Aaron Chew - Vice President of Investor Relations Lyndon R. Rive - Co-Founder, Chief Executive Officer and Director Tanguy Vincent Serra - Chief Operations Officer Brad W. Buss - Chief Financial Officer

Patrick Jobin - Crédit Suisse AG, Research Division Brian K. Lee - Goldman Sachs Group Inc., Research Division Krish Sankar - BofA Merrill Lynch, Research Division Jerimiah Booream-Phelps - Deutsche Bank AG, Research Division Paul Coster - JP Morgan Chase & Co, Research Division Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division Philip Shen - Roth Capital Partners, LLC, Research Division Josh Baribeau - Canaccord Genuity, Research Division Y. Edwin Mok - Needham & Company, LLC, Research Division

Greetings, and welcome to the Third Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Aaron Chew, Vice President of Investor Relations. You may begin.

Thank you, and good afternoon to all those joining us today for SolarCity's Third Quarter 2014 Earnings Conference Call. Leading the presentation today will be a discussion from our Chief Executive Officer, Lyndon Rive; and our Chief Operating Officer, Tanguy Serra; as well as some final earnings commentary from our new Chief Financial Officer, Brad Buss, after which point in time, we will open it up to questions. As a reminder, today's discussion will contain forward-looking statements that involve our views as of today based on information currently available to us. Forward-looking statements should not be considered a guarantee of future performance or results and reflect information that may change over time. Please refer to SolarCity's shareholder letter issued today as well as the slides accompanying this letter as well as our periodic report filed with the Securities and Exchange Commission for a discussion of forward-looking statements and the factors and risks that could cause our actual results to differ from our forward-looking statements. We do not undertake any obligation to publicly update or revise any forward-looking statements. 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, including non-GAAP financial metrics. We refer to the definitions of these terms and the required reconciliation between GAAP and non-GAAP financial metrics included in the shareholder letter today and 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. Lyndon R. Rive: Thank you, Aaron. Q3 was a record quarter for the company. We booked 230 megawatts, which is a 150% increase from Q3 last year. We also installed 137 megawatts, which is a 77% increase from Q3 last year. Our residential installations increased by 100%. The last 3 months had been amazing. We launched 4 new products. I'm super pleased with the entire team for all the hard work they did on launching these new products. So the first product we launched is MyPower. MyPower broadens the offering to our customers that want their own systems, but they still receive the benefits of paying for power. The goal of MyPower is unique as it pays off the loan with the energy that the system produces. The other product we launched, 2 new products on the mounting hardware side, ZS Peak and ZS Beam. ZS Peak allows us to provide more kilowatt hours per square foot, and ZS Beam reduces our cost of installs for carports. Then finally, we're very happy to announce Solar Bonds. This is an additional source of capital, but more importantly, it will allow every American to participate in the energy transformation. We normally raise capital only institutional investors can participate, but now everybody can participate in the benefits of deploying clean energy. So as you can see, the last 3 months has been very, very busy. Moving forward on to contracted payments. For the quarter, we had -- we added over $800 million of nominal contracts, and we now have $4.1 billion of contracted payments coming to SolarCity. Our customer count continues to grow. We have over 168,000 customers, and we're well on our way to achieve our 1 million customer goal by mid-2018. To achieve this, we only need to grow at 61% a year, and historically, we've always grown at 100% per year, so I'm feeling very confident about achieving our 1 million customer goal come mid-2018. Our market share continues to grow. With our vertical integrated model, it allows us to invest into our people and to our products. We have the best-looking systems at the lowest cost. We've gone from 11% to 36% in less than 3 years. Our residential division is now larger than the next 50 competitors combined. I'm now going to hand it over to Tanguy Serra, our COO.

