Tigo Energy, Inc.

Good afternoon. Welcome to Tygo Energy's fiscal third quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Joining us today from Tygo are Zvi Alon, CEO, and Bill Roschlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Roschlein, Chief Financial Officer. You may begin.

Thank you, Operator. It's a pleasure to join you today. Also with us is the Elaner CEO. I'd like to remind everyone that some of the matters we'll discuss on this call, including our expected business outlook, our ability to increase our revenues and become profitable, and our overall long-term growth prospects, expectations regarding recovery in our industry, including the timing thereof, statements about our demand for our products, our competitive position and market share, the impact of tariffs and our current and future inventory levels, charges and reserves, and their impact on future financial results, inventory supply and its impact on our customer shipments, statements about the recovery of the solar industry, statements about our revenue and adjusted EBITDA for the fourth quarter of fiscal 2025, and our revenue for the full fiscal year of 2025, as well as statements about our existing backlog and bookings, statements about the anticipated benefits of our manufacturing and marketing partnership with EG4, and our ability to realize such benefits, as well as our ability to expand market share in the U.S. through power market, our ability to refinance our convertible debt prior to maturity, our ability to obtain funding that's acceptable to fund our working capital needs, Our ability to penetrate new markets and expand our market share, including expansion in international markets, investments in our product portfolio are all forward-looking and as such are subject to known 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 most recent annual report on Form 10-K, a quarterly report on Form 10-Q for the fiscal quarter ended September 30, may file with the SEC from time to time. These risks and uncertainties may cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date one made. During our call today, we will reference certain non-GAAP financial measures. We include non-GAAP to GAAP reconciliations in a press release furnished as an Exhibit 2 or Form 8K. the non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Finally, I'd like to remind everyone that this conference call is being webcast and a recording will be made available for replay on Tygo's investor relations website at investors.tygoenergy.com. And with that, I'd like to now turn the call over to our CEO, Zvi Alon. Zvi?

Thank you, Bill. To begin today's discussion, I will highlight key areas in our recent financial and operational performance before turning the call over to our CFO, Bill Roschlein. He will discuss our financial results for the third quarter in more depth, as well as provide our guidance for the fourth quarter of 2025 and updated guidance for the full year of 2025. After that, I will share some closing remarks, tell you about our outlook, and then open the call for questions from the analysts. I'm pleased to report that we entered the third quarter of 2025 with our seventh increase on sequential quarterly revenue growth. Quarter to quarter, we grew more than 27%. And on a year-over-year basis, we grew 115%. We are pleased to see a return to growth similar to what we saw before the industry downturn and believe our top-line growth and market share gains are evidence of the value that Tygo brings to the marketplace. Now to the numbers. In the third quarter of 2025, we reported total revenue of $30.6 million and shipped 795,000 units or 600 megawatts of MLPE. Importantly, we have also returned to GAAP operating profitability for the quarter, which we had guided towards the high end of our estimates on our last quarter call. And for the second time in a row, We are reporting positive adjusted EBITDA. I'm exceptionally proud of what our team here at Tygo has accomplished. To give some geographical color to our results, we saw strong growth in the EMEA and Americas region, which comprise 70% and 26% of our revenue. Noteworthy We performed exceptionally well in the US, as sales grew by approximately 68% sequentially, making it our largest sales region this quarter on a country level. Contributing to this is our sustained effort in the US repower market, where we continue to make significant inroads in this area. During the third quarter, we also announced a domestic manufacturing marketing partnership with EG4 Electronics in the U.S. This partnership will allow Tygo and EG4 to offer an ITC and domestic content bonus tax credit Tygo optimized inverter for the U.S. customers along with the 45X tax credit for Tygo and EG4. Although Analyst expects weakness in the U.S. market next year, we believe this partnership combined with our re-power initiative may mitigate the macro headwinds in the U.S. market and potentially provide significant growth opportunities for us in 2026. And with that, I will turn it over to Bill.

