10-Q 1 run-20240331.htm 10-Q run-20240331
false2024Q1000146936712/31P5Yhttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2023#AccruedLiabilitiesAndOtherLiabilitieshttp://fasb.org/us-gaap/2023#AccruedLiabilitiesAndOtherLiabilities0.00848070.0613704357441xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesrun:investment_fundrun:segmentrun:business_activityrun:reporting_unitxbrli:purerun:derivativerun:fund00014693672024-01-012024-03-310001469367dei:FormerAddressMember2024-01-012024-03-3100014693672024-05-0300014693672024-03-3100014693672023-12-310001469367us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-03-310001469367us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-12-310001469367us-gaap:ServiceMember2024-01-012024-03-310001469367us-gaap:ServiceMember2023-01-012023-03-310001469367us-gaap:ProductMember2024-01-012024-03-310001469367us-gaap:ProductMember2023-01-012023-03-3100014693672023-01-012023-03-310001469367run:RedeemableNoncontrollingInterestMember2023-12-310001469367us-gaap:CommonStockMember2023-12-310001469367us-gaap:AdditionalPaidInCapitalMember2023-12-310001469367us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001469367us-gaap:RetainedEarningsMember2023-12-310001469367us-gaap:ParentMember2023-12-310001469367us-gaap:NoncontrollingInterestMember2023-12-310001469367us-gaap:CommonStockMember2024-01-012024-03-310001469367us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001469367us-gaap:ParentMember2024-01-012024-03-310001469367run:RedeemableNoncontrollingInterestMember2024-01-012024-03-310001469367us-gaap:NoncontrollingInterestMember2024-01-012024-03-310001469367us-gaap:RetainedEarningsMember2024-01-012024-03-310001469367us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001469367run:RedeemableNoncontrollingInterestMember2024-03-310001469367us-gaap:CommonStockMember2024-03-310001469367us-gaap:AdditionalPaidInCapitalMember2024-03-310001469367us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001469367us-gaap:RetainedEarningsMember2024-03-310001469367us-gaap:ParentMember2024-03-310001469367us-gaap:NoncontrollingInterestMember2024-03-310001469367run:RedeemableNoncontrollingInterestMember2022-12-310001469367us-gaap:CommonStockMember2022-12-310001469367us-gaap:AdditionalPaidInCapitalMember2022-12-310001469367us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001469367us-gaap:RetainedEarningsMember2022-12-310001469367us-gaap:ParentMember2022-12-310001469367us-gaap:NoncontrollingInterestMember2022-12-3100014693672022-12-310001469367us-gaap:CommonStockMember2023-01-012023-03-310001469367us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001469367us-gaap:ParentMember2023-01-012023-03-310001469367run:RedeemableNoncontrollingInterestMember2023-01-012023-03-310001469367us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001469367us-gaap:RetainedEarningsMember2023-01-012023-03-310001469367us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001469367run:RedeemableNoncontrollingInterestMember2023-03-310001469367us-gaap:CommonStockMember2023-03-310001469367us-gaap:AdditionalPaidInCapitalMember2023-03-310001469367us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001469367us-gaap:RetainedEarningsMember2023-03-310001469367us-gaap:ParentMember2023-03-310001469367us-gaap:NoncontrollingInterestMember2023-03-3100014693672023-03-310001469367run:NonRecourseDebtMember2024-01-012024-03-310001469367run:NonRecourseDebtMember2023-01-012023-03-310001469367srt:MinimumMember2024-03-310001469367srt:MaximumMember2024-03-310001469367run:CustomerAgreementsMember2024-01-012024-03-310001469367run:CustomerAgreementsMember2023-01-012023-03-310001469367run:IncentivesMember2024-01-012024-03-310001469367run:IncentivesMember2023-01-012023-03-310001469367run:SolarEnergySystemsMember2024-01-012024-03-310001469367run:SolarEnergySystemsMember2023-01-012023-03-310001469367us-gaap:ManufacturedProductOtherMember2024-01-012024-03-310001469367us-gaap:ManufacturedProductOtherMember2023-01-012023-03-310001469367run:PaymentsUnderCustomerAgreementsMemberrun:PaymentsReceivedMember2024-03-310001469367run:PaymentsUnderCustomerAgreementsMemberrun:PaymentsReceivedMember2023-12-310001469367run:PaymentsUnderCustomerAgreementsMemberrun:FinancingMember2024-03-310001469367run:PaymentsUnderCustomerAgreementsMemberrun:FinancingMember2023-12-310001469367run:PaymentsUnderCustomerAgreementsMember2024-03-310001469367run:PaymentsUnderCustomerAgreementsMember2023-12-310001469367run:SRECContractsMemberrun:PaymentsReceivedMember2024-03-310001469367run:SRECContractsMemberrun:PaymentsReceivedMember2023-12-310001469367run:SRECContractsMemberrun:FinancingMember2024-03-310001469367run:SRECContractsMemberrun:FinancingMember2023-12-310001469367run:SRECContractsMember2024-03-310001469367run:SRECContractsMember2023-12-310001469367run:SolarEnergySystemsMember2024-01-012024-03-310001469367us-gaap:CarryingReportedAmountFairValueDisclosureMemberrun:RecourseDebtMember2024-03-310001469367us-gaap:EstimateOfFairValueFairValueDisclosureMemberrun:RecourseDebtMember2024-03-310001469367us-gaap:CarryingReportedAmountFairValueDisclosureMemberrun:RecourseDebtMember2023-12-310001469367us-gaap:EstimateOfFairValueFairValueDisclosureMemberrun:RecourseDebtMember2023-12-310001469367us-gaap:CarryingReportedAmountFairValueDisclosureMemberrun:SeniorDebtMember2024-03-310001469367us-gaap:EstimateOfFairValueFairValueDisclosureMemberrun:SeniorDebtMember2024-03-310001469367us-gaap:CarryingReportedAmountFairValueDisclosureMemberrun:SeniorDebtMember2023-12-310001469367us-gaap:EstimateOfFairValueFairValueDisclosureMemberrun:SeniorDebtMember2023-12-310001469367us-gaap:SubordinatedDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001469367us-gaap:SubordinatedDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001469367us-gaap:SubordinatedDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001469367us-gaap:SubordinatedDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001469367run:SecuritizationDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001469367run:SecuritizationDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001469367run:SecuritizationDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001469367run:SecuritizationDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001469367us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001469367us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001469367us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001469367us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001469367us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2024-03-310001469367us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2024-03-310001469367us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2024-03-310001469367us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2024-03-310001469367us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2024-03-310001469367us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001469367us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001469367us-gaap:FairValueMeasurementsRecurringMember2024-03-310001469367us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMemberus-gaap:FairValueInputsLevel1Member2023-12-310001469367us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2023-12-310001469367us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2023-12-310001469367us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateSwapMember2023-12-310001469367us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310001469367us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001469367us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001469367us-gaap:FairValueMeasurementsRecurringMember2023-12-310001469367us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2024-03-310001469367us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-12-310001469367us-gaap:EquipmentMember2024-03-310001469367us-gaap:EquipmentMember2023-12-310001469367run:InvertersAndBatteriesMember2024-03-310001469367run:InvertersAndBatteriesMember2023-12-310001469367run:CustomerAgreementsMember2024-03-310001469367run:CustomerAgreementsMember2023-12-310001469367run:IncentivesMember2024-03-310001469367run:IncentivesMember2023-12-310001469367run:RecourseDebtMemberrun:BankLineOfCreditMember2024-03-310001469367run:RecourseDebtMemberrun:BankLineOfCreditMember2023-12-310001469367srt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMemberrun:RecourseDebtMemberrun:BankLineOfCreditMember2024-01-012024-03-310001469367srt:MaximumMemberrun:SecuredOvernightFinancingRateSOFRMemberrun:RecourseDebtMemberrun:BankLineOfCreditMember2024-01-012024-03-310001469367run:ConvertibleSeniorNotesDue2026Memberrun:RecourseDebtMember2024-03-310001469367run:ConvertibleSeniorNotesDue2026Memberrun:RecourseDebtMember2023-12-310001469367run:ConvertibleSeniorNotesDue2026Membersrt:MinimumMemberrun:RecourseDebtMember2024-01-012024-03-310001469367run:ConvertibleSeniorNotesDue2030Memberrun:RecourseDebtMember2024-03-310001469367run:ConvertibleSeniorNotesDue2030Memberrun:RecourseDebtMember2023-12-310001469367run:ConvertibleSeniorNotesDue2030Membersrt:MinimumMemberrun:RecourseDebtMember2024-01-012024-03-310001469367run:RecourseDebtMember2024-03-310001469367run:RecourseDebtMember2023-12-310001469367run:NonRecourseDebtMemberrun:SeniorRevolvingAndDelayedDrawLoansMember2024-03-310001469367run:NonRecourseDebtMemberrun:SeniorRevolvingAndDelayedDrawLoansMember2023-12-310001469367run:NonRecourseDebtMembersrt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMemberrun:SeniorRevolvingAndDelayedDrawLoansMember2024-01-012024-03-310001469367srt:MaximumMemberrun:NonRecourseDebtMemberrun:SecuredOvernightFinancingRateSOFRMemberrun:SeniorRevolvingAndDelayedDrawLoansMember2024-01-012024-03-310001469367run:NonRecourseDebtMemberrun:SeniorNonRevolvingLoansMember2024-03-310001469367run:NonRecourseDebtMemberrun:SeniorNonRevolvingLoansMember2023-12-310001469367run:SeniorNonRevolvingLoansMemberrun:NonRecourseDebtMembersrt:MinimumMember2024-01-012024-03-310001469367srt:MaximumMemberrun:SeniorNonRevolvingLoansMemberrun:NonRecourseDebtMember2024-01-012024-03-310001469367run:SeniorNonRevolvingLoansMemberrun:NonRecourseDebtMembersrt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMember2024-01-012024-03-310001469367srt:MaximumMemberrun:SeniorNonRevolvingLoansMemberrun:NonRecourseDebtMemberrun:SecuredOvernightFinancingRateSOFRMember2024-01-012024-03-310001469367run:NonRecourseDebtMemberrun:SubordinatedRevolvingAndDelayedDrawLoansMember2024-03-310001469367run:NonRecourseDebtMemberrun:SubordinatedRevolvingAndDelayedDrawLoansMember2023-12-310001469367run:NonRecourseDebtMembersrt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMemberrun:SubordinatedRevolvingAndDelayedDrawLoansMember2024-01-012024-03-310001469367srt:MaximumMemberrun:NonRecourseDebtMemberrun:SecuredOvernightFinancingRateSOFRMemberrun:SubordinatedRevolvingAndDelayedDrawLoansMember2024-01-012024-03-310001469367run:NonRecourseDebtMemberrun:SubordinatedLoansMember2024-03-310001469367run:NonRecourseDebtMemberrun:SubordinatedLoansMember2023-12-310001469367run:NonRecourseDebtMembersrt:MinimumMemberrun:SubordinatedLoansMember2024-01-012024-03-310001469367srt:MaximumMemberrun:NonRecourseDebtMemberrun:SubordinatedLoansMember2024-01-012024-03-310001469367run:NonRecourseDebtMembersrt:MinimumMemberrun:SubordinatedLoansMemberrun:SecuredOvernightFinancingRateSOFRMember2024-01-012024-03-310001469367srt:MaximumMemberrun:NonRecourseDebtMemberrun:SubordinatedLoansMemberrun:SecuredOvernightFinancingRateSOFRMember2024-01-012024-03-310001469367run:NonRecourseDebtMemberrun:SecuritizedLoansMember2024-03-310001469367run:NonRecourseDebtMemberrun:SecuritizedLoansMember2023-12-310001469367run:NonRecourseDebtMembersrt:MinimumMemberrun:SecuritizedLoansMember2024-01-012024-03-310001469367srt:MaximumMemberrun:NonRecourseDebtMemberrun:SecuritizedLoansMember2024-01-012024-03-310001469367run:NonRecourseDebtMember2024-03-310001469367run:NonRecourseDebtMember2023-12-310001469367run:RecourseAndNonrecourseDebtMember2024-03-310001469367run:RecourseAndNonrecourseDebtMember2023-12-310001469367run:RecourseDebtMemberrun:BankLineOfCreditMember2024-02-290001469367srt:MinimumMemberrun:RecourseDebtMemberus-gaap:BaseRateMemberus-gaap:LineOfCreditMember2024-03-310001469367srt:MaximumMemberrun:RecourseDebtMemberus-gaap:BaseRateMemberus-gaap:LineOfCreditMember2024-03-310001469367us-gaap:FederalFundsEffectiveSwapRateMemberrun:RecourseDebtMemberrun:BankLineOfCreditMember2024-03-310001469367us-gaap:PrimeRateMemberrun:RecourseDebtMemberrun:BankLineOfCreditMember2024-03-310001469367run:A2022CreditAgreementBaseRateLoansMemberus-gaap:BaseRateMemberus-gaap:LineOfCreditMember2024-01-012024-03-310001469367srt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMemberus-gaap:LineOfCreditMember2024-03-310001469367srt:MaximumMemberrun:SecuredOvernightFinancingRateSOFRMemberus-gaap:LineOfCreditMember2024-03-310001469367run:SecuredOvernightFinancingRateSOFRMemberrun:A2022CreditAgreementSOFRRateLoansMemberus-gaap:LineOfCreditMember2024-01-012024-03-310001469367run:OneMonthSecuredOvernightFinancingRateMemberrun:A2022CreditAgreementSOFRRateLoansMemberus-gaap:LineOfCreditMember2024-01-012024-03-310001469367run:A2022CreditAgreementSOFRRateLoansMemberrun:ThreeMonthSecuredOvernightFinancingRateMemberus-gaap:LineOfCreditMember2024-01-012024-03-310001469367run:A2022CreditAgreementSOFRRateLoansMemberrun:SixMonthSecuredOvernightFinancingRateMemberus-gaap:LineOfCreditMember2024-01-012024-03-310001469367run:ConvertibleSeniorNotesMemberrun:NonRecourseDebtMember2024-03-310001469367run:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2024-03-310001469367run:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2024-01-012024-03-310001469367run:CappedCallMemberrun:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2024-01-012024-03-310001469367run:CappedCallMemberrun:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2024-03-310001469367run:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMemberus-gaap:BaseRateMember2024-03-310001469367run:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMemberus-gaap:BaseRateMember2024-01-012024-03-310001469367run:CappedCallMemberrun:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMemberus-gaap:BaseRateMember2024-01-012024-03-310001469367run:CappedCallMemberrun:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMemberus-gaap:BaseRateMember2024-03-310001469367run:SecuritizedLoansMember2024-03-310001469367run:NonRecourseDebtMemberrun:SubordinatedLoansMemberrun:FloatingRateMember2024-03-310001469367run:ConvertibleSeniorNotesDue2030Memberus-gaap:ConvertibleDebtMember2024-03-310001469367us-gaap:DesignatedAsHedgingInstrumentMember2024-03-310001469367us-gaap:NondesignatedMember2024-03-310001469367us-gaap:InterestRateSwapMember2024-03-310001469367us-gaap:InterestRateSwapMembersrt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMember2024-03-310001469367us-gaap:InterestRateSwapMembersrt:MaximumMemberrun:SecuredOvernightFinancingRateSOFRMember2024-03-310001469367us-gaap:SwaptionMember2024-03-310001469367srt:MinimumMemberrun:SecuredOvernightFinancingRateSOFRMemberus-gaap:SwaptionMember2024-03-310001469367srt:MaximumMemberrun:SecuredOvernightFinancingRateSOFRMemberus-gaap:SwaptionMember2024-03-310001469367us-gaap:DesignatedAsHedgingInstrumentMember2023-12-310001469367us-gaap:NondesignatedMember2023-12-310001469367us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2024-01-012024-03-310001469367us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-01-012023-03-310001469367us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2024-01-012024-03-310001469367us-gaap:InterestRateSwapMemberus-gaap:OtherNonoperatingIncomeExpenseMember2024-01-012024-03-310001469367us-gaap:InterestRateSwapMemberus-gaap:InterestExpenseMember2023-01-012023-03-310001469367us-gaap:InterestRateSwapMemberus-gaap:OtherNonoperatingIncomeExpenseMember2023-01-012023-03-310001469367run:SolarEnergySystemsPlaceInServiceMember2024-03-310001469367run:SolarEnergySystemsPlaceInServiceMember2023-12-310001469367us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-01-012024-03-3100014693672023-01-012023-12-310001469367us-gaap:RestrictedStockUnitsRSUMember2023-12-310001469367us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001469367us-gaap:RestrictedStockUnitsRSUMember2024-03-310001469367us-gaap:WarrantMember2024-01-012024-03-310001469367us-gaap:WarrantMember2023-01-012023-03-310001469367run:EmployeeStockPurchasePlanMember2024-01-012024-03-310001469367run:EmployeeStockPurchasePlanMember2024-03-310001469367run:CostOfOperatingLeasesAndIncentivesMember2024-01-012024-03-310001469367run:CostOfOperatingLeasesAndIncentivesMember2023-01-012023-03-310001469367run:CostOfSolarEnergySystemsAndProductSalesMember2024-01-012024-03-310001469367run:CostOfSolarEnergySystemsAndProductSalesMember2023-01-012023-03-310001469367us-gaap:SellingAndMarketingExpenseMember2024-01-012024-03-310001469367us-gaap:SellingAndMarketingExpenseMember2023-01-012023-03-310001469367us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-03-310001469367us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001469367us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-03-310001469367us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310001469367srt:MinimumMemberus-gaap:LetterOfCreditMember2024-01-012024-03-310001469367srt:MaximumMemberus-gaap:LetterOfCreditMember2024-01-012024-03-310001469367srt:MinimumMemberus-gaap:LetterOfCreditMember2023-01-012023-12-310001469367srt:MaximumMemberus-gaap:LetterOfCreditMember2023-01-012023-12-310001469367us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001469367us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001469367us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-03-310001469367us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-03-310001469367us-gaap:ConvertibleDebtSecuritiesMember2024-01-012024-03-310001469367us-gaap:ConvertibleDebtSecuritiesMember2023-01-012023-03-310001469367us-gaap:RelatedPartyMember2024-03-310001469367us-gaap:RelatedPartyMember2023-12-310001469367run:LynnJurichMember2024-01-012024-03-310001469367run:LynnJurichFebruary292024PlanStockOptionsMemberrun:LynnJurichMember2024-01-012024-03-310001469367run:LynnJurichFebruary292024PlanStockOptionsMemberrun:LynnJurichMember2024-03-310001469367run:LynnJurichMemberrun:LynnJurichFebruary292024PlanCommonStockMember2024-03-310001469367run:LynnJurichMemberrun:March12024TradingArrangementMember2024-01-012024-03-310001469367run:LynnJurichMemberrun:March12024TradingArrangementMember2024-03-31