Thank you, Lyndon. So Q3 was a great quarter for SolarCity with 137 megawatts deployed, of which 18 megawatts of commercial installs and 119 megawatts of residential installs, up 100% year-on-year. We are doubling our install capacity every year of already large numbers. We've developed sophisticated compensation structures across the organization and infrastructure to grow our warehouse footprint and our fleet. This allows us to grow our capacity, while reducing our costs at the same time. We have a massive amount of proprietary mobile accessible web-based software to track the location of our assets and the stage in our pipeline of our customers, which links our call centers and our operation centers, including a number of predictive algorithms to ensure no disruption on our supply chain. I truly believe we have cracked the code on growing residential solar, while lowering cost at the same time. We added 6 new warehouses in Q3 and we'll add another 14 in Q4, mainly on the East Coast, in Arizona and in California, to satisfy the demand for our products. We cover 95% of the population on our core states within a 30-mile radius of our warehouses. We already covered 26% of the total population of the U.S. Our commercial megawatts came in below our internal forecast. Part of the main reasons for this is that we have a series of commercial projects, about 10 megawatts, with a developer with whom we are having issues. We're expecting 3 megawatts in Q3 and about 7 megawatts in Q4. Based on where we stand today, I don't see those systems getting installed this year. We're on track to install 179 megawatts to 194 megawatts in Q4. The range is wide, given the weather and the holiday season for inspections and the potential for commercial jobs slipping in Q1. But we don't see any significant operational constraints that we control outside of Massachusetts. This implies a full year number of 505 to 520 megawatts, which is still almost doubling year-on-year with 10 megawatts shy of where we wanted to land given the commercial job I mentioned earlier. Importantly, we expect to enter 2015 on track to deploy 920 megawatts to a full gigawatt in 2015. The R&D team at Zep is continuing to innovate. After having giving up -- after having given up a significant competitive advantage in residential installs, Jack West and his team are turning their minds into the commercial space and have come up with innovative restructures for flat roofs, for carports, consistent with our principle of optimizing every piece of the process from parts to labor for the overall benefit of the customer. Both ZS Peak and ZS Beam allow for significantly faster install times, reducing labor costs, while increasing their production in kilowatt hours, and ultimately, revenue available per square foot of line or roof. So let us continue to perform according to plan. The unique architecture of the sale is allowing [indiscernible] and his team to continue having breakthroughs, which we're excited about and hope to be able to talk about in the near future. The building in New York is on schedule and we expect to be producing more build in 2016 and ramp up to full capacity in 2017. As I mentioned, in Q3, we saw 100% growth in residential installs, a growing of capacity and our infrastructure and the continued investment in R&D. Despite that, we have continued reducing unit costs significantly, taking another $0.13 off the cost structure and getting us under $3 a watt fully loaded costs. We've taken out $0.13 a watt on a unit basis in one quarter out of our cost structure, massive achievements. The vast majority of these costs are fundamental productivity improvements for which I'm incredibly proud of the men and women of SolarCity. Our sales and our operations group work as one team and we're all focused on the build cost of our assets. I'm particularly focused on our installation costs. At scale, overhead will not be significant and the #1 reason for not going solar is people don't care about it. As solar becomes like other basic services, insurance or cell phone, the cost of acquisition will fall as we have seen in those industries. I should mention our quality and safety are at all-time highs, proving best-in-class productivity and cost structures, quality and safety do truly go together as we have seen in other industries also. Page 12 on the chart, I'm particularly happy with. Over the last 8 quarters, we have continually been taking out costs. We IPO-ed a cost structure of $3.93 a watt and we've taken our total cost down to $2.90 a watt. This is all the cash-out, including all the sales costs, all the overhead, all of our R&D, infrastructure growth, government affairs team legal, et cetera, et cetera, all-in costs, under $3 a watt at $2.80 a watt currently right now. Take out full $1 per watt or 25% of our total cost structure, 1/3 of the install cost, another 2 years, while doubling and installing 0.5 gigawatt, summarized in a couple of PowerPoint slides, a massive amount of work and the sacrifice of 7,500 SolarCity employees have done over the last 8 quarters. I'm incredibly grateful to everyone wearing the SolarCity logo on their shirt today. Last quarter, we set ourselves a goal of $1.90 a watt install cost by 2017. In light of our recent performance, we will reiterate this number. But we also wanted to communicate a conservative goal of an all-in cost of $2.50 per watt. As you can see, this assumes marginal reduction in cost of acquisition overhead. And Hayes and Jonathan Beamer and the entire marketing and sales organizations are all over transforming how solar is sold at a significantly lower cost. And we hope to be able to update this number as our efforts kick in. Lastly, I'm about to pass the floor over to the only person who's more allergic to overheads than I am, my partner and associate CFO, Brad Buss. Brad, over to you. Brad W. Buss: Thanks, Tanguy. You're a cost animal, and as a CFO, I really appreciate that. Hi, everybody. I'm very excited to join the team. It's a fascinating company at a fascinating time and sure makes my time in semiconductors look much slower than what it really was. I'm very excited to be here working with the team on cost returns, and more importantly, driving a long-term value creation. I see that very heavily in our cards and one of the main reasons why I joined. So one of the first questions I get from people is, what happens to the business post the planned ITC step-down in 2017? My answer is it's really business as usual. Pete and Lyndon have built this company from day 1 and driving to a cost structure that is very profitable, and most importantly, in a non-incentivized world, as Tanguy has shown you, we have a strong cost discipline, which I'm very grateful for as a CFO, and our target of $2.50 in 2017 will allow us to drive very healthy profits and returns for the long run with NPVs greater than $1 per watt. In addition, I think the competition will struggle to be anywhere near this cross-target. And more importantly, this overhang that many of you get hung up on will be gone and you'll be able to model the business long term with even greater confidence. And as well, any extension or any other incentive would only be upside to the model, and we will take that if and when that comes. Retained value is a very strong indicator for the long-term value that we're creating and it really isn't apparent from reading our financial statements. The Q3 increase in retained value grew 104% year-over-year, and we ended the quarter with a cumulative value of $2.2 million. The quarterly increases will continue to grow materially each quarter