Stem, Inc. (STEM) Earnings Call Transcript & Summary

Good morning. Welcome to the Stem 2022 Investor and Analyst Day. I'm Ted Durbin. I'm the Head of Investor Relations at Stem. We're thrilled to host you at this inaugural event for us. Welcome to everybody here in the room in New York and to those of you listening on the webcast. Thank you for taking the time to be with us. Before we get started, I'm going to say, please silence your cell phones and laptops. Thank you. A couple of housekeeping items. The presentation we're going to use today will be posted to the Investor Relations portion of our website this morning. It's at www.investors.stem.com. We have about 2 to 2.5 hours prepared remarks, and that will be followed by a question-and-answer session. For those of you in the room, we do ask that you'll hold your questions until the end of the presentation, and we're going to be compiling questions on the webcast as well. And so we'll try to get to as many questions as we can at the end of the session. And then lastly, before we begin, I would like to remind all participants that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. I therefore refer you to our latest 10-K filing and our other SEC filings. Our comments today will also include non-GAAP financial measures. Additional details and notes on the reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures can be found in the appendix of the presentation. So with that, I'm excited to turn the floor to John Carrington, our Chief Executive Officer. Thank you.

Thanks, Ted, and I'll second your welcoming. I really want to thank everybody for joining, particularly the shareholders and analysts. We have a good Stem contingency that you'll hear from later today. And I know there's a significant crowd on the webcast. So we appreciate you taking the time to spend the next few hours with us, and we are really, really excited about the agenda that we put forth. I couldn't be more proud of this team. I think you're going to get a real sense today of how broad and the depth and breadth of this team. You're going to hear a lot about the Athena differentiation. You could see the agenda here. I'm going to do a strategic overview for about 25, 30 minutes, and then we'll jump into some of the growth outlook with Prakesh. He'll talk more about the IRA and the implications there and strategies we have there. Also a nice opportunity to meet Bob Schaefer. He's the Co-founder of AlsoEnergy, which was the acquisition that we completed earlier in the year. I think many of you are aware of that, but it will be nice to have a chance to hear from Bob. On the technology side, Larsh will have a very extensive overview, as I said, on Athena and the road map and path in which we're going forward. And then we'll have a break. We'll come back and then Bryan Ho is going to walk through some software demos. And I think you'll find that very instructive, show a little bit of the Athena portal and some of the value that really brings to our customers and how customers use the product. Finally, we'll have a technology roundtable on the technology front. And I think you'll find that very interesting, whereby we're bringing the product and the software developers together to really, again, help you understand how we go to market, how we think about building our software and the time lines we think about and kind of the lean philosophy that we use. And then Bill will wrap with a finance update. And then as Ted mentioned, we'll go right into Q&A. So let me jump right into my slides. I'm going to talk a little bit about the team itself. I'll go through the 4 ways in which we think about how we will win as a company and then also the final takeaway slide on some of my thoughts going forward. So from a leadership team, look, I think it's one of the best teams in the industry. The individuals across the top, I just mentioned are the presenters today. The balance of the individuals on this page represent the executive team. I would highlight that Mike Carlson is here in the back left. At lunch, maybe you have a chance to say hello to him. He's our new Chief Operating Officer that we've announced recently. Excited to have Mike comes to us from Coke, has also spent time at GE, ABB and Siemens. So a terrific addition to the team. I would say this is a team that's worked together for many years, for the most part. We have also added some incredible new people all of which, though, have extensive experience in software, industrials and in the energy space. So just, I think, a really top-notch team with some great experience to help us go into the next level of this business. So welcoming them. I think one of the big components of how we think about the company is around execution. And this is the core guiding principles that we use. And it's really off of OKR. So you think about Objectives and Key Results. Each one of these is an objective. Each one of these is owned by 1 or 2 of the executive staff members that you saw on the previous slide. And then what we do is we build key results to the entire business around each of these objectives. So an individual in India could look at this and understand what results they're responsible for to execute on that objective. I think it's very important that everyone's aligned to our success, and they understand what they have to do to enable these objectives. These are reviewed on a weekly basis. It's a rigorous process. And again, it's really focused on our continued commitment to executing on our goals. I think a lot of you haven't been with the company through the journey to get to today. I know some -- I just -- I saw one of our bankers that's been on that journey smiling as I said that. And look, I think it's important to kind of recap a little bit about what got us here. And it's really -- it's a history of execution. It's somewhat remarkable path that we got. It was never a straight line as it typically isn't. But when we were in California on the C&I market, we were really the first to introduce an ESS product. It was so early, in fact, that we had to build the inverters. We put batteries into a server, think of a server box, put 18 batteries in and very manual process and that box saved anywhere from $7,500 to $10,000 a year, okay? We had customers say, it cost me more to do the contracting than put this product in. So those are the early days of this business, but it was always grounded in software. And it was also grounded in building out virtual power plants. So we started to execute on the Fortune 500. Then we took it to aggregating all of these and participating in the wholesale market. So we participated in day ahead and real-time markets. We were the first to do that with a battery system. We eventually developed the largest virtual power plant in California with a utility, and that's for Southern Cal Edison and you can see 420-megawatt hours. And I think it was a very admirable feet that we accomplished in California. And then we started to get a lot of incoming in front of the meter. And people said, do you think you can really execute in front of the meter because you've done such a great job behind the meter. While we went from 0 to over 50% market share in 18 months in the New England ISO. So a real accomplishment that is very much attributable to our software platform because we could translate our behind-the-meter software deck to that front-of-the-meter need. And I think that -- that was a big milestone for the business to make that transition. We also acquired the #1 solar asset performance management software platform. You'll hear more about this from Bob. This is the AlsoEnergy piece, and it's just a really great addition to the Stem family, and you'll see some of the upside associated with that. And then finally, we announced last quarter that we're the only software provider in the space to bring all 13 Rocky Mountain Institute wheel of storage items from a software offering. So I think just -- it's good to get a little level set on some of the key milestones that got us here. And on the right side, you could see how our execution has really generated significant enterprise value over the last several years. The right side might be my favorite slide I've ever seen or done. So I'm pretty excited about that one. And again, we expect to continue up into the right as we go forward. Along the lines of execution, look, as I said, we have really built a foundation for success. And I think it really shows in the results. As you can see here, revenues have nearly tripled over the last 3 years, bookings on track to nearly double. So these numbers are, I think, exceptional. I think what's really exciting about it is all of this drives strong recurring long-term software revenue. The difference between the 187 and the 169 as an example, on the revenue side, it's just low end and high end of guidance on a CAGR level. So just to level set -- the footnotes are probably difficult to see here in the audience. If I go over to kind of the money slide, today, we are announcing that the company will be EBITDA positive in the second half of 2023. We are very focused on our growth in software and services, and we believe this drives 15% to 20% long-term EBITDA margin. And thirdly, we are reaffirming our 2022 guidance. Going forward, 4 ways in which we will win: technology leadership, operational excellence, commercial strategy and micro tailwinds -- macro, excuse me, macro tailwinds. From a technology leadership standpoint, this is an analysis that we've not shared before. It's one that McKinsey did, they have a technology team specifically aligned to analyzing your digital and analytical capabilities, and it's a deep group of subject matter expertise in the software space. And what they did is looked at us, deep dive on the Athena platform and then they looked at how we scored versus 550 other companies. And we scored higher than the average digital leader. Now you may say, who's the digital leader. While the digital leaders included Google, Amazon and Netflix. So this was -- these are your top software developers and digital leaders globally. As you can see, where Stem landed on that front. From the perspective of some of the items that they measured us on the core dimensions, it was really an extensive analysis done. You could see Strategy, Org and Talent, Agile Delivery, which you'll hear more about from Albert later today; Capabilities; Adoption and Scaling. So I would say Stem's technology team and the group is very highly performing. You could see that we're on the high end across every one of these 5 metrics, and you'll see the tangible results of this later today as we go through the software and the Athena platform in more detail. From a combined company standpoint, I think we are very uniquely positioned to build a platform-based model. The exciting part is our customers want a single pane of glass, and we're going to bring that to them. There's no other software provider that has the solar and storage optimization capabilities, longevity or amount of assets under management that Stem brings now. So this is a very exciting acquisition that we've executed on. I would say also, not only were they nominated #1 by Guidehouse again. But Stem was named one of the top 10 most innovative energy firms in the world by Fast company. So I think we're both getting a lot of exposure and being recognized for the software platform and the execution that we've accomplished. From an operational excellence standpoint, I would say our technology teams have really accomplished some notable milestones, including 13 -- all 13 of the RMI as I mentioned, value streams and RMI wheel from a utility obligation standpoint, look, you see it today in Florida. But we've seen many market issues, catastrophic weather conditions and these are straining the grids, and our utility customers are calling on our systems more than ever. We are becoming a more and more material part of helping them in times of need, and we are executing on 100% of our utility obligations, and we're getting called on year-over-year over 70% more. So it's just becoming a remarkable, important component of the grid. On the ISO New England side, we've built a leading market share, as I mentioned, by delivering better forecasted financial performance, achieving over 96% of perfect forecast revenues. That's a very impressive number. It's best-in-class. And then from a greenhouse gas optimization standpoint, this is a very interesting newer component of Athena. And what we've done is, we've provided our customers a software solution to look at all the types of energy sources of their energy, and we can actually utilize Athena at the right time to help drive their greenhouse gas emissions lower. And our customers are coming to this for this service. They want to understand where is the energy coming from what type of generation and utilize Stem system to offset that greenhouse gas issue. So it's something that we're working on with our C&I customers and having a tremendous amount of success. And then finally, the solar asset performance business is very differentiated. And you'll see here as well, as you'll hear more from Bob. But we continue to be the market leader in that space with the PowerTrack technology. On the bookings side, I would say that the continued momentum around bookings demand continues to be strong. We'll talk more about that with Bill later in the discussion. As we build our pipeline of software-only deals and really flex our power pricing, you'll see some price increases that we've done, and we've talked about this on earnings calls. We continue to deliver growing gross margins with accelerating software share, and we see that as driving higher gross margins throughout the model period. We also see strong growth in our Contracted Annual Revenue -- annual recurring revenue, our CAR metric that we introduced some time ago. And then finally, on the operating leverage standpoint, this is an area Bill will talk more about. I'm really excited about this because we have over 100 people in India that came with the AlsoEnergy acquisition. And having that installed base in that key and that center of excellence that we're going to build there and expand there will really help us drive down the OpEx piece of our business. And as you can see, we went from 44% in 2021 as a percent of revenue and we're at 33% as the midpoint of guidance for this year. On the commercial side, I mean, I think a lot of you have seen in this page, 3 pillars to our model. Software drives 80% gross margin with long-term Contracted Recurring Revenue. The hardware continues to be a strategic subject matter expertise, product that we bring to our customers. And notably, it's one that we can serve in a very low cost way. In fact, we only have about 10 people focused on hardware in this company. And 100% of our hardware sales are software attached for Athena. So it's still an important part of our business. And again, we view it as a low cost to serve. And then again, on the market participation, we see long-term upside from the aggregated capacity that we have in the market, and this continues to drive higher-than-forecasted project economics for our customers. So market participation is an important part of our model as well as we go forward. From a value prop standpoint, they're really -- 2 segments of the market that we focus on behind-the-meter and in front-of-the-meter, and we're continuing to build out our EV offering. We'll talk a little bit about that as well. And that's an important component, particularly for a lot of the behind-the-meter customers that you see here and others. We really built the behind-the-meter market. And today, I think many of these Fortune 500 customers think of us as a trusted adviser. They think of us as someone that can help them install more storage, help them with a solar plus storage, also help them think through their EV and fleet electrification. A lot of our customers are trying to understand that piece and companies like UPS and Home Depot in particular. So we'll continue to be that trusted adviser to them, and we feel like -- we feel like we have the right offering to execute on that key space for us. And then finally, on the front-of-the-meter side, this is a market, as I mentioned, that we really continue to have great success on. I'd say that we have simplify the solution to help these customers achieve significant increases in their returns. You see the IRR increases of 10% to 40%. We have the software platform that they need. We'll continue to grow this. We are becoming the de facto company for the space. And as I mentioned, really to go from 0 to leading market share in 18 months in New England ISO is very impressive. And it says a lot about the software. It also says a lot about Athena that over 50% of our contracted volume last quarter was from repeat customers. So, we are executing the say-do ratio is there, and they're continuing to come back and purchase from Stem. From a macro tailwind standpoint, look, I think everyone is very familiar with the inflation Reduction Act. This is a significant for the entire industry, but particularly for storage. We feel like we're incredibly well positioned in this area. We're going to continue to work through the details. You'll hear that today from Bill. I mean we still have to unpack some of the tax components around IRA. But all in all, it's a nice opportunity for the business, certainly. And there's 3 areas I'd highlight on the greenfield side. We see customer economics improving from 30% to 60%. One of the unique things about the AlsoEnergy acquisition is that we have over 40,000 existing customers that are solar only. So this is a very compelling competitive moat for our sales team to go see those Also customers, add storage to those existing solar sites. We know where they are, we know how big the solar system is. We know how to size the system. And as you could see here, we view it as a $6 billion potential in that portfolio of customers. No other competitor has that type of an opportunity and just a hunting ground, if you will, from a sales standpoint. And then finally, on the solar production tax credit, we believe that with Athena and PowerTrack, we can enable over 500 bps. Prakesh will talk through that more in his section. He unpacks this. It's a very interesting offering that we think we can bring our customers, and we're going to share that with you today. On the battery supply chain piece, look, I think IRA will drive further U.S. manufacturing. We're seeing the announcements already. I expect significant capacity expansions globally in addition to just the U.S. And from a Stem standpoint, we're fully contracted through 3Q 2023. We're executing on the fourth quarter of '23 and starting to look at the beginning of 2024. As we've told you, we typically try to be a year out and unless there's some big dislocation that would allow us to go longer or we change that strategy. But typically, that's how you can think about our perspective on our supply chain and how we kind of contract that out longer term. And I'd say that, look, despite near-term fluctuations in supply chain, the long-term trajectory for battery prices is deflationary, as you can see here. 20% price down. That goes out to about 2030, big cost component is still the sales. So we continue to monitor that very closely. And I think that we've added some very strong supply chain team members, and I think that will really help continue the momentum that we've had in this space. I would say, another thing to note is, in the last couple of months, I think there's been over a dozen gigafactories announced in the U.S. alone. So the amount of capacity coming on, if you were one of the 28,000 people that participated in RE+ last week, you saw and heard how many suppliers are adding capacity, I'm sure. And it's an impressive amount. Now I don't think the U.S. piece will be on for a couple of years. That's okay because I think everyone globally is going to continue to add capacity. So a couple of 3 takeaways here that I just want to hit on before I turn it over to Prakesh. Number one, this really is a massive market. Energy storage and asset performance management are some of the fastest-growing areas. And we really offer the potential for the most profitable market opportunity. And really, we view it as kind of the broadest energy landscape where we can bring solar and storage together and execute on that for our customers. You're going to hear a lot about the innovative products and services today. And I think you'll walk away realizing how differentiated we are. We really believe that both the team and the platform is unique. You saw it in the McKinsey report, you're going to see it here live today, and we're really excited to share all that with you. And then on the profitability standpoint, we really view this as a core competency. And you're going to see our commitment to financial discipline and really, we expect to meet these profitability goals that we've talked about in the second half of next year. There's going to be significant financial discipline. Bill Bush and his team are well staffed to execute on this. And we feel like driving a capital-light business that can generate a significant free cash flow is very important for our investors and the company in general. So with that, I'll turn the discussion over to our Chief Strategy Officer, Prakesh Patel.

