UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 8-K
________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 25, 2022
________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________
| (State or other jurisdiction of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices, including zip code)
(877 ) 774-7000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2022 , Enphase Energy, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the third quarter ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information in Item 2.02 of this Form 8-K and the exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and shall not be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filings, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
| Exhibit Number | Description | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | ENPHASE ENERGY, INC. | ||||||||||
| By: | /s/ Mandy Yang | ||||||||||
| Mandy Yang | |||||||||||
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||||||||
Exhibit 99.1
Enphase Energy Reports Financial Results for the Third Quarter of 2022
FREMONT, Calif., Oct. 25, 2022 - 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 third quarter of 2022, which included the summary below from its President and CEO, Badri Kothandaraman.
We reported record quarterly revenue of $634.7 million in the third quarter of 2022, along with 42.9% for non-GAAP gross margin. We shipped 4,342,805 microinverters, or approximately 1,709 megawatts DC, and 133.6 megawatt hours of Enphase® IQ™ Batteries.
Financial highlights for the third quarter of 2022 are listed below.
•Record quarterly revenue of $634.7 million
•GAAP gross margin of 42.2%; non-GAAP gross margin of 42.9%
•GAAP operating income of $135.4 million; non-GAAP operating income of $194.0 million
•GAAP net income of $114.8 million; non-GAAP net income of $175.5 million
•GAAP diluted earnings per share of $0.80; non-GAAP diluted earnings per share of $1.25
•Free cash flow of $179.1 million; ending cash, cash equivalents, and marketable securities of $1.42 billion
Our revenue and earnings for the third quarter of 2022 are provided below, compared with the prior quarter and the year ago quarter:
(In thousands, except per share and percentage data)
| GAAP | Non-GAAP | ||||||||||||||||||||||||||||||||||
| Q3 2022 | Q2 2022 | Q3 2021 | Q3 2022 | Q2 2022 | Q3 2021 | ||||||||||||||||||||||||||||||
| Revenue | $ | 634,713 | $ | 530,196 | $ | 351,519 | $ | 634,713 | $ | 530,196 | $ | 351,519 | |||||||||||||||||||||||
| Gross margin | 42.2 | % | 41.3 | % | 39.9 | % | 42.9 | % | 42.2 | % | 40.8 | % | |||||||||||||||||||||||
| Operating expenses | $ | 132,475 | $ | 124,969 | $ | 103,007 | $ | 78,587 | $ | 71,169 | $ | 57,341 | |||||||||||||||||||||||
| Operating income | $ | 135,441 | $ | 94,036 | $ | 37,351 | $ | 193,962 | $ | 152,412 | $ | 85,932 | |||||||||||||||||||||||
| Net income | $ | 114,812 | $ | 76,976 | $ | 21,809 | $ | 175,513 | $ | 149,852 | $ | 84,157 | |||||||||||||||||||||||
| Basic EPS | $ | 0.85 | $ | 0.57 | $ | 0.16 | $ | 1.29 | $ | 1.11 | $ | 0.62 | |||||||||||||||||||||||
| Diluted EPS | $ | 0.80 | $ | 0.54 | $ | 0.15 | $ | 1.25 | $ | 1.07 | $ | 0.60 | |||||||||||||||||||||||
Our total revenue increased 20%, compared to the second quarter of 2022. Demand was strong in our markets worldwide, particularly in North America and Europe. Our revenue in Europe for the third quarter of 2022 increased approximately 70%, compared to the second quarter of 2022, as countries in the region are accelerating their efforts to address rising energy prices and reliance on fossil fuels. Our IQ Battery shipments increased 1%, compared to the second quarter of 2022. Our non-GAAP gross margin was 42.9% in the third quarter of 2022, compared to 42.2% in the second quarter of 2022, driven by IQ8™ Microinverter product mix.
Our non-GAAP operating expenses were $78.6 million in the third quarter of 2022, compared to $71.2 million in the second quarter of 2022, primarily due to increased investment in R&D, customer service, and sales. Our non-GAAP operating income was $194.0 million in the third quarter of 2022, compared to $152.4 million in the second quarter of 2022.
