Enphase Energy, Inc.

Good day and welcome to the Enphase Energy's fourth quarter 2025 financial results. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Zach Friedman. Please go ahead, sir.

Good afternoon, and thank you for joining us on today's conference call to discuss Enphase Energy's fourth quarter 2025 results. On today's call are Badri Kothandaraman, our President and Chief Executive Officer, Mandy Yang, our Chief Financial Officer, and Ray Gugel, our Chief Products Officer. After the market closed today, Enphase issued a press release announcing the results for its fourth quarter ended December 31, 2025. During this conference call, Enphase Management will make forward-looking statements, including but not limited to statements related to our expected future financial performance, market trends, the capabilities of our technology and products, and the benefits to homeowners and installers, our operations, including manufacturing, customer service, and supply and demand, anticipated growth in existing and new markets, including the TPO market, the timing of new product introductions and enhancements to existing products, and regulatory tax, tariff, and supply chain matters. 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 8K, 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 2025 financial results. We had a good quarter. We reported quarterly revenue of $343.3 million. shipped 1.55 million microinverters and 150 megawatt hours of batteries, and generated free cash flow of $37.8 million. Our Q4 revenue included $2.3 million of safe harbor revenue. U.S. consumers pulled forward purchases ahead of the Section 25D tax credit deadline, helping us exit 2025 with a lean channel. For Q4, we delivered 46% gross margin above the high end of our guidance range, 23% operating expenses, and 23% operating income, all as a percentage of revenue on a non-GAAP basis. Mandy will go into our financials later in the call. Our global customer service NPS was 79% in Q4 compared to 77 in Q3. Average call wait time was 1.6 minutes. We piloted an AI assistant in the Enphase app in Q4 and plan to roll it out in Q1 to help customers manage their systems intuitively. We also plan to pilot an AI assistant for installers in Q1 to help them manage their fleet and identify upgrade opportunities. Let's talk about operations. In Q4, we shipped approximately 1.31 million microinverters from our Texas and South Carolina manufacturing facilities and book associated Section 45X production tax credits. These domestically made microinverters help residential lease and PPA providers as well as commercial asset owners qualify for the 10% domestic content ITC add-ons. In Q4, we shipped 51.1 megawatt hours of IQ batteries from our Texas manufacturing facilities. meeting applicable domestic content requirements and helping lease PPA customers qualify for ITC bonuses. We continue to differentiate through our ability to deliver domestic content and meet FIAC requirements as regulatory standards tighten. Also, we expect to receive our first non-China battery cells in Q1 and remain on track to scale non-China cell supply into battery production in the first half of 2026. Let's now cover the regions. Our U.S. and international revenue mix for Q4 was 89% and 11% respectively. In the U.S., our revenue decreased 13% in Q4 compared to Q3, primarily due to safe harbor revenue of $20.3 million compared to $70.9 million in Q3. The overall sell-through of our products increased 21% in Q4 compared to Q3, to the highest level in more than two years. The strong demand trends that we saw at the beginning of Q4 continued till the end of the year, driven by increased solar and battery installations ahead of the expiring Section 25D tax credit. In Europe, our revenue decreased by 29% in Q4 compared to Q3, while our sell-through decreased by 23%. The overall business environment across the region is still challenging, We are staying disciplined in managing the channel and focusing on targeted growth areas for 2026. I will provide some additional color on the key markets in Europe. In the Netherlands, solar demand remained soft in Q4, but we are making steady progress towards a large battery retrofit opportunity driven by structural changes in the market. Rising solar export penalties and the planned phase-out of net metering by the end of 2026 are shifting economics decisively towards self-consumption, strengthening the case for batteries. With an installed base of approximately 475,000 in-phase residential solar systems, we estimate a total opportunity of roughly $2 billion for batteries. We are seeing early traction from targeted homeowner outreach, including homeowner events and direct marketing, and are expanding partnerships with retail energy providers that offer compelling VPP economics. With continued rollout of software capabilities like PowerMatch and the launch of our fifth generation battery later this year, we believe we are very well positioned to lead the battery transition in Netherlands. In France, reduction in feed-in tariffs are shifting residential solar economics towards self-consumption. increasing the interest in batteries, particularly for new installations. With approximately 375,000 Enphase residential solar systems installed in France, the retrofit opportunity is more modest than in the Netherlands due to fixed energy contracts, but overall battery adoption is still gaining traction. New business models, including battery leasing, are emerging, and we expect the battery demand in France to build