I'm gonna get started here as soon as the music dies down, I think. I'll let John get situated. Appreciate everyone. It's been a long day. We're gonna wrap up with a really good session on energy storage with a leader in the space. To my left, we have CEO of Stem, John Carrington. Thanks for joining us, John. It's good to be here. It's been- Thanks to you. ... a long day. Lots of meetings for you as well. You know, one of the points that I think we just wanted to start off with and clear the air a bit is, you did provide a little bit of a market update here, a new slide deck. I know some investors have been questioning the sort of 4Q update. Yeah. Can you kind of walk us through what you articulated? Sure. We did. We posted an update this morning in advance of our sessions here, and really it was to give more guidance around the fourth quarter. It was a quarter in our view that was very strong. You know, we had revenue and bookings that exceeded the entire 2021 year. The bookings were well above our extended guidance, in fact, over $1 billion. That's a great leading indicator for the business. On the revenue side, we had some projects that got delayed from a hardware standpoint coming out of China. We probably spent, I'd say four or five, six ho urs a day the last couple weeks of December working with suppliers in China because. It's still, I think at a relative level, probably not in the media as bad as it is over there. I mean, we had our suppliers that didn't have people in the warehouse to package equipment. We had ports that were empty to load onto the boats. It's a pretty tough situation over there in our view. I would say on the EBIT side, very strong performance there. We've been prudent as we'll continue to be around hiring, so 10%-15% lower on our OpEx, which is really the biggest lever we have in the business. We're not a heavy CapEx company. I would say on the backlog continues to grow sequentially quarter-over-quarter, so a good story there as well. I'm gonna get to the backlog in just a minute. Just to level set, I'm assuming this had to do with sort of, the reopening and also the COVID infection rate spiking there. Yeah ... people on the ground to get product out. Where are you in that? Is that behind you? Are you still gonna be working through that into 1Q? Are these revenues that, you know, you make up immediately? Do they just show up later on into 2023? Yeah. Kind of update us there. We feel very good about It's a timing issue. We'll put these projects in place. It's hard to tell how impactful it'll be in the first quarter. The good news is we expect, and we'll talk about this in our guidance call in February, but we do expect the similar seasonality that we've had in the past. You're gonna see, you know, 15%, 20% of the year or less in the first quarter. This rolling into 2023, it's not like we missed guidance. It's, it's going into 2023. It's helpful to the year. It's a little early, I think, Brian, to say that it's better or worse at this point. We were I think pretty fortunate to get out what we did at the end of December. It really does sound like it's a timing issue. We'll get an update on that as we move into the new year. You did, you know, reach your target of exceeding a $1 billion of backlog exiting the year. It's more than double what it was at the end of 2021. How does that kinda translate, especially for folks who are newer to the business? What does a $1 billion of backlog mean in terms of kind of the outlook for the next 12 months, 2023? Then, you know, maybe anything notable around mix, whether it's software, hardware- Sure ... FTM, BTM. Yeah. From a revenue standpoint, think in terms of 60/40 hardware, software. You know, it won't be over the next 12 months typically, so it will be kind of 12-18 months, and obviously when we provide guidance, there'll have more clarity around that. It is an indicator in our view of the strength of demand for our products and services. At that point, you know, it's significant growth. We're also seeing significant growth in the pipeline. It's over $7.2 billion as we reported in our third quarter. That was 29% quarter-over-quarter growth. The demand continues to be exceptional in the business, and I think that bodes very well. From an end market standpoint, you know, [inaudible] versus BTM. How should we be thinking about kind of the FTM, the mix between end markets as you roll into 2023? Yeah. Look, I mean, I'd say Front-of-the-Meter was a conscientious effort of us to go after the Front-of-the-Meter side. The business started in Behind-the-Meter. We were the market leader in California, and we learned a lot about how to build out our software. Quite frankly, Behind-the-Meter is harder than Front-of-the-Meter, although Front-of-the-Meter is getting more complex, which is good for the Athena platform. I would say You know, we're at 90/10 is the mix today, Front-of-the-Meter to