Core Insights - Sunrun has successfully priced its first securitization transaction of 2025, marking the second largest in the industry's history, showcasing strong execution in capital markets [2][3] - The transaction includes three classes of A rated notes and one class of BB rated notes, with a total of $628.5 million in Class A notes and a retention of Class B notes [3][4] - The Class A-1 and Class A-2A notes were oversubscribed, with coupons of 5.99% and 6.41% respectively, reflecting a 42 basis points improvement from the previous securitization in September 2024 [3] Securitization Details - The Class A-1 notes amount to $102.0 million, while Class A-2A notes total $276.5 million, and Class A-2B notes are privately placed at $250.0 million [3] - The weighted average spread for Class A notes is 192 basis points, with an expected weighted average life of 4.58 years for Class A-1 and 7.12 years for Class A-2A [3] - The anticipated repayment date for both classes of notes is April 30, 2032, with a final maturity date of April 30, 2060 [3] Asset Backing and Portfolio - The notes are backed by a diversified portfolio of 39,458 systems across 20 states, Washington D.C., and Puerto Rico, covering 83 utility service territories [5] - The weighted average customer FICO score for the portfolio is 738, indicating a strong credit quality [5] Strategic Partnerships - ATLAS SP Partners served as the sole structuring agent and joint bookrunner for the securitization, highlighting a strong partnership with Sunrun [6][7] - The collaboration aims to enhance the efficiency of large transactions in the capital markets, supporting the growth of the solar industry [7]

Core Viewpoint - Sunrun has successfully priced its first securitization of 2025, marking the second largest transaction in the industry's history, showcasing its strong execution in capital markets and ability to access competitively priced capital to support growth [2][3]. Securitization Details - The securitization consists of three classes of A rated notes (Class A-1, Class A-2A, and Class A-2B) and one class of BB rated notes (Class B) [3]. - Class A-1 notes total $102.0 million with a coupon of 5.99%, while Class A-2A notes total $276.5 million with a coupon of 6.41% [3]. - Class A-1 notes priced at a spread of 170 basis points and a yield of 6.035%, while Class A-2A notes priced at a spread of 200 basis points and a yield of 6.465% [3]. - The weighted average spread for Class A notes improved by 42 basis points compared to the previous securitization in September 2024 [3]. - The initial balance of Class A notes represents a 65.3% advance rate on the Securitization Share of ADSAB [3]. Portfolio and Customer Metrics - The notes are backed by a diversified portfolio of 39,458 systems across 20 states, Washington D.C., and Puerto Rico, covering 83 utility service territories [5]. - The weighted average customer FICO score is 738, indicating a strong credit profile among customers [5]. Transaction Timeline and Structure - The transaction is expected to close by February 5, 2025 [5]. - Sunrun plans to raise additional subordinated subsidiary-level non-recourse financing secured by distributions from the retained Class B notes, which is anticipated to increase the cumulative advance rate [4]. Involvement of Financial Institutions - ATLAS SP Partners served as the sole structuring agent and joint bookrunner alongside BofA Securities, Morgan Stanley, MUFG, and TD Securities [6].

Core Viewpoint - Sunrun is set to release its fourth quarter and full-year 2024 earnings report on February 27, 2025, after market close [1] Group 1: Earnings Release Details - The earnings report will be followed by a conference call scheduled for 1:30 p.m. Pacific Time [2] - The conference call will be accessible via the Sunrun Investor Relations website and through a toll-free phone number [2] - An audio replay and transcript of the conference call will be available on the Sunrun Investor Relations website for approximately one month [2] Group 2: Company Overview - Sunrun Inc. has been a leader in the solar industry since 2007, focusing on removing financial barriers to renewable energy access [3] - The company offers residential solar and storage solutions as a subscription service with no upfront costs [3] - Sunrun's services aim to provide energy security and predictability while benefiting communities and the electric grid [3]

