Enphase Energy Reports Financial Results for the Third Quarter of 2022

FREMONT, Calif., Oct. 25, 2022 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. ENPH, a global energy technology company and the world's leading supplier of microinverter-based solar and battery systems, announced today financial results for the third quarter of 2022, which included the summary below from its President and CEO, Badri Kothandaraman.

We reported record quarterly revenue of $634.7 million in the third quarter of 2022, along with 42.9% for non-GAAP gross margin. We shipped 4,342,805 microinverters, or approximately 1,709 megawatts DC, and 133.6 megawatt hours of Enphase® IQ™ Batteries.

Financial highlights for the third quarter of 2022 are listed below.

  • Record quarterly revenue of $634.7 million
  • GAAP gross margin of 42.2%; non-GAAP gross margin of 42.9%
  • GAAP operating income of $135.4 million; non-GAAP operating income of $194.0 million
  • GAAP net income of $114.8 million; non-GAAP net income of $175.5 million
  • GAAP diluted earnings per share of $0.80; non-GAAP diluted earnings per share of $1.25
  • Free cash flow of $179.1 million; ending cash, cash equivalents, and marketable securities of $1.42 billion

Our revenue and earnings for the third quarter of 2022 are provided below, compared with the prior quarter and the year ago quarter:

(In thousands, except per share and percentage data)

 GAAP Non-GAAP
 Q3 2022 Q2 2022 Q3 2021 Q3 2022 Q2 2022 Q3 2021
Revenue$634,713  $530,196  $351,519  $634,713  $530,196  $351,519 
Gross margin 42.2%  41.3%  39.9%  42.9%  42.2%  40.8%
Operating expenses$132,475  $124,969  $103,007  $78,587  $71,169  $57,341 
Operating income$135,441  $94,036  $37,351  $193,962  $152,412  $85,932 
Net income$114,812  $76,976  $21,809  $175,513  $149,852  $84,157 
Basic EPS$0.85  $0.57  $0.16  $1.29  $1.11  $0.62 
Diluted EPS$0.80  $0.54  $0.15  $1.25  $1.07  $0.60 

Our total revenue increased 20%, compared to the second quarter of 2022. Demand was strong in our markets worldwide, particularly in North America and Europe. Our revenue in Europe for the third quarter of 2022 increased approximately 70%, compared to the second quarter of 2022, as countries in the region are accelerating their efforts to address rising energy prices and reliance on fossil fuels. Our IQ Battery shipments increased 1%, compared to the second quarter of 2022. Our non-GAAP gross margin was 42.9% in the third quarter of 2022, compared to 42.2% in the second quarter of 2022, driven by IQ8™ Microinverter product mix.

Our non-GAAP operating expenses were $78.6 million in the third quarter of 2022, compared to $71.2 million in the second quarter of 2022, primarily due to increased investment in R&D, customer service, and sales. Our non-GAAP operating income was $194.0 million in the third quarter of 2022, compared to $152.4 million in the second quarter of 2022.

We exited the third quarter of 2022 with $1.42 billion in cash, cash equivalents, and marketable securities and generated $188.0 million in cash flow from operations in the third quarter of 2022. Our capital expenditures were $8.9 million in the third quarter of 2022, compared to $8.7 million in the second quarter of 2022.

IQ8 Microinverters constituted approximately 47% of all our microinverter shipments during the third quarter of 2022. IQ8 Microinverters can form a microgrid and provide Sunlight Backup™ during an outage, even without a battery. With our Sunlight Jump Start™ feature, IQ8 Microinverters can restart a home energy system using sunlight only after prolonged grid outages that may result in a fully depleted battery. This eliminates the need for a manual restart of the system and gives homeowners greater resilience.

Our IQ Battery shipments were 133.6 megawatt hours in the third quarter of 2022, compared to 132.4 megawatt hours in the second quarter of 2022. We shipped batteries to the United States, Germany, and Belgium during the third quarter. We now have approximately 2,100 installers worldwide that are certified to install our IQ Batteries.

We recently acquired GreenCom Networks AG based in Munich, Germany. The company provides Internet of Things (IoT) software solutions for customers to connect and manage a wide range of distributed energy devices within the home, thereby enabling sector convergence. This acquisition allows us to add a local engineering team to service the accelerating clean energy transition in Europe, provide installers with a complete home energy management system integrating Enphase microinverters and batteries with third-party electric vehicle (EV) chargers and heat pumps, and enable homeowners to monitor and control their devices from the Enphase® App.

