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Vivint Solar Beat Analysts’ 3Q17 Revenue Estimates

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Revenue from operating segments

Vivint Solar’s (VSLR) revenues come from two operating segments, its operating leases and incentives segment and its solar energy systems and product sales segment. Revenue from the operating lease and incentive segment includes revenues from ITC (or investment tax credits), customer agreements, solar energy system rebate incentives, as well as SREC (or solar renewable energy certificates) sales.

The company reported $45.9 million in revenues from the operating lease and incentive segment in 3Q17 compared to $43.4 million in 2Q17 and $33.4 million in 3Q16.

The $12.5 million rise on a quarter-over-quarter basis was partly due to an $8.5 million rise in operating lease revenue as a result of a 35% increase from contracted solar energy systems’ total megawatts and partly due to $4.0 million in SREC sales as a result of more solar energy systems in service.

SREC sales vary depending on market conditions. Thus, revenue recognized from SREC sales of solar companies (TAN) like SunPower (SPWR), Sunrun (RUN), and SolarCity (SCTY) might change from quarter to quarter.

Revenue from the solar energy systems and product sales segment was reported to be $29.3 million compared to $29.6 million in 2Q17 and $7.9 million in 3Q16. The YoY rise of $21.4 million was mainly due to the company’s increased focus on its system sales, which has led to significant growth in the number of solar energy systems placed in service.

Vivint Solar’s overall 3Q17 revenue

Vivint Solar reported $75.1 million in consolidated revenue for 3Q17 compared to $73.0 million in 2Q17 and $41.3 million 3Q16. The company beat analysts’ revenue expectations of $74.6 million for 3Q17 by nearly 0.7%. Vivint Solar beat analysts’ revenue expectations primarily due to an increase in revenue from both operating segments.

In the next part of this series, we’ll discuss Vivint Solar’s cost performance for 3Q17.

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