Risk Factors” in this Report, in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in our other filings with 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 assumption…

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Current wording

Such forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results or outcomes to differ materially from those expressed or implied by such forward-looking statements, including but not limited to our inability to execute on, and achieve the expected benefits from, our operational and strategic initiatives, including from our cost reduction, workforce reduction and restructuring efforts; our inability to successfully execute on our new software and services-centric strategy; the effects of the OBBB on our business and that of our customers; 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, high interest rates, changes in monetary policy, changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, and instability in financial institutions; the direct and indirect effects of widespread health emergencies on our workforce, operations, financial results and cash flows; geopolitical instability, such as the armed conflicts between Russia and Ukraine and in the Gaza Strip and nearby areas; the results of operations and financial condition of our customers; 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; our inability to maintain compliance with New York Stock Exchange listing standards; risks relating to the development and performance of our 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 Part II. Item 1A. “Risk Factors” in this Report, in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and in our other filings with 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, our actual results or outcomes, or the timing of these results or outcomes, may vary materially from those reflected in our forward-looking statements. Forward-looking statements and other statements in this Report regarding our environmental, social, and other sustainability plans and goals are not an indication that these statements are necessarily material to the Comp…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In storage, we serve project developers, asset owners, EPCs, and distributors by selling them software-enabled forecasting and optimization managed services that minimize spending on utility bills, or maximize revenue from energy market participation. In some cases, we also resell battery OEM hardware to our customers for a fee.

Current wording

In storage, we serve project developers, asset owners, EPCs, and distributors by selling them software-enabled forecasting and optimization managed services that minimize spending on utility bills, or maximize revenue from energy market participation. In some cases, we also resell battery original equipment manufactured (“OEM”) hardware to our customers for a fee.

Previous wording

Our total revenue increased from $25.5 million for the three months ended March 31, 2024 to $32.5 million for the three months ended March 31, 2025. For the three months ended March 31, 2025 and 2024, we incurred net losses of $25.0 million and $72.3 million, respectively. As of March 31, 2025, we had an accumulated deficit of $1,651.5 million.

Current wording

Our total revenue increased from $59.5 million for the six months ended June 30, 2024 to $70.9 million for the six months ended June 30, 2025. For the six months ended June 30, 2025 and 2024, werecognized net income of $177.5 million and incurred a net loss of $654.6 million, respectively. As of June 30, 2025, we had an accumulated deficit of $1,449.0 million.

Previous wording

On April 9, 2025, we announced a reduction of our global workforce of approximately 27%, as part of the Company’s broader efforts to prioritize investments in software, reduce operating costs, increase efficiency, drive profitable growth and increase stockholder value, as more fully described above under Note 13 — Subsequent Events, of the accompanying Notes to the unaudited condensed consolidated financial statements in this Report. We expect to continue to exercise discipline and moderate expenses associated with sales and marketing, research and development, regulatory and related functions. In addition, we expect to continue to manage and reduce our general and administrative expenses associated with scaling our business operations and being a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Current wording

On April 9, 2025, we announced a reduction of our global workforce of approximately 27%, as part of our broader efforts to prioritize investments in software, reduce operating costs, increase efficiency, drive profitable growth and increase stockholder value. For the six months ended June 30, 2025, we incurred $5.9 million for restructuring costs related to thereduction of our global workforce. We expect to continue to exercise discipline and moderate expenses associated with sales and marketing, research and development, regulatory and related functions. In addition, we expect to continue to manage and reduce our general and administrative expenses associated with scaling our business operations, including legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Previous wording

In 2024, we announced a new business strategy that reflects a renewed focus on developing and marketing our AI-enabled software and services offerings. This transition entails significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes are expected to result in reduced revenue, increased restructuring-related costs and short-term disruptions in our operations, which may negatively affect our ability to effectively scale our software and services offerings and achieve our financial and operational targets. Failure to successfully and timely implement our new strategy may have a material adverse effect on our business, financial condition, and results of operations. See“We may not be able to successfully implement our recently announced new strategy.” in Part I. Item 1A. “Risk Factors”in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Current wording

