The leading U.S. rooftop solar installer SolarCity Corp. (SCTY - Snapshot Report) incurred a third-quarter 2014 loss of 75 cents per share on a non-GAAP basis, narrower than the Zacks Consensus Estimate of a loss of $1.09.

On a GAAP basis, after adjusting for a loss of $89.3 million that was attributed to non-controlling interests, the company earned a profit of 19 cents per share as against a year-ago loss of 3 cents per share.

This solar panel company more than doubled its customer base in the reported quarter.

Total Revenue & Gross Profit

In the quarter under review, SolarCity’s total revenues were $58.3 million, missing the Street consensus by 1.1%. On a year-over-year basis, reported revenues climbed 20% on the back of increased operating leases and solar energy systems incentives.

The company’s gross profit in the third quarter advanced significantly by 87.5% to $26 million from $13.9 million a year ago.

Operating Highlights

In the reported quarter, total deployment was 137 megawatt (MW), up nearly 77% on the back of a 100% rise in residential MW deployed. This brought the total installed capacity to 894 MW as of Sep 30, 2014.

The company’s MW booked figure in the reported quarter shot up 154% year over year to 230 MW.

During the quarter, SolarCity added 27,305 customers to its portfolio, bringing the cumulative customer count to 168,339 (up 105% year over year). The company had a customer base of 12,386 at the end of the third quarter 2013.

The company’s total operating expenses shot up 119.3% year over year to $100.3 million, primarily due to higher sales and marketing, research and development and general and administrative expenses.

Financial Position

As of Sep 30, 2014, SolarCity had cash and cash equivalents of $696.5 million compared with $577.1 million as of Dec 31, 2013.

Long-term debt as of Sep 30, 2014 stood at $275.3 million (including the current portion) compared with $246 million as of Dec 31, 2013.

During the third quarter of 2014, SolarCity’s net cash used in operating activities was $22.5 million as against net cash from operating activities of $93.5 million in the prior-year quarter.

Guidance

SolarCity expects fourth-quarter 2014 non-GAAP loss in the range of $1.25–$1.35 per share.  

The company expects to deploy a respective 179–194 MW, 505–520 MW and 920–1,000 MW in the fourth quarter 2014, full year 2014 and full year 2015.

At the Peer

SunPower Corp. (SPWR - Analyst Report) reported third-quarter 2014 adjusted earnings per share of 30 cents, ahead of the Zacks Consensus Estimate by 7 cents. Earnings, however, dropped 31.8% from 44 cents in the year-ago quarter. Yet, it marked a 7.1% sequential increase.

Our Take

SolarCity is rapidly expanding its business and winning customers before it loses a key federal tax credit in 2017. The 30% tax credit for solar systems on residential and commercial properties is expected to drop to 10% in 2017.

Although the money being invested in its business now is weighing on its bottom line, it will likely boost its top line over the long haul. SolarCity however brought down its average cost per watt to $2.90 during the quarter from $3.03 in the second quarter. It expects to cut that to less than $2.50 per watt in 2017.

The company is currently pursuing multiple growth avenues and marketing ploys to strengthen its presence across the nation. It is also following inorganic strategies like the purchase of the Silicon Valley solar technology and manufacturing company Silevo.

Last month, it unveiled plans to offer loans to homeowners for solar systems, under a program called MyPower. This move could reshape the rooftop solar market and drive rapid adoption.

SolarCity currently carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the same industry are Canadian Solar Inc. (CSIQ - Analyst Report) and ReneSola Ltd. (SOL), both carrying a Zacks Rank #2 (Buy).