SunPower - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 delivered record non-GAAP operating income of $3.12M on $70.0M revenue as gross margin expanded to 48% and the company posted a third consecutive profitable quarter.
• Management guided to new records in Q4 2025 with $83.3M revenue and $3.56M operating income, and projected FY 2025 revenue of $303M with $12.0M operating income; Q1 2026 operating income is expected to be ≥$2.0M.
• The Sunder Energy acquisition materially expands reach (45 states) and the dealer salesforce to 1,744; management expects bookings in Q4 to rise by slightly over 2x (translating to ~1.3x revenue until installs catch up in 2026).
• Liquidity remains tight with ending cash at $4.11M; management is “in the process of raising money now,” a key near‑term catalyst and risk for the stock.

What Went Well and What Went Wrong

What Went Well

• Record non‑GAAP operating income: “Our Q3’25 operating income is a post‑acquisition record of $3.12 million, representing 4.5% of revenue”.
• Margin improvement and sequential growth: Revenue rose to $70.0M from $67.5M in Q2; gross margin expanded to 48% non‑GAAP (from 44% in Q2), supported by cost discipline and mix focus.
• Go‑to‑market scale-up via Sunder: “SunPower closed the strategic acquisition of Sunder Energy to create the No. 5 residential solar company in the U.S.*, expanding reach from 22 to 45 states and increasing the dealer salesforce from 881 to 1,744”.

What Went Wrong

• GAAP profitability not yet achieved: GAAP operating loss of ($2.344M) in Q3 despite non‑GAAP profit, driven by stock comp and intangible amortization exclusions in non‑GAAP.
• Liquidity constraints: Ending cash fell to $4.11M (from $11.13M in Q2), and management is actively raising capital, highlighting funding risk.
• Policy/macro overhang: Q2 revenue was impacted by ITC and tariff pressures; while bookings warmed in Q3, broader industry headwinds remain a watchpoint.

Transcript

Sioban Hickie (VP of IR)

Good morning. My name is Sioban Hickie, VP of IR, and I would like to welcome everyone to SunPower's third quarter earnings call. I will review a few housekeeping items before turning the call over to our CEO, Dr. T.J. Rodgers. To begin, this call is being recorded, and a replay will be available on our company's Investor Relations website within the events section. Please note today's presentation may contain projections and other forward-looking statements. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those expressed or implied in our statements. Also, on today's call, we may discuss certain non-GAAP financial measures. A reconciliation of any differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures is available within our press release.

Lastly, we will hold a question and answer session after the end of formal remarks today. For those watching via the webcast, you may submit a written question at any time via the submission box located at the right-hand side of your screen. I will now turn the call over to T.J. Rodgers, SunPower's Chairman and CEO.

Thurman John Rodgers (Chairman and CEO)

Thank you, Sioban. We've got a quarter report here. Third quarter, we've got our logo, the Helios, the airplane that set a record still standing in 2001 of taking off under the solar power of SunPower solar cells, which, by the way, took light through the bottom of the wings, which are clear plastic from both sides, bifacial, and hasn't been matched by any airplane, fighter plane SR-71. I'm tracking down one. I can't afford this right now, but I should be able to buy one of these pretty cheap since they're now obsolete. I want to put it in the lobby, except it's 247-foot wingspan, so I got to figure out what to do with it. I tracked down an engineer, it's got one in the hangar. He actually was part of it. He gave me this picture.

This is the thing actually flying at about 80,000 ft, clearly above the atmosphere, clearly 99.2% of the atmosphere up there. You've got here, Dan, can we get, you've got here the administrative officers of SunPower, all of us. Dan just joined me. I've announced that before. He's had a storied career in marketing sales. He helped me. He didn't help me, he ramrodded the Sunder acquisition we're going to talk about today. He and I are the only two people in SunPower of other rank of Executive Vice President or equivalent. Sounds weird, but the way this business works, that's what we can afford. I kind of like it because I can micromanage and not have to justify it because there's no possibility of doing anything else. This is our report that I sent out last night and our new logo. I created a commemorative postage stamp for it.

Now I'm going to go into it. These are the details of the P&L, a simple P&L that is easy to read, but there's a lot in there, and I'll go slowly over the lines to explain it. First of all, this is how we run the company, and most companies are that way. We grew in the prior quarter, the bad quarter. ITC hit the quarter a little bit, and there are two reasons for that. The ITC has not gotten any worse, and people are accommodating it and actually reacting to it. We did the Sunder acquisition, and there were like four or five days of stub revenue, not consequential, but in there. Those two things are what caused the number to go up. I'll talk about the next quarter in a while. We had fall through to gross margin, good gross margin.

I want to warn you that our gross margin isn't really 48%. We're doing some deals that we bought from SunPower, and they're on the books at a favorable price, and they add about 4-5 points on the gross margin. Also, the merger with Sunder will take away another few points. For those of you tracking the company, please don't put that in there because then I'll have to live up to it. Put that in there for gross margin going forward. It's still a good number. I have two forms of OpEx here. FASB demands that OpEx include sales costs, commissions. I do an OpEx less commission so I can get that out of there and look at the company because, as I've already said, keeping costs down is extremely important.

You'd look at last quarter, $17 million, and this quarter, $23 million, and say, $6 million bucks staying lean isn't exactly an accomplishment. I'll point out that our costs this quarter are actually flat to a little bit down, and there are some reserves in here that have added up to the quarter. We had a good quarter, and we were lean, and we are generating good gross profit. What I asked them to do is clean the house this quarter. We had some accounts receivable that were a year old or more. We got rid of them. One of our finance companies went bankrupt. We put reserves on the questionable line items for that. This is a very clean number, and we still ended up even with that extra $5 million, $6 million bucks in there with an operating income of $3.1 million.