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q


(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-37511 
Sunrun Inc.
(Exact name of registrant as specified in its charter)
Delaware26-2841711
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

600 California Street, Suite 1800
San Francisco, California 94108
(Address of principal executive offices and Zip Code)

(415) 580-6900
(Registrant’s telephone number, including area code) 

225 Bush Street, Suite 1400
San Francisco, California 94104
(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareRUNNasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
     
Non-accelerated filerSmaller reporting company
     
Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of May 3, 2024, the number of shares of the registrant’s common stock outstanding was 221,662,910.




Table of Contents

1


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The discussion in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “goals,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “likely,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

the potential impact of regulatory and policy development and changes;

the availability of rebates, tax credits and other financial incentives, and decreases to federal solar tax credits;

the potential impact of volatile or rising interest rates on our interest expense;

our industry’s, and specifically our, continued ability to manage costs (including, but not limited to, equipment costs) associated with solar service offerings;

potential changes in the retail price of utility-generated electricity or electricity from other energy sources;

the sufficiency of our cash, investment fund commitments and available borrowings to meet our anticipated cash needs;

our need and ability to raise capital, refinance existing debt, and finance our operations and solar energy systems from new and existing investors;

our investment in research and development and new product offerings;

determinations by the Internal Revenue Service (“IRS”) of the creditable basis of our solar energy systems;

our ability to manage our supply chains and distribution channels and the impact of natural disasters, supply chain disruptions, inflation, tariffs and trade barriers, export regulations, bank failures, geopolitical conflicts, macroeconomic conditions, and other events beyond our control on our business and operations, results of operations, and financial position;

our business plan and our ability to effectively manage our growth, including our rate of revenue growth;

our ability to further penetrate existing markets, expand into new markets and our expectations regarding market growth (including, but not limited to, expected cancellation rates);

our expectations concerning relationships with third parties, including the attraction, retention and continued existence of qualified solar partners;

the impact of seasonality on our business;

our strategic partnerships and investments and the expected benefits of such partnerships and investments;

our ability to realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and risk that the integration of these acquisitions may disrupt our business and management;

our ability to protect our intellectual property and customer data, as well as to maintain our brand;

the willingness and ability of our solar partners to fulfill their respective warranty and other contractual obligations;

2


our ability to renew or replace expiring, canceled, or terminated Customer Agreements at favorable rates or on a long-term basis;

the ability of our solar energy systems to operate or deliver energy for any reason, including if interconnection or transmission facilities on which we rely become unavailable;

our expectations regarding certain performance objectives and the renewal rates and purchase value of our solar energy systems after expiration of our Customer Agreements;

the calculation of certain of our key financial and operating metrics and accounting policies; and

our ability to capitalize on the market opportunities created by the electrification of the U.S. economy with renewable energy.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. These risks and uncertainties may be amplified by evolving economic and regulatory conditions, including increasing or volatile interest rates. The extent to which these risks and uncertainties impact our business, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous factors, including, but not limited to, the duration, rapidity, and intensity of these conditions, how widespread their impact is and will continue to be on our industry, and how quickly and to what extent more predictable and stable economic conditions resume. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in these forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission (the “SEC”) as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.


