Stem's Q2 2026 Earnings Call Highlights: A Year of Transformation for the Company
Stem, a leading provider of AI-driven energy management solutions, reported impressive results in its second-quarter 2026 earnings call, marking a significant inflection point in the company's transformation. As Arun Narayanan, CEO, noted during the call, the Q2 results demonstrate the effectiveness of Stem's software-centric approach, which was designed to drive operational leverage and ensure structural improvements.
One of the key highlights from the quarter was the achievement of record non-GAAP gross margins, driven by a revenue mix weighted towards software services and edge hardware. This, combined with low operating expenses, resulted in adjusted EBITDA of $6 million, up 63% from the same period last year. For the first half of 2026, adjusted EBITDA was $8 million, compared to negative $1 million for the first half of 2025. This marked a clear evidence of the inflection point the company has been building towards.
Stem's CEO, Arun Narayanan, emphasized that the company is proving its operational leverage and structural improvements, which were made in 2025. The improved gross margins and low operating expenses are expected to continue driving results throughout the second half of 2026. Furthermore, operating cash flow reached breakeven this quarter at $0.3 million, a $9 million sequential improvement and a $22 million improvement versus the same period last year.
The company's second priority is strengthening its core PowerTrack platform, which saw significant growth in the second quarter. Stem added approximately 0.8 gigawatts of solar assets under management, driving 3% sequential growth in PowerTrack Annual Recurring Revenue (ARR). The company also shipped a handful of product improvements, including an updated user experience with dark mode and keyboard shortcuts, which are valued by its operators and asset managers.
Customer adoption of PowerTrack Sage, the AI assistant within PowerTrack, remains strong, reflecting consistent day-to-day usage across various organizations. Stem continues to advance the integration of raicoon, an automated fault detection and event management technology acquired in April, into its PowerTrack platform. The development and sales teams are now working through how best to package and release this new capability to customers.
As Brian Musfeldt, CFO, highlighted during the call, Stem is reaffirming its full-year 2026 guidance, driven by its confidence in the company's operational performance and growth momentum. The results from the second quarter demonstrate that Stem is on track to deliver what its software-centric transformation was designed to achieve.
Stem's Q2 2026 earnings call highlights a year of transformation for the company, marked by impressive financial results and significant progress in strengthening its core PowerTrack platform. As the company continues to drive operational leverage and ensure structural improvements, investors can expect further evidence of its inflection point in the coming quarters.
