Enphase Energy, Inc.

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Good afternoon, and thank you for joining us on today's conference call to discuss Enphase Energy's fourth quarter 2024 results. On today's call are Badri Kothandaraman, our President and Chief Executive Officer, Mandy Yang, our Chief Financial Officer, and Raghu Ballur, our Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its fourth quarter ended December 31, 2024. During this conference call, Enphase Management will make forward-looking statements, including but not limited to statements related to our expected future financial performance to homeowners and installers, our operations, including manufacturing, customer service, and supply and demand, anticipated growth and existing and new markets, the timing of new product introductions, and regulatory and tax matters. These forward-looking statements involve significant risks and uncertainties, and our actual results and the timing of events could differ materially from these expectations. For a more complete discussion of the risks and uncertainties, please see our most recent Form 10-K and 10-Qs filed with the SEC. We caution you not to place any undue reliance on forward-looking statements and undertake no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in expectations. Also, please note that financial measures used on this call are expressed on a non-GAAP basis unless otherwise noted and have been adjusted to exclude certain charges. We have provided a reconciliation of these non-GAAP financial measures to GAAP financial measures in our earnings release furnished with the SEC on Form 8-K, which can also be found in the Investor Relations section of our website. Now I'd like to introduce Badri Kothandaraman, our President and Chief Executive Officer.

Badri. Good afternoon and thanks for joining us today to discuss our fourth quarter 2024 financial results. We reported quarterly revenue of $382.7 million, shipped approximately 2 million microinverters and 152 megawatt hours of batteries, and generated free cash flow of $159 million. Our overall channel inventory remained normal as we exited the fourth quarter. For Q4, we delivered 53% gross margin, 22% operating expenses, and 31% operating income, all as a percentage of revenue on a non-GAAP basis, including the net IRA benefit. Mandy will cover the financials later in the call. Let's cover customer service. Our worldwide Net Promoter score was 78% in Q4, the same compared to Q3. Our average call wait time decreased to 2.8 minutes from 4.4 minutes. We are working to further reduce wait times by leveraging AI and rolling out software fixes. Let's talk about operations. Our global capacity is around 7.25 million microinverters per quarter, with 5 million in the U.S. In Q4, we shipped approximately 1.7 million microinverters from our U.S. contract manufacturing facilities, booking 45x production tax credits. We also introduced a higher domestic content SKU for U.S. two of our products, the IQ8X microinverter and the IQ8P commercial microinverters in Q4 to help the commercial asset owners qualify for a 10% domestic content ITC error. We now offer higher domestic content microinverters that cover both residential and commercial solar applications and continue to see good demand. for these products from lease, PPA, and commercial markets. We expect to ship 1.2 million units, microinverters, from our U.S. contract manufacturing facilities in Q1. We also began shipping the IQ Battery 5P, our third generation battery system, from our U.S. contract manufacturing facilities during Q4, utilizing domestically made microinverters, battery management systems, and enclosures while sourcing cell packs from China. We shipped 6.7 megawatt hours of batteries from our Texas contract manufacturing facility in Q4. We continue to evolve our sourcing strategy to maximize domestic content opportunities and diversify our geographic exposure. Let's cover the regions. Our U.S. and international revenue mix for Q4 was 79% and 21% respectively. In the US, our revenue increased 6% in Q4 compared to Q3, driven by 11% increase in microinverter sales. This increase was due to strong demand for our higher domestic content microinverters. Our battery sales were down 8% in Q4, compared to Q3 due to lesser channel restocking as we had previously anticipated. Our overall sell-through of products was flat in Q4 compared to Q3. We are generally seeing stable demand in the US, both in California as well as outside of California. NEM 3.0 currently represents 66% of our installs in California with a 45% attach rate for our own batteries. The adoption of batteries is steadily increasing across the U.S. due to new tariff structures like M3, VPP programs, and the need for resilience. In Europe, our revenue was down 25% in Q4 compared to Q3, while our overall sell-through declined by 13%. The overall business environment across the region is still challenging. but we are maintaining discipline on controlling the channel and expanding our served available market by introducing new products. I'll provide some additional color on key markets in Europe, the Netherlands, followed by France, Germany, and the UK. In the Netherlands, demand remains weak but has stabilized. The market is transitioning away from solar-only systems to solar plus batteries, which avoids export