What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-02-27 · 274 added, 266 removed, 1122 unchanged (32% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Redeemable Noncontrolling Interests and Stockholders' Equity

107 unchanged sentences

Restricted cash 148 148

Solar energy systems, net 15,032,115 13,028,871

Energy systems, net 16,817,863 15,032,115

Property and equipment, net 75,692 121,239

Goodwill — 3,122,168

Other assets 3,560,924 3,021,746

10 unchanged sentences

Non-recourse debt, current portion 269,510 231,665

Pass-through financing obligation, current portion — 16,309

Total current liabilities 1,302,515 1,334,482

5 unchanged sentences

Convertible senior notes 473,749 479,420

Pass-through financing obligation, net of current portion — 278,333

Other liabilities 156,199 119,846

21 unchanged sentences

(1) The Company’s consolidated assets as of December 31, 2025 and 2024 include $ 15,593,689 and $ 13,290,216 , respectively, in assets of variable interest entities, or “VIEs”, that can only be used to settle obligations of the VIEs.

Solar energy systems, net, as of December 31, 2024 and 2023 were $ 12,062,819 and $ 10,469,093 , respectively;

Energy systems, net, as of December 31, 2025 and 2024 were $ 13,777,190 and $ 12,062,819 , respectively;

cash as of December 31, 2025 and 2024 were $ 539,440 and $ 420,756 , respectively;

8 unchanged sentences

deferred revenue as of December 31, 2025 and 2024 of $ 1,025,241 and $ 826,854 , respectively;

deferred grants as of December 31, 2024 and 2023 of $ 0 and $ 0 , respectively;

non-recourse debt as of December 31, 2025 and 2024 of $ 1,434,535 and $ 1,407,784 , respectively;

6 unchanged sentences

Customer agreements and incentives $ 1,819,007 $ 1,505,227 $ 1,186,706

Solar energy systems and product sales 532,492 1,073,107 1,338,375

Energy systems and product sales 1,137,990 532,492 1,073,107

Total revenue 2,956,997 2,037,719 2,259,813

1 unchanged sentence

Cost of customer agreements and incentives 1,282,357 1,169,213 1,077,114

Cost of solar energy systems and product sales 539,952 1,019,638 1,178,548

Cost of energy systems and product sales 777,342 539,952 1,019,638

Sales and marketing 709,253 617,162 740,821

6 unchanged sentences

Interest expense, net ( 996,782 ) ( 848,366 ) ( 652,989 )

Other income (expense), net 161,539 ( 63,900 ) 260,657

Other (expense) income, net ( 53,413 ) 161,539 ( 63,900 )

Loss before income taxes ( 1,176,324 ) ( 4,382,034 ) ( 2,695,532 )

Income tax (benefit) expense ( 26,817 ) ( 12,691 ) 2,291

Income tax benefit ( 167,218 ) ( 26,817 ) ( 12,691 )

Net loss ( 1,009,106 ) ( 4,355,217 ) ( 2,682,841 )

1 unchanged sentence

( 1,459,053 ) ( 1,509,050 ) ( 1,078,344 )

Net (loss) income attributable to common stockholders $ ( 2,846,167 ) $ ( 1,604,497 ) $ 173,377

Net (loss) income per share attributable to common stockholders

Net income (loss) attributable to common stockholders $ 449,947 $ ( 2,846,167 ) $ ( 1,604,497 )

Net income (loss) per share attributable to common stockholders

Basic $ 1.96 $ ( 12.81 ) $ ( 7.41 )

Diluted $ 1.71 $ ( 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 income (loss) per share attributable to common stockholders

Basic 229,809 222,215 216,642

1 unchanged sentence

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

1 unchanged sentence

2025 2024 2023

Net (loss) income attributable to common stockholders $ ( 2,846,167 ) $ ( 1,604,497 ) $ 173,377

Unrealized gain on derivatives, net of income taxes 58,056 14,482 140,805

Net income (loss) attributable to common stockholders $ 449,947 $ ( 2,846,167 ) $ ( 1,604,497 )

Unrealized (loss) gain on derivatives, net of income taxes ( 12,443 ) 58,056 14,482

Adjustment for net gain on derivatives recognized into earnings, net of income taxes ( 11,268 ) ( 25,918 ) ( 26,915 )

Other comprehensive income (loss) 32,138 ( 12,433 ) 140,159

Comprehensive (loss) income $ ( 2,814,029 ) $ ( 1,616,930 ) $ 313,536

Other comprehensive (loss) income ( 23,711 ) 32,138 ( 12,433 )

Comprehensive income (loss) attributable to common stockholders

$ 426,236 $ ( 2,814,029 ) $ ( 1,616,930 )

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

Common Stock Additional

Comprehensive(Loss) Income Retained

Comprehensive Income (Loss)

Earnings (Accumulated Deficit)

11 unchanged sentences

Acquisition of noncontrolling interest ( 20,011 ) — — 5,146 — — 5,146 ( 32,968 ) ( 27,822 )

Other comprehensive income, net of taxes — — — — 140,159 — 140,159 — 140,159

Other comprehensive loss, net of taxes — — — — ( 12,433 ) — ( 12,433 ) — ( 12,433 )

Balance - December 31, 2023 676,177 219,392 22 6,609,229 54,676 ( 1,433,699 ) 5,230,228 1,007,608 6,237,836

5 unchanged sentences

Distributions to redeemable noncontrolling interests and noncontrolling interests ( 68,543 ) — — — — — — ( 246,400 ) ( 246,400 )

Net (loss) income ( 30,601 ) — — — — ( 1,604,497 ) ( 1,604,497 ) ( 1,047,743 ) ( 2,652,240 )

Net income (loss) 14,820 — — — — ( 2,846,167 ) ( 2,846,167 ) ( 1,523,870 ) ( 4,370,037 )

Capped call transaction — — — ( 38,365 ) — — ( 38,365 ) — ( 38,365 )

Acquisition of noncontrolling interests ( 22,897 ) — — 33,231 — — 33,231 ( 38,858 ) ( 5,627 )

9 unchanged sentences

( 75,260 ) — — — — — — ( 177,077 ) ( 177,077 )

Net income (loss) 14,820 — — — — ( 2,846,167 ) ( 2,846,167 ) ( 1,523,870 ) ( 4,370,037 )

Capped call transaction — — — ( 38,365 ) — — ( 38,365 ) — ( 38,365 )

Net (loss) income ( 244,887 ) — — — — 449,947 449,947 ( 1,214,166 ) ( 764,219 )

Acquisition of noncontrolling interests ( 17,506 ) — — 18,596 — — 18,596 ( 31,794 ) ( 13,198 )

11 unchanged sentences

Goodwill impairment — 3,122,168 1,158,000

Deferred income taxes ( 26,817 ) ( 12,716 ) 2,291

Income tax benefit ( 167,218 ) ( 26,817 ) ( 12,716 )

Stock-based compensation expense 107,952 112,825 111,781

10 unchanged sentences

Deferred revenue 188,192 152,762 106,700

Deferred tax liabilities 198,071 — —

Net cash used in operating activities ( 421,440 ) ( 766,153 ) ( 820,740 )

Investing activities:

Payments for the costs of solar energy systems ( 2,699,452 ) ( 2,587,183 ) ( 1,992,863 )

Payments for the costs of energy systems ( 2,498,561 ) ( 2,699,452 ) ( 2,587,183 )

Purchase of equity investment — — ( 5,000 )

29 unchanged sentences

Supplemental disclosures of noncash investing and financing activities

Purchases of solar energy systems and property and equipment included in accounts payable and accrued expenses $ 40,814 $ 61,740 $ 61,327

Purchases of energy systems and property and equipment included in accounts payable and accrued expenses $ 37,679 $ 40,814 $ 61,740

Right-of-use assets obtained in exchange for new finance lease liabilities $ 3,058 $ 36,991 $ 87,726

Portion of solar energy systems financed with seller financing, included within non-recourse debt $ — $ — $ —

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

(“Sunrun” or the “Company”) was formed in 2007.

The Company is engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy and battery storage systems (“Projects”) in the United States.

The Company is engaged in the design, development, installation, sale, ownership and maintenance of home battery storage and energy systems (“Projects”) in the United States.

Sunrun acquires customers directly and through relationships with various solar and strategic partners (“Partners”).

The Projects are constructed either by Sunrun or by Sunrun’s Partners and are mostly owned by the Company.

Sunrun’s customers enter into an agreement to utilize the solar energy system (the “Customer Agreement”) which typically has an initial term of 20 or 25 years.

Sunrun’s customers enter into an agreement to utilize the home battery storage and/or energy system (the “Customer Agreement”) which typically have an initial term of 20 or 25 years.

Sunrun monitors, maintains and insures the Projects during the term of the Customer Agreement.

The Company also sells battery storage along with the solar energy systems and products, such as panels and racking and solar leads generated by customers.

Certain of these energy systems under Customer Agreements are sold to third-party investors.

The Company also owns and operates home-to-grid power plants, home electrification products, and solar leads generated by customers.

The Company has formed various subsidiaries (“Funds”) to finance the development of Projects.

These Funds, structured as limited liability companies, obtain financing from outside investors and purchase Projects from Sunrun under master purchase.

