Sign in
SI

Sunrun Inc. (RUN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong results: revenue $569.3M (+9% YoY), diluted EPS $1.07, record Contracted Net Value Creation (CNVC) $376M and Aggregate Subscriber Value (ASV) $1.6B; Cash Generation was positive at $27M, the fifth consecutive quarter .
  • Guidance raised materially: full-year 2025 CNVC lifted to $1.0–$1.3B (from $650–$850M), while FY ASV $5.7–$6.0B and FY Cash Generation $200–$500M were reiterated; Q3 guidance set at ASV $1.5–$1.6B, CNVC $275–$375M, Cash Generation $50–$100M .
  • Storage-first strategy continues to outperform: storage attachment rate reached 70% vs 54% YoY; management emphasized home-to-grid dispatch scale and value creation, highlighting large multi-state dispatches this summer .
  • Capital markets remained supportive: $431M July securitization (6.37% yield, 240 bps spread) and ongoing deleveraging ($21M recourse debt repaid in Q2; >$235M since Mar-2024) .
  • Note: Prepared materials cite a 70% storage attach rate; CFO at one point referenced 78% on the call—treat 70% as the official reported figure for Q2 .

What Went Well and What Went Wrong

What Went Well

  • Record value creation: CNVC of $376M (+316% YoY) and ASV of $1.6B (+40% YoY); Upfront Net Subscriber Value margin hit 11.4% (best ever), with 17 percentage points of margin expansion vs prior year .
  • Storage-led differentiation and grid services scale: storage attachment rate at 70% with >130,000 batteries activated to support grids; single-day dispatch >340 MW across CA, NY, MA, RI, and PR .
  • Financing execution and deleveraging: $431M securitization at 6.37% yield; $21M recourse debt repaid in Q2; no major recourse maturities until Mar-2027 .

Management quotes:

  • “We set a new record in the second quarter for Contracted Net Value Creation as we achieved an all time high 70% storage attachment rate.” — CEO Mary Powell .
  • “Strongest Upfront Net Subscriber Value the company has ever reported… expanding our margins by seventeen percentage points compared to the prior year.” — CFO Danny Abajian .

What Went Wrong

  • Cash Generation below intra-quarter guidance: Q2 Cash Generation was $27M vs prior Q1 guidance of $50–$60M, driven by working capital (inventory +$77M QoQ) and tax equity timing digestion post policy developments .
  • Equipment costs up with higher storage mix: 12% increase in equipment costs driven by storage attachment rate jump; partially offset by 13% improvement in non-equipment costs and ~10% lower CAC/overhead per subscriber .
  • Policy overhang: discussion of 25D sunset and ITC timing/safe harbor mechanics introduced uncertainty; management expects prospective changes and is pursuing multi-year safe-harbor strategies .

Financial Results

Revenue and EPS vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($M)$518.5 $504.3 $569.3
Revenue YoY0% +10% +9%
Diluted EPS ($)$(12.51) (impairment) $0.20 $1.07

Notes: Q4 2024 EPS reflects a non-cash goodwill impairment; non-GAAP diluted EPS was $1.41 in Q4 2024 .

Segment revenue breakdown

Segment ($M)Q4 2024Q1 2025Q2 2025
Customer agreements and incentives$388.6 $402.9 $458.0
Solar energy systems and product sales$129.9 $101.4 $111.3
Total$518.5 $504.3 $569.3

Margins and profitability

MetricQ4 2024Q1 2025Q2 2025
Gross Profit ($M)$97.5 (calc: 518.5–421.0) $98.9 (calc: 504.3–405.4) $119.8 (calc: 569.3–449.5)
Gross Margin (%)18.8% (calc) 19.6% (calc) 21.1% (calc)
Operating Income (Loss) ($M)$(3,256.3) (impairment) $(114.9) $(112.2)
Operating Margin (%)(628%) (calc, impairment) (22.8%) (calc) (19.7%) (calc)

KPIs and unit economics

KPIQ4 2024Q1 2025Q2 2025
Subscriber Additions (#)30,709 23,692 28,823
Storage Capacity Installed (MWh)392.0 333.7 391.5
Solar Capacity Installed (MW)242.4 190.9 227.2
Storage Attachment Rate (%)62% 69% 70%
Subscriber Value ($)$55,811 $52,206 $53,891
Creation Costs ($)$36,634 $41,817 $36,887
Net Subscriber Value ($)$19,177 $10,390 $17,004
Aggregate Subscriber Value ($M)$1,566 $1,237 $1,553
Contracted Net Value Creation ($M)$313 $164 $376
Cash Generation ($M)$34 $56 $27