Bill? Thank you, Zvi. Turning now to our financial results for the third quarter ended September 30th, 2025. Revenue for the third quarter of 2025 increased 115% to $30.6 million from $14.2 million in the prior year period. On a sequential basis, revenue increased 27.3% with improved results coming from many countries in the EMEA and America's regions, including Italy, the United Kingdom, Czech Republic, and the United States. By region, EMEA revenue was 21.6 million, or 70.5% of total revenues. America's revenue was 8 million, or 26% of total revenues. And APAC revenue was 1.1 million, or 3.5% of total revenues. By product family, for the third quarter of 2025, MLPE revenue represented 26.8 million of revenue, or 87.5% of total revenues, Well, GOESS represented 3.1 million, or 10.3% of total revenues, and PREDICT Plus and licensing revenue represented 0.7 million, or 2.2% of total revenues during the quarter. Gross profit for the third quarter of 2025 was 13.1 million, or 42.7% of revenue, compared to a gross profit of 1.8 million, or 12.5% of revenue in the comparable year-ago period. Sales of GOESS, which included reserved inventories, had a positive 1.5 gross margin impact during the quarter. Operating expenses for the third quarter increased 1.8% to $12.4 million compared to $12.2 million in the prior year period. The increase was driven primarily by higher sales and marketing costs in the quarter. Operating income for the third quarter increased by 106.2%. to 0.6 million compared to an operating loss of 10.4 million in the prior year period. Gap net loss for the third quarter was 2.2 million compared to a net loss of 13.1 million for the prior year period. An adjusted EBITDA in the third quarter increased 134.3% to 2.9 million compared to adjusted EBITDA loss of 8.3 million in the prior year period. These results reflect both top-line growth and operating expense management. As a reminder, adjusted EBITDA is a non-GAAP measure that represents net loss as adjusted for interest and other expenses, income tax expense, depreciation, amortization, stock-based compensation, and M&A transaction expenses. Primary shares outstanding were 69.5 million at the end of the third quarter of 2025. During the quarter, we issued 6.5 million shares from our ATM program for gross proceeds of 10.9 million, representing an average purchase price of $1.69 per share. Subsequent to quarter end, we completed the ATM program with the issuance of 837,000 shares for gross proceeds of 2.2 million, representing an average purchase price of 261 per share. Now turning to the balance sheet, Accounts receivable net increased $5.4 million in the third quarter to $15.8 million compared to $10.4 million last quarter and $8.8 million in the year-ago comparable period. Inventory's net increased by $9.6 million, or 50.8%, to $28.5 million compared to $18.9 million last quarter and $46.8 million in the year-ago comparable period. Our inventory buildup comes as a result of increased activity that we're seeing in our business. Cash equivalents in short-term and long-term marketable securities totaled $40.3 million at September 30, 2025. Principle on our convertible debt due in early January 2026 is $50 million. We've been working diligently with certain financial parties regarding refinancing this debt. While we have not entered into any binding agreements yet, we expect to complete this process in the fourth quarter. We further expect to utilize a combination of cash on hand and borrowing arrangements to complete the refinance and fund our working capital needs as we continue to grow the business in 2026. Turning now to our financial outlook for our fourth quarter of 2025 and full year of 2025. As a reminder, Tygo provides quarterly guidance for revenue as well as adjusts EBITDA as we believe these metrics to be key indicators for the overall performance of our business. For the fourth quarter of 2025, which traditionally is a seasonally slow quarter in our industry, we expect revenues and adjusted EBITDA to be in the following range. We expect revenues in the fourth quarter ended December 31st, 2025 to range between 29 million and 31 million. We expect adjusted EBITDA in the fourth quarter ended December 31st, 2025 to range between $2 million and $4 million. For the full year of 2025, we anticipate revenue to be between $102.5 million and $104.5 million. That completes my summary, and I'd like to now turn the call back over to Zee for final remarks. Zee?

Thanks, Bill. As we look ahead, I'm happy to say that even against the backdrop of the economic uncertainty, We believe that our track record of seven consecutive quotas with stop-line growth and discipline expense management builds a strong foundation for possible future growth as we near the end of 2025 and look into 2026. We firmly believe in the growth prospects of our business and look forward to providing additional updates in the coming quotas. Who is that? Operator. Please open the call.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. And to withdraw your call, please press star 1-1 again. And our first question is going to come from Eric Stein with Craig Harlem Capital Group. Your line is open.

Hi, Zvi. Hi, Bill. Hey, Eric. Hey, hello. So I'm wondering, maybe we could just dig in on the improvement that you are seeing in the U.S. since that obviously was a highlight in the quarter. And then, you know, just curious, you've got this new arrangement with EG4. You know, what kind of, I know it's early, but early impressions, you know, what you think that potentially can become here as we get into fiscal 26th?

