I sold out after earnings, had a 4.5% position. I was worried about the impact of interest rate hikes and incentives in California, haven’t listened to the earnings call but the slowdown was major. Could be a generational buying opportunity if the turn-around is your thing. Major earnings miss, $711 million missed by $14.86M. Guidance was a disaster, looks like negative YoY growth. Topline Guidance was $600M vs $749M analyst consensus estimate. Stock down about 12.5% After Hours.
Revenue of $711.12M (+34.1% Y/Y) misses by $14.86M.
Free cash flow of $225.2 million; ending cash, cash equivalents, and marketable securities of $1.8 billion.
The company’s board has approved a new $1 billion share repurchase program, which may be discontinued or amended at any time and expires on July 26, 2026.
Q3 Outlook: Revenue to be within a range of $550.0 million to $600.0 million, which includes shipments of 80 to 100 megawatt hours of IQ Batteries
GAAP gross margin to be within a range of 41.0% to 44.0%, before net IRA benefit
Non-GAAP gross margin to be within a range of 42.0% to 45.0%, excluding stock-based compensation expense and acquisition related amortization and before net IRA benefit
Net IRA benefit to be within a range of $14.5 to $16.5 million based on estimated shipments of 600,000 units of U.S. manufactured microinverters
GAAP operating expenses to be within a range of $159.0 million to $163.0 million
Non-GAAP operating expenses to be within a range of $101.0 million to $105.0 million, excluding $58.0 million estimated for stock-based compensation expense and acquisition related expenses and amortization
GAAP and non-GAAP annualized effective tax rate with IRA benefit is expected to be within a range of 20.0% to 22.0%.
Wow! That makes me REALLY glad I sold out earlier this year and bought SMCI/TSLA instead. I certainly didn’t expect 3Q guidance to be less than 2Q. Yikes.
Down ~12% after hours. Not huge, but not welcome I’m sure.
Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.
In a concentrated Portfolio and trying to learn from Saul to always “follow the numbers”, these numbers were really bad, US down -12% QoQ. CEO says things looks slow for the next 4-5 months. Maybe I need to look into Axon again. I owned it back in 2019.
That is strange. Tsla has almost a non existent solar business, it barely shows up on their Income statement. Also Tsla doesn’t sell microinverters. They have one inverter so if it goes out, the whole system is down until replaced. A friend of ours had it go out and their system was down for a month.
Apsystems and Growatt I have not heard about but I will check them out. Thanks.
Looks like my previous post was deleted. If you are wondering what buynholdisdead is referring to, it is a tweet thread from Brad Lyons on twitter. @BLyons151. I won’t repost the link, but you can easily look for his ENPH tweet yesterday at 4:38 pm. He has some back and forth dialogue with others in the thread that gives more context.
I assume my previous post got deleted because it included a chart with a trend line and a couple comments about the chart. I don’t personally consider that “technical analysis”, but if that is why it was deleted can someone let me know and tell me what is ok/not ok when showing charts? Can I show a chart with a line on it if I don’t make any comments about the chart? Or are any charts with lines on them forbidden?
I’m out too. I was skeptical to go in because of my previous experiences with solar and alternate energy companies (all bad). ENPH seemed less dependent on subsidies and grants, but it’s still a very volatile segment.
I’m out as well. Sold 20% before earnings and the rest after earnings. After Q1, CEO said that they expect an adaptation to high rates. But it turns out the high rates are affecting demand more than management and I expected. I don’t think growth will be impressive until we see lower interest rates. If the Fed stays higher for longer on the Fed Funds Rate then the cost to install solar systems (residential) will be higher and growth won’t bounce back. So I’m out for now. ENPH has a great business and some products (new battery and bidirectional EV charger) coming. I expect these products will likely he hits. But residential home owners look at the cost of financing a new solar system and likely say I’ll wait until interest rates drop down and the cost of the system vs the savings pencil out better.