as the law of large numbers and rapid growth work in concert. Go do the math like I did before I joined, for the next 3 to 5 years and I think your jaw will drop regardless of the assumptions that you will use. So just some housekeeping on the financials. We had a lot of stuff going on in Q3, and I just want to highlight some of it, just to put it in perspective. So on the convert, we issued $500 million of convertible notes at a fixed rate of 1.625%. The conversion price is $83.53. And we also purchased a capped call, which is the first time it's been done here at SolarCity, in a separate transaction. That will end up raising our net as-converted price upon expiration to $126.08. Obviously, a very bullish sign of what we expect for the future. I'd be disappointed if we don't go north of that by that time frame. The greenshoe was exercised in October for $66 million, and again, we have the same capped call on that piece. Silevo closed in late September and there's a lot of accounting that goes with that. We issued 2.28 million of shares, and there's a lot of balance sheet impact that you can see in our 10-Q that'll come out tomorrow. Overall, the integration's gone very well. We're focused on bringing Buffalo up and introducing new products and driving our costs down. As you'll see, our GAAP net loss was smaller than expected due to tight OpEx controls and also due to the onetime noncash benefit in the tax line related to our Silevo acquisition where we released a portion of our valuation of allowance. In addition, we ended the quarter with GAAP earnings per share, yes, I said earnings, due to a higher share of the loss being absorbed by our noncontrolling interest under the HLBV accounting rules. I don't expect that to continue on an ongoing basis. As you know, it varies wildly and will fluctuate and we're not guiding for that for Q4. Solar Bonds, I'll discuss a little more later, but there's no impact to Q3 since we launched in October. Basically, the same thing for MyPower, I'll cover that as well. But there's really nothing of any material amount that was in the Q3 numbers. So as you see, we've moved our earnings release to a shareholder letter concept. It's our first attempt to try to describe our business model and results in an easier fashion since, quite frankly, the GAAP accounting doesn't fully reflect our business and the value that we're creating. The team here is very focused on providing more details. I think you'll see continual changes over the next few quarters. And if you have any suggestions or ideas, please reach out. If you go through our GAAP statement of operations, a couple of things I'd like to point out. The operating lease revenue increased 110% year-on-year. Gross margin was 51% and that included $2 million of intangibles. If you exclude the intangibles, we had really an operating gross margin of about 55%. The vast majority of the operating expenses, which totaled $100 million, were incurred to add the additional $804 million of contracted payments as we discussed earlier, a very good leverage on each dollar invested. Also, in our Q3 OpEx, we had $16.5 million of noncash expenses associated with stock-based comp, as well as some intangible amortization. And we also had a benefit of $6 million from the receipt of some -- certain insurance proceeds. On the balance sheet, if you look at the cash end of it, you'll see cash and you'll also see investments for the first time. That totaled $733 million. A lot of ins and outs and we obviously have the convert, as I talked about, that after the capped call, netted us about $431 million. We had tax equity proceeds of $223 million, ABS proceeds of $196 million, and we put out $137 million in various debt payments. We also invested $343 million into new solar system assets. So again, you'll see a lot more detail and explanations in the 10-Q. Overall, I would just say I think our finances are in very good shape. I don't see the need to do any type of equity raises anytime soon. We're adding new global banking partners. And I think long term, you're going to see us continue to focus on dropping our cost of capital. Solar Bonds. Very excited to see that product and be part of it. Our plan is to broaden our pool of solar ambassadors, allow retail investors to achieve better-than-market returns, which are, quite frankly, pathetic right now, as well as participate in the distributed generation revolution. We rolled it out as a soft launch. It's exceeded our early expectations. And we've had page views of over 100,000. And we were -- we've signed up bondholders at every state in the country. We will begin the first wave of marketing next week post this earnings. And due to the fact that we have an open registration, there's not a lot of details we can provide at this time. Please go see the website for more details. MyPower, a very popular question lately, and as Lyndon said, it's an extremely important product for us. I mean, the most important thing is that it expands the available market. For us, we're now able to capture homeowners that want to own versus lease. It's being very well received across all markets. And it's also the first product that doesn't require financing through tax equity funds and also allows us to have the home under -- homeowner under contract for 30 years versus the standard 20-year contract plus the 10-year renewals. All very positive from a financial perspective. The introductory rate is 5%, and we'll go down to 4.5% if you sign up for ACH. We plan on evaluating the rate periodically and will adjust it as necessary. In the end, the incremental retained value we're creating with this product as well as adding new customers is very healthy for the long-term returns of the company. I'll now finish up with some guidance. For Q4 2014, we're expecting megawatts deployed of 179 to 194, driven mostly by residential. This will yield you 505 megawatts. It's 525 megawatts for the year, and obviously, it excludes the commercial job that went sideways as Tanguy described. Operating lease and solar energy systems revenue of $47 million to $52 million. Remember, we get a little bit of Q4 weather seasonality that impacts that number and the same for the gross margin. I would see solar energy system sales of $20 million to $24 million, driven mostly by commercial. The operating lease gross margins, again, 35% to 40%, impacted by the weather seasonality and a tick-up in intangibles from Silevo. If you adjust out the intangibles, you'll see operating lease gross margins of 45% to 50%. Operating expenses of $118 million to $128 million, up from Q3. It's really due to just hires that we're doing in the sales end of things to drive the future growth. And remember, included in that, we have $22 million to $28 million of noncash expenses related to stock-based comp and intangibles. And if you roll that all together, I would expect a non-GAAP loss per share of $1.25 to $1.35, and again, that doesn't include any assumptions for HLBV due to the inability to forecast that. As Tanguy discussed, our 2015 megawatts deployed have been adjusted up to 922 gigawatt with very high confidence. In summary, I'm very excited to be here. It's an amazing company at the start of an amazing journey. I've been very impressed with the financial discipline. I love the market leadership. And more importantly, we're just in the infancy of a long ride. So if you take a look at the retained value that we're talking about and look at growth rates in the future, it's pretty amazing. So all I'd say is buckle up, it's going to be an amazing ride. And we'll now turn it -- open to questions.

