SunPower Corporation (SPWR) Earnings Call Transcript & Summary

Good morning, everybody. All right. Good morning. I'm Mike Weinstein. I'm Vice President of Investor Relations, a lot of you already know me, for SunPower. Welcome to our 2022 Analyst Day. At today's event, we will have Peter Faricy, CEO of SunPower; and Manu Sial, CFO of SunPower; as well as several members of the executive leadership team that Peter will introduce in a moment. Now we'll make forward-looking statements that are subject to various risks and uncertainties that are described in the safe harbor slide of today's presentation, which I can click to, maybe, but we can go to the slide for the safe harbor statement, if you guys want. They are in the safe harbor slide of today's presentation, our 2021 10-K and our quarterly reports from 10-Q. Now please see those documents for additional information regarding factors that may affect these forward-looking statements. We have also posted a set of PowerPoint slides, which we will reference today on the Events and Presentations page of the Investor Relations website. At the conclusion of the presentations, we have a Q&A session for attendees. And for those of you attending virtually, welcome. We will -- you will be able to submit your questions through the chat function of the webcast, and I will read them for you. The -- a replay of the event will be available later today on the Investor Relations page of the website. Finally, a brief safety notice emergency exits are located in the back of the room and also in the front of the room behind the curtains on both sides of the stage. With that, let me introduce Peter Faricy, CEO of SunPower, who will kick off our Analyst Day for 2022. Welcome.

Thank you, and a warm welcome to everybody. We're so happy to be here. For those of you who traveled to San Diego, thank you for joining us in person. This is the first week we've really had like a full week of in-person business meetings. It feels so good to be here, not wearing a mask, not socially distant, like we're shaking hands. It's kind of fun again. I remember this. I remember this part of the business world. For those of us who are joining by webcast, we appreciate you tuning in, and we're so excited to be here with you today. I think I've met a bunch of you, but let me give you a quick bit of my background. I joined SunPower last April as our CEO. And my experience is very different than many of the other CEOs in the solar industry. I don't have a traditional energy background. I don't have a utility background. And we really believe that we can blend the background that I do have, which is much more focused on consumer growth, digital and technology with the incredible innovation history we've had at SunPower together to create this very, very powerful company. So I'm thrilled to be here. I'm also thrilled to be in this role for another reason, which is I'm very focused on our mission. I really, really love the fact that we're not just building a very strong company and a company that we think will be very valuable but we really care about the damage that's being done to the planet and the report that came out from the UN about how to make a big difference in the world. When you meet the executives today, you're going to see a team of people who are here because they're committed to build a strong company, but they're also committed to this mission to make a big difference in the world. And I can't wait for you to meet them. So with that in mind, let me walk you through our agenda today. I'm going to talk a little bit about how we view the marketplace, our strategy and why we think that our company is a great investment. And then I'm going to bring up a number of our executives that you're going to get a chance to meet for the first time. So leading customer care, you're going to get a chance to meet Nuala Murphy and hear more about our efforts to become the world-class customer company that we want to be. You're going to get the chance to hear a number of exciting announcements from Nate Coleman, who's our Chief Products Officer. You're going to get a chance to hear from June Sauvaget about our growth plans, how are we going to invest in sales and marketing and really grow our business. And then you're going to get the chance to hear about SunPower financials from Jason MacRae. And then finally, from our wonderful CFO, Manu Sial, he'll be our closer, and then we'd be happy to take your questions here in the audience and over webcast as well. So we're really looking forward to spending time with you today. Let me start off by talking a little bit about the market landscape. I think our view of the market is distinct and it's different than others. And I think that will lead you to naturally understand how we're viewing our strategy, and I'm going to walk you through our strategy in some detail. And then you're going to get a chance to hear from all of our executives about how our plans for our strategy will play out this year and in the years coming. So first of all, the page I always love to start on because I just think it's incredible is we really believe the opportunity in residential solar is enormous. Depending on what data that you want to tie to, we believe that there will be 100 million households in the U.S. that would benefit from adding solar on the rooftop, benefit by saving money financially net of their solar costs. To me, working over 35 years in the business world, it's an incredible value proposition for consumers. We can save people money, we can help them maintain their power, and we can help them make a big difference in the world. It's really, really incredible. The interesting thing to me is just how much of the opportunity is still left. For as long as these companies have been around, and we've been around for 35 years, 4% of the people in the U.S. have solar. So you'll see, I often say to my team, we got 96 more million people to go. We just have an enormous opportunity out there. And that frames how we kind of think about what our strategy is. There's a number of tailwinds that we think are going to be sustainable. Let me walk you through 3 in particular that we are quite confident will be true for a period of time. The first one is, I think many of you are enduring this yourselves. Traditional utility costs continue to rise. This data on the screen shows 37 states where utility prices rose much faster than the consumer price index. But this data is 2000 through 2020. All of you have had the recent experience of seeing the even more rapid increases that have happened over the last 6, 9, 12 months with our utility prices. Gas prices, oil prices, 8% increases, 10% increases are not uncommon. It's really hitting consumers hard for something that they expected they would always be able to afford. So this is constantly making solar more and more on top of people's minds and more and more affordable over time. The second big tailwind we see is actually on the policy front. I think you could argue this is the most favorable time from a policy point of view we've had in the history of solar power. I'll start at the federal level, and I'll kind of work my way to the right. But we're cautiously optimistic that after a lot of back and forth that there'll be some kind of renewable energy package passed. We would hope that would happen before the summer break in August. But when you see Senator Manchin's comments that have been very favorable towards renewable energy. We would love to see this $0.5 trillion package that's been proposed passed between -- sometime between now and then and grow the level of the ITC and extend the ITC over time. And we think that, that would be very beneficial for consumers around the U.S. In California, many of you will remember last December, the initial read on NIM from CPUC was quite negative. And that would have had a very big impact on California consumers. It would have had a very big impact on our dealers and our workers all across the state. The great news from my perspective is their voices were heard. The protest were heard. People said we can't let renewable energy be pushed aside for higher NIM rates. And I think you've seen the CPUC and the governor to give them credit react accordingly. So we've continued to push the California discussion further and further down the pipe this year in terms of getting on the agenda. We do believe it will be back on the agenda again sometime in Q2, and there'll probably be a decision that gets implemented later on this year. But it is also our belief that the decision that gets implemented will be more favorable than what was proposed in December, and I think something that the California consumers and workers can hopefully live with as we move forward. And then I think the other news that doesn't get reported very well is just how positive the policy tailwinds are for all the other states. So there's a lot of focus on California for a good reason because they've been the pioneers. But in our 32 largest states, 27 of the 32 have favorable policies or they're considering even more favorable policies. This is for stuff like PV, for battery storage, for EV chargers. So when you take a look at the whole landscape across the nation, you also have to consider like New York, New Jersey, Massachusetts, those are extremely favorable environments right now for renewable energy, and we're beginning to see real growth outside of California across the whole country. So we're quite excited about the policy tailwinds, and we expect those to remain favorable in the short and medium term. The third big tailwind that we think a lot about is actually the enormous opportunity with electric vehicles. And we're quite excited to see all of the announcements. You can't go a day without seeing a new announcement from an automotive OEM about a new vehicle they're introducing. But let me tell you why that's so important for solar. Every time a customer buys an electric vehicle, they do 80% plus of their charging at home. That means their home needs about 40% more electricity than it used to before they bought the electric vehicle. And we know the grid doesn't have 40% more capacity. So the more and more electric vehicles that get sold, we really believe is going to directly translate to more and more interest in having solar and renewable energy on your rooftop. One of the things that consumers are beginning to understand is you're only as green as your charging source. Would you just plug into your garage today and charge from the grid, you're still charging for fossil fuels. And so in addition to buying electric vehicles, more and more people are going to want to have solar and battery storage and integrated package as part of all of that. So we're quite excited about the growth of electric vehicles. We're planning on partnering aggressively across the industry to make sure we can support every one of those consumers not just by installing an EV charger, but really helping them get a bigger ecosystem across solar and storage and beyond. So when you add up all these tailwinds, where does this leave us? From my perspective, it leaves us with a huge market, 96 million people, and there's not a clear frontrunner. There's lots of companies competing. But from my perspective, it's the business is there for the taking. And as our strategy, we're viewing this market as a land grab. And a land grab means, we really believe the first person to serve the consumer and really make them happy, we'll be the winner in this space. Because for consumers, this is a big ticket item. This is an item that requires a lot of work on their part. It's not an item that has a good secondary market. And we really believe high customer service and high satisfaction, those companies are going to remain the winners as we go forward. So as we talk about our strategy and we talk about investing in growth, you're going to see we're behaving as if it is a land grab, and we're leaning in and we're moving forward very aggressively to serve as many consumers on residential solar as we can. Let me walk you through our strategy. For those who I've had a chance to interact with on our earnings calls, these are the same 5 pillars we've talked about. And the 5 pillars I'm going to walk you through are the same 5 pillars we talk to our employees about were the same 5 pillars we talk to our dealers about and the same 5 pillars we've talked to our Board about. For me, strategy is really just a different way of saying where are you going to choose to invest your incremental resources? And what is it that you hope to get from each of those areas? So what I'd like to do for each of these 5 is I'm going to describe them quickly, and then I'm going to go through each 1 of the 5, and I'm going to tell you a little bit about where we stand today and where our aspirations are, and then you're going to get to hear from our leadership group about a lot more detail about each of these 5 as we go forward. So the very first strategy that we always talk about starts with our customers. Everything we do starts with our customers and works backwards. And to keep it simple, we want to build a world-class customer experience that's a differentiator and puts us in a completely different league than other solar companies. Number two, we remain committed to be an innovative product company. Hardware still matters in this business. We really believe that we have an innovative future on the hardware side, and we will continue to offer the most innovative and the most affordable hardware products as we go forward. Number three, we're very committed to leading on growth. We really see great opportunities to grow across multiple channels. We see a great opportunity to really invest in marketing and really grow the number of consumers participating in solar. Number four, I'm excited to share with you our thoughts because they're very different than I think others in the industry about the role of software. We truly believe that software will be as important as hardware someday, and we're really investing as if it will be going forward. And then number five, this is a business that requires an enormous amount of financing in order for consumers to be able to participate. 80% plus of people today in solar need a lease or a loan. And we want to tell you more about our plans for SunPower Financial and why we think that's a winning strategy. So let me start with the consumer piece. The part that we don't talk a lot about is, without question, SunPower is the highest-rated solar power company in the United States today. It's not even close. Every survey you check, every site you go on to, we're ranked number one. This is coming from customers, thousands of reviews over many, many years, we're the #1 company. From my perspective of someone who's worked for the last 35 years and as an investor, I like to invest in the companies that do the best job of serving the customer. What I see a company that's #1 in customer satisfaction and consistently #1 in customer satisfaction, that says to me, that's going to be a winning company in this industry. That's how we're thinking about the focus here. I will tell you, it's very, very hard to earn a rating over 4.0 today. Customers are very discerning. Rooftop solar is very difficult to do. It's a big construction project. Imagine a remodel. It's a very, very difficult project. It's very hard to earn a 4.2 rating, but we're far from satisfied with the 4.2 rating. We think we can do far beyond that. And that's what you're going to hear more about today. We think differently about the customer experience. We start with the customer. We want to know what's important to them. We measure what's important to them, and we goal ourselves at much higher standards than others do in this industry and many other industries. I'm giving you one example up here on resolution time. It's -- we could take it as an article of faith that every customer, if they have a question or they have an issue, they want it resolved quickly. We're all the same. If you have to call someone, you want to resolve quickly. We not only goal ourselves on improving it. And you can see in 2021, we improved it from the beginning to the end by quite a bit. But we actually are focused on how do we achieve world-class levels for consumer companies. And that's far higher standard than what you see in residential solar today. In this particular case on resolution time, we don't just measure the average customer experience. For those of you who are very analytic, you'll know that averages are misleading. There's averages sometimes mislead you to think that the average experience is just fine. We also judge ourselves on the extreme hardest experiences to solve, and Nuala will walk you through more about this, but we really -- we hold ourselves accountable for constantly innovating on behalf of customers. Our goal is without question, is to build the highest customer loyalty because we believe our current customers want to buy more from us if we do that and also have the highest positive word of mouth. We want our customers to be so happy that they tell many other customers about the service and the experience they've had with SunPower. We think that's a winning formula, and that's the approach we're taking as we go forward. We're very excited to share our plans with you today, and I can't wait for you to meet Nuala in a few minutes. The second part of our strategy is about our products. And I think many of you know, we have this incredible heritage at SunPower. I'm really -- I'm just so honored to be a part of this company. I mean this is the original Silicon Valley start-up in solar. We did all these incredible things with making the first solar-powered plane with NASA and winning the first car race with Honda. We have an incredible hardware history. We're not letting that history go. We will remain the most innovative hardware company in the solar business, particularly in residential solar. The big change we've made, however, we started to make last year shortly after I joined the company. And that's around we've really pivoted our strategy to be focused very differently than before. We're not a company that sells one product and has a onetime sale with the consumer. That's our history. We primarily sold panels that we made. We sold them to dealers, sometimes the customers and we were one and done. That's changed. Last year, we introduced our first battery storage product, SunVault, which has gotten off to a terrific start. We announced our partnership with Wallbox, and we're just getting started. We plan to have a suite of products and services that will delight consumers all over the United States. But we also have a very different philosophy about how we feel about interacting with consumers, which is we want to have a lifetime relationship with them. And that changes the dynamic completely. That means you actually do want to interact with them. It means you do want to invest in things like the mySunPower app to give them features that they can use to make their life better. It means you do care about financing because you know that, that's going to be an important part of their experience every month for the next 20 or 30 years. So we're really doubling down on not just offering a broader array of products and services but having the kind of relationship with our customers that makes them loyal to us and want to buy our products and services over time. Now I'm particularly excited to make one of our first big announcements today. And if I could have a couple of colleagues come up here and help me do our first reveal, I would like to show you something very, very exciting. Please work on our first reveal. Yes. Thank you very much. Ladies and gentlemen, I would like to show you what we believe will be the most technically advanced residential solar panel and history. We are in late-stage discussions with our friends at First Solar, and our goal is to develop a partnership around a residential solar panel that will change the world. Now for those of you who are here in the room, you might have mistaken this panel for a flat screen TV. It looks beautiful. It looks shiny, it's gorgeous. But the aesthetics are just the beginning. Underneath the surface of this panel, for the first time in history, we've actually combined 2 different types of technologies to help us maximize the amount of sun penetration that we can get into our panels. The first technology is the one that First Solar is so well known for, and that's the thin film technology. So right below the surface of this panel is this thin film that First Solar has done so well in the commercial applications, and now for the first time ever, will be available to residential consumers. But the big difference maker is we didn't stop there. We're working in partnership to them, and we've been working for Monson having a layer of silicon sales below the thin film layer that gives us this dual technology and allows us to capture a greater share of the sun's rays. We think this is going to be an incredible innovation in the consumer world. This is, for us, a game changer on the panel side. We really believe that if we are able to complete this partnership together that we will have an opportunity to really make a big difference in efficiency, durability and value for consumers. We're very, very excited about the opportunity here, and we're continuing to work together to complete a deal. We're in late-stage discussions now, as I said earlier. When Nate Coleman comes up here in a few minutes, we'll do our second reveal, and Nate will tell you more about some more details about our panel strategy. We're excited to share that with you. All right. I talked about growth earlier. And in this same room and on the same stage, we had 150 of our biggest and best world-class dealers. It was so inspiring this week. I love meeting with our dealers. I love meeting with our installers the people who are on the front line who are actually talking to consumers and installing our product, it's fun, it's inspiring. And one of the things that we're doing that's different is in a land grab strategy, we don't have to make choices between channels. I sometimes get asked, are you trying to grow one channel over another? Are you trying to favor one state over another? No, there's 96 more million people to go. We're investing heavily across all channels. We're investing heavily across all states where we see consumer demand. Let me give you a couple of call-outs on our channel strategy here. I'm going to work on the left-hand side. So from the SunPower direct point of view, I think, all of you know, we're super pleased with the partnership -- the acquisition we made last year of Blue Raven. Ben Peterson and his team have built an incredible business. It's been great to welcome them as part of the SunPower family. I think many of you knew Ben when they were an independent company. It's made a very big difference. Both companies have learned from each other. It's really helped us accelerate our growth. But I'll tell you something you probably wouldn't expect, which is as fast as Blue Raven is growing, and we're very pleased with their growth, our SunPower Direct business is growing at twice that growth rate. I saw a note recently that speculated that a lot of our direct growth must be because of Blue Raven. And Blue Raven has been terrific. But our SunPower Direct business is as terrific or more, and we're really excited to see it take off this year. So it's quite exciting. The second big area is we're still doubling down on our dealer network. We were the company that pioneered the dealer network, and now we announced this morning that we're pioneer something different, something new, something that we believe will really help us invest in our dealers and help them invest in their growth. It's called the SunPower Dealer Accelerator program. Inspired from our Blue Raven acquisition, the question we asked ourselves is, if we're able to achieve incremental growth by buying new residential solar companies, what would happen if we also invested for growth with our existing dealer network, and that's exactly the program we've put together. It's a program that our dealers love and there's a lot of interest in it. The program kind of works like this. We're making a capital investment in these businesses. That's helping them expand to new territories and expand their teams much faster than they could have otherwise. Many of these small and medium-sized businesses need capital to grow and we can provide them capital to grow. In exchange for that capital, they are exclusively working with SunPower across all products and services. They're selling our panels, they're selling our batteries, they're selling our EV chargers, and they're using our SunPower financial products. It's really a bringing together of 2 groups that work well together and now kind of strengthening that bond. In addition to hearing how exciting it is for me, I'd love to tell you we have 2 investments that we announced this week. One of them is with Sea Bright Solar. Brian Kelly out of New Jersey, one of our most wonderful dealers, I think they were Dealer of the Year 2 years ago. They have a fantastic business. We're really excited to invest in them. As I mentioned, we're investing heavily outside of California as well and that New Jersey area has really got great potential, and we're very excited to become even closer partners with Brian. And then many of you know Freedom Solar, Bret Biggart down in Austin, Texas. Very large, very successful, very fast-growing dealer. We're very excited to become partners with Bret. Let me let you hear a few words from Bret on his thoughts on the partnership. [Presentation]