Great to be with you. Today, I'm going to share a couple of our thoughts on our growth outlook, and in particular, a preliminary view on how we expect the inflation reduction act to impact our business and our view on growth. And also, we'll provide some upside opportunities, as John mentioned. We think there's some really compelling new offerings that we can bring to market and we'll detail some of the returns and how we think that's going to hit with customers. Here, I wanted to lay out, this is really a preliminary view. As John discussed, there's still a couple of considerations around the IRA that need to get resolved by the market. But overall, we think the impact of the Inflation Reduction Act is really underappreciated by the market. And as you'll see in Bill's slides, there are several factors that we think once resolved could cause us to have a more aggressive view on our growth outlook. Based on current estimates on just the impact of the stand-alone storage ITC, based on market estimates that we've seen, we expect about a 50% or greater increase in the rate of growth across both behind-the-meter and front-of-the-meter markets? And then will unpack the expected growth in the solar asset performance market as well. But overall, continued strong growth and a lot of potential tailwinds that could accelerate that further. Here, one of the points I wanted to highlight is really the fact that we haven't seen a complete view on the impact of the Inflation Reduction Act come out from third-party research houses. Wood Mac released something just around the stand-alone storage ITC, but there are several provisions around the broader market that we think could be synergistic in driving demand, list some of those here. In particular, the extension of the solar tax credits, wind and many other provisions around electric vehicles, each of these have a synergistic effect on driving more demand for energy storage, and we'll talk about how we're capitalizing on these opportunities. Overall, we think we're very well positioned to bring to market these solutions, and we'll talk about some of that in a couple of slides. The first segment, really where Stem started behind-the-meter market. We expect the benefits [ of ] have a particular meaningful impact in vectoring our business to drive greater volume in this segment. As we've discussed, we have significant deeper relationships with many of the Fortune 500s. Recently, we've had a lot of incoming requests from these accounts around thinking through national rollouts across their footprint. Historically, we were primarily focused in markets where storage penciled such as California, New York and other geographies. Today, we're in discussions with many brands around a national rollout. I think we've mentioned with some of the folks here, if you think of just one of our accounts as an example, Home Depot, their footprint across the U.S. represents a several hundred million dollar opportunity alone. Now when you multiply this across the several dozen accounts that we have in the BTM market, we think that's a very compelling number, and we're very optimistic about our prospects for capturing growth in this segment. One of the aspects that we think could be really interesting is the electrification of electric vehicle fleets. On the right-hand side, this is an analysis from NREL where basically, the takeaway is that the expected load growth from the electric vehicle fleet market is expected to be as large or larger than the existing commercial industrial load in the U.S. Effectively, this means that the BTM market should double in size as far as an opportunity for us for helping these customers to reduce their electricity bills and, in particular, drive sustainability solutions across Fortune 500s and the broader BTM market. Our view is conservatively about 50% of our BTM business will be attached with EVs. And notably, as we've talked about, the system sizes should be much larger in these opportunities by 2x to 5x. And these installations also come with compelling hardware gross margins and about a double of our typical software fee on installations at these locations. Next, when I talk about the front-of-the-meter market. This is something, as John mentioned , we entered recently about 3 years ago, and we continue to see strong momentum. It's the fastest-growing segment of the storage landscape, a 58% compound annual growth rate forecast by Wood Mackenzie through 2025. This represents about 900 basis points better than what we showed in our prior Analyst Day about a year ago. And notably, it's almost a double of what is forecast -- was forecast for the 2025 period. So a lot of acceleration in this market. And what across both the front-of-the-meter and behind-the-meter space, one of the things we're really excited about is the fact that market participation revenues, we're expecting that to be significantly a greater share of our project economics. And that's really because we no longer have this restriction on our trading activity. Historically, we were relying on the storage ITC. Now with the stand-alone -- I'm sorry, solar ITC now with the stand-alone storage ITC, there's no longer that restriction on charging. And as a result, we expect greater market participation revenues in systems across BTM and FTM. Lastly, these are forecasts on the solar asset performance monitoring segment, both in the U.S. and globally. I'll remind everyone the bulk of -- AlsoEnergy's businesses in the U.S., about 90% and with the majority of that in the behind-the-meter segment. So we expect a lot of growth there. John talked a little bit about the opportunity with their captive footprint, and I'll go into detail on that in the next slide here. One of the things we did post-closing the acquisition is look through the install register at AlsoEnergy, and our sales teams have begun outreach on discussions around retrofitting existing solar locations with storage. With the storage ITC, this is very compelling economics. And if you look at just the core markets where stem is currently active. That represents about a $6 billion opportunity across the entire AlsoEnergy footprint, that's [ 20 billion ] of customers where we have their solar data, we have a contractual relationship with them. They're very happy with our service. And it's very easy for us to access that market. We're excited, in particular, to think of ways how we can efficiently target this market, right? This is 41,000 sites. And so it really takes someone who's serviced a fragmented set of customers that Stem has through its history, and we're focused on automated tools and customer self-service offerings to programmatically sell into this installed base. If you think about the portfolios of other asset managers like a GSAM or Brookfield, we think we could replicate this programmatic selling capability across their footprint as well and leverage that same strategy across the Fortune 500. So at a minimum, just within our customer base, it's several billion, and we think we can multiply that across the broader CNA landscape. Then this slide, this is really something that we think is uniquely differentiated that we can bring into the market. On the right-hand side, this is something that several market analysts have put together. Essentially, what it is, is the -- what it represents is one of the provisions of the Inflation Reduction Act relate to the ability to opt into the production tax credit in lieu of the solar ITC. What's required to receive this incentive is really a software solution that can ensure credibly uptime and generation across the asset life whereby a developer would take the incentive over time rather than the upfront ITC incentive. What this analysis says and it's really difficult to decipher in this table. But what we've done separately across our existing customer base is to use the pro forma project economics that we have and looked at a scenario where we took the solar PTC and the key conclusion is that we can enhance project returns by anywhere from 500 to 1,000 basis points on these systems by electing to take PTC. That's a uniquely differentiated financial outcome that's enabled by the combination of Stem and AlsoEnergy. So again, something that we can uniquely bring to market substantially better returns in select instances, and this bundled offering is one we're taking to market right now and really capitalizing on some of the provisions of the Inflation Reduction Act. Lastly, as I've been mentioning, we still -- and in this [ analysis ] are still digesting some of the provisions of the Inflation Reduction Act. Bill will talk about some of the factors that lead us to guide around the growth rates that we're expecting. However, we expect to revisit that as some of these items, including the battery supply chain as an example resolve. We're pretty optimistic, as John mentioned and I have on this page, there's a 13x expansion in domestic manufacturing capacity that's been announced, about 10 gigafactories have been announced as well in the U.S. And there are several factors that we think should drive substantial demand for storage. So we're really excited. And next, I want to hand it over to Bob Schaefer and then Larsh Johnson to talk about exactly how our technology solutions will capitalize on this opportunity. So I'll hand it off to Bob.

Thanks, Prakesh. Good morning, folks. My name is Bob Schaefer. I'm President of AlsoEnergy, one of its founders. I'm really excited to be here, excited to share with you our vision and really the joint vision that we have here together. When I would start my meetings with the team, we talked about our vision of the company and our vision of the future. And honestly, that vision was a vision where all generation on the grid was renewable, driven by cost and by resilience. And we're going to see kind of the story and how it evolves to where it is today, where really we can achieve that vision. So first, you may be wondering what AlsoEnergy is and what we do. And what we do is we provide a software platform called an Asset Performance Management Platform. What that does is it gathers data from sites, in AlsoEnergy's case, over 200,000 sites, located wherever they are in the world in 50 countries, in fact, gathers that data and allows people to monitor, manage, control and increase the value of those properties, right? Those assets, those investments, without the products and services that we provide, you'd manage things with paper and pencil, spreadsheets, maybe some other Microsoft products, it would be awful, absolutely awful. And really, what we developed here is we've built a system of record, right? It's a system of record. We're all primary data associated with the site performance is located. And that allows us to do analytics, allows us to do optimization and reduce the cost to maintain, while at the same time, increasing the performance, increasing the financial performance of the system. Prior to AlsoEnergy, I spent 25 years in the computer industry. We just learned about best practices, right? We're in a fast-moving industry. We have best practices. We figured out best practice for products, for our teams, for companies and how to grow them. And what we did when we started the company in 2007, we thought we had the expertise to make a difference. And that difference really was we would apply those best practices to an emerging industry, right, the emergency industry being renewables. And so it took a little time to figure it out. We started in 2007. But here we are today. I think we've done a great job. The company is successful. And our flagship product, PowerTrack, is a system of record or solar PV sites. So here, you might want to wonder about like how we got here, right? What happened. Honestly, solar is still a maturing industry. But we've been around since the beginning here in the United States. We've grown with the industry. We remain trusted and reliable name. We've been there through the ups and the downs, will be here tomorrow for you. We're a stable company. And that's important because the assets that our customers are deploying have an expected life of 20 to 25 years. So it's really kind of critical. The recent acquisition of our company by Stem really provides us further stability and really a further growth opportunity. So since we started and had our first revenue in 2009, 2 years after we started the company, and we've grown to become a global provider. We started with an acquisition in 2013, which was done on the balance sheet, which really helped us kind of understand and grow in the C&I market here domestically. And when I talk about markets here, we talk about 3 basic markets of residential market, homes, systems on rooftops. We talk about a C&I market, which is typically systems under 5 megawatts in size, and we talk about utility markets, which are those markets and those sites over 5 megawatts. When we first started, we were doing just residential. In fact, the first site is my house or was my old house, right? And it was interesting. It was a 7-kilowatt system, the second site was 125 kilowatts, and the third site was a megawatt. This demonstrated to us early on that we had the right pieces of the puzzle and the right technology to kind of grow. And we went through [ tours of ] magnitude within a very, very short period of time in terms of size of the sites that were taken care of. So we're excited about that. Just very, very excited. At the same time, just a year after we start getting revenue in 2009, in 2010, we were lucky enough to attract an anchor customer called Morgan Stanley. Morgan Stanley saw some things in us that we just didn't understand yet, and they standardized on us of all crazy things. And that was interesting from our perspective because we're just trying to wrap our brains around what was the value of the standardization. And honestly, what it did is it reduced their cost of human capital to manage all these systems, instead of having 10 different systems to go into, they had 1. So they had 1 run book, right, and that allowed them to really maximize the value of their systems by minimizing the human cost of managing assets. In 2017, we attracted a private equity firm. And we looked at that because we look inside ourselves and said, how do we continue to grow the company. And we said we have skills and we had gaps. In 2017, private equity firm -- we attracted a private equity firm. In 2018, we acquired 3 companies in the course of 90 days. It was a little [indiscernible], a little difficult. But what those 3 companies did for us is kind of interesting. What they did is they expanded our market coverage as well as our geographic coverage. One company we acquired was heading into bankruptcy. It was a customer acquisition, right, pretty straightforward. A second company we acquired had an office in Berlin and had a utility expertise. And with that office in Berlin, we received -- we also acquired an office in Tokyo. So we had now with the second acquisition, more of a global coverage into key markets, which we thought would lead the world and lead the world in renewable adoption. Third acquisition that we did further kind of strengthened our case and our strengthened our sales here domestically, but also gave us an ops in Delhi, India. So now the AlsoEnergy team could -- which was located here in States, which is located in Berlin and which was located in Delhi and Tokyo could honestly say the sun never sets on AlsoEnergy. And that was kind of an interesting comment, and it just made us very proud of what we were able to do. So what happens here, you can see rapidly then we grew in terms of Assets [ Performance ] Management, in terms of skills and capabilities, in terms of segment coverage, and in addition in terms of geographic coverage. So what does that lead to, right? Strategy is great. I love execution, right? I do. So for us, what happened now is, we have customers now that's standardized on our platform. Just like Morgan Stanley, but now we have a better understanding of why. If you look at the data here or the information here, it shows, hey, 13 of the top 15 United States, C&I, commercial industrial asset owners have standardized on PowerTrack, our platform. 9 of the top 10 community solar asset owners have standardized on PowerTrack. To me, our customers, right, this adoption is evidence of the market-leading capabilities. We have companies like NextEra, Clearway and Nexamp, they have standardized on our product. And the great thing about that is, from my selfish perspective, as our customers grow, we grow with them, right? We grow site at a time, not -- and some of these customers that have not one site or 5 sites or 10, but they have 100 or 1,000 sites. And that's where the real value of the platform that we provide comes in. The interesting thing about this also when we look at standardization is it really creates what, I'm going to call, a flow business where we do many, many transactions. We'll do several thousand transactions and be responsible for several thousand sites on an annual basis. So it's a nice flow business, just it runs. We're always actually looking at for new customers, but we have a great base, a great and growing base with a continued increase in the number of sites we have under management. So again, if we look at -- so you say, hey, so Bob, you created the system, you said, "Hey, I've got this. People have standardized. You may be wondering now why, right? What are the key customer value propositions. I kind of touched on them a little bit, but I'm going to repeat them here. So I always think about renewable sites, these solar PV sites, sites with storage, sites with solar and/or however it works, right? These are simply investments, right? They're simply investments with elements of risk, liquidity and yield. And quite honestly, when you have 10,000 or 100,000 of these sites, you can't manage them with spreadsheets, SharePoint, with any of these things, you have to go to a platform, right? And the value we bring to our customers is that we have a platform, we have expertise, we're subject matter experts in what we're doing. So they can buy that subject matter expertise as part of a SaaS component. And so what we do then with our SaaS product is we maximize the yield. We maximize the revenue from the site. That's done because in near real time, we're able to report system outages or system underperformance. So you're able to understand how your systems are performing against what they should be doing, right, predicted versus actual predictive versus production, right? These are important ideas. At the same time, we decreased the cost of operations and maintenance, right? This is a human element. And the reason, and the way we do that is we're able to pinpoint the problems on the site. So when truck rolls occur or when the corrective actions need to be made, people know what to do. right? It's not -- you don't want to do this twice or 3 times, no, you're going to do once, right? So for us, it's all about increasing the revenue and decreasing the cost, right? That's the things that we do. And finally, as we talk about decreasing the cost, now since you have a single pane of glass, a single asset performance management portal, right, you as an asset manager can run standardized reports and KPIs across your fleet, understand how they are performing against their prediction, how they're performing against each other, how they're performing against things that could be close by. So quite honestly, you get this great 360-degree view of your assets, right? And again, it's all about how do you increase that yield, how you increase the value of those assets. And again, that's precisely what our platform is designed to do. Where does that take us? I said early on, right, in this presentation that the vision that I told our folks was that in the future, all generation on the grid is going to be renewable, driven by cost and resilience. But honestly, AlsoEnergy could not deliver the promise of resilience in the absence of storage, right? We couldn't do it. We could never achieve the full vision [ state ]. And that's we're able to do today, right? With Stem Athena, PowerTrack, the piece of the puzzle you have here in front of you today, we're able to further maximize and this is what is what Prakesh said, we can further maximize the return of these renewable investments. We can further reduce the risk associated with the investments and really drive the adoption. It's an incredible combination, right? It's a vision I'm happy and proud to tell. And I appreciate, again, you're listening to the presentation and hope to be able to answer any questions later on. Thank you. Now I'd like to introduce Larsh Johnson, Larsh is our Chief Technology Officer.