[Operator Instructions] Our first question comes from Patrick Jobin with Crédit Suisse. Patrick Jobin - Crédit Suisse AG, Research Division: So a few quick questions for me. First, it seems like backlog is building a little bit. I guess, Tanguy, how are you thinking about installation capacity today to get to that Q4 number, how you're alleviating that? Then I have a follow-up. Lyndon R. Rive: Yes, this is Lyndon. So the -- right now, there's no real constraints in the operations. So if you look at the bookings that we had in Q2, it was 218 or so. That's now getting installed -- a big -- a majority of that is being installed now in late Q3 and Q4. We do have some commercial projects that push out. And then we also have -- in the net bookings of the last quarter, there are some cancellations, and those cancellations get netted out in the next quarter's bookings. Currently, the only constraint is Massachusetts. Correct, Tanguy?

Correct. Yes, that's exactly right, the -- we cracked the code on how to grow here and so we're growing to make sure that we bring in [indiscernible] on time to make sure that we develop the megawatts that they can build. The only place which is hard is Massachusetts where the [indiscernible] requirements there are somewhat annoying and difficult to deal with, but everywhere else is in great shape. Lyndon R. Rive: And then our install time frames for the average, so the medium is about 85 days right now.

75. Lyndon R. Rive: 75?

Across the company. Lyndon R. Rive: And then the average is about...

On average, it takes us 75 days to install across the company and that includes some of the longer time lines in Mass as well as some of the Nevada jobs where they were sold before the install. The program opened up and so there's a natural sort of time line there. But overall, we're in great shape. Patrick Jobin - Crédit Suisse AG, Research Division: Got it. Makes sense. And then just a question, when I think about kind of profit margins on new contracts, so I guess, certainly, retained value will become a little bit more complicated with the loan product. But if I look at Q3, I'm calculating an incremental retained value per watt of about $1.72 versus last quarter's $2. Just want to better understand what drove that decline? And then bigger picture, how are you thinking about, I guess, NPV per watt for loan versus lease and what your expectations are for mix?

Patrick, it's Aaron. I'll tackle the first and let Lyndon tackle the second one. So on the implied derived incremental retained value, really, 3 things there. One is a little bit lower resi commercial mix. A little bit, not a huge factor. But the bigger driver, actually was that the commercial incremental was just below the low end of our historical range just because of some specific -- the economics of some specific projects signed that quarter. Also, resi was down a little bit, but still, I'd say in the $1.80 to $1.90 range, reflecting, as we've discussed a little bit in the past, the new California pricing strategy, so. Lyndon R. Rive: Yes, one question to add-on to it, Aaron, is the -- hopefully, I've been consistent on every earnings call. The incremental unit is not the unit that one should be looking at. One should be looking at the total retained value because what's important is how many dollars are we collecting on the dollars per watt. I don't think that's the metric. Like if you had the choice of deploying 2x the megawatts, but at a 20% less retained number, it would be wise to do that. And then on MyPower, out of the gate, it's been received quite well. This is a total guess. This is not a forecast at all, just an expectation on what I think will happen. I'd say probably move to late next year, Q2 to Q3 will be at a run rate, not for the year, but at a run rate at about, call it, 40% to 50% of our residential business. So we like it. We think it's going to be a great product for us to launch. On the interest rates, as Brad mentioned, we have essentially an introductory interest rate of 4.5%. We will continue evaluating that and it's a very high probability we'll increase that. I just don't know exactly when. Do we increase it in Q1 or Q2? But that's roughly the time frame that we're looking at.