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Aggregate Subscriber Value ($B)FY 2025$5.7–$6.0 $5.7–$6.0 Maintained
Contracted Net Value Creation ($B)FY 2025$0.65–$0.85 $1.0–$1.3 Raised
Cash Generation ($M)FY 2025$200–$500 $200–$500 Maintained
Aggregate Subscriber Value ($B)Q3 2025N/A$1.5–$1.6 New
Contracted Net Value Creation ($M)Q3 2025N/A$275–$375 New
Cash Generation ($M)Q3 2025N/A$50–$100 New
Aggregate Subscriber Value ($B)Q2 2025$1.30–$1.375 Actual $1.553 Beat
Contracted Net Value Creation ($M)Q2 2025$125–$200 Actual $376 Beat
Cash Generation ($M)Q2 2025$50–$60 Actual $27 Miss

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Storage attachment & unit marginsStorage attach 62% and margin expansion via higher ITC and cost discipline 70% attach; best-ever upfront margin; SV +22% YoY; creation costs down 4% YoY Improving
Grid services/home-to-grid16 VPPs; ARR >$1.6B; dispatch capability ramping 130k+ batteries activated; >340 MW single-day dispatch; PR emergency dispatches Scaling rapidly
Capital markets (tax equity, ABS)$1.3B tax equity added YTD (early 2025); Jan ABS oversubscribed $431M July ABS at 6.37% yield; ~$1.4B ABS YTD; more private placements planned Stable access
Safe harbor & ITC policyEnd-2024 safe harbor ($350M equipment) to mitigate risks Multi-year safe harbor plan; very low likelihood of retroactivity per DC engagement; continued activity by July 2026 De-risking
CAC/OpEx efficiency & AICommission/CAC leverage from superior ops and storage-first model ~10% CAC/overhead reduction per subscriber; AI team accelerating cost efficiencies Ongoing reductions
TariffsModerated cost impact; low-end of prior range Tariff impacts moderated; policy digestion among investors noted Manageable

Management Commentary

  • “Sunrun is the largest home-to-grid distributed power plant operator in the country… our home-to-grid resources were dispatched to avoid rolling blackouts.” — CEO Mary Powell .
  • “Upfront Net Subscriber Value… expanding our margins by seventeen percentage points compared to the prior year… improvements in installation, sales and overhead costs exceeding 10%.” — CFO Danny Abajian .
  • “We estimate upfront sources of cash will be approximately $1.2B for subscriber additions in Q2… expected upfront net value creation of ~$165M.” — CFO Danny Abajian .
  • “Retroactivity [on policy changes] is very, very low likelihood… we see Sunrun generating attractive returns without the solar portion of the ITC.” — CEO Mary Powell .

Q&A Highlights

  • Cash Generation vs value creation: Q2 CG shortfall vs guidance due to working capital timing (inventory +$77M) and slower tax equity monetization timing; expectation for back-half-weighted CG .
  • Safe harbor strategy: multi-year runway; further activity planned by July 2026 subject to Treasury guidance; low retroactivity likelihood .
  • Grid services monetization: ~35% of battery fleet enrolled; directionally ~$20M ARR now; multi-year path to several hundred million of NPV; financing options to open as scale grows .
  • Market shift post-25D sunset: management anticipates ~25% overall market contraction; selective migration to TPO; focus remains margin-first .
  • Cost discipline: ~13% improvement in non-equipment install costs; ~10% lower CAC/overhead per subscriber .
  • Tariffs: impacts moderated; within the low end of prior ranges; baked into outlook .

Estimates Context

MetricQ2 2025 ConsensusQ2 2025 ActualSurprise
Revenue ($M)560.3569.3 +9.1
Primary EPS ($)-0.1151.07 +1.185
# of Estimates (Rev / EPS)18 / 4——

Values retrieved from S&P Global.*

Implications: Strong upside vs EPS expectations driven by noncontrolling interest allocations and elevated contracted value creation; modest top-line beat augments narrative but cash conversion timing muted intra-quarter .

Key Takeaways for Investors

  • Raised full-year CNVC guidance (to $1.0–$1.3B) signals sustained margin-driven growth and supports multi-quarter cash generation trajectory despite Q2 working capital headwinds .
  • Storage-first model is compounding: 70% attach rate, rising SV, lower creation costs—reinforcing unit margins and differentiation vs pure solar peers .
  • Grid services are becoming a tangible revenue stream and optionality for financing as enrolled devices and dispatch scale increase across multiple geographies .
  • Capital markets access remains healthy (ABS and tax equity), and parent deleveraging continues, reducing recourse risk ahead of 2027 maturities .
  • Policy overhang (25D sunset and ITC timing) appears manageable; safe harbor strategy extends runway and management expects prospective (not retroactive) adjustments .
  • Near-term trading: focus on Q3 execution vs guidance (ASV $1.5–$1.6B; CNVC $275–$375M; CG $50–$100M) and evidence of working capital normalization/tax equity timing improvements .
  • Medium-term thesis: margin-focused growth, expanding grid services monetization, and stable financing access support valuation re-rating if cash generation cadence strengthens and storage leadership persists .