Enphase Energy, Inc. Q2 FY2025 earnings call

• Operations: Global microinverter capacity around 7 million per quarter (5 million in U.S.), shipped ~1.41 million microinverters from U.S. contract manufacturers in Q2, expect ~1.2 million from U.S. in Q3. Grew domestic battery production, shipping 46.9 MWh in Q2 vs. 44.1 MWh in Q1, building IQ Battery 5P in U.S. with domestic components.
• Tariffs: Absorbed 2% gross margin impact due to tariffs in Q2; originally proposed 145% tariff on Chinese products reduced to 30% in May, expected 6%-8% margin headwind in Q3 improved to 3%-5% after new tariff increases effective August 1.
• Regions: U.S. revenue increased 3% in Q2 vs. Q1, overall sell-through up 17%; Europe revenue up 11% in Q2 vs. Q1, with specific market updates for Netherlands, France, Germany, U.K., and Australia.
• New products: Began shipping fourth-generation IQ Batteries in U.S. in June; preparing to launch IQ9 microinverter powered by gallium nitride technology; IQ Balcony Solar shipping in Germany and Belgium; IQ PowerPack 1500 entering direct-to-consumer market; next-generation IQ EV charger 2 shipping in multiple countries; Solargraf platform enhancements for installers.

Enphase Energy reported quarterly revenue of $363.2 million for the second quarter ended June 30, 2025. They shipped 1.53 million microinverters and 190.9 megawatt hours of batteries. The U.S. and international revenue mix for Q2 was 75% and 25% respectively. Non-GAAP gross margin for Q2 was 49%, operating expenses were 21% of revenue, and operating income was 27% of revenue on a non-GAAP basis. Battery channel inventory was normal, while microinverter channel inventory was slightly elevated. Q2 revenue included $40.4 million of safe harbor revenue.

• Q3 revenue expected to be in range of $330 million to $370 million, ~75% booked to midpoint of guidance. IQ battery shipment expected to be between 190 and 210 MWh. Anticipate continued growth in U.S. and seasonal softness in Europe.
• Q3 GAAP gross margin expected to be 41%-44% including ~3-5 percentage points of reciprocal tariff impact; non-GAAP gross margin expected to be 43%-46% with net IRA benefit, 33%-36% before net IRA benefit including tariff impact.

• Tariff impacts: Continued risk from reciprocal tariffs on various countries, with an estimated 4% gross margin impact due to tariffs as of Q3 guidance.
• Supply chain: Uncertainties related to FEOC compliance and potential future tariff changes affecting supply chain costs and margins.

Q: Praneeth Satish with Wells Fargo asked about partnering with TPO providers and market share with TPOs.

A: Badri Kothandaraman stated they work with all TPOs, aim to bring lease financing to long-tail installers, focus on reducing installation costs, and lead generation.

Q: Philip Shen with ROTH Capital asked about Q3 safe harbor, TAM assumptions for 2026, and cadence.

A: Badri Kothandaraman said Q3 revenue guidance doesn't include safe harbor, expects 25D demand in Q4, and discussed TAM assumptions for 2026.

Q: Julien Dumoulin-Smith with Jefferies asked about 4Q safe harbor dynamics.

A: Badri Kothandaraman expected safe harbor demand to happen as installers are experienced.

Q: Colin Rusch with Oppenheimer asked about upselling to existing homeowners and growth in non-U.S. markets.

A: Raghu Belur discussed upselling advantages with AC-coupled solutions, and Badri Kothandaraman provided updates on growth in Australia, India, Japan, etc.

Q: Maheep Mandloi with Mizuho asked about tariff impact quantification and silicon carbide tariffs.

A: Badri Kothandaraman discussed tariff impacts on gross margin and noted they don't use silicon carbide.

Q: Mark Strouse with JPMorgan asked about using balance sheet for helping tail customers.

A: Badri Kothandaraman said they are not looking to use balance sheet but have data and partnerships to help tail customers.

Q: David Arcaro with Morgan Stanley asked about internal cost reduction efforts.

A: Badri Kothandaraman discussed continuously adjusting expenses without compromising R&D or customer service.

Q: Christopher Dendrinos with RBC Capital Markets asked about strategy with bigger TPO providers.

A: Badri Kothandaraman stated they collaborate closely with all TPOs on installation cost, time, and O&M to gain market share.