Our next question is from Brian Lee with Goldman Sachs. Brian K. Lee - Goldman Sachs Group Inc., Research Division: Maybe to follow up on those comments, Lyndon. On MyPower specifically, I was wondering, can you give us any better sense from a volume perspective where you think it has the most potential to be additive in the next 12 months? So are there states that you now target that you haven't before? And what are those? And then in the states you're in already, where do you see most upside for MyPower? And what are some of the dynamics that might be driving that in those locations? Lyndon R. Rive: Sure. So in terms of new state expansion, it's very hard to move the needle. At the size that we are right now, no new state can move the needle within a 1-year period. It's going to be very hard to do that. It takes -- every other state is doubling. So I mean, you start off with a small foundation at a new state, it takes a few years for that to really impact the business. So if you were to look at MyPower and actually look at the impact to the business, it'll be within our existing states. And out of that, I'd say the popular states would be Arizona, California, would probably be the 2 most popular states, oh, and then Colorado. Brian K. Lee - Goldman Sachs Group Inc., Research Division: Okay. Fair enough. And then just a follow-up question would be on the competitive landscape. I know there seems to be some growing concerns here in the market that pricing is potentially getting more competitive, maybe some chatter around aggressive pricing tactics by some of your peers. And so as the market starts to consolidate, which it seems like it is, if you look at the market share stats, just wondering how you're expecting pricing to trend from here and whether or not this fixed pricing strategy that you recently introduced allows you to raise prices along with utilities, and I guess over the next 12 months, if that's the trend as it has been in states like California. Lyndon R. Rive: Yes, 2 things on that. So we essentially have 2 competitors. You have your -- yes, current cost of retail energy, which is competitor A, which to us is the #1 competitor and then you have solar competitors. So in terms of the -- competitor A, the current energy provider, their costs continue to go up and in our fixed pricing, should be able to go up. But then you have to match it up against competition. Our current cost is lower than our competitors by a healthy margin. We're also the only company to have successfully securitized our assets, so our cost of capital is also better. So their pricing, they're doing it purely for market gain, not because it's going to add initial volume or initial NPV for them. But we would have to react to it. Now the benefit is we have the lowest cost structure, but I don't see us moving it like -- the all indications is I think we are going to hold tight at $0.15 in California and then we've launched that fixed pricing in different -- in all the utilities that we're in. And I haven't got -- it hasn't yet needed to move it and the market is pricing very similar to one another. So I think we'll hold next year.

Our next question comes from the line of Krish Sankar with Bank of America Merrill Lynch. Krish Sankar - BofA Merrill Lynch, Research Division: I had a couple of them, and I do apologize for the background noise. First is, do you guys right now have the personnel to do a gigawatt for next year? And along those same lines, is the plan to grow the business at minimal backlog? Or do you want to grow backlog as you start growing into 2015? Then I also have a follow-up.

I'll take the first piece. So the answer is, no, we don't have the personnel currently. And I would separate out that on 2 buckets, right? It would be sales and install personnel versus the overhead personnel. So the install personnel, by definition, you want to make sure that you're matching on-boarding people in megawatts to be deployed to ensure that you've got a cost structure that makes sense. So what we have though, however, and this is probably the most important point, which is we've got the infrastructure, the recruiting teams to be able to onboard that personnel. So from an overhead perspective, the answer is yes. From a variable cost perspective, the answer is no. We feel very good that we got the systems and properties to be able to onboard those people. That's the first part of the question. Lyndon R. Rive: Aaron, just remind me again, what was the megawatts installed in Q1? 82?

82. Lyndon R. Rive: 82. So the -- we installed 82 megawatts in Q1. So within 3 quarters, we're now planning 190 megawatts. So it is clear that the company knows how to scale. Brad W. Buss: Yes. And for us, guys, just sort of from a financial perspective, it's very impressive what the team -- they have a copy-paste ability. They have fantastic tools upfront from a booking and where the market's going. And they know where they want to go and where they need to be. And then they're able to just recruit, copy-paste, drop in right ahead of time. So we don't need to build up a bunch of costs that are stuck there for a while. And it's operated very, very well so far. So I have 100% confidence on the ability to scale from a deployment perspective.

And then the other question is, no, I mean, I think it's just the better customer experience if you're able to get a sale or sort of sign up for solar, get a site survey within 5 days, very quickly get a design turnaround within 24 hours. And then as soon as your permit in your local jurisdiction allows you to get installed on your roof, I think it's a much, much better customer experience. And I think that's ultimately what matters to you, which is the customer experience. And then if you can combine an awesome customer experience with best-in-class cost structures and continue scale, that feels pretty good to me. Krish Sankar - BofA Merrill Lynch, Research Division: Got it. It's helpful. Lyndon R. Rive: Just one other point I -- I'm not sure that you know this, rest of increase of forecast for next year. We took up the bottom end, from 900 megawatts to 920 megawatts. Krish Sankar - BofA Merrill Lynch, Research Division: Right, right. And just as a follow-up, is any of the MyPower expectations rolled into your 1 gigawatt forecast for next year? Or would MyPower be additive to that forecast? Lyndon R. Rive: No, it's included into the 1 gigawatts.

Our next question comes from the line of Vishal Shah with Deutsche Bank. Jerimiah Booream-Phelps - Deutsche Bank AG, Research Division: This is Jerimiah on the line for Vishal. I just wanted to delve a little deeper into the cost structure here. You guys had made some good progress there and 2017 goal doesn't seem that far off. So how conservative is that? And how much is that sort of a function of the scale in the back half of the year?

I think you answered your own question. Lyndon R. Rive: Yes. But in all seriousness, we were -- going back and forth, do we even forecast the 250? So one of the concerns of forecasting the 250 was we feel very comfortable we will exceed that number. So we like -- do we forecast that? Do we want to give a more aggressive number? Should we feel that it will be more appropriate for us to forecast the 250? You can do the math on it. With a 10% ITC, we create a buffer value for every system we deploy. Assuming a 1 million customer goal, we'll be at around a 2 gigawatt run rate. That's $2 billion of incremental value every single year if we stay flat. So that's kind of the message that we wanted to convey. And then you can play around the assumptions. Okay, is it 250? Do we come in at 230? You can play with your own assumptions there. As we get better in our sales and marketing, get more leverage through OpEx and reduce overall cost, we will update that number. Brad W. Buss: And just another tidbit. The entire company is very heavily on performance bonuses up and to and including the stock. And Tanguy and I are very aligned in that perspective on driving costs down. Jerimiah Booream-Phelps - Deutsche Bank AG, Research Division: Great, that's helpful. And then also on the commercial side, given the issues that you had in the quarter and sort of the commentary around that. Would there be any change to the traditional 80-20 mix of residential versus commercial? Or are you sticking to that? Lyndon R. Rive: For now, we're still sticking to that. We're still investing to commercial. It's -- some of these are bound to happen when you deal with commercial, but no, we're still sticking to 80-20.

