v3.26.3
FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS
The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.
The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:
•Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.
•Level 2 - Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
The following table presents assets and liabilities measured at fair value on a recurring basis using the above input categories:
September 30, 2026December 31, 2025
(In thousands)
Level 1Level 2Level 3Level 1Level 2Level 3
Assets:
Cash equivalents:
Money market funds$44,150 $— $— $186,677 $— $— 
Commercial paper— — — — 14,985 — 
U.S. Treasuries— 19,970 — — 29,885 — 
U.S. Government agency securities— 6,000 — — — — 
Marketable securities:
Certificates of deposit— — — — 14,515 — 
Commercial paper— 13,405 — — 12,908 — 
Corporate notes and bonds— 239,480 — — 373,383 — 
U.S. Treasuries— 64,147 — — 63,754 — 
U.S. Government agency securities— 234,149 — — 573,976 — 
Equity securities - SunPower common stock267 — — — — — 
Other current assets:
Investments in debt securities— — 24,408 — — — 
Other assets:
Investments in debt securities— 2,319 29,746 — 6,300 55,046 
Investment in equity instruments— — 5,000 — — 5,000 
Investment in tax equity fund— — 380 — — 754 
Total assets measured at fair value$44,417 $579,470 $59,534 $186,677 $1,089,706 $60,800 
Liabilities:
Warranty obligations:
Current$— $— $22,771 $— $— $23,259 
Non-current— — 164,191 — — 169,963 
Total warranty obligations measured at fair value— — 186,962 — — 193,222 
Total liabilities measured at fair value$— $— $186,962 $— $— $193,222 
Notes due 2028
The Company carries the Notes due 2028 (as defined in Note 11, “Debt”) at face value less unamortized debt issuance costs on its condensed consolidated balance sheets. The fair value as of September 30, 2026 was determined based on the closing trading price per $100 principal amount as of the last day of trading for the period. The Company considers the fair value of the Notes due 2028 to be a Level 2 measurement as they are not actively traded. As of September 30, 2026, the carrying amount and fair value of the Notes due 2028 was as follows:
Carrying AmountFair Value
(In thousands)
Notes due 2028$573,163 $530,438 
Investments in debt securities
Investments in debt securities are recorded in Other current assets and Other assets on the condensed consolidated balance sheets. The changes in the balance of investments in debt securities were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
(In thousands)
Balance at beginning of period$87,948 $55,693 $61,346 $64,834 
Secured revolving credit facility, net(4,944)6,300 24,408 6,300 
Fair value reduction included in other expense, net(26,531)(3,174)(29,281)(12,315)
Balance at end of period$56,473 $58,819 $56,473 $58,819 
In January 2021, the Company invested approximately $25.0 million in Series C preferred units issued by a privately-held company. The investment qualifies as a debt security, as it accrues interest and principal plus accrued interest becomes payable to the Company at certain dates unless it is converted to equity at a pre-determined price. As the investment includes a conversion option, the Company has elected the fair value option, with changes in fair value recognized in Other income (expense), net in the condensed consolidated statements of operations. The fair value option was elected to reduce the operational complexity of accounting for embedded features that would otherwise require bifurcation as a separate unit of account. The fair value of approximately $20.3 million and approximately $29.6 million as of September 30, 2026 and December 31, 2025, respectively, for Series C preferred units are categorized as Level 3 within the fair value hierarchy, as the valuation incorporates significant unobservable inputs. The Company uses a scenario-based probability weighted discounted cash flow model that includes significant assumptions, including the discount rate and probability weighting of the various redemption scenarios that impact the settlement of the Series C preferred units. The decrease in fair value of approximately $7.9 million and $9.3 million during the three and nine months ended September 30, 2026, respectively, reflects updated inputs.
In September 2021, the Company invested approximately $13.0 million in secured convertible promissory notes issued by the stockholders of a privately-held company. In February 2026, the notes were amended to extend the maturity date and modify certain other contractual terms. The notes are classified as debt securities, and the Company has elected the fair value option, with changes in fair value recognized in Other income (expense), net in the condensed consolidated statements of operations. The fair value option was elected to reduce the operational complexity of accounting for embedded features that would otherwise require bifurcation as a separate unit of account. The fair value of approximately $3.8 million and approximately $11.0 million as of September 30, 2026 and December 31, 2025, respectively, for the notes are categorized as Level 3 within the fair value hierarchy, as the valuation incorporates significant unobservable inputs. The Company uses a scenario-based probability weighted discounted cash flow model that includes significant assumptions, including the discount rate and probability weighting of the various redemption scenarios that impact the settlement of the notes. The decrease in fair value of approximately $6.4 million and $7.2 million during the three and nine months ended September 30, 2026, respectively, reflects updated inputs.
