How Did Vivint Solar’s Costs Affect Its Bottom Line in 3Q17?

Alexis Tate - Author

Nov. 16 2017, Updated 7:31 a.m. ET

Segment-wise cost performance

In 3Q17, Vivint Solar (VSLR) posted $34.7 million as its cost of revenue for its operating leases and incentives, higher than the $33.8 million in 2Q17 but lower than $39.3 million in 3Q16. According to company filings, the YoY (year-over-year) fall in the cost of operating leases and incentives is mainly due to the decrease in the depreciation and amortization of solar energy systems.

The cost of revenue of the Solar Energy Systems and Product Sales segment for 3Q17 was reported at $22.2 million compared to $6.5 million in 3Q16 and $22.8 million in 2Q17. The cost of solar energy system and product sales includes direct and indirect material and labor costs. The growth in the volume of system sales led to a higher cost of revenue on a YoY basis.

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Vivint Solar’s overall cost performance

VSLR reported $56.9 million as the total cost of revenue for 3Q17 as compared to $56.6 million in 2Q17 and $45.7 million in 3Q16.

Vivint Solar’s adjusted net loss

Vivint Solar’s net operating loss for 3Q17 came in at $11.9 million, much lower than the $33.3 million in 3Q16. It was also lower than $14.4 million posted in 2Q17. Lower installation cost per watt helped the company to report lower operating losses on a YoY basis. Also, the company reported a net loss of $37.7 million as compared to $39.3 million reported during the corresponding period in 2016. The income attributable to common stockholders came in at $6.9 million, higher than the $4.9 million during 2Q17.

Downstream solar (TAN) players like VSLR, Sunrun (RUN), SolarCity (SCTY), and SunPower (SPWR) generate revenue based on customer lease contracts. These contracts typically last for 20 years. Thus, operating losses are common among the downstream solar energy companies.

In the next part of this series, let’s take a look at Vivint Solar’s financial position.


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