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Sunrun Inc. (RUN)·Q1 2025 Earnings Summary

Executive Summary

  • Sunrun delivered a stronger-than-seasonal Q1: total revenue rose 10% year over year to $504.3M, and GAAP diluted EPS was $0.20 as net income to common stockholders reached $50.0M; Cash Generation was $56M, marking the fourth consecutive positive quarter .
  • Q1 2025 significantly beat Wall Street consensus: revenue $504.3M vs $485.2M*, and GAAP diluted EPS $0.20 vs -$0.27*; 19 revenue estimates and 10 EPS estimates contributed to consensus, driving a clear upside surprise on profitability and sales (bold beat) .
  • Management reiterated FY 2025 Cash Generation guidance of $200–$500M and introduced value-creation guidance: Q2 Aggregate Subscriber Value of $1.30–$1.375B and Q2 Contracted Net Value Creation of $125–$200M; Q2 Cash Generation guided to $50–$60M .
  • Strategic highlights included record 69% storage attachment rate and strong capital markets execution (two ABS deals at ~6.35% yield), while management framed tariff and tax policy uncertainty as manageable and back-half weighted; the company sees tariff impacts of ~$1,000–$3,000 per subscriber (3–7% of creation costs), trending Cash Generation toward the lower half of the FY range unless tariffs ease .

Values marked with an asterisk (*) are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Storage-led mix shift: storage capacity installed reached 333.7 MWh (+61% YoY) and storage attachment rate hit a record 69% (vs 50% last year), supporting higher Subscriber Value and Contracted Net Value Creation .
  • Positive cash trajectory: fourth straight quarter of positive Cash Generation ($56M), above Q4 guidance of $40–$50M, and continued deleveraging with $27M parent recourse debt repaid in Q1 (>$214M repaid since Mar-2024) .
  • Capital markets strength: January $629M securitization at ~6.35% yield and March $369M private placement at ~6.36% yield; cumulative advance rates “well above 80%” supported non-recourse funding and strong upfront proceeds .

What Went Wrong

  • Tariff/cost headwinds: management expects tariffs to add ~$1,000–$3,000 per subscriber in 2025 (3–7% of creation costs), with back-half impact; at current levels, Cash Generation trends toward the lower half of guidance .
  • Product sales shrinkage: solar energy systems and product sales revenue fell 25% YoY to $101.4M as subscription mix rises, dampening upfront revenue despite long-term contract value recognition .
  • Creation costs per subscriber increased 7% YoY to $41,817, reflecting higher battery hardware and installation labor tied to the storage mix, partly offset by productivity and fixed-cost absorption .

Financial Results

Revenue and EPS (GAAP) vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$537.2 $518.5 $504.3
GAAP Diluted EPS ($)($0.37) ($12.51) (goodwill impairment) $0.20

Q1 2025 Actual vs S&P Global Consensus

MetricQ1 2025 ActualQ1 2025 ConsensusSurprise
Revenue ($USD Millions)$504.3 $485.2*+$19.1M (beat)
GAAP Diluted EPS ($)$0.20 -$0.27*+$0.47 (beat)
# of Estimates (Revenue / EPS)—19 / 10*—

Values marked with an asterisk (*) are retrieved from S&P Global.

Margins and Profitability

MetricQ3 2024Q4 2024Q1 2025
EBIT ($USD Millions)($127.8) ($3,256.3) (impairment) ($114.9)
EBIT Margin (%)(23.8%) (628.1%) (22.8%)
Gross Profit ($USD Millions)$103.5 (537.2–433.7) $97.5 (518.5–421.0) $98.9 (504.3–405.4)
Gross Margin (%)19.3% 18.8% 19.6%

Notes: Q4 EBIT reflects a non-cash goodwill impairment recorded in Q4 2024 .

Revenue Mix (GAAP)

Revenue Category ($USD Millions)Q3 2024Q4 2024Q1 2025
Customer agreements & incentives$405.9 $388.6 $402.9
Solar energy systems & product sales$131.3 $129.9 $101.4

KPIs and Value Creation

KPIQ3 2024Q4 2024Q1 2025
Subscriber Additions (units)30,348 30,709 23,692
Customer Additions (units)31,910 32,932 25,428
Storage Capacity Installed (MWh)336.3 392.0 333.7
Solar Capacity Installed (MW)229.7 242.4 190.9
Storage Attachment Rate (%)60% 62% 69%
Aggregate Subscriber Value ($USD Millions)$1,437 $1,566 $1,237
Contracted Net Value Creation ($USD Millions)$206 $313 $164
Cash Generation ($USD Millions)$2 $34 $56

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Aggregate Subscriber Value ($USD Billions)Q2 2025N/A$1.30–$1.375 Introduced value-creation guidance
Contracted Net Value Creation ($USD Millions)Q2 2025N/A$125–$200 Introduced value-creation guidance
Cash Generation ($USD Millions)Q2 2025N/A$50–$60 New quarterly CG guide format
Cash Generation ($USD Millions)FY 2025$200–$500 (revised on Q4 call) $200–$500 (reiterated) Maintained
Storage Capacity Installed (MWh)Q1 2025265–275 Actual: 333.7 Beat prior guide
Solar Capacity Installed (MW)Q1 2025170–180 Actual: 190.9 Beat prior guide