I’m out too. Long term thesis may be intact, but I’m more interested in companies that are increasing revenue…right.now.
Going forward, a CEO expressing frustration (…even nuanced frustration) with Sales personnel and/or Partners they rely critically on (…to get Sales closed) is a big red flag for me. It probably usually means demand for their product is waning.
This statement is a HUGE takeaway for me the last few quarters.
In my opinion recent growth durability numbers for SNOW, NET, and ENPH didn’t quite add up, yet each CEO stated the softness was only temporary. In all three cases, the weakening trends were indeed the reality.
In the infamous April thread where Matthew Prince either did or did not unnecessarily throw 100 salespeople under the bus for NET’s stumble I wrote:
Staying true to my word, ENPH and CEO Badri Kothandaraman have been kicked to the curb. One more chance is one more chance, and that’s it.
We have other companies issuing sunnier outlooks into easier comps. I’m happy to focus on those while ENPH works through its current issues.
Hi Analog, here’s what it says in The Rules of the Board
“Investing subjects that are off topic include technical analysis…”
What you posted was clearly technical analysis. It was followed by something which didn’t really belong here as well : a post from Twitter by someone we never heard of and who had no status, so your post had two reasons to be deleted. Repeats will get you barred from the board.
For what we ARE looking for take a look at the posts further down the thread by Gaucho Rico, Intjudo, and Stocknovice.
I have posted similar charts in the past and they have not been called out or deleted. In fact, I had the exact same ENPH chart, with the exact same line (and a similar caution), in a reply to a post after the last ENPH earnings report - and it has not been deleted or pointed out as being a problem. April 26 - reply to thread started by intjudo.
IMO, technical analysis is stuff like MACD, Bolinger Bands, Regression Analysis, Stochastic Oscillator, RSI. All I had was a straight line on a standard chart. Just so I’m clear (so I don’t get banned from the board), is showing any chart ok in posts?
Regarding posting a link to outside information. People post links to Seeking Alpha articles all the time here. How is that any different than linking to a Twitter post - almost anyone can be a Seeking Alpha contributor? The author of the tweet I posted is blue check verified and is Head of Primary Research at BWG Strategy - it says that in his Twitter bio. You can look on the BWG website and confirm who he is - the Twitter blue check validates who he is. Please help me understand why he is not an acceptable reference to link to.
Look Analog, I didn’t ban you or anything. I just deleted a post. I may not see every one like that, but I’d delete them if I did. Talking about the stock price piercing various lines is not for our board. We are supposed to be talking about how the company is doing! Just drop it!
Saul
I think Analog what they had wrong or maybe misunderstood is that Tesla could be stealing their battery business. Tesla does have a very good wall mounted battery. Enphase only sold 82.3MWH of batteries this quarter and that has been over 100MWH every quarter since Q122. Their Microinverters were up 55% at 5.200.000 YoY which was a decline from last quarter of 70% growth. That is concerning since Q2 is generally their strongest quarter.
This quarters FCF was at 30.96% YoY and Sequentially at 31.67% which is really strong for any company.
I don’t own this stock, and I don’t follow it closely - so maybe I am misunderstanding something. However, I went back and read the referenced tweet again and it specifically says “we picked up substantial commentary about inverter share shifts away from SolarEdge and Enphase, in particular to Tesla, APSystems, and Growatt.” The tweet provides cost comparison info between these competitors and ENPH.
I can not prove if the author’s information is correct or not, but the above is a quote from his firms note to clients published in Jan 2023, so he made the right call in advance.
He also says in the tweet thread “we were super bullish on ENPH until Jan '23. That was the first time we heard in years that competition was having a residual impact.”
Another quote “I don’t pick sides, just relay what we hear from people in the trenches…reality is that some installers are switching to TSLA despite higher quality with ENPH.”
Final quote replying to someone that was challenging his conclusions - “I can guarantee we have spoken to more installers than you have - we’ve been spot on the story for years.”
