Tigo Energy, Inc.

Good afternoon. Welcome to Tygo Energy's fiscal fourth quarter and full year 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 Svi Alon, CEO, and Bill Rushline, CFO. As a reminder, this call is being recorded. I will now turn the call over to Bill Rushline, Chief Financial Officer. Please go ahead.

Good afternoon. Welcome to Tygo Energy's fiscal fourth quarter and full year 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 myself, Bill Roschlein, CFO. As a reminder, this call is being recorded. We'd like to remind everybody that some of the matters that we discussed on this call include our expected business outlook, our ability to increase our revenues and achieve and maintain profitability, and our overall long-term growth prospects, expectations regarding a recovery in our industry, including the timing thereof, statements about demand for our products, our competitive position and market share, the impact of tariffs, 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 our revenue and adjusted EBITDA for the first fiscal quarter of 2026, and our revenue for the full year fiscal 2026, as well as our ability to penetrate new markets, expand our market share, including expansion in international markets, and investments in our product portfolio are forward-looking. And as such, they're 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 factor section of our most recent annual report on Form 10-K and other reports we may have filed or may file with the SEC from time to time. These risks and uncertainties could cause actual results to differ material 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 10-8-K. 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 would 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. With that, I'd like to now turn the call over to Tygo 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 Rochelein. He will discuss our financial results for the fourth quarter in more depth, as well as provide our guidance for the first quarter of 2026 and full year of 2026. 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 ended 2025 with yet another strong quarter, and that against the backdrop of seasonally slower periods for our industry. During the year, we continuously built on our 2024 results and I'm exceptionally proud of what our team here at Tygo has accomplished in 2025. Beginning with achieving $103.5 million in revenue, representing annual year-over-year growth of 91.7%. Moving to the fourth quarter of 2025, we reported total revenue of $30 million, A 73.8% increase over the 17.3 million in revenue was reported in Q4 of 2024. During the quarter, we shipped 744,567 megawatts of MLPE. During the total MLPE, the total ship to customers is 2.7 million units. for the year. I will also note that our optimizer unit volume outgrew that of our main competitor in this space, indicative of the market share gains we achieved in 2025. Turning now to our geographical results, we saw continued sequential growth in several countries within the EMEA and america's region during the fourth quarter which comprised 60.3 and 30.8 respectively of our quarterly revenue by country we performed exceptionally well again in the uk which grew 72.3 percent sequentially and in the u.s which grew 24.4 percent sequentially these results were offset by seasonal softness in Germany and Italy, and lower revenue from Eastern Europe, specifically the Czech Republic and Poland. An unusually cold weather pattern this year has significantly impacted the solar installations. While the environment has improved lately, we do expect some lingering effects to spill into our first quarter of 2026 revenue, expectation. Within the APAC region, we saw renewed growth as revenue more than doubling sequentially with particularly strong results in Australia. Looking ahead, we're excited about a number of growth drivers that we believe will propel continued growth in 2026 and beyond. In the US market, we have a number of initiatives in play. We have now established a domestic contract manufacturing operation in the U.S. that allows us to provide, to produce 45X qualified domestic content and FEOC compliant MLP to support our U.S. customers and our EG4 partnership. Initial deliveries are scheduled for May and we believe that our combined optimized inverter product will be well received by the market. In addition, we also see continued growth in our re-power initiative and expect further growth in this area in 2026. Finally, we recently announced our new GO battery for the U.S. market, featuring 5 to 30 kilowatt hours capacity in 5 kilowatt hour modules and 11.4 kilowatt hour optimized output, continuous output. We expect this new battery to further enhance upsell opportunities and produce additional growth for us in the U.S. market. In EMEA and APAC regions, we have witnessed some competitors reducing their physical footprint in the market. We expect to benefit from this dynamic as the year progresses, and we are currently making investments in this area. Finally, we continue to push the envelope technologically and have a robust pipeline of new product introductions in the three market segments we serve, mainly MLPE, energy storage, solutions and AI-driven software solutions that we look forward to updating investors as the year progresses. I would like to close by stating that we achieved an important milestone during the fourth quarter of 2025 by eliminating our $50 million convertible promissory note ahead of its January 2026 maturity. This allowed us to end the year with no outstanding debt maturities, remove $2.5 million in annual interest payments obligations, strengthen our balance sheet and capital structure, and set us up to success in 2026. And with that, I will turn it over to Bill.