In July 2023, the Company invested approximately $15.0 million in a secured convertible promissory note issued by the stockholders of a privately-held company. In July 2026, the notes were amended to extend the maturity date and modify certain other contractual terms. The notes are classified as debt securities, and the Company has elected the fair value option, with changes in fair value recognized in Other income (expense), net in the condensed consolidated statements of operations. The fair value option was elected to reduce the operational complexity of accounting for embedded features that would otherwise require bifurcation as a separate unit of account. The fair value of approximately $5.7 million and approximately $14.5 million as of September 30, 2026 and December 31, 2025, respectively, for the notes are categorized as Level 3 within the fair value hierarchy, as the valuation incorporates significant unobservable inputs. The Company uses a scenario-based probability weighted discounted cash flow model that includes significant assumptions, including the discount rate and probability weighting of the various redemption scenarios that impact the settlement of the notes. The decrease in fair value of approximately $8.8 million during the three and nine months ended September 30, 2026 reflects updated inputs.
In September 2025, the Company invested $6.3 million in cash to purchase convertible notes with an aggregate principal amount of $7.0 million issued by SunPower Inc. (“SunPower”) (formerly named “Complete Solaria, Inc.”). The SunPower notes are classified as debt securities, and the Company has elected the fair value option, with changes in fair value recognized in Other income (expense), net, in the condensed consolidated statements of operations. The notes bear an interest rate of 7% per annum and mature on July 1, 2029. The initial
conversion rate is 467.8363 shares of SunPower common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $2.14 per share). The notes are categorized as Level 2 within the fair value hierarchy, as the valuation incorporates significant inputs that are observable, either directly or indirectly. During the three and nine months ended September 30, 2026, the Company recognized decreases in the fair value of the SunPower convertible notes of approximately $2.9 million and $4.0 million, respectively, in Other income (expense), net in the condensed consolidated statements of operations. The estimated fair value of the notes was approximately $2.3 million and $6.3 million as of September 30, 2026 and December 31, 2025, respectively, based on a scenario-based probability weighted discounted cash flow model that includes significant assumptions, including the discount rate and probability weighting of the various redemption scenarios that impact the settlement of the notes.
Investments in equity securities
On June 23, 2026, the Company entered into an Equity for Interest Exchange and Consent Agreement (the "Exchange Agreement") with SunPower, pursuant to which the Company agreed to exchange the cash interest payments due on July 1, 2026 and January 1, 2027 under the SunPower notes, totaling approximately $0.5 million, for shares of SunPower common stock (“Exchange Shares”). Under the Exchange Agreement, the number of Exchange Shares was determined by dividing the cash interest payments due by 80% of the 10-day volume-weighted average price of SunPower common stock as of the close of trading on June 29, 2026. The closing of this transaction occurred on July 1, 2026, at which time the Company received 874,064 restricted shares of SunPower common stock. The Exchange Shares are accounted for as equity securities with a readily determinable fair value, measured at fair value using the NASDAQ closing price (Level 1), with changes in fair value recognized in Other income (expense), net. The restriction on the shares terminates on January 1, 2027. As of September 30, 2026, the fair value of Exchange Shares amounted to approximately $0.3 million included in Marketable Securities on the condensed consolidated balance sheet. The Company recognized a loss of approximately $0.2 million in Other income (expense), net during the three months ended September 30, 2026.
Loan receivables
The loan receivables represent financing arrangements provided to certain customers. These loan receivables have contractual maturities ranging from one to three years and are recorded on an amortized cost basis. Interest income is accrued and recognized based on the stated coupon rate, included in Other income (expense), net on the condensed consolidated statements of operations. The principal outstanding under the loan receivables were as follows:
September 30,
2026
(In thousands)
Current$34,113 
Non-current1,500 
Loan receivables$35,613 
There was no activity in the allowance for credit losses related to loan receivables during the three and nine months ended September 30, 2026.
Variable Interest Entities
The Company holds a 19.99% non-controlling equity investment in a residential solar and storage finance entity and has extended loan receivables, a revolving credit facility and standby letters of credit to that entity and its wholly owned special-purpose subsidiaries (together, the "Investee"). The Company elected the fair value option for the equity investment, loan receivables and revolving credit facility to avoid measurement inconsistencies across its interests in the Investee. These instruments are classified as Level 3 within the fair value hierarchy, with fair values estimated using a discounted cash flow methodology incorporating market yield, projected cash flows, and estimated timing of distributions. Changes in fair value and interest income are recognized in Other income (expense), net in the condensed consolidated statements of operations.
The Company has determined that the Investee is a variable interest entity (“VIE”). The Company is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the Investee’s economic performance, and accordingly does not consolidate the Investee.
