Sunrun’s first quarter results drew a positive market reaction, with management crediting expansion in higher-margin storage offerings and the successful rollout of its Flex product for driving growth. CEO Mary Powell pointed to a 23% increase in aggregate subscriber value, underpinned by a record 69% storage attachment rate and new customer additions. Powell noted, “Demand for our offering is strong in good times and during periods of weakening consumer confidence, or even in a recession, as Americans look for ways to control what they can.” The company also emphasized ongoing efforts in cost control and efficiency, including leveraging artificial intelligence to streamline operations and reduce expenses.
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Sunrun (RUN) Q1 CY2025 Highlights:
- Revenue: $504.3 million vs analyst estimates of $484.8 million (10.1% year-on-year growth, 4% beat)
- Adjusted EPS: $0.20 vs analyst estimates of -$0.27 (significant beat)
- Adjusted EBITDA: $55 million vs analyst estimates of $58.17 million (10.9% margin, 5.4% miss)
- Operating Margin: -22.8%, up from -40% in the same quarter last year
- Customers: 1.07 million, up from 1.05 million in the previous quarter
- Annual Recurring Revenue: $1.73 billion at quarter end, up 22.3% year on year
- Market Capitalization: $2.40 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Sunrun’s Q1 Earnings Call
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Brian Lee (Goldman Sachs) asked how much of Sunrun’s full-year contracted net value creation guidance is impacted by back-half tariff effects. CFO Danny Abajian explained that tariff impacts are weighted toward the second half as safe-harbored inventory is utilized, but volume and margin gains offer partial offsets.
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Andrew Percoco (Morgan Stanley) inquired about the company’s approach to pricing adjustments in response to tariff costs and changing consumer sentiment. Abajian said the company is scenario planning but will only adjust pricing when market clarity increases, while President Paul Dickson noted continued strong demand even amid uncertainty.
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Moses Sutton (BNP Paribas) asked about Sunrun’s plans to safe-harbor equipment in anticipation of possible changes to the Inflation Reduction Act. Abajian said any future safe-harbor actions will depend on policy clarity, with current objectives focused on maintaining substantial cash reserves and debt repayment.
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Joseph Osha (Guggenheim Securities) requested sensitivity analysis on how changes in Investment Tax Credit (ITC) rates could impact cash generation. Abajian provided a rule-of-thumb, estimating that every 1 percentage point change in ITC realization affects value creation by about $50 million, but said pricing and operating levers would help mitigate impacts.
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Dylan Nassano (Wolfe Research) asked about the sustainability of high ITC levels and their trend for the remainder of the year. Abajian responded that the company expects to sustain a mid-40% ITC realization for the balance of the year.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) how quickly Sunrun can mitigate cost inflation from tariffs and adjust its sourcing mix, (2) sustained adoption and incremental revenue from the Flex product and higher storage attachment rates, and (3) developments in federal tax credit and tariff policy that could reshape industry economics. Execution on AI-driven efficiencies and advances in battery supply chain localization will also be key for margin stability.
Sunrun currently trades at $11.10, up from $7.39 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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