Sunrun Inc (RUN) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Second Quarter 2017 Sunrun Inc.

Earnings Conference Call.

(Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Patrick Jobin, Vice President of Investor Relations.

You may begin.

Thank you, operator, and thank you to those on the call for joining us today.

Before we begin, please note that certain remarks we will make on this conference call constitute forward-looking statements.

Although we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially and adversely.

Please refer to the company's filings with the SEC for a more inclusive discussion of risks and other factors that may cause actual results to differ from projections made in any forward-looking statements.

Please also note, these statements are being made as of today, and we disclaim any obligation to update or revise them.

On the call today are Lynn Jurich, Sunrun's Co-Founder and CEO; Bob Komin, Sunrun's CFO; and Ed Fenster, Sunrun's Co-Founder and Executive Chairman.

The presentation today will use slides, which are available on our website at investors.sunrun.com.

And now let me turn the call over to Lynn.

Thanks, Patrick.

We are pleased to share with you Sunrun's second quarter financial and operating results, along with progress against our priorities for 2017.

In the second quarter, we deployed 76 megawatts, generating $74 million of NPV, up 56% year-over-year.

We gained market share and increased unit economics while maintaining our cash position above $200 million for the eighth consecutive quarter, a huge thank you to our customers and our employees for building the industry's most valuable and satisfied customer base and delivering the financial and operating results to prove it.

We have now surpassed 1 gigawatt of deployed systems.

We are most proud of what this means for our customers and deployment.

We've helped families save over $150 million on their electric bills, proving that it doesn't need to be inconvenient to help defeat extreme weather and climate change.

Our strong financial and operating results in the quarter were complemented by progress against our long-term strategic priorities and supported by an increasingly constructive regulatory environment.

Turning to Slide 6 now.

Sunrun is focused on building long-term customer relationships and modernizing our inefficient and dirty trillion-dollar energy infrastructure.

We can both help our customers save money and better manage their energy while lowering prices for the entire electric system.

It's a simple concept: using the existing infrastructure of rooftops and delivering power right where it's consumed is a more efficient model.

When you add batteries and the power of the Internet, you can build a more resilient, secure, dynamic and efficient system to benefit everyone.

This is starting to be realized faster than we expected.

The cost improvements and innovation are stunning.

As you know, we continue to innovate with BrightBox, the first zero-down solar plus storage as a service offering for residential customers.

Homeowners benefit from backup power during power outages and can optimize when they consume or export power to the grid.

We have received over 2,000 BrightBox orders, and installs are ramping nicely in Hawaii and California.

More states are just getting underway.

There is also a value proposition for the electric grid at large as these resources can provide energy when and where it is needed most.

Because our resources are located where power is consumed, they are at the most valuable locations on the grid and can improve stability through participation and capacity, energy and ancillary service markets.

We can solve local imbalances or acute congestion much more cost effectively than investing in centralized resources and transmission and distribution.

And because we have a decade building customer relationship and a large install base, we are well positioned to deliver products that meet the needs of both homeowners and the utilities operating the grid.

It is, in fact, this opportunity that we are exploring as part of our partnership with National Grid.

We recently welcomed an industry veteran from Advanced Microgrid Solutions, Audrey Lee, to help spearhead these initiatives as our Vice President of Grid Services.

And while we're still in the early phases of exploring monetization options, an initial analysis suggests that grid services could represent an additional 2,000 or more in net present value, on top of the 7,000 of value per customer today.

In support of this feature, we were successful in securing grid services opportunities in PG&E's DRAM program.

While the program itself is small, our fleet of over 1 gigawatt of capacity is massive and growing.

Over the last few months, we have also launched into 7 new geographies, nearly doubling our available market size and establishing the foundation for long-term growth.

We're particularly pleased to reenter Nevada after the state legislature unanimously approved the reinstatement of net metering.

The voice of consumer is strong and clear.

They want the ability to choose lower-cost, predictable and clean energy options.

While many viewed Nevada's 2015 action as precedent-setting, the reversal sets an even stronger precedent that consumer choice for rooftop solar will be protected and regulators that don't get it right the first time will correct.

Retail net metering, coupled with TOU rates and open-access grid service markets, is a sound and proven policy to encourage cost-effective modernization of our grid, even up to high levels of penetration of around 40%.

In fact, over the last 5 years, net metering has been protected or expanded 32x and only reduced 6x.

When NEM was reduced, it was often overturned when the full set of facts were appropriately evaluated.