We exited the third quarter of 2022 with $1.42 billion in cash, cash equivalents, and marketable securities and generated $188.0 million in cash flow from operations in the third quarter of 2022. Our capital expenditures were $8.9 million in the third quarter of 2022, compared to $8.7 million in the second quarter of 2022.
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IQ8 Microinverters constituted approximately 47% of all our microinverter shipments during the third quarter of 2022. IQ8 Microinverters can form a microgrid and provide Sunlight Backup™ during an outage, even without a battery. With our Sunlight Jump Start™ feature, IQ8 Microinverters can restart a home energy system using sunlight only after prolonged grid outages that may result in a fully depleted battery. This eliminates the need for a manual restart of the system and gives homeowners greater resilience.
Our IQ Battery shipments were 133.6 megawatt hours in the third quarter of 2022, compared to 132.4 megawatt hours in the second quarter of 2022. We shipped batteries to the United States, Germany, and Belgium during the third quarter. We now have approximately 2,100 installers worldwide that are certified to install our IQ Batteries.
We recently acquired GreenCom Networks AG based in Munich, Germany. The company provides Internet of Things (IoT) software solutions for customers to connect and manage a wide range of distributed energy devices within the home, thereby enabling sector convergence. This acquisition allows us to add a local engineering team to service the accelerating clean energy transition in Europe, provide installers with a complete home energy management system integrating Enphase microinverters and batteries with third-party electric vehicle (EV) chargers and heat pumps, and enable homeowners to monitor and control their devices from the Enphase® App.
BUSINESS HIGHLIGHTS
On Aug. 1, 2022, Enphase Energy announced that Salcomp, a global high-precision manufacturer, shipped more than five million Enphase IQ® Microinverters.
On Aug. 11, 2022, Enphase Energy announced that ClipperCreek™, a division of Enphase offering EV charging solutions, is expanding product deployments amidst rising consumer interest in EVs and electrification.
On Aug. 31, 2022, Enphase Energy announced a new agreement with Home Connect, an open digital platform that allows home appliances of various brands to be managed with a single app. Home Connect is available for nine well-known home appliance brands including Bosch, Siemens, Gaggenau, Neff, and Thermador.
In Aug. 2022, Enphase Energy announced that Complete Solar, a leading technology-enabled residential solar company in the United States, is seeing increased deployments of Enphase Energy Systems™ powered by IQ8 Microinverters and IQ Batteries. Enphase Energy also announced that Meraki Solar, headquartered in Florida, is expanding the adoption of Enphase IQ Microinverters as homeowners across the United States are hit with extreme weather and rising energy prices.
On Sept. 6, 2022, Enphase Energy announced that it expanded its global relationship with renewable energy company BayWa r.e., a leading global developer and solar photovoltaic (PV) distributor, to distribute Enphase’s IQ7™ family of microinverters and IQ Batteries in Germany and Benelux.
On Sept. 17, 2022 Enphase Energy announced that Gaslicht.com, a Netherlands-based leading energy platform and part of the Bencom Group, is seeing an increase in deployments of residential solar energy systems powered by the Enphase IQ7 family of microinverters.
In Oct. 2022, Enphase Energy announced that Energiekonzepte Deutschland GmbH (EKD), one of the leading residential solar and battery storage service providers in Germany, will now offer Enphase IQ Batteries to its customers. Enphase Energy also announced that CREATON GmbH, one of the leading residential roof manufacturers in Europe, is now exclusively offering Enphase IQ Batteries as CREATON is now able to integrate battery installations into solar roofing projects.
Enphase Energy recently announced that installers in Hawaii, Rhode Island, Massachusetts, and New Jersey have seen growing deployments of Enphase Energy Systems powered by IQ8 Microinverters and IQ Batteries.