As I’ve said before, there is also the future risk from Small Modular Nuclear - which I personally think will become a much bigger thing in the next decade. If this SMR thesis is correct, all solar and wind power companies are going to become worth less.
I could be wrong. ENPH could be at a bottom, and it could turn around tomorrow. For those invested in ENPH I hope I am wrong, and I hope you profit from your investment. I have no dog in the fight - I’m just relaying info that I thought might be helpful.
From Tesla’s own press release for the quarter:
“Solar deployments remained roughly flat sequentially at 66 MW, declining YoY,
predominantly due to a high interest rate environment that is causing postponement of solar purchasing industry-wide.”
66 MW per quarter is inconsequential to 5.2 million micro inverters Enphase shipped will be approximately 2GW per quarter. Anecdotally every solar quote today in US I have solicited has an Enphase inverter, which was not the case even couple of years back.
I will not read too much in these tweets. There are perils of following random guys on twitter and especially in companies not followed closely personally.
And I would say you probably don’t need to. If anything, demand doubts have already been confirmed by the company. Q3 guide was a dagger. As many (@stocknovice in detail) have pointed out above, as far as we had been told, the company expected a big second half. That all changed Thursday.
I’m out of course. This is a peril with any widget company. As many smarter than me have pointed out in the past (and even I caught on a few years ago and predicted with Peloton): At some point, in some year, they will sell fewer units than the prior year. Write than in stone if you want: it’s true of any company without subscription revenue (and in the very long term, even the ones with subscription revenue). Now I obviously can’t predict what year that will be – but that’s the point: it could come sooner than we think. To quote from the Supermicro thread, it may be a decade away! If that turns out to be true, you will likely make a lot of money in the years between.
Enphase did $2.3b in revenue last year. They’ll top that this year, unless things crater in Q4…but they won’t top it by much…maybe by 10% thanks to Q1 and Q2. But in 2024, who knows? Could be flat, or even down. That’s not a growth company…at least, for now we can’t be sure it is. And they’re still priced for some growth, too!
One of the first big lessons from Saul I learned years ago is that we need to look for a good long term AND a good short term from our best companies. Long term trends alone aren’t enough. Neither are short term trends. With our best companies, we shouldn’t have to pick one or the other. It’s never numbers alone, but sometimes the numbers are pretty clear.
@PaulWBryant
Paul the tweets were not about demand - which the management has confirmed -and is a macro headwind due to interest rates, but Enphase loosing market share to lower priced competitors like Tesla. The two are fundamentally different. Macro demand will come back in time, loosing competitive positioning is more worrisome.
On demand front US residential market will be challenging as long interest rates stay high. They need the batteries and the small commercial entries to fire in this high interest rate macro environment for the US market to grow.
Split between US and international is now 59/41 and international is still growing fast. Last year was triple digits. So mathematically growth will resume at some point.
There is merit in the widget argument, but Solar penetration remains is very low for it to be a worry for a decade or two. And there are other vector the company can evolve in.
I believe the best days of the companies are ahead of it !
I didn’t mean demand for solar (only), I meant demand for Enphase. There are a lot of factors that go into it, and competition is one.
The CEO said: “Yes. I mean, just for context, in Q2, we grew about 25% in Europe compared to Q1. And in Q3, we expect Europe to be slightly down compared to Q2 due to typical summer seasonality. And Europe for us is underpenetrated.”
Q2 was 25% sequential growth and Q3 will be down sequentially in their largest international market. I think your assumption that international is still growing fast is incorrect.
I have seen no credible evidence yet to suggest that competition is the cause of demand drop. If anything their gross margins have improved sequentially every quarter. This quarter it was 46 percent in an otherwise commoditized industry.
They have literally tripled their Europe revenues out of nowhere last year and they are only now entering several more countries including large markets like Italy and UK.
They come from no where to dominate US market, the same is unfolding in Europe. One seasonal quarter does not make a trend.
The above said, I do expect near term - next 2-3 quarters - to be challenging.