3


SELECTED RISKS AFFECTING OUR BUSINESS

Investing in our common stock involves numerous risks, including the risks described in Part II, Item 1A. “Risk Factors”, of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations and prospects.

Selected Risks Related to the Solar Industry

The solar energy industry is an emerging market which is constantly evolving and may not develop to the size or at the rate we expect.
We have historically benefited from declining costs in our industry, and our business and financial results may be harmed as a result of recent, and any continued increases in, costs associated with our solar service offerings and any failure of these costs to continue declining as we currently expect. If we do not reduce our cost structure in the future, our ability to continue to be profitable may be impaired.
We face competition from traditional energy companies as well as solar and other renewable energy companies.

Selected Risks Related to Our Operating Structure and Financing Activities

We need to raise capital to finance the continued growth of our operations and solar service business. If capital is not available to us on acceptable terms, as and when needed, our business and prospects would be materially and adversely impacted. In addition, our business is affected by general economic conditions and related uncertainties affecting markets in which we operate. Volatility in current economic conditions could adversely impact our business, including our ability to raise financing.
Volatility and increases in interest rates raise our cost of capital and may adversely impact our business.
We expect to incur substantially more debt in the future, which could intensify the risks to our business.

Selected Risks Related to Regulation and Policy

The customer value proposition for distributed solar, storage, and home electrification products is influenced by a number of factors, including, but not limited to, the retail price of electricity, the valuation of electricity not consumed on site and exported to the grid, the rate design mechanisms of customers’ utility bills, various policies related to the permitting and interconnection costs of our products to homes and the grid, the availability of incentives for solar, batteries, and other electrification products, and other policies which allow aggregations of our systems to provide the grid value. Significant changes to any of these factors may impact the competitiveness of our service offerings to customers.
Electric utility statutes and regulations and changes to such statutes or regulations may present technical, regulatory, and economic barriers to the purchase and use of our solar service offerings that may significantly reduce demand for such offerings.
Regulations and policies related to rate design could deter potential customers from purchasing our solar service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings.

Selected Risks Related to Our Business Operations

Our growth depends in part on the success of our relationships with third parties, including our solar partners.
We and our solar partners depend on a limited number of suppliers of solar panels, batteries, and other system components to adequately meet anticipated demand for our solar and storage service offerings. Any shortage, bottlenecks, delay, detentions, or component price change from these suppliers, or the acquisition of any of these suppliers by a competitor, could result in sales and installation delays, cancellations and loss of market share.
If we fail to manage our recent and future growth effectively, we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges.
We may not realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and integration of these acquisitions may disrupt our business and our management team.
The failure to hire and retain a sufficient number of employees and service providers in key functions would constrain our growth and our ability to timely complete customers’ Projects and successfully manage customer accounts.
4


Regulators may impose rules on the type of electricians qualified to install and service our solar and battery systems in California, which may result in workforce shortages, operational delays, and increased costs.
Our results of operations may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our results of operations for a particular period to fall below expectations, resulting in a decline in the price of our common stock.
Our actual financial results may differ materially from any guidance we may publish from time to time.
Failure or perceived failure to comply with existing or future laws, regulations, contracts, self-regulatory schemes, standards, and other obligations related to data privacy and security (including security incidents) could harm our business. Compliance or the actual or perceived failure to comply with such obligations could increase the costs of our products/services, limit their use or adoption, and otherwise negatively affect our operating results and business.

Selected Risks Related to Taxes and Accounting

Our ability to provide our solar and storage service offerings to customers on an economically viable basis depends in part on our ability to finance these systems with fund investors who seek particular tax and other benefits.
If the IRS makes determinations that the creditable basis of our solar energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our fund investors, and our business, financial condition, and prospects may be materially and adversely affected.
Our business currently depends on the availability of utility rebates, tax credits and other benefits, tax exemptions and exclusions, and other financial incentives, on the federal, state, and/or local levels. We may be adversely affected by changes in, and application of, these laws or other incentives to us, and the expiration, elimination. or reduction of these benefits could adversely impact our business.

If we are unable to adequately address these and other risks we face, our business may be harmed.
5



Sunrun Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Par Values)
(Unaudited)
March 31, 2024December 31, 2023
Assets
Current assets:
Cash$487,280 $678,821 
Restricted cash295,751 308,869 
Accounts receivable (net of allowances for credit losses of $16,015 and $19,042 as of March 31, 2024 and December 31, 2023, respectively)
169,661 172,001 
Inventories411,993 459,746 
Prepaid expenses and other current assets305,921 262,822 
Total current assets1,670,606 1,882,259 
Restricted cash148 148 
Solar energy systems, net13,422,536 13,028,871 
Property and equipment, net157,165 149,139 
Goodwill3,122,168 3,122,168 
Other assets2,461,720 2,267,652 
Total assets (1)
$20,834,343 $20,450,237 
Liabilities and total equity
Current liabilities:
Accounts payable$286,923 $230,723 
Distributions payable to noncontrolling interests and redeemable noncontrolling interests
34,039 35,180 
Accrued expenses and other liabilities538,117 499,225 
Deferred revenue, current portion120,673 128,600 
Deferred grants, current portion8,199 8,199 
Finance lease obligations, current portion24,015 22,053 
Non-recourse debt, current portion245,310 547,870 
Pass-through financing obligation, current portion16,545 16,309 
Total current liabilities1,273,821 1,488,159 
Deferred revenue, net of current portion1,109,391 1,067,461 
Deferred grants, net of current portion193,409 195,724 
Finance lease obligations, net of current portion73,807 68,753 
Convertible senior notes662,781 392,867 
Line of credit387,002 539,502 
Non-recourse debt, net of current portion9,852,968 9,191,689 
Pass-through financing obligation, net of current portion253,361 278,333 
Other liabilities147,204 190,866 
Deferred tax liabilities122,216 122,870 
Total liabilities (1)
14,075,960 13,536,224 
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests656,845 676,177 
Stockholders’ equity:
Preferred stock, $0.0001 par value—authorized, 200,000 shares as of March 31, 2024 and December 31, 2023; no shares issued and outstanding as of March 31, 2024 and December 31, 2023
  
Common stock, $0.0001 par value—authorized, 2,000,000 shares as of March 31, 2024 and December 31, 2023; issued and outstanding, 220,672 and 219,392 shares as of March 31, 2024 and December 31, 2023, respectively
22 22 
Additional paid-in capital6,614,414 6,609,229 
Accumulated other comprehensive income87,532 54,676 
Retained earnings(1,521,517)(1,433,699)
Total stockholders’ equity5,180,451 5,230,228 
Noncontrolling interests921,087 1,007,608 
Total equity6,101,538 6,237,836 
Total liabilities, redeemable noncontrolling interests and total equity$20,834,343 $20,450,237 



6






1)The Company’s consolidated assets as of March 31, 2024 and December 31, 2023 include $11,973,297 and $11,538,540, respectively, in assets of variable interest entities (“VIEs”) that can only be used to settle obligations of the VIEs. These assets include solar energy systems, net as of March 31, 2024 and December 31, 2023 of $10,871,862 and $10,469,093, respectively; cash as of March 31, 2024 and December 31, 2023 of $207,883 and $254,522, respectively; restricted cash as of March 31, 2024 and December 31, 2023 of $40,146 and $48,169, respectively; accounts receivable, net as of March 31, 2024 and December 31, 2023 of $94,176 and $76,249, respectively; inventories as of March 31, 2024 and December 31, 2023 of $119,803 and $150,065, respectively; prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023 of $209,140 and $161,414, respectively; and other assets as of March 31, 2024 and December 31, 2023 of $430,287 and $379,028, respectively. The Company’s consolidated liabilities as of March 31, 2024 and December 31, 2023 include $2,433,853 and $2,417,984, respectively, in liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include accounts payable as of March 31, 2024 and December 31, 2023 of $6,581 and $12,187, respectively; distributions payable to noncontrolling interests and redeemable noncontrolling interests as of March 31, 2024 and December 31, 2023 of $34,016 and $35,181, respectively; accrued expenses and other current liabilities as of March 31, 2024 and December 31, 2023 of $231,302 and $185,766, respectively; deferred revenue as of March 31, 2024 and December 31, 2023 of $754,735 and $708,413, respectively; non-recourse debt as of March 31, 2024 and December 31, 2023 of $1,389,627 and $1,459,621, respectively; and other liabilities as of March 31, 2024 and December 31, 2023 of $17,592 and $16,816, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
7


Sunrun Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended March 31,
20242023
Revenue:
Customer agreements and incentives$322,967 $246,474 
Solar energy systems and product sales135,221 343,375 
Total revenue458,188 589,849 
Operating expenses:
Cost of customer agreements and incentives269,534 236,905 
Cost of solar energy systems and product sales
156,159 320,018 
Sales and marketing152,264 202,836 
Research and development12,087 4,557 
General and administrative51,266 53,227 
Total operating expenses641,310 817,543 
Loss from operations(183,122)(227,694)
Interest expense, net(192,159)(142,698)
Other income (expense), net89,930 (25,000)
Loss before income taxes(285,351)(395,392)
Income tax benefit
(2,201)(59,619)
Net loss(283,150)(335,773)
Net loss attributable to noncontrolling interests and redeemable noncontrolling interests
(195,332)(95,385)
Net loss attributable to common stockholders$(87,818)$(240,388)
Net loss per share attributable to common stockholders
Basic$(0.40)$(1.12)
Diluted$(0.40)$(1.12)
Weighted average shares used to compute net loss per share attributable to common stockholders
Basic219,882 214,548 
Diluted219,882 214,548 

The accompanying notes are an integral part of these consolidated financial statements.