FOURTH QUARTER 2022 FINANCIAL OUTLOOK
For the fourth quarter of 2022, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:
•Revenue to be within a range of $680 million to $720 million, which includes shipments of 120 to 135 megawatt hours of Enphase IQ Batteries
•GAAP gross margin to be within a range of 39.0% to 42.0%; non-GAAP gross margin to be within a range of 40.0% to 43.0%, excluding stock-based compensation expenses and acquisition related amortization
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•GAAP operating expenses to be within a range of $152.0 million to $156.0 million
•Non-GAAP operating expenses to be within a range of $87.0 million to $91.0 million, excluding $65.0 million estimated for stock-based compensation expenses, restructuring charges for site consolidation, and acquisition related costs and amortization
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Use of Non-GAAP Financial Measures
Enphase Energy has presented certain non-GAAP financial measures in this press release. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this press release. Non-GAAP financial measures presented by Enphase Energy include non-GAAP gross profit, gross margin, operating expenses, income from operations, net income, net income per share and free cash flow.
These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Enphase Energy’s results of operations as determined in accordance with GAAP. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Enphase Energy uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. Enphase Energy believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.
As presented in the “Reconciliation of Non-GAAP Financial Measures” tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items for purposes of calculating non-GAAP financial measures to facilitate an evaluation of the Enphase Energy’s current operating performance and a comparison to its past operating performance:
Stock-based compensation expense. Enphase Energy excludes stock-based compensation expense from its non-GAAP measures primarily because they are non-cash in nature. Moreover, the impact of this expense is significantly affected by the Enphase Energy’s stock price at the time of an award over which management has limited to no control.
Acquisition related expenses and amortization. This item represents expenses incurred related to the Enphase Energy’s business acquisitions, which are non-recurring in nature, and amortization of acquired intangible assets, which is a non-cash expense. Acquisition related expenses and amortization of acquired intangible assets are not reflective of the Enphase Energy ongoing financial performance.
Restructuring charges and asset impairment. Enphase Energy excludes restructuring related charges due to the nature of the expenses being unplanned and arising outside the ordinary course of continuing operations. These costs primarily consist of fees paid for cash-based severance costs and asset write-downs of property and equipment, and other contract termination costs resulting from restructuring initiatives.
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Non-cash interest expense. This item consists primarily of amortization of debt issuance costs and accretion of debt discount because these expenses do not represent a cash outflow for the Enphase Energy except in the period the financing was secured and such amortization expense is not reflective of the Enphase Energy ongoing financial performance.
Loss on partial settlement of convertible notes. This item is reflected in other income (expense), net and represents (i) the difference between the carrying value and the fair value of the settled convertible notes and (ii) the inducement loss for the difference between the value of the shares issued to settle the convertible notes and the value of the shares that would have been issued under the original conversion terms with respect to the repurchased Notes due 2025, which is non-cash in nature and is not reflective of the Enphase Energy ongoing financial performance.
Non-GAAP income tax adjustment. This item represents the amount adjusted to the Enphase Energy’s GAAP tax provision or benefit to present the non-GAAP tax amount based on cash tax expense and reserves.
Free cash flow. This item represents net cash flows from operating activities plus deemed repayment of convertible notes attributable to accreted debt discount reported in operating activities less purchases of property and equipment.
Conference Call Information
Enphase Energy will host a conference call for analysts and investors to discuss its third quarter 2022 results and fourth quarter 2022 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (833) 634-5018. A live webcast of the conference call will also be accessible from the “Investor Relations” section of Enphase Energy’s website at investor.enphase.com. Following the webcast, an archived version will be available on the website for approximately one year. In addition, an audio replay of the conference call will be available by calling (877) 344-7529; replay access code 3730150, beginning approximately one hour after the call.
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to its fourth quarter of 2022 financial outlook and expense levels; the capabilities, advantages, features and performance of its technology and products; the anticipated benefits of its acquisition of GreenCom Networks; the anticipated demand for and availability of its products and services; and growth in deployments of Enphase Energy Systems. These forward-looking statements are based on Enphase Energy’s current expectations and inherently involve significant risks and uncertainties. Enphase Energy’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of certain risks and uncertainties including those risks described in more detail in its most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, its most recent Annual Report on Form 10-K for the year ended December 31, 2021 and other documents on file with the SEC from time to time and available on the SEC’s website at www.sec.gov. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.