Thanks to Bret for doing a video and for being such a great partner. We're looking forward to help them grow their business in Texas and beyond. Let me cover the fourth part of our strategy, which is really around software innovation. As I mentioned earlier, I think, we have a distinctive point of view here that's very different. I think forward-looking, if I were to look 10 years down the road, I see many of the parts of the hardware in this business becoming more and more commoditized over time. And I think the difference maker will increasingly be software. And when you think about the importance of software, for those of you who are excited about virtual power plants, there's some hardware involved, but a lot of it's going to depend on how good do we make the customer experience? How compelling can we make it for them to give some of their battery storage back to the grid, which is kind of an unusual event that doesn't happen normally today. Same thing for the solar process. What we hear from customers today is why is it so challenging to buy solar. Depending on what industry studies you read is taking customers 3 months, 6 months, 9 months from being interested in solar to being activated. The process is slow and bureaucratic and long, and it's perfect for software innovation. We are doubling down on taking away those things called soft costs, and we're doubling down on making it simple and easy for consumers. Yes, I think that will result in some efficiency for us over time. But honestly, I think, the bigger lever here is customers are going to love the fact that it becomes easier and easier to get solar and get battery storage and get it done faster. We're very excited in our future discussions with you to share more details there. And then fifth and finally, let me tell a little bit about SunPower Financials. So when I joined the company, I think, the thing that started me the most was really this middle column. When you talk to the consumers who considered solar, so they're in the market, and they thought it was a good idea and you asked them, why do they not buy the top 2 reasons have to do with financing. They're not sure they can afford the upfront cost for the down payment, and they're not sure they can get qualified for financing. When you actually dig into the reality of it, those are perceptions. They aren't the reality. We really have an opportunity to offer leases and loans to millions of consumers across the U.S. So being really good at financial products isn't just meant to be a one-off moneymaker. It's because it's actually really important to our customers. Our customers need innovative solutions on leases and loans, and I'm very excited for you to meet Jason MacRae, who's our leader in this business, in a few minutes. The part that we truly believe is that we really believe we have some distinct advantages for SunPower Financial. We have a large dealer network that makes our serving customer cost very efficient. We have 10-plus years of data on how our leases and loans have performed. We have this software bent that other companies don't have that will allow us to make this process simple and easy. And we really feel like we're going to end up growing a business here that will be great for our customers, but also a very big part of SunPower as we move forward. So if I were to bring this all together, what does this deliver, why does this make this company more valuable? So here's how we think about it. First of all, we really think this strategy will result in outsized growth. Depending on whether you want to believe the Bloomberg study or the Woodmark study, people have forward-looking estimates of 7% to 12% growth as we go forward. I frankly think those probably are a little bit conservative but it's our commitment to achieve 2x market growth by 2025. We really believe that when we implement our strategy, and we continue to make progress that we're going to begin to far outpace the growth of the industry. But the second part of this is possibly even more exciting, which is that for every customer we have, and on the left-hand side of this page, you'll see that by the end of this year, we'll have 550,000 customers roughly. We believe there's an opportunity to sell them more products. Most of these customers only bought PV from us, there's an opportunity to sell them storage and EV chargers and smart home products. Along with on the right-hand side, every new customer we sign up, we believe over the next 3 years will be twice as valuable as they've been historically. And that's because they'll be interested as they buy EVs and upgrading their PV panels, adding storage, adding an EV charger, virtual power plant services and beyond. In the end, this is supported in the foundation of over $1 billion of potential investment capacity over the next few years. We have a strong balance sheet. We have $1 billion we can invest. We've got the right strategy. We've got the right leadership team, and we really think this is a very compelling investment as we move forward. I'm very excited now to move on to our first speaker from our executive team. I had a chance to work with Nuala at Amazon, and I saw her face some of the most difficult customer care challenges imaginable and quickly make enormous progress in surprising delight customers. The very first thing I did when I took over SunPower was I called Nuala. She, at the time, was working for an e-commerce company that sold furniture. And I said to Nuala, that sounds great. Furniture is awesome. But you could spend the next 10 years shipping furniture across the company or you can come here and change the world. I'm happy to say Nuala didn't hang up on me, and she's here to talk all about customer care and beyond. Please give a warm welcome to, Nuala Murphy, please.