Stock Performance - Sunrun's stock ended at $9 57, marking a -1 64% decline from the previous day's close, underperforming the S&P 500's gain of 0 12% [1] - Over the past month, Sunrun's shares have depreciated by 2 6%, outperforming the Oils-Energy sector's loss of 8 42% and the S&P 500's loss of 3 45% [1] Earnings and Revenue Projections - Sunrun is projected to report earnings of -$0 24 per share in its upcoming earnings report, representing a year-over-year growth of 81 95% [2] - The company is expected to report revenue of $547 77 million, reflecting a 6 04% increase compared to the same quarter last year [2] Analyst Estimates and Revisions - Recent adjustments to analyst estimates for Sunrun reflect evolving short-term business trends, with positive revisions indicating optimism about the company's outlook [3] - Estimate revisions are directly correlated with near-term share price momentum, as highlighted by the Zacks Rank system [4] Zacks Rank and Industry Performance - Sunrun currently holds a Zacks Rank of 3 (Hold), with no change in the Zacks Consensus EPS estimate over the past month [5] - The Solar industry, part of the Oils-Energy sector, has a Zacks Industry Rank of 82, placing it in the top 33% of all industries [5] - Industries in the top 50% of the Zacks Industry Rank outperform the bottom half by a factor of 2 to 1 [6]

Company Performance - The stock of Sunrun (RUN) has decreased by 12.38% over the past month, underperforming the Oils-Energy sector's loss of 8.03% and the S&P 500's gain of 1.05% [1] - Sunrun's most recent trading day closed at $10.07, reflecting a decline of 0.49% from the previous session, while the S&P 500 experienced a daily loss of 0.04% [6] Earnings Estimates - For the upcoming earnings report, Sunrun is projected to report an EPS of -$0.15, indicating an 88.72% growth compared to the same quarter last year [7] - The consensus estimate for revenue is $561.6 million, representing an 8.71% increase from the same quarter last year [7] Analyst Sentiment - Recent changes to analyst estimates for Sunrun indicate evolving short-term business trends, with upward revisions reflecting analysts' positive outlook on the company's operations and profit generation capabilities [8] - The Zacks Consensus EPS estimate has increased by 34.09% over the past month, and Sunrun currently holds a Zacks Rank of 3 (Hold) [9] Industry Overview - The Solar industry, part of the Oils-Energy sector, has a Zacks Industry Rank of 78, placing it in the top 32% of over 250 industries [4] - The Zacks Industry Rank evaluates the strength of industry groups based on the average Zacks Rank of individual stocks, with top-rated industries outperforming lower-rated ones by a factor of 2 to 1 [10]

Core Insights - Sunrun's CEO Mary Powell has been recognized in the TIME100 Climate list for 2024, highlighting her influence in driving business climate action [1] - Under Powell's leadership, Sunrun has added over 400,000 new customers and achieved a nearly 500% increase in battery installations, generating approximately 21 billion kilowatt-hours of solar energy and avoiding nearly 10 million metric tons of carbon emissions [2] Company Growth and Impact - Sunrun has rapidly expanded its customer base and battery installations, with 112,000 new storage customers contributing to significant solar energy generation [2] - The company has become the first residential storage-plus-solar provider to reach over 1 million customers, driven by a strategic shift to a storage-first model [3] Leadership and Vision - Powell's leadership is characterized by a focus on customer experience and innovation, positioning Sunrun to lead in creating a more economical and sustainable energy grid [3] - The vision for Sunrun includes connecting households to clean energy and becoming a multi-product clean energy lifestyle company, benefiting families and communities [4] Recognition and Accolades - Mary Powell has received multiple accolades, including being named to Forbes' 50 Sustainability Leaders 2024 list and the prestigious Rachel Carson Award for environmental impact [4] Company Overview - Sunrun, founded in 2007, is the leading provider of clean energy as a subscription service, offering residential solar and storage solutions with no upfront costs [5] - The company aims to democratize access to renewable energy and enhance energy security for its customers while benefiting communities and the electric grid [5]

3Q 2024 Financial Results November 7, 2024 Safe harbor & forward looking statements This communication contains forward-looking statements related to Sunrun (the "Company") within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements related to: the Company's financial and operating guidance and expectations; the Comp ...