The Company currently utilizes the legal structure for its investment Funds which are referred to as partnership-flips.

These Funds, structured as limited liability companies, obtain financing from outside investors and purchase Projects from Sunrun under master purchase agreements.

The Company currently utilizes a partnership-flip legal structure for its Funds.

Summary of Significant Accounting Policies

9 unchanged sentences

All intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

When necessary, reclassifications have been made to the Company’s prior period financial information to conform with current year presentation and are not material to the Company’s consolidated financial statements.

Effective December 31, 2025, the Company revised the terminology used for certain financial statement line items to better align with its operations.

The Company has renamed financial statement line items “Solar energy systems, net” on the consolidated balance sheets as “Energy systems, net”, “Solar energy systems and product sales” and “Cost of solar energy systems and product sales” on the consolidated statements of operations as “Energy systems and product sales” and “Cost of energy systems and product sales,” respectively, and “Payments for the costs of solar energy systems” as “Payments for the costs of energy systems” on the consolidated statements of cash flows.

The change in terminology does not impact the amounts reported in the financial statements.

Comparative periods have been renamed to reflect this change for consistency.

Use of Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

The Company regularly makes estimates and assumptions, including, but not limited to, revenue recognition constraints that result in variable consideration, the discount rate used to adjust the promised amount of consideration for the effects of a significant financing component, the estimates that affect the collectability of accounts receivable, the valuation of inventories, the useful lives of solar energy systems, the useful lives of property and equipment, the fair value estimates used in the goodwill impairment calculation, the discount rate used for operating and financing leases, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, the fair value of debt instruments disclosed and the redemption value of redeemable noncontrolling interests.

The Company regularly makes estimates and assumptions, including, but not limited to, revenue recognition constraints that result in variable consideration, the discount rate used to adjust the promised amount of consideration for the effects of a significant financing component, the estimates that affect the collectability of accounts receivable, the valuation of inventories, the useful lives of energy systems, the useful lives of property and equipment, the fair value estimates used in the goodwill impairment calculation, the discount rate used for operating and financing leases, the valuation of stock-based compensation, the determination of valuation allowances associated with deferred tax assets, the fair value of debt instruments disclosed and the redemption value of redeemable noncontrolling interests.

The Company bases its estimates on historical experience and various other assumptions believed to be reasonable.

13 unchanged sentences

Customer agreements and incentives 1,819,007 1,505,227 1,186,706

Solar energy systems 204,776 656,408 913,904

Energy systems 878,341 204,776 656,408

Products 259,649 327,716 416,699

Solar energy systems and product sales 532,492 1,073,107 1,338,375

Energy systems and product sales 1,137,990 532,492 1,073,107

Total revenue $ 2,956,997 $ 2,037,719 $ 2,259,813

Revenue from Customer Agreements includes payments by customers for the use of the system as well as utility and other rebates assigned by the customer to the Company in the Customer Agreement.

Revenue from incentives includes revenue from the sale of commercial investment tax credits ("Commercial ITCs") and solar renewable energy credits (“SRECs”).

Revenue from incentives includes revenue from the sale of solar renewable energy credits (“SRECs”).

Energy systems sales are revenue from the sale of energy systems directly to customers or third-party investors.

Product sales revenue consists of revenue from the sale of solar panels, inverters, racking systems, roof repair, and other solar energy products sold to resellers, as well as the sale of customer leads to third parties, including the Company’s partners and other solar providers.

Revenue from energy system sales from one customer represents approximately $ 683.7 million of the Company’s consolidated revenues for the year ended December 31, 2025.

Cash and Restricted Cash

3 unchanged sentences

The Company believes that its credit risk is not significant.

Restricted cash represents amounts related to obligations under certain financing transactions and future replacement of solar energy system components.

Restricted cash represents amounts related to obligations under certain financing transactions and future replacement of energy system components.

The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows.

15 unchanged sentences

Customer receivables $ 191,559 $ 179,152

Third party system sales receivables 44,419 —

Grid services receivables 29,800 3,474

Other receivables 17,541 3,500

1 unchanged sentence

Total $ 262,627 $ 170,706

Asset Retirement Obligation

The Company has an asset retirement obligation (“ARO”) arising from contractual or regulatory requirements to perform certain asset retirement activities at the time the Company's energy systems are retired.

The Company recognizes a corresponding ARO when an obligating event takes place, which typically is when the energy system is installed.

An asset is considered retired when it is permanently taken out of service, such as through a sale or disposal.

The Company's aggregate ARO is immaterial and is recorded as a component of energy systems, net and other liabilities on the Company’s consolidated balance sheets.

The Company's ARO balances are subject to change in future periods given the inherent uncertainty in estimating asset retirement costs and timing.

Inventories are stated at the lower of cost or net realizable value on a first-in, first-out basis.

Inventories consist of raw materials such as photovoltaic panels, inverters and mounting hardware as well as miscellaneous electrical components that are sold as-is by the distribution operations and used in installations and work-in-process.

Work-in-process primarily relates to solar energy systems that will be sold to customers, which are partially installed and have yet to meet the criteria for revenue recognition.

For solar energy systems where the Company performs the installation, the Company commences transferring component parts from inventories to construction-in-progress, a component of solar energy systems, once a lease contract with a lease customer has been executed and the component parts have been assigned to a specific project.

Work-in-process primarily relates to energy systems that will be sold to customers, which are partially installed and have yet to meet the criteria for revenue recognition.

For energy systems where the Company performs the installation, the Company commences transferring component parts from inventories to construction-in-progress, a component of energy systems, once a lease contract with a lease customer has been executed and the component parts have been assigned to a specific project.

Additional costs incurred including labor and overhead are recorded within construction in progress.

1 unchanged sentence

Based on this evaluation, provisions are made to write inventories down to their market value.

Solar Energy Systems, net

The Company records solar energy systems subject to signed Customer Agreements and solar energy systems that are under installation as solar energy systems, net on its consolidated balance sheet.

Solar energy systems, net is comprised of system equipment costs related to solar energy systems, less accumulated depreciation and amortization.

Depreciation on solar energy systems is calculated on a straight-line basis over the estimated useful lives of the systems of 35 years.

Notes to Consolidated Financial Statements — Continued

Energy Systems, net

The Company records energy systems subject to signed Customer Agreements and energy systems that are under installation as energy systems, net on its consolidated balance sheet.

Energy systems, net is comprised of system equipment costs related to energy systems, less accumulated depreciation and amortization.

Depreciation on energy systems is calculated on a straight-line basis over the estimated useful lives of the systems of 35 years.

The Company periodically reviews its estimated useful life and recognizes changes in estimates by prospectively adjusting depreciation expense.

Inverters and batteries are depreciated over their estimated useful life of 10 to 15 years.

Solar energy systems under construction will be depreciated as solar energy systems subject to signed Customer Agreements when the respective systems are completed and interconnected.

Notes to Consolidated Financial Statements — Continued

Energy systems under construction will be depreciated as energy systems subject to signed Customer Agreements when the respective systems are completed and interconnected.

Property and Equipment, net

9 unchanged sentences

Capitalization of Software Costs

For costs incurred in the development of internal use software, the Company capitalizes costs incurred during the application development stage.

For costs incurred in the development of internal use software, including cloud implementation costs, the Company capitalizes costs incurred during the application development stage.

Costs related to preliminary project activities and post implementation activities are expensed as incurred.

2 unchanged sentences

Impairment of Long-Lived Assets

The carrying values of the Company’s long-lived assets, including solar energy systems, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.

The carrying values of the Company’s long-lived assets, including energy systems, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.

Factors that are considered in deciding when to perform an impairment review would include significant negative industry or economic trends and significant changes or planned changes in the use of the assets.

7 unchanged sentences

The Company performs its 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, the Company uses qualitative and if necessary, quantitative methods in accordance with FASB ASC Topic 350, Goodwill.

The Company also considers its enterprise value and if necessary, discounted cash flow model, which involves assumptions and estimates, including the Company’s future financial performance, weighted average cost of capital and interpretation of currently enacted tax laws.

When assessing goodwill for impairment, the Company uses qualitative

Notes to Consolidated Financial Statements — Continued

and if necessary, quantitative methods in accordance with FASB ASC Topic 350, Goodwill.

Circumstances that could indicate impairment and require the Company to perform a quantitative impairment test include significant declines in the Company’s financial results or enterprise value relative to its net book value or a sustained decline in the Company's stock price below its book value, coupled with declines in valuations for comparable public companies or acquisition premiums.

The Company tests goodwill for impairment for its one reporting unit using an estimated fair value approach.

The Company’s stock price, consistent with other industry peers, experienced a significant decline during the fourth quarter of fiscal 2024.

A sustained decrease in the Company’s stock price 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.

As of October 1st, the Company performed a qualitative assessment and concluded that the fair value of the Company’s one reporting unit exceeded its carrying value with consideration of a reasonable control premium.

However, during the fourth quarter of fiscal 2024, due to the significant sustained decline in the Company’s market capitalization below the book value of equity, the Company performed an interim quantitative assessment.

During the fourth quarter of fiscal 2024, due to the significant sustained decline in the Company’s market capitalization below the book value of equity, the Company performed an interim quantitative assessment.

