ENPH 2Q2025 Earnings Preview 7/22/2025

SUMMARY

ENPH might have a revenue upside surprise to the expected $360 million in revenue after the close on 7/22/2025. Potential short squeeze with 24 million or more than 19% of the float short, a short ratio of 2.92.

ENPH announced an after the market 2Q2025 earnings release for July 22, 2025.

On April 22, 2025, ENPH guided to $360 mm revenue, 45.5% GPM, and implied 59c EPS, with no below line expenses.

Yahoo Consensus estimates of 22 analysts are for 63c on $359.2 mm revenue.

ENPH could be set up to beat revenue expectations, on the following. ENPH said they were 80% booked to the midpoint of guidance at April 22, 2025, with expectations of getting to 100%, plus the possibility of pull forward demand for customers hoping to avoid future tariffs.

We are concerned about the unknown impact on the 2028-elimination of tax incentives for solar, and would like to see sell-side quantification of that impact.

We expect that the focus of the call will be on the following:

Impact of tariffs on margins; supplier diversification. At the April 22, 2025 earnings conference call, ENPH said that 75% of inverter supply was based in the U.S., and relatively tariff resistant, but 90+ of battery supply was from China. Therefore, ENPH expected a 2% negative margin impact in 2Q2025, and 6% to 8% negative margin impact, by 4Q2025, but that fast-track qualification of non-China suppliers could mean no net impact by 1Q2026.

Impact of 2028 elimination of tax incentives on sales & margins. In classic sell on the rumor of bad news, but on the release of the bad news, ENPH stock has fallen dramatically on previous expectations of elimination of tax incentives for solar. However, ENPH stock steadied on the actually enacting of the OBBBA. We still do not understand what the “right-size” of the financial statements will be, assuming no tax incentives.

New Products and Geography: ENPH has been positive on the specific developments within geographies and new products in response to Analyst questions. 4th generation battery was highlighted ion the 1q2025 call on April 22, 2025, with an offhand comment on the mobile product. We’d expect further positive commentary, along with comments on specific positives in various geographies.

Commentary:

We rate ENPH as a BUY, but the current action as of July 9, 2025 is a HOLD.

Contrarian analysis suggests buying. Cramer said ENPH is untouchable and Goldman downgraded to a sell with a $32 price target.

ENPH management continues to display its quality at navigating and delivering profits and margins in a difficult macro and regulatory environment.

Our primary area of concern is exactly what the financials could look like without tax incentives.

DETAILS

4:40 pm ENPH 2Q2025 earnings release. Live: (833) 634-5018; Replay: (877) 344-7529. Replay access code: 6021998.

Yahoo Finance of 22 analysts consensus for 2Q2025 is 63c on $359.2 mm revenue. ENPH guidance was for $360 mm revenue, 45.5% GPM, and implied 49c EPS, or 59c EPS with no below line expenses.

Versus

2Q2024 ENPH⁠

results 43c on $303.5mm & 45.2% [1,403 unit inverter shipments & 608.3 Mw and 120.2 MW batteries].

Versus

1Q2025⁠

of 68c on $356.1 mm & 47.2% GPM [1,531 unit inverter shipments & 688.5 Mw and 170.1 MWh batteries].

2Q2025 Guidance at April 22, 2025 - $360 mm, 45.5% non-GAAP GPM, 59C EPS, 63C EPS analyst expectations

Guidance implied guidance is 20.1% operating profit, 16.3% pre-tax, and 12.7% Net income margin, yielding $45.77 mm, over 136.2 mm shares implies 49c non-GAAP guidance, based on following

ENPH Revenue Guidance for 2Q2025 at April 22, 2025, was between $340 mm and $380 mmm, with a midpoint of $360 mm, including $40 mm Safe Harbor revenue, planned to be installed in a year, $288 mm sales booked.

Guidance for 2Q2025 ENPH expects to ship between 160 and 180 megawatt hours of IQ Batteries versus 170.1 in 1Q2025

⁠

1Q2025 Earnings Transcript⁠

commentary

“Battery channel inventory was normal, while our microinverter channel inventory was a little elevated...”

“[G]lobal capacity is around 7.25 million microinverters per quarter, 5 million of those are in the US. In Q1, we shipped approximately 1.21 million microinverters [of .53 million microinverters total].”

Then-”145% tariff on products from China...with the 10% reciprocal tariffs on imports from other countries is expected to have minimal impact on our microinverters and accessories....[due to]....diversification [sic]....[of the]...supply chain.”

Batteries will be more [negatively] impacted....[by tariffs]

ENPH “currently source[s] battery cell packs from China....expected to reduce our gross margin by approximately 2% in Q2 of '25.

[Then]...[s]tarting in Q3, [ENNPH]...anticipate[s] a 6% to 8% total gross margin impact after accounting for pricing adjustments[,]...with gradually lessen[ed impact on gross profit margin]...over the subsequent quarters[, due to]....mitigation.

ENPH said it was “moving with 10C...already identified tangible sourcing options outside China and...fast tracking the qualification....[ENPH]...expect[s] to fully offset the impact starting in Q2 '26

US / International mix 74% & 26%, respectively

US down sales 13%, sell through down 18%

Europe revenue up 7%, driven by battery sales in Germany, sell through down by 9%

Guidance for 2Q2025 Revenue between $340 mm and $380 mmm, with a midpoint of $360 mm, including approximately $40 million in Safe Harbor revenue, sales planned to be installed in a year. At date of guidance, April 22, 2025, ENPH was had $288 mm sales booked, or 80% of the $360 mm midpoint revenue guidance.

