What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-21 · 82 added, 98 removed, 405 unchanged (31% of the section changed)

67 unchanged sentences

Through these electrification opportunities and our grid services business, we aim to be the consumer brand synonymous with repowering our customers’ homes with renewable energy and providing a pathway to a cleaner, healthier future.

2024 Election

As a result of the recent transition in both the White House and Congress, we may face changes or delays in policies that affect our business, including those related to federal tax credits, tariffs, and other regulatory measures.

Any delay, reduction, or elimination in the implementation of policies that support the residential solar industry, such as the ITCs and adders under the IRA, or Executive Orders issued by the President of the United States, could have an adverse effect on our business.

Additionally, these changes in the United States’ government could contribute to a higher interest rate environment, which may further negatively impact our operations and financing costs.

While it is difficult to predict specific outcomes at this time, we expect a period of regulatory and policy uncertainty in the near term.

However, we believe our diversified business model and flexible operational framework position us to adapt to potential changes in the regulatory landscape and will continue to build on the robust bi-partisan support for residential solar policy.

Investment Funds

14 unchanged sentences

The allocation of the economic benefits between us and the fund investor and the corresponding accounting treatment varies depending on the structure of the investment fund.

We currently utilize three legal structures in our investment funds, which we refer to as:

(i) pass-through financing obligations, (ii) partnership flips and (iii) joint venture (“JV”) inverted leases.

We reflect pass-through financing obligations on our consolidated balance sheet as a pass-through financing obligation.

We record the investor’s interest in partnership flips or JV inverted leases (which we define collectively as “consolidated joint ventures”) as noncontrolling interests or redeemable noncontrolling interests.

These consolidated joint ventures are usually redeemable at our option and, in certain cases, at the investor’s option.

If redemption is at our option or the consolidated joint ventures are not redeemable, we record the investor’s interest as a noncontrolling interest and account for the interest using the HLBV method.

We currently utilize the legal structure for our investment funds which we refer to as partnership flips.

Historically, we also utilized pass-through financing obligations as a legal structure for our investment funds.

In Q4 2024, we retired our last pass-through financing obligation fund.

We record the investor’s interest in partnership flips as noncontrolling interests or redeemable noncontrolling interests.

These partnership flips are usually redeemable at our option and, in certain cases, at the investor’s option.

If redemption is at our option, we record the investor’s interest as a noncontrolling interest and account for the interest using the hypothetical liquidation at book value (“HLBV”) method.

If the investor has the option to put their interest to us, we record the investor’s interest as a redeemable noncontrolling interest at the greater of the HLBV and the redemption value.

The table below provides an overview of our current investment funds (dollars in millions):

Consolidated Joint Ventures

Pass-Through Financing Obligations Partnership Flip JV Inverted Lease

Consolidation Owner entity consolidated, tenant entity not consolidated Single entity, consolidated Owner and tenant entities consolidated

Balance sheet classification Pass-through financing obligation Redeemable noncontrolling interests and noncontrolling interests Redeemable noncontrolling interests

Revenue from Commercial ITCs Recognized on the permission to operate date None None

Method of calculating investor interest Effective interest rate method Greater of HLBV or redemption value Greater of HLBV or redemption value

Liability balance as of December 31, 2023 $ 294.6 N/A N/A

Pass-Through Financing Obligations Partnership Flip

Consolidation Owner entity consolidated, tenant entity not consolidated Single entity, consolidated

Balance sheet classification Pass-through financing obligation Redeemable noncontrolling interests and noncontrolling interests

Revenue from Commercial ITCs Recognized on the permission to operate ("PTO") date None

Method of calculating investor interest Effective interest rate method Greater of HLBV or redemption value

Liability balance as of December 31, 2024 $ — N/A

Noncontrolling interest balance (redeemable or otherwise) as of December 31, 2024 N/A $ 1,610.0

1 unchanged sentence

Risk Factors —" Our ability to provide our solar service offerings to customers on an economically viable basis depends in part on our ability to finance these systems with fund investors who seek particular tax and other benefits.

