Executive Summary

Q2 2024 revenue was $14.71M, down 51% year-over-year; gross margin improved to 29.8% from 18.7% as operational efficiencies and lower materials costs offset volume decline; adjusted EBITDA turned positive at $0.68M (4.6% margin) while GAAP net loss was $1.29M .
Management emphasized a shift toward profitability and expansion into Ohio and Illinois; CFO Cannon Holbrook was appointed to strengthen finance, reporting, and M&A capabilities .
The company disclosed a material weakness and filed a non-reliance 8-K on Aug 2, 2024 to correct misstatements in prior filings (FY 2023 and Q1 2024), which is an overhang until remediation is complete .
Zeo did not provide quantified guidance; the near-term narrative centers on margin resilience, sales re-ignition later in 2024, and potential consolidation/M&A as industry conditions normalize .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 29.8% (vs 18.7% YoY) on improved labor efficiency and reduced materials costs despite lower sales volume .
Adjusted EBITDA turned positive: $0.68M in Q2 (4.6% margin), reflecting disciplined cost management and a flexible operating model; “we have successfully navigated through this turbulent period thanks to our flexible operating model and disciplined expense management” — CEO Tim Bridgewater .
Market expansion momentum: “recent launch into the Ohio and Illinois markets has been encouraging, and we’ll be looking to build on our initial progress” — CEO Tim Bridgewater .

What Went Wrong

Top-line pressure: revenue fell 51% YoY to $14.71M, with management citing higher interest rates weighing on residential solar direct sales demand .
Earnings headwinds: GAAP net loss of $1.29M; stock compensation expense of $2.42M in the quarter (none in Q2 2023) impacted bottom-line performance .
Controls overhang: audit committee determined previously issued FY 2023 and Q1 2024 statements should not be relied upon; material weakness in ICFR disclosed with plans to amend filings .

Financial Results

Core Financials vs Prior Periods and Prior Year

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$30.08	$23.36	$19.49	$14.71
Gross Profit ($USD Millions)	$5.60	$3.10	$1.80	$4.40
Gross Margin (%)	18.7%	13.4%	9.5%	29.8%
Net Income ($USD Millions)	$0.80	$(0.14)	$(1.70)	$(1.29)
Adjusted EBITDA ($USD Millions)	$1.32	$1.32	$(1.15)	$0.68
Adjusted EBITDA Margin (%)	4.4%	5.6%	(5.9%)	4.6%

Notes:

Adjusted EBITDA definition excludes stock-based compensation (Q2 2024) and, in prior periods, also excluded M&A expenses where specified .

Revenue Composition

Revenue Breakdown	Q1 2024	Q2 2024
Revenue, net of financing fees ($USD Millions)	$10.68	$7.71
Related party revenue, net of financing fees ($USD Millions)	$8.81	$7.00
Total Revenue ($USD Millions)	$19.49	$14.71

Additional KPIs

KPI	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Operating Income ($USD Millions)	$0.83	$0.14	$(1.61)	$(2.20)
Cash and Cash Equivalents ($USD Millions)	—	$8.02	$7.73	$5.34

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	None provided	None provided	Maintained (no quantified guidance)
Margins	FY 2024	None provided	None provided	Maintained (no quantified guidance)
Sales activity	2H 2024	N/A	Management expects to “reignite” sales efforts later in 2024	Qualitative update
M&A posture	Ongoing	N/A	CFO appointed; evaluating strategic M&A opportunities	Qualitative update
Tax rate, OI&E, OpEx, dividends	FY 2024	None provided	None provided	Maintained (no quantified guidance)

Earnings Call Themes & Trends

Note: A Q2 2024 earnings call transcript could not be located in the available corpus; themes below reflect management commentary from Q2/Q1/Q4 releases.