8


Sunrun Inc.
Consolidated Statements of Comprehensive Loss
(In Thousands)
(Unaudited)
Three Months Ended March 31,
20242023
Net loss attributable to common stockholders$(87,818)$(240,388)
Unrealized gain (loss) on derivatives, net of income taxes
40,302 (30,434)
Adjustment for net gain on derivatives recognized into earnings, net of income taxes(7,446)(5,154)
Other comprehensive income (loss)32,856 (35,588)
Comprehensive loss$(54,962)$(275,976)

9


Sunrun Inc.
Consolidated Statements of Redeemable Noncontrolling Interests and Equity
Three Months Ended March 31, 2024 and 2023
(In Thousands)
(Unaudited)

Three Months Ended March 31, 2024
Redeemable
Noncontrolling
Interests
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Retained
Earnings
Total
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
SharesAmount
Balance at December 31, 2023$676,177 219,392 $22 $6,609,229 $54,676 $(1,433,699)$5,230,228 $1,007,608 $6,237,836 
Exercise of stock options
— 177 — 1,056 — — 1,056 — 1,056 
Issuance of restricted stock units, net of tax withholdings— 1,103  — — — — —  
Stock-based compensation
— — — 42,494 — — 42,494 — 42,494 
Contributions from noncontrolling interests and redeemable noncontrolling interests
16,435 — — — — — — 147,902 147,902 
Distributions to noncontrolling interests and redeemable noncontrolling interests
(16,653)— — — — — — (57,046)(57,046)
Net loss
(17,955)— — — — (87,818)(87,818)(177,377)(265,195)
Capped call transaction— — — (38,365)— — (38,365)— (38,365)
Acquisition of noncontrolling interests(1,159)— —  — —    
Other comprehensive income, net of income taxes
— — — — 32,856 — 32,856 — 32,856 
Balance at March 31, 2024
$656,845 220,672 $22 $6,614,414 $87,532 $(1,521,517)$5,180,451 $921,087 $6,101,538 

Three Months Ended March 31, 2023
Redeemable
Noncontrolling
Interests
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Retained
Earnings
Total
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
SharesAmount
Balance at December 31, 2022$609,702 214,184 $21 $6,470,194 $67,109 $170,798 $6,708,122 $861,193 $7,569,315 
Exercise of stock options
— 199 — 1,328 — — 1,328 — 1,328 
Issuance of restricted stock units, net of tax withholdings
— 783 — — — — — —  
Stock-based compensation
— — — 29,805 — — 29,805 — 29,805 
Contributions from noncontrolling interests and redeemable noncontrolling interests
 — — — — — — 397,750 397,750 
Distributions to noncontrolling interests and redeemable noncontrolling interests
(17,002)— — — — — — (45,471)(45,471)
Net (loss) income17,248 — — — — (240,388)(240,388)(112,633)(353,021)
Acquisition of noncontrolling interest
(5,241)— — 4,479 — — 4,479 (5,550)(1,071)
Other comprehensive income, net of income taxes
— — — — (35,588)— (35,588)— (35,588)
Balance at March 31, 2023
$604,707 215,166 $21 $6,505,806 $31,521 $(69,590)$6,467,758 $1,095,289 $7,563,047 


10


Sunrun Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Three Months Ended March 31,
20242023
Operating activities:
Net loss$(283,150)$(335,773)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization, net of amortization of deferred grants150,520 123,105 
Deferred income taxes(2,202)(59,613)
Stock-based compensation expense28,869 28,266 
Interest on pass-through financing obligations4,756 4,862 
Reduction in pass-through financing obligations(9,335)(9,641)
Unrealized (gain) loss on derivatives(55,103)30,721 
Other noncash items14,639 27,366 
Changes in operating assets and liabilities:
Accounts receivable(1,371)(9,385)
Inventories47,753 (103,986)
Prepaid expenses and other assets(135,678)(109,454)
Accounts payable59,641 (1,428)
Accrued expenses and other liabilities3,395 (26,776)
Deferred revenue34,173 2,413 
Net cash used in operating activities(143,093)(439,323)
Investing activities:
Payments for the costs of solar energy systems(538,975)(506,314)
Purchases of property and equipment, net3,531 (3,996)
Net cash used in investing activities(535,444)(510,310)
Financing activities:
Proceeds from state tax credits, net of recapture 4,033 
Proceeds from line of credit139,805 143,331 
Repayment of line of credit(292,305)(96,236)
Proceeds from issuance of convertible senior notes, net of capped call transaction444,822  
Repurchase of convertible senior notes(173,715) 
Proceeds from issuance of non-recourse debt770,106 514,880 
Repayment of non-recourse debt(431,532)(50,968)
Payment of debt fees(47,779)(733)
Proceeds from pass-through financing and other obligations, net1,808 2,004 
Repayment of pass-through financing obligation(20,000) 
Payment of finance lease obligations(6,732)(4,477)
Contributions received from noncontrolling interests and redeemable noncontrolling interests164,337 397,750 
Distributions paid to noncontrolling interests and redeemable noncontrolling interests(74,834)(63,901)
Acquisition of noncontrolling interest(1,159)(7,175)
Proceeds from transfer of investment tax credits106,529  
Payments to redeemable noncontrolling interests and noncontrolling interests of investment tax credits(106,529) 
Net proceeds related to stock-based award activities1,056 1,328 
Net cash provided by financing activities473,878 839,836 
Net change in cash and restricted cash(204,659)(109,797)
Cash and restricted cash, beginning of period987,838 953,023 
Cash and restricted cash, end of period$783,179 $843,226 
Supplemental disclosures of cash flow information
Cash paid for interest$136,711 $93,988 
Cash paid for income taxes$ $ 
Supplemental disclosures of noncash investing and financing activities
Purchases of solar energy systems and property and equipment included in accounts payable and accrued expenses$59,370 $69,557 
Right-of-use assets obtained in exchange for new finance lease liabilities$14,891 $10,175 

The accompanying notes are an integral part of these consolidated financial statements.
11


Sunrun Inc.
Notes to Consolidated Financial Statements
(Unaudited)

Note 1. Organization
Sunrun Inc. (“Sunrun” or the “Company”) was formed in 2007. The Company is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy and battery storage systems (“Projects”) in the United States.
Sunrun acquires customers directly and through relationships with various solar and strategic partners (“Partners”). The Projects are constructed either by Sunrun or by Sunrun’s Partners and are mostly owned by the Company. Sunrun’s customers enter into an agreement to utilize the solar energy system (the “Customer Agreement”) which typically has an initial term of 20 or 25 years. Sunrun monitors, maintains, and insures the Projects during the term of the Customer Agreement. The Company also sells battery storage along with the solar energy systems and products, such as panels and racking and solar leads generated by customers.
The Company has formed various subsidiaries (“Funds”) to finance the development of Projects. These Funds, structured as limited liability companies, obtain financing from outside investors and purchase or lease Projects from Sunrun under master purchase or master lease agreements. The Company currently utilizes three legal structures in its investment Funds, which are referred to as: (i) pass-through financing obligations, (ii) partnership-flips, and (iii) joint venture (“JV”) inverted leases.


Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting, and in the opinion management, include all necessary adjustments for the fair presentation of the Company’s interim financial statements. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2023. The results of the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2024 or other future periods.
The consolidated financial statements reflect the accounts and operations of the Company and those of its subsidiaries, including Funds, in which the Company has a controlling financial interest. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve holding a majority of the voting interests. In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 810 (“ASC 810”) Consolidation, the Company consolidates any VIE of which it is the primary beneficiary. The primary beneficiary, as defined in ASC 810, is the party that has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb the losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it continues to be the primary beneficiary. The consolidated financial statements reflect the assets and liabilities of VIEs that are consolidated. All intercompany transactions and balances have been eliminated in consolidation.
Reclassifications
When necessary, reclassifications have been made to our prior period financial information to conform with current year presentation and are not material to our consolidated financial statements.
12


Use of Estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company regularly makes estimates and assumptions, including, but not limited to, revenue recognition constraints that result in variable consideration, the discount rate used to adjust the promised amount of consideration for the effects of a significant financing component, the estimates that affect the collectability of accounts receivable, the valuation of inventories, the useful lives of solar energy systems, the useful lives of property and equipment, the effective interest rate used to amortize pass-through financing obligations, the discount rate used for operating and financing leases, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, the fair value of debt instruments disclosed and the redemption value of redeemable noncontrolling interests. The Company bases its estimates on historical experience and various other assumptions believed to be reasonable. Actual results may differ from such estimates.
Segment Information
The Company has one operating segment with one business activity, providing solar energy services and products to customers. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who manages operations on a consolidated basis for purposes of allocating resources. When evaluating performance and allocating resources, the CODM reviews financial information presented on a consolidated basis.
Revenue from external customers (including, but not limited to homeowners) for each group of similar products and services is as follows (in thousands):
Three Months Ended March 31,
20242023
Customer agreements$304,134 $225,088 
Incentives18,833 21,386 
Customer agreements and incentives322,967 246,474 
Solar energy systems65,065 228,902 
Product sales70,156 114,473 
Solar energy systems and product sales135,221 343,375 
Total revenue$458,188 $589,849 

Revenue from Customer Agreements includes payments by customers for the use of the system as well as utility and other rebates assigned by the customer to the Company in the Customer Agreement. Revenue from incentives includes revenue from the sale of commercial investment tax credits (“Commercial ITCs”) and solar renewable energy credits (“SRECs”).
Cash and Restricted Cash
Restricted cash represents amounts related to obligations under certain financing transactions and future replacement of solar energy system components.
13