Financial Data and Key Metrics - The company achieved positive cash generation for the second consecutive quarter and reiterated its strong cash generation outlook for Q4 2024 and 2025 [9] - Storage installations reached 336 megawatt hours in Q3, up 92% YoY, marking the highest quarterly installation to date [11] - Total networked storage capacity reached 2.1 gigawatt hours with 135,000 storage systems installed [12] - Solar energy capacity installed was approximately 230 megawatts, at the high end of guidance [30] - Annual recurring revenue (ARR) stood at over $1.5 billion, up 22% YoY, with an average contract life remaining of nearly 18 years [31] - Net Subscriber Value was $14,632 in Q3, driven by higher battery attachment rates and improved fixed cost absorption [32] Business Line Performance - Storage attachment rates reached 60% of new customer installations in Q3, nearly double the 33% rate from a year ago [11] - The company now has 16 active grid service programs across the US, with over 20,000 customers participating [12] - The new homes business is growing rapidly, with the company working with 9 of the top 10 home builders in California and over half of the top 20 home builders in the US [22] - The new homes division is expected to grow at least 50% over the next year, currently representing less than 5% of total volumes [23] Market Performance - The company's share of residential solar installations nationwide increased from 13% in Q1 to 18% in Q3, while residential storage share expanded to 49% in the US [21] - California remains the largest market, with strong growth also seen in the Northeast, Illinois, Puerto Rico, and Texas [110][111] Strategy and Industry Competition - The company is focusing on a storage-first strategy, with nearly 50% share of all residential storage installations in the US [11] - The company is leading in establishing a platform to turn homes and vehicles into smart, controllable loads that can improve the electric grid [13] - The company is testing new products and services through pilots, with a focus on offering additional products to its existing customer base [18] - The company is not engaging in irrational pricing competition and is instead focusing on delivering differentiated value to customers [20][76] Management Commentary on Operating Environment and Future Outlook - The company is confident in its leadership position and ability to generate enduring value despite short-term policy uncertainties [7] - The company expects storage capacity installed to grow 52% YoY in Q4, with solar energy capacity installed expected to grow 8% YoY [52][53] - The company reiterated its cash generation outlook of $350 to $600 million for 2025 [54] - The company is optimistic about the long-term demand for residential solar and storage, driven by rising utility rates and declining equipment costs [51] Other Important Information - The company has over $900 million in unused commitments available in its non-recourse senior revolving warehouse loan, providing funding for approximately 318 megawatts of projects [41] - The company closed a $365 million securitization of residential solar and battery systems in September, with a weighted average yield of 5.87% [43] - The company ended Q3 with over $1 billion in total cash, despite a $32 million decline from the prior quarter due to debt repurchases [49] Q&A Session Summary Question: How derisked is the $350 to $600 million cash generation target for 2025 given the election outcome? - The company believes an outright repeal of the IRA is highly unlikely, and the ITC has historically received bipartisan support [60][61] - The company has secured funding against all three ITC adders, with a 45% weighted average ITC level underpinning the cash generation guidance [64] Question: What is the path for the cost of capital going forward? - The company saw a declining base rate environment through Q3, resulting in a pro forma asset-level cost of capital of 7.1%, but expects it to return to 7.5% in the near term [67][68] Question: How will the company allocate cash generation next year? - The company will focus on debt paydown, particularly the corporate revolver, while maintaining a strong balance sheet [72][73] Question: How is the competitive landscape shaping up? - The company has seen some irrational pricing from competitors but continues to gain market share through a disciplined approach [75][76] Question: How is the company managing tariff risk? - Module costs are less than 10% of the cost stack, and the company has a diverse supplier base, including domestic content options [80] Question: What is the opportunity for Sunrun in the data center AI theme? - The company sees its residential solar and storage assets as a valuable resource for meeting the growing demand for clean energy in data centers [102][103] Question: What are the unit economics of the new homes business? - The new homes business is more efficient, with single permitting and one-to-many customer acquisition, leading to improved margins as it scales [106] Question: What is the current revenue from grid services? - The company is seeing a pickup in grid services revenue, in line with the assumption of a few hundred dollars per year per customer [120] Question: Are there any labor availability or permitting trends impacting the business? - The company is seeing strong demand for labor and progress in automating permitting processes, which is improving efficiency [122][123]

