As CEO Matt Potere describes it, Sunlight Financial sits at the nexus of fintech and solar energy. That nexus represents a multibillion-dollar opportunity — an opportunity enhanced by Sunlight Financial’s newly minted status as a publicly traded company.
Charlotte, North Carolina-based Sunlight Financial went public July 12 on the New York Stock Exchange after merging with the Apollo Global Management-sponsored SPAC Spartan Acquisition Corp. II in a deal valued at $1.35 billion. Sunlight’s fintech platform, Orange, helps American consumers secure loans for solar power installations and home improvement projects.
Sunlight’s stock closed July 14 at $8.48 per share, down from $16.66, its high for the week. New York City-based private equity firm Tiger Infrastructure Partners remains Sunlight’s biggest institutional investor.
Capitalizing on its position as a public company, Sunlight aims to capture an even larger market share in solar and home improvement fintech. Today, the company partners with more than 1,200 contractors to offer point-of-sale loans for residential solar installations and other home improvement projects. Since 2014, Sunlight has provided roughly $5 billion in residential solar loans for about 150,000 solar energy systems.
“We’re in a high-growth market,” Potere said. “Solar has grown 10x over the last decade, and we’ve grown even faster than the market over the past few years. So we’re in a terrific market with great tailwinds, and we’re going to continue to expand our contractor network base. And we’re relatively early in our launch into home improvement, so we think there’s a lot of opportunity to accelerate growth there as well.”
In the solar sector alone, Sunlight has plenty of room to grow. Potere notes that only 3% of U.S. homes are equipped with rooftop solar energy systems. Yet a 2019 survey by the Pew Research Center found 46% of U.S. homeowners had seriously considered installing solar panels.
Data in an investor presentation from Sunlight indicates the residential solar market is projected to reach $17.8 billion in 2023, up from $12.3 billion in 2020. Meanwhile, the share of residential solar installations financed by loans is expected to climb from 61% in 2020 to 72% in 2023.
Even though residential solar continues to be a relatively small market, Sunlight is profitable (net income of $2.66 million in the first quarter of this year) and cash-flow positive ($8.2 million in the first quarter), Potere pointed out.
“So we really didn’t have to go public at all or raise capital for that matter,” Potere said.
But Sunlight was attracted to partnering on a SPAC merger with Apollo, which has more than $400 billion in assets under management, and to accessing the capital markets in order to spur growth, he said. Before the SPAC deal, Sunlight had amassed $705 million in funding, according to Crunchbase.
Sunlight posted revenue of $69.6 million in 2020, up 31% from the previous year. In the first quarter of 2021, the company generated revenue of $24.8 million, a year-over-year increase of 90%. For all of 2021, Sunlight forecasts revenue of $123.4 million.
A cornerstone of Sunlight’s revenue growth is its proprietary fintech platform.
Potere said Sunlight’s Orange app simplifies the lending process by letting a consumer take and upload a photo of their driver’s license and then asking them to type in personal data. From application to approval, the entirely digital process takes as little as two minutes, he said. The application can be completed on a contractor’s or consumer’s electronic device.
Sunlight works with an array of financial partners to offer a range of loan products.
“We always thought that having a really simple customer experience was important. And so we’ve invested heavily in our proprietary tech platform to make that a fully digital experience,” said Potere, a former executive at Bank of America. “We have no paper anywhere in the process, and even if a customer for some reason needs to send us a document, they can take a picture of that document and upload it directly through the app, so it is very convenient and very efficient.”