In 2024, we announced a new business strategy that reflects a renewed focus on developing and marketing our AI-enabled software and services offerings. This transition entails significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes have resulted in reduced revenue, increased restructuring-related costs and short-term disruptions in our operations, which may negatively affect our ability to effectively scale our software and services offerings and achieve our financial and operational targets. Failure to successfully and timely implement our new strategy may have a material adverse effect on our business, financial condition, and results of operations. See“We may not be able to successfully implement our recently announced new strategy.” in Part I. Item 1A. “Risk Factors”in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Previous wording

In addition, the execution of our new business strategy is expected to require investment in our human capital and infrastructure. As of March 31, 2025, we had cash and cash equivalents of$58.6 million (as compared to$56.3 million as of December 31, 2024), while our operating expenses for the three months ended March 31, 2025 was$31.7 million. Our cash reserves may constrain our ability to make the investments required to execute our new strategy or may otherwise not be sufficient to fund operations. If our cash flow from operations does not improve as quickly as expected, or if we are unable to secure additional sources of capital if or when the need arises, it may have a material adverse effect on our business, financial condition, and results of operations.

Current wording

The execution of our new business strategy has required, and is expected to continue to require, investment in our software, our employees and infrastructure. As of June 30, 2025, we had cash and cash equivalents of$40.8 million, while our operating expenses for the three months ended June 30, 2025 were$26.1 million. If our cash flow from operations does not improve as expected, or if we are unable to secure additional sources of capital if or when the need arises, we may be constrained in our ability to make the investments required to continue execution of our new strategy.

Previous wording

On August 28, 2024, we received formal notice from the New York Stock Exchange (the “NYSE”) that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days. We subsequently notified the NYSE of our intent to regain compliance with the requirements of Section 802.01C. We are able to regain compliance at any time within the six-month period following receipt of the notice if, on the last trading day of any calendar month during this cure period (or the last trading day of this cure period), we have a closing share price of at least $1.00 and an average closing share price of at least $1.00 over the prior 30 trading-day period. If we do not regain compliance with Section 802.01C within such cure period, the NYSE may commence delisting proceedings. The NYSE rules also provide for an exception to the six-month cure period if the action required to regain compliance with Section 802.01C requires stockholder approval, in which case, the action needs to be approved by stockholders by no later than our next annual meeting of stockholders and promptly implemented. We would be able to regain compliance if our share price promptly exceeds $1.00 per share after receiving stockholder approval, and the price remains above that level for at least the following 30 trading days. On February 13, 2025, we notified the NYSE that we intend to regain compliance with Section 802.01C through a reverse stock split, for which we will seek stockholder approval at our 2025 annual meeting of stockholders to be held on June 4, 2025.

Current wording

On August 28, 2024, we received formal notice from the New York Stock Exchange (the “NYSE”) that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days.

Previous wording

Prior to July 2023, we agreed in certain customer contracts, to PCG 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 accompanying Notes to the unaudited condensed consolidated financial statements in this Report. We accounted for such contractual terms and guarantees as variable consideration at each measurement date. We updated our estimates of variable consideration each quarter with respect to outstanding guarantees, including changes in estimates related to such guarantees, for facts or circumstances that had 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 2024.

Current wording

Prior to July 2023, we agreed in certain customer contracts, to PCG 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 accompanying Notes to the unaudited condensed consolidated financial statements in this Report. We accounted for such contractual terms and guarantees as variable consideration at each measurement date. We updated our estimates of variable consideration each quarter with respect to outstanding guarantees, including changes in estimates related to such guarantees, for facts or circumstances that had 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 2024.

Previous wording

For those contracts where the customers invoked PCG protection pursuant to the applicable contract, we worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers, as more fully described above under Note 3 —Revenue, in the accompanying notes to the unaudited condensed consolidated financial statements in this Report. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where we believe we have enforceable rights of recovery, we believed the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s was no longer probable. Accordingly, we wrote-off the remaining receivables of $104.1 million during the fiscal year ended December 31, 2024. We are pursuing all potential remedies with respect to its enforceable rights under applicable contracts.

