Good evening, and welcome to Sunrun's second quarter 2022 earnings conference call. At this time, all participants are on a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Patrick Jobin. Thank you. You may begin. Thank you, operator. Before we begin, please note that certain remarks we will make on this conference call constitute forward-looking statements. Although we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially and adversely. Please refer to the company's filings with the SEC for a more inclusive discussion of risks and other factors that may cause our actual results to differ from projections made in any forward-looking statements. Please also note that these statements are being made as of today, and we disclaim any obligation to update or revise them. On the call today are Mary Powell, Sunrun's CEO, Danny Abajian, Sunrun's CFO. Ed Fenster, Sunrun's Co-Founder and Co-Executive Chair is also on the call today and will be participating in the Q&A session that follows the prepared remarks. Now let me turn the call over to Mary. Thank you, Patrick. Well, well, well. So much to talk about since our last quarter. Frankly, I was already looking forward to speaking with all of you this week to talk about the exciting developments and how strong we are delivering on the fundamentals, and then we received the good news coming out of Washington on climate legislation. As a company providing customers with the ability to have a more affordable, innovative, resilient, and recession-proof future, it truly feels like the sun is shining on our work. That said, in the spirit of you make your own luck, the Sunrun team has been laser-focused on crushing the fundamentals, and I am excited to talk about the work we have been doing and some of the luck we have created. We delivered above guidance volumes in the quarter, growing new installations by 33% from the same period last year, and have continued to see incredibly strong momentum, breaking sales records again just last month and growing customer orders 28% compared to last year. We are delivering on improving net subscriber values through continued actions to be faster, better, and stronger, and to see those benefits continuing to build and flow through the pipeline, which underpins our guidance of continued margin expansion into Q3. Looking beyond the quarter, I am very excited about building the future we are running to. We are a clean energy technology company, and we believe the ultimate way to fuel life is through the natural abundance of the sun. We aim to put control, simplicity, and possibility in the hands of every customer to connect with the cleanest energy on Earth for powering their homes, their transportation, and their lives. We are running to provide a more affordable, resilient, and energy-independent future for America. Now is the time for Americans and the world to embrace clean energy to help solve some of our greatest problems and to create greater socioeconomic prosperity by providing more resilient and affordable clean energy to all. The crippling heat waves across the country, devastating wildfires in areas facing record-breaking droughts and geopolitical tensions, highlighting the vulnerabilities of finite fossil fuel sources all underscore the need to accelerate to clean, affordable, decentralized energy sources that put customers at the center and provide them what they need and want to run their lives. This summer, we celebrated our 15th anniversary as a company, marking 15 years of continuous and rapid growth and putting us in the enviable position of leading the industry forward. Today, we are operating at a scale that is twice as large as our nearest competitor, and we have more than 5 GW of network solar energy capacity, making us the second largest owner of solar assets in the U.S. across all segments of the industry. As the nation's leader in deployed personal storage, we sit on the capability to deploy over 150 MW of clean stored energy when called upon. Our track record sets us apart. We have navigated repeated policy uncertainties, various economic cycles, and dynamic supply chains before, and I'm proud of the team we have in place today that is executing so well in the current environment. Sunrun is positioned incredibly well for periods of high inflation or even a recession because fundamentally, we offer customers security, price stability, and control over a basic human necessity. My focus since assuming the CEO role has been to make Sunrun even faster, better, and stronger, building on the solid foundation that has been built over the last 15 years to accelerate what we can accomplish for our customers and stakeholders. I am proud to share that Sunrunners are embracing the opportunity and running to the future where we are the go-to provider for whole home energy services across the country. We are making great progress against these goals. First, we are delivering rapid growth. We grew new installations by 33% this quarter. The confluence of a growing understanding about the virtues of powering your home with solar energy and storage, compounded by rapid utility rate inflation across the country, is driving record levels of demand following on the price actions we took in late March and early April. Rapidly escalating utility rates sustained a very strong customer value proposition. As many of you know, utility rate inflation was over 13% across the country in the latest CPI data and is running even higher in many of our large markets and is poised to remain elevated for the foreseeable future. Second, we are also continuing to innovate and expand our offerings. We are benefiting from and helping enable the transition to electric vehicles by providing our customers the ability to run their vehicles on clean, independently generated energy. Customers who drive electric vehicles need larger systems. These solar and battery and EV resources are incredibly valuable for homeowners and the energy system alike. Our partnership with Ford has officially kicked off and is tremendously exciting. Hundreds of orders have already been placed, and we have started conversations with over 1,000 additional potential customers as they approach delivery of their Ford F-150 Lightning. Approximately 2/3 of customers placing orders are opting for the advanced bi-directional power flow and home backup capabilities from the Ford Charge Station Pro, along with the Home Integration System. Based on initial numbers, we are seeing over 10% uptake of bundling solar at the same time as the installation of a Home Integration System. Sunrun has already installed several systems and expects to install thousands more in the coming months. We have also just launched our new Level 2 electric vehicle charger to complement the company's home energy management solutions. This allows customers to achieve even greater benefits, independence, and stability by powering their vehicles at home, tapping into the most abundant and affordable clean energy source on the planet, the sun. The offering will be available later this month in California, New Jersey, and Vermont, and will be rolled out to all Sunrun markets as an optional add-on by year-end. We are also the leader in deploying batteries with solar systems today, installing more than any other solar company. With more than 42,000 battery systems installed thus far, we can provide a critical service by discharging electricity to the grid during the times it's most needed. As more severe and frequent heat waves continue to stress our nation's grid this summer, we strongly encourage grid operators, utilities, and policymakers alike to leverage this amazing source of solar energy. Not only do our solar customers take load off the grid, our batteries export during times of peak demand, which reduces the overall stress on the grid. We expect as battery availability improves, we will see even faster adoption by customers choosing to add batteries alongside solar systems. As electric vehicle adoption increases, we will have tremendous opportunity to innovate even further with our service offerings and grid service capabilities. Yesterday, Sunrun announced