1st winning software publisher on the energy market

Stem (STEM 4.50%) has a compelling AI-powered software tool called Athena that sets it apart in the power market. In this Motley Fool live excerpt from “The High Energy Show”, recorded on June 28Fool.com contributor Jason Hall takes a closer look at Stem’s business.

Jason Hall: I have to talk about Stem here. Because I think it’s gotten to a point where Stem and their company are, so they’re leading with batteries, energy storage, but they’re not looking to make a lot of money on batteries. They have good relationship with many battery suppliers. Their differentiator is Athena, which is their AI-powered software that manages the energy you put into those batteries. Whether you are a utility and trying to meet that network need or you are a power user, commercial user and trying to minimize your expenses. That you participate in the market and sell the energy. Athena is this wonderful AI tool that handles this for virtually any stakeholder considering energy storage. They sell it on 20-year contracts, so it’s a high-margin SaaS business.

Travis Houm: It’s an energy company that has a software product.

Jason Hall: Exactly, I think it’s a software company that has an energy product. I really think how you should think about it. Because every time he sells a battery, he adds 20 years of recurring revenue at 70% gross margins. They are very early. I don’t want to quote a number because I can’t remember the magnitude, but over the next five decades the amount of money that will be spent on energy storage is staggering. Businesses need the technology to manage it. That’s what Stem does. I think that’s really compelling. There’s a risk because he’s still burning cash because he needs to get that larger-scale SaaS recurring revenue to cover his basic expenses. But once it hits that critical mass, I think it will become a very lucrative business.