"Sunrun" Q2 2026 Earnings Call - Direct Sales Pivot Trims 2026 Guidance While Storage and Grid Monetization Build the Next Growth Engine

Operator: Good afternoon, welcome to Sunrun’s second quarter 2026 earnings conference call. Please note that this call is being recorded and that the 1 hour has been allotted for the call, including the Q&A session. To join the Q&A session after prepared remarks, please press star one at any time. We ask participants to limit themselves to 1 question and 1 follow-up question. I will now turn the call over to Patrick Jobin, Sunrun’s investor relations officer. Please go ahead.

Patrick Jobin, Investor Relations Officer, Sunrun: Thank you, Latonya. Before we begin, please note that certain remarks we will make on this call constitute forward-looking statements related to the expected future results of our company, including our Q3 and full year 2026 financial outlook and other statements that are not historical in nature, are predictive in nature or depend upon or refer to future events or conditions, such as our expectations, estimates, predictions, strategies, beliefs or other statements that may be considered forward-looking. Though we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially or adversely. Please refer to the company’s filings with the SEC for more inclusive discussion of risks and other factors that may cause our actual results to differ from projections made in any forward-looking statements.

Please also note these statements are being made as of today, we disclaim any obligation to update or revise them. Please note, during this earnings call, we may refer to certain non-GAAP measures, including cash generation, creation costs reflected in operating expenses, and creation costs reflected in capital expenditures, which are not measures prepared in accordance with U.S. GAAP. These non-GAAP measures are being presented because we believe they provide investors with a means of evaluating and understanding how the company’s management evaluates the company’s operating performance. Reconciliation of these measures can be found in our earnings press release and other investor materials available on the company’s investor relations website and accompanying this webcast. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP.

On the call today are Mary Powell, Sunrun’s CEO, Danny Abajian, Sunrun’s CFO, and Paul Dickson, Sunrun’s President and Chief Revenue Officer. A presentation is available on Sunrun’s investor relations website, along with supplemental accompanying materials. An audio replay of today’s call, along with a copy of today’s prepared remarks and transcript, including Q&A, will be posted to Sunrun’s investor relations website shortly after the call. Let me turn the call over to Mary.

Mary Powell, Chief Executive Officer, Sunrun: Thank you, Patrick, and thank you all for joining us today. Sunrun is successfully executing a transition towards our direct business, which has higher margins, better customer satisfaction, and better credit profiles. We had positive cash generation in the quarter while executing a sizable safe harbor investment. We are delivering award-winning customer experience and laying the foundation for durable high margin growth in the periods ahead. We resumed strong growth in sales activities in recent months and expect to be exiting the year growing by over 10%. This tees us up well for a very strong 2027. Sunrun’s energy assets are at the center of a power sector that is in need of energy capacity and where speed to power is critical. Sunrun now has over 4.6 GWh of storage capacity installed across the country and is the largest residential independent power producer.

America needs more power faster than the traditional grid can deliver it. Sunrun is well situated to meet that need. On to our Q2 results. We continue to generate strong demand for our storage offerings and set a new record in Q2, reaching a 74% Storage Attachment Rate. This equates to the installation of over 15,500 battery systems in Q2. Aggregate Subscriber Value for Q2 was nearly $1.2 billion, near the top end of our guidance range of $1.1 billion-$1.2 billion. In the quarter, we produced positive cash generation of $45 million when excluding $22 million of equipment safe harbor investments. Excluding safe harbor investments, we have produced positive cash generation in the first half of the year and $428 million of cash generation over the last two years.

We are adjusting our full year guidance to $200 million-$375 million versus our prior range of $250 million-$450 million. This is being driven by three things. First, we are further reducing our outlook for volume originated through our affiliate channels due to deliberate reductions we made and the bankruptcy of Freedom Forever. Second, the ramp of sales activities and the process of onboarding new reps took more time than expected. This transition towards a higher direct mix carries more front-loaded costs but higher long-term margins. Third, we are reflecting a higher capital cost as interest rates have inched up over the last few months. Our monthly sales trends in our direct business have inflected in June and July, turning positive, with monthly sales growth exceeding 10% compared to the prior year. We are confident we will return to robust growth in our direct business.