Hello, everybody. Thank you so much, Peter, for the warm welcome. And yes, I am here and furniture is no longer a part of my career. I am so psyched to be part of SunPower and be able to make such a contribution to the solar industry and help those millions of consumers that Peter mentioned earlier. So this is my first kick in solar. It's my first kick in renewable energy. It's my first kick in anything remotely to do with construction. So what qualifies me to be part of the SunPower story today. Well, in fact, it's my experience in customer care. So I have over 20 years of experience in sales, customer service. I've worked for Oracle, Bank of America, Amazon, Amazon Web Services and as you now know, Wayfair. And throughout my journey, I've had the privilege of getting to know, learn about, understand multiple types of consumers, be that in business, technology, insurance, credit cards, everything. And it has been a wonderful ride and have learned a ton. So when I was asked to consider joining SunPower, that was an easy choice for me to make. I met Peter back at Amazon, where one of my biggest tasks was to centralize our vendor support back then in those days worldwide that consisted of taking 25 consumer goods categories, over 8 physical locations, over 3 channels, 24/7 contact to customers and to top it all in almost 10 languages. So that was fun, but this is even more fun. So I'm delighted to be here. And let me start on the journey and share with you why customer experience at SunPower is different. So Peter mentioned we are best-in-class in solar, something we are extremely proud of. 4-star plus ratings don't come easy, especially in an industry that is so complex and one that consumers fear. But on top of the 4-star rating, we also manage something that I'm sure most of you are familiar with, a very common measure in the industry today, in any industry today, is Net Promoter Score. And Net Promoter Score really attempts to understand how likely the customer is to recommend us going forward. So we measure this and we ask our customers how likely are you to recommend SunPower. And why do we do that? We do that because every time a customer recommends us, that is the biggest praise we can get. It is our best way to acquire customers. In fact, a dealer at our conference this week shared with me that her business relies on 80% referrals. It's incredibly important, particularly again when the process is so complex. So I'm delighted to share with you today that the SunPower Net Promoter Score, bear in mind, we've already got the 4-star plus rating. We are at a 49 NPS. And I'll take that as excellent. So the creators of NPS actually say that 50 is an excellent score and 80 is world-class. So 80 is the goal. You heard Peter say, we don't just want to be best in solar. We will be world-class across all consumer industries. And how do we know that? Well, our progress from 2021 to today is actually a 32% increase in NPS already. So we know we can do this. We will not stop at 4 stars and 49 NPS. We are going for the 80. And I'm excited to share with you now how we're going to do that. So I want to take you on a little trip, which is about customer trust because we can talk about price, we can talk about product. But when we talk about our customers, ultimately, what customers wish to do is they wish to do business with a company that they trust. And if I can ask you to think about your own personal life, who do you speak to? You speak to people you trust. Who do you go to for advice? You go to people you trust. Who do you confide in? Those you trust. And it's no different in business. So we aim to really focus on our customers to build that trust to drive long-lasting relationships. And in fact, Forrester states that customer-focused companies increased their revenue 1.4x faster than companies who don't focus on the customer. So a little challenge for everybody today. You can write down how many times I say customer, every single thing that we do starts and ends with the customer. So why is our approach to customer care different at SunPower? Peter mentioned it early on in the presentation. But one of the things that we do is we measure what matters most to customers. For any of you familiar with traditional customer service, there are a plethora of metrics to choose from to measure the efficiency, customer satisfaction, everything internally. For example, we could choose to measure handle time. We don't do that at SunPower. We use handle time to understand our staffing, our capacity planning, as you would expect. That's important. But we do not ask our frontline teams to use handle time targets, talk time, writing time. And why is that? Because we know that customer interactions take time. So we measure the things that matter most to customers. And the first thing I'm going to point out here on the bottom left of the slide, is our response times. So we measure our response times. This indicates that the percentage of calls, e-mails, chats, everything that we get, that we answer within our service level is steadily increasing. In the second graph, we talk about first contact resolution. First contact resolution is our ability to resolve the issue, not handle the contact and put the phone down, but actually resolve the customer issue in one interaction with that customer. That's what we all want, right, who wants to back and forth with the company. And thirdly, we measure resolution time. And that resolution time we measure in days. And as you can see on the graph, it's actually coming down. Again, all of these are 2021 numbers. So we believe we have the right metrics because they matter to customers. But what is it that we're measuring? All of you, I'm sure, in your field, understand that averages cloud the true visibility of the performance of the number. So we measure percentiles. We measure the 50th percentile, but more importantly, we measure the 90th percentile. We measure the 90th percentile because that gives us an indication of where our biggest opportunities are to improve the experience for our customers. And finally, in customer care, before we implement a change or when we're analyzing a problem that our customers have, when we look at the solution that is being proposed. We ask ourselves, why is this important for customers? Is this really going to change an outcome for the better for our customers? If the answer is no, we simply don't do it. So now I want to share a concept with you that may come to you as news, maybe some not. But at SunPower, we propose that contacts from our customers are defects. Defects is a harsh word, right? I know from my product owner colleagues, and you'll meet Nate later, who wants to hear that the product is defective or the process is defective. But using a word like defect actually challenges us to seek the real reason for that customer contacting us. Let's be honest. Customers don't wake up every morning wanting to contact SunPower. I think if they did, that would be pretty strange. Maybe they'd like a friendly phone call. But at the end of the day, it is up to us to understand why the customer is contacting us because only when we truly understand the reason for that contact, that's when we can improve and innovate and reduce customer effort and reducing customer effort increases customer trust and increasing trust, drive satisfaction, drives referrals and so on. So what we do is in customer care, we do or, as I call it, bread-and-butter job of making sure that we're helping the customer when they do reach out. But the bigger task is understanding the why behind it. So we identify the root cause and then we go through the following steps: number one, we attempt to eliminate the defect; number two, if we can't get rid of it, for all customers, let's see if we can automate it somehow so customers don't have to reach out to us; thirdly, if we can automate it, why don't we have a good self-service solution for our customers. And this is really important because if you think about the numbers that Peter mentioned, a 96 million consumers across the U.S., we're growing our business. For sure, we don't wish to grow our customer service at the same rate. So we are not looking to scale one and one as our customer base grows. Best-in-class companies don't do that. Best-in-class companies seek to improve for customers on that journey. And so self-service solutions become incredibly important for our customers. We all want to be able to resolve issues ourselves, we all go on the Internet, we all try and figure it out before we actually have to reach out to that company. But finally, we do understand that customers do need to talk to us and will want to speak to us. So rather than having a contact center agent who has blurbs and compliance scripts, don't get me wrong, of course, we will comply. But what we have to enable is good, intelligent, mature, knowledgeable conversations between our customers and our employees. And that is the journey that we're on and hence, why we say experts. So let's look at some examples of that strategy. Back in September, we had a homeowner contact us, who reached out because the data on the monitoring application looked a bit funky, and it actually looked like this. On the left, you can see this incorrect picture. And what this incorrect graph is actually showing is that solar power was being produced at night. That's news to me that the moon can produce solar power. But what actually happened was that there was an install mistake, the site metering was installed incorrectly. And so our team looked at that in more depth, and we're able to remotely flip that. Once they figured that out, they then went and examined all of our customer sites. And since September, we've corrected 12,000 homes where customers have not had to reach out to us and have not noticed that this is even an issue. Secondly, our automation, our SunVault systems. 100% of SunVaults that are out there today with our customers are scanned for conditions, 120-plus conditions. And when we notice any one or a combination of these conditions, that is endangering the battery, we send it into automatic recovery without the customer knowing. Secondly, again, related to SunVault, particularly important when we have power outages. When customers are running on their battery, some continue to use power in the same way that they would. And so they should, right? But it is sometimes very important to understand how long is that power outage going to be for. Sometimes we just don't know. So we send automated alerts to our customers to actually tell them when the battery is depleting too fast, and that enables them to go look at their consumption and maybe scale it back a little bit to get through that power outage. And finally, our PVS monitoring system. It's very important that our PVS is always running on the most up-to-date firmware. So we install over-the-air firmware upgrades to make sure that, that service is superior for our customers, again, without customers knowing. And finally, self-service, one of the most common reasons that customers actually contact us is because their WiFi has gone down. All of us know that. WiFi, we forget our password, maybe there's an outage and the solar system also suffers in that situation. But we need to alert our customers, and we need to help them understand that they need to go back and reconnect to WiFi. So we provide this on the mySunPower app, we also provide it on the desktop. And we enable them to reconnect without even having to contact SunPower, and we also provide them with a short tutorial. So why is all of this important? I talked about customer trust. So every time that we can identify the root cause of a customer contacting us, it means that we have the opportunity to eliminate that situation for all of our customers in the future. And in doing so, we increase customer trust. But not only do we increase customer trust. We also are able to scale back to my point earlier with our customer base growing, it's important that we continue to innovate. So what this graph is representing in the blue bars is that over time, year-over-year, we will see an 8% reduction in our cost to serve our customers as we continue on our strategy of root cause identification and defect elimination. This also has the side effect that it increases our productivity and efficiency. So I'm delighted to share with you today that we are working with Amazon Web Services to enable a technology platform that is going to support the strategy that I just outlined. And in working with Amazon Web Services, we will be able to build customer engagement by using our customer contact capabilities with deep data analytics and artificial intelligence that will help us meet the customer where they are. And that is incredibly important. And the visual here -- I'll just step to the side, the visual here shows us that when we focus on growth in the middle and we engage with customers in a meaningful way, it allows us to build trust. It allows us to meet customer expectations. It allows us to better understand our customers. But also, it allows us to improve our operations, it allows us to improve efficiencies. And it also drives innovation. It allows us that space to think about innovation and build new and better products and services for our customers that then again come back to meeting customer expectations, building trust and so the flywheel continues. So I want to leave you with this. As I think about solar and I think about that complex process, it is incumbent upon us at SunPower to understand the issues that customers face because only then can we truly make solar easy and accessible for all consumers. So thank you very much for listening. I'm delighted to welcome Nate Coleman on stage now, our Chief Product Officer, to share more about this wonderful product.

