Can Stem (STEM) Narrowing Guidance Reveal More About Its Path to Sustainable Profitability?

• Stem, Inc. recently reported third quarter 2025 earnings, showing revenue growth to US$38.24 million and a net loss of US$23.79 million, both improved compared to a year earlier; the company also updated its full-year revenue guidance to a range of US$135 million to US$160 million.
• Compared to last year, Stem recorded a significant improvement in its net income for the first nine months of 2025, turning a net loss into positive income, while narrowing its annual revenue guidance range to reflect expectations for the remainder of the year.
• We'll examine how Stem's improved quarterly results and narrowed full-year revenue guidance shape the company's evolving investment narrative.

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Stem Investment Narrative Recap

To be a Stem, Inc. shareholder, you need to believe in its transition to a software-centric business model and the potential for recurring high-margin revenue from clean energy management. The latest earnings report shows strong year-over-year revenue growth and a much narrower net loss, while the revised full-year revenue guidance signals management's updated expectations but does not materially impact the most important short term catalyst: achieving sustained profitability through growing software and services revenue. The biggest current risk remains exposure to policy and regulatory uncertainty, which could reshape demand for clean energy solutions if incentives change. Among recent announcements, the September launch of the PowerTrack Energy Management System stands out. This product signals Stem's commitment to expanding its AI-driven software platform, a key factor supporting potential margin expansion and recurring revenue growth, both of which lie at the heart of the company's evolving investment story and near-term profitability goals. In contrast, investors should not overlook the ongoing risk that policy or regulatory shifts could suddenly...

Read the full narrative on Stem (it's free!)

Stem's narrative projects $217.2 million revenue and $22.3 million earnings by 2028. This requires 11.7% yearly revenue growth and a $44.2 million increase in earnings from -$21.9 million today.

Uncover how Stem's forecasts yield a $16.67 fair value, in line with its current price.

Exploring Other Perspectives

Four members of the Simply Wall St Community estimate Stem's fair value between US$8.06 and US$45.46 per share. While many see software growth as the catalyst for future returns, policy uncertainty could still disrupt earnings and revenue momentum. Explore these differing viewpoints to see how your outlook compares.

Explore 4 other fair value estimates on Stem - why the stock might be worth less than half the current price!

Build Your Own Stem Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Stem research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Stem research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Stem's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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