Danny will further address guidance shortly. Strategically, Sunrun is executing well, building a base of valuable energy assets. At the end of Q2, we had installed more than 266,000 storage plus solar systems, representing approximately 4.6 GWh of networked storage capacity. We are creating a formidable network of flexible dispatchable power at a rapid pace. Sunrun added more than one GWh of storage capacity and dispatched more than 700 MW of power over the last 12 months. This is equivalent to dozens of peaker plants. The assets we have already deployed today represent over $500 million in grid services present value. Sunrun’s distributed power plants are on track to generate approximately $40 million in GAAP gross revenue and greater than $10 million in operating margin in 2026, with substantial growth expected in the years ahead.

We remain on track to reach our goal to over 10 gigawatt hours of dispatchable capacity online by the end of 2028, more than doubling from current levels. We expect revenue to grow materially faster as we continue to secure commercial opportunities for the fleet we have built. Conversations with potential off-takers have inflected materially in just the last few months. Our large scale of dispatchable resources and development engine that is growing this fleet at a rapid pace is opening the doors to monetize these resources through utility partnerships, direct energy market participation, retail electricity providers, and large load users such as data center hyperscalers. Sunrun is well positioned in a market that is structurally short power and where speed to power is a critical bottleneck.

To this end, in June, we announced a framework with Renew Home and Tesla to bring over 16 gigawatts of home energy resources to hyperscalers, deployable in months without the land, transmission, or interconnection burden of traditional generation. In July, we launched a distributed AI compute pilot using our home footprint not just as a power resource, but as an edge compute platform. Commercial momentum is accelerating as the market turns to us for the scale, assets, and customer relationships that would otherwise take years and billions of dollars to replicate. We remain sharply focused on growing our direct business. It’s our highest margin business. It’s where we have the most control over the full lifecycle customer experience and compliance amid increased regulatory complexity. Our vertically integrated approach allows us to drive competitive advantage. Earlier this year, we shared that we expected volumes in our direct business to grow.

Volume growth in our direct business is ramping from negative growth in Q1 to double-digit growth exiting this year. This results in full year growth of low single digits. Over the past few quarters, as the broader market has gone through turmoil, we have had the opportunity to bring on some of the best talent in the industry. Our sales force has grown by over 1,500 people year to date, far outpacing what is seasonally typical, as we backfill what was a deliberate reduction in sales capacity in mid-2025 due to tax bill uncertainty as we position for growth. Importantly, this hiring is response to demand signals we’re seeing for our battery offerings. Some of the talent we are onboarding from the industry is taking more time to acclimate to selling our more sophisticated product.

We are being deliberate about that ramp. We are building out our capacity to expertly guide customers through complex rate environments while presenting our full suite of advanced offerings. By holding our expanded team to the industry’s highest standards for customer experience and operational quality, we are focused on achieving durable, profitable growth. New customer growth is only one lever. Increasingly, we’re focused on unlocking value from the customers and assets we already have. Our distributed power plant business is a good example of this. Monetizing capacity we’ve already installed and turning existing systems into a recurring high-margin revenue stream with no incremental acquisition cost. As we grow customer participation in these programs and broaden monetization into data centers, grid edge applications, and capacity markets, we expect this to become a larger contributor to cash generation over time. We’re seeing a similar dynamic play out in add-on batteries.

As resiliency becomes a bigger priority for homeowners, existing solar-only customers, and even homeowners without solar are increasingly choosing to add storage to their homes. We installed nearly 1,200 add-on batteries during Q2, and momentum is accelerating as we explore various new offerings and markets. Between distributed power plant programs and add-on batteries, we are building substantial recurring cash flow streams that are additive to our core origination business. Before handing it over to Danny, I want to take a moment to celebrate some of our people who truly embrace our customer-first service mentality. For this quarter, I want to specifically highlight Sunrun service organization. In Q2, we launched Lighthouse, turning our best-in-class service capabilities for Sunrun customers into an opportunity to also serve non-Sunrun customers. Our service organization is well positioned to drive additional recurring cash flow growth.

Connor and our regional service managers, thank you for the customer focused execution that makes this possible.

Danny Abajian, Chief Financial Officer, Sunrun: Thank you, Mary. We added nearly 21,000 customers in Q2, with average system sizes up 2% from Q1. We achieved a 74% Storage Attachment Rate in Q2, up one point from Q1. Our volume performance in Q2 continued to be impacted by the transition we are strategically undertaking to grow in our direct business while reducing volume through our affiliate channel by applying more stringent requirements. In our direct business, volumes are up by more than 20% from Q1 and back to nearly flat year-over-year. We have rapidly expanded our sales force and productivity metrics continue to improve as new sales talent adapts to Sunrun’s customer focused and margin driven approach. We expect year-over-year volume growth in our direct business to resume in the third quarter, with second half growth exceeding 10% versus the prior year.