A copy of this press release can be found on the investor relations page of Enphase Energy’s website at investor.enphase.com.
About Enphase Energy, Inc.
Enphase Energy, a global energy technology company based in Fremont, CA, is the world's leading supplier of microinverter-based solar and battery systems that enable people to harness the sun to make, use, save, and sell their own power—and control it all with a smart mobile app. The company revolutionized the solar industry with its microinverter-based technology and builds all-in-one solar, battery, and software solutions. Enphase has shipped more than 52 million microinverters, and over 2.7 million Enphase-based systems have been deployed in more than 145 countries. For more information, visit www.enphase.com.
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© 2022 Enphase Energy, Inc. All rights reserved. Enphase Energy, Enphase, the “e” logo, IQ, IQ7, IQ8, IQ Battery, Enphase Energy Systems, Sunlight Backup, Sunlight Jump Start, ClipperCreek, and certain other names and marks are trademarks of Enphase Energy, Inc. Other names are for informational purposes and may be trademarks of their respective owners.
Contact:
Karen Sagot
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com
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ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Net revenues | $ | 634,713 | $ | 530,196 | $ | 351,519 | $ | 1,606,201 | $ | 969,330 | |||||||||||||||||||
| Cost of revenues | 366,797 | 311,191 | 211,161 | 942,307 | 578,222 | ||||||||||||||||||||||||
| Gross profit | 267,916 | 219,005 | 140,358 | 663,894 | 391,108 | ||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||
| Research and development | 44,188 | 39,256 | 29,411 | 119,163 | 73,937 | ||||||||||||||||||||||||
| Sales and marketing | 55,257 | 53,588 | 39,296 | 150,189 | 84,504 | ||||||||||||||||||||||||
| General and administrative | 32,436 | 32,125 | 34,300 | 102,647 | 74,530 | ||||||||||||||||||||||||
| Restructuring charges | 594 | — | — | 594 | — | ||||||||||||||||||||||||
| Total operating expenses | 132,475 | 124,969 | 103,007 | 372,593 | 232,971 | ||||||||||||||||||||||||
| Income from operations | 135,441 | 94,036 | 37,351 | 291,301 | 158,137 | ||||||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||||||||
| Interest income | 3,680 | 796 | 110 | 4,936 | 281 | ||||||||||||||||||||||||
| Interest expense | (2,255) | (2,168) | (12,628) | (7,159) | (32,463) | ||||||||||||||||||||||||
| Other income (expense), net | (2,611) | (456) | 874 | (5,208) | 814 | ||||||||||||||||||||||||
| Loss on partial settlement of convertible notes (1) | — | — | — | — | (56,382) | ||||||||||||||||||||||||
| Total other expense, net | (1,186) | (1,828) | (11,644) | (7,431) | (87,750) | ||||||||||||||||||||||||
| Income before income taxes | 134,255 | 92,208 | 25,707 | 283,870 | 70,387 | ||||||||||||||||||||||||
| Income tax benefit (provision) | (19,443) | (15,232) | (3,898) | (40,261) | 22,471 | ||||||||||||||||||||||||
| Net income | $ | 114,812 | $ | 76,976 | $ | 21,809 | $ | 243,609 | $ | 92,858 | |||||||||||||||||||
| Net income per share: | |||||||||||||||||||||||||||||
| Basic | $ | 0.85 | $ | 0.57 | $ | 0.16 | $ | 1.80 | $ | 0.69 | |||||||||||||||||||
| Diluted | $ | 0.80 | $ | 0.54 | $ | 0.15 | $ | 1.70 | $ | 0.65 | |||||||||||||||||||
| Shares used in per share calculation: | |||||||||||||||||||||||||||||
| Basic | 135,633 | 135,196 | 134,721 | 135,056 | 133,719 | ||||||||||||||||||||||||
| Diluted | 145,962 | 143,725 | 141,220 | 144,058 | 143,091 | ||||||||||||||||||||||||
(1) Loss on partial settlement of convertible notes of $56.4 million for the nine months ended September 30, 2021, primarily related to the $9.5 million non-cash loss on partial settlement of $87.1 million aggregate principal amount of the Notes due 2024, $9.5 million non-cash loss on partial settlement of $217.8 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.
