Sunrun Swings to Q4 Loss Weighed by Lower Sales and High-Interest Rates

The company saw a shift from purchase agreements to solar subscriptions


United States-based residential solar, battery storage, and energy services company Sunrun swung to a loss in the fourth quarter (Q4) of 2023, hurt by lower sales, higher interest expense, and a non-cash investment charge.

The company reported a net loss of $350.1 million in Q4 2023 versus net income of $63 million in Q4 2022. Excluding the $58.6 million non-cash charge related to its investment in Lunar Energy, the Nasdaq-listed company recorded a loss of $291.5 million.

Total quarterly revenue decreased 15% year-over-year (YoY) to $516.6 million from $609.2 million last year. The decline was driven by a 47% drop in solar energy systems and product sales revenue, from $366.9 million to $195 million.

Meanwhile, customer agreements and incentives revenue rose 33% to $321.6 million, compared to $242.3 million last year. This resulted from Sunrun’s strategic shift towards a greater mix of solar subscriptions versus direct purchase agreements.

However, beyond the top-line numbers, Sunrun posted positive metrics related to its transition to a solar subscription-focused business model. Installations accelerated, with 227.1 MW of solar capacity installed in Q4, up 18% from 209.6 MW last year. Storage deployments also grew substantially, with 219.7 MWh of capacity installed in Q4, a 154% increase from 86.6 MWh in the same period last year.

The company added 30,005 customers in the quarter, with total customers reaching 933,275, up 17% YoY. During the quarter, it launched a pilot to offer customers the ability to renew their subscription agreements early and extend the price protection.

The company also announced a preferred retail partnership with home improvement retailer Lowe’s. Sunrun said it is staffing more than 260 Lowe’s stores in 10 states with its representatives to guide customers in accessing residential solar.

Full Year 2023

Sunrun’s full-year (FY) net loss widened significantly in 2023, primarily due to a $1.2 billion goodwill impairment charge taken in Q3 due to a decline in its stock price, which has fallen by 35% in the past 12 months.

Net loss attributable to shareholders was $1.6 billion in 2023, compared to net income of $173.4 million in 2022. Excluding the impairment charge, it was $387.8 million.

Meanwhile, the total FY revenue decreased 3% to $2.26 billion, from $2.32 billion in 2022. The decline was largely due to a 20% drop in solar energy systems and product sales revenue, from $1.34 billion to $1.07 billion, partially offset by a 21% rise in customer agreements and incentives revenue, from $983 million to $1.19 billion. Higher revenue and operating expenses costs also contributed to the decline.

According to the Lawrence Berkeley National Laboratory, new residential solar installations in the U.S. had a median size of 7.2 kW in 2022, a significant jump from the 2.4 kW seen in 2000, thanks to cost reductions and improved module efficiencies.