Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GAAP gross margins improved to 28% and non-GAAP gross margins to 40%, a significant year-over-year increase.
- Contracted annual recurring revenue (CARR) increased by 20% compared to Q2 2023.
- Operating cash flow improved by $154 million year-over-year, despite being negative $12 million this quarter.
- Significant progress in software activations and product launches, driving operating leverage and improved cash flow generation.
- Deployment of over 300 megawatt hours of storage assets in the quarter, contributing to approximately $3 million of annual recurring revenue (ARR).
Negative Points
- Revenue for the second quarter was $34 million, substantially lower than expected due to project financing delays and extended interconnection approvals.
- Bookings in the second quarter were only $25 million, impacted by delays in customer project financings.
- Operating cash flow remained negative at $12 million for the quarter.
- Backlog declined by approximately $61 million quarter-over-quarter.
- Revised guidance for full-year revenue to $200 million to $270 million, down from previous expectations.
Q & A Highlights
Q: Can you share more about the bottleneck occurring with USDA financing and provide visibility on when this financing might get unlocked? Also, does the more than $1 billion of projects delayed mean that more than $1 billion of your $1.6 billion backlog is dependent on this financing?
A: Many of the delayed projects are not in the backlog, so the $1 billion is incremental to the $1.6 billion backlog. The USDA financing bottleneck is due to the need for thorough reviews and approvals to ensure projects are viable and compliant. Less than a third of the current backlog is dependent on USDA financing.
Q: How long are the interconnection delays, and how much of the guidance reduction is due to these delays?
A: Interconnection approvals are extending between 18 and 24 months in markets like Texas. The guidance reduction is significantly impacted by a few large projects facing delays due to high-voltage transformer availability and interconnection issues.
Q: Are any of the SSVEC projects using the remaining hardware under the previously disclosed $50 million guarantee?
A: The SSVEC projects are using Sun Growth equipment, not part of the $50 million guarantee. Other DevCo projects, typically around 10 megawatt hours, are expected to use the excess hardware.
Q: What are the unique drivers for demand in the solar business, and are there specific countries in Europe you are focusing on?
A: The installed base and PowerTrack platform are compelling to customers, driving growth in Europe and Japan. Specific countries include Hungary, with broad-based momentum expected in these markets.
Q: For storage opportunities in Europe, are they driven by customers from the solar sector or more broadly?
A: The European team primarily focuses on solar, but there is increasing interest from existing solar customers and new clients in expanding to storage solutions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