Hello, everybody. My name is Nate Coleman, and I'm here to talk about our products. I want to start off a little bit on my background. I started at this role in SunPower back in October, but I'm actually a boomerang. I was here previously from 2007 to 2009 when I was working on PV tracking systems for utility scale applications. So a lot has changed over the past 13 years, both here at SunPower and within the industry as a whole. But I've actually been in solar since 1999, I -- when I first started testing solar modules at a research lab. And I have seen a lot of changes over the past 2-plus decades. I've watched the solar industry grow tremendously while having prior leadership roles at SolarCity, Tesla and Sunrun. And I've really had a unique opportunity to see what works and what doesn't work from a product strategy perspective. I've also watched our grid continued to degrade, and home batteries become more and more common. And I've seen the EV adoption grow as well as electrification. And so with all this in mind, I'm very excited to be here today to talk through the products that we're offering to our customers. So this image right here, this really illustrates our product vision. And as Peter already stated earlier, we offer much more than just premium solar panels and systems. As shown here, we have our Equinox system that provides power from the rooftop. We have our SunVault batteries that allow customers the option to store solar energy so they can use it when the sun goes down, or during an outage. We also offer EV charging, which allows customers to fuel their vehicle with clean energy. And now we have the ability to provide virtual power plant and grid services, which allow us to provide additional value to customers and lower the cost of ownership of storage. Connecting all these hardware products is our mySunPower app, which gives us a daily and lasting relationship with our customers. And as Peter already mentioned, these combined ecosystem of offerings increases our total addressable market by 4x to $74 billion. So Peter already gave a sneak preview of something we're very excited about, and he showed you the front of our module. But what I'd like to now show is what's inside of this thing that makes it so special. And so as shown here, underneath this top layer of sun -- or First Solar's proprietary thin film technology, we've also embedded silicon solar cells. And so what this allows us to do is capture more energy from sunlight's wavelengths. And so the top photovoltaic layer captures high energy photons, where this bottom layer captures low-energy photons that would normally just pass through and not be captured. By having the stacked tandem architecture, we can capture more of the sun's energy and provide a better value to our customers. This technology is something that I remember learning about in grad school over 10 years ago, and here it is now in front of us. So this is amazing. We think when this product becomes available in 18 to 24 months from now, when we started putting it on our customers' roof, there's not going to be anything like this on the market. And we really are raising the bar in terms of efficiency and aesthetics. But as we look at the solar market as a whole, really the next frontier for us is to address not just the premium market, but also this 56% shown right here that our current offerings don't currently appeal to. And so by working with First Solar, we are exploring options to provide both premium and mainstream products that will allow us to provide an amazing solar technology and offering at a much more appealing price. Now if we move on to energy storage offerings, I think, it's becoming more and more apparent that our grid is not very reliable. And where I live in the Bay Area, unfortunately, every year, wildfire season and the associated grid outages is becoming more and more common and more and more expected. And so even in areas where customers don't currently experience grid outages, they still see this on the news all the time, and they're wondering, is this going to be me next. And so they want to have peace of mind, and we're very excited that we now provide whole home backup opportunity for our customers that gives them the peace of mind and resiliency that they're looking for. With our whole home backup solution, which is available this summer, we can now provide the ability to run both essential and comfort loads for customers. And this means when you're having a conversation with the customer, they don't need to make the decision as to what they want to back up and what they don't want to back up, they can now back up their entire home. This allows them to run heavy loads like air conditioning, pumps, even EV chargers in addition to their essential loads like the refrigerator, lights and WiFi. And having more batteries provides the ability to go off grid for longer. In fact, we recently heard of one customer in Northern California that was able to successfully power their home on just solar and storage for 9 days straight. And this is the kind of product we want to make widespread available to customers across the country. Now as we look at our storage supply chain, like everyone else, we are definitely having to manage some of the things that are going on in the world in terms of what components are available. But we've been successful in being able to mitigate these challenges by having partnerships with our suppliers and expediting shipping as required. We expect gross margins for our storage products to increase in the second half of this year as a number of the cost-saving initiatives we put in place are realized. And as we look at our next generation of storage, cost is definitely at the top of our mind. And we think we have a lot of opportunity to not only reduce hardware costs but also the associated installation and commissioning labor costs. And so if we look at this really at a whole system level perspective, we think we have a lot of levers for cost reduction. As Peter already mentioned, there is tons of synergy with EV adoption and solar and storage. And so as we look at our next generation of SunVault, we want to make sure we're incorporating the ability to provide EV charging. And the way we're getting a head start on that is with our partnership with Wallbox, which gives us the opportunity to offer charging to our customers is a perfect add-on to solar if they want to power their cars from the sun. But really, as we look ahead, we're excited about bidirectional charging and having this integrated into our future offering. And so if you look at the schematic here, we have a home hub, which is the -- really the brains of the system that allows smart connectivity and load control. We have a SunPower base that has a bidirectional inverter that converts DC to AC and back again. And then we have an EV charging module that will allow direct DC charging for faster fill-ups on electric vehicles. All this also, obviously, comes with our standard solar and battery offerings that continue to generate electricity to offset usage and provide storage for the home and for grid services. We've introduced our Wallbox offering now, and we're expecting attach rates to increase substantially over the next upcoming months. So as we look at grid services and VPP, this is an area where we see a huge amount of growth. And we've recently made some very exciting hires in terms of our business development and products organization to lead our grid services initiatives. We'll also be coordinating very closely with our technology -- digital technology teams to help us realize this. We think that there's a lot of value that customers can obtain through VPP. And one of the biggest ones is the ability to offset the cost of ownership of storage. But the incentives that customers get from VPP is not the only benefit here, and it's not the most important thing to us. Actually, it's really the experience because with these types of programs, there's a lot of trust involved. We're asking customers to allow us to control loads in their house. So we want to make sure that we do this right. And right now, we're participating in a number of existing programs, which are very variable in terms of what the rules are from utilities as to how you participate and how you're compensated. But this is still very early days for us, and we're working with all stakeholders to ensure that we bring the most value to our customers. One way that we're really going to accelerate our efforts, and you may have seen in this announcement this morning is through our investment in Home Connect. Now Home Connect is a very interesting company, and they've -- the way they've gone about this is very unique. They have gamified energy use, and they have incentivized customers to reduce energy use at certain times of the day when the grid is failing or the grid is not able to provide the power that's required. And so this capacity that they free up can then be monetized and sold to utilities. And this isn't something that's an experiment. They're already doing this. They already have 200,000 customers. They have 250,000 devices already enrolled in these programs. And some of these numbers you see appear from recent pilots in California where we're now integrating our SunVault battery into the Home Connect platform and actually reinjecting stored solar energy into the grid when it needs it the most. And so we see a lot of opportunity to collaborate with Home Connect, those 200,000 customers that they have are all customers that are eventually if not now going to be looking for solar, storage and EV. And then we also want to work with our existing customers and Home Connect to have a VPP program that is -- that has services provided through Home Connect. So I'm now going to play a short video that gives a lot more detail on how this partnership is going to benefit both our customers and the grid. [Presentation]

Yes. So hopefully, that helps give a better indication of the opportunity here and why we're so excited about it. So I would like to close out my section with a very exciting project that we're doing right now that really shows this vision that we've laid out. This isn't some far distant future. This is happening now. We've already broken ground on a 219 new homes community by KB Home that's located here in Southern California. And this connected community home is funded through the DOE. This is going to have everything we just laid out in the product vision, solar, storage, EV chargers, electrification, grid services. These are all standard offerings. And although -- this is not just a single home, too, this is a connected community. So this is going to really allow us to see what happens when you connect all these homes together and how they can orchestrate to provide better resiliency in a microgrid scenario. And I think even though this is our first project, this really is a blueprint of what renewably powered resilient communities across the country can look like as we move forward. So thank you very much, everyone, and great talking with you. Look forward to talking to you more.

All right. Thank you very much, everybody. We're going to take a quick 10 minute break and then we'll be back for the next 3 presentations in a row and then we'll do Q&A right after that. Okay. [Break]

For being here and being so actively engaged with all of us, our next presenter is going to tell our story about growth. To me, the fact that there's 96 million people who need solar, but there's -- the penetration levels are so small, it's an enormous opportunity for a great CMO. How do we create a distinctive consumer brand and how do we really lower our customer acquisition costs so we can grow faster? We found someone with incredible experience across the world and across many very successful consumer companies. Please give a warm welcome to June.

