Stem - Earnings Call - Q3 2025

Executive Summary

• Revenue of $38.2M, up 31% YoY, with GAAP gross margin at 35% and non-GAAP gross margin at 47%; adjusted EBITDA was $2.0M and operating cash flow was $11.4M. ARR reached $60.2M (+3% QoQ, +17% YoY) and cash/equivalents rose to $43.1M.
• Guidance tightened: FY25 revenue $135–$160M (raised low end), non-GAAP GM 40–50% (raised), adjusted EBITDA -$5M to $5M (raised low end), operating cash flow -$5M to $5M (lowered from $0–$15M), year-end ARR unchanged at $55–$65M.
• Sequential bookings/backlog declined (bookings $30.3M; backlog $22.2M) on deliberate de-emphasis of low-margin battery hardware resales; storage AUM up 6% QoQ to 1.8 GWh and solar AUM up 4% QoQ to 33.9 GW.
• Near-term stock catalysts: visibility and margin credibility from raised gross margin guidance, second consecutive positive adjusted EBITDA, and international expansion/product launches (PowerTrack EMS; Sage) offset by expected Q4 gross margin mix compression from edge deliveries.

What Went Well and What Went Wrong

What Went Well

• Second consecutive quarter of positive adjusted EBITDA ($2.0M) and strong gross margins (GAAP 35%; non-GAAP 47%) demonstrating software-centric operating leverage. “We have reduced the historical volatility… de-risked the low end of nearly all guidance ranges” — CEO Arun Narayanan.
• Positive operating cash flow ($11.4M) and sequentially higher cash/equivalents ($43.1M), underpinning improved liquidity and sustainability of the model — “underlying quality and sustainability” — CFO Brian Musfeldt.
• Strategic execution: launch of PowerTrack EMS to expand TAM into utility-scale/hybrid internationally and rebrand Athena to PowerTrack Optimizer; initial bookings within 8 weeks across three countries; continued ARR growth (+17% YoY to $60.2M).

What Went Wrong

• Sequential softness in bookings ($30.3M vs. $34.3M in Q2) and backlog ($22.2M vs. $26.8M in Q2) due to de-emphasis of low-margin battery hardware and higher quarterly revenue recognition pulling backlog lower.
• Managed services revenue down YoY given one-time overperformance in Q3’24; project/professional services down YoY (prior-year dev co revenue boost) — press release and call commentary.
• FY25 operating cash flow guidance lowered to -$5M to $5M (from $0–$15M), acknowledging working capital timing risk; management flagged macro/policy headwinds (tariffs/OBBB/geopolitics) as ongoing external risks.

Transcript

Operator (participant)

Ladies and gentlemen, greetings and welcome to the STEM Incorp. Third Quarter 2025 Results Conference Call. At this time, all participant lines are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today, Erin Reed, Investor Relations Manager. Please go ahead.

Erin Reed (Head of Investor Relations)

Thank you, operator. This is Erin Reed, Head of Investor Relations at STEM. We welcome you to our third quarter 2025 earnings call. Before we begin, please note that some of the statements we will be making today are forward-looking. These statements involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. We therefore refer you to our latest 10-Q, 10-K, and other SEC filings and supplemental materials which can be found on our website. Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our third quarter 2025 earnings release, which is on our website. Arun Narayanan, CEO, and Brian Musfeldt, CFO, will start the call today with prepared remarks and then we will take your questions. Now I will turn the call over to Arun.

Arun Narayanan (CEO)

Thanks, Erin. Hello everyone, and thank you for joining us today. Q3 2025 marks 12 months since we announced our strategic realignment. I'm proud to report that our transformation continues to deliver tangible, positive results. Today, we reported third-quarter revenue of $38 million, up 31% year-over-year, with ARR growing 17% year-over-year to $60 million. We achieved our second consecutive quarter of positive adjusted EBITDA, and generated positive operating cash flow. Our software-centric strategy is delivering results. The success of our strategic transformation is evident in our consistent earnings performance, with steady growth in software and services revenue and continued improvement across key profitability metrics. As we maintain disciplined cost management, we believe we have achieved operational stability and our high-performing team is laser-focused on execution and results.