Behind-the-Meter. We are seeing more of a shift to Behind-the-Meter, so I think we'll see 75/25. We're seeing that in our pipeline. We're also seeing enhanced margins in our pipeline, so I think both of those are very positive. I think a lot of it's IRA-driven from the behind the meter side. We feel like the mix is definitely going back to more behind the meter, which you know, we feel good about both. Look, I mean, WoodMac's got Front-of-the-Meter growing at 10 to 20 times that of behind the meter, so you kinda have to be in Front-of-the-Meter. We've got a great channel partner strategy that we think will continue to help us grow in that market. We're engaged in both. When you say you're seeing margin in that pipeline, you know, growing for both sides, you know, FTM, BTM, what are some of the major levers, I guess, on each side, if they are different? Yeah, I mean, I think a lot of it is just general energy cost increases, right? I mean, the IRRs are improving for our developer partners. You know, we typically will value price our deals. We're seeing some lift in that area. Behind the meter typically has been strong. It's an interesting dynamic right now. We've had many of our Fortune kind of 50 accounts call and say, "Can you model out 600 locations and help us understand where we can put your product?" We have MSAs with a lot of these large customers already. It's a pretty simple strategy as far as deployment. It's not as simple when you start to model out all the different states because there are a variety of different levels of demand charges and other use cases that we can, you know, exploit in that market. At an aggregate, very strong demand from the behind the meter side. Just kind of focusing on some of the newer opportunities for you guys, obviously, AlsoEnergy acquisition that you didn't have in the mix when you first came to the markets. You introduced this, you know, CARR metric, as part of that, growing software and recurring mix, of your revenue, as a KPI, EV charging has started to become a bigger focus and I think has some opportunities here. You kind of walk through, you know, beyond, you know, the FTM, BTM core business, how are you thinking about AlsoEnergy, EV charging, and then the evolution of, I guess, CARR within the context of all that? Yeah, I mean, CARR certainly will continue to grow. It's a metric that we put in place. For those of you that aren't familiar, it's our Contracted Annual Recurring Revenue. The way our model works is we recognize revenue at the point of hardware sale, then the software is all ratable based upon the length of the contract. Your FTM could be 15 to 20 years, BTM maybe is 10. On the solar side, the AlsoEnergy piece, that's more like three maybe 16, 17 years. We like it. I think our investors like into long-term software recurring revenues. There's adders in there in our contracts as well, we do see increases. I think the other advantage is, as new use cases come about, we can then go back and sell additional software. As it relates to AlsoEnergy, one of the very compelling things, we've talked about this in the past, is the fact that they have 40,000 customer sites. 10% of those have storage attached. Again, AlsoEnergy is a solar, monitoring, asset monitoring software platform. It's a very interesting opportunity for our sales teams to go jointly look at these opportunities. We've actually taken the C&I sales team from Stem, embedded them into AlsoEnergy in their Boulder location, and they're starting to work through all the various opportunities to now go back and attach Athena as well as our storage platform at those customers. There's been a couple updates and, you know, positive developments on EV charging. Can you kind of talk about? Yeah the opportunities. Yeah, again, I think the real key point on the last one as well is it's, we talked about a $6 billion opportunity. It's $20 billion total. I mean, it's a huge play. On the EV side, you know, it's interesting. We've had, I think, a couple things have changed. One is this NEVI deal whereby it's pretty compelling for charging, like a ChargePoint or others, to look at putting storage into C&I customers. What those companies, EVgo, ChargePoint, and others don't necessarily have is the knowledge behind the meter. As I mentioned at the onset, the California market in C&I is really where we started. The unintended consequence of EV chargers is a significant increase in demand charges, as well as we're seeing more fleet electrification from our customers. When they do that, you see upwards of 7 to 10 times the energy cost at those facilities. We've done a couple things. One, we've announced a partnership with ENGIE to provide the Athena platform on the software side, solar and EV charging at these customers, a lot of which we have an install base already, so it's a nice opportunity for both parties. The other one was In-Charge, which is a