So please let me know if you're not able to hear me, and I will be going through the program here and hopefully give you a sense of the differentiation of Athena, introduce you to our technical talent. We have a number of them who are going to be joining us little later, give you a demonstration and show you what is what's happening with our platform. As Bob mentioned, we have a variety of different things that the platform does. But first and foremost, it will optimize the economic value of assets through both the effective and intelligent dispatch of flexible resources like storage, and it will improve the overall asset performance through the lifetime management of the solution. So we'll be covering that in a number of these slides. But I'll start off with that because that is a key differentiating factors to have that combined unified platform that services those 2 key values. So if you followed Stem you know this energy transition is the problem that we're solving, and we believe that Smart Energy storage is the key to this solution. And what's been happening with the various changes in the markets and regulations is that the value propositions for storage are getting richer. They're getting more complex. And the same thing is happening in the solar industry. As we see the attach rate of solar and storage in new project development continuing to increase. And so with the success of these programs, the value models have gotten more complex, and we've been able to essentially envision this platform that allows us to make this work. The problem with [ complexity ], is that it's sand in the gears, right? And the sand in the gears is the real problem that we'll end up solving with software through automation and the effective use of technology. And to accelerate this transition, we need to make Smart Energy simpler. So you're going to hear the simplifying theme throughout the presentation. So Athena is an enterprise platform developed specifically to make solar and clean energy storage simpler and more scalable to affect the energy transition. So we introduced some of the people that are developing this and talk about our team. This Athena and PowerTrack is a unified platform, is built over 10 years with multiple different generations. The operating experience in the school of hard knocks has been a big part of making sure that we deliver the most robust platform in the industry. And today, over 1/3 of the company is devoted to this endeavor. 200 professionals with deep experience in all aspects of Software as a Service, data science, controls and industrial IoT. And if you've heard from John, the experience of this team and the methodologies of our development, the technical capabilities have been ranked best-in-class across the digital leaders, let alone our industry peers. So it's a super accomplishment, very proud of this team and the work that they've been doing. Getting there has taken some time. When I started with Stem almost 7 years ago, we were delivering software releases on a quarterly basis. We even named them after BART stations in San Francisco because a train was leaving the station, going into the next stop, but it took us 90 days to get that process completed and get that software out the door, best-in-breed software today. We're delivering software on a daily basis in incremental releases that allow us to continually innovate and update software, all while we're continuing to operate a 24/7 platform. It's today managing over 0.5 million in devices, 32 gigawatts of solar and 2 gigawatts of storage assets together, having accumulated over 1 billion hours of operating time. It's truly remarkable that we're able to continue to operate in this very fast-paced implementation process. So these best-in-class ratings also applied to our product strategy, as you saw on the chart. Our agile development methods for our experienced commercial and product teams, evaluate the needs and opportunities of the grid, incorporate our voice of customer and prioritize and develop and deliver all of these Athena innovative solutions. So very proud of this team and want to continue to highlight the successes that they've developed here. So just talk a little bit about a platform and what makes up the platform that we offer here. The software is key, first and foremost, probably our largest investment in terms of our people. And this open enterprise platform is today supporting a growing number of software applications that simplify the full life cycle of our clean energy assets. To do that, we have a second part of the solution, which is the edge solutions. So while we often talk about hardware and you think about batteries or solar panels, there's an important part of the overall operating plan, that is the controls, communications and the compute power necessary at that local site in order to provide the instrumentation to measure, manage and control those assets. And so that control equipment, that software and equipment deployed at each site, we call that the edge platform. And AlsoEnergy has been a leading provider of edge platforms for the solar monitoring business and controls. And what we've been able to do is to unify the platforms with both solar energy storage and provide a single unified approach to instrumenting and controlling these large assets and the equipment that we operate. So when we talk about our edge platform, it is a combination of our proprietary software, extending Athena at the edge and the equipment that is necessary to run the compute and communications to monitor and control each of those assets at the site. And then third, we have an extremely strong group of expert services personnel that provide subject matter expertise across a wide range of applications and capabilities that are very important to the overall life cycle management and simplifying the process with our customers, starting at the conception of a project all the way through to the operating metrics that achieve the value of the asset over time. So those 3 elements of our platform are all key to our offering and a big part of what you'll continue to see us delivering to the customers. So together, they form the trusted enterprise platform that unlocks the flexibility across the clean energy value chain. This is an important set of words. It defines what we deliver, defines our commitment to our customers and that starting with the idea that it's a trusted platform. And that's rooted in the performance and the metrics that you've seen, the deliverables that we have for our customers and the value that they get by working with Stem. The flexibility is in the 13 different value streams that you've heard us talk about. Today, we have a new icon. So we're going to throw a little curveball at you, but the summary of those 13 value streams as shown around the room of this particular wheel. And this is essentially the flexibility to provide full solar optimization using storage to achieve utility bill savings for C&I customers behind-the-meter, to participate in wholesale markets and earn grid revenues from dispatchable utility services. And these are provided both in front-of and behind-the-meter. And then as you heard also from Prakesh to address some of the GHG objectives that customers have, whether it's through incentive programs or internal ESG objectives that many of our customers have in terms of their sustainability management. And then finally, we provide resiliency and backup power. And as the people in Florida are probably finding out right now, that can be very important in some of these different weather conditions. So flexibility is not just for the economic -- the initial economics, but for future-proofing these assets. So as we see the landscape changing, markets and regulations evolving, it's important for our customers to know that even though they may not be able to take advantage of one of these values right now in the future, they may be able to or it may become more important to their initial than maybe initially when we start the project with them. And then finally, enterprise. And you've heard Bob talk about how customers are standardizing on a platform like PowerTrack. And we see the same application being able to provide a unified performance management window across behind-the- meter, front-of-the-meter, storage, storage plus solar, solar alone and then any type of different OEM equipment that needs to be integrated on a single platform as an incredible value to our customers who are continuing to grow and invest in these assets over time. So that is a unique breadth and depth of clean energy solutions, value streams, asset performance management that we feel is highly differentiated in our offering today. We're going to unpack that software a bit just a little bit and talk a little bit more about the 2 categories we've been mentioning here, economic optimization and the asset performance. So first, Athena automates dispatching with flexible energy systems, right, to achieve that maximum economic value. How does that happen? The first step is we need to predict the future. We need to predict what's going to happen. You need to understand how much solar generation we're going to have available. These are at every particular site that we're operating. We need to predict that solar generation. We need to predict what the market prices will be. We need to predict a customer load if we're going to be offsetting the customer load and optimizing for behind-the-meter facility. And then we need to run that optimization which oftentimes takes millions of scenarios in order to achieve the best fit and look at the landscape of that particular site over a multi-day period, determining if the energy available is best to use today or best to save and use tomorrow when market prices may be higher or opportunities may be better. We do that over a multiple day scenario. And we're doing this continuously, literally running millions of scenarios every hour. And then finally, we have to dispatch the asset. So once we determine what the economic ideal operating plan is we need to actually create that -- realize that economic plan, either through bidding into a wholesale market and clearing in prices that will affect the operation of the system in the way we want or by directly dispatching that aspect for a particular customer opportunity. This automated, very scalable prediction optimizing dispatch process run continuously, nonstop 24/7, supporting the economic dispatch of these flexible assets. This is a fully automated process lights out. There's no humans involved in this loop. Once we set it up, it just keeps running. And then second, we're at the point of asset performance management. All the time we're doing this, we're continually getting streaming data from these sites. Data that can range from every second to every few minutes. It's coming in, in order to make sure that we have a complete situational awareness for all assets. And then Athena can determine if there's anything that needs to be acted on. Corrective actions such as remote automated solutions as well as corrective actions that may involve field work dispatch. So Athena automates this process, processing terabytes of data every day and determining where there are issues and then triggering the appropriate workflows to either automatically resolve an issue, informing the proper people and then in some cases, being able to initiate a workflow that results in a truck roll in order to do some work at the site. Delivering both of these again on a unified platform, we think it's a entirely differentiated offer that increases yield, reduces risk and improves the operating efficiency of these clean energy assets. And this is just incredibly important to achieve our mission of accelerating the clean energy transition because the cost of these operations, the economic value is what underwrites the ability to continue to grow this clean energy portfolio. I'm going to dig in one more level and talk a little bit about the automated AI operations. And it operates on several levels. So you'll hear us talk about one second data. We're also talking about one second and even sub-second control that has to happen. A lot of this is affected directly at the edge because of the latency that has to be low for some of these grid-related services. And that's -- these kinds of cadences are effectively what lead us into the performance that we've been citing. 96% of perfect foresight in terms of the ISO New England market revenues and overperforming in the greenhouse gas goals at C&I sites in California. So again, every second, these solutions are operating at the edge, they're acquiring site-specific data, combining that real-time asset condition, generation, local weather status and the making control decisions that can respond in milliseconds. At least every hour, Athena is executing the digital model of each and every site. This is being done in the cloud. And it's leveraging that real-time data that's streaming to the cloud from every one of these sites. And these individual models of each site effectively will generate predictions for solar generation, site loads, energy market prices. And then those predictions are used in these millions of operating scenarios that are evaluated in order to determine the best way forward for that individual site. And again, that's being optimized across a multi-day period, typically 3 to 4 days. And then on a daily basis, we're evaluating the key performance indicators, the KPIs that really determine how we're performing, either against greenhouse gas goal against an incentive goal against battery longevity and performance objectives for the battery and warranty and so forth and then determining what that ongoing operating plan should be in relation to those maybe longer-horizon metrics that are also part of the optimization process. And then very interesting, quite important is on a monthly basis, our automated AI operations will evaluate the models that are used for each of these forecasts for each and every site. So every site may have multiple forecast streams that are being run. And every one of those may have a model that's selected specifically based on model evaluation process that runs automatically every month in order to adapt to longer changing conditions and that automated model selection, you can look at deep neural net, gradient boosted network, gradient boosted forecast, random forest approach. And all of those different approaches are evaluated in order to say what's the best one for this particular site and then that's selected for the next operating period. So Athena is automatically doing this in the background, evaluating the best model approach, that set of hyperparameters that control that model and then being able to say this is how we should proceed and that AI automation for that process is something we think is also a unique and differentiated value in terms of scaling and operating these systems, adapting to conditions without human intervention. And then, of course, our data scientist, as you'll hear later, they'd love to get hands on the data. And so they get very deep into some of the operational reviews and so forth in order to say, well, how are things going? What are some of the benefits of this particular model approach or that model approach and how do we improve that? And typically, we feed that into our product development process, but then we can very rapidly deploy software, as you heard, in order to adapt to those changes as well. So this is part of the overall platform. And once we've looked at that -- those core capabilities, we think about well now, how are we going to use these? What are some of the applications that can take advantage of these capabilities. So we'll talk about 3 of them here. This is 3 out of a longer list, and you're going to see some of these demonstrated today. But the starting point for this is to understand what's -- what are the customer personas that need some of the value that we can create through these Athena processes. That starts in the beginning of a project, we need to evaluate the economic returns and do the simulations in order to say what's the best battery, what's best size, how are we going to model that with different value streams over time. And the analyzer product is used by the developers in those particular cases. And as you heard from Bob, O&M providers are using PowerTrack in order to monitor and determine when the assets need some sort of repair and determine what the asset performance is against expected capabilities and then indeed being able to affect that corrective action when needed. And then asset owners who are a key target for us in terms of our enterprise software platform are the ones who own these assets over time, sometimes 10 to 20 years, operating objectives that they have and being able to use our software for ongoing economic performance evaluation, understanding where it is with relationship to the expected and then deciding if they want to change any kind of operating strategies that may affect the future economic value of that particular site. And as we do all this, we're using a common enterprise platform that leverages a common data plane that ensures consistency in the reviews of the asset and the performance against any one of the -- from any one of these vantage points. So I've described some of the core Athena services that can be leveraged in multiple ways. And a few of our applications that demonstrate how we're going to be serving different parties throughout the ecosystem. So -- but if we look at this and talk a little bit just about the core platform itself, we think about really 3 different areas of capabilities within the software infrastructure. We call these core, common and distinct. And if we think about the value of the platform, the value of a platform is when you can have core and common services that allow you to rapidly build new individual applications without having to replicate that underpinning. So the infrastructure for data acquisition, the infrastructure for data quality and data management, the infrastructure for doing forecasting and optimization, all of these services become part of that building block that allows us to assemble applications and achieve a great deal of software reuse and what you would call operating leverage as we attempt to expand new markets and do new things with new use cases and even new sectors. So examples of this include the ability to move into EV charging space because the data acquisition infrastructure and the data modeling for achieving telemetry from EV solutions is in place, and it's extensible based on what we have in our core data acquisition services that today process over a terabyte of data every day from a whole variety of different endpoint devices. As we think about the core services, I mentioned forecasting and optimization. And as you think about what we're doing throughout the life cycle of the project, before we start a project, we'll analyze the project performance using the same optimization process we use in production, operation, where we're running controls. We're using the same optimization service. And then when you look at retrospective review of performance, we'll compare that operating performance against a perfect foresight using the same optimization process. So those components are being reused in multiple different ways to provide applications that cover the full life cycle of a project for different parts of the customer ecosystem. I'm going to move on to the third part of our platform, and this is our services. And as much as we automate things, there's still some things that humans need to do. The software platform has got a terrific range of capabilities and our customers value that, but they also value the subject matter expertise that we see from a team of experts that have been working with solar and storage for many years. Storage is much more, let's say, nuanced today. It's not as far down the learning curve in solar. There's a lot of product iteration. There's a lot of new value streams. There's a lot of variability in the way storage systems get used. And so a lot of our customers are really trying to come up that learning curve themselves. And in doing so, they're willing to pay us for these kinds of services. We've proven our expert services and bundled offerings. And now we're starting to announce services that will be available on an unbundled basis as in a number of these different areas. So -- with that, we think we can capture the full value of the subject matter experts that we have on staff to help in the design process to be able to bring Athena ready sites into a commercial operation, simplifying the process for the -- both the developer and the engineering and construction teams. We think we'll be able to provide network services for those folks who don't have remote operation centers, our remote operations team today provides full life cycle management, monitoring and managing the overall sites, coordinating dispatching to multiple different OEMs and field service providers. And then very importantly, in our program operations team, we provided a sort of almost an onerous representative or an agent that enables that team to enroll systems and assets into wholesale markets in the utility programs and provide all of that back office support in order to get to the value streams that are part of a wholesale market and grid service participation. So taken together, we really have a full set of software, edge solutions and program services and operating services with subject matter experts that can really simplify the process of getting a scalable approach to deploying clean energy assets. So the question is, well, what does winning look like? With this extensive suite of capabilities, there's a lot of different characteristics that I think are important here. The interesting thing that's going on with the passage of IRA is how to think about solar plus storage combination. So we're going to focus a little bit on winning with the hybrid systems where you have both solar and storage, in particular, potentially retrofitting storage to that 40,000 installed base that you heard about with AlsoEnergy PowerTrack system. So we'll start with one of the sites that has solar and storage in Massachusetts. We've been operating this site, delivering a full suite of capabilities that automatically continuously co-optimize 7 different value streams. We're bidding hybrid solar and storage into the ISO-New England market. PowerTrack is at the site providing a complete view of the asset, the solar asset and on-site weather conditions. And this combination of economic optimization and asset management has resulted in revenues exceeding the project pro forma by over 46%. This demonstrates the differentiated capability to operate and monetize these different value streams in grid services and wholesale market opportunities in front-of-the-meter site, operating with the combined services of the Athena platform and the AlsoEnergy PowerTrack application. Moving behind-the-meter. With the continuing growth in solar and the inevitable duck curve that's occurring in multiple different markets already, we're going to see utility tariffs and wholesale market prices and incentives that drive a lot of the economics as you see in this picture in another jurisdictions as well, the economics for storage are going to shift -- there to shift demand to optimize solar and then be providing fast-acting services for grid operators in order to stabilize the grid with increasing the penetration of solar. In this example, with solar energy, we -- the customer add solar energy, we significantly increase our savings, adding storage as Athena monetizes these value streams. And this is optimizing against that customer's forecasted load. It's optimizing against utility tariffs and market prices and then also again forecasting solar generation in order to do so. So that optimization forecasting loop that we talked about is in full swing here, optimizing this value for this site, delivering these kinds of returns for the customer. And I think as example picture of what we can see as we look at that installed base of solar that now with the IRA passage is likely to benefit from attached storage and just as a reminder, this is the bread and butter that Athena grew up on in the California market where these conditions were all present. And so we've been able to continue to establish our leadership. You've heard us talk about the project that we took over in 2020, where we've been able to demonstrate superior returns for the asset owners and the customers on the order of 30% and that's another, again, proof point of our differentiated performance in this particular market segment. So we'll see that Athena's advantages will continue to play out in California. And not only did the IRA, but the rollout of the FERC 2222 ruling that we'll now see taking shape in multiple different markets where wholesale market participation is starting to become more attractable and economically valuable to behind-the-meter assets. So one of the other dynamics that's going to come in here is the merger and the co-optimization across what we're already doing today in multiple markets with front-of-the-meter projects moving into the behind-the-meter applications as well. So again, bringing back the differentiation of Athena with this broader suite of capabilities across a broad market segments and being able to tie that back under a single platform into a unique value proposition. Another aspect of winning is the idea that we expand our partner ecosystem. We've announced a relationship with EV charging leader InCharge Energy. And it's just another example of an expanding ecosystem where we're adding value, taking adjacent capabilities and being able to integrate that with the capabilities that we offer in this case, being able to, as I say, fuel the fleets from the sun, optimize -- minimize the grid impact and then providing resiliency, so the customers can continue to charge their fleet vehicles even if the grid may be unreliable at that time. As we look at these applications and some of the partners in our ecosystem look at these applications, they see what Athena and Stem is doing with utility tariffs, market pricing, the complexities of that, the complexity of integration into wholesale markets and grid services programs, and they see that we're already doing that. And then they see that we're also able to optimize for greenhouse gas and then offer resiliency and they say, "Well, this is a no-brainer. We have to work with Stem to achieve these goals in addition to our fleet management and fleet operations goals for EV charging." So taken together, we offer a solution that I think will mirror some other electrification initiatives that we'll see coming as well, but it's definitely being led, as you heard from Prakesh, by the fleet electrification and EV charging. But finally, you heard Bob mention the standardization on the PowerTrack platform. And we see winning as owners, standardizing on the Athena platform. And all what that means. That means the entire combination of the services that we offer for economic optimization, the services we offer for asset performance management with a PowerTrack application and the services we offer fundamentally as a company. And we've seen that PowerTrack has been able to achieve that status, and we think that one of the ways that we'll continue to drive that for the broader platform is to focus on applications that address the full ecosystem. So while owners may be the long-term target for our sales efforts, we're also able to sell our capabilities, some of them have described into all different parts of the ecosystem. As I mentioned, developers want to understand the project economics upfront. They will be looking at the Athena analyzer and the capability to model and assess the value of projects and different value streams, look at pro formas, it may do the what-if and what happens if policies change and be able to create value there and simplify that process, of achieving a bankable solution that will have great value to the asset owners and ultimately acquire those solutions. The EPCs, the engineering and construction companies, will see simpler deployments. The unified edge that I mentioned will allow them to more effectively model the control -- and get the cost of implementing controls for a project site that they're responsible for, and to have services that can help them commission sites and make them operation before that commercial operation date where they may be transferred over to the operating partners and the owners. O&M service providers will be key long-term users of the Athena platform. They'll be using it to monitor the systems that they're responsible for and maintaining, and they will be able to use that to initiate the workflows that will ultimately help drive the effective use of resources, to minimize the operating cost and to make sure they deliver the best value and best performance to the owners of those systems. And then full circle, of course, owners will have a trusted enterprise platform. We offer a single pane of glass that covers both behind-the-meter and front-of-the-meter facilities, with a mix of clean energy assets across multiple markets, use cases and OEMs and provides integrated economic optimization and asset performance management. And that's a mouthful, but that's what the platform promises, is to be able to provide that kind of capability with one stop with one company who can support that over time. And when compared to multiple point solutions, our unified platform and Athena offerings are differentiated in the industry, and the ability to sell solutions into this entire ecosystem will make smart energy simpler for all. And now I think we're going to take a break.