Our next question comes from the line of Paul Coster with JPMorgan. Paul Coster - JP Morgan Chase & Co, Research Division: A couple of quick questions. First up, there's clearly a little bit of a supply constraint in the panels coming out of China, at least in the year-end. Is that in any way a constraint in the -- at the end of this year or beginning of 2015? And then I have a quick follow-up.

No, our scale, we're the perfect business for these businesses. If you think about the Chinese panel manufacturers, they don't obviously have massive output and what they really care about is a consistent throughput that they could put into us. And our resi business, in particular, is virtually a weekly demand and so we're able to absorb on a weekly basis the demand that comes out. And so we're typically a first choice for a number of these panels, and we've had no issues there. Paul Coster - JP Morgan Chase & Co, Research Division: Okay, got it. And then if you deliver on these costs and your customer targets, gigawatt targets, and obviously, this is going to be producing a huge amount of free cash flow after 2017, and I'm just wondering, you must be a bit frustrated by the fact that the stock's trading at a discount to the retained value. So is it possible for you soon to articulate a dividend kind of strategy, albeit forward dated and start to sort of have a target dividend expressed so that people can start looking at this from a free cash flow or dividend perspective? Brad W. Buss: Yes, this is Brad. I mean, I don't think you're going to see a dividend in the card anytime soon. I mean, if you really look at it, every dollar we generate plus taking advantage of a low cost to capital that, as I mentioned, I think will only get better going forward, we plan on reinvesting every nickel with as much leverage as rational for a long time. I think what you're hitting on, though, is if you look at kind of the Power business, so to speak, all that future retained value levered, unlevered and the cash flow and margins that could come with that, that is one of the big areas that we're spending a lot of time working on internally to help provide more information and then I think we will be setting longer-term targets associated with that. But I don't want anyone thinking there'll be a cash dividend because as far as I can see, if something dramatically changes, we can be investing in this market for eternity. Lyndon R. Rive: Yes. I mean, even at our 1 million customer goal, we only still have a 2.5% penetration just in the markets that we serve today. So it's -- the best use of cash is to reinvest. Brad W. Buss: Yes. I mean, we'll go international. We'll go to other states. We'll add additional service offerings into our model. I mean, if you really look at it, we're evolving into a, really, a consumer-orientated Internet/energy provider, right, /financial institution. So I don't think there's going to be any limit on the number of things that we can add to provide greater returns than the dividend. And being 50-year-old -- 50 years old, I do appreciate dividends, but I think I would look for it in a different area.

Our next question comes from the line of Ben Kallo with Robert W. Baird. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Just looking at the tax equity capacity, 150 megawatts, could you just talk through that and how comfortable you feel? Because it looks like it's less than a quarter ahead. So what's changed there? And then I have a follow-up. Brad W. Buss: Yes, this is Brad. I mean, I think we're fully booked up for the end of the year. I mean, that is definitely a different animal. I think the thing that I've been very positive on is, obviously, with us being the market dominated -- the market driver in this area, we're seeing more and more appetite for this asset class. We're seeing a lot of movement out of the bigger utility deals, and I think even wind as this asset class becomes more mature. So yes, I don't think it's something we're ever going to have a full year in advance. But we spend a lot of time on it. We have a lot of interest from all the major banking, insurance institutions as well as a lot of the major corporations that obviously have big tax appetites and only continue to grow. Lyndon R. Rive: Yes, the goal, of course, is to increase that backlog. But what we find is that when we raise the capital, the investors want us to deploy the capital. So investors that have -- we certainly have capital for a long time, they don't like that. They like coming back for a repeat and continual repeats. So expect probably a quarter for now, as Brad can change some stuff there. Brad W. Buss: And again, I'm trying to evolve the whole financing to the company to what I call the financing factory because we really are like a factory. I mean, we're adding tens of thousands of customers, very repeatable, very consistent asset, and we're trying to evolve all the financing to kind of stay on that factory-like concept and be very repeatable, somewhat standard terms. And the nice thing is we can give a lot of the big corporations -- they weren't that excited at seeing $25 million or $50 million, but it's a lot of work to do a deal. But now with our size and the dollars, we can be giving hundreds of millions to a corporation, which gets them very excited. And then they can see that we can continue to give that out over a long-term basis and that gets them very excited. So that's kind of the big focus for 2015. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then If I can just -- 2 quick ones. NPV a watt for MyPower and then I think there is a little bit of concern, I don't know, maybe too strong of a word, about deployments as I look out to next year, saying you're going to do 800-or-so megawatts of residential, a run rate of just over 100. Could you talk to us about how you did in October since that's passed? Lyndon R. Rive: No, we don't want to break out our months. So we're sticking to -- we feel very confident about the 800, but we don't want to break out the months. Benjamin J. Kallo - Robert W. Baird & Co. Incorporated, Research Division: Okay, got it. And then the incremental -- the NPV per watt for MyPower? Brad W. Buss: I think it's still a little early right now. I mean, we got -- I think we'd like to get a good quarter under our belt for the business than to see what stayed and what it's coming at, and then we'll give you some more color in the next quarter. Again, like I said earlier, I mean it's a very healthy NPV and I would take MyPower projects all day long. Lyndon R. Rive: Just one point on the 800 megawatts, Tanguy just mentioned this, is if you use Q4 as the proxy, you can do the math.