", Note 12, Pass-Through Financing Obligations , Note 13, VIE Arrangements and Note 14, Redeemable Noncontrolling Interests to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

", Note 12, Pass-Through Financing Obligation , Note 13, VIE Arrangements and Note 14, Redeemable Noncontrolling Interests to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Pass-through Financing Obligations

12 unchanged sentences

In certain arrangements, we agree to defer a portion of the up-front payments by arranging a loan between one of our indirectly wholly owned subsidiaries to a subsidiary of the investor’s tenant entity.

Consolidated Joint Ventures

Partnership Flips

5 unchanged sentences

Under our partnership flip structures, we have determined that we control the partnership entity which is a variable interest entity (“VIE”), and accordingly we consolidate the entity and record the investor’s interest as either noncontrolling interests or redeemable noncontrolling interests in our consolidated balance sheets.

Inverted Leases .

Under our inverted lease structure, we and the fund investor set up a multi-tiered investment vehicle that is comprised of two partnership entities which facilitate the pass through of the tax benefits to the fund investors.

In this structure we contribute solar energy systems to an “owner” partnership entity in exchange for interests in the owner partnership and the fund investors contribute cash to a “tenant” partnership in exchange for interests in the tenant partnership, which in turn makes an investment in the owner partnership entity in exchange for interests in the owner partnership.

The owner partnership uses the cash contributions received from the tenant partnership to purchase systems from us and/or fund installation of such systems.

Under our existing JV inverted lease structure, a substantial portion of the value generated by the solar energy systems is provided to the fund investor for a specified period of time, which is generally based upon the period of time corresponding to the expiry of the recapture period associated with the Commercial ITCs.

After that point in time, we receive substantially all of the value attributable to the long-term recurring customer payments and the other incentives.

Generally, under the terms of each agreement, the investors’ contributions include the value of Commercial ITCs earned or grants to be received by the fund investor.

Any other proceeds are allocated on a pro rata basis to the fund investor and us in accordance with their ownership percentages.

Since Sunrun has the power to control both the owner and tenant entities, both entities are included in our consolidated financial statements.

For all of our partnership flips and JV inverted leases, the redeemable noncontrolling interest is carried on our balance sheet at the greater of the redemption value or the amount calculated under the HLBV method.

For all of our partnership flips, the redeemable noncontrolling interest is carried on our balance sheet at the greater of the redemption value or the amount calculated under the HLBV method.

The HLBV method estimates the amount that, if the fund’s assets were hypothetically sold at their book value, the investor would be entitled to receive according to the liquidation waterfall in the partnership agreement.

8 unchanged sentences

Furthermore, other companies may calculate these metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure.

• Networked Solar Energy Capacity represents the aggregate megawatt production capacity of our solar energy systems, whether sold directly to customers or subject to executed Customer Agreements (i) for which we have confirmation that the systems are installed on the roof, subject to final inspection;

(ii) in the case of certain system installations by our partners, for which we have accrued at least 80% of the expected project cost (inclusive of acquisitions of installed systems), or (iii) for multi-family and any other systems that have reached Notice to Proceed (“NTP”), measured on the percentage of the project that has been completed based on expected project cost.

or (ii) in the case of certain system installations by our partners, for which we have accrued at least 80% of the expected project cost (inclusive of acquisitions of installed systems).

Systems that have met these criteria are considered to be deployed.

2 unchanged sentences

◦ Gross Earning Assets Contracted Period represents the present value of the remaining net cash flows (discounted at 6%) during the initial term of our Customer Agreements as of the measurement date.

It is calculated as the present value of cash flows (discounted at 6%) we expect to receive from Subscribers in future periods, after deducting expected operating and maintenance costs based on the service agreements underlying each fund, equipment replacements costs, distributions to tax equity partners in consolidated joint venture partnership flip structures, and distributions to project equity investors.

