SolarCity has been on a path of very strong growth over the past few years, nearly doubling installations every year. During the third quarter of 2015 the company installed 256 MW of solar PV and booked 345 MW, an increase of 86% and 50% year-over-year respectively.
This slower rate of bookings compared to installed solar is where SolarCity is intentionally heading. In its third quarter 2015 results call, the company has announced a new strategy where it will only seek to grow 40% annually and reduce costs with the aim to become cash-flow positive by the end of 2016.
The timing of this to coincide with the pending drop-down of the U.S. investment tax credit to 10% at the beginning of 2017 is not accidental. The competitive landscape is going to be completely different, and we are taking action now to make sure that we are the leader at that point, notes CEO Lyndon Rive.
SolarCity has already done an enviable job of reducing costs. Even with a US$0.64 customer acquisition cost, the company reported an average system cost of $2.84 per watt, a very slight decrease year-over-year. With its new focus on cost reduction, SolarCity expressed confidence that it will reach its goal of installing solar at $2.50 per watt in 2017, and that it expects to remain cash-positive that year as well, despite the ITC drop-down.
In terms of other metrics, it is always challenging to measure SolarCity's progress using conventional measures, given both the company's strategy of creating long-term value and its investment in rapid growth.
SolarCity brought in $114 million in revenue during Q3, with a loss from operations of $191 million. However, it retains plenty of available cash, with $418 million in cash and short-term investments.
The last nine years its all been about growth, to improve scale, explains Rive. When you are growing at 80%, you have to make big, big investments, but you are only going to see the results of these investments 2-3 quarters later.
The company added 298,000 customers during the quarter, and ended the quarter with 1.6 GW of energy contracts and a net retained value of $3.3 billion in the PV systems it has deployed.
In addition to the 19 U.S. states that SolarCity is present in, the company also installed its first PV systems in Mexico during the third quarter, as its first international expansion. SolarCity says that it will be moving slowly and incrementally with international expansions.
Finally, SolarCity says that it is on track to ramp production from its gigafactory in Upstate New York during the first half of 2016, and notes that results from its technology are better than its expected.