Management also shifted disclosure to value-based metrics (Aggregate Subscriber Value, Contracted Net Value Creation) starting Q1 2025, moving away from unit volume guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Storage-first strategy & attachment60% attach; record storage adds 62% attach; record storage adds 69% attach; +46% YoY customer adds with storage Strengthening
Tariffs & cost mitigationManaging tariffs; domestic content benefits Safe harbor executed; domestic content ramp in affiliates slower Tariff impact ~$1k–$3k per subscriber; back-half weighted; pricing/go-to-market levers Headwind intensifying H2
Policy/IRA & transferabilityBipartisan support; market evolution 45% blended ITC target; adders ramp Transferability likely supportive; sensitivity 1pt ITC ≈ $50M; planning scenarios Monitoring, risk-managed
Capital markets (ABS & tax equity)Four ABS in 2024; spreads ~235 bps $1.3B tax equity added YTD; Jan ABS ~6.35% yield Jan/Mar ABS ~6.35–6.36%; private credit demand strong; >80% cumulative advance Robust access, stable terms
AI/technology initiativesOperational efficiency; VPP scaling Emphasis on resiliency/VPP >100 AI initiatives; 30% design efficiency gain; VPPs scaling nationwide Scaling execution
Virtual Power Plants (VPP)Programs across states; NY largest residential VPP 16 programs; 80 MW peak 2024 CalReady quadrupled (>250 MW avg per event); multi-state dispatches Rapid scale-up

Management Commentary

  • CEO Mary Powell: “We exceeded our volume and Cash Generation targets… leveraging AI for innovation… This has allowed us to gain market share… We believe the tariff outlook is manageable, and we will still generate meaningful cash this year.”
  • CFO Danny Abajian: “We delivered our fourth consecutive quarter of positive Cash Generation… paid down parent recourse debt by $214 million over the last four quarters… As we increase our Cash Generation, we will continue to further pay down parent recourse debt.”
  • President Paul Dickson on Flex: “Flex is the most important financial product innovation… allowing customers to plan for growing energy needs… larger Flex systems are paired with more batteries… creating an even more valuable grid resource.”
  • CFO on sensitivities: “1 percentage point of weighted average ITC realization is approximately $50 million; 25 basis points cost of capital is approximately $40 million.”

Q&A Highlights

  • Tariffs and pricing: Management expects ~$1,000–$3,000 tariff impact per subscriber (3–7% of creation costs), mainly in H2; pricing, commissions, cost efficiencies and domestic supply shifts are levers to offset .
  • Safe harbor strategy: Executed ~$350M equipment with ~$18M corporate cash; enables ~12 months solar and ~6 months storage coverage; future safe harbor optional depending on clarity and financing .
  • Transferability & tax equity: Market remains active; broadened buyer universe, low-to-mid 90¢ pricing per $ tax credit; company can pivot between transfer and traditional tax equity as needed .
  • Domestic content adders: Ramp expected through Q1/Q2, with higher qualification rates over time; affiliate partner adoption slower than direct .
  • Demand and competitive dynamics: Differentiation and storage-first model support market share gains without chasing uneconomic pricing; steady or improving competitive rationality in pockets .

Estimates Context

  • Q1 2025 results vs consensus: Revenue $504.3M vs $485.2M*, GAAP diluted EPS $0.20 vs -$0.27*, with 19 revenue and 10 EPS estimates underpinning consensus (both beats). Expect upward revisions to FY profitability metrics and sustained focus on Cash Generation given strong Q1 delivery .

Values marked with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

  • Storage-first strategy is driving higher unit economics, record attachment rates, and recurring value creation; expect continued margin support even amid policy/tariff uncertainty .
  • Strong capital markets access (ABS/private credit/tax equity) and >80% cumulative advance rates underpin upfront proceeds and fund growth without parent capital strain .
  • Tariff impacts are back-half weighted; management has a clear cost/pricing playbook. Near-term trading likely hinges on tariff headlines and Q2 execution on value-creation guidance .
  • Flex product may expand contracted baseline value with upside consumption and larger system efficiencies, supporting both unit margins and future grid services monetization .
  • Cash Generation guide ($200–$500M FY) reiterated; Q2 guide $50–$60M provides a near-term KPI. Deleveraging remains a priority, with ~$100M or more recourse paydown targeted in 2025 .
  • VPP scale is a differentiator: CalReady quadrupled; multi-state dispatches demonstrate real grid services value and potential for growing recurring revenues .
  • Watch domestic content/ITC adders ramp and transferability markets; sensitivities (ITC, cost of capital) materially impact value creation. Policy outcomes are manageable per management, but remain key narrative drivers .