We include cash flows we expect to receive in future periods from state incentive and rebate programs, contracted sales of solar renewable energy credits, and awarded net cash flows from grid service programs with utility or grid operators.

It is calculated as the present value of cash flows (discounted at 6%) we expect to receive from Subscribers in future periods as set forth in Customer Agreements, after deducting expected operating and maintenance costs, equipment replacements costs, distributions to tax equity partners in partnership flip structures, and distributions to project equity investors.

We include cash flows we expect to receive in future periods from tax equity partners, government incentive and rebate programs, contracted sales of solar renewable energy credits, and awarded net cash flows from grid service programs with utility or grid operators.

◦ Gross Earning Assets Renewal Period is the forecasted net present value we would receive upon or following the expiration of the initial Customer Agreement term but before the 30th anniversary of the system’s activation (either in the form of cash payments during any applicable renewal period or a system purchase at the end of the initial term), for Subscribers as of the measurement date.

We calculate the Gross Earning Assets Renewal Period amount at the expiration of the initial contract term assuming either a system purchase or a renewal, forecasting only a 30-year customer relationship (although the customer may renew for additional years, or purchase the system), at a contract rate equal to 90% of the customer’s contractual rate in effect at the end of the initial contract term.

After the initial contract term, our Customer Agreements typically automatically renew annually or for five years and the rate is initially set at up to a 10% discount to then-prevailing utility power prices.

After the initial contract term, our Customer Agreements typically automatically renew annually or for a five year term and the rate is initially set at up to a 10% discount to then-prevailing utility power prices.

◦ Subscribers represent the cumulative number of Customer Agreements for systems that have been recognized as deployments through the measurement date.

• Customers represent the cumulative number of deployments, from our inception through the measurement date.

We believe that it is helpful to investors to evaluate customers

added during the period in order to measure the growth of our business as a whole.

We believe that it is helpful to investors to evaluate customers added during the period in order to measure the growth of our business as a whole.

Gross Earning Assets is forecasted as of a specific date.

1 unchanged sentence

Factors that could impact Gross Earning Assets include, but are not limited to, customer payment defaults, or declines in utility rates or early termination of a contract in certain circumstances, including prior to installation.

We believe it is useful for investors to evaluate the future expected cash flows from all customers that have been deployed through the respective measurement date, less estimated costs to maintain such systems and estimated distributions to tax equity partners in consolidated joint venture partnership flip

structures, and distributions to project equity investors.

Various assumptions are made when calculating these metrics.

9 unchanged sentences

As of December 31,

2023 2022 (1)

(in thousands)

2 unchanged sentences

Gross Earning Assets $ 17,833,828 $ 14,166,520

(1) The Gross Earning Assets as of December 31, 2022 reflect the application of a 5% unlevered discount rate, which is consistent with the discount rate used during that period.

If we had applied an unlevered discount rate of 6% as of December 31, 2022, the Gross Earning Assets Contracted Period would have been $8,151,849 and the Gross Earning Assets Renewal Period would have been $2,918,950.

The tables below provide a range of Gross Earning Asset amounts if different default, discount and purchase and renewal assumptions were used.

30 unchanged sentences

For further information on all of our significant accounting policies, see Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We believe that policies associated with our principles of consolidation, revenue recognition, goodwill, impairment of long-lived assets, provision for income taxes, business combinations and calculation of noncontrolling interests and redeemable noncontrolling interests have the greatest impact on our consolidated financial statements.

We believe that policies associated with our principles of consolidation, revenue recognition, impairment of long-lived assets, provision for income taxes, business combinations and calculation of noncontrolling interests and redeemable noncontrolling interests have the greatest impact on our consolidated financial statements.

Therefore, we consider these to be our critical accounting policies and estimates.

16 unchanged sentences

Customer Agreements typically have an initial term of 20 or 25 years.