BUSINESS HIGHLIGHTS

On Aug. 1, 2022, Enphase Energy announced that Salcomp, a global high-precision manufacturer, shipped more than five million Enphase IQ® Microinverters.

On Aug. 11, 2022, Enphase Energy announced that ClipperCreek™, a division of Enphase offering EV charging solutions, is expanding product deployments amidst rising consumer interest in EVs and electrification.

On Aug. 31, 2022, Enphase Energy announced a new agreement with Home Connect, an open digital platform that allows home appliances of various brands to be managed with a single app. Home Connect is available for nine well-known home appliance brands including Bosch, Siemens, Gaggenau, Neff, and Thermador.

In Aug. 2022, Enphase Energy announced that Complete Solar, a leading technology-enabled residential solar company in the United States, is seeing increased deployments of Enphase Energy Systems™ powered by IQ8 Microinverters and IQ Batteries. Enphase Energy also announced that Meraki Solar, headquartered in Florida, is expanding the adoption of Enphase  IQ Microinverters as homeowners across the United States are hit with extreme weather and rising energy prices.

On Sept. 6, 2022, Enphase Energy announced that it expanded its global relationship with renewable energy company BayWa r.e., a leading global developer and solar photovoltaic (PV) distributor, to distribute Enphase's IQ7™ family of microinverters and IQ Batteries in Germany and Benelux.

On Sept. 17, 2022 Enphase Energy announced that Gaslicht.com, a Netherlands-based leading energy platform and part of the Bencom Group, is seeing an increase in deployments of residential solar energy systems powered by the Enphase IQ7 family of microinverters.

In Oct. 2022, Enphase Energy announced that Energiekonzepte Deutschland GmbH (EKD), one of the leading residential solar and battery storage service providers in Germany, will now offer Enphase IQ Batteries to its customers. Enphase Energy also announced that CREATON GmbH, one of the leading residential roof manufacturers in Europe, is now exclusively offering Enphase IQ Batteries as CREATON is now able to integrate battery installations into solar roofing projects.

Enphase Energy recently announced that installers in Hawaii, Rhode Island, Massachusetts, and New Jersey have seen growing deployments of Enphase Energy Systems powered by IQ8 Microinverters and IQ Batteries.

FOURTH QUARTER 2022 FINANCIAL OUTLOOK

For the fourth quarter of 2022, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

  • Revenue to be within a range of $680 million to $720 million, which includes shipments of 120 to 135 megawatt hours of Enphase IQ Batteries
  • GAAP gross margin to be within a range of 39.0% to 42.0%; non-GAAP gross margin to be within a range of 40.0% to 43.0%, excluding stock-based compensation expenses and acquisition related amortization
  • GAAP operating expenses to be within a range of $152.0 million to $156.0 million
  • Non-GAAP operating expenses to be within a range of $87.0 million to $91.0 million, excluding $65.0 million estimated for stock-based compensation expenses, restructuring charges for site consolidation, and acquisition related costs and amortization

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Use of Non-GAAP Financial Measures

Enphase Energy has presented certain non-GAAP financial measures in this press release. To view a description of non-GAAP financial measures used and the non-GAAP reconciliation schedule for the periods presented, click here.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its third quarter 2022 results and fourth quarter 2022 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (833) 634-5018. A live webcast of the conference call will also be accessible from the "Investor Relations" section of Enphase Energy's website at investor.enphase.com. Following the webcast, an archived version will be available on the website for approximately one year. In addition, an audio replay of the conference call will be available by calling (877) 344-7529; replay access code 3730150, beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Enphase Energy's expectations as to its fourth quarter of 2022 financial outlook and expense levels; the capabilities, advantages, features and performance of its technology and products; the anticipated benefits of its acquisition of GreenCom Networks; the anticipated demand for and availability of its products and services; and growth in deployments of Enphase Energy Systems. These forward-looking statements are based on Enphase Energy's current expectations and inherently involve significant risks and uncertainties. Enphase Energy's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of certain risks and uncertainties including those risks described in more detail in its most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, its most recent Annual Report on Form 10-K for the year ended December 31, 2021 and other documents on file with the SEC from time to time and available on the SEC's website at www.sec.gov. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, or changes in its expectations, except as required by law.

A copy of this press release can be found on the investor relations page of Enphase Energy's website at investor.enphase.com.

About Enphase Energy, Inc.