an exclusive agreement with Span, making the company's smart home electric panel available to residents in Puerto Rico. The offering is available exclusively through Sunrun and Sunrun's partners in Puerto Rico, further differentiating our offering. Still recovering from the devastating effects of Hurricane Maria, Puerto Rico's fragile electric grid remains prone to unplanned power outages and protracted blackouts. With this partnership and state-of-the-art innovation, customers will be able to shift home solar and battery power supply to different uses throughout the home during an outage, controlling where and how backup power is used. This technology also provides Sunrun with an even more sophisticated ability to control and dispatch energy back to the grid if called upon by the grid operators. Sunrun entered Puerto Rico in 2018 and has quickly become one of the island's largest providers of residential solar energy and battery systems. Sunrun will start offering this incredible next innovation to customers this month. We are accomplishing all of this with a laser focus on efficiency. While tremendous growth opportunities and innovation initiatives can pressure organizations to deprioritize efficiency, we are focused on delivering growth, innovation, and efficiency together. As an example of our combined focus, Sunrun delivered 16% sequential growth in new solar installations in Q2, while headcount remained materially unchanged in the organization. We are driving cost efficiency while also remaining committed to delivering a great experience to forge enduring decades-long relationships with our beloved customers. Shifting gears to some external items. We were delighted that Senator Joe Manchin came back to the table on climate legislation, and there seems to be a highly likely passage of a meaningful commitment to clean energy. It is clear that by providing incentives to invest in clean energy, we can actually combat inflation and provide customers what they need, clean, affordable energy, insulating them from skyrocketing utility bills. We also see tremendous opportunity in the latest legislation to build on our success of providing clean, affordable energy as a path to building greater socioeconomic impact through our work with multifamily housing and to first-time homebuyers and those in communities most in need of energy security, stability, independence, and cost savings. It has also been a busy period for trade policy. We were encouraged that the administration took steps to block the anti-circumvention tariffs for two years. However, the current bureaucratic process from the U.S. Customs and Border Protection is causing delays to the timely re-release of football fields worth of modules currently sitting at the ports for us and many in the industry. This results in unnecessary friction costs such as customer system redesigns. We have called upon the U.S. Customs and Border Protection to follow guidelines, respond to consumer demand, and quickly release solar modules that are demonstrated to be in compliance with the latest requirements, and we have seen some recent progress. These delays are slowing the deployment of what Americans need and want, clean, affordable solar energy. With that, before I turn the call over to Danny, I want to share a few words of appreciation for the amazing employees at Sunrun, and most of all to our customers who we are privileged to serve. Our team is doing tremendous work to deliver on rapid growth, accelerate innovation, and drive a customer-obsessed culture at Sunrun. We are running a marathon to help combat climate change and provide customers control over their energy future. We appreciate all of our customers and Sunrunners who are part of this journey with us. With that, over to you, Danny. Thank you, Mary. Hi, everyone. I'm pleased to be joining Mary and Ed today on my first quarterly call as CFO. Today, I will cover our operating and financial performance in the quarter, along with an update on our capital markets activities and outlook. Turning first to the results for the quarter. In the second quarter, customer additions were approximately 34,400, including more than 25,000 subscriber additions. Our subscriber additions were nearly 74% of our total customer additions in the period, up from nearly 72% in Q1. Solar energy capacity installed was over 246 MW in the second quarter 2022, a 33% increase from the same quarter last year and exceeding the high end of our guidance range. We saw strong customer demand for our products and services in Q2. Customer orders increased by 28% in the quarter compared to the prior year. While we are still adding customers to our pipeline, the increased pace of installations is allowing us to gradually work down our pipeline. Our current pipeline is closer to one quarter at this point. We have now installed over 42,000 batteries. We expect battery installations to grow rapidly in the quarters ahead. Current battery supply conditions and longer install cycle times have resulted in lower battery attachment expectations in the near future, but we expect that as we introduce additional battery suppliers and work through our pipeline, attachments, attachment rates will increase meaningfully. Today, we are prioritizing allocation of batteries in key markets where they are needed for the most for grid reliability concerns. We ended Q2 with approximately 724,000 customers and more than 614,000 subscribers, representing 5.1 GW of network solar energy capacity, an increase of 21% compared to the prior year. Our subscribers generate significant recurring revenue with most under 20- or 25-year contracts for the clean energy we provide. At the end of Q2, our annual recurring revenue or ARR stood at $917 million with an average contract life remaining of over 17 years. In Q2, subscriber value was approximately $38,700, and creation cost was approximately $30,800, delivering a net subscriber value of approximately $7,900. Total value generated, which is the net subscriber value multiplied by the number of subscriber additions in the period, was $200 million in the second quarter. The adjustments we made to pricing and home upgrades policies in late March and early April are starting to partially flow through our installations in Q2 and will be more fully reflected in Q3 deployments. We are optimizing overall sales activities and revising our policies on pricing and product mix in certain markets. These moves are already producing positive results in Q2, and we will continue to evaluate our customer offering based on incumbent utility rate trends and the capital markets environment. Turning now to Gross Earning Assets and Net Earning Assets and our balance sheet. Gross Earning Assets were $10.8 billion at the end of the second quarter. Gross Earning Assets is the measure of cash flows we expect to receive from customers over time, net of operating and maintenance costs, distributions to tax equity partnerships, partners in partnership flip structures, and distributions to project equity financing partners discounted at a 5% unlevered capital cost. Net Earning Assets were $4.6 billion at the end of the second quarter, an increase of over $130 million from the prior year and $145 million compared to the first quarter. Net Earning Assets is Gross Earning Assets, plus cash, less all debt. We ended the quarter with $863 million in total cash. We continue to maintain a robust project finance runway. As of today, closed transactions and executed term sheets provide us with expected tax equity and project debt capacity to fund over 360 MW for subscribers beyond what was deployed through the second quarter. Turning now to our outlook. The current solar module import disruptions Mary mentioned create some uncertainty around volumes during the second half of 2022. The strong consumer demand we see are further improving operational efficiencies and fulfillment capacity, and the visibility of our robust pipeline gives us confidence to confirm our full year guidance of over 25% year-over-year growth in solar energy capacity installed. We now expect total value generated to be substantially greater than $900 