After the initial contract term, our Customer Agreements typically automatically renew annually or for five years.

After the initial contract term, our Customer Agreements typically automatically renew annually or for a five year term.

We also apply for and receive SRECs associated with the energy generated by our solar energy systems and sell them to third parties in certain jurisdictions.

8 unchanged sentences

Consideration from customers is considered variable due to the performance guarantee under Customer Agreements and liquidated damage provisions under SREC contracts in the event minimum deliveries are not achieved.

Customer Agreements with a performance guarantee provide a credit to the customer if the system's cumulative production, as measured on various PTO anniversary dates, is below our guarantee of a specified minimum.

Customer Agreements with a performance guarantee provide a credit to the customer if the system's

cumulative production, as measured on various PTO anniversary dates, is below our guarantee of a specified minimum.

Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur.

12 unchanged sentences

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed.

Goodwill is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may be impaired.

Goodwill is reviewed for impairment at least annually as of October 1st or whenever events or changes in circumstances indicate that the carrying value may be impaired.

We have determined that we operate as one reporting unit and our goodwill is tested for impairment at the enterprise level.

We perform our annual impairment test of goodwill on October 1 of each fiscal year or whenever events or circumstances change or occur that would indicate that goodwill might be impaired.

When assessing goodwill for impairment, we use qualitative and if necessary, quantitative methods in accordance with FASB ASC Topic 350, Goodwill .

We also consider our enterprise value and if necessary, a discounted cash flow model, which involves assumptions and estimates, including our future financial performance, weighted average cost of capital and interpretation of currently enacted tax laws.

Circumstances that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in our financial results, a significant decline in our enterprise value relative to our net book value, a sustained decline in our stock price, or an unanticipated change in competition or our market share and a significant change in our strategic plans.

Circumstances or events that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in our financial results, a significant decline in our enterprise value relative to our net book value, a sustained decline in our stock price, or an unanticipated change in competition affecting our market share and a significant change in our strategic plans or regulatory environment.

A sustained decrease in the price of our common stock is one of the qualitative factors to be considered as part of an impairment test when evaluating whether events or changes in circumstances may indicate that it is more likely than not that a potential goodwill impairment exists.

During the third quarter of fiscal 2023, consistent with other industry peers, our stock price continued to decline resulting in a decline in our market capitalization after consideration of a control premium below the book value of equity.

We performed an interim quantitative assessment as of September 30, 2023 related to the recoverability of our goodwill for our one reporting unit.

We estimated the fair value of our reporting unit primarily based on consideration of an income approach analysis.

As of October 1, 2024, we performed a qualitative assessment to evaluate any circumstances and events impacting our one reporting unit to determine the likelihood of goodwill impairment.

We concluded it was more likely than not that the fair value of our one reporting unit exceeded its carrying value.

To corroborate this conclusion, we compared the carrying value of our one reporting unit to our enterprise market capitalization after consideration of a reasonable control premium.

However, in November 2024, consistent with industry peers, our stock price declined resulting in a significant decline in our market capitalization below the book value of equity.

This indicator triggered an interim quantitative assessment as of December 31, 2024.

Per ASC 350-20-35-22 “quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available.” We estimated the fair value of our reporting unit primarily based on consideration of an income approach and market capitalization.

Under the income approach, our future cash flows were estimated and present valued based on a discount rate reflecting a market participant risk-adjusted rate of return.

As of September 30, 2023, we concluded that the fair value of our one reporting unit did not exceed its carrying value with consideration of a control premium and recorded an impairment charge of $ 1.2 billion in our consolidated statements of operations.

For our interim quantitative assessment of goodwill as of September 30, 2023, we estimated the fair value of our one reporting unit and compared that fair value to its recorded carrying value.

The assumptions and estimates used in the assessment include, among others, estimated future net annual contracted cash flows under our existing long term customer agreements, as well as future growth estimates which rely on management judgements.