penalties and allows participation of residential solar plus battery systems in energy markets. We announced new collaborations with two retail energy providers during Q4 that enable homeowner access to dynamic tariffs and participation in the imbalanced markets, both of which can improve payback to better than six years, even without net metering. We expect to announce more partnerships with Dutch energy providers in the future and see gradual improvement in this market as we progress through 2025. We also started shipping our new IQEV chargers into Netherlands in the fruits water. In France, the market is slowing down due to the recent utility rate cuts. France remains a key long-term growth market for us, given our leadership, and low solar penetration. We started shipping our IQ EV chargers into France in the fourth quarter. We plan to introduce hot water heater compatibility in Q2, enabling homeowners to do heating with excess solar called green heating. We also plan to introduce backup capability for our batteries, further enhancing resilience for homeowners. As the feed-in tariffs in France gradually reduce, The value of solar plus batteries along with home energy management continues to rise. In Germany, we are excited about a few new products that will expand our reach. In early January, we started shipping the IQ Battery 5P with FlexPhase, a new product, to customers in Germany, Austria, and Switzerland. The early feedback has been very positive. and we see an opportunity to increase share in the region now that we have three-phase backup capability. We also recently started shipping our new IQ EV chargers into Germany. In addition, we expect to introduce our IQ balcony solar solution in Q2. We believe N-phase microinverters are ideal for small systems, and this product is expected to increase our served available market in Germany by approximately 400 megawatts per year. A bright spot for us is the UK, where we are growing steadily. We recently announced that our systems are integrated into Octopus Energy's smart import and export tariffs, such as the intelligent Octopus Flux that is designed to optimize the charging and discharging of solar plus battery systems, aiming to provide customers the best rates for buying and selling electricity. We expect to start shipping our new IQEV chargers into the UK shortly in Q1. We are still under-penetrated in many countries in Europe, including the UK, Italy, Spain, Belgium, Luxembourg, Switzerland, Austria, and Poland. While each country faces its own unique challenges and opportunities, homeowners are prioritizing safety, reliability, quality, savings, and an all-in-one app experience for their home energy system, which aligns well with our core strengths. We plan to introduce our entire suite of products, the IQ8 microinverters, both single and three-phase batteries with backup, the new IQEV chargers, and the AI-powered home energy management software, along with the SolarGraph installer platform, across a lot more European countries throughout 2025. We continue to make incremental progress in other regions. In India, our IQ8P and IQ8HC, these are the high-powered microinverters, those sales continue to ramp, and we began shipping the IQ Battery 5P in December. We also recently started shipping the high-powered IQ8P microinverters into Vietnam and Malaysia, further expanding into Southeast Asia. Additionally, we are building momentum in Thailand and Philippines, steadily ramping up businesses in these growing markets as demand for high-quality, reliable energy solutions continues to rise. Let's cover Japan. We are especially excited about Japan's 1.3 gigawatt solar market, where we recently began piloting installations and plan to ship IQ8HC microinverters in Q2. The Tokyo Metropolitan Government subsidies for MLPE make the market even more attractive for consumers. Japan's solar landscape aligns well with small systems, 2 to 3 kilowatts, complex roofs, strong demand for quality. These are all well aligned with our strengths. Let's come to Q1 guidance. We are guiding revenue in the range of $340 to $380 million. We anticipate recognizing approximately $50 million in safe harbor revenue in Q1, partially offsetting seasonality. We define safe harbor revenue as any sales made to customers who plan to install the inventory over more than one year. We are approximately 85% booked to the midpoint of our overall revenue guidance. We expect to shift between 150 and 170 megawatt hours of IQ batteries, slightly higher than Q4. Before we talk about new products, let's discuss the growing importance of energy market participation. In many markets worldwide, REPs or regional energy providers and VPP programs are offering homeowners attractive ROI by utilizing their solar plus battery systems to buy and sell energy. We believe Enphase energy systems offer best-in-class reliability, customer support, and API integration, which are important for REPs and VPP programs. We look forward to sharing with you our progress in these markets as we go through 2025. Let's cover new products starting with IQ batteries. As I said before, our third generation battery continues to gain traction in the US as well as worldwide. In the US, we introduced two key system enhancements to improve flexibility and reduce costs. The first is bus bar power control software, which allows