Residential solar energy company Sunrun (NASDAQ:RUN) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 10.1% year on year to $504.3 million. Its GAAP profit of $0.20 per share was significantly above analysts’ consensus estimates.
Revenue: $504.3 million vs analyst estimates of $484.8 million (10.1% year-on-year growth, 4% beat)
EPS (GAAP): $0.20 vs analyst estimates of -$0.35 (significant beat)
Adjusted EBITDA: $80.01 million vs analyst estimates of $58.17 million (15.9% margin, 37.6% beat)
Operating Margin: -22.8%, up from -40% in the same quarter last year
Free Cash Flow was -$104.4 million compared to -$139.6 million in the same quarter last year
Customers: 957,313, down from 1.05 million in the previous quarter
Market Capitalization: $1.69 billion
“The first quarter was another strong quarter for Sunrun as we exceeded our volume and Cash Generation targets by significant margins in what is seasonally the slowest quarter of the year. We are focused on delivering the best product for customers, underwriting volumes with strong unit margins, optimizing our routes to market, and driving cost discipline, including leveraging AI for innovation, creating significant operating efficiencies and quality enhancement. This has allowed us to gain market share in recent periods and produce strong operating and financial results,” said Mary Powell, Sunrun’s Chief Executive Officer.
Company Overview
Helping homeowners use solar energy to power their homes, Sunrun (NASDAQ:RUN) provides residential solar electricity, specializing in panel installation and leasing services.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Sunrun’s 19% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
Sunrun Quarterly Revenue
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Sunrun’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 7.1% over the last two years. Sunrun isn’t alone in its struggles as the Renewable Energy industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
Sunrun Year-On-Year Revenue Growth
Sunrun also reports its number of customers, which reached 957,313 in the latest quarter. Over the last two years, Sunrun’s customer base averaged 13.7% year-on-year growth. Because this number is better than its revenue growth, we can see the average customer spent less money each year on the company’s products and services.
Sunrun Customers
This quarter, Sunrun reported year-on-year revenue growth of 10.1%, and its $504.3 million of revenue exceeded Wall Street’s estimates by 4%.
Looking ahead, sell-side analysts expect revenue to grow 8.7% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and indicates its newer products and services will spur better top-line performance.
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Operating Margin
Sunrun’s high expenses have contributed to an average operating margin of negative 79.6% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.
Analyzing the trend in its profitability, Sunrun’s operating margin decreased significantly over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Sunrun’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.
Sunrun Trailing 12-Month Operating Margin (GAAP)
Sunrun’s operating margin was negative 22.8% this quarter. The company's consistent lack of profits raise a flag.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Sunrun, its EPS declined by 167% annually over the last five years while its revenue grew by 19%. This tells us the company became less profitable on a per-share basis as it expanded.
Sunrun Trailing 12-Month EPS (GAAP)
Diving into the nuances of Sunrun’s earnings can give us a better understanding of its performance. As we mentioned earlier, Sunrun’s operating margin improved this quarter but declined by 118.6 percentage points over the last five years. Its share count also grew by 116%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.
Sunrun Diluted Shares Outstanding
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Sunrun, its two-year annual EPS declines of 1,290% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q1, Sunrun reported EPS at $0.20, up from negative $0.40 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Sunrun to improve its earnings losses. Analysts forecast its full-year EPS of negative $12.13 will advance to negative $1.04.
Key Takeaways from Sunrun’s Q1 Results
We were impressed by how significantly Sunrun blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. On the other hand, its customer base missed significantly. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 8.3% to $8 immediately after reporting.
Sunrun had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