Enphase Energy, a global energy technology company based in Fremont, CA, is the world's leading supplier of microinverter-based solar and battery systems that enable people to harness the sun to make, use, save, and sell their own power—and control it all with a smart mobile app. The company revolutionized the solar industry with its microinverter-based technology and builds all-in-one solar, battery, and software solutions. Enphase has shipped more than 52 million microinverters, and over 2.7 million Enphase-based systems have been deployed in more than 145 countries. For more information, visit www.enphase.com.

© 2022 Enphase Energy, Inc. All rights reserved. Enphase Energy, Enphase, the "e" logo, IQ, IQ7, IQ8, IQ Battery, Enphase Energy Systems, Sunlight Backup, Sunlight Jump Start, ClipperCreek, and certain other names and marks are trademarks of Enphase Energy, Inc. Other names are for informational purposes and may be trademarks of their respective owners.

Contact:
Karen Sagot
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com


ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

 Three Months EndedNine Months Ended
 September 30,
2022
 June 30,
2022
 September 30,
2021
 September 30,
2022
 September 30,
2021
Net revenues$634,713  $530,196  $351,519  $1,606,201  $969,330 
Cost of revenues 366,797   311,191   211,161   942,307   578,222 
Gross profit 267,916   219,005   140,358   663,894   391,108 
Operating expenses:         
Research and development 44,188   39,256   29,411   119,163   73,937 
Sales and marketing 55,257   53,588   39,296   150,189   84,504 
General and administrative 32,436   32,125   34,300   102,647   74,530 
Restructuring charges 594         594    
Total operating expenses 132,475   124,969   103,007   372,593   232,971 
Income from operations 135,441   94,036   37,351   291,301   158,137 
Other income (expense), net         
Interest income 3,680   796   110   4,936   281 
Interest expense (2,255)  (2,168)  (12,628)  (7,159)  (32,463)
Other income (expense), net (2,611)  (456)  874   (5,208)  814 
Loss on partial settlement of convertible notes (1)             (56,382)
Total other expense, net (1,186)  (1,828)  (11,644)  (7,431)  (87,750)
Income before income taxes 134,255   92,208   25,707   283,870   70,387 
Income tax benefit (provision) (19,443)  (15,232)  (3,898)  (40,261)  22,471 
Net income$114,812  $76,976  $21,809  $243,609  $92,858 
Net income per share:         
Basic$0.85  $0.57  $0.16  $1.80  $0.69 
Diluted$0.80  $0.54  $0.15  $1.70  $0.65 
Shares used in per share calculation:         
Basic 135,633   135,196   134,721   135,056   133,719 
Diluted 145,962   143,725   141,220   144,058   143,091 


(1)Loss on partial settlement of convertible notes of $56.4 million for the nine months ended September 30, 2021, primarily related to the $9.5 million non-cash loss on partial settlement of $87.1 million aggregate principal amount of the Notes due 2024, $9.5 million non-cash loss on partial settlement of $217.8 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.

     

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

 September 30,
2022
 December 31,
2021
ASSETS   
Current assets:   
Cash and cash equivalents$337,583 $119,316
Marketable securities 1,079,713  897,335
Accounts receivable, net 367,647  333,626
Inventory 146,451  74,400
Prepaid expenses and other assets 51,270  37,784
Total current assets 1,982,664  1,462,461
Property and equipment, net 91,801  82,167
Operating lease, right of use asset, net 18,128  14,420
Intangible assets, net 90,924  97,758
Goodwill 195,508  181,254
Other assets 140,439  118,726
Deferred tax assets, net 178,371  122,470
Total assets$2,697,835 $2,079,256
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$92,823 $113,767
Accrued liabilities 255,800  157,912
Deferred revenues, current 79,609  62,670
Warranty obligations, current 32,350  19,395
Debt, current 89,654  86,052
Total current liabilities 550,236  439,796
Long-term liabilities:   
Deferred revenues, noncurrent 239,971  187,186
Warranty obligations, noncurrent 73,530  53,982
Other liabilities 25,418  16,530
Debt, noncurrent 1,198,627  951,594
Total liabilities 2,087,782  1,649,088
Total stockholders' equity 610,053  430,168
Total liabilities and stockholders' equity$2,697,835 $2,079,256


ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 Three Months Ended Nine Months Ended
 September 30,
2022
 June 30,
2022
 September 30,
2021
 September 30,
2022
 September 30,
2021
Cash flows from operating activities:         
Net income$114,812  $76,976  $21,809  $243,609  $92,858 
Adjustments to reconcile net income to net cash provided by operating activities:         
Depreciation and amortization 14,664   13,999   8,255   42,766   21,409 
Amortization of marketable securities premiums, net of accretion of purchase discounts (612)  1,248   58   2,091   58 
Provision for doubtful accounts (79)  (16)  179   52   450 
Asset impairment    1,200      1,200    
Loss on partial settlement of convertibles notes             56,382 
Deemed repayment of convertible notes attributable to accreted debt discount             (15,585)
Non-cash interest expense 2,065   2,046   12,430   6,090   31,893 
Change in fair value of debt securities (519)  (987)  (784)  (390)  (3,153)
Stock-based compensation 52,296   53,064   46,954   153,157   77,110 
Deferred income taxes 115   12,452   1,337   15,732   (28,790)
Changes in operating assets and liabilities:         
Accounts receivable (46,226)  51,770   5,462   (18,680)  (93,069)
Inventory (16,185)  (33,830)  (27,648)  (72,051)  (23,640)
Prepaid expenses and other assets 526   (18,310)  (3,568)  (20,826)  (18,762)
Accounts payable, accrued and other liabilities 32,060   12,033   24,897   42,288   71,787 
Warranty obligations 9,329   12,972   7,574   32,207   21,599 
Deferred revenues 25,764   16,033   16,399   63,858   64,308 
Net cash provided by operating activities 188,010   200,650   113,354   491,103   254,855 
Cash flows from investing activities:         
Purchases of property and equipment (8,948)  (8,691)  (12,682)  (30,014)  (39,050)
Purchases of marketable securities (512,176)  (60,061)  (545,490)  (572,237)  (545,490)
Maturities of marketable securities 184,123   116,298   35,000   377,156   35,000 
Investments in private companies (1,000)     (13,000)  (1,000)  (58,000)
Business acquisitions, net of cash acquired    (3,055)     (27,680)  (55,239)
Purchase of intangible asset       (250)     (250)
Net cash provided by (used in) investing activities (338,001)  44,491   (536,422)  (253,775)  (663,029)
Cash flows from financing activities:         
Issuance of convertible notes, net of issuance costs             1,188,439 
Purchase of convertible note hedges             (286,235)
Sale of warrants             220,800 
Principal payments and financing fees on debt             (1,422)
Partial repurchase of convertible notes             (289,312)
Repurchase of common stock             (200,000)
Proceeds from exercise of equity awards and employee stock purchase plan 693   4,183   42   5,280   3,684 
Payment of withholding taxes related to net share settlement of equity awards (4,589)  (5,463)  (3,313)  (19,396)  (20,311)
Net cash provided by (used in) financing activities (3,896)  (1,280)  (3,271)  (14,116)  615,643 
Effect of exchange rate changes on cash and cash equivalents (4,003)  (238)  (376)  (4,945)  (1,302)
Net increase (decrease) in cash and cash equivalents (157,890)  243,623   (426,715)  218,267   206,167 
Cash and cash equivalents—Beginning of period 495,473   251,850   1,312,261   119,316   679,379 
Cash and cash equivalents —End of period$337,583  $495,473  $885,546  $337,583  $885,546 


ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)

 Three Months Ended Nine Months Ended
 September 30,
2022
 June 30,
2022
 September 30,
2021
 September 30,
2022
 September 30,
2021
Gross profit (GAAP)$267,916  $219,005  $140,358  $663,894  $391,108 
Stock-based compensation 3,188   3,131   2,915   8,826   4,957 
Acquisition related amortization 1,445   1,445      4,189    
Gross profit (Non-GAAP)$272,549  $223,581  $143,273  $676,909  $396,065 
          
Gross margin (GAAP) 42.2%  41.3%  39.9%  41.3%  40.3%
Stock-based compensation 0.5%  0.6%  0.9%  0.5%  0.6%
Acquisition related amortization 0.2%  0.3%  %  0.3%  %
Gross margin (Non-GAAP) 42.9%  42.2%  40.8%  42.1%  40.9%
          
Operating expenses (GAAP)$132,475  $124,969  $103,007  $372,593  $232,971 
Stock-based compensation (1) (49,108)  (49,933)  (44,039)  (144,331)  (72,153)
Acquisition related expenses and amortization (4,186)  (3,867)  (1,627)  (11,662)  (8,082)
Restructuring and asset impairment charges (594)        (594)   
Operating expenses (Non-GAAP)$78,587  $71,169  $57,341  $216,006  $152,736 
          