So let me start with the first question on the improvements in North America. We, in the last couple of quarters, highlighted that we have identified a segment which is not very well served, and it's not necessarily new installations. It's the repowering of existing ones, and it's a very large installed base. And we targeted it. We are very happy to say that it has been very successful. So we have seen a major increase in our revenue as we've just reported for North America and we see a major continuation in the future. We have a unique solution that really is aiming at solving this problem. In addition, we have seen some fairly nice inroads with the new installations and new storage to the point where we actually are getting close to the depletion of all the inventory we actually had before. So it's all very positive indications in at least being able to address the growth in North America, unlike the general market, which is actually down. In Europe, since we are diversified, and needless to say, Germany is still a fairly big chunk of our business, but we see very good inroads in Italy, the UK, Czech Republic, which that diversification helps us quite a bit to actually eliminate some of the downside of some of the countries. So in general, this strategy has been really working well for us in trying to avoid the biggest downfall or shortcoming as the market is recovering. Now, on the EG4 for North America relationship and partnerships, EG4 is a very well-known supplier that started with the off-grid and expanded well beyond that. And we have had that relationship with them for quite some time in complementing the inverter and storage solutions with our MLPE. What we have announced is that together, what we will bring to the market is a domestic content applicable solution which will be an optimized inverter solution that includes obviously the inverter and optimizers as well. And this progress is actually continuing as planned and early indication we provided when we just made the announcement that we foresee an opportunity to start shipments early in Q1 or sometimes mid Q1 and that has not changed so far. I believe that it will provide a significant increase in our footprint to new installations with that partnership and really providing a very competitive solution in the optimized inverter market.

Got it. That is helpful. And then maybe just sticking with part of that answer, when you talk about repowering, I mean, I would assume the open architecture setup of your optimizer is important, going after that market opportunity and just competitively. I mean, does that mean that, or I'm curious what you think that means in terms of how you stack up events against others who may be looking at repowering as well?

So you're absolutely 100% correct. The open architecture is really very well positioned to address any power capability. But in addition, we have a very strong inverter solution that is also an open system and can work with pretty much any old installation in the market and can be easily adjusted with the power requirements to whatever power needs of that one specific system is. And that's really very unique. So the combination of these two is what's really very unique in the market. Needless to say, it also benefits from the fact that it's very easy to install. It pretty much is 100% compatible with all the other components that you have in the system. So you don't need to replace the whole system and provides all those benefits to the installer and to the owners of those systems.

Okay, thank you.

Welcome.

And the next question will come from Philip Shin with Roth Capitals. Your line is open.

Hey, guys. I wanted to get some more clarity on the EG4 partnership. Sorry if I missed it because I'm navigating a couple of calls at the same time. But when do you expect your initial output to be available? Thanks.

So as we've indicated before, and I just repeated it, Phil, it will be sometimes in Q1, middle to the second part. But we don't know. I have this specific date, but we are targeting Q1 shipment. And we have a fairly good indication as to the potential for us next year, and it is significant.

Great. So how much of your overall volume of production could come from EEG4 for 2026? I mean, could it be half or do you think it's maybe a third?

So in the US, it's a brand new production capacity for us. So it would initially be the majority for EEG4, but we plan to actually utilize it also beyond the EEG4 as well. And so the initial production capacity will be really dedicated to the EG4 relationship. But it's a brand new line, which we are just in the final stages of getting it up and running.

Right. Okay.

So... This is additional capacity, which we did not have before. It's not replacing any. We are adding capacity.

Right. And do you think you could use... this U.S. EG4 facility to ship units to Europe or elsewhere in the world?

Correct. You're absolutely 100% correct, yes. And we do plan to get the maximum utilization we can, as you can imagine.

Right. Okay, great. Thanks. Shifting over, I know you have not provided any guidance for 2026, but wanted to see if we could get a sense for what you're looking for. From a seasonality standpoint, would you expect Q1 to be similar to, you know, a past Q1? Maybe which one might be a useful comparison? And then what kind of growth could we see in 26 year-over-year or, you know, maybe sequential growth? You know, however you think you can describe the 26 outlook in a... in a way that makes you feel comfortable but can give the market color would be fantastic. Thanks.

