Enphase Energy Inc (ENPH) Q2 2026 Earnings Call Highlights: Strong Profitability Amid Market Challenges

Release Date: July 28, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Enphase Energy Inc ENPH reported a quarterly revenue of $291.9 million, with a 3% increase in global Q2 revenue compared to Q1.
• The company achieved a GAAP gross margin of 60% and a non-GAAP gross margin of 46.8%, indicating strong profitability.
• Enphase Energy Inc (ENPH) is expanding its product offerings with the launch of the fifth-generation IQ battery and the GaN-based IQ 9 microinverter, which are expected to enhance market competitiveness.
• The company is seeing significant growth in Europe, with a 35% increase in revenue and a 30% increase in sell-through, driven by strong performance in solar and battery markets.
• Enphase Energy Inc (ENPH) is making progress in the data center market with its IQ Solid-State Transformer (SST), which is expected to provide high efficiency and reliability.

Negative Points

• The US revenue declined 3% sequentially, with a 7% decrease in US sell-through, reflecting continued pressure from higher interest rates and the expiration of the 2025 tax credit.
• The company's Global Customer Service NPS decreased to 80% in the second quarter from 82% in the first quarter.
• Enphase Energy Inc (ENPH) is experiencing cautious distributor behavior amid broader macroeconomic uncertainty, including interest rates.
• The company is facing challenges in the US residential solar market, with industry-wide permits and upstream sales activity remaining about 30% below prior year levels.
• Enphase Energy Inc (ENPH) is still under shipping relative to sell-through, indicating potential inventory management issues.

Q & A Highlights

Q: How is Enphase Energy balancing margin capture versus market share adoption for the Solid-State Transformer (SST) product, considering the potential for high gross margins with 45x credits?
A: Badrinarayanan Kothandaraman, President and CEO, explained that Enphase Energy aims to be extremely competitive while focusing on their value drivers such as faster response times and modularity. The SST's ability to respond within sub-milliseconds allows battery storage to move to the data center's black space, which is a key differentiator. The company is finalizing details on the 45x production tax credits, which will help maintain high profitability.

Q: What is driving the significant safe harbor revenue in the third and fourth quarters, and is this indicative of market share gains among third-party owners (TPOs)?
A: Badrinarayanan Kothandaraman noted that strong relationships with TPO partners, some of whom are supported by strong balance sheets, are driving the safe harbor revenue. Enphase has executed agreements totaling approximately $1.1 billion, with $202 million under the 5% ITC safe harbor method and $878.6 million under the physical work test method. This reflects confidence in Enphase's strategy and partnerships.

Q: Why is Enphase Energy under-shipping in the third quarter despite improving demand, and what is the outlook for the fourth quarter?
A: Badrinarayanan Kothandaraman explained that the company is cautious and aims to maintain healthy channel inventory. The core revenue is expected to increase by approximately 10% from Q2 to Q3, with growth primarily from the US market. The company is focusing on ensuring a healthy channel inventory and expects to see continued growth in Q4.

Q: How is Enphase Energy addressing the potential impact of the FCC's plan to ban Chinese inverters in the US, particularly in the commercial segment?
A: Badrinarayanan Kothandaraman highlighted opportunities in the small commercial segment, with expected revenue of approximately $10 million in Q3. Enphase has introduced new products, such as the IQ9N and IQ9S-3P microinverters, to address the 3-phase market. The company is also focusing on small commercial storage, which presents a significant opportunity.

Q: What actions is Enphase Energy taking to drive battery demand, and how does pricing play a role?
A: Badrinarayanan Kothandaraman stated that Enphase has made pricing adjustments in Europe and is generating organic demand from its installed base. In the US, the company is leveraging its meter collar qualification and Propel program, which has a 75% battery attach rate. The upcoming fifth-generation battery, with higher energy density and lower cost, is expected to drive further demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.