ABB company, and again, that's primarily on the fleet side, but both of which are interesting, Brian. I think as you look forward, we believe EVs will be... I mean, this EV side of behind the meter will represent about 1/3 of our bookings and sales over the next couple years. That is a new area that we're focused on. Again, an extension, we believe of the Athena software platform that we've developed. Is the profile of the EV business similar, or is it all BTM? Is it higher margin? Sort of how does it fit into the landscape of... It's BTM. It is higher margin. Primarily two things. One is the hardware side is larger. It's upwards of two times our typical behind the meter, which is about 2.5 MWh. The other thing is we're getting upwards of twice the software fees for this application, just because the savings and the use case is very compelling for our customers. Okay. Fair enough. Maybe switching gears and in a bit of a timely topic, just given the update you provided in the market. Supply chain outlook, you know, battery supply, I think you've been out there for some time, you know, saying battery supply should be improving. It hasn't been an issue for you. Maybe just give us a real-time update on how you're thinking about battery supply heading into the new year, if you're fully covered on demand for 2023, and then any, you know, further visibility you might have as well? In our earnings call, we said through the third quarter, we were contracted into the third quarter of 2023. We're now fully through 2023. We're actually working on the third quarter of 2024. We've taken an approach to look a little longer, i.e., 18 months, whereas before we were kind of thinking in terms of 12. We feel good about where we are for 2023, and we also think 2024 is shaping up. I think in general, supply chain's still fairly tight. We have been pretty vocal, both on the earnings call as well as with our suppliers, that if you have any cancellations, call us first. I know Bill Bush, my CFO, bought 50 MWh today. It's differentiated. To have the hardware now is differentiated. Developer partners of ours want to get the hardware. They want to have assurity that they have that hardware. There's a lot of demand for hardware, and we feel like we're well positioned both, you know, for 2023 as well as kind of these spot buys. We are getting the calls. We feel like there is some project cancellations and pushouts, and we'll hit those bids. You have multiple suppliers, and I think that supplier list has grown. Given, you know, just the recent issue with China, any updated thoughts around kind of how you're gonna diversify your geographic exposure to suppliers? Well, I think there's a couple things. One is we're always looking at new suppliers. We also announced this unit controller strategy, which I think is pretty compelling, and it gives us the opportunity to match our unit controller with a variety of different inverters. When you look at interconnection, it's tied to the inverter. What this allows our customers to do is mix different DC blocks from other battery suppliers into whatever inverter they have. It's gonna allow them more flexibility. It'll probably allow them better speed to market and likely better pricing because we'll have a variety of suppliers for that. I like it because we won't and they won't be leveraged by a specific supplier. That's an area. As I said, we're looking at a variety of other suppliers. I mean, it's a China game right now for what we do. We're a big customer to Tesla, and, you know, we've had a long relationship with them. It's still heavily weighted to China. How about your view on battery, you know, prices in addition to supply? Is there a differentiated view on pricing? Do we start to see some easing of cell or pack pricing this year, or does it, you know, does it have to wait till next year? Yeah, I think we could see some softening in the second half, maybe, but certainly into the first quarter. I think the, you know, our take has been any price increase we've passed through to our customers, so it's not as impactful to the company. We have that in our agreement to our customers. But, you know, I'd say that all indications are that, you know, it's still pretty firm. There's a lot of demand out there. A variety of suppliers have told us they're sold out. That seems to be the headline, and then we get the call for, "Hey, we have some additional capacity." I think time will tell if you get a lot of projects that roll over. I know that coming out of RE+, which I'm sure a lot of you were a part of as well, every Chinese supplier we spoke to was adding significant capacity, and by the way, all of it in China. IRA had zero impact from what we could tell on their commitment to building in the United States. Well, you mentioned interconnection. I know that's been an issue in certain pockets of the country. Has that been something that's been