We also compared the total invested capital (including market capitalization) to the fair value of our reporting unit to assess the reasonableness of fair value after consideration of a control premium based on observable comparable company transactions.

We also compared the total invested capital (including market

capitalization) to the fair value of our reporting unit to assess the reasonableness of fair value.

As of December 31, 2024, we concluded that the fair value of our one reporting unit did not exceed its carrying value primarily driven by our market capitalization and recorded an impairment charge of $ 3.1 billion in our consolidated statements of operations equal to the full value of the previously recorded goodwill.

We utilized varying discount rates depending on the risk associated and sensitivity with differing cash flow projections.

Holding all other assumptions constant, a 50 basis point increase in the discount rate assumptions would have increased the goodwill impairment charge by approximately $0.5 billion.

Should, among other events and circumstances, industry conditions deteriorate, the outlook for future operating results and cash flow decline or regulations change, costs of equity or debt capital increase, valuations for comparable public companies or comparable acquisition valuations decrease, or our market capitalization experience a further sustained decline below its book value, we may need to further reassess the recoverability of goodwill in future periods.

Given the inherent estimation uncertainty in assumptions underlying a discounted cash flow analysis, actual conditions may differ materially from the Company’s estimates, which could result in additional impairment charges.

As of October 1, 2023, we conducted our annual goodwill impairment test.

The test concluded that no additional impairment had occurred during the fourth quarter of 2023.

To corroborate this conclusion, we compared the carrying value of our one reporting unit to our enterprise market capitalization after consideration of a reasonable control premium and concluded that there was no goodwill impairment during the fourth quarter of 2023.

Holding all other assumptions constant, a 50 basis point decrease in the discount rate assumptions or a 10% increase in our market capitalization as of December 31, 2024 would not change the goodwill impairment charge.

Impairment of Long-Lived Assets

15 unchanged sentences

We account for the income tax consequences of these intra-entity transfers, both current and deferred, as a component of income tax expense and deferred tax liability, net during the period in which the transfers occur.

We account for investment tax credits as a reduction of income tax expense in the year in which the credits arise ( i.e.

We account for investment tax credits as a reduction of income tax expense in the year in which the credits are recognized (i.e.

the flow-through method).

The Company enters into ITC transfer agreements with third-party transferees to transfer to such third-parties, for cash, the ITCs generated by certain solar energy systems that have been or will be placed in service.

The Company accounts for its share of ITC transfer proceeds under ASC 740, Income Taxes , as a reduction of income tax expense in the consolidated statement of operations during the year in which the credits are recognized ( i.e.

, the flow-through method) and the tax equity investor’s share is distributed upon receipt.

We determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

42 unchanged sentences

Goodwill impairment

3,122,168 1,158,000

Total operating expenses 5,732,926 4,238,456

1 unchanged sentence

Interest expense, net (848,366) (652,989)

Other (expense) income, net

(63,900) 260,657

Other income (expense), net 161,539 (63,900)

Loss before income taxes (4,382,034) (2,695,532)

Income tax (benefit) expense

(12,691) 2,291

Income tax benefit (26,817) (12,691)

Net loss (4,355,217) (2,682,841)

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests (1,509,050) (1,078,344)

Net (loss) income attributable to common stockholders

$ (1,604,497) $ 173,377

Net (loss) income per share attributable to common stockholders

Net loss attributable to common stockholders $ (2,846,167) $ (1,604,497)

Net loss per share attributable to common stockholders

Basic $ (12.81) $ (7.41)

Diluted $ (12.81) $ (7.41)

Weighted average shares used to compute net (loss) income per share attributable to common stockholders

Weighted average shares used to compute net loss per share attributable to common stockholders

Basic 222,215 216,642

13 unchanged sentences

The $311.3 million increase in Revenue from Customer Agreements was primarily due to new systems placed in service in 2024 and a full year of revenue recognized in 2024 for systems placed in service in 2023 versus only a partial amount of such revenue related to the period in which the assets were in service in 2023.