Our monthly sales trends in our direct business have inflected in June and July, with monthly sales growth exceeding 10% compared to the prior year. Affiliate volume was down 30% in Q2 compared to Q1, and down more than 70% year-over-year, driven both by our decisions to scale back our affiliate partnerships and by continued challenges in the dealer ecosystem. This includes the impact of the bankruptcy of our partner, Freedom Forever. We now expect volumes from the affiliate channel to be down greater than 60% for the full year, and for our direct business volumes to represent greater than 85% of our total origination volume for the year. We remain confident in our actions to reduce affiliate volumes given the growing divergence in origination quality, customer experience, and margin profiles between our direct and affiliate businesses. Aggregate Contracted Subscriber Value was $1.1 billion in Q2.

On a unit basis, Contracted Subscriber Value was approximately $55,000, up 10% year-over-year, driven by higher system sizes, a higher Storage Attachment Rate, a higher average ITC level, and lower capital costs. We estimate upfront proceeds will be approximately $52,000 per subscriber after applying an advance rate of 94% against Aggregate Contracted Subscriber Value. We estimate Upfront Net Subscriber Value of approximately $2,000, representing a margin as a percent of Contracted Subscriber Value of approximately 4%. This figure was lower this quarter owing primarily to timing effects, including more front-loaded costs from our transition toward a higher direct mix. We expect this margin to increase next quarter. I’d like to spend a brief moment on changes to metrics. You will note that Sunrun no longer reports Aggregate Creation Costs, a previously reported non-GAAP metric.

We have introduced two new non-GAAP metrics, Creation Costs Reflected in Operating Expenses and Creation Costs Reflected in Capital Expenditures. Furthermore, Sunrun no longer reports Aggregate Net Value Creation metrics, including Net Value Creation, Contracted Net Value Creation, and Upfront Net Value Creation. These changes are a result of a comment letter, which is now resolved. We will continue to report unit volumes and unit economics, which we believe are important operating measures for investors to track our business. These metrics are additive to and not a replacement of GAAP results. Cash generation was $23 million in Q2, or $45 million excluding the $22 million net investments in equipment safe harboring. Cash generation is a non-GAAP metric. Please reference the earnings release and other associated investor relations materials published today for a reconciliation to its most directly comparable GAAP measure, cash provided by operating activities.

Turning now to our activity in the capital markets. Sunrun is executing well. We closed multiple tax equity funds and ITC transfer agreements during the second quarter. We have built a strong pipeline of transactions we expect will close in the second half. As we move through the year, corporate tax equity investors have largely completed their 2025 tax credit purchases and have gained better clarity on their 2026 tax appetite. Corporate tax credit buying activity has followed, a continuation of the momentum we described last quarter. ITC pricing during the quarter remained relatively stable compared to Q1, with transfer deal pricing ranging from the high $0.80 to low $0.90 range. Treasury guidance on FEOC ownership restrictions remains outstanding, and once published, we expect that the subset of multinational tax equity investors awaiting this guidance will emerge from the sidelines, further improving ITC pricing.

As of today, closed transactions and executed term sheets provide us with expected tax equity capacity or equivalent to fund approximately 1,000 megawatts of projects for subscribers beyond what was deployed through the second quarter. We also have over $840 million in unused commitments available in our non-recourse senior revolving warehouse loan to fund over 340 megawatts of projects for retained subscribers as of the end of Q2. Year to date, we have raised approximately $1.5 billion in non-recourse asset-level debt financing. We recently priced a $267 million public securitization, our second transaction of the year, at a spread of 200 basis points, a 20-basis point improvement from our most recent transaction in Q2. We expect additional securitization activity during the second half of the year. Approximately 32% of our subscriber additions in Q2 were monetized through the non-retained or partially retained model.

As a reminder, proceeds from these transactions are equal to or better than our on-balance sheet retained monetization, while also providing simpler GAAP treatment and further diversification of capital sources. Under the joint venture structure, we retain a share of long-term cash flows along with grid services and the ability to cross-sell customers. Turning to our outlook on slide 23. We are revising our Aggregate Subscriber Value guidance to a range of $4.6 billion-$4.9 billion for the full year compared to our prior guidance of $4.8 billion-$5.2 billion. We are revising our cash generation guidance to a range of $200 million-$375 million for the full year before investments in safe harbor equipment of between $50 million and $100 million.