The Company estimated the fair value of its reporting unit primarily based on consideration of an income approach and market capitalization.

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

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

The Company selected estimates used in the discounted cash flow projections using historical data as well as current and anticipated market conditions, and estimated growth rates with consideration of published industry trends.

2 unchanged sentences

This impairment charge did not result in a change to previously recorded deferred taxes, as goodwill was not deductible for tax purposes, nor did it impact the Company’s liquidity position, its debt covenants or cash flows.

As a result of this impairment charge, the Company no longer carries any Goodwill in its consolidated balance sheet as of December 31, 2025.

Supplier Finance Agreements

8 unchanged sentences

Repayment of trade receivable financing —

Accrued interest on trade receivable financing 5,977

Supplier finance obligations outstanding at December 31, 2024 130,238

1 unchanged sentence

Repayment of trade receivable financing ( 291,342 )

Accrued interest on trade receivable financing 5,977

Repayment of accrued interest on trade receivable financing ( 5,977 )

Supplier finance obligations outstanding at December 31, 2025 $ —

Notes to Consolidated Financial Statements — Continued

Deferred Revenue

When the Company receives consideration, or when such consideration is unconditionally due, from a customer prior to delivering goods or services to the customer under the terms of a Customer Agreement, the Company records deferred revenue.

Such deferred revenue consists of amounts for which the criteria for revenue

Notes to Consolidated Financial Statements — Continued

recognition have not yet been met and includes amounts that are collected or assigned from customers, including upfront deposits and prepayments, and rebates.

Such deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes amounts that are collected or assigned from customers, including upfront deposits and prepayments, and rebates.

Deferred revenue relating to financing components represents the cumulative excess of interest expense recorded on financing component elements over the related revenue recognized to date and will eventually net to zero by the end of the initial term.

Amounts received related to the sales of SRECs which have not yet been delivered to the counterparty are recorded as deferred revenue.

The opening balance of deferred revenue was $ 1,096.0 million as of December 31, 2022.

The opening balance of deferred revenue was $ 1.2 billion as of December 31, 2023.

Deferred revenue consists of the following (in thousands):

11 unchanged sentences

Contracted but not yet recognized revenue was approximately $ 37.3 billion as of December 31, 2025, of which the Company expects to recognize approximately 5 % over the next 12 months.

The annual recognition is not expected to vary significantly over the next 10 years as the vast majority of existing Customer Agreements have at least 10 years remaining, given that the average age of the Company's fleet of residential solar energy systems under Customer Agreements is less than 6 years due to the Company being formed in 2007 and having experienced significant growth in the last few years.

The annual recognition is not expected to vary significantly over the next 10 years as the vast majority of existing Customer Agreements have at least 10 years remaining, given that the average age of the Company's fleet of residential energy systems under Customer Agreements is less than 6 years due to the Company being formed in 2007 and having experienced significant growth in the last few years.

The annual recognition on these existing contracts will gradually decline over the midpoint of the Customer Agreements over the following 10 years as the typical 20 - or 25 -year initial term expires on individual Customer Agreements.

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Warranty Accrual

The Company accrues warranty costs when revenue is recognized for solar energy systems sales, based on the estimated future costs of meeting its warranty obligations.

The Company accrues warranty costs when revenue is recognized for energy systems sales, based on the estimated future costs of meeting its warranty obligations.

Warranty costs primarily consist of replacement costs for supplies and labor costs for service personnel since warranties for equipment and materials are covered by the original manufacturer’s warranty (other than a small deductible in certain cases).

As such, the warranty reserve is immaterial in all periods presented.

The Company makes and revises these estimates based on the number of solar energy systems under warranty, the Company’s historical experience with warranty claims, assumptions on warranty claims to occur over a systems’ warranty period and the Company’s estimated replacement costs.

The Company makes and revises these estimates based on the number of energy systems under warranty, the Company’s historical experience with warranty claims, assumptions on warranty claims to occur over a systems’ warranty period and the Company’s estimated replacement costs.

A warranty is provided for solar systems sold and leased.

However, for the solar energy systems under Customer Agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company.

Instead, any repair costs on those solar energy systems are expensed when they are incurred as a component of customer agreements and incentives costs of revenue.

However, for the energy systems under Customer Agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company.

Instead, any repair costs on those energy systems are expensed when they are incurred as a component of customer agreements and incentives costs of revenue.

Solar Energy Performance Guarantees

The Company guarantees to customers certain specified minimum solar energy production output for solar facilities over the initial term of the Customer Agreements.

The Company monitors the solar energy systems to determine whether these specified minimum outputs are being achieved.

The Company monitors the energy systems to determine whether these specified minimum outputs are being achieved.

Annually or every two years , depending on the terms of the Customer Agreement, the Company will refund a portion of electricity payments to a customer if the solar energy production output was less than the performance guarantee.

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Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income if a derivative is designated as part of a hedge transaction.

The ineffective portion of the hedge, if any, is immediately recognized in earnings and is included in other income (expenses), net in the consolidated statements of operations.

The ineffective portion of the hedge, if any, is immediately recognized in earnings and is included in other (expense) income, net in the consolidated statements of operations.

The Company uses derivative financial instruments, primarily interest rate swaps, to manage its exposure to interest rate risks on its syndicated term loans, which are recognized on the balance sheet at their fair values.

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• Level 3—Inputs that are unobservable, significant to the measurement of the fair value of the assets or liabilities and are supported by little or no market data.

The Company’s financial instruments include cash, receivables, accounts payable, accrued expenses, distributions payable to noncontrolling interests, derivatives, contingent consideration, and recourse and non-recourse debt.

The Company’s financial instruments include cash, receivables, accounts payable, accrued expenses, distributions payable to noncontrolling interests, derivatives, and recourse and non-recourse debt.

Certain assets are measured at fair value on a non-recurring basis.

5 unchanged sentences

Customer agreements and incentives

Customer agreements and incentives revenue is primarily comprised of revenue from Customer Agreements in which the Company provides continuous access to a functioning solar energy system and revenue from the sales of SRECs generated by the Company’s solar energy systems to third parties.

Customer agreements and incentives revenue is primarily comprised of revenue from Customer Agreements in which the Company provides continuous access to a functioning energy system and revenue from the sales of SRECs generated by the Company’s energy systems to third parties.

The Company begins to recognize revenue on Customer Agreements when permission to operate ("PTO") is given by the local utility company or on the date daily operation commences if utility approval is not required.

Revenue recognition does not necessarily follow the receipt of cash.

For Customer Agreements that include a fixed fee per month which entitles the customer to any and all electricity generated by the system, and for which the Company’s obligation is to provide continuous access to a functioning solar energy system, the Company recognizes revenue evenly over the time that it satisfies its performance obligations, which is over the initial term of the Customer Agreements.

For Customer Agreements that charge a fixed price per kilowatt hour, and for which the Company’s obligation is the provision of electricity from a solar energy system, revenue is recognized based on the actual amount of power generated at rates specified under the contracts.

For Customer Agreements that include a fixed fee per month which entitles the customer to any and all electricity generated by the system, and for which the Company’s obligation is to provide continuous access to a functioning energy system, the Company recognizes revenue evenly over the time that it satisfies its performance obligations, which is over the initial term of the Customer Agreements.

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

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

SREC revenue arises from the sale of environmental credits generated by solar energy systems and is generally recognized upon delivery of the SRECs to the counterparty or upon reporting of the electricity generation.

SREC revenue arises from the sale of environmental credits generated by energy systems and is generally recognized upon delivery of the SRECs to the counterparty or upon reporting of the electricity generation.

In determining the transaction price, the Company adjusts the promised amount of consideration for the effects of the time value of money when the timing of payments provides it with a significant benefit of financing the transfer of goods or services to the customer.

In those circumstances, the contract contains a significant financing component.

When adjusting the promised amount of consideration for a significant financing component, the Company uses the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception and recognizes the revenue amount on a straight-line basis over the term of the Customer Agreement, and interest expense using the effective interest rate method.

Notes to Consolidated Financial Statements — Continued

its customer at contract inception and recognizes the revenue amount on a straight-line basis over the term of the Customer Agreement, and interest expense using the effective interest rate method.

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

3 unchanged sentences

These amounts are amortized on a straight-line basis over the term of the Customer Agreements, and are included in Sales and marketing in the consolidated statements of operations.

Solar energy systems and product sales

For solar energy systems sold to customers, revenue is recognized when the solar energy system passes inspection by the authority having jurisdiction, which inspection generally occurs after installation but prior to PTO, at which time the Company has met the performance obligation in the contract.

For solar energy system sales that include delivery obligations up until interconnection to the local power grid with permission to operate, the Company recognizes revenue at PTO.

Certain solar energy systems sold to customers include fees for extended warranty and maintenance services.

Energy systems and product sales

For energy systems sold to customers, revenue is recognized when the energy system passes inspection by the authority having jurisdiction, which inspection generally occurs after installation but prior to PTO, at which time the Company has met the performance obligation in the contract.

For energy system sales that include delivery obligations up until interconnection to the local power grid with permission to operate, the Company recognizes revenue at PTO.

For sale of energy systems subject to newly originated Customer Agreements to third-party investors, the Company recognizes revenue over time as performance obligations are satisfied, based on the achievement of milestones.

