Residential solar and storage company Sunnova logged an overall loss in the third quarter of 2020, as the industry emerges from a difficult period in which the coronavirus pandemic challenged overall sales.
Sunnova, unlike many of its publicly traded peers, chose to plow ahead through COVID-19 disruptions without revoking its 2020 guidance. In May, the Houston-based company said it expected to add between 28,000 and 30,000 new customers in 2020 and end the year with between $10 million and $20 million in cash.
Sunnova affirmed that guidance on Thursday, despite posting a net loss of about $73.3 million in the third quarter that it attributed to converting debt to equity. The company's stock dipped about 4 percent in response.
Prior to the coronavirus crisis and related shutdowns, analysts at Wood Mackenzie expected residential solar to log another record year after a big 2019. The pandemic has made that exceedingly unlikely. But the residential industry's overall resilience — as evidenced by recent third-quarter earnings reports from nationwide competitors Tesla and SunPower — means 2020 installations are likely to be flat compared to 2020, with growth resuming at a rate of 7 percent in 2021.
Sunnova's other quarterly metrics demonstrated that durability. It continued growing its customer base in Q3, reaching a total of more than 98,000 customers as of the end of September. Customer acquisitions grew 40 percent over the same quarter last year, even at a time when door-knocking has largely been halted and companies have had to rely on online sales.
So far this year Sunnova has added just under 20,000 customers, 7,000 of them in the third quarter. To reach its 2020 guidance, it will have to finish with a strong fourth quarter, which tends to be the most significant in terms of installations for solar companies.
Sunnova also continued expanding its trademark dealer network, a key aspect of its business which it claims makes it more capital-light than its competitors. The company now has 270 dealers and sub-dealers, nearly double the number it had at the same point last year, according to the company.
"Our growth is fueled by the increasing number of dealers and sub-dealers we are partnering with," said CEO John Berger in a statement on the results.
Sunnova raised $170 million in its 2019 initial public offering, one of the first major solar industry IPOs since Sunrun's in 2015, on the premise that this approach would give it a leg up on Tesla, Sunrun and other major U.S. residential installers that perform their own customer acquisition. This business model also relies on strong and growing relationships with local and regional installers, and it remains to be seen whether it can lead to profitability, Michelle Davis, a senior solar analyst at Wood Mackenzie, noted at the time of its IPO.
Sunnova is also striving to increase the number of behind-the-meter batteries it sells to its solar customers, as are its primary residential solar competitors. Its third-quarter battery "attachment rates" continued to hover around 34 percent, consistent with the same metric last quarter.
While Sunnova has not projected when it will become profitable, it did provide 2021 guidance this week. The company expects customer counts to continue growing, adding up to 48,000 in 2021 and increasing the interest payments it gets from solar loans, while ending the year with cash between $20 million and $30 million.