I read the transcript; the things that stood out the most for me have to do with Sales, so I thought I’d submit some thoughts for your consideration.
Here are some specifics regarding challenges $ENPH sees right now for making sales:
IN CALIFORNIA
Installers figuring out how to sell batteries (…and in particular their new third-generation battery) based on the notion that under NEM 3.0 the higher cost of the batteries will be offset by the opportunity to utilize batteries to make money selling energy back to the grid.
I noted that Badri stated that in order to make that happen, Enphase has to first sell this concept to their Installers (see Acquisitions, below).
US OUTSIDE OF CALIFORNIA
Installers figuring out how to adjust their deal parameters to accomodate higher interest rates; specifically by charging lower Installer fees and compensating with higher APR on loans.
And again, several times in the call, Badri mentioned the challenge of first having to sell this concept to their Installers.
OUTSIDE OF THE USA
Badri seemed more optimistic regarding sales OUTSIDE OF THE USA: He sees continuation of the existing trend of sales going along at a great clip for several reasons including increased overall demand, addition of additional Countries to sell into and addition of additional products to sell
The thing I took away from the call is just how they are dependent on their Installers to hit their Sales targets, at least in the USA.
…It makes sense, then, that they have made some acquisitions they hope will help their Installers:
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They “acquired a company called SolarLeadFactory that basically helps in providing leads to installers.” Their goal is to provide Installers access to higher-quality leads such that close rate improves from 2-3% to more like 10% (…I have some experience with Sales; 10% definitely seems like a lofty goal).
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They acquired a company called SolarGraph: Design and Proposal software: “…basically estimates what a homeowner can save and provide him most accurate payback calculations depending on its consumption. So that’s Solargraf, and that is now helping us a lot. 1,000 installers are using it with NEM 3.0, it is helping us to sell the NEM 3.0 more clearly to our installers and show them the value of a solar plus storage system.”
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They are buying a company that has software that digitizes/automates/speeds-up the permitting process, thus alleviating a pain point for their Installers.
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They bought a software company called 365 Pronto that provides an online marketplace to facilitate Operations/Maintenance proposals between Installers and Customers. The Installers get access to Customers, the Customers get a mechanism that makes it easier to shop around and Enphase gets a transaction fee
It’s good that they are taking proactive action to improve their sales by making life better for their Installers, and maybe a touch disconcerting that they have to work so hard to keep sales going along.
I was surprised to learn just how much they do to help their Installers make sales, they are doing a lot including
- Teaching their Installers specific tactics for selling batteries
- Teaching their Installers specific tactics for making sales despite higher interest rates
- Obtaining higher-quality sales leads for their Installers
- Putting software in the hands of their Installers (Solargraph) that makes it easier for their Installers to communicate the benefits of an installation to prospective Customers
I suppose that’s probably par-for-the-course, and I’m certainly glad they are helping their Installers make Sales, but there seems to be some friction to the Sales process in that they first have to sell the Installers on the Sales techniques/tactics, and train them on the techniques/tactics, and subsequently rely on the Installers to effectively utilize those techniques/tactics.
Overall, I don’t find anything alarming in the numbers or in the content of the call. Seems like minor, short-term tactical issues against a backdrop of enormous demand for their solutions.