Certain energy systems sold to customers include fees for extended warranty and maintenance services.

These fees are recognized over the life of the service agreement.

The Company’s installation Projects are typically completed in less than twelve months.

Product sales consist of solar panels, racking systems, inverters, other solar energy products sold to resellers, roofing repair, and customer leads.

Product sales consist of batteries and other solar energy products sold to resellers, roofing repair, and customer leads.

Product sales revenue is recognized at the time when control is transferred, upon shipment, or as services are delivered.

Customer lead revenue, included in product sales, is recognized at the time the lead is delivered.

Taxes assessed by government authorities that are directly imposed on revenue producing transactions are excluded from solar energy systems and product sales.

Taxes assessed by government authorities that are directly imposed on revenue producing transactions are excluded from energy systems and product sales.

Cost of Revenue

Customer agreements and incentives

Cost of revenue for customer agreements and incentives is primarily comprised of (1) the depreciation of the cost of the solar energy systems, as reduced by amortization of deferred grants, (2) solar energy system operations, monitoring and maintenance costs including associated personnel costs, and (3) allocated corporate overhead costs.

Solar energy systems and product sales

Cost of revenue for solar energy systems and non-lead generation product sales consist of direct and indirect material and labor costs for solar energy systems installations and product sales.

Cost of revenue for customer agreements and incentives is primarily comprised of (1) the depreciation of the cost of the energy systems, as reduced by amortization of deferred grants, (2) energy system operations, monitoring and maintenance costs including associated personnel costs, and (3) allocated corporate overhead costs.

Energy systems and product sales

Cost of revenue for energy systems and non-lead generation product sales consist of direct and indirect material and labor costs for energy systems installations and product sales.

Also included are engineering and design costs, estimated warranty costs, freight costs, allocated corporate overhead costs, vehicle depreciation costs and personnel costs associated with supply chain, logistics, operations management, safety and quality control.

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The Company estimates the fair value of stock options and employee stock purchase plans awards granted using the Black-Scholes option-valuation model.

Upon completion of the acquisition of Vivint Solar, all outstanding equity awards under Vivint Solar's equity incentive plans were automatically converted to Sunrun equity awards with the number of shares underlying such awards (and, in the case of stock options, the applicable exercise price) adjusted based on the exchange ratio of 0.55 shares of Sunrun common stock per share of Vivint Solar common stock and the fair value was also updated in accordance with FASB ASC Topic 718, Stock Compensation .

Compensation cost is recognized over the vesting period of the applicable award using the straight-line method for those options expected to vest.

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For RSUs granted to non-employees that vest upon the satisfaction of a performance condition, the Company starts recognizing expense on the RSUs when the performance condition is met.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted net (loss) income per share is computed by dividing net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period adjusted to include the effect of potentially dilutive securities.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period adjusted to include the effect of potentially dilutive securities.

Potentially dilutive securities are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive.

Noncontrolling Interests and Redeemable Noncontrolling Interests

Noncontrolling interests represent investors’ interests in the net assets of the Funds that the Company has created to finance the cost of its solar energy systems subject to the Company’s Customer Agreements.

Noncontrolling interests represent investors’ interests in the net assets of the Funds that the Company has created to finance the cost of its energy systems subject to the Company’s Customer Agreements.

The Company has determined that the contractual provisions in the funding arrangements represent substantive profit sharing arrangements.

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Redeemable noncontrolling interests are reported using the greater of their carrying value as determined by the HLBV method or their estimated redemption value at each reporting date.

Notes to Consolidated Financial Statements — Continued

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements and tax returns.

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Valuation allowances are provided against deferred tax assets to the extent that it is more likely than not that the deferred tax asset will not be realized.

Valuation allowances are provided against deferred tax assets to the extent that it is more likely than not

Notes to Consolidated Financial Statements — Continued

that the deferred tax asset will not be realized.

The Company is subject to the provisions of FASB ASC Topic 740, Income Taxes , which establishes consistent thresholds as it relates to accounting for income taxes.

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Management has analyzed the Company’s inventory of tax positions with respect to all applicable income tax issues for all open tax years (in each respective jurisdiction).

The Company sells solar energy systems to the Funds.

As the Funds are consolidated by the Company, the gain on the sale of the solar energy systems is not recognized in the consolidated financial statements.

The Company sells energy systems to the Funds.

As the Funds are consolidated by the Company, the gain on the sale of the energy systems is not recognized in the consolidated financial statements.

However, this gain is recognized for tax reporting purposes.

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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 enters into ITC transfer agreements with third-party transferees to transfer to such third-parties, for cash, the ITCs generated by certain 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.

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The Company’s customers under Customer Agreements are primarily located in California, Arizona, New Jersey, New York, Maryland, Illinois and Massachusetts.

The loss of a customer would not adversely impact the Company’s operating results or financial position.

The loss of a customer under a Customer Agreement would not adversely impact the Company’s operating results or financial position.

The Company depends on a limited number of suppliers of solar panels and other system components.

During the years ended December 31, 2024 and 2023, the solar materials purchases from the top five suppliers were approximately $ 854.9 million and $ 561.6 million, respectively.

During the years ended December 31, 2025 and 2024, the solar materials purchases from the top five suppliers were approximately $ 1.0 billion and $ 854.9 million, respectively.

Recently Issued and Adopted Accounting Standards

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In October 2022, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers .

This ASU is effective for interim and annual periods beginning after

Notes to Consolidated Financial Statements — Continued

December 15, 2022 on a prospective basis, with early adoption permitted.

Effective January 1, 2022, the Company early adopted ASU 2021-08 on a prospective basis.

There was no impact to its consolidated financial statements.

In May 2021, the FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) , which requires issuers to account for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange.

The Company adopted ASU 2021-04 effective January 1, 2022, and there was no impact to its consolidated financial statements.

Accounting standards adopted January 1, 2023:

In October 2022, the FASB issued ASU No.

2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50):

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In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which expands disclosures about a public entity’s reportable segments and requires enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s CODM uses reported segment profit or loss information in assessing segment performance and allocating resources.

Improvements to Reportable Segment Disclosures , which expands disclosures about a public entity’s reportable segments and

Notes to Consolidated Financial Statements — Continued

requires enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s CODM uses reported segment profit or loss information in assessing segment performance and allocating resources.

This ASU became effective for fiscal years beginning after December 15, 2023.

The Company adopted ASU 2023-07 during the year ended December 31, 2024, see Segment Information above in this footnote for further detail.

Accounting standards to be adopted:

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements — Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , to modify the disclosure or presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the SEC’s requirements, and to align the requirements in the FASB accounting standard codification with the SEC’s regulations.

The amendments in this ASU are effective when the related disclosure is effectively removed from Regulations S-X or S-K, with early adoption prohibited.

The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

Accounting standards adopted January 1, 2025:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating this guidance and the impact it may have on its financial statement disclosures.

In March 2024, the SEC issued Final Rule 33-11275 and 34-99678 - The Enhancement and Standardization of Climate-Related Disclosures for Investors.

This rule requires registrants to provide standardized disclosures related to climate-related risks, governance and risk management strategies, and the financial impact of severe weather events and Scope 1 and 2 greenhouse gas emissions.

The rule requires implementation in phases between 2025 and 2033.

In April 2024, the SEC announced that it would voluntarily stay its final climate disclosure rules pending judicial review.

The Company is currently evaluating the impact of the rule on its future consolidated financial statements.

Notes to Consolidated Financial Statements — Continued

The Company adopted ASU 2023-09 on a prospective basis during the year ended December 31, 2025.

Accounting standards to be adopted:

The amendments in this ASU are effective when the related disclosure is effectively removed from Regulations S-X or S-K, with early adoption prohibited.

The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures:

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The Company is currently evaluating this guidance and the impact it may have on its future consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326) — Measurement of Credit Losses for Accounts Receivable and Contract Assets .

This guidance provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets.

This ASU is effective for fiscal years beginning after December 15, 2025 and interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating this guidance and the impact it may have on its future consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40) — Targeted Improvements to the Accounting for Internal-Use Software .

The amendments in this update improve the operability of the guidance by removing all references to software development project stages and clarifies the threshold entities apply to begin capitalizing cost.

This ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating this guidance and the impact it may have on its future consolidated financial statements.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements .

This ASU amends certain aspects of hedge accounting guidance to more closely align hedge accounting with the economics of an entity’s risk management activities in the financial statements.

Specifically, this guidance allows entities to apply hedge accounting to a greater number of highly effective

Notes to Consolidated Financial Statements — Continued

economic hedges in five areas:

(i) similar risk assessment for cash flow hedges;

(ii) hedging forecasted interest payments on choose-your-rate debt instruments;

(iii) cash flow hedges of nonfinancial forecasted transactions;

(iv) net written options as hedging instruments;

and (v) Foreign-currency-denominated debt instrument as hedging instrument and hedged item (dual hedge).

This ASU is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating this guidance and the impact it may have on its future consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements .

This guidance creates a comprehensive list of interim disclosures required under GAAP and codifies a disclosure principle that requires disclosures at interim periods when an event or change that has a material effect on an entity has occurred since the last annual report.