Okay. So yes, let's take a break for about 10 minutes or so, come back around 10:30, and we'll restart with a software demo. So 10 minutes and we'll be back in the room. Restrooms are around the outside there... [Break]

All right. Let's -- if everybody can sit down, we're running a little over, we want to get stay on track. So everybody can take your seats, please. We're going to get restarted here with the software demo.

Hey, everybody. Welcome back. We're going to go ahead and get started on the next part of the presentation here. [indiscernible] next session. So I wanted to introduce some of the team here, and in particular, Bryan Ho, who's going to lead off the demonstration of our software products and applications and talk a little bit about the value proposition to the key customer users and so forth. But I want to brag a little bit about Bryan and his background. First of all, he's overeducated like many of our folks with Harvard undergraduate and a PhD from MIT. So I'm very jealous on that front. And then he founded an energy storage company and then was the Head of Product at Energy Storage for Engie, was it 6 years? 6 years. So obviously, very well trained, very well versed in the economics and business value of storage and he is here to demonstrate some of the capabilities we have with the Athena platform and applications. So with that, you're on.

All right. Well, thank you for that very kind intro, Larsh. So over the next 15 minutes or so, I'll take you through a tour of our Athena apps. As Larsh mentioned, our apps sit at the top of the Athena platform and provide that window to connect our asset owners, our customers, with their assets. As I walk through the apps, I'll do my best to highlight some of the powerful data and analytics going on under the hood that power those apps. So we can see here, we've got Explorer, which is our asset owner, asset manager facing application that provides high-level insights on financial and economic performance of the assets. We've got PowerTrack, which provides asset performance management capabilities across asset types, really targeted towards asset managers, operations managers and field technicians. We've got Analyzer, which is developer facing, which provides analytics on pro forma revenue expectations on projects. And finally, we've got Supervisor, which is a network operator facing application that provides a bit more detailed views of the telemetry and operations of the asset. Athena is sort of 1 platform idea is something I'll emphasize as a theme and come back to you as I go through these applications. It's the idea that across our applications and across our capabilities, we offer asset owners a one-stop shop regardless of asset class, whether that be solar, storage or now electric charging across asset scale, whether that be C&I or utility scale and across asset activity, whether that be asset performance management or economic optimization. So we'll start with PowerTrack, diving right in here. When you log into PowerTrack, you're greeted at a portfolio level summary, of key performance indicators around your assets that constitute that portfolio. So here, we'll see a list of sites within the portfolio and a completely configurable table of KPIs. We can bring in KPIs like availability, which could help asset owner quickly identify compliance with contracted targets. We could bring in a summary of any active alerts. And by hovering over, we can see details on those alerts. We can bring in reminders, production numbers against rolling averages. And this whole view is deeply customizable as you understand that asset owners and users will have their particular list priorities amongst indicators that they use to gauge portfolio health. Another important portfolio level view is going to be the event manager. Here, we bring up across the portfolio, active events, typically faults and alerts that are actionable for the asset manager and their agents. Actionable is an important word here because I want to unhide some suppressed alerts. With this kind of view, nuisance alerting is a big problem, right? If you flood a user with information that is not actionable, they lose the forest from the trees. They lose the valuable insights amongst noise and reduce the value of the tool entirely. What's going on under the hood is with all the information and all the faults alerts coming in, analytics are being applied to those to categorize them, nest them and determine which ones are actionable. So that at the end of the day, we have a very clean list of items that an asset manager or operator really needs to concern themselves with, and can take remedial steps to bring their portfolio back up to a state of operating efficiency. We click into any of these particular items, can immediately acknowledge them. We can also start creating work orders. The idea of Athena as an open platform means that we interact with third-party systems to enable seamless workflows that provide Athena as a head end to connect in with our customized enterprise systems to, again, enable to get a job done. Now in addition to these portfolio level views, once you start talking about operating managers, operations managers and field technicians, you might want to go deeper into a specific site. When we look at site-level information, we get immediate real-time data across solar and storage assets. We get data and configurations on all the hardware on-site, as well as production time series data. A particular -- if a site is a particular interest and there is an issue that needs to be taken a deeper look at, we can build custom charts. You see here that we are bringing in data from across a large number of devices on site. And that's really another sort of key value of PowerTrack is it's open configurability and compatibility what the hardware out there that enables asset owners to bring the hardware they choose to the projects and connect up into PowerTrack with what Bob mentioned this concept of standardization across the portfolio. Once it's in PowerTrack, everything looks like -- all weather stations look like weather stations. All inverters look like inverters, and we standardize on that data plane. If we wanted to look at inverter data, we can look at specific inverter data down to highly granular information, for example, data coming off of the DC bus of an inverter. And this would provide the tools for a technician to really get into root cause diagnostics, seeing which inverters deviating from the norm or what that behavior looks like and roll the appropriate truck. Now once we get past sort of the asset performance management aspect, the other side of the house might be interested in for these sites, how is it performing from a financial perspective? What kind of revenues is it generating? So for that, we'll hop over across to the Explorer app. The Explorer app will look at a similar solar plus storage site. And as we land on that site, we're immediately greeted with a summary of revenue performance on that site. You can look at both the storage view, as well as a combined solar and storage view. On this page, you get a monthly view by utility billing cycle of how much the facility has saved on their bill, with the deployment of solar and storage. We can see some very high-level breakdowns of where those savings came from on a billing period view. And if we dive into the data any given month, we can get an even more granular breakdown. Here on this site, we're looking at a month's view of data, both solar production, original building load and net building load after the contribution of storage and solar. What you'll see here is that storage is working hard to keep those peaks of the facility at bay, thereby mitigating their demand charges, which are a common form of utility charge amongst C&I customers. You see the solar carving out large amounts of load during the day, reducing their energy charges. Combined through the breakout of this monthly bill into a subcomponents, we can find that of the original $28,000 monthly bill, solar and storage was able to reduce the bill down to a little over $15,000. For those asset managers who are particularly interested in what drives the behavior of the savings, we can go to views that provide some of the input signals into our optimization plotted against the time series data. So here the site is optimizing for utility bill savings as well as greenhouse gas reductions. So we see that same operating data. And against that, we can now see how the retail tariff charges are changing with time, typically having a peak period, a part peak -- shoulder peak period and an off-peak period, and how the marginal emissions on the grid are fluctuating over time is co-optimizing against saving on the utility bill and again, generating reductions in greenhouse gas emissions for the facility operations to finally arrive at the ultimate operations of the site. It is worth kind of noting here, what's going on under the hood, right? To accomplish this, we have an up-to-date, high fidelity database of tariffs. You need to have good tariff information to operate properly. We've got advanced forecasting models that allow us to forecast building load to best understand how we can use the limited energy in a battery to maximal effect. And then we're operating through a model predictive control loop, as Larsh mentioned, updating our forecast and optimizations every hour to execute on the optimal dispatch strategy of that storage system. Now once we actually dispatch a storage system, we then take in the meter data, again, we reconcile it against utility bills, as well as the retail tariff information to then come up with those summary savings metrics. In these situations, Athena sits really at kind of a center of intelligence for an entire facility, which just allows us then to summarize for facility owner key information about their facility, how their peak demand is evolving over time with and without the [Indiscernible] storage, as well as how their energy consumption is evolving over time with and without storage. Into this sort of center of intelligence for the site, we're now adding new capabilities. And as Larsh mentioned, EV charging is our next asset class. As we diversify now to solar, storage and EV charging, we're updating our Explorer to now bring more relevant information to the user immediately in the form of customizable KPI tiles. So here, we immediately bring to the attention to the asset owner, the savings generated, the solar generation on site and quantify the greenhouse gas reductions. We also provide a unique tile for them to get clear information about how their EV charger status is in terms of what power is being discharged by the EV chargers, what the availability is. And then again, with this concept of an open platform, allowing them to link in their charge management system natively through Athena. In addition, we're creating new views, particularly around greenhouse gas emissions that will really allow facilities to track our emissions and the emissions reductions are achieving over time. So we sent a couple of slides looking at what solar and storage is doing for the C&I customer. We're not going to switch tracks a bit and go on to our supervisor app to look at the wholesale market participation use case. We're taking a look at a solar plus storage site in Massachusetts, participating in the ISO New England market for energy and ancillary services. We bring in real-time data into Supervisor. And again, this is the network operator facing applications. And as we chart historical data, I'll give you a bit of a background on what's going on site. This site, again, in Massachusetts, is part of the Massachusetts Smart Program, which has incentivized many new storage facilities to co-locate -- many new solar facilities to colocate with storage. Storage on site is participating in the wholesale power markets independently. But there are operating constraints placed on that solar asset. It will claim -- the storage asset claims solar ITC and therefore must charge off of solar energy. The project also has a limited interconnection capacity. So the storage cannot discharge concurrently with solar. Under these operating constraints, Athena is optimizing the operations and dispatch of the storage and is bidding behavior to earn the maximum amount of revenue in the ISO New England wholesale power market through both the day-ahead and real-time energy markets as well as the for reserves -- real-time reserves and real-time frequency regulation markets. And the activity in those -- and the dispatch by ISO New England in those markets are what you see here as the purple. In order to -- again, looking under the hood a bit, in order to execute on this use case and sort of derive revenue from that ISO nEW England markets, Athena is forecasting prices for each of those market products. It's forecasting the intermittent solar generation on site to understand what it can bid in the future to not violate these constraints of solar ITC charging or interconnection. It is then taking on other site level constraints related to hardware configuration, other programmatic rules from participating in the SMART program and then optimizing all that to generate bids, prices and quantities are submitted to ISO New England. When those bids are cleared, the dispatch signals are routed back out to the asset, battery dispatches. And then on the back end, we provide services to our customers and asset owners to summarize settlement data and report on performance. We'll take a look a little bit here at the bidding behavior. So we can go in and look at, for example, what the battery is doing in the real-time energy markets. We've got on the top graph, historical prices. And on the bottom graph, we see a combination of data related to our forecasted prices, as well as the quantities that we're bidding in to buy and sell energy and the prices associated with those quantities that we're bidding and selling energy at. The peakiness you see in the hash lines are the hours at which we're choosing to participate and buy or sell energy in that real-time market. Solid curves are the prices associated with those quantities at which we are buying and selling energy. And then the dash curve is our forecast for the energy price. Well, generally, obviously, you buy energy when prices are low, sell energy when prices are high, but we'll also transact in order to maintain the state of charge to posture for our participation in ancillary services, particularly reserves and frequency regulation. We can take a look now over at what we're doing in frequency regulation specifically. And here, we see within the green and red hashed envelope is the capacity we're offering into the market for frequency regulation. We'll offer in when frequency regulation prices are high or enduring even moderate price hours if the battery is relatively idle, we will sort of monetize those idle hours with participation in the regulation market. The importance and kind of the value of Athena as an intelligent platform is, again, co-optimizing against both day-ahead, real-time energy and service markets. By bringing that full bundle in together, and optimizing our cross-sells, we provide the optimal revenue outcome for asset owners and the sort of the greatest uplift we can possibly provide over manual control of these assets. So with that, I'm going to go ahead and return now back to our Athena landing page. Again, Athena is that one platform where our users regardless of asset class, asset scale and asset activity can come and connect with their assets. All right. Well, thank you very much. We're going to put on a short video now as we transition into our panel discussion.

