Shares of Stem Inc. vaulted 26% to $6.88 on August 13, after the clean-energy software company delivered a second-quarter earnings report that rewarded profitability over growth. Stem reported a narrower-than-expected loss of -$1.58 per share, beating analyst estimates of -$1.79, while revenue of $33.65 million fell short of the $36.76 million forecast. Wall Street looked past the sales miss and zeroed in on a company that is earning far more on every dollar it brings in.

  • Record Margins Signal the Software Pivot Is Working. Revenue from software, services, and edge hardware was $33.4 million, up 1% year-over-year, supported by 11% growth in its core energy-management software platform, while non-GAAP gross margin climbed to 55% from 49% a year ago. That shift matters: software revenue is recurring and carries fatter profits than reselling batteries, which is exactly where Stem is shedding sales. The higher margin proves the company can do more with less hardware-dependent revenue.

  • Profits and Cash Flow Are Turning a Corner. Adjusted EBITDA — essentially operating profit before non-cash charges — hit $6.2 million, up 63% year-over-year and the fifth straight positive quarter, while operating cash flow swung to positive $0.3 million from a -$21.3 million outflow a year earlier.

For the first half of 2026, adjusted EBITDA was $8 million versus negative $1 million in the same period of 2025. A company that was burning cash a year ago is now approaching self-funding — a critical threshold for a stock still down roughly 61% year-to-date.

  • Revenue Is Still Shrinking, and That Matters. Revenue fell 12% year-over-year to $33.7 million from $38.4 million, driven by sharply lower battery hardware resales and managed services.

Management reaffirmed full-year guidance of $140–$190 million in revenue and $10–$15 million in adjusted EBITDA , but the wide revenue range underscores how much depends on lumpy hardware deals in the second half.

  • The Stock Is Cheap for a Reason — Insiders Are Selling. With a market cap of roughly $53 million and a 52-week range of $4.92–$32.23 , Stem remains a micro-cap gamble on the energy-storage buildout. Insiders have made 10 sales and zero purchases in the past six months , a pattern that tempers the bullish earnings narrative. Analysts have cut their average price target from $10 to $7.50 , barely above today's price — suggesting Wall Street sees limited near-term upside even after the profitability beat.