That was, I think, a good accomplishment. We're now up to 4.5% of revenue. Our target is 10%. I think that's totally achievable, and I'll explain how to go forward. As I said, it's a record. Bad news is we've had $10 or $11 million in cash, and I've actually enjoyed, I never had that in my life. I was a chip guy, as you know, and I always had several hundred million dollars in the bank and that cash flow stuff somebody else worried about in finance. Now I got to worry about it, and I found out I'm quite comfortable with $10 or $11 million. That's the way we've run for a year now. This quarter, we had some large payments on our convertible ventures, and we ran down the $4 million bucks. I'm out raising money right now. I'll leave it there.

I'm out raising money right now. Okay, to summarize, revenue increased to $70 million from $67.5 million, the bottom point of the quarter. We made $3.12 million in profit, up from $2.42 million in the prior quarter, and our cash balance I just discussed. Okay, this is a graph of operating income, and by operating income, I mean the full definition of operating income in the GAAP sense, but let me tell you what the corrections are. If you look at our operating income, then there's a correction on GAAP. This is stock compensation and amortization of intangibles, amortization or depreciation of intangibles of charge of $5.4 million, meaning the GAAP profit is -$2.3 million. Let me tell you what's in there. All but $1.3 million is stock compensation charges. Nobody expenses stock compensation. The price of stock is dilution.

We have 83.11 million shares, 83.11, and we give our employees stock options, and we think that's better for shareholders, Silicon Valley style. The other $1.3 million, this is an important thing, and I'd like you to take note and make sure you keep this in your models. We are now depreciating the name SunPower. It came across to us in the acquisition of assets. We also are depreciating our software, which we built and paid for, called Albatross. It's our main operating system. We're depreciating that because in both cases, the name and the software, we had to buy it back, get it appraised, pay money for the appraisal, and now we're depreciating it. These charges, and there's a footnote in there, we play it straight on GAAP. We believe in GAAP except for these foolish charges. We've been conservative, as I said. All right.

Having said that, this is a graph of operating income minus those charges, and that's how we report, and that's how we run the company. It shows since we acquired, the acquisition came here of the assets. We lost money. That was the division that we took from SunPower that we thought could work, didn't work. As soon as we got rid of it, we started making money. We made money ever since. We came out of the bankruptcy, the SunPower bankruptcy with about $320 million in revenue. We got hammered about like everybody else. This is no special charge, but it was disappointing to make this a very profitable number for us and then have it go down, but we still made profit at that number because we have a very, I'll explain later, aggressive campaign to keep costs down.

This quarter, we recovered, as I said, to $70 million, and even with the reserves we took, we had $3.12 million in OpEx. That takes us up to Q3 2025. The future is here. We've just acquired Sunder. In the first quarter, there won't be a lot of revenue from Sunder because their revenue comes from selling solar. Their revenue is the solar sale, and their profit is minus their sales costs. Their sales costs are costs per sales company. Therefore, all the deals they've done up to the time we've acquired them got sold to somebody else. Now we have to start to fill the pie from scratch. This quarter, we're going to start putting, and we already have, start putting jobs. We're on plan. We got a plan for them. They're already integrated in that way. There's a pop in revenue.

That's non-trivial, and it gets us back to where we were. We're hoping for a record. Worst case, it'll be above 80. I had debates all day yesterday with the executive staff on what to say about Q1. I said if I don't tell them about Q1, they'll ask me about Q1. You get my off-the-cuff answer, which is almost always worse than an answer you've thought about. It is so uncertain. I won't know until the end of this quarter what we shipped and what backlog we'll have left to go into the next quarter. I won't know that. Our bookings rate right now is fine. Our bookings rate just doubled because of Sunder, literally. That's delayed. I have good FP&A, and we gamed, meaning did simulations of what happens if this is bad, that's bad.

Our worst simulation said we're going to make at least $2 million in Q1. I mean at least. Our goal is to beat that. I wanted to tell you, and of course, I believe Q1, which is always the weak quarter, the winter quarter, and half our states are snow on the roofs. The winter quarter will be gone, and we'll move into the spring quarter, which is a much better quarter, and then the fall quarter, which is always a big quarter. That's the best I can do. I didn't do any revenue, but I know for the minimum revenue I've simulated that we're going to make $2 million. I think we're going to do okay on revenue. I've shown this many times. The way we put together the company, starting with 3,499 people from three companies, was the ARC plan.

I didn't inherit a huge number of people and go through the screaming and wailing of layoffs. We hired what we could afford. At that time, it was 1,225, and we've been upping the bar or lowering the bar, if you will, since that time. That leads to this graph, which I've shown before. This is our headcount history. 3,499 was back in July. When we acquired the company, the assets, we went to 1,341. When we started post-merger day one, so this is our very first quarter here as a company, we had it down to 1,280. We got to our plan. That was all I was going to hire. I can guarantee if you get to the plan, I told HR how much hiring we could do.

That led to a healthy debate on who should we hire, why should we hire them, are they good enough, should we leave the spot open and hire as we get into it and get access to better people. We've done all of the above. There's the target dropping to 980 and 820. You can see our system. It's called the rec auction. I explained it before. It's a process I developed back at Cypress. It works by forcing management every week to debate how many people do you have, who left, do you really need to replace them, and if you replace them, is the best hire for the company the person that left or somebody else? That means you have no recs. Your VPs can hire all the time.

The VP of HR walks into the executive staff meeting and says, "We lost six people." This is in dollars, of course, but I can explain it in headcount easier. You say, "We lost six people last week. Out of 1,000, we can hire six people." The VPs together perhaps have 12 people they want to hire. We debate among us. This gets rid of the president versus all the VPs, all the VPs arguing why they need to be bigger. This has the guy who wants to hire against the president and all the other VPs, and the dynamic is better. It typically goes into a merit-based discussion when the culture is there. Having said all that, without a lot of hoopla, without any warnings, you know, the government-required thing, we've managed our headcount down. By the way, that last number, 829, includes 19 current employees from Sunder.