Bill? Thanks, Vy. Before I start reviewing the results for the fourth quarter of 2025, I would like to remind investors of inventory reserve charges that have significantly impacted certain line items during the year-ago quarter. Turning now to our financial results for the fourth quarter ended December 31st, 2025. Revenue for the fourth quarter of 2025 increased 73.8% to $30 million from $17.3 million in the prior year period. By region, EMEA revenue was 18.1 million, or 60.3% of total revenues. America's revenue was 9.2 million, or 30.8% of total revenues. And APAC revenue was 2.7 million, or 8.9% of total revenues. By product family, for the fourth quarter of 2025, MLPE revenue represented $26.9 million of revenue, or 89.7% of total revenues, while Go ESS represented $2.2 million, or 7.4% of total revenues, and PredictPlus and licensing revenue represented $0.9 million, or 2.9% of total revenues during the quarter. As Vy mentioned, We expect the introduction of the GOESF battery to be a positive contributor to growth in Q2 and beyond. Gross profit in the fourth quarter of 2025 was $13.4 million or 44.5% of revenue compared to a gross loss of $12.6 million or negative 72.7% of revenue in the comparable year-ago period. The year-over-year increase was primarily due to the previously mentioned inventory charge of 19.5 million in the prior year period. We also continue to see USD, Euro, FX rates benefiting us in the marketplace as most of our revenue and expenses are denominated in U.S. dollars. Operating expenses for the fourth quarter increased 13 percent to 13 million compared to 11.5 million in the prior year period. The increase was driven primarily by increased sales and marketing and general and administrative expenses. Operating income for the fourth quarter increased by 101.4% to $0.3 million compared to an operating loss of $24.1 million in the prior year period. Gap net income for the fourth quarter was $11.7 million compared to a net loss of 26.8 million for the prior year period. Net income for the fourth quarter of 2025 includes the net gain on the sale of intangible assets of 14.6 million. Diluted earnings per share for the fourth quarter of 2025 was 16 cents compared to a loss per common share of 44 cents in the fourth quarter of 2024. Adjusted EBITDA in the fourth quarter was $2.7 million compared to an adjusted EBITDA loss of $22.1 million in the prior year period. As a reminder, adjusted EBITDA is a non-GAAP measure that represents net loss after adjusted for interest and other expenses, income tax expense, depreciation, amortization, stock-based compensation, and M&A transaction expenses. Shares outstanding at December 31st, 2025 were $70.4 million for the fourth at the end of the year period. Turning to the balance sheet, accounts receivable net decreased this quarter to $13.9 million compared to $15.8 million last quarter and increased from $8 million in the year-ago comparable period. Inventories net increased by $2.8 million or 9.6% to $31.3 million compared to $28.5 million in the last quarter and $22 million in the year-ago comparable period. Cash, cash equivalents, and short and long-term marketable securities totaled $7.7 million at December 31, 2025. On a sequential basis, cash Cash equivalents and marketable securities decreased by $32.6 million as we repaid a $50 million convertible promissory note, as V had mentioned. In addition, we just announced that we have entered a definitive agreement with certain institutional investors for a registered direct offering of 5 million shares of common stock at a price of $3 per share. The transaction is expected to generate gross proceeds of approximately $15 million before placement agent fees and other offering expenses. We believe this financing further strengthens our balance sheet and enhances our financial flexibility as we execute on our growth trajectory. The offering is expected to close on or about February 26, 2026, subject to customary closing conditions. Turning now to our financial guidance for the first quarter of 2026 and outlook for the full year of 2026. As a reminder, Tygo provides quarterly guidance for revenue as well as adjusted EBITDA as we believe that these metrics are key indicators for the overall performance of our business. For the first quarter of 2026, we expect revenues and adjusted EBITDA to be in the following range. We expect revenues in the first quarter ending March 31st, 2026 to range between $25 million and $27 million. We expect adjusted EBITDA to range between negative $1 million and positive $1 million. The quarterly guidance reflects weather-related seasonality in EMEA for revenue and a potential $500,000 reserve within operating expenses for a slow-paying distributor issue that we are working to resolve. Based on the midpoint of our guidance and our annual guidance for 2026, our first quarter revenue expectations this year represent approximately 19.6% of our expected 2026 revenues compared to the first quarter of the prior year, which represented 18.1% of 2025 actual results. For the full year of 2026, We expect revenues to grow between 26% and 30%, and to range between $130 million and $135 million. Our annual guidance reflects another year of strong growth for our company, and we expect to outgrow our competition again this year. That completes my summary, and I'd like to now turn the call back over to Zvi for final remarks. Zvi?

Thank you, Bill. As we close out 2025, we are encouraged by the progress we have made in the market that continues to evolve. While the broader industry has faced periods of volatility, our performance this year reinforces our confidence in the strengths of Tygo's platform, the resilience of our business model, and the value of our differentiated product portfolio. We remain confident in the long-term growth trajectory for our business and look forward to providing additional updates in the coming quarters. With that, operator, please open the call for Q&A.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. please stand by. We will compile the Q&A roster. Our first question comes from the line of Eric Stein of Craig Hallam Capital Group. Your line is now open.

Hi, it's V. Hi, Bill.

