SolarCity dims 2016 installation guidance again, a week before Tesla vote

SolarCity, the largest US rooftop PV installer, is making substantial progress in its planned shift to selling more PV systems outright rather than leasing them out to customers, giving a boost to its third-quarter results.

Like many companies in the challenged solar market, SolarCity is shifting its immediate tactics to emphasise cash flow and nearer-term profits – which for a rooftop solar installer means selling more systems for cash as opposed to signing long-term leases or PPAs with homeowners that pay out over many years.

SolarCity, whose proposed acquisition by Tesla remains uncertain, had forecast third-quarter revenue of $34m-$39m from system sales – but the figure came in at a much higher $58m.

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System sales for cash or through SolarCity’s new loan product made up 10% of  the 187MW the company installed in the third quarter, far higher than in the past – and accounted for 23% of all new residential bookings made in the quarter. 

Critically, the gross margin SolarCity makes on cash sales also improved substantially during the quarter.

“We expect loans and system sales to continue to grow into a larger portion of our business through 2016 and into 2017,” chief executive Lyndon Rive wrote in a shareholder letter.

Total quarterly revenues of $201m were ahead of expectations, as was SolarCity's loss per share of $2.27 (on a non-GAAP basis).

SolarCity reported a net loss of $225.2m for the quarter, down modestly from a $233.8m loss in the same quarter last year.

For all its cost-cutting efforts, SolarCity continues to struggle with a heavy debt burden of $1.36bn that is still growing, albeit at a much slower pace than it did in the company’s high-growth phase in 2014-15. 

SolarCity also lowered its full-year installation guidance yet again, saying it now expects to put up 900MW in 2016 – down from the 900-1,000MW outlook it issued in August. The company, the largest employer in the US solar industry, has lowered its guidance repeatedly throughout the year.

SolarCity did not hold an analyst call regarding its results, citing the looming shareholder vote on 17 November that will decide whether Tesla’s acquisition goes through.

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The two companies have taken a number of steps to whip up support for the acquisition, including the recent launch of SolarCity's new solar tile product in Los Angeles.

Tesla’s offer – based on its own share price – is currently worth about $20.17 per share of SolarCity. SolarCity shares fell more than 3% on Thursday morning following its results, giving it a stock price of $19.36 – meaning investors remain sceptical the acquisition will go through.