Good morning. It's an honor to be here. I wanted to first thank Peter for the warm welcome. It's been about 3.5 months since I've joined SunPower. And in the 3.5 months, I've learned so much about solar, and like Nuala, I am brand new to the space. So what makes me qualified? Well, over the course of my career, I've worked on global consumer brands and introduced those brands into new markets, new emerging markets and new audiences. My experience spans across leading global consumer marketing for Spotify and also working across brands for Gap Inc. and Shiseido Corporations. The through line in all of those experiences has been that I've been building up a brand, introducing brands, also building value and equity to the customer with a laser focus on building customer trust. This is why my role and Nuala role will have to work very much hand in hand. I'm looking forward to leveraging the experience that I've had in my past experience into the work that I do at SunPower. As Peter mentioned, there's a huge amount of households that have not yet even considered the possibility of going solar. This is a different situation than just competing with competitors. We are competing with utilities, and we need to inform our customers why it is beneficial to move to solar and why it is beneficial to move to clean energy. Not only will you save money, you will save the planet and you will also have energy resilience that will help protect you and your family. This is a story that we have not yet been able to tell and, in fact, no other brand has been able to tell that either. So today, I'm excited to share with you what the growth strategy is and what -- how we're thinking about applying our strategic river to areas of growth at SunPower. I first want to talk about how we are going to serve every single U.S. households across America. We've had a decent track progress so far. Last year, we've added 222 new dealers into our dealer network. This allows us to expand our territory coverage. That, coupled with what Peter mentioned earlier with SunPower Direct, we are a powerhouse and able to cover many, many households. Today, we cover more territory than any other U.S. solar provider or any affiliate network. That puts us at the #1 spot. But we are not satisfied because we ended the last -- we ended 2021 at 63% coverage of all eligible U.S. households. We are going to aim for 100%. In 2022, we are going to go from 63% territory coverage to 83%. And of course, we're not going to stop there. In 2023, we will continue to evolve and enter into new markets. So what makes me so confident that we can achieve that? SunPower has a unique ability and -- unique ability to expand our footprint and meet consumer demand. And it's something that Peter mentioned earlier, it's because we have a multichannel strategy, we are not reliant on one single channel, we have multiple channels so that we can meet that consumer demand. The first thing I want to talk about is the tremendous growth that we've seen through our direct sales team. We call this SunPower Direct. SunPower Direct has expanded tremendously over the course of the last year. And in fact, we see this as an opportunity both to cover territories where we don't have coverage, but also to complement what we do have coverage with our dealer network. In some of our hottest solar markets, there's so much demand that just the dealer network alone cannot fulfill the demand. So as Peter mentioned, as consumer demand rises, many, many channels can coexist without any conflict. We love our dealer network. As we mentioned, we have 700-plus dealers. We will continue to expand our dealer network. And the idea is SunPower Direct and our dealer network will together bolster our total growth for the business. Peter also mentioned earlier about Blue Raven, Blue Raven entered our family last year. And now that they are fully integrated into our business, we are able to pass leads to Blue Raven in markets like Idaho, Oregon and the Carolinas. In the first half of this year, SunPower Direct is also expanding into new 6 -- new 6 territories, 6 new territories, sorry. That will be Houston, El Paso, Dallas, Columbus, Las Vegas and Long Island. So as you can see, we are leveraging our 2 channels, the dealer network and the SunPower Direct to ensure that we cover the entirety of the United States. Another very important channel to us is New Homes. I'm going to dive deeper into this, but what I will say about New Homes and when you think about the customer journey of solar, meeting the customer as they are thinking about purchasing a home is the perfect moment to be introducing solar. To be able to move into a home that is solar-ready, it's incrementally better than moving into a home and later deciding to do construction on your roof. And so we see this as a prime moment to interact with the customer. And it goes beyond just panels, and I'll speak to that shortly. Finally, strategic brand partnerships are also incredibly important for our growth story. As we tie partnerships like the one that Nate just mentioned with OhmConnect, these are adjacent category partnerships where we share customers, but we also have customer bases that do not yet overlap. We are able to beat each other's lead flow and together grow as a business. So we will be entering into more strategic partnerships in the coming months and years because we see this as a channel for growth. Moving on to New Homes. I mentioned the importance of this. In case you don't know, we've been in this business since 2004. We've built a lot of rigor and we have operational excellence when it comes to new homes. Our focus primarily has been in California. And it shows in the numbers, we have 41% market share and we're continuing to grow in California. But that's not the big story I want to share today. We are moving into national exposure in the New Homes category. The New Homes team has done an incredible job. They've signed 5 national agreements with some of the top 20 builders, including KB Homes, Toll Brothers and Richmond American. These opportunities present our SunPower products to be in front of New Home buyers across the United States. We already have some proof points. We have 151 optional communities activated in 12 states already. And we also have new bookings in 6 states, including Florida, Arizona, Nevada, North Carolina, Texas and Tennessee. The story doesn't stop there. We have 2 more exciting initiatives to further expand our leadership position in New Homes. The first is to deepen our presence in communities by adding multiproduct installations. This means that we are now installing storage and solar into New Homes and, in some cases, storage, solar and EV. Nate also mention this in his presentation. We already have 900-plus some bulk standard community bookings in place, and we will continue to expand that further. We're also very excited to be expanding into multifamily new construction. This is going to be a huge opportunity and already the size of the opportunity is 60,000 multifamily units built in California annually. So in the short and medium and long term, the multifamily construction will also bolster our growth. We already have 25 to 30 megawatts of sales and pipeline from a multifamily sale in 2022. Okay. So we talked about how we're going to grow the business through our channels and leveraging our channels and expanding our channels. Of course, being the CMO, I have to talk about marketing as well. So lead generation is incredibly important for us to achieve our goals. In 2022, we have more aggressive goals than ever before. We are actually seeing demand come to those funnels that is outsizing the market pace. What's even more exciting to us right now is we are seeing 67% of our bookings occur outside of California. We are really focused on expanding our business, of course, inside California and continue to grow there, but even more so outside of California. I do want to take a moment to talk about our lead generation efforts because we not only generate leads for SunPower Direct, we also generate leads for Blue Raven and our dealer network. This is the value proposition that not all solar providers can say they have. This allows us to intake customers and route them to our best dealers around the country to ensure a stellar customer experience and installation experience. Another area I want to talk about is the funnel. Solar has many, many, many touch points. I think Nuala touched on that. With many, many touch points in place and many of them being quite manual and requiring human interaction, there's a lot of patience that we are asking of our customers. Through the entire funnel, we want to make sure that we're measuring every single point and making sure that we're keeping the customer within the funnel. The more leads that we can take all the way down to contract, of course, that will increase our volume, but it will also decrease our customer acquisition cost. We see a tremendous opportunity in evaluating this with a fine tooth comb, and we are already beginning to do that. So I talked a little bit about paid acquisition. But the best scenario for us is to reduce the amount of paid acquisition we do and rely more on organic growth of the business. So there are 3 pillars for us that we will be including in our strategy moving forward, and some of this has already been implemented. The first area I want to talk about is results. As a marketer, I'm also going to put myself out of business. But the best kind of marketing is when I satisfy customer, talk to their family or friend about a service or product. You're always going to trust what your friend or family tells you over what a company tells do. With Nuala's team focused on customer satisfaction and knowing that we will have the best innovative products in the marketplace, we have an opportunity to tap into our already 500,000 customer base by the end of this year as well as tapping into our future customers that come into our funnel and enabling that word of mouth and enabling that to tell the SunPower story. Second, we have a huge opportunity in upselling. As Nate mentioned, we're moving from a single product to multiple products and ecosystem of home energy solutions. This presents a great opportunity for us. Again, we have 500,000 customers that we will have by the end of this year. We have an opportunity to go back to them, most of which only have panels on their home. We can talk to them about our ecosystem and upsell them into new categories. Additionally, we have new customers coming into the funnel in the future. We foresee a future where customers don't necessarily come in panel first. They will buy an EV, for example. The first need out of that is getting a charging -- EV charger. And then a couple of months down the road, you may realize, "Wow, my god, my electric bill is so high." Or you might realize, to Peter's point, I bought this clean machine, and I'm actually powering it not with clean energy. So the reality is there's an opportunity to upsell into those customers as well. I think the idea is the point of entry into solar is going to look very different than how it looked historically. We're already beginning to do upsells into our New Home audiences, and we're seeing some success upselling them into some bulk and EV chargers. Lastly, retention and relationships are critical in making sure that we continue to drive growth and we have a lifetime relationship with customers. For example, when a customer leaves their home, the reality is most people do not live in one home their entire life, so when a customer is leaving their home and moving to a new home, we want to make sure that there is continuity with that customer. As they move into their new home, the first thing they should be considering is again to install SunPower systems into their home. Additionally, there is a newcomer into that home that already has SunPower. So maybe this new family that moves into this house has more energy needs, so we need to increase the rooftop capacity. Maybe they want storage and they don't already have storage. So there's an opportunity to also welcome this new home buyer that has -- is buying a home with SunPower systems in place. So these are the areas that we'll be focused on to drive organic growth and to reduce the amount of paid acquisition we do. Speaking of paid acquisition, we work in an industry where the cost of acquiring a customer is extremely high. I can tell you from my experience working in streaming music, fashion, retail and beauty, the customer acquisition cost is not as high as it is here. However, in all instances, no matter where you work, you're always looking at ways to lower your customer acquisition costs. So I am going to apply what I have done in my past and do that exactly here. So when we look at the customer acquisition cost, we do foresee that to go up in the coming months and years. The reason for that is there will be more audiences coming into this marketplace. And more importantly, there will be more competition coming into this marketplace. So how do we come back to the fact that there is an inevitable situation of customer acquisition going up? There's 4 key levers that we will pull, but the most important one is the application of software, digital tools, marketing technology and constantly leveraging data to drive efficiency. Many companies already do this, but we have not historically done this and we are doing it now. What this means is we are able to look at real-time results and match the audience with the right message and evaluating the right media mix to reach that audience. It also means that we're constantly A/B testing messages because, as I said earlier, the reasons for people to come into the funnel are different. Some care about the cost. Some care about sustainability and some care about energy resilience. In either case, being able to have the right message in front of the customer is extremely critical in optimization of our efforts. Second is the full funnel optimization, which I briefly spoked about earlier. Again, when you look at our funnel, you want to contain the lease that you bring in as much as possible. So evaluating every point of the funnel and making sure that we're optimizing those certain points so that we can contain the customer from lead to conversion is going to be very critical in driving down our acquisition costs. Thirdly, as I said, we are going to have nationwide coverage. This means that our marketing efforts are going to shift away from geo-specific to nationwide. As soon as you go nationwide, you have scale, and scale allows you to optimize much more efficiently. It is extremely expensive to target customers on a geo basis. It is much less expensive when you have nationwide coverage. So this will be a critical part of how we lower customer acquisition costs. Lastly, I touched on this already, but partnerships, again, are very, very important. In my past life, I have formed some very strong strategic partnerships that have enabled a funnel of customers into our business. And I know for a fact that if we line up with some automotive industry, real estate or even retail, there will be opportunities for us to tap into each other's audiences. So I shared with you today on how we are going to drive growth through our channel strategy, how we are going to drive growth through our marketing efforts but, most importantly, how we are going to lower our customer acquisition costs. Our plan is to reduce our customer acquisition cost by 20% by the end of 2023. This application of data, software and analytics into our lead-gen efforts will be industry breaking, and we're very excited to share those results in the near future. So with that, I conclude my presentation, and I would like to welcome Jason MacRae, who will speak to you about SunPower Financial. Thank you very much.

