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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2014	Oct. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Enphase Energy, Inc.
Entity Central Index Key	0001463101
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Current Fiscal Year End	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		43,624,571

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 44,537	$ 38,190
Accounts receivable, net of allowances of $2,241 and $2,000 at September 30, 2014 and December 31, 2013, respectively	49,270	32,084
Inventory	15,488	16,580
Prepaid expenses and other	5,194	3,655
Total current assets	114,489	90,509
Property and equipment, net	28,825	24,853
Other assets	1,410	1,307
Total assets	144,724	116,669
Current liabilities:
Accounts payable	21,992	7,363
Accrued liabilities	22,906	14,780
Deferred revenues	2,418	2,773
Warranty obligations, current portion (includes $978 and $0 measured at fair value at September 30, 2014 and December 31, 2013, respectively)	7,749	4,942
Term loans, current portion	2,888	3,507
Total current liabilities	57,953	33,365
Long-term liabilities:
Deferred revenues, noncurrent	15,339	11,284
Warranty obligations, noncurrent (includes $1,983 and $0 measured at fair value at September 30, 2014 and December 31, 2013, respectively)	24,558	25,490
Other liabilities	1,439	1,154
Term loans, noncurrent	2,973	5,170
Total liabilities	102,262	76,463
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.00001 par value, 10,000 shares authorized; none issued and outstanding	0	0
Common stock, $0.00001 par value, 100,000 shares authorized; 43,378 and 42,123 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively	0	0
Additional paid-in capital	203,911	192,916
Accumulated deficit	(161,393)	(152,939)
Accumulated other comprehensive (loss) income	(56)	229
Total stockholders’ equity	42,462	40,206
Total liabilities and stockholders’ equity	$ 144,724	$ 116,669

Condensed Consolidated Balance Sheets (Unaudited ) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Allowances, accounts receivable	$ 2,241	$ 2,000
Warranty obligations, current at fair value	978	0
Warranty obligations, non-current at fair value	$ 1,983	$ 0
Preferred stock, par value (in usd per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	43,378,000	42,123,000
Common stock, shares outstanding (in shares)	43,378,000	42,123,000

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
Net revenues	$ 99,113	$ 62,046	$ 238,697	$ 165,790
Cost of revenues	66,592	44,611	160,689	119,870
Gross profit	32,521	17,435	78,008	45,920
Operating expenses:
Research and development	12,112	8,293	32,346	25,803
Sales and marketing	9,884	8,550	29,205	22,765
General and administrative	8,632	5,937	22,837	17,899
Total operating expenses	30,628	22,780	84,388	66,467
Income (loss) from operations	1,893	(5,345)	(6,380)	(20,547)
Other income (expense), net:
Interest expense	(356)	(437)	(1,291)	(1,385)
Other expense, net	(597)	(378)	(432)	(724)
Total other income (expense), net	(953)	(815)	(1,723)	(2,109)
Income (loss) before income taxes	940	(6,160)	(8,103)	(22,656)
Provision for income taxes	(127)	(141)	(351)	(447)
Net income (loss)	$ 813	$ (6,301)	$ (8,454)	$ (23,103)
Net income (loss) per share:
Basic (in usd per share)	$ 0.02	$ (0.15)	$ (0.20)	$ (0.56)
Diluted (in usd per share)	$ 0.02	$ (0.15)	$ (0.20)	$ (0.56)
Shares used in per share calculation:
Basic (in shares)	43,128	41,777	42,664	41,517
Diluted (in shares)	48,786	41,777	42,664	41,517

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 813	$ (6,301)	$ (8,454)	$ (23,103)
Other comprehensive (loss) income:
Foreign currency translation adjustments	(292)	104	(285)	145
Comprehensive income (loss)	$ 521	$ (6,197)	$ (8,739)	$ (22,958)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (8,454)	$ (23,103)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	6,004	5,122
Provision for doubtful accounts	711	665
Net loss on disposal of assets	247	82
Non-cash interest expense	256	322
Stock-based compensation	7,037	4,955
Changes in operating assets and liabilities:
Accounts receivable	(17,897)	(7,666)
Inventory	1,092	(4,549)
Prepaid expenses and other assets	(1,867)	(969)
Accounts payable, accrued and other liabilities	22,638	3,827
Warranty obligations	1,875	8,028
Deferred revenues	3,700	4,835
Net cash provided by (used in) operating activities	15,342	(8,451)
Cash flows from investing activities:
Purchases of property and equipment	(9,836)	(4,886)
Net cash used in investing activities	(9,836)	(4,886)
Cash flows from financing activities:
Repayments of term loans	(2,847)	(1,815)
Principal payments under capital leases	0	(40)
Proceeds from issuance of common stock under employee stock plans	3,958	1,672
Net cash provided by (used in) financing activities	1,111	(183)
Effect of exchange rate changes on cash	(270)	4
Net increase (decrease) in cash and cash equivalents	6,347	(13,516)
Cash and cash equivalents—Beginning of period	38,190	45,294
Cash and cash equivalents—End of period	44,537	31,778
Supplemental disclosures of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable	$ 1,291	$ 305