This ASU is effective for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years.

The Company is currently evaluating this guidance and the impact it may have on its financial statement disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements .

The FASB issued final guidance to clarify, correct errors in or make other improvements to a variety of topics in the Codification that are intended to make it easier to understand and apply.

This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating this guidance and the impact it may have on its future consolidated financial statements.

Fair Value Measurement

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Total $ — $ 7,385 $ — $ 7,385

The above balances are recorded in other assets and other liabilities, respectively, in the consolidated balance sheets, except for $ 30.6 million and $ 55.5 million as of December 31, 2024 and 2023, respectively, which is recorded in prepaid expenses and other current assets.

The above balances are recorded in other assets and other liabilities, respectively, in the consolidated balance sheets, except for $ 9.8 million and $ 30.6 million as of December 31, 2025 and 2024, respectively, which is recorded in prepaid expenses and other current assets and $ 6.3 million as of December 31, 2025, which is recorded in accrued expenses and other liabilities.

The Company determines the fair value of its interest rate swaps using a discounted cash flow model that incorporates an assessment of the risk of non-performance by the interest rate swap counterparty and an evaluation of the Company’s credit risk in valuing derivative instruments.

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$ 501,286 $ 402,083

The Internal Revenue Service (“IRS”) provided taxpayers a safe harbor opportunity for solar facilities that began construction prior to January 1, 2025 and are placed in service on or after January 1, 2025 to elect the application of the Commercial ITC under Section 48(a) of the Code.

The Company has sought to avail itself of the safe harbor in order to retain the ability to elect the application of the Commercial ITC under Section 48(a) of the Code by incurring certain costs and taking title to equipment in 2024.

As of December 31, 2024, there was $ 349.5 million related to the safe harbor program within raw materials.

Solar Energy Systems, net

Solar energy systems, net consists of the following (in thousands):

Solar energy system equipment costs

$ 14,258,772 $ 12,558,996

The Company has sought to avail itself of the safe harbor in order to retain the ability to elect the application of the ITC under Section 48(a) of the Code by incurring certain costs and taking title to equipment in 2024.

As of December 31, 2025, and 2024, there was $ 85.3 million and $ 349.5 million, respectively, related to the safe harbor program within raw materials.

Energy Systems, net

Energy systems, net consists of the following (in thousands):

Energy system equipment costs $ 16,090,654 $ 14,258,772

Inverters and batteries 3,343,643 2,554,739

Total solar energy systems

16,813,511 14,404,576

Total energy systems 19,434,297 16,813,511

accumulated depreciation and amortization ( 3,384,021 ) ( 2,732,888 )

construction-in-progress 767,587 951,492

Total solar energy systems, net

$ 15,032,115 $ 13,028,871

All solar energy systems, including construction-in-progress, have been leased to or are subject to signed Customer Agreements with customers.

In accordance with its policy, the Company periodically reviews the estimated useful lives of its fixed assets on an ongoing basis and recognizes any changes in estimated useful lives

Total energy systems, net $ 16,817,863 $ 15,032,115

All energy systems, including construction-in-progress, have been leased to or are subject to signed Customer Agreements with customers.

In accordance with its policy, the Company periodically reviews the

Notes to Consolidated Financial Statements — Continued

by prospectively adjusting depreciation expense.

estimated useful lives of its fixed assets on an ongoing basis and recognizes any changes in estimated useful lives by prospectively adjusting depreciation expense.

During the three months ended June 30, 2024, the Company completed an assessment of its battery equipment, which included review of an independent engineering report, and determined that the useful life of its batteries was longer than the estimated useful life being used to calculate depreciation.

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For batteries placed in service as of the effective date of April 1, 2024, the impact on depreciation for the year ended December 31, 2024 was approximately $ 14.0 million.

The Company recorded depreciation expense related to solar energy systems of $ 584.6 million, $ 500.6 million and $ 426.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The Company recorded depreciation expense related to energy systems of $ 677.7 million, $ 584.6 million and $ 500.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The depreciation expense was reduced by the amortization of deferred grants of $ 9.5 million, $ 7.8 million and $ 8.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

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As of September 30, 2023, the Company concluded that the fair value of the Company’s one reporting unit did not exceed its carrying value with consideration of a control premium and recorded a non-cash goodwill impairment charge of $ 1.2 billion in its consolidated statements of operations.

There was no such impairment during the year ended December 31, 2022.

The change in the carrying value of goodwill is as follows (in millions):

Balance—January 1, 2023 and 2022 $ 4,280

Impairment—September 30, 2023

Balance—December 31, 2023 $ 3,122

Impairment—December 31, 2024 $ ( 3,122 )

Balance—December 31, 2024 $ —

Balance—December 31, 2025 and 2024

Other assets consist of the following (in thousands):

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2,104,000 2,412,400 39,500 6.51 % 7.24 % SOFR + 2.35 % - 3.10 %

March 2027 - February 2028

February 2028 - March 2030

Senior non-revolving loans (9)

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SOFR + 1.90 % - 2.25 %

September 2026 - January 2054

September 2026 - July 2060

Subordinated revolving and delayed draw loans (8)

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Securitized loans 6,036,907 4,705,549 — 5.40 % 5.08 % 2.27 % - 6.60 %

April 2048 - October 2059

April 2048 - January 2061

Total non-recourse debt 14,132,262 12,155,441 39,500

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(3) Ranges shown reflect fixed interest rate and rates using SOFR, as applicable.

(4) The working capital facility (the “Facility”) was amended in October 2024 and its total commitment of up to $ 447.5 million is secured by substantially all of the unencumbered assets of the Company, as well as ownership interests in certain subsidiaries of the Company.

(4) The working capital facility (the “Facility”) was amended in December 2025 and its total commitment of up to $ 321.4 million is secured by substantially all of the unencumbered assets of the Company, as well as ownership interests in certain subsidiaries of the Company.

Borrowings under the Facility may be designated as Base Rate Loans or Term SOFR Loans, subject to certain terms and conditions under the Credit Agreement.

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pursuant to clause (b), the “Adjusted Term SOFR Rate”).

The maturity date of this facility was automatically extended to March 1, 2027 in September 2024 as the Company had funds on deposit in the Convertible Debt Reserve Account equal to the amount sufficient to repay at the scheduled maturity all of its 0% Senior Convertible Notes due 2026 that were outstanding as of September 2024.

As part of the December 2025 amendment, the maturity date of this facility was extended to March 1, 2028.

The Company is in compliance with its quarter-end liquidity covenant.

This facility is subject to various restrictive covenants, such as the completion and presentation of audited consolidated financial statements, maintaining a minimum modified interest coverage ratio, a minimum modified current ratio, a maximum modified leverage ratio, and a minimum unencumbered cash balance, in each case, tested quarterly.

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If, however, the market price per share of the common stock, as measured under the 2026 Capped Calls, exceeds the cap price of the 2026 Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price.

The final components of the 2026 Capped Calls are scheduled to expire on January 29, 2026.

The 2026 Capped Calls expired on January 29, 2026 and the 2026 Notes were repaid on February 2, 2026.

None of the conversion criteria has been met as of December 31, 2025.

The 2026 Notes outstanding balance is recorded in accrued and other liabilities in the consolidated balance sheet as of December 31, 2025.

(6) Convertible senior notes due 2030 (the "2030 Notes" and, together with the 2026 Notes, the "Notes") under this category with an outstanding balance of $ 483.2 million as of December 31, 2025 will bear regular interest at 4.00 % per annum, and the principal amount of the 2030 Notes will not accrete.

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As of December 31, 2025, $ 3.6 million of the debt discount was amortized to interest expense inception to date.

In connection with the offering of the 2030 Notes, the Company entered into privately negotiated capped call

transactions (the “2030 Capped Calls”) with certain of the initial purchasers and/or their respective affiliates at a cost of approximately $ 38.4 million.

connection with the offering of the 2030 Notes, the Company entered into privately negotiated capped call transactions (the “2030 Capped Calls”) with certain of the initial purchasers and/or their respective affiliates at a cost of approximately $ 38.4 million.

The 2030 Capped Calls are classified as equity and were recorded to additional paid-in-capital within stockholders’ equity as of March 31, 2024.

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(8) Pursuant to the terms of the aggregation facilities within this category the Company may draw up to an aggregate principal amount of $ 2.8 billion in revolver borrowings depending on the available borrowing base at the time.

(9) Loans under this category with a fixed rate had a total outstanding balance of $ 888.6 million as of December 31, 2024.

(9) Loans under this category with a fixed rate had a total outstanding balance of $ 1.7 billion as of December 31, 2025.

(10) A loan under this category with an outstanding balance of $ 162.4 million as of December 31, 2025 contains a put option that can be exercised beginning in 2036 that would require the Company to pay off the entire loan on November 30, 2037.

(11) Loans under this category with a floating rate had a total outstanding balance of $ 680.7 million as of December 31, 2025.

(12) A loan under this category with an outstanding balance of $ 217.5 million as of December 31, 2024 and a maturity date of June 28, 2026 was amended on January 31, 2025 to extend the maturity date to June 28, 2027 and upsize the facility by $ 35.0 million.

