Sunrun Inc. 10-K

Item 8. Financial Statements and Supplementary Data. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm (PCAOB ID: 00 42 ) 80 Consolidated Balance Sheets 83 Consolidated Statements of Operations 85 Consolidated Statements of Comprehensive Income (Loss) 86 Consolidated Statements of Redeemable Noncontrolling Interests and Stockholders' Equity 87 Consolidated Statements of Cash Flows 88 Notes to Consolidated Financial Statements 90 79 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Sunrun Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sunrun Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive (loss) income, redeemable noncontrolling interests and stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 80 Noncontrolling Interests and Redeemable Noncontrolling Interests Description of matter At December 31, 2025, noncontrolling interests were $1 billion and redeemable noncontrolling interests were $0.7 billion. As explained in Note 2 to the consolidated financial statements, noncontrolling interests and redeemable noncontrolling interests represent investors’ interests in the net assets of the tax equity funds that the Company has created to finance the cost of its solar 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. The Company has further determined that the appropriate methodology for attributing income and loss to the noncontrolling interests and redeemable noncontrolling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Auditing the noncontrolling interests and redeemable noncontrolling interests is complex due to the volume of tax equity funds and the allocation of the net income or loss to the equity holders. Each HLBV calculation is based upon the liquidation provisions of each fund’s contractual agreement used to calculate the amount of income or loss to be attributed to the noncontrolling member. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls that address the risks of material misstatement relating to the noncontrolling interests and redeemable noncontrolling interests. This included evaluating controls over establishing each HLBV model and management’s review of each significant input into the HLBV models for compliance with the contractual provisions of such funding arrangements, the completeness and accuracy of underlying data, the calculation of tax capital accounts, and the mathematical accuracy of the HLBV models. To test the noncontrolling interests and redeemable noncontrolling interests, our audit procedures included, among others, examining the HLBV models for compliance with contractual provisions in the funding arrangements. We tested the completeness and accuracy of the underlying data used in the HLBV models. We involved tax professionals to assist in evaluating the calculation of the tax capital accounts in accordance with the tax code, as well as compliance with contractual provisions in the funding arrangements. We also tested the mathematical accuracy of management’s HLBV models. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2010. San Francisco, California February 26, 2026 81 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Sunrun Inc. Opinion on Internal Control Over Financial Reporting We have audited Sunrun Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Sunrun Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2025 consolidated financial statements of the Company and our report dated February 26, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Francisco, California February 26, 2026 82 Sunrun Inc. Consolidated Balance Sheets (In Thousands, Except Share Par Values) As of December 31, 2025 2024 Assets Current assets: Cash $ 823,380 $ 574,956 Restricted cash 413,460 372,312 Accounts receivable (net of allowances for credit losses of $ 20,692 and $ 15,420 as of December 31, 2025 and 2024, respectively) 262,627 170,706 Inventories 501,286 402,083 Prepaid expenses and other current assets 155,216 202,579 Total current assets 2,155,969 1,722,636 Restricted cash 148 148 Energy systems, net 16,817,863 15,032,115 Property and equipment, net 75,692 121,239 Other assets 3,560,924 3,021,746 Total assets (1) $ 22,610,596 $ 19,897,884 Liabilities and total equity Current liabilities: Accounts payable $ 271,021 $ 354,214 Distributions payable to noncontrolling interests and redeemable noncontrolling interests 47,072 41,464 Accrued expenses and other liabilities 518,835 543,752 Deferred revenue, current portion 162,839 129,442 Deferred grants, current portion 8,681 7,900 Finance lease obligations, current portion 24,557 26,045 Non-recourse debt, current portion 269,510 231,665 Total current liabilities 1,302,515 1,334,482 Deferred revenue, net of current portion 1,350,494 1,208,905 Deferred grants, net of current portion 196,726 196,535 Finance lease obligations, net of current portion 36,908 66,139 Line of credit 238,323 384,226 Non-recourse debt, net of current portion 13,708,532 11,806,181 Convertible senior notes 473,749 479,420 Other liabilities 156,199 119,846 Deferred tax liabilities 163,176 137,940 Total liabilities (1) 17,626,622 15,733,674 Commitments and contingencies (Note 17) Redeemable noncontrolling interests 709,255 624,159 Stockholders’ equity: Preferred stock, $ 0.0001 par value—authorized, 200,000 shares as of December 31, 2025 and 2024; no shares issued and outstanding as of December 31, 2025 and 2024 — — Common stock, $ 0.0001 par value—authorized, 2,000,000 shares as of December 31, 2025 and 2024; issued and outstanding, 233,612 and 225,662 shares as of December 31, 2025 and 2024, respectively 23 23 Additional paid-in capital 6,899,277 6,747,236 Accumulated other comprehensive loss 63,103 86,814 Retained earnings ( 3,829,919 ) ( 4,279,866 ) Total stockholders’ equity 3,132,484 2,554,207 Noncontrolling interests 1,142,235 985,844 Total equity 4,274,719 3,540,051 Total liabilities, redeemable noncontrolling interests and total equity $ 22,610,596 $ 19,897,884 83 (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. 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; restricted cash as of December 31, 2025 and 2024 were $ 59,010 and $ 57,892 , respectively; accounts receivable, net as of December 31, 2025 and 2024 were $ 118,907 and $ 92,259 , respectively; inventories as of December 31, 2025 and 2024 of $ 180,841 and $ 62,581 , respectively; prepaid expenses and other current assets as of December 31, 2025 and 2024 were $ 64,588 and $ 7,616 , respectively and other assets as of December 31, 2025 and 2024 were $ 853,713 and $ 586,293 , respectively. The Company’s consolidated liabilities as of December 31, 2025 and 2024 include $ 2,643,129 and $ 2,343,040 , respectively, in liabilities of VIEs whose creditors have no recourse to the Company. These liabilities include accounts payable as of December 31, 2025 and 2024 of $ 5,125 and $ 5,400 , respectively; distributions payable to noncontrolling interests and redeemable noncontrolling interests as of December 31, 2025 and 2024 of $ 47,073 and $ 41,465 , respectively; accrued expenses and other liabilities as of December 31, 2025 and 2024 of $ 110,390 and $ 42,997 , respectively; deferred revenue as of December 31, 2025 and 2024 of $ 1,025,241 and $ 826,854 , respectively; non-recourse debt as of December 31, 2025 and 2024 of $ 1,434,535 and $ 1,407,784 , respectively; and other liabilities as of December 31, 2025 and 2024 of $ 20,765 and $ 18,540 , respectively. The accompanying notes are an integral part of these consolidated financial statements. 84 Sunrun Inc. Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) Year Ended December 31, 2025 2024 2023 Revenue: Customer agreements and incentives $ 1,819,007 $ 1,505,227 $ 1,186,706 Energy systems and product sales 1,137,990 532,492 1,073,107 Total revenue 2,956,997 2,037,719 2,259,813 Operating expenses: Cost of customer agreements and incentives 1,282,357 1,169,213 1,077,114 Cost of energy systems and product sales 777,342 539,952 1,019,638 Sales and marketing 709,253 617,162 740,821 Research and development 36,125 39,304 21,816 General and administrative 278,049 245,127 221,067 Goodwill impairment — 3,122,168 1,158,000 Total operating expenses 3,083,126 5,732,926 4,238,456 Loss from operations ( 126,129 ) ( 3,695,207 ) ( 1,978,643 ) Interest expense, net ( 996,782 ) ( 848,366 ) ( 652,989 ) 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 ( 167,218 ) ( 26,817 ) ( 12,691 ) Net loss ( 1,009,106 ) ( 4,355,217 ) ( 2,682,841 ) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests ( 1,459,053 ) ( 1,509,050 ) ( 1,078,344 ) 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 income (loss) per share attributable to common stockholders Basic 229,809 222,215 216,642 Diluted 264,465 222,215 216,642 The accompanying notes are an integral part of these consolidated financial statements. 85 Sunrun Inc. Consolidated Statements of Comprehensive Income (Loss) (In Thousands) Year Ended December 31, 2025 2024 2023 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 (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. 