tougher to navigate? Are you generally avoiding those parts of the market with your strategy? I guess just at a broad industry level, what are you seeing in terms of the interconnection status of, you know, how it's either impeding or impacting negatively the deployment side? We think, you know, I'd say, in our Analyst Day, we kind of said, "Look, it's, we're gonna bank on it being similar level in 2023 as we saw in 2022," and I think we're sticking to that. I think there are some interesting plays out there, whether it's at a state level like California, who's trying to, or Texas, expedite certain projects specific to storage. I think PJM at a, you know, grid operator level is looking at doing some things. FERC's talking about driving some permitting. You know, we don't geographically select based on that, but we don't see significant improvement today. I think just time will tell. I would say a lot of utility executives are saying that they wanna hire more people. They wanna bring down that cycle time. It's early still. Is labor one of the issues there? Yeah, absolutely. Okay. Okay. I think they lost a lot of people through COVID, and I think they're just slow to bring them back. I'm surprised a little bit by your comments around, you know, you had RE+, and it didn't seem like there was a lot of impetus for battery manufacturing to come into the U.S. From China. From China. Yeah. Okay. Fair enough. Yeah, no, from China. No. No, clearly, I mean, there's a terawatt hour announced capacity in the U.S. from what we've heard. That's, look, it's subject to change. I'm just giving you a data point of what we heard while we were there. What, what do you think that would do to sort of your sourcing strategy when that's, you know, up and fully running here in the U.S., assuming we get that domestic base? Then I guess is, are there implications for pricing, for your margins? Sort of what, what would that do? Well, I think, you know, as I mentioned, I feel like I've seen this movie before when I was with GE in Asia. The Chinese took a very aggressive stance, a strategic pillar around the plastics business. I happened to be in the GE Plastics business at the time. They built plants, and they drove costs down. We saw it in solar. I was at First Solar when, you know, they really started driving the solar down to sub $1 a watt, and we were at $4. I think, I think you'll see them respond very quickly. It'll take, I think, upwards of 36 months, Brian, to see anything here in the U.S. Certainly, we would contract with those potential suppliers if we can. I still think there's a lot of risk sourcing out of China, but today that's what we have, and I don't know that in the interim there's gonna be enough domestic supply. Quite frankly, for us to try to contract with them today, it's just we don't have visibility into our projects out that far. Yeah. Maybe in the next year we'll have those discussions, but it's still a little early. That's kind of peripheral to you in terms of the IRA impact. When we talk about direct IRA impact to your model, is there sort of a framework you're using to think about the potential upside, whether it's, you know, over all markets, BTM versus FTM? Like how does IRA generally help. Yeah the outlook? I mean, you know, as I mentioned a minute ago, I think the pipeline piece we see it in at $7.2 billion through the third quarter. Again, 29% growth just from the second quarter to the third quarter. We continue to see a lot of momentum around our pipeline related to IRA. I think you'll see a big pop in the BTM side, as I mentioned as well. So in an aggregate, it's very positive. We'll roll out in February kinda how we, how we think about it. You know, it's game changing, and certainly we're very excited about, what it can do for the business and the, and the industry at large. Remind me, I forget if you had of that $7.2 billion pipeline, did you ever quantify what you thought was sort of IRA driven? No. I haven't outlined that. Okay. I guess the $6 billion retrofit opportunity, maybe, that is something you have outlined. Yeah ...related to the AlsoEnergy. Maybe walk us through sort of. You talked about the integration of the sales force with the Boulder teams out there. What's sort of the on the ground color? How quickly can you gain traction toward that, you know, getting some of that going down? I think we could see traction this year. You know, it's a big undertaking. There's also the piece of we're combining on the technology front, both the Athena platform and the PowerTrack platform. Our customers want the single, you know, source for those products. That's coming along. We've integrated the finance team. I think the integration's going very well. Specific to the customer front, it's an ongoing process. We're looking at who has a better relationship if there is, you know, duplication. There was only 30% of the customer duplication. There's