homeowners to install larger solar and battery systems without costly main panel upgrades. The second is power control software for NEM expansion, enabling homeowners in California to expand legacy NEM systems without any penalty. These advancements provide homeowners with increasing flexibility and cost savings and are being well received by installers. We are making excellent progress with our fourth generation IQ battery, which offers 60% less wall space. thanks to its integrated battery management and power conversion architecture. The battery pairs with our IQ meter caller and new enhanced combiner, reducing installed costs by approximately $300 per kilowatt hour for a typical backup system, making us highly competitive across all use cases. We have achieved UL compliance for the meter caller, and we are now working on getting approval from the California utilities. We expect to pilot our fourth generation battery in the US in the first quarter. IQ8P-3P commercial microinverter with its new three-phase cabling system is ideal for 208 volt small commercial solar installs between 20 and 200 kilowatts. We have over 516 sites in the US with an average size of 40 kilowatts, and the feedback so far has been positive. These three-phase microinverters are now shipping from the U.S. with increased domestic content, offering a 10% ITC adder for commercial asset owners, which should drive up demand even further. One more positive thing to note is that our IQ8 residential and commercial microinverters are now in compliance with the Build America by America Act, BABA. Let me provide an update on IQ9, powered by gallium nitride technology. The IQ9 family is built for higher DC input currents handling up to 18 amperes versus IQ8, which handles up to 14 amperes. IQ9 also supports a wide range of AC grid voltages, including 240 volts, 208 volts, and 480 volts for both residential and commercial markets. Leveraging GaN high-voltage transistors, these microinverters deliver high AC output power of 427 watts and 548 watts at a lower cost. We remain on track to launch IQ9 in the second half of this year for both residential and commercial markets with a significant SAM expansion driven by compatibility with 480 volts AC commercial systems. Let's dive into EV charging. We started shipping our new IQ EV charger across several countries in Europe, tapping into a $1.4 billion annual market. The next generation smart charger is designed to work seamlessly as part of our in-phase energy system or as a powerful standalone charger. Key features of this new IQEV chargers include dynamic phase switching and fine-grained current control for efficient green charging, dynamic load balancing, ISO 15118 support for AC bidirectional vehicle expansion, and compatibility with MID meter for Germany, as well as compatibility with OCPP Cloud Software 2.01. making it a very comprehensive and future-ready solution. In Q4, we began shipping the IQ PowerPak 1500 product to customers in the U.S. and Canada. This 1.5 kilowatt-hour smart portable energy system incorporates all of Enphase's core technologies of power conversion, battery management, and software. You should think about it as Enphase in a box. During the recent LA fires, Enphase donated PowerPak 1500s along with an organization called Empowered by Light to support relief efforts with some firefighters who were using them to power their communications gear. We are excited to enter this growing consumer market and plan to expand the PowerPak globally in 2025. Let's talk briefly about Solar Graph, our installer platform. We added a lot of new features to Solar Graph in 2024 with ease of doing design as the goal. Solar Graph is now available to installers in the US, Canada, Brazil, Germany, Austria, Netherlands, France, with plans to expand into more countries in the coming quarters. Looking ahead, we are working on key enhancements to Solar Graph, including auto route detection, ultra-fast proposals, UI UX overhaul, and expanded CNI features, making SolarGraph even more powerful and intuitive. Let me conclude. We successfully navigated a challenging 2024, generating strong free cash flow and profitability while bringing down channel inventory to normalized levels. We entered 2025 with a continued focus on operational efficiency, product reliability, customer service, product breadth, and geographic expansion. We have also doubled down on US manufacturing for microinverters and batteries, which we believe is good for our customers, economy, and for Enphase. There is some uncertainty around government policies for our industry, both in the US and abroad. But one trend is very clear. Centralized grids need more support to keep up with the increased electricity demand. Unsubsidized free markets are increasingly turning to distributed energy systems to help balance the grids through RETs and VPP programs. We see this trend increasing and getting stronger as we look ahead and believe we are well positioned there. We believe our new products will help drive gradual revenue growth throughout 2025, with safe harbor ordering in the U.S. having the potential to accelerate growth as we progress into the second half of 2025. We remain committed to delivering best-in-class solutions and are energized by the road ahead. With that, I will turn the call over to Mandy for her review of our financials. Mandy?