Current wording

For those contracts where the customers invoked PCG protection pursuant to the applicable contract, we worked actively to remarket the remaining systems subject to PCG with a wide variety of potential customers, as more fully described above under Note 3 —Revenue, in the accompanying notes to the unaudited condensed consolidated financial statements in this Report. Given the uncertainty of collection from the original customers of due and unpaid amounts in those cases where we believe we have enforceable rights of recovery, we believed the likelihood for collection of the accounts receivable outstanding relating to hardware subject to these PCG’s was no longer probable. Accordingly, we wrote-off the remaining receivables of $104.1 million during the fiscal year ended December 31, 2024. As of June 30, 2025, the Company has entered into an arrangement to recover $3.5 million of the receivables previously written off. We are pursuing all potential remedies with respect to its enforceable rights under applicable contracts.

Previous wording

Our results of operations have typically fluctuated due to seasonal trends, which we expect to recur in future periods. Historically, we have recognized most of our revenue in the third and fourth fiscal quarters of each year due to various factors, including the requirement by our customers to reach target commercial operation dates for their renewable energy projects as well as tax equity and financing considerations. For instance, our revenue recognized in the third and fourth quarters of the fiscal year ended December 31, 2024 accounted for 59% of the total revenue recognized in the fiscal year ended December 31, 2024. The seasonality of our results of operations may be mitigated as our software and services offerings begin to comprise a greater percentage of our total revenue.

Current wording

Our results of operations have typically fluctuated due to seasonal trends, which we expect to recur in future periods. Historically, we have recognized more of our revenue in the third and fourth fiscal quarters of each year due to various factors, including the requirement by our customers to reach target commercial operation dates for their renewable energy projects as well as tax equity and financing considerations. For instance, our revenue recognized in the third and fourth quarters of the fiscal year ended December 31, 2024 accounted for 59% of the total revenue recognized in the fiscal year ended December 31, 2024. The seasonality of our results of operations may be mitigated as our software and services offerings begin to comprise a greater percentage of our total revenue.

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 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, 2024 for additional information about certain risks related to these DevCo Projects.

Current wording

We, through an indirect wholly-owned development subsidiary, 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 2— Summary of Significant Accounting Policies, of the Notes to the unaudited condensed consolidated financial statements in this report. These projects sometimes required significant upfront investment by us and involved 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, 2024 for additional information about certain risks related to these DevCo Projects. We are not making further investments in these DevCo Projects, but have exposure on existing investments.

Previous wording

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

Current wording

We calculate adjusted EBITDA as net income (loss) attributable to us before depreciation and amortization, including amortization of internally developed software, interest expense, further adjusted to exclude stock-based compensation and other income and expense items, including net gain on extinguishment of debt, reduction in revenue, excess supplier costs and resulting liquidated damages, 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 income (loss) (in thousands):

Previous wording

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

Current wording

Adjusted EBITDA for the six months ended June 30, 2024 included other expenses of $1.7 million, comprised of $1.1 million for expenses related to restructuring costs to pursue greater efficiency and to realign our business and strategic priorities, and $0.6 million of other non-recurring expenses.

Previous wording

We generate services and other revenue and hardware revenue. Services and other revenue is generated through (i) energy optimization software (ii) asset management software, and (iii) the sale of project assets and advisory services. Software fees charged to customers generally consist of recurring fixed monthly payments throughout the term of the contract and in some arrangements, an installation and/or upfront fee component. We may also receive incentives from utility companies in relation to the sale of our services.

Current wording

We generate services and other revenue and hardware revenue. Services and other revenue is generated through (i) energy optimization software (ii) asset management software, and (iii) advisory services and (iv) the sale of project assets. Software fees charged to customers generally consist of recurring fixed monthly payments throughout the term of the contract and in some arrangements, an installation and/or upfront fee component. We may also receive incentives from utility companies in relation to the sale of our services.

Previous wording

Cost of services and other revenue includes depreciation of the cost of energy storage systems we own under long-term customer contracts, which includes capitalized fulfillment costs, such as installation services, permitting and other related costs. Cost of services and other revenue also includes the costs for the development and constructions of project assets. Cost of revenue may also include any impairment of inventory and energy storage systems, along with system maintenance costs associated with the ongoing services provided to customers. Costs of revenue are recognized as energy optimization and other supporting services are provided to our customers throughout the term of the contract.

