Executive Summary

Q4 2023 net revenue was $23.4M, up 2% year over year, but down sharply versus Q3 2023 ($37.9M) as sales slowed amid higher rates and mix shifts to lease financing .
Gross margin improved modestly YoY to 13.4% (vs. 12.8% in Q4 2022), yet profitability deteriorated sequentially; net income was a -$0.1M loss vs. $4.0M profit in Q3, primarily due to costs for financing tech launch and Business Combination expenses .
Adjusted EBITDA in Q4 was $1.3M (5.6% margin), down YoY and sequentially; FY23 net revenue reached $110.1M (+24% YoY), with FY23 adjusted EBITDA $11.2M (+8% YoY) .
Strategic catalyst: completed Business Combination with ESGEN on March 13, 2024 and listing on Nasdaq, positioning to expand geographies and capture share in residential solar; management highlights Missouri market entry and plans for 2024 expansion .
Wall Street consensus (S&P Global) for ESAC was unavailable for Q4 2023 due to mapping constraints; estimate comparison could not be performed (we attempted to retrieve but mapping was missing) [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

Net revenue grew 2% YoY in Q4 to $23.4M, driven primarily by adoption of lease financing options .
Gross margin ticked up YoY to 13.4% (from 12.8%), reflecting a modest improvement in unit economics despite industry headwinds .
Management executed on strategic goals: completed SPAC merger and public listing; opened Missouri market; reiterated plans to expand into new geographies and drive sustainable profitability in 2024 (“We plan to expand into several new geographies, drive sustainable profitability, and take additional market share…”) .

What Went Wrong

Sequential performance weakened: Q3 net revenue was $37.9M vs. Q4 $23.4M; gross profit fell from $8.4M in Q3 to $3.1M in Q4, with net income swinging from $4.0M profit to a $0.1M loss .
Adjusted EBITDA compressed to $1.3M (5.6% margin) in Q4 from $5.4M (14.2%) in Q3, reflecting lower volume and elevated operating costs .
Cost pressure from financing technology launch and legal/accounting/consulting tied to the Business Combination hurt Q4 profitability; similarly, Q3 commentary cited higher interest rates and equipment/materials costs as headwinds .

Financial Results

Metric	Q4 2022	Q3 2023	Q4 2023
Net Revenue ($USD Millions)	$22.9	$37.9	$23.4
Gross Profit ($USD Millions)	$2.9	$8.4	$3.1
Gross Margin (%)	12.8%	22.2%	13.4%
Net Income ($USD Millions)	$1.08	$3.97	-$0.14
Net Income Margin (%)	4.7%	10.5%	-0.6%
Adjusted EBITDA ($USD Millions)	$1.54	$5.38	$1.32
Adjusted EBITDA Margin (%)	6.7%	14.2%	5.6%
EPS per common unit ($)	$1.08	—	-$0.14

Note: The consolidated statements imply Q4 2023 gross profit of ~$3.54M (Revenue $23.36M minus COGS $19.83M), which is higher than the $3.1M cited in the narrative; management’s stated gross profit/margin (13.4%) should be treated as the primary disclosure, but the difference suggests classification/definition nuances in reported COGS .

Liquidity and Cash Flow	FY 2022	Q3 2023 (as of 9/30/23)	FY 2023 (as of 12/31/23)
Cash & Cash Equivalents ($USD Millions)	$2.27	$4.30	$8.02
Net Cash Provided by Operating Activities ($USD Millions, FY)	$10.72	—	$11.96

Segment breakdown: Not disclosed (single integrated residential solar platform) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	2024	—	No formal guidance issued in Q4 2023 press release	Maintained (no guidance)
Margins	2024	—	No formal guidance issued in Q4 2023 press release	Maintained (no guidance)
OpEx	2024	—	No formal guidance issued in Q4 2023 press release	Maintained (no guidance)
Other (tax rate, OI&E, dividends)	2024	—	No formal guidance issued in Q4 2023 press release	Maintained (no guidance)

Management outlined strategic priorities (geographic expansion, sustainable profitability, market share gains) but did not provide quantitative guidance ranges for 2024 in Q4 materials .

Earnings Call Themes & Trends

No Q4 2023 earnings call transcript was available; commentary synthesized from press releases.

