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Why Analysts Expect Vivint Solar’s Revenue to Rise in 3Q16

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Oct. 31 2016, Updated 8:05 a.m. ET

Vivint Solar’s revenue estimate

Vivint Solar (VSLR) reported about $35.0 million in consolidated revenue for 2Q16 and $23.0 million in 3Q15. Analysts estimate that the company will report revenue of $44.0 million in 3Q16, which is almost a 26.0% rise on a QoQ (quarter-over-quarter) basis.

The expected rise in revenue is primarily due to the anticipated rise in megawatts installed on a QoQ basis. The launch and expansion of the company’s cash and loan sales program and the expansion of operations into new markets could have a positive impact on megawatts installed, according to analysts’ estimates.

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Regulatory uncertainty surrounding the net metering system in Nevada had a negative impact on the company’s growth in the first half of 2016. The uncertainty also impacted Vivint Solar’s peers Sunrun (RUN) and SolarCity (SCTY). The grandfathering of the net metering system in Nevada led to the market exit of Vivint Solar and its peers. However, SunPower (SPWR) didn’t exit the market.

With resolved regulatory issues and an expected rise in cash and loan sales, analysts anticipate a rise in Vivint Solar’s revenue in the second half of the year.

Fiscal 2016 guidance

Following its 2Q16 earnings, Vivint Solar revised down it 2016 megawatt installation guidance. It no longer expects to meet its previous 2016 megawatt installation guidance of 260 MW (megawatts). However, it didn’t provide any updated guidance information on the back of the recent changes in its operational strategy.

For the six months ended June 30, 2016, Vivint Solar installed about 116 MW of solar energy systems. Moving ahead, the company intends to lower its installation costs by streamlining the installation size of its solar (TAN) energy systems, depending on electricity rates. This could impact the company’s volumes in the coming quarters.

In the next two parts of this series, we’ll look at what you should watch in Vivint Solar’s 3Q16 earnings.

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