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Shares of Zeo Energy Corp. (ZEO - Free Report) have declined 2.1% since reporting first-quarter 2026 results, underperforming the S&P 500 index’s 1.3% return. The stock has also fallen 8.5% over the past month, lagging the 4% advance for the S&P 500.
Earnings & Revenue Performance
Zeo Energy reported first-quarter 2026 net revenues of $13.2 million, up 50.1% from $8.8 million in the prior-year quarter, driven primarily by higher solar system installation activity. Net loss narrowed to $4.7 million from $13.3 million a year earlier, while net loss attributable to Class A common stockholders narrowed to $3.5 million, or 11 cents per share, from $6.4 million, or 48 cents per share, in the year-ago period.
Operating loss narrowed to $4.8 million from $13.5 million. Total operating expenses declined 19.5% year over year to $18 million, reflecting lower depreciation and amortization expenses, and reduced general and administrative costs.
Zeo Energy Corp. Price, Consensus and EPS Surprise
Gross profit increased to $5.6 million from $4 million in the prior-year quarter, although the gross margin declined to 42.5% from 45.5% due to higher costs associated with the increased use of domestic-content products. Contribution profit improved to $2.2 million from a loss of $2.8 million a year earlier, whereas the contribution margin rose to 17% from a negative 31.5%. Adjusted EBITDA loss narrowed to $2.9 million from $5.5 million, and the adjusted EBITDA margin improved to negative 21.6% from negative 62.7%.
Solar system installations remained the primary growth driver. Solar installation revenues rose to $13 million from $8.4 million a year earlier, while roofing installation revenues declined to about $140,000 from approximately $409,000. The company generated no revenues from energy storage solutions during the quarter.
Management Commentary
Chief executive officer Tim Bridgewater said that the company benefited from focusing on core markets with low solar penetration rates and substantial growth potential. He highlighted that first-quarter revenue growth exceeded 50% despite seasonal softness that typically makes the first quarter the weakest period of the year for the business. Management also emphasized efforts to lower operating expenses and improve efficiency, while addressing higher costs related to sourcing domestic-content products.
Bridgewater added that work under the company’s memorandum of understanding with Creekstone continues to progress. He expressed optimism regarding growth opportunities in the residential solar business and the long-duration energy storage segment.
Factors Influencing the Quarter’s Results
Revenue growth was fueled by an increase in solar system installations. However, the gross margin compressed as the cost of revenues increased 58.3% year over year to $7.6 million, outpacing revenue growth due in part to higher product costs.
Profitability improved significantly because of lower operating expenses. Depreciation and amortization expenses plummeted 77.9% year over year to $1.1 million after the customer-related intangible asset acquired in the Lumio transaction became fully amortized during 2025. General and administrative expenses declined 33.9% to $6.3 million, aided by lower bad debt expenses and reduced stock-based compensation costs. Sales and marketing expenses were relatively stable at $3 million.
The company also reported an improved operating cash flow. Net cash used in operating activities was $0.9 million compared with $2.3 million in the prior-year period.
Outlook
Management reiterated its objective of moving toward profitable operations during 2026. The company plans to increase the number of sales agents, centralize field offices and improve productivity through the implementation of new customer relationship management software. Management also expects to support liquidity through its equity purchase agreement with White Lion Capital and other potential financing avenues.
Other Developments
During the quarter, Zeo Energy expanded a subordinated note receivable with White Horse Energy from the $3 million reported a year ago to $6.15 million. The company also entered a common stock purchase agreement with White Lion Capital, giving it the right to sell up to $30 million of Class A common stock, subject to certain limitations. During the quarter, Zeo Energy sold 241,000 shares under the facility, generating net proceeds of approximately $13,000 after offering costs.
Separately, Zeo Energy continued integrating Heliogen, the long-duration energy generation and storage business acquired in August 2025. While Heliogen generated no revenues during the quarter, management has said that it is pursuing engineering service agreements and working to integrate the technology platform into the company’s broader clean-energy offerings. The company also disclosed that Nasdaq notified it in April 2026 that it had fallen below the $1 minimum bid-price requirement, triggering a 180-day compliance period through Oct. 20, 2026.