Hello. Good morning. Thank you so much for traveling all the way to see us. I'm Jason MacRae, I'm very excited to speak with you. I joined SunPower 7 months ago. And my career has been kind of half in banking, I've been at Morgan Stanley, also on the asset management side of Capital Group and some hedge funds. Have also been in the technology business, I did a start-up, center back startups and, most recently, at Amazon, where I led Amazon Lending. Amazon Lending is an analogous business to SunPower Financial which is what I'm going to talk to you about today, basically a captive owned by a larger company that's selling things to consumers and small businesses. So I'm very -- like everyone else, you've talked -- you've met today who's joined recently is not from the solar industry, I am passionate about our mission, it's really why I'm here. I think this is a great business, but it's also a wonderful feeling to work in an industry like this. And I think we have -- we've only just started. So as Peter mentioned, financing is really important in solar. And I guess this is sort of obvious. I mean, the sale is a $35,000, $40,000 sale, a little bit like a new car. It's a very expensive purchase. And just like new cars, about 80% of it is financed. So people don't have $40,000 in the [ check me ] account. And even if they do, they don't want to use that for a purchase like this. So financing is critical and financing is way too hard. And there's much too much anxiety associated with it. People are not sure they can get it. People are not sure what it's going to cost. It's too complicated. There's a lot of friction. And so SunPower Financial exists to solve those problems. Okay. So why do we want to do this? There's really 4 reasons. The first is we think it's going to increase sales. We're going to do more equipment sales if customers come to us and it's really easy to pay. And it's a compelling financial product. At the end of the day, a good number of the customers who do come in are looking to save money and that, of course, equates to what the monthly payment is. And so making that super easy to see, have it be something that doesn't take a lot of time to apply for and get is critical to selling more equipment. The second part is, of course, financing is a profit center in its own right. It's an opportunity for us to have higher incremental EBITDA per customer. And so there's a business here. It's not just a service, it is on business. The third is, as a financier, whether it's loan or lease, we can service that customer and that creates a lifetime relationship that could extend out to 25 years. It's an opportunity for us to touch that customer and create stickiness to that customer. And as they look to upsize or we look to upsell them or we look to engage with them in other ways, they're always going to have to finance it or look at how do they pay for it. And so if we're there with them every step of the way, that also creates incremental value. And the final reason is, these days, it's possible to set up a finance company in the marketplace model that's asset-light. There's a lot of capital out there in the world looking for great ESG fixed income investments, and that's exactly what we're generating here. And so we don't see this as something that requires us to have a balance sheet or takes a lot of credit risk. It's something we can build in a very asset-light sort of modern fintech model. And we know how to do that, so we did at Amazon and we can do here as well. So you may ask yourselves, why do we want to be in this business? There are other companies who do this. There are finance companies who focus on solar. They're good companies, have done well. Why is SunPower going to have a competitive advantage in this space? I think there are really 4 reasons. First of all, if we set up a finance company, you got to do what all the other companies need to do. They need to acquire customers. Those customers need to be captured in the CRM system. They need to have an e-commerce platform where they can transact. They can make choices that they can actually go sign the agreement, all the things you need to do as a digital business. While SunPower already has that, that's already built, we have a sales force, we have a great marketing team, we have technology which is on display next -- in the next room, and so by bolting on financial products to that existing platform, we could, at a very low cost, offer that service. So here, I've given an example of Sunlight is publicly traded, so we can look up their CAC. Our CAC is basically 0. We don't really have to acquire this customer. We already have the systems. And so that's an advantage. The more important advantage though is the second one here, which is when you talk to people who take risk, the people who are ultimately the permanent capital who is buying solar loans and leases, what that tells you is that when there's a delinquency in the pool, it's very often not because of the ability to pay, it's often because the behavior of the dealer, the quality of the installation or the quality of the equipment was problematic. So this is a customer who's angry because their roof is leaking or the system is not working or they felt like they were misled during the sale. And unfortunately, in the solar industry, these things do happen. And when you look at the data on a granular basis, you find that the root cause of delinquency is often those sorts of factors. And this is where SunPower has a real decisive advantage. We have the best equipment, the best warranty, the highest quality dealer network and the highest quality standards for installation. And that is borne out in the data. Our last ABS deal was in 2018. I provided some data. This is all in the call. These are all public deals. Our delinquency rates are lower than our competitors and the lowest in the industry. And we think that, that's something that over time will give us an advantage, it gives us lower cost of capital. The third reason is our approach to the customer. Most of our competitors are one track. It's loan only or lease only or primarily one channel. In our case, we don't do that. What we try to do is talk to the customer, understand what's best for them and offer them all the options. We expect that they'll choose the one that's best for them, but we don't push them one way or the other, and we think that, that's going to get an advantage as well. So we're the only large solar finance company that extends all the way from the product suite from loan and lease and is indifferent to which one you select. Lastly, a loan -- a lending business, the leasing and lending business is really about taking credit risk and taking credit risk ultimately requires data. It's predicting the future. And the best way to do that is to have as much historical data as you can. And we're proud of the fact that we've been doing this for over 10 years. And during that time, we've experienced the great recession. You want to be able to -- it's like asset management, you don't trust something unless you've seen a cycle. So in our case, we've seen a cycle. And we have granular data on how consumers behave in solar, residential solar, all the way back to 2009. And we think that's an advantage versus fintechs who are more recent entrants in the space. They joined the party late teens. So I think that, that will bear itself out over the long term as we have superior data we can play with. So we're taking this quite seriously. We're trying to build a big business here. And as part of that, we've hired a fantastic leadership team. So most of the people, except for one on this slide, are new to the company, they've joined in the last 6 months. Almost all of them worked with me in the past, some of them have worked multiple times with me in the past. Many of them came from Amazon. And as I mentioned before, I ran Amazon Lending which is a successful business. We had tremendous operating leverage and a very, very profitable business. And so we have assembled a team that's cohesive and experienced. Collectively, there's 197 years of experience on this page. I won't tell you what my contribution to that was. So Peter mentioned software, and in lending, software is just as important. It's a big competitive advantage to have better software. And so we are investing on this. This is an important part of our growth and our differentiation. We want to have the easiest customer experience. So if I'm a consumer, I should be able to go right through the process as quickly as possible, fully automated. At the moment, that's not the case for anyone in this industry. There will never be 100% automation because there are regulatory reasons why you can't do that in some cases, but we think we can get pretty close to 100%. What you're seeing here is our progress during the course of 2021 and since I joined, and we're going to go much further than this over time. The second, of course, is we have partners. We have our dealer network. We want to make sure that we are easy to deal with. And we, of course, pay them quickly and have minimum friction in how they interact with us, and that's a major focus, taking care of their needs. And then finally, the servicing. In the past, we've had lease servicing, but we now have loan. I'm proud to say that we launched the loan servicing in late 2021. And that is now available online. We're integrating that into the mySunPower app and that is coming later this year. Speaking of servicing, we think this is a big opportunity. If you want to have a sticky lifetime relationship with customers, you have to have a recurring touch point with them, you have to have contact with them. And partly, that will happen through the mySunPower app. And as we do VPP, they'll have reasons to interact with us. But servicing provides an additional reason, they're making monthly payments, they're checking the status of their loan, they're thinking about prepayments. So there's an additional touch point there. And if it's integrated into the mySunPower app, we think it's going to provide incremental opportunities for upsell and positive conversations with our customers. The other thing about servicing is that the fact that we're servicing the loan gives us access to the data on the performance of that loan and as well the information about the bureau. So if that customer is looking to buy a second home, we're going to notice that as they apply for another mortgage. So there's insights we get because we have a closer relationship with that customer than just if we had solar alone. So we see this as a big opportunity. We're very excited by it, and stay tuned for that later this year. So the lending business, you need capital. We don't intend to run this using our own capital for lending. We're looking to create a marketplace model. And I'm very proud to say that we've raised over $3 billion of lending capital since I joined. That's lease and loan. On the lease side, we've extended our relationship with Hannon Armstrong, and we're launching very shortly, literally in a matter of days, a fund called Dorado, which is a new version of the old fund [ UltraLite 2 ] with Hannon. And this is a great accomplishment. We have better terms than we had before. And I think it's a testament to the fact that when you have a track record and you've shown through data that you can perform well, ultimately, spreads come in, and we're seeing that here with this transaction. The [ mezz ] and equity investors are demanding a lower yield than they did before. So very excited about that. It's going to provide greater flexibility to us, additional capital to scale our lease business which, as you guys know, is very important in New Homes. And we're looking to close that very shortly. On the loan side, we -- our strategy is to have a diverse set of capital providers. We want to tap the ABS markets, and so we have a facility that ultimately will lead to that. And so we're looking for that sort of funding. But we also want relationships with depository institutions, right? Because it's very important to have different sources of capital so we can pivot to the cheapest and most flexible and advantageous in choppy markets. So we've signed 3 transactions in the last 6 months. We have more coming. So expect to see more there. But the good news is, when I look out into the market, I see tremendous demand for this asset. And it's no surprise, I was at Capital Group before and I was involved in ESG, which is a big initiative for everybody in the space. And one of the big challenges in ESG investing is you want to buy something where you can show impact. You want to be able to demonstrate that not only you're getting a good yield and it's a good risk return profile, but they're also -- you're also doing something for the E, S or G part of ESG. In our case, we have granular customer level monitoring. I can tell you exactly how much carbon we've removed from the atmosphere and I can compute that in a very precise way and tell you what your bond is doing for the climate. And that's something that very few people can do. So this is why we're seeing a lot of demand for this asset. Okay. Peter mentioned our dealer accelerator program. And of course, you know that we acquired Blue Raven last October. These sorts of transactions, whether they're outright acquisitions or minority investments, these are accelerants to SunPower Financial. And the reason for that is it gives us an opportunity to get closer to those companies and do more of their financing business. So Blue Raven had not done any financing with us in the past. And within 2.5 months of the acquisition, we have built an API integrated into their system and start lending for them. During the course of 2022, we're going to scale that up. And by the end of the year, we'll be powering all their loans. In the case of Freedom Solar, you saw the gentleman Bret, who is the CEO. They had been a large SunPower dealer, so selling a lot of equipment, but not using any financing from SunPower. That is now changing. We're going to start lending for him, and we expect to do about 30% of his volume this year. So both of these are examples of very large, successful dealers who are coming into the financial -- SunPower financial fold as part of their deepening relationship with us. And we think that, that's going to continue and that will help drive our attach rates up. So where does this leave us? The basic message is SunPower Financial is growing faster than SunPower as a whole. What you're seeing here is Q4 2021 data year-on-year growth compared to Q4 2020. SunPower grew at 28%, SunPower Financial at 41%. And that gap is continuing and, in fact, may widen this year. And what -- it's really a result of the fact that people are migrating to SunPower Financial, people on our platform. When I joined the company, the percentage of SunPower equipment sales which were financed by SunPower is in the mid to high 30s. Our target for 2022 is to hit 45% and we feel very good about our trajectory there. And what's particularly exciting about this is each sale we do that is financed by SunPower Financial has a higher incremental margin, right? It's a higher EBITDA sale than it would be if it was financed by somebody else. And so this is highly accretive to SunPower's business and it's something we think we can grow. Our longer-term strategy is to get this thing up to the 70s, the attach rate for SunPower Financial. We think we can do that. We had the dealers in this room just a few days ago, and we had the opportunity to meet all the big ones. And I think this is something that we can do. I think people are hungry for this, and we're excited to meet their needs. So with that, I'm going to introduce my friend and colleague, Manu.