Think about that. 19 people left. They were declared to be less important, and we decided the new 19 people would be those from Sunder. Of course, that's transformed the company. I'll explain that later. This is a great system. Looking at the number 829, the next question is, who do you hire and where? I've shown this graph before. Oops. I'm going to go over it again. It's a graph of headcount. Here we see our headcount of 829. That's the number that bridges to the last slide. This is a break-off. We look at five running weeks to see if you're growing or shrinking. We put, there's the target, 820. We're almost there now, including the Sunder folks. You can see here, we've already started talking about a new number.

I'm not sure I'm going to enforce that number completely or quickly because as I look at the company, we're at the right size right now, and I can see a few spots where we're threadbare, and we need more bodies. We're talking about upgrading, getting more efficient, in particular, quality in the solar industry ain't there, not like chips. We're working on quality programs. Hence, if you look at my quality group, it's big because it needs to be. The major point here is the red is revenue per employee per year. Blue Raven, which is our sales and fulfillment organization internal, the old SunPower, if you will, is $293,000 per year per employee. I start griping at 300. I get happy at 350. These guys have to either grow or shrink their headcount.

Here you can see the headcount requirement for them, and they've been working on getting there. New Homes is the other part of SunPower, separate division, doing a separate job, putting solar on New Homes in projects, even including helping design the project. They have higher revenue per employee, and they also have higher profit. Here's why Sunder is a good deal for shareholders. $4.2 million per employee per year. There are many software companies that don't have that. Why is that? In the solar industry, based on custom and reasonable custom, the sales forces don't work for the company. They're contractors. You pay big bucks. You pay a commission to the sales force, and it's typically 30%, even a little bit higher. You get your job.

You own the job, and then you make your money with the revenue from the thing, minus 30% you pay to the sales company, and you make your money underneath that. This company, if you look at its structure, what came in back when there was their first quarter, first day, it was 20 people, 20 smart W2 employees running a sales force of almost 1,000. They specialize in managing sales. We don't. We specialize in everything from managing sales all the way down through O&M, keeping your customers happy over the years when their system breaks, and they can call a 1-800 number and get somebody that cares. If you want to ask one reason, economically anyway, there's more. Why is it a good deal?

Now, if I take the weighted average of these, this number has jumped over 400,000 for the first time for the company, and I'll show you that in a minute. I want to make one more point. These are efficiency numbers from our consultants. They're for 200 high-tech companies, and they give the median and top quartile, meaning cheapest, lowest headcount, lowest cost for overhead. It says, for example, IT full-time equivalent per billion dollars of revenue should be 77, and the best companies are at 62. You have spend per FTE, you have percentage of revenue, and you have matrices for each of the important parameters. That's how we do it. Based on that, you now can see the deployment of the company. I don't have a fetish about it. I just go over it twice a week in detail with a full meeting.

I already talked to you that quality is 18, and I don't cut them below that. We need, if anything, more quality people. We need to develop a quality culture in the company. We need to develop quality awareness. We need to do training. Finance, we had a target of 22. We're down to 12. We're now subcontracting some of the accounting functions that don't really need a full expense American employee, and we're actually doing it as a fee per month. I have an IT guy from Cypress, my old company. He runs really lean, and this function is, I'm happy with it. Dan and I have, in 19 people in admin that do all of admin. We're the top admin guys. I got six lawyers in my legal department with six employees. That's a Drew Wanker that we introduced last time. We're on a third lawyer.

He's really good, and I'm happy. Oh, my old lawyer at Cypress was Drew, and I just conflated names. We're going to compromise on that, and we're asking Nick Wanker to change his name to Drew Wanker. Anyway, when I came in, I had 57 lawyers in the company. All gone, 100%. Customer care, this is important. We've got 62 people. We're about at target. This is when you call in and something's wrong. The company proves that it cares. We have a good star rating, but in terms of doing what we need to do, it's not as much as we need to do, and I'm asking them to do more. I've been able to tell you about our efficiency, the bodies, the fact that our overhead is lean, that it's carefully managed, and we have a process for it.

That process has gotten us profit numbers we can brag about. We talk about revenue per employee. This is our graph going back. This is the first quarter after the merger. We had a nice trajectory then we got hammered. We didn't lose employees as fast as we lost revenue because we lost like 15% of revenue in one quarter. Sunder brought in revenue, and that improved it. This quarter, we're in the middle of the quarter, so I can already tell you I just showed you my twice-a-week estimate is 425. In the letter, I promised 400, so I've got margin, and we're going to beat that. That's the number. If you drive that number in the solar business, you will make money. I made that point in the letter. Consequently, our only effective cost control method is to control employee expenses.

First step, reducing headcount to the right number of employees is done. From now on, growing revenue will be our earnings driver, hence our current focus on acquisitions. This report went out at 4:00 A.M. California time this morning, and I took the snapshot literally as I got in the car to come here to talk to you. What does the snapshot say? Over a long period of time, they're unsure, and we bounce between, if you forget the anomalies, they bounce between $1.50 and $2.00. This is the confined space we're in. This looks to be a breakout. What's the volume today?

Sioban Hickie (VP of IR)

37.7.

$37 million shares traded today. In our attempt to raise money that I'm in right now, I'm going to try to get some of the big guys to have enough confidence to get into us and trade toward institutional shareholders from retail shareholders, which is where we've been. They supported us, so I'm not griping. Share price. This is a graph of market cap on revenue, market capitalization on revenue, the price-to-sales ratio, so I can have a short term for it. It's nothing but revenue in a quarter times four times price-to-sales divided by share count equals share price. This says that our peer group, and this is a reasonable peer group, and it's got good and bad companies in it, trades at about two. This shows that the industry is together gone down. We're dragging along here. It is what it is.

We have given shareholders, our employees shares, and our executives have a significant number of shares. We will make out as individuals when our company makes out. That's Silicon Valley all the way. Our headquarters is in Utah. Less common for that to happen there, less broad belief in it, but it's coming around. If you take even this last low quarter we had, not the 80, but 70 times four, if you assume we can get to a PS ratio of one up to here, still below our peers, and our official 83.11 million shares, that's 337. That's not a pipe dream, an unreachable goal, or anything like that. That's a calculation of something that as soon as we have big investors that believe in us will happen. Why isn't it happening? There's one. There's always been a concern for viability. It's reasonable.