million for the full year, confirming our prior guidance that total value generated will grow meaningfully faster than volumes. We continue to expect Net Subscriber Value above $10,000 in Q3 and Q4. In our forecast, we do not assume any increase to the federal investment tax credit that may result from passage of the Inflation Reduction Act of 2022. An increase in the investment tax credit, pending California net metering policy and any impacts to volumes from supply chain disruptions could obviously result in variations in Total Value Generated in either direction. For the third quarter, we expect solar energy capacity installed to be in a range of 250 MW-260 MW. Since the April pricing of our half billion dollar senior note securitization, capital availability has remained strong in both the securitization and bank markets. Apart from a brief period in June, market interest rates have remained in a narrow range. Our borrowing costs, which are indexed to long-term interest rates, have benefited from downward pressure recently as expectations for economic growth have softened. We continue to expect advance rates on our deployed portfolios to be between 85%-95% of contracted subscriber values, which are discounted at a 5% rate. We believe the wide range is appropriate given the potential volatility in debt capital markets. As a reminder, the numerator in advance rate includes proceeds received net of fees from all sources, rebates, tax equity, customer prepayments, senior and subordinated debt, and swap terminations. As we've shared before, we frequently enter into interest rate swaps to hedge capital costs on our newly installed customers. Our existing capital structure is also well hedged through a mix of interest rate swaps and fixed coupon long-dated debt securities. We currently observe our capital costs is between 5%-6%. As you may recall, several years ago, we used to report subscriber value and Gross Earning Assets figures using a 6% discount rate and didn't update it to 5% until we saw capital costs below 4%. While we actively monitor capital costs, we don't plan to update the discount rate for minor fluctuations around 5%. As mentioned, we implemented meaningful price increases earlier this year behind large electric utility price inflation and high interest rates. Since then, utility price inflation has remained persistently in the double digits as utilities pass through their higher labor, fuel, and capital costs to customers. This provides ample headroom to continue to evaluate market and pricing opportunities while still delivering customers an incredibly attractive value proposition. With that, let me turn it back to Mary. Thanks, Danny. It is such a powerful time in our nation's history to be working in clean energy, shoulder to shoulder with 1000s of Sunrunners every day, working hard to deliver to Americans what they want and need. Clean, affordable, independent energy to power their lives and to give them a greater sense of comfort and security. We sit on the precipice of perhaps the most impactful climate and inflation reduction legislation the U.S. has ever seen. It is so exciting to think about the measures and how they could dramatically accelerate our work and maximize our impact, all while addressing rampant energy inflation, which is squeezing households all across the country. That said, no matter what the world throws at us, at Sunrun, we stay focused on making our own luck, growing faster, better and stronger, and delivering on our obsession with our customers, with the employees who serve them, and delivering strong results for our investors. Before opening the line for questions, I want to again express my deep appreciation for the big-hearted, ambitious team of employees at Sunrun, the customers we are blessed to serve, and the many partners who work with us every single day to deliver on creating a planet run by the sun. With that, operator, let's open the line for questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. As a reminder, we ask that you please limit to one question and one follow-up. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Julien Dumoulin-Smith with Bank of America. Please proceed with your question. Hey, team. Good afternoon. Thank you, and kudos for holding on to that 10,000 figure that we've all been fixating on here. If I can just keep running with that, if you don't mind, I'd love to hear a little bit more about how you're thinking about future further rate increases, right? For example, how do your rates compare with utilities today after the increases that you've implemented? Considering that typically the cadence of rate increases is fixated around January first, can we expect a further step up and expand that 10,000 going into 2023 or at least into 1Q 2022 or 2023? Hey, Julien. It's Mary. Thanks so much for the question and for the enthusiasm for maintaining our focus on that subscriber value. That said, yeah, your question, you know, I'll hit it first at the broad level and then see if Danny has any additional comments. We have a lot of headroom. I mean, the bottom line is we have a lot of headroom. You know, we basically are providing customers all across America, but, you know, particularly in some markets with, you know, really significant savings value proposition. We're also at the same time, Julien, you know, we're seeing more and more customers candidly that are so motivated by other factors. Again, more and more customers are also going solar to power their electric vehicles. When you also think about the opportunity to power an electric vehicle with your own independent solar versus the prices, the volatile prices at the pump, that also is a part of what we see as continuing to drive demand. I would say at the highest level, again, we're being, you know, very opportunistic at the same time as we're very, very focused on making sure that we're delivering a significant value proposition to the customers we serve. With that, Danny, I didn't know if you wanted to hit any more. Yeah, not much to add, Julien. Thanks for the question. You know, as we discussed last period, and as we've shown this period, you know, we're making progress towards getting the realization of the pricing actions we've made. And as you'll notice, you know, the guidance for Q3 and Q4 this time indicating you know we also obviously have gained confidence that the pricing actions we've taken will stick. You know, beyond that, you know, we're not guiding anything at the moment. You know, Mary has kind of given you a sense for how we're thinking about things, and you know, I think we're confident in what we've said regarding Q3 and Q4 at this time. Julien, lastly, also, as you know, the other adoption that's happening, whether it's electric vehicles, heat pumps, other types of electrification, is just then driving up the demand for larger systems as well. Totally. Excellent. Thank you. Just a quick follow-up here. Considering IRA, obviously as an existing ITC, but to the extent to which you could get an additional bump up on the ITC with some of these additional adders, what portion of your prospective origination could qualify for some of these additional ITC adders here? Or how nimble could your business be to pivot towards those kind of higher ITC opportunities as best you see it today? Hi, Julien. It's Ed. You know, we have a fantastic opportunity here. I'm a little cautious to share exact numbers because the regulations on each of the adders will be promulgated by Treasury and haven't been issued yet. You know, our preliminary analysis is on the low income adder, approximately a third of our existing customers that we originate would qualify based on census tract data. Obviously with our direct marketing sales team in particular, you know, it would be possible for us to seek additional business in those geographic areas. On the American Made component, the opportunity obviously will depend on the percent requirements that are promulgated, but again, we think there's probably a good opportunity there. On the energy communities, there's a significant opportunity there. For instance, I suspect like most of