Guidance for 2Q2025 ENPH expects to ship between 160 and 180 megawatt hours of IQ Batteries versus 170.1 in 1Q2025.

Guidance 2Q2025 ENPH expects non-GAAP gross margin to be within a range of 44% to 47% with net IRA benefit and 35% to 38% before net IRA benefit, including 2 percentage points of new tariff impact.

ENPH sees more confidence in US & California from NEM 3.0 supported by battery-attached.

ENPH expects multiple product launches internationally.

2Q2025 ENPH Guidance at April 22, 2025

Guidance implied guidance is 20.1% operating profit, 16.3% pre-tax, and 12.7% Net income margin, yielding $45.77 mm, over 136.2 mm shares implies 49c non-GAAP guidance, based on following

Guidance for 2Q2025 ENPH expects to ship between 160 and 180 megawatt hours of IQ Batteries versus 170.1 in 1Q2025

Guidance 2Q2025 ENPH expects non-GAAP gross margin to be within a range of 44% to 47% with net IRA benefit and 35% to 38% before net IRA benefit, including 2 percentage points of new tariff impact.

Non-GAAP operating expenses to be within a range of $78 million to $82 million [$80 midpoint, 25%]

Other expense [complete speculation] $14.0, 3.8%

For the year of 2025, we expect our GAAP tax rate of 21% to 23% and a non-GAAP tax rate of 15% to 17%, including IRA benefits

Estimated shares outstanding, diluted 136.2, unchanged from prior period

1Q2025 Analyst Q&A

Q: Praneeth Satish, Wells Fargo - 2% next quarter, 6% to 8% high-end impact from margins, before ENPH mitigates, can you talk about absorbing tariff costs versus passing some on?

A: Impact mostly from the battery side, because 90% to 95% batteries are sourced from China, we want to absorb at least some, because we are qualifying non-China battery suppliers fast. So, we don’t want to alienate customers for what ENPH regards as a temporary problem that can be solved by adjustments to supply chain that can happen in a year or under.

Q: Praneeth Satish, Wells Fargo - Has ENPH been negatively impacted by its channel customers well-known and documented, cash flow, liquidity and financial difficulties? Can these difficulties be mitigated, and does the negative potential tariff impacts have the potential to create increased sales in 2Q2025 from those trying to avoid paying tariff costs after 2Q2025?

A: Yes. Originators suffered in 1Q2025, including one national lease provider’s well-known liquidity difficulties. This specific and general problem negatively impacted 1Q2025 sell-through. However, 2Q2025 is seasonally the strongest season. ENPH management is positive on battery shipments in 2Q2025, because this generation of product has fewer components, is less expensive relatively, and comparable to cost of electricity generated from the grid, and now offered in 10 Mw capacity versus 5 Mw capacity.

Q: Phil Shen with ROTH - Can ENPH see $375 mm guidance for 4Q2025?

A: ENPH does not guide two quarters ahead. However, ENPH can offer the following color - Several new products will be launched in 2Q2025, and traction in other recently launched products.

Q: Brian Lee of Goldman Sachs - Can you give us more information on volume and margin impacts of battery sales beyond 2Q2025 guidance already given?

A: Yes. The new 4th Generation Battery is 10 Mw capacity versus 5 Mw, and has fewer parts, so although the price is up, the cost to the customer to provision and install is less. In Germany battery attach is 80% to 90% penetrated, but only 30% of that has backup.

Follow up asks about tariff impact on margins & mitigation - sourcing suppliers outside China.

Q; Mark Strouse with JPMorgan - Does the supply chain adjustment discussed imply a redesign of the LFPO battery technology?

A: No. ENPH intends to keep the same design, but diversify suppliers outside China geography.

Follow up, ENPH management expects to be 100% booked to mid-point of revenue guidance “soon,” after April 22, 2025.

Q: Colin Rusch with Oppenheimer - Can you give some color commentary on the impact of VPP functionality and analytics impact on market share?

A: These features give homeowners the ability to tailor their product usage and therefore how much electricity that customers draw from the grid and pay the utility for. Therefore, the products can save customers more money and reduce payback time.

Follow up - do the late April 2025 disruption in container ships impact ENPH? Not really, already expect 44 Mwh batteries to sourced in the United States, with that capacity growing.

Q: Christine Cho with Barclays - Most recent 10C inverter product was originally scheduled to be manufactured in China, has that changed?

A: No. Within two or three months, we expect to increase the U.S. manufacturing volume of 10C.

Follow up, battery volume guidance appears light? A: End of 3rd gen is shipping, 4th gen is ramping, speculates 30Mwh to be shipped, but not guiding there.

Q: Andrew Percoco with Morgan Stanley & Answer reiterates strategy of diversifying battery outside of China.

Follow up: NEM 3.0 was a difficulty abrupt transition, California went to 90% battery attached. Growth of AI is going to negatively impact grid, making solar and battery attached to residential more attractive.

Other Q&A

ENPH is disciplined on selling to the channel, based on lower sell through in 1Q2025.

ENPH notes improved financing supply offsetting sell through obstacles in 1Q2025

As to NVTS, ENPH is not concerned about GaN sourcing

High interest rates have decreased loan financing from 70% to 30%, with increased uses of lease financing

ENPH concedes that tariffs are going to increase cost of goods sold

Want to print your doc?
This is not the way.

Try clicking the ⋯ next to your doc name or using a keyboard shortcut (

CtrlP

) instead.