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ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| September 30, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 337,583 | $ | 119,316 | |||||||
| Marketable securities | 1,079,713 | 897,335 | |||||||||
| Accounts receivable, net | 367,647 | 333,626 | |||||||||
| Inventory | 146,451 | 74,400 | |||||||||
| Prepaid expenses and other assets | 51,270 | 37,784 | |||||||||
| Total current assets | 1,982,664 | 1,462,461 | |||||||||
| Property and equipment, net | 91,801 | 82,167 | |||||||||
| Operating lease, right of use asset, net | 18,128 | 14,420 | |||||||||
| Intangible assets, net | 90,924 | 97,758 | |||||||||
| Goodwill | 195,508 | 181,254 | |||||||||
| Other assets | 140,439 | 118,726 | |||||||||
| Deferred tax assets, net | 178,371 | 122,470 | |||||||||
| Total assets | $ | 2,697,835 | $ | 2,079,256 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 92,823 | $ | 113,767 | |||||||
| Accrued liabilities | 255,800 | 157,912 | |||||||||
| Deferred revenues, current | 79,609 | 62,670 | |||||||||
| Warranty obligations, current | 32,350 | 19,395 | |||||||||
| Debt, current | 89,654 | 86,052 | |||||||||
| Total current liabilities | 550,236 | 439,796 | |||||||||
| Long-term liabilities: | |||||||||||
| Deferred revenues, noncurrent | 239,971 | 187,186 | |||||||||
| Warranty obligations, noncurrent | 73,530 | 53,982 | |||||||||
| Other liabilities | 25,418 | 16,530 | |||||||||
| Debt, noncurrent | 1,198,627 | 951,594 | |||||||||
| Total liabilities | 2,087,782 | 1,649,088 | |||||||||
| Total stockholders’ equity | 610,053 | 430,168 | |||||||||
| Total liabilities and stockholders’ equity | $ | 2,697,835 | $ | 2,079,256 | |||||||
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ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||||||||
| Net income | $ | 114,812 | $ | 76,976 | $ | 21,809 | $ | 243,609 | $ | 92,858 | |||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||||
| Depreciation and amortization | 14,664 | 13,999 | 8,255 | 42,766 | 21,409 | ||||||||||||||||||||||||
| Amortization of marketable securities premiums, net of accretion of purchase discounts | (612) | 1,248 | 58 | 2,091 | 58 | ||||||||||||||||||||||||
| Provision for doubtful accounts | (79) | (16) | 179 | 52 | 450 | ||||||||||||||||||||||||
| Asset impairment | — | 1,200 | — | 1,200 | — | ||||||||||||||||||||||||
| Loss on partial settlement of convertibles notes | — | — | — | — | 56,382 | ||||||||||||||||||||||||
| Deemed repayment of convertible notes attributable to accreted debt discount | — | — | — | — | (15,585) | ||||||||||||||||||||||||
| Non-cash interest expense | 2,065 | 2,046 | 12,430 | 6,090 | 31,893 | ||||||||||||||||||||||||
| Change in fair value of debt securities | (519) | (987) | (784) | (390) | (3,153) | ||||||||||||||||||||||||
| Stock-based compensation | 52,296 | 53,064 | 46,954 | 153,157 | 77,110 | ||||||||||||||||||||||||
| Deferred income taxes | 115 | 12,452 | 1,337 | 15,732 | (28,790) | ||||||||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||||||||
| Accounts receivable | (46,226) | 51,770 | 5,462 | (18,680) | (93,069) | ||||||||||||||||||||||||
| Inventory | (16,185) | (33,830) | (27,648) | (72,051) | (23,640) | ||||||||||||||||||||||||
| Prepaid expenses and other assets | 526 | (18,310) | (3,568) | (20,826) | (18,762) | ||||||||||||||||||||||||
| Accounts payable, accrued and other liabilities | 32,060 | 12,033 | 24,897 | 42,288 | 71,787 | ||||||||||||||||||||||||