86 Sunrun Inc. Consolidated Statements of Redeemable Noncontrolling Interests and Stockholders' Equity (In Thousands) Redeemable Noncontrolling Interests Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Deficit) Total Stockholders' Equity Noncontrolling Interests Total Equity Shares Amount Balance - December 31, 2022 $ 609,702 214,184 $ 21 $ 6,470,194 $ 67,109 $ 170,798 $ 6,708,122 $ 861,193 $ 7,569,315 Exercise of stock options — 838 — 4,304 — — 4,304 $ — 4,304 Issuance of restricted stock units, net of tax withholdings — 2,836 1 — — — 1 — 1 Shares issued in connection with the Employee Stock Purchase Plan — 1,534 — 18,305 — — 18,305 — 18,305 Stock-based compensation — — — 111,280 — — 111,280 — 111,280 Contributions from redeemable noncontrolling interests and noncontrolling interests 185,397 — — — — — — 1,387,002 1,387,002 Distributions to redeemable noncontrolling interests and noncontrolling interests ( 68,310 ) — — — — — — ( 159,876 ) ( 159,876 ) Net (loss) income ( 30,601 ) — — — — ( 1,604,497 ) ( 1,604,497 ) ( 1,047,743 ) ( 2,652,240 ) Acquisition of noncontrolling interest ( 20,011 ) — — 5,146 — — 5,146 ( 32,968 ) ( 27,822 ) 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 Exercise of stock options — 524 — 3,607 — — 3,607 — 3,607 Issuance of restricted stock units, net of tax withholdings — 4,076 1 — — — 1 — 1 Shares issued in connection with the Employee Stock Purchase Plan — 1,670 — 15,267 — — 15,267 — 15,267 Stock-based compensation — — — 124,267 — — 124,267 — 124,267 Contributions from redeemable noncontrolling interests and noncontrolling interests 24,602 — — — — — — 1,787,364 1,787,364 Distributions to redeemable noncontrolling interests and noncontrolling interests ( 68,543 ) — — — — — — ( 246,400 ) ( 246,400 ) 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 ) Other comprehensive income, net of taxes — — — — 32,138 — 32,138 — 32,138 Balance - December 31, 2024 624,159 225,662 23 6,747,236 86,814 ( 4,279,866 ) 2,554,207 985,844 3,540,051 Exercise of stock options — 363 — 2,480 — — 2,480 — 2,480 Issuance of restricted stock units, net of tax withholdings — 5,897 — — — — — — — Shares issued in connection with the Employee Stock Purchase Plan — 1,690 — 14,321 — — 14,321 — 14,321 Stock-based compensation — — — 116,644 — — 116,644 — 116,644 Contributions from redeemable noncontrolling interests and noncontrolling interests 422,749 — — — — — — 1,579,428 1,579,428 Distributions to redeemable noncontrolling interests and noncontrolling interests ( 75,260 ) — — — — — — ( 177,077 ) ( 177,077 ) 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 ) Other comprehensive loss, net of taxes — — — — ( 23,711 ) — ( 23,711 ) — ( 23,711 ) Balance - December 31, 2025 $ 709,255 233,612 $ 23 $ 6,899,277 $ 63,103 $ ( 3,829,919 ) $ 3,132,484 $ 1,142,235 $ 4,274,719 The accompanying notes are an integral part of these consolidated financial statements 87 Sunrun Inc. Consolidated Statements of Cash Flows (In Thousands) Year Ended December 31, 2025 2024 2023 Operating activities: Net loss $ ( 1,009,106 ) $ ( 4,355,217 ) $ ( 2,682,841 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization, net of amortization of deferred grants 725,578 620,876 531,669 Goodwill impairment — 3,122,168 1,158,000 Income tax benefit ( 167,218 ) ( 26,817 ) ( 12,716 ) Stock-based compensation expense 107,952 112,825 111,781 Interest on pass-through financing obligations — 8,837 19,504 Reduction in pass-through financing obligations — ( 20,787 ) ( 40,352 ) Unrealized (gain) loss on derivatives 55,245 ( 120,008 ) 28,105 Other noncash items 307,833 210,479 261,390 Changes in operating assets and liabilities: Accounts receivable ( 119,765 ) ( 14,974 ) 15,748 Inventories ( 99,203 ) 57,663 324,158 Prepaid expenses and other current assets ( 613,652 ) ( 771,997 ) ( 476,628 ) Accounts payable ( 80,057 ) 177,449 ( 108,785 ) Accrued expenses and other liabilities 84,690 80,588 ( 56,473 ) 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 energy systems ( 2,498,561 ) ( 2,699,452 ) ( 2,587,183 ) Purchase of equity investment — — ( 5,000 ) Purchases of property and equipment, net ( 1,777 ) ( 1,572 ) ( 20,960 ) Net cash used in investing activities ( 2,500,338 ) ( 2,701,024 ) ( 2,613,143 ) Financing activities: Proceeds from state tax credits, net of recapture 9,668 5,203 4,033 Proceeds from trade receivable financing 167,081 124,261 41,225 Repayment of trade receivable financing ( 291,342 ) — ( 41,225 ) Proceeds from line of credit 382,986 354,256 1,124,675 Repayment of line of credit ( 528,889 ) ( 509,532 ) ( 1,090,331 ) Proceeds from issuance of convertible senior notes, net of capped call transaction — 444,822 — Repurchase of convertible senior notes ( 2,124 ) ( 346,581 ) ( 1,545 ) Proceeds from issuance of non-recourse debt 4,111,079 4,009,906 3,745,580 Repayment of non-recourse debt ( 2,286,014 ) ( 1,794,962 ) ( 1,575,527 ) Payment of debt fees ( 67,452 ) ( 93,875 ) ( 47,342 ) Proceeds from pass-through financing and other obligations, net — 4,795 8,812 Repayment of pass-through financing obligation — ( 240,288 ) — Payment of finance lease obligations ( 25,185 ) ( 27,240 ) ( 23,279 ) Contributions received from noncontrolling interests and redeemable noncontrolling interests 2,002,177 1,811,966 1,572,399 Distributions paid to noncontrolling interests and redeemable noncontrolling interests ( 246,731 ) ( 308,657 ) ( 225,114 ) Acquisition of noncontrolling interest ( 30,705 ) ( 26,195 ) ( 46,274 ) Net proceeds related to stock-based award activities 16,801 18,876 22,611 Proceeds from transfer of investment tax credits 1,602,866 705,697 6,980 Payments to redeemable noncontrolling interests and noncontrolling interests of investment tax credits ( 1,602,866 ) ( 705,697 ) ( 6,980 ) Net cash provided by financing activities 3,211,350 3,426,755 3,468,698 Net change in cash and restricted cash 289,572 ( 40,422 ) 34,815 Cash and restricted cash, beginning of period 947,416 987,838 953,023 Cash and restricted cash, end of period $ 1,236,988 $ 947,416 $ 987,838 Supplemental disclosures of cash flow information Cash paid for interest $ 741,674 $ 591,285 $ 433,050 Cash paid for income taxes $ — $ — $ — Supplemental disclosures of noncash investing and financing activities 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 88 The accompanying notes are an integral part of these consolidated financial statements. 89 Sunrun Inc. Notes to Consolidated Financial Statements Note 1. Organization Sunrun Inc. (“Sunrun” or the “Company”) was formed in 2007. 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 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. 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 agreements. The Company currently utilizes a partnership-flip legal structure for its Funds. Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and reflect the accounts and operations of the Company and those of its subsidiaries, including Funds, in which the Company has a controlling financial interest. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as variable interest entities (“VIEs”), through arrangements that do not involve controlling voting interests. In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation , the Company consolidates any VIE of which it is the primary beneficiary. The primary beneficiary, as defined in FASB ASC Topic 810, Consolidation , is the party that has (1) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb the losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company evaluates its relationships with its VIEs on an ongoing basis to determine whether it continues to be the primary beneficiary. The consolidated financial statements reflect the assets and liabilities of VIEs that are consolidated. All intercompany transactions and balances have been eliminated in consolidation. 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 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. Actual results may differ from such estimates. 90 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Segment Information The Company has one operating segment with one business activity, providing solar energy services and products to customers. The Company's chief operating decision maker ("CODM") is its Chief Executive Officer, who reviews financial information presented on a consolidated basis. When evaluating performance and allocating resources, the CODM uses consolidated income (loss) from operations and net income (loss). These financial metrics are used by the CODM to make key operating decisions, such as the determination of volume targets and the allocation of budget between cost of revenues, sales and marketing, research and development, and general and administrative expenses. The CODM does not use asset or liability information in evaluating the Company’s operating segment. Revenue from external customers (including, but not limited to homeowners) for each group of similar products and services is as follows (in thousands): Year Ended December 31, 2025 2024 2023 Customer agreements $ 1,708,483 $ 1,388,412 $ 1,077,099 Incentives 110,524 116,815 109,607 Customer agreements and incentives 1,819,007 1,505,227 1,186,706 Energy systems 878,341 204,776 656,408 Products 259,649 327,716 416,699 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 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 Cash consists of bank deposits held in checking and savings accounts. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company has exposure to credit risk to the extent cash balances exceed amounts covered by federal deposit insurance. 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 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. Cash and restricted cash consists of the following (in thousands): December 31, 2025 2024 2023 Cash $ 823,380 $ 574,956 $ 678,821 Restricted cash, current and long-term 413,608 372,460 309,017 Total $ 1,236,988 $ 947,416 $ 987,838 91 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Accounts Receivable Accounts receivable consist of amounts due from customers as well as state and utility rebates due from government agencies and utility companies. Under Customer Agreements, the customers typically assign incentive rebates to the Company. Accounts receivable are recorded at net realizable value. The Company maintains allowances for the applicable portion of receivables using the expected credit loss model. The Company estimates expected credit losses from doubtful accounts based upon the expected collectability of all accounts receivables, which takes into account the number of days past due, collection history, identification of specific customer exposure, current economic trends, and management’s expectation of future economic conditions. Once a receivable is deemed to be uncollectible, it is written off. In 2025, 2024 and 2023, the Company recorded provisions for credit losses of $ 24.7 million, $ 17.0 million and $ 21.7 million, respectively, and wrote-off uncollectible receivables of $ 19.4 million, $ 20.7 million and $ 15.8 million, respectively. Accounts receivable, net consists of the following (in thousands): December 31, 2025 2024 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 Allowance for credit losses ( 20,692 ) ( 15,420 ) 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 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 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. The Company periodically reviews inventories for unusable and obsolete items based on assumptions about future demand and market conditions. Based on this evaluation, provisions are made to write inventories down to their market value. 