Houston would qualify based on the workforce, although we've got additional work to do there. I think we feel like there's a significant opportunity even on the run rate business, and we have a lot of flexibility in targeting to achieve higher, you know, sort of attachment rates of those adders. Obviously I should mention again, you know, that those adders are only available under the Section 48 tax credit, which is the one available to lessors. Yes, indeed. Excellent. Thank you, guys. Our next question is from Andrew Percoco with Morgan Stanley. Please proceed with your question. Just my first question is just more on the cost side. You know, totally understand you have pricing power to offset some of the near term pricing headwinds, but just curious here if you have any thoughts on when you might start seeing, you know, the actual acquisition costs start to drift down, you know, more towards that 5% decline per annum that we, you know, saw historically. Yeah, we've talked a lot about some of the cost pressures. I think as Mary mentioned, you know, one of the positives on that dimension over the quarter was, you know, we were able to achieve the sequential growth with our headcount virtually unchanged or, you know, not materially up as we described it. It's speaking to the improving efficiency of the business. You know, there are equipment cost pressures. There are other kind of pressures around us, and we continue to work through those things by delivering greater efficiency through the business as we continue to scale up the volumes. You know, in addition, driving towards higher margin product via battery attach, right? Like we commented about, battery attach, you know, that is a product that kind of has momentarily had a dip in or a lack of further increase in the attachment rate, which we think is going to resume, as that supply eases, and certainly the consumer demand is there. Like, you know, margin expansion opportunities, coupled with just grinding out, you know, day by day, further efficiency in the business to compensate the inflation pressures we know are all around us. Got it. Super helpful. Just one more on the funding strategy for me. You know, ABS has been a big component of your, you know, funding strategy in the past. I think, Ed, last call you alluded to the fact that there was a, you know, a noticeable difference between the credit spreads in the ABS markets and what you're seeing from some depository capital. Just curious, you know, maybe where your cost of capital is today and how that funding strategy might change, if at all, going forward. You know, it's quite habitual for us to be looking at, you know, the broad access to the capital markets we have and continuing to evaluate those cost of capital difference we see between markets. I think we've played that quite favorably over different cycles and periods of time. We're certainly in one of those where, you know, we think there is a cost of capital difference between the markets. We also understand that that cost of capital difference can often be fleeting and we are, you know, strategically designed, you know, in our approach to the capital markets to be able to access both and, you know, pivot back and forth quickly as needed. Today, yeah, we have said and continue to believe that the commercial bank market is a little bit ahead or more favorable than the ABS market on a pricing basis. That pricing difference is relatively narrow, but it exists, and we continue to look at that. To your question about cost of capital, we continue to see cost of capital, which is the blended cost of capital with our senior and subordinated debt all in, run in that 5%-6% range. It has varied through the quarter as we've seen credit spreads move around a little bit. We've seen base rates move around a little bit more, but I think as we mentioned in the opening remarks, have tapered off recently to a much more favorable spot. You know, cost of capital recently trending positive, still up from late last year. As we've discussed, we've taken a lot of action to kind of work through that and those dynamics broadly. Great. Thanks so much. I'll leave it there. Thank you. Our next question is from Brian Lee with Goldman Sachs. Please proceed with your question. Hey, everyone. Thanks for taking the questions. I had two, kind of related to the model. You know, first on the growth guidance, you know, you're implying 3% sequential growth for 3Q and then maybe mid- to high-single-digits growth in 4Q to hit the full year target. That's, you know, a little bit slower than what you just saw on 2Q, which was robust and above the high end of the guide. Just question would be, was there any sort of pull forward ahead of your pricing increases? Or maybe you can just talk us through the cadence of growth you're seeing in bookings activity versus prior quarters right now. If there's been any notable shifts in customer trends you're seeing between, you know, the different offerings, PPAs, leases, loans, et cetera. I had a follow-up. Thank you for the question. On sequential growth in volumes, I think we've had, as we've discussed previously, major increase in new customer orders at the beginning part of the year, even late last year. Heading into this year, on the last call, we guided to a backlog or a pipeline, encroaching on nearly two quarters. As the sequential growth in the business has picked up, that has reduced to closer to one quarter. As we look at the next couple of quarters and even the next few quarters, that has also obviously there are some challenges on the cost side we've talked about with a growing pipeline, but the ability to bring it in and continue to work that down on a measured pace, I think is valuable to the business. You know, that is a deliberate focus. As we see some of these uncertainties in the macro picture, you know, growing the physical footprint of the business in a measured, deliberate pace, you know, has been a focus. The guidance we provide, we are comfortable with. As far as the product mix, the lease versus loan, we've seen a little bit of a shift. We've seen a relative pickup of the lease product, where last quarter that was 72%, and this quarter that increased to 74%. Okay, that's awesome. And then on Net Subscriber Value Expansion, kudos on hitting the targets here and reiterating the second half. Just wondering, can you sort of bridge the $2,000+ step up from 2Q? How much of that is pricing reading out, you know, versus other drivers like mix and so forth? And then as we think about the model longer term here, what's the normalized target for Net Subscriber Value? I know you had talked about kind of reaching $10,000-$12,000 per customer in the past. Obviously, you're kind of already there. So, you know, wondering if there's an update to that and what some of the step-up drivers from here would be, if you can quantify. Thank you. Yep, thank you. We have, you know, still room to run on the realization of the pricing increases. Those are late March, early April. Coupling that with the backlog, which we said again encroaching upon two quarters means, you know, about one quarter has passed, and we've got a little bit more room to run here for those pricing actions to kind of take hold through the metric. Partial realization of those, you know, through the quarter. That's also what's, you know, causing us to form the guidance to greater than 10,000, you know, for the balance of the year. As we continue to deliver scale, we get some operating cost leverage as well, which we'll see on the cost side in the back half of the year. You know, we continue to see margin improvement within our acquisition cost. We have platform services margin. We expect some margin improvement there as well through the balance of the year, all contributing to that positive direction in the metric. All right. Fair enough. I'll pass it on. Thanks, guys. Our next question is from James West with Evercore. Please proceed with your question. Hey, good afternoon, guys. Hey, good afternoon. Mary, you've had some back and forth with you know, a notable short seller here recently, or at least there's been you know, some