Current wording

Cost of services and other revenue primarily includes costs to service our storage and solar subscription customers. It includes expenses related to providing support to our customers and cloud-related costs, such as hosting costs. These costs primarily consist of personnel-related expenses of our services and customer support personnel, amortization of internal-use software development, and public cloud and cellular infrastructure costs. Cost of services and other revenue also includes depreciation of the cost of energy storage systems we own under long-term customer contracts, which includes capitalized fulfillment costs, such as installation services, permitting and other related costs. Additionally, cost of services and other revenue may include the costs for the development and constructions of project assets or any impairment of inventory and energy storage systems, along with system maintenance costs associated with the ongoing services provided to customers.

Previous wording

Cost of hardware revenue generally includes the cost of the hardware purchased from a manufacturer, shipping, delivery, and other costs required to fulfill our obligation to deliver the energy storage system to the customer location. Cost of hardware revenue may also include any impairment of energy storage systems held in our inventory for sale to our customer. Cost of hardware revenue related to the sale of energy storage systems is recognized when the delivery of the product is completed.

Current wording

Cost of hardware revenue generally includes the cost to produce edge hardware and the battery hardware purchased from a manufacturer, shipping, delivery, and other costs required to fulfill our obligation to deliver the energy storage system to the customer location. Cost of hardware revenue may also include any impairment of energy storage systems held in our inventory for sale to our customer. Cost of hardware revenue related to the sale of energy storage systems is recognized when the delivery of the product is completed.

Previous 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.

Current wording

Our gross profit (loss) is subject to fluctuation 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. We expect to increase both our gross profit in absolute dollars and gross margin as a percentage of revenue in future periods through enhanced operational efficiency and economies of scale.

Previous wording

General and administrative expense consists of payroll and other related personnel costs, including salaries, stock-based compensation, employee benefits and expenses for executive management, legal, finance and other costs. In addition, general and administrative expense includes fees for professional services and occupancy costs. We expect to continue to manage and reduce our general and administrative expense associated with scaling our business operations and being a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Current wording

General and administrative expense consists of payroll and other related personnel costs, including salaries, stock-based compensation, employee benefits and expenses for executive management, legal, finance, human resources and other costs. In addition, general and administrative expense includes fees for professional services and occupancy costs. We expect to continue to manage and reduce our general and administrative expense associated with scaling our business operations and being a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Previous wording

Cost of revenue decreased by$27.7 million, or 56%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily driven by a decrease in cost of hardware revenue of $29.1 million due to a change in the mix of hardware and service offerings. This decrease was partially offset by anincrease in cost of services and other revenue of $1.4 million primarily due to providing services at higher costs.

Current wording

Cost of revenue decreased by$26.7 million, or 36%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was primarily driven by a decrease in cost of hardware revenue of $31.5 million primarily reflecting the reduction in battery resale activities. This decrease was partially offset by anincrease in cost of services and other revenue of $4.7 million primarily due to higher cloud infrastructure costs to support our growing solar software platform and increased personnel costs associated with expanded project deliveries.

Previous wording

Sales and marketing expense decreased by$4.3 million, or 39%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was driven by a decrease of$1.0 million in professional services, resulting from reductions in advisory services and office-related expenses as a result of marketing related subscription cancellations, and a decrease of$3.3 million in personnel related expenses due to a decrease in headcount.

Current wording

Sales and marketing expense decreased by$8.0 million, or 36%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was driven by a decrease of$6.6 million in personnel related expenses due to a decrease in headcount, and a decrease of$1.4 million in professional services, resulting from reductions in advisory services and office-related expenses as a result of marketing related subscription cancellations.

Previous wording

Research and development expense decreased by$2.8 million, or 20%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily due to a decrease of$2.9 million in personnel related expenses as a result of lower headcount, partially offset by an increase of$0.1 million in professional services and other expenses.