92 Sunrun Inc. 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. 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 Property and equipment, net consists of leasehold improvements, furniture, computer hardware and software, machinery and equipment and automobiles. All property and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Property and equipment is depreciated on a straight-line basis over the following periods: Leasehold improvements Lesser of 6 years or lease term Furniture 5 years Computer hardware and software 3 years Machinery and equipment 5 years or lease term Automobiles Lease term Capitalization of Software Costs 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. Internal use software is amortized on a straight-line basis over its estimated useful life of 3 years. Costs of $ 33.5 million, $ 25.9 million and $ 21.3 million were capitalized in 2025, 2024 and 2023, respectively. Impairment of Long-Lived Assets 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. Recoverability of these assets is measured by comparison of the carrying value of each asset group to the future undiscounted cash flows the asset group is expected to generate over its remaining life. If the asset group is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset group. If the useful life is shorter than originally estimated, the Company amortizes the remaining carrying value over the new shorter useful life. The Company has recognized no material impairments of its long-lived assets in any of the periods presented. Goodwill Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. Goodwill is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may be impaired. The Company has determined that it operates as one reporting unit and the Company’s goodwill is recorded at the enterprise level. 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 93 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 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. 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. 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 judgment. 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. The Company also compared the total invested capital (including market capitalization) to the fair value of its reporting unit to assess the reasonableness of fair value. The Company concluded that the fair value of its one reporting unit did not exceed its carrying value as of December 31, 2024 and recorded a non-cash goodwill impairment charge of $ 3.1 billion in its consolidated statements of operations primarily driven by the Company’s market capitalization. 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 The Company has entered into supplier finance agreements with certain financial institutions, whereby these institutions pay amounts related to trade and inventory payables to suppliers on behalf of the Company. The terms of these agreements allow the Company to extend, at its sole discretion, the original supplier payment terms up to 90 or 120 days. The Company does not provide any form of guarantee under these financing agreements. Amounts outstanding under these agreements are reflected in Accrued expenses and other liabilities in the consolidated balance sheets. The Company records interest for the period the supplier finance obligation is outstanding and reflects the proceeds and payments related to these transactions as a financing activity within its consolidated statement of cash flow. The following is a rollforward of the obligations under these supplier finance agreements (in thousands): Supplier finance obligations outstanding at December 31, 2023 $ — Proceeds from trade receivable financing 124,261 Repayment of trade receivable financing — Accrued interest on trade receivable financing 5,977 Supplier finance obligations outstanding at December 31, 2024 130,238 Proceeds from trade receivable financing 167,081 Repayment of trade receivable financing ( 291,342 ) Repayment of accrued interest on trade receivable financing ( 5,977 ) Supplier finance obligations outstanding at December 31, 2025 $ — 94 Sunrun Inc. 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 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 $ 1.2 billion as of December 31, 2023. Deferred revenue consists of the following (in thousands): December 31, 2025 2024 Under Customer Agreements: Payments received, net $ 1,047,929 $ 950,225 Financing component balance 87,294 79,731 1,135,223 1,029,956 Under SREC contracts: Payments received, net 356,263 291,972 Financing component balance 21,847 16,419 378,110 308,391 Total $ 1,513,333 $ 1,338,347 During the years ended December 31, 2025, 2024 and 2023, the Company recognized revenue of $ 152.7 million, $ 137.7 million and $ 113.3 million, respectively, from amounts included in deferred revenue at the beginning of the respective periods. Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized and includes deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods. 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 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. Deferred Grants Deferred grants consist of U.S. Treasury grants and state tax credits. The Company applied for a renewable energy technologies income tax credit offered by one of the states in the form of a cash payment and deferred the tax credit as a grant on the consolidated balance sheets. The Company records the grants as deferred grants and recognizes the benefit on a straight-line basis over the estimated depreciable life of the associated assets as a reduction in Cost of customer agreements and incentives. 95 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Warranty Accrual 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 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 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 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. The Company considers this a variable component that offsets the transaction price. Derivative Financial Instruments The Company recognizes all derivative instruments on the balance sheet at their fair value. 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 (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. On the date that the Company enters into a derivative contract, the Company formally documents all relationships between the hedging instruments and the hedged items, as well as its risk management objective and strategy for undertaking each hedge transaction. Derivative instruments designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Cash flow hedges are accounted for by recording the fair value of the derivative instrument on the balance sheet as either a freestanding asset or liability. Changes in the fair value of a derivative that is designated and qualifies as an effective cash flow hedge are recorded in accumulated other comprehensive loss, net of tax, until earnings are affected by the variability of cash flows of the hedged item. Any derivative gains and losses that are not effective in hedging the variability of expected cash flows of the hedged item or that do not qualify for hedge accounting treatment are recognized directly into income. At the hedge’s inception and at least quarterly thereafter, a formal assessment is performed to determine whether changes in cash flows of the derivative instrument have been highly effective in offsetting changes in the cash flows of the hedged items and whether they are expected to be highly effective in the future. The Company discontinues hedge accounting prospectively when (i) it determines that the derivative is no longer effective in offsetting changes in the cash flows of a hedged item; (ii) the derivative expires or is sold, terminated, or exercised; or (iii) management determines that designating the derivative as a hedging instrument is no longer appropriate. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the derivative instrument is carried at its fair market value on the balance sheet with the changes in fair value recognized in current period earnings. The remaining balance in accumulated other comprehensive income associated with the derivative that has been discontinued is not recognized in the income statement unless it is probable that the forecasted transaction will not occur. Such amounts are recognized in earnings when earnings are affected by the hedged transaction. 96 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Fair Value of Financial Instruments The Company defines fair value as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company uses valuation approaches to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. The FASB establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: • Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; • Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and • 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, and recourse and non-recourse debt. Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances. These assets can include goodwill that is written down to fair value when it is impaired, which uses level 3 inputs. Assets that are written down to fair value when impaired are not subsequently adjusted to fair value unless further impairment occurs. Revenue Recognition The Company recognizes revenue when control of goods or services is transferred to its customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. 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 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 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 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. 97 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 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. Performance guarantees provide a credit to the customer if the system's cumulative production, as measured on various PTO anniversary dates, is below the Company's guarantee of a specified minimum. Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur. The Company capitalizes incremental costs incurred to obtain a contract in Other Assets in the consolidated balance sheets. 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. 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 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 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 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. Cost of revenue for lead generations consists of costs related to direct-response advertising activities associated with generating customer leads. Research and Development Expense Research and development expenses include personnel costs, allocated overhead costs, and other costs related to the development of the Company’s proprietary technology. 98 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Stock-Based Compensation The Company grants stock options and restricted stock units (“RSUs”) for its equity incentive plan and employee stock purchase plan. Stock-based compensation to employees is measured based on the grant date fair value of the awards and recognized over the period during which the employee is required to perform services in exchange for the award (generally the vesting period of the award). When determining the grant date fair value of stock-based compensation, the Company utilizes the observable closing share price of its stock on the grant date. The Company considers whether any adjustments are needed to the share price to reflect fair value, including in instances where the observable market price does not reflect certain material non-public information known to the Company, but unavailable to marketplace participants at the time the market price is observed. No such adjustments were made during the years ended December 31, 2025, 2024, and 2023. The Company estimates the fair value of stock options and employee stock purchase plans awards granted using the Black-Scholes option-valuation model. Compensation cost is recognized over the vesting period of the applicable award using the straight-line method for those options expected to vest. For performance-based equity compensation awards, the Company generally recognizes compensation expense for each vesting tranche over the related performance period. The Company also grants RSUs to non-employees that vest upon the satisfaction of both performance and service conditions. 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 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 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. The Company has further determined that the appropriate methodology for attributing income and loss to the noncontrolling interests and redeemable noncontrolling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts of income and loss attributed to the noncontrolling interests and redeemable noncontrolling interests in the consolidated statements of operations reflect changes in the amounts the investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements of these arrangements, which are based on the investors' tax capital accounts, assuming the net assets of these funding structures were liquidated at recorded amounts. The Company’s initial calculation of the investor’s noncontrolling interest in the results of operations of these funding arrangements is determined as the difference in the noncontrolling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions, such as contributions or distributions, between the Fund and the investors. The Company classifies certain noncontrolling interests with redemption features that are not solely within the control of the Company outside of permanent equity on its consolidated balance sheets. 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. Income Taxes 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 99 Sunrun Inc. 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. It defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more likely than not” to be sustained by the taxing authority and requires measurement of a tax position meeting the more-likely-than-not criterion, based on the largest benefit that is more than 50% likely to be realized. 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 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. The Company accounts for the income tax consequences of these intra-entity transfers, both current and deferred, as a component of income tax expense and deferred tax liability, net during the period in which the transfers occur. 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 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 energy systems that have been or will be placed in service. The Company accounts for its share of ITC transfer proceeds under ASC 740, Income Taxes , as a reduction of income tax expense in the consolidated statement of operations during the year in which the credits are recognized ( i.e. , the flow-through method) and the tax equity investor’s share is distributed upon receipt. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local jurisdictions, where applicable. The statute of limitations for the tax returns varies by jurisdiction. Concentrations of Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable, which includes rebates receivable. The associated risk of concentration for cash is mitigated by banking with institutions with high credit ratings. At certain times, amounts on deposit exceed Federal Deposit Insurance Corporation insurance limits. The Company does not require collateral or other security to support accounts receivable. To reduce credit risk, management performs periodic credit evaluations and ongoing evaluations of its customers’ financial condition. Rebates receivable are due from various states and local governments as well as various utility companies. The Company considers the collectability risk of such amounts to be low. The Company is not dependent on any single customer. 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 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, 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 Accounting standards adopted January 1, 2023: In October 2022, the FASB issued ASU No. 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which requires entities to disclose the key terms of supplier finance programs they use in connection with the purchase of goods and services along with information about their obligations under these programs, including a rollforward of those obligations. This ASU is effective for fiscal periods beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2022-04 effective January 1, 2023 and there was no impact to its financial statement disclosures. Accounting standards adopted January 1, 2024: 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 100 Sunrun Inc. 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 adopted January 1, 2025: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 on a prospective basis during the year ended December 31, 2025. 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. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses . This guidance requires disclosures about significant expense categories, including but not limited to, inventory purchases, employee compensation, depreciation, amortization, and selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this guidance and the impact it may have on its financial statement disclosures. In November 2024, the FASB issued ASU 2024-04, Debt — Debt with Conversion and Other Options (Subtopic 470-20) — Induced Conversions of Convertible Debt Instruments . This guidance clarifies the requirements for determining whether to account for certain early settlements of convertible debt instruments as induced conversions or extinguishment. This ASU is effective for fiscal years beginning after December 15, 2025, with early adoption permitted for entities that have already adopted ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815- 40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . 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 101 Sunrun Inc. 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. Note 3. Fair Value Measurement At December 31, 2025 and 2024, the carrying value of receivables, accounts payable, accrued expenses and distributions payable to noncontrolling interests approximates fair value due to their short-term nature and falls under the Level 2 hierarchy. The carrying values and fair values of debt instruments are as follows (in thousands): December 31, 2025 December 31, 2024 Carrying Value Fair Value Carrying Value Fair Value Recourse debt $ 717,529 $ 919,709 $ 863,646 $ 807,801 Senior debt 4,759,238 4,739,577 4,738,594 4,681,858 Subordinated debt 3,279,002 3,220,986 2,667,010 2,539,930 Securitization debt 5,939,802 5,861,033 4,632,242 4,363,326 Total $ 14,695,571 $ 14,741,305 $ 12,901,492 $ 12,392,915 At December 31, 2025 and 2024, the fair value of certain recourse debt and certain senior, subordinated and securitization loans approximate their carrying values because their interest rates are variable rates that approximate rates currently available to the Company. At December 31, 2025 and 2024, the fair value of the Company’s other debt instruments are based on rates currently offered for debt with similar maturities and terms. The Company’s fair value of the debt instruments fell under the Level 2 hierarchy. These valuation approaches involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market. At December 31, 2025 and 2024, financial instruments measured at fair value on a recurring basis, based upon the fair value hierarchy are as follows (in thousands): December 31, 2025 Level 1 Level 2 Level 3 Total Derivative assets: Interest rate swaps $ — $ 102,346 $ — $ 102,346 Total $ — $ 102,346 $ — $ 102,346 Derivative liabilities: Interest rate swaps $ — $ 14,860 $ — $ 14,860 Total $ — $ 14,860 $ — $ 14,860 102 Sunrun Inc. Notes to Consolidated Financial Statements — Continued December 31, 2024 Level 1 Level 2 Level 3 Total Derivative assets: Interest rate swaps $ — $ 171,758 $ — $ 171,758 Total $ — $ 171,758 $ — $ 171,758 Derivative liabilities: Interest rate swaps $ — $ 7,385 $ — $ 7,385 Total $ — $ 7,385 $ — $ 7,385 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. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads and measures of volatility. Note 4. Inventories Inventories consist of the following (in thousands): December 31, 2025 2024 Raw materials $ 456,924 $ 357,870 Work-in-process 44,362 44,213 Total $ 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 ITC (as defined below) 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 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. Note 5. Energy Systems, net Energy systems, net consists of the following (in thousands): December 31, 2025 2024 Energy system equipment costs $ 16,090,654 $ 14,258,772 Inverters and batteries 3,343,643 2,554,739 Total energy systems 19,434,297 16,813,511 Less: accumulated depreciation and amortization ( 3,384,021 ) ( 2,732,888 ) Add: construction-in-progress 767,587 951,492 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 103 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 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. As a result, effective April 1, 2024, the Company changed its estimated useful life to reflect the estimated period these assets will remain in service. The estimated useful life of batteries previously was 10 years and was increased to 15 years. The impact of this change in estimate reduces depreciation expense and was immaterial for the twelve months ended December 31, 2024. 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 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. Note 6. Property and Equipment, net Property and equipment, net consists of the following (in thousands): December 31, 2025 2024 Machinery and equipment $ 15,726 $ 17,375 Leasehold improvements, furniture, and computer hardware 29,009 43,835 Vehicles 137,910 159,736 Computer software 57,048 56,742 Total property and equipment 239,693 277,688 Less: Accumulated depreciation and amortization ( 164,001 ) ( 156,449 ) Total property and equipment, net $ 75,692 $ 121,239 Depreciation and amortization expense was $ 38.3 million, $ 44.1 million and $ 31.9 million for the years ended December 31, 2025, 2024 and 2023, respectively. Note 7. Goodwill, net The goodwill was acquired as part of the acquisition of Mainstream Energy Corporation, which included AEE Solar and its racking business SnapNrack; Clean Energy Experts, LLC; Omni Energy, LLC; and Vivint Solar. The Company has determined that it has one reporting unit and 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. During the fourth quarter of 2024, the Company as part of its annual impairment test performed a qualitative assessment as of October 1, 2024 related to the recoverability of its goodwill for its one reporting unit. As of October 1, 2024, the Company concluded that the fair value of the Company’s one reporting unit exceed its carrying value with consideration of a reasonable control premium. However, during the fourth quarter of fiscal 2024, the Company performed an interim quantitative assessment as of December 31, 2024 related to the recoverability of its goodwill for its one reporting unit as a result of a material sustained decline in the Company’s market capitalization below the book value of equity. The Company concluded that the fair value of its one reporting unit did not exceed its carrying value as of December 31, 2024 and recorded a non-cash goodwill impairment charge of $ 3.1 billion in its consolidated statements of operations. 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. The change in the carrying value of goodwill is as follows (in millions): Balance—December 31, 2023 $ 3,122 Impairment—December 31, 2024 $ ( 3,122 ) Balance—December 31, 2025 and 2024 $ — 104 Note 8. Other Assets Other assets consist of the following (in thousands): December 31, 2025 2024 Costs to obtain contracts - customer agreements $ 2,474,515 $ 2,084,545 Costs to obtain contracts - incentives 2,481 2,481 Accumulated amortization of costs to obtain contracts ( 338,450 ) ( 243,989 ) Unbilled receivables 931,535 681,823 Allowance for credit loss on unbilled receivables ( 9,767 ) ( 6,928 ) Operating lease right-of-use assets 62,839 76,810 Equity investment 81,297 81,297 Other assets 356,474 345,707 Total $ 3,560,924 $ 3,021,746 The Company recorded amortization of costs to obtain contracts of $ 95.3 million and $ 76.2 million for the years ended December 31, 2025 and 2024, respectively, in sales and marketing expense in the consolidated statements of operations. The majority of unbilled receivables arise from fixed price escalators included in the Company's long-term Customer Agreements. The escalator is included in calculating the total estimated transaction value for an individual Customer Agreement. The total estimated transaction value is then recognized over the term of the Customer Agreement. The amount of unbilled receivables increases while billings for an individual Customer Agreement are less than the revenue recognized for that Customer Agreement. Conversely, the amount of unbilled receivables decreases once the billings become higher than the amount of revenue recognized in the period. At the end of the initial term of a Customer Agreement, the cumulative amounts recognized as revenue and billed to date are the same, therefore the unbilled receivable balance for an individual Customer Agreement will be zero. The Company applies an estimated loss-rate in order to determine the current expected credit loss for unbilled receivables. The estimated loss-rate is determined by analyzing historical credit losses, residential first and second mortgage foreclosures and consumers' utility default rates, as well as current economic conditions. The Company reviews individual customer collection status of electricity billings to determine whether the unbilled receivables for an individual customer should be written off, including the possibility of a service transfer to a potential new homeowner. Note 9. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consist of the following (in thousands): December 31, 2025 2024 Accrued employee compensation $ 126,958 $ 104,747 Operating lease obligations 25,254 28,784 Accrued interest 128,706 115,112 Accrued supplier finance obligations — 130,238 Other accrued expenses 237,917 164,871 Total $ 518,835 $ 543,752 105 Note 10. Indebtedness As of December 31, 2025 and 2024, respectively, debt consisted of the following (in thousands, except percentages): December 31, 2025 December 31, 2024 Unused Borrowing Capacity (1) Weighted Average Interest Rate at December 31, 2025 (2) Weighted Average Interest Rate at December 31, 2024 (2) Contractual Interest Rate (3) Contractual Maturity Date Recourse debt Line of credit (4) $ 238,323 $ 384,226 $ — 7.20 % 8.45 % SOFR + 3.25 % - 3.75 % March 2028 Convertible Senior Notes due 2026 (5) 5,457 7,687 — — % — % — % February 2026 Convertible Senior Notes due 2030 (6) 483,185 483,187 — 4.00 % 4.00 % 4.00 % March 2030 Total recourse debt 726,965 875,100 — Unamortized debt discount ( 9,436 ) ( 11,454 ) — Total recourses debt, net 717,529 863,646 — Non-recourse debt (7)(12) Senior revolving and delayed draw loans (8) 2,104,000 2,412,400 39,500 6.51 % 7.24 % SOFR + 2.35 % - 3.10 % February 2028 - March 2030 Senior non-revolving loans (9) 2,661,578 2,325,558 — 6.24 % 6.66 % 4.66 % - 6.93 %; SOFR + 1.90 % - 2.25 % September 2026 - July 2060 Subordinated revolving and delayed draw loans (8) 43,900 20,400 — 12.94 % 13.62 % SOFR + 9.10 % March 2030 Subordinated loans (10)(11) 3,285,877 2,691,534 — 9.39 % 9.36 % 7.00 % - 10.75 %; SOFR + 6.50 % - 6.90 % April 2027 - January 2042 Securitized loans 6,036,907 4,705,549 — 5.40 % 5.08 % 2.27 % - 6.60 % April 2048 - January 2061 Total non-recourse debt 14,132,262 12,155,441 39,500 Unamortized debt (discount) premium, net ( 154,220 ) ( 117,595 ) — Total non-recourse debt, net 13,978,042 12,037,846 39,500 Total debt, net $ 14,695,571 $ 12,901,492 $ 39,500 (1) Represents the additional amount the Company could borrow, if any, based on the state of its existing assets as of December 31, 2025. (2) Reflects weighted average contractual, unhedged rates. See Note 11, Derivatives, for hedge rates. (3) Ranges shown reflect fixed interest rate and rates using SOFR, as applicable. (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. Base Rate Loans accrue interest at a rate per year equal to 2.25 % to 2.75 % depending on total outstanding balance as a percentage of total commitment plus the highest of (a) the federal funds rate plus 0.50 %, (b) the interest rate determined from time to time by the Administrative Agent as its prime rate and notified to the Company, (c) the Adjusted Term SOFR Rate (defined below) for a one-month interest period in effect on such day (or if such day is not a business day, the immediately preceding business day) plus 1.00 % and (d) 0.00 %. Term SOFR Loans accrue interest at a rate per annum equal to (a) 3.25 % to 3.75 % depending on total outstanding balance as a percentage of total commitment plus (b) the greater of (i) 0.00 % and (ii) the sum of (x) the forward-looking term rate for a period comparable to the applicable available tenor based on SOFR that is published by CME Group Benchmark Administration Ltd or a successor for the applicable interest period and (y) (1) if the applicable interest period is one month, 0.11448 %, (2) if the applicable interest period is three months, 0.26161 % or (c) if the applicable interest period is six months, 0.42826 % (the rate 106 pursuant to clause (b), the “Adjusted Term SOFR Rate”). 