assertions made against Sunrun around some of the accounting. Of course, there was a response from you and another response from them. I'm curious if you wanted to comment or take this opportunity with the microphones you have right now on your conference call to respond to them. Sure. Yeah. Actually, James, I you know, from a high level, I think as you know, we went to lengths to sort of go, you know, sort of point by point. Right. Just make sure that folks were so clear that, you know, from our perspective, Muddy Waters is, you know, has it wrong. You know, I thought actually it'd be great for Danny as CFO, given his tenure with the company. I would actually love to have you, Danny, share your thoughts on sort of how we look at it. You know, we certainly welcome any and all, you know, dialogue as we always have as a company. Yeah, Danny, I thought it'd be great if you could hit- Yeah. I'd just layer on those internally prepared remarks that we posted on our website were kind of, you know, at our fingertips, if you will, given the long history here. Sure. Of delivering just very high quality, you know, and reputation from a due diligence standpoint over the course of 15 years, my 12 years here, with probably close to about $20 billion raised, much of which was, you know, under private situations, private deals, where investors really have the opportunity to come in, even some for like spanning multiple days, to have asked us these questions, and we've answered them some over a decade ago. You know, we felt quite good about the response. I don't think we plan to elaborate further here on those point-by-point responses. I think that record speaks for itself on our website. You know, again, it's a culture of awesome reputation with our investors that comes from the transparency and humility with which we've treated a lot of the due diligence we've had to go through to raise all the capital we've raised. I think, you know, as far as like anybody you could reach in the market to ask them about our reputation in those situations, I think they would speak very highly. They've certainly said those things to us. We definitely appreciate that level of rigor we already get from a lot of these private investors, where we do have to kind of open up the hood a bit and get really into these very specific issues, which we've done so many times. Which is why, again, you saw a pretty robust response, you know, go on our website that the team kind of, you know, very quickly prepared here. I think that's kind of basically it on the matter. You know, we're excited about all of the execution. You know, there's a dynamic macro environment, but we're excited about the execution of this team, and we're excited about the trajectory of the business. Okay. Fair enough. I'll leave it there. Thanks, Danny. Our next question is from Maheep Mandloi with Credit Suisse. Please proceed with your question. Hey, good evening. Thanks for taking our questions. First, just on the growth over here in terms of, you know, targeting kind of 275+ MW in Q4. Could you kind of talk about the sensitivity to that growth from California, the NEM 3.0 proceedings over there? Yeah. I mean, there is a question on the timing, so there is some timing uncertainty there. You know, at the moment, the base assumption is any impact, given it's unknown, the impact of any action would deliver kind of more into next year. You know, we obviously have to see what comes out of it, measure those impacts and more clearly guide to them. At the moment, we don't believe there is a high impact to the volumes that we've guided to, you know, between Q3 and what's implied for Q4 with the annual guidance. Gotcha. Just like two more from me. One on the IRA. Does the tax credit transferability help with tax equity? For the EV chargers, who's the OEM supplier or is it related to the SK JV? Thanks. Sure. This is Ed. A couple questions. First again on the potential for tax credit transfer in the current IRA draft. That is something again, where Treasury will have to promulgate rules and I'm, you know, don't want to speak in advance of those rules. I think my high level suspicion is that sort of traditional tax equity capital will continue to be cheaper, but that will certainly expand the market and be helpful, and potentially, you know, for more off the run products or something like that. We continue to monitor that and, you know, chat more about it. Think that, you know, the traditional structure which, you know, monetizes depreciation as well ought to give a better financial outcome, most likely. As to the EV charger, that is a product that we're sourcing separately, although we're not manufacturing it ourselves. It continues to be that, you know, or I should say that the SK JV will be talking more about itself sometime during the calendar year. Gotcha. Thanks for taking the questions. Our next question is from Mark Strouse with JP Morgan. Please proceed with your question. Yes, good afternoon. Thank you very much for taking our questions. Just had one kind of two-part question on inventory. Going back to the comments about UFLPA creating some kind of delays in the market, is that having a tangible impact on your ability to meet demand here in 3Q, or are you kind of Leaning into your inventory during this period. Then kind of the second part of that question is, assuming the UFLPA kind of gets, you know, cleared up over the next quarter or two, kind of what your strategy on inventory would be if that becomes kind of a working capital tailwind. Thank you. Hey, Mark. Thanks for calling in. I didn't know if you were done with the question. I didn't want to talk over you. Yeah, great questions. On the inventory balance itself, given those dynamics with UFLPA, you know, if you look at our financials, you know, you'll still see inventory balance up for the year. If you kind of compare June 30th to December 31, you'll also notice that it's slightly down about $9 million quarter-over-quarter. We did dip into the inventory a little bit through the period. We're still overall up. Obviously, some of that is being driven by increased volume in the business. Some of it is being driven by keeping that days of supply high. You know, we did guide last time that we were carrying a balance of days in excess of 100. Now, with both the volumes increasing and some of our product getting detained, that has dipped a little bit, 100 days. I think we've planned around it in a way where I think we feel comfortable for the balance of the year. Although it remains a risk, we feel comfortable given all the procurement activity that we've done very tightly around the situation. Okay. Thank you, Danny. Our next question is from Philip Shen with ROTH Capital Partners. Please proceed with your question. Everybody, thanks for taking my questions. As a follow-up on the UFLPA situation, Mary, I think you referenced some of the CBP challenges. Can you provide some additional color on how the UFLPA may have impacted your business? You know, how much redesigning did you guys actually have to do? You know, was one of the module vendors that you had contracted with possibly impacted? Thanks. Yeah. At, you know, at a high level, I mean, again, we're crushing it on the fundamentals. You know, and as we reported, like, yes, we had some, you know, flexing we have to do in the organization. And again, we work with a number of suppliers, so, make no mistake, there's always some flexing we've had to do in the business. It's just highlighting that risk and that, you know, that's where it shows up is in the context of the friction it causes in the business and the amount of redesigning that you might have to do for customers if you're finding that you have one set of, you know, vendor panels versus another. You know, the good news is we're in a, you know, enviable position. We work with really good vendors. We've had long-standing relationships. We've been a leader in having standards for who we operate with, making sure that they meet all of the requirements. It's really been around, you know, just working very directly, you know, most recently with U.S. Customs and Border Protection