a lot of opportunity out there we believe. Obviously, we know the customer. We know how big the system size is. We know now how much storage we could put into that. We know how much time is left on that contract. If it's a deal that's got two years left on the solar side, maybe it's not as advantageous as one that's zero to kinda three years old. We're looking at all those factors. It's probably one of the largest opportunities that we see. We've got a lot of people looking at it, and we're excited about it. Huge competitive moat in our view. That's, I would assume, predominantly a BTM mix given what... Yeah Energy's mix was, presumably also a higher margin mix if you do start- That's right. some of that I mean, look, I mean, their margins are significantly higher than Stem, and that was a very compelling part of the acquisition, right? They've got probably the biggest recurring revenue stream in the market. People always ask, "Okay, what M&A would you do, and would it be as big?" We don't see anything with the kind of recurring revenue at that scale in the market today, so. Maybe one last policy question and I'll shift gears. UFLPA, AD/CVD, you know, just broadly trade policy issues, more on the solar side, but given the solar plus storage, you know, complement that's generally being deployed in your end market. Are you seeing, I think most participants we've talked to, panelists today have said AD/CVD is less of a concern, but UFLPA still is sort of lingering. What are you seeing real time? What are you kind of expecting into the early part of next year? I would agree with that. I would also add, though, that I think when you look at Also, who's most impacted, right? 'Cause they're in the solar side. Their backlog's up 50%, so they're seeing, I think, strong growth. We do feel like it's improving. I would also add that, you know, because we have so many standalone storage applications, we're a little insulated as kind of Stem X the solar performance side of our business. We feel good about where we are on that front. In general, we think it's gonna improve. I mean, WoodMac calling for a double in solar this year? Again, still in 2021 was, we will have a very strong 2023 with regards to that side of our business. Okay. Fair enough. I'm gonna switch gears here, maybe talk competition for a bit, 'cause energy storage, you know, pure play companies like yourself, they're, you know, more nascent, less familiar to the market. I think there's always questions we get from investors around what really differentiates one software platform from the next, what really makes Stem win an RFP versus, you know, one of your peers. Yeah. What do you respond to investors? Mm ... who do question the whole sustainability of software advantage- Sure ... in energy storage? I mean, I think when you look at let's go third party first. You've got Frost & Sullivan and Guidehouse coming out saying, you know, Stem's Athena platform and PowerTrack through AlsoEnergy are best in class. At our analyst day, we spent a lot of time, and it's webcast is still there, the slides are still there, talking about how differentiated our software platform is. That's from McKinsey, Bain. I mean, we put a lot of details into that deck. I would also say voice of customer. You know, we have over 50% of our contracted deals are repeat customers. I don't think you'd get that if you have a product that's failing or is not compellingly different. The other thing is, I think we've got significant runtime hours versus our competition. A very broad offering we announced. We have all 13 of the Rocky Mountain Institute wheel kind of value chains tied to our Athena platform now. We kinda can bring anything our customer needs, we continue to do that. I think the other big piece is their ability to co-optimize. You know, we took over a large base of customers in the L.A. area, and we saw increases of 30%-40% returns just by putting Athena in, replacing the existing software platform. Again, that was a press release that we did, and there's certainly information on our website around that. There's a lot of data points, Brian. On the C&I side, that's a close-knit group actually of the energy buyers, so they talk quite a bit. You know, I think we continue to delight that customer base as well. You know, we feel like we have the most kinda runtime hours, the biggest customer base, the broadest offering, and the fact that they continue to come back and buy is pretty compelling. You've also kind of parlayed that C&I success into the FTM markets if we look at the backlog growth in that particular end market. Anything new or different or a changing competitive landscape that allowed you to do that in FTM? You know, I think a lot of what we learned in behind the meter helped us in front of the meter. As I said earlier, it's actually easier to do the front of the meter, but it's getting much more complicated, which