Enphase Energy (NASDAQ:ENPH) reported what CEO Badri Kothandaraman described as a “good quarter” for the fourth quarter of 2025, highlighted by $343.3 million in revenue, shipments of 1.55 million microinverters and 150 MWh of batteries, and free cash flow of $37.8 million.
Management said demand in the U.S. benefited from customers pulling purchases forward ahead of the Section 25D tax credit deadline, which helped Enphase exit the year with what it characterized as a lean channel. On a non-GAAP basis, Enphase posted gross margin of 46.1% in Q4 and delivered operating expenses of $78.8 million. The company also pointed to customer service metrics, including a global service net promoter score of 79% in Q4 versus 77% in Q3 and an average call wait time of 1.6 minutes.
Quarterly results and margin drivers
Yang said reciprocal tariffs reduced Q4 gross margin by 5.1 percentage points, and management indicated reciprocal tariffs remain a headwind in Q1 guidance as well. On profitability, Enphase reported:
- Non-GAAP operating income: $79.4 million (vs. $123.4 million in Q3)
- Non-GAAP net income: $93.4 million, or $0.71 per diluted share (vs. $117.3 million, or $0.90 in Q3)
- GAAP net income: $38.7 million, or $0.29 per diluted share
GAAP operating expenses were $129.6 million and included $48.6 million of stock-based compensation and $2.9 million of acquisition-related amortization, partially offset by a $0.6 million restructuring and asset impairment benefit.
Cash, manufacturing, and tax credits
Enphase ended Q4 with $1.51 billion in cash, cash equivalents, and marketable securities, up from $1.48 billion in Q3. Yang said the company expects to settle the principal amount of its 2021 convertible notes—$632.5 million due March 1, 2026—using cash on hand.
As of December 31, 2025, Enphase had approximately $337 million of production tax credit (PTC) receivable on its balance sheet net of income taxes payable, including $109 million tied to 2024 shipments and $228 million tied to 2025 shipments. Yang said the company has limited visibility into when the IRS will refund the 2024 amount due to extended processing timelines and is evaluating options to get paid sooner for 2025 PTCs.
Operationally, Kothandaraman said Enphase shipped approximately 1.31 million microinverters from Texas and South Carolina in Q4 and booked associated Section 45X production tax credits. He added that the company shipped 51.1 MWh of IQ batteries from its Texas facility that meet domestic content requirements. Enphase expects to receive its first non-China battery cells in Q1 and said it remains on track to scale non-China cell supply into production in the first half of 2026.
Regional performance and channel conditions
Enphase reported a Q4 revenue mix of 89% U.S. and 11% international. In the U.S., Kothandaraman said revenue declined 13% sequentially primarily because safe harbor revenue fell to $20.3 million in Q4 from $70.9 million in Q3. He added that overall U.S. sell-through increased 21% quarter over quarter to the highest level in more than two years, driven by increased solar and battery installations ahead of the Section 25D deadline.
In Europe, Enphase revenue declined 29% sequentially and sell-through declined 23%, with management describing the regional environment as challenging and competitive. Kothandaraman said Enphase reduced microinverter list prices at distributors by about 20% across Europe in November as installers faced pricing pressure.
Management highlighted battery retrofit opportunities in the Netherlands and France, citing rising export penalties and the planned phase-out of net metering in the Netherlands by the end of 2026. Enphase said it has an installed base of about 475,000 residential solar systems in the Netherlands and estimated a roughly $2 billion total battery opportunity. In France, Enphase cited an installed base of approximately 375,000 systems and said reduced feed-in tariffs are shifting economics toward self-consumption.
On channel inventory, management said it was “very happy” with where inventory ended in both the U.S. and international markets. Kothandaraman said inventory looks “very, very lean” on a backward-looking basis and “normal” based on forward-looking demand. Later in the Q&A, he said Enphase took ownership of inventory from a contract manufacturer in Q4 to ensure FIOC compliance, contributing to higher balance sheet inventory, and expects to bring inventory down.
Product updates and market expansion
Enphase emphasized product launches and software updates aimed at batteries, commercial solar, and EV charging. In batteries, management said the fourth-generation IQ Battery is ramping in the U.S. and highlighted the IQ Meter Collar, which Kothandaraman said is approved by 52 utilities, covering about 30 million customer accounts. He added it is approved by all three major investor-owned utilities in California.
The company also launched PowerMatch in Q4, which it said dynamically matches battery output to real-time home demand and can improve performance by up to 40%. In the Q&A, management discussed “tare loss” and positioned PowerMatch as a way to reduce losses at low loads by switching on only the microinverters needed for the home’s demand.
On next-generation storage, Enphase said its fifth-generation battery will use stackable 5 kWh modular blocks and scale up to 20 kWh in the U.S. and up to 30 kWh in other regions. Management said the design targets roughly 50% higher energy density than the fourth generation at about 40% lower cost. Enphase expects to begin pilots in the third quarter of 2026 and start shipping in the fourth quarter of 2026.
In microinverters, Enphase began shipping the IQ9 3P commercial microinverter in December, built on its GaN-based power conversion architecture. Kothandaraman said IQ9 expands Enphase into 480-volt three-phase commercial systems in the U.S. for the first time and represents an approximately $400 million total addressable market. He said more than 50,000 microinverters were ordered for Q1, and later estimated the product could contribute roughly $5 million to $10 million of revenue in the first quarter. Enphase expects to introduce IQ9 for global residential markets in the first quarter of 2026 and a higher-powered 548-watt version in the third quarter.
Enphase also said it started shipping the IQ EV Charger 2 in December, supporting Level 2 charging up to 19.2 kW on 240-volt service and up to 22.1 kW where 277 volts is available. On bidirectional EV charging, management said it continues to target initial availability in Q4 2026 with limited deployments pending certifications, utility coordination, and vehicle compatibility validation. The company said it is in discussions with multiple auto OEMs.
Q1 2026 guidance, safe harbor, and financing initiatives
For the first quarter of 2026, Enphase guided revenue to $270 million to $300 million, including approximately $35 million of safe harbor revenue and shipments of 120 MWh of IQ batteries. The company expects GAAP gross margin of 40% to 43% and non-GAAP gross margin of 42% to 45%, both including about five percentage points of reciprocal tariff impact.
Yang guided GAAP operating expenses to $137 million to $141 million, including about $60 million tied to stock-based compensation, acquisition-related items, and restructuring/impairment charges. Non-GAAP operating expenses are expected at $77 million to $81 million. She also said Enphase recently reduced headcount by around 6% and expects non-GAAP operating expenses to decline to $70 million to $75 million per quarter starting in Q3 2026.
On demand, Kothandaraman said management believes Q1 marks the low point for underlying demand, with improvement expected through 2026, particularly in the second half. In response to an analyst question, he said Enphase expects Q2 to be up but said it is too early to quantify. He added that safe harbor activity could remain healthy in Q2 as tax equity partners formulate plans for future years.
Enphase also discussed third-party ownership (TPO) activity and prepaid leases. In Q4, the company announced two TPO orders totaling $123 million, including $55 million under the 5% safe harbor method and $68 million under the physical work test method. Management said a TPO-led prepaid lease program using Enphase equipment is being piloted across four states with approximately 40 installers, and it expects to share more as the program matures.
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.
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