Despite the media hype and well-funded lobbying efforts of many utilities, the adoption of distributed resources is the future.

The market opportunity ahead remains massive.

Residential energy sales is $175 billion annual market, and there are more than 61 million single-family owner-occupied homes in the U.S. We are just 2% penetrated today, but we know the housing stock and customer interest supports much higher adoption.

In Hawaii, for instance, where the value proposition was first evident, 38% of houses have solar, and adoption continues to grow.

I'll now turn the call over to Bob Komin, our CFO, to review Q2 performance in more detail and discuss guidance.

Thanks, Lynn.

In the second quarter, we exceeded our deployment guidance and made solid progress on our 2017 goals.

NPV was $1.10 per watt in Q2, resulting in aggregate NPV created of $74 million, representing 56% growth compared to the prior year.

We delivered strong NPV per watt in Q2 and a solid first half of the year that sets us up well to achieve our $1 per watt target for all of 2017.

NPV per watt can fluctuate from quarter-to-quarter given business mix, and Q2 was somewhat favorable.

We calculate NPV as project value less creation costs, so let's go through each of the components next.

Q2 project value of $4.47 per watt was $0.26 higher than Q1, principally due to the mix of business in the quarter.

As a reminder, project value is very sensitive to modest changes in geographic channel and tax equity fund mix.

We expect project value will continue to decline slightly over time, with cost declining more.

Although in the short run, there can be quarterly fluctuations.

Turning now to creation costs on Slide 11.

In Q2, total creation costs were $3.37 per watt, an improvement of $0.38 or 10% year-over-year.

Similar to project value, creation costs can fluctuate quarter-to-quarter due to changes in geographic and channel mix.

As a reminder, our cost stack is not directly comparable to those of peers because of our channel partner business.

Blended installation cost per watt, which includes both solar projects deployed by our channel partners as well as by Sunrun, improved by $0.10 or 4% year-over-year to $2.70 per watt.

Install costs for systems built by Sunrun, however, were $1.87 per watt, reflecting a $0.40 or 18% year-over-year improvement.

Sunrun's installation costs benefited from lower equipment costs this quarter as we worked through higher cost inventory.

We expect installation costs to remain roughly stable, owing to fluctuations in business mix as we remain on offense by investing in new geographies and grid services.

We also expect the attachment rate of storage to increase, which carries a higher per watt cost but also delivers higher NPV.

In Q2, our sales and marketing costs were $0.54 per watt, a 37% improvement from the prior year, primarily driven by channel mix and our focus on the most cost-effective customer acquisition channels.

Next, G&A cost per watt was $0.29, flat from Q1 and a $0.04 improvement from the prior year.

These costs remain largely flat for the last several quarters.

We expect to realize further operating leverage, with volume growth exceeding G&A cost increases over time, although there can be quarterly fluctuations.

Finally, when we calculate creation costs, we subtract the GAAP gross margin contribution realized from our platform services.

This includes our distribution, racking and lead generation businesses as well as solar systems we sell for cash or with a third-party loan.

We achieved platform services gross margin of $0.16 per watt, higher than Q1, due primarily to a slightly higher mix of solar system sales that have better gross margins.

In the second quarter, deployments increased 16% year-over-year to 76 megawatts, exceeding our guidance of 72 megawatts.

The strength was primarily attributable to an increase in our channel volumes.

The flexibility of our multichannel platform model continued to serve as well in the current market conditions.

As we've highlighted over the past year, we're seeing more opportunities that are favorable to work with partners while meeting our NPV and cash contribution goals.

We do not manage to a specific mix or volume target, we instead prioritize realization of NPV.

Our cash and third-party loan mix was 11% in Q2, slightly higher than Q1 but in line with recent levels and our outlook of low to mid-teens.

In Q2, our net bookings were 88 megawatts, an increase of 28% from the prior year.

As a reminder, bookings are calculated net of cancellations.

Turning now to our balance sheet.

Our liquidity position remains strong.

We ended Q2 with $211 million in unrestricted cash, the eighth consecutive quarter we've been above $200 million.

We believe we'll increase our cash balance by the end of the year.

Our primary objective is to maximize equity returns over the long run while optimizing for the most efficient capital structure, balanced with near-term cash generation.

We plan to continue to invest in ramping new geographies and further increasing our market share.

Our cash generation outlook excludes any strategic opportunities or accelerated market entries beyond our current plan.

Our primary objective is to optimize for the lowest long-term cost of capital, and we focus, first and foremost, on the best execution of this financing, which could impact the timing of our cash balance on a specific quarter and measurement date.

