Enphase Q4 revenues drop 35% in U.S. and 70% in Europe

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Enphase Energy, a California-based global provider of solar microinverters, energy storage and other related technologies, announced its Q4, 2023 revenues, reporting a miss on revenues despite sharply lowered expectations. The company posted revenues of $302 million in Q4 2023, down from $724 million in Q4 2022.

Revenues have been damaged significantly in both the United States and Europe, which are both having widespread struggles in the rooftop solar sector. In the U.S., high interest rates and regulatory changes have dropped the financial attractiveness of rooftop solar. Enphase reported a 35% drop in U.S. revenues in the fourth quarter.

As for Europe, unexpected lowered demand from stabilizing energy prices and an influx of inexpensive alternatives from China have slowed sales. This, combined with a glut of inventory in distributor channels, has led to reduced shipments and a loss of 70% revenues quarter-over-quarter in Europe.

Enphase made some improvements to its gross margins, reaching 50.3% in the fourth quarter, compared to 48.4% in Q3. Enphase also cut its operating expenses from $99 million to $86.6 million quarter-over-quarter.

The company said capital expenditures occurred due to reduced manufacturing operations spending in the U.S. It also announced the layoff of about 10% of its workforce in December 2023.

The company exited 2023 with $1.7 billion in cash, cash equivalents, and marketable securities. It generated $35.5 million in cash flow from operations in Q4, 2023.

Enphase continues to operate a share repurchase plan that was authorized in July 2023. The program authorizes up to $1 billion of repurchases of the company’s common stock. In the fourth quarter of 2023, the company reported repurchasing 1,183,246 shares of common stock at an average price of $84.51 per share for a total of approximately $100 million.

Looking ahead

Looking ahead to the first quarter of 2024, Enphase expects revenues to continue to fall, landing in a range between $260 million and $300 million. This includes the shipment of 70 MWh to 90 MWh of its IQ Battery.

Enphase expects to ship roughly 500,000 units of U.S.-manufactured microinverters, leading to a net Inflation Reduction Act benefit of $12 million to $14 million.

In a December interview with pv magazine USA, Enphase co-founder Raghu Belur said that he expects 2024 to be “a year of recovery” for residential solar. He said that California’s market may be a quarter or two from reaching the bottom trough in demand, and Europe has started to stabilize and clear out channel inventories.

Belur noted that while demand has dipped in major markets like California, the fundamentals of rooftop solar remain strong. In California, for instance, what used to be a four-to-five-year payback period, or return on investment, for rooftop solar, is now about seven to nine years under the NEM 3.0 rate structure.

“But you’re buying a 25-year asset, so you’re still coming out way ahead,” he said.

He points to the financial fundamentals of rooftop solar, storage and EV charging. Interest rates are eventually going to come down, and meanwhile, utility rates are rising far faster than inflation. This is particularly true in California, where the Public Utilities Commission approved a 13% bump to electric utility rates in 2024. Couple these changing forces with diving solar module prices, and suddenly the payback period looks strong, and demand recovers.

While solar and storage shoppers typically use a rule of thumb of about 3% to 4% annual rate increases from the utility company to estimate long-term savings, Belur said this assumption no longer applies. “Double-digit rate hikes are common now,” he said.

Q4 business updates

  • Launched IQ8 Micros in Austria, Italy, and Belgium. Now shipping IQ8 in 21 countries.
  • Shipping Enphase’s most powerful battery yet, the IQ Battery 5P in the US, Puerto Rico, Australia, Italy, and the UK.
  • Expanded high-powered IQ8 Micros to Switzerland, Brazil, Austria, Mexico, and Belgium.

New Products:

  • IQ8 Commercial Microinverters, which power Enphase’s first-ever comprehensive energy solution for the small commercial market.
  • IQ EV Charger, Enphase’s newest and smartest EV charger for broader home energy management.

U.S. Manufacturing:

  • Shipped roughly 913,000 microinverters manufactured in the U.S. during Q4; plans to ship about 500,000 micros from U.S. manufacturing facilities in Q1 ‘24.
  • U.S. manufacturing of IQ Batteries is expected to start in Q3 ‘24.

Scaling solar+storage Under NEM 3.0:

  • Expanded tools on Solargraf (Enphase’s design and proposal tool) significantly enhance installers’ ability to factor in dynamic tariffs and model systems and savings to help give customers confidence in the payback of a NEM 3.0 system. 

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