is good for our platform. There's just more use cases to exploit and drive value from. Not really any huge learnings as much as just making sure we had the right software in the right, the right areas of the country. You know, started, people said, "You won't be able to make this transition. You're a behind the meter company." Well, two years ago we weren't in Massachusetts. Recently, we were at 50% share, we're probably still in the forties. We're delivering more returns than we told our customers we would, the developer base there, that's great. We're now, I think, a leader in Texas. We've got a lot of projects down there. We're getting into Cali. I think we're gonna continue to win in the markets we are targeting, and again, we're leading with our software. In many cases, we will not sell the hardware, and that's okay. Some of these large FTM projects, I don't wanna sell $100 million of hardware at 2% or 3%. I do want the software, though, and that 20-year recurring revenue stream. A lot of our developer partners are saying that works for them, and that certainly works for us. We wanna be the operating system of a variety of assets longer term. It's too early to be a software-only supplier today, but we think longer term we're well positioned for that. I guess, who do you consider to be your most direct peers? Then if there is an RFP where a buyer decides to go with one of them versus Stem, Well, they're wrong if they do that. What's making them- Um- come to that wrong conclusion? Wrong conclusion. No, look, I'd say a few things. I think when you look at the competitive base has changed a little bit. A couple years ago we saw more of the strategics. I just mentioned the ENGIE deal, you know, the In-Charge Energy deal. Some of these large strats are coming to Stem to say, "Hey, help us with the software side of the business." We saw Schneider got into the business, try to build out the hardware, the software, and then they exited. I think it's a lot harder than people think. I think the competition that we've seen, I mean, FlexGen was more of a regional Texas play. We see them more into California. I still think we have the broadest software offering. A lot of people ask us about Fluence. Candidly, we don't run into one another very often. I can't think of really any significant area that we have. Enel is another one that we see sometimes in the storage, solar plus storage side. you know, I think we have a very strong hold behind the meter, and we're, you know, I mean, we continue to gain share, we believe, in front of the meter. When you go against someone like you mentioned Enel, so I'll pick on them because they're a big company, big balance sheet. Does the balance sheet, does sort of the financing strength of the company come into play when customers are trying to pick between one provider and... 'Cause these are 10, 15, 20-year- Yeah ... software- Yeah ... subscriptions in some cases. If my CFO were in here, he'd love that question because he's pointed out in a variety of occasions with developers that Enel is not necessarily Enel in Europe. It's Enel U.S. with not necessarily the balance sheet that you may perceive them to be, and he's encouraged a lot of developers to dig into that, he's been proven right on many occasions. Our balance sheet actually relative to Enel U.S., and I just pick on them as an example, but fill-in-the-blank U.S. entity is much stronger than in a lot of cases, I should say, with Stem. Look, I think where we've seen customers trade away, they don't wanna pay the price that we are charging for our software. That's fine, and in many cases, they'll come back. We have numerous examples where our competitors overcommitted, underdelivered, and they came back to us either on that project, Brian, or certainly on the next one. You know, we're gonna continue to try to maximize our pricing, value sell everything we do to drive higher gross margins with that focus on, you know, second half of this year being EBITDA positive. Fair enough. I think in the interest of time, maybe just one last. Sure ... question, kind of. We're kinda in between us and cocktail hour, right? Cocktail hour and dinner. Appreciate everybody that's here, actually. Fun stuff this evening. Lightning round type of question. Oh ... be pretty quick, but you guys are in California. You're based there. You're in the C&I market, so you're not completely immune to this, but Net Metering 3.0 in California, does that have any implications for you in the C&I segment? It really doesn't ... affect you all at all? I mean, you know, Brian, it affects 500 kW and lower. Okay. Our average system size is 2.5 MWh. It's not necessarily in our zip code at all. No effect to us. Okay. Fair enough. I think with that, we'll wrap up. I wanna thank John for. Thanks, Brian. concluding the afternoon with us. Thank you all. Appreciate it. Thank you, everyone. Thanks, Brian.