Senior and Subordinated Debt Facilities

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Each of the financings also contains certain provisions which entitle the indenture trustee or collateral agent to take certain actions upon the occurrence of an event of default, including acceleration of amounts due under the facilities and the foreclosure on the assets of the Non-Recourse Borrower that are pledged to the lenders under the terms thereof.

The facilities are non-recourse to the Company and are secured by first priority security interests by each Non-Recourse Borrower in favor of the indenture trustee or collateral agent in all of the Non-Recourse Borrower’s assets including the cash flows from Customer Agreements which are available to each Non-Recourse Borrower after giving effect to certain operating,

maintenance and other expenses and, where applicable, distributions to tax equity investors.

As a result of such security interests, the assets of each Non-Recourse Borrower are not available to the creditors of the Company unless and until distributions from such entities are made to the Company as permitted under the applicable facility documentation.

As a result of such

security interests, the assets of each Non-Recourse Borrower are not available to the creditors of the Company unless and until distributions from such entities are made to the Company as permitted under the applicable facility documentation.

Under the terms of these financings, each Non-Recourse Borrower pays interest and principal from such net cash flows.

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2029 1,353,503

2030 1,869,997

Thereafter 7,396,340

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These swaps allow the Company to incur fixed interest rates on these loans and receive payments based on variable interest rates with the swap counterparty based on SOFR (daily, one month, three month) on the notional amounts over the life of the swaps.

In the second quarter of 2023, the Company entered into bilateral agreements with its swap counterparties to transition the remaining portion of its swaps to SOFR.

The Company made various elections under FASB ASC Topic 848, Reference Rate Reform , related to changes in critical terms of the hedging relationships due to reference rate reform to not result in a de-designation of these hedging relationships.

As of September 30, 2023, all of the Company's interest rate swap agreements were indexed to SOFR.

In December 2023, the Company started using interest rate swaptions to protect against adverse fluctuations in interest rates prior to expected future draws on the Company’s floating-rate facilities, at which point the Company enters into long-term interest rate hedges.

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(2) Comprised of 13 interest rate swaptions which effectively fix the SOFR portion of interest rates on future outstanding balances of certain loans under the senior revolving section of the debt footnote table (see Note 10, Indebtedness ) at 3.77 % to 4.09 % per annum.

These swaptions expire from February 5, 2025 to March 5, 2025 with potential underlying swaps maturing on October 31, 2040.

These swaptions expire from January 7, 2026 to March 4, 2026 with potential underlying swaps maturing on January 31, 2043 to January 31, 2044.

As of December 31, 2024, the information related to these offsetting arrangements were as follows (in thousands):

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Total derivative assets & liabilities $ 164,373 $ — $ 164,373 $ 4,153,946

The gains on derivatives designated as cash flow hedges recognized into OCI, before tax effect, consisted of the following (in thousands):

The losses (gains) on derivatives designated as cash flow hedges recognized into OCI, before tax effect, consisted of the following (in thousands):

Year Ended December 31,

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Interest rate swaps $ 12,462 $ ( 75,396 ) $ ( 23,787 )

The losses (gains) on derivatives financial instruments recognized into the consolidated statements of operations, before tax effect, consisted of the following (in thousands):

The (gains) losses on derivatives financial instruments recognized into the consolidated statements of operations, before tax effect, consisted of the following (in thousands):

Year Ended December 31,

2025 2024 2023

Interest expense, net Other expense, net Interest expense, net Other income, net

Interest expense, net Other income, net

Interest expense, net Other expense, net

Interest expense, net Other income, net

Derivatives designated as cash flow hedges:

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Interest rate swaps

(Gains) losses recognized into income — ( 121,665 ) — 661 — ( 189,710 )

Losses (gains) recognized into income

— 49,829 — ( 121,665 ) — 661

Total (gains) losses $ ( 17,458 ) $ 49,829 $ ( 35,237 ) $ ( 121,665 ) $ ( 36,755 ) $ 661

All amounts in Accumulated other comprehensive (loss) income ("AOCI") in the consolidated statements of redeemable noncontrolling interests and equity relate to derivatives, refer to the consolidated statements of comprehensive loss.

The net gains (losses) on derivatives includes the tax effect of $ 8.0 million, $ 0.5 million and $ 34.9 million for the twelve months ended December 31, 2024, 2023 and 2022, respectively.

The net (losses) gains on derivatives includes the tax effect of $ 6.2 million, $ 8.0 million and $ 0.5 million for the twelve months ended December 31, 2025, 2024 and 2023, respectively.

During the next 12 months, the Company expects to reclassify $ 7.5 million of net gains on derivative instruments from accumulated other comprehensive income to earnings.

There were forty-four undesignated derivative instruments recorded by the Company as of December 31, 2024.

Pass-Through Financing Obligation

The Company's pass-through financing obligation ("Financing Obligation") arises when the Company leases solar energy systems to Fund investors who are considered commercial customers under a master lease agreement, and these investors in turn are assigned the Customer Agreements with customers.

The Company receives all of the value attributable to the accelerated tax depreciation and some or all of the value attributable to the other incentives.

Given the assignment of operating cash flows, this arrangement is accounted for as a Financing Obligation.

The Company also sells the rights and related value attributable to the Commercial ITC to these investors.

Under the Financing Obligation arrangement, a wholly owned subsidiary of the Company finances the cost of solar energy systems with investors for an initial term of seven years .

The solar energy systems are subject to Customer Agreements with an initial term of typically 20 years that automatically renew annually or for five years .

These solar energy systems are reported under the line item solar energy systems, net in the consolidated balance sheets.

As of December 31, 2023, the cost of the solar energy systems placed in service under the Financing Obligation arrangement was $ 692.3 million.

The accumulated depreciation related to these assets as of December 31, 2023 was $ 191.5 million.

During the year ended December 31, 2024, the Company retired all five of its remaining Financing Obligation arrangements and terminated the associated leases for $ 240.3 million, which resulted in a gain on debt extinguishment of $ 50.6 million.

The investors make a series of large up-front payments and, subsequent smaller quarterly payments (lease payments) to the subsidiary of the Company.

The Company accounts for the payments received from the investors under the Financing Obligation arrangement as borrowings by recording the proceeds received as a Financing Obligation on its consolidated balance sheets, and cash provided by financing activities in its consolidated statements of cash flows.

This Financing Obligation is reduced over a period of approximately 7 years by customer payments under the Customer Agreements.

In addition, funds paid for the Commercial ITC value upfront are initially recorded as a refund liability and recognized as revenue as the associated solar energy system reaches PTO.

The Commercial ITC value, if any, is reflected in cash provided by operations on the consolidated statements of cash flows.

The Company accounts for the Customer Agreements consistent with the Company’s revenue recognition accounting policies as described in Note 2, Summary of Significant Accounting Policies.

Interest is calculated on the financing obligation using the effective interest rate method.

The effective interest rate, which is adjusted on a prospective basis, is the interest rate that equates the present value of the estimated cash amounts to be received by the investor over the lease term with the present value of the cash amounts paid by the investor to the Company, adjusted for amounts received by the investor.

The Financing Obligation is nonrecourse once the associated assets have been placed in service and all the contractual arrangements have been assigned to the investor.

Under the Financing Obligation, the investor has a right to extend its right to receive cash flows from the customers beyond the initial term in certain circumstances.

Under the Financing Obligation, the Company is responsible for services such as warranty support, accounting, lease servicing and performance reporting to customers.

As part of the warranty and performance guarantee with the customers in applicable Funds, the Company guarantees certain specified minimum annual solar energy production output for the solar energy systems leased to the customers, which the Company accounts for as disclosed in Note 2, Summary of Significant Accounting Policies.

There were forty-six undesignated derivative instruments recorded by the Company as of December 31, 2025.

VIE Arrangements

9 unchanged sentences

Prepaid expenses and other current assets

7,616 161,414

Total current assets

962,786 641,104

Solar energy systems, net

12,062,819 10,469,093

Energy systems, net 13,777,190 12,062,819

853,713 586,293

26 unchanged sentences

The Company did not declare or pay any dividends in 2025, 2024 or 2023.

Notes to Consolidated Financial Statements — Continued

The Company has reserved sufficient shares of common stock for issuance upon the exercise of stock options and the exercise of warrants.

3 unchanged sentences

Shares available for grant

Sunrun-VSI 2014 Equity Incentive Plan — 5,694

2015 Equity Incentive Plan

15,595 17,830

2015 Employee Stock Purchase Plan

2015 Amended and Restated Equity Incentive Plan

Options outstanding

1 unchanged sentence

17,299 12,375

63,524 38,345

Stock-Based Compensation

6 unchanged sentences

Upon completion of the Merger, the Company may grant equity awards through the Sunrun-VSI 2014 Equity Incentive Plan (“Sunrun-VSI 2014 Plan”), which was previously called the Vivint Solar 2014 Equity Incentive Plan.

Notes to Consolidated Financial Statements — Continued

Under the Sunrun-VSI 2014 Plan, the Company could grant stock options, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, performance stock units, performance shares and performance awards to its employees, directors and consultants, and its parent and subsidiary corporations’ employees and consultants.

