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Analysts Expect SunPower’s Revenues to Decrease in 2Q16

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SunPower’s revenue estimates

SunPower (SPWR) reported about $381 million in consolidated revenue for 2Q15. Analysts estimate that the company will report revenue of $339 million in 2Q16. This is close to an 11% decrease on a YoY (year-over-year) basis.

The company’s estimated 2Q16 revenue is ~12% lower than its 1Q16 revenue. Also, the estimated revenue in 2Q16 is lower than the second quarter revenue in the last four years.

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Revenue recognition

Revenues of upstream solar (TAN) companies like SunPower, First Solar (FSLR), Canadian Solar (CSIQ), SunEdison (SUNEQ), and Trina Solar (TSL) can fluctuate depending on their revenue recognition model. Also, seasonal changes in weather patterns can impact reported revenue. In turn, revenue recognition depends on the status of ongoing projects and the schedule of the future project pipeline.

According to company filings, SunPower expects to derive a substantial portion of its fiscal 2016 revenue through the sale of its projects in the US. The company expects to complete a substantial portion of these projects by the end of fiscal 2016. As a result, analysts anticipate that the company will report higher revenues in 2H16.

Also, analysts estimate a significant improvement in fiscal 2016 revenue—compared to its fiscal 2015 revenue. Analysts’ expectations are in line with the company’s fiscal 2016 guidance.

Fiscal 2016 guidance

SunPower affirmed its fiscal 2016 guidance in its latest company filings. SunPower has a non-GAAP (generally accepted accounting principles) fiscal 2016 revenue guidance of $3.2 billion–$3.4 billion. It expects its fiscal 2016 operating expenses to be $430 million–$455 million. The company maintained its capital expenditure guidance of $210 million–$240 million for fiscal 2016.

For 2Q16, SunPower has a non-GAAP revenue guidance of $310 million–$360 million and EBITDA guidance of $0–$25 million. The company expects its non-GAAP gross margins to be 12%–14% in 2Q16.

In the next part of our series, we’ll take a close look at SunPower’s 2Q16 margin estimates.

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