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. The Company was in compliance with all debt covenants as of December 31, 2025. (5) Convertible senior notes due 2026 (the "2026 Notes") under this category with an outstanding balance of $ 5.5 million as of December 31, 2025 will not bear regular interest, and the principal amount of the 2026 Notes will not accrete. The 2026 Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the 2026 Notes are not freely tradeable as required by the indenture. The 2026 Notes will mature on February 1, 2026, unless earlier repurchased by the Company, redeemed by the Company or converted pursuant to their terms. The initial conversion rate of the Notes is 8.4807 shares of the Company’s common stock, par value $ 0.0001 per share, per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $ 117.91 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or an issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2026 Notes in connection with such make-whole fundamental change or notice of redemption. The debt discount recorded on the 2026 Notes is being amortized to interest expense at an effective interest rate of 0.57 %. As of December 31, 2025, $ 7.7 million of the debt discount was amortized to interest expense inception to date. In connection with the offering of the 2026 Notes, the Company entered into privately negotiated capped call transactions (the “2026 Capped Calls”) with certain of the initial purchasers and/or their respective affiliates at a cost of approximately $ 28.0 million. The 2026 Capped Calls are classified as equity and were recorded to additional paid-in-capital within stockholders’ equity as of March 31, 2021. The 2026 Capped Calls each have an initial strike price of approximately $ 117.91 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2026 Notes. The 2026 Capped Calls have initial cap prices of $ 157.22 per share. The 2026 Capped Calls cover, subject to anti-dilution adjustments, approximately 3.4 million shares of common stock. The 2026 Capped Calls are expected generally to reduce the potential dilution to the common stock upon any conversion of 2026 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2026 Notes, as the case may be, in the event the market price per share of common stock, as measured under the 2026 Capped Calls, is greater than the strike price of the 2026 Capped Call, with such offset subject to a cap. 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 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. The 2030 Notes may bear special interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the 2030 Notes are not freely tradeable as required by the indenture. The 2030 Notes will mature on March 1, 2030, unless repurchased by the Company, redeemed by the Company or converted pursuant to their terms prior to maturity. The initial conversion rate of the 2030 Notes is 61.3704 shares of the Company’s common stock, par value $ 0.0001 per share, per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of approximately $ 16.29 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a make-whole fundamental change or an issuance of a notice of redemption, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2030 Notes in connection with such make-whole fundamental change or notice of redemption. The debt discount recorded on the 2030 Notes is being amortized to interest expense at an effective interest rate of 4.51 %. As of December 31, 2025, $ 3.6 million of the debt discount was amortized to interest expense inception to date. In 107 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. The 2030 Capped Calls each have an initial strike price of approximately $ 16.29 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2030 Notes. The 2030 Capped Calls have initial cap prices of $ 22.37 per share. The 2030 Capped Calls cover, subject to anti-dilution adjustments, approximately 29.7 million shares of common stock. The 2030 Capped Calls are expected generally to reduce the potential dilution to the common stock upon any conversion of 2030 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the 2030 Notes, as the case may be, in the event the market price per share of common stock, as measured under the 2030 Capped Calls, is greater than the strike price of the 2030 Capped Call, with such offset subject to a cap. If, however, the market price per share of the common stock, as measured under the 2030 Capped Calls, exceeds the cap price of the 2030 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 2030 Capped Calls are scheduled to expire on February 27, 2030. None of the conversion criteria has been met as of December 31, 2025. (7) Certain loans under this category are part of project equity transactions. (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 $ 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. Senior and Subordinated Debt Facilities Each of the Company's senior and subordinated debt facilities contain customary covenants including the requirement to maintain certain financial measurements and provide lender reporting. Each of the senior and subordinated debt facilities also contain certain provisions in the event of default that entitle lenders to take certain actions including acceleration of amounts due under the facilities and acquisition of membership interests and assets that are pledged to the lenders under the terms of the senior and subordinated debt facilities. The facilities are non-recourse to the Company and are secured by net cash flows from Customer Agreements or inventories less certain operating, maintenance and other expenses that are available to the borrower after distributions to tax equity investors, where applicable. Under the terms of these facilities, the Company's subsidiaries pay interest and principal from the net cash flows available to the subsidiaries. The Company was in compliance with all debt covenants as of December 31, 2025. Non-Recourse Financings In connection with each of the Company's non-recourse debt (including securitized loans), assets (consisting of membership interests in project companies that own photovoltaic systems and related Customer Agreements) were contributed by the Company to special purpose subsidiaries of the Company (each a “Non-Recourse Borrower”). Each of such financings contains customary covenants including the requirement to provide reporting to the indenture trustee or collateral agent and, if applicable, ratings agencies. 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 108 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. The Company was in compliance with all debt covenants as of December 31, 2025. Maturities of Indebtedness The aggregate future principal payments for debt as of December 31, 2025 are as follows (in thousands): 2026 $ 294,093 2027 1,401,577 2028 2,543,717 2029 1,353,503 2030 1,869,997 Thereafter 7,396,340 Subtotal 14,859,227 Debt discount, net ( 163,656 ) Total $ 14,695,571 Note 11. Derivatives Interest Rate Swaps The Company uses interest rate swaps to hedge variable interest payments due on certain of its term loans and aggregation facility. 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 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. The interest rate swaps have been designated as cash flow hedges. The credit risk adjustment associated with these swaps is the risk of non-performance by the counterparties to the contracts. In the quarter ended December 31, 2025, the hedge relationships on the Company’s interest rate swaps have been assessed as highly effective as the quarterly assessment performed determined changes in cash flows of the derivative instruments have been highly effective in offsetting the changes in the cash flows of the hedged items, are expected to be highly effective in the future and the critical terms of the interest rate swaps match the critical terms of the underlying forecasted hedged transactions. Accordingly, changes in the fair value of these derivatives are recorded as a component of accumulated other comprehensive income, net of income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings, and are included in interest expense, net in the Company’s statements of operations, in the period that the hedged forecasted transactions affect earnings. To the extent that the hedge relationships are not effective, changes in the fair value of these derivatives are recorded in other expense (income), net in the Company's statements of operations on a prospective basis. The Company’s master netting and other similar arrangements allow net settlements under certain conditions. When those conditions are met, the Company presents derivatives at net fair value. As of December 31, 2025, the information related to these offsetting arrangements were as follows (in thousands): 109 Instrument Description Gross Amounts of Recognized Assets / Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet Notional Amount (1) (2) Assets: Derivatives designated as hedging instruments $ 78,223 $ — $ 78,223 $ 988,447 Derivatives not designated as hedging instruments 24,123 ( 7,210 ) 16,913 1,771,893 Total derivative assets 102,346 ( 7,210 ) 95,136 2,760,340 Liabilities: Derivatives designated as hedging instruments ( 449 ) — ( 449 ) — Derivatives not designated as hedging instruments ( 14,411 ) 7,210 ( 7,201 ) 800,058 Total derivative liabilities ( 14,860 ) 7,210 ( 7,650 ) 800,058 Total derivative assets & liabilities $ 87,486 $ — $ 87,486 $ 3,560,398 (1) Comprised of 58 interest rate swaps which effectively fix the SOFR portion of interest rates on outstanding balances of certain loans under the senior section of the debt footnote table (see Note 10, Indebtedness ) at 0.31 % to 4.15 % per annum. These swaps mature from August 13, 2027 to January 31, 2044. (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 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): 110 Instrument Description Gross Amounts of Recognized Assets / Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets / Liabilities Included in the Consolidated Balance Sheet Notional Amount Assets: Derivatives designated as hedging instruments $ 117,793 $ — $ 117,793 $ 1,382,188 Derivatives not designated as hedging instruments 53,965 ( 7,252 ) 46,713 2,118,393 Total derivative assets 171,758 ( 7,252 ) 164,506 3,500,581 Liabilities: Derivatives designated as hedging instruments — — — — Derivatives not designated as hedging instruments ( 7,385 ) 7,252 ( 133 ) 653,365 Total derivative liabilities ( 7,385 ) 7,252 ( 133 ) 653,365 Total derivative assets & liabilities $ 164,373 $ — $ 164,373 $ 4,153,946 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, 2025 2024 2023 Derivatives designated as cash flow hedges: Interest rate swaps $ 12,462 $ ( 75,396 ) $ ( 23,787 ) 111 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 income, net Interest expense, net Other expense, net Interest expense, net Other income, net Derivatives designated as cash flow hedges: Interest rate swaps Gains reclassified from AOCI into income $ ( 17,458 ) $ — $ ( 35,237 ) $ — $ ( 36,755 ) $ — Derivatives not designated as cash flow hedges: Interest rate swaps 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 (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-six undesignated derivative instruments recorded by the Company as of December 31, 2025. 