to make sure they're aware of that, to really put the pressure on ensuring that we get product released as quickly as possible that's sitting at the port. You know, as Danny said, you know, we are still sitting on a good amount of supply. We have great vendor relationships. We've been a leader in making sure that folks meet requirements. You know, really ultimately, I see it largely as, you know, just being something we've really got to keep our eye on and keep pushing on, in this quarter. Great. Thanks, Mary. As a follow-up to Net Subscriber Value, wanted to see if we could hit the potential view on 2023 again. Specifically, you know, would you expect Net Subscriber Value to be flat in 2023 as we get through the year, maybe potential for, you know, even more expansion? Thanks. So far, you know, we haven't guided to 2023. I think in the remarks, we noted some of the swinging variables around Net Subscriber Value, Total Value Generated, and those come into play, more so in 2023 than they do for the balance of the year. You know, that includes impacts from what happens in California, the ITC stepping up to 30%, the interest rate environment. With enough of those uncertainties, and you know, I think our focus on, you know, closing out the year strong and having those pricing increases stick, I think we've kind of stayed away at the moment, from getting deep into 2023 on the guidance. Okay. Fair enough. Thanks very much. Our next question is from David Peters with Wolfe Research. Please proceed with your question. Yeah. Hey, good afternoon, everybody. Just curious with respect to the IRA, I think in the past you've said the industry could grow, you know, anywhere from 10%-15% annually over the next several years. You made the comment in the release about, I think, the incentives turbocharging your growth. Do you have any sense in magnitude at this point or just any thoughts about how much bigger the TAM would get from day one, just in new markets that you could enter where it, you know, wasn't quite economic enough before? Thanks. Hey, this is Ed. I mean, assuming if the IRA were to pass, which we expect it will, I think, you know, TAM could increase from quite a few areas, right? There's obviously the base increase in the tax credit. There are also tax credits now available for things, or there would be like main panel electric upgrades, which also will make storage more affordable for more people. There are the adders that we discussed earlier on the call, you know, particularly for lower income Americans, but also for other situations. Also it's also a long-term extension of the credit, which is also helpful. With those elements, and obviously against the backdrop of just rapidly escalating commodity and electricity prices, you know, we think that the opportunity for, you know, robustly quicker growth is significant. We obviously haven't quantified that yet, and obviously are, you know, we want the bill to pass and the regulations to be made clear. Yeah. Yeah. It's. Right. It's obviously very, would be- Yeah. It would be a nice acceleration. Yeah. Ed, thank you so much. Just to put a point on that, again, I mean, we're sitting at a place of like really strong growth, surging customer demand, right? Then, you know, with a potential passage of a bill that is going to encourage more Americans to move faster towards electrification, which means more Americans are gonna also wanna move faster, not just to the other kinds of electrification products we can help them with, but with the ability to generate their own energy that is way more affordable, reliable and energy independent. You know, we really believe, you know, as I said, that we're on the precipice of really some monumental and impactful climate legislation that, again, is gonna be felt not just in like the TAM, not just in sort of these very practical ways, but seismic ways in terms of the drive towards electrification, and the surging demand that's going to turbocharge around, you know, the need for solar energy. Great. No, I appreciate those thoughts. Just one other one, just back to the net subscriber value. I guess you guys are kind of guiding the exit year around that 10,000 level. Just how quick could we see that step up just from the higher ITC alone? Again, assuming the bill passes, just you know understanding the value of tax equity would be marked up in that calculation, right? Would it flow through pretty fast, or just how should we think about that? Yeah. Depends on obviously the legislation. In its current form, it is dated to January first, so there would be an immediate flow on future installations, and then there would be some additional value pickup on the systems you've already placed in service for the year. And that would show up as an impact through our investment funds as well, as we kind of calculate you know the tax equity returns with the 26 versus the 30. I think it'll factor in there, and have some you know positive you know financing and working capital benefits as well. But should be pretty immediate, and apply to systems across the year. This year. Great. Thank you. Appreciate it. Our next question is from Colin Rusch with Oppenheimer. Please proceed with your question. Thanks so much. I'm just curious about a couple elements on the cycle time. Can you talk a little bit about changes in the sales cycle and then also in terms of recruiting and training new installation staff? Yeah. What specifically was the question on the sales cycle? Yes. If you can elaborate on that first one. Yeah. You know, just the directionality of it. You know, are you able to shorten it here with some of the elements that you've been working on with permitting? You know, are customers getting, you know, to a point where they're educated enough, where they make faster decisions and you're able to get out and install these systems quicker? You know, yeah, 100%. Sure. Gotcha. Yeah. In that context, again, I was really pleased with the progress we made in this last quarter with really tightening the cycle time. You know, candidly, it's not so much in the sales process. It's actually, you know, again, with a lot of the COVID-related challenges over the last couple of years, it was more, you know, the cycle time we really focused on was shortening the time from, you know, customer signature to installation. That's where we again made some real nice headway in this last quarter. Yes, we're seeing, as again, you know, as I've talked about before, that we've, you know, in my view, we've really already hit this, you know, consumer tipping point, where again, you know, solar is really becoming a way more mainstream to be thinking about and talking about. In the context of the work that our sales teams are doing, you know, it is, it has been really fundamentally dealing with really incredible customer demand, and that part of the process is moving very slow. In the context of also, I think you mentioned training, you know, again, as you would expect, you know, we definitely have robust training that we have new employees go through. One of the things I've also been really impressed with from a labor perspective at Sunrun is we continue to remain a highly attractive employer. We also just seem to have a relatively straightforward time in the context of recruiting and bringing on a lot of new enthusiastic Sunrunners where and when we need them. We're in a really good position from labor, from, you know, the productivity metrics that we're seeing and what we're driving towards in terms of the installation cycles. Fantastic. Then the second question is the conversion rate of the referrals you're getting from Ford. Can you speak to how many or what percentage of those referrals are actually turning into sales for you guys? Well, it's, you know, again, we're early in the process. I think as I described, you know, when I opened, you know, we are talking to literally thousands of customers. What I also described is, I think right now, again, it's super early, but we're at, like, 10% of the currently scheduled customers for the bi-directional charging are, you know, have also decided they wanna go solar at the same