Enphase Energy Reports Third Quarter 2024 Financial Results

Enphase Energy, Inc., a global energy technology company and global leader in microinverter-based solar and battery systems, announced financial results for the third quarter of 2024, including the following summary from its President and CEO Badri Kothandaraman.

Enphase Energy reported quarterly revenue of $380.9 million in the third quarter of 2024, along with a non-GAAP gross margin of 48.1%. The company delivered 1,731,768 microinverters, or approximately 730.0 megawatts of DC power and 172.9 megawatt-hours of IQ^® Batteries.

Below are the financial highlights for the third quarter of 2024:

• Quarterly revenue of $380.9 million
• GAAP gross margin of 46.8%; Non-GAAP gross margin of 48.1% with net IRA benefit
• Non-GAAP gross margin of 38.9%, excluding net IRA benefit of 9.2%
• GAAP operating income of $49.8 million; Non-GAAP operating income of $101.4 million
• GAAP net income of $45.8 million; Non-GAAP net income of $88.4 million
• GAAP diluted earnings per share of $0.33, non-GAAP diluted earnings per share of $0.65
• Free cash flow of $161.6 million; Closing cash, cash equivalents and marketable securities of $1.77 billion

Below are Enphase Energy’s Q3 2024 revenue and earnings compared to the previous quarter:

Total revenue for the third quarter of 2024 was $380.9 million, compared to $303.5 million in the second quarter of 2024. Enphase Energy’s United States revenue increased in the third quarter of 2024 compared to the second quarter of 2024 by about 43%. The increase was due to higher deliveries to dealers as inventories returned to normal levels. The company’s sales in Europe decreased approximately 15% in the third quarter of 2024 compared to the second quarter of 2024. The decline in sales was the result of a further weakening in European demand.

Enphase Energy’s non-GAAP gross margin was 48.1% in the third quarter of 2024, compared to 47.1% in the second quarter of 2024. Non-GAAP gross margin, excluding net IRA benefit, was 38 in the third quarter of 2024 .9%. compared to 41.0% in the second quarter of 2024.

Enphase Energy’s non-GAAP operating expenses were $81.6 million in the third quarter of 2024, compared to $81.7 million in the second quarter of 2024. Non-GAAP operating income was in the third quarter of 2024 to $101.4 million, compared to $61.1 million in the second quarter of 2024.

Enphase Energy exited the third quarter of 2024 with $1.77 billion in cash, cash equivalents and marketable securities and generated cash flow from operations of $170.1 million in the third quarter of 2024. In comparison, capital expenditures were $8.5 million in the third quarter of 2024 compared to $9.6 million in the second quarter of 2024.

During the third quarter of 2024, Enphase Energy repurchased 434,947 shares of common stock at an average price of $114.48 per share for a total of approximately $49.8 million. The company also spent approximately $6.3 million by withholding stock to cover taxes on vested employee stock, which reduced diluted stock by 59,607 shares.

Enphase Energy shipped 172.9 megawatt-hours of IQ batteries in the third quarter of 2024, compared to 120.2 megawatt-hours in the second quarter of 2024. The company is now shipping its third generation of IQ batteries, the IQ^® Battery 5P™ to the USA, Puerto Rico, Mexico, Canada, Australia, the United Kingdom, Italy, France, the Netherlands, Luxembourg and Belgium. More than 9,000 installers worldwide are certified to install Enphase Energy’s IQ batteries, compared to more than 7,400 installers worldwide in Q2 2024.

During the third quarter of 2024, Enphase Energy shipped approximately 1,176,000 microinverters from its contract manufacturing facilities in the United States for which 45x production tax credits were recorded. Enphase Energy began shipping higher domestic content IQ8HC™ microinverters manufactured at its contract manufacturing facilities in the United States. The Company expects to begin shipping its commercial microinverters and higher domestic content batteries manufactured at its contract manufacturing facilities in the United States in the fourth quarter of 2024.

In the third quarter of 2024, Enphase Energy launched AI-based software designed to optimize energy consumption by integrating solar and consumption forecasts into electricity rates. This is intended to help consumers maximize their savings as energy markets become increasingly complex, for example with dynamic electricity tariffs in parts of Europe and NEM 3.0 in California. The company is preparing to launch its second-generation IQ^® EV charger, the 3-phase IQ battery with backup and the IQ^® Balcony Solar Kit, everything for the European market – and pushes the boundaries of innovation. Finally, the fourth generation energy system with the IQ^® Meter collar, 10kWh IQ battery and enhanced IQ^® Combiner is expected to launch in the US in early 2025 and aims to significantly reduce installation costs.