I can just tell you that I'm 77. I don't need to do this economically, and I didn't start playing this game to lose. I'll just make that statement. The second thing, which is also important, maybe even more important, is we have disinformation from retail market data companies. I gave a talk at Canaccord in Boston, and their format was to have separate rooms, and the company team would go in there you'd set up your PowerPoint, and about 10-12 investors would show up, and they would operate on cycles, 45-minute cycles. I was sitting behind a guy, and I was giving this pitch, and he wanted to find out more about us, obviously. I watched him type through a bankrupt company, has been delisted. Then the bot questions, the brain-dead bot questions. Is SunPower a good buy?

No, SunPower is not a good buy since they just filed for bankruptcy. Of course, that was a year and a quarter ago. We've got companies that pretend to give good advice to investors, and they don't. We're starting to bitch about it, and the bitching will get stronger. We've had a breakthrough. We called CNET. They're a company that says printing the truth is important. It's one of their core values. I put that quote in the quarterly report. We said, "This is hurting us. We're a new company, we're doing well, we feel good about ourselves, and we're having trouble getting people to know that." They said, "You're right. We understand." The pushback we've been getting sometimes, "Oh, man, this is all over. It's difficult to fix, yada, yada, yada." They fixed it in two weeks.

Now I have a data point to show to our other companies and start getting us recognized for what we do, good or bad, not the history of the old company. This guy's Eric Neilson. He's our new EVP of Sales. You can just look at him. You can see he's a sales guy. You can see he's got enthusiasm. He's big, like 6'2". He's athletic, and he's got a lot of life about him. He was the President of Sunder, and he's now our EVP of Sales. I'm going to talk about the Sunder thing briefly because I've reported on it before, but I want to remind you what it did for us. I want Dan to talk about Sunder. The way it works is Eric reports to Dan, and Dan and I are the top two guys in the company.

Since Dan is a sales expert and I'm not, we're doing better with him there. That's why I asked him. He's on the board, and I asked him to come in. SunPower closed the strategic acquisition of Sunder Energy. That makes us the number five residential solar company. Their sales force was complementarily distributed relative to ours, so we went from 22-45 states. Our dealers, so the number of 1,099 contractors in our dealer sales force went up from 881-1,744. I tracked that. There's another graph I decided not to show, but that was last week's graph. What's interesting is I asked Dan to tell me what our bookings rate was doing, and he got a little frown, doubling. As a matter of fact, a little more than doubling. Of course, we're not promising double revenue, so I've got this dissonance I got to deal with.

I put in a footnote for you. Remember, a 2x increase in bookings equates to a 1.3x increase in revenue. That is, the bookings only produce 30% of the revenue, and then the EPC function, taking the booking and turning it into a system, creates the other 70% of the revenue. That's how the industry works. Right now, they're filling our pipeline with new bookings because their old bookings got sold to somebody else before they came in. What I'm worried about is you guys look at that, write some big numbers, and then I have to explain why I missed forecast in the future. I'm putting that warning in. Tell us about Sunder, Dan.

Dan Myers (EVP of Sales and Marketing)

There are two things I'd like you to take away from this. First off is that Sunder knows what they're doing in this space. They are the acknowledged experts in how to hire, motivate, drive, retain, and fire when necessary a 1,099 sales force. This shows up fast inside of SunPower. In the first three and a half weeks, the Sunder team has captured the imagination and, frankly, the heart of our existing sales force. They are now totally behind Sunder, they're modifying their behavior, they're modifying their sales strategies to be more like Sunder. The first thing I'd like you to remember is that Sunder knows what they're doing. They're absolute pros at this, and they are not only contributing to bookings organically from the previous Sunder organization, they are causing an increase in bookings in our SunPower organization. The second thing is that Sunder is strong where we were weak. We were in about 22 states. We are now in 45 states.

The important thing to remember there is that there was very little overlap between where Sunder was and where SunPower was. In other words, Sunder was strong in California, Texas, Florida. We were not. What you're seeing now is no negative synergies in bookings. As T.J. pointed out before, our booking numbers are extremely strong in Q1. The first three weeks were at 120% of plan, discounting the Sunder. It's even more when you add the Sunder bookings on top of that. We're proud of the bookings, and we're proud of the way that the SunPower sales organization is aligning with and joining with the Sunder team.

Thurman John Rodgers (Chairman and CEO)

A couple more points. Because of that feeling, Sunder, we said, "Sunder, you maintain your own practices." Normally, the acquiring company says, "This is how we do business." When you acquire a company that does business in a given area, better to you to take it. We said, "Maintain your own practice." In particular, they are known in Solar Valley, Salt Lake. They have a state-of-the-art sales force in recruiting and training, getting good people, and they have fast training so they can take a raw recruit and put them on the street as effective. That word's getting around the industry. Since they came in, we've had 232 inquiries about joining SunPower's Sunder division. I'm glad I left it that way. We've already signed up 195. My experience is that the dealers scatter when something changes in the main company. We're not having that problem.

The other thing we did is we merged already faster than our plan into a single 1,744-member sales force led by Eric. Dan talked about that. I had to socialize it inside because I've done a lot of acquisitions in semiconductors. You bring in a little chip company, they got some hot new chip that does something. You've got the fab and the sales force and the infrastructure and your public. They want to come in. You bring them in. Synergy comes from you've got two of these, two of those, two of those, and you pick the best. That means there's layoffs and demotions necessary in order to get the synergy, the benefit that comes from the merger. I tracked down our VP of Sales. His name is Evan Dwyer. This is SunPower's VP of Sales, our sales force. I threw out some broad areas to talk about.