So we do have a quick testimonial video. [Presentation]

So I'm back to introduce our leadership panel, and we're going to have some great discussion with the team here. I'd like to introduce the man who's going to [ MC ] this process, Albert Hofeldt, who's our new SVP of Technology. Albert joined us in September, and comes to us with a rich background in energy, energy markets, IoT devices. And one thing that was particularly interesting from my perspective was his experience with financial transactions and blockchain applications. So there's a lot of interesting tech that's going to be discussed today. and Albert is going to lead that process and introduce the panel that we have in with.

Thanks, Larsh. Appreciate it. So I'll give a little bit of background on myself before we get into the panelists. It is great to see you all here. They don't let some technology out much. So it's a delight. Thanks very much. And it's very exciting to be here on the back of [indiscernible], right? Our industry conference was absolutely fantastic. A huge amount of excitement which is a delight, of course, for our product and technology teams, right? We love to see the support of partners, customers, validation of everything that we've crafted. And of course, that gives us feedback to iterate and refine and further perfect our applications. Now in terms of why I came to Stem, it's a very interesting organization, of course. My background is technology for 25 years. I've worked at Thomson Reuters and started my platform unification activities back then. And then I went on to the CTO at Genscape and that was, of course, in the energy field, machine learning platforms, building it from the ground up and IoT monitoring, et cetera. Very exciting. And then also LiquidX, I was recently CTO there, and that's also about building multi-asset class trading platforms in the cloud. All of this is really around the SaaSifiation of applications and operating both in the cloud as well as out in the edge in some instances with containerization. Of course, here at Stem, it is all about all the above. So I think the other thing around the organization is a very common DNA with the essence of what architecture is really about. Microservices, [indiscernible] entitlements, componentization, services, which can be easily adaptable to suit the need of customers and build out products almost in a synthetic way, right, through those microservices and entitlement system. The organization really impressed me in terms of the approach taken with the platform, the adaptability, extensibility of it, and that was absolutely fantastic. So the edge side is exciting as well. So Athena Cloud, Athena Edge, all wonderful. The organization is very clearly product-led, having been through a variety of situations where, of course, it needs to be a balance, but product-led is absolutely fantastic. And I see that here in spades, long-term road map planning is part and parcel with the DNA of the organization. So that's also something I really value. And the exceptional team we've seen from Bryan and others and as you meet the panelists here, of course, you could probably take this slice across any number of areas within Stem and you'd find similarly qualified and talented candidates. So an honor to be here. Thank you very much for listening to us. We get on to our roundtable now and why don't we let the panelists do brief intros.

My name is Vikas Walia, I'm the Chief Platform Architect at Stem.

I'm Bryan Ho, Senior Director of Product Management.

I'm Pranav Agarwal. I'm the Head of Data Science at Stem.

My name is Sharifa Dunn. I'm on the product team at AlsoEnergy.

Excellent. So the objective today is to give you guys a little bit of an experience and kind of look behind the curtain of the magic that happens and talk to the folks who are literally designing and building our applications around Athena, et cetera. So to do that, we have gathered 3 themes that we wish to talk about, agility, simplicity and platform intelligence/machine learning. I think all very kind of interesting topics as it relates to other things that you've heard today. Also with respect to agility, you'll hear many organizations talk about it. We're agile, right? There's very much to that, which has to be carefully managed, especially as we are 25 squads or scrum teams working to build enterprise-grade applications. And as I mentioned, architecture is absolutely essential to the go-forward strategy. That architecture needs to be evolved very carefully even though you're releasing in production on a daily basis, which we'll talk about and how we do that, agility is also part of the culture. It has to be very carefully managed through process. An architecture has to be established in really kind of a long-range view. And you can get out of sync if you're too active or to hyper. So agility is essential and also architecture evolution is essentially managed carefully. Now we'll talk a little bit more about this. Now Bryan, can you talk to us a little bit about how the PD process is unique at Stem.

Yes. I think what makes Stem unique, particularly in energy industry is that it is a software tech company. From the ground up, agile processes are implemented in a true form, and as a product manager that gives us a really exciting product development organization with which to partner. Developments measured on the scale of weeks, when we've got any sort of production issues, those are resolutions measured on the scale of hours. And particularly in the storage side, where the industry is still relatively nascent, right, the revenue streams, the stacks of revenue streams, the regional programs are still evolving. That agility gives us a really, really powerful foundations by which to lead into markets. Stem has led into California, Stem has led into Hawaii, Stem has led into Ontario, Stem has led into Massachusetts. We can be on that cutting edge because we've got that machinery behind us. I think agility is also important because we've got an open platform, which means we've got on the edge of our platform, on the periphery of our platform, these integrations with a lot of data providers as well as third-party software services. And as those move and evolve, we need to be able to adapt with them. And again, Agile helps us get there.

And what's great about that, too, of course, is that as we've talked about, our team is global, right? So we have an encapsulated set of scrum teams which are in India and the product owners as well as technologists are there. And so we all share kind of the common approach and DNA. So when Bryan is working here in the U.S., right, then we also have counterparts in Delhi that are picking up and so we can operate very effectively that way. And also in terms of that design for integration, right, it eases kind of the -- what we talked about earlier is the many configurations that happen at a client site, right? Those integrations have to be handled in an agile way, right? And so we kind of have this kind of configurator or the process of transmogrification of edge configurations into the platform, and that also goes to how we live, eat and breathe agile. The other way you can see, of course, is what we've done with PowerTrack, which is obviously a fantastic acquisition that Bob talked about earlier. And Sharifa, can you tell us a little bit about how that was done so rapidly in terms of integrating with Athena.

Yes. It was actually quite remarkable when you think about the size and the breadth of the PowerTrack application. We have about 200,000 sites and numerous assets that's been underneath that and think about bringing that onto the Athena platform and to have the team and the architecture to do that as quickly as we did, which was in about 6 months from the closing of our acquisition really speaks to the right platform and the right architecture and being able to extend the Athena platform has been crucial in bringing PowerTrack on as quickly. And so we think about now being able to share data across different sites across, PowerTrack across, some of the applications that we see on the legacy Athena platform that Bryan demoed earlier and that really speaks to how quickly the team has been able to focus and connect sites and connect information for our customers, which has been super important. Just after the acquisition closed, we had customers asking us how quickly are we going to be able to see some of our sites on the Stem Athena platform. And we were able to do that in such a short amount of time. And it was important for us to be able to meet our customers where they are, especially as they're growing their sites, growing their portfolios. -- and being able to see across different types of applications, what their assets are doing. And so we are really focused on bringing the team together, both on the AlsoEnergy side, as well as on the Stem side to really bring PowerTrack quickly onto the Athena platform. And it really speaks to, again, the breadth and the depth of the platform of the team to be able to do that as quickly as we did.

And I think also, it's a great example of then how we can take persona-based development and do something like that single pane of glass view, and integrate then something as significant as AlsoEnergy in such a rapid time. And again, this speaks to architecture and to that point, then Vikas as Chief Architect, can you give us a little bit of an insight in terms of how you believe that architecture supports the PD vision of Athena.

Like you heard, we have an ever-changing landscape. We're integrating new partners. We're running in multiple geographies and continuously operating sites. So we need to plan for change, embrace change, but we also need to keep the system up and running 24/7. So agile DevOps and our investment in continuous integration and continuous development, deployment, is key to that particular development philosophy. So let's double click a little bit into what we mean by that and how we practice that. So you've all heard about microservices, probably not heard about micro front ends. So you saw the 3 layers that Larsh talked about. You've got the app layer, the Athena portal apps, and I call them micro front ends, the Athena cloud services, those are micro services and the Athena service -- edge services as well, and those are services and components as well. So I call these micro components. And the key thing that we care about for these micro components for scalability and reliability and availability is for us to be able to independently deploy them and independently scale them, right? So -- and that's the mandate, right? Because you have different demands for different components, but those are the 2 key aspects, if anything, that we care about. Now where we take from there is we've got like 80-plus micro complements identified, right? And we've got different guild members. We've got people who are UI specialists, people who are data scientists, people who specialize in data pipelines and they've got their own ownership of competence. So we take those competence and we assign them team ownership. And then to those team members, they're responsible not just for development, but also for test automation and for deploying it in production and also operating it and monitoring it and feedback into the loop, right? So it's -- that's what we call Agile DevOps, right? The teams who are responsible for that component are responsible for the entire life cycle and upkeep for that particular stuff. And the next thing that we enable them, so our CI/CD team, we call them developer experience team, and what their focus is on empowering these teams to be able to iterate quicker, right? So it's not just sufficient to -- we can no longer have the luxury to say, I'll deploy this when I'll have all the pieces of the puzzle figured out, 6 months later, 9 months later. So what we want to be able to do is iterate quicker, deploy quicker, make small changes in the system incrementally and make that change and let the developers embrace that change on a daily basis. So we've set ourselves up for is to take any of those components that you saw, whether it's a micro front ends, the micro services in the cloud or micro services on the edge for developers to be able to develop them every day and push that change out every day. It requires consistent effort and a consistent practice and a discipline and rigor in the organization. So to make sure that your code is being executed, it's being built every day. It's being tested every day. It's being deployed everyday, right? And we have around 80-plus components across the edge cloud and micro front ends. We run on an average, about 3 component integration test cycles where we actually deploy that software with all its dependencies and run it through the spaces every day. And we run on an average about 5 to 10 system integration test cycles where we deploy the entire suite of apps and run it through paces. And those are components which are, again, because of the practices that we follow, we can simulate the entire deployment pipeline, run-through basis and then allow our developers to deploy at will.

And to add to that, and complemented, I think when people talk about agility then they talk about continuous deployment, they talk about being able to make these changes in rapid cycles, right? The responsibility is huge on the development of the QA teams, right? Because we're powering the grid. So everybody has a very deep sense of quality to that point. We've invested heavily in QA automation. And then also, in terms of how this relates to agility and functional changes right on the front end, right, the customers experience right? It's also on the back end on underlying logic and also in terms of models and algorithms, right? And so being able to make changes and enhancements there to models and features is important. So to that point, Pranav, can you tell us a little bit about how our operating rhythm supports the AI brain and machine learning that you run?

Yes, absolutely. So as Head of Data Science, my team's mandate is to release cutting-edge algorithms and intelligence into the Athena platform. Being able to do that at scale, at speed, right? And in an agile manner, in an ever-changing landscape. So we have hardware complexity that's changing. We have tariffs that's changing. The market constructs are changing. So in all of this landscape, we really need an agile process to be able to iterate and sort of release cutting-edge features into the Athena platform. So we leverage what Vikas and his team has built in a big way to be able to not just deploy software in the cloud, but also on the edge, which is extremely hard and being able to do that consistently and reliably is super important. Another thing that we do extremely well at Stem is once we've released the product into the market, we define performance KPIs that are continuously being fed back with the engineering team from the fleet from operations. So I run a weekly call with performance and operations team, where the performance KPIs from the fleet are being fed back and we're learning from the fleet because no matter how much we simulate, the hardware behavior in a big sense we learn from the operation and the markets, right? So as we get these learnings, we need to iterate and sort of keep our product performance on the cutting edge. And having that agile way mechanism to deploy the software in cloud and edge is an extremely big enabler for us to sort of deliver good quality product consistently.