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ZEO Q1 Loss Narrows Y/Y, Revenues Jump 50% Despite Margin Pressure
Shares of Zeo Energy Corp. (ZEO - Free Report) have declined 2.1% since reporting first-quarter 2026 results, underperforming the S&P 500 index’s 1.3% return. The stock has also fallen 8.5% over the past month, lagging the 4% advance for the S&P 500.
Earnings & Revenue Performance
Zeo Energy reported first-quarter 2026 net revenues of $13.2 million, up 50.1% from $8.8 million in the prior-year quarter, driven primarily by higher solar system installation activity. Net loss narrowed to $4.7 million from $13.3 million a year earlier, while net loss attributable to Class A common stockholders narrowed to $3.5 million, or 11 cents per share, from $6.4 million, or 48 cents per share, in the year-ago period.
Operating loss narrowed to $4.8 million from $13.5 million. Total operating expenses declined 19.5% year over year to $18 million, reflecting lower depreciation and amortization expenses, and reduced general and administrative costs.
Zeo Energy Corp. Price, Consensus and EPS Surprise
Zeo Energy Corp. price-consensus-eps-surprise-chart | Zeo Energy Corp. Quote
Other Key Business Metrics
Gross profit increased to $5.6 million from $4 million in the prior-year quarter, although the gross margin declined to 42.5% from 45.5% due to higher costs associated with the increased use of domestic-content products. Contribution profit improved to $2.2 million from a loss of $2.8 million a year earlier, whereas the contribution margin rose to 17% from a negative 31.5%. Adjusted EBITDA loss narrowed to $2.9 million from $5.5 million, and the adjusted EBITDA margin improved to negative 21.6% from negative 62.7%.
Solar system installations remained the primary growth driver. Solar installation revenues rose to $13 million from $8.4 million a year earlier, while roofing installation revenues declined to about $140,000 from approximately $409,000. The company generated no revenues from energy storage solutions during the quarter.
Management Commentary
Chief executive officer Tim Bridgewater said that the company benefited from focusing on core markets with low solar penetration rates and substantial growth potential. He highlighted that first-quarter revenue growth exceeded 50% despite seasonal softness that typically makes the first quarter the weakest period of the year for the business. Management also emphasized efforts to lower operating expenses and improve efficiency, while addressing higher costs related to sourcing domestic-content products.
Bridgewater added that work under the company’s memorandum of understanding with Creekstone continues to progress. He expressed optimism regarding growth opportunities in the residential solar business and the long-duration energy storage segment.
Factors Influencing the Quarter’s Results
Revenue growth was fueled by an increase in solar system installations. However, the gross margin compressed as the cost of revenues increased 58.3% year over year to $7.6 million, outpacing revenue growth due in part to higher product costs.
Profitability improved significantly because of lower operating expenses. Depreciation and amortization expenses plummeted 77.9% year over year to $1.1 million after the customer-related intangible asset acquired in the Lumio transaction became fully amortized during 2025. General and administrative expenses declined 33.9% to $6.3 million, aided by lower bad debt expenses and reduced stock-based compensation costs. Sales and marketing expenses were relatively stable at $3 million.
The company also reported an improved operating cash flow. Net cash used in operating activities was $0.9 million compared with $2.3 million in the prior-year period.
Outlook
Management reiterated its objective of moving toward profitable operations during 2026. The company plans to increase the number of sales agents, centralize field offices and improve productivity through the implementation of new customer relationship management software. Management also expects to support liquidity through its equity purchase agreement with White Lion Capital and other potential financing avenues.
Other Developments
During the quarter, Zeo Energy expanded a subordinated note receivable with White Horse Energy from the $3 million reported a year ago to $6.15 million. The company also entered a common stock purchase agreement with White Lion Capital, giving it the right to sell up to $30 million of Class A common stock, subject to certain limitations. During the quarter, Zeo Energy sold 241,000 shares under the facility, generating net proceeds of approximately $13,000 after offering costs.
Separately, Zeo Energy continued integrating Heliogen, the long-duration energy generation and storage business acquired in August 2025. While Heliogen generated no revenues during the quarter, management has said that it is pursuing engineering service agreements and working to integrate the technology platform into the company’s broader clean-energy offerings. The company also disclosed that Nasdaq notified it in April 2026 that it had fallen below the $1 minimum bid-price requirement, triggering a 180-day compliance period through Oct. 20, 2026.