The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows. Cash and restricted cash consists of the following (in thousands):
Three Months Ended March 31,
  20242023
Beginning of period:
   Cash $678,821 $740,508 
   Restricted cash, current and long-term309,017 212,515 
Total$987,838 $953,023 
End of period:
   Cash $487,280 $628,536 
   Restricted cash, current and long-term295,899 214,690 
Total$783,179 $843,226 
Accounts Receivable
Accounts receivable consist of amounts due from customers, as well as state and utility rebates due from government agencies and utility companies. Under Customer Agreements, the customers typically assign incentive rebates to the Company.
Accounts receivable, net consists of the following (in thousands):
  March 31, 2024 December 31, 2023
Customer receivables$180,117 $186,537 
Other receivables5,559 4,506 
Allowance for credit losses(16,015)(19,042)
Total$169,661 $172,001 
Goodwill
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. Goodwill is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may be impaired. The Company has determined that it operates as one reporting unit and the Company’s goodwill is recorded at the enterprise level. The Company performs its annual impairment test of goodwill on October 1 of each fiscal year or whenever events or circumstances change or occur that would indicate that goodwill might be impaired. When assessing goodwill for impairment, the Company uses qualitative and if necessary, quantitative methods in accordance with FASB ASC Topic 350, Goodwill. The Company also considers its enterprise value and if necessary, discounted cash flow model, which involves assumptions and estimates, including the Company’s future financial performance, weighted average cost of capital and interpretation of currently enacted tax laws.
Circumstances that could indicate impairment and require the Company to perform a quantitative impairment test include significant declines in the Company’s financial results or enterprise value relative to its net book value or a sustained decline in the Company’s stock price below its book value, coupled with declines in valuations for comparable public companies or acquisition premiums. The Company tests goodwill for impairment for its one reporting unit using an estimated fair value approach. Due to the sustained decline in the Company’s market capitalization after consideration of a control premium below the book value of equity, the Company recorded an impairment charge as of September 30, 2023 related to the recoverability of its goodwill for its one reporting unit. After the impairment charge, the fair value of the Company’s one reporting unit approximated its estimated carrying value. No additional impairment had occurred as of December 31, 2023.


14


Should, among other events and circumstances, industry conditions deteriorate, the outlook for future operating results and cash flow decline or regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or the Company’s market capitalization experience a further sustained decline below its book value, the Company may need to further reassess the recoverability of goodwill in future periods. As of March 31, 2024, there were no indicators of impairment that would require a goodwill impairment analysis.
Deferred Revenue
When the Company receives consideration, or when such consideration is unconditionally due, from a customer prior to delivering goods or services to the customer under the terms of a Customer Agreement, the Company records deferred revenue. Such deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes amounts that are collected or assigned from customers, including upfront deposits and prepayments, and rebates. Deferred revenue relating to financing components represents the cumulative excess of interest expense recorded on financing component elements over the related revenue recognized to date and will eventually net to zero by the end of the initial term. Amounts received related to the sales of SRECs which have not yet been delivered to the counterparty are recorded as deferred revenue.
The opening balance of deferred revenue was $1.1 billion as of December 31, 2022. Deferred revenue consists of the following (in thousands):
 March 31, 2024December 31, 2023
Under Customer Agreements:
Payments received, net$880,755 $873,137 
Financing component balance74,121 72,289 
954,876 945,426 
Under SREC contracts:
Payments received, net260,352 237,800 
Financing component balance14,836 12,835 
275,188 250,635 
Total$1,230,064 $1,196,061 

During the three months ended March 31, 2024 and 2023, the Company recognized revenue of $27.7 million and $24.1 million, respectively, from amounts included in deferred revenue at the beginning of the respective periods. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized and includes deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods. Contracted but not yet recognized revenue was approximately $26.6 billion as of March 31, 2024, of which the Company expects to recognize approximately 5% over the next 12 months. The annual recognition is not expected to vary significantly over the next 10 years as the vast majority of existing Customer Agreements have at least 10 years remaining, given that the average age of the Company’s fleet of residential solar energy systems under Customer Agreements is less than five years as a result of the Company experiencing significant growth in the last few years. The annual recognition on these existing contracts will gradually decline over the midpoint of the Customer Agreements, which is around 10 years, as the typical 20- or 25-year initial term expires on individual Customer Agreements.
Fair Value of Financial Instruments
The Company defines fair value as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses valuation approaches to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. The FASB establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
15


Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3—Inputs that are unobservable, significant to the measurement of the fair value of the assets or liabilities and are supported by little or no market data.

The Company’s financial instruments include cash, receivables, accounts payable, accrued expenses, distributions payable to noncontrolling interests, derivatives, and recourse and non-recourse debt.

Certain assets are measured at fair value on a non-recurring basis. These assets are not also measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances. These assets can include goodwill that is written down to fair value when it is impaired, which uses Level 3 inputs. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs.
Revenue Recognition
The Company recognizes revenue when control of goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.
Customer agreements and incentives
Customer agreements and incentives revenue is primarily comprised of revenue from Customer Agreements in which the Company provides continuous access to a functioning solar energy system and revenue from the sales of SRECs generated by the Company’s solar energy systems to third parties.
The Company begins to recognize revenue on Customer Agreements when permission to operate (“PTO”) is given by the local utility company or on the date daily operation commences if utility approval is not required. Revenue recognition does not necessarily follow the receipt of cash. For Customer Agreements that include a fixed fee per month which entitles the customer to any and all electricity generated by the system, and for which the Company’s obligation is to provide continuous access to a functioning solar energy system, the Company recognizes revenue evenly over the time that it satisfies its performance obligations, which is over the initial term of the Customer Agreements. For Customer Agreements that charge a fixed price per kilowatt hour, and for which the Company’s obligation is the provision of electricity from a solar energy system, revenue is recognized based on the actual amount of power generated at rates specified under the contracts. Customer Agreements typically have an initial term of 20 or 25 years. After the initial contract term, Customer Agreements typically automatically renew annually or for a five year term.
SREC revenue arises from the sale of environmental credits generated by solar energy systems and is generally recognized upon delivery of the SRECs to the counterparty or upon reporting of the electricity generation. For pass-through financing obligation Funds, the value attributable to the monetization of Commercial ITCs are recognized in the period a solar energy system is granted PTO, see Note 10, Pass-Through Financing Obligations.
In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money when the timing of payments provides it with a significant benefit of financing the transfer of goods or services to the customer. In those circumstances, the contract contains a significant financing component. When adjusting the promised amount of consideration for a significant financing component, the Company uses the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception and recognizes the revenue amount on a straight-line basis over the term of the Customer Agreement, and interest expense using the effective interest rate method.
Consideration from customers is considered variable due to the performance guarantee under Customer Agreements and liquidating damage provisions under SREC contracts in the event minimum deliveries are not achieved. Performance guarantees provide a credit to the customer if the system’s cumulative production, as measured on various PTO anniversary dates, is below the Company’s guarantee of a specified minimum. Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur.
16


The Company capitalizes incremental costs incurred to obtain a contract in Other assets in the consolidated balance sheets. These amounts are amortized on a straight-line basis over the term of the Customer Agreements, and are included in Sales and marketing in the consolidated statements of operations.
Solar energy systems and product sales
For solar energy systems sold to customers, revenue is recognized when the solar energy system passes inspection by the authority having jurisdiction, which inspection generally occurs after installation but prior to PTO, at which time the Company has met the performance obligation in the contract. For solar energy system sales that include delivery obligations up until interconnection to the local power grid with PTO, the Company recognizes revenue at PTO. Certain solar energy systems sold to customers include fees for extended warranty and maintenance services. These fees are recognized over the life of the service agreement. The Company’s installation Projects are typically completed in less than twelve months.
Product sales consist of solar panels, racking systems, inverters, other solar energy products sold to resellers, roofing repair, and customer leads. Product sales revenue is recognized at the time when control is transferred, upon shipment, or as services are delivered. Customer lead revenue, included in product sales, is recognized at the time the lead is delivered.
Taxes assessed by government authorities that are directly imposed on revenue producing transactions are excluded from solar energy systems and product sales.
Cost of Revenue
Customer agreements and incentives
Cost of revenue for customer agreements and incentives is primarily comprised of (1) the depreciation of the cost of the solar energy systems, as reduced by amortization of deferred grants, (2) solar energy system operations, monitoring and maintenance costs including associated personnel costs, and (3) allocated corporate overhead costs.
Solar energy systems and product sales
Cost of revenue for solar energy systems and non-lead generation product sales consist of direct and indirect material and labor costs for solar energy systems installations and product sales. Also included are engineering and design costs, estimated warranty costs, freight costs, allocated corporate overhead costs, vehicle depreciation costs and personnel costs associated with supply chain, logistics, operations management, safety and quality control. Cost of revenue for lead generations consists of costs related to direct-response advertising activities associated with generating customer leads.
Recently Issued and Adopted Accounting Standards
Accounting standards to be adopted:
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, to modify the disclosure or presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements, and to align the requirements in the FASB accounting standard codification with the SEC’s regulations. The amendments in this ASU are effective when the related disclosure is effectively removed from Regulations S-X or S-K, with early adoption prohibited. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s CODM uses reported segment profit or loss information in assessing segment performance and
17


allocating resources. This ASU became effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating this guidance and the impact it may have on its financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating this guidance and the impact it may have on its financial statement disclosures.
In March 2024, the SEC issued Final Rule 33-11275 and 34-99678 - The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule requires registrants to provide standardized disclosures related to climate-related risks, governance and risk management strategies, and the financial impact of severe weather events and Scope 1 and 2 greenhouse gas emissions. The rule requires implementation in phases between 2025 and 2033. In April 2024, the SEC announced that it would voluntarily stay its final climate disclosure rules pending judicial review. The Company is currently evaluating the impact of the rule on its future consolidated financial statements.