Today, we are also refining guidance to reflect our revised forecast, which we will go into more detail later in the call. The key takeaways are, we have reduced the historical volatility in our business. We have de-risked the low end of nearly all guidance ranges, and we feel confident about the stability of our business. This quarter also marked a pivotal moment in our evolution, as we unified our corporate identity under the STEM brand and streamlined our entire product portfolio within the comprehensive PowerTrack suite. This transformation goes far beyond surface-level changes. It reflects the deep integration of OSO Energy's solar expertise with STEM's storage and AI capabilities. For our customers, this means that we approach them with a single voice, with superior technical solutions across their entire energy portfolio, covering solar, storage, and hybrid assets alike.

Combined with STEM's industry-leading subject matter expertise, this creates an unparalleled customer value proposition. We welcome you to visit our redesigned website at stem.com, to see this unified vision in action. Each quarter, we have touched upon our strategic priorities for 2025, driving software and services revenue growth, revamping software development, and reducing our cost structure and driving profitability. We've advanced all three strategic priorities in Q3 with concrete results. Let me detail our progress. First, let's focus on software and services growth and revamping our software. On September 2nd, we launched PowerTrack EMS for hybrid and standalone storage projects. This energy management system integrates OSO Energy's solar CNI offerings with STEM's storage offerings, and positions us to meet the needs of key markets, including solar, storage, and hybrid assets in both the CNI and utility-scale segments.

It is an intelligent control system that manages battery charging and discharging operations, while coordinating grid services and enabling revenue streams for energy storage projects. PowerTrack EMS fills the critical gap between basic battery management and advanced optimization software such as our PowerTrack Optimizer product, enabling us to provide important control offerings regardless of the commercial management of the battery, including in territories where merchant optimization is not permitted. We remain excited about PowerTrack EMS, because it expands our total addressable market by widening our potential customer base and the markets we can serve. Here in the U.S., it unlocks for us the utility-scale market, which is heavily hybridized versus the CNI market. Outside of the U.S., PowerTrack EMS unlocks the international market for CNI and utility-scale projects, which are also largely hybridized.

International expansion is a key component of our corporate strategy, that also helps us manage near-term macro headwinds in the U.S. Importantly, in all markets, PowerTrack EMS is an optimization-agnostic, controls-oriented product, which means that it can be sold in markets where utilities provide dispatch signals without the need for a third-party optimizer, or in international markets where STEM does not provide managed optimization services with PowerTrack Optimizer. It is truly a complementary offering to the existing portfolio, and allows us to offer an end-to-end solution for our customers. We launched PowerTrack EMS at the RE+ conference to strong customer reception. This product garnered particularly high interest from operators of hybrid energy sites. Just eight weeks after launch, we've already booked significant capacity deployments with blue-chip customers in three different countries, validating both our product capabilities and market positioning.

These deals cover primarily hybrid, utility-scale projects with existing solar assets that expect to convert to hybrid in the near term, and are using PowerTrack EMS as a way to future-proof this conversion while limiting downtime. We expect these bookings to convert to revenue in the coming quarters with about a six to nine-month typical lead times. Our core CNI solar monitoring platform is deeply established in the industry, but we remain dedicated to continuous innovation and addressing key customer feedback as quickly as we can. In the last 90 days alone, we've rolled out over 100 software improvements and bug fixes, directly enhancing the PowerTrack experience for our customers. Recently, we have added BESS monitoring features and enhanced PB performance analytics, ensuring that PowerTrack is the platform of choice for our customers as they add storage to their solar portfolios and scale to more complex operations.

As we announced last quarter, we are also incorporating advances in AI into our offerings with PowerTrack Sage. PowerTrack Sage is an AI-powered assistant that sits on top of PowerTrack, and transforms complex solar and storage data analysis into natural language conversations. It's like an expert analyst available 24/7 to simplify certain important product workflows and serve as a first line of support for customer questions. There's high customer interest and excitement about this product, particularly around solar analytics and diagnosing root causes for unusual data. PowerTrack Sage development remains on track for limited beta release with select customers in December, and is expected to be broadly available in 2026. PowerTrack software continues to demonstrate strong performance across key metrics. Revenue increased 10% year-over-year, ARR expanded 19% year-over-year and we commissioned 1.2 GW of solar assets this quarter.