time, which is super powerful. You know, and not surprising to us 'cause there is such an incredible correlation between electric vehicle drivers and those who wanna go solar. We're expecting to see great, continued uptake. Perfect. Thanks a lot, you guys. Our next question is from Kashy Harrison with Piper Sandler. Please proceed with your question. Good afternoon, everyone, and thank you for taking the questions. So I noticed that you disclosed the value generation target of greater than $900 million. I think there was also some mention of it in the prepared remarks, and you indicated that is way up relative to 2021. However, you know, corporate cash net of recourse debt is down about $215 net of the SK investment from Q1. Just wondering if you'd help us think through the corporate cash trajectory as you look into the second half of the year. I have a follow-up. Yeah, the corporate cash dynamic. I think we might have talked. I forget exactly what we said on the last call, but I think the enormous growth over the first half of the year was such that it was cash consuming on the working capital side, as we have increased sequentially by large numbers quarter-over-quarter, getting that installation footprint increased and catching up to the demand. You know, we have also mentioned the increasing inventory balances we've had to carry over the supply chain situations. There's just been general working capital consumption through the year. I think quarter-over-quarter, the movement was less significant. This is Ed. I think the one other thing we did mention on the prior call, which, you know, continued to be the case, is that, you know, from a cash flow performance, the systems that we originated prior to the quick run-up in interest rates, that we've now placed in service during the period of higher interest rates, you know, don't meet our, you know, kinda long-term desires for cash generation. As we now transition back to installing the projects that we originated after we increased pricing, you know, that is very helpful to the cash trajectory as well. That's helpful context. Thanks. Then as my follow-up, as you know, as you contemplate strategies to maximize customer economics, you know, not just in second half of the year, but just really long term, I was wondering if we could maybe talk a little bit about, you know, customer acquisition costs, 'cause that is something that you know, you have the ability to control, unlike NEM and ITC, et cetera. You know, looking at where customer acquisition costs are now relative to prior to the Vivint deal, you know, those numbers are up a bunch, and so just wondering, is that somewhere where, with a downturn coming on the economy, you can maybe bring those down and rapidly improve customer economics, levered cash generation for 2023? Yep. So definitely the dynamics in the economy, you know, particularly as the economy softens, I think that could generally be a tailwind to the business, on the cost side. I think that would apply whether you're talking about equipment, you're talking about input labor on the install side, or you're talking about labor on the sales side. You know, that could certainly be a factor that would be beneficial over time. You know, we've also seen just the record demand for the product. I think the benefits as we see those tailwinds just from consumer awareness, adoption, you know, their wallets being pinched with rising utility rates and everything else, I think that those are generally favorable dynamics to customer acquisition costs. We did see the sales and marketing in our acquisition cost metric go up quarter-over-quarter. That is reflecting because of the way we realize that upon the install to the dynamics that Ed mentioned earlier. You are also seeing in our metric some of the sales and marketing costs get realized upon install from systems we originated in Q1 prior to those pricing changes, which should have a beneficial impact over the next period or two. Yeah. I would just add to that, you know, yes, from a big picture perspective, back to your, you know, your fundamental question, we are 100% focused in, like, as we're getting faster, better, stronger in, you know, driving down the cost stack, like, in every area, right? At the same time, you know, really, again, dramatically driving up customer experience. We're doing a lot of things around simplifying process and other activities that should, you know, continue to improve the overall profile. Thank you. Our next question is from Sophie Karp with KeyBank. Please proceed with your question. Hi, good afternoon, and thank you for taking my question here. It's been a long discussion. I have a couple questions for you guys. Okay. First, I was curious, looking at the net earning asset value, right? How the trajectory of that metric has tracked in the last, call it 12 months. It's been growing in low single digits, especially if you look at it on a per share basis, and it's pretty much grown flat, right? Do you expect to target that growth in that metric as one of your core targets at some point? Or, would you just prefer to focus on, I guess, customer value? I guess what I'm trying to say is like how should we think about increase in customer value translating into ultimate increase in net earning asset? Is this the right way of looking at the economics of the business? Yeah. Thanks for the question. Going back to one of my responses to the prior questions, in the last couple of quarters, and again echoing what Ed mentioned, there was that period of time where we had that major increase in volumes, that major increase in interest rates, where we did write a lot of business that you know had impacts to their ultimate unit economics from the financing environment as well as the working capital environment, which we're still kind of working through, as we you know raise up to the higher volume level over the course of the year. You also see the related impacts through the metric. The metric is also burdened by the SK investment. We've also talked about before. Eventually we should see that metric to kinda recover to a more robust level of growth. Let's say Yeah, we have seen, you know, a modest pickup between Q1 and Q2. You know, in the most recent period, there has been a resumption of growth in the metric. Yep. Okay. As a follow-up. We talked about utility rate inflation and such, right? We all know the energy costs are up. Here's my question. The most recent spike in the utility rates, you know, rates that we've seen is to a large degree driven by the spike in energy and fuel prices, right? Let's say if the economy softens and the energy prices moderate, so we will presumably see a corresponding decline or moderation at least in the utility growth rate. Is there any risk that some of your most recently underwritten customers could actually see negative savings versus the utility rate if that happens? Sorry, could you repeat the last part of your question? If the utility rates come down because energy prices, let's say, crash in the softening economy, is it possible that some of your most recent customers would see, negative savings or no savings or maybe pay even more with the solar installation versus the utility rate because they were underwritten in a higher energy cost environment? Yeah. Hi, Sophie. It's Mary. Yeah. No. I think that's my short answer. You know, again, as a former utility executive, for 20 years, you know, fundamentally, the fundamental cost drivers of what you're seeing, from a utility rate perspective, like, yes, you're right. Fuel costs were a big part of the driver of a lot of the recent uptake. What you're also seeing is fundamentally, you know, just really billions of dollars of rate-based investment that needs to make its way through, the process of being absorbed in rates. You also are seeing, you know, like as I think about different major markets we're in, like California, you know, you're seeing, you know, the effects of climate change and fires and droughts creating, you know, again, unprecedented levels of utility spending, both from a distribution and a transmission perspective. You're also seeing, you