Thank you. So you're absolutely right. We did not provide the guidance for 26 yet. We will do it early in Q1, as we traditionally have been doing at the beginning of the year. But I was trying to communicate that, as you can see in Q3 and some of the guidance we provided to Q4, which normally is a down quarter, We actually provided guidance to a flat quarter, not down, and we feel fairly strong about the outcome and where we are. I don't want to unveil too much specificity, but I can tell you we are very comfortable with that guidance that we just provided, which gives us a very good indication as to how we get into 2026. So we do believe it's going to be a growth year for us. And we will provide a bit more guidance as to the specificity, as I said, in early Q1. And as far as seasonality, normally, as you know, Q4 and Q1 are a little bit more challenged. But Q2 and Q3 are actually on the upside. And we've been demonstrating it also this year. So we do believe that we will see a very similar behavior in the markets. I will tell you that we are happy with the results of the repowering of the North America market, and that has no seasonality at all. And so that's a little bit more comforting, and it might actually provide some more stability for us in North America as we move through the year.

Right. Okay. Interesting. And from a margin standpoint, as we get through 26, do you also feel very comfortable with the current levels, you know, call it 40 plus percent? Absolutely. Remain steady through 26. Absolutely.

Absolutely. Yes.

Great. Great. So that's good. And then one last one. I'll pass it on. You just mentioned the repowering initiative. And can you share? what percentage of the market might be repowering, or what percentage of your revenue could be repowering for next year?

I'm not sure we're ready to actually share this number in more specificity, but I can tell you in Q3, the North America results have been substantially impacted by the repowering. That has demonstrated for us the depth and strength. So obviously, as we move into 2026, we believe it's going to gain much more momentum and can be much more significant.

So the boost in the North America business really was substantially positively impacted by the repowering efforts.

It was a very strong addition, yes. Absolutely.

Absolutely. That momentum can continue through Q4 and through 26 as well.

Correct. And I will tell you, it does not suffer from the problems of the new installations that the whole market is going through, including us. Because when you do the repowering, it's installations that you have, and they don't quite work and operate, and you really have no choice but to repower.

Okay, great. Thank you. I'll pass it on.

Most welcome. Thank you, Phil.

And the next question comes from Amit Dial with H.C. Wainwright. Your line is open.

Thank you, Graf and everyone, and congrats on another strong quarter. Just touching on your last comments, I'm just trying to get a better understanding of what's driving this repowering trend here in the U.S. Is this more market-driven or is there any regulatory element that is also supporting some of these repowering-related CLG improvements?

Hi, Amit. Thanks for the question. So to be very, very clear and to the point and focus, there is no regulation or government or anything that is impacting it. It's purely financially driven. Customers are installed in systems that are aging and they don't perform anymore and they did benefit from the solar installations they did, want to continue. And they have no choice either to rip it apart, start from scratch, which is very expensive, or to repower. So it is just a ready-made problem that is looking for a solution and we've identified it. and aimed at this market. And we have a solution which is superior and is not relying on any benefits from any local governments or any changes at all. It's a purely financial decision by the owners of those systems.

Understood. Thank you for that. That's very helpful. And do you get similar efficiencies from the post-re-powered setup that you might have had before, or are there even more improvements?

There are actually more improvements because most of those aging systems have been suffering from a reduction in performance before they actually broke or about to break. And so, yes, there is an uptick in performance for those. And in some cases, this is not yet a big phenomenon, but in some cases, customers opt to also add storage too. So that's an additional source that potentially is available for us.

Interesting. And then this repowering trend could begin in other geographies for you in the future also, it looks like.

That is absolutely correct. We started focusing here in the U.S., and it seems to be working for us well. But this phenomena is a global phenomena. And many of the systems are aging. They're 7, 8, 9, 10 years old plus. And in many cases, you cannot get replacement parts. It's just you have no choice. So it's a problem that has been created over time, and now it's coming to fruition. And it's a ready-made market, basically.

Thank you for that. This one, last one for me. You have the EG4 sort of manufacturing setup here in the U.S. now. What is happening on the business development side to sort of take advantage of this? Are you making any investments in like sales teams over here or any other partnerships you may be looking to capitalize on the manufacturing setup you have over here now?

The beauty of this relationship is such that It is relying on the strengths of the two entities. EG4 is a very good brand in a specific market, which is doing well and growing nicely. And the Tygo NLP optimization has been growing and very well known in our space. And so the combination of them do not require any additional new sales or marketing activities. It's utilizing the existing channels we have. And that's the beauty of the relationship. Okay. Understood. That's all I have, guys. Thank you so much.

Thank you.

At this time, this concludes our question and answer session. I would like to turn the call back over to Mr. Alon for closing remarks.

Thanks again, everyone, for joining us today. I especially want to thank our dedicated employees for their ongoing contributions as well as our customers and partners for their continued hard work. I also want to thank our investors for their continued support. Operator?

Thank you for joining us today for Tygo's third quarter 2025 earnings conference call. You may now