Our platform now manages nearly 34 GW of solar assets, reinforcing our market-leading position in CNI solar monitoring. Now, let's move on to managed services. Our managed services are software-enabled, full lifecycle energy storage services covering the design, procurement, commissioning, operation, and optimization of energy storage and hybrid solar plus storage systems. We help asset owners maximize the reliability, performance, and returns of their storage assets. Managed services are supported by our PowerTrack Optimizer software, previously known as Athena. Energy optimization, especially when value stacking, is a specialized area that requires both our optimization software and humans in the loop to execute well. Humans in the loop ensure that the optimization is keeping up with the constant market and program rule changes, market dynamics, and new value streams.

Our competitive advantage in managed services lies in our ability to serve as a full-service provider, leveraging our substantial market share across diverse segments. We remain one of the few companies with this expertise. Our managed services contracts include both recurring revenue and performance-based upside when we exceed operational targets. Q3 2024 included significant overperformance that we did not repeat this quarter, which impacts the year-over-year comparison. The underlying health of this business is strong, as our recurring base revenue grew 14% year-over-year and 4% sequentially. Finally, our consultative professional services offering continues to resonate with customers across a wide range of development, deployment, and operational needs. We are continuing to drive repeat business, a clear mark that our offerings are adding value. We are increasingly focused on cross-selling professional services with other business units' offerings. Now to another strategic priority, reducing our cost structure and driving profitability.

We remain diligently focused on cost management. We've achieved our second consecutive quarter of positive adjusted EBITDA, while maintaining robust GAAP and non-GAAP gross margins. Operating expenses remain flat compared to the second quarter, and we are continuing to drive further efficiencies through AI implementation. Additionally, we've generated positive operating cash flow and kept cash flat sequentially. Our financial performance validates the business model transformation, expanding gross margins, two consecutive quarters of positive adjusted EBITDA and positive operating cash flow. These results demonstrate both profitability and sustainability. We are dedicated to financial transparency, and we remain committed to helping our investors and stakeholders better understand our business. To that extent, our Form 10-Q to be filed today,, once again disaggregates revenue across distinct categories. What's new this quarter is that we are also providing detailed gross margin disclosure for each revenue category in our supplemental slides. Now on to guidance.

With nine months of reported results and early visibility into Q4, today we are refining our full-year 2025 guidance ranges, including a tightening of ranges previously disclosed. First, we'd like to highlight that our ability to tighten ranges is a significant advancement versus where we were previously, where volatility and backend seasonality negatively impacted our ability to guide with precision. Our software-centric model has reduced this volatility, and enhanced our forecasting accuracy. With that said, we are tracking towards the midpoint or better, on all metrics except operating cash flow, where timing of working capital moments could result in performance towards the lower end of our range. I'd like to highlight that we have brought up the low end of the ranges for software, edge hardware, and services revenue, and adjusted EBITDA and raised the guidance for non-GAAP gross profit.

Brian will provide the specific updated ranges, but I want to emphasize that the underlying business fundamentals remain strong and we are well-positioned entering into 2026. Now turning to the macro environment. Headwinds from policy uncertainty remain, and we are actively working with our customers to navigate this environment. We remain on track to meet our guidance expectation through the end of the year. In addition, our diversified software-centric model, combined with our recently enhanced international strategy, should position us well against the potential impact of domestic headwinds. We remain confident in our end markets, and we believe that we are well-positioned to benefit from the projected international load growth. Our international expansion efforts are focused on a multiphased approach. First, we developed an internationally ready product suite with PowerTrack EMS. Second, we are leveraging our regional expertise through our existing teams in Berlin and Japan.

We see significant opportunities to expand within the European markets, and in Berlin, we recently moved our operations to more centralized and collaborative facilities. We are expanding our technical depth and customer support in Berlin, to combine our global expertise with local execution that can service high-priority European markets. Our growth strategy for Q4 and beyond centers on two drivers, PowerTrack EMS, expanding our addressable market into utility-scale and international hybrid projects, and continued focus and acceleration in our core CNI solar business. Our recurring revenue base, substantial backlog, and international diversification provide a strong foundation for sustained growth. With that, let me turn the call over to Brian for detailed financial results and the updates to guidance.

