Enphase Energy Q2 Earnings Call Highlights

Enphase Energy (NASDAQ:ENPH) reported second-quarter 2026 revenue of $291.9 million, up 3% sequentially, as growth in Europe offset softer U.S. demand. The company shipped 1.59 million microinverters and 113.8 megawatt-hours of batteries during the quarter and generated $25.9 million in free cash flow.

Revenue included $84.3 million from safe harbor sales, compared with $34.5 million in the first quarter. Enphase defines safe harbor revenue as sales to customers planning to install inventory over more than one year. The company said it ended the quarter with normal battery channel inventory and slightly elevated microinverter inventory.

On a GAAP basis, Enphase reported gross margin of 60%, operating income of $51.5 million and diluted earnings per share of $0.27. GAAP gross margin benefited from 15.6 percentage points related to tariff refunds received during the quarter. On a non-GAAP basis, gross margin was 46.8%, operating income was $56.7 million and diluted earnings per share was $0.46.

U.S. market remains pressured, while Europe accelerates

U.S. revenue declined 3% from the first quarter. Excluding safe harbor revenue, Enphase said U.S. revenue declined primarily because it intentionally undershipped into the distribution channel. U.S. sell-through fell 7% sequentially, although the company said sell-through was approximately flat after excluding one-time orders in the first quarter that did not recur in the second quarter.

Year over year, U.S. sell-through declined 34%, which Chief Executive Officer Badri Kothandaraman attributed to higher interest rates and market transition after the expiration of the 25D tax credit. He said third-party reports showed signs of stabilization in the residential solar market, including a 4% month-over-month increase in permits in June and a 5% rise in upstream sales activity. However, those measures remained about 30% below year-earlier levels.

Enphase said residential battery attachment nationally remained near 40%, while commercial solar permit activity rose 36% year over year in June. Kothandaraman said future U.S. growth would be influenced by storage economics, commercial demand, financing availability and utility rates.

Europe was a brighter spot. Revenue in the region increased 35% sequentially, and sell-through rose 30%, supported by solar and battery demand across multiple markets. Battery activations in the Netherlands rose about 102% from the first quarter as export penalties and the planned end of net metering in late 2026 increased interest in self-consumption. France battery activations increased about 34%, while Germany saw microinverter and battery activations rise approximately 35% and 27%, respectively.

The company said it is increasing homeowner events, direct marketing and internal sales efforts to pursue battery-retrofit opportunities in the Netherlands and France, where it has a combined installed base of nearly 900,000 Enphase customers.

Third-quarter outlook calls for higher sell-through

Enphase forecast third-quarter revenue of $290 million to $320 million, including about $75 million of safe harbor revenue. The midpoint represents approximately 5% growth from the second quarter. Management said it was more than 70% booked toward the midpoint of the forecast.

The company expects global sell-through to rise 10% sequentially in the third quarter while maintaining modest undershipment into the channel, reflecting distributor caution amid interest-rate and macroeconomic uncertainty. Battery shipments are expected to range from 130 megawatt-hours to 150 megawatt-hours.

For the quarter, Enphase expects GAAP gross margin of 42% to 45% and non-GAAP gross margin of 44% to 47%, each including an approximately two-percentage-point impact from reciprocal tariffs. The company said it has reduced battery pricing and may take further targeted actions to improve system economics and demand.

Enphase also said it has executed year-to-date safe harbor agreements totaling about $1.1 billion, including $202 million under the 5% investment tax credit method and $878.6 million under the Physical Work Test method. Management said Physical Work Test revenue has not yet been recognized and is likely to begin in 2028, when related inventory is expected to be deployed.

New products target batteries, commercial systems and data centers

Enphase expects to begin initial shipments of its fifth-generation IQ Battery G5 before the end of 2026. The stackable AC-coupled platform uses 5-kilowatt-hour modules and can scale to 30 kilowatt-hours in one stack. Kothandaraman said the product is designed to provide 50% higher energy density than the prior generation at about 40% lower cost per kilowatt-hour.

The company also plans to begin shipping its IQ Vault 80 commercial battery in the first quarter of 2027. The 80-kilowatt-hour, three-phase battery system is designed for 208-volt and 480-volt commercial applications and can scale to 2 megawatt-hours using up to 25 cabinets.

Enphase launched its GaN-based IQ9N residential microinverter in June in the U.S. and selected European markets, and began shipping the IQ9S-3P commercial microinverter for 480-volt systems. Kothandaraman said the company expects about $10 million of U.S. small-commercial revenue in the third quarter.

Meanwhile, Enphase said its IQ Solid-State Transformer, or IQ SST, remains on track for a fully working system later this year, customer pilots in 2027 and commercial shipments in 2028. The system is being designed for AI data centers, converting medium-voltage alternating current directly to 800-volt direct current. Management said customer discussions have advanced to request-for-information and request-for-proposal stages representing potential demand totaling multiple gigawatts.

Chief Products Officer Raghu Belur said Enphase’s proposed SST architecture is intended to offer modularity, sub-millisecond response times, reliability and a U.S.-manufactured, FEOC-compliant supply chain. The company said it is also evaluating applications for the platform in utility-scale solar, storage and high-power DC fast charging.

Enphase ended the quarter with $937.7 million in cash, cash equivalents and marketable securities, up from $930.6 million at the end of the first quarter.

About Enphase Energy (NASDAQ:ENPH)

Enphase Energy is a global energy technology company that specializes in solar microinverters, energy storage systems and energy management software. Its core business centers on converting direct current (DC) power generated by solar panels into alternating current (AC) power suitable for use in residential and commercial applications. By integrating hardware and software solutions, Enphase Energy aims to improve solar energy yield, enhance system reliability and provide real-time monitoring capabilities to its customers.

The company’s product portfolio includes its IQ Series microinverters, which attach to individual solar panels to optimize performance at the module level and reduce the impact of shading or system failures.