(1) Includes stock-based compensation as follows:         
Research and development$17,400  $16,266  $10,999  $47,395  $22,215 
Sales and marketing 20,069   22,176   15,472   55,302   24,344 
General and administrative 11,639   11,491   17,568   41,634   25,594 
Total$49,108  $49,933  $44,039  $144,331  $72,153 
          
Income from operations (GAAP)$135,441  $94,036  $37,351  $291,301  $158,137 
Stock-based compensation 52,296   53,064   46,954   153,157   77,110 
Acquisition related expenses and amortization 5,631   5,312   1,627   15,851   8,082 
Restructuring and asset impairment charges 594         594    
Income from operations (Non-GAAP)$193,962  $152,412  $85,932  $460,903  $243,329 
          
Net income (GAAP)$114,812  $76,976  $21,809  $243,609  $92,858 
Stock-based compensation 52,296   53,064   46,954   153,157   77,110 
Acquisition related expenses and amortization 5,631   5,312   1,627   15,851   8,082 
Restructuring and asset impairment charges 594         594    
Non-cash interest expense 2,065   2,048   12,430   6,092   31,893 
Loss on partial settlement of convertible notes             56,382 
Non-GAAP income tax adjustment 115   12,452   1,337   15,732   (28,790)
Net income (Non-GAAP)$175,513  $149,852  $84,157  $435,035  $237,535 
          
Net income per share, basic (GAAP)$0.85  $0.57  $0.16  $1.80  $0.69 
Stock-based compensation 0.39   0.39   0.35   1.13   0.58 
Acquisition related expenses and amortization 0.04   0.04   0.01   0.12   0.06 
Restructuring and asset impairment charges              
Non-cash interest expense 0.01   0.02   0.09   0.05   0.24 
Loss on partial settlement of convertible notes             0.42 
Non-GAAP income tax adjustment    0.09   0.01   0.12   (0.21)
Net income per share, basic (Non-GAAP)$1.29  $1.11  $0.62  $3.22  $1.78 
          
Shares used in basic per share calculation GAAP and Non-GAAP 135,633   135,196   134,721   135,056   133,719 
          
Net income per share, diluted (GAAP)$0.80  $0.54  $0.15  $1.70  $0.65 
Stock-based compensation 0.37   0.38   0.34   1.11   0.55 
Acquisition related expenses and amortization 0.05   0.04   0.01   0.12   0.06 
Restructuring and asset impairment charges 0.01         0.01    
Non-cash interest expense 0.02   0.02   0.09   0.05   0.23 
Loss on partial settlement of convertible notes             0.40 
Non-GAAP income tax adjustment    0.09   0.01   0.12   (0.21)
Net income per share, diluted (Non-GAAP) (2)$1.25  $1.07  $0.60  $3.11  $1.68 
          
Shares used in diluted per share calculation GAAP 145,962   143,725   141,220   144,058   143,091 
Shares used in diluted per share calculation Non-GAAP (3) 140,634   139,650   140,516   139,983   141,101 
          
Net cash provided by operating activities (GAAP)$188,010  $200,650  $113,354  $491,103  $254,855 
Purchases of property and equipment (8,948)  (8,691)  (12,682)  (30,014)  (39,050)
Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount             15,585 
Free cash flow (Non-GAAP)$179,062  $191,959  $100,672  $461,089  $231,390 


(2)Calculation of non-GAAP diluted net income per share for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million in each period from non-GAAP net income. Calculation of non-GAAP diluted net income per share for the nine months ended September 30, 2022 and 2021 excludes convertible notes due 2023 interest expense, net of tax of approximately $0.1 million in each period from non-GAAP net income.
(3)Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We excluded the in-the-money portion of convertible notes due 2024 totaling 46 thousand shares and 1,014 thousand shares in the three months and nine months ended September 30, 2021 from non-GAAP weighted-average diluted shares as we entered into convertible note hedge transactions that reduce potential dilution to our common stock upon any conversion of the notes due 2024. We excluded the in-the-money portion of convertible notes due 2025 totaling 1,253 thousand shares and 658 thousand shares in the three months ended September 30, 2022 and 2021, respectively, and 976 thousand shares in the nine months ended September 30, 2021 from non-GAAP weighted-average diluted shares. We excluded in-the-money portion of convertible notes due 2026 and notes due 2028 totaling 2,057 thousand shares and 2,018 thousand shares, respectively, each in the three months and nine months ended September 30, 2022 from non-GAAP weighted-average diluted shares as we entered into convertible note hedge transactions that reduce potential dilution to our common stock upon any conversion of the notes due 2026 and notes due 2028.

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