Brian Musfeldt (CFO)

Thanks, Arun. Hello, everyone. In the third quarter of 2025, we saw solid financial performance across the business. Total revenue grew an impressive 31% year-over-year to $38 million. PowerTrack software revenue continued its strong performance in the third quarter, growing 11% year-over-year and Edge Hardware grew a notable 18% year-over-year. As a note, this quarter, with the introduction of PowerTrack EMS for hybrid and storage sites, we have redefined solar software revenue to PowerTrack software revenue, as our PowerTrack software revenue will now include all customer-facing SaaS revenue generated from solar, storage, and hybrid assets. Project and professional service revenue decreased year-over-year, as the third quarter of 2024 benefited from approximately $5 million of one-time dev co-revenues. As Arun discussed, managed service revenue was also down year-over-year due to one-time overperformance in the third quarter2024.

Although we are de-emphasizing the business as part of our software-centric strategy, battery hardware resale brought in $4 million in revenue this quarter. You can find this revenue detail in the disaggregation of revenue footnote in our Form 10-Q and supplemental materials, which provide enhanced clarity into our business. We again achieved strong gross margin this quarter, with GAAP gross margins of 35% and non-GAAP gross margins of 47%. This expansion reflects the increasing mix of higher margin software and services in our revenue base, and improving hardware margins for both Edge Hardware and battery resales. Our disaggregation of revenue provided in our supplemental materials, now includes gross margin ranges for each revenue category to provide more clarity for investors and analysts. GAAP and cash operating expenses were both flat sequentially from the second quarter of 2025. Cash operating expenses were down an impressive 47% year-over-year.

These reductions were primarily the result of the difficult but necessary workforce reduction that took place in the second quarter, and we remain focused on driving operating leverage and further cost savings across the business. That said, we feel positive about our ability to grow revenue without significant OpEx increases, as demonstrated by our development of PowerTrack EMS and PowerTrack Sage products, with current staffing levels. The improved margins and significantly reduced OpEx drove positive adjusted EBITDA of $2 million for the quarter, demonstrating that we are finding sustained operational profitability in our lower OpEx structure and our business transformation. Operating cash flow turned decisively positive at $11 million this quarter, a $21 million swing versus the same quarter last year, and our cash position remains stable at $43 million.

My key strategic priorities as CFO remain to help drive profitable growth and manage our capital structure, as we look to continue growing in key revenue categories over the coming years. Now turning to our operating metrics. Bookings were $30 million, down slightly versus last quarter, largely due to timing of bookings from our historically lumpy, low-margin battery hardware resales. Software and service bookings were sequentially flat, and contracted backlog was $22 million, down from $26.8 million last quarter, due to lower bookings and increased hardware revenue recognition in the quarter. Contracted ARR remains stable at $70 million, and importantly, ARR increased 3% sequentially and 17% year-over-year, demonstrating the strength and scalability of our recurring revenue model. Finally, storage and solar AUM increased 6% and 4% respectively since last quarter. Now turning to our updated guidance for full-year 2025.

First, for revenue, we are tightening our revenue range to $135 million-$160 million from the prior $125 million-$175 million range. This reflects strong software and service performance, with an updated range of $125 million-$140 million and is offset by lower battery hardware resale expectations of up to $20 million, as we continue to de-emphasize that business. For gross margins, we are raising the range to 40%-50%. We are already tracking toward the high end of this range, but expect some margin compression in the fourth quarter, with increased edge hardware deliveries. For adjusted EBITDA, we are raising the low end of the range, and now forecast between -$5 million and +$5 million for the fiscal year 2025. We have factored in some conservatism in this metric, and I would highlight that we are currently tracking above the midpoint of our updated range.

For operating cash flow, we are adjusting our range for this metric to between -$5 million and +$5 million. This quarter's $11 million in positive cash flow demonstrates the underlying cash generation capability of the business. Any fourth-quarter working capital fluctuations will reflect normal timing differences in customer payment cycles, not fundamental business performance. Finally, our forecast for year-end ARR remains consistent, at $55 million-$65 million and continues to reflect an attractive base of recurring revenue. While we won't provide formal guidance for 2026 until early next year during our fourth quarter and full-year 2025 call, I can share that we enter 2026 with strong visibility from our recurring revenue base and contracted backlog, positioning us well for continued growth. Now I will pass the call back over to Arun for closing remarks.

