Executive Summary

ENPH delivered a clean beat: revenue $410.4M and non-GAAP EPS $0.90 versus S&P Global consensus $369.6M and $0.66, respectively, as safe harbor pull-ins and stronger U.S. demand drove the highest revenue in two years (Consensus values from S&P Global: Revenue Consensus Mean=$369.6M*, Primary EPS Consensus Mean=$0.656*).
Non-GAAP gross margin of 49.2% exceeded expectations (Street est. 44.2%), despite a 4.9 ppt headwind from reciprocal tariffs; ex-IRA benefit, non-GAAP GM was 38.9% (Gross Margin Consensus Mean=44.2%).
Q4 2025 guide is conservative: revenue $310–$350M, GAAP GM 40–43%, non-GAAP GM 42–45%, and 140–160 MWh battery shipments; management cited (i) $70.9M safe harbor pulled forward into Q3 and (ii) deliberate undershipment to destock channels (~$45M at midpoint) .
Preliminary look for Q1 2026 is ~$250M revenue (cycle trough) with improvement through 2026 on declining rates, new financing (prepaid lease with loan), and ENPH-specific product ramps (IQ9 GaN microinverters, 5th-gen batteries, VPPs) .

What Went Well and What Went Wrong

What Went Well

U.S. demand strength and safe harbor: Revenue rose to $410.4M with $70.9M safe harbor; U.S. revenue +29% q/q, helping offset Europe softness. CEO: “We had a good quarter… highest revenue level in two years” .
Margins and IRA benefit: Non-GAAP GM 49.2% beat (ex-IRA 38.9%); net IRA benefit was $42.5M; tariffs were a 4.9 ppt drag, but mix and U.S. manufacturing offset .
Storage momentum and product cadence: Record 195.0 MWh battery shipments; fourth-gen U.S.-made batteries and IQ Meter Collar approvals (39 utilities) underpin U.S. competitiveness and VPP traction .

What Went Wrong

Europe remained a headwind: Europe revenue down ~38% q/q on demand softness and policy changes; management flagged country-specific demand and incentive issues (Netherlands, France, Germany) .
Q4 guide reset and channel destock: Q4 revenue guided below implied sell-through ($350–$400M) due to ~~$70.9M safe harbor pull-forward and planned under-shipment (~~$45M at mid-point) to normalize channel inventories entering 2026 .
Cash generation moderated: Free cash flow was $5.9M despite operating excellence; operating cash flow $13.9M; FCF headwinds from working capital and timing of PTC cash receipts .

Financial Results

Core P&L vs prior periods (GAAP and non-GAAP)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$380.9	$356.1	$363.2	$410.4
GAAP Diluted EPS ($)	$0.33	$0.22	$0.28	$0.50
Non-GAAP Diluted EPS ($)	$0.65	$0.68	$0.69	$0.90
GAAP Gross Margin (%)	46.8%	47.2%	46.9%	47.8%
Non-GAAP Gross Margin (%)	48.1%	48.9%	48.6%	49.2%

Q3 2025 Actual vs S&P Global Consensus

Metric	Consensus	Actual	Beat/(Miss)
Revenue ($M)	$369.6*	$410.4	+$40.8 (bold beat)
Primary EPS ($)	$0.656*	$0.90	+$0.244 (bold beat)
Non-GAAP Gross Margin (%)	44.2%*	49.2%	+500 bps (bold beat)

Values marked with * retrieved from S&P Global.

Regional mix and sequential dynamics (Q3 2025)

Region	Mix	q/q Change
United States	~85% of revenue	+29% q/q
International (incl. Europe)	~15% of revenue	Europe: -38% q/q

Operating KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Microinverters shipped (units)	~1.53M	~1.53M	~1.77M
Microinverters shipped (MW DC)	688.5	675.4	784.6
Batteries shipped (MWh)	170.1	190.9	195.0
Safe harbor revenue ($M)	54.3	40.4	70.9
Non-GAAP OpEx ($M)	79.4	77.8	78.5
Non-GAAP Op Income ($M)	94.6	98.6	123.4
Cash from ops ($M)	48.4	26.6	13.9
Free cash flow ($M)	33.8	18.4	5.9
Ending cash & marketable secs ($B)	1.53	1.53	1.48
Net IRA (AMPTC) benefit ($M)	37.9	41.5	42.5
Tariff headwind (ppts)	— (guided 2 ppts in Q2)	~2 ppts	4.9 ppts

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q4 2025	N/A	$310–$350	New
IQ Battery Shipments (MWh)	Q4 2025	N/A	140–160	New
GAAP Gross Margin (%)	Q4 2025	N/A	40–43 (incl. ~5 ppt tariff)	New
Non-GAAP Gross Margin (%)	Q4 2025	N/A	42–45 (incl. ~5 ppt tariff)	New
GAAP OpEx ($M)	Q4 2025	N/A	130–134	New
Non-GAAP OpEx ($M)	Q4 2025	N/A	77–81	New
GAAP Tax Rate (%)	FY 2025	Prior 19–21% (Q2)	18–20%	Lowered
Non-GAAP Tax Rate (%)	FY 2025	Prior 15–17% (Q2)	14–16%	Lowered

Management also provided an indicative preliminary view for Q1 2026 revenue of ~$250M (not formal guidance) and expects a trough followed by gradual improvement through 2026 .

