Sunrun’s third quarter was marked by strong top-line growth, with management highlighting cost efficiencies and a rapid increase in storage adoption as key contributors. Despite exceeding Wall Street’s revenue expectations, the market reacted negatively, reflecting concerns over lower-than-expected GAAP earnings. CEO Mary Powell described the quarter as one where Sunrun “delivered higher unit margins and considerably more cash generation,” attributing performance to disciplined execution and a focus on storage-first strategies. Management acknowledged that while profitability improved, increased battery hardware and installation costs pressured margins.
Is now the time to buy RUN? Find out in our full research report (it’s free for active Edge members).
Sunrun (RUN) Q3 CY2025 Highlights:
- Revenue: $724.6 million vs analyst estimates of $592 million (34.9% year-on-year growth, 22.4% beat)
- Adjusted EPS: $0.06 vs analyst expectations of $0.12 (48.7% miss)
- Adjusted EBITDA: $185.2 million vs analyst estimates of $74.77 million (25.6% margin, significant beat)
- Operating Margin: 0.5%, up from -23.8% in the same quarter last year
- Customers: 1.14 million, up from 1.11 million in the previous quarter
- Annual Recurring Revenue: $1.86 billion vs analyst estimates of $1.80 billion (22.3% year-on-year growth, 3.3% beat)
- Market Capitalization: $4.51 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Sunrun’s Q3 Earnings Call
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Brian Lee (Goldman Sachs) asked about the new asset monetization structure’s impact on cash generation and GAAP reporting. CFO Danny Abajian explained the shift would show more revenue upfront and partially simplify financials, with long-term net cash generation unaffected.
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Julien Dumoulin-Smith (Jefferies) pressed CEO Mary Powell on volume outlook for 2026 and beyond. Powell reiterated the focus on margins and recurring customer value, declining to guide specifically on volume but emphasizing share gains and disciplined growth.
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Julien Dumoulin-Smith (Jefferies) also questioned the competitive threat of prepaid solar leases. President Paul Dickson responded that such models may suit niche segments but are not seen as a major threat to Sunrun’s core business, citing higher complexity and less favorable economics.
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Ameet Thakkar (BMO Capital Markets) sought clarification on whether Q3 cash generation would have been negative absent the new asset sale structure. Abajian clarified that the transaction was complementary and would not have materially altered net cash generation under previous methods.
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Vikram Bagri (Citi) inquired about declining G&A expenses per customer and the sustainability of platform services margins. Abajian attributed margin improvement to operating leverage, higher value storage sales, and cost discipline, expecting similar trends to continue.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be monitoring (1) the continued ramp of storage attachment rates and Flex product adoption, (2) the execution and impact of the new asset monetization strategy on cash flows and profitability, and (3) how Sunrun manages cost pressures amid shifting supply chain and policy incentives. The company’s ability to expand grid service programs and recurring revenue streams will also be key to tracking progress against long-term strategic goals.
Sunrun currently trades at $19.44, down from $20.37 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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