Sunrun Inc. (RUN) Earnings

Management highlights

• Sunrun is rapidly scaling sales and operations to meet the surging customer demand. It is solidifying its position as the nation's largest residential distributed power plant developer and operator. • In Q1, Sunrun added around 19,000 customers, and the storage attachment rate reached 73%, showing its commitment to a storage - first strategy. • The company's strategy includes a vertically integrated model, a focus on execution and customer experience. It is also dealing with the industry environment factors like the sunset of the consumer ITC, complex utility rate structures, and regulatory complexity. • Hawaii team members were celebrated for their recovery efforts after the flooding in March. • Danny Abajian mentioned that Q1 volume performance exceeded expectations, with the direct business seeing growth in sales force and sales bookings

Guidance

• Sunrun is reiterating all its 2026 full - year guidance. • It expects strong volume growth in the direct business and cash generation of $250 million to $450 million for the year, excluding the use of approximately $50 million to $100 million related to equipment safe harbor investments. • The company plans to allocate cash generation to reduce parent leverage and make final equipment safe harbor investments, and will evaluate additional value - accretive capital allocation strategies depending on the market environment

Segment performance

In Q1, Sunrun added approximately 19,000 customers. The storage attachment rate increased to 73%. Aggregate subscriber value for Q1 was $1.1 billion, which was above the guidance range of $850 million to $950 million. Contracted net value creation was $108 million, near the high end of the guided range of $25 million to $125 million. Cash generation was negative $31 million excluding equipment safe harbor investments. Danny Abajian further detailed that aggregate contracted subscriber value was $980 million in Q1. Aggregate creation costs were $872 million in Q1. Upfront net value creation was $91 million in Q1, which was approximately 9% of aggregate contracted subscriber value. Cash generation was negative $59 million in Q1, or negative $31 million excluding the $28 million net investment in equipment safe harboring

Risks & headwinds

• There are market dislocations that could impact performance. • Certain multinational tax equity investors paused 2026 activity while awaiting Treasury guidance on FIAT ownership restrictions. • There has been some elevation in default rates due to credit cycle consumer performance degradation, although they are generally contained

Analyst Q&A

• Q: On the tax equity pause, what are the impacts to the business, and whether the company has pivoted to other sources of capital or funding, and on volumes?

  A: Some multinational tax equity investors paused over FIAT ownership restrictions, which is a small portion of the market. Market activity is picking up, and it matches the volume trajectory and demand.

• Q: What is the exposure of Sunrun to Freedom Forever bankruptcy?

  A: The partnership with Freedom has declined in volume over the years, and there is relatively little exposure. The focus is on the internal business.

• Q: Regarding net subscriber value assumptions and the gating factors for megawatt growth?

  A: Factors like system characteristics, mix, and retained and non - retained mix affect net subscriber value. Gating factors for megawatt growth include sourcing deals, construction availability, and tax equity, and the company is managing through hiring sales talent and being selective in profitable markets.

• Q: How do tax equity trends play into the cash generation range?

  A: Market trends are positive with some improvement in pricing, and tax equity availability and cost are embedded in the cash generation range.

• Q: What was the impact of the shift of financing into Q2 on Q1 cash generation, the volume shifted, and the progress in Q2?

  A: The negative $31 million excludes the safe harbor investment, and the delay in transactions is inherent to those straddling quarter ends.

• Q: What are the drivers of the trend of decreasing fleet servicing costs and what does the future hold?

  A: The decrease is due to the team's focus on customer experience, scale, and AI leverage, and more improvements are expected.

• Q: Can you talk about the mix in the tax equity pipeline?

  A: The mix includes investors from global institutions to domestic players and various transaction types.

• Q: What is the impact of the partnership change on cash flow and the direct business ramp strategy?

  A: JV structures have similar economics, and the direct business ramp involves sophisticated sales training and a focus on customer and grid needs.

• Q: On selling battery storage products and the recourse debt plan?

  A: The standalone battery offering is well received, and the plan is to get to less than 2x total parent debt to trailing four - quarter cash generation by the end of the year.

• Q: About default rates and renewal rates?

  A: Default rates are in the less - than - 1% per year territory, with some elevation recently, and renewals are not linear due to contract terms and customer resumption of payments.

• Q: What about market share, TPO market evolution, and safe harbors?

  A: Sunrun represents one - third of subscription volumes in solar and more than 50% of the storage market, expects market consolidation, and will play the market opportunity with safe harbors