Just use -- can't give out October. It's usually quarterly guidance for Q4. Break out the residential there and multiply by 4. We're in pretty good shape. Brad W. Buss: I'll be disappointed if Tanguy doesn't hit that number.

Our next question comes from the line of Philip Shen with Roth Capital Partners. Philip Shen - Roth Capital Partners, LLC, Research Division: I was wondering if you could articulate your strategy and technology behind expanding your web presence, perhaps help us understand what the potential impact is to your cost structure and what the timing of that might be.

Sure. So there's -- so the web process, there's 2 aspects to it. There is the pre-sale or pre-install and posting and the installation period, and those are 2 discrete periods. The online pre-sale piece, I think is critical. As we think about cellphones or insurance or Uber or other consumer services where you can sign up, I think that web experience, whether it's mobile or on the desktop, I think is very, very important and just ease of making it simple and frictionless to be able to sign up for a service. That is a -- there's a number of great applications out there and I think we're going to have a phenomenal product, a totally frictionless online sales, which we're incredibly excited about. As you can imagine, the cost of acquisition to that channel becomes -- is very, very attractive. That's one piece of it. And the second piece of it, obviously, is post the sale once the customer is in that period between the sale and the install where we're going back to work in the background where nothing happens. And for me, I think the best proxy there is the Amazons, Chevrons, where you know exactly where your package is or the Domino's Pizza where, again, same thing, you see exactly who's having your pizza and what they're doing with that. I think giving customers that experience of just showing where they are in the process, I think is incredibly powerful. So in terms of cost, I think we'll have, one, a significant benefit in cost of acquisition; secondly, a significant benefit on time between selling an install and just getting customers more informed; and then we'll have some marginal costs on our increased throughput, but the Q1 is on cost of acquisition. Brad W. Buss: Yes, I think -- I don't think you're going to see any major step-up in OpEx for it. We have a team. We have the engineers in place. And I think you'll be pleasantly surprised where we end up relatively soon. And if you haven't had a chance to go through the process online, go do it. It's pretty amazing. And it's only going to get exponentially better, as Tanguy said. I mean, we expect to have a very large percent of our business done through the web over the next few years. Philip Shen - Roth Capital Partners, LLC, Research Division: Great. And what kind of mix could we actually see? Lyndon R. Rive: Web versus direct sales? Is that what you... Philip Shen - Roth Capital Partners, LLC, Research Division: Yes. What kind of mix of web and direct sales? Lyndon R. Rive: It's just too early for us to forecast that now. Philip Shen - Roth Capital Partners, LLC, Research Division: Okay. As a quick follow-up to a prior answer or question, you guys talked about your blend-in turnaround times of being 75 days. What are you guys expect going forward? How low could it go? I think in the past, you guys said the theoretical limit might be 45 days. What are you seeing now? And what's the timing of those reductions?

Yes, I think it depends by state. So in California, we're obviously significantly faster than at 75. I think we're below theoretical limits, which suggests that the theoretical limit is lower than that number. But the theoretical event is a 24 or 40 hour turnaround. So if a customer signs up, site survey that afternoon and the next morning, design up overnight. And then in some jurisdictions, whether it's either an online or over-the-counter permitting process, you can get the install in that afternoon or the next day. That's the theoretical -- like that's the true theoretical limit, which is very, very fast. For that to happen, obviously, there's a significant amount of work that the jurisdiction needs to do in allowing residential solar to be either an over-the-counter or online process, which we're big fans of and we're supporting that. Lyndon R. Rive: And California has actually made big movements there.

And we're incredibly grateful to California for the movement they've done, phenomenal, phenomenal work by our -- including our government [indiscernible] schemes. So that would be a theoretical limit. And candidly, that's where we would like to get to over a long period of time. I don't think we're going to get there any time soon, but over a long period of time. Right now, we're at 75. As I said, California is lower, and I expect, depending on the mix of the state, that number to hover around 60 to 75, hopefully go below that. But that's kind of the range which we're expecting to hover around.