We have reduced our volume outlook for the full year, principally driven by a reduction to our affiliate volume and a slower sales ramp in our direct business than we initially forecasted as we undergo the transition towards more growth in our direct business. In our direct business, we expect second half installation growth of more than 10% compared to the prior year, setting us up well as we enter 2027. In our affiliate route, we expect installation volume to be down more than 60% this year. In addition to these volume trends, sustained higher interest rates have also modestly impacted cash generation. We expect to continue to allocate cash generation to reduce parent leverage. In the coming quarters, we will evaluate additional value accretive capital allocation strategies depending on the market environment and our outlook. Operator, you can now open the line for questions.

Operator: Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove yourself from the queue. We ask participants to please ask one question, limit themselves to one question and one follow-up. One moment while we poll for the first question. The first question is from Brian Lee with Goldman Sachs. Please proceed.

Brian Lee, Analyst, Goldman Sachs: Hey, everyone. Good afternoon. Thanks for taking the questions. Maybe Danny, since you ended the call with your remarks, question for you first. You mentioned the recent ABS transaction. Congrats on that 200 basis point spread. I think that’s the tightest we’ve seen in maybe a year and a half or so, maybe even longer. Can you kind of speak to the financing environment? I know you’re talking about a little bit of a pinch here in terms of higher cost of capital. Maybe that’s just all the base rate, but how should we just generally think about cost of capital trends from here on out through the rest of the year? And then any visibility? I know you kind of alluded to everyone’s full up on 2026, but what are you kind of thinking early read into 2027 from that vantage point?

Danny Abajian, Chief Financial Officer, Sunrun: Yeah, great question. We did notice a difference in participation levels, depth of order book. We’ve been in constant communication, obviously, directly interfacing with investors. Overall tone in the capital markets has been quite good. Overall kind of participation from an asset class standpoint, I think we’ve always been getting the confidence. I think last year was a year where several more people waited until this year to participate. We’re definitely seeing that in the results here. I would focus on from an overall all-in cost of capital standpoint, we’ve seen some spread benefit. We’ve also seen increase in base rates. Taken together, we still see cost of capital modestly higher than we were expecting coming into the year. Obviously from an overall capital availability standpoint and enabling what we have planned for the rest of the year, very positive signals from the ABS market.

The other part of capital markets for us is the ITC transfer market, which has also been active. I think we noted last quarter there was an improvement of price that largely held this quarter based on the transaction activity we’ve seen or currently seeing in our pipeline. We also remain optimistic there. As we noted in the remarks, like, as FEOC guidance comes out, that would only be additive to the market in terms of boosting participation where we see participation already at a healthy place.

Brian Lee, Analyst, Goldman Sachs: Okay. Helpful color. I appreciate that. Then maybe a bigger picture question. I don’t know if this one is maybe for Mary. Just thoughts on the battery storage opportunity. Obviously, you guys have pushed hard on that and been very successful. Be curious, any thoughts on potentially diversifying, maybe going larger scale? There have been some recent reports about a pure play peer in the battery space. The valuation delta versus you seems pretty stark. Wondering at a high level if you’re contemplating any strategy shifts or opportunities to sort of target other end markets, given you’ve got quite a bit of traction scale already. Curious if you’re thinking broader about the battery opportunity. Thank you.

Mary Powell, Chief Executive Officer, Sunrun: Yeah. Hey, Brian. Nice to chat with you. Yes, I think as I said in my remarks, we are at a really interesting inflection point in terms of the value of the storage first strategy that we adopted, as you know, many years ago. We are sitting on top of 4.6 gigawatt hours. Yes, there are some new entrants that again, are after the same thing that we’ve already built. We are sitting at the largest scale in the U.S. from a residential perspective. As I say, we are the nation’s largest residential independent power producer.

Because of the importance of speed to power right now, because of the importance of the demand, particularly from AI, but let’s be real, there was already demand and challenges from a grid perspective that were already in place a number of years ago that that has just added to the importance of speed to power, meeting the need, particularly, I would say, in the next five years. We’re really well positioned. We’re seeing, as I mentioned, an acceleration of the conversations that we’re having. Not just an acceleration of conversations with commercial partners, but I would say a very varied list of commercial partners. I think we’re in a great position to monetize the value of these assets for the company. Of course, that also brings some value for customers as well.