Note 3. Fair Value Measurement
At March 31, 2024 and December 31, 2023, the carrying value of receivables, accounts payable, accrued expenses and distributions payable to noncontrolling interests approximates fair value due to their short-term nature and falls under the Level 2 hierarchy. The carrying values and fair values of debt instruments are as follows (in thousands):
March 31, 2024December 31, 2023
Carrying ValueFair ValueCarrying ValueFair Value
Recourse debt$1,049,783 $1,029,681 $932,369 $844,727 
Senior debt4,392,367 4,357,504 4,114,134 4,082,994 
Subordinated debt2,385,584 2,270,183 2,219,573 2,131,994 
Securitization debt3,320,327 3,078,187 3,405,852 3,191,542 
Total$11,148,061 $10,735,555 $10,671,928 $10,251,257 
At March 31, 2024 and December 31, 2023, the fair value of certain recourse debt and certain senior, subordinated and securitization loans approximate their carrying values because their interest rates are variable rates that approximate rates currently available to the Company. At March 31, 2024 and December 31, 2023, the fair value of the Company’s other debt instruments are based on rates currently offered for debt with similar maturities and terms. The Company’s fair value of the debt instruments fell under the Level 2 hierarchy. These valuation approaches involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market.
18


At March 31, 2024 and December 31, 2023, financial instruments measured at fair value on a recurring basis, based upon the fair value hierarchy, are as follows (in thousands):
March 31, 2024
Level 1Level 2Level 3Total
Derivative assets:
Interest rate swaps$ $169,888 $ $169,888 
Total$ $169,888 $ $169,888 
Derivative liabilities:
Interest rate swaps$ $22,403 $ $22,403 
Total$ $22,403 $ $22,403 
December 31, 2023
Level 1Level 2Level 3Total
Derivative assets:
Interest rate swaps$ $132,734 $ $132,734 
Total$ $132,734 $ $132,734 
Derivative liabilities:
Interest rate swaps$ $60,401 $ $60,401 
Total$ $60,401 $ $60,401 
    
The above balances are recorded in other assets and other liabilities, respectively, in the consolidated balance sheets, except for $58.4 million and $55.5 million as of March 31, 2024 and December 31, 2023, respectively, which is recorded in prepaid expenses and other current assets.
The Company determines the fair value of its interest rate swaps using a discounted cash flow model that incorporates an assessment of the risk of non-performance by the interest rate swap counterparty and an evaluation of the Company’s credit risk in valuing derivative instruments. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads, and measures of volatility.

Note 4. Inventories
Inventories consist of the following (in thousands):
March 31, 2024December 31, 2023
Raw materials$362,779 $413,410 
Work-in-process49,214 46,336 
Total$411,993 $459,746 

Note 5. Solar Energy Systems, net
Solar energy systems, net consists of the following (in thousands):
March 31, 2024December 31, 2023
Solar energy system equipment costs$13,002,812 $12,558,996 
Inverters and batteries2,005,966 1,845,580 
Total solar energy systems15,008,778 14,404,576 
Less: accumulated depreciation and amortization(2,303,527)(2,165,171)
Add: construction-in-progress717,285 789,466 
Total solar energy systems, net$13,422,536 $13,028,871 
All solar energy systems, including construction-in-progress, have been leased to or are subject to signed Customer Agreements with customers. The Company recorded depreciation expense related to solar energy
19


systems of $141.7 million and $116.6 million for the three months ended March 31, 2024 and 2023, respectively. The depreciation expense was reduced by the amortization of deferred grants of $2.0 million and $2.1 million for the three months ended March 31, 2024 and 2023, respectively.

Note 6. Other Assets
Other assets consist of the following (in thousands):
March 31, 2024December 31, 2023
Costs to obtain contracts - Customer Agreements$1,674,184 $1,565,098 
Costs to obtain contracts - incentives2,481 2,481 
Accumulated amortization of costs to obtain contracts(185,489)(168,564)
Unbilled receivables516,126 468,379 
Allowance for credit loss on unbilled receivables(5,252)(4,774)
Equity investment132,563 132,563 
Operating lease right-of-use assets88,282 91,635 
Other assets238,825 180,834 
Total$2,461,720 $2,267,652 
The Company recorded amortization of costs to obtain contracts of $17.0 million and $12.2 million for the three months ended March 31, 2024 and 2023, respectively, in Sales and marketing in the consolidated statements of operations.
The majority of unbilled receivables arise from fixed price escalators included in the Company’s long-term Customer Agreements. The escalator is included in calculating the total estimated transaction value for an individual Customer Agreement. The total estimated transaction value is then recognized over the term of the Customer Agreement. The amount of unbilled receivables increases while billings for an individual Customer Agreement are less than the revenue recognized for that Customer Agreement. Conversely, the amount of unbilled receivables decreases once the billings become higher than the amount of revenue recognized in the period. At the end of the initial term of a Customer Agreement, the cumulative amounts recognized as revenue and billed to date are the same, therefore the unbilled receivable balance for an individual Customer Agreement will be zero. The Company applies an estimated loss-rate in order to determine the current expected credit loss for unbilled receivables. The estimated loss-rate is determined by analyzing historical credit losses, residential first and second mortgage foreclosures and consumers’ utility default rates, as well as current economic conditions. The Company reviews individual customer collection status of electricity billings to determine whether the unbilled receivables for an individual customer should be written off, including the possibility of a service transfer to a potential new homeowner.

Note 7. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consist of the following (in thousands):
March 31, 2024December 31, 2023
Accrued employee compensation$94,790 $93,414 
Accrued interest91,901 92,881 
Operating lease obligations29,182 29,572 
Other accrued expenses322,244 283,358 
Total$538,117 $499,225 
    

20


Note 8. Indebtedness
As of March 31, 2024, debt consisted of the following (in thousands, except percentages):
March 31, 2024December 31, 2023
Unused Borrowing Capacity (1)
Weighted Average Interest Rate at March 31, 2024 (2)
Weighted Average Interest Rate at December 31, 2023 (2)
Contractual Interest Rate (3)
Contractual Maturity Date
Recourse debt
Line of credit (4)
$387,002 $539,502 $ 9.32%8.89%
SOFR +3.25% - 3.75%
November 2025
Convertible Senior Notes due 2026 (5)
194,478397,642 %%
%
February 2026
Convertible Senior Notes due 2030 (6)
483,187   4.00%%
4.00%
March 2030
Total recourse debt1,064,667 937,144  
Unamortized debt discount(14,884)(4,775) 
Total recourse debt, net1,049,783 932,369  
Non-recourse debt (7)
Senior revolving and delayed draw loans (8)
1,826,800 1,886,300 49,800 7.98%7.59%
SOFR +2.35%- 3.10%
March 2027 - February 2028
Senior non-revolving loans(9)
2,568,240 2,226,343  6.98%7.07%
4.66% - 6.93%; SOFR +1.85% - 2.65%
September 2025 - February 2055
Subordinated revolving and delayed draw loans (8)
181,550 146,000  11.45%12.01%
SOFR +3.76% - 9.10%
March 2027 - April 2028
Subordinated loans (10)(11)
2,245,740 2,110,693  9.23%9.18%
7.00% - 10.50%; SOFR +6.00% - 6.90%
June 2026 - January 2042
Securitized loans
3,364,050 3,450,794  4.62%4.61%
2.27% - 6.60%
April 2048 - January 2059
Total non-recourse debt10,186,380 9,820,130 49,800 
Unamortized debt (discount) premium, net(88,102)(80,571) 
Total non-recourse debt, net10,098,278 9,739,559 49,800 
Total debt, net$11,148,061 $10,671,928 $49,800 

(1)Represents the additional amount the Company could borrow, if any, based on the state of its existing assets as of March 31, 2024.
(2)Reflects weighted average contractual, unhedged rates. See Note 9, Derivatives for hedge rates.
(3)Ranges shown reflect a fixed interest rate and rates using SOFR, as applicable.
21


(4)The working capital facility (the “Facility”) was amended in February 2024 and its total commitment of up to $447.5 million is secured by substantially all of the unencumbered assets of the Company, as well as ownership interests in certain subsidiaries of the Company. Borrowings under the Facility may be designated as Base Rate Loans or Term SOFR Loans, subject to certain terms and conditions under the Credit Agreement. Base Rate Loans accrue interest at a rate per year equal to 2.25% to 2.75% depending on total outstanding balance as a percentage of total commitment plus the highest of (a) the federal funds rate plus 0.50%, (b) the interest rate determined from time to time by the Administrative Agent as its prime rate and notified to the Company, (c) the Adjusted Term SOFR Rate (defined below) for a one-month interest period in effect on such day (or if such day is not a business day, the immediately preceding business day) plus 1.00% and (d) 0.00%. Term SOFR Loans accrue interest at a rate per annum equal to (a) 3.25% to 3.75% depending on total outstanding balance as a percentage of total commitment plus (b) the greater of (i) 0.00% and (ii) the sum of (x) the forward-looking term rate for a period comparable to the applicable available tenor based on SOFR that is published by CME Group Benchmark Administration Ltd or a successor for the applicable interest period and (y) (1) if the applicable interest period is one month, 0.11448%, (2) if the applicable interest period is three months, 0.26161% or (c) if the applicable interest period is six months, 0.42826% (the rate pursuant to clause (b), the “Adjusted Term SOFR Rate”). The maturity date of this facility could be extended to March 1, 2027 if, as of September 30, 2024, the Company maintain funds on deposit in a collateral account equal to an amount sufficient to repay at the scheduled maturity all of its 0% Senior Convertible Notes due 2026 that are outstanding on September 30, 2024 and the Company is otherwise in compliance with its quarter-end liquidity covenant. This facility is subject to various restrictive covenants, such as the completion and presentation of audited consolidated financial statements, maintaining a minimum modified interest coverage ratio, a minimum modified current ratio, a maximum modified leverage ratio, and a minimum unencumbered cash balance, in each case, tested quarterly. The Company was in compliance with all debt covenants as of March 31, 2024.
(5)Convertible senior notes due 2026 (the “2026 Notes”) under this category with an outstanding balance of $194.5 million as of March 31, 2024 will not bear regular interest, and the principal amount of the 2026 Notes will not accrete. The 2026 Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the 2026 Notes are not freely tradeable as required by the indenture. The 2026 Notes will mature on February 1, 2026, unless earlier repurchased by the Company, redeemed by the Company or converted pursuant to their terms. The initial conversion rate of the Notes is 8.4807 shares of the Company’s common stock, par value $0.0001 per share, per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $117.91 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or an issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2026 Notes in connection with such make-whole fundamental change or notice of redemption. The debt discount recorded on the 2026 Notes is being amortized to interest expense at an effective interest rate of 0.57%. As of March 31, 2024, $7.1 million of the debt discount was amortized to interest expense inception to date. In connection with the offering of the 2026 Notes, the Company entered into privately negotiated capped call transactions (the “2026 Capped Calls”) with certain of the initial purchasers and/or their respective affiliates at a cost of approximately $28.0 million. The 2026 Capped Calls are classified as equity and were recorded to additional paid-in-capital within stockholders’ equity as of March 31, 2021. The 2026 Capped Calls each have an initial strike price of approximately $117.91 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The 2026 Capped Calls have initial cap prices of $157.22 per share. The 2026 Capped Calls cover, subject to anti-dilution adjustments, approximately 3.4 million shares of common stock. The 2026 Capped Calls are expected generally to reduce the potential dilution to the common stock upon any conversion of 2026 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2026 Notes, as the case may be, in the event the market price per share of common stock, as measured under the 2026 Capped Calls, is greater than the strike price of the 2026 Capped Call, with such offset subject to a cap. If, however, the market price per share of the common stock, as measured under the 2026 Capped Calls, exceeds the cap price of the 2026 Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price. The final components of the 2026 Capped Calls are scheduled to expire on January 29, 2026. None of the conversion criteria has been met as of March 31, 2024.
22