Current wording

Research and development expense decreased by$8.1 million, or 28%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was primarily due to a decrease of$5.7 million in personnel related expenses as a result of lower headcount, partially offset by a decrease of$2.4 million in professional services and other expenses.

Previous wording

General and administrative expense decreased by$5.0 million, or 27%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily driven by a decrease of $4.8 million in personnel related expenses driven by lower stock-based compensation expense, a decrease of $0.4 million in professional services and other expenses, and an increase of $0.2 million in office-related expenses.

Current wording

General and administrative expense decreased by$11.9 million, or 35%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was primarily driven by a decrease of $7.2 million in personnel related expenses driven by a decrease in headcount and a decrease of $5.9 million in office-related and other expenses, partially offset by an increase of $1.0 million in professional services, resulting from increases in advisory services.

Previous wording

Interest expense, net decreased by$0.4 million, or 9%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily driven by a decrease of$0.5 million in interest on financing obligations, partially offset by the accretion of the discount on short-term investments of$0.1 million.

Current wording

Interest expense, net decreased by$1.0 million, or 10%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was primarily driven by a decrease of$1.1 million in interest on financing obligations, partially offset by prior period accretion of the discount on short-term investments of$0.1 million.

Previous wording

Other income, net decreased by$0.1 million, or 12%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 primarily due to a $0.3 million decrease in interest income from short-term investments, partially offset by a $0.2 million increase due to the prior period reversal of a previously recognized accretion expense on assets.

Current wording

Other income, net decreased by$0.5 million, or 36%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024 primarily due to a $0.8 million decrease in interest income from short-term investments, partially offset by a $0.3 million increase due to the prior period reversal of a previously recognized accretion expense on assets.

Previous wording

During thethree months ended March 31, 2025, we recorded a provision for income taxes of $0.1 million primarily as a result of foreign income tax expense. During the three months ended March 31, 2024, we recorded a$0.2 million provision for income taxes primarily as a result of state income tax expense.

Current wording

During thesix months ended June 30, 2025, we recorded a provision for income taxes of $0.5 million primarily as a result of foreign and state income tax expense. During the six months ended June 30, 2024, we recorded a$0.2 million provision for income taxes primarily as a result of foreign and state income tax expense.

Previous wording

As of March 31, 2025, our principal sources of liquidity were cash and cash equivalents of $58.6 million, which were held for working capital purposes and for investment growth opportunities. As of March 31, 2025, we had net accounts receivable of $34.7 million and our working capital (deficit), which we define as current assets less current liabilities, was a deficit of $9.6 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, 2025, our principal sources of liquidity were cash and cash equivalents of $40.8 million, which were held for working capital purposes and for investment growth opportunities. As of June 30, 2025, we had net accounts receivable of $42.8 million and our working capital (deficit), which we define as current assets less current liabilities, was a deficit of $12.8 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

The attainment of profitable operations is dependent upon future events, including successfully implementing our new business strategy, hiring and retaining our key executives and personnel with the requisite experience to develop our software and AI-based solutions, obtaining adequate financing to complete our development activities, developing an adequate network of suppliers, and building our customer base. Failure to successfully implement our new business strategy, generate sufficient revenues from our software and services offerings, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, and financial condition. The execution of our new strategy will entail significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes are expected to result in reduced revenue, increased costs and short-term disruptions in our operations, which is expected to negatively impact our financial condition in the near term. Further, our cash reserves may constrain our ability to make the investments required to execute our new strategy or may otherwise not be sufficient to fund operations. If our cash flow from operations does not improve as quickly as expected, or if we are unable to secure additional sources of capital if or when the need arises, it may have a material adverse effect on our business, financial condition, and results of operations.