In other words, I didn't ask him specific questions. That was a day before yesterday. He said, "Now we have the people, systems, and management to achieve the growth we need." Bingo. If you don't have your sales force behind you in the spirit, it doesn't matter how tough a manager you are. It ain't going to happen. That was my closing line in the quarter of the report. The big guy over here is Eric. Unfortunately, preparing this thing, I didn't get to see the Packer game until midnight last night. This is my caves. That's California. And here's Evan Dwyer we invited him to the party.

Okay, outlook. $83 million in revenue, which is an estimated record. $3.5 million in profit, an estimated record. These are both estimates. Subsequent events, other stuff that happened that matters, or should matter to shareholders. We signed a joint development agreement with REC. There will be a press release coming out on it. We're working. We signed the agreement, and we have a formal agreement. We're now working out on who does what when. They are the largest seller of panels in the United States. They're currently overbooked tremendously. Nobody wants, you know, Chinese panels that are risky. They make stuff as good as the best Chinese companies. They're out of Singapore, and we've got safe harbor stuff going on. They're booked. The question is, what can we do now to get going? We're working on that.

When we have an answer to that question, I'll come back and do a press release. By the way, they are our panel partner. Our inverter partner is Enphase. There are a lot of details behind that I won't go into today unless somebody asks a question, but Enphase sells batteries as well. We just received a 200,000 battery opportunity through Enphase. Our company, which has not done a good job in batteries, primarily because our company equals Blue Raven and New Homes, neither of which is fertile territory for new batteries. Sunder has a 50% attach rate with batteries. We just got this big opportunity so we can start flexing our muscle.

Like I qualified two quarters ago, 100 technicians who got more pay and the status bump and last to get laid off status in the company when they went and did formal training on how to install batteries and do it quickly and efficiently. We've got them waiting. We are doing a 10% attach rate. Think about, you know, 100 batteries a quarter or something like that. They're keeping in shape is my point. Now all of a sudden, we're going to have a battery opportunity. Going forward, I want to show a mission statement I created this last month. Consistently profitable growth from $300 million in 2025. We did $303 million-$1 billion in 2028. Three years to $1 billion is 50% per year, very close. It requires internal growth and acquisition. This was an estimate I put out. I left the estimate in there.

Bottom line, the quarter we just reported, the share count I just reported, and our goal for share price, I gave you the equivalent calculation for today. In Q3 2028, we'll grow to $250 million a quarter. That is $100 million per quarter less than old SunPower wants to have. It's doable. The acquisitions I want, and I'm currently targeting six companies. Now I want more Eric Neilsons. I want the economics, obviously. I want companies that are already efficient so I don't have to pare down a company. I want companies that bring technology to us. Those Venn diagrams do overlap, and there are a few companies in that category. Even with 100, even saying we're going to pay 60 million shares to pay for those guys, our revenue per share is going to be $7.14.

At a PS ratio of 1, that means $7.14 share price, and a PS ratio of 1.6, which is currently SunRun. Therefore, achievable if we get recognized as being a contender in their category at $11. This is the pitch I made to investors. Second part of it, SunPower will again be recognized as number one in solar by introducing advanced technology, hardware, and software controller system products. The advanced technology hardware, we're working with Enphase. They just introduced a gallium nitride version of their inverter, and people don't understand how important that is. I'm going to try to help them by writing a paper on that. Software control system products, everybody thinks of solar as something you kind of patch together. You buy your panels here and your inverter from Tesla or Enphase, which is an architectural change.

They don't understand you're buying an electronic system, and that electronic system has to do its function. That means the parts have to talk to each other and control each other. I'll give you one factoid on Enphase. First of all, if you go look at their app, punch in your cell phone, you'll see a satellite picture of your house, and you'll see the power of every one of your panels displayed from sunrise till the time you look at it. Secondly, they have a new app, which is if you activate it, it tells your system, and it's AI-driven. If it tells your system, this is a California thing. I want to charge my electric car with only solar energy. When you think about it, that is a technological breakthrough, a pyramid, and I mean stacking the rock pyramid proportion.

It means you can drive your car with sunlight. Your car doesn't burn any oil because it's any gas because it's electric, and it doesn't use any electricity that burnt oil to be created. It allows, and it gives a picture for a significant population in California how we can drive around all we want in the future without burning oil. Some of you in the oil business, and I have nothing against oil, will say, "Okay, that's fine, but there's a bunch of people in California that care about it." That is an application on an Enphase-based system, undoable if you patch in anything else because you disrupt, you cut the cables, you change the computer, you change the language, you change the communication bus, which by the way is the automotive CAN bus.

Cheap, highly reliable, the thing that connects your steering wheel and your brakes to the activators in your car. SunPower will again be recognized as number one in solar by introducing advanced technology hardware. I'm hoping to do that with REC and software-controlled solar system products. That already exists with Enphase, and that is going to be a stream of products that aren't about hardware. Okay, we are ready for questions.

Sioban Hickie (VP of IR)

Apologies. We will now begin our Q&A session. As a reminder for those joining via the web, you may submit a written question via the submission box located on the right-hand side of your screen. For those joining via our live Q&A, please click on the raise hand located at the bottom of your screen within the black bar. When it's your turn, you'll receive a message on your screen allowing you to speak. When you hear your name called, please accept, unmute your audio, and ask your question. Our first question today comes from Derek Soderbergh from Cantor Fitzgerald. Go ahead, Derek.

Derek Soderberg (Director and Senior Equity Research Analyst)

Yeah, hey guys, thanks for taking the questions. TJ, you just mentioned the 200,000 battery opportunity with Enphase. I'm imagining those are part of a solar install as well, but curious if those are Enphase batteries, and then how should we sort of quantify that opportunity for SunPower.

Thurman John Rodgers (Chairman and CEO)

First of all, let me say as one of only two people above the Vice President level, I asked about our AVL, and we kind of had one, but we kind of didn't use it. I took over the AVL, and there's only one battery in it. It's called Enphase. The reason is exactly what I said. The Enphase battery is the only battery compatible with future electronic systems. It came through Enphase. I am not at liberty right now to say what it is. It's not new stuff, take it out. It is an opportunity for an existing group, and I'll leave it there.