Thank you, Jason. It's great to see everyone. In fact for spending the day with us today and coming over to San Diego. For those of you who have not had the pleasure of meeting, I joined the company a little less than 4 years back as the CFO when we began our journey of transformation. Over the last several years, we have greatly simplified the company and believe that our transformation to a residential and consumer-focused company is now complete. Post our transformation, we have a business that has a large untapped TAM, has had high gross margins and now has the benefit of a great balance sheet. This results in a company where we are targeting to grow our return on invested capital north of 25%, with greater predictability of results. Let me now walk you through our 3-year target financial model. We have a very simple financial model that is anchored around number of customers and the value we generate on a per customer basis. We are targeting to grow our annual customer adds at 2x the market growth rate that Peter shared with you a few slides back. The adjusted EBITDA target for 2025 is in the range of $3,000 to $4,000 on a per customer basis compared to $2,000 to $2,400 in 2022. And while we'll continue to invest in our platform, we will create operating leverage by investing in our platform at half the rate of our customer growth. We believe we are positioned really well to execute on our model given the market potential and the initiatives that Peter and the team shared with you so far. We are also affirming our 2022 guidance. Let's now dig into each of the elements of the model. Let's start with the number of customers first. As I mentioned earlier, we are targeting to grow our annual customer base at 2x the market growth rate. The confidence in growing our customer adds stems from the fact that we have been executing and we are pleased with the progress we've made on our initiatives in 2021, including on SunPower Financial, with momentum continuing in 2022. We are targeting to grow nationally by the end of 2022 to have a geographic coverage north of 80% in the U.S. And while we grow California over the next 3 years, we are targeting California to be less than 40% of our total volume in 2025 compared to 50% in 2022. As we look at our sales mix, consistent with our strategy of selling less of [ Pros ] component sales, we'll be reducing the component sales in 2025 compared to where we come today and increase sales from our direct sales channel relative to our total volume. We are pleased with the performance of all our channels that June shared with you, including New Homes that we plan to grow both nationally and into multifamily. The second element of our financial model is adjusted EBITDA per customer. We're targeting 2025 adjusted EBITDA per customer greater than 50% of 2022 levels. The growth in adjusted EBITDA per customer largely comes from increasing attach rates for our storage, EV charger and for SunPower Financials. For 2025, we are targeting SunPower financial attach rates in the range of 65% to 75%, with storage and easy charger attach rate getting up to between 30% and 40% over the same period. June and Nuala talked about specific plans to lower our customer acquisition costs and our cost to serve. In addition, we've started several initiatives under the leadership of [indiscernible] to lower installed cost on a per customer basis. With these actions, we are confident of achieving our 2025 adjusted EBITDA per customer target. Let's shift gears to a third and final element of our model, which is our platform investment. Platform investment is defined to primarily include products, digital and corporate OpEx. And while we will continue to invest in the platform like I mentioned earlier, we will create operating leverage by growing that investment at half the rate of our annual customer adds. Significant investment in infrastructure upgrades and talent hiring is largely complete by 2023. Investment in products and digital OpEx associated with growing our EBITDA per customer peaks on a per customer basis in '22 and '23 and then declines. Corporate spend is roughly 1.5% of revenue and stable. Let's now turn to the balance sheet. From a balance sheet perspective, we have an asset-light and positive operating cash generating model. We are targeting a leverage ratio of less than 2.5x net recourse debt to adjusted EBITDA. As you can see from the chart on the left, given our growth plans and margin expansion results in an incremental debt capacity. And adding to that, the pending proceeds from the sale of ENPH shares and the sale of the C&I business, we have the ability to invest over $1 billion while maintaining a healthy leverage ratio. Continuing with the balance sheet. We have a return on invested capital that is significantly better compared to our peer group and the return on invested capital that we're targeting north of 25% that enhance post the sale of the C&I business. Before we set up for Q&A, I want to share with you why I believe that SunPower is an even more compelling investment today. One, we have a residential business with a large and untapped TAM with market tailwinds. Two, we are targeting to grow our customer adds annually at 2x the market growth rate based on specific initiatives that we heard today. Three, we have an integrated suite of products and services that Nate talked about. And with the growth of SunPower Financial, we are targeting to grow our adjusted EBITDA per customer materially and also enhance our TAM. Four, we have a large and growing installed base of customers that we have the opportunity to upsell current and future products and services. And that is largely incremental to the target model I shared with you. And finally, we have the ability to invest over $1 billion to support our growth plans. And with that, we'll take a break to start the Q&A. [Break]

Okay. We're back, and we're ready for your questions. Before we get started, I want to introduce a couple of folks that are here in the audience that are part of our senior leadership team. So Derek Kuzak, if you could stand up and give everybody a wave here real quick. Yes, it's okay to clap. He deserves a round of applause. You guys don't know what he does yet, but I think it is to applaud him anyways. I think that's fine. He's our Senior VP for Supply Chain, Quality and Field Operations. I know a number of you over our earnings calls have asked questions about how are you managing supply chain, how are you managing quality and how are you managing this very large field force. And we're grateful to have Derek on board. He had many of those same roles in Amazon. He's come to join us at the beginning of the year, and Derek is a big senior part of our team. And I also want to introduce Josh Koppelman, who's our new Chief Technical Officer. You can clap for Josh. Josh has been in Amazon for over 10 years. He's just an expert in software, but he's also becoming an expert in this combination of hardware and software. And I think given the presentation we made about the importance of both, Joshua, we're so great to have you here. So sorry for those who are on webcast, you may not be able to see those folks, but I want to do a quick introduction for those who are here. With that said, we'd love to take your questions. We're going to take -- we're going to take back and forth between the audience here and Mike Weinstein, who's got them on questions he's taking from the online audience as well. I think we have a couple of microphones. I apologize, with the lights, I can't see real well. So who's ever got their hand up. Just give us your name and who you're with, and we'd love to hear your questions. Thank you. I take all the microphones are on. Okay. Sorry. Can we turn the mic on in the back, please?

It's working now. Philip Shen with ROTH Capital Partners. This First Solar SunPower module looks really exciting. I was wondering if you might be able to give some of the history on how it came to be, what the efficiencies might be with the tandem cell as well as when you get ramped up in 18 to 24 months, what do you expect the annual capacity to be. How much capital might it require? And then ultimately, the branding and pricing strategy relative to the potential cost structure. I think it's going to be targeting the premium market, but I was wondering if you might be able to tackle all those questions.

That sounds great. Thank you, Phil. And I'll take a shot at it, and then I'll have Nate jump in for anything on this. So we're in late-stage discussions. We've signed a nonbinding letter of agreement, but we haven't come to our final agreement yet. So it's kind of premature to give out many of the details of the questions you asked. We are looking forward to getting a final agreement and having a proper forum and making a formal announcement, and we'd love to talk about all of those. But let me give you a couple of pieces of color for context. As Nate mentioned, we do believe we're going to be able to develop together the best-in-the-world product for the premium segment. This is a product that will set a new benchmark for efficiency, and it will be the best of the best products that exist in the solar world. And we think we can actually do that at an also good value as well, which would be a game changer for us. We're in the premium segment today, selling a premium product, but we're also selling it at a premium price. We think we're going to have an opportunity with First Solar to sell the premium product in the premium segment and also a potential affordable price. So we're also interested in doing the same thing for that mass market segment. So mass market is now 60% of the total solar market and growing faster than the premium segment. We don't want to have a race to the bottom kind of a product, and we don't want to have a me-too product. Our dealers want exclusive, best-in-class, world-class technology products, and that's exactly what we're going to build for that mass market segment. Within the segment, it will have, by far, the best efficiency, and it will also be a great value. So that's a bit of how we're thinking about it. In terms of production capacities and pricing and comparisons, that's all information we'd love to share for you if we're able to get a formal deal done and make an announcement around that. Nate, what else would you add to...

Yes, I think you asked about the history. I mean I'm very excited to be able to share this with you all because this is something both First Solar and my product team working on for months. So this has been a very collaborative effort. And everything we've talked about today is really about the laminate and about having 2 layers of distinct photovoltaic absorbers. But this really is an opportunity to rethink other parts of the system and the architecture in terms of how it attaches to the roof, electrical architecture decisions. There's a lot more opportunity here and how we can make systems more efficient and easier to install.

