Sunrun reports strong growth in Q1 results

Sunrun reported its Q1 2016 results today, announcing a year-over-year doubling in revenues to US$99 million, with nominal contract payments rising to $2.6 billion.

Like other companies that install solar and retain the assets long-term, Sunrun is losing money quarter to quarter while building long-term value. The company reported operating expenses of $166 million, giving it a substantial negative operating margin.

However, as non-controlling interests took a $91 million loss, Sunrun was able to bring in $13 million for its shareholders, which allowed it to be positive on an earnings per share basis for the first time since becoming a public company.

Like SolarCity, Sunrun has a goal to become cash-flow positive, but has not said when exactly it expects that to happen. The company’s cash balance fell $4.4 million during the quarter to US$204 million.

Sunrun grew total deployments of residential solar 63% year-over-year to 60 MW in Q1, which exceeded its guidance by 7%. This includes both PV systems installed by Sunrun and its channel partners, but Sunrun-built deployments are an increasing share, and grew 148% year-over-year.

The company is also seeing more direct sales as a portion of its mix. During Q1 85% of the PV systems the company deployed were through its operating leases, however the company expects the share of direct sales to grow to 20% in the future.

Sunrun has indicated that issues around net metering policies impacted its deployments during Q1, including the late December dismantling of net metering in Nevada. And while the company stresses that the large majority of net metering cases are coming out in its favor, it notes that deployment during Q1 was affected by uncertainty around the future of net metering in Massachusetts, California and other states.

Sunrun does not appear to have been hit as hard by these changes as SolarCity. While SolarCity significantly lowered its 2016 forecast on weak Q1 bookings, Sunrun is maintaining its earlier outlook to install 285 MW over the course of the year.

The company is reporting around $4.11 per watt in Pro-Forma creation costs, of which installation costs excluding sales and administrative expenses are hovering at $2.97 per watt, and have hovered just below $3 per watt for several quarters. Sunrun notes that its costs are much lower for its direct installation business, at only $2.39 per watt.

Given these favorable economics, the company expects to continue to double its direct install business on a year-over-year basis while keeping its channel partner business flat.