Revenue from incentives, which primarily consisted of the sale of SRECs, decreased by $1.1 million when compared to the prior year related to the timing and volume of SREC sales which were responsive to market conditions.

Revenue from incentives consisted primarily of sales of SRECs.

The $7.2 million increase when compared to the prior year related to the timing and volume of SREC sales, which were responsive to market conditions.

Solar Energy Systems and Product Sales .

Revenue from solar energy systems sales decreased by $451.6 million compared to the prior year primarily due to an increase in the proportion of customers choosing to enter into a Customer Agreement versus purchasing a system outright using a loan, likely due to increased interest rates.

Product sales decreased by $7.8 million compared to the prior year primarily due to the lower average sales price of solar energy products, as well as lower sales volume of solar energy products to installers of solar energy systems compared to the prior year, due to easing of supply chain constraints.

Product sales decreased by $89.0 million compared to the prior year primarily due to the lower average sales price of solar energy products, as well as lower sales volume of solar energy products to installers of solar energy systems compared to the prior year, due to easing of supply chain constraints and the wind-down of the AEE Solar operations in 2024.

Operating Expenses

12 unchanged sentences

The $92.1 million increase in Cost of customer agreements and incentives was primarily due to the new systems placed in service in 2024, plus a full year of costs recognized in 2024 for systems placed in service in 2023 versus only a partial amount of such expenses related to the period in which the assets were in service in 2023.

The Cost of customer agreements and incentives increased to 91% of customer agreements and incentives revenue during 2023, from 86% in the prior year.

This increase is primarily due to a higher proportion of customers choosing to enter into Customer Agreements versus purchasing a system outright.

Customer Agreements fulfillment incurs upfront non-capitalizable costs for building the system which do not recur during the agreement period over which the revenue is recognized.

The Cost of customer agreements and incentives decreased to 78% of customer agreements and incentives revenue during 2024, from 91% in the prior year.

This decrease is primarily due to customer pricing increases

catching up to costs.

Cost of Solar Energy Systems and Product Sales .

There was a $479.7 million decrease in Cost of solar energy systems and product sales, which was primarily due to the corresponding net decrease in the solar energy systems and product sales discussed above.

The Cost of solar energy systems and product sales increased to 95% of solar energy systems and product sales revenue during 2023, when compared with 88% in the prior year, primarily as a result of sales price increases lagging cost increases, as well as volume pricing granted in our distribution business.

The Cost of solar energy systems and product sales increased to 101% of solar energy systems and product sales revenue during 2024, when compared with 95% in the prior year, primarily as the result of a $22.1 million increase in inventory reserves recorded in the first quarter of fiscal 2024 related to the wind-down of the AEE Solar operations.

Sales and Marketing Expense.

2 unchanged sentences

Research and Development Expense .

The $0.9 million increase in Research and development expense was primarily attributable to an increase in support related consulting costs.

The $17.5 million increase in Research and development expense was primarily attributable to an increase in headcount driving higher employee compensation costs, as well as an increase in support related consulting costs.

General and Administrative Expense .

The $24.1 million increase in General and administrative expenses was primarily attributable to an increase in headcount driving higher employee compensation costs.

Additionally, there

were increases related to information technology related consulting costs, when compared to the prior year period.

Included in general and administrative expense were $7.458 million and $5.364 million of amortization of intangibles for 2023 and 2022, respectively.

Additionally, there were increases related to information technology related consulting costs, when compared to the prior year period.

Goodwill impairment .

The $1.2 billion increase in Goodwill impairment expense related to an impairment charge of $1.2 billion that was a result of an interim impairment test performed during the third quarter of 2023.

The $2.0 billion increase in Goodwill impairment expense related to an impairment charge of $3.1 billion that was a result of an interim impairment test performed during the fourth quarter of 2024 and an impairment charge of $1.2 billion that was a result of an interim impairment test performed during the third quarter of 2023.