Overview and Summary of Significant Accounting Policies	9 Months Ended
Overview and Summary of Significant Accounting Policies	Sep. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Overview and Summary of Significant Accounting Policies	Overview and Summary of Significant Accounting Policies The Company Enphase Energy, Inc. (“Enphase” or the “Company”) designs, develops, and sells microinverter systems for the solar photovoltaic industry. The Company’s microinverter system consists of (i) an Enphase microinverter and related accessories that convert direct current (“DC”) power to grid-compliant alternating current (“AC”) power; (ii) an Envoy communications gateway device that collects and transmits performance information from each solar module to the Company’s hosted data center; and (iii) the Enlighten web-based software platform that collects and processes this information to enable customers to monitor and manage their solar power systems. The Company sells microinverter systems primarily to distributors who resell them to solar installers. The Company also sells directly to large installers, original equipment manufacturers (“OEMs”), developers of third party solar financing offerings and strategic partners. Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. Certain reclassifications of prior year's balances have been made to conform to current year presentation, including separately presenting balances for “Warranty obligations” in current liabilities on the condensed consolidated balance sheets and under changes in operating assets and liabilities on the condensed consolidated statements of cash flows. Unaudited Interim Financial Information These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company's financial condition, results of operations, comprehensive income (loss) and cash flows for the interim periods indicated. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013. Other than as described under “Fair Value Option for Microinverters Sold Since January 1, 2014” below, there have been no material changes in the Company's significant accounting policies since the date of the Company's Annual Report on Form 10-K for the year ended December 31, 2013. Reference is made to the disclosures therein for a summary of all of the Company’s significant accounting policies. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events and apply judgments that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. Significant estimates and assumptions by management affect the timing and amounts of revenue recognition, warranty obligations and expense and the carrying value of inventory. Fair Value Option for Warranty Obligations Related to Microinverters Sold Since January 1, 2014 The Company’s warranty obligations related to microinverters sold since January 1, 2014 provide the Company the right, but not the requirement, to assign its warranty obligations to a third-party. Under Accounting Standards Codification (“ASC”) 825—Financial Instruments, (“fair value option”), an entity may choose to elect the fair value option for such warranties at the time it first recognizes the eligible item. The Company made an irrevocable election to account for all eligible warranty obligations associated with microinverters sold since January 1, 2014 at fair value. This election was made to reflect the underlying economics of the time value of money for an obligation that will be settled over an extended period of up to 25 years. See Note 4—Fair Value Measurements. The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of failure rates, claim rates and replacement costs, the Company used certain inputs that are unobservable and significant to the overall fair value measurement. Such additional assumptions included a discount rate based on the Company's credit-adjusted risk-free rate and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation. Warranty obligations initially recorded at fair value at the time of sale will be subsequently re-measured to fair value at each reporting date. In addition, the fair value of the liability will be accreted over the corresponding term of the warranty of up to 25 years using the interest method. Any changes in fair value of the liability from period-to-period, including accretion expense, will be recognized in cost of revenues. As of September 30, 2014, warranty obligations associated with sales prior to December 31, 2013 were $29.2 million and warranty obligations associated with sales subsequent to December 31, 2013 were $3.1 million, of which $3.0 million were eligible for fair value accounting. The portion of warranty obligations arising from sales subsequent to December 31, 2013 that was not eligible for fair value accounting relates to sales of non-microinverter products. Periodic adjustments necessitated by actual experience of claims and any future changes in estimates to amounts not eligible for fair value accounting will continue to be accounted for on an undiscounted basis. Recent Accounting Pronouncements Not Yet Effective In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under U.S. GAAP. The updated standard's core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The standard generally requires an entity to identify performance obligations in its contracts, estimate the amount of variable consideration to be received in the transaction price, allocate the transaction price to each separate performance obligation, and recognize revenue as obligations are satisfied. In addition, the updated standard requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. Accordingly, the ASU will be effective for the Company beginning in the first quarter of 2017. The Company is currently evaluating the impact of the adoption on its Consolidated Financial Statements.

Inventory

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Inventory

INVENTORY

Inventory is valued at the lower of cost or market, on a first-in, first-out basis and consists of the following as of September 30, 2014 and December 31, 2013 (in thousands):



	September 30, 2014		December 31, 2013
Raw materials	$	2,924	$	1,428
Finished goods	12,564		15,152
Total inventory	$	15,488	$	16,580

Warranty Obligations

9 Months Ended

Sep. 30, 2014

Product Warranties Disclosures [Abstract]

Warranty Obligations

WARRANTY OBLIGATIONS

The Company’s warranty activities during the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Warranty obligations, beginning of period	$	32,969		$	26,777		$	30,432		$	21,338
Accruals for warranties issued during period	1,361			1,392			3,112			4,802
Changes in estimates	1,146			3,823			5,506			8,537
Settlements	(3,041		)	(2,626		)	(6,666		)	(5,311		)
Increase due to accretion expense	47			—			87			—
Other	(175		)	—			(164		)	—
Warranty obligations, end of period	$	32,307		$	29,366		$	32,307		$	29,366
Less current portion							$	(7,749	)	$	(8,434	)
Noncurrent							$	24,558		$	20,932

As of September 30, 2014, the $32.3 million in warranty obligations included $3.0 million measured at fair value (see Note 4—Fair Value Measurements).

Changes in Estimates

On a quarterly basis, the Company uses the best and most complete underlying information available and follows a consistent, systematic and rational methodology to determine its warranty obligations. The Company considers all available evidence to assess the reasonableness of all key assumptions underlying its estimated warranty obligations for each generation of microinverter. The changes in estimates discussed below arose from new information available to management and subsequent developments, and accordingly, from better insight and improved judgment.

For the three and nine months ended September 30, 2014, incremental charges from changes in estimates, each related to the Company's second generation microinverter, consisted of $1.1 million and $4.2 million, respectively, to reflect higher estimated failure rates. The remaining $1.3 million incremental charge for the nine months ended September 30, 2014 was due to higher projected estimated replacement costs.

For the three and nine months ended September 30, 2013, net incremental charges from changes in estimates were $3.8 million and $8.5 million, respectively. During the three and nine months ended September 30, 2013, the Company experienced actual failures of its second generation microinverters that exceeded its then current failure rate estimate. Based on continuing analysis of field performance data and diagnostic root-cause failure analysis performed on returned units, the Company concluded that it was necessary to increase the estimated failure rates for its second generation product and recorded additional warranty expense of $7.3 million and $15.9 million for the three and nine months ended September 30, 2013, respectively. In addition, the Company recorded a reduction to warranty expense of $3.1 million for the three and nine months ended September 30, 2013 related to a decrease in the expected failure rate of the Company's third generation product. During the third quarter of 2013, the Company concluded that there was sufficient historical data of actual field performance of previously sold third generation products to support a lower estimated failure rate. Further decreases to warranty expense were $0.4 million and $0.1 million of net decreases in estimated replacement costs for the three and nine months ended September 30, 2013, respectively. In addition, for the nine months ended September 30, 2013, the Company updated its estimated claim rates for all product generations resulting in a decrease to warranty expense of $4.2 million. The revision to estimated claim rates was based on the Company’s observed historical end user behavior and assumptions with respect to expected customer behavior over the warranty term (15 years for first and second generation products, up to 25 years for third and fourth generation products).

Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:


•	Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of such assets or liabilities do not entail a significant degree of judgment.


•	Level 2—Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.


•	Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Financial Instruments

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of those instruments. The carrying amounts of the Company's term loans approximate fair value because they are variable interest rate debt.

Derivative Instruments

The Company utilizes foreign currency forward contracts from time to time to reduce the impact of foreign currency fluctuations arising from both sales and purchases denominated in Euros and the British Pound Sterling.

As of September 30, 2014, the aggregate gross notional amounts of outstanding foreign currency forward contracts, all with maturities of less than one year, were $3.0 million. As of December 31, 2013, the aggregate gross notional amounts of outstanding foreign currency forward contracts were $12.5 million, all of which matured on January 15, 2014.

The following table presents the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy at September 30, 2014 and December 31, 2013 (in thousands):



	September 30, 2014				December 31, 2013
	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Foreign currency forward contracts (Level 2)	$	107	$	—	$	325	$	605

For both the three and nine months ended September 30, 2014, the Company recorded net gains related to foreign currency forward contracts of $0.1 million. For both the three and nine months ended September 30, 2013, the Company recognized net losses related to foreign currency forward contracts of $0.6 million.

Fair Value Option for Warranty Obligations Related to Microinverters Sold Since January 1, 2014

The following table presents the Company's warranty obligations measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2014 (in thousands):



	Warranty Obligations Measured at Fair Value
Balance—December 31, 2013	$	—
Accruals for warranties issued during period	2,913
Changes in estimates	117
Settlements	(15		)
Increase due to accretion expense	87
Other	(141		)
Balance—September 30, 2014	$	2,961

Quantitative and Qualitative Information about Level 3 Fair Value Measurements

As of September 30, 2014, the significant unobservable inputs used in the fair value measurement of the Company's warranty obligations designated as Level 3 are as follows:



Item Measured at Fair Value	Valuation Technique	Description of Significant Unobservable Input	Percent Used
Warranty obligations for microinverters sold since January 1, 2014	Discounted cash flows	Profit element and risk premium	18%
	Discounted cash flows	Credit-adjusted risk-free rate (discount rate)	15%

An increase (decrease) in the profit element and risk premium input in isolation would result in a higher (lower) fair value measurement of the liability. An increase (decrease) in the discount rate in isolation would result in a substantially lower (higher) fair value measurement of the liability.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Term Loans

9 Months Ended

Sep. 30, 2014

Long-term Debt, by Current and Noncurrent [Abstract]

Term Loans

TERM LOANS

The Company’s long-term debt at September 30, 2014 and December 31, 2013 consists of the following (in thousands):



	September 30, 2014			December 31, 2013
Term loans	$	5,861		$	7,400
Equipment financing facility, net of unamortized discount of $0 and $31, respectively	—			1,277
Total term loans	5,861			8,677
Less current portion	(2,888		)	(3,507		)
Term loans, noncurrent	$	2,973		$	5,170

During the nine months ended September 30, 2014, the Company was a party to three debt agreements: (i) a $50.0 million revolving credit facility (the "Revolver") with Wells Fargo Bank, N.A., (ii) a facility with Hercules Technology Growth Capital, Inc. (“Hercules Facility”) consisting of an initial draw in the amount of $7.4 million under the facility and a commitment to provide an incremental line of credit of up to $15.6 million through March 31, 2014, and (iii) a $5.0 million equipment financing facility, also with Hercules. Each of these debt agreements is described in greater detail in the consolidated financial statements and related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.

On February 14, 2014, the Company entered into an amendment to the Revolver which extended the maturity date from November 7, 2015 to November 7, 2016. In addition, the amendment lowered the minimum liquidity covenant in undrawn availability from $8.0 million to $5.0 million in cash while maintaining at least $15.0 million of liquidity (defined as the sum of cash and the borrowing base) at all times. As of September 30, 2014, the Company has not drawn on the Revolver.

On March 31, 2014, the undrawn $15.6 million incremental line of credit under the Hercules Facility expired in accordance with its terms as the Company elected not to renew this incremental line of credit.

On June 1, 2014, the $5.0 million equipment financing facility with Hercules expired in accordance with its terms and all remaining amounts outstanding were repaid in full.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	COMMITMENTS AND CONTINGENCIES Contingencies—The Company is not currently involved in any material legal proceedings. The Company may become involved in various legal proceedings and claims that arise in the ordinary course of business. Such matters are subject to uncertainty and there can be no assurance that such legal proceedings will not have a material adverse effect on its business, results of operations, financial position or cash flows.

Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

STOCK-BASED COMPENSATION

The Company has adopted certain equity incentive and stock purchase plans as described in the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Equity Awards Activity

Stock Options

The following is a summary of stock option activity for the nine months ended September 30, 2014 (in thousands, except per share data):



	Number of Shares Outstanding		Weighted- Average Exercise Price per Share
Outstanding at December 31, 2013	8,509		$	3.94
Granted	1,005		10.04
Exercised	(759	)	4.29
Canceled	(257	)	7.50
Outstanding at September 30, 2014	8,498		4.52

The intrinsic value of options exercised in the nine months ended September 30, 2014 was $4.5 million. At September 30, 2014, the intrinsic value of options outstanding was $89.1 million based on the closing share price of the Company's stock as of September 30, 2014.

Restricted Stock Units

The following is a summary of restricted stock unit activity for the nine months ended September 30, 2014 (in thousands, except per share data):



	Restricted Stock Units		Weighted Average Fair Value per Share at Grant Date
Outstanding at December 31, 2013	418		$	6.31
Granted	1,215		8.62
Vested	(242	)	7.52
Canceled	(31	)	7.41
Outstanding at September 30, 2014	1,360		8.13

The total fair value of restricted stock units that vested in the nine months ended September 30, 2014 was $2.7 million. At September 30, 2014, the aggregate intrinsic value of restricted stock units outstanding was $20.4 million based on the closing share price of the Company's stock as of September 30, 2014.

Stock-Based Compensation Expense

Compensation cost for all stock-based awards expected to vest is measured at fair value on the date of grant and recognized ratably over the requisite service period. The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenues	$	229	$	137	$	572	$	309
Research and development	824		625		2,215		1,541
Sales and marketing	635		542		1,816		1,317
General and administrative	842		741		2,434		1,788
Total	$	2,530	$	2,045	$	7,037	$	4,955

The following table summarizes stock-based compensation expense associated with each type of award for the periods presented (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Stock options and restricted stock units	$	2,317	$	1,871	$	6,465	$	4,588
Employee stock purchase plan	213		174		572		367
Total	$	2,530	$	2,045	$	7,037	$	4,955

Valuation Assumptions

The fair value of option awards was estimated on the date of the grant using the Black-Scholes option valuation pricing model with the following input assumptions:

•

Expected term—The expected term of the option awards represents the period of time between the grant date of the option awards and the date the option awards are either exercised, converted or canceled, including an estimate for those option awards still outstanding. The Company used the simplified method, as permitted by the SEC for companies with a limited history of stock option exercise activity, to determine the expected term for its option grants.

•

Expected volatility—The expected stock price volatility for option awards granted prior to March 31, 2014 was determined based on an average of the historical volatilities of the common stock of several peer companies with characteristics similar to those of the Company. For option awards granted after March 31, 2014, the Company used a blended volatility estimate consisting of its own historical share price volatility (as the Company had at least two years of historical stock price data) augmented with historical volatility of peer companies for periods preceding the Company's initial public offering such that the time period over which historical volatility data used was at least equal to the expected term of the option award.


•	Risk-free interest rate—The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant and with a maturity that approximated the Company's expected term.


•	Dividend yield—The dividend yield was based on the Company's dividend history and the anticipated dividend payout over its expected term.

The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted in the periods presented:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Expected term (in years)	4.6			4.4			4.5			4.4
Expected volatility	68.3		%	67.2		%	67.3		%	68.7		%
Annual risk-free rate of return	1.5		%	1.2		%	1.4		%	1.0		%
Dividend yield	0.0		%	0.0		%	0.0		%	0.0		%
Weighted average grant date fair value	$	6.98		$	4.07		$	5.43		$	3.84

The fair value of restricted stock units granted was determined based on the price of the Company's common stock on the date of grant.

As of September 30, 2014, there was approximately $20.7 million of total unrecognized compensation cost related to unvested equity awards expected to be recognized over a weighted-average period of 2.8 years.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES No provision for U.S. federal or state income taxes has been made due to cumulative losses since the commencement of operations. The Company had a provision for income taxes of $127,000 and $141,000 for the three months ended September 30, 2014 and 2013, respectively, and $351,000 and $447,000 for the nine months ended September 30, 2014 and 2013, respectively. The provision relates to the Company's subsidiaries located outside of the United States.

Concentration of Credit Risk and Major Customers	9 Months Ended
Concentration of Credit Risk and Major Customers	Sep. 30, 2014
Risks and Uncertainties [Abstract]
Concentration of Credit Risk and Major Customers	CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS Revenue Concentration Two customers represented approximately 20% and 18% of total net revenues for the three months ended September 30, 2014, and 25% and 16% of total net revenues for the nine months ended September 30, 2014. The same two customers represented approximately 16% and 16% of total net revenues for the three months ended September 30, 2013, and 15% and 13% of total net revenues for the nine months ended September 30, 2013. Concentration of Credit Risk At September 30, 2014, two customers accounted for 20% and 12% of net accounts receivable. At December 31, 2013, two customers accounted for 16% and 10% of net accounts receivable, respectively.

Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share is computed in a similar manner, but it also includes the effect of potential common shares outstanding during the period, when dilutive. Potential common shares include outstanding in-the-money stock options, restricted stock units, shares to be purchased under the Company’s employee stock purchase plan and warrants to purchase common stock. To the extent these potential common shares are antidilutive, they are excluded from the calculation of diluted net income (loss) per share.

The following table presents the computation of basic and diluted net income (loss) per share for the periods presented (in thousands, except per share data):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Numerator:
Net income (loss)	$	813	$	(6,301	)	$	(8,454	)	$	(23,103	)

Denominator:
Weighted average shares outstanding for basic calculation	43,128		41,777			42,664			41,517
Effect of dilutive securities
Employee stock-based awards	5,591		—			—			—
Warrants	67		—			—			—
Weighted average shares used in diluted calculation	48,786		41,777			42,664			41,517

Net income (loss) per share, basic	$	0.02	$	(0.15	)	$	(0.20	)	$	(0.56	)
Net income (loss) per share, diluted	$	0.02	$	(0.15	)	$	(0.20	)	$	(0.56	)

For the three months ended September 30, 2014, the Company excluded 0.6 million of potential common shares outstanding from the calculation of diluted net income per share because their effect would have been antidilutive. In periods of net loss, all potential common shares were excluded from the diluted calculation because their effect would have been antidilutive. The following table summarizes the potential common shares excluded from the diluted calculation (in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Stock options	557	8,493	8,474	8,095
Restricted stock units	3	482	1,229	363
Warrants to purchase common stock	—	293	223	312
Total	560	9,268	9,926	8,770

Related Party Transactions	9 Months Ended
Related Party Transactions	Sep. 30, 2014
Related Party Transactions [Abstract]
Related Party Transactions	RELATED PARTY TRANSACTIONS Prior to August 19, 2014, KPCB Holdings, Inc. ("KPCB"), as nominee for certain funds of Kleiner Perkins Caufield & Byers was a related party which has a significant ownership interest in the Company. Entities that are majority-owned by KPCB are customers of the Company. On August 19, 2014, the Company completed a secondary offering of its common shares pursuant to which KPCB's ownership in the Company's common stock dropped to below10% and, as a result, was no longer deemed to be a related party. Sales of microinverters to entities that are majority-owned by KPCB were $0.6 million and $2.7 million in the three and nine months ended September 30, 2013, respectively. There were no sales to these entities for the three and nine months ended September 30, 2014.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References + Details

Overview and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation, Consolidation and Related Party Transactions

Unaudited Interim Financial Information

These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company's financial condition, results of operations, comprehensive income (loss) and cash flows for the interim periods indicated. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the operating results for the full year. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation.

Reclassifications

Certain reclassifications of prior year's balances have been made to conform to current year presentation, including separately presenting balances for “Warranty obligations” in current liabilities on the condensed consolidated balance sheets and under changes in operating assets and liabilities on the condensed consolidated statements of cash flows.

Unaudited Interim Financial Information

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events and apply judgments that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from these estimates. Significant estimates and assumptions by management affect the timing and amounts of revenue recognition, warranty obligations and expense and the carrying value of inventory.

Fair Value Option for Warranty Obligations Related to Microinverters Sold Since January 1, 2014

The Company’s warranty obligations related to microinverters sold since January 1, 2014 provide the Company the right, but not the requirement, to assign its warranty obligations to a third-party. Under Accounting Standards Codification (“ASC”) 825—Financial Instruments, (“fair value option”), an entity may choose to elect the fair value option for such warranties at the time it first recognizes the eligible item. The Company made an irrevocable election to account for all eligible warranty obligations associated with microinverters sold since January 1, 2014 at fair value. This election was made to reflect the underlying economics of the time value of money for an obligation that will be settled over an extended period of up to 25 years. See Note 4—Fair Value Measurements.

The Company estimates the fair value of warranty obligations by calculating the warranty obligations in the same manner as for sales prior to January 1, 2014 and applying an expected present value technique to that result. The expected present value technique, an income approach, converts future amounts into a single current discounted amount. In addition to the key estimates of failure rates, claim rates and replacement costs, the Company used certain inputs that are unobservable and significant to the overall fair value measurement. Such additional assumptions included a discount rate based on the Company's credit-adjusted risk-free rate and compensation comprised of a profit element and risk premium required of a market participant to assume the obligation. Warranty obligations initially recorded at fair value at the time of sale will be subsequently re-measured to fair value at each reporting date. In addition, the fair value of the liability will be accreted over the corresponding term of the warranty of up to 25 years using the interest method. Any changes in fair value of the liability from period-to-period, including accretion expense, will be recognized in cost of revenues. As of September 30, 2014, warranty obligations associated with sales prior to December 31, 2013 were $29.2 million and warranty obligations associated with sales subsequent to December 31, 2013 were $3.1 million, of which $3.0 million were eligible for fair value accounting. The portion of warranty obligations arising from sales subsequent to December 31, 2013 that was not eligible for fair value accounting relates to sales of non-microinverter products. Periodic adjustments necessitated by actual experience of claims and any future changes in estimates to amounts not eligible for fair value accounting will continue to be accounted for on an undiscounted basis.

Recent Accounting Pronouncements Net Yet Effective

Recent Accounting Pronouncements Not Yet Effective

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606), Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under U.S. GAAP. The updated standard's core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The standard generally requires an entity to identify performance obligations in its contracts, estimate the amount of variable consideration to be received in the transaction price, allocate the transaction price to each separate performance obligation, and recognize revenue as obligations are satisfied. In addition, the updated standard requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. Accordingly, the ASU will be effective for the Company beginning in the first quarter of 2017. The Company is currently evaluating the impact of the adoption on its Consolidated Financial Statements.

Inventory

Inventory is valued at the lower of cost or market, on a first-in, first-out basis

Share-Based Compensation Valuation Assumptions

Valuation Assumptions

The fair value of option awards was estimated on the date of the grant using the Black-Scholes option valuation pricing model with the following input assumptions:

•


•	Risk-free interest rate—The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant and with a maturity that approximated the Company's expected term.


•	Dividend yield—The dividend yield was based on the Company's dividend history and the anticipated dividend payout over its expected term.

The fair value of restricted stock units granted was determined based on the price of the Company's common stock on the date of grant.

- Definition

Disclosure of accounting policy for major classes of inventories, bases of stating inventories (for example, lower of cost or market), methods by which amounts are added and removed from inventory classes (for example, FIFO, LIFO, or average cost), loss recognition on impairment of inventories, and situations in which inventories are stated above cost. If inventory is carried at cost, this disclosure includes the nature of the cost elements included in inventory.

+ References + Details

Inventory (Tables)

9 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Schedule of inventory

Inventory is valued at the lower of cost or market, on a first-in, first-out basis and consists of the following as of September 30, 2014 and December 31, 2013 (in thousands):



	September 30, 2014		December 31, 2013
Raw materials	$	2,924	$	1,428
Finished goods	12,564		15,152
Total inventory	$	15,488	$	16,580

Warranty Obligations (Tables)

9 Months Ended

Sep. 30, 2014

Product Warranties Disclosures [Abstract]

Changes in the Company's product warranty liability

The Company’s warranty activities during the three and nine months ended September 30, 2014 and 2013 were as follows (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Warranty obligations, beginning of period	$	32,969		$	26,777		$	30,432		$	21,338
Accruals for warranties issued during period	1,361			1,392			3,112			4,802
Changes in estimates	1,146			3,823			5,506			8,537
Settlements	(3,041		)	(2,626		)	(6,666		)	(5,311		)
Increase due to accretion expense	47			—			87			—
Other	(175		)	—			(164		)	—
Warranty obligations, end of period	$	32,307		$	29,366		$	32,307		$	29,366
Less current portion							$	(7,749	)	$	(8,434	)
Noncurrent							$	24,558		$	20,932