6 unchanged sentences

The automatic increase of the number of shares available for issuance under the 2015 Plan is equal to the least of 10 million shares, 4 % of the outstanding shares of common stock as of the last day of the Company’s immediately preceding fiscal year or such other amount as the Board of Directors may determine.

In 2023 and 2024, there were no additional shares reserved for issuance under the 2015 Plan pursuant to the automatic provision.

In 2023 and 2024, there were no additional shares reserved

Notes to Consolidated Financial Statements — Continued

for issuance under the 2015 Plan pursuant to the automatic provision.

Stock options granted to employees generally have a maximum term of ten-years and vest over a four-year period from the date of grant;

4 unchanged sentences

25 % vest at the end of one year , and 75 % vest quarterly over the remaining three years .

2015 Amended and Restated Equity Incentive Plan

In June 2025, the Company's stockholders approved the Amended and Restated 2015 Equity Incentive Plan (the "A&R 2015 Plan"), which amended and restated the Company's existing 2015 Equity Incentive Plan.

The A&R 2015 Plan is a stockholder-approved plan that provides for equity-based awards, including incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares, to employees, directors and consultants.

As of the effective date, the maximum aggregate number of shares of common stock authorized for issuance under the A&R 2015 Plan was 38,223,498 shares.

The A&R 2015 Plan is administered by the Sunrun Board or a designated committee thereof.

Stock Options

10 unchanged sentences

Options vested and expected to vest at December 31, 2025 3,083 $ 20.52 3.92 $ 15,626

The weighted-average grant-date fair value of stock options granted during the year ended December 31, 2024, 2023 and 2022 were $ 0.00 , $ 0.00 and $ 17.21 per share, respectively.

There were no stock options granted during the years ended December 31, 2025, 2024 and 2023.

The total intrinsic value of the options exercised during the year ended December 31, 2025, 2024 and 2023 was $ 3.9 million, $ 4.5 million and $ 10.3 million, respectively.

1 unchanged sentence

The total fair value of options vested during the year ended December 31, 2025, 2024 and 2023 was $ 4.3 million, $ 6.5 million and $ 11.8 million, respectively.

Notes to Consolidated Financial Statements — Continued

The Company estimates the fair value of stock-based awards on their grant date using the Black-Scholes option-pricing model.

1 unchanged sentence

All options are amortized over the requisite service periods of the awards, which are generally the vesting periods.

The Company estimated the fair value of stock options with the following assumptions:

Year Ended December 31,

2024 2023 2022

Risk-free interest rate

1.60 % - 3.80 %

65.60 % - 69.40 %

Expected term (in years)

Expected dividend yield

The expected term assumptions were determined based on the average vesting terms and contractual lives of the options.

The risk-free interest rate is based on the rate for a U.S.

Treasury zero-coupon issue with a term that approximates the expected life of the option grant.

No stock options were granted in the years ended December 31, 2024 and 2023.

For stock options granted in the year ended December 31, 2022, the expected volatility was calculated based on the Company’s average historical volatilities.

The Company accounts for forfeitures as they occur and, as such, reverses compensation cost previously recognized in the period the award is forfeited, for an award that is forfeited before completion of the requisite service period .

Notes to Consolidated Financial Statements — Continued

Restricted Stock Units

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Unvested balance at December 31, 2025 17,299 $ 10.34

Warrants for Strategic Partners

The Company has issued warrants for up to 846,943 shares of its common stock to certain strategic partners (calculated using the respective quarter of grant's closing stock price).

The exercise price of each warrant is $ 0.01 per share, and 13,939 , 63,742 and 346,269 warrants were exercised during the years ended December 31, 2024, 2023 and 2022, respectively.

During the years ended December 31, 2024, 2023 and 2022, the Company recognized stock-based compensation expense of nil , $ 4.3 million and $ 4.3 million, respectively, under time-based warrants.

Employee Stock Purchase Plan

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Employees may purchase a limited number of shares of the Company’s common stock via regular payroll deductions at a discount of 15 % of the lower of the fair market value of the Company’s common stock on the first trading date of each offering period or on the exercise date.

Employees may deduct up to 15 % of payroll, with a

Notes to Consolidated Financial Statements — Continued

cap of $ 25,000 of fair market value of shares in any calendar year and 10,000 shares per employee per purchase period.

Employees may deduct up to 15 % of payroll, with a cap of $ 25,000 of fair market value of shares in any calendar year and 10,000 shares per employee per purchase period.

Under the ESPP, 1,000,000 shares of the Company’s common stock have been reserved for issuance to eligible employees.

6 unchanged sentences

Cost of customer agreements and incentives $ 9,034 $ 8,538 $ 8,772

Cost of solar energy systems and product sales

1,999 5,267 9,274

Cost of energy systems and product sales 2,550 1,999 5,267

Sales and marketing

7 unchanged sentences

As of December 31, 2025 and 2024, total unrecognized compensation cost related to outstanding stock options and RSUs was $ 111.3 million and $ 150.6 million, respectively, which are expected to be recognized over a weighted-average period of 2.4 years.

Notes to Consolidated Financial Statements — Continued

The Sunrun 401(k) Plan and the Vivint Solar 401(k) Plan are deferred salary arrangements under Section 401(k) of the Internal Revenue Code.

4 unchanged sentences

The Company recognized expense of $ 20.4 million, $ 21.1 million and $ 22.7 million in the years ended December 31, 2025, 2024 and 2023, respectively.

Adoption of ASU 2023-09

In December 2023, the Financial Accounting Standard’s Board (“FASB”) issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures.

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The Company adopted ASU 2023-09 on a prospective basis during the year ended December 31, 2025.

The following table presents the domestic and foreign loss before income taxes for the period ended December 31, 2025 (in thousands):

Loss before income taxes – Domestic

Loss before income taxes – Foreign 188,203

Total Loss before income taxes

The following table presents the loss (income) before income taxes for the periods presented (in thousands):

18 unchanged sentences

For the Year Ended December 31,

2024 2023 2022

Tax provision (benefit) at federal statutory rate

4 unchanged sentences

Effect of noncontrolling and redeemable noncontrolling interests

7.23 8.40 25.35

Stock-based compensation

( 1.78 ) ( 0.63 )

( 1.78 ) ( 0.63 ) ( 1.42 )

Effect of valuation allowance ( 0.16 ) 4.06

1 unchanged sentence

( 0.61 ) % ( 0.47 ) %

Notes to Consolidated Financial Statements — Continued

The following table represents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented (following the adoption of ASU 2023-09):

For the Year Ended December 31, 2025

(in Thousands)

federal statutory tax rate

$ ( 247,028 ) 21.00 %

State and local income taxes, net of federal income tax effect 1

5,154 ( 0.44 )

Change in state valuation allowances

( 4,860 ) 0.41

Foreign tax effects

Puerto Rico ( 42,216 ) 3.59

Change in foreign valuation allowances

45,405 ( 3.85 )

Effect of changes in tax laws or rates enacted in the current period

Energy-related tax credits ( 229,934 ) 19.55

Changes in valuation allowances

( 18,009 ) 1.53

Nontaxable or nondeductible Items

Stock-based compensation

12,567 ( 1.07 )

Other 968 ( 0.08 )

Other adjustments

Noncontrolling interest allocation 306,401 ( 26.05 )

Other 4,334 ( 0.37 )

Effective tax rate

$ ( 167,218 ) 14.22 %

(1) State taxes in California made up the majority (greater than 50 percent) of the tax effect in this category.

The Company paid an immaterial amount of federal, state and foreign income taxes during 2025.

Notes to Consolidated Financial Statements — Continued

24 unchanged sentences

Net deferred tax liabilities $ ( 163,176 ) $ ( 137,940 )

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

The Company accounts for investment tax credits as a reduction of income tax expense in the year in which the credits arise ( i.e.

the flow-through method).

As of December 31, 2024, the Company has an investment tax credit carryforward of approximately $ 109.3 million which begins to expire in the year 2033, if not utilized.

As of December 31, 2025, the Company has an investment tax credit carryforward of approximately $ 109.1 million which begins to expire in the year 2033, and $ 1.1 million of other state tax credits which begin to expire in the year 2029.

As of December 31, 2024, the Company has an investment tax credit carryforward of approximately $ 109.3 million and California enterprise zone credits of approximately $ 0.5 million.

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

The Company enters into investment tax credit (each, an "ITC" and collectively, the "ITCs") transfer agreements with third-party transferees to transfer to such third-parties, for cash, the ITCs generated by certain energy systems that have been or will be placed in service.

During the 12 months ended December 31, 2025 and December 31, 2024, the Company recognized income tax benefit to the Company of $ 196.6 million and $ 70.0 million, respectively, from such transfers.

5 unchanged sentences

The Company’s management considers all available positive and negative evidence including its history of operating income or losses, future reversals of existing taxable temporary difference, taxable income in carryback years and tax-planning strategies.

The Company has concluded that it is more likely than not that the benefit from certain federal, state, and foreign tax credits and net operating loss carryforwards will not be realized.

In recognition of this risk, the Company has provided a valuation allowance of

The Company has concluded that it is more likely than not that the benefit from certain federal, state, and foreign tax credits and net operating loss

Notes to Consolidated Financial Statements — Continued

$ 165.0 million on certain deferred tax assets, including those relating to federal, state, and foreign tax credits and net operating loss carryforwards, which is a decrease of $ 9.3 million in 2024.

