Press Release

Enphase Energy Reports Financial Results for the Second Quarter of 2022

FREMONT, Calif., July 26, 2022 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. (NASDAQ: 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 second quarter of 2022, which included the summary below from its President and CEO, Badri Kothandaraman.

We reported record quarterly revenue of $530.2 million in the second quarter of 2022, along with 42.2% for non-GAAP gross margin. We shipped 3,348,553 microinverters, or approximately 1,213 megawatts DC, and 132.4 megawatt hours of Enphase® IQ™ Batteries.

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

  • Record quarterly revenue of $530.2 million
  • GAAP gross margin of 41.3%; non-GAAP gross margin of 42.2%
  • GAAP operating income of $94.0 million; non-GAAP operating income of $152.4 million
  • GAAP net income of $77.0 million; non-GAAP net income of $149.9 million
  • GAAP diluted earnings per share of $0.54; non-GAAP diluted earnings per share of $1.07
  • Free cash flow of $192.0 million; ending cash, cash equivalents, and marketable securities of $1.25 billion

Our revenue and earnings for the second 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
  Q2 2022   Q1 2022   Q2 2021   Q2 2022   Q1 2022   Q2 2021
Revenue $ 530,196     $ 441,292     $ 316,057     $ 530,196     $ 441,292     $ 316,057  
Gross margin   41.3 %     40.1 %     40.4 %     42.2 %     41.0 %     40.8 %
Operating expenses $ 124,969     $ 115,149     $ 68,401     $ 71,169     $ 66,250     $ 51,696  
Operating income $ 94,036     $ 61,824     $ 59,400     $ 152,412     $ 114,529     $ 77,165  
Net income $ 76,976     $ 51,821     $ 39,351     $ 149,852     $ 109,670     $ 74,676  
Basic EPS $ 0.57     $ 0.39     $ 0.29     $ 1.11     $ 0.82     $ 0.55  
Diluted EPS $ 0.54     $ 0.37     $ 0.28     $ 1.07     $ 0.79     $ 0.53  

Our total revenue increased 20%, compared to the first quarter of 2022. Our microinverter shipments were up 18%, compared to the first quarter of 2022. Our IQ Battery shipments were up 10%, compared to the first quarter of 2022. Our non-GAAP gross margin was 42.2% in the second quarter of 2022, compared to 41.0% in the first quarter of 2022, driven by a favorable product mix.

Our non-GAAP operating expenses were $71.2 million in the second quarter of 2022, compared to $66.3 million in the first quarter of 2022, primarily due to increased investment in R&D, customer service, sales, and IT infrastructure. Our non-GAAP operating income was $152.4 million in the second quarter of 2022, compared to $114.5 million in the first quarter of 2022.

We exited the second quarter of 2022 with $1.25 billion in cash, cash equivalents, and marketable securities and generated $200.7 million in cash flow from operations in the second quarter of 2022. Our capital expenditures were $8.7 million in the second quarter of 2022, compared to $12.4 million in the first quarter of 2022.

Our quarterly revenue in the second quarter of 2022 was driven by strong demand for Enphase Energy Systems, powered by IQ® Microinverters and IQ Batteries. IQ8™ Microinverters constituted 37% of all our microinverter shipments during the second quarter. The grid-forming IQ8 Microinverters can provide Sunlight Backup™ during an outage, even without a battery. And, with the 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.

Our IQ Battery shipments increased to 132.4 megawatt hours in the second quarter of 2022, compared to 120.4 megawatt hours in the first quarter of 2022. We shipped batteries to the United States, Germany, and Belgium during the second quarter, and made updates to improve the installer and homeowner experience. We now have more than 1,600 installers worldwide that are certified to install our IQ Batteries.

Our revenue in Europe for the second quarter of 2022 increased 69%, compared to the first quarter of 2022, led by strong growth in the Netherlands and Germany. Homeowners want self-consumption as the region not only faces rising energy prices but also a growing demand for home electrification driven by EVs and natural gas shortages. We expect to introduce IQ Batteries in more European countries during the second half of 2022.

Our strategy is to build best-in-class home energy systems and deliver them to homeowners through our installer and distribution partners, enabled by an installer platform. We have completed five acquisitions in the last six quarters, one for EV chargers and four to help create our installer platform. We shipped more than 8,250 ClipperCreek EV chargers to U.S. customers in the second quarter of 2022 and expect healthy growth going forward. We are working to move production to our manufacturing partner in Mexico, making our chargers smart and integrating the EV chargers into our home energy management systems.

We recently acquired SolarLeadFactory LLC to provide high-quality leads to our installers and further strengthen our installer platform. In January 2021, we acquired Sofdesk Inc. to provide solar design software capability and approximately 950 installers are using the Solargraf software. We acquired a business in Noida, India in March 2021 to provide proposal and permitting services for installers and are focused on automating these services. In December 2021, we acquired 365 Pronto, Inc. to simplify maintenance for installers by matching cleantech asset owners to a local and on-demand workforce of service providers. All four acquisitions aim to make life simpler for installers by providing them high-quality products and services, ultimately reducing their soft costs.

BUSINESS HIGHLIGHTS

On April 19, 2022, Enphase Energy announced that ADT Solar™, formerly Sunpro Solar, a leading rooftop solar provider and one of the fastest-growing residential solar-plus-storage service providers across 22 states in the United States, is now exclusively offering Enphase IQ8 Microinverters as part of its comprehensive home energy solution.

On May 9, 2022, Enphase Energy announced that Enphase IQ Batteries now officially support the most common third-party string inverters in Belgium and Germany, helping meet the increasing demand for energy independence in the region. Since the 2021 launch of the IQ Battery in Belgium and Germany, installers of Enphase products have seen increasing deployments of Enphase Energy Systems powered by IQ Microinverters and Enphase IQ Batteries, as well as residential solar-only energy systems powered by IQ7™, IQ7+™, and IQ7A™ Microinverters.

On May 23, 2022, Enphase Energy announced that the Enphase IQ8 Microinverter system is the first in the world to be certified by UL, a global safety science leader, to UL 1741, 3rd edition including the Supplement SB. This certification meets the new North American safety and grid interconnection standards for connecting solar inverters, energy storage systems, and distributed energy resources to the grid in compliance with IEEE 1547-2018 and IEEE 1547-1 2020.

Enphase Energy recently announced that installers in Rhode Island, Massachusetts, Washington, New Mexico, Texas, New York, Florida, Hawaii, Missouri, Michigan, Southern California, and Puerto Rico have seen growing deployments of the Enphase Energy System powered by IQ Microinverters and IQ Batteries.

THIRD QUARTER 2022 FINANCIAL OUTLOOK

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

  • Revenue to be within a range of $590 million to $630 million, which includes shipments of 130 to 145 megawatt hours of Enphase IQ Batteries
  • GAAP gross margin to be within a range of 38.0% to 41.0%; non-GAAP gross margin to be within a range of 39.0% to 42.0%, excluding stock-based compensation expenses and acquisition related amortization
  • GAAP operating expenses to be within a range of $137.0 million to $141.0 million
  • Non-GAAP operating expenses to be within a range of $77.0 million to $81.0 million, excluding $60.0 million estimated for stock-based compensation expenses 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 second quarter 2022 results and third 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 9407506, 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 third quarter of 2022 financial outlook and expense levels; the capabilities, advantages, features and performance of its technology and products; its business strategies and anticipated demand for and availability of its products and services; market demand for residential solar and battery deployments; 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 March 31, 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 48 million microinverters, and over 2.5 million Enphase-based systems have been deployed in more than 140 countries. For more information, visit www.enphase.com.

© 2022 Enphase Energy, Inc. All rights reserved. Enphase Energy, Enphase, the “e” logo, IQ, IQ7, IQ7+, IQ7A, IQ8, Sunlight Backup, Sunlight Jump Start, 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 Ended Six Months Ended
  June 30,
2022		   March 31,
2022		   June 30,
2021		   June 30,
2022		   June 30,
2021
Net revenues $ 530,196     $ 441,292     $ 316,057     $ 971,488     $ 617,811  
Cost of revenues   311,191       264,319       188,256       575,510       367,061  
Gross profit   219,005       176,973       127,801       395,978       250,750  
Operating expenses:                  
Research and development   39,256       35,719       22,708       74,975       44,526  
Sales and marketing   53,588       41,344       25,586       94,932       45,208  
General and administrative   32,125       38,086       20,107       70,211       40,230  
Total operating expenses   124,969       115,149       68,401       240,118       129,964  
Income from operations   94,036       61,824       59,400       155,860       120,786  
Other income (expense), net                  
Interest income   796       460       98       1,256       171  
Interest expense   (2,168 )     (2,736 )     (12,506 )     (4,904 )     (19,835 )
Other income (expense), net   (456 )     (2,141 )     (633 )     (2,597 )     (60 )
Loss on partial settlement of convertible notes (1)   —       —       (13 )     —       (56,382 )
Total other expense, net   (1,828 )     (4,417 )     (13,054 )     (6,245 )     (76,106 )
Income before income taxes   92,208       57,407       46,346       149,615       44,680  
Income tax benefit (provision)   (15,232 )     (5,586 )     (6,995 )     (20,818 )     26,369  
Net income $ 76,976     $ 51,821     $ 39,351     $ 128,797     $ 71,049  
Net income per share:                  
Basic $ 0.57     $ 0.39     $ 0.29     $ 0.96     $ 0.53  
Diluted $ 0.54     $ 0.37     $ 0.28     $ 0.91     $ 0.49  
Shares used in per share calculation:                  
Basic   135,196       134,327       135,094       134,768       133,209  
Diluted   143,725       144,617       141,533       143,602       144,022  

 

(1) Loss on partial settlement of convertible notes of less than $0.1 million for the three months ended June 30, 2021, primarily relates to the non-cash loss on partial settlement of $0.1 million aggregate principal amount of the Notes due 2025. Loss on partial settlement of convertible notes of $56.4 million for the six months ended June 30, 2021, primarily relates 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)

  June 30, 
2022		   December 31, 
2021
ASSETS      
Current assets:      
Cash and cash equivalents $ 495,473   $ 119,316
Marketable securities   752,328     897,335
Accounts receivable, net   312,451     333,626
Inventory   130,266     74,400
Prepaid expenses and other assets   45,474     37,784
Total current assets   1,735,992     1,462,461
Property and equipment, net   86,778     82,167
Operating lease, right of use asset, net   16,987     14,420
Intangible assets, net   96,887     97,758
Goodwill   197,004     181,254
Other assets   129,153     118,726
Deferred tax assets, net   174,307     122,470
Total assets $ 2,437,108   $ 2,079,256
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 90,398   $ 113,767
Accrued liabilities   197,919     157,912
Deferred revenues, current   74,067     62,670
Warranty obligations, current   29,197     19,395
Debt, current   88,429     86,052
Total current liabilities   480,010     439,796
Long-term liabilities:      
Deferred revenues, noncurrent   217,095     187,186
Warranty obligations, noncurrent   67,354     53,982
Other liabilities   23,864     16,530
Debt, noncurrent   1,197,786     951,594
Total liabilities   1,986,109     1,649,088
Total stockholders’ equity   450,999     430,168
Total liabilities and stockholders’ equity $ 2,437,108   $ 2,079,256

ENPHASE ENERGY, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands) 
(Unaudited)

  Three Months Ended   Six Months Ended
  June 30, 
2022		   March 31, 
2022		   June 30, 
2021		   June 30, 
2022		   June 30, 
2021
Cash flows from operating activities:                  
Net income $ 76,976     $ 51,821     $ 39,351     $ 128,797     $ 71,049  
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation and amortization   15,247       15,558       7,596       30,805       13,154  
Provision for doubtful accounts   (16 )     147       257       131       271  
Asset impairment   1,200       —       —       1,200       —  
Loss on partial settlement of convertibles notes   —       —       13       —       56,382  
Deemed repayment of convertible notes attributable to accreted debt discount   —       —       (6 )     —       (15,585 )
Non-cash interest expense   2,046       1,979       12,307       4,025       19,463  
Change in fair value of debt securities   (987 )     1,116       (932 )     129       (2,369 )
Stock-based compensation   53,064       47,797       15,312       100,861       30,156  
Deferred income taxes   12,452       3,165       5,240       15,617       (30,127 )
Changes in operating assets and liabilities:                  
Accounts receivable   51,770       (24,224 )     (44,812 )     27,546       (98,531 )
Inventory   (33,830 )     (22,036 )     (2,880 )     (55,866 )     4,008  
Prepaid expenses and other assets   (18,310 )     (3,042 )     (10,154 )     (21,352 )     (15,194 )
Accounts payable, accrued and other liabilities   12,033       (1,805 )     10,514       10,228       46,890  
Warranty obligations   12,972       9,906       5,385       22,878       14,025  
Deferred revenues   16,033       22,061       28,469       38,094       47,909  
Net cash provided by operating activities   200,650       102,443       65,660       303,093       141,501  
Cash flows from investing activities:                  
Purchases of property and equipment   (8,691 )     (12,375 )     (16,428 )     (21,066 )     (26,368 )
Purchases of marketable securities   (60,061 )     —       —       (60,061 )     —  
Maturities of marketable securities   116,298       76,735       —       193,033       —  
Investments in private companies   —       —       (20,000 )     —       (45,000 )
Business acquisitions, net of cash acquired   (3,055 )     (24,625 )     —       (27,680 )     (55,239 )
Net cash provided by (used in) investing activities   44,491       39,735       (36,428 )     84,226       (126,607 )
Cash flows from financing activities:                  
Issuance of convertible notes, net of issuance costs   —       —       (949 )     —       1,188,439  
Purchase of convertible note hedges   —       —       —       —       (286,235 )
Sale of warrants   —       —       —       —       220,800  
Principal payments and financing fees on debt   —       —       (344 )     —       (1,422 )
Partial repurchase of convertible notes   —       —       (79 )     —       (289,312 )
Repurchase of common stock   —       —       (200,000 )     —       (200,000 )
Proceeds from exercise of equity awards and employee stock purchase plan   4,183       404       3,428       4,587       3,642  
Payment of withholding taxes related to net share settlement of equity awards   (5,463 )     (9,344 )     (7,813 )     (14,807 )     (16,998 )
Net cash provided by (used in) financing activities   (1,280 )     (8,940 )     (205,757 )     (10,220 )     618,914  
Effect of exchange rate changes on cash and cash equivalents   (238 )     (704 )     (224 )     (942 )     (926 )
Net increase (decrease) in cash and cash equivalents   243,623       132,534       (176,749 )     376,157       632,882  
Cash and cash equivalents—Beginning of period   251,850       119,316       1,489,010       119,316       679,379  
Cash and cash equivalents —End of period $ 495,473     $ 251,850     $ 1,312,261     $ 495,473     $ 1,312,261  

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

  Three Months Ended   Six Months Ended
  June 30, 
2022		   March 31, 
2022		   June 30, 
2021		   June 30, 
2022		   June 30, 
2021
Gross profit (GAAP) $ 219,005     $ 176,973     $ 127,801     $ 395,978     $ 250,750  
Stock-based compensation   3,131       2,507       1,060       5,638       2,042  
Acquisition related amortization   1,445       1,299       —       2,744       —  
Gross profit (Non-GAAP) $ 223,581     $ 180,779     $ 128,861     $ 404,360     $ 252,792  
                   
Gross margin (GAAP)   41.3 %     40.1 %     40.4 %     40.8 %     40.6 %
Stock-based compensation   0.6 %     0.6 %     0.4 %     0.5 %     0.3 %
Acquisition related amortization   0.3 %     0.3 %     — %     0.3 %     — %
Gross margin (Non-GAAP)   42.2 %     41.0 %     40.8 %     41.6 %     40.9 %
                   
Operating expenses (GAAP) $ 124,969     $ 115,149     $ 68,401     $ 240,118     $ 129,964  
Stock-based compensation (1)   (49,933 )     (45,290 )     (14,252 )     (95,223 )     (28,114 )
Acquisition related expenses and amortization   (3,867 )     (3,609 )     (2,453 )     (7,476 )     (6,455 )
Operating expenses (Non-GAAP) $ 71,169     $ 66,250     $ 51,696     $ 137,419     $ 95,395  
                   
