NRG quarterly performance points to accelerating integration of smart home services into commercial operations

HOUSTON – During its third fiscal quarter financial results webcast NRG Energy revealed new guidance for 2024 above the initial investor day plan and has been hastening its integration of Vivint's smart home offerings into its commercial operations.

The company reported a third quarter 2023 Net Income of $343 million. Adjusted EBITDA for the third quarter was $973 million, Cash Provided by Operating Activities was $566 million, and Free Cash Flow Before Growth Investments (FCFbG) was $355 million.

“I am proud of our team’s work in the quarter, which is reflected in our solid financial and operational performance and the increased guidance we are announcing today,” said Mauricio Gutierrez, NRG President and Chief Executive Officer. “Our results continue to validate the ability of NRG’s consumer strategy to generate substantial cash flows and significant long-term shareholder value. We are well-positioned to finish the year strong and enter 2024 with significant momentum. We have line of sight to achieving our 2025 growth targets and believe that our continued focus on the emerging demand-side management opportunity will drive additional value to consumers and shareholders.”

Gutierrez discussed Vivint during the webcast noting that the integration of Vivint is, “…well underway,” and that as a result of early success with their growth initiatives, from $60 million to $75 million. Those numbers are a 150% increase from NRG’s original $30 million target which it set in May.

During the questions and answers portion of the webcast a participant asked the assembled panel whether they had any feedback from their activist investor, Elliott Management, who issued a letter and presentation to NRG Energy on May 15 announcing their acquisition of over 13% economic interest in the company and the accusation that the company had made a strategic mishap with its acquisition.

“I have been on the road talking to investors to help them better understand the strategy, to help them better understand the value proposition that this consumer strategy represents and not just to the activist, but to all shareholders,” Gutierrez responded. “…that has been our focus, that’s what we can do as a company, as a management team and I am very pleased with the results that we are delivering, and I think shareholders in general are appreciating the value of our consumer strategy.”

The same participant asked about some of the positives attributed to Vivint, which included lower attrition, seemingly owed to higher interest rates. Vivint President Rasesh Patel responded, “I think the results reflect the strong value proposition that we provide to consumers. If you think about 7% subscriber growth. We are also seeing an increase in the number of products each subscriber is actually taking into 5% growth in recurring revenue, simultaneously the cost-to-serve customers is down 19% on a unit basis year-over-year.”

He added, “…one of the most powerful aspects of the value proposition is the near -- I think that(s) a record-low attrition rate for us and this economy to have a nine-year customer life. When you bring these things together, combined with the fact that the average consumer is engaging with our products, 33% more than they were this time last year. It’s a really robust flywheel that results in just improving customer lifetime value and so we feel really good about the business, and we think there’s a long runway ahead forward.”

Despite several lawsuits over the course of the year affecting the company, including a recent judgment awarding SkyBell Technologies $45 million, Vivint has made strides in 2023. Since the beginning of the year, it’s expanded into smart lighting and was named the IoT Breakthrough Awards Smart Home Company of the Year.

You can find the full financial results online at investors.nrg.com.