Business highlights

• On October 16, 2024, Enphase Energy announced that it has begun shipping IQ8™ microinverters to support newer, high-performance solar panels in select countries and territories, including the Netherlands, Austria, New Caledonia and Malta.
• On October 9, 2024, Enphase Energy announced that it is expanding its support for grid service programs – or virtual power plants (VPPs) – in New Hampshire, North Carolina and California powered by the new IQ Battery 5P.
• On October 3, 2024, Enphase Energy announced the launch of its IQ8X™ microinverters in Australia and that all IQ8 microinverters activated in Australia from October 1, 2024 will come with an industry-leading 25-year limited warranty, the current limit longest standard residential warranty in the Australian market.
• On September 24, 2024, Enphase Energy announced the launch of its most powerful Enphase^® Latest Energy System™ with the new IQ Battery 5P and IQ8 microinverters for customers in India.
• On September 16, 2024, Enphase Energy announced that it had begun shipping the IQ Battery 5P in Belgium. Enphase also introduced IQ^® Energy Management, its new AI-based energy management software that enables the support of dynamic electricity tariffs and the integration of chargers and heat pumps for third-party electric vehicles in Belgium.
• On September 10, 2024, Enphase Energy announced initial shipments of IQ8HC microinverters, delivered from contract manufacturing facilities in the United States, with a higher domestic share than previous models. The microinverters have SKUs with the suffix “DOM”, indicating the increased amount of domestic content.
• On September 4, 2024, Enphase Energy announced a solution to expand existing Net Energy Metering (NEM) solar energy systems in California without penalty using new Enphase Energy Systems configurations with IQ^® Microinverters, IQ batteries and Enphase Power Control.
• On August 27, 2024, Enphase Energy announced the availability of pre-orders for US-made IQ Battery 5Ps. Pre-orders are also available for IQ8HC microinverters, IQ8P-3P™ microinverters and IQ8X ​​microinverters, which are manufactured in the USA with a higher domestic content.
• On August 19, 2024, Enphase Energy announced that it had begun shipping the IQ Battery 5P in the Netherlands. Enphase also introduced IQ Energy Management, its new energy management software that enables support for dynamic electricity tariffs and integration of chargers and heat pumps for third-party electric vehicles in the Netherlands.
• On August 8, 2024, Enphase Energy announced the launch of its new North American Charging Standard (NACS) connectors across its entire line of IQ electric vehicle chargers. NACS connectors and charging ports have recently become an industry standard, adopted by several major automotive manufacturers for electric vehicles (EVs).
• On August 5, 2024, Enphase Energy announced that it has begun shipping the IQ8P™ and IQ8HC microinverters to support newer, high-performance solar panels in select countries in the Caribbean.
• On August 1, 2024, Enphase Energy announced that it has begun shipping IQ8 microinverters to support newer, high-performance solar panels in select countries across Europe, including France, Germany, Spain, Bulgaria, Estonia, Slovakia and Croatia.

Financial outlook for the fourth quarter of 2024

For the fourth quarter of 2024, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

• Revenue is expected to be in the range of $360.0 million to $400.0 million, including shipments of 140 to 160 megawatt hours from IQ Batteries
• GAAP gross margin is expected to be in the range of 47.0% to 50.0%, with net IRA benefit
• Non-GAAP gross margin is expected to be in the range of 49.0% to 52.0% with Net IRA benefit and 39.0% to 42.0% without Net IRA benefit. Non-GAAP gross margin excludes stock-based compensation expense and acquisition-related amortization
• Net IRA benefit will be in the range of $38.0 million to $41.0 million based on estimated shipments of 1,300,000 units of U.S.-manufactured microinverters
• GAAP operating expenses range from $135.0 million to $139.0 million
• Non-GAAP operating expenses range from $81.0 million to $85.0 million, excluding an estimated $54.0 million for stock-based compensation expense, acquisition-related expenses and depreciation and amortization

For 2024, GAAP and non-GAAP annual effective tax rates for IRA benefits, excluding itemized items, are expected to be in the range of 17.0% to 19.0%.

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