Topic	Previous Mentions (Q4 2023 & Q1 2024)	Current Period (Q2 2024)	Trend
Profitability focus	Asset-light model supported full-year 2023 adj. EBITDA of $11.2M; pricing/financing initiatives; public listing completed	Emphasis on profitability amid industry turbulence; positive Q2 adj. EBITDA	Strengthening margin discipline despite revenue pressure
Market expansion	Opened Missouri (FY23); planning expansion in 2024	Entered Ohio and Illinois; early results encouraging	Expansion continuing; execution focus
Macro headwinds (rates)	Headwinds noted around financing and industry conditions	Higher rates cited for lower demand and sales	Persistent, expected to dissipate over time
Sales force trajectory	Seasonal ramp expected; returning managers/new reps in coming quarters	Plans to “reignite” sales later in 2024	Rebuild underway for 2H24
Controls and reporting	Public company transition; transaction costs impacted Q4/Q1	Non-reliance 8-K, material weakness; remediation planned	Controls remediation critical near term
Strategic M&A	Not highlighted prior	CFO appointment to support M&A pursuit	Offensive posture as consolidation unfolds

Management Commentary

“We believe we have successfully navigated through this turbulent period thanks to our flexible operating model and disciplined expense management.” — CEO Tim Bridgewater .
“We anticipate that this offensive stance will mean reigniting our sales efforts… later this year… and… pursue strategic M&A opportunities currently available in the market.” — CEO Tim Bridgewater .
On CFO appointment: “Cannon’s extensive experience… and proven track record in financial leadership make him the ideal choice for our CFO position.” — CEO Tim Bridgewater .

Q&A Highlights

A full Q2 2024 earnings call transcript was not available in the document set; no Q&A details could be verified. Management’s prepared remarks indicate near-term sales re-ignition, margin discipline, and exploration of M&A, with no quantified guidance ranges provided .

Estimates Context

S&P Global consensus (EPS, revenue, EBITDA) for Q2 2024 and comparison periods was unavailable through the tool at the time of request; therefore, results cannot be benchmarked to Wall Street estimates here. Values retrieved from S&P Global.*

Where estimates may need to adjust: Given a 51% YoY revenue decline but meaningful gross margin improvement and positive adjusted EBITDA, consensus models (when available) should reflect a lower near-term revenue base with higher gross margin assumptions due to operational efficiencies and mix shifts noted by management .

Key Takeaways for Investors

Margin resilience despite volume compression: gross margin at 29.8% and positive adjusted EBITDA signal cost discipline and efficiency gains even as demand softened; this underpins downside protection while revenue normalizes .
Rebuild and expansion set the stage for 2H: sales efforts planned to “reignite” later in 2024 and new geographies (Ohio/Illinois) provide catalysts for sequential recovery if macro rates pressure subsides .
Controls remediation is a must-watch: the Aug 2 non-reliance 8-K and material weakness require close monitoring; timely remediation and amended filings are essential to investor confidence .
Strategic optionality via M&A: CFO appointment strengthens finance/reporting and M&A execution capacity; potential consolidation could accelerate growth and scale in Zeo’s core residential solar footprint .
Near-term trading setup: absent quantified guidance and consensus benchmarks, stock may trade on operational milestones (sales force ramp, cash trends, adj. EBITDA trajectory) and controls remediation headlines; watch quarterly cash burn and adj. EBITDA margins for signal quality .
Medium-term thesis: if interest-rate headwinds ease and sales ramp returns, operating leverage from improved cost structure and expanded markets can drive revenue stabilization and margin persistence, with optionality from accretive M&A .

Appendix: Source Documents Reviewed

Q2 2024 8-K with earnings press release and exhibits, including CFO press release .
Q1 2024 8-K with earnings press release .
Q4 2023 8-K with corrected earnings press release .
Aug 2, 2024 8-K (non-reliance; material weakness disclosure) .

Non-GAAP definitions: Adjusted EBITDA excludes stock-based compensation in Q2 2024; prior period definitions also excluded M&A-related expenses where noted .

Zeo Energy Corp. (ESAC)·Q2 2024 Earnings Summary