| Warranty obligations | 9,329 | 12,972 | 7,574 | 32,207 | 21,599 | ||||||||||||||||||||||||
| Deferred revenues | 25,764 | 16,033 | 16,399 | 63,858 | 64,308 | ||||||||||||||||||||||||
| Net cash provided by operating activities | 188,010 | 200,650 | 113,354 | 491,103 | 254,855 | ||||||||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||||||||
| Purchases of property and equipment | (8,948) | (8,691) | (12,682) | (30,014) | (39,050) | ||||||||||||||||||||||||
| Purchases of marketable securities | (512,176) | (60,061) | (545,490) | (572,237) | (545,490) | ||||||||||||||||||||||||
| Maturities of marketable securities | 184,123 | 116,298 | 35,000 | 377,156 | 35,000 | ||||||||||||||||||||||||
| Investments in private companies | (1,000) | — | (13,000) | (1,000) | (58,000) | ||||||||||||||||||||||||
| Business acquisitions, net of cash acquired | — | (3,055) | — | (27,680) | (55,239) | ||||||||||||||||||||||||
| Purchase of intangible asset | — | — | (250) | — | (250) | ||||||||||||||||||||||||
| Net cash provided by (used in) investing activities | (338,001) | 44,491 | (536,422) | (253,775) | (663,029) | ||||||||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||||||||
| Issuance of convertible notes, net of issuance costs | — | — | — | — | 1,188,439 | ||||||||||||||||||||||||
| Purchase of convertible note hedges | — | — | — | — | (286,235) | ||||||||||||||||||||||||
| Sale of warrants | — | — | — | — | 220,800 | ||||||||||||||||||||||||
| Principal payments and financing fees on debt | — | — | — | — | (1,422) | ||||||||||||||||||||||||
| Partial repurchase of convertible notes | — | — | — | — | (289,312) | ||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (200,000) | ||||||||||||||||||||||||
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Proceeds from exercise of equity awards and employee stock purchase plan | 693 | 4,183 | 42 | 5,280 | 3,684 | ||||||||||||||||||||||||
| Payment of withholding taxes related to net share settlement of equity awards | (4,589) | (5,463) | (3,313) | (19,396) | (20,311) | ||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | (3,896) | (1,280) | (3,271) | (14,116) | 615,643 | ||||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (4,003) | (238) | (376) | (4,945) | (1,302) | ||||||||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | (157,890) | 243,623 | (426,715) | 218,267 | 206,167 | ||||||||||||||||||||||||
| Cash and cash equivalents—Beginning of period | 495,473 | 251,850 | 1,312,261 | 119,316 | 679,379 | ||||||||||||||||||||||||
| Cash and cash equivalents —End of period | $ | 337,583 | $ | 495,473 | $ | 885,546 | $ | 337,583 | $ | 885,546 | |||||||||||||||||||
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ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Gross profit (GAAP) | $ | 267,916 | $ | 219,005 | $ | 140,358 | $ | 663,894 | $ | 391,108 | |||||||||||||||||||
| Stock-based compensation | 3,188 | 3,131 | 2,915 | 8,826 | 4,957 | ||||||||||||||||||||||||
| Acquisition related amortization | 1,445 | 1,445 | — | 4,189 | — | ||||||||||||||||||||||||
| Gross profit (Non-GAAP) | $ | 272,549 | $ | 223,581 | $ | 143,273 | $ | 676,909 | $ | 396,065 | |||||||||||||||||||
| Gross margin (GAAP) | 42.2 | % | 41.3 | % | 39.9 | % | 41.3 | % | 40.3 | % | |||||||||||||||||||
| Stock-based compensation | 0.5 | % | 0.6 | % | 0.9 | % | 0.5 | % | 0.6 | % | |||||||||||||||||||
| Acquisition related amortization | 0.2 | % | 0.3 | % | — | % | 0.3 | % | — | % | |||||||||||||||||||
| Gross margin (Non-GAAP) | 42.9 | % | 42.2 | % | 40.8 | % | 42.1 | % | 40.9 | % | |||||||||||||||||||
| Operating expenses (GAAP) | $ | 132,475 | $ | 124,969 | $ | 103,007 | $ | 372,593 | $ | 232,971 | |||||||||||||||||||
| Stock-based compensation (1) | (49,108) | (49,933) | (44,039) | (144,331) | (72,153) | ||||||||||||||||||||||||
| Acquisition related expenses and amortization | (4,186) | (3,867) | (1,627) | (11,662) | (8,082) | ||||||||||||||||||||||||
| Restructuring and asset impairment charges | (594) | — | — | (594) | — | ||||||||||||||||||||||||
| Operating expenses (Non-GAAP) | $ | 78,587 | $ | 71,169 | $ | 57,341 | $ | 216,006 | $ | 152,736 | |||||||||||||||||||
(1) Includes stock-based compensation as follows: | |||||||||||||||||||||||||||||
Research and development | $ | 17,400 | $ | 16,266 | $ | 10,999 | $ | 47,395 | $ | 22,215 | |||||||||||||||||||
Sales and marketing | 20,069 | 22,176 | 15,472 | 55,302 | 24,344 | ||||||||||||||||||||||||
General and administrative | 11,639 | 11,491 | 17,568 | 41,634 | 25,594 | ||||||||||||||||||||||||
Total | $ | 49,108 | $ | 49,933 | $ | 44,039 | $ | 144,331 | $ | 72,153 | |||||||||||||||||||
| Income from operations (GAAP) | $ | 135,441 | $ | 94,036 | $ | 37,351 | $ | 291,301 | $ | 158,137 | |||||||||||||||||||
| Stock-based compensation | 52,296 | 53,064 | 46,954 | 153,157 | 77,110 | ||||||||||||||||||||||||
| Acquisition related expenses and amortization | 5,631 | 5,312 | 1,627 | 15,851 | 8,082 | ||||||||||||||||||||||||
| Restructuring and asset impairment charges | 594 | — | — | 594 | — | ||||||||||||||||||||||||
| Income from operations (Non-GAAP) | $ | 193,962 | $ | 152,412 | $ | 85,932 | $ | 460,903 | $ | 243,329 | |||||||||||||||||||
| Net income (GAAP) | $ | 114,812 | $ | 76,976 | $ | 21,809 | $ | 243,609 | $ | 92,858 | |||||||||||||||||||
| Stock-based compensation | 52,296 | 53,064 | 46,954 | 153,157 | 77,110 | ||||||||||||||||||||||||
| Acquisition related expenses and amortization | 5,631 | 5,312 | 1,627 | 15,851 | 8,082 | ||||||||||||||||||||||||
| Restructuring and asset impairment charges | 594 | — | — | 594 | — | ||||||||||||||||||||||||
| Non-cash interest expense | 2,065 | 2,048 | 12,430 | 6,092 | 31,893 | ||||||||||||||||||||||||
| Loss on partial settlement of convertible notes | — | — | — | — | 56,382 | ||||||||||||||||||||||||
| Non-GAAP income tax adjustment | 115 | 12,452 | 1,337 | 15,732 | (28,790) | ||||||||||||||||||||||||
| Net income (Non-GAAP) | $ | 175,513 | $ | 149,852 | $ | 84,157 | $ | 435,035 | $ | 237,535 | |||||||||||||||||||
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| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2022 | June 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||||
| Net income per share, basic (GAAP) | $ | 0.85 | $ | 0.57 | $ | 0.16 | $ | 1.80 | $ | 0.69 | |||||||||||||||||||
| Stock-based compensation | 0.39 | 0.39 | 0.35 | 1.13 | 0.58 | ||||||||||||||||||||||||
| Acquisition related expenses and amortization | 0.04 | 0.04 | 0.01 | 0.12 | 0.06 | ||||||||||||||||||||||||
| Restructuring and asset impairment charges | — | — | — | — | — | ||||||||||||||||||||||||
| Non-cash interest expense | 0.01 | 0.02 | 0.09 | 0.05 | 0.24 | ||||||||||||||||||||||||
| Loss on partial settlement of convertible notes | — | — | — | — | 0.42 | ||||||||||||||||||||||||
| Non-GAAP income tax adjustment | — | 0.09 | 0.01 | 0.12 | (0.21) | ||||||||||||||||||||||||
