Stem Gears Up to Report Q2 Earnings: What's in Store for the Stock?

Stem STEM is set to report its second-quarter 2025 earnings results on Aug. 7.

The Zacks Consensus Estimate for the second quarter of 2025 revenues is pegged at $33.1 million, suggesting a decrease of 2.65% from the year-ago quarter’s reported figure.

The consensus mark for loss is pegged at $3 per share, which has remained unchanged over the past 90 days. This marks a sharp improvement from the year-ago quarter's loss by 31.82%

Stem’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, the average surprise being 12.34%.

Stem, Inc. Price and EPS Surprise

Stem, Inc. price-eps-surprise | Stem, Inc. Quote

Let us see how things are shaping up for the upcoming announcement.

Factors Likely to Have Influenced STEM’s Q2 Performance

Stem’s second-quarter 2025 performance is likely to have been driven by continued momentum in its solar asset performance management software platform, Powertrack. In the first quarter, solar ARR rose 10% sequentially and 24% year over year, supported by strong demand in the commercial and industrial segment. The company continued investing in PowerTrack to expand into utility-scale projects and international markets. With utility-scale bookings nearly tripling year over year in the first quarter, these efforts are expected to have positively impacted second-quarter software revenues.

The 27% workforce reduction announced on April 9 is another key factor expected to have impacted second-quarter performance. Stem said that this move would generate $30 million in annual cash savings, including $24 million in 2025. These cuts were positioned as consistent with its software-first strategy and intended to support long-term software revenue growth. The cost savings from this reduction are likely to have begun to take effect during the second quarter.

STEM also indicated that profitability would improve quarter by quarter through the year. The improvement is expected to come from two areas from ongoing management of operating expenses, and a change in product mix with a reduced share of OEM hardware and more focus on high-margin software and edge devices. Gross margins in the first quarter were already above the full-year guidance range, suggesting this shift might have continued to benefit the quarter to be reported.

However, seasonal trends might have slightly impacted bookings in the second quarter. The company noted that total bookings were lower in the first quarter due to seasonality, and it generally sees higher booking volumes in the second half of the year. While key metrics like Contracted Backlog and CARR increased sequentially in the first quarter due to strong solar bookings, the seasonal pattern might have limited overall revenue growth in the early part of the second quarter.

What Our Model Says for STEM

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

STEM currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat earnings in their upcoming releases:

Globant GLOB currently has an Earnings ESP of +0.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Globant shares have lost 61.8% in the year-to-date (YTD) period. Globant is set to report its second-quarter 2025 results on Aug. 14.

Affirm AFRM currently has an Earnings ESP of +15.20% and a Zacks Rank #3.

Affirm shares have increased 22.8% YTD. Affirm is slated to report its fourth-quarter fiscal 2025 results on Aug. 28.

Analog Devices ADI has an Earnings ESP of +0.72% and a Zacks Rank #3 at present.

Analog Devices shares have gained 4.7% YTD. Analog Devices is scheduled to report its third-quarter fiscal 2025 results on Aug. 20.

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This article originally published on Zacks Investment Research (zacks.com).

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