(6)Convertible senior notes due 2030 (the “2030 Notes” and, together with the 2026 Notes, the “Notes”) under this category with an outstanding balance of $483.2 million as of March 31, 2024 will bear regular interest at 4.00% per annum, and the principal amount of the 2030 Notes will not accrete. The 2030 Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the indenture or if the 2030 Notes are not freely tradeable as required by the indenture. The 2030 Notes will mature on March 1, 2030, unless repurchased by the Company, redeemed by the Company or converted pursuant to their terms prior to maturity. The initial conversion rate of the 2030 Notes is 61.3704 shares of the Company’s common stock, par value $0.0001 per share, per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of approximately $16.29 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or an issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2030 Notes in connection with such make-whole fundamental change or notice of redemption. The debt discount recorded on the 2030 Notes is being amortized to interest expense at an effective interest rate of 4.51%. As of March 31, 2024, $0.2 million of the debt discount was amortized to interest expense inception to date. In connection with the offering of the 2030 Notes, the Company entered into privately negotiated capped call transactions (the “2030 Capped Calls”) with certain of the initial purchasers and/or their respective affiliates at a cost of approximately $38.4 million. The 2030 Capped Calls are classified as equity and were recorded to additional paid-in-capital within stockholders’ equity as of March 31, 2024. The 2030 Capped Calls each have an initial strike price of approximately $16.29 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2030 Notes. The 2030 Capped Calls have initial cap prices of $22.37 per share. The 2030 Capped Calls cover, subject to anti-dilution adjustments, approximately 29.7 million shares of common stock. The 2030 Capped Calls are expected generally to reduce the potential dilution to the common stock upon any conversion of 2030 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2030 Notes, as the case may be, in the event the market price per share of Common Stock, as measured under the 2030 Capped Calls, is greater than the strike price of the 2030 Capped Call, with such offset subject to a cap. If, however, the market price per share of the common stock, as measured under the 2030 Capped Calls, exceeds the cap price of the 2030 Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price. The final components of the 2030 Capped Calls are scheduled to expire on February 27, 2030. None of the conversion criteria has been met as of March 31, 2024.
(7)Certain loans under this category are part of project equity transactions.
(8)Pursuant to the terms of the aggregation facilities within this category the Company may draw up to an aggregate principal amount of $2.7 billion in revolver borrowings depending on the available borrowing base at the time.
(9)Loans under this category with a fixed rate had a total outstanding balance of $907.8 million as of March 31, 2024.
(10)A loan under this category with an outstanding balance of $143.7 million as of March 31, 2024 contains a put option that can be exercised beginning in 2036 that would require the Company to pay off the entire loan on November 30, 2037.
(11)Loans under this category with a floating rate have a total outstanding balance of $468.5 million as of March 31, 2024.


23


Senior and Subordinated Debt Facilities
Each of the Company’s senior and subordinated debt facilities contain customary covenants, including the requirement to maintain certain financial measurements and provide lender reporting. Each of the senior and subordinated debt facilities also contain certain provisions in the event of default that entitle lenders to take certain actions including acceleration of amounts due under the facilities and acquisition of membership interests and assets that are pledged to the lenders under the terms of the senior and subordinated debt facilities. The facilities are non-recourse to the Company and are secured by net cash flows from Customer Agreements or inventories less certain operating, maintenance and other expenses that are available to the borrower after distributions to tax equity investors, where applicable. Under the terms of these facilities, the Company’s subsidiaries pay interest and principal from the net cash flows available to the subsidiaries. The Company was in compliance with all debt covenants as of March 31, 2024.
Non-Recourse Financings
In connection with each of the Company’s non-recourse debt (including securitized loans), assets (consisting of membership interests in project companies that own photovoltaic systems and related Customer Agreements) were contributed by the Company to special purpose subsidiaries of the Company (each a “Non-Recourse Borrower”). Each of such financings contains customary covenants including the requirement to provide reporting to the indenture trustee or collateral agent and, if applicable, ratings agencies. Each of the financings also contains certain provisions which entitle the indenture trustee or collateral agent to take certain actions upon the occurrence of an event of default, including acceleration of amounts due under the facilities and the foreclosure on the assets of the Non-Recourse Borrower that are pledged to the lenders under the terms thereof. The facilities are non-recourse to the Company and are secured by first priority security interests by each Non-Recourse Borrower in favor of the indenture trustee or collateral agent in all of the Non-Recourse Borrower’s assets including the cash flows from Customer Agreements which are available to each Non-Recourse Borrower after giving effect to certain operating, maintenance and other expenses and, where applicable, distributions to tax equity investors. As a result of such security interests, the assets of each Non-Recourse Borrower are not available to the creditors of the Company unless and until distributions from such entities are made to the Company as permitted under the applicable facility documentation. Under the terms of these financings, each Non-Recourse Borrower pays interest and principal from such net cash flows. The Company was in compliance with all debt covenants as of March 31, 2024.

Note 9. Derivatives
Interest Rate Swaps
The Company uses interest rate swaps to hedge variable interest payments due on certain of its term loans and aggregation facility. These swaps allow the Company to incur fixed interest rates on these loans and receive payments based on variable interest rates with the swap counterparty based on SOFR (daily, one month, three month) on the notional amounts over the life of the swaps. In the second quarter of 2023, the Company entered into bilateral agreements with its swap counterparties to transition the remaining portion of its swaps to SOFR. The Company made various elections under FASB ASC Topic 848, Reference Rate Reform, related to changes in critical terms of the hedging relationships due to reference rate reform to not result in a de-designation of these hedging relationships. As of September 2023, all of the Company’s interest rate swap agreements were indexed to SOFR. In December 2023, the Company started using interest rate swaptions to protect against adverse fluctuations in interest rates prior to expected future draws on the Company’s floating-rate facilities, at which point the Company enters into long-term interest rate hedges.
24


The interest rate swaps have been designated as cash flow hedges. The credit risk adjustment associated with these swaps is the risk of non-performance by the counterparties to the contracts. In the three months ended March 31, 2024, the hedge relationships on the Company’s interest rate swaps have been assessed as highly effective as the quarterly assessment performed determined changes in cash flows of the derivative instruments have been highly effective in offsetting the changes in the cash flows of the hedged items, are expected to be highly effective in the future and the critical terms of the interest rate swaps match the critical terms of the underlying forecasted hedged transactions. Accordingly, changes in the fair value of these derivatives are recorded as a component of accumulated other comprehensive income, net of income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings, and are included in interest expense, net in the Company’s statements of operations, in the period that the hedged forecasted transactions affect earnings. To the extent that the hedge relationships are not effective, changes in the fair value of these derivatives are recorded in other expenses, net in the Company’s statements of operations on a prospective basis.
The Company’s master netting and other similar arrangements allow net settlements under certain conditions. When those conditions are met, the Company presents derivatives at net fair value. As of March 31, 2024, the information related to these offsetting arrangements were as follows (in thousands):
Instrument DescriptionGross Amounts of Recognized Assets / LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet
Notional Amount (1) (2)
Assets:
Derivatives designated as hedging instruments$123,808 $(4)$123,804 $1,729,598 
Derivatives not designated as hedging instruments46,080 (6,851)39,229 1,784,895 
Total derivative assets$169,888 $(6,855)$163,033 $3,514,493 
Liabilities:
Derivatives designated as hedging instruments$(3)$4 $1 $ 
Derivatives not designated as hedging instruments(22,400)6,851 (15,549)546,860 
Total derivative liabilities$(22,403)$6,855 $(15,548)$546,860 
Total$147,485 $— $147,485 $4,061,353 

(1)    Comprised of 73 interest rate swaps which effectively fix the SOFR portion of interest rates on outstanding balances of certain loans under the senior and securitized sections of the debt footnote table (see Note 8, Indebtedness) at 0.31% to 4.53% per annum. These swaps mature from April 30, 2024 to January 31, 2043.

(2)    Comprised of 12 interest rate swaptions which effectively fix the SOFR portion of interest rates on future outstanding balances of certain loans under the senior revolving section of the debt footnote table (see Note 8, Indebtedness) at 3.81% to 4.13% per annum. These swaptions expire from April 8, 2024 to June 7, 2024 with potential underlying swaps maturing from July 31, 2042 to October 31, 2042.
25


As of December 31, 2023, the information related to these offsetting arrangements were as follows (in thousands):
Instrument DescriptionGross Amounts of Recognized Assets / LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Amounts of Assets / Liabilities Included in the Consolidated Balance SheetNotional Amount
Assets:
Derivatives designated as hedging instruments$97,321 $(5)$97,316 $1,416,686 
Derivatives not designated as hedging instruments35,413 (5,246)30,167 1,695,495 
Total derivative assets$132,734 $(5,251)$127,483 $3,112,181 
Liabilities:
Derivatives designated as hedging instruments(5,963)5 (5,958)324,042 
Derivatives not designated as hedging instruments(54,438)5,246 (49,192)809,785 
Total derivative liabilities$(60,401)$5,251 $(55,150)$1,133,827 
Total$72,333 $— $72,333 $4,246,008 
The (gains) losses on derivatives designated as cash flow hedges recognized into OCI, before tax effect, consisted of the following (in thousands):
Three months ended March 31,
20242023
Derivatives designated as cash flow hedges:
   Interest rate swaps$(42,987)$38,027 
The (gains) losses on derivatives financial instruments recognized into the consolidated statements of operations, before tax effect, consisted of the following (in thousands):
Three months ended March 31,
20242023
Interest expense, netOther expense, netInterest expense, netOther expense, net
Derivatives designated as cash flow hedges:
   Interest rate swaps:
      (Gains) losses reclassified from Accumulated other comprehensive income (“AOCI”) into income
$(10,131)$ $(7,039)$ 
Derivatives not designated as cash flow hedges:
   Interest rate swaps:
      (Gains) losses recognized into income
 (60,501) 25,050 
         Total (gains) losses$(10,131)$(60,501)$(7,039)$25,050 
26


All amounts in AOCI in the consolidated statements of redeemable noncontrolling interests and equity relate to derivatives, refer to the consolidated statements of comprehensive income (loss). The net gain (loss) on derivatives includes the tax effect of $0.0 million and $9.5 million for the three months ended March 31, 2024 and 2023, respectively.
During the next 12 months, the Company expects to reclassify $30.7 million of net gains on derivative instruments from accumulated other comprehensive income to earnings. There were 49 undesignated derivative instruments recorded by the Company as of March 31, 2024.

