Tigo Energy, Inc.

Good afternoon, and welcome to Tego Energy's third quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Joining us for today's call from Tego are Zi Alon, CEO, and Bill Rochlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Rochlein, Chief Financial Officer.

Thank you, Operator. We'd like to remind everyone that some of the matters we'll discuss on this call, including our expected business outlook and anticipated costs and market trends, statements about current inventory levels and its impact on future financial results, inventory supply and its impact on customer shipments and our revenue for the fiscal third quarter of 2023, and our ability to penetrate new markets and expand our product portfolio are forward-looking. And as such, are subject to unknown and unknown risks and uncertainties, including, but not limited to, Those factors described in today's press release and discussed in the risk factors section of our definitive prospectus filed with the SEC on April 26, 2023, as supplemented by the prospectus supplement filed with the SEC on May 19, 2023, our quarterly report on Form 10-Q for the quarter ending September 30, 2023, and other reports we may file with the SEC from time to time. These risks and uncertainties could cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date when made. During our call today, we will reference certain non-GAAP financial measures. We include non-GAAP to GAAP reconciliations in our press release furnished as an exhibit to our Form 8K. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of a financial performance prepared in accordance with GAAP. Finally, I'd like to remind everybody that this conference call is being webcast. And a recording will be made available for replay at Tygo's investor relations website at investors.tygoenergy.com. I would like Nat to now turn the call over to Tygo's CEO, Zvi Alon. Zvi?

Thank you, Bill. Before we begin, we would like you to know that our hearts go out to those impacted by recent violent attacks in Israel. Our Tiger family includes a small number of employees and partners in the region, some of whom have been personally impacted. Our thoughts and prayers are with them and their families during this difficult time. To begin today's discussion, I'll give some background on our company, its recent performance and market trends before turning the call over to our CFO, Bill Roschlein. He will discuss our financial results for the quarter in more depth, as well as provide our outlook for the remainder of the year. After that, I'll share some closing remarks before opening the call for questions. All right, let's begin. For those of you who may be new to our story, Tygo Energy is a global provider of intelligent solar and energy storage solutions. founded in 2007. Our mission is to deliver smart hardware and software solutions that enhance safety, increase energy yield, and lower operating costs for residential, commercial, and utility-scale solar systems. Tygo's largest selling product consists of a series of flexibly designed MLP solutions to meet the particular needs of a broad base of installers. Our superior MLP design provides a number of important benefits to our customers. First, our MLP has an energy efficiency designed to operate on an as-needed duty cycle, which optimizes the MPPT of the solar string when compared to solutions requiring constant optimization and high-duty cycles. Our design is so efficient, in fact, that it is housed in a plastic casing instead of a metal one that uses heat sinks. Second, our MLPE solutions provide customers with a highly reliable product and a very low failure rate. High reliability is driven by the product design, low component count, and duty cycle. Third, our MLPs are quick and easy to install in about 10 seconds each. You literally clip the MLP to the back of the panel and connect the wires. And lastly, we provide flexibility. The Tygo products are certified to work with more than 1,600 inverter types across all market segments, including the Resi, CNI, and utility marketplaces today. Year-to-day MLP revenue grew 153% to 122.9 million compared to 48.6 million in the year-ago comparable period, which we believe was driven by the market's realization of these significant advantages. In addition, Our MLPE product, we expanded our product footprint with an energy intelligence or EI solutions over the past year and a half. These solutions combine a hybrid inverter, battery, and automatic transfer switch configured in a DC coupled architecture. The hybrid design allows for one inverter to be used for both P3 modules and battery. while DC coupling increases the round-trip efficiency by reducing the number of DC to AC conversions needed for the system. Moreover, the system, including the battery, can be commissioned in about 10 minutes. Year-to-date, our EIA solutions revenue grew to $12.1 million compared to $1 million in the year-ago comparable period. Most recently, we announced the launch of Tygo's Green Glove Service Program to provide a premium support experience for first-time residential and new existing commercial installers of Tygo systems. This program is expected to enhance customer confidence in the safety, security, and reliability of Tygo product installation and features a six-point design inspection along with an on-call and post-installation support services. We already have many customers who have signed up for the service, and early feedback has been overwhelmingly positive. Now for the review of our financial results and demand outlook. This quarter, our team navigated industry-wide headwinds driven by elevated inventory levels in the channel. Due to a large contingence of distributor partners who requested that we delay product deliveries into future quarters, our third quarter results in revenue of 17.1 million and adjusted EBITDA loss of $9.5 million. Despite these delays, the number of customers that have signed up in the quarter for TIGOS module-level monitoring services increased to a record level. Monitoring services registration occurs once the solar system installation has been completed for the end customer and provides us with an indication of the level of the product sell-through. Based on the inventory on hand, data from our European customers combined with our internal analysis of the current market demand data, we believe Tygo inventory in EMEA channel represented approximately six months of current market demand at the September 30th of 2023. Inventory digestion cycle will likely continue into early 2024. As we look forward into 2024, we believe distributors will seek to keep lower inventory weeks on hand as they did in 2023. As supply chain lead time shorten, for 2024 our overall outlook for EMEA is for continued growth, albeit at a more moderate pace compared to 2023. In America, high interest rates and net metering policies may delay recovery until the second half of next year at the macro level. Although we do expect to gain AVL traction with the expanding list of TPOs serving the market, and that could be a significant catalyst of growth for us in the region. Regardless of the macroeconomic environment, however, we believe Tygo is well positioned to grow as we execute on the following four initiatives in 2024. One, cost effectiveness. We will continue to sell advantages of using Tygo's products to lower electrical balance of system costs in the solar installation. Two, market expansion. We will continue our market penetration of underserved markets and long-tail customers. Within the Asia-Pacific region, for instance, we invested in additional headcount targeting that region earlier this year, and so our region contributed 19% of the total revenue in the third quarter to achieve sequential growth of 28%. We believe our Green Club program is similarly positioned to provide long-tail installers with VIP customer support experience they will not find elsewhere. Three, EI product expansion. Our EI solution continues to gain traction and provide a $12 million or 9% of the total revenue year-to-date compared to $1 million a year ago in a comparable period. We expect our business momentum to continue with the product line and plan on announcing additional EI products in the future quarters. PredictPlus software expansion. As you may recall, we acquired Foresight Energy in January 2023. Since then, we have integrated and scaled this unique software offering which provides customers with the ability to predict and manage energy demand and load balancing. Our PredictPlus software solutions enables utility and VPP to manage the so-called dark curve challenges posted by changes in electricity demand and generations throughout the day. Our ARR continues to grow as we add new customers for this product. With that, I will turn the call over to Bill to discuss our third quarter financial results and 2023 outlook in greater detail.