Earnings Call Themes & Trends

Topic	Q1 2025 (Q-2)	Q2 2025 (Q-1)	Q3 2025 (Current)	Trend
Tariffs & margins	Guided new tariff impact into Q2 (+2 ppts)	~2 ppt headwind; non-GAAP GM 48.6%	4.9 ppt headwind; non-GAAP GM 49.2%; will stop guiding ex-IRA	Tariff drag rising; mix/IRA offsets
Safe harbor dynamics	$54.3M in Q1	$40.4M in Q2	$70.9M in Q3; Q4 excludes safe harbor but could present upside	Volatile; Q3 pull-in, potential optionality
U.S. demand and 25(d)	U.S. -13% q/q; seasonality, soft demand	U.S. +3% q/q	U.S. +29% q/q; Oct sell-through +20% vs Q3 avg; 25(d) expiry to drive Q1 2026 trough	Improving into Q4; near-term cliff Q1
Europe	+7% q/q in Q1	+11% q/q in Q2	-38% q/q; policy/market softness; country-level strategy	Weaker; pivot to storage/self-consumption
Storage/VPP	170 MWh Q1	191 MWh Q2; 210 MWh enrolled VPP	195 MWh record; 39 utilities approve Meter Collar; 53+ VPP programs; GMP, SDCP deals	Expanding programs and attach rates
Product roadmap	IQ Battery 10C to launch Q2	Battery 10C shipped; EV Charger 2 expansion	IQ9 GaN microinverters (Dec ship), 5th-gen battery in 2026, bidirectional EV charger mid-2026	New vectors for 2026 growth

Management Commentary

“We reported quarterly revenue of $410.4 million… our highest revenue level in two years… shipped 1.77 million microinverters and a record 195 MWh of batteries” (Badri Kothandaraman) .
“Our revenue guidance [Q4] is $310–$350 million… two reasons: $70.9M safe harbor pulled into Q3; we are reducing shipments to destock the channel… ~75% booked to midpoint” .
“Reciprocal tariffs impacted our gross margins by 4.9% in Q3… without the reciprocal tariff [Q3] GM would have been ~54% given mix” .
“We anticipate Q1 2026 revenue of ~$250 million… a cycle trough… with improvement through the year on power price increases, lower rates, and new prepaid lease offerings” .
“We are entering the 480-volt commercial market with IQ9 GaN microinverters… a ~$400M TAM for Enphase” .
“In Europe… focusing on self-consumption and storage… Netherlands retrofit opportunity with Essent VPP; France VAT/tariff changes; stabilizing UK/Germany partnerships” .

Q&A Highlights

Guide mechanics and channel destock: Management highlighted ~$45M of deliberate undershipment in Q4 at midpoint to ensure 8–10 weeks of channel inventory entering 2026, and Q3 safe harbor pull-in of ~$70.9M .
Margin bridge: Q3 non-GAAP GM of 49.2% included a 4.9 ppt tariff hit; Q4 mid-point GM ~43.5% reflects normalized mix (less safe harbor) and ~5 ppt tariff drag; without tariffs, ~48.5% .
Europe underperformance: Soft demand and incentive resets in Netherlands/France/Germany; response is innovation (5th-gen battery cost-down, IQ9) and VPP partnerships to drive storage attach in 2026 .
Safe harbor methodologies: ENPH supports both 5% method and physical work test with customized components to reduce TPO cash outlay and smooth ENPH revenue linearity .
2026 setup: Expect Q1 trough (~$250M), with recovery drivers including prepaid lease with loan, IQ9 GAN for small C&I, 5th-gen batteries, and bidirectional EV charger .

Estimates Context

Beat vs consensus: Q3 revenue $410.4M vs $369.6M*, EPS $0.90 vs $0.656*, and non-GAAP GM 49.2% vs 44.2%* (Street); upside driven by safe harbor ($70.9M) and stronger U.S. sell-through (Consensus values from S&P Global).
Estimate revisions: Q4 guidance implies sequential step down before expected 2026 improvement, likely leading to modest downward revisions near-term for Q4 and Q1 2026 before medium-term 2026 ramps are recalibrated .