steadily through the years. supported by anticipated increases in utility rates and evolving dynamic tariffs. Across Europe, competition remains intense and pricing pressure is high as installers adapt to a tougher demand environment. We are responding by controlling costs within our current products and aligning pricing to market realities, including our microinverter price reductions, which we implemented across Europe in November. At the same time, we are investing in next-generation products very strongly, both IQ9 microinverters and our fifth-generation battery platform. We expect to deliver structural cost improvements in these products, which enable attractive pricing and sustain healthy gross margins. Our focus remains on supporting our installers and competing effectively as the market evolves. In Australia, we see of meaningful battery growth opportunities supported by a mature rooftop solar base and accelerating customer interest in self-consumption, resilience and VPP. The market is installing larger, more capable storage systems to take advantage of current incentives and installers are increasingly asking for solutions that are simple to size, expand and commission. With our fifth generation system expected later this year, We believe our stackable, scalable AC coupled architecture is well aligned with what installers want and what homeowners increasingly value. Flexible capacity today with the ability to add more over time. Let's now discuss Q1 outlook. During last quarter's call, we shared a view of Q1 revenue to be around $250 million. Today, we are providing Q1 revenue guidance of $270 to $300 million. we are approximately 90% booked to the midpoint of our revenue guidance. We continue to believe Q1 marks the low point for underlying demand with improvement expected through 2026, particularly in the second half. Installer sentiment is also improving as higher utility rates strengthen the customer value proposition, including in several Northeast and Midwest markets that have seen double-digit residential electricity price increases over the last year. The feedback on prepaid lease offerings is also encouraging, giving installers yet another effective tool to drive solar and battery adoption this year. Let's talk about financing. Enphase is well positioned to support all major TPOs today. In Q4, we announced two TPO orders totaling $123 million. including $55 million under the 5% safe harbor method and $68 million under the physical work test method. We collaborate with CPOs on tax equity support, domestic content and FIAC-compliant offerings, O&M services through Enphase Care, and an integrated workflow through SolarGraph for design, proposal, and permitting, while also partnering on innovative financing structures. We continue to see prepaid leases as an attractive option, which give homeowners a lower upfront cost today and the option to own the system after five years. In this structure, the TPO owns the system initially and claims the 4080 tax credit, then shares that value with the homeowner through a prepaid lease or low monthly payments when paired with a loan. The result is a lower effective cost for the homeowner and economics that look much closer to what customers were used to when the 30% Section 25D tax credit was available. We are supporting a TPO-led prepaid lease program that is being field tested with a loan partner as well as a distribution partner. The program which uses Enphase equipment is currently in pilot across four states with approximately 40 installers. We expect a broader rollout to happen upon completing the pilot successfully and validating the customer experience, installer execution, and financing performance at scale. We expect to share more as the program matures in the coming months. Let's cover products, starting with IQ batteries. Our fourth-generation IQ battery, 10C, continues to ramp in the U.S., delivering a smaller footprint, higher energy density, and a simpler installation process enabled by the IQ meter collar. The collar is now approved by 52 U.S. utilities and growing. serving approximately 30 million customer accounts. We believe this represents the broadest utility approval footprint of any major battery provider today. In California, the meter collar is approved by all three major investor-owned utilities. We also launched Match in Q4, a software-enabled technology that dynamically matches the IQ battery output to real-time home demand, increasing usable energy extending battery life and improving performance by up to 40%. Unlike hybrid systems that push all power through a single large inverter, PowerMatch activates only the microinverters that are needed, reducing the losses at low power consumption so customers get more usable energy from the same battery capacity. Let's now cover our fifth-generation batteries. We are making significant progress on this battery. It is built from stackable 5 kilowatt hour modular blocks and will scale up to 20 kilowatt hours in the US and up to 30 kilowatt hours in other regions. The design targets roughly 50% higher energy density than the fourth generation battery at about 40% lower cost. When paired with PowerMatch, we believe this platform will offer a compelling combination of performance, flexibility, and value for installers and homeowners. We expect to start pilots in the third quarter of 2026 and start shipping in the fourth quarter. We are making strong progress in partnering with retail energy providers and VPP operators across the globe that are seeking flexible distributed capacity. Through these programs, homeowners can earn attractive incentives from their energy provider for installing and enrolling in-phase batteries. In Q4, we added several programs, the notable being a home battery leasing program with GMP in Vermont, and eligibility under San Diego Community Power Solar Battery Savings Program. These partnerships can drive meaningful battery volumes, and we are targeting many more additional VPP partnerships this year. Let's come to microinverters. In December, we began shipping the IQ9 3P commercial microinverter built on our GAN-based power conversion architecture. IQ9 is a major step forward for Enphase, expanding us into 480-volt three-phase commercial systems in the U.S. for the first time and represents an approximately $400 million total addressable market. The demand is encouraging, with more than 50,000 microinverters ordered for Q1 and early feedback confirms the market need for reliability, fiat compliance, and domestic content that IQ9 delivers. We expect to introduce IQ9 for the global residential markets in the first quarter of 2026 and the higher-powered 548-watt version for both residential and commercial markets in the third quarter. More broadly, our IQ, our GAN-based microinverter platform, gives us a step change in speed, efficiency, and controllability. Capabilities that matter as the grid and large electrified loads increasingly demand fast response times and load shaping. We are increasing our R&D investment in these areas to extend our core capabilities to address these demanding use cases. More to come here as we make progress. Let's cover EV charging. In December, we began shipping our new IQ EV charger 2 to customers across the US. This charger supports a fast level 2 charging up to 19.2 kilowatts on 240 volt service and up to 22.1 kilowatts where 277 volts is available. It also works as a stand-alone charger or fully integrated with Enphase solar and battery systems. is also available in Europe, Australia, New Zealand, and Canada with additional availability plans for 2026. Let me share an update on our IQ bidirectional EV charger built on our GaN power platform, engineered to work seamlessly with modern 800-volt DC EV architectures. It is a concrete example of our ability to move power efficiently between grid-facing AC and 800-volt DC backbone, and to do so bidirectionally with tight control and protection. We continue to target initial availability in the fourth quarter of 2026, starting with limited deployments as we complete required certifications, utility coordination, and vehicle compatibility validation. The product is compelling because it pairs simply with the IQ meter collar in the US and a backup switch in Europe. to enable a streamlined configuration for seamless home backup, which is V2H, and VPP participation, which is V2G. We are also in active discussions with multiple auto OEMs on partnerships and will share more as those discussions mature. Let's cover SolarGraph, our all-in-one design and proposal platform built for installers. We continue to deliver meaningful upgrades, including fully customizable proposals with in-line editing, battery-only proposals, and racking integration to generate a complete bill of materials. We are also expanding AI capabilities, including one-touch design and automation, and light and integration to help installers reduce operational overhead. Looking ahead, we are adding support for commercial system designs to align with our expanding commercial products. SolarGraph remains a core installer enablement tool, especially as TPO integration accelerates. Let me conclude. We are executing well through a challenging period, and our focus on innovation, quality, and customer service continues to support healthy margins and good market share in U.S. residential solar. We are now extending these strengths into commercial solar, where we believe we can build a meaningful business. We expect the underlying demand to stabilize from current levels with improvements developing as several tailwinds build. Rising electricity costs are making energy affordability a priority for households. New financing options are expanding how consumers can buy solar. And easing interest rates can further improve affordability. In 2026, we are continuing to evolve from a single product and end market company strategy. into a broader technology platform that can apply our power electronics and energy management strength to significantly larger markets. The transition began five years ago with our entry into residential batteries and is now accelerating with our expansion into commercial solar and our planned entry into commercial batteries, bidirectional EV charging, and additional adjacencies in the year ahead. As the world's power needs grow, Larger and more complex, we believe Enphase brings a differentiated, best-in-class power management foundation to meet them. We remain laser-focused on the near-term revenue levers that we can control. Number one, accelerating IQ battery latency growth. Number two, scaling IQ9 GAN microinverters to expand our 480-volt three-phase commercial footprint. Number three, unlocking battery retrofits across Netherlands and France. Number four, ramping IQ EV charger 2 while preparing for bidirectional EV charging later in 2026. Number five, launching our fifth generation residential battery along with IQ 9 microinverters to materially lower system costs and strengthen solar economics. With that, I will turn the call over to Mandy for her review of our financials.