For further detail, see Note 2, Summary of Significant Accounting Policies to our consolidated financial statement included elsewhere in this Annual Report on Form 10-K.

4 unchanged sentences

Interest expense, net $ (848,366) $ (652,989) $ (195,377) 30 %

Other (expense) income, net

(63,900) 260,657 (324,557) (125) %

Other income (expense), net 161,539 (63,900) 225,439 (353) %

Total interest and other expense, net

3 unchanged sentences

Included in net interest expense is $34.8 million and $31.2 million of non-cash interest recognized under Customer Agreements that have a significant financing component for 2024 and 2023, respectively.

Other (expense) income, net.

The increase in other expense of $324.6 million relates primarily to a $58.7 million loss on an equity investment in Lunar Energy Inc.

(“Lunar Energy”) during 2023, compared with a $47.3 million gain on this same equity investment in Lunar Energy during 2022, as well as to gains on derivatives during 2022, with no such comparable activity in 2023.

Income Tax (Benefit) Expense

Other income (expense), net.

The increase in other income of $225.4 million relates primarily to an increase in gains on derivatives during 2024, as well as a $7.4 million decrease in loss on an equity investment, as we recorded a $51.3 million loss on an equity investment in 2024, compared with a $58.7 million loss on an equity investment during 2023.

Income Tax Benefit

December 31, Change

1 unchanged sentence

(in thousands)

Income tax (benefit) expense

$ (12,691) $ 2,291 $ (14,982) (654) %

The decrease in Income tax (benefit) expense of $15.0 million primarily relates to an increase in tax benefit related to a higher pre-tax loss, which was offset by goodwill impairment, an increase in valuation allowance on certain federal and state tax credits and net operating losses, and an increase in noncontrolling interest and redeemable noncontrolling interests.

Income tax benefit $ 26,817 $ 12,691 $ 14,126 111 %

The increase in Income tax benefit of $14.1 million primarily relates to an increase in pre-tax loss, increased proceeds from investment tax credit transfers, and a decrease in valuation allowance on certain federal and state

tax credits and net operating losses, which was offset by goodwill impairment and an increase in noncontrolling interest and redeemable noncontrolling interests.

Given our net operating loss carryforwards as of December 31, 2024, we do not expect to pay income tax, including in connection with our 2024 income tax provision, until our net operating losses are fully utilized.

As of December 31, 2023, we had net operating loss carryforwards for federal and state income tax purposes of approximately $720.7 million and $3.3 billion, respectively, which will begin to expire in 2028 for federal purposes and in 2024 for state purposes.

As of December 31, 2024, we had net operating loss carryforwards for federal, state, and foreign income tax purposes of approximately $720.7 million, $3.3 billion, and $459.9 million, respectively, which will begin to expire in 2028 for federal purposes, in 2025 for state purposes, and in 2031 for foreign purposes.

In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $2.0 billion and $334.4 million, respectively, and have indefinite carryover periods and do not expire.

4 unchanged sentences

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests $ (1,509,050) $ (1,078,344) $ (430,706) 40 %

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests was primarily the result of an addition of six new investment funds since December 31, 2022, for which the HLBV method was used in determining the amount of net loss attributable to noncontrolling interests.

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests was primarily the result of an addition of seven new investment funds since December 31, 2023, for which the HLBV method was used in determining the amount of net loss attributable to noncontrolling interests.

Investment funds generally allocate more loss to the noncontrolling interest in the first several years after fund formation.

2 unchanged sentences

We finance our operations mainly through a variety of financing fund arrangements that we have formed with fund investors, cash generated from our sources of revenue and borrowings from secured credit facilities arrangements with syndicates of banks and from secured, long-term non-recourse loan arrangements.

In 2023, we received $1.0 billion of new commitments on secured credit facilities arrangements with syndicates of banks and $0.8 billion of commitments from secured, long-term non-recourse loan arrangements.