Current wording

The attainment of profitable operations is dependent upon future events, including successfully implementing our new business strategy, hiring and retaining our key executives and personnel with the requisite experience to develop our software and AI-based solutions, obtaining adequate financing to complete our development activities, developing an adequate network of suppliers, and building our customer base. Failure to successfully implement our new business strategy, generate sufficient revenues from our software and services offerings, achieve planned gross margins and operating profitability, control operating costs, or secure additional funding may require us to modify, delay, or abandon some of our planned future expansion or development, or to otherwise enact operating cost reductions available to management, which could have a material adverse effect on our business, operating results, and financial condition. The execution of our new strategy will entail significant operational changes, including reduction of what has historically been the source of most of our revenue (battery resales), adjustments to the way we develop and market our products and services, and realignment of our business processes. These changes have resulted in reduced revenue, increased costs and short-term disruptions in our operations, which have negatively impacted our financial condition in the near term. Further, our cash reserves may constrain our ability to make the investments required to execute our new strategy or may otherwise not be sufficient to fund operations. If our cash flow from operations does not improve as quickly as expected, or if we are unable to secure additional sources of capital if or when the need arises, it may have a material adverse effect on our business, financial condition, and results of operations.

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, 2025 was $54.6 million, of which $17.4 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, 2025 was $48.4 million, of which $15.0 million was classified as a current liability.

Previous wording

On November 22, 2021, we sold to Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Barclays Capital Inc, as initial purchasers (the “2021 Initial Purchasers”), and the 2021 Initial Purchasers purchased from us, $460.0 million aggregate principal amount of our 0.50% Green Convertible Notes due 2028 (the “2028 Convertible Notes, pursuant to a purchase agreement dated as of November 17, 2021, by and between us and the 2021 Initial Purchasers. Our net proceeds from this offering were approximately $445.7 million, after deducting the 2021 Initial Purchasers’ discounts and commissions and the estimated offering expenses payable by us. The 2028 Convertible Notes will accrue interest payable semi-annually in arrears and will mature on December 1, 2028, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock. The 2028 Convertible Notes are redeemable for cash at our option at any time given certain conditions. Refer to Note 7 — Convertible Notes, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

Current wording

On November 22, 2021, we sold to Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Barclays Capital Inc, as initial purchasers (the “2021 Initial Purchasers”), and the 2021 Initial Purchasers purchased from us, $460.0 million aggregate principal amount of our 0.50% Green Convertible Notes due 2028 (the “2028 Convertible Notes’), pursuant to a purchase agreement dated as of November 17, 2021, by and between us and the 2021 Initial Purchasers. Our net proceeds from this offering were approximately $445.7 million, after deducting the 2021 Initial Purchasers’ discounts and commissions and the estimated offering expenses payable by us. The 2028 Convertible Notes accrue interest payable semi-annually in arrears and will mature on December 1, 2028, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock. The 2028 Convertible Notes are redeemable for cash at our option at any time given certain conditions. Refer to Note 7 —Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

Previous wording

On April 3, 2023, we used approximately $99.8 million of the net proceeds from the issuance of the 4.25% Green Convertible Senior Notes due 2030 (“2030 Convertible Notes”) to purchase and surrender for cancellation approximately $163.0 million in aggregate principal amount of our 2028 Convertible Notes. See Note 7— Convertible Notes, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

Current wording

On April 3, 2023, we used approximately $99.8 million of the net proceeds from the issuance of the 4.25% Green Convertible Senior Notes due 2030 (“2030 Convertible Notes”) to purchase and surrender for cancellation approximately $163.0 million in aggregate principal amount of our 2028 Convertible Notes. See Note 7— Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report for additional details regarding this transaction.

Previous wording

On April 3, 2023, we issued $240.0 million aggregate principal amount of our 2030 Convertible Notes in a private placement offering to qualified institutional buyers (the “2023 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2030 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 4.25% per year, payable in cash semi-annually in arrears in April and October of each year, beginning in October 1, 2023. The 2030 Convertible Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver cash, shares of common stock or a combination of cash and shares of common stock. The 2030 Convertible Notes are redeemable for cash at our option at any time given certain conditions. See Note 7— Convertible Notes, of the Notes to the unaudited condensed consolidated financial statements in this Report, for additional details regarding this transaction.