know, much higher labor costs. You're seeing so many fundamentals that really take years. Like, you know, even if some of those fundamentals change, which I'm having a hard time seeing what would be driving that change in the short term, it, you know, you're literally talking about like things that take sort of a decade to work their way through the system. So even if you had other countervailing positive trends, it would just take, you know, an incredibly long time for that to feed through. I mean, you know, where you see fuel prices affect utility rates positively and negatively more quickly is just in power adjusters, right? In certain parts of the country or in certain states or regions where there's the pass-throughs, right? You're gonna see those really huge upticks that, you know, may be purported as being temporary. You know, the reality is they shake customers to their core in the context of price stability. Again, that's a big part of what our customers want. It isn't honestly just the savings as much as it is about the stability. It's about really knowing what the cost is gonna be of this really important essential service, and knowing what that's gonna be for a given period of time. I think there's a lot of dynamics. I know, Ed, I don't know if you want to add something to that. Yeah, there are a few things I wanted to add. In the background, as Mary mentioned, there is this- CapEx extravaganza. Utilities nationwide are incurring 2.5 times as much CapEx as depreciation. This is why, for instance, in Arizona, you know, over the last half decade, even before the recent, you know, rise in energy costs, wholesale power costs fell in half while retail power costs doubled. In addition, retail power costs kind of go up with Madoff-like efficiency because even if there is a savings on the fuel side, usually someone finds a CapEx experiment to plug the hole. That said, a lot of the operating cost increases that utilities have already experienced, they have not yet been able to pass through because they get approved in rate cases. Increases in operating costs, increases in capital costs and long-term, you know, and increases in long-term fuel procurement, you haven't seen actually in rate increases. What you've only really seen in the last six months is the impact from the small portion of energy that utilities kind of buy on the spot market. There is this, you know, giant animal that the snake still has to digest in terms of price increases. You've also got happening in the background, this huge CapEx increase. I think that the best projections for retail rate increases are that they will continue to be, you know, double digit or close to double digit for years, even if you saw wholesale prices moderate or decline fully. It's one of the many reasons why we've talked a lot, and this company has done so much work on radical collaboration around, you know, really having our assets become a valuable part of how we operate the grid going forward. Because, you know, fundamentally, the work we do, and the work we're doing around, you know, particularly like with Ford, with the bidirectional charger, with solar, with storage. You know, we are in essence creating an opportunity for utilities to have access to smart, controllable load. As we electrify more of, you know, devices and transportation around the country, we could play a really critical role, in, you know, helping utilities and grid operators operate the grid much more cost effectively. Operator, I think we're gonna try to squeeze in two more quick questions if we can. Maybe we have folks just do one question, and then I think we are out of time. Our next question comes from David Nierenberg with Nierenberg Investment Management Company. Please proceed with your question. Hi, guys. Thanks for taking my question. Very quick question. The value proposition to customers has expanded rapidly from just being solar to being solar plus storage, plus backup power, plus EV and, bidirectional and, I guess a whole home energy storage, energy service application. You have a very large installed customer base. Have you given thought or how should we think about the potential to upsell existing customers on the expanded offering? What would that mean for customer acquisition costs and, something akin to a refinancing or renewing of a contract that captures renewal value, that was somewhat amorphous previously? I hope that question is clear. Yeah. Thank you. It's a great question and actually one we're very focused on, because again, you're right, we're really well positioned. We are all ready, and for many customers, you know, acting as their clean energy company that can help them with the transformation of, you know, their electric vehicle as well. 100%, I mean, we've actually already seen that in some cases, right? Where a customer, you know, already needs to make their system larger. We definitely see, you know, increased opportunity around system sizes. We absolutely see opportunity to bring, you know, to existing customers, new products and technologies that we're bringing to the market. Again, we see not just rapid growth in the number of customers that we serve, but also the opportunity to continue to deepen and enrich our relationship, you know, with our existing customers. It's also interesting to think about the fact that, you know, a lot of customers stay in their home on average seven years. In many cases, we're already seeing cases where we've picked up a new customer because they bought the home of an existing customer who then becomes a new customer again with their new home. The expansion opportunities of the relationship in, you know, are endless. They're limitless in our minds. You know, again, that's why I talk a lot about customer obsession and being that beloved, trusted partner for customers all across America in helping them get to that more affordable, clean, independent, smarter energy future. One thing I would add to that, you know, we've tested the interest, particularly in retrofit storage, is enormous. You know, while we support that for our customers, we haven't marketed it yet, given some of the constraints in battery supply. As those constraints relieve, you know, we would expect to market that and think there's a really enormous opportunity there. 100%. Our final question comes from Joseph Osha with Guggenheim. Please proceed with your question. Hi, this is actually Hillary, for Joseph, and thanks for squeezing me in here at the end. I just wanted to touch real quickly on storage, and if you could just give us a better sense For where kind of attach rates are, and particularly as you work through bringing down those, install cycle times, kind of what has to happen and how quickly we might see that stronger adoption rate. Thank you. Yep. Thanks for the question. If we look at the demand for storage, I think it far outpaces the supply that we have of batteries. If we look at the volume growth rate in our storage customers, that has been robust, like far outpacing the overall growth in the business. I think if we look at the attach rate, I don't have the number, the exact number in front of me, it's somewhere in the teens. But also our volumes have been increasing for overall installations at a pretty robust pace relative to the amount of battery supply available. That's been putting downward pressure on the attach rate, but the physical units and the number of customers have been growing at a pretty robust pace. Yeah. As we said, we have 42,000 customers with storage. Again, one of the largest providers, I think actually the largest provider in the country. You know, no doubt in my mind that again, you know, there are so many customers that wanna go with storage, as Ed highlighted already. You know, there's just incredible opportunity to go back to customers, existing customers with storage capabilities, as we again see the tightening that's happened in the market sort of loosen up and free up. Tremendous upside opportunity for us. This concludes today's Q&A session. Also this concludes our conference. You may disconnect your lines at this time, and we thank you for your participation.