In 2024, we received $3.4 billion of new commitments on secured credit facilities arrangements and $1.5 billion of commitments from secured, long-term non-recourse loan arrangements.

Our principal uses of cash are funding our business, including the costs of acquisition and installation of solar energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements.

As of December 31, 2023, we had outstanding borrowings of $539.5 million on our $600.0 million credit facility maturing in January 2025.

As of December 31, 2024, we had outstanding borrowings of $384.2 million on our $447.5 million credit facility maturing in March 2027.

In February 2024, we amended one of our subsidiary’s senior secured credit facility to, among other things, increase the total commitments from $1.8 billion to $2.4 billion and extend the maturity date from April 2025 to April 2028.

In July 2024, we amended the same senior secured credit facility to increase total commitments from $2.4 billion to $2.6 billion.

In February 2024, we amended our bank line of credit to, among other things, reduce the total commitments from $600.0 million to $447.5 million, and to extend the maturity date from January 2025 to November 2025.

This maturity date can be further extended to March 2027, if we meet certain liquidity tests as of September 30, 2024.

For additional details, see the description of "Senior Secured Credit Facility" and "Line of Credit" in Item 9B.Other Information.

Additionally, we have purchase commitments, which have the ability to be canceled without significant penalties, with multiple suppliers to purchase $366.4 million of photovoltaic modules, inverters and batteries by the end of the first quarter of 2025.

In January 2021, we issued $400.0 million of convertible senior notes with a maturity date of February 1, 2026, for net proceeds of approximately $389.0 million.

As of September 30, 2024, this maturity date was automatically extended to March 1, 2027, due to us maintaining funds on deposit in a collateral account equal to an amount sufficient to repay at the scheduled maturity all of our 0% Senior Convertible Notes due 2026 that are outstanding as of September 30, 2024 and being otherwise in compliance with our quarter-end liquidity covenant.

Additionally, we have purchase commitments, which have the ability to be canceled without significant penalties, with multiple suppliers to purchase $574.0 million of photovoltaic modules, inverters and batteries by the end of the fourth quarter of 2025.

In February 2024, we issued $475.0 million of convertible senior notes with a maturity date of March 1, 2030, for net proceeds of approximately $470.1 million.

Our business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional solar energy systems.

13 unchanged sentences

Net cash provided by financing activities 3,426,755 3,468,698

Net increase in cash

Net (decrease) increase in cash

$ (40,422) $ 34,815

11 unchanged sentences

The majority was used to design, acquire and install solar energy systems and components under our long-term Customer Agreements.

Included within cash used in investing activities during 2023, was a $5.0 million contribution we made as an additional investment in Lunar Energy.

During 2023, we used $2.6 billion in cash in investing activities.

3 unchanged sentences

During 2024, we generated $3.4 billion from financing activities.

This was primarily driven by $1.4 billion in net proceeds from fund investors, $2.2 billion in net proceeds from debt, $22.6 million in net proceeds from stock-based awards activity, offset by $1.5 million in repurchase of convertible senior notes, $46.3 million in acquisition of noncontrolling interests and $23.3 million in repayments under finance lease obligations.

This was primarily driven by $1.3 billion in net proceeds from fund investors, $2.1 billion in net proceeds from debt, $124.3 million in net proceeds from trade receivable financing, $98.2 million in net proceeds from convertible senior notes and $18.9 million in net proceeds from stock-based awards activity, offset by $26.2 million in acquisition of noncontrolling interests and $27.2 million in repayments under finance lease obligations.

During 2023, we generated $3.5 billion from financing activities.

This was primarily driven by $1.2 billion in net proceeds from fund investors, $1.9 billion in net proceeds from debt, $32.9 million in net proceeds from stock-based awards activity, offset by $42.6 million in acquisition of noncontrolling interests and $14.1 million in repayments under finance lease obligations.

Debt, Equity, and Financing Fund Commitments

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis