#enph

#ENPH Q3 2026 earnings review: core demand still shrinking, Q4 guided −18% QoQ, 20 points of margin come from tax credits Revenue $293.3M, −29% YoY and flat QoQ, at the low end of the $290–320M guide and below the ~$304M consensus; non-GAAP EPS $0.41 against ~$0.50. The EPS miss is a $26.5M write-down of debt securities in private companies (−$0.14); without it EPS was ~$0.55. GAAP net income of $23.4M came entirely from a $27.0M tax benefit on a $3.6M pre-tax loss. 29% of revenue ($85.0M) was safe harbor shipments to lease providers, not end demand. Strengths • Non-GAAP gross margin 45.0% (tariffs −1.3pp) and operating margin 18.3%; opex held at $78.4M, flat YoY. • IQ Batteries 129.9 MWh, +14% QoQ; Europe revenue +$6.8M YoY on Netherlands storage, batteries now ~50% of European revenue. • Safe harbor contracts of $1.08B signed in 2026, deliveries through Q2 2031; deferred revenue $525.7M. • $931.8M of cash against $575M of 2028 converts; $228.5M of 45X credits receivable, a $108.3M refund due in Q4. • Inventory $243.7M, from $288.0M at year-end; channel to be drawn down by ~$20M in Q4. • Propel prepaid lease: ~350 installers, >300 originations a week, 71% battery attach; ~70% of Q4 revenue already booked. Weaknesses • Global sell-through +1% QoQ against a planned +10%; U.S. sell-through −35% YoY after the 25D credit expired; microinverter units −22% YoY, battery MWh −33% YoY. • 45X credits added $58.6M to gross profit, 20.0 points of margin (16.5 a year ago); without them non-GAAP gross margin is ~25%. The credits are now sold at 93% of face. • Q4 guide $225–255M, −18% QoQ at the midpoint, with sell-through −10%; non-GAAP gross margin 40–43% after an 8–9% battery price cut. • Operating cash flow $0.1M, free cash flow −$11.4M; no buybacks in 2026 with $268.7M authorized. • GAAP operating margin 2.2%; stock comp in opex $39.4M, 13% of revenue. • Visibility: management cites FEOC rules and rates, gave no 2027 guidance and declined to discuss price elasticity, SST customers or Q1. Bottom line The core business runs at ~$200M a quarter and is still shrinking, held up by tax credits and prepaid lease contracts. Management's 2027 frame: $200M a quarter of core plus ~$200M for the year from G5 batteries, commercial storage, EV chargers and Propel; the AI data center transformer is a 2028 story. The question for Q4 is whether sell-through bottoms at −10% and the G5 launch keeps gross margin above 40%. #ENPH #earnings #Q3_2026 #Solar