Arun Narayanan (CEO)

Thank you, Brian. Our team delivered strong execution across the business this quarter. One year into our strategic transformation, the results are evident, revenue growth, margin expansion, sustained profitability, and positive cash generation. We established clear objectives for this transformation, and we are achieving them. The clean energy transformation continues accelerating globally, and our industry-leading software platforms, solutions, and dedicated team positions us to capitalize on this transformation. I want to thank our investors and customers for their continued confidence and trust in us, and I want to take this opportunity to also express my gratitude for the hard work and contributions of STEM employees in achieving these results. With that, operator, let's open the line for questions please.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Justin Clare with ROTH MKM. Please go ahead.

Justin Clare (Analyst)

Hi. Thanks for the time. I wanted to start with the guidance. With the update here, it looks like you're guiding to the midpoint or better, across all the metrics. Just looking back to what you said last quarter, it sounded like you were tracking toward the high end of the guidance based on your comments from last quarter. I'm just wondering, has your outlook moderated somewhat, given the new ranges? Maybe you could speak to the potential to kind of deliver at the high end.

Arun Narayanan (CEO)

Justin, this is Arun. Thanks for the question. Let's address your point. The way we show the updated guidance on slide six in the exhibit, you can see that we are actually still tracking towards the midpoint or high end of all the ranges. Only the de-emphasized and non-predictable sort of OEM hardware resale business, which was ranged at $0-$35 million, is now ranged up to $20 million. I think that difference is sort of, you could say the main difference. The rest of it is just a tightening of the ranges. I would say that that's the main interplay between the two quarters.

Justin Clare (Analyst)

Okay, got it. That's helpful. Just on the gross margins, it looks like in Q4 you could see a slight compression. I'm wondering, is this only really due to a mix shift with a little bit higher sales of the battery hardware or should we anticipate any other notable change to the gross margins by business line? Just looking beyond Q4, how should we be thinking about the gross margins by business line? I definitely appreciate the added disclosure here that you provided this quarter.

Brian Musfeldt (CFO)

Yeah. Thanks, Justin. This is Brian. I think when you look at the new disclosure there, hopefully you can see detailed on page 12, when we talked a little bit about compression in Q4, it's just going to be mixed. Q4 is our largest delivery quarter for our Edge hardware, so the slightly lower margin. That's really what will compress it in the fourth quarter, kind of just in that period. As far as the out periods, you know we don't give guidance until Q1, but I think you can kind of see the three and nine months' trends. We do expect to keep working on margins and improving them over the next coming years, especially as you know again, we're de-emphasizing that OEM hardware. The other categories are pretty stable and will continue to improve.

Justin Clare (Analyst)

Got it, okay. Maybe just one more, you know, bookings in Q3 modestly lower than Q2. Again, that sounds like it's more a de-emphasis of the battery hardware sales. Wondering, you know, with the release of PowerTrack EMS, can you talk a little bit more about the demand that you're seeing, the potential to see an increase in bookings potentially in Q4 here and just what you're seeing at this point?

Arun Narayanan (CEO)

I can take a stab at that. This is Arun again. We are very excited about PowerTrack EMS, as we have said in the prepared remarks quite a few times. It opens up new markets for us. The market subsegment that we are targeting is the small utility-scale sites, so 20 MW-100 MW in size. As we look at the initial energy around it, we are quite enthusiastic about it and we are quite glad that our product fit is good. As PowerTrack EMS becomes a more meaningful portion of the revenue, we will provide more breakup and details around that. I think that's our thinking at this point.

Justin Clare (Analyst)

Okay, appreciate it. Thank you.

Operator (participant)

Thank you. Our next question comes from Jon Windham with UBS. Please go ahead.

Jon Windham (Analyst)

Hi, perfect. Thanks for taking the questions. Congratulations on the back-to-back quarters. [Just leave] it up. I just have two questions. I'll just ask them one at a time. Any [crosstalk] commentary or sense of color what you're getting from your customers? There's obviously a lot of moving parts going on right now, particularly around batteries with Fiat, but also with solar and some of the IRS guidance. Just [crosstalk] your thoughts on what you're seeing at sort of the top of the funnel, how demand looks in general for the industry and for your product. [Thanks, sir].

Arun Narayanan (CEO)

John, thanks for that question. This is Arun. I can take a stab at it. We are maintaining the momentum in our engagement with our customers. We do see that the engagement levels that we have in terms of being able to drive our conversations on PowerTrack are maintained. The comments I'm making about Fiat and other points are valid, but we see reasonably unchanged sort of conversation momentum in customer engagements.