Our next question comes from the line of Josh Baribeau with Canaccord. Josh Baribeau - Canaccord Genuity, Research Division: Do you guys feel like you've had to walk away from some sales, given the fixed pricing in California? Lyndon R. Rive: No. The -- we are -- well, let me repeat that. So our fixed pricing does have a production minimum in it. In other words, if your house has really bad shading and it cannot accommodate the fixed pricing, we'll give the customer 2 choices: either don't go solar or increase the pricing. So in that case, we would be no different than if we had our previous pricing strategy before. But we actually think it's going to help us as it adds -- brings total transparency. Neighbors tell neighbors, hey, how much are you paying? Hey, I'm paying $0.15. Great. I'm going to get $0.15, too. And so a lot simplistic in the referral and in the sales process. So we definitely haven't walked away from any customers, that we wouldn't have walked away before on the previous pricing. Josh Baribeau - Canaccord Genuity, Research Division: Got you. And then maybe as sort of a follow-up to that. As more of this business becomes web based, are you at all concerned that there's going to be too much transparency and maybe even the potential for additional price competition between your peers? Lyndon R. Rive: Yes, let me walk you through a little history on the solar industry. When I got into the Solar business, everything was a very, very complicated sale. And then we looked at the sales process and said, clearly, we can deliver more value in the proposals, really explain to customers the investments they're making and the savings that they're getting. So then we transformed it from selling equipment to selling energy. Then it was, okay, can you sell this over the phone? And everybody thought, it's impossible to sell this over the phone. Now in hindsight, everybody sells over the phone. It's super easy to sell it over the phone. I think the next step is going to be selling it over the web. It'll take some time to crack that nut. But the #1 -- I want full transparency. I think the pricing is important. Today, all of our competitors know our pricing. We know all our competitors' pricing. The pricing is roughly the same. We have the lowest unit cost. So if we do need to react, we will. I don't think we will need to react next year. But I do think the transparency that's on the web will be good. We'll also be adding additional services. I mean, we're adding storage. We're going to have new software applications that we're going to announce that will differentiate us in the market and actually give a tool to our customers that no one else in the industry has. But that announcement will be coming out some time. Stay tuned on that one.

Our next question is from the line of Edwin Mok with Needham & Company. Y. Edwin Mok - Needham & Company, LLC, Research Division: So first one, just to revisit the commercial, I think you mentioned on a call that some of the pricing may have came in low end or below the low end of historical range. Just want to know, is that a -- are you guys seeing pricing pressure in the marketplace, and I guess, that you booked more project at a lower price point that caused some pressure on your retained value for the quarter or incremental retained value for the quarter?

Yes. Edwin, it's Aaron. I think you're just mentioning -- you're referring to the comment I made about incremental retained value. It's nothing market-driven. It's just -- keep in mind, commercial, very lumpy in a lot of small -- or I should say, a small amount of large projects. So it just really has to do with a couple of projects. It's nothing market related. Lyndon R. Rive: Yes, but just to add to that, we have had good growth of our commercial bookings on the East Coast, which is the cost per kilowatt hour is lower, but you have a big SREC that you need to include as well. And so that's the differentiation between the 2. So your cost per kilowatt hour, which is in retained value and SRECs on retained value. So just because on the volatility on that. So when you're booking commercial that has a lower kilowatt hour rate, it's kind of this is what Aaron has mentioned that historically -- the commercial bookings, the retained value on that is on the low end. That's because they're not including the SRECs. You've got to include the SRECs when you look at the total retained value, but SRECs is not in our retained value formula. Y. Edwin Mok - Needham & Company, LLC, Research Division: Actually, that explanation is very, very helpful to explain that. And then just on MyPower quickly, I know you guys don't want to give out the -- you want to wait a little bit before you give out how the retained value looks like for MyPower. Maybe help us a little bit on the cost side, right? Does MyPower help you in any form -- way, shape or form in terms of cost, maybe lower cost -- acquisition cost or something? And how does it affect your way of selling your solar product? Lyndon R. Rive: Yes, I mean, in terms of -- for now, we just kind of the same cost. So if we look at the slides over there that Brad went through, essentially, we're selling the system, depending on the state, between 400 -- $4.35 to $5.16. So our cost is $2.90. So you can just kind of all-in cost that and we're financing it to 4.5%. So I mean, actually, the most simplistic way to look at MyPower is it's costing us roughly $3, we sell at roughly $5, great, we're making $2, and we're financing that over -- 4.5% over 30 years. Brad W. Buss: Yes. And the other big impact is the cost of capital is vastly different since we don't have to deal with tax equity. I have a fun group beside the Rhode Island, managing tax equity, I don't have pressure on those administrative costs. And again, the other big question is going to be, does the homeowner actually take the dollars he receives from the credit and give it to us to pay down the rate? I mean, that's going to have a big impact on what retained value really is. So if you assume 100% due, you get one number. If you get some mix of it, it jumps dramatically. So I think we really have to see what that behavior is going to be before we see. In the end though, I think we're splitting hairs when you look at the growth and where we're going and whether it's MyPower or whatever other products on a gigawatt. It's not like it's billions of dollars. It's $100 million to $200 million, maybe, delta. It all becomes a rounding error a couple of years from now.

There are no further questions at this time. I'd like to turn the call back over to management for any closing remarks. Lyndon R. Rive: Thank you very much for your time today. It's been an amazing quarter, launching 4 incredible products, the hard work the entire team has done, and look forward to speaking to you again next quarter. Have a good day.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.