As of September 30, 2026, the fair value of the loan receivables and the revolving credit facility approximated their respective outstanding balances, including accrued and capitalized interest. The following table presents the carrying amounts of the Company’s variable interests and its maximum exposure to loss as of September 30, 2026:
ArrangementBalance Sheet ClassificationCarrying Amount (Fair Value)Maximum Exposure
(In thousands)
Non-controlling equity investment (19.99%)
Other assets$5,000 $5,000 
$1.5 million secured loan receivable — Loan 1
Other assets$1,777 $1,777 
$1.0 million secured loan receivable — Loan 2
Prepaid expenses and other current assets$1,082 $1,082 
$30.0 million secured revolving credit facility (approximately $24.4 million drawn)
Prepaid expenses and other current assets$24,408 $30,000 
$35.0 million letters of credit (drawn: None)
Accrued and other liabilities— $35,000 
The Company’s maximum exposure to loss as of September 30, 2026 was approximately $72.9 million, comprising the aggregate carrying amounts of the equity investment, loan receivables, and revolving credit facility, the undrawn commitment on the revolving credit facility, and the aggregate stated amount of the irrevocable standby letters of credit. It will increase as paid-in-kind (“PIK”) interest is capitalized. The excess of maximum exposure over carrying amounts primarily reflects the undrawn commitment on the revolving credit facility and the letters of credit, neither of which is recorded on the condensed consolidated balance sheet.
Loan 1 and Loan 2 bears interest at 15% payable in cash and mature in December 2027 and December 2026, respectively. The revolving credit facility bears interest at 9.0% PIK capitalized quarterly, restricts advances to permitted expenditures, and matures April 30, 2027.
In connection with the Investee's new credit facility and a separate tax credit transfer agreement, the Company issued three irrevocable standby letters of credit with an aggregate stated amount of $35.0 million, which expires between March 2027 and January 2034, including annual auto-renewal. The letters of credit may be drawn upon specified events including tax credit deficiencies, events of default, or issuing bank events. The Company recognized a stand-ready guarantee liability of approximately $0.8 million at inception, which is amortized over the respective terms of the letters of credit. The probability of a draw is assessed as remote as of September 30, 2026; accordingly, no contingent loss accrual has been recorded. A separate reimbursement agreement with the Investee provides for repayment of any amounts drawn under the letters of credit. In connection with the Investee’s new credit facility, the Company entered into an intercreditor agreement under which the Company’s security interest in the shared collateral is subordinated to the obligations of the Investee under the new credit facility.
Warranty Obligations
Fair Value Option for Warranty Obligations Related to Products Sold Since January 1, 2014
The Company made an irrevocable election to account for all eligible warranty obligations associated with products sold since January 1, 2014 at fair value. This election was made to reflect the underlying economics of the time value of money for an obligation that will be settled over an extended period of up to 25 years. The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of return rates and replacement costs, the Company used certain Level 3 inputs, which are unobservable and significant to the overall fair value measurement. Such additional assumptions are based on the Company’s credit-adjusted risk-free rate (“discount rate”) and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation.
The following table provides information regarding changes in non-financial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs designated as Level 3 for the periods indicated:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2026202520262025
(In thousands)
Balance at beginning of period$185,447 $182,179 $193,222 $170,916 
Accruals for warranties issued during period6,970 7,918 18,238 22,814 
Changes in estimates(2,074)554 (9,037)8,430 
Settlements(4,920)(4,965)(12,843)(14,783)
Increase due to accretion expense3,491 3,498 10,373 9,804 
Change in profit element and risk premium— — (3,526)781 
Change in discount rate— — (3,332)(5,715)
Other(1,952)(2,105)(6,133)(5,168)
Balance at end of period$186,962 $187,079 $186,962 $187,079 
Quantitative and Qualitative Information about Level 3 Fair Value Measurements
As of September 30, 2026 and December 31, 2025, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 were as follows:
Percent Used
(Weighted Average)
Item Measured at Fair ValueValuation TechniqueDescription of Significant Unobservable InputSeptember 30,
2026		December 31,
2025
Warranty obligations for products sold since January 1, 2014Discounted cash flowsProfit element and risk premium14.9%17.5%
Credit-adjusted risk-free rate7.5%7.3%
Sensitivity of Level 3 Inputs - Warranty Obligations
Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on the requirements of a third-party participant willing to assume the Company’s warranty obligations, which decreased in the nine months ended September 30, 2026, contributing to an approximately $3.5 million change in warranty benefit captured in “Change in profit element and risk premium” in the table above. The discount rate is determined by reference to the Company’s own credit standing at the fair value measurement date, which increased in the nine months ended September 30, 2026 and 2025 due to the increase in the risk free rate and market spreads, contributing to the approximately $3.3 million and approximately $5.7 million, respectively, change in warranty benefit captured in “Change in discount rate” in the table above. Under the expected present value technique, increasing the profit element and risk premium input by 100 basis points would result in a approximately $1.4 million increase to the liability. Decreasing the profit element and risk premium by 100 basis points would result in an approximately $1.4 million reduction to the liability. Increasing the discount rate by 100 basis points would result in approximately $12.7 million decrease to the liability. Decreasing the discount rate by 100 basis points would result in an approximately $14.3 million increase to the liability.