Derek Soderberg (Director and Senior Equity Research Analyst)

Got it. Got it. On the sort of 2028 goal for the company to reach a $1 billion run rate in revenue, just to clarify, I'm wondering, it sounds like the base for gross margin is 38%. Is that including the acquisition of Sunder? That's the range of gross margin we should expect. TJ, I don't know if you can comment on this, but how do you envision earnings per share when you guys are doing a billion dollars? What can we get? I think in the past you've said a 10% profit margin. Is that still the case at a billion in revenue scale?

Thurman John Rodgers (Chairman and CEO)

It's a multiple-faceted question giving me many opportunities to commit future suicide. First of all, what I put on the slide, and we'll put this pitch on the website so you can get what's in it, is 38%. That's where I'm at now. 38% is about where gross margin is, about where if you take an order and run it through today's SunPower, we're lean enough to get 38% gross margin and with a little bit more volume, get 10% profit on the operating income. That's our goal. The question is what is our reported gross margin at aggregate level? For a while, we have, you can think of as two companies and taking a mix. Right now, Sunder is a sales company. Their gross margins, I want to refine the numbers, but right now are in the 16% range.

I'll gladly take a profitable, and they have almost no overhead with only 20 people. They're profitable on the bottom line. I'll gladly take a sales order and report it as a SunPower sales order. I'll only get for the potential value of the system, 30% of the sales order for the sales money. For this first month, they're still selling to the companies they've always sold to. Right now, we won't get any revenue because we can't get them through our line for a quarter until they fill up our line. Secondly, we cannot double the size of our installation. We got 150 guys out there. Can't go to 300, train them, the whole thing. There will be a ramp during the year.

I pointed that out, and it was a confusing, I admit, press release where we go from sales only revenue gross margin to sales plus EPC from us. It looks like an internal order of zero cost. That's a 38%, 36% if you want to be a little bit conservative. Eventually, and eventually means down the path, we'll be about to pick a number for the future. You might want to do a 50-50 mix of those two to calculate the numbers. In the future, I'm a big fan of divisions. In the future, we'll give you some number. I've been telling you, I've been indicating without giving numbers, the profitability, revenue and profitability of Blue Raven, our internal sales force and fulfillment organization. New Homes are internal New Homes organization that sells to corporations 300 homes at a time. We have a new one. We'll have a sales organization.

We're still in the process of working out how we will report that. One way is to leave them as a sales organization. They simply can sell to us. They sell to Blue Raven. Blue Raven would install. Blue Raven makes 70% of the revenue based on installation. It doesn't matter if they bought it from the guy next door or an outside dealer. The sales force can remain pure sales force that's created all of the goodness that they have in that organization for running sales. That's yet to come. The whole reason I was ambiguous, all I can say is I'm remodeling the crap out of this thing, and we understand it pretty well now. All I can tell you is we're going to make money in the first quarter. I gave you that number.

You got to wait till this quarter, 90 days from now, and I'll give you more data. EPS ain't there yet. I can calculate it for you. We have, you know, GAAP says you got to calculate it. So we calculated it's negative a few pennies per share. Until I get the thing profitable and start worrying about EPS, I'm dealing with operating income. That's my currency of exchange with our shareholders.

Derek Soderberg Director and Senior Equity Research Analyst] (Cantor Fitzgerald)

Got it. That's all the questions for me. I'll pass it on. Thanks, guys.

Sioban Hickie (VP of IR)

Thank you, Derek. Our next question comes from the web. Based on 2Q, SunPower's break-even revenue has proven defensible in the mid-$60 million revenue range. Post-acquisition, do you anticipate any changes to that break-even revenue level?

Thurman John Rodgers (Chairman and CEO)

No. That's the beauty. When you're caught, think about it. You're struggling for orders. The ITC is screwing everything down. A guy walks in and says, "I got a group of 20 people. If you hire us, put us on and give us stock options, we will double your order rate." That's a no-brainer. No, the only thing we're going to have to spend more to get bigger is the fulfillment group's going to have to get bigger. I want them to get bigger. I want to get them big enough that they, but I want to have excess orders all the time. We're selling the orders we can't service, and we are executing on the orders we can service.

Sioban Hickie (VP of IR)

Thank you. Our next question comes from Gus Richard from Northland Capital. He asks about battery contract duration. How many years is the battery contract for? If you've got the numbers right, it would be $1 billion of revenue for Enphase.

Thurman John Rodgers (Chairman and CEO)

Yeah, 50% of what I said is a million. I'm hoping for more than that. The opportunity is there, 200,000. 50% is 100,000. When you think battery, think $10,000. There's 5 KW-hour batteries, 10 kWh batteries. The average out there is 8.5 KW-hours. Batteries now are attractive. Battery-only sales are attractive. The way that happens is pick San Diego Gas and Electric. I mean, I like to gripe about PG&E, but they're equally as bad. When we went to NEM3, Net Electricity Metering Revenue III, or Rev III, they stopped paying their customers who had excess power on their roofs and put it back into the grid at the grid rate that they were charging. They started paying $0.03 kWh. That means you're losing your power. That means your solar system, a new solar system, wouldn't have an ROI.

The other interesting thing is that after 4:00 P.M., they start charging at the high price. I once knew it, but think about $0.40 kWh. They'll give you $0.03 kWh and take $0.40 kWh. You put a battery in. It's called a grid-tied battery. It's the cheapest and most cost-efficient battery. It sucks up power at noon, saves it, and powers your house starting at 4:00 P.M. You pay $0.03 kWh that you could have gotten for it, and you get back $0.40 kWh However big your battery is, you get that every day. If it's $0.40 kWh times a 5 kWh battery, even a small battery, you're looking at $2 a day times 365 days, etc. This thing pays itself quickly. Batteries are going to become more important. That comes from the fundamental problem. The sun only shines, on average, in North America 5 hours a day.