One more piece of context on our panel supply agreements. When I joined the company, we were single-sourced, and we were contractually not permitted to work with other panel manufacturers. I don't think you'll need a CEO who says single sourcing is a great idea. There's a lot of limit to single sourcing. And we were in a high-growth market like this, where we believe consumer demand is going to accelerate. We really want to be able to have the ability to work with multiple partners or partners who can grow and scale to meet our needs. So we're quite pleased that we have the ability to develop this partnership, and we look forward to telling you more about that in the days and weeks and months to come.

Just a quick follow-up here on your dealer accelerator strategy. I think in some of our chats with -- post your dealer conference suggest that you guys are making -- you're making the investments in Freedom and the other one, and there might be more ahead. And it sounds like these are more minority investments as opposed to the Blue Raven strategy of taking them out completely. Can you talk about the financial approach and the difference there? And do you expect to -- how many more minority investments might you make? How much total capital do you think you might spend? And maybe talk through the advantages and disadvantages of doing the minority versus the full acquisition.

Yes. Thank you. So the Dealer Accelerator Program, we feel like is a huge innovation in the space. We really feel like it's an opportunity to change the game. We're locking in the highest quality installation capacity in the United States. That's kind of how we're thinking about it. There's installation capacity, and then there's the best of the best dealers in the United States, and those are the ones that we're interested in doing the accelerator program with. It was really inspired, as I said earlier, by this notion. There's more than one way to grow this business rapidly. One way is through acquisition. We'll continue to be interested in looking at acquisition opportunities, and we'll take a look at those constantly as we evaluate our business. But there's a new model here that we feel like we've invented, which is there's a lot of companies that are capital-constrained and, if they weren't capital-constrained, could grow a lot faster. And if they can keep the same high-quality DNA and we increase their loyalty to SunPower, it's kind of a win-win-win. We really love the investments because they're high return on investment. These investments that leave us with an equity share, we think, will pay back in 2 years, 3 years because we get the immediate benefit of them selling our full product and financial services line. It's great for the dealers because it gives them influx of capital to allow them to grow much faster. And therefore, they're actually building a larger and more valuable business. But because we're a shareholder of theirs, we both benefit together. So we really think it's quite an innovative model. I would tell you that we don't have a number in mind for a number of dealers. And as Manu talked about, we're not capital-constrained. So we're going to make rational decisions based on who beats the criteria, who would be our best growth partners as we go forward. We probably will over-index on people who are outside of California and people who are not using our full suite of products today, and we'll probably focus more on those. Manu, what else would you add to that?

Nothing. You covered it well.

Okay. Thank you.

Brian Lee with Goldman Sachs. Maybe just following up on that, Peter. The -- a little bit more on the scope of the Dealer Accelerator Program. So are they fully exclusive to you on all products and all geos when you make this minority investment? And then is there sort of a duration to that exclusivity if that is the case?

So with the way we're thinking about it is that we would like to have those deals result in full exclusivity over time. As Jason mentioned, for example, in financial products, there is some integration work that needs to take time, and this may take place over the first couple of months or quarters or years as it plays out. But it's our intent when we make these investments that it really is kind of -- we're all in together on both parties. They're all in with us, and we're all in with them. We do have other places we could invest our capital. This is a high payback. From our point of view, it's a great investment for us. I think on the -- again, on the scope side, I think this program, should these first 2 investments be successful, I think will inspire us to want to do many more. But as June talked about, we have a multichannel strategy, and this is just one of our many levers that I think we can pull to grow the business more effectively. Manu, anything else you want to add to that?

No, Peter. I think the elements of how we think about it is geographic coverage, full suite of products, shorter payback. Those would be the top 3 selection criteria.

Okay. And then Manu, during your presentation, you showed the kind of 2025 targets, doubling the market growth rate. I know you didn't quantify that, but most folks who cover the vertical would think at least 10% annual growth. So if we use that as a baseline, you're implying kind of 20% growth out in 2025, doubling the market growth, $3,000 to $4,000 of EBITDA per customer. I mean it implies you're going to get to something like $400 million to $500 million of EBITDA into the middle part of the decade. Is that the right message? Or what would make that math not play out the way that some of those parameters you ruled out would [indiscernible].

Let me take all your questions and comments one by one. I think you're thinking about it the right way. Take the market, take an assumption that we'll double the market and then, well, straightforward multiply it by the number of EBITDA per customer, and then you get to around -- so that's one. I think -- so that's -- I think you're modeling about it correctly. Second, you asked about why we are confident in our ability to achieve as I take a step back. We've gone from a single product to a set of integrated products, layer on top of that SunPower Financial, which gives us incremental margin on a per customer basis. And I think the early signs are really powerful as to what Jason showed you. And then the last element is around investment. We've been very disciplined about our investment over the last several years that you've seen, including corporate investment, and then the growth of the platform investment is at half the rate of our customer growth. So I think it gets you into the ZIP code from how to model it.

Mike, do you have a question online you want to give? And then we'll go back to the audience here. Yes, could somebody run with a microphone over to Mike, just so everyone can hear on the webcast? Sorry. Hang on Mike. I want to make sure the folks on the webcast can hear. Okay. Thanks.

So one question coming in from Ben Kallo. We have -- do you plan on adding additional panel suppliers? And can you talk about the mass market strategy going forward as well?

Yes. So no further comments yet on our panel strategy other than the announcement we made today that we're in late discussions with First Solar. I think many of you know, our current panel supply arrangement takes us through '22 and '23. So we'll have at least a couple of panel providers during that window, and then we'll see where we go from there. I think on the mass market segment, Nate, what else would you add to what I mentioned earlier on how we're thinking about serving there?

Yes. I think there's a lot of opportunity actually with First Solar to satisfy both of those markets. So we're having active discussions with them on that topic as well.

Yes. If I go back to the dealer conference, I think, from our dealers' perspective, one of the things that we've built with this company is exclusivity and distinctive product. That's not going to change. So this, in no way, as we move into the mass market, changes that equation. I think we're going to have something that, for the mass market, looks very different, and it's very unique for our dealers and for our SunPower direct channel. And that gives us the confidence that we could achieve the same kind of market share in the mass segment that we've achieved in the premium segment today.

Also a follow-up -- just one follow-up from Ben also on cells -- on battery cells. Can you talk about cell -- the supply chain for batteries right now, how that's shaping up to the second half of the year and how we will get higher margins on SunVault as we progress with new batteries?

We're pretty pleased with our supply chain performance. I think Nate did a great job of pointing this out. It is daily hand-to-hand combat of the supply chain. I think anyone who gives you a view longer than a couple of months ahead of time is in a different business than we're in because we're constantly trying to figure out creative ways to stay in stock and get all the components we need and work with our suppliers. I think on the battery space, we feel very, very good about 2022. Nate, do you want to talk a little bit about some of the cost improvements that we're thinking that will pull through later this year?

Yes. And it's hard to know, too. We use LFP. So nickel shortages are not impacting us like they do impact our competitors. We've put in place a number of cost reduction initiatives. As I mentioned, it's not only on the hardware side. It's also on installation and commissioning. And I think we want to take a system-level approach and realize the cost savings over time.

Let's take some more questions from the room. I know I saw some hands up there. Hi, Julien.

Congratulations, again, Peter. So Manu, I want to go back to your presentation and the last question, just to clarify this a little bit. Because again, if you use that 20% growth rate, you cascade it forward, it seems like you end up in the 460-ish ballpark, again, consistent. Just to clarify that, on the platform investments, that net against it, right? So the $70 million from '22, you cascade that forward, kind of nets against that mid-400 number to end up in a mid-300 number. Is that fair? That's like a formal adjusted EBITDA. I'm not trying to nitpick. I'm just trying make sure [indiscernible] right.

No. So let me give you the framework, and then you'll have our comments, and you'll have your own perspective from an assumption perspective. So the math to get to adjusted EBITDA is number of customers times adjusted EBITDA per customer. And then you subtract the platform investment, and that gets it adjusted EBITDA. So we talked about growing the top line or the number of customers, that 2x the market growth rate, to give you a range for the adjusted EBITDA per customer. We are intending to go invest in our platform and grow our $70 million rough number that we have for 2022 at a rate half the market growth rate, and that should help you model the platform investment and then gets you to...

Right, but the platform investment goes from like roughly 70 to 90 something or 90 to 100.

Right, it's the assumptions you make. Right.

Yes, and you end up with like 360, 370 or something like that, if I...

I think you're thinking about the model correctly.

Okay. Excellent. Sorry, I know that's top guidance.

The one thing I'll say real quick, Julien, and we'll take your follow-up question. This business leverage, to me, is the biggest compliment you could do as a business leader, and one of the reasons we brought in the talent we did at these certain positions is that I see a world where we're going to go from 500,000 customers to millions of customers. We don't want to scale our business one for one. we don't want to scale costs for revenue one for one and keep the same margin model we have today. We want to expand it. We want to increase that leverage as Manu talked about. These guys up on this stage know how to run a business going forward that has more and more leverage. And if we can keep our platform investment and half our customer growth, that's going to be a really terrific company that we're building.

Excellent. Two -- and in fact, 2 clarifying questions on that. Given that sort of compounding nature that you just described, Peter, is it fairly linear? Or is it sort of back-end weighted as you think about this sort of like accelerating? Or is it kind of -- have you figured out a way to kind of ease into that, if you will, in kind of a straight line fashion on EBITDA?

I think of it this way. You're going to begin -- we begin to see already this year some scaling, but it's like an annuity. It builds and builds and builds. So if you use the example that Nuala gave, every time we fix something at the root cause, that never happens again. But the benefit of it in '23 is small. It's really the compounding benefit of '23 and '24 and '25. It never happens again. And that's exactly the experience I had leading the Amazon Marketplace, is that we really began to get more leverage in the business. Now the thing I don't know is where does the business go 5 or 10 years from now? Do we choose -- how do we choose to reinvest it? And is there a different model we consider after this initial 5-year period? But I can clearly see a path because anytime you see manual work and slow processes, it's an opportunity for great innovation. And it's a great application for software. That's the primary way we feel like we can get a lot of leverage in the business.

And then if I can, just a final clarification here. As you think about that model that you guys have built out here, how much of that -- should we call it, $1 billion plus, right, it seems like there's a plus on that of latitude, shall we say, is assumed to get there, right? How much are you taking of that and reinvesting in the business to end up in that '25 metrics? Or said differently, how much is remaining that you can, again, reinvest and accelerate? I'm just trying to understand how much critical dry powder you might have assumed through that period.

Yes. Manu, do you want to comment on that?