Moving on to guidance on Slide 11.

We remain confident on our growth trajectory with Q3 guidance of 88 megawatts, which reflects approximately 15% year-over-year growth for the first 3 quarters of 2017.

We're reiterating our guidance of 325 megawatts for 2017, reflecting a 15% growth rate year-over-year.

Our principal focus is generating approximately $1 of NPV per watt for the year.

We continue to believe we can generate approximately $290 million in aggregate NPV in 2017, which is about a 35% increase from the prior year.

Before I turn the call over to Ed, I wanted to share an update on the independent review that we asked the Audit Committee to launch in June following media claims about Sunrun's historical practices relating to the timing and processing of customer cancellations.

The Audit Committee completed its inquiry and determined that the claims in The Wall Street Journal report were unfounded.

Specifically, the committee concluded that: one, senior management did not instruct employees to hold back or delay the recording of customer cancellations; and two, representatives did not alter cancellation dates.

Based on its review, the Audit Committee expressed confidence in the company's current cancellation processes and did not recommend any changes.

Now let me turn it over to Ed.

Thanks, Bob.

Today, I want to touch on 3 items.

First, I will discuss gross and net earning asset figures for the quarter and how our use of cash equity with National Grid impacted these figures during the quarter.

Second, I'll report on what we see as a strong project finance environment generally.

And third, I'll provide an update on the Section 201 trade case and how Sunrun is positioned.

Turning first to our installed asset base.

We're pleased to report that as of June 30, net earning assets rose slightly to $1.1 billion, reflecting a 29% year-over-year increase.

Net earning assets totaled $10 per share.

As a reminder, net earning assets represent the present value of cash flows that Sunrun Inc.

expects to receive from our fleet of deployed solar systems after deducting our estimated operating and maintenance costs, project level debt service and distributions to cash equity and tax equity partners.

The use of cash equity capital, such as the National Grid partnership, increases our corporate cash balance compared to the use of just nonrecourse debt.

As I mentioned last call, growth in net earning assets slows as we utilize cash equity because the solar facilities in such partnerships are largely monetized upfront.

This quarter, we continue to contribute certain assets to the National Grid partnership, which resulted in high upfront monetization of those assets, within the range previously guided.

As a result, in the quarter, we generated approximately $20 million in restricted and unrestricted cash, offset by a final payment of $9 million for our 2015 acquisition of Clean Energy Experts, resulting in a net increase in total cash of about $11 million during the quarter.

We expect to be able to increase cash while adding to net earning assets between now and year-end.

Including executed term sheets, we have tax equity capacity into the second quarter of 2018 and back-leverage capacity into the fourth quarter.

We continue to see robust interest from tax equity providers and lenders in providing Sunrun additional capital.

We observed improving terms for back-leverage project debt and, in particular, nonrecourse subordinated or term loan B debt.

Nonrecourse term loan B debt may increasingly allow us to achieve much of the proceed benefits of cash equity while allowing us to maintain more flexibility and long-term upside as capital costs continue to fall.

At the same time, there's a growing market for cash equity.

Particularly as we further improve our development margins, we see nonrecourse fee loans or cash equity transactions as potentially part of our capital strategy.

While we have capacity remaining within the National Grid partnership, we continuously consider options to balance our goals of maximizing long-term equity returns, minimizing our capital costs and exposure to changes in base interest rates and providing attractive upfront cash flow dynamics.

I turn now to my final topic on Slide 14, the Suniva trade case.

Sunrun is actively involved in the case through the Solar Energy Industries Association and as a direct participant in the case.

A diverse group of unusual bedfellows, including the Heritage Foundation, The American Legislative Exchange Council, the Solar Energy Industries Association and many utilities have all taken actions in opposition of the petition.

American needs, and the President who's promised to provide, jobs that cannot be automated or exported and that create opportunity for all Americans.

The U.S. solar industry now employs more than 260,000 workers, up almost fourfold since 2010, who reside in thousands of communities across the country.

99% of U.S. solar jobs are outside of solar cell manufacturing.

As detailed on the slide, the procedural hurdles for the petitioners are real, and the opposing coalition is strong.

That said, we have module supply secured through 2017 and have already established frameworks for a large portion of 2018 volumes and terms that remain favorable for Sunrun.

We remain comfortable with our overall outlook on equipment cost reductions of about $0.15 by the end of the year.

I'll now turn the call back to Lynn for closing remarks.

Thanks, Ed.