And to that point, I think we can get very excited about our technology, right? Containerization in cloud, containerization at the edge. That's a very refined workflow and deployment model and doing it with Athena is fantastic. But while we're excited about the technology, it has to correlate to the financials, right? So what right for customers? So Bryan, can you give us a few tidbits and factoids on the financial benefits.

Yes. I mean, Albert, you're saying, I mean, all of this, right, I mean, has come at the service of a customer, at the service of the asset owner. I think what this agility does in addition to some more thoughtfully planned development is it allows us to be opportunistic and solve hard problems that other people can't solve. So one example is -- there was an asset owner who had a fleet of 86 sites in California that were underperforming, and they wanted to bring on new software to improve the performance of those sites. Now taking over 86 operational sites in itself is a feat that very few operators -- very few operators have 86 sites, right? But taking over a new portfolio of that magnitude is undertaking that, I think, probably Stem is the only, if not one of the few people who could have pulled it off. We brought those sites over into Athena, got them operational in under 60 days. And then within the first quarter of operations, demonstrated a 30% improvement on performance on those assets. So that's -- those -- that's the kind of like magnitude of problem that Stem can solve with this agility that's given by the product development team.

Yes. And we have kind of a myriad of these case studies, which are, I think, very interesting and the illustrative of what has gone into our platform. And to that point, simplicity, right? So simplicity is another theme as we move on to the second one. So how do we delight customers. So that customer satisfaction comes in many ways, shapes, forms. So for example, it can be something like the 86 sites and how we absorb those, which is much around the integration, but it's also about how we integrate applications, whether they be third-party or acquisition. And coming and building those applications in presenting them through a single pane of glass, right? So you've heard a bit about that. You've heard a bit about PowerTrack. So from the simplicity perspective, there's a lot of engineering that happens under the scenes or behind the scenes, behind that curtain that we're pulling back. And there's a lot of blood, sweat and tears that goes into that. But at the end of the day, customers experience through that single pane of glass. So with that Sharifa, can you tell us about how then our Athena platform and our process there of simplification has eased the PowerTrack integration.

Yes, absolutely. So when you think about PowerTrack now being a part of the Athena platform, we are really now one of the few, if not the only provider that provides asset performance management and economic optimization under one roof. And that really translates to simplicity for our customers. We are positioning ourselves as a solutions company. The markets are nascent as a lot of my co-panelists have mentioned, and we need to be able to be flexible to be modular so that we can meet our customers where they are. And that means a lot of different things for a lot of different people. When we think about the stack of solutions that we provide, we can do everything from the edge to the cloud and they're within. And so we can provide modular solutions to our customers depending on if they need just solar, if they need just storage, if they need solar plus storage we have applications that are set up so that they can maybe buy one of our applications or buy a multiple of our applications. And that's really the key to the success of our platform here and why we're setting ourselves up to be simple and flexible so that our customers are getting exactly what they need, exactly when they need it. And that allows us to continue to layer on applications as well as features and functionality so that when our customers continue to grow, add assets, add markets, become more global, we are able to grow with them. And we've heard that theme before by a couple of speakers ahead of this panel. And we really are making sure that flexibility is a part of the ethos of our teams and making sure that we are able to appropriately and sufficiently meet our customers and meet the markets, especially if things are changing so quickly and so dynamically. And so we're setting ourselves up really to make sure that our applications and our platform are really set up for that success. And really -- another key point around that is building applications that also meet those personas. You heard Larsh in his section talking about PowerTrack for OEM providers, Analyzer for developers and making sure that we're crafting applications that are really suited for specific personas. So they're, again, getting exactly what they need, when they need it. And additionally, when we continue to integrate and extend our platform, thinking about OEM integrations, thinking about utility interconnections, being able to partner with folks like InCharge with Sitetracker so that our customers are able to plug and play into our Athena an applications, into our Athena platform where it makes sense for them. And so that's really a call to, again, flexibility, which provides simplicity for our customers.

Yes. And that flexibility correlates to the modularity of the platform, modularity with services, micro services, and again, back to entitlements. And then to this point about modularity, Vikas, can you talk a bit more about the architecture and the simplicity that we build in, part of that also being trust.

Yes, I'm going to be the developer evangelist here because I firmly believe that if we simplify the life of our developers, we empower them to delight our customers with more powerful apps and iterate more quickly. One -- and the choices that we make and how we do things is motivated by that, right? How do we simplify the life of developers. One of the conscious choices that we made a long time ago, 5 years ago, was we were early adopters of containerization. And ever since like 2017, we had like 100% deployment of our production in using containers, right? So it simplifies the life of developers, whether you're a Python developer or a Java developer or data scientist or UI developer, you have different development stacks, but it homogenizes how you develop and how you interoperate in that particular system. And when we set up the environments, whether we're using -- we use a lot of simulators, use device simulators, we have our own software that's deployed on the edge. And we go a step further. So today, it's become quite a bit of a fashion that most of the cloud deployment is containerized because of the immense benefits for that. But 5 years ago, it was not so. And we made early bets on that, which proved out to be quite rewarding. We went a step further and containerized not just --and homogenized not just on the cloud, but on the edge too. So even today, you have very few companies who roll out the software on the edge. Edge is the new frontier, right? It's an important piece of our software that runs on the edge. The real-time controls happen on the edge and we have to iterate software for controls on the edge with the same agility as we do in the cloud. So having a homogenous way of deploying for developers really eases the friction in terms of how a developer develops on their workstation to deploy it in the cloud with simulators to push it out there, whether it's the edge or the cloud. Another example of nuanced process, but simplified is our approach to cybersecurity, right? So we are operating critical assets, critical infrastructure. So we need to do it reliably and we need to do it securely. And all of us know that cybersecurity threats are pretty real. So we invested in a nuanced approach within the organization, engaging the people, process and technology in a fairly simplified way. So let's look at what we do in terms of some of the things. It starts with training people and training people not in long training sessions once a year or when they start. But our approach to training people and educating them and reinforcing that learning is basically training them in byte-size, 5-minute, 10-minute courses that we send it to them, which are educational and they're also testing their knowledge of cyber security, right? So -- and that's something that applies to everybody in the organization, right? Because somebody in the organization clicking an e-mail with some vulnerabilities is as detrimental to a developer doing the right -- wrong thing from a code perspective. On the process side, we focused on software compliance. So we passed with fine colors in record time from start to finish. And on the technology side, we embraced that continuous development and continuous patching and continuous software upgrade all the way in terms of the CV scanning as well. So we set ourselves on a process again on a leading edge. So instead of like -- you probably heard about people scanning or scanning the SAST and the DAST tools out there. So we're early adopters of container scanning. So when you package your software in the container, you've got different components. You got components that are in C++, you have components written in Python, you have components written in Java. So we're going to scan it all together and make sure we're addressing the vulnerabilities all the way from the Linux operating system, all the way to components that we develop, right? So there is a software BOM and we need to continuously scan our software BOM to see if there are vulnerabilities out there that have been from researchers out there [Indiscernible]. We scan all of our containers every day. It finds vulnerabilities every day, and we patch them every day. So we've incorporated that into the same agile development process. So to date, this year alone, we patched about 3,000 of these vulnerabilities in our software, right? So that's a scale of engagement of our developers into that particular security-minded process. And as much as it is a nuanced approach, we invested pretty heavily in developer experience to make it seamless for developers to work and make it part of their daily rituals, right? So it's not something that they do as a one-off. They follow the exact same CI/CD processes, exact same deployment. And we try to do as much of these things ahead of time for them. To the extent that for most of those changes, all they need to do is accept the merge request, accept the patch request. And our investments in packaging the code, our investments in testability and testing the code on a regular basis does the bulk of the work for it.

And I think as you hear Vikas talk about that, this really does place us, as you saw in John's presentation at the top 5%, 10% rally of digital leaders. Being able to containerize in cloud and on the edge and deploy in real time, continuously, run infosec and ensure that everybody has that same mindset is trained in the same way as we accelerate with our growth in India, et cetera, our development team there. It's relatively unique. But in addition to that uniqueness then is kind of the AI and ML optimization that we do with forecasting and all of our modeling, as you've seen in the applications, it looks relatively simple. Underneath that, there's a lot more to it. Pranav, can you give us a little view about the Wizardry that you do?

Yes, absolutely. So I mean, I would really like to underline the point of having a microservice-based architecture that we have, it's really important because we have structured the optimization and the core forecasting functionality as independent microservices. And what that lets us do in a big part is if you view the customer engagement with our product through the life cycle, when the customer comes to us and they want to assess the expected performance on the site, we are using the exact same micro service of optimization, which is the same thing that we use when the asset is actually on the ground and operating. We're using exact same micro service and then later on when the asset performs, right? And we want to kind of compare the performance with expected performance we're again using the same microservice of optimization. So what that really lets us do is it holds us accountable and honest to our customers of what we are promising early on during the performance stage is exactly what we delivered them during operations. So that's a huge enabler in being able to leverage microservice-based architecture to keep things simple for the customer, whereas all the complexity is sort of containerized within a single micro service. And very recently, we saw like this year in California, we have dispatched 72% year-to-date higher number of grid dispatches than what we did in 2021. And so from a customer's point of view, we are experiencing higher heat days in California and the system is performing. It's dispatching when the utility is asking it to dispatch. So it seems fairly simple. But in the back end, all of these micro services are orchestrating seamlessly to kind of ingest the Open ADR signal, run this forecasting, run optimization microservice and dispatch the asset. So all of this complexity is kind of under the hood. From the customer, it's a seamless experience of delivering the performance when it is demanded from the utility from the grid. So...

And then carrying on with that customer centricity from a product perspective, Brian, can you give a view on how simplicity is enabled by Athena?

Yes. I think, in terms of customer-centric value derived from simplicity, I think -- well, really, we -- to the degree, we do put on kind of a magic show, right? I mean there is a -- like because of there's an incredible amount of complexity that goes under the hood. So to our customers, as you see through the apps, the lens that they see things, these are pretty charts, and these are performance numbers that should be hitting the mark. So I think we put on a happy face to our customers and create a simple experience for them, right, to ensure that we are doing our jobs on the product side, on the engineering side to ensure reliability of performance, the reliability of operations, so we do not suck our customers into those issues, and we can ensure that what they're worried about is developing projects, right? The gating projects on the ground, get projects built, managing the high-level operations of their asset fleets versus having to get into the leads with us. And that simplicity is hard, in concept, right? I mean you can think of -- again, forecasting country management, optimization and dispatch has a pretty simple fundamental loop. But under all that is, the operating history that Stem has, and I think the number is somewhere north of 25 million hours of operating run time now, right, has kind of given Stem all the bruises and taught us all the lessons we need to understand: what do you need to viably operate 24/7 in a fault-tolerant rate? Data connections go out, meters go bad, software services fail, even AWS can have service issues. So how do you operate through all of that and maintain performance at a high level and ensure again that all of that is abstracted away from the customer experience? And there's been an immense amount of investment going at Stem over the years, as a leader and sort of a long-time player in the industry, a lot of complexity that's been built into the back end to make sure that we can operate reliably.

Great. Thanks, Brian. So then it moves on to our third and final theme, which is around platform Inteligencia and machine learning/AI. As you guys have heard, a lot of the secret sauce in the platform is around that, right? So devising the analytics around forecasting optimization, discharge events, et cetera, right? That is a very complex task, and the Athena platform does it remarkably well. In order to do that, we talked about how ingestion of data is essential, right? We heard 1 terabyte per day. We're monitoring over 500,000 end points, which is fantastic. And so to feed platform and that intelligence around it. We need to empower the platform with AI and machine learning. Vikas, can you give us a perspective on how you have crafted Athena with AI/ML?

Yes. So we really kept it simple. So for our AI/ML developers. We empower them in 3 different ways, right? So the first is the big data and making that big data readily available to them from production in real time. The second is big compute. We have AI/ML processes that are quite hungry for compute, and I'll talk about that a little bit later. And the third is hands-on engagement in operations, right? So we -- let me focus on the first one first. So we get about a terabyte of data from our sites every day. So that's a lot of data to crunch in real time. But we invested in using scalable technologies only possible in the cloud, right, with that kind of volume. And we make all of that data available and the curated insights on top of that to our data scientists in near real time. So they can pull the data at any time for their simulation, offline or online, without affecting the production system for the life of the system, right? So we've got 10 years of data for some of the systems. We can pull that out in the heartbeat. Second aspect is compute. So as you all are aware, AI/ML, there are certain aspects of AI/ML that are very compute [indiscernible]. And there are certain aspects in a way that we use it, we want that to be not a barrier. So we create models -- unique models for every one of our sites. So we don't have a common model for all of our sites. We create a unique forecasting model for each of the things that we forecast for each of the sites. And that requires model selection and that requires model training. So we -- for every one of our sites, we do model selection, which is triggered either manually or automatically. So when we detect deviation of the forecasting, algorithms, then they could be model selection that's triggered. Again, we want to be able to do that thing could be triggered for all of our sites at the same time. And that would result in spinning up on-demand, hundreds of containers, and we have. And that's effortless scalability that we offer to our AI/ML developers saying, "You've got big computer at your disposal, use it." We do model selection every month. We do model training every hour for every site, and you can just imagine what that volume of processing that goes on. And the last thing, which is hands-on engagement with ops, right? So when things go wrong and things will go wrong, that they don't behave, the assets are not behaving for your expectations. And that could be because of human error. That could be because of software errors that are found, or that could be because of conditions that we didn't anticipate in our design. The good thing is that our data scientists, we don't have them locked in an ivory tower, fed some reports, months and 3 months and they're saying, "Can you come up with this new algorithm for me that fixes this particular problem?" So our operations feed in through automatic and that just means shorter taps, our data scientists signed us for -- right away and they jump on the system right away to see the behavior of the system as it's -- as the anomaly is unfolding and contribute directly in terms of either interceptions that can be done. Sometimes we have a 4-hour event. We see something going wrong in the first hour. And sometimes we engage folks in the first hour, and they can recommend certain interventions, certain knobs and dials that they can play with, to basically make sure that we have an overall better outcome in that 4 hours. So that's the agility that we offer to our developers. And again, when things go bad, we also allow them to be able to make remediations in a [indiscernible] manner: push code out, develop remediations, test them quickly and push them out in less than a day.

Thank you, Vikas. So without getting into further trade secrets, et cetera, I wanted to wrap up our roundtable. Thank you all for the time and listening. As you can hear, we're product-led, tech-enabled and customer focused. Thank you very much. Over to Larsh.