Jon Windham (Analyst)

Perfect. I guess the second question, you're going to love this. You're [crosstalk] turnaround, tou're delivering on gross margin expansion very nicely. EBITDA is positive. How do you think about your goals for them? You know the market's always on to the next thing. When do we get the operating income positive? When do we get to net income positive? You know, how do you think about that path?

Alternatively, if you don't want to answer that question, which I would understand, how do you think about laying that out to investors on, here's the path we're on, our timeline to sort of get a longer term? I know you've had a lot of success here in the first year with the strategy shift. I think the questions from investors are increasingly, you know, how does this progress down the income statement to positive numbers all the way down? Appreciate any thoughts you have on it. Thanks for taking the questions.

Arun Narayanan (CEO)

Thanks. Yeah, it's a really good question. Let me take two or three parts to it. First of all, I think this quarter is the one-year anniversary of the shift to the software-centric focus for the company. You can sort of see that that strategy is paying off in terms of stabilizing the revenue margins, and being able to have a predictable business. The second piece is, I've been in this role now nine months roughly, and there's been a focus on managing costs and driving a push towards profitability. Now, I think we'll give more guidance on this in the next call.

Maybe one thing I can direct you towards is a note that we put out towards investors and stakeholders in one of the press releases in the early part of September, which sort of explains our thinking in terms of our overall product strategy, in terms of our overall service strategy, how we look at international markets, and what our general approach is towards having a very continuous full-market coverage solution all the way from CNI to the smaller scale utility projects, and then going up from that space to what PowerTrack Optimizer provides in terms of the high end of that market. I think it's an elegant story. I would sort of encourage you and the other listeners to go back to our website and read that note that we have put out towards investors, that comes with an attachment and a very nice presentation.

Jon Windham (Analyst)

Appreciate it. Thank you.

Arun Narayanan (CEO)

Thank you.

Operator (participant)

Our next question comes from Thomas Roche with Barclays. Please go ahead.

Thomas Roche (VP)

Hi. This is Tom on for Christine. Congrats on the great quarter.

Arun Narayanan (CEO)

Thank you, Tom.

Thomas Roche (VP)

Thank you. I just first wanted to ask, do you foresee the business benefiting from the hyperscaler data center build-out in any way? I know you've typically been more focused on CNI and smaller utility-scale customers, but has there been any internal strategy discussions around trying to go after hyperscaler customers with either your solar or storage offering?

Arun Narayanan (CEO)

Yeah, Tom. Really good question. This is Arun. You know, one of the things I love about STEM is the team is very energetic, always focused on new business models, new business opportunities. We continue to target all of these opportunities with a lot of vigor. What we're seeing in the data center markets, which typically prefer sort of natural gas solutions, is that there are early indications that it's going to come around towards more renewable energy plays. It's an exciting development as that shift seems to be happening. We continue to watch that market space and see how we can play into that effectively.

Thomas Roche (VP)

Got it, understood. Thank you. Just one more quick one for me. You guys, you've cut a fair amount of OpEx here in the last few quarters. Would you say that it's safe to assume that we're at a decent quarterly run rate here on a go-forward basis?

Brian Musfeldt (CFO)

Yeah. Tom, this is Brian. I can take that one. I mean, as you've seen, we've cut cash OpEx. We've cut about 47% year-over-year. We reported just over $20 million of cash OpEx this quarter. I think we're done with the fundamentally large execution of that that you've seen in the second quarter. We took a really large chunk out of the team, with a very difficult, but motivated strategy.

We continue to look at other opportunities for savings. An example, this quarter we exited our India facility, which was just oversized for what we needed. The team is working on it. We'll always kind of manage cash. It's just in the fundamental blood of this company now to make sure that we're operating that way. We're not really giving guidance yet, but I would say this quarter's trend is a good indication and we'll keep working it down.

Thomas Roche (VP)

Great, thank you very much. Appreciate it.

Operator (participant)

Thank you. Ladies and gentlemen, this concludes the question-and-answer session. I would now like to hand the conference over to Arun Narayanan, the CEO, for the closing comments.

Arun Narayanan (CEO)

I want to thank everyone for joining the third-quarter earnings call, and we look forward to speaking with you during our fourth-quarter and full-year 2025 earnings call next year. Thanks, everyone.

Operator (participant)

Ladies and gentlemen, the conference of STEM Incorp. has now concluded. Thank you for your participation. You may now disconnect your lines.