112 Note 12. VIE Arrangements The Company consolidated various VIEs at December 31, 2025 and 2024. The carrying amounts and classification of the VIEs’ assets and liabilities included in the consolidated balance sheets are as follows (in thousands): December 31, 2025 2024 Assets Current assets Cash $ 539,440 $ 420,756 Restricted cash 59,010 57,892 Accounts receivable, net 118,907 92,259 Inventories 180,841 62,581 Prepaid expenses and other current assets 64,588 7,616 Total current assets 962,786 641,104 Energy systems, net 13,777,190 12,062,819 Other assets 853,713 586,293 Total assets $ 15,593,689 $ 13,290,216 Liabilities Current liabilities Accounts payable $ 5,125 $ 5,400 Distributions payable to noncontrolling interests and redeemable noncontrolling interests 47,073 41,465 Accrued expenses and other liabilities 110,390 42,997 Deferred revenue, current portion 77,663 62,278 Non-recourse debt, current portion 54,129 60,292 Total current liabilities 294,380 212,432 Deferred revenue, net of current portion 947,578 764,576 Non-recourse debt, net of current portion 1,380,406 1,347,492 Other liabilities 20,765 18,540 Total liabilities $ 2,643,129 $ 2,343,040 Note 13. Redeemable Noncontrolling Interests During certain specified periods of time (the “Early Exit Periods”), noncontrolling interests in certain funding arrangements have the right to put all of their membership interests to the Company (the “Put Provisions”). During a specific period of time (the “Call Periods”), the Company has the right to call all membership units of the related redeemable noncontrolling interests. Note 14. Stockholders’ Equity Convertible Preferred Stock The Company did not have any convertible preferred stock issued and outstanding as of December 31, 2025 and 2024. The Company did not declare or pay any dividends in 2025, 2024 or 2023. Common Stock 113 Sunrun Inc. 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. Common stockholders are entitled to dividends if and when declared by the board of directors, subject to the prior rights of the preferred stockholders. As of December 31, 2025, no common stock dividends had been declared by the board of directors. The Company has reserved shares of common stock for issuance as follows (in thousands): December 31, 2025 2024 Stock plans Shares available for grant 2015 Equity Incentive Plan — 15,595 2015 Employee Stock Purchase Plan 5,179 6,868 2015 Amended and Restated Equity Incentive Plan 37,963 — Options outstanding 3,083 3,507 Restricted stock units outstanding 17,299 12,375 Total 63,524 38,345 Note 15. Stock-Based Compensation 2013 Equity Incentive Plan In July 2013, the Board of Directors approved the 2013 Equity Incentive Plan (“2013 Plan”). In March 2015, the Board of Directors authorized an additional 3,000,000 shares reserved for issuance under the 2013 Plan. An aggregate of 4,500,000 shares of common stock were reserved for issuance under the 2013 Plan plus (i) any shares that were reserved but not issued under the plan that was previously in place, and (ii) any shares subject to stock options or similar awards granted under the plan that was previously in place that expire or otherwise terminate without having been exercised in full and shares issued that are forfeited to or repurchased by the Company, with the maximum number of shares to be added to the 2013 Plan pursuant to clauses (i) and (ii) equal to 8,044,829 shares. All the remaining shares that were available for future grants under the 2013 Plan were transferred to the 2015 Equity Incentive Plan (“2015 Plan”) at the inception of the 2015 Plan. Sunrun-VSI 2014 Equity Incentive Plan 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. 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. In September 2024, the Sunrun-VSI 2014 Plan expired pursuant to its terms and as of that date no additional shares were able to be granted pursuant to such plan. All Sunrun-VSI 2014 Plan shares that were reserved but not granted have expired and are no longer available for grant under the Sunrun-VSI 2014 Plan. 2015 Equity Incentive Plan In July 2015, the Sunrun Board approved the 2015 Plan. An aggregate of 11,400,000 shares of common stock are reserved for issuance under the 2015 Plan plus (i) any shares that were reserved but not issued under the 2013 Plan at the inception of the 2015 Plan, and (ii) any shares subject to stock options or similar awards granted under the 2008 Plan, 2013 Plan and 2014 Plan that expire or otherwise terminate without having been exercised in full and shares issued that are forfeited to or repurchased by the Company, with the maximum number of shares to be added to the 2015 Plan pursuant to clauses (i) and (ii) equal to 15,439,334 shares. The 2015 Plan provides for annual automatic increases on January 1 to the shares reserved for issuance. 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 114 Sunrun Inc. 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; 25 % vest at the end of one year , and 75 % vest monthly over the remaining three years . The options may include provisions permitting exercise of the option prior to full vesting. Any unvested shares shall be subject to repurchase by the Company at the original exercise price of the option in the event of a termination of an optionee’s employment prior to vesting. RSUs granted to employees generally vest over a four-year period from the date of grant; 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 The following table summarizes the activity for all stock options under all of the Company’s equity incentive plans for the years ended December 31, 2025 and 2024 (shares and aggregate intrinsic value in thousands): Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Outstanding at December 31, 2023 4,243 $ 17.19 4.85 $ 31,762 Granted — — Exercised ( 669 ) 6.55 Canceled ( 67 ) 25.76 Outstanding at December 31, 2024 3,507 19.05 4.54 3,882 Granted — — Exercised ( 362 ) 6.85 Canceled ( 62 ) 17.23 Outstanding at December 31, 2025 3,083 $ 20.52 3.92 $ 15,626 Options vested and exercisable at December 31, 2025 3,028 $ 20.38 3.88 $ 15,626 Options vested and expected to vest at December 31, 2025 3,083 $ 20.52 3.92 $ 15,626 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. The aggregate intrinsic value is the difference of the current fair value of the stock and the exercise price for in-the-money stock options. 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. The Company estimates the fair value of stock-based awards on their grant date using the Black-Scholes option-pricing model. The Company estimates the fair value using a single-option approach and amortizes the fair value on a straight-line basis for options expected to vest. All options are amortized over the requisite service periods of the awards, which are generally the vesting periods. 115 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Restricted Stock Units The following table summarizes the activity for all RSUs under all of the Company’s equity incentive plans for the years ended December 31, 2025 and 2024 (shares in thousands): Shares Weighted Average Grant Date Fair Value Unvested balance at December 31, 2023 8,449 $ 22.16 Granted 9,447 13.88 Issued ( 4,079 ) 22.03 Canceled / forfeited ( 1,442 ) 18.29 Unvested balance at December 31, 2024 12,375 16.29 Granted 12,753 6.85 Issued ( 5,901 ) 15.48 Canceled / forfeited ( 1,928 ) 11.64 Unvested balance at December 31, 2025 17,299 $ 10.34 Employee Stock Purchase Plan Under the Company's 2015 Employee Stock Purchase Plan (“ESPP”) (as amended in May 2017), eligible employees are offered shares bi-annually through a 24 -month offering period which encompasses four six-month purchase periods. Each purchase period begins on the first trading day on or after May 15 and November 15 of each year. 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 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. The ESPP provides for an automatic increase of the number of shares available for issuance under the ESPP on the first day of each fiscal year beginning on January 1, 2016, equal to the least of 5 million shares, 2 % of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or such other amount as may be determined by the Board of Directors. In 2024 and 2025, the Board of Directors did not authorize any additional shares reserved for issuance under the ESPP. Stock-Based Compensation Expense The Company recognized stock-based compensation expense, including ESPP expenses, in the consolidated statements of operations as follows (in thousands): Year Ended December 31, 2025 2024 2023 Cost of customer agreements and incentives $ 9,034 $ 8,538 $ 8,772 Cost of energy systems and product sales 2,550 1,999 5,267 Sales and marketing 44,911 50,741 59,026 Research and development 4,418 9,961 1,739 General and administration 47,039 41,586 36,977 Total $ 107,952 $ 112,825 $ 111,781 During the years ended December 31, 2025 and 2024, stock-based compensation expense capitalized to the Company’s consolidated balance sheet was $ 9.0 million and $ 9.9 million, respectively. 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. 116 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 401(k) Plans 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. Under both the Sunrun and Vivint Solar 401(k) Plans, participating U.S. employees may defer a portion of their pre-tax earnings, up to the IRS annual contribution limit ($ 23,500 for calendar year 2025). Under the Sunrun 401(k) Plan, the Company matches 100 % of the first 1 % and 50 % of the next 6 % of each employee's contributions. Under the Vivint Solar 401(k) Plan, the Company matches 33 % of each employee's contributions up to a maximum of 6 % of the employee’s eligible earnings. 