The Company sells solar energy systems to investment Funds.

carryforwards will not be realized.

In recognition of this risk, the Company has provided a valuation allowance of $ 189.3 million on certain deferred tax assets, including those relating to federal, state, and foreign tax credits and net operating loss carryforwards, which is an increase of $ 24.3 million in 2025.

The Company sells energy systems to investment Funds.

As the investment Funds are consolidated by the Company, the gain on the sale of the assets has been eliminated in the consolidated financial statements.

11 unchanged sentences

The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations.

In 2018, the IRS opened an audit of one of the Company’s investors and reviewed the tax basis of the Company’s solar energy systems in the investment fund, which is covered by the Company’s 2018 insurance policy.

In December 2024, this IRS audit resolved with no adverse findings involving the fair market value of the price paid by the investment fund for the Company’s solar energy systems.

The Company incurred no out-of-pocket costs except the time, procedural, and administrative expenses associated with such a multi-year process.

The Company does not expect increases in insurance premiums as a result of this audit.

The Company is subject to taxation and files income tax returns in the U.S., its territories, and various state and local jurisdictions.

6 unchanged sentences

As a result of the Company’s net operating loss carryforwards as of December 31, 2025, the Company does not expect to pay income tax, including in connection with its income tax provision for the year ended December 31, 2025.

As of December 31, 2024, the Company 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.

As of December 31, 2025, the Company had net operating loss carryforwards for federal, state, and foreign income tax purposes of approximately $ 720.7 million, $ 3.5 billion, and $ 1.3 billion, respectively, which will begin to expire in 2028 for federal purposes, in 2026 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 $ 2.6 billion and $ 371.4 million, respectively, and have indefinite carryover periods and do not expire.

Notes to Consolidated Financial Statements — Continued

Commitments and Contingencies

Letters of Credit

As of December 31, 2024 and 2023, the Company had $ 47.3 million and $ 37.0 million, respectively, of unused letters of credit outstanding, which each carry fees of 0.50 % - 3.25 %, respectively.

As of December 31, 2025 and 2024, the Company had $ 23.0 million and $ 47.3 million, respectively, of unused letters of credit outstanding, which each carry fees of 0.50 % - 3.75 % per annum and 0.50 % - 3.25 % per annum, respectively.

Notes to Consolidated Financial Statements — Continued

Certain tax equity funds and debt facilities require the Company to maintain an aggregate amount of $ 35.0 million of unencumbered cash and cash equivalents at the end of each month.

45 unchanged sentences

Purchase Commitment

The Company entered into a purchase commitment, which has the ability to be canceled without significant penalties, with a supplier to purchase $ 574.0 million of batteries by the end of the fourth quarter of 2025.

The Company has several purchase commitments, which have the ability to be canceled without significant penalties, with multiple suppliers to purchase $ 317.6 million of batteries by the end of the third quarter of 2026 and to purchase $ 1.7 billion of photovoltaic modules, inverters and batteries between fiscal 2026 and fiscal 2029.

Warranty Accrual

The Company accrues warranty costs when revenue is recognized for solar energy systems sales, based on the estimated future costs of meeting its warranty obligations.

The Company accrues warranty costs as revenue is recognized for energy systems sales, based on the estimated future costs of meeting its warranty obligations.

As such, the warranty reserve is immaterial in all periods presented.

A warranty is provided for solar energy systems sold.

However, for the solar energy systems under Customer Agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company.

Instead, any repair costs on those solar energy systems are expensed when they are incurred as a component of customer agreements and incentives costs of revenue.

Commercial ITC Indemnification

The Company is contractually committed to compensate its investors for any losses that they may suffer in certain limited circumstances resulting from reductions in Commercial ITCs, including any reduction in depreciable basis.

Generally, such obligations would arise as a result of reductions to the value of the underlying solar energy systems as assessed by the Internal Revenue Service (the “IRS”).

The Company set the purchase prices and claimed values based on fair market values determined with the assistance of an independent third-party appraisal with respect to the systems that generate Commercial ITCs (and the associated depreciable basis) that are passed-through to, and claimed by, the Fund investors.

In April 2018, the Company purchased an insurance policy providing for certain payments by the insurers in the event there is a final determination (including a judicial determination) that reduced the Commercial ITCs and depreciation claimed in respect of solar energy systems sold or transferred to most Funds through April 2018, or later, in the case of Funds added to the policy after such date.

In general, the policy indemnifies the Company and related parties for additional taxes (including penalties and interest) owed in respect of lost Commercial ITCs, depreciation, gross-up costs and expenses incurred in defending such claim, subject to negotiated exclusions from, and limitations to, coverage.

The Company purchased similar additional insurance policies in January 2021, October 2022 and May 2023.

At each balance sheet date, the Company assesses and recognizes, when applicable, the potential exposure from this obligation based on all the information available at that time, including any audits undertaken by the IRS.

A warranty is provided for energy systems sold.

However, for the energy systems under Customer Agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company.

Instead, any repair costs on those energy systems are expensed when they are incurred as a component of customer agreements and incentives costs of revenue.

ITC Indemnification

The Company is contractually committed to compensate its investors for any losses that they may suffer in certain limited circumstances resulting from reductions in ITCs, including any reduction in depreciable basis.

Generally, such obligations would arise as a result of reductions to the value of the underlying solar energy systems as assessed by the IRS.

The Company set the purchase prices and claimed values based on fair market values determined with the assistance of an independent third-party appraisal with respect to the systems that generate ITCs (and the associated depreciable basis) that are passed-through to, and claimed by, the Fund investors.

In April 2018, the Company purchased an insurance policy providing for certain payments by the insurers in the event there is a final determination (including a judicial determination) that reduced the ITCs and depreciation claimed in respect of solar energy systems sold or transferred to most Funds through April 2018, or later, in the case of Funds added to the policy after such date.

In general, the policy indemnifies the Company and related parties for additional taxes (including penalties and interest) owed in respect of lost ITCs, depreciation, gross-up costs and expenses incurred in defending such claim, subject to negotiated exclusions from, and limitations to, coverage.

The Company purchased similar additional insurance policies in January 2021, October 2022, May 2023, March 2024, June 2024, and March 2025.

Notes to Consolidated Financial Statements — Continued

In December 2024, this IRS audit resolved with no adverse findings involving the fair market value of the price paid by the investment fund for the Company’s solar energy systems.

The Company incurred no out-of-pocket costs except the time, procedural, and administrative expenses associated with such a multi-year process.

The Company does not expect increases in insurance premiums as a result of this audit.

The Company is subject to certain legal proceedings, claims, investigations and administrative proceedings in the ordinary course of its business.

5 unchanged sentences

While the outcome of these matters cannot currently be predicted with certainty, the Company does not currently believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations, or cash flows.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Potentially dilutive securities are excluded from the computation of dilutive EPS in periods in which the effect would be antidilutive.

Notes to Consolidated Financial Statements — Continued

The computation of the Company’s basic and diluted net (loss) income per share is as follows (in thousands, except per share amounts):

The computation of the Company’s basic and diluted net income (loss) per share is as follows (in thousands, except per share amounts):

Years Ended December 31,

2025 2024 2023

Net (loss) income attributable to common stockholders $ ( 2,846,167 ) $ ( 1,604,497 ) $ 173,377

Net income (loss) attributable to common stockholders $ 449,947 $ ( 2,846,167 ) $ ( 1,604,497 )

Debt discount amortization 2,303 — —

Net (loss) income available to common stockholders $ ( 2,846,167 ) $ ( 1,604,497 ) $ 175,635

Weighted average shares used to compute net (loss) income per share attributable to common stockholders, basic 222,215 216,642 211,347

Net income (loss) available to common stockholders $ 452,250 $ ( 2,846,167 ) $ ( 1,604,497 )

Weighted average shares used to compute net income (loss) per share attributable to common stockholders, basic 229,809 222,215 216,642

Weighted average effect of potentially dilutive shares to purchase common stock

Weighted average shares used to compute net (loss) income per share attributable to common stockholders, diluted 222,215 216,642 219,157

Net (loss) income per share attributable to common stockholders

Weighted average shares used to compute net income (loss) per share attributable to common stockholders, diluted 264,465 222,215 216,642

Net income (loss) per share attributable to common stockholders

$ 1.96 $ ( 12.81 ) $ ( 7.41 )

$ 1.71 $ ( 12.81 ) $ ( 7.41 )

The following shares were excluded from the computation of diluted net (loss) income per share as the impact of including those shares would be anti-dilutive (in thousands):

The following shares were excluded from the computation of diluted net income (loss) per share as the impact of including those shares would be anti-dilutive (in thousands):

Year Ended December 31,

11 unchanged sentences

The Company provided a reserve of $ 2.6 million and $ 2.8 million as of December 31, 2025 and 2024, respectively, related to advances to direct-sales professionals who have terminated their employment agreement with the Company.

Subsequent Events

In February 2026, the Company amended the senior secured credit facility of one of its subsidiaries to, among other things, increase the total commitments from $ 2.63 billion to $ 2.7 billion and extend the maturity date from February 2028 to February 2030.

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

Other Information.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data