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of financial instruments that are measured at fair value on a recurring basis



	September 30, 2014				December 31, 2013
	Asset Derivatives		Liability Derivatives		Asset Derivatives		Liability Derivatives
Foreign currency forward contracts (Level 2)	$	107	$	—	$	325	$	605

Schedule of warranty obligations measured at fair value on a recurring basis



	Warranty Obligations Measured at Fair Value
Balance—December 31, 2013	$	—
Accruals for warranties issued during period	2,913
Changes in estimates	117
Settlements	(15		)
Increase due to accretion expense	87
Other	(141		)
Balance—September 30, 2014	$	2,961

Schedule of significant unobservable inputs used in the fair value measurement of the Company's warranty obligations

As of September 30, 2014, the significant unobservable inputs used in the fair value measurement of the Company's warranty obligations designated as Level 3 are as follows:



Item Measured at Fair Value	Valuation Technique	Description of Significant Unobservable Input	Percent Used
Warranty obligations for microinverters sold since January 1, 2014	Discounted cash flows	Profit element and risk premium	18%
	Discounted cash flows	Credit-adjusted risk-free rate (discount rate)	15%

Term Loans (Tables)

9 Months Ended

Sep. 30, 2014

Long-term Debt, by Current and Noncurrent [Abstract]

Schedule of long-term debt

The Company’s long-term debt at September 30, 2014 and December 31, 2013 consists of the following (in thousands):



	September 30, 2014			December 31, 2013
Term loans	$	5,861		$	7,400
Equipment financing facility, net of unamortized discount of $0 and $31, respectively	—			1,277
Total term loans	5,861			8,677
Less current portion	(2,888		)	(3,507		)
Term loans, noncurrent	$	2,973		$	5,170

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=34725769&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=6451184&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6451184&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21521-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 02
-Paragraph 22
-Article 5

+ Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity

The following is a summary of stock option activity for the nine months ended September 30, 2014 (in thousands, except per share data):



	Number of Shares Outstanding		Weighted- Average Exercise Price per Share
Outstanding at December 31, 2013	8,509		$	3.94
Granted	1,005		10.04
Exercised	(759	)	4.29
Canceled	(257	)	7.50
Outstanding at September 30, 2014	8,498		4.52

Summary of restricted stock unit activity

The following is a summary of restricted stock unit activity for the nine months ended September 30, 2014 (in thousands, except per share data):



	Restricted Stock Units		Weighted Average Fair Value per Share at Grant Date
Outstanding at December 31, 2013	418		$	6.31
Granted	1,215		8.62
Vested	(242	)	7.52
Canceled	(31	)	7.41
Outstanding at September 30, 2014	1,360		8.13

Summary of components of stock-based compensation expense, by report line

The following table summarizes the components of total stock-based compensation expense included in the condensed consolidated statements of operations for the periods presented (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenues	$	229	$	137	$	572	$	309
Research and development	824		625		2,215		1,541
Sales and marketing	635		542		1,816		1,317
General and administrative	842		741		2,434		1,788
Total	$	2,530	$	2,045	$	7,037	$	4,955

Summary of stock-based compensation expense by award type

The following table summarizes stock-based compensation expense associated with each type of award for the periods presented (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Stock options and restricted stock units	$	2,317	$	1,871	$	6,465	$	4,588
Employee stock purchase plan	213		174		572		367
Total	$	2,530	$	2,045	$	7,037	$	4,955

Schedule of weighted average valuation assumptions of stock options

The following table presents the weighted-average assumptions used to estimate the fair values of the stock options granted in the periods presented:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Expected term (in years)	4.6			4.4			4.5			4.4
Expected volatility	68.3		%	67.2		%	67.3		%	68.7		%
Annual risk-free rate of return	1.5		%	1.2		%	1.4		%	1.0		%
Dividend yield	0.0		%	0.0		%	0.0		%	0.0		%
Weighted average grant date fair value	$	6.98		$	4.07		$	5.43		$	3.84

Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted net loss per share

The following table presents the computation of basic and diluted net income (loss) per share for the periods presented (in thousands, except per share data):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
Numerator:
Net income (loss)	$	813	$	(6,301	)	$	(8,454	)	$	(23,103	)

Denominator:
Weighted average shares outstanding for basic calculation	43,128		41,777			42,664			41,517
Effect of dilutive securities
Employee stock-based awards	5,591		—			—			—
Warrants	67		—			—			—
Weighted average shares used in diluted calculation	48,786		41,777			42,664			41,517

Net income (loss) per share, basic	$	0.02	$	(0.15	)	$	(0.20	)	$	(0.56	)
Net income (loss) per share, diluted	$	0.02	$	(0.15	)	$	(0.20	)	$	(0.56	)

Schedule of potentially dilutive securities excluded from computation of diluted net loss per share



	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Stock options	557	8,493	8,474	8,095
Restricted stock units	3	482	1,229	363
Warrants to purchase common stock	—	293	223	312
Total	560	9,268	9,926	8,770

Overview and Summary of Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Accounting Policies [Line Items]
Warranty obligation	$ 32,307	$ 32,969	$ 30,432	$ 29,366	$ 26,777	$ 21,338
Prior to December 31, 2013
Accounting Policies [Line Items]
Warranty obligation	29,200
Subsequent to December 31, 2013
Accounting Policies [Line Items]
Warranty obligation	3,100
Subsequent to December 31, 2013 \| Warranty obligations, fair value option
Accounting Policies [Line Items]
Warranty obligation	$ 3,000
Maximum
Accounting Policies [Line Items]
Product warranty term	25 years

Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Schedule of inventory
Raw materials	$ 2,924	$ 1,428
Finished goods	12,564	15,152
Total inventory	$ 15,488	$ 16,580

Warranty Obligations - Changes in the Company's Product Warranty Liability (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Changes in the Company's product warranty liability
Warranty obligations, beginning of period	$ 32,969	$ 26,777	$ 30,432	$ 21,338
Accruals for warranties issued during period	1,361	1,392	3,112	4,802
Changes in estimates	1,146	3,823	5,506	8,537
Settlements	(3,041)	(2,626)	(6,666)	(5,311)
Increase due to accretion expense	47	0	87	0
Other	(175)	0	(164)	0
Warranty obligations, end of period	32,307	29,366	32,307	29,366
Less current portion	(7,749)	(8,434)	(7,749)	(8,434)	$ (4,942)
Noncurrent	$ 24,558	$ 20,932	$ 24,558	$ 20,932	$ 25,490

Warranty Obligations - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Product Liability [Line Items]
Warranty obligation	$ 32,307	$ 29,366	$ 32,307	$ 29,366	$ 32,969	$ 30,432	$ 26,777	$ 21,338
Change in warrant accrual	1,146	3,823	5,506	$ 8,537
First and Second Generation Products
Product Liability [Line Items]
Product warranty term				15 years
Third and Fourth Generation Products
Product Liability [Line Items]
Product warranty term				25 years
Failure Rate \| Second Generation Products
Product Liability [Line Items]
Increase (Decrease) in Warranty Expense Due to Changes in Warranty Variables	1,100	7,300	4,200	$ 15,900
Failure Rate \| Third Generation Products
Product Liability [Line Items]
Increase (Decrease) in Warranty Expense Due to Changes in Warranty Variables		(3,100)		(3,100)
Replacement Cost
Product Liability [Line Items]
Increase (Decrease) in Warranty Expense Due to Changes in Warranty Variables		$ (400)		(100)
Replacement Cost \| Second Generation Products
Product Liability [Line Items]
Increase (Decrease) in Warranty Expense Due to Changes in Warranty Variables			1,300
Claim Rate
Product Liability [Line Items]
Increase (Decrease) in Warranty Expense Due to Changes in Warranty Variables				$ (4,200)
Warranty obligations, fair value option
Product Liability [Line Items]
Warranty obligation fair value measurement portion	$ 3,000		$ 3,000

Fair Value Measurements - Narrative (Details) - Not designated as hedging instrument - Foreign exchange forward - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Derivative [Line Items]
Notional amount	$ 3.0		$ 3.0		$ 12.5
Net gain (loss) on foreign currency	$ 0.1	$ (0.6)	$ 0.1	$ (0.6)

Fair Value Measurements - Schedule of Financial Instruments that are Measured at Fair Value on a Recurring Basis (Details) - Fair value, measurements, recurring - Level 2 - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Asset Derivatives
Foreign currency forward contracts	$ 107	$ 325
Liability Derivatives
Foreign currency forward contracts	$ 0	$ 605

Fair Value Measurements - Schedule of Warranty Obligations Measured at Fair Value on a Recurring Basis (Details) - Warranty obligations, fair value option $ in Thousands	9 Months Ended
	Sep. 30, 2014 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance—September 30, 2014	$ 3,000
Level 3
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance—December 31, 2013	0
Accruals for warranties issued during period	2,913
Changes in estimates	117
Settlements	(15)
Increase due to accretion expense	87
Other	(141)
Balance—September 30, 2014	$ 2,961

Fair Value Measurements - Schedule of Significant Unobservable Inputs Used in the Fair Value Measure of the Company's Warranty Obligations (Details) - Warranty obligations for microinverters sold since January 1, 2014 - Discounted cash flows - Level 3	9 Months Ended
	Sep. 30, 2014
Fair Value Inputs [Abstract]
Profit element and risk premium	18.00%
Credit-adjusted risk-free rate (discount rate)	15.00%

Term Loans - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Schedule of long-term debt
Total term loans	$ 5,861	$ 8,677
Less current portion	(2,888)	(3,507)
Term loans, noncurrent	2,973	5,170
Term loans
Schedule of long-term debt
Total term loans	5,861	7,400
Equipment financing facility, net of unamortized discount of $0 and $31, respectively
Schedule of long-term debt
Total term loans	$ 0	$ 1,277

Term Loans - Schedule of Long-Term Debt (Parenthetical) (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Equipment financing facility
Debt Instrument [Line Items]
Unamortized discount	$ 0	$ 31

Term Loans - Narrative (Details)			9 Months Ended
Term Loans - Narrative (Details)	Jun. 01, 2014 USD ($)	Mar. 31, 2014 USD ($)	Sep. 30, 2014 USD ($) debt_agreement	Feb. 14, 2014 USD ($)	Feb. 13, 2014 USD ($)
Debt Instrument [Line Items]
Number of debt agreements \| debt_agreement			3
Wells Fargo Bank \| Revolving credit facility
Debt Instrument [Line Items]
Credit line facility			$ 50,000,000.0
Amount of undrawn credit for debt compliance				$ 5,000,000.0	$ 8,000,000.0
Amount of liquidity required for debt compliance				$ 15,000,000.0
Hercules Technology Growth Capital Inc \| Secured debt
Debt Instrument [Line Items]
Initial draw under credit line arrangement			7,400,000
Incremental line of credit amount			15,600,000
Line of credit expired during period		$ 15,600,000
Hercules Technology Growth Capital Inc \| Equipment financing facility
Debt Instrument [Line Items]
Credit line facility			$ 5,000,000.0
Line of credit expired during period	$ 5,000,000.0

Stock-Based Compensation - Summary of Stock Option Activity (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2014 $ / shares shares
Number of Shares Outstanding
Outstanding at December 31, 2013 (in shares) \| shares	8,509
Granted (in shares) \| shares	1,005
Exercised (in shares) \| shares	(759)
Canceled (in shares) \| shares	(257)
Outstanding at September 30, 2014 (in shares) \| shares	8,498
Weighted- Average Exercise Price per Share
Outstanding at December 31, 2013 (in usd per share) \| $ / shares	$ 3.94
Granted (in usd per share) \| $ / shares	10.04
Exercised (in usd per share) \| $ / shares	4.29
Canceled (in usd per share) \| $ / shares	7.50
Outstanding at September 30, 2014 (in usd per share) \| $ / shares	$ 4.52

