Spruce Power (NYSE:SPRU) reported second-quarter results marked by lower revenue but improved profitability, as cost reductions and stable recurring customer payments helped offset declines in performance-based incentive and solar renewable energy certificate revenue.
Revenue totaled $30.3 million for the second quarter of 2026, down from $33.3 million a year earlier, but up sequentially from $23.4 million in the first quarter. Chief Executive Officer Chris Hayes said the sequential increase reflected the seasonal pattern of solar production and customer payments.
Recurring Revenue Holds Steady as Other Sources Decline
Combined power purchase agreement and solar lease agreement revenue increased 2% from a year earlier to $22.5 million. The company’s portfolio generated approximately 196,000 megawatt hours of power during the quarter, compared with 187,000 megawatt hours in the prior-year period.
Hayes said lower SP5 SREC production and a slower-than-expected ramp in Spruce Pro revenue were the principal headwinds to overall revenue. He said those factors were separate from the performance of the company’s recurring customer portfolio, which remained stable.
Chief Financial Officer Thomas Cimino said the year-over-year revenue decline reflected a $1.4 million reduction in performance-based incentive revenue, a $1.1 million decline in SREC revenue, and a net $900,000 decrease in other revenue, including $600,000 of non-cash revenue. Those declines more than offset a $400,000 increase in PPA and lease revenue.
Spruce Power said it had approximately 83,000 customer contracts under long-term agreements across a geographically diversified portfolio. Customer satisfaction was 80% during the quarter.
Cost Controls Support EBITDA and Operating Income
Total operating expenses declined 16% to $20.6 million from $24.4 million a year earlier. Core operating expenses, including selling, general and administrative expenses and operations and maintenance costs, declined year over year as the company continued its expense-streamlining efforts.
SG&A expense fell 26% to $11.3 million, primarily due to lower labor and recurring professional-services costs. Cimino said the reduction was partly offset by non-recurring professional fees associated with corporate strategy, refinancing and legal matters.
Operations and maintenance expense increased to $2.5 million from $2.2 million in the prior-year quarter. The increase reflected additional work to reduce the company’s service-ticket backlog, though Spruce Power said routine recurring costs benefited from streamlined contract negotiations. For the first six months of 2026, O&M expense was down about 40% year over year.
Operating EBITDA increased to $26.5 million from $24.6 million in the second quarter of 2025. Hayes said the company’s in-house field-services model had reduced servicing costs across its New Jersey portfolio and was being extended into Southern California. The company expects the model to lower per-system servicing costs, shorten repair cycles and improve service quality and system uptime as the rollout matures.
Liquidity, Debt Reduction and Refinancing Remain Priorities
Spruce Power ended the quarter with $81.5 million in total cash and restricted cash, including $44.7 million of unrestricted cash. The company repaid $7.9 million of debt principal during the quarter, leaving total debt principal outstanding at $680 million as of June 30.
Cash used in operating activities was $3.2 million, primarily due to working-capital timing and higher SREC receivables. Cimino said the majority of those receivables were fully collected in July. After recurring cash proceeds from the SEMTH master lease and customer buyouts and prepayments, adjusted cash flow from operations was positive $4.8 million.
The company said it remains in compliance with all covenants under its credit agreements, and interest-rate swaps covered 91% of its floating-rate term debt. However, management said refinancing is a critical near-term priority.
- The SP1 facility matures Jan. 30, 2027, if the company obtains an executed term sheet for long-term financing by Oct. 30, 2026.
- The SP2 facility matures May 14, 2027.
- The company had not entered committed refinancing arrangements as of the quarter-end financial statement date.
Hayes said Spruce Power’s financial statements include a going-concern disclosure because the SP1 and SP2 maturities fall within 12 months of the issuance date of the statements. The classification of those facilities contributed to negative working capital at quarter end. The company has begun preliminary discussions with potential SP1 lenders and is evaluating alternatives for both facilities, though Cimino said there could be no assurance regarding the timing, terms or completion of refinancing transactions.
Full-Year Outlook Unchanged
Management maintained its full-year forecast. Spruce Power expects PPA and lease revenue to remain generally consistent with first-half portfolio performance and normal solar-production seasonality. It also expects SREC-related revenue to remain in line with the first half, while continuing to monitor SP5 production.
The company expects higher service activity in the second half to offset favorable first-half O&M costs, resulting in full-year O&M spending broadly in line with its initial expectations. Recurring SG&A is expected to move from about $11 million per quarter toward roughly $10 million in the fourth quarter.
Hayes said the company will focus during the second half on refinancing, liquidity discipline, service and operating efficiency, and growth opportunities only where expected returns justify the capital and incremental overhead.
About Spruce Power (NYSE:SPRU)
Spruce Power is a renewable energy company that specializes in the ownership, operation and management of distributed solar energy assets. The company partners with solar developers to acquire residential and small-commercial solar portfolios, providing long-term performance monitoring, maintenance and customer support for system owners. By focusing on turnkey asset management, Spruce Power enables homeowners and businesses to benefit from solar power without the upfront risks and responsibilities of system ownership.
Headquartered in San Francisco, California, Spruce Power was founded in 2009 and has grown through strategic acquisitions and partnerships.