Yes, I love these guys. And you can see why these guys are basically the best in the business. They've been with us for quite some time and working on all these different things that you've heard about. And I'm assuming that at this point, we can all give you a software test, and you'll pass with flying colors and submit your resumes for software developer positions because it's a fascinating place to work, and I'm sure you would all enjoy it. I'm going to wrap up really quickly because I know we need to get to Bill. And I just want to give you a little bit of that future of Athena. You can see in the image here that we're creating this vision of multiple applications, the modularity that [indiscernible] mentioned, the kind of capability and the flexibility for persona-based development to really simplify the operation of FenEnergy assets and add to the capability system in a number of different dimensions, whether it's new use cases, new geos, new equipment type, new assets of all different models, and it certainly adapting to the continuous transformation as we accelerate this energy transition. So with that, I'm going to hand it over to Bill Bush.

I appreciate everybody coming today. This being our first official Analyst Day, we thought we would run through some of the highlights of the business, talk about target metrics, which I'm sure probably most people have already downloaded from the web based on the number of computers, so that. And then talk about some of the potential risks that can run into the business, some of which we've talked about in some length and others that are new, which also are opportunities for the company. So since we've been public, I think the company has really performed really well. You can see we talked about the revenue CAGRs already, the positive GAAP gross margin. I think one of the things that we're most proud of is the growth in CARR, Contracted Annual Recurring Revenue, almost 110% year-to-date. That -- and so as you think about the company, that's definitely something that you'll want to focus on. I mean, that is the lifeblood of the company. It drives the highest gross margin products that we have, and it really differentiates us from others in the marketplace. Operating leverage improvement, which certainly is no small part, thanks to the Gibson Dunn team. We are using their space today. And so that's obviously part of our operating cost leverage here. So -- and I think one of the things that I think we've been very fortunate about is the capital side of the business. We had a very successful IPO back in April of '21. Not so long after that, we were able to extinguish nearly all of the warrants, which are outstanding at that point in time. We've been able to both combine a green bond under very favorable terms with an acquisition. And I think all of those have fairly -- have been strong aspects of what we've done from a capital standpoint, you should expect to see those sorts of things from us in the future. When we got started back in April, we had 2 covering analysts and we now have 10. And we also have a strong average daily trading value. And so I think all of those reflect both, the reception of the company and the business and the work that we've done in terms of making sure that we're both, public ready and public into the future. One of the things that I want to make sure that we kind of step back a little bit is like what we -- what were some of the thoughts of the senior leadership team as we went into the going public transaction? And since then -- and these are 3 things: growth, profitability and predictability. That's what we've been talking about within the company for years now when we -- both when we were private and on the invested from a private equity side to today. And so I think those are the types of things that you should expect to see from us in the future. And that's how we feel very confident both; in our guidance, which we'll talk about here in a couple of slides and our -- the statement that we think that we're going to be EBITDA positive in the second half of 2023. We have great confidence in that because of the predictability component of the business. Our FP&A team works seamlessly with the various product and supply-chain teams and across the business. And so we're really able to put a fine line on what we're doing. One of the things that's been super helpful to us is that the also Energy team just as a for instance, also use NetSuite, which was certainly a part of the decision to acquire that company because we use NetSuite as well. It allowed us to bring them on to our platform and file our first 10-Q with them within 45 days from when we have completed that acquisition. So there's a lot of work that goes into things like that, but that's where that predictability comes from, which is systematic processes to be able to create financial records as quickly as possible. So the 2025 financial targets, I'm sure most of you have already seen this. So one of the things that -- and this is the result of a long-range planning process that was led by Jigar Shah, who runs FP&A for us and all of those teams within the company. One of the things you'll probably see that comes out on the page is that one of the things that we expect really are 2 pieces. The first is that software and services is going to grow somewhere between 65% and 85%. We feel quite confident in that. Again, highest margin -- highest gross margin part of the business. The hardware though, we expect actually to grow slightly slower than the marketplace. And the reason for that is a good reason. I think it will -- newer to us positively is that we expect to do more software-only deals going forward. So the hardware component of the business probably will slow down some. We've been talking about that in the public marketplace for a while. As we move up the size, scale of the business, we likely are not the best supplier of hardware. And a good example of that is the available power deal size, deals like that, we're actually supplying hardware to that. But as you go forward, the balance sheet that we have in the company isn't necessarily either going to be appropriate nor will -- what we would describe as a fully enabled developer look to us to supply hardware. What they will do though, and we feel very confident that is allow us to continue to provide design-based services to those same systems. So one of the things that you'll see less is the sale of hardware. One of the things that you'll see more services revenue from the business. So in the past, we really kind of bundled those 2 things together. We're now, as of August 1, separating those items. And so you'll see a growth in service revenue in the total business going forward. So we're really happy about that. And of course, as we've said, the hardware is the least differentiated part of our business. You just heard from the tech team, that's where the differentiation is. That's why customers come to us. That's why we're continuing to win in the marketplace. The non-GAAP gross margin range of 25% to 30%, really reflecting all of the work that the company is doing in terms of managing its growth and focusing on an ROI-based methodology in terms of deciding which projects to work on and which projects to fund. And then, of course, lastly, adjusted EBITDA margin. As I mentioned, we expect to be EBITDA positive in the second half of '23. By the end of '25, we would expect to be in the range of 15% to 20% on the adjusted EBITDA level, which reflects a lot of the work that we're going to do, both on the top side and at the operating leverage line, which we'll talk about here in a second. So operating leverage, and I think this is a big part of what we're doing. And really, one of the things that I think has been -- the most successful part of the business has been our ability to drive operating leverage. On one of the things that came with the AlsoEnergy team, and we'll talk about here in a second, is a very strong international operation in India, which is going to allow us to continue to drive down our average wage per employee. One of the things that we look at, across the spectrum, is really the ability for us to drive more sales, drive more gross margin at an ever-decreasing percentage. So we've been able to do that so far. We think that in the future, we're going to continue to be able to do that in an accelerating rate. And talking about India. And I think this is something which I think is aspirational for a lot of companies. They talk about their ability to diversify their workforce. The good news for us is we've already done that through the AlsoEnergy team, there's 100 folks in India already. We expect to increase that number significantly. And so if you think about the hard work that Bob and his team put in, that's already a part of our DNA today. So the ability to add that marginal person in an overseas environment is significantly easier when you're at 101 to 102 versus 1 to 2. And so I think we're set up for success to be able to do that across the platform. We're already moving significant amounts of our transactional work to the office in Delhi, and we expect to continue to do that. That sort of task and opportunity for us is going to be the thing that will drive operating leverage for us. So we're really excited about that as an initiative. Risks that we are managing. And I think this is a significant part of the planning that goes in or went into the LRP. It's going to be a significant part of what we're focused on the future. Some new things. I mean the IRA is obviously a huge boon to the business. But there's also issues that come with that. When you think about what's going to happen in terms of supply chain, what's going to happen in terms of how the transferability of tax credits is going to work? Much of that is not yet quite known. We think that there's a huge opportunity, obviously, but there's work that has to be done there. And so we'll continue to do that work. UFLPA hasn't hit the battery side of our business yet. And I say yet, because we don't know that it will or it won't, but certainly has been on the utility scale side of the slower business. We've seen delays in terms of transferring to panels into the United States, whether that increases in the future, we're not sure, but it's something that we're closely monitoring for impacts on our business. The next 2 are really ones that we've been talking about for some time, supply-chain constraints. One of the great news of the IRA is the storage ITC. The potential downfall to that is that there's not new supply coming on in the next year. You shouldn't -- that matches up with the potential demand. We've long been talking about oversupply in '23, in late '23. We're not sure that that's going to continue to happen. Good news for us is that we -- as John mentioned, we have supplied all of the equipment that we would think we would need through the third quarter of '23 and a significant amount, both for the fourth quarter in '23 and in the first quarter and second quarter of '24. So we're in good shape from that standpoint. More to do, but for sure, we're in a very good spot from that standpoint. And then, of course, interconnection improving continues to plague the industry. I think Senator Mansion is talking about having a bill. We're not sure what the impacts of that bill will be. But most of that work is actually at a local level rather than federal. So it's something that I think has impacted the business negatively. We've talked about that some in the past. And I don't see a near-term solution to that. But we'll continue to work with the interconnection and the permitting agencies that are part of our network. And much like on the solar side, which I spent more than 10 years in, there were ways to make that process more seamless and we'll certainly work with those counterparties to do that. As I mentioned, '22 guidance, we're reaffirming that. We don't see any risk to where we are at this point in time in terms of that guidance. Business is growing well. Demand is very high. And so we're excited about where we are from a '22 standpoint. What you'll see from us in the future, just to kind of level set everyone, we'll likely be doing or not even, we will be doing this Analyst Day, providing longer-range guidance. And then in the February time frame when we announce our annual results, we'll give the next year's guidance. So you should expect from a '23 guidance in the February time frame, we haven't scheduled our earnings call yet, but it will happen kind of late February or mid-to-late February, I'll say. So we're in good shape for '22, and I think we're in the business is well positioned for the future. So a couple of quick things, just as your kind of thinking about next steps in terms of the business, what you should expect from us is that we're going to continue to focus on TAM and the most profitable aspects of that TAM as well. So when you think about business that we're going after, we're not just chasing deals. We have an ROI focus. The sales team is well integrated into this. The sales commission plan, importantly, is also focused on that. So there's a lot of positives in terms of what we're doing. All of that's going to result in increasing margins and profitability of the business. We're very focused on being a capital-light business. You won't see us going and buying a lot of assets or anything like that. We're going to continue on this focus. We're a software-focused business. What that will mean is that EBITDA and free cash flow are effectively the same, not significant differences between those. We do have some amortization, depreciation but not significant. So really, EBITDA will be a good proxy for free cash flow. So again, EBITDA positive in the second half and targeting the 15% to 20% out into '25. So I think we're in great shape as a business. We've got the team in place. We continue to add strong folks across the business, and we're really looking forward to the future. So those are the financial slides. I know we're going to go to Q&A as well. There is lunch out on the other side. So I think maybe what we were thinking to do is everybody wanted to...

Let's go do a little Q&A here before we do lunch here. So if you can have all the team, come up. So we're going to be over a little bit over 12, but we'll maybe start with questions from the audience. And then we've got questions that are coming from the web. So if you're on the web and you want to ask questions, go ahead and use the chat function, but we'll start in the room here.

Goldman Sachs. This is Grace. I appreciate all the color on IRA and the potential upside. Just a quick question on the $6 billion retrofit opportunity, seems like it could be a big upside. But that seems to be going to be more like in the back half of '23. Is that fair? And just wonder, how quickly can you leverage that $6 billion? Let's say, what percent of the $6 billion can you get by 2025? And what is the reasonable share you can achieve?

Yes. One of the key things I wanted to emphasize in that discussion was us building the tools to automate attacking that market opportunity because we think it's more expansive than just within the AE footprint. And if you look at the broader C&I marketplace, our Fortune-500 customers or the asset managers that we have relationships with, if we can deliver -- if we can target sales to them in an automated self-service way, here's your pro forma economics, push here, you can expect delivery of the storage system by this state, and it's backed by partners of ours that can provide the financing. We think that is a way to reduce customer acquisition costs, drive operating leverage and really serve a segment of the market that's very difficult for other competitors to access because it's fragmented and it involves a lot of hand-to-hand combat if you don't have the tools, the data and the relationships to execute on that. So we'd like to get that right. We think we're very well positioned, certainly on the AlsoEnergy footprint to do it because we have upwards of 40,000 customers that are happy. We have a contractual relationship. So that $6 billion just in the markets where we're transacting today feels very -- and that's 30% of the total footprint. That feels very achievable, but we haven't really broken out expected win rates. And frankly, it's early days for that. So we expect revenue to lag bookings. We are expecting bookings in 2023, but the revenue will really come '24 and beyond.

Joe Osha, Guggenheim. Two questions. First one simple one. You gave us the hardware and software revenue CAGRs, we can do the math. But if you could just clarify for us what you expect the overall revenue CAGR to be between '22 and '25? And then the second question is other asset classes, you've got wind, geothermal, non-lithium-ion storage. I'm wondering if -- how you think about potentially incorporating those in your platform over time?

Want to go backwards. I'll take the first part, Joe. I think from the perspective of Athena, we could put Athena on top of really any battery technology, and we do get called on a variety of those. So we'll continue to monitor where it makes sense. And we have in the past, quite frankly, we looked at some other technologies other than just lithium ion as an example. And then, Bill, do you want to take the -- we don't have '23 in the number yet, so guidance.

Mid-30s.

Well done, Joe. Congratulations.

But maybe the answer -- the other part of that answer is also it's going to be high margin focused. So it's mid-30s growth, but this is really a business which we're positioning for profitability as opposed to just straight growth. So I think that's really the key part of the answer is the absolute part of -- I'd say the absolute inflection and what the scope of the curve is, is less important than the profitability of the deals that make up that. Hence, the focus on software and services, which are much higher gross margin for the business.

I guess just maybe more on the hardware software side. It seems to me that, obviously, with the IRA, the hardware or the market demand will be really strong. So it's naturally the same that obviously, you have a really good software offering, but it's much easier to sell more hardware, so your software can tag it off, right? So I just wonder -- I guess I understand the rationale behind the hardware being slower, but why don't you think the other way interbody sell as much hardware as possible, so the seller growth will be much easier?

I think the way to differentiate that is from market and/or system size standpoint, we're going to -- and nobody should hear from either this answer or any prior comment that we're not going to be selling hardware. So that's not what we mean. What we mean is that projects -- because we're significantly moving up the size curve in terms of projects, which means that will -- and what we're saying is that we're less likely to sell hardware into those types of projects. We're not unlikely to sell hardware into smaller data traditional part of the business, which was BTM, i.e., system sizes of 5 megawatt hours and smaller. So different -- and those are going to be strong margin systems. They always have been for the business. But on the top end, you see 2 things: one, fully enabled developers, meaning that they have procurement departments; and two, very strong, say, a lack of differentiation in what you're purchasing. So it's not set up well for us and large capital constraints. I mean if you think about multi-gigawatt hour systems, the amount of hardware that you're talking about in terms of dollars is huge. And that's not necessarily something that Stem with its current balance sheet can participate in, right? We don't want to leverage ourselves into one project to the absence of all the other high-margin projects, which we would have to pass on to do that. So that's what we mean. Not -- no hardware, more systematic, more ROI-focused investments in hardware selling.

Ron, I'd add -- I think we're seeing more incoming on the software-only piece to take Bill's point a little further is, if they don't -- or if we don't want to participate quite frankly, in the hardware piece, we can always go with the Athena side. They -- these large developers don't have a software solution. So they'll still need that component, which is great, high-margin business for us.

Biju Perincheril, Susquehanna. Just expanding on that hardware-software split. Are you looking at potential partnerships with large integrators, you bring in the software capabilities or maybe just talk about how that split happens?

You mean, actually putting Athena at the manufacturer level that would then be sold more broadly.

Right, right.