It is truly amazing what we can do with technology in the sun.

The solar eclipse highlights just how bright the future will be.

The sun is one of the most reliable and predictable energy sources in the world.

Just think about it, at any given place on earth, the sun on average takes a break once every 300 to 400 years, and we know about it well in advance.

In contrast, our aging fossil fuel plants are riddled with unexpected outages, and our nuclear plants are being abandoned after years of delays and billions of dollars wasted.

We build clean power assets in as little as 1 day, on budget and capable of generating low-cost power within hours.

Operator, please open the line for questions.

(Operator Instructions) And our first question comes from Brian Lee of Goldman Sachs.

Maybe just first off on the cost stack, a housekeeping one.

Can you give us some sense of the puts and takes on the blended cost trajectory?

It was up a little bit quarter-on-quarter.

So curious, what was the mix of direct versus channel in Q2 versus Q1?

And then did you actually see an uptick in channel cost sequentially?

And if so, what were some of the drivers behind that?

Sure, Brian.

So first, as we've described in the past, we don't manage to a mix between the channel versus the direct.

We're very much focused market by market, channel by channel on generating the NPV target of $1 a watt.

And we're really pleased with the delivery of the $1.10.

In terms of the general trend in the mix, as we've talked about over the last couple of quarters, we have seen a slight increase in the percentage coming from the channel.

And in the quarter, that sustained.

So not materially different at all.

And so I think in terms of the go forward, again, we're confident with that $1 a watt of generation.

But again, that's the focus, not necessarily a specific cost target.

Okay.

Well, maybe just as a fellow-up to that.

Is it -- from a like-for-like standpoint, did you see any uptick in channel costs?

The reason I ask being curious if the channel for you is seeing any potential pricing impact from Section 201 and the trade case uncertainty.

So the channel costs are highly variable based on the geography.

And so it's really tricky to start to forecast any sort of same stores, sort of same-stores costs there -- in that numbers.

So I would caution against that.

No.

But to answer your question, we have not seen an increase in the price of those projects due to the trade case.

Okay, fair enough.

That's helpful.

On the -- Ed, you mentioned increasing developer margins when you were talking about some context for cash equity going forward.

Is there any way you can kind of quantify where you guys stand now on that metric, what a reasonable target might be and some of the drivers behind expansion in those margins?

And then, I guess, to round it off, how that factors into your cash equity, some financing trends as you think about that source of capital going forward.

I think, Brian, the -- we did see very strong expansion in the margin in the quarter.

We're pretty excited about that.

So if you just look at the deployment overall growth rate year-over-year, it was 16%.

But the actual aggregate NPV we're able to generate was growing at 56%, so pretty strong growth in the quarter.

We like where that NPV sits in terms of there's always a trade-off of how much you spend to acquire customers, but that's sort of natural margin in the industry.

Certainly, we are going to continue -- we do think that it's proving out that there are real strong entry barriers in this market.

And so we do expect to -- over a medium to a longer-term period of time expect to see real operating leverage in those numbers and real advantages accretive to us.

But for the remainder of the year, we're sticking with that $1 a watt guidance that we opened up the year with.

Okay, great.

Last one for me, and I'll pass it on.

Lynn, you started off the call speaking to Nevada, which has obviously been a positive development.

Can you maybe speak a little bit more to the traction you're seeing there, how quickly you're able to reengage the customer base and how additive it could be to volume this year or if maybe that's more of a 2018 story?

Sure, absolutely.

Yes, I think the short answer is it's more of a 2018 story.

And I would put that as all of the new market that we've expanded to this year.

We're excited to be on offense this year.

It's fun to play on offense.

And so as you know we expanded into 7 states, and -- but again, it takes a little while for those to ramp.

In Nevada, in particular, they're still working through some tariff things.

And so we think it sets a strong foundation for great growth in 2018 and beyond, but we don't expect it to materially impact any of the deployments this year.

And our next question comes from Colin Rusch of Oppenheimer.

Guys, you had a pretty impressive drop in the built costs -- or the Sunrun built cost, down $0.27 quarter-over-quarter.

Can you walk through a little bit of what the drivers were there and what we might expect as we go through the balance of the year?

So this is Bob.

We've talked about how we thought that we would be able to start to see improvement in equipment cost as we worked our way through the year.

The bulk of the improvement for us was due to lower equipment cost, which includes primarily module costs.

We think for the rest of the year, I think we've talked about 15% -- or $0.15 or so as the amount that we'd see in Sunrun kind of cost improvement.

