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BUSINESS COMBINATIONS | 12 Months Ended
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Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS On February 1, 2022, Stem, Inc. acquired 100% of the outstanding shares of AlsoEnergy. AlsoEnergy provides end-to-end turnkey solutions that monitor and manage renewable energy systems. AlsoEnergy has deployed systems at various international locations, but its largest customer bases are in the United States, Germany and Canada. The combined company delivers a one-stop-shop solution for front-of-meter and commercial and industrial (“C&I”) customers with solar and storage needs. The total consideration to acquire AlsoEnergy was $652.0 million, comprised of $543.1 million in cash, net of a working capital adjustment for an escrow recovery, and $108.9 million in the form of 8,621,006 shares of the Company’s common stock. The Company incurred $6.1 million of transaction costs related to the acquisition of AlsoEnergy, which were recorded in general and administrative expense during the year ended December 31, 2022. The following table summarizes the purchase price as a part of the acquisition of AlsoEnergy (in thousands):
| Purchase Price
Cash consideration | $ | 544,059
Equity consideration | 108,883
Working capital adjustment | (915)
Total consideration | $ | 652,027
The following table summarizes the fair values of assets acquired and liabilities assumed in the acquisition of AlsoEnergy at the date of acquisition (in thousands):
Assets Acquired |
Cash | $ | 10,135 |
Accounts receivable | 9,614 |
Other current assets | 1,795 |
Inventory | 3,701 |
Operating lease right-of-use assets | 1,333 |
Separately identifiable intangible assets acquired other than goodwill | 152,100 |
Other noncurrent assets | 1,032 |
Total identifiable assets acquired | 179,710 |
Liabilities Assumed |
Accounts payable | 1,985 |
Other current liabilities | 1,596 |
Accrued payroll | 2,533 |
Deferred revenue, current portion | 17,486 |
Lease liabilities, current portion | 431 |
Deferred revenue, noncurrent | 32,140 |
Lease liabilities, noncurrent | 902 |
Deferred tax liability | 15,476 |
Other noncurrent liabilities | 150 |
Total liabilities assumed | 72,699 |
Total net identifiable assets acquired | 107,011 |
Goodwill | 545,016 |
Total consideration | $ | 652,027 |
Based on the accounting guidance provided in ASC 805, the Company accounted for the acquisition of AlsoEnergy as a business combination in which the Company determined that AlsoEnergy was a business. In the second quarter of 2022, a working capital adjustment was made that resulted in the decrease of goodwill of $0.9 million. The allocation of fair values of assets acquired and liabilities assumed was finalized in the fourth quarter of 2022. No further adjustments were made. The following table and accompanying paragraphs below summarize the intangible assets acquired, their fair value as of the acquisition date, and their estimated useful lives for amortizable intangible (in thousands, except estimated useful life, which is in years):
| Fair Value |  | Useful Life
Trade name | $ | 11,300 |  | 7
Customer relationships | 106,800 |  | 12
Backlog | 3,900 |  | 1.1
Developed technology | 30,100 |  | 7
Separately identifiable intangible assets acquired other than goodwill | $ | 152,100 |  |
Trade names include the AlsoEnergy and PowerTrack trade names, which were measured at fair value using the relief-from-royalty method. Customer relationships represent the estimated fair values of the underlying relationship with AlsoEnergy customers measured using the multiple-period excess earnings method under the income approach. Backlog relates to subscriptions contracts that were measured at fair value using the multiple-period excess earnings method under the income approach. Developed technology represents the preliminary fair value of AlsoEnergy’s renewable energy platform that was measured using the relief-from-royalty method of the income approach. Significant estimates and assumptions related to the Company’s forecasts of future revenues and selection of the weighted average cost of capital, royalty rates, and estimated revenue growth rates are used in measuring the fair value of these assets. The amortization expense for all acquired intangible assets will be recognized on a straight-line basis over their respective estimated useful lives. Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired. The acquisition of AlsoEnergy resulted in the recognition of $545.0 million of goodwill. Goodwill acquired primarily consists of expanded market and product opportunities, including acceleration of growth of renewable energy onto the power grid, expanded value for the Company’s customers to manage and optimize combined solar and energy storage systems through the vertical integration of software solutions, as well as access of the Company’s product offerings to international markets. Goodwill created as a result of the acquisition of AlsoEnergy is not expected to be deductible for tax purposes. A net deferred tax liability of $15.5 million was established for the intangible assets acquired net of deferred tax assets, which primarily consists of net operating loss carryforwards and deferred revenue. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information summarizes the combined results of operations for the Company and AlsoEnergy, as if the acquisition had occurred on January 1, 2021. The pro forma financial information is as follows (in thousands):
|  | (Unaudited)
|  | Twelve Months Ended December 31,
|  | 2022 |  | 2021
Total revenue |  | $ | 366,815 |  |  | $ | 189,930 |
Net loss |  | $ | (131,959) |  |  | $ | (132,187) |
The pro forma financial information for the periods presented above has been calculated after adjusting the results of AlsoEnergy to reflect the business combination accounting effects resulting from this acquisition, including the elimination of transaction costs incurred by the Company, amortization expense from acquired intangible assets, and settlement of stock option awards. The historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination. The pro forma financial information is for informational purposes only, and is not indicative of either future results of operations, or results that may have been achieved had the acquisition been consummated as of the beginning of 2022 or 2021.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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