"The company reported Q3 revenue of $38.2M, topping the $36.44M consensus estimate by more than 4%. Yet the market's initial enthusiasm faded. After closing at $23.46 on earnings day (up 4.2% from the prior close), STEM dropped to $21.51 in after-hours trading by 4:50 PM ET, a decline of 9.4% from the intraday high. The pullback reflects lingering skepticism about whether the company can sustain profitability as it scales."
"The headline numbers looked solid. Q3 revenue climbed 31% year-over-year from $29.3M, and gross profit more than doubled to $13.5M from $6.2M. Annual Recurring Revenue grew 17% to $60.2M, a key metric for a software-focused business. Management's focus on ARR underscores the shift toward predictable, recurring revenue streams. Adjusted EBITDA turned positive at $2.0M for the second straight quarter. That matters. It signals the company is moving toward operational efficiency after years of heavy losses. Operating cash flow also came in strong at $11.4M, and cash on hand improved to $43.1M. But here's what tempers the optimism: STEM still posted a net loss of $23.8M in Q3. While that's a massive improvement from the $148.3M loss a year ago, the company remains deeply unprofitable. The improvement is real, but the trajectory is still one of red ink."
Q3 revenue was $38.2M, up 31% year-over-year and above consensus, with gross profit rising to $13.5M and ARR reaching $60.2M. Adjusted EBITDA was positive $2.0M for a second consecutive quarter, operating cash flow was $11.4M, and cash on hand improved to $43.1M. The company still recorded a net loss of $23.8M, though much improved from the prior year. Full-year 2025 guidance was narrowed to $135M–$160M revenue, 40–50% non-GAAP gross margins, and adjusted EBITDA between negative $5M and positive $5M, leaving significant uncertainty about the pace of profitability.
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