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. Note 16. Income Taxes 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 $ 988,121 Loss before income taxes – Foreign 188,203 Total Loss before income taxes $ 1,176,324 The following table presents the loss (income) before income taxes for the periods presented (in thousands): For the Year Ended December 31, 2025 2024 2023 Loss (income) attributable to common stockholders $ ( 282,729 ) $ 2,872,984 $ 1,617,188 Loss attributable to noncontrolling interest and redeemable noncontrolling interests 1,459,053 1,509,050 1,078,344 Loss before income taxes $ 1,176,324 $ 4,382,034 $ 2,695,532 117 Sunrun Inc. Notes to Consolidated Financial Statements — Continued The income tax (benefit) provision consists of the following (in thousands): For the Year Ended December 31, 2025 2024 2023 Current Federal $ — $ — $ — State — — — Foreign — — — Total current (benefit) expense — — — Deferred Federal ( 170,701 ) ( 25,833 ) ( 23,583 ) State 294 ( 984 ) 10,892 Foreign 3,189 — — Total deferred (benefit) provision ( 167,218 ) ( 26,817 ) ( 12,691 ) Total $ ( 167,218 ) $ ( 26,817 ) $ ( 12,691 ) The following table represents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented: For the Year Ended December 31, 2024 2023 Tax provision (benefit) at federal statutory rate ( 21.00 ) % ( 21.00 ) % State income taxes, net of federal benefit 0.06 ( 1.11 ) Foreign provision, net of federal benefit ( 0.71 ) — Effect of noncontrolling and redeemable noncontrolling interests 7.23 8.40 Stock-based compensation 0.27 0.46 Tax credits ( 1.78 ) ( 0.63 ) Effect of valuation allowance ( 0.16 ) 4.06 Goodwill impairment 14.96 9.02 Other 0.52 0.33 Total ( 0.61 ) % ( 0.47 ) % 118 Sunrun Inc. 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 Amount (in Thousands) Percent U.S. 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 — — Tax credits 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. 119 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table represents the components of the Company’s deferred tax assets and liabilities for the periods presented (in thousands): December 31, 2025 2024 Deferred tax assets Accruals and prepaids $ 57,783 $ 48,019 Deferred revenue 157,317 149,928 Net operating loss carryforwards 1,005,094 835,420 Stock-based compensation 13,639 16,962 Investment tax and other credits 167,137 168,623 Interest expense 257,090 188,016 UNICAP costs 98,285 73,180 Total deferred tax assets 1,756,345 1,480,148 Less: Valuation allowance ( 189,335 ) ( 165,000 ) Gross deferred tax assets 1,567,010 1,315,148 Deferred tax liabilities Interest rate derivatives 19,128 27,134 Capitalized costs to obtain a contract 562,715 486,978 Fixed asset depreciation and amortization 703,163 696,755 Deferred tax on investment in partnerships 445,180 242,221 Gross deferred tax liabilities 1,730,186 1,453,088 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 arise ( i.e. the flow-through method). 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 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. 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 arise (i.e., the flow-through method) and the tax equity investor’s share is distributed upon receipt. 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. Generally, utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code (IRC) of 1986, as amended and similar state provisions. The Company performed an analysis to determine whether an ownership change under IRC section 382 had occurred and determined that no ownership changes were identified as of December 31, 2025. As of December 31, 2025, the Company had approximately $ 7.1 million of federal and $ 7.1 million of state capital loss carryforwards. The Company believes its capital loss carryforwards are not likely to be realized. 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. 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 120 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 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. However, this gain is recognized for tax reporting purposes. The Company accounts for the income tax consequences of these intra-entity transfers, both current and deferred, as a component of income tax expense and deferred tax liability, net during the period in which the transfers occur. Uncertain Tax Positions The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local, and foreign jurisdictions, where applicable. The statute of limitations for the tax returns varies by jurisdiction. The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company has analyzed its inventory of tax positions with respect to all applicable income tax issues for all open tax years (in each respective jurisdiction). 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. The Company is subject to taxation and files income tax returns in the U.S., its territories, and various state and local jurisdictions. Due to the Company’s net losses, substantially all of its federal, state and local, and foreign income tax returns since inception are still subject to audit. The following table summarizes the tax years that remain open and subject to examination by the tax authorities in the most significant jurisdictions in which the Company operates: Tax Years U.S. Federal 2022 - 2025 State 2021 - 2025 Foreign 2021 - 2025 Net Operating Loss Carryforwards 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, 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. Note 17. Commitments and Contingencies Letters of Credit 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. 121 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Guarantees 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. Operating and Finance Leases The Company leases real estate under non-cancellable operating leases and equipment under finance leases. The components of lease expense were as follows (in thousands): For the Year Ended December 31, 2025 2024 2023 Finance lease cost: Amortization of right-of-use assets $ 27,072 $ 29,332 $ 18,827 Interest on lease liabilities 4,545 5,704 3,291 Operating lease cost 29,308 31,742 34,937 Short-term lease cost 1,933 2,857 2,025 Variable lease cost 14,075 9,828 11,516 Sublease income ( 2,222 ) ( 3,132 ) ( 4,667 ) Total lease cost $ 74,711 $ 76,331 $ 65,929 Other information related to leases was as follows (in thousands): For the Year Ended December 31, 2025 2024 2023 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 31,849 $ 35,473 $ 39,157 Operating cash flows from finance leases 4,352 5,588 2,952 Financing cash flows from finance leases 25,185 27,240 23,279 Right-of-use assets obtained in exchange for lease obligations: Operating leases 14,938 14,461 21,417 Finance leases 3,058 36,991 87,726 Weighted average remaining lease term (years): Operating leases 4.26 4.56 4.92 Finance leases 2.59 3.48 4.07 Weighted average discount rate: Operating leases 5.6 % 5.3 % 4.4 % Finance leases 5.9 % 5.9 % 5.6 % Future minimum lease commitments under non-cancellable leases as of December 31, 2025 were as follows (in thousands): 122 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Operating Leases Sublease Income Net Operating Leases Finance leases 2026 $ 28,951 $ 2,594 $ 26,357 $ 27,365 2027 19,450 1,729 17,721 23,956 2028 12,686 837 11,849 13,066 2029 11,367 — 11,367 1,628 2030 10,287 — 10,287 98 Thereafter 7,138 — 7,138 — Total future lease payments 89,879 5,160 84,719 66,113 Less: Amount representing interest ( 9,993 ) — ( 9,993 ) ( 4,648 ) Present value of future payments 79,886 5,160 74,726 61,465 Less: Amount for tenant incentives — — — — Revised Present value of future payments 79,886 5,160 74,726 61,465 Less: Current portion ( 25,254 ) ( 2,594 ) ( 22,660 ) ( 24,557 ) Long term portion $ 54,632 $ 2,566 $ 52,066 $ 36,908 Purchase Commitment 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 as 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 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 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. 123 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 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 routine audits undertaken by the IRS. Litigation The Company is subject to certain legal proceedings, claims, investigations and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. The Company evaluates the adequacy of its legal reserves based on its assessment of many factors, including interpretations of the law and assumptions that ultimately may or may not be correct about the future outcome of each case based on available information. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows, or financial position in a particular period. In the normal course of business, the Company has from time to time been named as a party to various legal claims, actions, or complaints. 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. Note 18. 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. 124 Sunrun Inc. Notes to Consolidated Financial Statements — Continued 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 Numerator: Net income (loss) attributable to common stockholders $ 449,947 $ ( 2,846,167 ) $ ( 1,604,497 ) Debt discount amortization 2,303 — — Net income (loss) available to common stockholders $ 452,250 $ ( 2,846,167 ) $ ( 1,604,497 ) Denominator: 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 34,656 — — 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 Basic $ 1.96 $ ( 12.81 ) $ ( 7.41 ) Diluted $ 1.71 $ ( 12.81 ) $ ( 7.41 ) 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, 2025 2024 2023 Outstanding stock options 1,927 1,805 1,674 Unvested restricted stock units 6,734 7,534 7,398 Convertible Senior Notes (if converted) — 11,232 2,544 Total 8,661 20,571 11,616 125 Sunrun Inc. Notes to Consolidated Financial Statements — Continued Note 19 . Related Party Transactions Advances Receivable—Related Party Net amounts due from direct-sales professionals were $ 8.6 million and $ 14.3 million as of December 31, 2025 and 2024, respectively. 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. Note 20 . 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. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.