If you want to use solar power, which actually getting kilowatts off the system is the cheapest possible power. What the opponents of solar say is that it's really more expensive than that because you have to have two power plants, one for the day and one for the night. When you have the one for the day, yes, you can have a nominal gain on it, but then you got to turn on the big expensive one and burn natural gas at night. That's the argument. It just says we need more storage. Right now, storage in utility space is going through the roof. The best storage is if everybody at their load has storage. I do not have to have some giant battery going into a transformer and then putting up power in the neighborhoods. The guy out there can, in effect, reduce his load.

If you think about it, he can reduce his load. That is why batteries are happening now, and it is a big deal. What I just said, I actually was home in Oshkosh, and I was trying to sell a battery at the dining room table, kitchen table. We do not have dining rooms in Wisconsin. We have kitchens. I gave him the thing, and the guy looked at me kind of frowning. He said, "Wisconsin Power and Electric, their cost is $0.12 kWh, and they only go off for a couple of hours every year. Why do I need a battery?" That is one of the reasons we have not sold as many batteries as I would like is we are deployed in those states, Midwest, Blue Raven. All of a sudden, this doubles our sales force, and all the states where my argument about saving power for nighttime are absolutely valid and are going to get better as time goes on.

Sioban Hickie (VP of IR)

Thank you. The next question we have, while appreciating the opportunity in the market to acquire attractive assets currently, can you speak to how you think about the balance between acquisitions and bolstering the balance sheet and the potential need to raise capital?

Thurman John Rodgers (Chairman and CEO)

Okay. I try to make these things look simple, but I think carefully about them. Unlike my training, which came from Collins and Porras at Stanford, when the idea of culture and mission statements being better came out, I wrote this mission statement because right now, as a culture, we're not ready to write one. Consistently profitable growth. I didn't say grow from $300 million-$1 billion. I said consistently profitable growth. I plan on putting something in the bottom line every quarter. Period. I don't think you can run a company. The idea I'll run in the hole and I'll burn a lot of money, and then it'll get better when the volume goes up. That's not what we're doing. I'm looking for acquisitions that are effectively priced. I'll use that word. We paid, I forget the, we paid our multiples 0.45.

If I pay more than 0.45x sales for any company, I'm diluting our price-to-sales ratio. That's kind of like my budget. I look around, then I find a team where kind of like some of the guys and hope they can become our new executives, some of our new executives, and where there's complementary, they're in different states. I'm shopping for things that fit in. During my time at Cypress, we acquired, as I said, 26 companies. My observation was that when mergers or acquisitions didn't work, it's when there was a culture problem. I'm real big on culture. The math has also got to work out, and I have a budget. Now, as our stock goes up, I'm able to pay more, right? I'm able to pay more and maintain my budget. That'll help there too. In terms of, then there's the last thing, is work.

What if I gave you $1 billion worth of orders today? The answer is you'd have $0.9 billion at the end of this quarter left because I can't do $1 billion. The same is true for mergers. In Cypress, we did about one a year. There was a flurry of activity in a given quarter. The second quarter was hard work. The third quarter, they were kind of part of us, and then we moved on. That process is specced. Badri Kothandaraman, who worked directly for me, the President of Enphase, has acquired five companies. He's taken that spec to the next level. I borrowed that spec from him. I believe we're capable of acquiring something like two companies a year, maybe only one company in the first year and three quarters later. I won't dilute price-to-sales ratio. I will pay stock if I can.

I will raise money with the stock as soon as the price allows me to raise money without being highly diluted. You guys, I'll give you a factoid. My current salary at SunPower is zero because I don't want to screw up our profit because I own 30 million shares. I've been working at the company for years, collecting shares for private rounds, stuff like that. I make money only, literally only. I don't even charge airplane fare to them. When the stock goes up, that's it. I'm a shareholder, and I'm a pure shareholder, and that's what I'm planning on doing.

Sioban Hickie (VP of IR)

Thank you. I do want to point out that we are at time, but we do have a few more questions in the queue.

Thurman John Rodgers (Chairman and CEO)

We're in the Novics, by the way. They have a little studio they lend to us for free, so we're here. Go ahead.

Sioban Hickie (VP of IR)

Okay. We have a follow-up question from Gus Richard from Northland Capital. How many of the Sunder sales are being converted into sales at this point into EPC?

Thurman John Rodgers (Chairman and CEO)

If the question is how many of Sunder orders are being converted into EPC revenue, okay, then I will report this quarter. The answer is very low. Because it's going to take me one quarter to fill the pipeline. What our plan is, is in the fourth quarter of this year, if we manage to capture half of the orders from Sunder, and that's pretty aggressive, we will then get $20 million per quarter of sales revenue from Sunder just for their orders, and $20 million more of install revenue from internal. Right now, this quarter, we get only the sales part of it.

Sioban Hickie (VP of IR)

Okay, thank you. Our next question is, as energy demand accelerates due to data center growth, energy pricing will continue to increase, making solar more attractive. How does the energy price trajectory play into your long-term vision for growth?

Thurman John Rodgers (Chairman and CEO)

I reviewed a startup the other day. I'm amazed at how brilliant we are as a country. We keep kicking ourselves, but we are brilliant as a country. There's a thing called Helms in Nevada, Sierra Nevada. PG&E once screwed my company by shutting down my power and ruining millions of dollars' worth of wafers. I had them on the run. They asked me what it would take to get me off their butt. My first answer was, I want to go to Diablo Canyon Nuclear Plant. I want a tour on a Saturday morning with a real engineer. No problem. I drove down there, a nice little drive on Highway 1. At the end of the tour, which was amazing, I went to the room, and I looked out in the hills. There were three wires going out of Diablo Canyon.

