RUN Q2 Deep Dive: Storage Attachments, Cost Discipline, and Policy Tailwinds Drive Outperformance

Residential solar energy company Sunrun (NASDAQ:RUN) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 8.7% year on year to $569.3 million. Its non-GAAP profit of $1.07 per share was significantly above analysts’ consensus estimates.

Is now the time to buy RUN? Find out in our full research report (it’s free).

StockStory’s Take

Sunrun’s second quarter results were met with a significant positive market reaction, reflecting the company’s performance above Wall Street’s expectations. Management credited the outperformance to the rapid increase in storage attachment rates, which reached an all-time high of 70% for new customers, and continued cost reduction efforts across installation and customer acquisition. CEO Mary Powell highlighted that Sunrun “generated this record profitability by growing the attachment rate of our storage offerings... and by driving significant cost efficiencies and performance improvements across the business.”

Looking ahead, Sunrun’s guidance is shaped by a combination of policy dynamics, storage-led product strategy, and ongoing cost efficiencies. Management is focused on capturing incremental value from grid services and expects ongoing growth in storage deployments to further enhance recurring revenue. CFO Danny Abajian emphasized, “We are planning for a step down in the solar portion of the tax credit in 2028, but we are taking actions to lengthen our runway,” citing safe harbor strategies and a focus on margin growth rather than volume as key priorities.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to higher storage attachment rates, improved operational efficiency, and favorable policy positioning, with a focus on long-term recurring value generation.

• Record storage adoption: The attachment rate for battery storage reached 70% of new customers, a company high, which management identified as a major driver of both higher subscriber value and growing grid services revenue.
• Cost reduction initiatives: Creation costs per subscriber declined, driven by lower non-equipment expenses such as labor and overhead. Management noted that these efforts led to a 17 percentage point margin improvement compared to the prior year.
• Grid services expansion: Sunrun’s enrolled home-to-grid (also known as virtual power plant) programs saw 300% year-over-year growth in participants, with over 71,000 customers providing 354 megawatts of power capacity to the grid. Management sees this as a key differentiator and future revenue stream.
• Safe harbor and tax strategy: The company actively pursued safe harbor strategies for the investment tax credit (ITC), securing several years’ worth of eligible equipment to extend the benefit period amidst changing federal incentives. Management believes this positions Sunrun well for potential policy shifts.
• Capital market access: Sunrun maintained robust access to nonrecourse debt and tax equity financing, with $1.7 billion in tax equity raised year-to-date and strong execution in asset-backed securitizations, supporting both growth and balance sheet health.

Drivers of Future Performance

Sunrun’s outlook is shaped by continued growth in storage deployments, evolving U.S. energy policy, and disciplined cost management.

• Storage and grid services focus: Management expects further growth in battery storage deployments and increased participation in grid services programs to drive recurring revenue and enhance customer value, aiming for 10 gigawatt hours of dispatchable energy by 2029.
• Policy and tax credit changes: The planned sunset of the homeowner investment tax credit (25D) in 2025 and the future step-down of the commercial solar ITC pose uncertainties, but Sunrun’s safe harbor actions and focus on commercial subscription models are intended to mitigate these headwinds.
• Cost efficiency and margin discipline: Management intends to prioritize margin expansion over volume growth, leveraging AI-driven operational improvements and sustained reductions in customer acquisition and servicing costs as a foundation for future profitability.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) ongoing growth in storage attachment rates and grid services enrollment, (2) execution of safe harbor strategies and their impact on tax credit eligibility, and (3) continued progress in cost reduction and margin expansion. Developments in federal and state energy policy, as well as the pace of recurring revenue growth from grid services, will be additional key factors shaping Sunrun’s trajectory.

Sunrun currently trades at $11.62, up from $9.01 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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