We still think that, that's a reasonable goal for the year.

And as I said in my kind of messaging, the number can move based on our product mix.

And now that we've introduced storage, in particular, and also, to some extent, high-efficiency panels, they can cause the cost to go up.

But the NPV contribution from those products is also higher.

So as we kind of talk about our goals for NPV, we're looking at that and trying to stay above $1 in all of the product mix that we have.

And we think that we can still do that.

We don't focus just on the installed cost number.

Okay, great.

And then as you look at some of these new markets and the awareness of solar and education processes, you've gone through a long period of time where you've really educated a lot of customers.

Are you seeing any real changes as you move into these new markets in terms of awareness and the time to market and the time to really ramp and grow in some of these new markets?

It tends to be pretty local.

So yes, there's -- but the broader trend, I think, that we're seeing happen is that people are really waking up to climate change.

And so we're riding either 2 massive waves, trends -- mega trends, we think: one, which is just people paying attention to the fact that their weather is quite extreme; and secondly, the fact that we're starting to deliver real meaningful savings.

And so when you get into the market, both of those facts, I think really help you.

But generally, it's still a little bit of a story where people need to see their neighbors and communities adopting it for them to get comfortable with it.

And so I think it's not materially different.

Okay.

And then as a follow-on for me.

Just in terms of the preparedness of different geographies for these grid services, as you look at the installed base that you have, is that an opportunity right now with all of the installed base or a portion of it?

And how should we think about the cadence of that?

Yes, sure.

Right now it's very much driven by the policy landscape.

So if you think about it, the overarching storage value proposition has 2 value prop.

One is the backup power value prop, and there are a meaningful number of people who are willing to pay a little extra to have that backup power.

And you just look out at generator market or markets like that, and you can see 10% to 20% of homeowners having the appetite to spend $2,000 or $3,000, $4,000 for backup power, so you have that driving an attach rate -- that can drive an attach rate.

I think of that kind of, call it, 10% to 20% rate.

Then what really drives the saving proposition for the customer is time of use rates.

And so as you see those coming into play in California, in San Diego in particular, where there's a big differential between off-peak and on-peak, you're starting to see that the solar plus storage package actually is accretive to savings for the customer, even though it may -- it's more expensive.

And so we believe that a lot of regulators are looking to these type of time of use rates because it just makes sense.

Let's match the supply and demand appropriately.

And that's why the opportunity for storage become so significant because it really adds value to the whole system, but it will be dependent on how do we evolve rate structures, what happens to time of use rate structures.

So I think that's how it will play out.

I mean, right now, what we're excited about is these pilot programs that we're operating on with really proving to regulators that these -- our assets have real value, real capacity value to the whole system.

And so what that means is now we are entering a whole new market.

So not only is our residential electricity sales market $175 billion annual market, but utilities are set to spend $90 billion on infrastructure.

And if we can defer that, that's an entire new market that's available to us, so we're very excited about the promise of that.

And our next question comes from Vishal Shah of Deutsche Bank.

Just on the cost side, you mentioned your installation costs would remain flattish over the next couple of quarters.

I'm just curious as to what you're seeing in the industry prices.

The module prices have gone up by about 25% since this New York case is announced.

I understand that you had some high-cost inventory that helped you in Q2 in terms of work cost.

But how are you managing the price increases in the supply chain?

And is your cost guidance taking into account some of the price increases that you've seen in the market?

It's Ed.

I think that which giveth, taketh away.

So there have been periods where our contracting into the future has been helpful and there have been periods it's not been as helpful.

But it does reduce risk volatility overall.

And so we're in a position where we feel good about the remainder of 2017.

We've secured module supply definitely through '17 and have established frameworks with -- for a large portion of our 2018 volumes, the terms that remain favorable for us despite some of the noise in the market.

So I think we're comfortable overall with the outlook on equipment reductions.

Okay, great.

And your bookings were quite good in the second quarter, where, seasonally, I think Q3 tends to be a strong quarter from a bookings standpoint.

So should we -- your guidance assumes relatively flat shipments in fourth quarter.

I'm just curious as to what are some of the puts and takes on Q4 volumes, especially in light of stronger Q3?

Did you say -- Vishal, you said Q4.

I think where we're at is we feel really great that in the first half of the year, we think we've taken considerable share in the market versus where the competition is.

And I think we're reiterating that 15% growth for the entire year, and that's where we feel comfortable.

Okay.

So just one last question on the trade case.