Company Performance - Sunrun reported a quarterly loss of $0.37 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.16, and a decline from earnings of $0.40 per share a year ago, representing an earnings surprise of -131.25% [1] - The company posted revenues of $537.17 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 4.18%, and down from $563.18 million in the same quarter last year [2] - Over the last four quarters, Sunrun has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Sunrun shares have declined approximately 39.4% since the beginning of the year, contrasting with the S&P 500's gain of 24.3% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.20 on revenues of $590.86 million, and for the current fiscal year, it is -$0.17 on revenues of $2.13 billion [7] Industry Outlook - The solar industry is currently ranked in the bottom 27% of over 250 Zacks industries, indicating potential challenges for stocks within this sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Sunrun's stock performance [5]

[PART I – FINANCIAL INFORMATION](index=8&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financials show asset and liability growth, with a narrowed net loss in Q3 2024 due to no goodwill impairment [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $22.10 billion, liabilities to $15.07 billion, primarily from solar systems and non-recourse debt Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash | $533,863 | $678,821 | | Solar energy systems, net | $14,427,903 | $13,028,871 | | **Total Assets** | **$22,104,323** | **$20,450,237** | | Non-recourse debt, net of current portion | $11,219,898 | $9,191,689 | | **Total Liabilities** | **$15,069,930** | **$13,536,224** | | **Total Equity** | **$6,400,576** | **$6,237,836** | - Assets of Variable Interest Entities (VIEs) that can only be used to settle VIE obligations totaled **$12.72 billion** as of September 30, 2024, up from **$11.54 billion** at the end of 2023[21](index=21&type=chunk) [Consolidated Statements of Operations](index=10&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 2024 revenue declined 4.6% to $537.2 million, but net loss significantly narrowed to $83.8 million due to no goodwill impairment Q3 Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $537,173 | $563,181 | (4.6%) | | - Customer agreements and incentives | $405,861 | $316,528 | 28.2% | | - Solar energy systems and product sales | $131,312 | $246,653 | (46.8%) | | Loss from Operations | $(127,778) | $(1,347,477) | 90.5% | | Net Loss Attributable to Common Stockholders | $(83,766) | $(1,069,459) | 92.2% | | Net Loss Per Share (Basic & Diluted) | $(0.37) | $(4.92) | 92.5% | Nine Months Ended Sep 30 Statement of Operations Summary (in thousands, except per share data) | Metric | YTD 2024 | YTD 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,519,227 | $1,743,223 | (12.8%) | | Loss from Operations | $(438,948) | $(1,781,112) | 75.4% | | Net Loss Attributable to Common Stockholders | $(32,510) | $(1,254,373) | 97.4% | | Net Loss Per Share (Basic & Diluted) | $(0.15) | $(5.81) | 97.4% | [Consolidated Statements of Cash Flows](index=14&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operations improved to $507.8 million, with $2.44 billion from financing funding investing activities Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(507,794) | $(704,733) | | Net Cash Used in Investing Activities | $(1,908,612) | $(1,952,019) | | Net Cash Provided by Financing Activities | $2,439,185 | $2,655,674 | | **Net Change in Cash and Restricted Cash** | **$22,779** | **$(1,078)** | [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue shifts to customer agreements, reliance on non-recourse debt, and purchase commitments Revenue by Product and Service (in thousands) | Revenue Source | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Customer agreements | $368,641 | $289,678 | $1,030,859 | $789,256 | | Incentives | $37,220 | $26,850 | $85,794 | $75,895 | | Solar energy systems | $47,189 | $135,476 | $167,535 | $566,861 | | Product sales | $84,123 | $111,177 | $235,039 | $311,211 | | **Total Revenue** | **$537,173** | **$563,181** | **$1,519,227** | **$1,743,223** | - Total debt as of September 30, 2024, was **$12.45 billion**, a significant increase from **$10.67 billion** at year-end 2023. The majority of this debt is non-recourse, totaling **$11.46 billion**[86](index=86&type=chunk) - The company has purchase commitments for **$125.4 million** of photovoltaic modules, inverters, and batteries to be fulfilled by the end of Q1 2025[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses solar capacity growth, macroeconomic impacts, revenue shifts, and reliance on external financing for operations [Key Operating Metrics](index=44&type=section&id=Key%20Operating%20Metrics) Key operating metrics show continued growth in networked solar capacity, customer count, and gross earning assets Key Operating Metrics