We're talking wires that are this big around, going out of Diablo Canyon, 2 GW of Diablo Canyon, and then up over posts and disappearing. What's that? That's our connection to Helms. What's Helms? Helms is where we store our energy. You know, you can't turn a nuclear plant on and off. You might have to get the ramp-up period is a month to get it up. Then it runs 24 by 7. What's that? That's where we store our energy at night. They release the energy at day. I called back the PG&E guy. I said, I'm feeling better, but I need one more thing. Oh, okay, what? I said, I got to go to Helms. I want to see Helms. Two lakes, Sierra Nevada, 4,000 ft apart.

In the middle is, think about a dam, the hydro part of a dam, except it's buried inside of a granite mountain, literally a mile inside of a granite mountain. At night, through a tunnel, down comes the water, turns the turbines. This is a big plant. Then it goes down to the lower lake. The lakes go six feet change. At night, they turn the turbines around, and they turn into pumps, and they pump water from the bottom lake back up again. That's how they see it. It's the world's biggest battery. Getting to the question, I just reviewed a business plan for a guy who, and by the way, that's known technology, and it's not that expensive. It's cheaper.

It's cheaper than any storage technology, cheaper by a factor of two than the cheapest battery for a car, and cheaper by a factor of 10 than batteries you put in your house. A storage, a pump storage is called. What's your plan? We go next to an AI center. We have these machines. The machines that board make 50-ft diameter tunnels. They go at the rate of, I think, like 30 ft a day. We said we dig on down till we're 4,000 ft down that's doable. We dig amazing tunnels down there, so we don't have to have a lake, and we don't have to be in the mountains. We have a little artificial lake on top, and then we've got those tunnels. We pump water from the tunnels back up and back down, and we're right there.

We don't have to have transmission lines expensive when we feed the AI center. All of a sudden, you realize these problems will be solved. The reason we're worried that they can't be solved is the politicians, both sides, talk about doom and gloom. It's known psychologically, people worry more about problems than they worry about upside. These problems are going to be solved. We're going to have the powerful data center. By the way, I'll make one more prediction. I don't believe we're going to need all the power. Somebody took the worst power from the earliest generation. It's like, what if you built all the computers today out of vacuum tubes? Hell, we'd need more power than the United States generates today to run all that number of vacuum tubes. Don't run vacuum tubes and invent transistors.

I think the power required to do AI is going to go down. I've argued that way at a philosophical level, and the AI guys that I know tell me why it can't be. It'll be, and it'll be ideas. I talked about generating the power, but there are a bunch of startups I've looked at where they're planning on making AI functionality draw less power for a given result.

Sioban Hickie (VP of IR)

Thank you. Our last question. In the last earnings call, Dr. T.J. Rodgers mentioned that he may still be serving as CEO in a year's time. Is this still expected? Can anything be shared about preparations for this transition or the succession planning process?

Thurman John Rodgers (Chairman and CEO)

Okay. First of all, I didn't set my target to run another company. I got drafted. My analogy that the lawyers bitched about was, it's like you go out on Christmas, and there's a baby in a basket on your front doorstep, and it's raining. You take the baby in. All right. I got drafted. Now I'm having fun. I'm frustrated sometimes, but I'm having fun. I'm in no hurry to leave. I have been trying in earnest to replace myself. I'm not going to have a goal and say I'm going to walk out of there. I've had three actual nobody knows about them attempts. It's a tough job because the financial requirements are every bit as tough as semiconductors. The environment, the solar environment, the culture is way different. It's more like semiconductors were in the 1980s.

These, and I won't use the word millennially, but the millennial, but these young guys come in and then look at the thing. I say, I'd like you to meet Dan. We are the administrative executive staff of the corporation. You may be able to hire one guy in the future because that's all you can afford. I think it's a great challenge to go to the next level in learning how to run a company, really, really mean. I'm 0 for 3. 0 for 3. I have another target I've started talking to. It's a tough job. You got to find the right guy. If I find the wrong guy, then, okay, great. I retire. Guy comes in, doesn't like the job, thing blows up. Okay, I blame him. I don't want that. I want this thing to succeed.

Sioban Hickie (VP of IR)

Thank you. As one of your rank and file, I will say the joy is in the journey. We appreciate you guys all being here and teaching us and guiding us. With that, that's the end of our questions. This concludes our Q&A session. I will turn it back over to Dr. T.J. Rodgers for closing remarks.

I've been loquacious for the whole thing. I don't have a lot more to say. I think that mission, which, by the way, looks simple because classic Winston Churchill quote, he has a letter which somebody owns now. He started out, please pardon the long letter. I didn't have the time to write a short one. Can you put on the mission statement? I don't put it on here because it kind of undermines the meaning of mission statement of the solidity. That's Rev. 25. Those used to be paragraphs. That little middle section got put in as an advertisement to get in the last round of investment where we raised the money to acquire Sunder. That's it. It's real. I mean it. We're going to do it. Every week, I feel the ship turning more toward being part of that vision. Dan, you got, and he got drafted too, right? I called, you've been working with me for a long time. I need some help here because I got sales problems. I need you to help.

Dan Myers (EVP of Sales and Marketing)

Yes, since 1993. That's a long time. I think there's two things I'd like to leave with on this. First off, the acquisition of this particular company, Sunder, is positively transformational for our bookings, positively. You're going to be seeing top-line numbers from us as a result of this booking transformation throughout 2026 and 2027. We're not even talking about possible other upsides that can occur above and beyond the Sunder acquisition, including tailwinds from the industry. Right now, there's a lot of consternation about the removal of the ITC tax credit and the effect that has on what we call cash or loan bookings. That will be an impact. It's not going to materially impact SunPower because of the Sunder acquisition.

If in the future energy prices increase or some other factor occurs from a market point of view that causes the loan part of the program to increase, we'll enjoy that as well. I think this is a pivotal point for the company. We've made a positive move in bookings that's going to allow us to have strong, strong revenue growth independent of outside activity. As outside external activity starts to improve in the 2026 and 2027 timeframe, you'll see even stronger growth for us.

Sioban Hickie (VP of IR)

Thank you. We appreciate listening to my long-winded dissertation.