Stock-Based Compensation - Summary of Restricted Stock Unit Activity (Details) - Restricted stock units shares in Thousands	9 Months Ended
	Sep. 30, 2014 $ / shares shares
Restricted Stock Units
Outstanding at December 31, 2013 (in shares) \| shares	418
Granted (in shares) \| shares	1,215
Vested (in shares) \| shares	(242)
Canceled (in shares) \| shares	(31)
Outstanding at September 30, 2014 (in shares) \| shares	1,360
Weighted Average Fair Value per Share at Grant Date
Outstanding at December 31, 2013 (in usd per share) \| $ / shares	$ 6.31
Granted (in usd per share) \| $ / shares	8.62
Vested (in usd per share) \| $ / shares	7.52
Canceled (in usd per share) \| $ / shares	7.41
Outstanding at September 30, 2014 (in usd per share) \| $ / shares	$ 8.13

Stock-Based Compensation - Summary of Components of Stock-based Compensation Expense by Report Line (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract]
Total stock-based compensation expense	$ 2,530	$ 2,045	$ 7,037	$ 4,955
Cost of revenues
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract]
Total stock-based compensation expense	229	137	572	309
Research and development
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract]
Total stock-based compensation expense	824	625	2,215	1,541
Sales and marketing
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract]
Total stock-based compensation expense	635	542	1,816	1,317
General and administrative
Allocation of Stock-based Compensation Expense Included in the Consolidated Statement of Operations [Abstract]
Total stock-based compensation expense	$ 842	$ 741	$ 2,434	$ 1,788

Stock-Based Compensation - Summary of Stock-Based Compensation Expense by Award Type (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 2,530	$ 2,045	$ 7,037	$ 4,955
Stock options and restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	2,317	1,871	6,465	4,588
Employee stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 213	$ 174	$ 572	$ 367

Stock-Based Compensation - Schedule of Weighted Average Valuation Assumptions of Stock Options (Details) - Stock options - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
The fair value of each option granted during the periods
Expected term	4 years 7 months 6 days	4 years 4 months 24 days	4 years 6 months	4 years 4 months 24 days
Expected volatility	68.30%	67.20%	67.30%	68.70%
Annual risk-free rate of return	1.50%	1.20%	1.40%	1.00%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Weighted average grant date fair value (in usd per share)	$ 6.98	$ 4.07	$ 5.43	$ 3.84

Stock-Based Compensation - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2014 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of options exercised during period	$ 4.5
Intrinsic value of options outstanding	89.1
Total unrecognized compensation cost	$ 20.7
Weighted-average recognition period for unrecognized compensation cost	2 years 10 months 5 days
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock vested during period	$ 2.7
Intrinsic value of restricted stock units outstanding	$ 20.4

Income Taxes - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
Income Taxes - Narrative (Details) - USD ($)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]
Provision for U.S. federal or state income taxes			$ 0
Provision for income taxes related to subsidiaries located outside the U.S.	$ 127,000	$ 141,000	$ 351,000	$ 447,000

Concentration of Credit Risk and Major Customers - Narrative (Details) - customer	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Net Revenue \| Customer Concentration Risk
Revenue, Major Customer [Line Items]
Number of customers considered to give rise to concentration risk			2	2
Net Revenue \| Customer Concentration Risk \| Largest Customer Accounting for Most Revenue
Revenue, Major Customer [Line Items]
Percentage of concentration risk	20.00%	16.00%	25.00%	15.00%
Net Revenue \| Customer Concentration Risk \| Second Largest Customer Accounting for Most Revenue
Revenue, Major Customer [Line Items]
Percentage of concentration risk	18.00%	16.00%	16.00%	13.00%
Accounts Receivable \| Credit Concentration Risk
Revenue, Major Customer [Line Items]
Number of customers considered to give rise to concentration risk			2		2
Accounts Receivable \| Credit Concentration Risk \| Customer With Highest Balance Due
Revenue, Major Customer [Line Items]
Percentage of concentration risk			20.00%		16.00%
Accounts Receivable \| Credit Concentration Risk \| Customer With Second Highest Balance Due
Revenue, Major Customer [Line Items]
Percentage of concentration risk			12.00%		10.00%

Net Income (Loss) Per Share - Narrative (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (in shares)	560	9,268	9,926	8,770

Net Income (Loss) Per Share - Schedule of Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Numerator:
Net income (loss)	$ 813	$ (6,301)	$ (8,454)	$ (23,103)
Denominator:
Weighted average shares outstanding for basic calculation (in shares)	43,128	41,777	42,664	41,517
Effect of dilutive securities
Weighted average shares used in diluted calculation (in shares)	48,786	41,777	42,664	41,517
Net income (loss) per share, basic (in USD per share)	$ 0.02	$ (0.15)	$ (0.20)	$ (0.56)
Net income (loss) per share, diluted (in USD per share)	$ 0.02	$ (0.15)	$ (0.20)	$ (0.56)
Employee Stock-Based Awards [Member]
Effect of dilutive securities
Dilutive securities	5,591	0	0	0
Warrant [Member]
Effect of dilutive securities
Dilutive securities	67	0	0	0

Net Income (Loss) Per Share - Schedule of Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders
Total (in shares)	560	9,268	9,926	8,770
Stock options
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders
Total (in shares)	557	8,493	8,474	8,095
Restricted stock units
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders
Total (in shares)	3	482	1,229	363
Warrants to purchase common stock
The potential common shares outstanding that were excluded from the computation of diluted net loss per share attributable to common stockholders
Total (in shares)	0	293	223	312

Related Party Transactions - Narrative (Details) - KPCB Holdings, Inc. [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Aug. 19, 2014
Related Party Transaction [Line Items]
Revenue from related parties	$ 0	$ 600,000	$ 0	$ 2,700,000
Maximum
Related Party Transaction [Line Items]
KPCB ownership interest below percent					10.00%