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SolarCity Corporation (SCTY)
Q2 2013 Earnings Conference Call
August 07, 2013 5:00 pm ET
Lyndon Rive - Founder and Chief Executive Officer
Robert Kelly - Chief Financial Officer
Peter Rive - Founder, Chief Operations Officer and Chief Technology Officer
Aaron Chew - Vice President, Investor Relations
Krish Sankar - Merrill Lynch
Phillip Shen - Roth Capital
Brian Lee - Goldman Sachs
Edwin Mok - Needham and Company
Pavel Molchanov - Raymond James
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At this time, I would like to turn the conference over to Aaron Chew, Vice President of Investor Relations at SolarCity.
Thank you and good afternoon to all those joining us today for SolarCity's second quarter 2013 earnings conference call. Leading the presentation today will be a discussion from our two founders, our Chief Executive Officer, Lyndon Rive and our Chief Operating Officer, Peter Rive, as well as our Chief Financial Officer, Bob Kelly, after which point in time, we will open up the call for questions.
As a reminder, today’s discussion will contain forward-looking statements that involve risks and uncertainties, including forecasts regarding SolarCity’s 2013 financial and operational results. Words such as believe, may, estimate, continue, anticipate, intend, expect, predict, potential and similar expressions as they relate to SolarCity, its business and its management are intended to identify forward-looking statements.
Forward-looking statements should not be considered a guarantee of future performance or results, and will not necessarily be accurate indications of the time at or by which such performance or results will be achieved if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed and/or suggested by the forward looking statements, including risks identified in SolarCity’s earnings press release issued today and in the slides accompanying this presentation, as well as additional risks and uncertainties identified in the section entitled Risk Factors in our registration statement on Form S-1, which has been filed with the Securities and Exchange Commission. We do not undertake any obligation to publicly update or revise any forward looking statement whether as a result of new information, future development or otherwise.
In addition, during the course of this call, we will use a number of specially defined terms relating to our business metrics and financial results. We referred to definitions of these terms included in the slides accompanying this presentation, which are available on our Investor Relations website at investors.solarcity.com.
With that finally behind us, I would like to introduce SolarCity's Chief Executive Officer, Mr. Lyndon Rive.
Thank you, Aaron. We had a great quarter, we had growth in almost every metric. Here are some highlights. So we had $19 million of positive cash flow, our residential business grew 144% year-on-year, our operating lease revenue rose 79%, contract payment increased $187 million to bring the total to over $1.4 billion. We also launched a new product called LightMount. This was a product co-developed with [indiscernible]. The product integrates the module into the roof membrane. It's a great product for commercial customers thinking of getting a new roof or that have roof weight limitations.
We launched another product called Energy Explorer. This is an interactive software that customers can use to see where is the energy is being lost in the house. This software helps customers make the best decisions and energy efficiency upgrades. We have previously charged for this but now we have included this in every solar system that we install. By doing this, we provide additional value to our customers that's hard for our competitors to match, and it provides us an opportunity to make additional revenue through software services.
As we look at creating the most compelling energy company of the 21st century, we need to have an incredible team. I'm pleased to announce Tanguy Serra as our Executive Vice President of Operations. Tanguy has incredible track record in growing operational capacity while lowering costs, [indiscernible].
Moving on to solar [indiscernible] mentioned, for the number of contracts now over $1.4 billion, we added $187 million in Q2, a dramatic increase over Q1. We also added over 8,000 new energy contracts in Q2 with 69 MW of booking being executed too, this was a good quarter. We see this momentum continue through the rest of the year as July was our highest residential booking month ever.
Peter Rive, Chief Operations Officer. Q2 was also a great quarter for us with deployments of 53 MW of total deployment, 43 MW of residential deployment which represents 144% of growth relative to Q2 2012. 144% is more than double the industry growth in the residential market and [indiscernible] increase in SolarCity's market share from past year. Deployment [indiscernible] building is ahead of schedule and has continued in Q3 with July setting a record for residential deployment and we are on track to hit our recently revised guidance which increased to 270 MW for the year.
Looking at our cost structure and our progress with our cost reduction goals, we have reduced our all-in costs by over 80% since Q2 of 2012. It's important to note that this reflects all of our costs, the direct installation costs, the panel cost, sales and marketing, everything. Again to that point, we set a goal of declining our cost by 5.5% annually and we are executing ahead of that target. Cost reductions are coming from many areas of the business as we see our volumes scale such as product improvement, gains from technology investments and better leverage over fixed expenses. It's important to note that even with module price decline stabilizing, our cost reductions have been exceeding our plan in 2013 year to date.