Brian Lee, Analyst, Goldman Sachs: All makes sense. Thank you. I’ll pass it on.

Operator: The next question comes from Praneeth Satish with Wells Fargo. Please proceed.

Praneeth Satish, Analyst, Wells Fargo: Thanks. Good afternoon, everyone. I guess just kind of drilling down on tax equity and pricing there. Sounds like it may have softened a little bit from last quarter, kind of in the high 80s, 90s versus low 90s last quarter, if I remember correctly your comments. I guess the question is, how do you expect pricing to trend over the balance of the year? It looks like final FEOC clarity may not arrive until even 2027. Kind of is the outlook for pricing, do you expect it to be stable or potentially some further pressure? Then, what kind of assumptions are assumed in the revised guidance around tax equity pricing?

Danny Abajian, Chief Financial Officer, Sunrun: Yeah. I would say it stayed stable to Q1. We are giving a range, high 80s to low 90s. That’s not implying any sort of change from last period. Pricing is held. To answer the question on future direction, we saw this year there was a start of activity after some people were paused due to tax appetite uncertainty. We’ve certainly seen 2025 volume mostly or entirely clear the market. We’ve seen focus turn heavily to 2026 as people have been working sequentially themselves in their own tax planning. Velocity volume has picked up. We’re seeing that, we’re experiencing that ourselves. We’re reading about that as it gets reported in the market. A lot of focus on 2026, which means as you get towards the back half of the year, urgency for both counterparties picks up to get your 2026 activity done.

What was noted was a little bit lower pricing in Q2, generally in the market. Our pricing held. A lot of what drove that seems to have been related to lots of smaller transactions getting done, subscale, maybe different quality getting done at different prices or different types of assets. We haven’t seen a difference in price in our transactions and more activity should unlock a higher price. We expect modestly higher for the year, maybe flat to modestly higher, just to be a little bit conservatively grounded there.

Praneeth Satish, Analyst, Wells Fargo: Got you. That’s helpful. Maybe switching gears. On the distributed AI node strategy, I guess the first question there is how quickly can you move from pilot to commercial deployment? Maybe just on the financing strategy and funding model, should we expect the GPU investments to sit on the balance sheet, or would you look to bring in third party capital? I know it’s probably small numbers, but they add up pretty quickly if you’re funding the GPU. Just trying to unpack that.

Mary Powell, Chief Executive Officer, Sunrun: Yeah. Thanks for the question. We’re excited about innovation and exploring the power of distributed compute because, again, we sit on the largest number of customers and homes across the country where people generate and store their own power. It’s a really interesting way to think about creating value, both for Sunrun and from a customer perspective. Again, it is a pilot, and we expect to learn a lot from it. We do expect to learn a lot within a few months. Paul, why don’t you talk a little bit more about the distributed compute pilot and then take that other question on the funding and how we’re thinking about it?

Paul Dickson, President and Chief Revenue Officer, Sunrun: Yeah, for sure. I think one of the things we know we have is a lot of customers with controllable power, and we can allocate that power to flow through a meter. We’ve got this Flex product that generates a bunch of excess power. Allocating those electrons to the highest return is something that we’re constantly thinking about. When you look at the value of using those electrons to power a GPU in someone’s home versus the alternative, the returns to us are really, really attractive. We’re excited about the economics of it. We’ve got, as you know, over 1 million host customers today with our solar and/or solar and storage offerings. Upon the announcement, we saw a really great surge of inbound customers calling, saying they’re interested and would like to host these sites.

We see a really low CAC opportunity and then leveraging our existing service. We see a lot of opportunities to have a very low entry point into a pilot and into an initial scale. Around the question on financing, we have a lot of experience in financing assets, and I think rolling this into a similar type structure is something that would be really natural for us as we scale the product. I think as Mary said, over the next couple of months, we’ll be expanding the pilot, working through it, and making decisions from there.

Praneeth Satish, Analyst, Wells Fargo: Got you. Thank you.

Operator: The next question comes from Maheep Mandloi with Mizuho. Please proceed.

Maheep Mandloi, Analyst, Mizuho: Hey, thanks for the question here. Just really trying to understand the cash generation range over here or the puts and takes on that now for you guys. As we kind of go into next year, could you expect that similar second half run rate for cash generation?