Assuming -- so when you talk about the 2018 outlook with some of the framework agreements, discussions -- in an environment where the trade case goes away, what kind of pricing are you viewing in the marketplace?

I mean, is pricing going back to the low-30s, mid-30s that we saw in the first half of the year?

Or are we seeing a different pricing environment?

I mean, I think that the increase in demand that we've seen in 2017, in our view, is more of a pull forward of demand in the utility scale sector rather than an increase in overall demand levels.

And so you would potentially expect that in the absence of a tariff, you would see a decline in the spot pricing of modules in 2018.

However, we haven't really been purchasers of panels in the spot market because we hedge our exposure in that regard, venture into long-term contracts.

So I'm not sure I see a lot of volatility there, but I think you would expect a reduction in spot pricing if that's your question.

And our next question comes from Krish Sankar of Bank of America.

This is Chirag Odhav on for Krish.

I was just curious if you could comment a little more on how you're preparing for an outcome from the Suniva petition.

I know you just mentioned that module inventory through the rest of the year is pretty secured.

But was also just wondering, looking into 2018, if you could give more clarity on what you mean by favorable terms and how far in advance into 2018 you're able to secure pricing.

It's Ed.

So first, I do want to reiterate that the outcome of the trade case is uncertain.

And that if you, for instance, compare the case to the prior case with Chinese imports here, the petitioners had a much tougher case to prove and the commission itself must consider any impact on the downstream market, whereas in the previous instance, they were forbidden from considering impact on the downstream market.

So under the law, interestingly, kind of definitionally, there isn't supposed to be a material impact on downstream businesses such as Sunrun.

That said, when we talk about the module contracts that we have, and we said they're favorable, we certainly mean that in the context of the prices that we're currently paying and we feel comfortable about that.

And I would also reiterate that module prices are approximately 15% of the total cost stack for residential solar.

And if there were a tariff, that would be an increase in input price across the board to all competitors.

So we continue to remain optimistic, involved in the tariff case and are managing our risk.

I also don't want to over-rotate in any way on the topic.

(Operator Instructions) And our next question comes from Joseph Osha with JMP Securities.

I am not going to ask about 201, so there.

Listen, on storage, I just want to put this idea out there.

Obviously, right now, storage is sort of being coupled with solar to help owners take advantage of time-of-day pricing and stuff like this.

But I'm wondering whether the next step here is something like, say, what Stem is doing, where you start going out and aggregating that capacity and offering it as a service to somebody.

Is this part of the plan as your storage business grows?

Yes, absolutely.

And I think we believe we're well positioned.

Well, that's a lot of what the partnership with National Grid is envisioned to develop to and why we hired Audrey, who was one of the leaders in those area at Advanced Microgrid Solutions.

So absolutely, I think it's another reason why there will be a real entry barrier on this industry and that there will be real -- there will be partner share leaders like Sunrun because as it gets -- as there are monetization opportunities from aggregating their fleet, that's an event that's going to continue to accrue to the large players, with the large install base and we're -- and also the service model.

There's a lot of discussions here around this (inaudible).

We do believe that as it gets more complex and you really are the energy -- you're managing this, that this service model will be important.

And that's how this will be delivered.

So thanks for the question.

Okay.

Then to follow on then, it would be a logical jump maybe to imagine you all going to some commercial market opportunities where maybe there's not even solar, right, where you're just going in, having built this -- the cloud service model and figure out how to do all this and start going in and just doing storage?

I mean, is that possible?

I think it's certainly possible.

I mean, I think we're very much focused on -- we think there's so much runway in our existing business and our existing go-to-market strategy that we're really focused on that.

I mean, one of the things that's pretty cool about what we're building is that a lot of people will hassle us about the industry's customer acquisition costs are high.

But you know what that -- what goes along with that is that you really had a consultative sale with that customer and you have this -- we are setting up this long-term relationship.

And so one of the benefits of our current business is that we do get to have that relationship with the customer.

And so I think we are well positioned to potentially orient around the home other products and services to the home.

It could be something that we're well positioned to do.

So I think, again, oriented for us.

We're homeowner driven.

We're consumer driven.

That's our end market.

So it's really more that than sort of commercial business that we think has lower returns.

And this does conclude our question-and-answer session.

I would now like to turn the call back over to Lynn Jurich for any further remarks.

Well, that's it, guys.

Thanks.

We look forward to talking with you guys again next quarter.

Take care.

Ladies and gentlemen, thank you for participating in today's conference.

This concludes today's program.

You may all disconnect.

Everyone, have a great day.