Comparison | Metric | As of Sep 30, 2024 | As of Sep 30, 2023 | | :--- | :--- | :--- | | Networked Solar Energy Capacity (megawatts) | 7,288 | 6,462 | | Customers | 1,015,910 | 903,270 | | Gross Earning Assets (in thousands) | $16,779,712 | $13,299,394 | [Results of Operations](index=50&type=section&id=Results%20of%20Operations) Q3 2024 revenue from customer agreements grew, offset by lower system sales; operating expenses decreased due to no goodwill impairment - The increase in revenue from Customer Agreements for Q3 2024 was primarily due to **new systems placed in service** over the last year[201](index=201&type=chunk) - The decrease in revenue from solar energy systems sales for Q3 2024 was attributed to a **higher proportion of customers choosing Customer Agreements** over outright purchases, likely due to increased interest rates[202](index=202&type=chunk) - The significant decrease in total operating expenses in Q3 2024 compared to Q3 2023 was primarily due to a **$1.2 billion goodwill impairment charge** recorded in the 2023 period that did not recur[203](index=203&type=chunk)[208](index=208&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity relies on external financing, with $533.9 million cash and sufficient funds for the next 12 months - The company's business model requires **substantial outside financing** to grow and facilitate the deployment of solar energy systems[228](index=228&type=chunk) - As of September 30, 2024, the company had **$392.5 million** in outstanding borrowings on its **$447.5 million** credit facility[226](index=226&type=chunk) - Management believes cash, investment fund commitments, and available borrowings will be **sufficient to meet anticipated cash needs for at least the next 12 months**[228](index=228&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate exposure on floating-rate debt, partially hedged, with no material changes - The primary market risk is from changes in interest rates on floating-rate debt, which is partially managed through **derivative instruments**[239](index=239&type=chunk) - Market risk exposures have **not changed materially** since the end of the previous fiscal year (December 31, 2023)[239](index=239&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2024[241](index=241&type=chunk) - No **material changes** to the internal control over financial reporting were identified during the quarter[243](index=243&type=chunk) [PART II – OTHER INFORMATION](index=60&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company faces ordinary course legal proceedings, not expected to have a material adverse effect - The company is subject to legal proceedings in the ordinary course of business but does not currently expect them to have a **material adverse effect**[135](index=135&type=chunk)[245](index=245&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) Key risks include industry evolution, reliance on incentives, macroeconomic factors, supply chain, competition, and financing challenges - The solar industry is an emerging market, and its growth depends on factors beyond the company's control, such as consumer acceptance, favorable regulations, and tax incentives. Changes to California's net metering policy (NBT) may **limit the financial attractiveness of solar-only offerings**[248](index=248&type=chunk)[249](index=249&type=chunk) - The business requires **substantial capital** to finance growth. An inability to raise capital on acceptable terms, potentially exacerbated by rising interest rates and changes in tax law, could **materially impact business and prospects**[275](index=275&type=chunk)[282](index=282&type=chunk) - The company and its partners depend on a **limited number of suppliers** for key components like panels, batteries, and inverters. Any shortage, delay, or price increase could result in **installation delays, cancellations, and loss of market share**[321](index=321&type=chunk)[322](index=322&type=chunk)[323](index=323&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=100&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or issuer purchases occurred during the reported period - There were **no unregistered sales of equity securities or issuer purchases of equity securities** in the reported quarter[490](index=490&type=chunk) [Item 5. Other Information](index=100&type=section&id=Item%205.%20Other%20Information) Paul Dickson, President and CRO, terminated and adopted new Rule 10b5-1 trading plans for company stock sales - Paul Dickson, President and Chief Revenue Officer, terminated a Rule 10b5-1 trading plan on August 16, 2024, and adopted a new one on August 26, 2024, for the **sale of company stock**[492](index=492&type=chunk) [Item 6. Exhibits](index=100&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and certifications [Signatures](index=104&type=section&id=Signatures) The report is signed by the CEO and CFO of Sunrun Inc., dated November 7, 2024