Danny Abajian, Chief Financial Officer, Sunrun: Starting with volume as a driver, we noted that we’ve inflected in terms of growth in the direct business. We’re seeing sales up 10% year-over-year. We expect back half volumes in the direct business to be up similarly, more than 10% year-over-year, and getting the whole year to a low single-digit growth in the direct business. Now that’s offset by the contraction of more than 60% in the affiliate business. That through the year should levelize. We implied we would be carrying unit volume growth into next year. We’re not guiding to 2027 at this point, but the volume trends are positive. Obviously, we noted cost of capital was a little bit of a modest headwind. Generally, as we grow scale, we do expect fixed cost absorption and more efficiency and productivity in the business.

Some of the near-term unit margin contraction you’re seeing is just related to the speed of the ramp on the direct side. That should largely be behind us as well as we get to the end of the year. That’s all positive indicators for what we carry into 2027.

Maheep Mandloi, Analyst, Mizuho: Appreciate it. Just a follow-up, just on the cost side, the latest news on potential tariffs on 232 and others in the works over here. Do you see enough levers in terms of utility bills going up or are we going to pass it down to the end customers? How do you see that in 2027, 2028?

Danny Abajian, Chief Financial Officer, Sunrun: Sorry, just to clarify, was that as to the impact on our cost structure or utility rates? I just want to make sure I heard that correctly.

Maheep Mandloi, Analyst, Mizuho: No, your cost structure in terms of the solar equipment costs and what flexibility do you see-

Danny Abajian, Chief Financial Officer, Sunrun: Yeah

Maheep Mandloi, Analyst, Mizuho: next year to pass that down? Yeah.

Danny Abajian, Chief Financial Officer, Sunrun: I got it. Yeah. It’s a minimal impact to us. We have been increasingly buying domestic on the module side. I’ll remind you, costs are about one-third of our cost structure. I think this is a modest impact to a portion of that one-third. I think we feel like we could absorb it. We have been buying more domestic. We’ve also hedged a little bit in terms of our planning for the year in terms of equipment costs. I think we feel like we could easily absorb that.

Maheep Mandloi, Analyst, Mizuho: Good. Appreciate it. Thank you.

Operator: The next question comes from Colin Rusch with Oppenheimer. Please proceed.

Colin Rusch, Analyst, Oppenheimer: Thanks so much, guys. Could you talk a little bit about the cadence and rate of conversion on the sales pipeline? Are you seeing an increase in conversion rate or is that starting to trend a little bit differently?

Paul Dickson, President and Chief Revenue Officer, Sunrun: Yeah, great question. We’ve onboarded, as we’ve kind of talked about, we’re growing our direct business quite aggressively. Since the beginning of the year, we’ve brought on over 1,500 new salespeople, and we’re seeing those new salespeople carry with them kind of the traditional conversion rates that a new salesperson brings with them as they come into the business, and growing and ramping those numbers as we would expect. In our core kind of offerings to customers, we see conversion rates flat to up and are optimistic as we continue to refine these new salespeople and get them into our business, even higher conversions.

Colin Rusch, Analyst, Oppenheimer: Okay, that’s super helpful. Then thinking about the portfolio of energy storage assets, can you talk a little bit about any sort of network effect that you’re starting to see in terms of monetization and how we should think about year-to-year variability in revenue from the portfolio of energy storage that you’ve got under management?

Mary Powell, Chief Executive Officer, Sunrun: Well, I think as I mentioned for this year, we’re projecting $40 million in GAAP gross revenue and $10 million to the bottom line. As we look to the future years, frankly, it’s hard to see a scenario where that value doesn’t continue to incrementally and materially grow. We have traditionally focused on, I would say, utility relationships, regulatory programs, and some favorable market rules like we have in some states to monetize the value of these assets for the grid and for customers and for Sunrun. The opportunities are just continuing to increase, both in the context of conversations directly with hyperscalers, some through our partnership with Tesla and Renew, some in the context of REP. Again, we have materially grown the number of conversations, opportunities, and frankly, deals that we’re working on. The outlook is very strong.

Colin Rusch, Analyst, Oppenheimer: Great. Thanks so much, guys.

Operator: The next question comes from Philip Shen with ROTH Capital. Please proceed.