I mean, Biju, certainly longer term would be our goal to see that occur. We've -- I think that it's something that we've talked to some of the suppliers about. I mean there are a lot of discussions on hardware, software only. And the fact is our customers demand that we provide the full solution at C&I for sure, larger developers, as we just said, we'll maybe do their own sourcing but certainly use Athena. But I think longer term, that would be admirable opportunity for us that we'd like to see, but we're kind of -- right now, we have a very -- I think we have a very nice diversification of hardware suppliers, and we'll keep working that as opposed to aligning with one. If we align with Athena on one hardware supplier, then probably pretty likely that they would say, you're going to buy 100% of our hardware from us. And I don't think that's a spot we want to be in. It served us well to have multiple suppliers, particularly in times of -- like this, to be quite frankly, that have been a little bit more turbulent and enable us to flex with other suppliers that might have capacity.

And maybe on -- a second question was on the market participation revenue. When does -- from the existing assets, when does that inflect? And with the ITC change, are you now able to realize that in the shorter time frame for newer projects?

You want to take that, Bill?

Sure. So I think it's a kind of a dual style answer there. The first part is that, in general, when you think about the existing fleet, those are solar plus storage, i.e., there was an ITC incentive attached to them under the old rules, which means that there are charge limits associated with the recharge of the battery from solar. So -- for the most part, you're not going to see those asset owners be aggressive until the expiration of that recapture, i.e., 5 years. So just in general, that's one way to think about market participation as it relates to solar to the existing fleet. Now going forward, I think that's a very different answer. And this is really where the work that Bob's team has done will be, I believe, to be very helpful to the business in general. There's 41,000 sites that the -- AlsoEnergy team has our current customers paying the business for high-value services, though some percentage of those are going to need and/or want a battery attachment. Those systems will not have that constraint that I talked about, or -- as will other systems that we can potentially sell into. So I think that market ration component will be different for the future components of the portfolio, very different than the existing. [Audio Gap]

Yes, the latter. I mean we're hardware agnostic. I think the -- actually, I prefer neutral. I think agnostic means we don't believe. But the -- but yes, I think we're neutral, right? That is to say there will be asset types and storage products that are characterized by behaviors from the OEM, that may limit their performance in certain characteristics or be advantageous in others. And so as we select the OEMs and we work with them, we understand what those characteristics may be. We've talked about other like long-duration storage. There are characteristics of flow batteries that are different, and you have to recognize if you're going to build a use case around them. So we don't necessarily have a preference for an OEM or a particular product. But we do look at the product making model. We do evaluate their characteristics and say, is it suitable to achieve the goals for that particular site. And in many cases, lithium ion is somewhat standard and commoditized and so forth. But that's not 100% true across the portfolio of operators -- or I'm sorry, OEMs that we work with or the products that they offer. So we do make that evaluation. But otherwise, we are just looking for the best price, best performance and performance guarantees that suit the duration of the project line.

We'll take a question that came in from the web. Talk about battery supply and labor. Are there adequate crews to install all the battery banks?

Take a [bill]?

Sure. we, of course, are not a contractor. So it's important to say that that's not part of our business. We are obviously impacted by a number of items and certainly crews or one of them. We don't -- at this point, though, we don't see labor as being a blocker in terms of advancing projects. That's not -- and that's really more from our partners on the EPC side. So we just don't see that as an issue. Permitting and interconnection are much more problematic than labor. That's not to say that if you solve one, it's the Pareto could labor eventually become a problem potentially, but it's not the biggest problem today.

How do you think about when you put up the 2025 plan, the sort of mix component U.S. international relative to today? How do you see that sort of developing over time?

So one of the -- and thanks for that question. When we went through the LRP, I would say it's almost kind of pre-IRA and post-IRA view of the world. I think pre-IRA we thought that the international aspects are going to be much more significant to us, really building upon the work that Bob and his team have done. Post-IRA, I think one of the comments within the company is that may be the best international market is here in the U.S. And so I think as the IRA gets more clarity, and there's a couple of important provisions, the transferability of credits is one that I mentioned there are others as well that need to be clarified by the IRS, I think that for us right now, I would say, within the -- in the near term, we're going to really take advantage of what's happening here in the U.S. I mean the good news is that we have assets, i.e., teams internationally, we're doing work in Chile and Colombia that Prakesh has led for some time. We're going to continue to look at those. But again, I'd come back to an ROI focus in terms of the business driving margin, driving profitability. And in general, you'd say like, hey, going to fill in the blank foreign country versus taking advantage of an opportunity in Arkansas, I'll do the ones in Arkansas.

And I think the real question too becomes is there an IRA-like initiative in another country. And if that's the case, I think we'll be very well positioned through AlsoEnergy in the sense that we have a hub in Berlin that we could address in the European action around those lines. And then there's a group in Japan so we could spread around Asia. But I mean, to Bill's point, we feel like it's such a good opportunity here that we're going to probably stay closed for a little while.

Couple of questions. Craig, at [indiscernible] Brothers. First, on Slide 69, I noticed the bidder and price manager applications coming soon. Some of your peers have made a big deal about highlighting the vulcanization of the markets and the different bidding and revenue opportunities from market balancing to ancillary services and how important it is to achieving maximum value to be customized for those markets. So I guess my first question is, do you agree with your peer statements? And how are you addressing that? And my second question is kind of a big picture, and I apologize if this is done. But I'm trying to think our -- is this new burgeoning market, asset-light, digital-focused AI market. Is this like hedge fund quants that constantly have to reinvent themselves in a more and more efficient market every 5 or 10 years? Or is it something where you're building relationships with project developers and you're innately gaining early market share, so you're kind of like an Amazon. And you have systemic long-term opportunities because you have such large upfront market share, and you're just a part of the nuts and bolts or the electrons that connect the entire system, which is... [Audio Gap]

Okay. So those are really great questions, not done at all. And I think to the first part of the question, I think, yes, all markets have unique characteristics, right? And optimizing in any given market is going to look at different kinds of value streams. Many of those, though, break down into fundamentals, right? So the fundamentals of energy trading day ahead or real time, the fundamentals of balancing services and different speeds of response in the way you get compensated and so forth. And then there's the financial versus physical trades and so forth that can go on. Those are all sort of constructs that are out there. And so we addressed that by looking at the markets and understanding what that means towards the extensions that we need for Athena to do something that might be new compared to what we've already done. So that extensibility that you heard about from the tech team is a key part of how we address that. Plus a number of folks on our team that have an at market knowledge in different jurisdictions and so forth. Now to the second part of the question, the longevity of the relationships we think is important. And so I don't dispute the idea that we're going to have to continue to innovate. And so those algorithmic performance and trading behaviors are going to continue to be something that will be important to us. But as we do that, we'll also be looking at how do we expand our ecosystem, trading partners or users who might just have that sort of trading view as opposed to the asset owners who have the asset ownership position. But what we do feel is very important is over time, the proof will be that trading an asset means you have to be very physically aware that situational awareness of the asset is capability of performing is something that has to be baked into your total solution. And so trading purely on some kind of fundamentals with some idea of some algorithm doesn't understand the asset itself, I think, is not going to be the winning strategy. So I think it makes us sticky with the asset owner as well as with the trading partners who want to leverage our software to help in some of that robotic trading processes that I think are going to continue to drive algorithms forward. Fortunately, we have a strong data science team that can do that. We hope to keep them motivated to keep up with some of these things as well.

So I think another big proof point on that is that -- and I mentioned it in my discussions around over half of our contracted volume was from repeat customers. And so it's a real attribute to I think what Larsh and his team have built. So [I love your note], by the way.

Let's ask one more from the web. Maybe I'll ask a couple. Do you plan to expand and when energy projects, wind or other forms of solar -- renewable nonsolar energy and talk about hydrogen storage is then able to handle hydrogen storage? It's probably for you Larsh.

So the answer there is that, I think, yes, I think there's going to be different opportunities with different asset classes to look at how we can provide that single pane of glass across this whole clean energy spectrum. I think as Bob pointed out, the monitoring is something that started with the initial solar industry and understanding that you had to be able to get that data to monitor systems and operate them effectively. And we'll continue that as we think about these new assets. As Bill pointed out, though, we'll also be looking at making those investments when we can see the ROI and when there's going to be that kind of benefit. But from a platform standpoint, we are, let's say, certainly very aware of those asset classes and making sure that we continue to have them in our radar from a product road map standpoint.

I think the one that wasn't mentioned in that question, that's super compelling is EV and the fact that the EV side, we believe, is the equivalent from energy usage standpoint of the buy in the meter market. So it's a massive TAM. And we are -- we've announced some things in the past. We did one last week with in charge. We've done some things in ONG, and I think you'll see more of that activity. Wind is interesting. What I find compelling is if you could get the British analytics piece that we have for the markets we're in today, just a couple percentage points in that market of huge dollars. So I think it's an interesting market. We've got Matt Tappin, who leads our corporate development here in the room with us, and he's always getting calls on a variety of deals, and we'll certainly update everybody as those come together.

Yes. I'm curious within the process of a customer building out a site, when do you kind of start discussions with the customer and sign a contract? And then therefore, like kind of what's the timeframe that you have very good visibility in the growth outlook?

I'll start it. Bill, maybe you can jump in. I think from a C&I standpoint, if we divide the 2 out. C&I typically will try to do a master service agreement take Walmart and say, okay, we're going to do X amount of stores in Y region. And what's interesting is when new regions open for a variety of reasons, whether it's legislatively or lower-cost hardware, some of our first customers into those new markets are the C&I customers that we've delighted in other regions. So that piece, they know the product. We know what to kind of plug and play at their new locations in a new region. And I think the other thing that rely on us on is what can be optimized or monetized in that specific new region. The perspective of front of the meter, it varies. In some cases, we're very early on. We have, as mentioned earlier, the fact that they're coming back to us so repeatedly, they'll open the book of pipeline business that they have and work with us on those. So I'd say those can be much earlier and mid-stage as well. It just varies by developer and maybe the relationship we have with that customer. Typically, once we close a deal with them, though, we move upstream from the perspective of timing on that individual customer. I don't know, Bill, if anything else you'd add to that?

Yes. I think maybe your question was maybe even more specific as to like the actual duration as well potentially. And so from a -- and I think we've -- we're starting to transition away from BTM/FTM kind of distinction. I think it's really size of project; it's probably going to be the more relevant metric going forward. But I think the smaller products, i.e., like 5 megawatt hours and smaller, you're really talking about a pipeline duration from opportunity to sign a contract like 0 to 6 months, and that's really kind of what you're looking at as our teams work with the developer to actually design the system and make sure that the appropriate hardware is chosen. And that's really underlying this shift out of the kind of the disaggregation of margin from hardware to services. So that's a service that we're charging for now. The larger projects take longer. I mean there, you're looking at it up to a year, really. I mean, it's a much more complicated interconnection, the system design that the teams have to go through is a much more complicated one. And so you just see a longer time period.

I hope this question is for you, Bill. I understand you're not giving annual guidance, but with more software-only deals coming into the mix and the potential to monetize services more, again, at higher margins. How should we think about free cash flow kind of going forward over the next few years and then uses as you scale?

So when I think about free cash flow. So I think we're in favor. I think that's where the EBITDA percentage comes from. I mean really -- I mean, this is not going to be a business where we're going to be buying building factories, buying equipment, owning assets. I mean there's other folks that are much more efficient than us to do that. So you shouldn't expect to see that. So when we think about adjusted EBITDA percentages, those are the free cash flow. I mean there's really going to be a very small differentiation between those things for this business. We're just -- we don't see ourselves being competitive, let's say, like a GCM or Brookfield or somebody like that who can bring hundreds of millions, if not billions of dollars in terms of asset ownership, but those are great partners of ours. We've been serving them for a long time, and we would expect and hope to continue to do that in providing services to those. So I don't think from that standpoint, we would get ourselves into a position that we needed or had assets, which would make a significant differentiation between EBITDA and free cash flow.

Software and Services have been flattish for the -- at $5 million for the past few quarters. When do you think we can expect to see an uptick in those?

I think that you should see that in the coming quarters. I think that for really 2 reasons. One, I think there have been -- effectively, if you go back and say like software and services, what drives those that's AUM. So AUM is increasing, not as quickly as we would like and for all the reasons that I've talked about interconnection, et cetera. But we're starting to see some projects come through that. So we'll see more services and software revenue coming into the business which is what's driving -- when you think about like how do we get to cash flow positive in '23, I mean, that's not because we're so more hardware, I can tell you that much. It's because we're deploying services and expectation around that.

Well, one last...

I've got to hold this side of the room.

And this will be our last question, and we'll call it after this.

Andrew with Morgan Stanley. Just curious on UFLPA. What percentage of your volumes next year depending on panels getting through customs? And if it's a high percentage, how easy is it to reallocate maybe stand-alone projects?

I think for next year -- I mean, clearly, the -- say, the solar monitoring part of the business is going to be impacted by UFLPA, has been so far, we expect that to continue. But what that means in part is that the projects are slower. It's not that they go away. I mean, that's a really important point is that we've never had cancellations of major projects. There are size differences, size changes and that sort of thing, but cancellations are few and far between. So I think that's what you would see. The battery part of the equation seems to be less impacted. We've done a lot of work on the -- which is obviously the bigger revenue print to the business. But we've done a lot of work on the supply chain, working with our suppliers. And I think part of the differentiation is that, in general, the battery supply chain is a bit more sophisticated than maybe the panel supply chain. There's more differentiation between, say, a Tier 1 and a Tier 2 or 3 on the panel side than there is on the battery side. I don't know, Bob, if you have any thoughts on that one.

So that's an interesting question, and I appreciate that. So my perspective is, and we've lived through the Section 201, the Suniva. We've lived through a number of different kind of disruptions. And my experience is that it's not demand destruction that we're talking about here. It's deferral. It's people scrambling to figure out how to refill the pieces of the puzzle, that the change is kind of lost. So it's hard to tell right now, but quite honestly, my expectation is that the growth will occur. It may get deferred in time. It's hard to tell exactly. But this is consistent with what we've seen in the past. It's not debookings, right, it's simply deferrals.

One thing I would add is we primarily see it in the utility scale side of the business in the AlsoEnergy side. So -- and I'd note that the BTM side is approximately 80% or more of what they do. So one of the things that's been great from an execution perspective is they factored to drive greater growth there as well as pushing through price increases that fully washed out any impacts from UFLPA delays on the utility scale side of the business. So that's a great agility. And we expect -- I think as we've talked to folks on the logistics side, most people are expecting the first half of next year is when it gets resolved, really, it's just kind of the forms and the clearances need to settle out with CBP and the ports to start flowing. But we do have just a mix shift that helps us as well. Okay. Well, I want to thank you all. Hopefully, you've enjoyed the morning as much as we have hosting you. And as Ted mentioned, there's lunch behind these doors. The management team, executive team will be here to answer any further questions. And again, thank you, all, for your time today.