| Net income per share, basic (Non-GAAP) | $ | 1.29 | $ | 1.11 | $ | 0.62 | $ | 3.22 | $ | 1.78 | |||||||||||||||||||
| Shares used in basic per share calculation GAAP and Non-GAAP | 135,633 | 135,196 | 134,721 | 135,056 | 133,719 | ||||||||||||||||||||||||
| Net income per share, diluted (GAAP) | $ | 0.80 | $ | 0.54 | $ | 0.15 | $ | 1.70 | $ | 0.65 | |||||||||||||||||||
| Stock-based compensation | 0.37 | 0.38 | 0.34 | 1.11 | 0.55 | ||||||||||||||||||||||||
| Acquisition related expenses and amortization | 0.05 | 0.04 | 0.01 | 0.12 | 0.06 | ||||||||||||||||||||||||
| Restructuring and asset impairment charges | 0.01 | — | — | 0.01 | — | ||||||||||||||||||||||||
| Non-cash interest expense | 0.02 | 0.02 | 0.09 | 0.05 | 0.23 | ||||||||||||||||||||||||
| Loss on partial settlement of convertible notes | — | — | — | — | 0.40 | ||||||||||||||||||||||||
| Non-GAAP income tax adjustment | — | 0.09 | 0.01 | 0.12 | (0.21) | ||||||||||||||||||||||||
| Net income per share, diluted (Non-GAAP) (2) | $ | 1.25 | $ | 1.07 | $ | 0.60 | $ | 3.11 | $ | 1.68 | |||||||||||||||||||
| Shares used in diluted per share calculation GAAP | 145,962 | 143,725 | 141,220 | 144,058 | 143,091 | ||||||||||||||||||||||||
| Shares used in diluted per share calculation Non-GAAP (3) | 140,634 | 139,650 | 140,516 | 139,983 | 141,101 | ||||||||||||||||||||||||
| Net cash provided by operating activities (GAAP) | $ | 188,010 | $ | 200,650 | $ | 113,354 | $ | 491,103 | $ | 254,855 | |||||||||||||||||||
| Purchases of property and equipment | (8,948) | (8,691) | (12,682) | (30,014) | (39,050) | ||||||||||||||||||||||||
| Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount | — | — | — | — | 15,585 | ||||||||||||||||||||||||
| Free cash flow (Non-GAAP) | $ | 179,062 | $ | 191,959 | $ | 100,672 | $ | 461,089 | $ | 231,390 | |||||||||||||||||||
(2) Calculation of non-GAAP diluted net income per share for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million in each period from non-GAAP net income. Calculation of non-GAAP diluted net income per share for the nine months ended September 30, 2022 and 2021 excludes convertible notes due 2023 interest expense, net of tax of approximately $0.1 million in each period from non-GAAP net income.
(3) Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We excluded the in-the-money portion of convertible notes due 2024 totaling 46 thousand shares and 1,014 thousand shares in the three months and nine months ended September 30, 2021 from non-GAAP weighted-average diluted shares as we entered into convertible note hedge transactions that reduce potential dilution to our common stock upon any conversion of the notes due 2024. We excluded the in-the-money portion of convertible notes due 2025 totaling 1,253 thousand shares and 658 thousand shares in the three months ended September 30, 2022 and 2021, respectively, and 976 thousand shares in the nine months ended September 30, 2021 from non-GAAP weighted-average diluted shares. We excluded in-the-money portion of convertible notes due 2026 and notes due 2028 totaling 2,057 thousand shares and 2,018 thousand shares, respectively, each in the three months and nine months ended September 30, 2022 from non-GAAP weighted-average diluted shares as we entered into convertible note hedge transactions that reduce potential dilution to our common stock upon any conversion of the notes due 2026 and notes due 2028.
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