Hello, Eric.

Hello. So, first question here, I know obviously you're getting to strong growth in 2026. On the last call, I recall you referring to or talking about potentially substantial growth opportunities that you see out there. So I'm curious, I mean, it seems to me that you're not really including those potential substantial opportunities in your current guidance, so do want to confirm that. But then also, as you think about some of those things that could drive upside, maybe how you rank them based on the list of things that you expected to be positive drivers here in 26th.

Sure, so the EG4 relationship, the partnership that we think is going to be very successful. That said, we just baked in the minimum order quantities for the contract that we signed as opposed to assuming more. I think that there's potentially large upside to the amount of business that can be generated there. We'll have to update you as the year goes along as it relates to that particular partnership. The battery, we introduced the Go battery, and we believe that it's going to positively impact revenues on that product line. We anticipate doing something similar in Europe. And that will constitute a full refresh of the battery product line since we introduced it a few years ago. Very excited about that. And that is another growth opportunity that Zvi also alluded to. We continue to be excited about the repower opportunities. And we think that, in fact, the repower opportunities plays well into the battery opportunity, which provides an upsell. to the customers who are purchasing the repowered inverters from us. So we think that could slipstream quite nicely in 2026 as well. So there's a number of new growth drivers for 26 that could layer on additional growth for the year.

Got it. And maybe a follow up there, just thinking about 2026 and in the US. I mean, maybe it's too early to call, kind of the makeup of repowering versus EG4 versus the battery offering. Any clarity there would be helpful. And then just curious, in terms of repowering, I mean, I would assume it's still very early days, but just any details or thoughts around that would be helpful. Thank you.

Hi, Eric. Luke. Have we not gotten into the differentiation between those three, and we are excited about all of them? And to just provide an additional insight, we are very excited about the EG4, and to the extent that they increase their market share by a small number, it can represent a very significant growth for us. But as we said, we are trying to be conservative about it, but we are very excited about that.

Thank you.

Thank you. Our next question comes from the line of Amit Dayal of HC Wainwright. Your line is now open.

Thank you. Good afternoon, everyone. Congrats on the strong results and outlook. With respect to this EG4 commentary, is EG4 upside more likely to come through in the second half of the year? Just trying to see what we should look at. you know, from an indicator perspective to see, you know, the traction from this relationship.

So initial, as we mentioned in the script, the initial deliveries will begin in May. And so you will start to see some benefit in the second quarter, and then you'll see a full benefit beginning in Q3. And just, you know, to, by way of background, you know, this is an optimized inverter U.S. domestic content, qualified ITC, qualified product for the U.S. market that would be the only other serious competition to the main player in the U.S. market here who has demonstrated success in a large amount of the business. So there's a large opportunity here for Tygo and G4 to capture quite a bit of share here. And so we're very optimistic about it.

Understood. Thank you, Bill. Just in relation to that, you know, and in the context of the financing, do you now have sort of the working capital to pursue even more aggressive growth, say, in 2027 than the growth that you are, you know, highlighting for 2026?

We do. We think we're in good shape here on our balance sheet. It's very clean, debt-free, and... We have the flexibility to be able to follow the initiatives that we want. There's, you know, we're excited about the U.S. manufacturing endeavor that has, again, ITC domestic content qualified products for U.S. customers who want that. And we think we've got the growth capital that we need to further expand our growth. That's all I have for now, guys.

Thank you so much.

Thank you.

Thank you. I am showing no further questions at this time. I would now like to turn the call back over to Mr. Allen. Oops, sorry. It looks like someone entered a queue. One moment, please. Our next question comes from the line of Gus Richard of Northland Capital Markets. Your line is now open.

Yes, thanks for taking the question. Just on your new storage system, can you talk about, you know, the energy efficiency of it and what the parasitic loss will be relative to competition?

So it definitely is providing a very interesting modern technology platform. And I believe that on all parameters, we're actually exceeding the competitors right now, including the fact that we are going to be able to provide consistent or constant 11.4 kilowatt hour outputs from the battery here in the US.

Okay. And then just a housekeeping question. Was there any previously written off inventory sold in the quarter?

Yes, there was, and it had about a three percentage point impact on the margins, so margins in the quarter.

Okay, and thinking about margins going forward, you know, given the new product coming out in the second quarter, should we think about, you know, gross margins hanging in there around 40% or maybe high 30s?

Our target model is 40%, and I think we're running above that, and I think I would expect Our goal is to maintain that 40%. Got it. All right. Thank you so much.

Thank you. As a reminder, to ask a question, you'll need to press star 1-1. We'll give it a couple seconds here before we move to closing. Okay. Seeing none, I'd now like to turn the call back over to Mr. Alon for his closing remarks.

Thank you. 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 fourth quarter 2025 earnings conference call. You may now disconnect.