(1)Includes stock-based compensation as follows:                  
Research and development $ 16,266     $ 13,729     $ 5,467     $ 29,995     $ 11,216  
Sales and marketing   22,176       13,057       5,335       35,233       8,872  
General and administrative   11,491       18,504       3,450       29,995       8,026  
Total $ 49,933     $ 45,290     $ 14,252     $ 95,223     $ 28,114  
                   
Income from operations (GAAP) $ 94,036     $ 61,824     $ 59,400     $ 155,860     $ 120,786  
Stock-based compensation   53,064       47,797       15,312       100,861       30,156  
Acquisition related expenses and amortization   5,312       4,908       2,453       10,220       6,455  
Income from operations (Non-GAAP) $ 152,412     $ 114,529     $ 77,165     $ 266,941     $ 157,397  
                   
Net income (GAAP) $ 76,976     $ 51,821     $ 39,351     $ 128,797     $ 71,049  
Stock-based compensation   53,064       47,797       15,312       100,861       30,156  
Acquisition related expenses and amortization   5,312       4,908       2,453       10,220       6,455  
Non-cash interest expense   2,048       1,979       12,307       4,027       19,463  
Loss on partial settlement of convertible notes   —       —       13       —       56,382  
Non-GAAP income tax adjustment   12,452       3,165       5,240       15,617       (30,127 )
Net income (Non-GAAP) $ 149,852     $ 109,670     $ 74,676     $ 259,522     $ 153,378  
                   
Net income per share, basic (GAAP) $ 0.57     $ 0.39     $ 0.29     $ 0.96     $ 0.53  
Stock-based compensation   0.39       0.36       0.11       0.75       0.23  
Acquisition related expenses and amortization   0.04       0.04       0.02       0.08       0.05  
Non-cash interest expense   0.02       0.01       0.09       0.03       0.15  
Loss on partial settlement of convertible notes   —       —       —       —       0.42  
Non-GAAP income tax adjustment   0.09       0.02       0.04       0.11       (0.23 )
Net income per share, basic (Non-GAAP) $ 1.11     $ 0.82     $ 0.55     $ 1.93     $ 1.15  
                   
Shares used in basic per share calculation GAAP and Non-GAAP   135,196       134,327       135,094       134,768       133,209  
                   
Net income per share, diluted (GAAP) $ 0.54     $ 0.37     $ 0.28     $ 0.91     $ 0.49  
Stock-based compensation   0.38       0.34       0.11       0.73       0.22  
Acquisition related expenses and amortization   0.04       0.04       0.02       0.08       0.05  
Non-cash interest expense   0.02       0.02       0.09       0.03       0.14  
Loss on partial settlement of convertible notes   —       —       —       —       0.40  
Non-GAAP income tax adjustment   0.09       0.02       0.03       0.11       (0.21 )
Net income per share, diluted (Non-GAAP) (2) $ 1.07     $ 0.79     $ 0.53     $ 1.86     $ 1.09  
                   
Shares used in diluted per share calculation GAAP   143,725       144,617       141,533       143,602       144,022  
Shares used in diluted per share calculation Non-GAAP (3)   139,650       139,289       140,931       139,527       141,379  
                   
Net cash provided by operating activities (GAAP) $ 200,650     $ 102,443     $ 65,660     $ 303,093     $ 141,501  
Purchases of property and equipment   (8,691 )     (12,375 )     (16,428 )     (21,066 )     (26,368 )
Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount   —       —       6       —       15,585  
Free cash flow (Non-GAAP) $ 191,959     $ 90,068     $ 49,238     $ 282,027     $ 130,718  

 

(2) Calculation of non-GAAP diluted net income per share for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, as well as the six months ended June 30, 2022 and 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.
(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 the Company has GAAP net income. The Company excluded the in-the-money portion of convertible notes due 2024 totaling 45 thousand shares and 1,506 thousand shares in the three months and six months ended June 30, 2021 from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2024. The Company excluded the in-the-money portion of convertible notes due 2025 totaling 557 thousand shares in the three months ended June 30, 2021 and 1,137 thousand shares in the six months ended June 30, 2021 from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2025.

 


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Source: Enphase Energy, Inc.