ENPH Earnings Recap
Beat 5 of last 7 quarters
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Enphase's IQSST solid-state transformer targets the AI data center power architecture, converting medium-voltage AC directly to 800V DC with sub-millisecond response, potentially enabling centralized BESS in data center black space. With multiple RFI/RFP engagements representing multiple gigawatts of potential demand and a path to commercial shipments in 2028, Enphase is positioning itself as a supplier to the AI infrastructure buildout, leveraging U.S. manufacturing and FEOC compliance as differentiators.
Enphase reported Q2 2026 revenue of $291.9M, up 3% sequentially, with non-GAAP gross margin of 46.8% and non-GAAP EPS of $0.46. U.S. revenue declined 3% sequentially (excluding safe harbor), while Europe revenue grew 35% sequentially with sell-through up 30%. Safe harbor revenue jumped to $84.3M from $34.5M in Q1, and year-to-date safe harbor agreements totaled ~$1.1B. The company received $41M in tariff refunds from CBP and reduced battery pricing in late May. IQ9 microinverters launched in the U.S. and Europe, and the IQSST data center power platform progressed with 15 power modules demonstrated in series and multiple RFI/RFP engagements representing multiple gigawatts of potential demand.
For Q3 2026, Enphase guided revenue of $290M to $320M (up ~5% at midpoint), including $75M of safe harbor revenue, and battery shipments of 130-150 MWh. Management expects global sell-through to increase 10% sequentially, with modest undershipping into the channel. They expect core revenue (ex-safe harbor) to grow over 10% sequentially, driven by U.S. growth, while Europe remains roughly flat due to summer seasonality. The company plans to expand Propel from 6 to 12 states by end of Q3, targeting 500 originations per week by year-end. They expect IQ Battery G5 shipments to begin in Q4 2026, IQ Vault commercial battery pilots in Q1 2027, and IQSST customer pilots in 2027 with commercial shipments in 2028. Management expressed cautious optimism about U.S. resi stabilization and strong European battery momentum, particularly in Netherlands and France ahead of net metering phase-outs.
“The rapid build out of AI infrastructure is reshaping data center power architecture as rack densities rise from approximately 15 kilowatts today towards 1 megawatt and beyond.”
on Data center opportunity
“We are not waiting for things to improve. We are taking matters into our own hands. It is about innovative financing. It is about innovative new products. It is about extending our range into commercial. And, of course, the big one is data centers.”
on Strategy
“The company that owns the battery relationship is well positioned to expand over time into the broader home energy system including solar, EV charging, and VPP.”
on Battery-led growth
On SST, how are you thinking about balancing margin capture versus market share adoption, especially with 45X credits potentially supporting very high gross margins?
Management said they will be extremely competitive but focus on value drivers like sub-millisecond response time, modularity, redundancy, reliability, and U.S. manufacturing. They noted 45X PTCs will help them be highly profitable but did not provide specific numbers.
Safe harbor revenue is tracking higher than guided—is this market share gain amongst TPOs? And why ship in Q3 when demand is improving?
Management attributed momentum to strong relationships with TPO partners, including new ones, and confidence in 5% or physical work test safe harbor strategies. They explained Q3 guidance assumes modest undershipping (~$15M) to normalize channel inventory, with core revenue up over 10% sequentially.
With the FCC working on a plan to ban Chinese inverters, how much share could you take in commercial? And could U.S. resi remain challenged through 2027?
Management sees opportunities in small commercial and utility-scale. They expect ~$10M in U.S. small commercial revenue in Q3, growing through the year. They acknowledged limited visibility on Treasury guidance but are driving growth through Propel, battery pricing, and new products like G5 and bidirectional EV charger.