Current wording

On April 3, 2023, we issued $240.0 million aggregate principal amount of our 2030 Convertible Notes in a private placement offering to qualified institutional buyers (the “2023 Initial Purchasers”) pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2030 Convertible Notes are senior, unsecured obligations of the Company and bear interest at a rate of 4.25% per year, payable in cash semi-annually in arrears in April and October of each year, beginning in October 1, 2023. The 2030 Convertible Notes will mature on April 1, 2030, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Upon conversion, we may choose to pay or deliver cash, shares of common stock or a combination of cash and shares of common stock. The 2030 Convertible Notes are redeemable for cash at our option at any time given certain conditions. See Note 7— Debt, of the Notes to the unaudited condensed consolidated financial statements in this Report, for additional details regarding this transaction.

Previous wording

During the three months ended March 31, 2025, net cash provided by operating activities was $8.5 million, primarily due to our net loss of $25.0 million, adjusted for non-cash items of $17.2 million and net cash inflow of $16.4 million from changes in operating assets and liabilities. Non-cash items primarily consisted of depreciation and amortization of $11.0 million, non-cash interest expense of $0.3 million related to debt issuance costs, stock-based compensation expense of $4.3 million, non-cash lease expense of $0.7 million, and provision for accounts receivable allowance of $0.1 million. The net cash inflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $24.4 million, a decrease in inventory of $2.1 million, a decrease in other assets of $2.0 million, an increase in accrued expenses and other liabilities of $3.9 million, partially offset by an increase in contract origination costs of $0.3 million, an increase in project assets of $1.5 million, a decrease in accounts payable of $10.5 million, a decrease in deferred revenue of $3.0 million, and a decrease in lease liabilities of $0.5 million.

Current wording

During the six months ended June 30, 2025, net cash used in operating activities was $12.7 million, primarily due to our net income of $177.5 million, adjusted for non-cash items of $186.4 million and net cash outflow of $3.9 million from changes in operating assets and liabilities. Non-cash items primarily consisted of a gain on extinguishment of debt of $220.0 million, and a reversal of provision for accounts receivable allowance of $1.5 million, partially offset by depreciation and amortization of $22.2 million, non-cash interest expense of $0.2 million related to debt issuance costs, stock-based compensation expense of $5.7 million, non-cash lease expense of $1.4 million, an impairment of energy storage systems of $1.4 million, and other non-cash items of $1.1 million. The net cash outflow from changes in operating assets and liabilities was primarily driven by a decrease in accounts receivable of $14.8 million, a decrease in inventory of $6.3 million, a decrease in other assets of $1.7 million, partially offset by a decrease in accrued expenses and other liabilities of $1.2 million, an increase in contract origination costs of $0.6 million, an increase in project assets of $2.2 million, a decrease in accounts payable of $18.7 million, a decrease in deferred revenue of $2.8 million, and a decrease in lease liabilities of $1.2 million.

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 charges 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, 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, 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 $0.7 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 charges 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 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, and an increase in deferred revenue of $4.3 million, a decrease in other assets of $1.1 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 $10.8 million, a decrease in accounts payable of $14.9 million, a decrease in accrued expenses and other liabilities of $13.3 million, and a decrease in lease liabilities of $1.5 million.

Previous wording

During the three months ended March 31, 2025, net cash used in investing activities was $3.6 million, and consisted of $3.6 million in capital expenditures related to internally-developed software.

Current wording

During the six months ended June 30, 2025, net cash used in investing activities was $4.7 million, and primarily consisted of $4.6 million in capital expenditures related to internally-developed software.

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 systems, $3.5 million in capital expenditures related to 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 related to internally-developed software, and $0.2 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 primarily consisted of proceeds from equity transactions to be remitted to tax authorities of $5.2 million, partially offset by the repayment of financing obligations of $2.1 million.

Current wording

During the six months ended June 30, 2025, net cash provided by financing activities was $1.7 million, and primarily consisted of net proceeds from the issuance of senior secured notes of $10.0 million, partially offset by the repayment of financing obligations of $8.4 million.

Previous wording

During the three months ended March 31, 2025, net cash used in financing activities was $2.8 million, and primarily consisted of the repayment of financing obligations of $2.8 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

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, 2024, and there have been no material changes to our critical accounting estimates during thethree months ended March 31, 2025.

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, 2024, and there have been no material changes to our critical accounting estimates during thethree and six months ended June 30, 2025.