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2023)	Trend
Interest rates / macro	Q3: Sales volume slowed over previous two quarters due to higher interest rates; equipment/material costs up	“Significant industry headwinds” acknowledged; lease financing adoption supporting revenue	Headwinds persist; mix shift to financing options
Financing technology	—	Higher expenses tied to launch of new tech to support financing partners	Investment phase; near-term cost drag
Geographic expansion	H1 2023: Strength in emerging markets; installs +65% YoY in first half	New market entry in Missouri; plans to expand to several geographies in 2024	Expanding footprint
Business Combination / listing	Q3: Business Combination expected in 1H24	Merger completed March 13, 2024; Nasdaq listing achieved	Completed; platform for growth
Profitability focus	H1/Q3: Adjusted EBITDA growth first nine months (11.4% margin)	Asset-light model highlighted; Q4 margins compressed due to costs; FY23 adjusted EBITDA +8% YoY	Medium-term positive; near-term compression

Management Commentary

“2023 was a transformational year for our business, culminating in a successful business combination and public listing on the Nasdaq Capital Market… we executed our strategy effectively and produced strong solar system installation and revenue growth for the year, closing with $110.1 million in net revenue.” — Tim Bridgewater, CEO .
“Our asset-light business model allowed us to drive our profitability metrics, and we finished 2023 with $20.2 million in gross profit and $11.2 in adjusted EBITDA.” — Tim Bridgewater, CEO .
“We plan to expand into several new geographies, drive sustainable profitability, and take additional market share in the residential solar space…” — Tim Bridgewater, CEO .

Q&A Highlights

No Q4 2023 earnings call transcript or Q&A session was found for ESAC/Zeo Energy; the company furnished its results via an 8-K press release and related exhibits .

Estimates Context

S&P Global consensus estimates for ESAC (Zeo Energy) Q4 2023 were unavailable due to a missing CIQ mapping; we attempted retrieval but could not access EPS and revenue consensus. We will monitor for mapping updates to enable estimate comparisons [GetEstimates error].

KPIs and Prior-Quarter Context

KPI	Q4 2022	Q3 2023	Q4 2023
Solar System Installations (indicative, annualized)	~2,100 in 2022 (company slide)	—	~3,200 in 2023 (company slide)
Cash & Cash Equivalents ($USD Millions)	$2.27	$4.30	$8.02

FY Performance	FY 2022	FY 2023
Net Revenue ($USD Millions)	$89.0	$110.1
Gross Profit ($USD Millions)	$16.0	$20.2
Net Income ($USD Millions)	$8.67	$6.23
Adjusted EBITDA ($USD Millions)	$10.43	$11.22
Adjusted EBITDA Margin (%)	11.7%	10.2%

Key Takeaways for Investors

Sequential deceleration: Q4 saw a sharp drop from Q3 on revenue and adjusted EBITDA amid higher rates and Business Combination-related costs; monitor whether Q1–Q2 post-merger shows normalization and cost discipline .
Asset-light model supports medium-term EBITDA generation; FY23 adjusted EBITDA grew 8% YoY, but margin compressed—watch for margin recapture as financing tech investments and merger costs roll off .
Strategic expansion narrative (new markets, Nasdaq listing) could be a valuation catalyst if execution translates to consistent installs growth and margin stability; Missouri entry evidences expanding footprint .
Liquidity improved into year-end (cash $8.0M vs. $4.3M at Q3 end); operating cash flow was robust in FY23 ($12.0M), supporting near-term growth initiatives .
Estimate visibility is limited; absence of S&P Global consensus hampers “beat/miss” framing—investors should focus on sequential trends, margin trajectory, and execution against expansion plans until coverage improves [GetEstimates error].
Disclosures show some definition nuances (e.g., Q4 gross profit narrative vs. implied from COGS); prioritize management-defined metrics and reconciliations, and seek clarity in future filings .
Near-term trading: sensitivity to volume recovery, cost containment, and any 2024 quantitative guidance; medium-term thesis hinges on geographic scale-up and reinforcing unit economics in a higher-rate environment .

Sources: Q4 2023 8-K Item 2.02 and Exhibit 99.1 including financial tables ; prior-quarter press releases for Q3 2023 and H1 2023 ; corrected press release link ; investor site references ; SPAC 425 filing for installs KPI context .

Zeo Energy Corp. (ESAC)·Q4 2023 Earnings Summary