Philip Shen, Analyst, ROTH Capital: Hi, guys. Thanks for taking my questions. First one is a follow-up on the AI compute pilot. Just was wondering if you might be able to share what the conversations with hyperscalers or potential customers to this asset base are going, and is there interest there? Are they excited about it as it’s a highly differentiated offering and something that they may not be used to, or is it something that’s a little bit foreign and it might take some time? Just curious, as a second part to that question, do we expect to see commercialization in 2027 or is it more of a 2028 thing? I think Praneeth asked, but I may have missed the answer. Thanks.

Mary Powell, Chief Executive Officer, Sunrun: Nice to hear you, Phil. I think it’s hard to say until we complete our pilot. Again, we’re doing our pilot. It’s hard to say on the commercialization and the revenue opportunity being 2027, whether it would end up being second half 2027, 2028, until we complete our pilot. That’ll be, as Paul mentioned, over the next couple of months. In the context of who would participate with us, I would say, first and foremost, there is a distributed compute marketplace. There is already a way to access the market to get value over GPUs in homes. That’s not something that we have to develop in order to monetize the value of these.

Putting that aside for a second, there are also those that are in the distributed compute space where it might make more sense to actually work on direct deals with them in a way that makes more sense than accessing the marketplace. There’s really a couple different ways to go after it, but there is already an existing distributed compute marketplace.

Philip Shen, Analyst, ROTH Capital: Great. Thanks, Mary. I appreciate the color. Shifting over to your share price, after hours, it’s looking like it’s going into the high single digits. Also wanted to check in on your latest view on buybacks as it relates to share price, given how low the stock has gone, it seems like an interesting and attractive opportunity. Thanks.

Mary Powell, Chief Executive Officer, Sunrun: I think as we’ve said, we are so focused on building a great company. I would point to what we’ve already done in the context of generating over $400 million of cash in the last couple of years. We also have been focused on, again, growing our direct business that has higher margins, better asset profile, better customer profile, and will be really valuable as we build the company to the future, as will the distributed power plant activities, as we just talked about. All of that puts us in a strong position to continue to pay down debt, and to hit the ratios and then explore the opportunities for value creation for our shareholders. Nothing has changed in that regard. We are very focused on creating value over time for our shareholders.

Philip Shen, Analyst, ROTH Capital: Great. Thanks again, Mary. I’ll pass it on.

Operator: The next question comes from Sophie Karp with KeyBanc Capital. Please proceed.

Sophie Karp, Analyst, KeyBanc Capital: Hi, good afternoon. Thank you for taking my question. I’m curious to get your take on the emerging, I guess, technology in the U.S. It’s plug-in solar panels that several states have adopted so far, and certification of them nationally may be upcoming. Kind of how do you see that interacting with your business opportunities, particularly on the lower end?

Mary Powell, Chief Executive Officer, Sunrun: Hi, Sophie, this is Mary. Are you referring to what is known as balcony solar?

Sophie Karp, Analyst, KeyBanc Capital: Maybe.

Mary Powell, Chief Executive Officer, Sunrun: I just want to make sure we understand your question.

Sophie Karp, Analyst, KeyBanc Capital: Maybe that’s the term, yeah. Like plug-in solar panels you have balcony and otherwise suitable for-

Mary Powell, Chief Executive Officer, Sunrun: Yeah, for sure.

Sophie Karp, Analyst, KeyBanc Capital: Single family homes too.

Mary Powell, Chief Executive Officer, Sunrun: Yeah, from my perspective, it’s a very interesting opportunity to continue to expand the total addressable market for what I would call generation and storage that can foundationally change your relationship with energy, which plug-in panels can’t do, obviously. I think I read a recent article in The New York Times where somebody cited they were excited because they think they were going to be saving about $5 a month. It’s just a very different product than our sophisticated product. One of the things I love about it is it’s raising awareness level, because I think so many of those folks that then will say, "Oh geez, I’m going to plug in a panel here and get some benefit." It almost becomes a gateway, a teaser product for people who really want to embrace more energy independence, home control, resilience.

Again, as we’ve moved particularly to a storage-first company, it’s just a very different value proposition. Like so many things, of course, we pay attention, and we’re excited about anything that excites the market about the power of solar energy.

Sophie Karp, Analyst, KeyBanc Capital: Thank you. Appreciate the color. That’s all from me.

Operator: Thank you. Ladies and gentlemen, we want to thank you for your participation on behalf of Sunrun. This does conclude today’s teleconference. Please disconnect your lines and have a wonderful day.