Note 10. Pass-Through Financing Obligations

The Company’s pass-through financing obligations (“Financing Obligations”) arise when the Company leases solar energy systems to Fund investors who are considered commercial customers under a master lease agreement, and these investors in turn are assigned the Customer Agreements with customers. The Company receives all of the value attributable to the accelerated tax depreciation and some or all of the value attributable to the other incentives. Given the assignment of operating cash flows, these arrangements are accounted for as Financing Obligations. The Company also sells the rights and related value attributable to the Commercial ITC to these investors.
Under these Financing Obligation arrangements, wholly owned subsidiaries of the Company finance the cost of solar energy systems with investors for an initial term of 22 years, and one Fund for 7 years. The solar energy systems are subject to Customer Agreements with an initial term of typically 20 or 25 years that automatically renew annually or for a term of five years. These solar energy systems are reported under the line item solar energy systems, net in the consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the cost of the solar energy systems placed in service under the Financing Obligation arrangements was $480.0 million and $692.3 million, respectively. The accumulated depreciation related to these assets as of March 31, 2024 and December 31, 2023 was $118.6 million and $191.5 million, respectively.
The investors make a series of large up-front payments and, in certain cases, subsequent smaller quarterly payments (lease payments) to the subsidiaries of the Company. The Company accounts for the payments received from the investors under the Financing Obligation arrangements as borrowings by recording the proceeds received as Financing Obligations on its consolidated balance sheets, and cash provided by financing activities in its consolidated statements of cash flows. These Financing Obligations are reduced over a period of approximately 22 years, or over 7 years in the case of one Fund, by customer payments under the Customer Agreements, and proceeds from the contracted resale of SRECs as they are received by the investor. In addition, funds paid for the Commercial ITC value upfront are initially recorded as a refund liability and recognized as revenue as the associated solar energy system reaches PTO. The Commercial ITC value is reflected in cash provided by operations on the consolidated statements of cash flows. The Company accounts for the Customer Agreements, as well as the resale of SRECs consistent with the Company’s revenue recognition accounting policies as described in Note 2, Summary of Significant Accounting Policies.
Interest is calculated on the Financing Obligations using the effective interest rate method. The effective interest rate, which is adjusted on a prospective basis, is the interest rate that equates the present value of the estimated cash amounts to be received by the investor over the lease term with the present value of the cash amounts paid by the investor to the Company, adjusted for amounts received by the investor. The Financing Obligations are nonrecourse once the associated assets have been placed in service and all the contractual arrangements have been assigned to the investor.
Under the majority of the Financing Obligations, the investor has a right to extend its right to receive cash flows from the customers beyond the initial term in certain circumstances. Depending on the arrangement, the Company has the option to settle the outstanding Financing Obligation on the ninth or eleventh anniversary of the Fund inception at a price equal to the higher of (a) the fair value of future remaining cash flows or (b) the amount that would result in the investor earning their targeted return. In several of these Financing Obligations, the investor has an option to require repayment of the entire outstanding balance on the tenth anniversary of the Fund inception at a price equal to the fair value of the future remaining cash flows.
Under the majority of the Financing Obligations, the Company is responsible for services such as warranty support, accounting, lease servicing and performance reporting to customers. As part of the warranty and
27


performance guarantee with the customers in applicable Funds, the Company guarantees certain specified minimum annual solar energy production output for the solar energy systems leased to the customers, which the Company accounts for as disclosed in Note 2, Summary of Significant Accounting Policies.

Note 11. VIE Arrangements
The Company consolidated various VIEs at March 31, 2024 and December 31, 2023. The carrying amounts and classification of the VIEs’ assets and liabilities included in the consolidated balance sheets are as follows (in thousands):
March 31, 2024December 31, 2023
Assets
Current assets
Cash$207,883 $254,522 
Restricted cash40,146 48,169 
Accounts receivable, net94,176 76,249 
Inventories119,803 150,065 
Prepaid expenses and other current assets209,140 161,414 
Total current assets671,148 690,419 
Solar energy systems, net10,871,862 10,469,093 
Other assets430,287 379,028 
Total assets$11,973,297 $11,538,540 
Liabilities
Current liabilities
Accounts payable$6,581 $12,187 
Distributions payable to noncontrolling interests and redeemable noncontrolling interests
34,016 35,181 
Accrued expenses and other liabilities231,302 185,766 
Deferred revenue, current portion57,132 54,103 
Non-recourse debt, current portion217,075 270,460 
Total current liabilities546,106 557,697 
Deferred revenue, net of current portion697,603 654,310 
Non-recourse debt, net of current portion1,172,552 1,189,161 
Other liabilities17,592 16,816 
Total liabilities$2,433,853 $2,417,984 
The Company holds certain variable interests in nonconsolidated VIEs established as a result of four pass-through Fund arrangements as further explained in Note 10, Pass-Through Financing Obligations. The Company does not have material exposure to losses as a result of its involvement with the VIEs in excess of the amount of the pass-through financing obligation recorded in the Company’s consolidated financial statements. The Company is not considered the primary beneficiary of these VIEs.

Note 12. Redeemable Noncontrolling Interests
During certain specified periods of time, noncontrolling interests in certain funding arrangements have the right to put all of their membership interests to the Company. During a specific period of time, the Company has the right to call all membership units of the related redeemable noncontrolling interests.


28


Note 13. Stock-Based Compensation
Stock Options
The following table summarizes the activity for all stock options under all of the Company’s equity incentive plans for the three months ended March 31, 2024 (shares and aggregate intrinsic value in thousands):
Number of OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual LifeAggregate Intrinsic Value
Outstanding at December 31, 20234,243 $17.19 4.85$31,762 
Granted  
Exercised(163)5.95 
Canceled(12)29.48 
Outstanding at March 31, 20244,068 $17.60 4.76$12,817 
Options vested and exercisable at March 31, 20243,544 $15.31 4.31$12,817 
Restricted Stock Units
The following table summarizes the activity for all restricted stock units (“RSUs”) under all of the Company’s equity incentive plans for the three months ended March 31, 2024 (shares in thousands):
Number of AwardsWeighted Average Grant Date Fair Value
Unvested balance at December 31, 20238,449 $22.16 
Granted2,615 16.62 
Issued(1,164)23.38 
Canceled / forfeited(362)20.94 
Unvested balance at March 31, 20249,538 $20.18 
Warrants for Strategic Partners

The Company has issued warrants for up to 846,943 shares of its common stock to certain strategic partners (calculated using the respective quarter of grant’s closing stock price). The exercise price of each warrant is $0.01 per share, and 13,939 warrants were exercised during the three months ended March 31, 2024. There were 15,939 warrants exercised during the three months ended March 31, 2023. The Company recognized stock-based compensation expense of nil and $1.1 million during the three months ended March 31, 2024 and 2023, respectively, under performance and time-based warrants.
Employee Stock Purchase Plan

Under the Company’s 2015 Employee Stock Purchase Plan (“ESPP”), as amended, eligible employees are offered shares bi-annually through a 24-month offering period with six-month purchase periods. Each purchase period begins on the first trading day on or after May 15 and November 15 of each year. Employees may purchase a limited number of shares of the Company’s common stock via regular payroll deductions at a discount of 15% of the lower of the fair market value of the Company’s common stock (i) on the first trading date of each offering period or (ii) on the exercise date. Employees may deduct up to 15% of payroll, with a cap of $25,000 of fair market value of the Company’s common stock in any calendar year and 10,000 shares of the Company’s common stock per employee per purchase period.
29


Stock-Based Compensation Expense
The Company recognized stock-based compensation expense, including ESPP expenses, in the consolidated statements of operations as follows (in thousands):
Three Months Ended March 31,
20242023
Cost of customer agreements and incentives$1,946 $1,841 
Cost of solar energy systems and product sales
554 1,768 
Sales and marketing15,175 14,877 
Research and development2,612 442 
General and administration8,582 9,338 
Total$28,869 $28,266 
During the three months ended March 31, 2024 and 2023, stock-based compensation expense capitalized to solar energy systems, net in the Company’s consolidated balance sheets was $2.7 million and $2.3 million, respectively.


Note 14. Income Taxes    

The income tax rate for the three months ended March 31, 2024 and 2023 was 0.8% and 15.1%, respectively. The differences between the actual consolidated effective income tax rate and the U.S. federal statutory rate were primarily attributable to the allocation of losses on noncontrolling interests and income tax expense related to the valuation allowance.

The Company sells solar energy systems to investment Funds. As the investment Funds are consolidated by the Company, the gain on the sale of the assets has been eliminated in the consolidated financial statements, however gains on sale are recognized for tax purposes and the tax effects of which, both current and deferred, are included in the Company’s income tax provision.

Note 15. Commitments and Contingencies
Letters of Credit
As of March 31, 2024 and December 31, 2023, the Company had $38.5 million and $37.0 million, respectively, of unused letters of credit outstanding, which each carry fees of 0.50% - 3.25% per annum and 0.50% - 3.25% per annum, respectively.
Guarantees
Certain tax equity funds and debt facilities require the Company to maintain an aggregate amount of $35.0 million of unencumbered cash and cash equivalents at the end of each month.
Purchase Commitment
The Company entered into purchase commitments, which have the ability to be canceled without significant penalties, with multiple suppliers to purchase $280.4 million of photovoltaic modules, inverters and batteries by the end of the first quarter of 2025.
30


Warranty Accrual
The Company accrues warranty costs when revenue is recognized for solar energy systems sales, based on the estimated future costs of meeting its warranty obligations. Warranty costs primarily consist of replacement costs for supplies and labor costs for service personnel since warranties for equipment and materials are covered by the original manufacturer’s warranty (other than a small deductible in certain cases). As such, the warranty reserve is immaterial in all periods presented. The Company makes and revises these estimates based on the number of solar energy systems under warranty, the Company’s historical experience with warranty claims, assumptions on warranty claims to occur over a systems’ warranty period and the Company’s estimated replacement costs. A warranty is provided for solar energy systems sold. However, for the solar energ