UPDATE 2-SolarCity results top Street but shares drop 10 pct
Aug 7 (Reuters) - SolarCity Corp, the U.S. solar installer backed by Tesla Motors founder Elon Musk, on Wednesday reported better-than-expected quarterly results, but sharply higher costs and an unchanged outlook for the year sent its shares down 10 percent in extended trade.
The second-quarter net loss was $23.9 million, or 31 cents per share, compared with a net loss of $25.8 million, or $2.37 per share, a year ago. This year's earnings per share are based on a much larger number of shares outstanding.
Wall Street analysts had been expecting a loss of 38 cents a share, according to Thomson Reuters I/B/E/S.
SolarCity has grown rapidly thanks to a business model that allows homeowners to pay a monthly fee to lease solar panels, eliminating the need for a large upfront investment.
Revenue fell 18.5 percent to $37.95 million but was well above Wall Street analysts' estimate of $27.44 million.
Operating expenses rose 60 percent due to higher employee compensation costs and professional service fees.
Much of the revenue upside came from sales of whole systems as opposed to SolarCity's primary solar lease products, according to Raymond James analyst Pavel Molchanov.
"The market tends to focus on lease revenue," Molchanov said in an email. "Also, operating expenses continue to escalate quite rapidly."
The San Mateo, California company's shares have gained more than 400 percent since their initial public offering at $8 a share in December of last year. They were down more than 10 percent at $38.05 in extended trade after closing at $42.50 Wednesday on the Nasdaq.
Molchanov added that investors that have driven the stock up may have been disappointed that the company did not raise its full-year outlook.
Operating lease revenue rose 79 percent to $20.6 million, above the company's estimated range of $16 million to $18 million. Deployments were 53 megawatts, at the high end of the company's forecasted range of 48 MW to 53 MW.
For the third quarter, SolarCity expects to deploy between 70 MW and 77 MW and forecast operating lease revenue of $21 million to $25 million. For the year, it said it still expects deployments of 270 MW.
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